Lydian outlines potential Armenian mine

Armenia-focused Lydian International (LYD-T) has outlined the potential to produce 1.6 million oz. gold from its Amulsar project in a preliminary economic assessment.

The study looked at open-pit mining the Tigranes and Artavasdes deposits. Together, the deposits host 32.4 million indicated tonnes grading 1.07 grams gold per tonne for 1.1 million oz. gold, and 48.3 million inferred tonnes at 0.91 gram gold for 1.4 million oz. gold, both using a 0.4 gram gold cut-off.

Lydian plans to start with a smaller 15,000-tonne-per-day operation producing 123,000 oz. gold annually for the first three years, and double throughput and gold production for the remaining four years, using the established cash flow. The company notes that the delayed ramp-up will also allow local miners to get used to the high throughputs.

The company expects to produce 1.64 million oz. by mining the two deposits at a 0.92 gram gold grade and a 2.5-to-1 strip ratio from the high-sulphidation, epithermal-type system. In processing, the company expects to achieve 85% gold recovery using cyanide and heap leaching.

In the study, the company investigated using its own mining fleet and contract mining.

Under the owner-operated plan, the mine looks to have a pre-tax internal rate of return of 39.5% and a pre-tax net present value of US$493.6 million, using a 5% discount rate. For contract mining, those numbers are 45.4% and US$514.5 million. Both scenarios were based on US$1,200 per oz. gold.

Total capital costs were US$378.8 million for owner-operated and US$254.6 million for contract mining, with payback at 3.2 years and 2.6 years, respectively. Cash costs are pegged at US$419.3 per oz. for owner operated and US$499.4 per oz. for contract mining. Total operating costs per tonne were US$10.58 for owner operated and US$12.60 for contract.

The Amulsar project also hosts the Erato deposit, 900 metres north of Tigranes and Artavasdes. Erato has an inferred resource of 17.2 million tonnes grading 0.9 gram gold, but the company ran possible scenarios that included between 360,000 and 460,000 oz. gold production from the target. Erato would add two years of mine life and between US$78 million and US$121 million to the net present value, though the low density of drilling on the target meant Lydian could not include it in a base case scenario.

To increase confidence in all its resources, Lydian is working through a 40,000-metre drill program that it plans to complete
by the end of the year, with a resource update around the same time. With metallurgical testing and environmental work also underway, the company plans to have a full feasibility study out by mid-2012 and start production by mid-2014.

Lydian’s share price was up 4¢ to $2.79 on the day, with 1.4 million shares traded. The company recently hit a 52-week high of $2.95. It traded at $1.20 a year ago.