DPM Contracts for Sale of Chelopech Pyrite Concentrate to

DPM Contracts for Sale of Chelopech Pyrite Concentrate to Xiangguang
Copper Co. 
TORONTO, ONTARIO -- (Marketwire) -- 12/05/12 -- Dundee Precious
Metals Inc. (TSX:DPM)(TSX:DPM.WT.A) ("DPM" or "the Company") has
entered into an agreement with Xiangguang Copper Co. ("XGC") for the
sale of up to 200,000 tonnes per year of pyrite concentrate to be
produced at DPM's Chelopech mine in Bulgaria (the "Agreement") during
Stage 1 of its gold in pyrite recovery project (the "Project"). The
total annual concentrate supply to XGC is expected to contain between
28,000 and 30,000 ounces of payable gold at a cash cost of
approximately US$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. 
"We are extremely pleased with this arrangement with XGC which
secures a sales outlet for our clean Chelopech pyrite concentrate,"
stated Jonathan Goodman, President and CEO. "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.  
In addition, XGC has agreed to purchase 2,000 tonnes per month of
Chelopech copper concentrates, on market competitive terms, starting
April 2013 for a minimum of 12 months. Purchases will continue from
March 2014, subject to three months' cancellation notice by either
Chelopech or XGC. 
Chelopech is an underground gold, copper and silver mine, which
currently produces a copper concentrate with metal recoveries
averaging 55%, 85% and 42%, respectively. The preliminary economic
assessment, reported in the National Instrument 43-101 Technical
Report for the Chelopech Project, Bulgaria filed on SEDAR on
September 10, 2012, confirmed that through this Project there is
potential to recover most of the unrecovered gold, silver and copper.
The bulk of these unrecovered metals are mainly associated with the
mineral pyrite, which is currently rejected in the flotation process
to ensure a saleable copper concentrate. Once Bulgarian regulatory
approval is received, reconfiguration of the Chelopech mill will
consist of the installation of a new flotation, thickening and
filtration system, creating a pyrite concentrate circuit.
Consequently, at the full mine production rate of 2 million tonnes
per annum, approximately 400,000 tonnes of pyrite concentrate, free
of deleterious matter, will be generated from the mill feed as a
separate concentrate product in addition to the copper concentrate
already produced. The reconfiguration of the mill is expected to take
approximately twelve months and be completed by the end of 2013 at an
estimated capital cost of US$23 million. The sale of the pyrite
concentrate to XGC will generate initial cash flow while the
remaining phases of Stage 2 of the Project are being designed,
permitted and constructed.  
XGC is one of the largest modern copper smelting companies in China
and in the world. Its smelter plant, located in Yanggu, County of
Shandong Province, China, employs the advanced double flash smelting
technology and is operated with high cost efficiency and superior
environmental standards. The smelter has designed capacities of
450,000mt blister, 500,000mt cathodes, 1,400,000mt sulphuric acid and
650,000 ounces of gold every year.  
DPM is a Canadian based, international gold mining company engaged in
the acquisition, exploration, development, mining and processing of
precious metals. The Company's principal operating assets include the
Chelopech operation, which produces a gold, copper and silver
concentrate, located east of Sofia, Bulgaria; the Deno Gold
operation, which produces a gold, copper, zinc and silver
concentrate, located in southern Armenia; and the Tsumeb smelter, a
concentrate processing facility located in Namibia. DPM also holds
interests in a number of developing gold properties located in
Bulgaria, Serbia, and northern Canada, including interests held
through its 51.4% owned subsidiary, Avala Resources Ltd., its 47.3%
interest in Dunav Resources Ltd. and its 10.7% interest in Sabina
Gold & Silver Corp.  
Forward-Looking Statements  
This news release contains "forward-looking statements" that involve
a number of risks and uncertainties. Forward-looking statements
include, but are not limited to, statements with respect to the
future price of gold and silver, the estimation of mineral reserves
and resources, the realization of mineral estimates, the timing and
amount of estimated future production and output, costs of
production, capital expenditures, costs and timing of the development
of new deposits, success of exploration activities, permitting time
lines, currency fluctuations, requirements for additional capital,
government regulation of mining operations, environmental risks,
unanticipated reclamation expenses, title disputes or claims,
limitations on insurance coverage and timing and possible outcome of
pending litigation. Often, but not always, forward-looking statements
can be identified by the use of words such as "plans", "expects", or
"does not expect", "is expected", "budget", "scheduled", "estimates",
"forecasts", "intends", "anticipates", or "does not anticipate", or
"believes", or variations of such words and phrases or state that
certain actions, events or results "may", "could", "would", "might"
or "will" be taken, occur or be achieved. Forward-looking statements
are based on the opinions and estimates of management as of the date
such statements are made, and they involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially different
from any other future results, performance or achievements expressed
or implied by the forward-looking statements. Such factors include,
among others: the actual results of current exploration activities;
actual results of current reclamation activities; conclusions of
economic evaluations; changes in project parameters as plans continue
to be refined; future prices of gold, copper, zinc and silver;
possible variations in ore grade or recovery rates; failure of plant,
equipment or processes to operate as anticipated; accidents, labour
disputes and other risks of the mining industry; delays in obtaining
governmental approvals or financing or in the completion of
development or construction activities, fluctuations in metal prices,
as well as those risk factors discussed or referred to in documents
filed from time to time with the securities regulatory authorities in
all provinces and territories of Canada and available at
Although the Company has attempted to identify important factors that
could cause actual actions, events or results to differ materially
from those described in forward-looking statements, there may be
other factors that cause actions, events or results not to be
anticipated, estimated or intended. There can be no assurance that
forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Unless required by securities laws,
the Company undertakes no obligation to update forward-looking
statements if circumstances or management's estimates or opinions
should change. Accordingly, readers are cautioned not to place undue
reliance on forward-looking statements.
Dundee Precious Metals Inc.
Jonathan Goodman
President & Chief Executive Officer
(416) 365-2408
Dundee Precious Metals Inc.
Lori Beak
Senior Vice President, Investor & Regulatory
Affairs and Corporate Secretary
(416) 365-5165
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