Metal Minings News

Bulgarian Government and Dundee Precious have entered into an agreement-in principle concerning the proposed expansion of the Chelopech copper-gold mine. Under the terms of this agreement-in-principle, DPM will pay a higher royalty for all the metals that can be mine. economically at the Chelopech site. This new royalty will be calculated in accordance with the existing Ordinance on Royalty Computation on a sliding scale. It will be between 2% and 8% at a profitability ratio of between 10% and
60%. This new royalty will replace the one entered into in good faith by DPM in 2004 and that was set to expire in 2010. As well, DPM will provide a full environmental reclamation bond covering the Chelopech mine, which will be one of the first of its kind in Europe. In addition to a higher royalty, Bulgaria and DPM have agreed-in-principle to enter into a public private partnership
(PPP) for the state-of-the-art metals processing facility to be built at the Chelopech mine site. Under the terms of this PPP, Bulgaria’s Silver Fund will own 25% of this new facility. The new smelter will cost approximately US$155 million to build and take close to 18 months to complete, from receipt of all permits. Once it is complete, the new smelter is expected to add - directly and indirectly - 150 new jobs to the Bulgarian economy. The operation of this new smelter will be in compliance with all local and international requirements. DPM’s proven track record of management and financial success will mean Bulgaria’s pensioners will receive a direct financial benefit from this new smelter for many years to come.

“On our part, we will do everything necessary, while abiding by all environmental standards and procedures, to make sure that the state provides full support to DPM for the implementation of this investment and for the functioning of the mining operation,” said Bulgarian Prime Minister Sergey Stanishev during a special press-conference given in Sofia today. “Both the state and the investor will do everything possible to have the plant commissioned in the fastest possible manner, ideally within 18 months.”

“We have stated all along that we want to be good partners with the Bulgarian people,” confirmed Jonathan Goodman, President & CEO of DPM. “With the resolution of this issue, both the Company and the Bulgarian people will share in the value created from our mining and metals processing activities at Chelopech, now and in the future.” In accordance with the Bulgarian constitution, the Bulgarian Council of Ministers will still have to approve any and all agreements reached between DPM and the government concerning the new royalty and the PPP. Once all of these agreements are finalized and approved, the Minister of Environment and Waters will finalize the Environmental Impact Assessment (EIA) permit for the Chelopech expansion project. In addition, DPM and the Bulgarian government have commenced negotiations with a view to implementing the Krumovgrad Gold Project, including
initiating the next stage in the EIA approval process.