Dundee Precious Metals sold the Tsumeb Smelter to Sinomine Resources Group’s subsidiary for US$49 million.
The company announced Thursday that it had sold the smelter, including all associated assets and liabilities, by disposing of all the issued and outstanding shares it indirectly holds in Dundee Precious Metals Tsumeb Holding.
Sinomine Resources Group is a Chinese company founded in 1999 and has developed into a global mining group with a comprehensive resource industrial chain.
The company’s main business and operation cover four segments: EV-lithium material development and utilization, rare & light mineral (caesium & rubidium) development and application, geo-tech services & mining property development.
Sinomine’s business covers more than 40 countries worldwide, including Canada, the US, the UK, Norway, Zambia, Congo (DRC), Zimbabwe, Uganda, Indonesia, Malaysia, and other regions in Asia, Africa, Europe, America, and Oceania.
Dundee Precious Metals will transfer all assets and liabilities associated with the Tsumeb smelter to Sinomine debt-free and cash-free, subject to normal working capital adjustments.
Dundee has also 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% of the purchase price. The cash received by Dundee Precious Metals on the closing of the deal will be less than a US$5 million holdback to be held in escrow for six months to secure the company’s indemnity obligations under the agreement.
In addition, Dundee Precious Metals is entitled to be paid all cash collected from IXM SA concerning a positive balance in metals exposure outstanding at Tsumeb, estimated to be approximately 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.
It is expected to close in Q3 2024.
Dundee Precious Metals expects to use the proceeds from the transaction to strengthen its balance sheet further and support its core mining business in line with its disciplined capital allocation framework.
David Rae, Dundee Precious Metals President and CEO, said the sale of the Tsumeb smelter is consistent with their strategic objective of focusing on gold mining assets and simplifying our portfolio in the future.
“We are extremely proud of the investments that we have made to transform Tsumeb’s operational and environmental performance into a specialized custom smelter with a highly skilled workforce,” Rae said.
He thanked Namibia’s government, the Tsumeb community 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 its stakeholders,” Rae said.
Dundee Precios Metals 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, Dundee Precious Metals can place its Chelopech concentrate at several other third-party facilities, providing secure and reliable processing alternatives at favourable terms.
Cutfield Freeman & Co. Ltd. acted as DPM’s financial adviser in the transaction.
