Krumovgrad is a small town in the eastern Rhodope Mountains. For decades, the local economy has centred on tobacco growing but the next ten years now looks rather more lucrative. It's all down to the new gold mine on Ada Tepe hill near the town that has started operating after 20 years' preparation. The $165 million investment of Dundee Precious Metals Krumovgrad, a subsidiary of Canada's Dundee Precious Metals (DPM), will create about 240 jobs and new opportunities for business in Krumovgrad.
Bulgaria's first new mine since communism is an open-pit one, unlike DPM's other gold mining project in the country, in Chelopech. In Krumovgrad, the company will mine and process 840,000 tonnes of ore a year with an average gold content of 85,000 oz. The mine is expected to produce 686,000 oz of gold and 310 oz of silver in the form of concentrate during its working life. The area of the complex, including mine and processing facilities, spans 85 ha and exploitation is projected to continue 8 years. Given the ongoing explorations, though, that period is very likely to be longer.
At the start
Dundee Precious Metals Krumovgrad started mining ore in the middle of 2018 and the first quantities of test concentrate were produced in the flotation factory in March 2019. Three months later, in June, the company announced it had achieved commercial production by exceeding an average of 60% of design throughput capacity and recovery over30 consecutive days. The project actually demonstrated it could achieve 90 to 98% of the planned quality and quantity indicators, which in the words of CEO Ilia Garkov is a great achievement in such a short period. The plant is now ready to start operating at full design capacity as soon as it receives the necessary permits.
The company has not yet decided where to sell its concentrate. The copper-gold concentrate produced in Chelopech is transported for processing to Namibia, where DPM has a metallurgical plant. For the Krumovgrad concentrate, however, that is not an option. "The reason is that it is a precious-metal concentrate and if we mix it with the concentrate in Namibia, we will actually impoverish it," Garkov explained. Currently, test quantities of the Krumovgrad concentrate are sent for trial processing to six metallurgical plants - in Bulgaria and abroad. In Garkov's words, the concentrate from Krumovgrad is pure, i.e. without harmful components, and there is a great deal of interest in it.
Dundee's local people
The company currently employs 238 people and that number will stay about the same for the entire life of the mine. Despite the concerns of the local authorities and community that the company will bring in its own workers, only 9 employees are from outside the region of Krumovgrad.
Finding enough workers in a small municipality like Krumovgrad may seem an insoluble task. Therefore back in 2013-14, the company launched a recruitment plan to prepare enough workers before production began.
"We found young boys and girls through the universities and took them to practice in Chelopech. When construction works in Krumovgrad began, we started moving them there one by one," Garkov said.
The company has a rule to only hire people with secondary or higher education. At the same time, it backs up various projects in schools and universities. For instance, it organized a course for mechanics and welders in the local occupational school and there it found one of its best mechanics: a young mother and university student, who now works with 45 male colleagues.
Business for other companies
More than 140 companies - both Bulgarian and foreign - were involved in the project as contractors and suppliers of services and equipment. Bulgarian companies supplied metal structures, thickeners, conveyor belts etc. Foreign companies delivered the flotation equipment, the crusher, some of the pumps and the mills. The mobile equipment in the mine is Caterpillar delivered by the Bulgarian authorized dealer.
Though the capacity of business in Krumovgrad is limited, local companies have also had their share of contracts, mainly for the supply of services. For instance, they are entrusted with cleaning, security and transportation of workers, as well as transportation of test samples to Chelopech or other laboratories. The small construction operations are also carried out by a local company. Data in the KAPI business register of Capital newspaper shows that there are a total of 380 companies in Krumovgrad.
Long time to start
The Krumovgrad project took a full 19 years to come to life. That long period probably explains why it is the first newly built mine in Bulgaria after 1989. The company received an exploration license in 2000 and five years later it prepared the first environmental impact assessment. The project then envisaged processing the ore to metal (dore alloy) by using a cyanidation process but after strong opposition from environmental organizations the company withdrew it.
Later, the project was considerably revised, though it meant extracting less of the metal in the ore, and in 2010 a new environmental impact assessment was prepared on what today is built on Ada Tepe. In 2012 the company received a 30-year concession. That was not the end to obstructions, as the municipal authorities kept delaying the necessary permits, despite court decisions to the contrary and the orders of the regional government.
Nevertheless, the project finally started. "It is a success, because we answered all questions and addressed all concerns," Garkov said. The company did not only change the processing technology to classical flotation but it also considerably reduced the area of the site, from 200 ha to 85 ha, and replaced the initially planned traditional tailings pond with an integrated mine waste facility, which is the most modern such facility in world mining: it takes much less space than a tailings pond, it is much safer and does not generate dust as the waste in it is solid.
The very facility is built in cells, one by one, which allows reclamation to proceed in parallel to mine operation. The company also built a water treatment plant that produces drinking-quality water, although the project does not envisage discharge of water but a closed-cycle operation.
Although the Ada Tepe project is expected to operate for 8 years and the entire project, including construction and reclamation at the end, is planned for 15 years, the mine may not close after that. "We have exploration activities, so if we find new reserves, we will continue operating. We have accumulated experience and we'd better use it," said Garkov.
Dundee Precious Metals Krumovgrad has also established a $5 million fund in support of small and medium businesses in the town. The aim is to create sustainable business after the reserves are exhausted and the mine closes. The fund will be managed by Raiffeisenbank and SmartA Group, which provides technical aid and training. The company has two stipulations for candidates: they must be local companies which pay their taxes in Krumovgrad and their businesses must not be in any way connected with mining, so that they continue operating after the life of the mine expires. The maximum financing to be provided per project is set at 400,000 levs.
The municipality has suggested that beneficiaries restore 50% of the amount, so that the fund can exist for a longer period and support more projects. Interviews with candidates are expected to begin in late September or early October.
The investorDundee Precious Metals Krumovgrad (formerly Balkan Mineral & Mining) is a subsidiary of Canada-based international mining company Dundee Precious Metals (DPM), which is engaged in acquisition, exploration, development, mining and processing of precious metal properties. DPM has one more project in Bulgaria, Dundee Precious Metals Chelopech, which operates the copper-gold deposit near the town of Chelopech. DPM acquired both properties in 2005 from Ireland's Navan Mining, which went bankrupt.
DPM is listed on the Toronto Stock Exchange and has a market cap of about C$930 million. Besides the two operations in Bulgaria, it has a metallurgical plant in Namibia and exploration operations in Serbia and Canada.