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AMULSAR GOLD PROJECT

ARMENIA

TECHNICAL REPORT MINERAL RESOURCE UPDATE AND RESERVE ESTIMATE UPDATE for

Lydian International Limited

TSX: LYD

Prepared by

G. David Keller, P. Geo.: AMC Consultants (UK) Limited

Gary Patrick, MAusIMM CP (Met): Metallurg Pty Ltd.

Herb Welhener, MMSA-QPM: Independent Mining Consultants, Inc

Richard E. Kiel, P.E.: Golder Associates Inc.

Peter R. Lemke, P.E.: Golder Associates Inc

John Maxwell Eyre, CEnv: North Coast Consulting Limited

Joseph M. Keane, P.E.: SGS-KD Engineering

In accordance with the Requirements

of National Instrument 43-101,

“Standards of Disclosure for Mineral Project”

of the Canadian Securities Administrators

AMC 412042

Effective Dates of Report:

Mineral Resources - 18 April 2013

Mineral Reserves - 28 November 2012

LYDIAN INTERNATIONAL LIMITED Amulsar Gold Project

12042 Amulsar Project Lydian Resource and Reserves Final - May 2013 ii

DATE AND SIGNATURE PAGE

This report has been prepared and signed for by the following “Qualified Persons” (within the meaning of National Instrument 43-101). The effective dates for this report are 18 April 2013 for the resource estimate and 28 November 2012 for the reserve estimate.

Signed the 21 April 2013

G David Keller, P.Geo. Principal Geologist AMC Consultants (UK) Limited

Gary Patrick, MAusIMM CP (Met) Metallurg Pty Ltd. Herb Welhener, MMSA-QPM Independent Mining Consultants, Inc

Richard E. Kiel, P.E. Golder Associates Inc. Peter R. Lemke, P.E. Golder Associates Inc John Maxwell Eyre, CEnv North Coast Consulting Limited Joseph M. Keane, PE SGS-KD Engineering


12042 Amulsar Project Lydian Resource and Reserves Final - May 2013 iii

1 SUMMARY

Introduction

This technical report for the Amulsar gold project, in the south-central region of Armenia has been prepared by AMC Consultants (UK) Limited (AMC) of Maidenhead, UK, for Lydian International Limited (Lydian). The report has been prepared in accordance with requirements of National Instrument 43-101 (NI 43-101), “Standards of Disclosure for Mineral Projects”, of the Canadian Securities Administrators (CSA) for lodgement on the CSA’s “System for Electronic Document Analysis and Retrieval” (SEDAR). This report is required to support an update of the estimation of mineral resources for the Amulsar Gold Project, as announced by Lydian in a press release issued 5 March 2013. The effective dates of this report are 18 April 2013 for the mineral resource estimate and 28 November 2012 for the mineral reserve estimate. Revised mineral reserves based on the current mineral resources are being developed. The mineral reserve estimates stated in this report represent those derived from a previous mineral resource estimates, effective date 28 November 2012.

From 2008 to December 2012, Lydian drilled 383 reverse circulation and 507 diamond core drillholes, totalling 110,561 metres of drilling, and chip sampled 358 lines for 1,337 metres of sampling, on the Amulsar gold project. This has allowed the delineation of major lithological units and structures that were used to model mineralization and estimate mineral resources for the project.

The Amulsar gold project is located in south-central Armenia approximately 115 Km south-west of the capital Yerevan and covers an area of approximately 98 square Km. The property is covered by three Prospecting Permissions. A mining licence covers the Amulsar area. Core shed facilities, sample processing, and offices for the project are located in the nearby town of Gorayk near the southern boundary of the project area.

Exploration and mining licences for the Amulsar project comprise the Saravan and Gorayk and Khatchkar Prospecting Permissions. A new mining licence granted for the project, that is valid until 2034 and permits extensions to the licence as new resources, has been approved. All prospecting permits and mining licences are held 100% by Geoteam CJSC, an Armenian registered Closed Joint Stock Company. Geoteam is owned 100% by Lydian Resources Armenia, a wholly-owned subsidiary of Lydian International Limited.

The Amulsar region was initially identified by the Armenian Soviet Expedition in 19361937 as an area of “secondary quartzite” which was deemed to host potential as a silica resource. Research work by the Soviet Expedition continued at Amulsar during the period 1979 to 1982. Silica reserves at Amulsar were never entered onto the Republic of Armenia State Balance, and no further exploration or research work has been conducted by the Soviet Expedition in the area since 1982.

Geology and Mineralization

The Amulsar gold deposit is situated in south-central Armenia and is hosted in Upper Eocene to Lower Oligocene calc-alkaline magmatic-arc system that extends north-west through southern Georgia, into Turkey, and south-east into the Alborz-Arc of Iran.


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Volcanic and volcano-sedimentary rocks of this system comprise a mixed marine and terrigenous sequence that developed as a near-shore continental arc between the southern margin of the Eurasian Plate, and the northern limit of the Neo-Tethyan Ocean. The Neo-Tethyan Ocean closed and subduction ceased along this margin in the Early Oligocene – when a fragment of continental crust was accreted with the Eurasian plate.

The Amulsar deposit is hosted in a sequence of Eocene-Oligocene volcanogenic rocks of basaltic to dacitic composition, containing two distinct volcano-sedimentary cycles. The Lower Volcanic unit (LV) is dominated by massive porphyritic andesite. The unit also contains abundant coarse volcaniclastic members in some project areas. The Upper Volcanic unit (UV) is characterized by coarse volcaniclastic breccia occurring within debris flow channels, incised into a thick package of finer grained volcanogenic rocks, including immature feldspathic sandstone. Andesitic lava flows form a minor component and also appear to occur in erosional channels. The UV unit lies disconformably over the LV unit.

Pervasive host fracturing has been produced during an interval of both east- and west-directed thrusting, producing a broad mild antiformal fold across Amulsar project area. The abundance of host fracturing is likely controlled by the differential strength increase produced by the focusing of pre-mineralization silica-alunite alteration into the porous breccia units. Mineralization is focused within a local zone of highly complex deformation near the crest of the antiform. At least two intervals of post-mineralization extensional faulting dissect the antiformal structure, such that the original ore system is now preserved within large discrete north-easttrending grabens that cross the antiform. These larger structures have been disrupted by north-westtrending extensional faults.

Gold mineralization at Amulsar is thought to have been a late event in the development of the deposit, occurring dominantly within the silica-alunite altered volcano-sedimentary breccia units of the UV unit. Mineralization is also associated with iron oxide-coated fracture surfaces and heavily oxidized faults that cut the silica-alunite alteration. Gold mineralization is believed to be associated with iron oxide coatings, fillings and hydraulic breccias in late stage brittle fractures, and faults within a thrust and fold complex.

Silver mineralization is present at the Amulsar project, but the genesis and distribution of is not well understood. Silver mineralization does not correlate with gold mineralization. Average silver grades range from 2 g/t to 5 g/t and locally can occur in the 100 g/t to 200 g/t range.


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Exploration and Data Management

Exploration on the Amulsar project was initiated with a joint venture between Lydian and Newmont Mining Inc. in the period from 2008 to 2010. Newmont completed approximately 150 line Km of ground magnetic surveys, and 54.6 line Km of induced polarization and resistivity surveys during the joint venture period.

After the project was acquired by Lydian in 2010, all exploration activity was managed by Geoteam CJSC—a wholly-owned subsidiary of Lydian.

Geoteam has completed an extensive programme of surface geological mapping over the project. In conjunction with the surface mapping programme Geoteam has collected approximately 358 (1,337 m) surface channel samples and 171 (50 m) trench samples. Channels samples are cut from outcrop faces cleared of vegetation, talus and loose rock. The average length of channel samples is about 2 metres, with approximately 99% of samples less than 3 metres in length.

In early 2012, Lydian commissioned a structural geological study of the deposit by Dr Rod J. Holcombe and associates to review drill core and reverse circulation chips, surface geological and structural mapping, and to assess drillhole structural data. A three-dimensional conceptual model of the deposit was generated, based on re-logging data and the integration of surface mapping and drillhole data, and has resulted in a major revision of the geological understanding of the deposit.

Exploration under the Newmont joint venture comprised diamond core drilling, reverse circulation drilling and geophysical surveys completed from 2008 to early 2010. During this period exploration drilling was carried out in the Erato and Artavasdes-Arshak-Tigranes areas. A total of 31 diamond core (4,363 m) and 175 reverse circulation holes (22,809 m) were completed.

All exploration activity on the Amulsar project is managed through Geoteam, Lydian’s subsidiary in Armenia. From 2010 onwards Geoteam has conducted an aggressive programme of core and reverse circulation exploration drilling over the Artavasdes, Arshak, Tigranes and Erato areas, completing a total of 218 core and 317 reverse circulation drillholes for total of drilled lengths of 33,422 m and 45,476 metres respectively.

Geoteam exploration personnel follow procedures outlined in a comprehensive manual for diamond drilling. Diamond drilling operations are supervised by Geoteam geologists at the drilling site. Diamond drillholes are drilled with a number of core sizes, including PQ, HQ, and NQ. Core is logged by Geoteam geologists at the drill site. At the end of each shift, core boxes are delivered to secure core shed facilities at Gorayk. Diamond drilling core recovery averages 96% for the project.

Similarly, for reverse circulation drilling, Geoteam exploration personnel follow procedures outlined in a comprehensive manual. All reverse circulation drilling is conducted under constant supervision by the rig geologist. Reverse circulation drilling is undertaken using downhole hammers with face-sampling drill bits. All drilling chips are collected from the reverse circulation cyclone. The entire chip sample is delivered to the core shed facilities in Gorayk for splitting and sampling.


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Specific gravity measurements were made by Geoteam at the project core shed, located in the town of Gorayk. Measurements were restricted to diamond core samples only, using a wax-sealed core water-immersion method.

Lydian has a sample preparation facility which is adjacent to core shed facilities at Gorayk. The facility includes two jaw crushers, two rotary splitters, two high-capacity pulverizers, and two drying ovens. Sample preparation facilities at Gorayk operated from September 2008 to 2010, and then were restarted in late 2011. Prior to establishing this facility, and during the period between 2010 and late 2011, all samples were sent to ALS Romania SRL laboratories in Rosia Montana for sample preparation. New containerized sample preparation facilities provided by ALS Chemex were installed in late 2011. The Gorayk laboratory is owned and operated by Geoteam.

Geoteam performs routine checks on laboratory submissions, upon import to the drillhole management Century Systems, Fusion database. On an ongoing basis QA/QC data is analysed using Fusion plots for standard, scatter, and quantilequantile plots. Failures in quality-control data are identified by Geoteam database managers and discussed with field geological personnel. Critical failures result in the resubmission of assay batches, or ten samples that precede the failed sample.

Lydian provided assay quality-control data for gold and silver assays for the Amulsar project, which AMC reviewed using scatter plots; HRD, HARD, ranked HARD, and quantilequantile plots to evaluate field duplicates, pulp duplicates, and umpire samples. Blank and certified reference material data were plotted on time-series plots using two standard deviations as data limits for reference material plots.

Based on the data provided, AMC concludes that assay analytical results for the Amulsar project are appropriate for the estimation of mineral resources.

AMC also completed a check of database assay values with assay certificates supplied by Lydian, and a separate check with assay certificates sent directly from the assay laboratories to AMC. AMC randomly selected assay values for validation. Approximately 10% of the gold and silver assays were checked with assay certificates supplied by Lydian, and 2% of gold and silver assays were checked with assay certificates from the analytical laboratories. No errors were found. AMC concludes that the Amulsar project assay drillhole data provided by Lydian is appropriate for the estimation of mineral resources.

Metallurgical Testing

Extensive testwork has been carried out on representative samples from the three main deposits; Tigranes, Artavasdes and Erato. Testwork has been carried out on bulk samples from rock outcrops, as well as half and whole core samples. Tests have included fine and coarse bottle roll leach tests, as well as column leach tests.

To date, a total of 46 column leach tests have been completed by various laboratories. The column leach tests show that the leach kinetics are very rapid, and that high gold leach recoveries can be obtained.


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Mineral Resource Estimate

The resource database used to evaluate the mineral resources for the Amulsar project was provided as MSExcel spreadsheet exports from Lydian’s Fusion database system. These spreadsheets contained all information for diamond core and reverse circulation drillholes, and chip samples for the project. The database consists of 1,154 drillholes and channel samples collected in exploration work undertaken between 2007 and 2012. The data comprises 298 diamond drillholes (40,017 m), 498 reverse circulation drillholes (69,380 m), and 358 channel samples (1,337 m). Drilling and chip sampling were carried out in the Tigranes, Artavasdes, Arshak and Erato areas of the Amulsar project.

The geological history of the Amulsar deposit has resulted in a complex of structurally positioned blocks of upper and lower volcanic rock units. Mineralization is predominantly confined to rocks of Upper Volcanic unit (UV). Mineralization in the Lower Volcanic unit (LV) are generally not mineralized, except near contacts with mineralized UV rocks or related mineralized structures.

The UV unit was subdivided into two, comprising the Erato sub unit to the north, and the Artavasdes-Arshak-Tigranes (AAT) sub unit to the south. The two units are structurally distinct, with the Erato unit having a slightly lower tenor of gold mineralization.

Rocks of the LV unit were assumed to occur in all areas outside of the Upper Volcanic and colluvium wireframes. The extent of the lower volcanic unit was modelled by AMC based on the extent of drilling over the Amulsar project. Exploration targets outside of the Erato and AAT areas were excluded.

The drillholes and chip sample database used for estimation of resources consists of 91,830 gold and silver assays, and 1,148 specific gravity measurements. AMC determined that the most appropriate method of representing specific gravity is to average the specific gravity values for each main unit modelled.

Drillholes for each of the four zones, Erato and AAT, Upper Volcanic, and Lower Volcanic units were composited to 1 metre to provide common support for statistical analysis and estimation for gold and silver data. Approximately 93% of assay samples were sampled at 1 metre intervals or less.

Based on statistical analysis of the Erato and AAT composites, it was found that a combined dataset of UV and LV units for each Erato and AAT zones provided more stable datasets for indicator variography, and Gaussian transform of gold composite data. These combined datasets were used for variography and the estimation of grades for the UV model only. The LV unit is estimated using composites from only the LV unit.

Conditional statistics were generated for the Erato and AAT zones using combined UV and LV gold composites, and used to determine intra-class mean grades to be used for post-processing of model panel grade estimates. Eleven thresholds were selected for each of the two UV zones, as they were considered sufficient to discretize both the sample and metal values.

A suite of experimental gold variograms were generated and modelled for the Erato and AAT subzone declustered composites (using combined UV and LV data). Variograms


12042 Amulsar Project Lydian Resource and Reserves Final - May 2013 viii

were generated for both gold and indicator thresholds. Traditional semi-variograms were used as the spatial model for Erato and AAT zones. Gold indicator variograms were used to estimate gold grades, while gold variograms were used to derive change-of-support correction factors. Omni-directional variograms or variograms that model major and semi-major axes are considered the most appropriate for estimating the UV units.

Gold grades were estimated using a multiple indicator kriging (MIK) estimator, using 1 m gold composites for each of the Erato and AAT UV zones. As the combined LV and UV composite set of grades for each of the Erato and AAT zones is more statistically stable, these were used to estimate gold into each of the Erato and AAT models. A panel model with the dimensions of 20 m E × 20 m N × 10 m elevation was used for the each UV zone MIK estimates. In preparation for ranking of localized estimates, gold grades were estimated by OK into a target SMU model with the dimensions 10 m N × 10 m E × 5 m elevation. These estimates also utilized the combined (LV and UV) composites for Erato and AAT zones.

Gold grades were estimated in three estimation runs using progressively larger search ellipsoid ranges for the Erato and AAT zones. The search ellipsoid for the Erato zone was inclined at 10° to the north to reflect a dip trend observed in mineralization. No similar trends were observed in the AAT zone.

A change-of-support adjustment was applied in order to produce resource estimates that reflect the anticipated level of mining selectivity. When estimating local recoverable resources, the objective is to obtain the proportion of mineralization above a particular cut-off grade (pseudo tonnage), within panels that are large enough to achieve a robust estimation.

A localized MIK (LMIK) SMU model was generated using the MIK SMU-corrected histogram, and partitioning the estimated tonnage and metal from the MIK panel model evenly into SMU blocks within the panel. In this manner, grades are mapped into each of the SMU-sized blocks, thereby replicating the targeted mining selectivity. Ranking of the SMU-sized blocks within a panel is based on SMU grades estimated by ordinary kriging (OK).

