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Armenian Gold Mining Project Still In Limbo


Armenia - Gold mining facilities constructed by Lydian International company at Amulsar deposit, 18 May 2018.
Armenia - Gold mining facilities constructed by Lydian International company at Amulsar deposit, 18 May 2018.

A Canadian-based company has still not raised enough funds to revive a large-scale gold mining project in Armenia that was controversially disrupted in 2018, Economy Minister Gevorg Papoyan said on Thursday.

The former Armenian government had granted the company now called Lydian Canada Ventures a license to develop a massive gold deposit at Amulsar in 2016. Lydian planned to start mining operations there in late 2018 and annually produce 210,000 ounces of gold worth $530 million at current international prices.

However, those plans were put on hold after several dozen environmental protesters blocked all roads leading to Amulsar shortly after the “velvet revolution” that brought Nikol Pashinian to power in May 2018. They said that the project would wreak havoc on the environment. Lydian dismissed those claims, saying that it would use modern technology that would prevent such damage.

Pashinian made conflicting statements about the Amulsar project at the time. His government did not revoke Lydian’s mining licenses. But it also refrained from using force to end the blockade.

The company, which claims to have invested $460 million in the project before the blockade, filed for bankruptcy protection in Canada in 2019 before being restructured. It is now owned by two U.S. and Canadian equity firms specializing in mining.

Following the disastrous 2020 war in Nagorno-Karabakh, Pashinian’s government signaled plans to revive the Amulsar project and started negotiating with Lydian for that purpose. The two sides reached an agreement to that effect in February 2023. Then Economy Minister Vahan Kerobian announced that the U.S. and Canadian investors will give the government a 12.5 percent stake in the project in return for its pledge to manage their risks.

Armenia - Economy Minister Vahan Kerobian (center) shakes hands with representatives of Lydian Canada Ventures and EDB, February 22, 2023.
Armenia - Economy Minister Vahan Kerobian (center) shakes hands with representatives of Lydian Canada Ventures and EDB, February 22, 2023.

The lavish donation touted by Pashinian was initially due to be formalized and completed in March this year. But it was postponed to September 1.

Pashinian’s cabinet announced another delay on Thursday, saying that the relevant agreement with Lydian Canada Ventures should be signed by November 1.

Commenting on the decision, Papoyan said: “We proposed that since they [Lydian] have problems with financing [of the Amulsar project] they solve those problems before we carry out the process.”

“They have part of the necessary funding [in the form of] their own money,” the minister told reporters after a weekly cabinet meeting. “They need to obtain loans to raise the rest of it. They’re now in the process of doing that.”

Lydian’s Armenian subsidiary says on its website that it needs $200 million to finish the construction of mining and smelting facilities at Amulsar. Kerobian, Papoyan’s predecessor, put the figure at $250 million in February 2023. He said Lydian will borrow $100 million from the Kazakhstan-based Eurasian Development Bank (EDB) and another $50 million from an unnamed Armenian bank.

The company has still not clarified when it will relaunch what would be one of the biggest foreign investment projects in Armenia’s history. The Amulsar mine would employ about a thousand people and pay at least $60 million in taxes annually.

No other large-scale Western investment projects are known to have been launched in Armenia during Pashinian’s rule. Furthermore, his government is now facing massive lawsuits by a number of foreign investors who have done business in the country.

They include some of Lydian’s current or former American shareholders. They filed an arbitration case against Yerevan at the UN Commission on International Trade Law (UNCITRAL). The arbitration body opened hearings on the appeal in January.

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