TORONTO, May 14, 2018 (GLOBE NEWSWIRE) -- Lydian International Limited (TSX:LYD) (“Lydian” or the “Company”) announced today its results for the three months ended March 31, 2018. All dollar amounts referenced in this news release are, unless otherwise indicated, in United States dollars.
Lydian continued to advance major construction and operational readiness activities at its 100%-owned Amulsar Gold Project in Armenia. Management’s construction schedule prepared in April 2018 reflects production commencing in Q4 2018, with ramp-up continuing into 2019. Gold production is targeted to average approximately 225,000 ounces annually over an initial 10-year mine life once steady-state operations are achieved.
João Carrêlo, President and Chief Executive Officer of Lydian, stated, “I look forward to leading the Lydian team through Amulsar’s transition from the construction stage to production, capitalizing on opportunities and, with the support of our stakeholders, building a strong and successful gold mining company.”
First Quarter 2018 Highlights, Recent Developments, and Expected Timelines as of April 2018 Construction Updates
Engineering – Engineering is 100% complete for the crushing and screening plant, the ADR facility, high voltage distribution, pre-fabricated buildings, and geotechnical designs. The overland conveyor design is now completed. The balance of engineering is nearing 100% completion, with the exception of the mine shop and wash bay. Construction of these two facilities is underway with foundation work nearing completion.
Mine Operations – Nine Caterpillar 789D haul trucks, one Caterpillar 6040 shovel, and one Caterpillar 994 front-end loader have been assembled and commissioned. In late Q1 2018, Lydian started using its fleet to widen the mine haul road to its full width of 35 meters. This work is expected to be complete by the end of Q2 2018. This will be followed by pre-stripping and mining ore for stockpiling in preparation for commissioning the material handling facilities.
Materials Handling System – Construction activities progressed significantly at the crushing and screening facilities. Key concrete work is nearing completion and is being handed over for steel erection and equipment installation. Structural steel is in place and equipment installation is 80% complete within the screening building. Structural steel and equipment installation for the crushing plant and conveyor drive station is expected to commence in May 2018. Pre-cast concrete panels and structural steel for the coarse ore reclaim tunnel are in place and backfilling has commenced. Work on the downhill conveyor, which is on the critical path, is a key focus. Approximately one-third of the conveyor galleries have been placed to date. Foundation sleepers are in place for two-thirds of the conveyor route, allowing for additional gallery placement to continue in May 2018.
Heap Leach Facility – Final stages of leach pad contouring and clay under-liner placement continued throughout the quarter. Installation of the geomembrane liner for the process pond will commence in mid-May and liner installation for the leach pad will commence thereafter.
Gold Processing Facilities – Steel for the pre-fabricated buildings for the process facilities, including the ADR plant, refinery, metallurgical lab, and warehouse are being erected. All of the carbon-in-column tanks have been installed and associated process component installation is ongoing and will continue throughout Q2 2018.
Infrastructure - The 35kV transmission lines are substantially complete as is the main mine substation. The latter will be energized in Q2 2018 with feed from the utility’s 110kV main transmission line that runs next to the mine substation. The 110Kv line has been upgraded by ENA, the utility, and an additional tower has been constructed to provide the necessary transition from the utility line to the substation. All modular substations have been delivered to site. Construction of the natural gas line is ongoing. This will feed the ADR plant and mine facilities area, both for process requirements and area heating. Process and potable water distribution designs have been finalized and procurement of mechanical and piping components is underway. Internet services have long been established with a fiberoptic backbone design in place. The radio communications system has been designed and all components are on order. The mobile cell network currently provides excellent coverage and will be superseded by the radio network once installed and commissioned.
Operational Readiness – Core operations and commissioning personnel are in place and are implementing Lydian’s operational readiness plan. Activities during Q1 2018 centered on initiating service and supply contracts, developing standard operating procedures, recruitment, and training. Aptitude screening of approximately 100 truck driver and shovel operator candidates was done using the Caterpillar simulators.
Sustainability – Lydian continued its focus on environmental and social affairs throughout the first quarter of 2018. Biodiversity activities progressed for the formation of the Jermuk National Park, including the socio-economic and perception studies and assessments of the Potentilla porphyrantha plant species. Lydian continued to increase local employment and procurement in cooperation with construction contractors.
Financing – On March 9, 2018 Lydian reduced its future potential commitments by exercising its option under the Newmont Royalty Agreement to terminate the 3% Net Smelter Return royalty and in lieu thereof, elected the quarterly payment option to pay to Newmont the aggregate sum of $20 million, without interest, in 20 equal quarterly installments of $1 million commencing on the first day of the third calendar month following the start of commercial production. During Q1 2018 and to the date of this report, additional debt draws of $62.8 million were received. Management also focused on developing additional financing alternatives to provide for the estimated project cost of $425 million, support cash flow requirements through ramp-up as production commences at Amulsar, and maintain adequate contingency.
