DPM TO ACQUIRE 80% INTEREST IN DENO GOLD ARMENIAN PROJECT ADDS 300,000 TONNES TO ANNUAL PRODUCTION
Market Wire Incorporated
Aug 10, 2006
Dundee Precious Metals Inc. (TSX: DPM) ("Dundee Precious", "DPM" or
"the Company") is pleased to announce that it has signed a Share
Purchase Agreement to acquire 80% of Vatrin Investment Limited
("Vatrin"), a private entity.
Vatrin holds 100% of Deno Gold Mining Company ("Deno Gold"), with
its principal asset, the Kapan Mining Project, located in Southern
Armenia. The transaction, amounting to US$22 million (representing
US$14 million for Vatrin shares and approximately US$8 million of
debt), plus an additional US$10 million investment commitment for
mine expansion, is expected to close by the end of this month.
The Kapan Mine has annual production of 300,000 tonnes of ore from
its current underground operations, where precious metals contribute
to approximately 50% of its revenues, based on long term prices. DPM
intends to expand the underground operations and introduce open pit
mining to maximize the present mine milling capacity of over 1 million
tonnes/year. The concentrate produced at Kapan is readily saleable
due to the lack of impurities or deleterious elements.
"We are excited to add this Project to our production pipeline,"
said Jonathan Goodman, President and CEO of Dundee Precious. "It
is our intention to invest the necessary resources and engage our
operations and exploration teams to apply their expertise and bring
this Project to its full production potential," he added.
As part of Deno Gold’s plan for the development of the Kapan Mining
Project, a loan was sought and approved by the European Bank for
Reconstruction and Development for US$4.5 million after undertaking
standard due diligence. The proceeds have been used for capital
equipment and environmental improvements.
The mining operation is based on two deposits, a copper, minor
gold-silver underground mine, known as Central, and a polymetallic
deposit of copper, gold, silver, zinc and minor lead, known as
Shahumyan, which remains open at depth, to the North and possibly to
the South. It is located approximately 1.5km from the town of Kapan
and some 320km south of the Armenian capital of Yerevan. Concentrates
from the project are transported by road to the town of Ararat (60km
south of Yerevan) where they are offloaded onto the rail system for
transport to the Black Sea via Georgia.
Resources
As part of standard Soviet era practice, extensive diamond drilling
and underground development was undertaken at both the Shahumyan
and Central deposits. For example, databases compiled by Deno Gold
based on Soviet era records, indicate that over 290,000m of surface
and underground diamond drilling and 32,000m of underground channel
sampling was completed to assess the Shahumyan deposit. No drill core
remains from the Soviet era exploration programs. Based on information
compiled by Deno Gold, Soviet era reports prepared for, and reportedly
approved by, the Armenian government listed the following combined
C1 and C2 resources for the Shahumyan and Central deposits.
It is understood that the resources were compiled using a sectional,
polygonal estimation method, however, the exact estimation parameters
are not known.
As part of its due diligence process, DPM staff independently collected
over 700kg of samples throughout the accessible sections of the
Shahumyan deposit for assay, mineralogical studies and metallurgical
testwork. Assaying of the DPM samples confirmed the overall tenor of
the mineralization. In addition, mining and processing of the deposit
since Deno Gold’s acquisition of the project in 2003 has confirmed
the tenor of the deposit. DPM has also independently sampled the mill
feed and tails from the processing plant, including reference samples
from previous years of production.
DPM plans to undertake an extensive drilling programme as part of
its proposed activities in order to confirm the scale of the deposit
and to enable a NI 43-101 compliant resource to be estimated and to
be used as the source for mine scheduling as part of a definitive
feasibility study.
All resource estimates quoted herein are based on prior data and
reports obtained and prepared by previous operators and information
provided by the State. The Company has not completed the work necessary
to verify the classification of the mineral resource estimates. The
Company is not treating the mineral resource estimates as NI 43-101
defined resources verified by a qualified person. The historical
estimates should not be relied upon. These properties will require
considerable further evaluation which DPM’s management and consultants
intend to carry out in due course.
