Lydian International (LYD-T) Armenian government approved a new location for the heap leach facility at the proposed Amulsar gold mine, where development was thrown into question in July when the expansion of a protected watershed area rendered Lydian's previous mine plan invalid.
In the first half of the year Lydian had been working away at Amulsar, calculating a new resource and advancing a 40,000-metre drill program while also fine-tuning its updated feasibility study, which the company planned to release in the third quarter. Lydian had already been advancing Amulsar for seven years and, with the new-and-improved feasibility study almost complete, the company had finally been close to making a development decision.
Then came some unexpected news: the Armenian government was modifying the area defined as the catchment basin for Lake Sevan, the country's largest freshwater resource, and the protected area now encompassed the proposed location for the Amulsar heap leach facility.
The company quickly got in touch with Armenian authorities, who organized a working group to study the problem. With no other choice, Lydian announced its feasibility study update would be delayed and got to work negotiating.
That work has now paid off. The corporate and government members of the working group agreed that Lydian can apply to build a heap leach facility in a valley 4 km to the southwest, a location where the group concluded that an operation of that sort would not conflict with any national laws.
"It's been about a two-month process, in which members of the government and from our technical team reviewed all possible alternatives for the facility and that have now settled on one," said Tim Coughlin, Lydian president and CEO, in an interview. "The whole process, I think, has brought Lydian and the government much closer together. We understand each other's issues and better understand what we’re trying to achieve out of this project, so all in all it's been quite a positive process."
The valley is 7 km from the proposed Amulsar pits and offers potential as a valley fill facility. Lydian's engineers are now working to develop a detailed plan for the new location, which Lydian says provides ample room for ore stacking and requires less preparatory earthworks than the original facility. Coughlin says he expects costs for the new facility to be in line with earlier estimates.
Lydian is already at work at the new site, completing geotechnical drilling and trenching. The company is also examining alternatives for crushing, conveying, and waste rock handling. Management will review all options before the end of the year, a timeline that should enable Lydian to complete its updated feasibility study in the second quarter of 2014.
Most of the mine plan was unaffected by the expansion of the watershed protection area, which is officially known as the Vorotan-Sevan water tunnel immediate impact zone. Mineral processing is specifically prohibited in the zone, but there are no restrictions on mining, crushing or milling.
Regardless, the new feasibility study is expected to offer some changes compared to the previous study, which was completed in 2012. That study assumed the mine would churn through 5 million tonnes per annum (mtpa) for the first four years, until an expansion doubled throughput to 10 mtpa for the next eight years.
As part of a study to optimize its crushing circuit, Lydian also assessed the potential to build the 10-mtpa facility from the start. The study identified several operational and financial benefits to the larger operation, so the new feasibility will assume a full build-out from the start.
The new study is also working off of a new resource estimate, completed in March, that increased the deposit's ounces and confidence. The three deposits at Amulsar, which include the adjacent Tigranes and Artavasdes zones and the nearby Erato zone, now contain 70.5 million measured and indicated tonnes grading 1.04 grams gold per tonne plus 58 million inferred tonnes averaging 0.93 gram gold. Combining all three resource categories gives a total contained gold count of 4.1 million oz.
Amulsar is in southern Armenia, approximately 170 km south of Yerevan. The gold at Amulsar comes in the form of high sulphidation epithermal mineralization. The deposits remain open at depth and in most directions. Lydian intended to probe for further mineralization at depth with its drill program this year, but challenging ground conditions made for slow progress.
The program still produced some interesting results. At Tigranes, for example, hole 505 returned 221 metres grading 1.2 grams gold; the bottom 92 metres of this intercept came from beneath the current pit shell. Over at Erato, hole 522 targeted mineralization beneath the pit shell to the southeast and returned 180 metres grading 1.26 grams gold, terminating in mineralization. Meanwhile, hole 517 was drilled on the northwest side of Erato and intersected 68 metres of 1 gram gold.
The deposits at Amulsar generally sit at or near surface and within hills, a combination that makes the mineralization easy to access. The last feasibility study predicted an average life-of-mine waste to ore ratio of 2.2 to 1. That study also predicted Amulsar would be able to produce an ounce of gold for US$468.50 on average over its 12-year mine life, and would generate a 27.7% pre-tax internal rate of return. |
