techReportChelop.pdf

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Coffey Mining Pty LtdABN 52 065 481 209

1162 Hay Street, West Perth WA 6005 Australia

Technical Report for the Chelopech Project

Prepared by Coffey Mining Pty Ltd on behalf of:

Dundee Precious (Chelopech) BV

Chelopech Project, Bulgaria

RSG Global has merged with Coffey Mining Pty Ltd


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Coffey Mining Pty Ltd

Chelopech Project, Bulgaria PCHE43

Technical Report for the Chelopech Project 24 March 2008

Table of Contents

1 Summary ....................................................................................................................................1

1.1 Introduction and Scope of Work ......................................................................................1

1.2 Property Description and Location ..................................................................................1

1.3 Accessibility, Local Resources and Infrastructure ...........................................................2

1.4 Geology...........................................................................................................................2

1.5 Drilling and Sampling ......................................................................................................2

1.6 Mineral Processing and Metallurgical Testing .................................................................3

1.7 Mineral Resources and Reserves ...................................................................................4

1.8 Conclusions ....................................................................................................................6

1.9 Recommendations ..........................................................................................................6

2 Introduction................................................................................................................................7

2.1 Scope of Work.................................................................................................................7

2.2 Site Visits ........................................................................................................................7

2.3 Principal Sources of Information......................................................................................7

2.4 Participants .....................................................................................................................8

2.5 Independence .................................................................................................................9

2.6 List of Abbreviations........................................................................................................9

3 Reliance on Other Experts ......................................................................................................10

4 Property Description and Location ........................................................................................12

4.1 Background Information................................................................................................12

4.1.1 Bulgaria ...........................................................................................................................12

4.2 Project Location ............................................................................................................12

4.2.1 Chelopech Project...........................................................................................................13

4.3 Tenement Description ...................................................................................................13

4.4 Permits..........................................................................................................................14

4.4.1 Permitting Schedule........................................................................................................15

4.5 Royalties .......................................................................................................................16

4.6 Environmental Liabilities................................................................................................16

5 Accessibility, Climate, Local Resources, Infrastructure and Physiography.......................17

5.1 Project Access ..............................................................................................................17

5.2 Physiography and Climate ............................................................................................17

5.3 Local Resources ...........................................................................................................17

5.4 Infrastructure.................................................................................................................18

6 History ......................................................................................................................................19

6.1 Exploration History ........................................................................................................19

6.2 Previous Operations......................................................................................................19

6.3 Resource Estimates ......................................................................................................20

7 Geological Setting ...................................................................................................................21


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7.1 Regional Setting............................................................................................................21

7.2 Project Geology.............................................................................................................23

7.3 Structure .......................................................................................................................26

8 Deposit Types..........................................................................................................................28

9 Mineralization...........................................................................................................................299.1 Mineralisation and Alteration .........................................................................................29

9.2 Mineralogy ....................................................................................................................31

10 Exploration...............................................................................................................................33

11 Drilling ......................................................................................................................................34

11.1 Surface Diamond Core Drilling......................................................................................34

11.2 Underground Drilling .....................................................................................................34

11.3 Drilling Quality...............................................................................................................35

11.4 Drillhole Recovery.........................................................................................................35

12 Sampling Method and Approach............................................................................................38

12.1 Underground Face Sampling ........................................................................................38

12.2 Diamond Core Sampling...............................................................................................38

12.3 Sample Recovery..........................................................................................................39

13 Sample Preparation, Analyses and Security .........................................................................40

13.1 Sample Security............................................................................................................40

13.2 Analytical Laboratories..................................................................................................40

13.3 Sample Preparation and Analytical Procedure..............................................................40

13.3.1 Copper Analysis ..............................................................................................................41

13.3.2 Sulphur Analysis .............................................................................................................41

13.3.3 Gold and Silver Analysis.................................................................................................41

13.3.4 Analysis of Arsenic, Lead, Zinc, Bismuth, Antimony and Iron........................................41

13.4 Adequacy of Procedures...............................................................................................42

13.5 Quality Control Procedures...........................................................................................42

14 Data Verification ......................................................................................................................44

14.1 Statistical Analysis of Assay Quality Control Data.........................................................44

14.1.1 Chemex (Chelopech Site Laboratory) ............................................................................44

14.1.2 UltraTrace........................................................................................................................46

14.1.3 SGS Chelopech ..............................................................................................................48

14.1.4 Summary of QAQC Analyses .........................................................................................50

14.2 Assessment of Project Database ..................................................................................50

14.2.1 Logging and Mapping .....................................................................................................5014.2.2 Grid Control and Survey .................................................................................................50

14.2.3 Bulk Density ....................................................................................................................52

14.3 Verification Sampling ....................................................................................................52

14.4 Comparison of Data Types............................................................................................55

15 Adjacent Properties.................................................................................................................62

16 Mineral Processing and Metallurgical Testing ......................................................................63


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16.1 Introduction ...................................................................................................................63

16.2 Mineral Processing Testwork ........................................................................................65

16.2.1 Comminution...................................................................................................................65

16.2.2 Flotation...........................................................................................................................66

16.2.3 Gravity Gold Recovery Testwork ....................................................................................67

16.3 Pressure Oxidation (POX) and Cyanidation Testwork...................................................6716.3.1 Testwork - Stage 1..........................................................................................................68

16.3.2 Testwork - Stage 2..........................................................................................................70

16.3.3 Testwork - Stage 3, Continuous Pilot Testing ................................................................71

16.3.4 Testwork - Stages 4, 5 and 6. Continuous Process Demonstration ..............................71

16.3.5 Cyanide Destruction Testwork........................................................................................72

16.3.6 Primary Neutralisation Testwork.....................................................................................72

16.4 Copper Recovery Testwork...........................................................................................73

16.4.1 Solvent Extraction (SX) Testwork...................................................................................73

16.4.2 Electrowinning Testwork .................................................................................................74

16.4.3 Impurity Removal Testwork ............................................................................................74

16.4.4 Environmental Testwork .................................................................................................75

16.5 Design Production Basis ...............................................................................................75

16.6 Plant Description...........................................................................................................75

16.6.1 Concentrator Upgrade Process Description................................................................79

16.6.2 Metals Production Facility Process Description .............................................................79

16.6.3 Plant services for the Concentrator Upgrade and MPF include:....................................82

16.7 Tailings Management....................................................................................................83

16.7.1 Flotation Tailings facility..................................................................................................83

16.7.2 POX/CIL facility...............................................................................................................83

16.7.3 Site Water Management.................................................................................................84

16.7.4 Stability Assessment.......................................................................................................84

16.7.5 Tailings Management Design Parameters .....................................................................85

17 Mineral Resource and Mineral Reserve Estimates................................................................87

17.1 Mineral Resource..........................................................................................................87

17.1.1 Database Validation........................................................................................................87

17.1.2 Geological Interpretation and Modelling.........................................................................88

17.1.3 Surface Topography .......................................................................................................97

17.1.4 Underground Development and Stoping ........................................................................97

17.1.5 Statistical Analysis ..........................................................................................................97

17.1.6 Variography.................................................................................................................. 108

17.1.7 Block Modelling............................................................................................................ 110

17.1.8 Grade Estimation ......................................................................................................... 111

17.1.9 Resource Reporting..................................................................................................... 120

17.2 Mineral Reserves ........................................................................................................123

18 Interpretation and Conclusions............................................................................................125

19 Recommendations.................................................................................................................126

20 References .............................................................................................................................127

21 Certificates .............................................................................................................................128


