viewLydian International Ltd.

Lydian International committed to putting massive Amulsar gold project into production in Armenia


The Toronto-based firm has faced a number of challenges in getting Amulsar up and running but believes it has a company-maker on its hands

gold mining trucks

Quick facts: Lydian International Ltd.

Price: 0.075 CAD

Market: TSX
Market Cap: $57 m
  • Amulsar is a massive gold project in Armenia with nearly 2.5 million ounces of recoverable gold
  • Updated feasibility study puts after-tax net present value at US$600 million 
  • Lydian committed to put Amulsar into production despite facing a number of local challenges

What Lydian International does:

Lydian International Ltd (TSE:LYD) continues to advance its huge Amulsar gold project in Armenia despite facing a series of challenges that would stop other mining companies in its tracks.

Amulsar, which was discovered by Toronto-based Lydian in 2006, is located in southern Armenia just 170 kilometres south of the country’s capital Yerevan.

According to a recent feasibility study, total recoverable gold is nearly 2.5 million ounces. The reserves go up to 119.3 million tons when including additional measured and indicated resources after the cut-off grade was lowered compared to an earlier 2017 report.

The life of the mine is put at 12 years, while its all-in-sustaining costs come in at US$744 per ounce.

That gives Amulsar an after-tax net present value of US$600 million and an internal rate of return at 24.8% based on a gold price of US$1,500 per ounce and an initial capital investment of US$508 million.

All major infrastructural needs are readily accessible at Amulsar, including high tension power lines, a gas pipeline, on-site sources of water, and regional labor sources.

With these numbers looking so attractive, the firm is eager to put Amulsar into production; however, Lydian has had to face a fifteen-month battle with protesters over the mine.

In June 2018, access to Amulsar was blocked by protesters concerned the mine could pollute local water sources and negatively affect the hot-water springs of the alpine spa town of Jermuk and nearby rivers.

During the long standoff, Lydian has submitted three new environmental audits and obtained a court order to remove the demonstrators from blocking access to the site.

It has even received high-level government support from Armenia’s prime minister Nikol Pashinyan, who recently commented that the exploitation of the mine does not harm the environment and that Lydian would be permitted to proceed with the Amulsar project.

The protesters remain at the site, but Lydian is still hoping to reach a resolution in order to turn Amulsar into a highly profitable operating gold mine in Armenia.

How is it doing:

Lydian is making progress with Amulsar despite its legal battle.

In September, the company updated its 2017 feasibility study, increasing total recoverable gold by 192,000 ounces and putting total reserves 16.7 million tons higher.

The life of the mine also increased by two years to 12, up from the ten-year mine life outlined in the 2017 study.

On the financing front, the gold mine developer recently struck a third amended and restated forbearance agreement with its creditors.

The company’s senior lenders, stream financing providers and equipment financiers have agreed to continue to temporarily suspend all principal and interest payments due and payable.

Lydian said it remained in discussion with senior lenders, stream financing providers and equipment financiers to further extend the term of the A&R Forbearance Agreement beyond October 11, 2019 while the company completes an agreed process to identify strategic alternatives.

During recent discussions with the Government of Armenia, Lydian confirmed that it will not be able to restart material construction on site until next April or May. It also said there would be some rehabilitation and earth moving associated with site recovery and remediation in the interim. 

Production is anticipated to commence in 4Q 2020 or 1Q 2021, depending on how construction advances.

Inflection points:

  • Restored access to Amulsar
  • Restart of mine construction
  • Commencement of gold production

What the CEO says:

Edward Sellers, Lydian’s interim CEO, commenting after the Armenian prime minister’s recent support of the project said: “Lydian welcomes recognition from the Government of Armenia that there are no grounds to prevent Lydian from completing and operating the Amulsar project. Lydian is looking forward to recovering and rebuilding its ability to complete construction and operate the Amulsar project in accordance with its environmental performance standards."

Contact Angela at angela@proactiveinvestors.com

Follow her on Twitter @AHarmantas

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