Dundee Precious Metals (DPM) has announced the sale of its Tsumeb Smelter to a subsidiary of Chinese company Sinomine Resource Group Co for N$920 million (US$49 million) cash.
Under the terms of the definitive share purchase agreement (SPA), DPM, through the sale of the shares of DPMTH, will transfer all assets and liabilities associated with the Tsumeb smelter to Sinomine on a debt-free and cash-free basis for a consideration of US$49 million in cash, subject to normal working capital adjustments.
Additionally, pursuant to the SPA, DPM is entitled to receive all cash collected from IXM S.A. with respect to a positive balance in metals exposure outstanding at Tsumeb, currently estimated to be approximately US$17.2 million, which will constitute an increase in the purchase price.
“We are pleased to announce the sale of the Tsumeb smelter, which is consistent with our strategic objective of focusing on our gold mining assets and simplifying our portfolio going forward. We are extremely proud of the investments we have made to transform Tsumeb’s operational and environmental performance into a specialized custom smelter with a highly skilled workforce,” said President and Chief Executive Officer David Rae on Thursday.
“We would like to thank the government of Namibia, the community of Tsumeb, and our employees for their support over the past 13 years. We will work closely with Sinomine to ensure a smooth transition to support a successful future for the operation and all of its stakeholders.”
DPM acquired the smelter in 2010 to secure a processing outlet for the complex concentrate produced by the Company’s Chelopech mine in Bulgaria. With developments in the global smelting market and changes in the quality of the Chelopech concentrate, DPM is able to place its Chelopech concentrate at several other third-party facilities, providing secure and reliable processing alternatives at favorable terms.
The transaction expected to close in Q3 2024, is subject to regulatory approval under the Namibia Competition Act , withapprovals required from Chinese regulatory authorities for overseas investments.
DPM expects to use the proceeds from the transaction to further strengthen its balance sheet and to support its core mining business in line with its disciplined capital allocation framework.
Cutfield Freeman & Co. Ltd. acted as a financial adviser to DPM in the transaction.
