Wednesday, August 12 2020 17:33
Emmanuil Mkrtchyan

EBRD completes its participation in Amulsar gold mine development  project

EBRD completes its participation in Amulsar gold mine development  project

ArmInfo.The European Bank for Reconstruction and Development (EBRD) today announced the  completion of its participation in the development of the Amulsar  gold mine, the construction of which has been blocked by  environmental activists and residents of nearby communities for about  two years.

Earlier this year, Lydian International, a mining company that was in  dire financial straits, announced a restructuring and was delisted from the Toronto Stock Exchange.

To note, the European Bank for Reconstruction and Development  initially took part in the capital of the Lydian International  offshore company, registered in Jersey, together with the  International Finance Corporation (IFC), which withdrew from the  project 2 years ago. The participation of these international donor  partners allowed the offshore company to enter the Canadian exchange  market and attract additional investment from institutional investors  in the form of investment and pension funds. As of today the main  lenders remain Orion Resource Partners, Osisko Mining and Resource  Capital.

"The EBRD should issue a public statement in which it will express  its position on the project and current events," Fidanka McGrath, a  senior official of the Bank said. She believes that current events  around the mine are causing significant reputational damage to the  EBRD, even after the EBRD's stake in Lydian International is  liquidated.

The total cost of the Amulsar project is $ 370 million. The life of  the mine was envisaged in 10 years and 4 months, while in the annual  section it was planned to produce an average of 200 thousand ounces  of gold.

The Amulsar mine is the second largest in Armenia. According to the  company, the deposit contains about 73,733 kg of gold with an average  grade of 0.78 g per tonne, and 294.367 tonnes of silver with an  average grade of 9.29 grams per tonne. It is located in the  south-east of the country, 13 km from the resort town of Jermuk,  between the rivers Arpa and Vorotan.  To note, despite the assurances  of the Lydian company that about $ 300 million has already been  invested in the project for the development of the Amulsar gold mine,  environmentalists do not share the government's enthusiasm for the  attractiveness of the mine's development plan. Environmentalists fear  that the use of sodium cyanide at the mine could lead to water  oxidation in rivers. Polluted waters will become unsuitable for  drinking and irrigation and can cause irreparable harm to the mineral  springs of Jermuk and the ecosystem of Sevan.

The Lydian company itself considers the blockade of the mine illegal  and accuses the Armenian government of inaction. In March 2019, the  company notified Armenia of a potential international arbitration  dispute under bilateral investment treaties between the UK and Canada  over what it calls the Armenian government's ongoing campaign against  Lydian's investments in Armenia. Lydian says it has followed the  highest international mitigation and environmental standards as  required by the EBRD, which has invested in the company since 2009.   "There is no environmental problem here, it has turned into a  political problem," Hayk Aloyan, director of Lydian Armenia said.  "The whole world is watching the situation in Armenia, where the most  environmentally friendly investment project in the mining industry  has become hostage to political games." Head of the Armenian office  of the European Bank for Reconstruction and Development (EBRD) Dmitry  Gvintadze said at the end of January that the Armenian government, in  the end, must make a final decision on the Amulsar project. The  specific share of the EBRD in the company's capital has not been  disclosed, but according to Gvintadze it is small.

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