Dundee Precious Metals started as a closed investment fund in 1983 focusing on gold and precious metals stocks in Canada. 20 years later, the business converted into an operating mining company after completing the acquisition of some assets in Bulgaria. Since then, Dundee has been on a solid growth path in terms of the number of assets under the company umbrella, with two operating assets – the Chelopech mine in Bulgaria and the Tsumeb smelter in Namibia and is close to adding a third asset in Bulgaria. The company’s portfolio is also reinforced by a number of exploration stage projects in Bulgaria, Serbia and Canada.
President and CEO Rick Howes joined Dundee in 2009 when he was appointed head of operations at the Chelopech mine, before quickly progressing to chief operating officer of the company in 2011 and CEO in 2015.
Like the entire senior management team at Dundee, Howes holds a deep understanding in the technical, operational and management aspects of running a mining company, stemming from 34 years of experience across several major Canadian mining firms.
“We mostly have been focused on organic growth. We’ve been successful with exploration and that is where most of our growth has come from,” says Howes when explaining the group’s strategy.
“We are mainly focused on gold as a mining company, but we do have copper as a by-product from our Chelopech mine. Our primary focus is on base metals like gold and silver in Europe and Africa, although we are looking globally as well.
“As long as the jurisdictions feel stable and have a good regulatory framework, we will consider capitalising on them because we need to ensure our investments are not being put into jeopardy.”
The Chelopech mine, located in Central-Western Bulgaria approximately 70km East of capital city Sofia, was purchased by Dundee in 2003 through a bankruptcy proceeding.
The large-scale copper-gold deposit was owned by an Irish company for around 10 years after it was privatised in 1993 following the end of Soviet rule in Bulgaria.
According to Howes, for more than 60 years Chelopech was a poor performing asset having first produced ore in 1954, but Dundee has instigated a dramatic turnaround in fortunes at the mine during the last decade and a half.
“We’ve transformed Chelopech into a modern efficient operation, we have quadrupled production, cut costs in half and it is now a flagship asset that generates profitably for the company. It has been a success story all the way round.
“Today it is seen as one of the examples of an underground mine which is modern and uses latest technologies to operate the mine and for this reason it is well visited by most of the major global mining companies.”
However, the growing success at Chelopech soon spawned a new problem for Dundee. As complex copper concentrate output rapidly increased from the mine, it became more difficult to find a market for the product, which contained high levels of arsenic – a toxic substance that requires capturing during the ore processing stage.
Therefore, in 2010 the company acquired the Tsumeb copper smelter in Namibia. “We invested in the smelter to make it modern and sustainable and to make it a global complex copper concentrate smelter, one that could not just treat our concentrates but complex concentrates from around the world,” says Howes.
In the time since then, Dundee has doubled throughput out of the smelter, cleaned up its environmental footprint and continues to treat global third party concentrates along with the company’s own concentrate from Chelopech.
“We have eliminated the majority of gas emissions coming out of the smelter stack. We now produce an acid that captures the SO2 emissions and then sell that acid into the market to uranium producers and other producers that need acid for their process.”
Development and exploration assets
Along with the Chelopech mine, Dundee also took ownership of the Krumovgrad exploration asset in Bulgaria as part of the acquisition, and the company has been advancing the open pit gold-silver asset ever since.
The earthworks contractor was mobilised to the site at the end of 2016, construction has been progressing for the last 18 months and is currently 70% complete, ahead of a commissioning target in September and first concentrate pour by Q4. “Everything is going well at Krumovgrad, construction is on track and under-budget,” says an assured Howes.
With a total gold production of 685,549 ounces (oz) at 4.04 grams per tonne (g/t) and silver production of 309,915 oz at 2.22 g/t over an eight year mine life, Krumovgrad is set to significantly boost Dundee’s total ore output, along with the company coffers based on a net present value (at a discount rate of 5%, after-tax) of $187.6 million.
With Krumovgrad inching closer towards fully operational status, Dundee’s senior management team is slowly shifting greater attention towards its other exploration stage assets in Bulgaria, Serbia and Canada.
“In Bulgaria, we’ve been successful at replacing reserves we have mined at Chelopech through our in-mine exploration programmes that have been going on for the last seven or eight years now.
“Then, two years ago we started a regional exploration programme around Chelopech and also one around Krumovgrad to extend the lives of those two assets. Those were very active programmes, exploring within about a 5 km radius from Chelopech and 20 km from Krumovgrad.”
Both surrounding areas are being heavily explored and a number of targets have been identified which the company is currently drill testing and is hoping to receive positive results from in the near future.
A core pillar of Dundee’s company strategy is sustainable mine development. Howes reveals that the firm’s notion of successfully operating in a host country is dependent on how satisfied the local communities and government are with Dundee’s ongoing roles as a mine operator.
Dundee works closely with local communities and governments to ensure that its practises and operations have minimal negative impacts on the environment, and to make sure that the company’s presence makes a positive contribution to the wellbeing of the regions it operates in.
To achieve this end, the company has initiated a number of sustainability programmes within the regions which host its assets. An example of a successful programme comes from Chelopech, where Dundee has been reinvesting a percentage of its profits into the local communities since 2003.
“We operate our own high school which is one of the top schools in the country. The students are also the top students in the country and many of them go off to international institutions like Harvard and others,” reveals Howes.
Dundee has also invested in community infrastructure, such as water projects and hospital builds, close to Chelopech following consultations with local citizens. The same philosophy is evident in Namibia, where Dundee has created the Tsumeb Trust – a community-led group which allocated money to small and medium sized business enterprises.
“We also built housing for employees in Tsumeb as part of a programme where employees can get access to low cost housing through loans that are provided to them,” says Howes.
2017 was a record year for Dundee in terms of gold production as the firm delivered close to 200,000 ounces and 35.8 million pounds of copper, while smelter throughput steadily improved in line with company’s guidance for the year.
This year, the company is guiding between 165,000 and 185,000 oz of gold, and after publishing a strong gold output of 57,331 ounces during Q1, the company has little reason to believe it won’t hit or exceed this target.
Similarly, Dundee is expecting to reach its annual smelter throughput guidance of between 220,000 and 250,000 tonnes of complex copper concentrates, especially after H2 results revealed a total year to date throughput of 100,500 tonnes.
With Krumovgrad and a series of other exploration stage assets still to come, the medium-term future of Dundee Precious Metals looks safe and secure.