Dundee Precious Metals Inc. (TSX: DPM) (“DPM” or “the Company”) today announced that DPM and other shareholders (collectively, “the Vendors”) of MineRP Holdings Inc. (“MineRP”) have entered into a definitive agreement for the sale of 100% of MineRP (the “Transaction”) to Epiroc Canada Holding Inc., a subsidiary of Epiroc Rock Drills AB (“Epiroc” or “the Purchaser”).
Consideration for DPM’s fully-diluted 70% equity interest in MineRP and the repayment of DPM shareholder loans include:
- Approximately US$40 million in cash representing the estimated portion payable to DPM on closing of the Transaction (“DPM’s Closing Proceeds”); and
- Potential additional payments in the form of an earn-out of up to US$28.7 million representing the portion payable to DPM upon the achievement of certain MineRP revenue targets in 2021 and 2022 (the “Earn-out”).
“We acquired MineRP in 2017 as part of our ongoing strategy to drive innovation at DPM and to leverage a technology with the potential to transform the mining industry,” said David Rae, President & Chief Executive Officer of Dundee Precious Metals. “Having substantially advanced our initiatives and supported MineRP in developing its software to position it for its next phase of growth, the time is right for DPM to divest our interest as we continue to focus on our core mining assets.
“The proceeds from this transaction, together with potential additional proceeds under the earn-out, will further strengthen our balance sheet and support our mining business. We would like to wish MineRP and Epiroc well in taking the business to the next level.”
Key terms of the transaction
DPM’s Closing Proceeds are estimated to be approximately US$40 million and are comprised of cash proceeds relating to the Company’s 70% fully-diluted equity ownership of MineRP, the repayment of its shareholder loans, and any accrued interest. DPM may receive potential additional proceeds from the Earn-out of up to US$28.7 million, which are payable on the achievement of certain revenue targets by MineRP in 2021 and 2022.
The other 25% of MineRP is held by Emerald Panther Investments 99 Proprietary Limited, a holding company owned by MineRP management, and 5% is held by DPM’s chairman and its former chief executive officer in the form of options exercisable into MineRP shares.
DPM’s Closing Proceeds are prior to any Earn-out payments, and are net of i) estimated transaction expenses; and ii) certain amounts to be placed in escrow to secure against any post-closing adjustments related to working capital and to secure against any potential breaches in representations and warranties for a period of 60 days and 2 years.
DPM expects to use the proceeds from the Transaction to further strengthen its balance sheet and to support its core mining business, in-line with DPM’s disciplined capital allocation framework, which consists of reinvesting in the business and returning capital to shareholders.
The Company has made certain representations and warranties and provided certain indemnities to the Purchaser customary with transactions of this nature.
The transaction is subject to South African competition review approval and is expected to close late in Q1 or early Q2 2021.
The Corum Group acted as financial advisor to MineRP in the Transaction.