On August 17, Canada's Dundee Precious Metals Inc offered to increase the concession fee that it pays to Bulgaria for the Chelopech copper and gold mine.

The proposal came in a bid by the company to secure the mine's expansion.

Dundee's plans to expand its mining operations at Chelopech have been blocked by delays in issuing environmental clearance for the project and by protests by Bulgarian environmental organisations.

In line with the negotiations with the government over the past few months, the company is proposing to raise the annual concession fee it pays by 0.65 percentage points to 2.15 per cent, Dundee said in an open letter to Economy and Energy Minister Roumen Ovcharov, published by Bulgarian-language business daily Dnevnik.

The increase will go to the municipalities of Chelopech and Chavdar, near the mine, if Dundee succeeds in implementing its project to expand its operations at Chelopech mine, the company said.

Dundee Precious Metals Inc said in July that it was preparing to take Bulgaria to international court over the delay in  environmental approval for its two mining projects in Bulgaria.

The Economy and Energy Ministry has approved both Dundee's projects, but Environment Minister Djevdet Chakurov has so far refused to grant final approval, referring to what he described as a need to consider "all aspects of the case".

Chakurov said in July that the 30-year concession deal with Dundee needed revision because it did not suit Bulgarian government interests and the state should benefit more from the concession.

Dundee acquired the concession to mine gold in the region of Chelopech near the capital, Sofia, through its Bulgarian subsidiary, Chelopech Mining EAD, three years ago.

Dundee has a $175 million (136.2 million euro) expansion and redevelopment project at the Chelopech mine and a $75 million gold and silver project near the town of Kroumovgrad in Southern Bulgaria. It says the legal limits for issuing environmental approval for both projects have been breached.

According to Chakurov, Dundee has to pay the government an annual concession fee of $600 000 and to invest 14 million euro in the mine by 2010.

"The sum of $600 000 is the minimum annual concession fee owed to the state under the concession contract for Chelopech, regardless of trends in production and international metal prices," Laurence Marsland, executive director of Chelopech Mining, said in a written statement, quoted by the SEE News news service.

The actual concession fee is calculated on the basis of current metal prices and production levels, which means it is significantly higher, he added.

Dundee projected that Chelopech and Chavdar municipalities could receive as much as $10 million from the increased concession fee over a period of 10 years.

The Chelopech depot has estimated gold deposits of 119.4 tons, 298.8 tons of silver and 430 900 tons of copper, said Chakurov.

The Krumovgrad mine has estimated deposits of 28.2 tons of gold and 13.9 tons of silver. The total value of the deposits under concession by Dundee Precious Metals is estimated at more than $6 billion, he said.

The Chelopech mine earned a gross profit of $28.6 million and $38.7 million on sales of 15 787 tons and 29 947 tons of gold/copper concentrate for the three and six months ended June 30 2006, respectively, as a result of high commodity prices.