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List of Tables

Table 1.5_1 Drilling and Sampling Statistics 3

Table 1.7_1 Grade Tonnage Report Grouped by Resource Category 5

Table 1.7_2 Mineral Reserve Summary 5

Table 2.5_1 Typical Abbreviations 9

Table 6.3_1 Previous Resource Calculations 20

Table 9.1_1 Copper Mineralisation Styles 30

Table 12_1 Drilling and Sampling Statistics 38

Table 14.4_1 Summary Statistics by Data Type 57

Table 14.4_2 Summary Statistics of Underground Drill Data by Company 57

Table 14.4_3 Comparative Raw and Declustered Grade Statistics by Data Type 58

Table 14.4_4 Comparative 3-D Grid Statistics by Data Type 60

Table 14.4_5 Comparative 3-D Grid Statistics by Owner/Company 61

Table 16.2.1_1 Comminution Characterisation Testwork Average Results Summary 66

Table 16.3.4_1 Summary Results of Final Stage 5 and Stage 6 POX-Cyanidation Testing 72

Table 16.4.2_1 Analytical Results for Stage 2 and Stage 3 Cathode 74

Table 17.1.5_1 Summary Statistics for Drillhole Composite Data 98

Table 17.1.5_2 Summary Statistics for Stockwork Domains (High Grade) 101

Table 17.1.5_3 Summary Statistics for Background Domains (Low Grade) 101

Table 17.1.5_4 Domain 103 : Correlation Matrix displaying Pearson Correlation Coefficients 102

Table 17.1.5_5 Regression formulas for Determination of Arsenic Grades 103

Table 17.1.5_6 Summary of Upper Cuts - Copper 104

Table 17.1.5_7 Comparison of Raw and Declustered Mean Grades by Domain 105

Table 17.1.5_8 Comparison of Measured and the Regressed Density 107

Table 17.1.6_1 Variography - Block 150 HG Domain 109

Table 17.1.6_2 Variography - Block 151 HG Domain 109

Table 17.1.6_3 Variography - Block 19w HG Domain 109

Table 16.1.6_10 Variography - Block 19e HG Domain 109

Table 17.1.7_1 Block Model Construction Parameters 110

Table 17.1.7_2 Block Model Variables 111

Table 17.1.8_1 Summary of Search Neighbourhoods 113

Table 17.1.8_2 Global Mean Grade Comparisons 116

Table 18.1.8_3 Comparative Estimates Varied Estimation Methods 119Table 18.1.8_4 Estimation Sensitivities OK with Varied Sample Search Criteria 120

Table 17.1.9_1 Criteria for Resource Classification 122

Table 17.1.9_2 Categorised Resources Based on Ordinary Kriged Estimates 123

Table 17.2_1 Mineral Reserve Summary 124


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List of Figures

Figure 4.2_1 Chelopech Project Location Plan 13

Figure 7.1_1 Regional Geology of the Panagyurishte Metallogenic District 22

Figure 7.2_1 Schematic Litho-Stratigraphic Cross-Section through the Chelopech Region 24

Figure 7.2_2 Spatial Relationship between the Silicification and the Mineralisation from the 405 level 25

Figure 7.2_3 Geology of the Area Surrounding the Chelopech Deposit 25

Figure 11.4_1 Surface Drilling Copper Grade (%) Versus Recovery 35

Figure 11.4_2 Surface Drilling Gold Grade (g/t) Versus Recovery 36

Figure 11.4_3 Underground Drilling Copper Grade (%) Versus Recovery 36

Figure 11.4_4 Underground Drilling Gold Grade (g/t) Versus Recovery 37

Figure 14.3_1 Twin Hole Comparison 150_405_34 versus 150_405_49 53




Figure 14.4_1 3D Perspective View of the Assay Data Coloured by Type 55

Figure 14.4_2 Scatter Plot comparing Copper (%) and Gold(g/t) Composites (3m) 59

Figure 16.1_1 Process Flowsheet 64

Figure 16.5_1 Chelopech Project Simplified Block Diagram 76

Figure 16.5_2 Isometric View of DFS Facility 77

Figure 16.6_1 Site Layout Plan 78

Figure 17.1.2_1 Plan Displaying the Mining Areas 89

Figure 17.1.2_2 Typical Cross Section (1) Displaying Composites and the Silica Envelope 90

Figure 17.1.2_3 Typical Cross Section (2) Displaying Composites and the Silica Envelope 90

Figure 17.1.2_4 Typical Section of the 103 Block Geological Interpretation 92






Figure 17.1.2_10 Typical Section of the 17 and 18 Blocks Geological Interpretation 96


Figure 17.1.5_1 Histogram - 150 Block High Grade Stockwork (Cu %) 100

Figure 17.1.5_2 Scatter Plot between Copper (%) and Arsenic (%) All Composites 102Figure 17.1.5_3 Scatter Plot - Bulk Density versus Depth 106

Figure 17.1.5_4 Scatter Plot - Bulk Density (Actual) versus Regressed Bulk Density 107

Figure 17.1.8_1 Swath Plot (Elevation) - Block Model versus Grade Copper (%) 117

Figure 17.1.8_2 Swath Plot (Elevation) - Block Model versus Grade Gold (g/t) 117

Figure 17.1.8_3 Swath Plot (Elevation) - Block Model versus Grade Silver (g/t) 118

Figure 17.1.8_4 Swath Plot (Elevation) - Block Model versus Grade Sulphur (%) 118


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List of Appendices

Appendix 1 Listing of Drillhole Collars 1

Appendix 2 Descriptive and Distribution Statistics Summarises and Plots 2

Appendix 3 Quality Control Statistical Plots 3

Appendix 4 Scatter Plots and Correlation Analyses 4

Appendix 5 High Grade Outlier Plots 5

Appendix 6 Variogram Models and Plots 6


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Chelopech Project, Bulgaria PCHE43 Page: 1


1 SUMMARY

1.1 Introduction and Scope of Work

Coffey Mining Pty Ltd (formerly RSG Global Consulting Pty Ltd) has been commissioned by

Dundee Precious (Chelopech) BV (Dundee) to compile a technical report on the Chelopech

Project (the Project), located in Bulgaria.

This report has been compiled to summarise the results of exploration, data collection,

database validation and resource estimation of Chelopech Copper/Gold Project, using the

exploration data collected by Dundee up till the end of June 2007. Currently Dundee is

undertaking cut off grade optimisation studies, and is updating the mine plan, which will be

based on the Mineral Resource stated in this report.

Dundee technical staff have provided data relating to geological data and interpretations,

underground development and stoped areas, the master drilling and assay database and

other relevant technical data.

This report is to comply with disclosure and reporting requirements set forth in National

Instrument 43-101, Companion Policy 43-101CP, and Form 43-101F1.

1.2 Property Description and Location

The Chelopech Operation is situated adjacent to the Chelopech village, in the Sofia District of

Bulgaria, 75 km east of the capital Sofia. It is situated approximately 350 km west of the

Black Sea ports of Burgas and Varna. The village is located at the foot of the Balkan

Mountains, at an elevation of approximately 700 m above sea level. The Project area is

bounded to the north by the foothills of the Balkan Range, to the east by a government-owned

road maintenance organisation and residential housing and by agricultural land to the south

and west.

The Project is owned by Dundee Precious (Chelopech) BV, a wholly owned subsidiary

company of Dundee Precious Metals Inc.

The Chelopech Project implementation is a planned production and processing upgrade to 2M

tonnes per year (tpa) of the existing underground gold copper mine located near the town of

Chelopech in Bulgaria. The mine upgrade will be developed, constructed, and operated by

Dundee Precious (Chelopech) BV, a wholly owned subsidiary of Dundee Precious Metals

(Inc). The processing facility is planned to be upgraded to produce copper and gold on site

using flotation, pressure oxidation, solvent extract-electrowinning (SX-EW) for copper andcarbon-in-leach (CIL) extraction of gold. A Memorandum of Understanding (MOU) has been

reached with the Government of Bulgaria wherein a Public-Private Partnership (PPP) will be

developed to own and run the metals processing facility wherein Bulgarias Silver Fund will

acquire a 25% equity in the facility.


