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TABLE OF CONTENTS Sep 16 - 22, 2013 Volume 99 Number 31 - 0 comments

Dundee tallies gold resource at Kapan in Armenia

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Dundee Precious Metals (TSX: DPM) released its much-anticipated maiden resource estimate for the Shahumyan gold deposit at its Kapan mine in Armenia, and the market apparently likes what it sees.

Indicated resources at Shahumyan stand at 2.8 million tonnes grading 2.6 grams gold per tonne, 50 grams silver per tonne, 0.4% copper, 2.1% zinc, 0.2% lead and 2.4% sulphur, for 467,000 equivalent oz. gold. Inferred resources are 10.6 million tonnes at 2.3 grams gold, 41 grams silver, 0.4% copper, 1.7% zinc, 0.1% lead and 3.2% sulphur, for 1.54 million equivalent oz. gold.

These results are just for the underground portion of the deposit, as Dundee plans to release another resource estimate for open-pit resources shortly. But the underground news was enough to push the company’s stock up 11% to $6.84 on Aug. 29 — the day the news was released.

Kapan is a polymetallic underground mine that is already producing two saleable concentrates: a copper-gold-silver and zinc-silver-gold concentrate, both of which are moved by road and rail to an exporting port on the Black Sea.

Last year the mine produced 22,000 oz. gold, 2.5 million lb. copper, 15.5 million lb. zinc and 450,000 oz. silver. It expects to produce between 25,000 and 30,000 oz. gold at the mine this year.

Dundee says that while expanding the underground mine is likely, it is doing an internal study on the economics of such an investment, and says that the study should be done before March 2014.

The company is well financed for capital expenditures, as it has $99 million in its treasury and another $150 million available through an undrawn, revolving-credit facility. Last year the company generated $121 million in operating cash flow.

Dundee acquired Kapan in 2006 and has done over 230,000 metres of surface and underground drilling since then. The resource estimate on Shahumyan incorporates Dundee’s seven years of drilling, as well as more than 50 years of historic, state-managed exploration activity.

The area hosted a small-scale mine during the Second World War, with more exploration in the mid-1970s. Most of the historical surface and underground exploration drilling reached the 550-metre mine level, which is 370 metres below surface.

Shahumyan is an intermediate sulphidation, epithermal vein-breccia system made up of more than 80 steeply dipping, polymetallic quartz-carbonate veins between 0.2 and 3.5 metres thick. The veins have an east–west strike of up to 500 metres and a 300-metre vertical extent. However, most veins remain open at depth.

It also has a clear plunge component within the deposit’s higher-grade portions, and Dundee says that the plunge is a good place to target high-grade gold shoots. It plans to do this in October.

There are three drill rigs turning on the deposit to upgrade inferred mineral resources.

Kapan is located in the Deno Gold mining area in southeastern Armenia, 320 km from Yerevan. Dundee’s exploration licence covers 350 sq. km and hosts rail and diesel-mechanical transport systems, two primary crushing stations, ore stockpiles and a processing plant.

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