Dundee: Bulgaria's Gold Mine Project Has 3.3 Year Payback

Industry | December 6, 2011, Tuesday // 11:06|  views

The area below the prominent Ada Tepe hill is expected to have a mine life of nine years assuming an annual operating rate of 850,000 tonnes ore and 31% internal rate of return. Photo by capital.bg

Dundee Precious Metals' investments in a controversial project for a big open-pit gold mine near the Bulgarian town of Krumovgrad will pay back in just a little more than three years, the company's final feasibility study shows.

"We are pleased with the results of the new feasibility study on our Krumovgrad project which confirms the commercial and economic viability", commented Jonathan Goodman, President and CEO.

"The Krumovgrad gold project has been designed to become a showcase for environmental responsibility, community relations and mine management that will allow us to create value for our shareholders and at the same time bring new economic opportunities into a great community," he added.

The area below the prominent Ada Tepe hill is expected to have a mine life of nine years, assuming an annual operating rate of 850,000 tonnes ore and 31% internal rate of return.

The company expects the average annual EBITDA (earnings before interest, taxes, depreciation, and amortization) to total USD 52.6 M.

The project, which faces fierce opposition by the local community, was recently given a provisional go-ahead by the Bulgarian environment minister, who approved the company's environmental impact assessment.

This allows the Canadian company to proceed with the permitting process for the construction of the process plant, the integrated mine waste facility and the open pit mine.

Earlier this month the people living in the poor Bulgarian town of Krumovgrad resumed their vehement protests against plans by Canadian mining company Dundee Precious Metals to open a big open-pit gold mine, spurred by the worldwide gold rush.

"We have established an initiative committee, launched a sign-up and will not hesitate to approach the European Commission. We won't let them poison our lives and our land," Margit Vassileva, leader of the environment association "Life for Krumovgrad" told Trud daily.

A group of European Commission experts are expected to come from Brussels and examine the situation on the field.

The people from Krumovgrad and the nearby villages in the picturesque Rhodope mountains, predominantly ethnic Turks and Pomaks, are worried that the planned waste facility would be just one kilometer away from the town and one kilometer away from the river.

"Toxic arsenic and heavy metals will be released directly into the Krumovitsa River, it will be poisoned," said Krumovgrad mayor Sebihan Mehmed, referring to the major supplier of drinking water and irrigation for the region, which is also part of the Maritza River Basin.

"There will be blasts nearby, poisonous dust everywhere, which we will breathe in. I am shocked by the refusal of the Health Ministry to inform us about the risks for the human health that the gold mine will pose," the mayor added.

The municipality and Green Balkans wildlife society have both challenged in court the granting of concession for gold-mining to Balkan Mineral & Mining, the Bulgarian subsidiary of Dundee Precious Metals. The complaints however were ignored by the Supreme Administrative Court and not considered.

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.

The Toronto-based mining company has repeatedly assured that Krumovgrad gold project will be beneficial for Bulgaria and the local community.

Under mounting public pressure the Canadian company was forced to abandon plans for 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 company has committed to invest USD 130 M in the project.

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Tags: European Commission, Canadian, toronto, canada, Bulgarian cabinet, concession, Dundee Precious Metals, Chelopech, Chelopech gold mine, Chepelare, Krumovgrad, mining, concession, Alex Nestor, environmental assessment, Chelopech Mining, Balkan Minerals and Mining, Krumovgrad gold mine, Namibia, cyanide, gold, Bulgaria, Bulgarian


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