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Following the establishment of the MOU between Dundee and the Bulgarian Government,

Dundee will pay a royalty to the Bulgarian government, which is on a sliding scale from 2% to

8%, based on a profitability ratio between 10% and 60%.

1.3 Accessibility, Local Resources and Infrastructure

Access to the Chelopech mine is excellent, via sealed major roads from the national capital of

Sofia, approximately 80km to the west. The principal rail and road links between Sofia and

the countrys largest port, Burgas, located on the Black Sea pass through the village of

Chelopech and the Chelopech minesite.

There has been a strong history of mining in the local region around the mine with a number

of large mines producing concentrate to feed a significant copper smelter at Pirdop, which is

just 10km from Chelopech.

Chelopech is well resourced, due to its proximity to major roads, power lines, communication

facilities, water sources and the town of Pirdop. The Chelopech Project obtains power from

the Bulgarian power grid, and obtains water from wholly owned water storage facilities.

1.4 Geology

The Chelopech deposit is located within the Panagyurishte metallogenic district in the central

part of the Srednogorie zone. The Panagyurshte mineral district is defined by a NNW

alignment of porphyry-copper (Elatsite, Assarel and Medet) and epithermal Cu-Au

(Chelopech) deposits, which is oblique to the east-west orientation of the Srednogorie belt in

Bulgaria. The geology of the Panagyurishte mining district comprises a basement of Pre-

Cambrian granitoid gneisses intruded by Palaeozoic granites and overlain by Upper

Cretaceous magmatic and sedimentary sequences. The Chelopech deposit occurs below a

sedimentary cover, which has preserved the underground mineralisation from erosion. TheChelopech regions consists of a metamorphic basement, and Late Cretaceous volcanic and

sedimentary successions. Within the mine environment, ore is associated with the Lower

Chelopech Formation, comprising of propylitically altered andesitic and dacitic lavas, tuffs and

agglomerates. The mineralisation occurs within sulphide-rich zones of replacement

silicification surrounded by haloes of silica-sericite alteration. The ore bodies, which formed

as both complex branched bodies and discrete pipes, are grouped into two mining areas, the

central and west zones.

The Chelopech deposit is interpreted to represent a low to medium sulphidation epithermal

system which may be associated with a porphyry-style hydrothermal system at depth.

1.5 Drilling and Sampling

Data from surface and underground diamond drilling and underground face samples have

been applied to resource estimation. Drilling by Dundee and previous operators has occurred

at the Chelopech Project in several phases since the mid 1950s as summarised below.


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Table 1.5_1

Drilling and Sampling Statistics

ExplorationPeriod

Company Method NumberAve

LengthTotal

MetersNumber ofCu Assays

Surface Diamond Drilling 437 610 266,895 44,596

Underground Diamond Drilling 216 124 26,858 5,474June 1956 to

February 1992

State Owned

(incl. Polimet) UG Face Samples (1972 onwards) 7,356 7,356

Closed March to December 1992

Surface Diamond Drilling 11 132 1,456 62

Underground Diamond Drilling 503 58 28,982 19,596January 1993 toSeptember 2003

Navan(incl. Homestake)

UG Face Samples 8,491 8,491


Underground Diamond Drilling 493 210 103,521 52,343August 2003 toPresent

Dundee



Underground Diamond Drilling 1,212 131 159,361 77,413

Drilling Combined 1,685 258 434,910 123,387Life of Mine Total


To date, the drilling forms a notional 25mN by 25mE to 50mN by 50mE grid over the deposit.

Comprehensive quality control procedures have been implemented for all data collection. Anexhaustive independent review of the QAQC data has been completed by Coffey Mining and

based on these reviews, Coffey Mining believes the analytical data to be accurate with

precision consistent with other similar copper gold deposits.

A total of 7,707 bulk density determinations were available for the purposes of resource

modelling. Bulk density measurements were undertaken at the Eurotest laboratory, in Sofia,

Bulgaria, using an industry standard wax coating water immersion method. Bulk density

values have been assigned to the resource model using ordinary kriging estimation.

1.6 Mineral Processing and Metallurgical Testing

Several comprehensive metallurgical testwork programmes have been completed as part of

the DFS. The ore treatment processes selected comprise conventional crushing of mined ore

in a primary jaw crushing circuit, wet grinding in a SAG milling circuit, 3 stage flotation and

concentrate dewatering. The copper concentrate is reground for subsequent treatment in the

new Metals Production Facility (MPF) where it is subjected to pressure oxidation in an

autoclave. The resultant slurry is separated into solid and solution components by counter

current decantation (CCD). The solution from the autoclave is purified and treated via solvent

extraction (SX) and electrowinning (EW) for copper recovery. The solids component is

neutralised and directed to a conventional carbon-in-leach (CIL) gold recovery circuit. The

adsorbed gold and silver are recovered from the carbon in an elution circuit and treated by

electrowinning and smelting into dor bars.


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1.7 Mineral Resources and Reserves

Based on observations made during the site visit and using all of the available geological and

geochemical information, suitable litho-structural mineralised domain boundaries were

interpreted based on the supplied geological interpretation and wireframe modelled to

constrain the resource estimation for the Chelopech deposit. Interpretation and digitising of allconstraining boundaries was undertaken on 10m levels. The resultant digitised boundaries

were used to construct wireframe surfaces or solids defining the 3-D geometry of each

interpreted feature.

Mineralisation was constrained by silica alteration, and further constrained by the

development of stockwork solids, where regions identified as predominantly normal stockwork

or massive sulphide were separated from regions that were identified as predominantly

disseminated or barren of sulphide.

The Chelopech deposit has been modelled as a central and western region. The western

region includes the 103, 149, 150, 151, 5 and 25 blocks while the central region includes the

16, 17, 18, 19 and 8 blocks. In general, the domains are steeply dipping and vary in plunge

from southeast to east.

In addition to the geological model, a void model was constructed to represent the

underground development and stoping as of July 2007 and this volume was depleted from the

estimate.

Detailed statistical and geostatistical investigations have been undertaken using 3m

composite data coded with the geological and mineralisation interpretation. The following

high-grade cuts were applied to the 3 metre composites prior to grade estimation for the

stockwork domains; 103 block 8.4% Cu and 21g/t Au, 149 block 10% Cu and 31g/t Au,

150 block 17% Cu and 42g/t Au, 151 block 16.5% Cu and 24g/t Au, 16 block 5.5% Cu

and 30g/t Au, 17 block 12% Cu and 41g/t Au, 18 block 17% Cu and 45g/t Au, 19w block

6% Cu and 25g/t Au, and 19e block 6% Cu and 24g/t Au. Sulphur and arsenic were not cut

for the estimate.

A regular, rotated whole block model was developed for Chelopech using 20mE x 20mN x

10mRL parent cells. Proportions were carried in the regular model, including proportions of

silica envelopes, proportions of stockwork and proportions of underground voids.

Ordinary Kriging was selected as the most appropriate method to determine the grade and

tonnage of the copper and gold mineralisation.


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Coffey Mining has categorised the Chelopech grade estimates as a combination of Measured,

Indicated and Inferred Resources in accordance with the criteria set out in the Canadian

National Instrument 43-101 (NI 43-101). The criteria used to categorise the resources include

the robustness of the input data, the confidence in the geological interpretation, the distance

from data and geostatistical service variables such as estimation variance. The Measured,

Indicated and Inferred Resources reported for the Chelopech deposit is summarised in the

Table 1.7_1. All estimated blocks greater than 4g/t gold equivalent grade are reported. Gold

equivalence is defined as 2 times copper plus gold.

