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CHELOPECH MINING

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The challenging task of bringing mining projects to fruition isn’ a question of solving engineering projects, as Alan Swaby le

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hey say that what doesn’t kill us makes us stronger. On that basis, the guys at the Chelopech Mine in Bulgaria must be feeling on top of the world.

It’s taken since 2004 and the job won’t be completed until the end of next year, but a mine they acquired due to the bankruptcy of its previous Irish owners has gone from unprofitable to extremely profitable—and when the upgrading is complete, it should be among the lowest cost underground mines of its kind anywhere in the world.

Bulgaria doesn’t immediately spring to mind when thinking about mining in general and gold in particular; but geological exploration began in the region over 150 years ago. However, nobody was in any rush and it wasn’t until the Soviets took an interest in the 1950s that production at Chelopech began—albeit on a small scale of just a few thousand tons a year until the early 1970s, when the mine was expanded and a new concentrator built.

After the fall of the Soviet Union, the mine was privatised but the Irish interests who took over always struggled, partly because of the then low mineral prices but also because they spread themselves too thinly, with properties elsewhere, and were unable to make any meaningful improvements to the mine.

Now that the minefield of Bulgarian bureaucracy has been negotiated, Dundee Precious Metals— the Canadian owner of Chelopech Mining—will invest $150 million in upgrading production. “It probably could have been done quicker,” admits general manager Rick Howes, “but we insisted on transparency all down the line and at that time, Bulgaria worked quicker if a little greasing of the wheels took place.”

In the end, Dundee had to call on the joint help of the Canadian, United States and EU diplomatic forces to put pressure on those causing unjustified obstructions; however, the company hasn’t won all its battles. The high arsenic content of the ore makes it difficult to find smelters capable of refining the copper concentrate, and so plans were drawn up to build an on-site gold and copper processing facility. But these had to be shelved as the original permission was overturned last year by the Bulgarian Supreme Administrative Court.

Along with the mine itself, Dundee acquired some of the key mine managers, so it had a pretty good idea of where its attention should be focused. The Chelopech deposit is situated at the

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“By doubling throughput and stabilising the ground by backfilling using a method known as blasthole open stoping, the whole economics of the project have been changed” foot of the Balkan Mountains, in the western half of the country, 700 metres above Black Sea level.

The gold inclusive copper ore is located in several steeply dipping orebodies that average 40 metres thick and several 100 metres in strike length, ranging in depth from 300 to 700 metres below ground. Not only were previous production levels too low to be economically viable, the wrong mining methodology had been employed.

“As the ore was being extracted,” explains Howes, “the seams were allowed to cave back in, in a method known as sub-level caving. This had the effect of diluting the quality of material being mined. But by doubling throughput and stabilising the ground by backfilling using a method known as blasthole open stoping, the whole economics of the project have been changed.”

And plenty more changes are in the pipeline.

Presently, ore is trucked to the bottom of a vertical shaft to be taken to the surface. But this method is limited to a maximum of one million tons a year. In

order to improve on this, the vertical shaft is being replaced by a 4.5 kilometre inclined conveyor. Ore will still be trucked from the face but then dropped into a crusher which will feed the conveyor. On surface the three stage crushing will be replaced with a semi-autogenous grinding mill which will then feed the new flotation plant. The final gold and copper concentrate will then be shipped to the company’s newly purchased Tsumeb Smelter in Namibia where it will be smelted into blister copper and shipped for further refining.

Chelopech has already been able to double production at the mine since acquiring it in 2003.

When all the upgrades come on stream next year, it will double yet again, to two million tons per annum producing about 140,000 tons of concentrate, from which 22,000 tons of copper and 140,000 ounces of gold are refined. Proven reserves exist for at least 10 years of production; but Dundee is hoping to find viable deposits nearby which will extend the life of the mine much longer.

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“There is no doubt,” says Howes, “that this mine is head and shoulders above others to be found in central and eastern Europe—so much so that many other mining companies have visited us here to examine how we go about things and learn from our experience.”

Dundee is determined to treat the local community and its inhabitants fairly and with respect. “When we do eventually move on,” says Howes, “we will leave it in a much better condition than the way we found it. Each year we are spending large amounts of money undoing the damage to the environment caused in previous years. The caving mine process has resulted in considerable subsidence on the surface which we are gradually filling in before reforesting the land. In addition we support many events in the local community and donate around $1 million annually to infrastructure projects in the

local communities.”

Chelopech is also continuing to finance an English language high school established by the previous mine operators but open to local inhabitants who pass the entrance exam. The school has around 100 students and invariably shines compared to other educational institutions in the country, as measured by annual results and periodical competitions.

Since this is the first mining venture for Dundee Precious Metals, it could have had a very different outcome. Instead, it is proving to be a significant success story. “Our experiences here,” says Howes, “have given us the experience and confidence to take on new challenges in other parts of Bulgaria and on development projects in other challenging areas of the world.” www.dpm-group.com/internal/chelopechAbout.html

CHELOPECH MINING

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