Last Updated: December 1, 2009
KRUMOVGRAD GOLD PROJECT
Kurdjali District, Bulgaria
Profile
The Krumovgrad gold property is a feasibility stage project located in southeast Bulgaria. The project is presently awaiting regulatory approvals from the Bulgarian government for the construction and operation of what is expected to be an 850,000 tonnes per year open pit to produce approximately 150,000 ounces of gold/silver doré bullion per year over the first four years.
A definitive feasibility study completed in 2005 estimated construction costs for the proposed open pit mine and related facilities of $75 million, with comparatively low unit cash operating costs, after tax payback in less than two years.
Status of Development
An environmental impact assessment ("EIA") on the Krumovgrad project, which met, and in certain cases exceeded, both Bulgarian and EU environmental standards, was filed with the Bulgarian Ministry of Environment and Waters ("MoEW") in April 2005. In order to protect the Company’s interests, a legal appeal was filed with the Supreme Administrative Court of Bulgaria on December 2, 2005 against the MoEW for failure to rule on the EIA submission within the timeframe allowed by Bulgarian legislation. Following a public hearing on May 15, 2006, a three member panel issued its ruling on July 10, 2006 for the termination of the Court proceedings on the grounds of the inadmissibility of the claim. DPM appealed the ruling and on November 1, 2006, a five member panel of the Court of Appeal in Bulgarian agreed with the Company’s arguments and revoked the July 10, 2006 ruling. The case was subsequently returned to the Court with instructions to decide on the merits of the Company’s case. A three member panel met on January 15, 2007 and while the Company had no new evidence to present, its lawyers restated the basis of the original appeal and challenged the validity of new evidence presented by the MoEW that the Ada Tepe property is situated within the proposed Natura 2000 territories, a protected area of conservation. On February 13, 2007, the Court revoked the silent refusal of the MoEW and required the MoEW to issue a pronouncement on the Krumovgrad EIA. The MoEW appealed the decision in front of the appellate instance of the Court and the appeal was heard on May 10, 2007. On July 13, 2007, the appellate Court upheld the Court’s original decision and instructed the MoEW to issue a decision on the Krumovgrad EIA. This resolution is final and cannot be appealed.
On September 8, 2009, the MoEW issued a Commercial Discovery Certificate (the “Certificate”) for the Project to BMM. The Certificate is the final requirement for conversion of the property to a mining concession, the application for which has already been filed with the MoEE by the Company.
On December 1, 2008, DPM received a letter from the MoEW requesting that DPM prepare a Compatibility Assessment Report (the “Report”) for the Project and provide an update of the Project’s EIA in accordance with the findings of the Report. The Report is to assess the compatibility of the Gold Project within the scope and purpose of Natura 2000, the European network of protected sites, and is a prerequisite for the issuance of a decision on the EIA. The letter stated that following the submission of an assessment of compatibility with the Natura conservation objectives of the protected zone the project lies within (the “Compatibility Assessment”) and an addendum to the EIA based on the requirements of the compatibility assessment (the “EIA addendum”), both the EIA addendum and the Compatibility Assessment will be submitted for consideration by the Supreme Expert Environmental Council at the MoEW (“SEEC”). As the compatibility assessment and the EIA procedures are aligned, the MoEW should issue a single final resolution for the Gold Project based on the findings of both procedures following the review by the SEEC.
The compatibility assessment work was undertaken by independent experts and initially indicated that there would be Natura 2000 compatibility concerns with the TMF and waste rock locations proposed in the EIA but that the open pit, plant, and infrastructure areas did not present any problems. Follow-up discussions were held with the independent experts and an alternative tailings management facility and waste location, upstream from the original proposal, was proposed by the Company and found to be satisfactory to all parties. A final compatibility assessment report, which reached a positive conclusion on the compatibility of the Project, was issued in June 2009 based on the new project footprint.
At present, the Company is carrying out a wider assessment of the proposed scope of the Project, including a review of the process technology and tailings facilities to ensure the optimum plan is advanced for consideration and development. It is currently anticipated that the final test work, plans and decisions surrounding the future development of the Project will be completed by the second quarter of 2010.