Dundee Precious Metals Inc. has 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. (Sinomine).
The sale is on track to close as planned in the third quarter of 2024, subject to completing the documentation regarding the revised purchase price and proposed tolling arrangement.
On March 7, 2024, DPM announced that it had entered into a definitive SPA with a subsidiary of Sinomine for the sale of its 98% interest in the Tsumeb smelter for a cash consideration of US$49.0 million, on a debt-free and cash-free basis, subject to normal working capital adjustments following closing. In addition, pursuant to the SPA, DPM is entitled to be paid all cash collected from IXM S.A. (IXM) with respect to the outstanding metal recoverable at Tsumeb, estimated to be $14.1 million as at June 30, 2024. The Tsumeb Disposition is subject to customary closing conditions, including approval under the Namibia Competition Act and approvals required from Chinese regulatory authorities for overseas investments. In July 2024, all Chinese regulatory approvals were received. The transaction is expected to close in the third quarter of 2024.
As a result of Tsumeb’s pending change of control, IXM elected to terminate the existing tolling agreement it had with Tsumeb (the IXM Tolling Agreement). Under the IXM Tolling Agreement, the cash value of all unprocessed concentrates and secondary materials became due and payable on July 31, 2024, however, both IXM and the Company have agreed to extend this period to August 9, 2024 in the interim, with a final settlement expected on August 29, 2024 (the IXM Extension Date). On the IXM Extension Date, Tsumeb will be required to purchase all unprocessed concentrates and secondary materials owed by Tsumeb to IXM estimated to be approximately $80 million, which amount could vary depending on, among other things, volumes of inventory, payable metals contained in the inventory and market metal prices at the time of the purchase. In addition, IXM is required to pay Tsumeb in cash for the estimated metal recoverable.
DPM 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$49.0 million to US$20.0 million. In addition, the parties are discussing a proposed arrangement pursuant to which DPM would agree to step into IXM’s position as a tolling agent and enter into a new tolling agreement with Tsumeb (the “DPM Tolling Agreement”) 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 (the “Financing Period”). It is proposed that on the IXM Extension Date, DPM would purchase the above estimated $80 million of inventory from Tsumeb and during the Financing Period, DPM would purchase new-metal bearing materials and sell the copper blister produced by Tsumeb until the end of the DPM Tolling Agreement, at which time Sinomine would pay DPM for all inventories owed by the smelter to DPM. Discussions are ongoing between the parties with respect to the foregoing proposed arrangements which will be subject to definitive documentation.
As a result, the assets and liabilities of Tsumeb have been presented as held for sale in the consolidated statement of financial position as at June 30, 2024 and December 31, 2023, and the operating results and cash flows of Tsumeb have been presented as discontinued operations in the condensed interim consolidated statements of earnings (loss) and cash flows for the three and six months ended June 30, 2024 and 2023. As a consequence, certain comparative figures in the condensed interim consolidated statements of earnings (loss) and cash flows have been reclassified to conform with current year presentation.
Complex concentrate smelted in the second quarter and first half of 2024 of 52,858 tonnes and 107,631 tonnes, respectively, was 3,375 tonnes and 8,501 tonnes higher than the corresponding periods in 2023 due primarily to increased plant availability following the completion of the maintenance work in the third quarter of 2023.
Dundee Precious Metals Inc. is a Canadian-based international gold mining company with operations and projects located in Bulgaria, Serbia and Ecuador. The Company’s purpose is to unlock resources and generate value to thrive and growth together.