“Amulsar” will rank among Armenia’s top 3 largest taxpayers

09.02.2012 | 12:49 Home / News / Articles /

It was known in December that Lydian International which owns 95% of shares of “Geoteam” CJSC was awarded “Outstanding Achievement” prize by Mining Journal for the work realized on the Amulsar gold deposit in the south of Armenia.

We talked to Director General of Geoteam CJSC Hayk Aloyan and Lydian International General Manager Caucasus, Nerses Karamanukyan, asking them to tell us about the project.

- When was Geoteam CJSC set up and who was the founder?

Hayk Aloyan - Geoteam was founded in October 2005 by Tim Coughlin and me.

- Your web site says that Geoteam discovered Amulsar as a result of large-scale geological prospecting works which is a priority program for the company”. How did you find the Amulsar deposit and what is it?

Hayk Aloyan - Amulsar is the only deposit found on Armenia’s territory after the collapse of the USSR.

It was discovered by British geologist Tim Coughlin and is the only high- sulfide deposit in Armenia. The deposit is situated adjacent to the Armenia-Iran highway and maybe that was the reason why it hadn’t been discovered before: hundreds of geologists traveled on this road every year didn’t even suspecting there might be a mine in the neighborhood.

It’s the first and only case when young Armenian geologists have explored a mine having studied the foreign style of geological prospecting works.

- 95% of Geoteam shares are owned by Lydian International. Tell us about this company. In which countries besides Armenia does it operate?

Nerses Karamanukyan – Lydian International was set up in 2005 by a group of prospectors on the initiative of the President, Founder and Executive Director of the company, Doctor of Geological Sciences, Tim Coughlin.

Having over 20 years of experience in the geological prospecting field and working in the largest companies of the field, Tim decided to set up a company which would study new promising deposits of the developing countries. The company focused on the implementation of programs in the field of geological prospecting and exploring new markets for world-famous companies on the initial phase of its operation. Tim was requested to come to Armenia by one of these companies to conduct the preliminary research in 2005.

The company currently implements large-scale prospecting programs in Armenia and Georgia. In the future, it may enter other CIS countries as well.

Nerses Karamanukyan (Photo: From Nerses Karamanukyan personal archive)

- There are international financial institutions among the Lydian shareholders- European Bank for Reconstruction and Development and International Finance Corporation. How much share do they have? What expectations do these shareholders have from the project being implemented in Armenia?

- Nerses Karamanukyan –The International Finance Corporation (IFC) which is a member of World Bank Group is the Lydian’s largest shareholder with 16.5% shares. The first investment was made back in 2007.

From January 2008, Lydian shares are traded in Toronto Stock Exchange which is specialized in the metal mining industry organizations.

The European Bank for Reconstruction and Development (EBRD) became a shareholder in 2009. It increased its share step-by-step and now it owns 7.5% of the shares and is the third on the list of shareholders.

The IFC and EBRD invest only in those companies which are responsible, transparent and have prospects of sustainable  development. They expect Lydian to meet the highest social and environmental standards while implementing its program and will be transparent for everyone by implementing a program in Armenia which will serve an example and stimulus for attracting foreign investors to Armenia.

Lydian is an open joint stock company and its stocks are on open sale. Any Armenian citizen may purchase our shares and become a co-owner of the company if he wants to.

- What volume of investments did Lydian make in Armenia and how more is it planned to invest?

Hayk Aloyan
– The company has invested over USD 30mln to implement the geological prospecting programs since 2006 up to now. This year we are investing USD 52mln to realize preparatory works on the operation of the deposit, road construction, development of infrastructures etc.

- Large-scale movement of nature preservation is revving up in Armenia. Trchkan and Teghut are being discussed even by those who don’t know their locations on the map. One should be rather courageous to start activities in the metal mining industry in such conditions.

- Nerses Karamanukyan – As I have already noted, IFC and EBRD are leaders in terms of introducing social and invironmental standards. All the international and Armenian organizations which were funded by these structures can state the fact that these shareholders demand introduction and maintaining certain standards not only from metal mining companies but even in case of financing businesses engaged in organizing retail sales.

You can figure out what high ecological standard our company should meet. That’s why 9 out of 30 main employees of the company in Armenia are engaged in works in the social field and nature preservation sphere.

We concluded a cooperation agreement on environmental and social impact assessment with a company having 150-year experience and competence in the sphere. It’s already 2 years the researches have been conducted and a program meeting high international standards has been worked out.

Hayk Aloyan – Metal mining industry makes 60% of Armenia’s export. “Amulsar” will rank among Armenia’s top 3 largest taxpayers. Proper and responsible implementation of “Amulsar” project will allow setting new standards in Armenia’s metal mining industry and create a favorable environment for foreign investments.

Hayk Aloyan (Photo: From Hayk Aloyan personal archive)

As for the movements for nature preservation, the thing is that many people mix the output of the 21st century with metal mining output of the Soviet era.  Up-to-date technologies and measures for nature preservation allow operating the deposit exerting a minimum impact on the nature.

- Please, speak about the peculiarities of these technologies in a language comprehensible for an ordinary people.

Nerses Karamanukyan – Lydian and four specialized consulting companies jointly worked out a program of the operation of the deposit which minimizes the possible negative impact the deposit may have on the nature and environment.

A closed circle is created and everything is controlled inside – the damage to the air (dust), noise, jolts caused by the use of explosives, visibility from settlements and roads with heavy traffic. The most important thing is that the project will have zero impact on  the surface and even ground waters.

The Amulsar deposit will be cultivated through heap leaching which doesn’t cause tailings and tailing dumps.

The reports on all the researches are available on our site: www.geoteam.am.   

- What relationships are established between the company and local inhabitants? Today Kajaran village which inhabitants headed by the leader of the community were against the operation of the deposit at the expense of the lands of the village is one of the most discussed subjects.

Hayk Aloyan – Gorark (5.5km), Saravan (5.0km) and Gndevaz (9km) are the closest communities to Amulsar. Since the very first day of prospecting (having no profit yet) the company has been implementing a number of social programs. I would like to speak about some of them. There are young people in the communities mentioned above who want to study in the Geological Department of the YSU and the Department of Mining of the Engineering University. These young people see their future working on the deposit and we finance their education in universities.

We provided equipment to the medical points of the community. We are repairing the internal irrigation in villages, repaired the kindergarten in Gndevaz, and co-financed gasification in Saravan, support opening of new enterprises. For instance, there is a garment shop in Gndevaz and we are their largest customer (they sew sacks for us).

We employ 150 people from these communities and their minimum wages is AMD 130 000. I can state that we change the mindset of these people and their attitude towards life, break the stereotypes according to which it’s impossible to have a properly-paid job in regions.

- What will happen in Amulsar after you finish the gold output? I mean the two problems – environmental and social.

Hayk Aloyan
– The Amulsar deposit will be exploited within 15 years. Lydian activity will have a long-term positive impact on the development of the region even after conservation of the mine using the best foreign practice. The company undertook such a responsibility and we are currently discussing the prospects of cooperation with the neighboring communities.
We proposed assistance to the town of Jermuk in implementing a number of programs aimed at tourism development. These programs will be implemented simultaneously with the operation of the mine which will allow finishing them before the closing of the mine and ensure higher level of tourism business after the closing. It may be regarded as a contribution to the development of Jermuk and adjacent communities.

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