According to Lydian’s President and CEO Tim Coughlan, what makes the firm different is that it started as a concept play that turned into a company rather than being a company that was founded from a particular project. With a background as a geologist, he’s spent most of his career as an industry consultant and has tended to specialize in ‘target generation’, which is basically regional exploration.
His work got him involved with consulting that focused on emerging and transitioning environments. This took him to places such as Columbia, Russia and various parts of Eastern Europe. Eventually, the concept turned into Lydian International.
Armenian Property
The company is currently concentrating most of its attention on the Amulsar project in Armenia, a property that Tim says they came across almost by accident: “We found that driving down the main road going somewhere else on our second day in Armenia. We claimed it in late 2005 without knowing if there was any gold. This is a brand new, grass roots discovery. We did our first drilling in 2007, got some good results and 2008 made it a million ounces, 2009 made it 1.4 million. The aim this year is to make it 2 million and it will remain open in all directions, simply getting bigger.”
The property is well-positioned on top of a hill and near a main road. This means that access is good and there’s also a gas pipeline going through the license and an electricity sub-station there as well. “Infrastructure is as good as it gets,” comments Tim. “We basically have everything we need to build a mine.”
There is, however, the need to put in some infrastructure before production can start. This includes putting in roads for the eleven kilometers to the main road, extending the power lines and deciding whether to use the gas supply to generate power. There are also three outlying areas for technical work and treatment plants.
Because the property is on top of a hill, the stripping ratio is not an issue. Tim also stresses that the quality of the ore is in Lydian’s favor: “It’s entirely oxide, so the metallurgy is up to about 90% and very good recoveries. It is, in my view, a bit of a perfect storm in terms of gold resource. Our intention at the moment is to drill out some more meters this coming year, probably about another 20,000 meters.”
Growing Resource
The aim of the drilling is to make the resource grow. Depending on the outcome, the company may move very quickly towards a production scenario and has high hopes of doing so due to the high grades that have been found.
Wardle Armstrong International consultants are currently working on a feasibility, which will be 43-101 compliant when it’s completed, with the aim of moving to measured and indicated next year. Lydian also has mining licenses over about 600,000 ounces on the project, so things are moving along. The hope is that it will be in a position to start pouring gold by 2013, although Tim is realistic about the situation: “I think every company’s plan is to take projects through to production. Having said that, we’re a public company, we trade shares every day, so by definition the company’s for sale every day. But our intention, certainly, is to move ahead and take the project through to production.”
If Lydian does hit its targets, Tim has every reason to believe that production will be a very economic process. He says: “We’ve done several studies on the existing resource. What you have to bear in mind is the resource is open in all directions. That means, wherever we design a pit, the limits of the pit are still in gold because we don’t know how big the thing is. Every test that we’ve run so far shows us very robust economics.
“Next year, when we get the new resource, we’ll be able to run more detailed scoping-type studies. But, by virtue particularly of the infrastructure and the good state of the ore, the fact that it’s oxide grades, it’s highly economic, very robust.”
Time reckons that Armenia is a good place to operate, with support from the government and the local communities. To achieve the latter, Lydian works hard on its relationship with the communities. Tim remarks: “Our community programs are audited twice a year by the World Bank. We have a very good relationship with the local government. They’re very pro-development, they want to see this project going into production, they want to earn their taxes and royalties.”
One thing that will make the process go smoother is that the border with Turkey is open, which will mean getting equipment to the property will be cheaper than coming through Georgia. The only other slight problem on the horizon is the need to get a permit for heap leaching in 2-3 year’s time. “This will be the first heap leach operation in Armenia,” comments Tim. “Having said that, they already have a cyanide plant in country and we don’t anticipate any issues.”
Mutual Advantages
Hayk Aloyan, who has been Managing Director at Lydian’s Geoteam subsidiary in Armenia since it started in 2006, thinks there are mutual advantages to the company’s activities: “What Lydian is now doing in Armenia is very important because around the villages unemployment is more than 90%. When we were in the Soviet Union, there were a couple of mines and so there are guys who have worked on projects. But we are also helping students who are studying geology or mining and we are actually preparing a generation for this mine. They will graduate university and they will work with us.”
Lydian will have around $28 million in the bank by the end of the year, which should be plenty to move the project forward. It has a growing mine and drill results coming through that are likely to cause quite a bit of stock movement over the next year or so. As a result, it has some high caliber investors on board. The company’s largest shareholders include International Finance Corporation, which is the equity investment arm of the World Bank and which bought a lot of stock at the last placement, and the European Bank of Construction and Development.
Tim says: “I see us as a good buy right now, certainly running up to this resource upgrade. We’re hoping to get plus two million ounces and I think there’s a psychological trigger once you exceed that level of valuations. My advice would be to get in now.”
http://www.lydianinternational.co.uk/