Gold grades were estimated by OK for the Lower Volcanic unit using only LV composites. No distinction was made between Erato and AAT areas for these estimates. Three estimation runs were completed using progressively expanded ellipsoid search ranges.

Silver grades were estimated for the Upper and Lower Volcanic units using silver composites separately for each zone. Capped composites for the Erato UV zone are used to for estimation of silver grades in the Erato UV model. Uncapped composites are used to for estimation of silver grades in the AAT UV model. Capped composites are used for estimation of silver grades in the LV model – no distinction is made between Erato and AAT areas for these estimates. Three estimation runs were completed using progressively expanded ellipsoid search ranges. Silver grades were estimated using an OK estimator.

Specific gravity values were assigned to each estimated model on the basis of the average specific gravity measurements in each of the estimated models.


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The Mineral Resources have been estimated using the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions and adopted by CIM Council, and procedures for classifying the reported resources were undertaken within the context of the Canadian Securities Administrators National Instrument 43-101 (NI 43-101).

Estimated resources have been classified with consideration of the following criteria:

Quality and reliability of raw data (sampling, assaying, surveying).

Confidence in the geological interpretation.

Number, spacing, and orientation of intercepts through mineralized zones.

Knowledge of grade continuities gained from observations and geostatistical analyses.

The likelihood of material meeting economic mining constraints over a range of reasonable future scenarios, and expectations of relatively low selectivity of mining.

Gold mineralization at the Amulsar deposit is characterized by short-range continuities, particularly if considering grades above potentially economic cut-offs. It is, therefore, important to identify low-confidence areas which have been estimated by one or two drillholes in an isolated area, regions at depth where estimates are highly influenced by a single drillhole, or regions that have been estimated at longer distances from any drillholes. AMC does not consider these areas as resources, and therefore, using the boundary between the UV second and third estimation runs as a guide, AMC developed a wireframe which constrained the extent of reportable estimated resources. The boundary also excluded blocks estimated by isolated drillholes, or blocks estimated by drillholes that are significantly isolated from other drillholes at depth. This wireframe was applied to the final block model containing UV and LV estimates, and all blocks below this boundary were removed from the model as unclassified material.

Indicated resources were classified on the basis of a wireframe enclosing drilling that was closely spaced (approximately 45 m), and included holes drilled vertically and at inclined angles, demonstrating vertical and horizontal continuity. The wireframe outline was drawn to enclose a continuous zone of mineralization, and relatively high number of composites used to make each block estimate.

Resources classified as Measured were contained within the Indicated wireframe, but where block grades are estimated by 50 or more composites. The Measured classification encompassed only blocks in the Upper Volcanic unit.

Resources classified as Inferred comprise all remaining blocks not classified as Measured or Indicated. The likelihood of the resource being potentially economic was tested by generating an optimized pit shell around the classified resources using:

Pit slope angle of 45 degrees

Gold price assumption of $1,200 per troy ounce of gold.


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Mineral Resources for the Amulsar project have been estimated in conformity with generally accepted CIM “Estimation of Mineral Resource and Mineral Reserves Best Practices” guidelines and are classified according to the “CIM Standards on Mineral Resources and Reserves: Definition and Guidelines” (December, 2005). At a cut-off grade of 0.35 g/t gold, the Mineral Resources are estimated at 52.4 Mt at 1.05 g/t Au (1.77 million ounces) of Measured category, 18.1 Mt at 1.02 g/t Au (0.59 million ounces) of Indicated category, and 58.0 Mt at 0.93 g/t Au (1.73 million ounces) of Inferred category resources.

Table 1.1 Mineral Resource Statement for the Amulsar Project, Armenia, AMC Consultants (UK) Limited, 5 March, 2013

Classification Quantity (tonnes) Gold

Grade (g/t) Silver

Grade (g/t) Contained Gold (toz)

Contained Silver (toz)

Measured 52,400,000 1.05 4.19 1,769,000 7,059,000

Indicated 18,100,000 1.02 3.25 593,000 1,888,000

Inferred 58,000,000 0.93 2.87 1,734,000 5,351,000

Total Measured and Indicated

70,500,000 1.05 3.95 2,379,000 8,949,000

Total Inferred 58,000,000 0.93 2.87 1,734,000 5,351,000

1. The effective date of the Mineral Resource Statement is 5 March 2013.

2. A cut-off grade of 0.35 g/t gold for this project based on gold price of US$1,200 per troy ounce of gold and assuming an open-pit mining scenario.

3. Figures have been rounded to the appropriate level of precision for the reporting of Indicated and Inferred Resources in the upper and lower volcanic units.

4. Due to rounding, some columns or rows may not compute exactly as shown.

5. Mineral Resources in this resource statement are not Mineral Reserves do not have demonstrated economic viability. The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues. Mineral Reserves have been previously reported for this project using a prior Mineral Resource statement

Mineral Reserves

A mineral reserve estimate for the Amulsar project was developed from the results of the 2012 feasibility study for the project using a concurrent mineral resources and mineral reserves estimate authored by Herb Welhener MMSA-QPM of Independent Mining Consultants, Inc. The reported mineral resources and reserves were contained in a by the Amulsar Resource update and Heap Leach Feasibility Study completed by K D Engineering for Lydian. The report for the study was dated 3 September 2012 and amended 28 November 2012. The mineral reserve will be revised for Mineral Resources reported on 5 March 2012 as part of a feasibility study currently underway and due for completion in August 2013.

As a basis for the mineral reserve evaluation, a floating cone algorithm (independently verified by Whittle optimizations) was used to determine the final pit design and internal phase designs. The final pit design is based on the shell generated by the US$ 900/oz floating cone run, selected as a result of the evaluation of the discounted net value at US$ 1200/oz gold and US$ 20/oz silver prices for a suite of cone geometries run from $400/oz to $1200/oz gold. The cones above US$ 900/oz. showed no increase in contained value for the additional material mined. This is also a function of the estimation being data limited, as the cone at US$ 900/oz captures ore up to where


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drilling is limited and insufficient drill data exists to classify material as either measured or indicated. The Mineral Reserves for 3 September 2012 are presented in Table 1.2.

Table 1.2 Mineral Reserves* Represent the Diluted Ore Scheduled to the Crusher, 3 September 2012

Category Ore kt Contained Recoverable Contained Recoverable

Gold g/t Silver g/t Gold g/t Silver g/t Gold oz Silver oz Gold oz Silver oz

Proven 51,143 0.801 3.37 0.713 1.31 1,317,000 5,541,000 1,172,000 2,154,000

Probable 43,751 0.692 3.15 0.609 1.08 973,000 4,435,000 857,000 1,526,000

Proven+ Probable

94,894 0.750 3.27 0.665 1.21 2,290,000 9,976,000 2,029,000 3,680,000

*Mineral Reserves in this table rely on Mineral Resources reported on 3 September 2012. Reserves for the current

Mineral Resources reported 5 March 2013 are currently in progress.

Mining

This section has not been revised to reflect work or studies that had been completed at the time of the Mineral Resources reported on 5 March 2012. This section will be updated as part of a feasibility study currently underway and due for completion in August 2013.

Mining of the Amulsar deposit is planned to be accomplished with conventional open pit mining methods. Over 12 years, 7 phases covering the Artavasdes, Tigranes and Erato ore bodies are sequenced to arrive at an ultimate pit geometry containing the project’s reserve. Mineralization extends to the surface in the Tigranes ore body where initial mining begins; as a result, minimal pre-stripping of 729,000 tonnes is required to have adequate ore feed to the crusher. Artavasdes and Tigranes areas are mined ahead of the Erato area which requires more waste stripping to expose the ore.

During the initial 3 years of mining, ore is scheduled from the pit as direct feed to the crusher at a rate of 5 million tonnes of ore per year. In Year 3, crusher capacity is doubled with a crusher expansion and 10 million tonnes of ore per year are sent to the crusher starting in Year 4. The average stripping ratio in the first 3 years of mining is 1.8:1 waste:ore. Beginning in Year 4, the stripping ratio increases to 2.35:1 and continues at that ratio to Year 10.

A small low grade stockpile is generated near the crusher in Year 2 of mining. This is scheduled to be fed to the crusher in Years 10 and 12 of the mine life. The low grade stockpile contains 655 ktonnes of ore which amounts to a little over 3 weeks of ore at a crushing rate of 10 million tonnes per year.

During the first 8 years of mine life, waste is hauled to the waste dump facility which is about 4.5 Km north of the mining area. Starting in Year 9, the mine plan takes advantage of the opportunity to backfill completed pits. This has two benefits of decreasing the haul distance and reducing the cost of reclamation.

Mine mobile equipment has been selected to meet the production requirements of the mine schedule generated for Amulsar. Blast holes will be drilled with Sandvik DP1500i


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drills. Loading and hauling of material from the pit will be accomplished with a mixed fleet of Cat 6018’s (RH90) and 6030’s (RH120) hydraulic excavators and Cat 777 haul trucks. An auxiliary fleet of D10 track dozers, 834 wheel dozers, a 16m Grader, CAT 777 water truck, 992 front end loader and CAT 336 back-hoe are also required for mining. These machines are planned for dump construction, road construction and maintenance, pit cleanup and miscellaneous jobs.

The waste dump facility (WDF) will consist of the waste dump (WD), and an influent equalization basin (IEB), wastewater treatment plant (WWTP), and evaporation pond (EP), located downgradient of the WD and utilized for the collection and treatment of mine-influenced water draining from the WD.

The WD will be constructed in three phases. The WD phase areas will be 465,500 m2, 506,800 m2 and 360,100 m2 for Phases 1, 2 and 3, respectively, for a total WD area of 1,332,400 m2. Waste material will be deposited on the WD in nominal 8 m thick lifts. The WD may be constructed in sub-phases to minimize initial capital costs and to optimize water management within the IEB and flows to the WWTP.

The WD will be lined with a 0.45-m minimum thickness compacted low permeability soil liner. An underdrain system will be constructed within the WD footprint beneath the soil liner to drain groundwater/subsurface seepage to the IEB and prevent the seepage from entering the waste pile above the WD base liner. Rainfall and snowmelt water within the WD (contact water) will be collected by an overdrain system constructed above the WD base liner and routed to the IEB.

The IEB was sized in accordance with the project design criteria to store the WD underdrain and overdrain flows, and to provide flow control to the WWTP. The IEB will have a composite liner system comprised of High Density Polyethylene (HDPE) geomembrane underlain by a 0.3-m minimum thickness compacted low-permeability soil liner.

The WWTP will receive water from the IEB. Treatment processes have been developed based on the projected water quality characterization of the combined flows from the WD underdrains and overdrains. The IEB and WWTP capacities have been designed to accommodate high flows associated with snowmelt, with operation of the WWTP at a constant rate for about eight months per year. Final treated effluent water quality targets are to be determined. The WWTP effluent is projected to comply with Armenian maximum allowable concentration (MAC) Category II standards. Category III standards (more lenient) have been considered, but the conceptual design and cost estimation for the WWTP is conservatively based on the more stringent Category II effluent targets.

Reverse osmosis brine from the WWTP will drain by gravity to the EP for evaporation. The EP was sized to meet the brine storage requirements. The final unit operation in the wastewater treatment process is the spray-enhanced solar EP. Use of the EP limits the operational season for water treatment. The EP will have a composite liner system comprised of HDPE geomembrane underlain by a 0.3-m minimum thickness compacted low-permeability soil liner.


12042 Amulsar Project Lydian Resource and Reserves Final - May 2013 xiii

Treated water will be discharged to the Vorotan River. Secondary waste sludge from chemical precipitation will be disposed on site. Solids accumulated in the EP may be removed for disposal or disposed in-place at the end of the WWTP life.

Recovery Methods

This section is based on 2012 feasibility study for the project completed by K D Engineering for Lydian. This section has not been revised to reflect work or studies that had been completed at the time of the Mineral Resources reported on 5 March 2012. This section will be updated as part of a feasibility study currently underway and due for completion in August 2013.

Run-of-mine ore will be hauled from the open pit to the three stage crushing plant located in close proximity to the mine. Haulage distance from the open pit to the run-of-mine stockpile is 1 km or less. The crushing plant consists of primary crushing through a jaw crusher, secondary crushing through a cone crusher, and tertiary crushing through a pair of cone crushers. The circuit will reduce ROM ore from minus 700 mm top size to a product of 80 percent passing 12 mm and is designed to process ore at a rate of 5 Mtpa.

In the first year of operation 3.75 Mtpa will be processed and 5 Mtpa in year two. Installation of a duplicate crushing circuit ramps up production to 10 Mtpa in Year 4 till the end of the life of the project.

Crushed ore will be transported approximately 3.5 km on an overland conveyor to be distributed along the north side of the leach pad. Pebble lime will be added to the ore while on the overland conveyor. A tripper conveyor will deliver the ore from the overland conveyor to a series of twenty four portable conveyors. A stacking conveyor will place the ore on the leach pad in lifts of a nominal thickness of 8 m.

The HLF will consist of a leach pad and collection ponds. The leach pad will be constructed in three phases with the ultimate ore heap amount of 95 Mt stacked in three stages. The pad phases will be expansions to the north and each phase will be divided into two cells for a total of six cells for the ultimate pad. The Phase 1 pad area will be 479,690 m2 and the Stage 1 heap capacity will be 18 Mt, suitable for the first 3.3 years of operation. The Phase 2 pad area will be 465,000 m2 and the Stage 2 heap capacity

will be 27 Mt to provide capacity through Year 6. The Phase 3 pad area will be 461,120 m2 and the Stage 3 heap capacity will be 50 Mt. The ultimate pad area will be 1,405,810 m2 and will accommodate 95 Mt of ore heap with a nominal maximum heap height of 72 m above the pad liner, suitable for the 11-year operating life. If additional leachable ore is identified, a fourth pad phase may be constructed to the north of Phase 3 to allow the stacking of up to 120 Mt of ore heap. The leach pad may be constructed in sub-phases to further minimize initial capital costs. A detailed discussion of the design of the HLF is provided in the Feasibility Design Report (Golder, 2012c).

The collection ponds consist of process (pregnant and intermediate) ponds and a storm event (storm) pond sized in accordance with the project design criteria and constructed down gradient of the leach pad. Additionally, an overflow pond will be constructed down gradient of the storm pond. The process ponds were sized to contain the operational


12042 Amulsar Project Lydian Resource and Reserves Final - May 2013 xiv

and drain down flows, and the storm pond was sized to contain the storm runoff from the ultimate pad and ponds.

The leach pad and collection ponds will have composite liner systems respectively, comprised of Linear Low Density Polyethylene (LLDPE) and HDPE geomembranes underlain by a 0.3-m minimum thickness compacted low-permeability soil liner. The process ponds will be double-HDPE-geomembrane lined with an intermediate leak collection and recovery system (LCRS) layer.

Pregnant leach solution (PLS), intermediate leach solution (ILS) and storm event ponds will be located south of the leach pad, and a barren leach solution tank will be located inside the Adsorption-Desorption-Regeneration (ADR) plant near the ponds. Barren and intermediate leach solutions will be dosed to contain 0.5 gpl sodium cyanide and will be applied by drip emitters to the top of the ore heap at irrigation rates of 10 l/h/m2. The drip emitter application system will operate to reduce evaporation in summer and allow leaching to continue in winter. These leach solutions will be stacked such that the barren solution will be used to irrigate the ore in a secondary leach cycle and the intermediate solution will be used to irrigate fresh ore in a primary leach cycle to produce PLS. The primary and secondary leach cycles will be 30 days and t 80 days respectively. Leaching of precious metal from the ore will continue as the leached ore is buried by consecutive lifts. After 30 days of buried lift leaching, resulting in 140 total leach days, the predicted overall recoveries shown in Table 1.2, will be attained with an overall leach solution to ore ratio exceeding 3 m3/t.

The barren and intermediate leach solutions will percolate through the ore and be collected in a network of perforated drain collection pipes installed within a granular layer above the pad liner. The solution will gravity flow from the drain pipes via transfer pipes exiting the pad and draining into the process ponds. The transfer pipes will direct the solution to either the pregnant or intermediate ponds by valve control. The PLS will be pumped from the pregnant pond into the ADR plant. Precious metal will be adsorbed from solution onto activated carbon counter-currently in a train of five adsorption columns. Carbon desorption and regeneration will occur daily in 7 tonne batches. A second train of five carbon columns will be installed for the Phase II expansion. Carbonate scale will be removed from batches of loaded carbon in an acid wash vessel using dilute hydrochloric acid. Precious metal will be desorbed from the acid washed carbon in a strip vessel operating under elevated temperature and pressure. After the carbon is used it will be regenerated in a kiln. The strip solution will report to an electrowinning circuit where precious metals will be deposited onto steel mesh cathodes. Weekly, the deposited metals will be washed from the cathodes, dried in a retort to volatilize and collect elemental mercury, if present, and smelted in a furnace with fluxes.