Geology and Mineralization
The prolific Tethyan Mineralized Belt passes through Southern
Armenia. The belt is host to world class porphyry copper-gold,
polymetallic vein array and epithermal gold-silver deposits. The same
belt is the host to DPM’s Chelopech deposit and the deposits of the
Bor area in Serbia.
At Shahumyan, mineralization is hosted in strongly altered dacite,
andesite and basaltic host rocks. The vein arrays at Shahumyan
cover an area of over 2.5km by 1.5km and are known to extend for at
least 400m vertical depth. The main ore minerals are chalcopyrite,
sphalerite, pyrite and minor galena. The Central deposit is a
quartz-carbonate-sulphide (chalcopyrite and pyrite) vein array with
strong similarity to porphyry related mineralization.
None of the deposits contain material quantities of deleterious
elements which would act as penalties in a concentrate.
Processing
A crushing and flotation plant has been developed at Shahumyan
using typical Soviet era construction and layouts. After primary
and secondary crushing, material is transported to a storage area by
conveyor to supply the concentrator. The current Shahumyan and Central
ore (crusher product size of 30-50mm) passes through a rod-mill,
followed by a ball mill and a small re-grind mill.
The primary cyclone overflow feeds the flotation circuit comprising
conventional Russian Denver style flotation cells to differentially
float a gold rich copper concentrate and a zinc concentrate. There
are three main thickeners, each 24m diameter, one for each type of
concentrate produced (Central mine copper, Shahumyan copper-gold
and Shahumyan zinc) and one small 8m diameter thickener serving the
un-commissioned lead concentrate circuit. Thickened concentrates are
then dried using vacuum filters producing a copper (high gold and
high silver) concentrate and a separate high zinc (gold – silver)
concentrate.
DPM’s assessment of the plant suggests that it is capable of 1 million
to 1.25 million tonnes per year throughput, and capital has been
budgeted to improve current metal recoveries.
Dundee Precious Metals Inc. is a Canadian based, international mining
company engaged in the acquisition, exploration, development and
mining of precious metals. It currently owns the Chelopech Mine,
a producing gold/copper mine, and the Krumovgrad Gold Project,
a mining development project, both located in Bulgaria, and is
engaged in mineral exploration activities in Serbia. In addition,
Dundee owns a 100% interest in the Back River gold exploration project
in Nunavut, Canada and has agreed to acquire an 80% interest in the
Kapan Mining Project in Armenia. The Company also holds a significant
and strategic portfolio of investments in the precious metals and
mineral related sector.
FORWARD-LOOKING STATEMENTS
This news release may contain certain information that constitutes
forward-looking statements. Forward-looking statements are frequently
characterized by words such as "plan," "expect," "project," "intend,"
"believe," "anticipate" and other similar words, or statements that
certain events or conditions "may" or "will" occur. Forward-looking
statements are based on the opinions and estimates of management at
the date the statements are made, and are subject to a variety of
risks and uncertainties and other factors that could cause actual
events or results to differ materially from those projected in the
forward-looking statements. These factors include the inherent risks
involved in the exploration and development of mineral properties,
the uncertainties involved in interpreting drilling results and other
geological data, fluctuating metal prices and other factors described
above and in the Company’s most recent annual information form under
the heading "Risk Factors" which has been filed electronically by
means of the Canadian Securities Administrators’ website located
at The Company disclaims any obligation to update or
revise any forward-looking statements if circumstances or management’s
estimates or opinions should change. The reader is cautioned not to
place undue reliance on forward-looking statements.
Contacts: Dundee Precious Metals Inc. Jonathan Goodman
President & Chief Executive Officer (416) 365-2408
[email protected] (mailto:[email protected])
Dundee Precious Metals Inc. Gabriela M. Sanchez Vice President
Investor Relations (416) 365-2549 [email protected]
(mailto:gsanchez@dunde eprecious.com).