Банкеръ Weekly

Briefs

EBRD TO ARBITRATE DISPUTE OVER ADA TEPE

Any objections against the development of the Ada Tepe field near Krumovgrad by the Canadian Dundee Precious Metals can be made during the public discussions of the report on evaluation of the effect on the environment. The discussion will begin 30 days after the report is published which is expected to be done soon. A shorthand report will be presented to the Ministry of Environment and Water which will inspect the well-grounded objections. Only then will it give permission for development of the field.According to Vera Dzhambazova, head of the Orange PR agency that represents Dundee Precious Metals in Bulgaria, the ecological ministry rated the report positively. However, the evaluation differs very much from the one given by the committee of the citizens of Krumovgrad. Its members claim that lots of things have not been mentioned in that report, including the citizens' attitude to the project. And their attitude is not positive at all. They have many things to be afraid of - the gold will be extracted by cyanides which will cause irretrievable damages to the whole East Rhodope mountains. Groundwater will be polluted and that will result in pollution of the drinking water, too. Moreover, the region will become a moonscape. According to calculations of the committee, the project will bring some BGN25MN to the Bulgarian state, while the company will make at least BGN150MN from it. However, Mrs. Dzhambazova explained, these fears are not reasonable. The people are not aware of the gold extracting technology, she said, which is why the project frightens them. The citizens of Krumovgrad and the Canadian company have been unable to reach an agreement for a year. They had several informal meetings which brought no result. At present, the committee is trying to talk with the European Bank for Reconstruction and Development (EBRD) which finances the development of the field. A member of the committee told the BANKER weekly that a representative of the bank would arrive in Bulgaria on July 18. If we manage to convince him of the damages the development of Ada Tepe will cause to Krumovgrad, the situation may change, he explained.Therefore, it is strange to hear Jonathan Goodman, Dundee Precious Metals President and Chief Executive Officer, saying that the aim of his company is to make the field near Krumovgrad an example of ecological responsibility and proper relations with the local people.In fact, the EBRD experts already saw the report on the evaluation of the field's effect on the environment. They visited Bulgaria between 24 and 26 June, but only managed to go to the mine in Chelopech which is owned by the Canadian company, too.In the meantime, it became clear that the technical and economic evaluation of the project was ready. It was prepared by the Australian Ausenco Limited company. The Canadian company is expected to return its investments (exceeding BGN150MN) for a year and nine months by exploiting the field. At least in the first four years there will be an average production of 150,000 troy ounces of gold per year. A total of 4.8 million tons of ore will be produced during the exploitation of the field which is to last about 6 years (they may be extended to fifteen). According to the calculation, the extracted gold will be more than 94% of it. As to the silver, the percentage will be between 80 and 88. According to research works by the Ausenco company, an average of 746,000 troy ounces of gold and 348,000 troy ounces of silver will be obtained in just six years. To reassure the committee which is afraid of extracting gold by cyanides, the Canadians promise to reduce the cyanide content after the removing process to approximately 1 part in a million (1 mg/l) which is much below the norm proposed by the European Union - 10 parts in a million (10 mg/l) in waste for preservation in a radioactive waste dump. The processing plant and the radioactive waste dump are to be built in the close proximity of the open mine that will provide permanent employment to 230 people.Before the construction works start, the Canadians must also have registration of commercial cover, extraction concession, an approved detailed processing plan as well as complex permission.Dundee Precious Metals acquired the gold field in Krumovgrad from Navan Mining on September 30, 2003. The price and the expenses made by the Canadian company so far amount to USD36MN. Dundee Precious Metals operates in Bulgaria through its subsidiaries, Chelopech Mining EAD (which processes a copper and gold field in Chelopech) and Balkan Mineral Mining EAD (which seeks golden ores in the Krumovgrad licensed area).Thanks to the significant amount of its investments, on March 24 2005 Dundee Precious was awarded a first class investment certificate. According to the Bulgarian legislation, it enables the investor to profit by preferential administrative service in shorter terms.

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