The doré, containing roughly equal proportions of gold and silver, will be shipped off-site for refining and sale.

Infrastructure

This section is based on 2012 feasibility study for the project completed by K D Engineering for Lydian.


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The Amulsar Gold Project covers an area of 130 km2, located in south central Armenia. Currently paved roads are available to the town of Jermuk and a 15 km dirt road is available from Jermuk to the mine site. Long term accommodation will be provided to house up to 200 people on site and the remaining personnel will reside in existing hotels in Jermuk. The contractor will be responsible for his own construction camp. Currently a small exploration camp is available at site which utilizes a portable generator.

There is good infrastructure surrounding the Amulsar project. This includes the paved highway between Yerevan and Iran, high tension power lines and substations, a gas pipeline from Iran, year round water from the Vorotan River and a fibre optic internet cable. As a consequence of the project location on the top of a mountain ridge, a reasonable amount of infrastructure will need to be constructed during project development. Mobile phones work on most parts of the project area. Out of country supplies, material and equipment can be shipped to the ports of Poti or Batumi, Georgia, then trucked through Georgia and Armenia to the Amulsar project site.

Community relations issues are currently handled by HSEC senior staff, a social development manager, and a community liaison officer and a good understanding of local issues and sensitivities has been established.

A detailed strategy for accommodating construction personnel, employees and security personnel during the construction period will be developed during the detailed engineering effort.

The Project is located in the catchments of three rivers Vorotan, Arpa and Darb. The sections of catchments of Vorotan and Arpa rivers fall under the Lake Sevan Law as the zones of non-immediate impact, where mining and processing are not restricted.

Environmental and Social Impact

The Environmental and Social Impact Assessment (ESIA) prepared for this project considers the proposed mining of the Tigranes and Artavasdes deposits at Amulsar, together with associated mine waste management, mineral handling, heap leaching, gold extraction and ancillary activities, to produce gold-silver bullion corresponding to Phases 1, 2 and 3 of the mining operations of a period of approximately 10 years from the commencement of ore extraction, followed by reclamation and closure of the mine. Environmental and social studies required with respect to mining operations at Erato will require full assessment in an ESIA addendum to be completed at a later stage of the Project.

The broad scope of the ESIA has considered the following:

The policy, legal and administrative framework.

The Project design covering geographical, ecological, environmental, social and temporal aspects, influences and effects.

Analysis of baseline environment and socio-economic, defined through detailed scope of work, in consultation with key stakeholders.


12042 Amulsar Project Lydian Resource and Reserves Final - May 2013 xvi

Review of alternatives for siting various project facilities, taking into account regulatory, environmental, biodiversity, cultural properties, social and community health and safety issues.

Defining the environmental and social impacts associated with Project construction, operation and mine closure and reclamation.

Incorporating mitigation measures into detailed design to eliminate or minimize impacts to an acceptable level and consider appropriate alternatives.

Develop key Framework Management Plans with input to the site specific Environmental and Social Action Plan (ESAP) for the delivery of the Project.

Framework Mine Closure Plan and measures for post-mining management.

The findings of the draft ESIA concluded the following:

Environmental impacts range from Negligible to Major, in the absence of mitigation. Through the implementation of detailed mitigation measures, together with adherence to management plans in the ESAP, it is considered that any potential residual environmental impacts can be reduced to a range Negligible to Moderate. Residual environmental impacts include dust generation, generation of greenhouse gas emissions, conversion of land reducing habitat available for avian, flora and fauna species and changes to landscape and topography. If left unmitigated, the project would have the potential to cause surface and groundwater contamination, however extensive mitigation measures have been developed which will manage any potential impacts to an acceptable level.

Social impacts are both positive and negative. Positive impacts relate to improvements in local livelihoods through direct employment by the project, as well as knock-on economic growth; and macroeconomic benefits through taxation, land rent and other revenues paid by Lydian. These positive impacts range from Minor to Moderate; provided enhancement measures (such as stakeholder engagement, transparency and governance) are implemented. Negative impacts relate to economic displacement as a result of land take; localized inflation driven by higher incomes in the region; community cohesion issues between mine employees and other local residents; potential in-migration of job-seekers; managed disturbance of archaeological sites; and community health impacts, including higher risk sexual practices. With mitigation, negative impacts range from Negligible to Moderate.

The effective implementation of the mitigation measures outlined in the ESIA is essential to ensure that positive benefits of the project outweigh the negative impacts and the negatives are mitigated or designed out. The development and implementation of detailed management plans will be incorporated into operational procedures, as well as Lydian’s ESMS. Lydian’s social strategy and on-going community development measures are expected to provide additional benefits to local communities over and above project impacts.

Capital Cost



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Capital costs for the project were estimated by IMC for mining, KDE for the processing plant/infrastructure and Golder for the leach pad, collection ponds, waste dump facility, wastewater treatment plant, and for mine closure and rehabilitation.

The capital expenditures for the Amulsar Project processing facility will occur in two phases; Years 1 to 3 is Phase I and Years 4 through the remaining years is Phase II. Besides the Phase II process plant expansion sustaining costs are incurred for the leach pad, mining fleet and waste dump.

The initial and sustaining capital costs are summarized in Table 1.2.


12042 Amulsar Project Lydian Resource and Reserves Final - May 2013 xviii

Table 1.2 Total Initial And Future Sustaining Project Capital Costs

Item Initial cost (US$) Sustaining cost (US$)*

Total (US$)

Mining Cost 8,791,700 17,189,800 25,981,500

Process Plant Cost 228,568,063 26,872,254 255,440,318

Waste Water Treatment Plant - 19,078,412 19,078,412

Leach Pads 15,687,450 31,814,488 47,501,938

Waste Dump 16,575,893 14,302,181 30,878,074

Closure and Reclamation 37,221,477 37,221,477

Total Initial and Future Sustaining Project Cost 269,623,106 146,478,612 416,101,718

* Sustaining costs include the majority of the capital costs associated with the Phase II expansion.

Operating Costs


Operating costs for the project were estimated with input from KDE, IMC and Golder. These costs over the life of the mine are summarized in Table 1.3.

Table 1.3 Life-of-Mine Cash Operating Cost

Item US$/Tonne Ore

Mining 6.29

Processing 2.92

Waste Water Treatment Plant 0.13

G & A 0.47

Cash Operating Cost 9.81

Newmont Payment 0.21

Total Operating Cost (US$/oz) 468.48

Economic Analysis


The economic highlights are summarized in Table 1.4.


12042 Amulsar Project Lydian Resource and Reserves Final - May 2013 xix

Table 1.4 Economic Highlights

Average stacked gold grade g/t 0.750

Steady state annual gold production (Yr 1-3) oz 118,341

Steady state annual gold production (Yr 4-12) oz 186,047

Life of Mine from production start yr 12

Planned Steady State Production Rate (Yr 1-3) tpd 15,000

Planned Steady State Production Rate (Yr 4-12) tpd 30,000

IRR Pre tax % 27.7%

NPV Pretax (5% discount rate) US$M 646.0

Payback period from start of production yr 4.0

NPV Pretax (0% discount rate) US$M 1,121.6

Initial Capital Cost US$M 269.6

Total Capital Cost US$M 416.1

Cash Costs US$/oz 468.5

Metallurgical Gold Recovery % 88.6

Total Mined Gold to Leach Pad Moz 2.29

The financials for the base case mining options are summarized in Table 1.5.

Table 1.5 Economic Analysis Summary - US$ Pre-Income Tax Cash Flow

US $ x 1000

US $/t Resource

US $/oz Gold

Mine Gate Value of All Resource Net of Transportation and Refining

2,424,680 25.55 1,194.75

Mining Operating Cost (596,959) (6.29) (294.15)

Processing Cost (277,116) (2.92) (136.55)

Waste Water Treatment Plant (12,276) (0.13) (6.05)

General & Administration (44,407) (0.47) (21.88)

Royalties (Newmont Payment) (20,000) (0.21) (9.85)

Cash Operating Cost (950,757) (10.02) (468.48)

Cash Operating Cash Flow 1,473,923 15.53 726.27

Capital Cost including Pre-Production Development (416,102) (4.38) (205.03)

Pre-Income Tax Cash Flow 1,057,821 11.15 521.24

Metal price scenarios were used in the pre-tax model to evaluate the sensitivity on NPV, IRR, and payback. The results for the base case mining options are shown in Table 1.6.


12042 Amulsar Project Lydian Resource and Reserves Final - May 2013 xx

Table 1.6 Summary of Key Financial Parameters (Sensitivity to Gold Price)

Gold Price, US$/oz 1,100 1,200 1,300 1,400 1,500

NPV(5), (000's) 512,504 645,976 779,448 912,920 1,046,392

IRR, Pre-Taxes 23.8% 27.7% 31.3% 34.8% 38.1%

Payback, Operating Years 4.5 4.0 3.7 3.4 3.1

Conclusion and Recommendations

The Amulsar high-sulphidation epithermal gold-silver deposit has been defined as a result of systematic exploration activities undertaken over a period from 2008 to 2012. More recently, surface geological and structural mapping, supported by a large database of orientated core measurements, has resulted in an improved understanding of the geology and mineralization of gold and silver for the deposit. In turn, this has allowed the estimation of resources to better reflect the geology and mineralization characteristics of the deposit. Exploration work for the project is professionally managed, using procedures that meet generally accepted, industry best practices. The project has been explored by; geophysical techniques, diamond core and reverse circulation drilling, and chip sampling. In 2012, a structural study over the Amulsar property was commissioned by Lydian. This study necessitated a major reinterpretation of geology and mineralization constraints for the project.

In the absence of clear mappable controls of mineralization an LMIK estimator was chosen as the most appropriate methodology to estimate gold resources for the UV unit. Gold mineralization for the LV unit is limited and overall subordinate to UV mineralization, and therefore, an OK estimator was used for this unit. Silver mineralization is not well understood, probably unrelated to gold and significantly low-grade. An OK approach to estimating silver for the UV and LV zones was deemed appropriate.

Based on review of exploration data and the estimation of resources, AMC concludes that mineral resources can be expanded at depth for the UV rocks to the south-east of the Arshak area, and at depth in the Erato, Tigranes and Artavasdes areas. Further exploration will require reverse circulation drilling and some diamond core drilling to provide structural information. Continuing work on a structural analysis of the project will be important to the accurate estimation of resource, and a better geological understanding of mineralization for the Amulsar project.

The exploration procedures and protocols used by Lydian meet best industry practices and should be continued. Assay quality-control procedures are appropriate, but could be strengthened with field duplicates for silver assays. It is AMC’s experience that operating a sample preparation facility provides many benefits to exploration companies, without any compromises in assay integrity or reliability. Although AMC has found no issues with the current sample preparation laboratory at Gorayk, developing protocols where samples are passed to the preparation facility in more formalized process will be beneficial.


12042 Amulsar Project Lydian Resource and Reserves Final - May 2013 xxi

A structural study of the Amulsar project, initiated in 2012, has provided important directions in understanding the Amulsar project and should be continued. Providing a structural framework for the deposit is considered by AMC as ongoing process of exploring and defining more mineral resources for the project.

AMC recommends a combination of infill drilling and step-out drilling to systematically extend known areas of mineralization. The infill drilling strategy is suggested to concentrate on delineating measured and indicated by drilling areas classified as inferred by resources, by increasing the drill to a nominal spacing of 40 m × 40 m spacing with both inclined and vertical holes. In some areas, more closely-spaced drilling may be required to better define structural or lithological contacts, or areas where mineralization becomes diffuse. Step-out drilling should concentrate on extending mineralization to the south-west of the Arshak area, and extending mineralization at depth in the Erato, Tigranes and Artavasdes areas.

An exploration programme to provide the basis for the above recommendations will comprise of approximately 34,000 metres of reverse circulation drilling and 6,000 metres diamond drillholes. The estimated cost including ancillary costs is estimated at US$6,400,000.

Recommended metallurgical testwork for the project are the following column leach tests:

Further column leach tests be carried out on metallurgical composites from the Erato deposit. Drillholes and sample intervals should be selected based upon the updated Mineral Resource Estimate and open-pit design prepared by AMC.

Carry out a single refrigerated column leach test on a mixed Tigranes/Artavasdes composite sample, to simulate the effect of ‘cold climate’ on leach performance;

Carry out column leach tests on a run-of-mine ore sample – to determine the potential metallurgical leach performance; and

Conduct additional column leach tests on low-grade material of 0.2 g/t Au and 0.3 g/t Au.

Positive results from this feasibility study, based on the mineral reserve estimates of 3 September 2012, suggest that the Amulsar project be advanced towards detailed engineering at an estimated cost of US$ 9.5 million.

Mining at Amulsar will be by conventional open pit methods with 90-tonne haul trucks. A study into improving economics by using 140-tonne trucks should be conducted as well as project improvements by modeling the ore body on 5-meter blocks instead of 10-meter blocks. Additional exploration upside at Amulsar has the potential to increase the mineral resource.

A site wide water balance has been completed with the design management plans to mitigate the discharge of contaminated water. Further analysis of the balance is recommended to reduce treatment requirements.

Environmental baseline monitoring programs should be maintained and the development of the Biodiversity Action Plan should be continued and implemented.


12042 Amulsar Project Lydian Resource and Reserves Final - May 2013 xxii

Social engagement should continue towards defining opportunities for local employment. Preparation should continue towards preparation for implementation of the Environmental and Social Action Plan.

The Engineering, Procurement and Construction Schedule should be optimized and work should commence on a Project Execution Plan. Key personnel should be hired including a construction manager familiar with in-country construction contractors.


12042 Amulsar Project Lydian Resource and Reserves Final - May 2013 i

CONTENTS

1 SUMMARY III

2 INTRODUCTION 1

3 RELIANCE ON OTHER EXPERTS 3

4 PROPERTY DESCRIPTION AND LOCATION 4 4.1 Location .......................................................................................................... 4 4.2 Property Description ....................................................................................... 5 4.3 Ownership ...................................................................................................... 6 4.4 Tenement ....................................................................................................... 6 4.5 Armenian Mining Legislation .......................................................................... 6 4.6 Royalties ......................................................................................................... 6 4.7 Newmont Joint Venture Agreement ............................................................... 7 4.8 Environmental ................................................................................................ 7

5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY 9

5.1 Accessibility .................................................................................................... 9 5.2 Physiography .................................................................................................. 9 5.3 Climate ........................................................................................................... 10 5.4 Infrastructure .................................................................................................. 11

6 HISTORY 12

7 GEOLOGICAL SETTING AND MINERALIZATION 13 7.1 Regional Geology ........................................................................................... 13 7.2 Local Geology ................................................................................................ 13

7.2.1 Alteration .......................................................................................... 14 7.2.2 Structure ........................................................................................... 15 7.2.3 Mineralization ................................................................................... 15

8 DEPOSIT TYPES 20

9 EXPLORATION 21 9.1 Introduction ..................................................................................................... 21 9.2 Newmont Joint Venture (20072010) ............................................................. 21 9.3 Lydian (2010-2012) ........................................................................................ 21 9.4 Methodology ................................................................................................... 21

9.4.1 Channel Samples ............................................................................. 21 9.4.2 Trench Samples ............................................................................... 22

10 DRILLING 23 10.1 Newmont Joint Venture (20082010) ............................................................. 23 10.2 Lydian (20102012) ....................................................................................... 23 10.3 Drilling Methodology ....................................................................................... 26

10.3.1 Drillhole Collar Coordinates .............................................................. 26 10.3.2 Downhole Surveys ............................................................................ 27 10.3.3 Diamond Core Drilling Protocols....................................................... 28 10.3.4 Reverse Circulation Drilling Protocols .............................................. 28

10.4 AMC Comments ............................................................................................. 28


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11 SAMPLE PREPARATION, ANALYSES AND SECURITY 30 11.1 Sampling Method and Approach .................................................................... 30

11.1.1 Specific Gravity Measurements ........................................................ 30 11.1.2 Diamond Drill Core Samples ............................................................ 31 11.1.3 Reverse Circulation Hole Samples ................................................... 31

11.2 Sample Preparation and Analysis .................................................................. 32 11.2.1 Amulsar Assay Quality Control Procedures...................................... 32

11.3 AMC Comments ............................................................................................. 34

12 DATA VERIFICATION 36 12.1 Verification by Lydian ..................................................................................... 36 12.2 Verification by AMC ........................................................................................ 36

