Dundee Precious Metals (TSX:DPM)
Historical Stock Chart
3 Years : From Aug 2012 to Aug 2015
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.
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.
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.
Dundee Precious Metals Inc.
President & Chief Executive Officer
Dundee Precious Metals Inc.
Lori Beak, Senior Vice President,
Investor & Regulatory Affairs and Corporate Secretary