Table 1.7_1

Chelopech Copper/Gold Project

Grade Tonnage Report Grouped by Resource CategoryOrdinary Kriged Estimate (Regressed As - Cu_ok), 20mN x 20mE x 10mRLCut Cu, Au and Ag, Min-12 and Max-24 Composites. 4gt Gold Equiv. Cutoff

Resource Category M Tonnes AuEq Cu (%) Au (g/t) Ag (g/t) S (%) As (%)

Measured 9.98 7.9 1.8 4.4 14 17 0.5

Indicated 14.9 7.1 1.4 4.4 8 14 0.4

Measured and Indicated 24.88 7.5 1.5 4.4 10 15 0.5

Inferred 3.9 6.1 1.2 3.7 15 13 0.4

The Mineral Reserves have not been updated from January 2006. Dundee is currently

undertaking an exhaustive mine planning exercise which includes cutoff grade determination

and optimisation, throughput studies and reserve determination. These studies will allow the

restatement of the Mineral Reserve which will be reported when they are completed. The

mine planning exercise is using the resource estimate, which forms the key component of this

report, as the key data source.

The Mineral Reserve statement as at January 2006 is presented in Table 1.7_2. The resource

estimate on which the Mineral Reserve has been based is reported in November 2004, andwhich formed part of the Definitive Feasibility Study. No depletion for mining has been

completed. The metallurgical and processing assumptions on which the Mineral Reserve is

predicated are provided in Section 16 of this report.

Table 17.2_2

Chelopech Project

Mineral Reserve Summary as of January 2006No Mining Depletion (post December 2005)

Gold Copper Classification ('000 t)

(g/t Au) ('000 oz) (% Cu) ('000 t)

Proven 2,287 4.3 316 1.6 37

Probable 19,233 3.5 2,173 1.4 262

Total 21,520 3.6 2,489 1.4 300

Note an additional 139kt of material of unclassified material was reported within the Mineral

Reserve constraints.


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1.8 Conclusions

Recent geological work and drilling has allowed for improved geological understanding and an

expanded Mineral Resource base. The data collection protocols implemented by Dundee are

considered to be consistent with good industry practice. The quality control data indicates the

data collected is robust with the analytical data both accurate and precise.

The geological framework has been updated based on the available data. This geological

model has been used to estimate a Mineral Resource that has been categorised by Coffey

Mining as a combination of Measured, Indicated and Inferred Resources in accordance with

the criteria set out in the NI 43-101.

The Mineral Reserves have not been updated from January 2006. Dundee is currently

undertaking an exhaustive mine planning exercise which includes cutoff grade determination

and optimisation, throughput studies and reserve determination. These studies will allow the

restatement of the Mineral Reserve which will be reported when they are completed. The

mine planning exercise is using the resource estimate, which forms the key component of this

report, as the key data source.

1.9 Recommendations

The results previously reported for the DFS indicate expansion of the Chelopech copper / gold

operation to 2Mtpa is economically viable and should proceed. Based on the MOU and

successful permitting, the mine plan should be updated and an updated Mineral Reserve

reported. The expansion project study should also be updated to account for changes in

costs.

Additional drilling of the down plunge extensions of the known mineralisation is warranted. In

addition, targets identified in recent geological studies should be drill tested. Theseprogrammes can logically be completed as part of the ongoing operations of the Chelopech

Mine.


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2 INTRODUCTION

2.1 Scope of Work

Coffey Mining Pty Ltd (Coffey Mining) was commissioned by Dundee Precious (Chelopech)

BV (Dundee) to undertake an independent mineral resource estimate on the Chelopech

Copper/Gold Project (the Chelopech Project) in Bulgaria, Eastern Europe. This report is to

comply with disclosure and reporting requirements set forth in the Toronto Stock Exchange

Manual, National Instrument 43-101 Standards of Disclosure for Mineral Project (NI 43-101),

Companion Policy 43-101CP to NI 43-101, and Form 43-101F1 of NI 43-101.

This report has been compiled to summarise the results of exploration, data collection,

database validation and resource estimation of Chelopech Copper/Gold project, using the

exploration data collected by Dundee up till the end of June 2007.

Dundee technical staff have provided data relating to geological data and interpretations,

underground development and stoped areas, the master drilling and assay database and

other relevant technical data.

2.2 Site Visits

RSG Global Pty Ltd (who were purchased by Coffey International Limited (Coffey) and

merged with Coffey Mining) technical staff commenced work on Chelopech in 2002.

Prior to the resource estimation study, technical staff have completed numerous site visits

including visits for technical reviews in 2002, supervising exploration between October 2003

and August 2004 and site visits for the purpose of resource estimation completed in August

2004 and March 2006. The observations and conclusions made on the basis of the technical

review, and details of the methods used and the results obtained in the resource estimation

study are described in this report.

2.3 Principal Sources of Information

Mine technical staff supplied digital and hard copy data for the Chelopech Project. In

summary, the following key digital data relevant to the mineral resource estimation study were

provided:

Drillhole database (acQuire format), containing collar location, downhole survey, assay

and geology data.

Face sample database (acQuire format), containing easting, northing and RL data, and

assay data.

A 3-dimensional model (DXF format) of the silica envelope and sandstone boundary.

A 3-dimensional model (DXF format) of the current development and stoping in the mine.

A 3-dimensional model (DXF format) of the topography.


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A representative selection of the original assay sheets.

Three original downhole survey reports.

Mapping from active levels.

Quality control procedures.

Internal and external quality control data.

The logging sheets for three Homestake Mining Company (Homestake) drillholes

showing core recovery data.

A bulk density dataset consisting of 6,424 determinations.

In addition, the following reference data and support documentation relevant to the mineral

resource estimation study were supplied:

Three representative cross-sections on 1:1000 scale.

Life of Mine Feasibility Report, Chelopech Mine, Bulgaria, which is reported in the

January 2006 Technical Report titled Chelopech Expansion Project, Definitive Feasibility

Study, Technical Report, January 2006 which was prepared by RSG Global (see

Section 3)

Copies of some of the assay check sheets from pre-1994.

The results of the updated geological and structural interpretation (the Jigsaw Study),

including digital data and supporting documentation.

2.4 Participants

The Coffey Mining personnel involved in the technical review and resource estimation study ofthe Chelopech Project are listed below:

Brett Gossage, Senior Principal

Ben Palich, (former employee) Specialist Resource Geologist

Jodi Morgan, Database Manager

Brett Gossage, and Ben Palich are Members of the Australia Institute of Mining and

Metallurgy (AusIMM), and are Qualified Persons as defined in NI 43-101.

In addition to the Coffey Mining personnel, Dr Julian Barnes who is Vice President of Dundee

Precious Metals Inc has coordinated the delivery data relating to other key aspects of the

updated study. Dr Barnes is a Member of the AusIMM and is a Qualified Person as defined

in NI 43-101.


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2.5 Independence

Coffey Mining is part of Coffey International Limited (Coffey), a highly respected Australian-

based international consulting firm specialising in the areas of exploration, geology, mining,

metallurgy, geotechnical engineering, hydrogeology, hydrology, tailings disposal,

environmental science and social and physical infrastructure.

Neither Coffey Mining, nor the authors of this report, have or have had previously any material

interest in Dundee or related entities or interests. Our relationship with Dundee is solely one

of professional association between client and independent consultant. This report is

prepared in return for fees based upon agreed commercial rates and the payment of these

fees is in no way contingent on the results of the report.

2.6 List of Abbreviations

A full listing of abbreviations used in this report is provided in Table 2.7_1.

Table 2.5_1

Typical Abbreviations

Abbreviation Description Abbreviation Description

Ag Silver m2 square metre

Asl Above sea level mE metres East

As Arsenic mN metres North

Au Gold mRL metres Relative Level

BD Bulk Density mg milligram

C degrees Celsius mm millimetre

Cu Copper OK ordinary kriging

CV Coefficient of Variation oz ounce (Troy)

DTM digital terrain model % percentage

g gram QAQC quality assurance quality control

g/t grams per tonne S SulphurJORC Joint Ore Reserves Committee 2D two dimensional

kg kilogram 3D three dimensional

km kilometre t/m3 tonnes per cubic metre

m metreTM

trademark

M millions TVM Tonnes per vertical metre


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3 RELIANCE ON OTHER EXPERTS

Neither Coffey Mining nor the authors of this report are qualified to provide extensive

comment on legal issues associated with the Chelopech Project and included in Sections 1

and 4 of this report. Assessment of these aspects has relied on information provided by

Dundee and its advisors, and has not been independently verified by the authors.

