Dundee sells Tsumeb Smelter to Chinese
Deal of nearly N$1bn
Pending on regulatory approvals, the Tsumeb Smelter could be in Chinese hands later this year.
Dundee Precious Metals Inc. (DPM) has entered into a definitive share purchase agreement with a subsidiary of Sinomine Resource Group, a Chinese company, for the sale of its interest in the Tsumeb Smelter for US$49 million or N$920.7 million in cash.DPM CEO and president David Rae yesterday said the sale was “consistent with our strategic objective of focusing on our gold mining assets and simplifying our portfolio going forward”.
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, said in a statement.
The deal is expected to be finalised in the third quarter this year.
Hint
Dundee hinted at the disposal of Tsumeb when it released its 2023 annual results recently.
“The smelter is no longer expected to process any Chelopech concentrate [from the copper mine in Bulgaria] commencing in 2024 and as a result, it is no longer seen as strategic to DPM's asset portfolio,” the company said at the time.
DPM acquired the Tsumeb Smelter in 2010 owns 92% of the asset.
In its results for the year ended 31 December 2023, DPM listed the assets and liabilities of Tsumeb as “held for sale”.
Impairment charge
According to DPM’s latest set of financials, the carrying value of Tsumeb exceeded its estimated recoverable amount, resulting in an impairment charge of US$85 million.
“This charge was primarily attributable to lower forecast toll revenue as a result of an expected reduction in higher arsenic-bearing third-party concentrate feed being received by the smelter, commencing in 2024, concurrent with when the smelter is not expected to be processing any Chelopech concentrate,” DPM said.
Tsumeb last year generated revenue of US$114.3 million or more than N$2 billion, compared to US$136.3 million in 2022.
This was primarily due to lower estimated metal recoveries and lower acid revenue resulting from lower volumes and market prices, partially offset by higher volumes of complex concentrate smelted, the group said.
Net earnings from Tsumeb were US$10.9 million, increased compared to a net loss from discontinued operations of US$80.7 million in 2022. This was mainly due to the impairment charge of US$85 million and restructuring costs of US$5.7 million, according to DPM.