12.2.1 Twinned Hole Review ....................................................................... 36 12.2.2 Potential Gold Assay Bias in Drilling Methods .................................. 36 12.2.3 Site Visit ............................................................................................ 38 12.2.4 Verification of Analytical Quality Control Data .................................. 39 12.2.5 Assay Database Verification ............................................................. 40

13 MINERAL PROCESSING AND METALLURGICAL TESTING 41 13.1 SGS Lakefield Research (2008) ..................................................................... 41 13.2 SGS Mineral Services UK Ltd. (2009) ............................................................ 41

13.2.1 -75 µm Bottle Roll Leach Tests ........................................................ 41 13.2.2 -2 mm Bottle Roll Leach Tests.......................................................... 42 13.2.3 Column Leach Tests ......................................................................... 42

13.3 Wardell Armstrong International (2010) ......................................................... 43 13.4 Wardell Armstrong International (2011) ......................................................... 45 13.5 Kappes Cassiday & Associates (2012) .......................................................... 45 13.6 Kappes Cassiday & Associates (2013) .......................................................... 49 13.7 Metallurgical Samples and Locations ............................................................. 52

14 MINERAL RESOURCE ESTIMATES 56 14.1 Overview of Estimation Strategy .................................................................... 56 14.2 Geological and Assay Database .................................................................... 56 14.3 Geological Modelling and Interpretation ......................................................... 57 14.4 Specific Gravity .............................................................................................. 58 14.5 Topography .................................................................................................... 59 14.6 Resource Database ........................................................................................ 59 14.7 Compositing, Capping and Declustering ........................................................ 60 14.8 Gold Indicator Statistics .................................................................................. 61 14.9 Variography .................................................................................................... 62 14.10 Block Model Parameters ................................................................................ 67 14.11 Estimation Procedures ................................................................................... 68

14.11.1 Gold Estimates for Upper Volcanic Units .............................. 68 14.11.2 Gold Estimate for Lower Volcanics ....................................... 69 14.11.3 Silver Estimates for Upper and Lower Volcanic Units ........... 69 14.11.4 Specific Gravity ..................................................................... 69 14.11.5 Validation .............................................................................. 75

14.12 Resource Classification .................................................................................. 75 14.13 Mineral Resource Statement .......................................................................... 76 14.14 Previous Resource Estimates ........................................................................ 77 14.15 Grade Sensitivity Analysis .............................................................................. 78


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15 MINERAL RESERVE ESTIMATES 81 15.1 Floating Cones ............................................................................................... 81 15.2 Final Pit Design .............................................................................................. 86 15.3 Mineral Reserve Estimate .............................................................................. 89

16 MINING METHODS 90 16.1 Pit and Phase Design ..................................................................................... 90 16.2 Mine Schedule ................................................................................................ 96 16.3 Waste Movement ........................................................................................... 99 16.4 Low Grade Stockpiles .................................................................................... 101 16.5 External Haul Roads and Time Sequence Drawings ..................................... 103 16.6 Mining Equipment Fleet .................................................................................. 109

16.6.1 Drill and Blast ................................................................................. 109 16.6.2 Load and Haul ................................................................................ 109 16.6.3 Ancillary Equipment ........................................................................ 110 16.6.4 Personnel ....................................................................................... 111

17 RECOVERY METHODS 114 17.1 Crushing Facility ............................................................................................. 114

17.1.1 Primary Crushing ............................................................................ 115 17.1.2 Secondary Crushing ....................................................................... 115 17.1.3 Tertiary Crushing ............................................................................ 115 17.1.4 Stacking .......................................................................................... 116

17.2 Heap Leach Facility ........................................................................................ 116 17.2.1 Leach Pad ...................................................................................... 117

17.3 Process Plant ................................................................................................. 120 17.3.1 Carbon Adsorption .......................................................................... 120 17.3.2 Carbon Acid Wash .......................................................................... 121 17.3.3 Carbon Stripping ............................................................................. 121 17.3.4 Carbon Regeneration ..................................................................... 121 17.3.5 Carbon Handling ............................................................................. 122 17.3.6 Electrowinning and Smelting .......................................................... 122 17.3.7 Reagent Handling ........................................................................... 122

18 INFRASTRUCTURE 123 18.1 Existing Infrastructure and Services ............................................................... 123

18.1.1 Location .......................................................................................... 123 18.1.2 Site Access and Roads .................................................................. 123 18.1.3 Buildings ......................................................................................... 123 18.1.4 Resources & Infrastructure ............................................................. 123 18.1.5 Communications ............................................................................. 124 18.1.6 Personnel ....................................................................................... 124 18.1.7 Power Supply ................................................................................. 128 18.1.8 Power Distribution .......................................................................... 128

18.2 Site Development ........................................................................................... 130 18.2.1 Crushing Plant ................................................................................ 133 18.2.2 Leach Pad and Collection Ponds ................................................... 133 18.2.3 Waste Dump Facility ....................................................................... 133

18.2.3.1 Waste Dump ............................................................. 134 18.2.3.2 Influent Equalization Basin ........................................ 134 18.2.3.3 Wastewater Treatment Plant .................................... 135


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18.2.3.4 Evaporation Pond ..................................................... 136 18.2.4 Accommodations ............................................................................ 136 18.2.5 Roads & Site Access ...................................................................... 136 18.2.6 Non–Process Buildings .................................................................. 137

18.3 Water Source ................................................................................................. 138 18.3.1 Potable Water Supply ..................................................................... 138 18.3.2 Raw Water Distribution System ...................................................... 138 18.3.3 Process Water Supply .................................................................... 139 18.3.4 Sewage Waste Water Treatment .................................................... 139

18.4 Waste Disposal .............................................................................................. 139

19 MARKET STUDIES AND CONTRACTS 141 19.1 Marketing Studies ........................................................................................... 141 19.2 Contracts ........................................................................................................ 141

20 ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY IMPACT 142

20.1 Location, Environmental and Social Setting ................................................... 143 20.2 ESIA and Permitting ....................................................................................... 144

20.2.1 Scope of the ESIA .......................................................................... 144 20.2.2 Republic of Armenia Environmental Impact Assessment ............... 145 20.2.3 Permits and Licensing .................................................................... 146

20.3 Significant Project Consumption and Releases ............................................. 148 20.4 Environmental Context ................................................................................... 152

20.4.1 Geology and Soils .......................................................................... 152 20.4.2 Radioactivity ................................................................................... 152 20.4.3 Seismicity ....................................................................................... 153 20.4.4 Water Resources ............................................................................ 153 20.4.5 Biodiversity ..................................................................................... 155 20.4.6 Air Quality ....................................................................................... 160 20.4.7 Noise and Vibration ........................................................................ 160 20.4.8 Visual and Landscape Aspects ...................................................... 160

20.5 Environmental and Social Impact Assessment (ESIA) ................................... 161 20.5.1 Environmental Impact Assessment ................................................ 161 20.5.2 Summary of Environmental Impacts ............................................... 165

20.6 Social Context and Baseline .......................................................................... 165 20.6.1 Archaeology and Cultural Heritage ................................................. 165 20.6.2 Demographic, Land-Use, Family Structure and Migration Patterns 165 20.6.3 Household income .......................................................................... 166 20.6.4 Land Use ........................................................................................ 167

20.7 Social Impact Assessment ............................................................................. 167 20.7.1 Summary of Social Impact Assessment ......................................... 173

20.8 Consideration of Alternatives ......................................................................... 173 20.9 Environmental, Health and Safety Project Design Parameters ...................... 174

20.9.1 Amulsar Mine EHS Engineering Measures .................................... 174 20.10 Environmental and Social Management System ............................................ 179 20.11 Environmental and Social Monitoring Plan ..................................................... 180 20.12 Reclamation, Closure and Rehabilitation ....................................................... 180 20.13 Planned Future Work ..................................................................................... 181

21 CAPITAL AND OPERATING COSTS 183


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21.1 Mine Capital Costs ......................................................................................... 183 21.2 Mine Operating Costs ..................................................................................... 184 21.3 Process Capital Costs .................................................................................... 187

21.3.1 Direct Costs .................................................................................... 190 21.3.2 Indirect Costs .................................................................................. 194 21.3.3 Contingency and Accuracy ............................................................. 195 21.3.4 Exclusions ...................................................................................... 195

21.4 Process Operating Costs ............................................................................... 195 21.5 Waste Dump Facility Capital Costs ................................................................ 199 21.6 Heap Leach Facility Capital Costs ................................................................. 200 21.7 Wastewater Treatment Plant Operating and Capital Costs ............................ 200 21.8 Closure and Reclamation Cost Estimate ........................................................ 201 21.9 Newmont Agreement (Royalty) ...................................................................... 202

21.9.1 Working Capital .............................................................................. 202

22 ECONOMIC ANALYSIS 203 22.1 Owner Operating Mining Case ....................................................................... 203

23 ADJACENT PROPERTIES 211 23.1.1 Seismicity and Seismic Hazards .................................................... 211

23.2 Preliminary Geochemical Assessment ........................................................... 212 23.2.1 Static Testing .................................................................................. 212 23.2.2 Kinetic Testing ................................................................................ 213 23.2.3 Spent Ore Characterization ............................................................ 213

24 INTERPRETATION AND CONCLUSIONS 215

25 RECOMMENDATIONS 219

26 REFERENCES 224

TABLES

Table 2.1 Persons who Prepared or Contributed to this Technical Report ..................... 2 Table 4.1 Summary of Amulsar Project Licences ........................................................... 6 Table 10.1 Summary of Drilling Completed for the Amulsar Project .............................. 24 Table 11.1 Summary of Laboratory Independent Assay Quality Control Samples ......... 34 Table 12.1 Drillholes Examined by AMC ........................................................................ 39 Table 13.1 Whole Ore Cyanidation Leach Tests ............................................................ 42 Table 13.2 Coarse Ore Cyanidation Leach Test ............................................................ 42 Table 13.3 Column Leach Tests (-38 mm) ..................................................................... 43 Table 13.4 Column Leach Tests (-19 mm) ..................................................................... 43 Table 13.5 Final Gold Recovery Summary by Test and Composite ............................... 43 Table 13.6 Column Leach Test Results Summary ......................................................... 44 Table 13.7 Fine Cyanidation Leach Tests (Tigranes/Artavasdes) .................................. 46 Table 13.8 Fine Cyanidation Leach Test Results ........................................................... 47 Table 13.9 KCA Column Tests ....................................................................................... 50 Table 13.10 Fine/Coarse Cyanidation Leach Tests (Erato) .............................................. 51 Table 13.11 Metallurgical Testwork Composite Summary ............................................... 53 Table 14.1 Summary of Amulsar Combined UV and LV Gold Indicator Statistics .......... 62 Table 14.2 Summary of Variogram Models Amulsar Project .......................................... 64


12042 Amulsar Project Lydian Resource and Reserves Final - May 2013 vi

Table 14.3 Amulsar Project Block Model Definition ........................................................ 67 Table 14.4 Gold and Silver Estimation Parameters ........................................................ 70 Table 14.5 Mineral Resource Statement for the Amulsar Project, Armenia, AMC

Consultants (UK) Limited, 5 March, 2013 ..................................................... 77 Table 14.6 Mineral Resource Statement for the Amulsar Gold Project, Independent

Mining Consultants Inc., 3 September, 2012 ................................................ 78 Table 14.7 Global Model Quantities and Grade Estimate, Amulsar Project ................... 79 Table 15.1 Floating Cone Inputs ..................................................................................... 82 Table 15.2 NPV of Floating Cone Geometries Evaluated at US$1,200/oz Au and

US$20/oz Ag ................................................................................................. 86 Table 15.3 Material Contained within Floating Cone Geometries .................................. 87 Table 15.4 Mineral Reserves Represent the Diluted Ore Scheduled to the Crusher ..... 89 Table 16.1 Phase Design Criteria ................................................................................... 91 Table 16.2 Comparison of Designed Phase Tonnes against $900 Cone Tonnes at a

0.25 g/t Recovered Gold Cut-Off .................................................................. 92 Table 16.3 Comparison of Designed Phase Tonnes against US$900 Cone Tonnes at

a 0.25 g/t Recovered Gold Cut-off ................................................................ 93 Table 16.4 Material Movements Total Annual Summary ................................................ 98 Table 16.5 Waste Movement Required for Mine Schedule .......................................... 101 Table 16.6 Summary of Mine Mobile Equipment Fleet Life of Mine ............................. 111 Table 16.7 Salaried Staff Labor Requirements ............................................................. 112 Table 16.8 Mine Hourly Labor Requirements ............................................................... 113 Table 18.1 Summary of Operations Personnel ............................................................. 126 Table 18.2 Mine Power Requirements (by Area) .......................................................... 129 Table 20.1 Republic of Armenia Permits Required for Development of Amulsar Mine 147 Table 20.2 Average Water Requirements .................................................................... 151 Table 20.3 Summary of findings from the Environmental Impact Assessment ............ 162 Table 20.4 Summary of Social Impacts ........................................................................ 168 Table 20.5 Environmental, Community and/or Health & Safety Design Protection

Measures and Best Management Techniques ........................................... 176 Table 21.1 Summary of Mine Capital Costs ($US x 1000) ........................................... 183 Table 21.2 Summary of Mine Operating Costs - Total Dollars ($US x 1000) ............... 186 Table 21.3 Summary Process Plant Initial Capital Cost ............................................... 188 Table 21.4 Summary Process Plant Sustaining Capital Cost ....................................... 189 Table 21.5 Process Plant Operating Cost Estimate Summary ..................................... 196 Table 21.6 Operating Cost Estimate - Heap Leach Consumables ............................... 198 Table 21.7 Maintenance ............................................................................................... 199 Table 21.8 Water .......................................................................................................... 199 Table 21.9 Waste Dump Facility Cost Estimate, US$ .................................................. 199 Table 21.10 Heap Leach Facility Cost Estimate, US$ .................................................... 200 Table 21.11 Wastewater Treatment Plant Cost Estimates ............................................. 201 Table 21.12 Closure and Reclamation Cost Estimate .................................................... 201 Table 22.1 Owner Operated Mining Economic Analysis Summary .............................. 203 Table 22.2 Owner Operated Mining Economic Analysis Summary - Before Tax Cash

Flow and Unit Values .................................................................................. 204 Table 22.3 Cash Flow Schedule ................................................................................... 205 Table 22.4 Rate of Return Sensitivity ........................................................................... 208 Table 22.5 NPV Sensitivity (US$ X 1000) .................................................................... 209 Table 22.6 Summary of Key Financial Parameters (Sensitivity to Gold Price) ............. 210


12042 Amulsar Project Lydian Resource and Reserves Final - May 2013 vii

Table 25.1 Estimated Costs for Recommended Exploration Programme .................... 220 Table 25.2 Estimated Costs for Detailed Engineering Study ........................................ 223

FIGURES

Figure 4.1 Location Map for Amulsar Project ................................................................... 4 Figure 4.2 Amulsar Project Land Tenure Map ................................................................. 5 Figure 5.1 Typical Amulsar Physiography ..................................................................... 10 Figure 5.2 Amulsar Project Infrastructure ...................................................................... 11 Figure 7.1 Regional Geology, Upper Eocene to Lower Oligocene Calc-Alkaline

Magmatic Arc System ................................................................................... 14 Figure 7.2 Geological Map of Amulsar Project .............................................................. 16 Figure 7.3 Amulsar Geological Cross-section A-A’, Erato Area ..................................... 17 Figure 7.4 Amulsar Geological Cross-section B-B’, Tigranes Area ............................... 17 Figure 7.5 Amulsar Geological Cross-section C-C’, Artavasdes ................................... 18 Figure 7.6 Amulsar Geological Cross-section D-D’, Erato and Tigranes Areas ............ 18 Figure 7.7 Examples of Gold Mineralization in Core Samples, Drillhole DDA-047 ........ 19 Figure 10.1 Location of Drillholes and Chip Samples ...................................................... 25 Figure 10.2 Drilling Operations Amulsar Project .............................................................. 26 Figure 10.3 Drillhole Marker for RCG-001 ....................................................................... 27 Figure 11.1 Station for Measuring Specific Gravity at Gorayk Core Shed Facilities ........ 30 Figure 12.1 Histogram Plot for Gold Assays (Length Weighted) for Core (A) and

Reverse Circulation (B) Drillholes ................................................................. 37 Figure 12.2 QuantileQuantile Plot for Gold Assays (Length Weighted) for Core and

