Canada’s Dundee Precious Metals, an investment arm of the Dundee Bancorp Group, started its association with Chelopech and Krumovgrad gold mines through a takeover agreement with Navan Mining of Ireland in February 2003. The agreement, under which Dundee paid $37 million for the assets, was completed in January 2005.
In February 2005, Bulgaria’s Investment Agency awarded Dundee’s Bulgarian arm, Chelopech Mining, a Class A certificate for its plans to spend 124.4 million leva on the expansion and modernisation of Chelopech gold mine. The funds, to be spent between 2005 and 2007, were intended to boost ore output to three million tons a year over a 15 year period and for the introduction of new copper and gold processing technologies. In 2003, ore output was 550 000 tons and in 2004 it was 620 000 tons.
Dundee’s Bulgarian operations made a profit in the first six months of 2005.

However, that period also saw Dundee’s first public spat with the Government. In a public letter, sent to Bulgarian Prime Minister Sergei Stanishev, Dundee, alongside other members of the Bulgarian International Business Association, complained that the Government was taking a long time to approve its investment projects. This was despite the fact that the all the documentation, including the environmental impact assessment (EIA), was in compliance with the local and European legislation.

The argument between Dundee and the state continued until March 10 2008. Throughout this period, Environment and Waters Minister Djevdet Chakurov was adamant in refusing to endorse the project’s EIA, despite continuous and multilateral pressure. His stance was contrary to that of the Supreme Environmental Expert Council at the environment ministry and the Economy and Energy Minister Roumen Ovcharov. It also went against the 2006 ruling of the Supreme Administrative Court, which found Chakurov guilty of inaction in office and urged him to come to a decision.

Faced with the reticence of the environment minister, on June 7 2007 Dundee filed a complaint with the European Commission.

On March 10 2008, the Government and Dundee agreed to reinstate the state as shareholder of Chelopech Mining with a 25 per cent stake and raise the concession fee. The Canadian company pledged, in return, to withdraw its complaint with the EC.