Vancouver — Dundee Precious Metals’ (DPM-T, DPMLF-O) environmental impact assessment for its Chelopech gold-copper mine in central Bulgaria has been approved by the country’s Supreme Environmental Council, leaving the environment minister’s signature the final detail in approving the planned expansion of mining operations.
Dundee acquired the Chelopech mine in 2003, but the underground operation was performing poorly, with a dilapidated mining fleet and low worker morale due to broken promises of planned upgrades. The company then launched its expansion plan to “redevelop” the project. The US$150-million program would involve ramping up production to about 2 million tonnes per year, up from the current 500,000-tonne-per-year operating rate.
An autoclave will be installed for on-site metal production. Installation of the pressure oxidation circuit will allow for effective treatment of the arsenic-rich concentrates and essentially eliminate current transportation, treatment and penalty costs.
When Chelopech reaches its projected mining rate, the operation is expected to produce 150,000 tonnes of concentrate annually, containing about 130,000 oz. gold and 48 million lbs. (21,700 tonnes) copper. The total cash cost of gold production is estimated at US$90 per oz., net of copper credits, or US$242 per oz. gold equivalent.
Chelopech hosts proven and probable reserves of 21.6 million tonnes grading 3.6 grams gold per tonne and 1.4% copper, for contained metal of almost 2.5 million oz. gold and 660 million lbs. (300,000 tonnes) copper.
The company also holds the advanced-stage Krumovgrad gold project in southern Bulgaria. A 2005 feasibility study reviewed 4.9 million tonnes of proven and probable reserves grading 5.1 grams gold and 2.7 grams silver per tonne at the project. The study envisaged an open-pit operation with US$75 million in capital expenses and production of about 150,000 oz. gold annually in the first four years of a 6-year mine life. Total cash operating costs are projected at US$116 per oz. of gold equivalent over the mine life. The proposal is in its environmental permitting phase, but has faced some local opposition. Government hearings regarding the matter are scheduled for mid-May.
The company posted 2005 earnings of $19.9 million, or 37 per share — primarily from Chelopech operations, which delivered earnings of $17.7 million on sales of 72,000 tonnes of gold-copper concentrate. The company also recently acquired three mining concessions in Serbia and has an agreement to purchase Kinross Gold’s (K-T, KGC-N) Back River gold project (George Lake and Goose Lake properties) in Nunavut for $7 million.
In 2004, Dundee Precious Metals converted from a closed-end investment company to an operating mining company through a corporate restructuring. The company posts a $590-million market capitalization based on its 53.7 million shares outstanding and recent $11.00 trading level.
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