Rössing Uranium Limited has entered into a long-term sulphuric acid supply agreement with Dundee Precious Metals Tsumeb (Pty) Ltd, a subsidiary of Dundee Precious Metals Inc. (DPM), listed on the Toronto Stock Exchange.

The supply agreement of about 225 000 tonnes sulphuric acid annually is expected to bolster local economic benefits. The acid will be railed from Tsumeb to Swakopmund by TransNamib. It is expected that shipments to Rössing will start during the fourth quarter of 2014.

Rössing is currently importing its sulphuric acid for ore processing through the Port of Walvis Bay, from where it is railed to the mine site.
The Dundee Precious Metals supply agreement, with a validity of a minimum term of five years, provides Rössing with an attractive market-linked pricing formula and provides certainty to both parties, protecting Rössing from surges in market pricing and sheltering DPM from prices falling below a reasonable economic threshold.

The Tsumeb plant is expected to produce between 230 000 and 320 000 tonnes of sulphuric acid annually. Only the balance of what Rössing uses in sulphuric acid beyond what Dundee Precious Metals provides will be imported from outside Namibia.

It is widely acknowledged that the mining industry has a significant procurement spend. This agreement alone has the potential to boost local production and promote enterprise development. Rössing spent N$2.2 billion in 2012 on goods and services of which about N$1.5 billion (or 63 per cent of the total spend) was allocated to Namibian registered suppliers.

Rössing continuously demonstrates its value to Namibia through its contribution to the fiscal authorities, ie royalty tax, PAYE, company tax, the envisaged training levy and payments to state-owned enterprises for services rendered.

The idea of Rössing purchasing sulphuric acid from the Dundee smelter should therefore be applauded in the context of sourcing mining inputs from local suppliers. Apart from living up to the objectives of Vision 2030 and the national development plans of promoting value addition within the Namibian market, with this agreement and transaction, Rössing is ensuring that Namibia does not lose foreign currency unnecessarily.

The agreement with Dundee should also be seen in the context of creating employment for Namibians and assisting Government in reducing the prevailing high unemployment rate in Namibia. This would also ensure that jobs are created and maintained for TransNamib, the national surface carrier, which will transport the chemicals from Tsumeb to Rössing mine.

For your information

Werner Duvenhage
Managing Director