8th Jan 2016 08:54
LONDON (Alliance News) - Weatherly International PLC Friday said it has agreed to sell its option to acquire a tailings facility in Namibia to Dundee Precious Metals Inc for a total of USD4.0 million.
The miner sold its smelter operation in the country to Dundee back in 2010, and as part of that deal Weatherly's subsidiary, Ongopolo Mining Ltd, was granted an option to repurchase the Tsumeb tailings facility. That option was exercised by Ongopolo, and Weatherly drilled the tailings site to secure a mineral resource for the area.
That measured mineral resource stood at 12.0 million tonnes at 0.48% copper, 0.77% lead, 0.63% zinc and 12.74 grammes of silver per tonne of ore, released in 2011.
Although it exercised the option, the formal transfer of the ownership of the tailings facility was never formally completed, with the news Friday effectively meaning that Weatherly's subsidiary has relinquished all of its rights under the option.
"The release of the Tsumeb Tailings rights is a positive move for the company, bringing an immediate and important cash flow benefit from an asset which would otherwise take several years and significant further investment before delivering any cash return, assuming an economic processing route could be found at all," said Weatherly Chief Executive Craig Thomas.
The tailings facility was being held at no cost on Weatherly's balance sheet and the company has not incurred any additional costs related to the facility in the financial year ended June 30, it said.
In return for Dundee Precious Metals retaining the tailings facility and for Ongopolo cancelling its option rights, Dundee will pay Weatherly USD4.0 million. That will be satisfied by a discount to the sulphuric acid that is supplied by Dundee to Weatherly's Tschudi copper heap leach operations. Dundee will pay that USD4.0 million by knocking off USD40 per tonne of acid supplied to Weatherly.
Concurrently, Weatherly and Dundee have also entered into an amended and restated supply agreement for Dundee's delivery of sulphuric acid to the Company under which Dundee commenced supply of sulphuric acid during 2015. The commercial terms for the sale of acid remain unchanged, it said.
Weatherly shares were trading up 1.4% to 0.370 pence per share on Friday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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