All images courtesy of Dundee Precious Metals

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THE POWER OF PATIENCEBy Eavan Moore

Despite a long history of mining in the region, the team behind DundeePrecious Metals’ Krumovgrad project in Bulgaria had to work hard to laya foundation of trust before building the mine

The new Bulgarian gold mine under construction byDundee Precious Metals looks modest on paper. Atan annual throughput of up to 840,000 tonnes overeight years and Proven and Probable gold reserves

of 807,000 ounces, the open-pit Krumovgrad project ismuch smaller than Dundee’s first investment in Bulgaria, theChelopech Mine (“Underground achiever,” CIM Magazine,September 2014).

But reaching this point required persistent effort and cre-ative thinking on the part of Dundee’s management. Kru-movgrad is Bulgaria’s first greenfield mine in 40 years, andDundee responded to the ensuing challenges with innovativesolutions and standard-setting practices. “This whole processwas a matter of us listening very intently to the communityand addressing concerns in a constructive way,” said PaulProulx, senior vice-president of corporate services atDundee.

ReinventionThe project centres on Ada Tepe, a low-sulfidation

epithermal gold-silver deposit a few kilometres south of thetown of Krumovgrad, close to the Krumovitsa River in theRhodope Mountains. Mining in Ada Tepe started some 3,500years ago, but over time subsistence farming and forestrycame to dominate local land use.

With its 2005 feasibility study, Dundee initially envi-sioned a carbon-in-leach plant that would produce gold/sil-ver doré bullion. Tailings would be stored in a conventionalfacility.

But the proposed use of cyanide “generated such negativesentiment in the local and regional communities that theproject was stalled for several years,” said John Lindsay, sen-ior vice-president of projects at Dundee. The company wentback to the drawing board and in 2011 came up with a newdesign that eliminated that concern and several others. Withpermits finally secured, construction started in late 2016.Startup is scheduled for the second half of 2018.

The biggest change is that the new design uses a flotationprocess rather than cyanide leaching, at the expense of aneight to 10 per cent reduction in gold recovery. “We gravi-tated to that as our preferred approach because of the expe-rience and expertise that we had in-house through ourChelopech operation,” said Lindsay. Dundee had successfullyintroduced Staged Flotation Reactors (SFRs) manufacturedby Woodgrove Technologies into its flotation circuit at Che-lopech and will do the same at Krumovgrad. SFRs reducefloor space and associated capital costs, while offering poten-tially better power efficiencies compared with more conven-tional flotation cells.

At Krumovgrad, crushed ore will go through a SAG milland a vertical mill. After an initial round of flotation, the pri-mary flotation concentrate is reground in another verticalmill, prior to final concentrate upgrading in the cleaner flota-tion circuit. The gold is very finely distributed, necessitatinga grind size of 30 microns. In order to minimize the project

The overburden at Krumovgrad is non-acid-generating,making it a relatively convenient container. The waste rockwill be crushed to a variety of sizes, from soccer-ball-sizeddown to fines, in order to maintain a homogenous mixturethat will stay stable and allow internal drainage. In keepingwith the mine’s zero-discharge design, any water reporting tothe underdrain will be recycled.

“One of the challenges will be coordination of the supplyof mine rock to support construction of the integrated minewaste storage facility through the life of the mine,” said Lind-say. “A great deal of detailed planning has been done to opti-mize the material balance.”

The community had many concerns about the Kru-movitsa River, which provides water for drinking and agri-culture. “The deposit sits on top of a hill, and at the bottomof the hill is the river,” said Lindsay. “In the original projectdesign, which used cyanide, the process facility was locatedat the bottom in a flat area, but it was very close to the river.”In its redesign, Dundee relocated the plant to the top of thehill. Dundee also committed to treat any water dischargedfrom the site and to run a six-kilometre pipeline from thetreatment plant to a discharge point downstream of the com-munity.

Locating the plant on a hill resulted in a significant earth-works project to develop level areas. Half of the two-yearconstruction timeline and approximately US$52 million isfocused on earthworks.

Developing relationshipsThese changes alone did not win over the community of

Krumovgrad, where the municipal council was reluctant tomove forward with mine development. The project’s opera-tions director, Irena Tsakova, relocated to the community in2012 to establish closer relationships. Garkov also spentmuch of 2013 through 2015 in Krumovgrad.

“I asked my guys to prepare a list with everybody who wasagainst the project,”

footprint, Dundee decided to produce concentrates for saleto a third party rather than refine the metal further.

That was in part a requirement of the European conserva-tion program Natura 2000, which became law in Bulgariaduring the permitting process. A compatibility assessmentfound that the original proposal would have significantimpacts on rare flora and fauna; that was mitigated by deci-sions made to reduce the mine’s footprint. Dundee alsoworked with a herpetological NGO to fence the site andresettle protected species of tortoise outside it. “Now ourstandard of practice has been recognized by the EuropeanUnion parliament as the best available practice working inNatura 2000,” said Iliya Garkov, vice-president and generalmanager for Bulgaria.

