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Hayk Aloyan: Lydian attracted reputable institutional investors to Armenia

Interview of Geoteam CEO Hayk Aloyan to Mediamax

- Recently, Lydian International, a Geoteam 100% shareholder, issued a press release stating that the RA Government formed joint working group has concluded its activities and a preliminary agreement for the location of the Amulsar mine facilities has been reached. What was the need for a new location?

- The need arouse by the government decisions adopted this year which also set forth limitationsfor the proposed location of our project facilitiesin previous areas. In order to discuss the issue Lydian International and the Armenian Government have jointly formedthe working group, which has recently concluded its activitieswith positive outcome. A preliminary agreement was reached with regard to the location of the Amulsar mine heap leach facility so that it doesn’t contradict the new regulations. Presently, an update to the feasibility study and an environmental and social impact revised assessment for the proposed new location shall be undertaken.

- Different groups have repeatedly stated that the previously suggested locations were posing environmental dangers and that is why you had to move.

- These allegations have been disproved by the independently prepared International Environmental and Social Impact Assessment (ESIA)– a precondition for project financing- carried out by reputable international consultants and scientists. The previously chosen locations were in line with international environmental standards and the concerns voiced by different groups had no scientific ground. This is not what we just say; this is proven by anumber of independent scientific studies on archeology, biodiversity, water and dust/noise that, by the way, took us 3 years and 3.3. Million USD to conduct.

Moreover, the Company had the necessary permits for the first  location selected too.
However in order to comply with new government regulations the working group was established to provide a new proposed location. We are glad that the joint working group has delivered positive results.

- Furthermore, about the environmental impact. A representative of the European Bank of Reconstruction and Development (EBRD) has recently visited Amulsar to assess the current rehabilitation activities and has given a positive appraisal for its progress. Why are reclamation activities being undertaken if the project has not even entered its main construction phase?

- Current reclamation activities are carried out regardless of the project progress. The areas that are being rehabilitated are those which will not be further used following exploration works. This is industry best practice and part of Lydian own sustainability policy and standards, in addition of implementing in Armenia  international standards for mining and environmental protection. This year,55 mln AMD has been allocated for the reclamation works, using mainly workforce from the surrounding communities. Concurrent reclamation is critical to develop a comprehensive program on environmental protection.

- The new feasibility study required for the new location will slow-down project implementation. How is it going to affect the anticipated economic outcome?

- The Amulsar project is an investment project of overall around USD 400m. It is expected to have about 2-3% of the potential impact on the GDP of Armenia. The entire volume of this year investments hasdeferred due the foregoing reasons. Obviously the expected jobs creation have not started, nor the use of local contractors to start construction activities. Upon receipt of final permits for the new location hopefully next year the jobopportunity will increase and the planned investments will be made.

- Are the social projects in the communities still underway?

- The projects that started have been completed. Thesewere important and long-awaited projects for the communities, relating to both infrastructure renovation and agricultural projects.This year we have implemented various social projectsin Jermuk,including the renovation ofthe kindergarten and art school. I want to emphasize that due to the land leased by Geoteam,the community budgets have significantly increased this year. Three communities, Gorayk, Gndevazand Saravan have receivedover 200 million dramsfor the lease of landthis year.We have created all the conditions for the communities to decide themselves how they want their village to develop and what investments to make. Though we will certainly continue various social projectsin the framework of the corporate social responsibility.

- It is often criticized that many overseas companies are operating in mining sector and Armenia does not benefit from these projects.

- Firstly, I would like to emphasize that the Amulsar project is 100% implemented by an Armenian company Geoteam. This means that the company operates exclusively in the Armenian legislative field in terms of both taxes and other obligations as prescribed by the laws. Secondly, Lydian International, a British company, which is a 100% shareholder of Geoteam, is listed on the Toronto Stock Exchange, with shares available for purchase for everybody interested. As a listed Company it operates in full financial transparency. Nowadays, it is quite hard to ensure large international investments anywhere; particularly in new markets such as Armenia. Greenfield mines require international expertise and large initial capital investments, if you want to build a modern mine. That is why even developed countries are keen to attract private investments.

In this context Lydian has done a tremendous work by attracting reputable institutional investors. Our preliminary calculations indicate that after the loan repayments the Company’s profit from an ounce of gold sold will be just as much as the Government of Armenia will get in taxes. Moreover, most of the operational costs will mean reinvestment in the project; i.e. in Armenia, and will include the mine maintenance, electricity and fuel, local salaries etc. It is obvious that this is a good investment project from all perspectives.

There are many examples in the world of well managed mining projects contributing greatly to the economy of the country. Amulsar project is one of those projects that will also provide a good opportunity to serve as an example of high quality environmental management.  

Khoren Ormanyan talked to Hayk Aloyan.

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