Canada's Dundee Precious Metals has reached an agreement with the Cabinet to allowing the state to become a shareholder in the Chelopech gold mine that the company runs. Prime Minister Sergei Stanishev told a March 10 news conference that both sides had agreed to letting the state back into the mine's list of shareholders and increase the concession fee.

After more than two years of silent refusal, the Environmental Ministry will allow the increase of gold output in exchange for a private-public partnership with Dundee.

The state will have a 25 per cent share in the mine; Dundee will continue managing it. Furthermore, Dundee will have to invest $155 million in new installations.

The most-debated item, the concession fee, will be increased from the current 0.75 per cent of total gold output to floating between two and eight per cent, depending on the price of gold on world markets. A formula will be used to define the exact rate.

For the Government, this meant about 51 million leva more in income, Stanishev said; compared with 2007 it was just 1.7 million leva. All of this “golden” money will be used for pensions, he added.

As a result of the agreement, Dundee will withdraw its complaint against Bulgaria, filed with the European Commission. The company argued that Environment Minister Djevdet Chakurov had defaulted on his duties by not giving an answer to the company's request for more than two years.

Dundee Precious Metals bought the Chelopech concession from the Irish Navan Mining in 2003 and since then it has been in constant conflict with the state on expanding extraction and processing works at the mine.

Even the Supreme Administrative Court could not make Chakurov issue a decision on the case. The SAC ruled in favour of Dundee and urged him to either approve or give reasons for his refusal for the project. On March 10, Stanishev said that he hoped that the agreement would stop speculation about bad business climate in Bulgaria and alleged corruption.