The Namibian Competition Commission (NaCC) has approved the sale of Dundee Precious Metals’ Tsumeb Smelter to a subsidiary of China’s Sinomine Resource Group Co.
“Dundee Precious Metals Inc. today (Friday) announced that it received notice of approval under the Namibia Competition Act for the Company’s sale of its interest in the Tsumeb smelter to a subsidiary of Sinomine Resource Group Co. Ltd.,” the company said.
This comes as earlier this month Dundee Precious Metals said it is in negotiations with Chinese mining giant Sinomine to lower the sale price of the Tsumeb smelter to N$364 million (US$20 million).
The initial agreement, signed in March 2024, valued the 98% stake in the Tsumeb smelter at N$891 million.
However, subsequent discussions between the two parties have led to a proposed reduction in the purchase price to N$364 million.
According to Dundee’s second-quarter results, the decrease is attributed to several factors, including the complex financial arrangements involving the previous tolling agent, IXM S.A., and the ongoing negotiations around the transfer of the tolling agreement to Dundee.
The revised agreement is expected to be finalised in the coming weeks, subject to the approval of regulatory authorities in both Namibia and China.
“Dundee and Sinomine are currently discussing amendments to the SPA whereby the consent of IXM for the change of control of Tsumeb will be removed from the closing conditions of the transaction and the cash consideration payable for the sale of the Tsumeb Smelter to Sinomine is expected to be reduced from US$49million to US$20 million,” the company said.
It stated IXM’s decision to terminate its tolling agreement with Tsumeb due to the pending change of ownership has introduced new variables.
The company is owed approximately N$1.45 billion (US$80 million) for unprocessed concentrates and secondary materials, a sum Dundee is expected to settle by 29 August 2024.
To streamline the process, Dundee and Sinomine are exploring a revised agreement that would see Dundee replace IXM as the tolling agent.
This would involve Dundee purchasing the N$1.45 billion inventory from Tsumeb and managing the smelting operations until the sale is finalised.
“In addition, the parties are discussing a proposed arrangement pursuant to which Dundee would agree to step into IXM’s position as a tolling agent and enter into a new tolling agreement with Tsumeb on substantially the same commercial terms as the IXM Tolling Agreement, for a period starting from the IXM Extension Date and ending four months following closing of the sale,” Dundee said.
The proposed amendments to the sale agreement aim to expedite the closing process by removing the need for IXM’s consent. If successful, the transaction is expected to be completed in the third quarter of 2024.
The company ended the period with a robust cash position of N$12.908 million, up from N$10.862 million at the beginning of the year.
This increase was primarily driven by N$1.940 million in operating cash flow.
Additionally, Dundee maintained a debt-free balance sheet and an undrawn N$2.733 million credit facility.
“Cash and cash equivalents of discontinued operations increased by N$73 million (US$4.0 million) to N$106 million (US$5.8 million) in the first half of 2024 due primarily to a N$164 million (US$9.0 million) cash settlement with IXM on the estimated metal recoverable, partially offset by the loss generated in the period,” the report says.
While the negotiations progress, the Tsumeb smelter’s operations have been classified as discontinued, with its financial performance reported separately.
Despite this, the smelter has shown improved productivity in the first half of 2024.
It was reported that 52,858 tonnes of complex concentrate were processed in the second quarter of 2024, which was 3,375 tonnes more than in 2023.
Similarly, 107,631 tonnes were processed in the first half of 2024, representing an increase of 8,501 tonnes over the same period in the previous year.
“This was due primarily to increased plant availability following the completion of the maintenance work in the third quarter of 2023,” the company said.
Sinomine Resource Group is a Chinese-based global mining group with a comprehensive resource industrial chain.
