Dundee Precious Metals Inc. (TSX:DPM)(TSX:DPM.WT.A) ("DPM" or the
"Company") announces plans to proceed with two significant capital
projects at its Tsumeb smelter in Namibia as well as commercial
developments related to a new concentrate tolling arrangement and a
Memorandum of Understanding for the sale of acid.
In addition, construction relating to Project 2012, a fugitive
dust management improvement project aimed at improving off-gas
capture and workplace conditions to better comply with national
standards, is substantially complete with commissioning expected to
take place in January 2013.
Sulphuric Acid Plant
As part of its long term strategy to bring the smelter to
internationally accepted environmental standards and consistent
with the directives issued by the Namibian government earlier this
year, DPM has entered into a definitive turnkey fixed price
Engineering, Procurement, and Construction Management ("EPCM")
contract with Outotec for the construction and installation of a
sulphuric acid plant, which is expected to begin in early 2013 and
be completed in the third quarter of 2014. Outotec is a Finnish
engineering firm and the global leader in sulphuric acid plant
design and delivery. After careful evaluation, the acid plant was
determined to be the best solution to capture and process the
off-gases from the copper smelter, and, in turn, reduce emissions
and considerably improve working and living conditions around the
smelter. The acid produced from this plant is expected to be sold
to domestic and international markets primarily through long-term
off-take agreements.
Following completion of detailed engineering and cost estimates
by Outotec, the capital cost on a fixed price basis is expected to
be approximately US$204 million.
Based on expected annual smelter production capacity, the plant
will produce between 230,000 - 320,000 tonnes of sulphuric acid. In
conjunction with Protea Chemicals (Pty) Limited, a leading
industrial chemicals company with significant presence in
Sub-Saharan Africa, Namibia Custom Smelters (Pty) Ltd. ("NCS"), a
wholly-owned subsidiary that owns and operates the smelter, has
entered into a Memorandum of Understanding with Rio Tinto Rossing
in connection with a long-term purchase arrangement for the acid
produced by NCS. Rossing currently imports sulphuric acid for
processing at its Rossing uranium mine in Namibia. The acid is
expected to be shipped by rail directly to Rossing from NCS. DPM
and Rossing are currently negotiating the commercial details and
expect to finalize definitive documentation during the first
quarter of 2013.
Electric Arc Furnace
In addition, an electric holding furnace will be installed to
temporarily store and upgrade copper matte until it can be
transferred to a converter furnace for final processing.
Based on the feasibility study recently completed by Hatch South
Africa, the capital cost is estimated to be US$66 million, which
includes a US$10 million contingency. Engineering design will
commence in the first quarter of 2013. Construction is expected to
commence in the second quarter of 2013, with a targeted completion
date of late 2014 or early 2015.
The project is expected to generate an attractive return based
on operating cost savings of approximately US$5 million per year,
capital expenditure savings of US$10 to $15 million over two years,
with ongoing sustaining capital savings, and improved metal
recoveries of approximately 1% to 2%. Additional benefits include
near-zero emissions and the eventual decommissioning of the current
slag mill and reverberatory furnace, which further improves the
long term sustainability of the smelter.
Copper Concentrate Off-Take Arrangements
NCS has entered into an agreement with Louis Dreyfus Commodities
Metals Suisse SA ("LDC"), the exclusive concentrate supplier and
blister offtaker, on smelting terms for an additional 200,000
tonnes of third party copper concentrate to be supplied by LDC from
2014 to 2016. The new terms provide substantially better pricing
than the existing contractual arrangements which were established
prior to the acquisition of NCS by DPM in 2010 and better reflect
the operating and capital requirements of the smelter. LDC has also
agreed to rollback a portion of the increased pricing by amending
the pricing on the final 100,000 tonnes under the existing
arrangements forecast to be processed during 2013 and the first
half of 2014 to enable NCS to begin realizing a portion of the
benefits from this increased pricing sooner.
