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Amulsar Project: Message from Geoteam

Geoteam has always presented all its stakeholders with timely and relevant information. We would once again like to address some issues and concerns around the project to emphasise several points.

Geoteam CJSC who operates the Amulsar gold project is an Armenian registered company, subject to all Armenian laws and taxes, and is the 100% owned subsidiary of Lydian International.

Lydian International is a publicly listed company and the “owners” of the company are thousands of shareholders worldwide. Anybody can become a shareholder as the case of any public company listed in the international market that is the Toronto Stock Exchange (TSX) in our case.

Lydian International’s headquarters are in Jersey, UK.

We would like to emphasise that it is the first international project in Armenia that presents a wide range of reputable international institutional investors, many of whom are bringing their investments to Armenia for the first time. The list of some of Lydian institutional investors can be found  here.

It took Lydian International considerable effort to present Armenia as a favourable investment destination to major banks and financial institutions around the world. There are a lot of mining projects   found in more appealing investment jurisdictions and better known investment environments such as Australia, Canada, Russia, Brazil and South Africa. We consider it a big success to have been able to bring some of these investments to Armenia. The success of the Amulsar project will open up Armenia to  wider international investment community thus bringing transparent worldwide investments into different sectors of the Armenian economy, not just mining.  Trust is the most difficult asset to obtain from investors in these times of economic volatility worldwide, so we are glad to have won it among reputable investors. The challenge now for the Company as well as for the country is to maintain and broaden that trust into the future.

The company is not yet making any cash flow from the Amulsar mine and with production planned to start in late 2015, we have already invested more than $50 million into the economy, provided well paid jobs and been involved with economic activity and tangible social benefits in the region. In fact, thanks to the project there is now an in-migration in the surrounding villages and out-migration has reduced since the project began in 2007.

Geoteam now employs not only 160 people in the surrounding villages; it also employs high-class local specialists such as- geologists, engineers, mapping specialists, environmentalists, biologists etc.

We think it is important to emphasise, that from the financial point of view the country as a whole benefits more from this kind of a Greenfield project than does the company that brings the initial investments.  Once the project starts bringing revenues; that is at least several years from now, the company will get only around 24 percent of the price of the extracted gold and around the same amount 22% will go direct to the state budget in form of taxes and royalties. The rest of the money around the 54% will constitute the capital and operational expenditures, the bulk of which will again be invested in the country in the form of salaries, construction and services.

Environmental concerns

The project’s environmental management plan is an exemplary one, and is in line with the highest international standards and best practice. Since early exploration the company has invested unprecedented resources, time and effort to ensure the Environmental and Social Impact Assessment is carried out by the best and most reputable international companies and the best available mitigation measures and environmental management is in place. This is not only due to the requirements of our major shareholders, IFC and EBRD, but also because the company is fully committed to building a world-class operation in Armenia. Our management team has long experience of working in these kinds of projects in countries like the US, Australia, Canada and Spain.

The International Environmental and Social Impact Assessment will be finalised and publically disclosed later this year.

Armenia warrants having considerable foreign investments and sustainable development of its mining sector that will benefit the country and the people. Modern technologies do provide the opportunity for the best environmental management of mining projects and there are hundreds of examples of this worldwide.

In fact, as early as this week Australia, one of the leading mining countries in the world was once again ranked at the top of “Happiest Industrialised Nations” by the Organisation for Economic Cooperation and Development's Better Life Index for the third consecutive year, followed by Sweden and another major mining country- Canada.
This is to emphasize, that if well managed, mining can contribute greatly to the economy while providing high life standard and best environmental management. This is what we are committed to demonstrate at Amulsar.