- What is your assessment of Amulsar project implementation and what meetings do you plan to have during your current visit in Armenia?
 
- The Amulsar project now contains in excess of 3 million ounces of gold which means it is in the top 15% of gold resources worldwide. That is something that our local communities and Armenia should be very proud of.

There is still potential to find more gold ounces so exploration work will continue through 2012 and beyond but we are now completing our Bankable Feasibility Study (BFS) which is aimed at providing the technical and financial comfort that the banks will need to lend the money required for project construction. Latest estimates put this initial construction cost at around USD 200 million.

Last year 8 commercial banks from Europe, South Africa and North America visited the project together with three development banks comprising the IFC (World Bank Group), EBRD and a Dutch development bank, FMO. For many of these bankers it was their first visit to Armenia and for most of them Amulsar will be their first investment in the country.

DOSSIER

Geoteam and Amulsar

Lydian International was set up in 2005 by a group of exploration geologists on the initiative of Tim Coughlin. Geoteam was founded in October 2005 by Tim Coughlin and Hayk Aloyan.

Amulsar is the only deposit found on Armenia’s territory after the collapse of the USSR. It was discovered by Tim Coughlin and is the only high-gold deposit of epithermal type in Armenia.

The International Finance Corporation (IFC) which is a member of World Bank Group is the Lydian’s largest shareholder with 16,5 % shares. Their  first investment was made back in 2007.
From January 2008, Lydian shares are traded on the  Toronto Stock Exchange which is specialized in the metals  mining industry . The European Bank for Reconstruction and Development (EBRD) became a shareholder in 2009. It increased its share step-by-step, has just yesterday announced further investment in the company and owns 7.5% of the shares.

The company has invested over USD 30mln to implement the geological prospecting programs since 2006 up to now.

We are also busy ordering and making down payments on the state of the art equipment the mine will use to responsibly and efficiently develop the project. Equipment operators will be sourced from our local communities with training program\'s getting underway this week.

I am here this week to meet with social and environmental specialists, with equipment suppliers, the IFC and EBRD and with some government and UK and US embassy officials.
 
- What is your assessment of doing business in Armenia? The Government proclaims ongoing reforms implementing in the country - do you feel the reforms as an investor?
 
- Lydian is the face of international investment in Armenia. In many ways, on our travels to various conferences, congresses and to investor meetings around the World we have become Armenia\'s unofficial business ambassadors.

Overall we have had a very positive experience investing in Armenia. As a publicly listed company we are compelled by law to disclose all material aspects of our business to our shareholders through the media, so if we hadn\'t had a positive experience, our shareholders which include banks, investment funds and individuals from all over the World, would know about it and would simply reconsider investing in Armenia.

The Governments current stand on corruption should be applauded and is a very positive development which makes our promotional work easier and should attract more badly needed foreign investment to Armenia.

- Your Company intends to make significant investments of about 52 mln USD in Armenia within this year. Please clarify in details how these funds will be allocated.
 
- This money will be spent on additional exploration drilling, on equipment orders, detailed engineering design, and training and environmental and social initiatives.
 
- EBRD and IFC are the major shareholders of the Lydian International. Does this fact help the Company to work in Armenia?
 
- Having EBRD and IFC as investors helps no matter which country we are working in. Both banks conduct thorough due diligence and impose strict disciplines ensuring that we conduct our business transparently and to the highest international standards. Because of those banks we put much more emphasis on the social and environmental aspects of exploration and mining.

Lydian has always been a company with a deep social and environmental conscience, but through their regular audits these Banks ensure we stay that way.

- Geoteam and Amulsar project have been getting in the spotlight of different political forces recently. How do you comment on this fact?
 
- A pre-election period is always politically charged and unfortunately it is a difficult environment for all commercial enterprises to navigate. Amulsar will be an exemplary state of the art project that will generate significant revenue and will be amongst the country\'s largest tax payers. So as such a high profile Company I guess we should expect a certain degree of unwanted attention at this time.

It is easy to be upset by some of the uninformed and politically-motivated comments that are sometimes directed at us, but our response can only be to stick to the facts, focus on our communities and keep everyone fully informed. All our policies, independent expert reports, maps and analytical results are available for anyone to download and review on our Geoteam website – www.geoteam.am.
 
- Last week there was discussion in Jermuk about the potential environmental impacts caused by the Amulsar project. During the meeting the Mayor of Jermuk expressed his opinion about your Company in quite rude manner. How do you explain such behavior?
 
- Some time ago the Mayor of Jermuk and parliamentary representatives from the town expressed some concerns about visibility, noise, dust, uranium and the impact on mineral water of our project. Although Jermuk is 15km away, although it is on the other side of a 3000m high mountain, in another province from our plant and operations and although our project is not located on Jermuk community lands, we considered their concerns and implemented a specific study to be conducted by international independent experts. That study has been complete for some time and again is available for all to download and read on our Geoteam web site.

The study found that the project will not be visible from Jermuk, that it will not be audible from Jermuk, that there will be no dust fall out, that Amulsar ore contains no concentration of Uranium is not radioactive and that there will be absolutely no effect on the mineral water which is sourced to the north of Jermuk, upstream and a long way from Amulsar. The only possible impact we will have on Jermuk is that some of the project earth works will be visible from the Jermuk access road about 10km south of the town. In order to mitigate that we are planting 5000 trees along the road side starting this year. We are then planning to plant an additional 20, 000 trees around the lower slopes of Amulsar to return the hill to the way it would have been before centuries of deforestation.

We have addressed all the Mayor’s proposed concerns and yet for some reason he continues to raise the same issues. I am not sure he has read the results we have provided him with. Although Jermuk is a peripheral community we employ workers from there and we sometimes use its hotels, so accordingly we have established a community liaison committee in the town. Through this committee we hear the communities concerns and have provided the town with an ambulance and sponsored various sporting events. Through further employment and as we investment more, Jermuk can only benefit from the Amulsar project. It is an interesting statistic that for every miner employed there are a further three new jobs created in service and supply industries. It is unfortunate that the Mayor has chosen to take his current position and as you say, he has in-fact been very rude to our Company, to our management and to our investors. We accept serious well-researched criticism and we openly engage with concerned groups and communities. Again, all we can do is focus on the job and keep providing the facts.

- One of the press-releases of the Company says that you are ready to participate in Jermuk tourism development projects and you have made a suggestion to the head of community. What was his feedback?
 
- Well, to be exact we are committed to leaving a positive sustainable impact on the Amulsar region long after the mine has been closed and rehabilitated. We want the local workers we have trained and employed to remain in jobs. If tourism is a means of doing that then we are prepared to participate in any useful initiative. We discussed this with the Mayor of Jermuk and offered assistance with his proposed ski-resort. We have proposed to him that we employ a tourism consultant to review the region, the infrastructure and develop an integrated tourism plan that if environmentally responsible and demonstrably beneficial for our local communities we would be prepared to financially assist with. A large scale initiative such as this would take at-least 10 to 15 years to develop at-which time the Amulsar mine would be coming to an end and in advanced rehabilitation and environmental development stage. It seemed to us to be the perfect solution, with the tourism initiatives and new jobs coming on-line as the mine closed down. So far he has not responded to this proposal.