Reverse Circulation Drillholes ....................................................................... 38 Figure 13.1 Gold Leach Curves (Bulk Composite) .......................................................... 48 Figure 13.2 Gold Leach Curves (Half Core Composites) ................................................ 48 Figure 13.3 Gold Leach Curves (Whole Core Composites) ............................................. 49 Figure 13.4 Erato Gold Leach Curves (Half Core Composites) ....................................... 52 Figure 13.5 Tigranes and Artavasdes Metallurgical Sample Drillhole Location Map ....... 54 Figure 13.6 Erato Metallurgical Sample Drillhole Location Map ...................................... 55 Figure 14.1 Wireframe Models for Amulsar Project and Interpreted Faults ..................... 58 Figure 14.2 Summary Statistics for Specific Gravity Measurements by Zone* ................ 59 Figure 14.3 Variogram Models for Upper Volcanic Unit, Erato Zone ............................... 65 Figure 14.4 Silver Variogram Models for Erato and AAT UV Zones ................................ 66 Figure 14.5 Silver Variogram Model for LV Zone ............................................................. 67 Figure 14.6 Tonnage and Grade Plot for Erato Upper Volcanic Zone LMIK Estimate ..... 71 Figure 14.7 Tonnage and Grade Plot for AAT Upper Volcanic Zone LMIK Estimate ...... 71 Figure 14.8 Cross-section of Amulsar Gold Deposit Sub Unit Block Model .................... 72 Figure 14.9 Cross-section of Amulsar Gold Deposit Gold Grade Block Model ................ 73 Figure 14.10 Figure 14.10 Cross-section of Amulsar Gold Deposit Silver Grade Block

Model ............................................................................................................ 74 Figure 14.11 Global Grade and Tonnage Curves, Amulsar Project .................................. 80 Figure 15.1 $900/oz Floating Cone used for Ultimate Pit Design .................................... 83 Figure 15.2 US$ 400-US$1200/oz Floating Cones Sliced at 1830m Elevation ............... 84 Figure 15.3 Cross Sections of $400, $600, and $900/.oz Au Cones ............................... 85 Figure 15.4 Results of Floating Cone Evaluations ........................................................... 87 Figure 15.5 Ultimate Pit ................................................................................................... 88


12042 Amulsar Project Lydian Resource and Reserves Final - May 2013 viii

Figure 16.1 Phases Sliced at 2830 m Elevation .............................................................. 94 Figure 16.2 Cross Sections of Designed Phases Showing Gold Grade in Block Model .. 95 Figure 16.3 Graphical Presentation of Mine Schedule .................................................... 99 Figure 16.4 Pit Backfill at End of Mine Life .................................................................... 100 Figure 16.5 Proposed Stockpiles at the End of Year 10 ................................................ 102 Figure 16.6 End of Production ....................................................................................... 104 Figure 16.7 End of Year ................................................................................................. 105 Figure 16.8 End of Year 5 .............................................................................................. 106 Figure 16.9 End of Year 10 ............................................................................................ 107 Figure 16.10 End of Year 12 ............................................................................................ 108 Figure 17.1 Amulsar Overall Flowsheet ......................................................................... 114 Figure 18.1 Mine Senior Management Staff .................................................................. 127 Figure 18.2 Proposed Overall Site General Arrangement Layout ................................. 132 Figure 20.1 Footprint of Mine Development (Throughout the Operational Life) ............ 149 Figure 20.2 State Sanctuaries and Important Bird Areas in relation to the Project

Exploration License .................................................................................... 159 Figure 22.1 Amulsar Gold Project Pre-Tax Sensitivity IRR ............................................ 208 Figure 22.2 Amulsar Gold Project Pre-Tax Sensitivity NPV@5% .................................. 209

APPENDICES

APPENDIX A

SELECTED ASSAY QUALITY CONTROL PLOTS

APPENDIX B

SUMMARY STATISTICS FOR COMPOSITES AND CAPPED COMPOSITES

APPENDIX C

SWATH PLOTS

APPENDIX D

DETAILED MINERAL RESOURCE BY ZONE


12042 Amulsar Project Lydian Resource and Reserves Final - May 2013 1

2 INTRODUCTION

This technical report for the Amulsar gold project, in the south-central region of Armenia, has been prepared by AMC Consultants (UK) Limited (AMC) of Maidenhead, UK, for Lydian International Limited (Lydian). The report was prepared by G. David Keller, P. Geo. Mineral reserves for this report are based on the “Lydian International Limited Amulsar Resource Update and Heap Leach Feasibility Study” report prepared by KD Engineering on 3 September 2012 and amended 26 November 2012. Mineral resources in this report are based on the “Amulsar Gold Project, Armenia for Lydian International Limited” report prepared by AMC on 18 April 2013.The report has been prepared in accordance with requirements of National Instrument 43-101 (NI 43-101), “Standards of Disclosure for Mineral Projects”, of the Canadian Securities Administrators (CSA) for lodgement on the CSA’s “System for Electronic Document Analysis and Retrieval” (SEDAR). This report is required to support an update of the estimation of mineral resources for the Amulsar Gold Project as announced by Lydian in a press release issued 5 March 2013. The effective date of this report is 18 April 2013 for mineral resources and 28 November 2013 for mineral reserves.

This technical report has been prepared by G. David Keller, P. Geo, of AMC, Gary Patrick, AusIMM CP (Met) of Metallurg Pty Ltd; Herb Welhener, MMSA-QPM of Independent Mining Consultants, Inc.; Richard E. Kiel, P.E. of Golder Associates Inc., Peter R. Lemke, P.E. of Golder associates Inc.; John Maxwell Eyre, CEnv of North Coast Consulting Limited and Joseph M. Keane, P.E. of SGS-KD Engineering who all meet the requirements of a “Qualified Person” (QP), and are independent as defined in NI 43-101. Responsibilities of each QP for this report are summarized in Table 2.1. Site visits conducted by each of the QP’s is also summarized in this table.



Table 2.1 Persons who Prepared or Contributed to this Technical Report

Qualified Person

Position Employer Date of Site

Visit Professional Designation

Sections of Report

Qualified Persons responsible for the preparation and signing of this Technical Report

G. David Keller Principal Geologist

AMC Consultants (UK) Limited

1214 December 2012

P.Geo.

Jointly Section 1 Sections 212 Section 14 and jointly Sections 24-25

Gary Patrick Director Metallurg Pty Ltd.

612 June 2011

MAusIMM CP (Met)

Jointly Section 1 Section 13 and Jointly Sections 24-25

Herb Welhener Vice President

Independent Mining Consultants, Inc.

June 21-23, 2011

MMSA-QPM

Jointly Section 1 Sections 15-16, 18.2, 21.1, 21.2 and jointly Sections 24-25

Richard E. Kiel Senior Geological Engineer

Golder Associates Inc.

June 2011, September-

October 2011, May 2012,

November2012 and April 2013

May 2011

P.E.

Jointly Section 1 Sections 17.2, 21.7 and jointly Sections 24-25

Peter R. Lemke

Water Treatment Technical Lead

Golder Associates Inc.

-

P.E.

Jointly Section 1 Sections 18.4, 21.7 and jointly Sections 24-25

John Maxwell Eyre

Director North Coast Consulting Limited

June 2011 CEnv

Jointly Section 1 Section 20 and jointly Sections 24-25

Joseph M. Keane

Associate SGS- KD Engineering

- P.E.

Jointly Section 1 Section 17, 18, 19, 23, 28; portions of 21, 22, 25, and 26; 27, and jointly Sections 24-25



3 RELIANCE ON OTHER EXPERTS

AMC has not performed an independent verification of land title and tenure as summarized in Section 3 of this technical report. AMC did not verify the legality of any underlying agreement(s) that may exist concerning the permits or other agreement(s) between third parties. AMC relies on Lydian to provide correct information on the land title and tenure of the Amulsar gold project.

AMC was informed by Lydian that there are no known litigations potentially affecting the Amulsar project.



4 PROPERTY DESCRIPTION AND LOCATION

4.1 Location

The Amulsar gold project is located in south-central Armenia approximately 115 Km south-west of the capital Yerevan, and covers an area of approximately 98 square Km (Figure 4.1). The property is covered by three Prospecting Permissions. A mining licence covers the Amulsar area. Core shed facilities, sample processing, and offices for the project are located in the nearby town of Gorayk, near the southern boundary of the project area.

Figure 4.1 Location Map for Amulsar Project



4.2 Property Description

The Amulsar project is comprised of three exploration permits or Prospecting Permissions (PPs) and one mining licence. The three PPs, comprising; Saravan (No. EHTV 29/043), Gorayk (No. EHTV 29/042), and Khatchkar (No. EHT-29/154), cover the project and are presented in Figure 4.2. The Saravan and Gorayk licences were granted by Ministry of Natural Resources in August 2007 with the Khatchkar PP granted in January 2013.

In May 2009, a mining licence (No. SHATV-29/245) was granted by Ministry of Natural Resources, and covers the Tigranes, Artavasdes and Arshak areas. Following an application to extend the mining licence, an extension for 25 years was approved on 22 November 2011 – providing that an approved work programme is undertaken and mineral resources are depleted within 16.5 years. A new mining licence and rock allocation area (RAA) was granted by Ministry of Natural Resources in September 2012. The RAA is an area designated for plant infrastructure and industrial use.

Figure 4.2 Amulsar Project Land Tenure Map

Source: Lydian, 2013



4.3 Ownership

All PPs and mining licences are held 100% by Geoteam CJSC (Geoteam), an Armenian registered Closed Joint Stock Company. Geoteam is owned 100% by Lydian Resources Armenia (Lydian Armenia) a wholly-owned subsidiary of Lydian International Limited.

4.4 Tenement

Exploration and mining licences for the Amulsar project are summarized in Table 4.1. The Saravan and Gorayk PPs were awarded to Lydian at auction, and were granted under Armenian 2007 mining law – providing five-years for exploration and two extensions of two-years each, before a mining licence application needs to be submitted. The Khachakar Prospecting Permission (PP) was awarded at auction under the Armenian mining laws of 2012.

Table 4.1 Summary of Amulsar Project Licences

Licence Type Name Licence Number

Previous Licence Number

Holder Grant Date

Expiry Area [ha2]

Prospecting Permission Saravan EHTV 29/043

42 Geoteam

CJSC 08 August

2007 5

years 8340

Prospecting Permission Gorayk EHTV 29/042

41 Geoteam

CJSC 08 August

2007 5

years 4700

Prospecting Permission Khachakar EHT-

29/154 -

Geoteam CJSC

31 January 2013

3 years

3116

Mining Licence Amulsar SHATV-29/245

14/588 Geoteam

CJSC 03 April

2009 25

years 75.6

The new mining licence granted for the Amulsar project is valid until 2034, and permits extensions to the licence as new resources are approved. The licence allows for a four-year construction period starting from 26 September 2012, and requires mining production to start at least 2.6 million tonnes per year.

4.5 Armenian Mining Legislation

The World Bank has advised the Armenian Government on revisions to the Mining Codes, including royalties, which became part of the revised law adopted in January 2012. A mining licence is valid for a period of up to 25 years, but the actual term is based on the mining plan submitted as part of the mining licence application, and the time required to exploit the resource.

Application for a special mining licence (SML) can be submitted at any time. The holders of an SML have the entitlement to convert the prospecting licence to a SML upon application. SMLs are current for a period from twelve to twenty-five years, but can be extended upon application by the licensee.

4.6 Royalties

As part of the January 2012 revisions to the mining law, a government royalty was introduced and the royalty fee is calculated as percentage of revenue from sales of



metal concentrates. If a company sells a cast product, or a product further converted from concentrate, the revenue amount will be adjusted as per the following formula provided by Government of Armenia.

R= 4+(P/(I*8))*100, where; R is royalty in percentages

P is profit before tax

I is income (revenue) from sales

The royalty is calculated on an annual basis, but quarterly pre-payments must be made.

4.7 Newmont Joint Venture Agreement

On 23 April 2010, Lydian purchased from Newmont Mining Corporation all of Newmont’s interest in the former joint venture between Lydian and Newmont known as the Caucasus Venture, including all of Newmont’s interest in the Amulsar gold property in Armenia. The consideration was a mixture of committed and contingent payments. The committed payments included the issuance by Lydian of three million ordinary shares to Newmont on the closing of the transaction, and three payments of US$5 million, of which; the first was paid in 2010, the second was due on 31 December 2011 and paid on 13 March 2012, together with interest owing thereon; and the third became due on 31 December 2012. Lydian has notified Newmont that it has decided to defer making this third instalment payment until no later than 31 December 2013. This deferred payment amount of US$5 million will bear interest at the rate of 10% per annum, commencing 31 December 2012 until it is paid.

In addition, Lydian agreed to pay Newmont, following the start of commercial production at the Amulsar project, a 3% net smelter royalty (NSR). However, at any time prior to the date, that is 20 days following commencement of commercial production, Lydian may at its option, elect to buy out the 3% NSR and instead pay to Newmont the aggregate sum of US$20 million, without interest, in 20 equal quarterly instalments of US$1 million, commencing on the first-day of the third calendar month following the start of commercial production. Furthermore, Lydian has a one-time option prior to the commencement of commercial production to prepay these quarterly instalments in a single cash payment, using an annual discount rate of 10%. This equates to a single payment of approximately US$15.6 million.

4.8 Environmental

There are no special environmental restrictions or known past liabilities in respect to the Amulsar project area. Lydian is required to operate under normal environmental regulations, as set out by the relevant Armenian authorities. Lydian has all the necessary permits to undertake exploration and initial development work at Amulsar, which are:

Permits for exploration activities

Mining licence (Tigranes and Artavasdes)

Water use permits

Air emission permit



Environmental impact assessment for exploration activities, open pits, waste dump facility and heap leach facility.

Geoteam submitted a number of environmental impact reports (EIA) for exploration activities and mining activities to the Concession Agency of Ministry of Energy and Natural Resources (MENR) of the Republic of Armenia, support for exploration permits and mining licence applications, and to the Ministry of Nature Protection (MNP) between 2009 and 2013.

The reports to MENR are submitted on an annual basis, and are focused totally on the activities carried out per the work plan attached to the licence or permits and a section on the environment.

The reports submitted to the MNP are done on a quarterly basis, and one annually that summarizes the previous four ones. These are related to the environmental payments, e.g. water consumed, air emissions, etc. After every approval from the regional environmental inspectorate based in Vayots Dzor Marz, Geoteam makes respective payments.

Lydian completed its first environmental impact assessment (EIA) for the Tigranes deposits in December 2009. The EIA was one of the reports that supported the mining licence application.

In December 2011, Lydian conducted an EIA on the conceptual design of a heap leach facility (HLF) for the proposed operation located in the Vorotan Valley. The EIA covered the conceptual design of crushers, conveyor, heap leach pad and plant, with the respective locations. The EIA was presented to the public on 28 November 2011. In December 2012, Geoteam was granted approval on the HLF location from the MNP.

The EIA approval for open-pit mining for the Tigranes/Artavasdes areas and the location of the waste dump facility was approved in July 2012. The EIA for the Erato deposit will be submitted for approval by the MNP before the end of 2013.

The EIA submission for the open pit and the waste dump facility is part of the mining licence application requirements. EIA approvals are also required by the MNP, including additional EIAs for other parts of the infrastructure like crushers, conveyors, and the metallurgical processing plant facilities.

In parallel, Lydian is preparing an Environmental and Social Impact Assessment (ESIA) in line with Equator Principles in order to meet requirements of shareholders, the International Finance Corporation (IFC), and the European Bank for Reconstruction and Development (EBRD), and to be able to raise international financing for the project construction and operation. The ESIA is expected to be available for public disclosure in August 2013.



5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

5.1 Accessibility

The Amulsar gold project area is readily accessed from the national M2 highway which passes near the project concessions. The M2 highway is the main connector for travel from Yerevan to Iran. Road access from Yerevan to the Amulsar project is approximately 170 km of sealed highway and 15 km of gravelled local secondary roads.

A currently unused airstrip is located at a nearby resort town of Jermuk, approximately 45 Km from the project. The nearest international airport is at Yerevan, with daily scheduled international flights from Europe and Asia.

Lydian exploration work routinely operates from April to mid-December. Exploration activity during the winter period is generally limited between December and March by snowfall in steep mountainous portions of the project areas.

5.2 Physiography

The Amulsar project area is located in mountainous terrain with rounded peaks and ridges. A dominant north-westsouth-east trending ridge extends about 7 km across the property. The ridge attains a maximum elevation of 2,988 m. Vegetation cover across the project consists of scrublands dominated by wild grasses and isolated shrubs. There is good access over the property by drill roads and trails. Typical terrain for the project area is shown in Figure 5.1.

