Lydian Armenia donates 12.5 per cent of its shares to Armenian government

YEREVAN, 28 December. /ARKA/. Lydian Armenia, a company that has been granted license to develop the Amulsar gold mine in the country’s Vayots Dzor region, has donated 12.5 per cent of its shares to the government. The agreement to this end was signed Friday by Armenian Minister of Economy Gevorg Papoyan and Hayk Aloyan, CEO of Lydian Armenia CJSC.

‘This co-operation between a private company and the government will contribute to the development of the economy. The project will start operating from next year,’ Aloyan told reporters after the signing ceremony.

According to him, Lydian Armenia itself proposed to hand over the 12.5 percent stake to the government, ‘as it is the government that should share the responsibility with the private company in such a large project.’

In his turn, Armenian Economy Minister Gevorg Papoyan noted that implementation of such megaprojects is very important for Armenia.

‘The development of the Amoulsar mine is one of such megaprojects. Another megaproject is the North-South road and the third one is the Academic City,’ the Minister stated, adding that private companies often prefer to turn to the government for assistance in the implementation of certain projects.

In February 2023, the government of Armenia, the Eurasian Develoment Bank (EDB) and Lydian Armenia signed a Memorandum of Understanding, according to which the parties were ready to attract about $150 million and another $100 million outside the framework of this document for the development of the Amulsar mine. The document envisaged a $100m loan from EDB, with another $50m were to be raised from a local bank.

In November 2024, EDB Board Chairman Nikolai Podguzov said that the bank was ready to work on the Amulsar project, but the application for financing the project was withdrawn.

'Mining at the Amulsar gold mine is scheduled to resume in the fourth quarter of 2025, Hayk Aloya told reporters.

He said about 70-80 per cent of the work on the mine's initial operation has already been done, and about $250 million are needed for completion.

‘Some $100 million we have already attracted, and the remaining $150 million we intend to get from several local banks,’ Aloyan said. He added that construction work at the mine will start in the first quarter of 2025, and operation in the fourth quarter of the same year. Aloyan said also that Lydian Armenia plans to produce approximately 210,000 ounces of gold per year.

‘At current world prices, this implies revenue of $500 million and tax payments of $120 million. The mine will employ about 1,000 people. Another 4-5 thousand will be employed indirect at service enterprises,’ he noted.

In turn, Armenian Economy Minister Gevorg Papoyan said that the Amulsar gold mine will be profitable even at lower gold prices. He added that according to preliminary estimation, the mine's exploitation is designed for 12 years, however, taking into account the projected reserves, it is possible to speak about 25 years.

Amulsar gold mine is Armenia's second–largest gold mine in terms of pure gold reserves. It is located in the southeast of the country, 13 km from Jermuk resort town, between rivers Arpa and Vorotan. The deposit is said to contain about 31 million tons of ore and 40 tons of pure gold.

Lydian Armenia (established in 2005, a 100% subsidiary of Lydian Canada Ventures owned by the American Orion Mine Finance and Canada's Osisko Gold Royalties) was until recently unable to develop the Amulsar mine in full due to protests by environmentalists and residents of the neighboring communities.

They were concerned that the operation of the mine may lead to the pollution of underground waters of Jermuk and Lake Sevan, causing an environmental disaster. Protests were regularly held there in 2018-2019m, then again in 2020, demanding that the operations stop.

In August 2021, the Investigative Committee of Armenia published the final expert report commissioned to Earth link & Advanced Resources Development (ELARD) in the framework of a criminal case initiated on July 20, 2018.

According to the Investigative Committee, there were no environmental threats from the operation of the mine, and the likely risks could be controlled if appropriate measures were taken.

Under a MoU, signed in February 2023 by the government, the Eurasian Development Bank (EDB), and Lydian Armenia the parties pledged to attract approximately $150 million for the development of the Amulsar gold deposit.

The Armenian government owns 12.5% of the company and is to provide insurance for the transaction against certain risks.
Neighboring communities are to receive $7 million annually in support from the company.