Armenian gold mine starts construction next month

Shovels in April will start turning on a new gold mine in Armenia, says the managing director of Geoteam, the company behind the Amulsar gold project in southern Armenia.

“Construction will be finished in January 2018 according to our schedule, then mine exploitation will begin. It will last for 10 years,” said Hayk Aloyan, speaking at the Armenia-Canada Mining Forum in Yerevan.  Mediamax, an Armenia-based news site, reports that a number of activities respecting local populations will take place in addition to construction:

Along with construction works, the company will continue implementation of social-economic programs in communities affected by the mine. In paticular, Geoteam plans to solve in 2016 the issue of drinking water for Goyark village, continue agricultural programs on installation and development of greenhouses  in Gndevaz village, support cattle husbandry in Gndevaz, and work on solving infrastructural issues in Jermuk city.

The Amulsar gold project will extract, via blasting and excavation, ore from three open pits on Amulsar Mountain; crush the ore and convey it to a heap leach facility where gold and silver are leached into solution using sodium cyanide; and extract the precious metals from the solution at an adsorption-desorption recovery plant, reads an executive summary of the project posted on Geoteam's website. Geoteam is owned by Lydian International (TSX:LYD), a gold explorer focused on Armenia and Georgia.

The project has a feasibility study and an environmental and social impact statement. Resources currently stand at 1.8 million ounces at 1.1 g/t measured, 1.0 g/t indicated and 1.7Moz gold at 0.8 g/t inferred. Exploration started in 2007.

Over its decade-long life the mine would produce 200,000 ounces per year; it is being built at a cost of $426 million.

Lydian's stock popped last year after the company announced legislative changes in the Republic of Armenia will help it significantly reduce operating costs.

Under the new regulations, the maximum allowable ramp gradient for haul roads has been increased to 10%. This change will not affect the safety of mining operations and will decrease the waste rock removed from the pit potentially saving the company $100 million over the life of the mine. Today, Lydian closed up 5 cents in Toronto to 27 cents a share.