Armenia lies within a seismically active zone, with some areas having a high risk of major earthquakes. The last major quake was in 1988 in northern Armenia. The Amulsar project area is seismically active, with the most recent destructive earthquake being recorded in September 1931, at the township of Sisian some 30 km to the south-east of the prospect area. Destructive earthquakes have also been recorded in the ancient city of Vayk, some 20 km to the west.



Figure 5.1 Typical Amulsar Physiography

Source: AMC, 2012

Notes:

A. Erato and Tigranes areas, looking north-west.

B. Arshak and Artavasdes areas, looking west

5.3 Climate

The Amulsar area is characterized by a highland continental climate with generally hot summers and cold winters. Temperature varies significantly depending on altitude. Mean summer temperatures at the Amulsar project are 25 C, with a maximum of 34.2 C, and mean winter temperatures are around -4 C, with a minimum of -27.6ºC – as recorded since 1962 at the Vorotan Pass state weather station. Annual precipitation is low, with an average in the order of 700 mm. Snow falls across higher ground during the winter months, and can remain from early November through to late March. Because of the altitude, Amulsar Mountain is snow-covered for the winter months. At present,

A

B



access is generally possible only from March to November, and access for heavy machinery is confined to the period from May to October/November.

5.4 Infrastructure

The Amulsar project infrastructure is generally well-developed with good road and power networks. The Armenian M2 highway connects the project from Yerevan, and borders the project to the south-west. The village of Gorayk is located just off of the M2 highway, south of the project. Gravel roads provide local access to the project and the towns of Jermuk to the north and Gorayk to the south. A map of infrastructure for the Amulsar project is shown in Figure 5.2.

A high-tension power line transects the southern limits of the project licence areas. Two power substations rated at 35 KVA and 110 KVA are located near the village of Gorayk. A major gas pipeline from Iran to Armenia crosses the prospecting licences on the eastern and north-eastern portions of the project. A fibre-optic communications line passes through the east and north-eastern parts of the project licences.

Figure 5.2 Amulsar Project Infrastructure




6 HISTORY

Due to its geological location, within a tectonically active collision zone between the Arabian and Eurasian plates, Armenia has been endowed with large porphyry-style copper-molybdenum deposits, and polymetallic and gold-bearing vein systems. Large-scale metal production began in the early 19th century with the opening of the Alaverdi and Kapan polymetallic mines. In the 1950s, the Zangezur Copper-Molybdenum Combine developed the world-class Kajaran deposit in the south of Armenia, which produces 3% of the world’s molybdenum output. The dissolution of the Soviet Union – coupled with low metal prices, severely disrupted Armenia’s mining industry in the 1990s, but a new legislative framework and improved market conditions led to a significant upturn over recent years. Metal production comes from:

Kajaran (Cronimet) and Agarak (GeoProMining) copper-molybdenum porphyry deposits;

Kapan vein-type polymetallic deposit (Dundee Precious Metals) and the Shahumyan polymetallic deposit;

Zod gold mine (GeoPro Mining)

Foreign mineral exploration companies active in Armenia include Global Gold, Caldera Resources, and Anglo African Minerals.

The Amulsar region was initially identified by the Armenian Soviet Expedition in 19361937 as an area of “secondary quartzite”, which was deemed to host potential as a silica resource. Work aimed at testing the potential of a silica resource commenced in 1946, with the development of small-scale exploration adits. This work concluded that the alunite content of the silica was too high (up to 25%) and that, as such, the project was of no interest as a source of quality silica. Further work in the early 1960s identified the “secondary quartzite” as metasomatic in origin, developed due to the replacement of intermediate-composition volcanic rocks (known regionally as the Amulsar Suite). Some 300 m of tunnelling and 640 m3 of trenching were also completed during this time, mostly on the north-eastern side of the Amulsar ridge. Testing of a bulk sample concluded that the silica was of sufficient quality for the production of low-grade glass. Volumetric calculations made during this time estimated some 360 Mt of secondary quartzite rock at Amulsar.

Research work by the Soviet Expedition continued at Amulsar during the period 19791982. This work was focused principally on understanding and mapping the alteration zonation across the area. Silica reserves at Amulsar were never entered onto the Republic of Armenia State Balance, and no further exploration or research work has been conducted by the Soviet Expedition in the area since 1982.



7 GEOLOGICAL SETTING AND MINERALIZATION

7.1 Regional Geology

The Amulsar gold deposit is situated in south-central Armenia and is hosted in an Upper Eocene to Lower Oligocene calc-alkaline magmatic-arc system that extends north-west through southern Georgia into Turkey, and south-east into the Alborz-Arc of Iran.

Volcanic and volcano-sedimentary rocks of this system comprise a mixed marine and terrigenous sequence that developed as a near-shore continental arc between the southern margin of the Eurasian Plate and the northern limit of the Neo-Tethyan Ocean. In the Early Oligocene the Neo-Tethyan Ocean closed, and subduction ceased along this margin when a fragment of continental crust, known as the Sakarya continent, collided at the trench axis and accreted with the Eurasian plate. The location of Amulsar within this arc is shown in Figure 7.1.

7.2 Local Geology

The Amulsar deposit is hosted in a sequence of Eocene-Oligocene volcanogenic rocks of basaltic to dacitic composition, containing two distinct volcano-sedimentary cycles. The Lower Volcanic unit (LV) is dominated by massive porphyritic andesite. The unit also contains abundant coarse volcaniclastic members in some project areas. The Upper Volcanic unit (UV) is characterized by coarse volcaniclastic breccia occurring within debris flow channels, incised into a thick package of finer-grained volcanogenic rocks, including immature feldspathic sandstone. Andesitic lava flows form a minor component and also appears to occur in erosional channels.

The UV unit lies disconformably over the LV unit, with clasts of the two units occurring at the contact between the two units, forming what has been termed the mixed breccia lithological unit. This lithological unit is believed to represent a paleoweathering surface. The geology of the Amulsar project area is shown in plan in Figure 7.2 and geological cross-sections in Figure 7.3 to Figure 7.6.



Figure 7.1 Regional Geology, Upper Eocene to Lower Oligocene Calc-Alkaline Magmatic Arc System


7.2.1 Alteration

The LV unit is characterized by pervasive argillic alteration in the region of the resource. However, this alteration reduces toward the periphery of the licence area. The argillic alteration is commonly void of gold mineralization, other than at a contact with the UV unit, or occasionally where through-going faults crosscut the LV unit. In both cases, a marked increase in iron-oxide and weak silicification can also be observed. Alteration within the UV unit is predominantly massive silica or silica-alunite, forming the main host to gold mineralization. The pervasive argillic alteration of the Lower Sequence appears



to be cut by the disconformity, which implies that the two alteration styles are unrelated in time.

7.2.2 Structure

Pervasive host fracturing occurred during an interval of both east- and west-directed thrusting, producing a broad mild antiformal fold across Amulsar project area. The abundance of host fracturing is likely controlled by the differential strength increase produced by the focusing of pre-mineralization silica-alunite alteration into the porous breccia units. Mineralization is focused within a local zone of highly complex deformation near the crest of the antiform, where complex smaller-scale duplexes of both verges have interleaved parts of the Lower Volcanic with the Upper Volcanic sequences. At least two intervals of post-mineralization extensional faulting dissect the antiformal structure, such that the original mineralizing system is now preserved within large discrete north-easttrending grabens that cross the antiform. These larger structures have been disrupted by north-westtrending extensional faults.

7.2.3 Mineralization

Gold mineralization at Amulsar is thought to have been a late event in the development of the deposit, occurring dominantly within the silica-alunite-altered volcano-sedimentary breccia units of the UV unit. Mineralization is also associated with iron oxide-coated fracture surfaces, and heavily oxidized faults that cut the silica-alunite alteration. Based on a structural study of the deposit by Holcombe (2013), gold mineralization is believed to be associated with iron oxide coatings, fillings, and hydraulic breccias in late stage brittle fractures and faults within a thrust and fold complex.

Three dominant controls of mineralization have been identified:

Faults and fractures acting as conduits for mineralizing fluids, resulting in gold mineralization as gossanous veins that form broad corridors of closely-spaced high-grade structures;

Porous and permeable lithological units, including hydrothermal breccias, volcaniclastic breccias, leached vuggy volcanics – allowing lateral migration of fluids away from structurally controlled conduits;

Relatively impermeable argillic altered LV rocks formed an impermeable boundary along contact zones with UV rocks, causing ‘ponding’ of higher-grade gold mineralization along contacts, often forming as leached or gossanous zones.

Examples of gold mineralization in drill core are shown in Figure 7.7.

Silver mineralization is present at the Amulsar project, but the genesis and distribution of is not well understood. Silver mineralization does not correlate with gold mineralization. Average silver grades range from 2 g/t to 5 g/t and locally can occur in the 100 g/t to 200 g/t range.

A small silver mining project adjoins the Amulsar licence to the north-west, exploiting a structurally controlled argentiferous galena vein. This deposit is located at a lower stratigraphic level than the Amulsar deposit.



Figure 7.2 Geological Map of Amulsar Project


Note: Cross-section lines shown on map



Figure 7.3 Amulsar Geological Cross-section A-A’, Erato Area

Figure 7.4 Amulsar Geological Cross-section B-B’, Tigranes Area



Figure 7.5 Amulsar Geological Cross-section C-C’, Artavasdes

Figure 7.6 Amulsar Geological Cross-section D-D’, Erato and Tigranes Areas



Figure 7.7 Examples of Gold Mineralization in Core Samples, Drillhole DDA-047

Notes:

A: Brecciated UV unit, highly altered, strong iron oxidization, 96.1 to 96.5 m, 96.0-97.0 at 5.67 g/t Au.

B: Brecciated UV unit, highly altered, strong iron oxidization, 97.0 to 97.1 m, 97.0-98.0 at 13.7 g/t Au.

A

B



8 DEPOSIT TYPES

The Amulsar project is a high sulphidation epithermal deposit, but its close association with syn-depositional deformation adds a signature also characteristic of orogenic gold systems.

The Amulsar deposit is hosted in a thick pile of volcanogenic rocks thought to be related to the Tethyan magmatic arc/back-arc system. High sulphidation epithermal deposits are associated normally with alteration grading from a central zone, dominated by silica-alunite alteration minerals, to an outer zone of argillic-kaolinite alteration mineral assemblages. At Amulsar, a similar sequence of alteration is observed, but the silica-alunite zone appears to be restricted to the mineralized volcaniclastic and breccia rocks of the upper volcanic unit, and the argillic-kaolinite alteration is dominantly restricted to rocks of the lower volcanic unit. Both rock units are now strongly structurally interleaved, and mineralization is associated with subsequent deformation of this interleaved package.

The background alteration is characteristic of high sulphidation epithermal systems, in which, fluids rich in magmatic volatiles cool and migrate to elevated crustal settings. The fluids are commonly highly oxidized. Mineralization at Amulsar is associated with iron oxides – iron sulphides have not been observed in significant quantities within the mineralized structures. Thus, these are oxidised fluids. The lack of micaceous alteration minerals associated with the gold mineralization indicates that fluid temperatures were likely less than 300°C, and within the range of temperatures associated with epithermal deposits. These oxidized fluids were injected into faults, fractures, and dilatant structures during an orogenic deformation that overprints the high sulphidation alteration. However, the general absence of veining, and in particular, quartz veins, is atypical of most orogenic gold systems.

The Amulsar deposit was likely developed within a volcanic edifice with a protracted high sulphidation fluid history that gradually developed into an epithermal level orogenic gold system – that was perhaps still being fed by highly oxidized magmatic fluids.

As the Amulsar deposit can be considered as a hybrid deposit type, there are few deposit types or examples that are similar.



9 EXPLORATION

9.1 Introduction

Initial exploration of the Amulsar gold project started in 2007 and was conducted by a joint venture between Newmont Mining Corporation and Lydian. After Lydian acquired full ownership the project in 2010, all exploration work was completed by Lydian.

9.2 Newmont Joint Venture (20072010)

Newmont completed approximately 150 line Km of ground magnetic surveys, with lines spaced at 100 metres and 200 metres. A total of 54.6 line Km of induced polarization and resistivity surveys were also completed by Newmont during the joint venture period. Details of the geophysical surveys are discussed in a CSA (2011) report.

9.3 Lydian (2010-2012)

All exploration activity on the Amulsar project is managed through Geoteam, Lydian’s subsidiary in Armenia. Geoteam has conducted limited geophysical work over the property since the acquisition of the property, being limited to developing three-dimensional modelling of Newmont magnetic and resistivity data, the results of which were used successfully to generate targets for exploration drilling.

Geoteam has completed an extensive programme of surface geological mapping over the project. In conjunction with the surface mapping programme Geoteam has collected approximately 358 (1,337 m) surface channel samples and 171 (50 m) trench samples.

Lydian commissioned a structural geological study of the deposit by Dr Rod J Holcombe in early 2012. The study included three visits by Dr Holcombe and associates to review drill core and reverse circulation chips, surface geological and structural mapping, and to review drillhole structural data. This study resulted in a major revision of the geological understanding of the deposit which required recoding and re-logging of core and reverse circulation chip samples. A three-dimensional conceptual model of the deposit was then generated based on re-logging data and the integration of surface mapping and drillhole data.

Dr Holcombe recognized two major volcanic sequences (upper and lower volcanic units) for the deposit, and also identified a complex structural framework, including thrust and folding events.

9.4 Methodology

9.4.1 Channel Samples

Geoteam collected 358 channel sample lines, for a total of 1,337 metres of sampling. Channel samples are cut from out crop faces that were cleared of vegetation, talus and loose rock. An angle grinder with two diamond saw blades were used to cut a channel into the rock face approximately 3 cm wide and 2 cm deep. Perpendicular cuts were made to facilitate sampling which was undertaken using a hand chisel and a hammer. The average sample length of channel samples is about 2 metres with approximately



99% of samples less than 3 metres in length. A location map of channel samples collected for the project is provided in Figure 10.1.

All channel samples collected were transported to the Gorayk core shed facilities by Geoteam staff.

9.4.2 Trench Samples

Geoteam excavated trench samples to a depth of two metres. Samples were collected at the base of the trench at 1 and 2 metre intervals. A total of 171 samples were collected from trenches. Trench samples were not used for the modelling of geological units, or for the estimation of resources.



10 DRILLING

Lydian has explored the Amulsar deposit using a combination of diamond and reverse circulation drilling. Drilling has been undertaken from 2010 onwards, and is currently scheduled to start up in early May 2013.

Drilling for the Amulsar project has been carried out by Drill-Ex International from 2010 to present, with reverse circulation holes drilled by Vahan Atlas Copco for 2012 only. Depending on availability, drilling on the project is carried out using two diamond rigs and two reverse circulation rigs. In addition to exploration drilling, Lydian has completed 19 (1,563 m) water holes, 9 (1,098 m) metallurgical holes, and 101 (1,831 metres) geotechnical holes. A summary of drilling completed on the project up to mid-December 2012 is summarized in Table 10.1. A map of drillhole collar and chip sample locations is provided in Figure 10.2. AMC observed Lydian diamond drilling in operation during the site visit, as shown in Figure 10.2.

10.1 Newmont Joint Venture (20082010)

Exploration under the joint venture was comprised of diamond core drilling, reverse circulation drilling, and geophysical surveys completed from 2008 to early 2010. During this period exploration drilling was carried out in the Erato and Artavasdes-Arshak-Tigranes areas. A total of 31 diamond core (4,363 m) and 175 reverse circulation holes (22,809 m) were completed.

10.2 Lydian (20102012)

All exploration activity on the Amulsar project is managed through Geoteam, Lydian’s subsidiary in Armenia. From 2010 onwards Geoteam has conducted an aggressive programme of core and reverse circulation exploration drilling over the Artavasdes, Arshak, Tigranes and Erato areas, completing a total of 218 and 317 core and reverse circulation drilling, for a total of drilled distance of approximately 33,422 m and 45,476 m respectively.