As announced previously, pre-operational costs at Amulsar are estimated at $425 million. Considering management’s construction schedule prepared in April 2018, which reflects production commencing in Q4 2018 and ramp-up continuing into 2019, Lydian anticipates an additional funding requirement of $65 million. This estimate is sensitive to several key risk factors, a) including potential further changes to the schedule to achieve production and ramp up to a point of positive cash flow, b) additional pre-operational costs, and c) upcoming contractual commitments. Management continues to assess its funding requirements considering these and other risk factors.
Armenian Government Developments – In 2015 the Armenian Constitution was amended, whereby effective April 2018 the government would change from a Presidential to a Parliamentary system. On April 17, 2018, Serzh Sargsyan, Armenia’s President for the preceding 10 years, was elected by Parliament as the new Prime Minister, effectively establishing a third term as head of state. Following 10 days of peaceful protests initiated by Nikol Pashinyan, Prime Minister Sargsyan voluntarily resigned on April 23, 2018 and a new Parliamentary election was set for May 1, 2018. Mr. Pashinyan, who sought election as Prime Minister in the May 1 election, failed to receive a majority vote by Parliament. Thereafter, Mr. Pashinyan was elected Prime Minister through a subsequent election on May 8, 2018. He will now begin forming a new government. These developments to date, have had minimal impact on construction activities at Amulsar.
Appointments – João Carrêlo was appointed as President and Chief Executive Officer of Lydian International Limited effective May 1, 2018 following the resignation of Howard Stevenson. Mr. Carrêlo is a senior mining executive with over 34 years of international experience in the mining and resource sectors. Mr. Carrêlo will be instrumental in bringing Amulsar into production and executing on the Company’s strategic growth objectives.
To view construction photos and videos, please visit www.lydianinternational.co.uk.
About Lydian International Limited
Lydian is a gold developer focusing on construction at its 100%-owned Amulsar Gold Project, located in south-central Armenia. Amulsar will be a large-scale, low-cost operation with production expected to begin in 2018. Gold production is targeted to average approximately 225,000 ounces annually over an initial 10-year mine life, making Lydian one of the largest gold producers to emerge during 2018. Open pit mining and conventional heap leach processing contribute to excellent scale and economic potential. 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 Technical Report. Existing mineral resources beyond current reserves and open extensions provide opportunities to improve average annual production and extend the mine life. Lydian is committed to good international industry practices in all aspects of its operations including production, sustainability, and corporate social responsibility. For more information and to directly contact us, please visit www.lydianinternational.co.uk.
For further information, please contact:
|Doug Tobler, Chief Financial Officer|
|Pamela Solly, Vice President of Investor Relations|
Caution regarding forward-looking information
Certain information contained in this news release is “forward looking”. All statements in this news release, other than statements of historical fact, that address events, results, outcomes or developments that the Company expects to occur are “forward-looking statements”. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the use of forward-looking terminology such as “plans”, “expects”, “is expected”, “intends”, “anticipates” or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “will”, “would”, “should”, or “occur” or the negative or other variations of such terms. Forward-looking statements in this news release include, among others, statements with respect to: the realization of mineral resource estimates and the timing of development of the Amulsar Gold Project, including the expected start date of gold production; the expected and estimated cost of operations and capital costs at the Amulsar Gold Project; the current Amulsar Gold Project construction schedule, the commitment to and implementation of good international industry practices; the expected gold production from, and life of mine of, the Amulsar Gold Project; the formation of the Armenian Government; the impact of management in relation to the Company’s strategic growth objectives; and the expected mining methods at the Amulsar Gold Project. Statements concerning mineral resource estimates may also be deemed to constitute forward-looking information to the extent that they involve estimates of the mineralization that will be encountered when the property is developed.
Forward-looking statements are necessarily based on estimates and assumptions that are inherently subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. Such risks, uncertainties and factors include, without limitation: changes in gold and silver prices; adverse general economic, market or business conditions; failure to achieve the objectives of the future exploration and drilling programs; regulatory changes; as well as "Risk Factors" included in the disclosure documents filed on and available at www.sedar.com. Forward-looking statements are not guarantees of future performance, and actual results and future events could materially differ from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. All of the forward-looking statements contained in this news release are qualified by these cautionary statements. The Company expressly disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, events or otherwise, except in accordance with applicable securities laws.