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Dundee Precious Metals to acquire Tsumeb smelter in Namibia

Dundee Precious Metals to acquire Tsumeb smelter in Namibia

Weatherly International (AIM: WTI) signed a binding letter of intent to sell its Tsumeb smelter and the subsidiary operating it, Namibian Custom Smelters (NCS), to Toronto headquartered Dundee Precious Metals (TSX: DPM) for approximately US$33 million. Weatherly will no longer proceed with the previously agreed 50.1% equity sale to East China Mineral Exploration Development Bureau (ECE).

In September Weatherly announced it would sell the controlling 50.1% stake to ECE, and under the terms of the proposed fundraising the company would have issued over 446 million shares at a price of 3.6p per share, raising £16.1 million.

According to Weatherly, the DPM proposal enables it to pursue its strategic objectives. On completion of the sale, Weatherly will be debt free, with its outstanding creditors settled; as such it will have sufficient cash on hand to advance its strategic objectives.

“The transaction provides the company with the funding it requires to address its near term working capital requirements and thereafter to execute its strategy”, Weatherly CEO Rod Webster said, “We expect to continue discussions with ECE with a view to exploring possible opportunities for our respective groups to work together in the future."

The Weatherly board said that the DPM proposal to acquire the assets of NCS and retire debt represents a superior outcome for the company. As such it is recommending the DPM proposal to shareholder and has already provided irrevocable undertakings in respect of 195,297,246 ordinary shares representing approximately 43.8% of the company's issued share capital to vote in favour of disposals.

In addition, DPM currently owns 40.4m Weatherly shares representing 9.1% of the company's issued share capital. Therefore they currently have irrevocable undertakings in favour of the deal equating to approximately 52.9% of the company’s share capital.

The DPM proposal consists of a US$18 million cash payment and an equity element valued at US$15 million, whereby Dundee Precious Metals will issue approximately 4.4 million new shares to Weatherly, which are valued at C$3.50 per share.

Additionally DPM will assume the debt and certain other obligations of NCS and provide with working capital facilities of up to US$6 million while the transaction is concluded.



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