Dundee Precious Metals Inc has entered into an agreement with Xiangguang Copper Company for the sale of up to 200,000 tonnes per year of pyrite concentrate to be produced at DPM's Chelopech mine in Bulgaria during Stage 1 of its gold in pyrite recovery project.
The total annual concentrate supply to XGC is expected to contain between 28,000 ounces and 30,000 ounces of payable gold at a cash cost of approximately USD 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.
Mr Jonathan Goodman president and CEO of Dundee Precious Metals said that "We are extremely pleased with this arrangement with XGC which secures a sales outlet for our clean Chelopech pyrite concentrate. 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.
