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Lece Mine sale controversy: A stealthy transaction amid rising gold prices

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The ongoing saga of the Lece Mine near Medveđa continues to spark debates as Serbia moves forward with plans to sell the gold-rich asset, despite concerns about undervaluation and potential mismanagement. The state is now preparing for a second attempt at selling the mine, with the starting price set at €34.5 million—half of its previously estimated value of €69 million. This has raised alarms among insiders who claim that the true worth of the mine is much higher, especially with rising gold prices expected to boost profits.

Back in 2019, President Aleksandar Vučić hinted at the possibility of the Chinese company Zijin taking over the Lece Mine, which has been in bankruptcy since 2017. Vučić described the mine as a valuable asset that had been looted by “thieves and swindlers,” and emphasized the potential for economic revitalization in the region if Zijin were to step in. However, five and a half years later, the Chinese interest has yet to materialize, and the mine remains up for sale.

Despite being in bankruptcy, the Lece Mine has continued to generate a significant profit, with an estimated annual profit of €10 million. Over the past three years, the mine’s net profit reached nearly €31 million, prompting some experts to suggest that the mine could pay back its purchase price in just three and a half years. However, others believe the real value of the mine is much higher, pointing out that it could be worth between €150 million and €200 million, especially with the current surge in gold prices. As of December, the price of gold has risen by 28% from $1,940 per ounce last year to around $2,374, with some projections estimating it could reach $2,900 or even $3,000 in 2025.

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Critics of the sale argue that the valuation of the mine is intentionally low, with some suggesting that it is part of a scheme to sell the mine at a fraction of its real worth. Former owner Miroslav Bogićević claims that the true value of the mine is much higher, citing unaccounted reserves of gold and silver, which could be worth hundreds of millions of euros. Furthermore, Bogićević and other creditors have raised concerns about the role of the bankruptcy administrator, Ljiljana Jovanović, accusing her of favoring certain buyers—particularly the Mediolanum Invest firm, which is closely tied to individuals with a history of dealing with the mine.

In a controversial move, the bankruptcy administrator has set the price of the mine at €34.5 million for the upcoming sale, a price that many believe is grossly undervalued. Furthermore, the sales documentation, priced at €1.1 million, has been criticized as an excessive barrier to entry, creating a situation where only a select group of buyers can participate. The situation has been compounded by the absence of international advisors or mining experts, further fueling suspicions that the sale process is being manipulated for the benefit of a few.

While the mine continues to be a profitable asset, the circumstances surrounding its sale raise serious questions about transparency and fairness. Critics, including the Moderano Investments group, argue that the sale should be postponed until a proper assessment of the mine’s reserves is conducted and a more thorough, transparent process is put in place. They warn that allowing the mine to be sold at such a low price could result in significant financial losses for the state and other stakeholders, not to mention the strategic implications of losing a key gold asset in the region.

As the gold market continues to climb, and with predictions of further price increases in the coming years, the sale of the Lece Mine could have long-term ramifications, both economically and politically. The question remains whether the Serbian state will allow this valuable resource to slip away at a fraction of its potential value, or whether it will step in to ensure that the process is conducted in a way that benefits all stakeholders, not just a select few.

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In the coming months, all eyes will be on the second attempt to sell the mine, and whether the legal and financial concerns raised by creditors will be addressed before the deal is finalized. If the mine is sold under these controversial circumstances, it could have far-reaching consequences for Serbia’s reputation and future economic opportunities.

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