Bulgarian Minister Demands Revision of Canadian Companys Gold-Mining Concessionadmin
Thursday, August 3rd 2006
Bulgaria’s environment minister said Wednesday that a 30-year gold mining concession deal with a Canadian company needed revision because it did not suit government interests.
“It is a question of national interests,” Dzhevdet Chakarov said. “The state must also benefit from the concessions.”
Canada’s Dundee Precious Metals Inc. through its Bulgarian subsidiary, Chelopech Mining EAD, acquired a 30-year concession three years ago to mine gold in the region of Chelopech near the capital, Sofia.
The company is also trying to get government approval for two investment projects — to expand the Chelopech mine and to exploit another gold deposit near the southern town of Krumovgrad.
Both projects won the approval of the Economy Ministry, but Chakarov has so far refused to grant final approval, saying he wanted to consider “all aspects of the case.”
Laurence Marsland, Dundee’s vice president, however, has said the company would rather withdraw its investment projects at Chelopech and Krumovgrad than bow to pressure. The projects are worth a total of US$250 million (euro196 million).
The company also filed legal action against the Environment Minister’s failure to clear the two gold mining projects. Hearings in Bulgaria’s Supreme Administrative Court have been scheduled for the autumn.
The final decision whether to seek revision of the gold-mining concession must be made by the Economy Ministry. The ministry — which has so far backed Dundee’s investment projects — refused further comment.
The Chelopech mine has an estimated 120 metric tons of gold deposits, more than 290 metric tons of silver and 435,000 metric tons of copper deposits, according to official data.
Officials, who asked not to be named, suggested that the government was trying to press the company to increasing the initially agreed concession fees.
The total value of the deposits is estimated at more than euro4.6 billion (US$5.8 billion). Under the current concession agreement, Chelopech Mining has to pay the government an annual concession fee of US$600,000 (euro470,000) and to invest US$18 million (euro14 million) in the mine by 2010.
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