Monday, June 27 2016 12:11

Geoteam CJSC (affiliate of Lydian International LLC) licensed for Amulsar gold deposit development, is sure that mining industry is quite compatible with agricultural activities.

The company's representatives demonstrate in practice that it is possible to maintain soil fertility and develop small business on the territory of Amulsar project implementation. 

The territory of the mining facility for heap leach of Amulsar deposit was chosen in 2013 as a result of joint activities of Geoteam CJSC and the Armenian government. The Amulsar project with the entire necessary infrastructure comprises agricultural lands, pasture grounds and apricot gardens. These gardens form 20% of the apricot gardens of Gndevaz community. Thus, the company's representatives state that crop harvesting will be maintained in 80% of the gardens. Moreover, the company has maintained apricot trees along the whole space for production of heap leach of gold as demonstrative evidence that even during the gold deposit operation the trees can blossom and bear fruit. 
In autumn 2014 international and local experts made an assessment of the lands on the territory of the Amulsar project implementation. Each piece of land was estimated taking into account its market cost.  "Each tree was estimated based on its age, fruits and the expected yield. The cost of the structures on the lands was also estimated," Social/Development program manager at Geoteam Nara Ghazaryan assured. 

Yet before the launch of the land buy-up process, the representatives of Geoteam CJSC researched the lifestyle of the inhabitants in Gorayk, Saravan, Gndevaz and Jermuk communities. As a result, it turned out that 75% of the landowners in Gndevaz own also other lands outside the community. "The idea was to use these data as a basis and review them in 2-3- years along with the development of economic entities. We needed to understand how vulnerable these people are. Based on these data, we planned to develop a strategy of creating alternative sources of income for the villagers. It was our "homework" which we had done prior to the launch of negotiations with the landowners", Ghazaryan stated. 

The land acquisition process started in February of 2016. The site-plan of the deposit with all its infrastructure covers 279 land plots in overall, which belong to 150 owners. The landowners were thoroughly informed of the principles of the land estimation and the amount of compensation as well as the possibility to exchange the land plots. According to Ghazaryan, the company demonstrated an equal attitude to all the landowners without exception. "We have never offered to one landowner a price higher than to the others in order to reach agreement on sale. Since the beginning of the deals on purchasing the territories we have observed full parity in our negotiations with the villagers", Ghazaryan stated. 
According to the company representatives, the land acquisition process is going on without any problems.  98% of the lands necessary for infrastructure development have already been purchased on 10/90 principle (10% from the full compensation has been paid and the remaining 90% will be paid in several months). The company's representatives mention that in the beginning of the process the landowners expressed certain distrust and concerns related to reliability of both the deal and the payments. However, very soon the landowners realized that the company is reliable and most importantly they themselves will benefit from this deal.  

The whole process was based on a voluntary basis, the company's representatives mention. As of today, only in three cases the mechanism of priority public interest has been used mainly due to the lack of documentation needed for the deal. 

Gerasim Andreasyan, the principal of the secondary school of Gndevaz, said that the rural residents have no reasons to complain. "The company observed all the provisions of the land plot purchase and sale agreement," he said. He is going to spend the funds on rehabilitation of another land plot of his, as well as "on other purposes". "No one is going to leave the village," Andreasyan said, noting that now the villagers have a real opportunity to do what they could not do earlier due to the lack of funds.     

"It is possible to invest funds smartly enough unless a person is ungifted," said villager Rita Khachatryan, who sold her land plot to the company and acquired two land plots near her house, transferred the rest of the amount to the trust of credit organizations. Ararat Hakobyan, in turn, successfully sold his orchards and he is now repairing his house and intends to launch business. Vardan Yeghyan sold his farmland in the territory of the mine and bought another land plot not far from his house, intending to grow apricots, apples and peaches.    

The company's representatives also take care of the shepherds, who drive the cattle to the seasonal pastures. "Though they lose the opportunity to graze the livestock on the aftergrass due to the project, however, they will be offered an alternative pasture," Ghazaryan said, noting that the road is already being rehabilitated to facilitate the cattle drive.    
In addition to the financial compensation, Geoteam CJSC is to implement a large framework program on rehabilitation of the rural residents' living standards within 2-3 years. One of the programs, which was launched in 2015, aims to ensure development of alternative income sources for the community's residents.  Another program implies reconstruction of irrigation systems of Northern Gndevaz with a view to create new gardens. It is also envisaged to implement education programs to teach how to manage personal funds, pastures, and small business and how to organize rural tourism. The program looks to train practical skills for construction of greenhouse facilities. It also provides an opportunity to communicate in English, learn cooking and sewing. Over 90 mln AMD (($187 thsd) has already been invested in fulfillment of these tasks. "So, we provide the rural residents with knowledge and skills to enable them to create their own profitable business and to find alternative income sources," said Social/Development program manager at Geoteam Nara Ghazaryan.

To note, Lydian International Limited is the sole shareholder of Geoteam CJSC.  The latter was incorporated in 2005 and after an extensive campaign of geological exploration in Armenia discovered what is now its flagship project - the Amulsar Mountain. Since 2006, the investment in exploration and other operations in Amulsar has amounted to nearly 80 million USD. Amulsar is a greenfield mining, the first for over 20 years in Armenia. The key shareholders of the Lydian are IFC, EBRD.  The company plans about $370 million capital investments in Amulsar project. According to the feasibility study, the approved reserves are 2.5 million ounces, the total recoverable gold is 2.1 million ounces over a 10 year mine life, gold production averaging over 200,000 ounces per year  (10 million tons of ore), low all-in sustaining costs of $585 per ounce of gold, 87% gold recoveries.  Amulsar is the second largest deposit in Armenia in terms of the reserves. The Amulsar project envisages creation of 1,300 jobs in the course of construction (the construction will last for about 2 years) and 650-700 jobs throughout the entire operation of the mine within the next 10 years.