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Lydian scores small victory in Armenia as criminal probe into blockades launched

If allowed to move forward, the Amulsar mine will be a large-scale operation with annual gold production averaging around 225,000 ounces over an initial 10-year life. (Image courtesy of Lydian International)

Lydian International (TSX:LYD) scored a small but key victory in Armenia on Friday after a court of appeal ruled that police must prosecute a group of protesters who have been illegally blocking access to the company’s Amulsar gold project for more than a year.

The miner filed a complaint with local police in July last year, but they declined to launch a criminal investigation on the issue, saying there was no basis for the removal of protestors, their vehicles, tents and trailers.

Lydian then went the legal way, applying in September for a reversal of the police’s decision.

In January this year, the highest court of appeal ruled in Lydian’s favour, but law enforcement officers have not restored uninterrupted access to the mine site, located in Armenia’s mountainous south.

Police must prosecute a group of protesters who have been illegally blocking access to the Amulsar gold project for more than a year

Opponents claim Amulsar would threaten several endangered animal species that live in the area, including the world’s rarest big cat, the Caucasian Leopard, of which there are thought to be only 10 left in Armenia.

The mine site sits above a tunnel that supplies water to Lake Sevan, the largest freshwater lake in the whole Caucasus region. Scientists have warned that acidic drainage from the mine would inevitably seep into the lake, posing a threat to Armenia’s water system.

Amulsar is also next to Jermuk, a spa town built around mineral springs, and an economy is based on health tourism. Opponents to the mine claim dust from construction has curbed the influx of visitors and also affected crops and grazing. Cattle, they say, have increasingly refused drinking water from streams on the mountain since construction started, affecting local livelihoods.

Last week’s ruling supports Lydian’s third appeal to the police decision of not forcing locals and environmental activists to stop Amulsar’s blockade.

Based on company’s estimates, the mine’s siege has cost it about $100,000 a day, not counting that it had to lay off 83% of its workforce and about 1,100 contracted jobs.

Moving forward

Also last week, the government of Armenia published the results of a long-awaited public audit, which sought determining Amulsar’s potential impact on the Southern Caucasus mountain range’s wildlife and, particularly, in water resources.

The assessment included a review of the project’s Environmental and Social Impact Assessment (ESIA) and Environmental Impact Assessment (EIA), even though the latter had been previously approved by the Armenian authorities before construction began.

International audit on Amulsar’s potential environmental impacts paves the way for the company to move forward with mine development

“Lydian is pleased to see the international audit has confirmed most of the same conclusions reached during either the EIA/ESIA process and/or confirmed through subsequent detailed design,” the company said after reviewing a it.

“We are particularly pleased to see that the findings of the audit confirm that there is no link between the groundwater beneath the project site and the Jermuk Mineral waters, and that the project is not likely to result in any measurable effect on Lake Sevan even in the event of a catastrophic occurrence such as an earthquake,” Lydian noted.

The document did make recommendations, including a reassessment of the capacity of contact water ponds and diversion systems and enlarge them to accommodate a 500-year, 24-hour storm event.

“The information provided was more than sufficient for the authors of the audit report to form professional judgements consistent with those of other international experts who have previously considered the matters covered by the audit,” Interim President and CEO, Edward Sellers, said in a statement.

Over the past year, the TSX-listed miner provided the special investigative committee with more than 300 documents, totalling about 20,000 pages of information. It also participated in extensive technical discussions during the audit.

Tainted reputation

Opposition to mining in Armenia has its roots in a long list of environmental disasters caused by previous operations, as well as in allegations of corruption among authorities in charge of granting licences.

The country, however, needs foreign investment and jobs that properly run and managed mining projects could bring in.

Minerals and metals make up about half of Armenia’s exports

Minerals and metals make up about half of Armenia’s exports and mining accounted for about 3% of the country’s economic output in 2017, government data shows.

Lydian foresees Amulsar as a large-scale operation with annual gold production averaging around 225,000 ounces over an initial 10-year life. Estimated mineral resources contain 3.5 million measured and indicated gold ounces and 1.3 million inferred gold ounces as outlined in the Q1 2017 technical report.

Last week’s news favoured Lydian’s shares, which closed at 16 Canadian cents. The stock has gained one-third in the past 30 days but is still trading 24% below its year-earlier level.