Table 10.1 Summary of Drilling Completed for the Amulsar Project

Year Number of

Holes Metres Drilled

Drillhole Series Exploration

Area

2007 5 593 DDA-001 to DDA-005 AAT*, ERATO

2008 18 2,680 DDA-006 to DDA-023 AAT, ERATO

74 10,363 RCA-001 to RCA-074 AAT, ERATO




4 184 DDAW-001 to DDAW-0041 Waste dump

3 421 DDAM-068 to DDAM-0712 AAT, ERATO


3 294 RCAW-286 to RCAW-2891 AAT, ERATO


6 677 DDAM-130 to DDAM-1742 AAT, ERATO

8 921 DDAG-170 to DDAG-1933 AAT, ERATO

67 769 DDAGLP-189 to DDAGLP-2693 AAT, ERATO


12 1,085 RCAW-399 to RCAW-4081 AAT

2012 78 12,697 DDA272 to DDA-374 AAT, ERATO

26 141 DDAG-287 to DDAG-3713 Crusher, waste dump

46 6,720 RCA-456 to RCA-500 AAT

Total RC Holes 383 40,897

Total Diamond Core Holes 507 69,664

Total 890 110,561

*AAT, Artavasdes, Arshak, Tigranes exploration areas. 1 Water holes 2Metallurgical holes 3Geotechnical holes



Figure 10.1 Location of Drillholes and Chip Samples



Figure 10.2 Drilling Operations Amulsar Project

Note: Truck-mounted diamond core wireline rig and diesel electric generator.

10.3 Drilling Methodology

Drillholes were drilled on grid patterns of 40 m intervals for closely-spaced drilling and 80 m or more at the peripheries of identified mineralized zones. Drillholes were drilled vertically or inclined at about -60 o. Inclined drillholes were drilled mainly at azimuths of 120° or 300°. Exploration drilling was conducted to a maximum depth from surface of about 350 m.

All drillholes collars are initially positioned by geological personnel using a hand-held GPS. Drillhole collar locations are marked with pegs and flagging tape to indicate the azimuth direction.

10.3.1 Drillhole Collar Coordinates

Drillhole collars for diamond and reverse circulation holes on the Amulsar project are surveyed by Geoteam surveyors. The survey coordinate system is UTM Zone 38N, WGS84 datum. Total station survey equipment is used for all surveys. After the completion of drilling, all drillhole collar positions are marked with a concrete base and a projected PVC pipe. Drillhole numbers are clearly marked with metal tags on each concrete base and attached to the top of the PVC pipe as shown in Figure 10.3.



Figure 10.3 Drillhole Marker for RCG-001

10.3.2 Downhole Surveys

Downhole surveys are conducted by the drilling contractor using Globaltech Pathfinder single-shot survey instruments. Drillholes were surveyed at approximately 20 m to 30 m intervals for most holes. Downhole survey data for each hole is reviewed by geological personnel before being entered into the drillhole database system.

Core orientation surveys are routinely completed by Geoteam personnel on all diamond core holes. Geoteam uses the EzyMark core orientation system for orientating drill core. Measurements are made at approximately 30 m intervals for the entire length of the drillhole. Each orientation survey is scrutinized by the Rig Geologist. If the survey fails, another orientation survey is completed in the following run. Each EzyMark Ori-Block is placed in the core box where the orientation measurement was made.



10.3.3 Diamond Core Drilling Protocols

Geoteam exploration personnel follow procedures outlined in a comprehensive manual for diamond drilling procedures. Diamond drilling operations are supervised by Geoteam geologists at the drilling site.

Diamond drillholes are drilled with a number of core sizes, including PQ (85 mm core diameter), HQ (63.5 mm), and NQ (47.6 mm) size core.

Core is transferred directly from the core barrel to plastic core boxes. Wooden markers are placed between runs recording the drilling depth. All core boxes are labelled with drillhole number, starting and ending depths for the core box, and box number. Core is logged by Geoteam Geologists at the drill site. At the end of each shift, core boxes are delivered to secure core shed facilities at Gorayk.

Diamond drilling core recovery averages 96% for the project. Approximately 90% of drill core intervals have a core recovery of greater than 90%. Approximately 5% of exploration drillhole core do not have core recovery information – excluding geotechnical and metallurgical holes.

10.3.4 Reverse Circulation Drilling Protocols

Geoteam exploration personnel follow procedures outlined in a comprehensive manual for reverse circulation drilling procedures. All reverse circulation drilling is conducted under constant supervision by the Rig Geologist.

Reverse circulation drilling is undertaken using a downhole hammers with face-sampling drill bits. The diameter of drill bits used by Drill-Ex is 127 mm, while Vahan Atlas Copco used a 139 mm drill bit.

The first few metres of reverse circulation drilling is open hole percussion (OHP) drilling, using either hammer or tri-cone bits, or air coring, depending on ground conditions. OHP drilling is used to allow PVC to be emplaced as casing, sealed by expanding polymer, with the stuffing box secured over the end of the casing, for air return.

All drilling chips are collected from the reverse circulation cyclone. Wet samples are recorded by the rig geologist and collected in poly weave bags to assist in drying of the chip samples. The entire chip sample is delivered to the core shed facilities in Gorayk for splitting and sampling.

10.4 AMC Comments

Protocols undertaken by Lydian for the Amulsar project, including drilling, core handling, logging, and database preparation, have been undertaken using procedures that meet industry standard practices. While reverse circulation sample recovery has been noted in the previous report by CSA (2011) and IMC (2012), AMC believes that procedures can be improved by routine monitoring of reverse circulation sample recovery for each drillhole.



As the Amulsar project has been developed, a better understanding of the geological and structural understanding has increased significantly. This process is typical of most advanced exploration projects. In this process, the delineation and lithological and structural units has necessitated reinterpretation of drillhole lithological data and structural domains within the deposit. It is important to continue updating lithological coding and continuing structural investigations to provide the basis for a resource estimate with a high-confidence level.



11 SAMPLE PREPARATION, ANALYSES AND SECURITY

11.1 Sampling Method and Approach

11.1.1 Specific Gravity Measurements

Specific gravity measurements were made by Geoteam at the project core shed located in the town of Gorayk. Measurements were restricted to diamond core samples only; using full core intervals with an average length of 20 cm to 30 cm. Measurements were made using a wax-sealed core water-immersion method. All core samples are dried before measurements are taken. AMC understands specific gravity quality-control measures are not regularly implemented for specific gravity measurements.

The equipment used by Geoteam to measure specific gravity is shown in Figure 11.1.

Figure 11.1 Station for Measuring Specific Gravity at Gorayk Core Shed Facilities



11.1.2 Diamond Drill Core Samples

All diamond drill core is photographed and logged at the drill site. Logging is completed at each drill site using hard-copy logging forms. Orientated core is reassembled and marked with an orientation line, using a permanent marker. Geological logging includes primary and detailed lithology units, alteration, porosity type, and iron sulphide and oxide percentages, geological structures and their orientations using alpha and beta angles. Geoteam Geologists log geotechnical core data including; rock quality designation (RQD), fracture count, rock strength classification and core recovery for each drill run.

After logging, core boxes are delivered to the core shed facilities, core logs are reviewed by senior geological personnel. Core samples are marked using coloured wax-markers at one metre intervals, and may be adjusted at upper and lower volcanic unit contacts. Core drillholes are mainly sampled along the full length, particularly in the Upper Volcanic unit. In some cases, in the lower volcanic unit, intervals that are clearly unmineralized are not sampled. Core cutting lines are marked 2 cm clockwise of the orientation lines. Sample intervals are assigned sequential sample and quality-control sample numbers by Geoteam technical personnel under supervision of Geoteam Geologists.

Drill core is split at the core shed using a diamond saw. Prior to cutting each sample the entire saw is flushed with water, including the catchment basin below the core tray. After the sample is cut, rock fragments and fine particles from the core are collected in the catchment basin and placed in a plastic sample bag, along with half the cut core, which is placed in a cotton sample bag. For sample intervals with disaggregated core, half of the material is taken directly form the core box. The remaining core is replaced in the core boxes, which are stored securely in core racks at the core shed facility.

Quality-control samples are submitted at a frequency of about 1 in 20. This includes core field duplicates consisting of quarter splits of sampled core, blank samples of unmineralized sand, pulp duplicates, and certified reference material.

11.1.3 Reverse Circulation Hole Samples

Reverse circulation drilling samples are routinely collected at 1 m intervals. Drill cuttings for each drilled metre are collected in plastic bags at the rig cyclone. Geoteam reports that pressurized air blow-backs are routinely used after every metre of advance, so that all the material within the drill stem is displaced into the sample bag prior to advancing to the next metre. The entire samples are weighed, logged, bagged, labelled, and sealed at the drill site. Geoteam Geologists log the reverse circulation chips in detail, including primary and detailed lithology units, alteration, and iron sulphide and oxide percentages. Representative chips for each interval are placed in plastic chip trays, which are marked with drillhole number sample number and sample intervals. Samples and chip sample trays are collected daily and transported to the core shed facilities for splitting and archiving.

Samples are split at core shed facilities using a 1:8 riffle splitter to produce a 1.5 kg to 2 kg sample. The remaining chip sample material is stored at the facilities as an archive. The riffle splitter is cleaned between samples by brushing and using compressed air. Individual weights for the entire 1 m sample and the final sample were recorded. The



split sample is placed in a cotton bag, labelled, and delivered to the sample preparation laboratory adjacent to the core shed facilities.

11.2 Sample Preparation and Analysis

Lydian has a sample preparation facility which is adjacent to core shed facilities at Gorayk. The facility includes two jaw crushers, two rotary splitters, two high-capacity pulverizers, and two drying ovens. Sample preparation facilities at Gorayk operated from September 2008 to 2010, and then were restarted in late 2011. Prior to establishing this facility, and during the period between 2010 and late 2011, all samples were sent to ALS Romania SRL Laboratories in Rosia Montana (ALS Romania) for sample preparation. A new, containerized, sample preparation facility, provided by ALS Chemex was installed in late 2011. The Gorayk laboratory is owned and operated by Geoteam.

Core and channel samples are collected from the core shed area and placed directly into drying racks which are moved into drying ovens. After drying at 110 °C for about 12 hours, samples are crushed to -2 mm. For core samples, fragments and fines from cutting the core are added at this stage to the core sample, and the combined sample is passed through the crushers. After crushing, the material is transferred using crusher bins to the rotary splitter where the sample is split to a sub-sample of approximately 2 kg. The entire 2 kg sample is pulverized and then split into 200 g250 g and 650 g pulps, where the former is used for assays, the latter as reference. An additional 200 g250 g duplicate pulp is split from the pulverized sample at a frequency of 1 in 20.

Reverse circulation samples are pulverized in their entirety and are not usually passed through the crushing stage. After pulverizing, the sample is split using a rotary splitter into 250 g and 650 g pulps, with the former for assaying and the latter held by Geoteam for reference. Similar to core procedures, a 200 g-250 g duplicate pulp is split from the pulverized sample at a frequency of about 1 in 20.

Pulp samples for assaying are packed in boxes and shipped to ALS Romania laboratories for gold assaying. On arrival, each sample is logged, weighed, and assigned an individual bar code. A 50 g sub-sample is analysed at the Romanian laboratory for gold by fire assay, with an AA finish. ALS Romania has been accredited, by the Standards Council of Canada, on January 28 2013, with ISO/IEC 17025:2005 for gold fire assays with atomic absorption and gravimetric finish (codes Au-AA, Au-GRA). The remainder of the pulp samples are sent for analysis by inductively coupled plasma mass spectrometry using a four-acid digestion. This analytical procedure assays 61 elements, including silver. Samples are sent to ALS Laboratories in North Vancouver, Canada (ALS Canada Ltd), this laboratory is ISO/IEC 1702(code ME-ICP61).

11.2.1 Amulsar Assay Quality Control Procedures

Geoteam performs routine checks on laboratory submissions, upon import to the drillhole management Century Systems, Fusion database. On an ongoing basis QA/QC data is analysed using Fusion plots for standard, scatter, and quantilequantile plots. Failures in quality-control data are identified by Geoteam Database Managers and discussed with field geological personnel. Critical failures result in the resubmission of



assay batches, or ten samples that precede the failed sample. Quality-control samples for gold assays are summarized in Table 11.1.

Quality-control samples are routinely submitted by Geoteam during all exploration sampling programmes. For gold assays, five quality-control samples are submitted independently of assay laboratory comprising of; field duplicates, pulp duplicates, blanks, and certified reference material. Field duplicates consist of split core for diamond drill samples and coarse rejects after the crushing of reverse circulation samples. Pulp duplicates are submitted by sample preparation laboratory at Gorayk for both core and reverse circulation holes. Umpire samples were submitted to Alfred H Knight Services, St Helens, England, at the request of Independent Mining Consultants – as outlined in the report IMC (2012). Routine umpire samples are submitted to Acme Laboratories, Vancouver, Canada.

Silver assay quality-control samples were limited to field duplicates for core and reverse circulation samples, blanks and standards. Quality-control data for silver assays is summarized in Table 11.1.



Table 11.1 Summary of Laboratory Independent Assay Quality Control Samples

Analyte Quality Control

Sample Standard

Certified Value (g/t)

Number of Samples

Ratio to Total Assays

Gold Field Duplicates Core 1017 1.0%

Field Duplicates RC 1618 1.6%

Pulp Duplicates 2635 2.6%

Blanks 2543 2.5%

Umpire Samples (AHK) 1210 1.2%

Umpire Samples (Acme) 1525 1.5%

Standards 6302-2 2.5 125 0.1%

G302-3 8.66 303 0.3%

G307-2 292 0.3%

G312-6 2.42 17 0.0%

G398-6 2.94 561 0.6%

G399-6 2.52 47 0.0%

G900-6 2.56 245 0.2%

6904-8 5.53 773 0.8%

G905-8 2.55 80 0.1%

GBMS 304 5.67 181 0.2%

GBMS 304-5 1.62 175 0.2%

GLG 302-2 0.01667 246 0.2%

GLG 304-1 0.15391 807 0.8%

GLG 307-1 0.00286 320 0.3%

GLG 911-1 0.003 48 0.0%

OXD57 0.413 54 0.1%

Total 14822 14.6%

Silver Field Duplicates Core 1037 1.0%

Field Duplicates RC 1442 1.4%

Blanks 3356 3.3%

Standards GBMS 304-5 0.8 182 0.2%

GBMS 304-4 3.4 187 0.2%

Total 6204 6.1%

11.3 AMC Comments

AMC recommends that quality-control procedures for specific gravity measurements should be implemented. These procedures should include:

In-house standards that can be made from existing core – these standards can be measured daily or weekly, to ensure that equipment is accurate and that measuring procedures are consistently implemented;

Periodic checks of electronic balance using standard reference weights;

Umpire specific gravity measurements.



AMC also recommends that criteria used for batch failures should be formalized into a clearly outlined set of procedures. Although no sample preparation issues are evident, it is recommend that procedures for transferring samples to the preparation laboratory can be improved by the following procedures:

Packaging sample bags from the core shed into sealed barrels or large bags that are then delivered to the laboratory;

Barrels or large bags are unpacked by laboratory personnel;

Barcodes are assigned to each sample that enters the laboratory and used to log samples out of the laboratory.

AMC concludes that sampling and analytical techniques used for the Amulsar project are appropriate for estimating resources. However, AMC suggests that the procedure of adding fragments and fines from the core cutting process should be further investigated, to determine if this material contains significant mineralization.



12 DATA VERIFICATION

12.1 Verification by Lydian

The Amulsar project data is maintained by Geoteam personnel using Century systems Fusion database system. Geoteam personnel routinely verify drillhole data and assay data. Detected database errors or inconsistencies are discussed with senior geological personnel and rectified.

Data security and integrity is maintained by daily backups of the Amulsar database in Geoteam offices in Yerevan, with systems at Lydian offices in St. Helier, Jersey.

12.2 Verification by AMC

12.2.1 Twinned Hole Review

AMC reviewed 14 sets of twinned diamond core and reverse circulation holes previously reviewed by CSA (2011). AMC compared the lithological coding and gold assays for each of these drillhole sets. The spacing between drillholes ranges from about 11 m to less than 3 m. The drillhole were visually compared using Datamine mining software.

AMC concludes from this examination that there does not seem to be any significant bias between assay values by lithology between diamond core and reverse circulation drilling.

12.2.2 Potential Gold Assay Bias in Drilling Methods

AMC reviewed gold assays for reverse circulation and diamond core drillholes to determine if there is a sampling bias between the two different types of samples. The two datasets for the upper volcanic unit were examined using histograms, probability plots and quantilequantile plots, using sample length-weighted gold assays.

AMC determined that summary statistics for the two datasets are not significantly different. Similarly an examination of histogram, probability and quantilequantile plot for the two datasets indicate that there is no significant bias. Histogram plots and quantilequantile plots are provided in Figure 12.1 and Figure 12.2 respectively.



Figure 12.1 Histogram Plot for Gold Assays (Length Weighted) for Core (A) and Reverse Circulation (B) Drillholes

A

B



Figure 12.2 QuantileQuantile Plot for Gold Assays (Length Weighted) for Core and Reverse Circulation Drillholes

12.2.3 Site Visit

In accordance with National Instrument 43-101 guidelines, G. David Keller, P.Geo., visited the Amulsar Gold Project from 1214 December 2012. Mr Keller was assisted by Geoteam’s Chief Geologist, Argam Snkhchyan.

