Dundee Precious Metals Inc. (TSX:DPM)(TSX:DPM.WT.A) ("DPM" or "the
Company") has entered into an agreement with Xiangguang Copper Co.
("XGC") for the sale of up to 200,000 tonnes per year of pyrite
concentrate to be produced at DPM's Chelopech mine in Bulgaria (the
"Agreement") during Stage 1 of its gold in pyrite recovery project
(the "Project"). The total annual concentrate supply to XGC is
expected to contain between 28,000 and 30,000 ounces of payable
gold at a cash cost of approximately US$1,200 per ounce. DPM will
earn a payable amount based on the gross value of the concentrate
at spot prices, net of certain transportation and processing
costs.
"We are extremely pleased with this arrangement with XGC which
secures a sales outlet for our clean Chelopech pyrite concentrate,"
stated Jonathan Goodman, President and CEO. "This not only
generates cash flow on previously unrecovered gold ounces for
relatively low capital while we continue the evaluation and
execution of Stage 2 of our project, it also establishes that there
is an expanding market for our pyrite products." Mr. Liu, Chairman
of XGC stated "XGC is also very happy to provide solutions to DPM
with its unique technologies and skills. The cooperation between
the two companies will be mutually beneficial and
complementary."
The reconfiguration of the Chelopech mill during 2013 will bring
annual production capacity of pyrite concentrate to 400,000 tonnes.
The Agreement provides for the purchase by XGC of up to 200,000
tonnes per year of pyrite concentrate from Chelopech Mining EAD, a
wholly-owned subsidiary of DPM and owner of the Chelopech mine,
from 2014 to 2016. There is also the possibility of a further sale
of up to 50,000 tonnes of pyrite concentrate during 2013, subject
to confirming the capability of the existing mill process equipment
to produce moderate amounts of pyrite concentrates in batch runs.
Sales in 2016 are conditional upon various global factors such as
the gold price, shipping rates and acid prices in China remaining
satisfactory. The Agreement is subject to requisite permitting,
government approvals and completion of the mill
reconfiguration.
In addition, XGC has agreed to purchase 2,000 tonnes per month
of Chelopech copper concentrates, on market competitive terms,
starting April 2013 for a minimum of 12 months. Purchases will
continue from March 2014, subject to three months' cancellation
notice by either Chelopech or XGC.
Background
Chelopech is an underground gold, copper and silver mine, which
currently produces a copper concentrate with metal recoveries
averaging 55%, 85% and 42%, respectively. The preliminary economic
assessment, reported in the National Instrument 43-101 Technical
Report for the Chelopech Project, Bulgaria filed on SEDAR on
September 10, 2012, confirmed that through this Project there is
potential to recover most of the unrecovered gold, silver and
copper. The bulk of these unrecovered metals are mainly associated
with the mineral pyrite, which is currently rejected in the
flotation process to ensure a saleable copper concentrate. Once
Bulgarian regulatory approval is received, reconfiguration of the
Chelopech mill will consist of the installation of a new flotation,
thickening and filtration system, creating a pyrite concentrate
circuit. Consequently, at the full mine production rate of 2
million tonnes per annum, approximately 400,000 tonnes of pyrite
concentrate, free of deleterious matter, will be generated from the
mill feed as a separate concentrate product in addition to the
copper concentrate already produced. The reconfiguration of the
mill is expected to take approximately twelve months and be
completed by the end of 2013 at an estimated capital cost of US$23
million. The sale of the pyrite concentrate to XGC will generate
initial cash flow while the remaining phases of Stage 2 of the
Project are being designed, permitted and constructed.
XGC is one of the largest modern copper smelting companies in
China and in the world. Its smelter plant, located in Yanggu,
County of Shandong Province, China, employs the advanced double
flash smelting technology and is operated with high cost efficiency
and superior environmental standards. The smelter has designed
capacities of 450,000mt blister, 500,000mt cathodes, 1,400,000mt
sulphuric acid and 650,000 ounces of gold every year.
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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