Last Updated: August 2010
KRUMOVGRAD GOLD PROJECT
Kurdjali District, Bulgaria
Profile
The Krumovgrad gold property is a feasibility stage project located in southeast Bulgaria. The deposit is a shallow, high grade gold deposit that has the potential to produce 700,000 to 800,000 ounces of gold over the life of the mine. A review of key aspects of the proposed open pit gold development, including the process technology and tailings facility to optimize the Project’s future profitability and ensure acceptance by the local community has been completed. It is the Company’s intention to commence permitting for this revised Project as soon as practical.
Background
Balkan Mineral & Mining EAD (“BMM”), a subsidiary of DPM, was awarded the Krumovgrad License area covering 130 km2 on June 12, 2000. Regulatory license reductions have required reduction of the license area to 100 km2. The License area is approximately 320 km south east of Sofia in the Kurdjali District, immediately south of Krumovgrad as part of the Rhodope Metallogenic Zone. The deposit is a high level epithermal gold-silver deposit.
As disclosed in a definitive feasibility study (“DFS”) issued in August 2005, the original Project included the construction and operation of an open pit and facilities to produce gold/silver doré bullion with low unit cash operating costs. The Mineral Resource was measured at 1 g/t cut off grade with Measured and Indicated Resources of 5.2 M tonnes for a total of 835,000 ounces and an initial productive life of six years.
The "Definitive Feasibility Study Technical Report for the Krumovgrad Gold Project, Ada Tepe Deposit" prepared by RSG Global, in accordance with NI 43-101, was filed on SEDAR (www.sedar.com) on August 5, 2005.
Status of Development
On September 8, 2009, the MoEW issued to BMM its Commercial Discovery Certificate (the"Certificate") for the Krumovgrad Gold Project. The Certificate is the final requirement for the conversion of the property to a mining concession, the application for which has been filed with the Ministry of Economy, Energy and Tourism ("MoEET"). On June 4, 2010 the MoEET notified BMM that it is in the process of obtaining the necessary approvals enabling the Ministry to open the concession procedure, and requested the Company to update the various analyses included in its original concession application filed on June 2, 2007. As part of this process, the Ministry of Culture confirmed its consent, granted in December 2007, for opening the concession proceedings but stated that the implementation of the concession activities is contingent upon an archaeological clearance of the site.
The Company is in the process of updating the concession application documentation and discussing with archaeologists the options for the implementation of the archaeological works coincident with the Krumovgrad Gold Project's implementation.
New Project Scope
An internal optimization study which consolidates a set of independent studies on various aspects of the Project was completed in the first quarter of 2010. Metallurgical and process studies carried out on samples provided by DPM and that reflect the sample composting strategy used for the 2005 DFS indicate that metallurgical recoveries of 85% or better can be achieved via conventional flotation technology for gold. Economic analysis indicates that this recovery, although lower than the 93% to 94% that can be achieved by the use of cyanide technology, will significantly reduce the permitting risks and result in sufficient cost and schedule benefits to be attractive.
Other studies completed by Golder Associates Ltd. indicate that a high density tailings system will be feasible at Krumovgrad and that an integrated tailings and mine waste facility can be constructed immediately adjacent to the proposed open pit. This would result in the elimination of the conventional tailings facility the original Project envisaged and will bring about a significant reduction in the project footprint (145 ha versus 300 ha; see figure below) and the land acquisition requirements, both of which were adversely impacting the permitting of the Project. Based on discussions with Natura 2000 experts, the company is confident it would also comprehensively address the Natura 2000 tailings management facility compatibility and waste rock disposal issues raised in 2009 by independent Natura 2000 experts. In December 2008, the Ministry of Environment and Water ("MoEW") requested that DPM prepare a Compatibility Assessment Report ("the Report") for the Krumovgrad Gold Project to assess the compatibility of the Krumovgrad 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 an Environmental Impact Assessment ("EIA").
Reduced Project Footprint
Based on recent technical works and economic analyses, a revised project configuration and a new permitting and project schedule were completed, which will form the basis of a new DFS presently underway. The Company believes that the new point-forward project schedule will be shorter than the original schedule and that the new project addresses all of the community and non-governmental organizations ("NGOs") concerns related to the earlier project. Stakeholder dialogue is providing positive feedback to date on the approaches being proposed. In response to the positive technical and economic results obtained to date, the Company has withdrawn its original EIA and is initiating a new EIA procedure for the revised Krumovgrad Gold Project.