This report documents the resource evaluations study completed in late 2007. Currently

Dundee is undertaking cut off grade optimisation studies, and is updating the mine plan, which

will be based on the Mineral Resource stated in this report.

All reference to the Mineral Reserves and the current mining operations is based on

information compiled in the Project DFS which is reported in the January 2006 Technical

Report titled Chelopech Expansion Project, Definitive Feasibility Study, Technical Report,

January 2006, prepared by RSG Global. The 2006 Technical Report relied extensively on

information compiled and provided by the following:

Dundee Precious (Chelopech) B.V. (Dundee) Project Owner and Manager.

GRD Minproc Ltd Study Manager; Concentrator Upgrade and Metals Production

Facility, Testwork Management.

Coffey Mining / RSG Global (RSG) geology resource classification, mine reserve and

mining engineering.

Combined Resource Engineering (CRE) design and costing for material handling

system.

Northwind Enterprises Pty Ltd (Northwind) Geotechnical consulting for underground

mining design ground support and backfill design.

Turnbery RPA Pty Ltd (Turnbery) - commissioned by Dundee to prepare a backfill project

study (Backfill Project) for the underground mine operations.

AMEC Earth and Environmental UK Ltd (AMEC) Environmental Impact and

Management.

Knight Pisold Pty Limited (Knight Pisold) provided analysis and reporting of

geotechnical conditions, design and estimate of TMF, that includes water balance,

tailings disposal, embankment design, seismicity modelling and planning of infrastructure

earthworks.

Jes E Ltd Consulting and Management Services TMF and site plant geotechnical

investigations.

MYR Consulting Pty Ltd (MYR) provided Risk Review report.


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SGS Lakefield-Oretest Pty Limited (Oretest), AMMTEC Limited (AMMTEC), Dynatec

Corporation (Dynatec) and MinnovEX Technologies Inc. (Minnovex) provided laboratory

services for batch and pilot scale continuous metallurgical.

SGS Lakefield Research for Environmental Stability Testing.

SRK for preliminary operating hazards assessment.

In addition, the current report has used the findings of the 2007 geological modelling

campaign coordinated by and documented by consulting geologists Jigsaw Geoscience Pty

Ltd.


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4 PROPERTY DESCRIPTION AND LOCATION

4.1 Background Information

4.1.1 Bulgaria

Bulgaria is a Slavic Republic in south-eastern Europe, bounded to the north by Romania, tothe west by Serbia and Macedonia, to the south by Greece and Turkey and to the east by the

Black Sea. The population is largely Bulgarian Orthodox Christian (~85%), with a Turkish and

Muslim minority (~13%). The capital city is Sofia and the national population is approximately

8 million.

Bulgaria is a member of the EU since January 1st2007 and is a full member of the Central

European Free Trade Association. The local currency, the BGN, has been pegged to the

Euro (1.95583 BGN/) since 1999.

Bulgaria is experiencing strong economic growth, averaging 6% to 7% per annum since 2004,

however, the economy is experiencing strong inflationary pressures increasing from 4% in thefirst half of 2007 to over 10% in the second half of 2007.

Educational standards within the country are high. Mineral exploration and mining were

important under the communist regime, resulting in a large pool of well qualified technical staff

and operating personnel.

Bulgaria is well serviced by facilities and infrastructure. Large towns have the normal facilities

provided in western European countries. The country is served by an extensive network of

paved roads, except in the most mountainous districts. There is also a comprehensive rail

network.

4.2 Project Location

The Project is situated adjacent to the Chelopech village, in the Sofia District of Bulgaria,

75 km east of the capital Sofia (Figure 4.2_1). It is situated approximately 350 km to the west

by road and rail from the Black Sea ports of Burgas and Varna. Chelopech is located at the

foot of the Balkan Mountains, at an elevation of approximately 700 m above sea level. The

Project area is bounded to the north by the foothills of the Balkan Range, to the east by a

government-owned road maintenance organisation and residential housing and by agricultural

land to the south and west.

The Project is an operating underground gold-copper mine which in recent years has typically

produced 60 000 ounces of gold and 14 000 tonnes of copper per annum contained in a higharsenic concentrate grading between 15% and 17% copper, 20 to 30g/t gold and

approximately 5% arsenic. Due to the high arsenic content all of the concentrate produced is

currently sold and exported to smelters outside Bulgaria.


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Figure 4.2_1Chelopech Project Location Plan

4.2.1 Chelopech Project

The Chelopech Project implementation is a planned production and processing upgrade to

2M tonnes per year (tpa) of the existing underground gold copper mine located near the town

of Chelopech in Bulgaria. The mine upgrade will be developed, constructed, and operated by

Dundee Precious (Chelopech) BV, a wholly owned subsidiary of Dundee Precious Metals

(Inc). The processing facility is planned to be upgraded to produce copper and gold on site

using flotation, pressure oxidation, solvent extract-electrowinning (SX-EW) for copper and

carbon-in-leach (CIL) extraction of gold. A Memorandum of Understanding (MOU) has been

reached with the Government of Bulgaria wherein a Public-Private Partnership (PPP) will be

developed to own and run the metals processing facility wherein Bulgarias Silver Fund will

acquire a 25% equity in the facility.

4.3 Tenement Description

The Mining Licence covers an area of 266 hectares. Under Bulgarian regulations, the Mining

Licence area is applied for on the basis of geographical coordinates. The physical boundaries

of the Mining Licence are not surveyed and marked on the ground. The Mining Licencecovers the area of the Chelopech Mining operation and the immediate surrounds. The legal

title of the project is outside the scope of the current report and the brief that was supplied to

Coffey Mining. As such, Coffey Mining has not sought to determine the status of legal title to

the Chelopech Project.


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4.4 Permits

Project Implementation can be divided into four main phases, from the Pre-construction period

through to entering full operations. The DFS completed in 2007 identified the endorsements,

approvals, permits and/or licenses required for each of the four phases of the Project, which

are highlighted as follows.

Pre-Construction

Included in this phase are the provisional permits required to proceed on the Project, including

Environmental Impact Assessment (EIA), General Development Plant (OUP), Detailed

Development Plan (PUP), Water Management Endorsement, Permits for storage of

hazardous substances are issued after completion of the engineering phase of the Project

and are the basis for issuance of a Construction Permit.

The Complex Permit for project environmental impact is issued from the Ministry of the

environment. The permit ensures the enforcement of the environmental protection law and

the reasonable compatibility of the interests of the Investor, the society and the Stateadministration. After granting the Complex Permit the Investor and the State Administration

see to the compliance of the execution of the investment intention and its operation with the

conditions of the permit.

Finally, the Construction Permit is issued by the chief municipal architect on the basis of the

Consultants report. The Consultant reports on the compliance of the presented by the

Investor documentation for: land ownership, designation of the land, availability of permits

issued by the control authorities and utility companies, completeness of the Project and

qualifications and licensing of the designers.

Construction

The second phase commences after the Construction Permit has been issued and continues

until all construction and equipment installation is finished and mechanical completion is

achieved. During this period the activities are focused on obtaining of permits for importation

of equipment, reagents and consumables and permits for export of the future finished

production, as well as preparation of agreements for electricity, water, fuel, etc. consumption

and supply. The main steps in phase two are as follows:

Independent construction control to follow the procedures for:

Lawful start of construction.

Implementation of the directive instructions to the Project.

Documenting of construction.

Use of appropriate construction materials.

Safe execution of construction.


