Amulsar Gold Mine to Resume Operations, Will Produce $385 Million Annually

YEREVAN — The Armenian government and a Canadian-based company formally agreed on Wednesday to restart a multimillion-dollar gold mining project in Armenia that was disrupted by protesters in  2018 .

The country’s former 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 produce 210,000 ounces of gold, worth $385 million at current international prices, annually.

However, those plans were put on hold after several dozen environmental protesters started blocking all roads leading to Amulsar in June 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.

The company, which claimed to have invested $370 million in the project before the blockade, filed for bankruptcy protection in Canada in late 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, Pashinyan’s government signaled plans to revive the Amulsar project and started negotiating with Lydian for that purpose.

The talks resulted in the signing in Yerevan on Wednesday of a memorandum of understanding by Economy Minister Vahan Kerobyan, Lydian board member Jeffrey Coach, and a senior executive of the Kazakhstan-based Eurasian Development Bank (EDB).

Kerobyan said at the signing ceremony that the three sides aim to raise $250 million for finishing the construction of mining and smelting facilities at Amulsar and installing other equipment there. In particular, he said, Lydian will borrow $100 million from the EDB and another $50 million from an unnamed Armenian bank.

Kerobyan also announced that the U.S. and Canadian investors have granted the Armenian government a 12.5 percent stake in the project in return for its pledge to manage their risks.

“This is a very important project for us,” Kerobyan told reporters.

“It is estimated that operations at Amulsar will increase Armenia’s GDP by approximately 1 percent … and we just cannot miss such an opportunity,” he said, adding that Lydian will be paying between 30 and 40 billion drams ($75-$100 million) in various taxes each year.

“It’s an incredibly dynamic project for the economy of the country,” Coach said, for his part. “It will employ hundreds of Armenians.”

He also said that Amulsar will be “one of the most sophisticated operating mines in the world.”

“We will have complied with every environmental standard,” added the Lydian executive.

Neither man gave any dates for the planned start of open-pit mining at Amulsar. Nor did Kerobyan clarify what the government will do if the mining site is again blocked by protesters. He said only that that the government “will do everything” to protect Lydian’s investments.

Mining has for decades been a key export-oriented sector of the Armenian economy. The country’s largest mining enterprise, the Zangezur Copper-Molybdenum Combine (ZCMC), is also its leading corporate taxpayer.