JOHANNESBURG (miningweekly.com) – Multicommodity miner Weatherly International has announced the release of its option to buy the Tsumeb tailings facility, in Namibia, from Dundee Precious Metals subsidiary Dundee Precious Metals Tsumeb, for $4-million.
The amount would be settled by applying a credit, at the rate of $40/t, against the cost of sulphuric acid being supplied by Dundee to the company.
As part of the sale of its smelter operation to Dundee in 2010, Weatherly subsidiary Ongopolo Mining was granted an option to buy back the Tsumeb tailings facility, subject to the reservation of certain rights of disposal and mining in favour of Dundee and subject to the obligation to maintain various mining and related licences and permissions.
The option was exercised by Weatherly, following which the company undertook drilling on the tailings site and declared a measured mineral resource of 12-million tons, grading 0.48% copper, 0.77% lead, 0.63% zinc and 12.74 g/t of silver in 2011.
The Tsumeb tailings were held at no cost on the company's balance sheet and the company had not incurred any additional expenditures in relation to the tailings facility in the financial year to June 30, 2015.
This settlement effectively cancelled Ongopolo's rights under the option, which had not yet resulted in title to the tailings facility being transferred to Ongopolo.
Concurrently, Weatherly and Dundee had also entered into an amended and restated supply agreement for Dundee's delivery of sulphuric acid to the company, under which Dundee started the supply of sulphuric acid in 2015. The commercial terms for the sale of acid remain unchanged.
“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.
“The board and I are confident in Weatherly's ability to continue to build a successful project at Tschudi and I look forward to updating shareholders with further progress in due course,” commented CEO Craig Thomas.