Dundee Precious Metals gets OK for Chelopech expansion

Vancouver – Dundee Precious Metals’ (DPM-T, DPMLF-O) redevelopment plans for its Chelopech gold-copper mine in central Bulgaria has received government environmental approval.

Bulgaria’s Supreme Environmental Council voted to approve the environmental impact assessment for the expansion of mining operations at Chelopech, leaving just a signature from the Minister to enact the resolution.

Dundee acquired the producing Chelopech mine in 2003, however 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 will involve ramping up production to the 2 million tonne-per-year level, up from the mine’s current 500,000 tonne-per-year operating rate.

Additionally, an autoclave will be installed for onsite 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 incurred.

When Chelopech reaches its projected mining rate, the operation is expected to produce 150,000 tonnes of concentrate annually, containing about 130,000 oz. of gold and 48 million pounds (21,700 tonnes) of copper. The total cash cost of gold production is estimated at US$90 per oz., net of copper credits, or US$242 per oz. of 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. of gold and 660 million pounds (300,000 tonnes) of copper.

The company also holds the advanced-stage Krumovgrad gold project in southern Bulgaria, which underwent a feasibility study in 2005 reviewing 4.9 million tonnes of proven and probable reserves grading 5.1 grams gold and 2.7 grams silver per tonne. The study envisions an open pit operation costing US$75 million in capital expenditures. The project would have a six-year mine life and produce about 150,000 oz. of gold annually in its first four years. Total cash operating costs are projected at US$116 per oz. of gold equivalent over the life-of-mine. The proposal is in its environmental permitting phase but has faced some local community opposition.

In 2004, Dundee Precious Metals converted from a closed-end investment company to an operating mining company through a corporate restructuring.