Dundee: Bulgaria, Locals to Benefit from Krumovgrad Gold Mine

Toronto-based mining company Dundee Precious Metals has made yet another attempt to assure that its controversial Krumovgrad gold project in Bulgaria will be beneficial for the country shortly after it was given thumbs up by the environment ministry.

Bulgarian Minister of Environment and Waters signed earlier this month a resolution approving the environmental impact assessment ("EIA") for the Company's Krumovgrad Gold Project in Bulgaria.

"Since initially embarking on this project in 2005, we have made great efforts to develop a comprehensive plan for Krumovgrad that addresses the concerns of the community and will prove to be economically beneficial for Bulgaria and the local community, as well as DPM and its shareholders," said Jonathan Goodman, President and CEO.

"We are very pleased by the Minister's endorsement and look forward to working with the Mayors of the communities involved to move this exciting project to the next stage of development."

According to the company the project plan takes into consideration concerns raised by the community through the use of water management and treatment systems and the elimination of cyanide as well as a tailings dam.

The new plan sees the construction of an open pit mining operation .

The plan consists of a process plant that will employ a conventional crushing, grinding, and flotation process for gold extraction and for the disposal of thickened tailings and mine rock waste.

A new feasibility study developed within the parameters of the project plan is being finalized and is expected to be released by the end of November.

Bulgaria's Environment Minister Nona Karadzhova signed at the beginning of November the company's environment impact assessment for the mine near the town of Krumovgrad after returning it in the middle of October back to the chief environment council for reassessment.

The council voted to preserve a clause, which allows the company to launch construction of the gold mining facilities whether or not the eco assessment is appealed.

The Bulgarian cabinet gave on a 30-year concession the gold mine near the town of Krumovgrad to Dundee Precious Metals in February this year.

The gold mine is located in the Krumovgrad municipality on lands of the villages of Guliya, Dazhdovnik, Zvanarka, Kaklitsa, Malko Kamnyane, Ovchari and Sarnak.

In exchange for the 30-year concession, the company is making the commitment to invest over BGN 114 M and extract an average of 850 tons a year of ore. The Krumovgrad municipality is to receive 30% of the concession payments.

In September, after examining the reports for the environment impact assessment for the mine, the chief environment council voted for giving the green light to the gold mine.

The minister however returned it for reassessment, citing the amendments to the law on environmental protection, which were adopted after the vote of the council. The minister acted on a request of Krumovgrad's mayor Sebihan Mehmed.

The project to extract gold from the Krumovgrad mine has so far suffered many setbacks and court battles.

In 2010, the Canadian company had to abandon plans for a gold mine near Bulgaria's Krumovgrad using cyanide technology after a Bulgarian court ruled against the cyanide gold extraction at the other mine operated by one Dundee's subsidiaries in the country, Chelopech Mining. The ruling came about after locals and environmentalists expressed concerns over the technology.

The company plans to process the gold concentrate extracted in Bulgaria outside the country. At the beginning of 2010, the Toronto-based company acquired a smelter in Namibia, which could be used for the purpose.

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