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The Directorate of National Construction Control (DNSK and RDNSK) this state agency

under the Ministry of Regional Development and Public Works is authorized to exercise

compliance of construction with the engineering design and with the relevant laws,

regulations, standards and norms in the Republic of Bulgaria. The agency has the authority to

shut down illegal construction sites and also sites for non-compliance.

Pre-Operations

The third phase commences after mechanical completion, and concludes with commissioning

of equipment and plant performance trials to demonstrate production capacity and

achievement of designed environment parameters before the competent Bulgarian authorities.

The Bulgarian legislation does not determine a deadline for finishing of the commissioning,

achievement of designed plant capacity and implementation of all recommendations for

protection of the environment, from the Environmental Impact Assessment Report. Four

months are considered as a reasonable period for implementation of the mentioned above

activities. The main steps in phase three with the appropriate authorities are as follows:

Fire Protection Statement - the local fire protection authorities; Sanitary Statement - theregional branch of Hygiene-Epidemiological Inspectorate, under the Ministry of Health; Civil

Protection Approvals - after completion of construction; Safety Statement - the local inspection

agency, under the Ministry of Labour; Environmental Statement - the regional environmental

protection authority (RIOSV), under the Ministry of Environment and Waters; Water

Management Statement; Electrical Management Statement - the local power supply company.

Operations

The fourth phase includes procedures for granting an Operational Permit and archiving of the

completed permits during the previous phases documentation. One month is considered as a

reasonable period for implementation of these activities. Only when the Operational Permit

has been issued can the plant be considered as legitimate and commissioned.

4.4.1 Permitting Schedule

The following permits are required to effect construction of the upgraded facility.

First Class Investor Status granted March 2005

EIA submitted November 2005

Environmental Approval Pending

Complex Permit Pending

Design Permit Pending

Construction Permit Pending

Practical completion Pending

Operating Permit Pending

Process Commissioning Complete Pending


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It should be pointed out that receipt of the first class investor certificate entitles the investor to

a reduction in some of the administrative periods during the approval process.

4.5 Royalties

Following the establishment of the MOU between Dundee and the Bulgarian Government,

Dundee will pay a royalty to the Bulgarian government, which is on a sliding scale from 2% to

8%, based on a profitability ratio between 10% and 60%.

4.6 Environmental Liabilities

An Environmental Impact Assessment (EIA) has been submitted to the Bulgarian authorities,

and is currently in the approval process. Once granted, this will form the basis of permits

required allowing the development of the Project to proceed. The EIA also sets out the

framework for the development of an environmental management plan for the Project.

Coffey Mining is not aware, nor has it been made aware, of any other significant

environmental liability associated with the Project.


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5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE

AND PHYSIOGRAPHY

5.1 Project Access

Access to the Chelopech mine is excellent, via sealed major roads from the national capital ofSofia, approximately 80km to the west. The principal rail and road links between Sofia and

the countrys largest port, Burgas, located on the Black Sea pass through the village of

Chelopech and the Chelopech minesite.

As such, the Chelopech Project can be easily reached by road transport throughout the year.

5.2 Physiography and Climate

Chelopech lies at the base of a range of hills on gently undulating terrain. The area

immediately surrounding the Chelopech Project comprises grassland. The Chelopech plant

site is located at approximately 730m above sea level (asl) whilst the ranges of hills which

form a backdrop to the plant site rise to over 1000m asl.

The project area has the climate of Subtropic Europe, featuring markedly higher winter and

substantially lower summer precipitation.

Winters are mild, but during intensive cold spells temperatures may fall to -13. Summers

are hot, reaching 36C in warmer spells and exceeding 40C in some locations.

The average annual precipitation is 703.5mm. The bulk of this falls in autumn and winter,

occasionally as snow in the coldest months. The highest rainfall occurs in December

(96.9mm average) and the lowest in August (24.1mm).

Average annual evaporation is 1050.8mm, similar overall to annual rainfall in magnitude, but

opposite in seasonal sense.

Estimated 1:100 year rainfall events are 117.3mm for 24 hours duration, and 184.1mm for

72 hours. Probable Maximum Precipitation (PMP) estimates are up to 383.4mm for 24 hours

and 605.4mm for 72 hours.

5.3 Local Resources

Small villages are dispersed widely throughout the Sofia District. Much of population outside

the City of Sofia is involved in subsistence farming, particularly the growing of tobacco on the

poorly developed soils characteristic of the region. The other main land use within the Districtis state controlled forestry.

There has been a strong history of mining in the local region around the mine with a number

of large mines producing concentrate to feed a significant copper smelter at Pirdop, which is

just 10km from Chelopech.


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The population of Bulgaria is largely Eastern Orthodox Christian (85%) with a Turkish Muslim

minority predominantly residing in the southeast of the country.

5.4 Infrastructure

Chelopech is well resourced, due to its proximity to major roads, power lines, communication

facilities, water sources and the town of Pirdop. The Chelopech Project obtains power from

the Bulgarian power grid, and obtains water from wholly owned water storage facilities.

Power is supplied from the Bulgarian national transmission and distribution system at 110 kV

via substations at Stolnik and Zlatitza to the project substation (110/6 kV) with two

transformers (16 MVA each) located in the southeast area of the mine. The majority of the

distribution system consists of above ground transmission lines.

The company takes fresh water from three water sources, namely the Dushantzi dam, the

Kachulka dam and the Zekov Vir derivation scheme. The Kachulka dam supplies the

company direct with water, as all the water catchments and transport facilities are owned by

the company. The dam itself is owned by the Chelopech municipality. The remaining water

sources are owned by external companies.

The village of Chelopech, located approximately 1km from the Chelopech Mine, has a

population of approximately 1,700, whilst the nearest major settlement of Zlatitza, some 4km

to the west of Chelopech, has a population of approximately 5,600.


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6 HISTORY

6.1 Exploration History

The mineral potential of the Chelopech area was first recognised in the mid 19th Century and

the outcrop area worked prior to the start of the Second World War. The Chelopech deposit

was re-discovered in 1953, following drilling by Sofia Geological Exploration (SGE).

Underground development began in late 1953 to gain bulk samples and to further evaluate

the deposits.

6.2 Previous Operations

On discovery of the copper-gold resources, exploration shafts were excavated and holes

drilled (approximately 1956), which represented the start of mining operations at Chelopech.

The Chelopech Mine, then part of several state-owned enterprises, was fully operational

between 1970 and 1990 producing bulk copper-gold and pyrite concentrates. In 1990 the

Bulgarian Government decreed that due to the high arsenic content, the concentrates could

no longer be treated at the nearby MDK-Pirdop copper smelter, and the mine was put intocare and maintenance. The production of ore treated at the Project between 1954 and 1992 is

estimated to be 8.2 Mt, at an average grade of 1.0% Cu and 2.7g/t Au.

A complete rebuild of the processing plant was carried out in the mid 1970s. It is the upgrade

and expansion of these facilities which is the subject of this study.

In 1994, operations were restarted by Navan Bulgarian Mining BV (NBM), a Dutch registered

subsidiary of Navan Mining Plc., with the re-treatment of approximately 100 kt of stockpiled

low-grade concentrate. Following a number of ownership changes over the next 5 years, in

1999, the Council of Ministers and Chelopech EAD signed a concession agreement for the

extraction of gold-copper ores from the Project, and the company name was again changed toNavan Chelopech AD (Navan).

Navan operated the Project until late 2002, when Navan went into receivership. The

operations continued under the direct control of an administrator appointed by Deutsche Bank

AG of London. Mining operations continued whilst Dundee negotiated the acquisition of the

Bulgarian assets from Navan, including the Project. The acquisition was completed in

September 2003.

During the later period of production, the ore treated at Project between 1994 to the end of

2002 is estimated to be in the order of 4.8 Mt at an average grade of 1.4% Cu and 3.9 g/t Au.

