Lydian International (TSX:LYD) scored a small, but key victory in Armenia on Friday after a court of appeal ruled that police must prosecute a group of protesters who have been illegally blocking access to the company’s Amulsar gold project for more than a year.
The miner filed a complaint with local police in July last
year, but they declined to launch a criminal investigation on the issue, saying
there was no basis for the removal of protestors, their vehicles, tents and
Lydian then went the legal way, applying in September for a reversal of the police’s decision.
In January this year, the highest court of appeal ruled in Lydian’s
favour, but law enforcement officers have not restored uninterrupted access to
the mine site, located in Armenia’s mountainous south.
Opponents claim Amulsar would threaten several endangered
animal species that live in the area, including the world’s rarest big cat, the
Caucasian Leopard, of which there are thought to be only 10 left in Armenia.
The mine site sits above a tunnel that supplies water to
Lake Sevan, the largest freshwater lake in the whole Caucasus region. Scientists have warned that acidic drainage from the
mine would inevitably seep into the lake, posing a threat to Armenia’s water
Amulsar is also next to Jermuk, a spa town built around
mineral springs, and an economy is based on health tourism. Opponents to the
mine claim dust from construction has curbed the influx of visitors and also
affected crops and grazing. Cattle, they say, have increasingly refused
drinking water from streams on the mountain since construction started,
affecting local livelihoods.
Last week’s ruling supports Lydian’s third appeal to the
police decision of not forcing locals and environmental activists to stop Amulsar’s
Based on company’s estimates, the mine’s siege has cost it
about $100,000 a day, not counting that it had to lay off 83% of its workforce and
about 1,100 contracted jobs.
Also last week, the government of Armenia published the results of a long-awaited public audit, which sought determining Amulsar’s potential impact on the Southern Caucasus mountain range’s wildlife and, particularly, in water resources.
The assessment included a review of the project’s Environmental and Social Impact Assessment (ESIA) and Environmental Impact Assessment (EIA), even though the latter had been previously approved by the Armenian authorities before construction began.
“Lydian is pleased to see the international audit has confirmed most of the same conclusions reached during either the EIA/ESIA process and/or confirmed through subsequent detailed design,” the company said after reviewing a it.
“We are particularly pleased to see that the findings of the audit confirm that there is no link between the groundwater beneath the project site and the Jermuk Mineral waters, and that the project is not likely to result in any measurable effect on Lake Sevan even in the event of a catastrophic occurrence such as an earthquake,” Lydian noted.
The document did make recommendations, including a reassessment
of the capacity of contact water ponds and diversion systems and enlarge them
to accommodate a 500-year, 24-hour storm event.
“The information provided was more than sufficient for the authors of the audit report to form professional judgements consistent with those of other international experts who have previously considered the matters covered by the audit,” Interim President and CEO, Edward Sellers, said in a statement.
Over the past year, the TSX-listed miner provided the
special investigative committee with more than 300 documents, totalling about
20,000 pages of information. It also participated in extensive technical
discussions during the audit.
Opposition to mining in Armenia has its roots in a long list
of environmental disasters caused by previous operations, as well as in
allegations of corruption among authorities in charge of granting licences.
The country, however, needs foreign investment and jobs that properly run and managed mining projects could bring in.
Minerals and metals make up about half of Armenia’s exports
and mining accounted for about 3% of the country’s economic output in 2017,
government data shows.
Lydian foresees Amulsar as a large-scale operation with
annual gold production averaging around 225,000 ounces over an initial 10-year
life. Estimated mineral resources contain 3.5 million measured and indicated
gold ounces and 1.3 million inferred gold ounces as outlined in the Q1 2017
Last week’s news favoured Lydian’s shares, which closed at 16
Canadian cents. The stock has gained one-third in the past 30 days but is still
trading 24% below its year-earlier level.