INTRODUCTION

Late in 2002, the parent company operating the Chelopech mine passed into receivership, and day to day operations were left under the control of the largest shareholder /Deutsche Bank/ while a new owner was located. The Dundee Group of Companies from Canada carried out a due diligence programme in the first half of 2003, and elected to continue to support current operations until an agreement with the appropriate government authorities was reached. Dundee officially took over operating control on 30th September, 2003, and new Concession Agreement negotiations were completed with the Ministry of Economy in early 2004.

In the course of Dundee completing their investigations, it was determined that a significant increase in production would be required for the operation to achieve acceptable profitability, and a phased plan was developed to achieve this over a period of four years. The annual throughput necessary was determined to be an increase from the current 520,000 tonnes in 2003, to a minimum of 1,500,000 tonnes by 2006, followed by the completion of an additional downstream processing facility to produce gold and copper metal at the Chelopech mine site.

The Chelopech operations are now in the process of implementing a plan of investment, introduction of new technologies and training, to increase mine production to the initial target of 1.5 million tonnes per year, and conducting a definitive feasibility study to confirm the viability of downstream metal processing at site.