Property Description and Location
The proposed mine site is located at Ada Tepe, approximately 3 km south of the town of Krumovgrad in south-eastern Bulgaria. The project plan contemplates the construction of an open pit mining operation comprised of a process plant, which will employ conventional crushing, grinding and flotation processing for gold extraction, and the disposal of thickened tailings, together with mine rock waste, in an integrated mine waste facility. A new feasibility study completed in November 2011, confirmed the commercial and economic viability of the project, which has a payback of approximately 3.3 years. Two ore treatment rates were considered as part of the feasibility study, namely 850,000 tonnes per year ("tpy") and 1,100,000 tpy. The treatment rate of 850,000 tpy is consistent with existing permitting applications and environmental submissions and at this production rate, the project has a mine life of nine years.
The Company is currently preparing a detailed development and implementation plan for the Krumovgrad Gold Project and site areas, which is a pre-requisite for issuance of a construction permit. The Krumovgrad Gold Project is expected to be fully compliant with all European safety and environmental directives and industry Best Available Techniques requirements
On November 24, 2011, the Bulgarian Minister of Environment and Waters signed a resolution approving the EIA with a provision for pre-emptive execution. The EIA resolution and the pre-emptive execution were appealed. On January 13, 2012, the three-member panel of the Supreme Administrative Court ("SAC") made a ruling which rejected the appeals against the pre-emptive execution of the EIA resolution. The court ruling in favour of the pre-emptive execution is subject to appeal to the five-member panel of the SAC. The Company is not aware of any further appeals having been filed nor of any further hearing dates. As for the appeal related to the EIA resolution itself, the Company is waiting for a decision as to the date for a hearing.
The Bulgarian Council of Ministers granted a 30 year concession to develop the project in February 2011, the implementation of which is subject to having a positive EIA resolution in full force. The grant of the concession was appealed over the course of 2011 and final appeal court (the five-member panel of the SAC) has ruled in support of the grant of the concession to the Company. The concession is not subject to any further appeals.
Infrastructure in the area of the Ada Tepe deposit is good, with paved roads, power and water resources available within close proximity to the project. Small villages are dispersed widely throughout the license area involved in subsistence farming, particularly the growing of tobacco. The other main source of land use within the license area is for forestry, which is state controlled.
History
The area covering the Krumovgrad License was originally explored in the early to mid 1990’s on behalf of the Bulgarian State, when an extensive program of geological mapping, trenching and drilling over the nearby Surnak prospect, together with a minor amount of trenching on the Skalak and Kuklitsa prospects was undertaken. The entire license area was covered by the regional soil sampling program (average sample grid 250 metres by 50 metres) conducted during this time, in addition to magnetic and induced polarization surveys across the prospect. The results of this work showed the presence of a gold soil geochemical anomaly of significant intensity and extent over the prospect, and a variety of geophysical anomalies.
Balkan Mineral & Mining AD (“BMM”), an indirect subsidiary of DPM, was awarded the Krumovgrad License area covering 130 km2 in June 2000, in accordance with the Agreement of Prospecting and Exploration reached with the Bulgarian Ministry of the Economy and Energy (“MoEE”), and commenced further exploration to better define these previously discovered anomalies. In accordance with the Underground Resources Act (1999), time extensions to the Krumovgrad License area required reduction of the original area allocated, resulting in the current License area of 100 km2. This is located approximately 320 kilometres (by road) south east of Sofia, immediately to the south of the town of Krumovgrad, within the south east Rhodope mountains.