Lydian Drilling

Drilling at the Amulsar project in Southern Armenia (Image: Lydian International)

Lydian International (LYD.T) has received an important mining right approval for the Amulsar gold project, located in Southern Armenia.  The permit allows the company to develop the project in line with the parameters from the feasibility study. The government of Armenia is very supportive of the project as it will provide jobs and growth for the country.

The mining right was granted to a 100% owned subsidiary of Lydian and covers:

  • all project infrastructure, including the location for crushers, the conveyor and heap leach facility,
  • a mining permit applicable to all three pits,
  • definition of the area within which operating activities may take place,
  • a mining agreement that outlines the nature and duration of mining operations.

An updated feasibility study released in September shows favourable economics to develop a low cost open pit heap leach mine. An initial CAPEX of $426 million will produce 2.14 million ounces over a 10.4 year mine life. All in sustaining costs are projected to be $706 per ounce generating an after tax IRR of 20.2% at $1250 gold.

There is upside to find more resources to incorporate into the mine plan as the project is open at depth.

All infrastructure needed to build the mine is located on site or nearby.

One final permit, the ESIA, is currently pending. Once the ESIA has been awarded Lydian can move toward financing the project.

Howard Stevenson, President and CEO, said “The previous EIA and TSP approvals, and now this most recent approval of the Mining Right, were the subjects of intensive and thorough interaction with the Armenian authorities, local communities, members of civil society, and others. Thank you to all who participated in this process. We look forward to a long working relationship within Armenia as this project progresses into construction and production. Lydian intends that Amulsar will become an exemplary mining and investment project in Armenia, beneficial both for the country and for our investors. Lydian is committed to implementing best international practices at Amulsar by complying with IFC and the EBRD environmental and social standards throughout the project’s duration.”

Lyd 1yr chart

Lydian stock is up 18% on the day (at press time), bouncing off its year low of 50 cents.

Once the ESIA is awarded discussion will ramp up with lenders to finance the $420 million CAPEX. Early talks have started but any financier will want to see all permits awarded as part of due diligence.

The feasibility study shows favourable economics which will help with project financing. If the financing can be completed construction will begin in March/April 2015 with production commencing in 2017.

Symbol: LYD.T

Share price: $0.59
Shares outstanding: 152.15  million
Market cap: $89.8 million

Read: Lydian Receives Comprehensive Mining Right Approval For Amulsar Gold Project

I have no position in any of the stocks mentioned. This is not investment advice. As always please do your own due diligence.