VEDANTA RESOURCES IS READY TO INVEST $80 MLN IN GOLD MINING IN ARMENIA

Yerevan, 17.05.06 ArmInfo. According to the information distributed by an Indian News Paper Economic Times Vedanta Resources is planning to enter the precious metal business in Armenia.

The Economic Times also informs that the intention of Vedanta - India's major player in non-ferrous metals, in investing in gold mining industry is based on an all-time high current prices of gold. The Vedanta Resources listed in London Stock Exchange may make an investment in Sterlite Gold, controlled by Agarwal family through Volcan Investments. For expansion of their gold mining project Sterlite needs $70-80 mln. Vedanta is likely to step in by investing the money and thereby picking up a stake in the company.

The Armenian operations are controlled through Ararat Gold Recovery Company (AGRC) owned by Sterlite Gold Ltd. As per the information provided by Economic Times Vedanta is yet to decide on the move and the rout to be followed, - " A decision on whether to bring in funds through Vedanta or through thee holding company is being debated." The company currently has a negligible presence in gold but is a major player in copper, zinc and aluminium.

AGRC presently is doing mining at Sotk and Meghradzor gold deposits and operates processing plant at Ararat. AGRC plans to expand capacities in exploration, confirmatory drilling, mining and increasing gold processing plant capacity to 1 mt per annum. The mine life, based upon proven reserves and proposed capacity will be at least 10 years. AGRC plans to upgrade some of the facilities of Ararat plant and to build a brand new processing plant with POX technology. AGRC already has invited expression of interest from companies, which can provide the latest technologies, engineering, design, supply of equipment and training of manpower for implementation of new project.

As per the available information, Vedanta is listed in London stock exchange since December 2003 and is controlled by Agarwal family, which also has full control over Sterlite Gold Ltd - the owner of AGRC. Vedanta is the 3rd largest supplier of aluminium in India, with a market share of 20%. In 2005 a new 300,000 tpa copper smelter was commissioned. Another 250,000 tpa of copper is produced at their property in Zambia. The company produces 210,000 tones of zinc planing to increase production up to 400,000 tpa. Vedanta's annual sales are of $1.9 bln. Company properties are located in India, Australia and Zambia. Vedanta is investing over $2 billion in growth projects over the next three years.

The publication in Economic Times looks to contradict the information circulated within trans -governmental circle in Armenia, which particularly states that the Indian company has an intention to terminate mining at Sotk.

We remember that AGRC's suggestion to put up a new processing plant at Sotk mine was rejected by Armenian Government because of certain environmental concerns. The Government at that time did not display any interest in that project and refused to further discuss this matter. As per rumors, circulated at that time AGRC was to terminate its activities in Armenia if approval for new plant in Sotk was not granted. We have requested AGRC management to comment on this. As we were tald by AGRC management - "AGRC does not have any intention to terminate its activities irrespective of any circumstances. The proposal for putting up a new processing plant at Sotk mine site was just one of our several options, conditioned by certain technical problems. We are ready to discuss and accept any other reasonable suggestion by RA Government and immediately start investing of $70-80 mln. Unfortunately our numerous written requests to the Government on this matter remain unanswered till now."

In fact the publication in the Indian news paper gives a clear message to Armenian government, that Indian company is ready to invest in Armenian economy tens of millions of dollars, irrespective of where the new processing plant will be located. Meanwhile the Investors are still waiting for answers... If the matter is associated only with environmental issues it is really difficult to apprehend why Armenian Government does not make any suggestion to the company on location for new processing plant, which is safe from environmental point of view, thereby giving "green light" to inflow of millions of dollars.