Attracting investments for Amulsar was challenging
168 Zham exclusive interview with Roderick Corrie, Chief Financial Officer of Lydian International.
– What does the Mines & Money exhibition and conference that you participated in London this month mean for mining companies and projects?
– Since the economic downturn in 2008 and the fall off in gold and other commodity prices in the last two years it has become a challenge to attract investments in any business, especially in the mining sector. Mining projects require large capital investments and are often high risk, considering the market volatility and initial funding needed for exploration that does not always guarantee positive results. The Mines and Money conference in London is attended by a number of companies from around the world with the aim to market their projects and promote their jurisdiction so as to attract international investment, not just including the developing countries. Virtually every country that has a mining industry, from Australia to the US, from Sweden to Canada, Mongolia and Turkey, will come to the Mines and Money conference every year. This is the 8th year that Lydian has participated and the company was extremely proud of the fact that two years ago in 2011 it won the prestigious Mining Journal Outstanding Achievement Award for Exploration at the Amulsar project. It was an honor to have the work Lydian and Geoteam has completed on Amulsar credited whilst exposing Armenia as an up and coming mining destination.
– In the last two years foreign investments in Armenia have seen a significant decline both because of the business environment and the instability in the region: Why have you decided to start a project in Armenia at all?
– Mining is a long term activity and to an extent all participants including Governments need to be able to take a long term view and not get too distracted by the shorter term economic cycle. Lydian discovered and registered Amulsar as a new discovery in 2006 and has been working on the project through good and bad international economic times since then. In Armenia Geoteam is privileged to be working with a team of highly professional and knowledgeable local experts including geologists, engineers and environmental specialists. Armenia is not however, a well-known destination for international markets and there are often questions about the difficulties and challenges of working there.
Yes, there are some challenges, because there is a lack of local experience of working with market-listed companies and the demands on transparency and best practice that this implies. Many private investors and institutions that choose to invest in the Amulsar project do not know much about Armenia and every bit of uncertainty in-country may trigger doubt and reduce their desire to continue their involvement. However, Lydian hopes that the Amulsar project will be a good ambassador for the country and will promote how Armenia is embracing international investment into local projects. This success story will hopefully help those international companies in mining and other sectors looking to come to Armenia in the future.
– You had mentioned that Lydian has put enormous efforts into representing Armenia in the International markets. Has there already been any success in this area?
– Again, I want to stress that Armenia is a new and unknown place for much of the international mining & financial markets. There are traditional well-known mining destinations to invest in such as Canada, Australia, South Africa, Russia, Chile, and Peru, but Armenia is not on this list just yet. There are also emerging mining countries like Mongolia and Turkey, however, when Lydian started promoting the Amulsar project back in 2006, few knew about Armenia and its background; in fact quite often a map has to be shown to begin, so people know where the country is located. Now more than 16 international banks have visited the project, among them leading financial institutions such as BNP Paribas, Natixis, ING, Societe Generale and HVB Unicredit. Lydian also has a number of large international shareholders, who many have also visited the project. Top shareholders include funds such as Franklin Templeton, Sprott Asset Management and Amber Capital. With the continued exposure that Armenia gets via marketing and promotion the Company does for the project, Lydian is certain that the success of the Amulsar project will mean more confidence for international investors when deciding to invest in other economic sectors in Armenia.
– It is often stated that Lydian with its Amulsar project will foster development of “right” mining in Armenia, in-line with international best practice. What is the guarantee that Lydian can match these standards?
– As two of our largest shareholders, Lydian is obliged to follow the International Finance Corporation (part of the World Bank) and the European Bank of Reconstruction and Development’s performance standards and requirements because these two institutions set very strict rules and regulations for the projects they finance.
But it’s not only about that: it is the Company’s own commitment to environmental and social responsibility that shows what Lydian has consistently demonstrated since it started nearly 8 years ago before either of these institutions had become shareholders.
As a development company not operating yet, Lydian has already put enormous effort into environmental and social work on the project and the surrounding communities. So far more than 3.5 million USD has been spent on various environmental studies, around 400,000 USD is spent annually on development projects in the communities. In the second half of 2013 the company has spent a lot of time and money on exploration rehabilitation activities; rehabilitating land that will no longer be used in the future development of the project.
Banks and international institutions that invest in modern mining projects have internal policies to ensure that the projects they finance are implemented in line with the best international practice. But it is not only the external pressure that makes listed companies like Lydian behave responsibly, there is also overall value in responsible behavior for the Company. Doing the right thing has a positive impact on the Company’s reputation and this reputation can facilitate future business activity for the Company and the country it is located in. So by making significant investments into environmental management and social projects for the communities, Lydian is demonstrating its responsibilities as a listed company and its best practice towards Armenia.