Production for the 18 month period since the 2006 RSG Global resource estimate (January

2006 to June 2007 inclusive) was as follows:

January to December 2006: 952,753 tonnes at 1.41% Cu and 3.99g/t Au.

January to June 2007: 451,369 tonnes at 1.39% Cu and 3.93 g/t Au.


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6.3 Resource Estimates

Navan Chelopech AD (Navan) completed various mineral resource estimations for the

Chelopech Project since 1994. Prior to 1999, these estimates were completed offsite using a

polygonal cross-section estimate method.

Since 1999, the resource model has been generated onsite by Chelopech geologists using

ordinary kriging with the GEMCOM software. Prior to 2000 only copper and gold were

estimated, however from 2000 onwards, silver, sulphur and arsenic were also estimated.

RSG Global completed a resource estimate in March 2003, November 2004 and December

2006 as part of the feasibility study using ordinary kriging with the Vulcan Software.

The results of the RSG Global estimates are presented in Table 6.3_1 and have been

reported using a 4g/t gold equivalent cutoff (gold equivalent formula Au+2xCu). The reported

resources are considered to have been reported in a manner consistent with the CIM

guidelines.

Table 6.3_1

Chelopech Copper/Gold Project

Resource Estimates Completed by RSG GlobalReported above 4g/t AuEq (Au+2xCu), Vulcan, Ordinary Kriging

March 2003

Tonnes (Mt) Cu Au Ag S As

Measured 3.83 1.6 3.8 15 16 0.49

Indicated 14.04 1.5 4.0 10 14 0.45

Measured + Indicated 17.87 1.5 4.0 11 15 0.46

Inferred 27.4 1.4 3.7 9 12 0.38

November 2004


Measured 3.13 1.8 4.7 21 18.6 0.5

Indicated 21.8 1.4 3.9 9 13.9 0.4

Measured + Indicated 24.93 1.5 4.0 10 14.5 0.4

Inferred 6.5 1.2 3.2 12 11.5 0.4

December 2006


Measured 7.22 1.8 4.5 16 18 0.5

Indicated 16.86 1.4 4.0 8 14 0.4

Measured + Indicated 24.08 1.5 4.2 10 15 0.5

Inferred 6.2 1.3 3.9 14 14 0.4


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7 GEOLOGICAL SETTING

7.1 Regional Setting

Bulgaria is located on the southeast part of the Balkan Peninsula, which lies within the Alpine

geosynclinal belt. In the southern Balkans two branches of this belt can be distinguished, the

Carpathian-Balkan branch to the north and the Dinaric-Hellenic branch to the south.

Between these tectonic belts the country can be divided into four primary tectono-stratigraphic

zones:

The Danube basin in the northern part of the country comprises non-folded Palaeozoic to

Mesozoic sediments of the Moisian platform overlying a complex basement of Balkalian

consolidation.

Further south, in the Balkanides, tectonism and magmatism increase. Represented

mainly by pre-Mesozoic basement and Cretaceous age magmatism and volcanism.

The west part of Rhodope structural zone comprises crystalline overlain by Cretaceous

age island-arc volcanic sedimentary sequences.

The east part of Rhodope structural zone comprises crystalline basic rocks overlain by

Mesozoic to recent marine to terrestrial volcano-sedimentary cover and crossed by

Tertiary magmatism.

The Late Cretaceous magmatic evolution in Bulgaria resulted in the formation of the

Srednogorie volcano intrusive zone. The Chelopech deposit is located within the

Panagyurishte metallogenic district in the central part of the Srednogorie zone. The

Panagyurshte mineral district is defined by a NNW alignment of porphyry-copper (Elatsite,

Assarel and Medet) and epithermal Cu-Au (Chelopech) deposits, which is oblique to the east-

west orientation of the Srednogorie belt in Bulgaria (Chambefort, 2005). Alluvial (Topolnitza

and Luda Yana) and vein-hosted (Svishti Plas) gold mineralisation is also known in the area

and has been previously exploited on a small scale.

Figure 7.1_1 summarises the regional geology of the Panagyurishte metallogenic district.

The geology of the Panagyurishte mining district comprises a basement of Pre-Cambrian

granitoid gneisses intruded by Palaeozoic granites and overlain by Upper Cretaceous

magmatic and sedimentary sequences. In some parts of the district, these rocks are overlain

by late Cretaceous flysch and by Palaeogene and Neogene molasse.

The basement rocks form a series of uplifted horst-anticlinal structures between which a

series of three north to east trending sub-parallel grabens contain the Cretaceous sequences.

To the north and towards Chelopech, the Srednogorie massif forms the basement.


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Figure 7.1_1Regional Geology of the Panagyurishte Metallogenic District

Mineralisation in the Panagyurishte district is intimately related to Cretaceous magmatic

activity. In general terms, the cupriferous massive pyrite deposits are associated with Upper

Cretaceous (Sennonian) volcanics of andesitic and dacitic affinity whilst the porphyry deposits

are generally associated with plugs and stocks of monzodioritic and quartz-syenodioritic

intrusives.


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The epithermal deposits comprise lens or stock like bodies enclosed within the volcanics and

are generally elongated along the principal structural grain. The porphyry copper deposits are

located either within volcano-sedimentary sequences in the grabens or in the horst blocks and

are all proximally related to areas with intense development of sub-volcanic intrusive bodies

and dykes.

7.2 Project Geology

The Chelopech deposit occurs below a sedimentary cover, which has preserved the

underground mineralisation from erosion. The Chelopech regions consists of a metamorphic

basement, and Late Cretaceous volcanic and sedimentary successions. The metamorphic

basement consists of amphibolite, gneiss and Pre-Cambrian sedimentary complex, while the

Late Cretaceous units represent a transgressive overlap of the basement commencing with

conglomerate and coarse sandstone coal bearing formation. Subvolcanic bodies intrude this

formation and are believed to be related to the volcano-sedimentary rocks of the Chelopech

formation that host the mineralisation. The Chelopech formation has been deformed, eroded

and covered by limestone-marls, flysch sedimentary sequences and a conglomerate(Chambefort, 2005).

The basement in the vicinity of Chelopech is comprised of Precambrian granite gneisses,

crystalline two-mica schists, quartzites and amphibolites. This basement is unconformably

overlain by Permian terrigenous volcanics and in turn by a terrigenous and transgressive

marginal marine sequence of Triassic, Jurassic and Cretaceous ages. The Cretaceous

Chelopech Formation reaches thickness up to 2,000 metres (m) thick and hosts the

mineralisation. The stratigraphy of the mine area is dominated by Middle and Upper

Cretaceous silici-clastics, volcanics and volcaniclastics, and flysch-type calcareous turbidites

contained within an east to west trending syncline centred to the west of Chelopech village.

Figure 7.2_1 shows a schematic litho-stratigraphic cross-section through the Chelopech

region.

The Lower Chelopech Formation (pre-mineralisation) comprises a basal sequence of siltstones

and calcareous argillites with subordinate terrigenous sandstones and angular breccio-

conglomerates. Upwards these sediments become intercalated and eventually superseded by

andesite agglomerates, andesites and andesitic lapilli and psammitic tuffs. The Upper

Chelopech Formation (post-mineralisation) of Coniacian-Santonian age (Lower Sennonian)

comprises a complex of andesitic and dacitic lavas and tuffs with siliciclastic, volcaniclastic and

argillaceous sediments intruded by sub-volcanic bodies of porphyritic andesites.

The Upper Chelopech Formation passes from mixed terrigenous-volcanogenous gritty

sandstones with volcanogenic exhalative iron-manganese oxide horizons up and laterally into

volcanogenic talus breccias and agglomeratic tuffs of andesitic affinity.


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Figure 7.2_1Schematic Litho-Stratigraphic Cross-Section through the Chelopech Region

The Chelopech deposit is located within the Chelopech volcanic centre, on the northern side

of a northeasterly trending jog in the regional, east-west trending, Balkan Fault. The northern

and northeastern part of the volcano has been removed by erosion, whilst the southern part

has been thrust down by part of the Balkan Fault complex.

