Dundee finally sells Tsumeb smelter
Chinese takeover
The NaCC recently approved the merger on condition there shall be no retrenchment of Namibian employees as a result of the merger for three years post-closing of the transaction.
Dundee Precious Metals this week announced the closing of the sale of the Tsumeb smelter to a subsidiary of Sinomine Resource Group. “In line with our strategy, the Tsumeb divestiture is another step in our continued track record of creating shareholder value. I’d like to extend our thanks to the government of Namibia, Sinomine and our former employees and stakeholders for its safe transition and continued success,” said David Rae, president and CEO.
The purchase price for the sale of the Tsumeb smelter was US$20 million (N$360 million), on a debt-free and cash-free basis, less a US$5 million (N$90 million) holdback to be held in escrow for a period of six months to secure the company’s indemnity obligations under the share purchase agreement with Sinomine. Total cash consideration paid on closing was US$15.9 million (N$286.2 million), as adjusted, less the escrow holdback amount. The cash consideration is subject to normal post-closing adjustments.
NaCC approves
The Namibian Competition Commission (NaCC) has approved the proposed merger between Hong Kong-based Sinomine Rare Metals Resources Co. Limited and Dundee Precious Metals Tsumeb Holding (Pty) Limited, with conditions.
Sinomine Resource Group recently concluded deals to purchase controlling interests in a copper mine in Zambia and earlier this year purchased Dundee’s copper smelter in Namibia. This is as the Chinese mining group steps up efforts to increase the production of copper and other critical minerals in Southern Africa.
The NaCC recently approved the merger on condition there shall be no retrenchment of Namibian employees as a result of the merger for three years post-closing of the transaction. Also, the parties must maintain a ratio of no less than 92% local employees to foreign employees.
Smooth transition
Earlier this year, Dundee Precious sold its Tsumeb speciality smelter to a subsidiary of Sinomine Resource Group. Dundee received about N$870 million (US$49 million) in cash for the issued and outstanding shares it holds in Dundee Precious Metals Tsumeb.
Dundee acquired the smelter in 2010 to secure a processing plant for the complex concentrate from the company’s Chelopech mine in Bulgaria. “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,” Rae said via a media statement. “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,” Rae added.
Dundee made significant upgrades at Tsumeb in the past years. Sulphur dioxide emissions were reduced by 95% from 2014 to 2021. There has also been a 72% decrease in average arsenic exposure since 2012 with the oversight of the arsenic advisory council.
The smelter produces 95% blister copper, which is then refined in Europe and Asia, as well as sulphuric acid, which is sold to third-party clients for use in uranium and copper mining.
- Additional reporting by New Era