Integrated waste managementThe redesign also cut out the conventional tailings dam

and replaced it with an integrated mine waste storage facilitythat uses a tenth of the space. Tailings will be thickened to apaste similar to underground backfill, ranging from 56 to 68per cent solids. Starting at the bottoms of two adjacent smallvalleys, the tailings will be placed into cells constructed frommine waste rock and progressively rehabilitated with nativespecies as they rise from 300 metres in elevation to 450metres.

Dundee’s general manager for Bulgaria Iliya Garkov has been instrumental in buildingsupport for the project within the community. Here he is shown giving a site tour to

people from the area.

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Dundee received the final constructionpermit for Krumovgrad in August 2016 and

site work began soon after.

Garkov said. “And I started to talk with those guys and askedthem for meetings.”

Garkov chatted with everybody in Krumovgrad. “I’m from asmall community here in the Chelopech region,” he said.“Everybody knows everybody, and they know the history of thefamilies for the last thousand years. You show respect, youshow that you recognize their concerns and you address them.”

After about a year and a half, Garkov felt that the commu-nity had accepted the mine. “I started receiving invitations togo to their houses, to their weddings, and to their celebra-tions,” he said.

Garkov got there by making promises he knew he coulddeliver on. Residents of Krumov-

grad badly needed employ-ment among young peopleand feared that Dundee wouldmerely send over employeesfrom Chelopech. “When westarted to hire local young peo-

ple and send

them to Chelopech for training, they started to see that yes,we actually follow our promises,” he said.

Dundee now meets every month with the local mayor andwith the chairman of the municipal council to update themon the next few months’ activities and hiring. “Of course wepublish all these things, but in the small regions it is veryimportant to show respect to the local leaders as well,” saidGarkov. “You have to understand what is important for peo-ple. Don’t give them or promise them things which are irrel-evant for them.”

Dundee committed to hiring 90 per cent of its anticipated230-person operations workforce from the Krumovgradregion. Since there is little to no mining know-how left there,that meant Dundee would need to train almost all of itsemployees.

The Chelopech operation, 300 kilometres to the north-west, provides a helpful training ground. More than 50interns have been hired from its university internship pro-gram and have progressed as geologists, metallurgists ormechanics. “Two-thirds of our technical services in Che-lopech came from this program,” said Garkov. There are now

around 12 students from Krumovgrad training in Che-lopech for future positions at the Krumovgrad

mine. Most of the Krumovgrad workforcewill be trained at Chelopech first.

The processing plant will include staged flotation reactors such as those installed at the company’s Chelopech operation shown here.

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The company redesigned the layout of itsfacilities to move the process plant (right)further from the Krumovitsa River.

tonnes of ceramic artifacts and ancient mining tools amid thestone foundations of buildings from the time. Back then,mining methods were simpler: the miners heated the rock,cracked it by applying cold water, smashing the ore withtools made from rock, and then heated it again in a crudesmelting process.

But in the last 40 years, said Garkov, “The country forgotwhat it means to develop a new mine.” For him, the oppor-tunity to open Bulgaria’s first new mine in decades, and itsfirst-ever mine to operate in a Natura 2000 protected area,was the most rewarding part of the process. That entailedchallenges – administrative capacity and familiarity withmining had disappeared, while distrust of the mining indus-try remained. “At the same time,” said Garkov, “that is anopportunity for you to do things the right way in the begin-ning.” CIM

Building for a short mine lifeIf ongoing exploration does not extend the life of the

mine, Krumovgrad will operate for only eight years. This fac-tored into the way that Dundee constructed the project andmade its social commitments.

The startup costs had to be kept low, and Dundee hasachieved that with an estimated capital cost of $178 million.At current metal prices, the plan is to finance the projectpartly through free cash flow generated from its other opera-tions and partly through an undrawn committed revolvingcredit facility, with a small contribution from existing cash onthe balance sheet.

The on-site electrical rooms and some satellite offices willbe modularized – assembled in shipping containers in majorurban centres where skilled labour is readily available. Theelectrical rooms will be assembled, wired and tested off site,reducing the number of skilled tradesmen on-site duringconstruction.

With the end of the mine in mind, Dundee made twocommitments to its Krumovgrad hires. The first was thatthey would be qualified when they went to find other jobs.“Everybody everywhere needs good, qualified truck opera-tors or front-loader operators,” said Garkov. “Okay, they willnot work in the mine, but they will work on the roads or incivil construction.”

The second commitment is that Dundee will offer othertypes of job training, such as for agriculture, as the projectcomes to the end of its life. “We’re still thinking about thesethings,” Garkov said.

ArchaeologyIn order to be cleared for mining rights, Dundee paid for

an archaeological study conducted by the Bulgarian NationalInstitute of Archeology and Museum. The dig found 17.5

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project profile

While modest in size, the mine will be the first new mine to be built in Bulgaria indecades.

The site is in Rhodope Mountains of southeastern Bulgaria where the primary industries are tobacco farming and forestry.