Financial Summary
These projects are expected to be financed primarily from DPM's
current cash position and free cash flow generation and
supplemented, if necessary, with a US$150 million committed
revolving credit facility expected to be in place in early January
2013. With the new tolling arrangements in place, the blended
revenue per tonne from Chelopech and third party concentrate is
expected to increase to approximately $550 per tonne by the end of
2013, compared to $360 per tonne in 2011, with further increases
over the balance of the contracted volumes.
Jonathan Goodman, President and CEO of DPM, stated "These
important capital initiatives and commercial arrangements not only
illustrate our commitment to the health and safety of the Namibian
people, they also reposition NCS as a sustainable and profitable
enterprise that will benefit of all our stakeholders."
DPM is a Canadian based, international gold mining company
engaged in the acquisition, exploration, development, mining and
processing of precious metals. The Company's principal operating
assets include the Chelopech operation, which produces a gold,
copper and silver concentrate, located east of Sofia, Bulgaria; the
Deno Gold operation, which produces a gold, copper, zinc and silver
concentrate, located in southern Armenia; and the Tsumeb smelter, a
concentrate processing facility located in Namibia. DPM also holds
interests in a number of developing gold properties located in
Bulgaria, Serbia, and northern Canada, including interests held
through its 51.4% owned subsidiary, Avala Resources Ltd., its 47.3%
interest in Dunav Resources Ltd. and its 10.7% interest in Sabina
Gold & Silver Corp.
FORWARD-LOOKING STATEMENTS
This news release contains "forward-looking statements" that
involve a number of risks and uncertainties. Forward-looking
statements include, but are not limited to, statements with respect
to the future price of gold and silver, the estimation of mineral
reserves and resources, the realization of mineral estimates, the
timing and amount of estimated future production and output, costs
of production, capital expenditures, costs and timing of the
development of new deposits, success of exploration activities,
permitting time lines, currency fluctuations, requirements for
additional capital, government regulation of mining operations,
environmental risks, unanticipated reclamation expenses, title
disputes or claims, limitations on insurance coverage and timing
and possible outcome of pending litigation. Often, but not always,
forward-looking statements can be identified by the use of words
such as "plans", "expects", or "does not expect", "is expected",
"budget", "scheduled", "estimates", "forecasts", "intends",
"anticipates", or "does not anticipate", or "believes", or
variations of such words and phrases or state that certain actions,
events or results "may", "could", "would", "might" or "will" be
taken, occur or be achieved.
Forward-looking statements are based on the opinions and
estimates of management as of the date such statements are made,
and they involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or
achievements of the Company to be materially different from any
other future results, performance or achievements expressed or
implied by the forward-looking statements. Such factors include,
among others: the actual results of current exploration activities;
actual results of current reclamation activities; conclusions of
economic evaluations; changes in project parameters as plans
continue to be refined; future prices of gold, copper, zinc and
silver; possible variations in ore grade or recovery rates; failure
of plant, equipment or processes to operate as anticipated;
accidents, labour disputes and other risks of the mining industry;
delays in obtaining governmental approvals or financing or in the
completion of development or construction activities, fluctuations
in metal prices, as well as those risk factors discussed or
referred to in documents filed from time to time with the
securities regulatory authorities in all provinces and territories
of Canada and available at www.sedar.com. Although the Company has
attempted to identify important factors that could cause actual
actions, events or results to differ materially from those
described in forward-looking statements, there may be other factors
that cause actions, events or results not to be anticipated,
estimated or intended. There can be no assurance that
forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Unless required by securities laws,
the Company undertakes no obligation to update forward-looking
statements if circumstances or management's estimates or opinions
should change. Accordingly, readers are cautioned not to place
undue reliance on forward-looking statements.
Contacts: Dundee Precious Metals Inc. Jonathan Goodman President
& Chief Executive Officer (416)
365-2408jgoodman@dundeeprecious.com Dundee Precious Metals Inc.
Lori Beak, Senior Vice President, Investor & Regulatory Affairs
and Corporate Secretary (416) 365-5165lbeak@dundeeprecious.com
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