Dundee Precious Metals sold for N$910 million

Martin Endjala

Dundee Precious Metals (DPM) has announced that it has entered into a definitive share purchase agreement for the sale of its Tsumeb Smelter in Namibia for N$910 million to a Chinese company, the Sinomine Resource Group.

The sale includes all its associated assets and liabilities, through the disposition of all of the issued and outstanding shares it indirectly holds in Dundee Precious Metals Tsumeb Holding (Pty).

“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 that we have made to transform Tsumeb’s operational and environmental performance into a specialised custom smelter with a highly skilled workforce,” said DPM President and Chief Executive Officer David Rae.

He commended the government of Namibia, the community of Tsumeb, and employees for their support over the past 13 years.

Additionally, the company will further 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 can place its Chelopech concentrate at several other third-party facilities, providing secure and reliable processing alternatives at favourable terms.

Under the terms of the SPA, DPM, through the sale of the shares of DPMTH, will transfer, on a debt-free and cash-free basis, all assets and liabilities associated with the Tsumeb smelter to Sinomine for consideration of US$49 million in cash, subject to normal working capital adjustments following closing the purchase price.

The Company has made limited representations and warranties and provided certain indemnities to Sinomine customary with transactions of this nature, subject to a liability cap equal to 50 percent of the purchase price.

The cash received by DPM on closing will be less than a U$5 million holdback to be held in escrow for six months to secure the Company’s indemnity obligations under the SPA.

In addition, under the SPA, DPM is entitled to be paid all cash collected from IXM S.A. with respect to a positive balance in metals exposure outstanding at Tsumeb, currently estimated to be US$17.2 million, which will constitute an increase in the purchase price.

The Transaction is subject to customary closing conditions, including approval under the Namibia Competition Act and approvals required from Chinese regulatory authorities for overseas investments, and is expected to close in the third quarter of 2024. 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.

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