Armenia`s government accepts 12.5% of the Lydian Armenia shares as  gift

ArmInfo.On January 18, Armenia's Cabinet approved a decision on the RA government accepting  12.5% of the Lydian Armenia shares as a gift.  

On February 22, 2023, the Government of the Republic of Armenia,  Lydian Armenia CJSC and the Eurasian Development Bank signed a  memorandum of understanding, which marked the restart of the program  for the exploitation of the Amulsar field. It was noted that within  the framework of the memorandum, $150 million will be raised, of  which $100 million will be loan funds from the EDB, $50 million will  be provided by a local bank, and an additional $100 million will be  invested outside the agreement by shareholders. After signing the  memorandum, Minister of Economy of the Republic Vahan Kerobyan stated  that the operation of the Amulsar mine will provide the state  treasury with annual revenues of 30-40 billion drams, and with the  launch of the mine, about 1,000 new jobs will open in the Vayots Dzor  region. As part of the deal, the Armenian government will receive  12.5% of the company's shares, for which it will not pay anything,  but instead will insure the deal against certain risks.

"Accept as a gift to the Republic of Armenia from the joint stock  company Lydian Resources Armenia Limited ordinary shares with a par  value of drams, which corresponds to 12.5% (from twelve to five  decimal places) of the total number of shares, 12,503 shares, and the  assignment of powers for them management at the Ministry of Economy  of the Republic of Armenia."

Presenting the project, Deputy Minister of Economy Ani Ispiryan  recalled that as part of the project, the company committed to  attract investments in the amount of $250 million and, in addition to  payments for the implementation of environmental projects, also  annually pay $7 million to nearby communities for social projects.  Accepting a gift of company shares does not entail any financial  obligations on the part of the state, Ispiryan emphasized. The  authority to manage shares will be assigned to the Ministry of  Economy of the Republic of Armenia. <We hope that the Amulsar mine  will become a platform for the introduction of new standards in the  mining sector. The Government of Armenia, already as a shareholder,  will be consistent in this matter," said Prime Minister of Armenia  Nikol Pashinyan.

Since the end of 2018, the Amulsar gold deposit has been blocked by  environmental activists. The government was unable to decide on the  resumption of construction of the mine and work on it had to be  suspended. In March 2022, the Minister of Economy of Armenia Vahan  Kerobyan noted that if nothing interferes, the work of the Amulsar  gold deposit will be resumed, referring to the department's program  of activities, which contains a provision on solving the Amulsar  problem. Previously, before the change of beneficiaries, Lydian  Armenia was a subsidiary of the British offshore Lydian  International, which placed shares on the Toronto Stock Exchange. The  company then went through the delisting procedure. As a result of the  restructuring, the full stake in the company passed to the newly  created Canadian-American Lydian Canada Ventures, the beneficiaries  of which are the American company Orion Mine Finance and the Canadian  Osisko Gold Royalties. The total cost of the Amulsar project is $370  million. The life of the deposit is 10 years and 4 months, while it  is planned to produce an average of 200 thousand ounces of gold  annually.

The field is the second largest in reserves in Armenia. According to  the company, the deposit contains approximately 73,733 kg of gold  with an average grade of 0.78 g per ton, as well as 294,367 tons of  silver with an average grade of 9.29 g per ton. It is located in the  southeast of the country, 13 km from the resort town of Jermuk,  between the Arpa and Vorotan rivers.

The Industrial Company JSC acquired 60% of the shares of ZMMK and on  September 30, 2021 donated 25% of its share to the Government of  Armenia. On March 24, 2022, the government received a gift of another  6.875% of the shares, thus becoming the owner of 21.875% of the  shares or 1/5 share in the plant.