The uppermost parts of the Upper Cretaceous comprises flysch-type thick bedded turbidites

interbedded with polymictic coarse grits and sandstones with thin marls, sandy limestone and

siltstones.

Within the mine environment, ore is associated with the Lower Chelopech Formation,

comprising of propylitically altered andesitic and dacitic lavas, tuffs and agglomerates. The

mineralisation occurs within sulphide-rich zones of replacement silicification surrounded by

haloes of silica-sericite alteration. The ore bodies, which formed as both complex branched

bodies and discrete pipes, are grouped into two mining areas. The Central zone consists of

5 mineralised bodies (16, 17, 18, 19E, 19W and 8) whilst the Western zone comprises a further4 mineralised bodies (103, 149, 150 and 151). Figure 7.2_2 shows each mining area and the

spatial relationship between the silicification and the mineralisation from the 405 level.

Figure 7.2_3 summarises the geology of the area surrounding the Chelopech deposit.


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Figure 7.2_2Mining Area and the Spatial Relationship between the Silicification and the Mineralisation from the

405 level

Figure 7.2_3Geology of the Area Surrounding the Chelopech Deposit


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7.3 Structure

The Chelopech magmatic rocks and associated mineralisation were probably developed in a

sinistral transtensional strike-slip system at the intersection of ~N55 and ~N110 oriented

faults. The latest generation of faults is parallel to the orientation of the Srednogorie belt,

which is thought to be a subduction-related magmatic belt (Chambefort, 2005).

After the Late Cretaceous magmatism and the deposition of the sedimentary cover, the

Chelopech region was marked by the development of the WNW oriented fold complex in the

sedimentary rocks, associated with thrust movement parallel to the Srednogorie elongation

(Chambefort, 2005).

A change in the stress axes resulted in an overprint of this magmatic pull-apart system by a

dextral transtensional strike slip duplex system, parallel to the E-W Srednogorie orientation.

This compressive stage initiated the development of folds in the sedimentary cover. The

thrust movement is accommodated by the development of mostly dextral normal strike-slip

faults, which are parallel to the NNW elongation of the Panagyurishte mineral district. Thisdextral transpressive duplex evolved into a transtensional system, which characterises the

present day structural system of the Chelopech area (Chambefort, 2005).

This evolution of strike-slip systems in the Chelopech deposit has been extrapolated to the

entire Panagyurishte mineral district. Strike-slip systems were formed between N110 and

N155-trending faults, parallel to the Srednogorie belt alignment, and parallel to the general

Panagyurishte NNW direction respectively. This migration of magmatism and structural

systems has been ascribed to subduction-slab roll-back (Chambefort, 2005).

During 2007 a major synthesis of the Chelopech environs to a depth of great than 2

kilometres was completed by a team consisting of Chelopech and other DPM technical staff

and the Jigsaw Geoscience consulting group (Jigsaw, 2007). Key aspects of the Jigsaw

Study included the following:

Review of literature relevant to the Chelopech area.

Assessment of architecture and kinematics of syn-ore environment at Chelopech.

Generation of a 3D Geological Model.

Assessment of the depth potential of the Chelopech ore system.

Validation of the architecture and kinematics of pre-ore, syn-ore and post-ore architecture

at Chelopech.

Assessment of base and precious metal zonation.

Preliminary assessment of alteration silicate mineral geometry and zonation.

Preliminary assessment of SiO2 geometry and paragenesis.

Preliminary assessment of a broad ore/silicate mineralogy paragenesis.


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The Jigsaw study concluded that the architecture and kinematics of the Chelopech

hydrothermal system is characterised by multiple fault and fluid flow events. Mineralising

fluids have entered the ore system as a series of repeated pulses, with fluid physical

properties evolving throughout. This pulsing nature of the fault-fluid system has created a

complicated high-sulphidation epithermal ore system creating a series of ore bodies, each

with slightly different geological character. Mineralogical data suggests that the Chelopech

deposit as known today might represent the top of a much larger system. This is evident

based on a silicate alteration mineralogy that comprises approximately equal amounts of

dickite and kaolinite, abundant illite (relative to sericite), and very little alunite and pyrophyllite

(Jigsaw, 2007).

In addition, the Jigsaw study indicated that the above features, coupled with a broad metal

zonation from Pb-Zn rich in the ENE to Cu-Au rich in the WSW, suggest that deeper parts of

the hydrothermal system would most likely be broadly located down and to the southwest.

Late- and post-ore faulting has served to modify the original shape and distribution of

epithermal mineralisation at Chelopech, most likely displacing it in a gross normal and sinistral

sense. A number of possible target areas have thus been defined in and around the

Chelopech deposit (Jigsaw, 2007).


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8 DEPOSIT TYPES

Bulgaria can also be sub-divided into a number of structural and metallogenic zones:

The Rhodope zone, east, west and Serbo-Macedonian districts.

The Srednogorie zone, central, Sacar-Strandja, east Thracian and Black Sea rift districts.

The Krashtide zone.

The Moisian zone.

The Balkan zone.

The structural-metallogenic zones are separated from each other by major structural

discontinuities or deep faults. Thus the Moesian platform and Balkan zones are separated

from the Srednogorie zone by the Balkan and Yambol faults and their associated splays. The

Rhodope zone is separated from the Srednogorie zone by the Maritsa, Struma and Yantra

faults.

Within these zones specific types and ages of mineralisation is found.

The Rhodope zone is characterised by dominantly vein and replacement type lead-zinc

and fluorite deposits, low sulphidation epithermal gold deposits, Alpine type chromite

deposits and granite skarn type scheelite deposits.

The Srednogorie zone is characterised by porphyry copper, skarn copper and

volcanogenic massive pyrite deposits.

The Krashtide zone is characterised by granite associated vein gold-arsenopyrite

deposits.

The Moisian zone is characterised by sedimentary salt, gypsum, kaolin and manganese

deposits.

The Balkan zone is characterised by Bleiberg type sediment-hosted polymetallic deposits

and vein type gold deposits.

Both Porphyry Copper Deposits (eg Asarel, Medet and Elastite) and epithermal deposits

(eg Elshitsa, Chelopech and Radka) occur in the Panagyurishte district.

The epithermal class of deposits (including Chelopech) were originally classed as massive

sulphide copper pyrite deposits. Recent studies indicate that an epigenetic origin for the

mineralisation formed by the replacement of volcanic rocks is more suitable (Chambefort,2005).


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9 MINERALIZATION

9.1 Mineralisation and Alteration

The Chelopech deposit is characterised by alteration typical of epithermal high-sulphidation

deposits. Recent studies have recognised three principle alteration zones distributed spatially

from the central part of the hydrothermal system to the extremities. The innermost part

consists of advanced argillic zone characterised by the presence of vuggy silica, massive

silica and a chalcedony zone. This is surrounded by a quartz sericite zone followed by an

external propylitic zone of alteration (Chambefort, 2005).

Three successive mineralisation stages have been recognised at Chelopech, including an

early Fe-S stage consisting mainly of disseminated and massive pyrite, a second Cu-As-S

stage which is the economic Cu and Au stage, and a late Pb-Zn stage.

The mineralisation displays different geometries, including veins, mineralised breccias,

massive sulphide and disseminated sulphide. The mineralisation occurs in a range of

different morphologies, including lens-like, pipe-like and columnar bodies that typically dip

steeply towards the south. These different types of geometries occur as a result of the

different host rocks, the origin and nature of the mineralisation fluid and the presence or

absence of tectonic processes. Subvertical vein mineralisation is volumetrically the most

important mineralisation style at Chelopech (Chambefort, 2005).

The current mine is separated into central and western mining regions. The central zone is

characterised by massive andesite affected by advanced argillic alteration with occurrences of

vu

Documents

techReportChelop.pdf