The purpose of the site visit was to review the borehole database, validation procedures, and exploration procedures; define geological modelling procedures; examine drill core, interview project personnel; and arrange for receipt by AMC of all relevant information for the preparation of a mineral resource model and the compilation of a technical report.

AMC briefly relogged core for 16 diamond drillholes. Drillhole DDA-116 was relogged from top-to-bottom, while only mineralized sections for the other 15 diamond drillholes were examined. In addition to diamond drillholes, the summary logging data for reverse circulation hole RCA-450 was also reviewed. Lydian supplied drillhole lithology sheets, including lithology and assay data for each of the drillholes examined, including an updated summary of lithologies for the drillholes. Diamond core drill examined by AMC is listed in Table 12.1.

As the deposit geology has undergone a number of reinterpretations, not all drillholes have been updated to the current definition of major lithological units comprising Upper Volcanic and Lower Volcanic units. The update and review of lithological codes by



Geoteam is in progress, but was not completed for all holes at the time of AMC’s site visit. Logging reviewed by AMC was found to be generally consistent. In some cases lithological units were not identified correctly or needed to be reviewed on the basis of Upper and Lower Volcanic unit classification. AMC understands that re-evaluation of lithology in terms of the two broad volcanic units is in progress. Summary drillhole logs are overall consistently logged, with minor inconsistencies. The Upper and Lower Volcanic units are more difficult to identify on the basis of lithological logging that was completed prior to the introduction of summary logs.

Diamond core and reverse circulation logging procedures, as discussed with Geoteam personnel, are carefully undertaken, and meet best practice standards. A review of drill cuttings from the reverse circulation chip library shows that Upper and Lower Volcanic units are readily identified by these samples.

Access to the project drillhole locations was limited because of snow cover. However, AMC was able to visit drillhole RCG-001. Using a hand-held GPS, AMC was able to confirm the UTM coordinates of this drill site to within 3 metres.

AMC visited a diamond drilling operation for drillhole DDA-374. However, no reverse circulation drilling was active during the time of the site visit.

Table 12.1 Drillholes Examined by AMC

DDA-020 DDA-126 DDA-352

DDA-027 DDA-135 DDA-362

DDA-058 DDA-313 DDA-367

DDA-076 DDA-331 DDA-368

DDA-096 DDA-348

DDA-116 DDA-358

12.2.4 Verification of Analytical Quality Control Data

Lydian provided assay quality-control data for gold and silver assays for the Amulsar project. AMC reviewed the data using scatter plots, HRD, HARD, ranked HARD, and quantilequantile plots to evaluate field duplicates, pulp duplicates and umpire samples. Blank and certified reference material data were plotted on time-series plots using two standard deviations as data limits for reference material plots.

AMC’s review of gold and silver assay quality-control data indicates a high correlation between assayed values and control sample assays for gold and silver. Excluding gold core field duplicates, correlation coefficients exceed 0.93 for these datasets. Ranked half absolute relative difference (HARD) plots show that 80% or more of the data is within an absolute relative error of 10%, with the exception of core field duplicates.

Gold and silver core field duplicate data consists of a comparison of split core assay values. Split core is expected to show more variation than other quality-control data. Correlation coefficients for gold and silver are 0.91 and 0.92 which is acceptable for split core data. Ranked HARD plot for gold indicate that 39% of data are within an absolute relative error of 10%, and 70% of silver of silver data is within an absolute relative error



of 10%. AMC considers results for the core field duplicates to be well within acceptable limits for these types of samples. Selected assay quality-control plots generated by AMC are provided in Appendix A.

AMC concludes that assay analytical results for the Amulsar project are appropriate for the estimation of mineral resources.

12.2.5 Assay Database Verification

AMC completed standard validation checks to ensure that the drillhole database provided to AMC does not contain duplicated data, overlapping intervals, unmatched drillhole identifiers, and incorrect data values. No matters of concern were identified.

AMC also completed a check of database assay values with assay certificates supplied by Lydian, and a separate check with assay certificates sent directly from the assay laboratories to AMC. AMC randomly selected assay values for validation. Approximately 10% of the gold and silver assays were checked with assay certificates supplied by Lydian, and 2% of gold and silver assays were checked with assay certificates from the analytical laboratories. No errors were found.

AMC concludes that the Amulsar project assay drillhole data provided by Lydian is appropriate for the estimation of mineral resources.



13 MINERAL PROCESSING AND METALLURGICAL TESTING

A number of testwork programmes have been completed to date on bulk composite samples from the Amulsar deposits.

13.1 SGS Lakefield Research (2008)

In September 2008, a gold recovery test programme was undertaken at SGS Lakefield in Canada on a crushed continuous half drill core from the entire 146 m length of hole DDA-004, a scout hole from the 2007 drill programme. The purpose of the programme was to evaluate the response of the sample to basic metallurgical processes. A summary of this work is contained in the SGS Lakefield March 2009 report, to which the reader is referred.

The following results were achieved:

For all tests, a gold recovery of 90% was established after only 8 hours, and reached 95% after 24 hours, both with modest to moderate sodium cyanide (NaCN) consumptions.

The results suggested that the mineralization is amenable to heap leaching and conventional whole ore cyanidation. The recovery of gold was in the range of 96%97%, leaving a residue assay of 0.030.06 g/t gold.

The reagent consumptions were very low, below 0.1 kg/t NaCN and 0.3 kg/t lime.

13.2 SGS Mineral Services UK Ltd. (2009)

During 2009, Lydian engaged SGS Mineral Services UK Ltd to conduct further testwork (press release, 3 November 2009), focusing on coarser fractions and lower cyanide concentration solution concentrations than previous testwork, and included column leach tests on large fraction half-core to simulate minimal or no crushing.

The testwork was conducted on three master composites (labelled A, B, and C) of half drill core samples from different parts of the Tigranes and Artavasdes areas. The composites are differentiated by alteration style, and gold and multi-element distribution. The three composites have head grades ranging from 1.09 g/t to 1.29 g/t Au.

Metallic screens of the composites show that >98% of the gold has a size fraction less than 106 µm. The results confirm the observations made in previous work, indicating that a gravity concentration step is not warranted with insignificant coarse gold component present.

Two different size fractions, 75 µm and 2 mm, were used for cyanidation bottle roll tests.

13.2.1 -75 µm Bottle Roll Leach Tests

Bottle roll leach tests were conducted at -75µm to determine leach recoveries attainable by conventional CIL. Results of the whole ore cyanidation bottle roll leach tests are shown in Table 13.1.



Table 13.1 Whole Ore Cyanidation Leach Tests

Leach Period (hours) %Au Recovery

Comp A Comp B Comp C

24 83.7 81.8 80.8

48 96.2 90.2 89.1

Cyanide and lime consumptions were in the range 0.050.10 kg/t and 1.131.32 kg/t respectively.

13.2.2 -2 mm Bottle Roll Leach Tests

Bottle roll leach tests were conducted at -2 mm to determine leach recoveries attainable by heap leach technology. Results of the coarse ore cyanidation bottle roll leach tests are shown in Table 13.2. Cyanide and lime consumptions were in the range 0.080.09 kg/t and 1.061.20 kg/t respectively.

Table 13.2 Coarse Ore Cyanidation Leach Test

Leach Period (days) %Au Recovery


1 89.1 81.2 78.2

14 95.1 91.8 89.2

Cyanide and lime consumptions were in the range 0.080.09 kg/t and 1.061.20 kg/t respectively.

13.2.3 Column Leach Tests

Column leach tests were carried out at crush sizes of -38 mm and -19 mm. The column leach tests were carried out for a total of 144 days, at a crush size of -38 mm, and for 72 days at a crush size of -19 mm.

Results of the column leach tests at a crush size of -38 mm are shown in Table 13.3. Cyanide and lime consumptions were in the range 0.180.31 kg/t and 0.630.97 kg/t respectively. Results of the column leach tests at a crush size of -19 mm are shown in Table 13.4. Cyanide and lime consumptions were in the range 0.100.13 kg/t and 0.901.14 kg/t respectively.



Table 13.3 Column Leach Tests (-38 mm)



70 56.7 71.0 53.1

144 68.5 80.3 64.4

Table 13.4 Column Leach Tests (-19 mm)



35 86.0 85.1 73.0

72 89.1 88.6 76.5

The results of the column leach test would tend to indicate that gold leach extraction is dependent on the crush, or liberation size i.e. the finer the crush size the higher the gold leach extraction.

A review of all final gold recovery results for all tests shows that, of the three composites, composite A produced the highest level of gold recovery in all but the -38 mm column test. The overall final gold recovery attainable for each composite, and testing of whole ore and coarse cyanidation bottle roll leach tests and column leach tests is summarized in Table 13.5. The results show that there is a reduction in gold extraction with increasing particle size.

These initial scoping testwork results suggest attractive processing economics of the Amulsar project. Bulk mining of low-grade ore with a leach operation requiring only a minor crush, or possibly ROM ore dump leaching, are feasible.

Table 13.5 Final Gold Recovery Summary by Test and Composite

Liberation Size Test Type % Au Recovery


80% -75 µm Bottle roll 95.8 95.2 93.2

-2 mm Bottle roll 95.1 91.8 89.2

-19 mm Column 89.1 88.6 76.5

-38 mm Column 68.5 80.3 64.4

13.3 Wardell Armstrong International (2010)

Previous testwork programmes undertaken by SGS have indicated that the gold mineralization is readily processable using cyanidation leaching, with gold recoveries of 9497% being achieved after grinding to between 75 µm and 150 μm.

Column leach testing on two composite samples, designated “A” and “B” gave gold recoveries of approximately 90%, at a crush size of 19 mm after 70 days of leaching. Bottle rolls testing had indicated that gold recoveries of up to 94.7% were achievable at a crush size of -12 mm.



Lydian commissioned WAI to undertake a further programme of laboratory testwork on samples from the Amulsar deposit, through further bottle rolls and column tests on the two composite samples originally tested by SGS. The testwork generally focused on leaching at finer crush sizes and using higher cyanide concentrations than were used in the SGS testwork.

The two samples tested were “Sample A” (HWA 149, weighing 120 kg) and “Sample B” (HWA 150, weighing 330 kg).

WAI were commissioned by Lydian to undertake a programme of laboratory testwork on samples from the Amulsar deposit. The test programme consisted of bottle rolls and column leach tests and focused on leaching at finer crush sizes and using higher cyanide concentrations than had been used previously. The two samples tested were “Sample A” (HWA 149, weighing 120 kg), and “Sample B” (HWA 150, weighing 330 kg).

The programme of column testwork was undertaken using cyanide concentrations of 0.075%, 0.050% and 0.025%. The crush sizes investigated were 38 mm, 25 mm, 18 mm and 12 mm. The columns were irrigated at a rate of 10 l/m2/h, and the leach period was 68 days. The column leach test results are given in Table 13.6.

Table 13.6 Column Leach Test Results Summary

Sample Crush Size (mm) % Cyanide Concn. % Au Recovery

A 25 0.05 91.9

A 19 0.05 93.5

A 12 0.05 94.8

B 38 0.05 88.6

B 25 0.05 88.6

B 25 0.075 89.1

B 19 0.025 89.2

B 19 0.05 93.1

B 19 0.075 92.3

B 12 0.025 89.3

B 12 0.05 90.7

B 12 0.075 94.9

Based on the results in Table 13.6, it can be concluded that the optimum crush size for both samples is probably 19 mm, and the optimum cyanide concentration is 0.05%; although further testwork is required to substantiate this.

Tests using the higher cyanide concentrations also gave higher cyanide consumptions and the additional gold recovery achieved needs to be related to the additional cyanide costs. The same is true for the additional capital and operating costs of crushing to the finer sizes.

The outcome from these tests provided an indication of metallurgical performance with respect to gold and silver leach recoveries, as well as reagent consumptions. It was concluded that the Amulsar ore types were amenable to processing using heap leach



technology, and both a high gold leach recovery and low reagent consumptions were achievable.

13.4 Wardell Armstrong International (2011)

The December 2011 WAI testwork programme consisted of coarse cyanidation bottle roll leach and column leach tests. The testwork programme was conducted on master composites representing Tigranes, Artavasdes and Erato, plus the four main rock types to determine any metallurgical variability.

Based on these tests it was concluded that the optimum crush size was -12 mm. Gold leach recoveries for the Tigranes, Artavasdes and Erato master composites were 89.5%, 95.1% and 97.7% respectively, after 47 days of leaching. The variability column leach tests conducted on pervasive iron oxide, siliceous breccias, fault gouge, and gossan rock types showed respective gold leach recoveries of 96.6%, 85.9%, 92.4% and 84.4%.

Average cyanide consumption for the master composite column leach tests was 0.47 kg/t ore.

13.5 Kappes Cassiday & Associates (2012)

As part of the testwork requirements for the “Amulsar Feasibility Study”, Kappes Cassiday and Associates (KCA) carried out a metallurgical testwork programme consisting of fine cyanidation bottle roll leach (simulating conventional CIL), and column leach tests (simulating heap leaching).

The testwork programme was conducted on master composites prepared from selected intervals taken from bulk ore samples, half and whole core – representing Tigranes and Artavasdes drillholes located within the starter and final pit shells.

The fine bottle roll cyanidation leach tests were conducted at -75 µm, whilst the column leach tests were conducted at 100% passing 12.5 mm. Results of the fine bottle roll cyanidation leach tests and column leach tests are summarized in Table 13.7 and Table 13.8.



Table 13.7 Fine Cyanidation Leach Tests (Tigranes/Artavasdes)

KCA Sample

No.

KCA Test No.

Description Liberation Size (mm)

Head Average

gms Au/MT

Calc. Head, gms

Au/MT

Extracted gms

Au/MT

Avg.Tailsgms

Au/MT

% Au Extracted

Leach Time

(days)

Consumption NaCN kg/MT

Addition Ca(OH)2,

kg/MT

Bulk Sample Composites

61723 61737A TM-1 thru TM-18 -0.075 4.470 4.317 3.987 0.330 92% 2 0.63 2.00

61724 61737B ATM-1 thru ATM-26 -0.075 0.647 0.641 0.576 0.065 90% 2 0.44 1.00

½ Split Core Composites

61730 61765A DDA-018 -0.075 0.528 0.594 0.582 0.012 98% 2 0.17 1.00

61731 61765B DDA-022 and DDA-055 -0.075 0.500 0.430 0.400 0.029 93% 2 0.07 1.00

61732 61765C DDA-033 -0.075 0.997 0.947 0.927 0.020 98% 2 0.28 2.00

61733 61766A DDA-035 and DDA-055 -0.075 1.059 1.178 1.130 0.048 96% 2 0.17 1.50

61734 61766B DDA-046 and DDA-076 -0.075 1.497 1.401 1.370 0.031 98% 2 0.30 2.50

61735 61766C DDA-055 -0.075 1.044 1.081 1.060 0.021 98% 2 0.26 1.50

61736 61766D DDA-076 -0.075 2.413 2.536 2.468 0.068 97% 2 0.31 1.50

Whole Core Composites

61768B 62501A DDAM-130 -0.075 1.312 1.348 1.290 0.058 96% 4 0.13 2.00

61769B 62501B DDAM-137 -0.075 1.557 1.520 1.470 0.050 97% 4 0.24 1.50

61770B 62501C DDAM-140 -0.075 1.403 1.490 1.421 0.069 95% 4 0.40 1.50

61771B 62501D DDAM-148 -0.075 0.734 0.792 0.754 0.038 95% 4 0.28 1.50

61772B 62502A DDAM-169 -0.075 0.461 0.408 0.379 0.029 93% 4 0.35 1.50

61773B 62502B DDAM-174 -0.075 0.759 0.777 0.678 0.099 87% 4 0.56 2.50



Table 13.8 Fine Cyanidation Leach Test Results

Deposit Sample – KCA Sample

Number

Calculated Head Assay g/t

Extraction %

Reagent Consumption kg/t

Au Ag Au Ag NaCN Ca (OH)2

Tigranes Bulk – 61723 4.50 8.72 91 5 0.34 1.5

Artavasdes Bulk – 61724 0.67 4.11 89 48 0.12 1.0

Tigranes Split Core - 61730 0.56 0.52 96 34 0.18 2.0

Artavasdes Split Core - 61731 0.50 1.21 92 43 0.17 2.0






Tigranes Whole Core - 61768 1.27 1.35 92 20 0.14 2.0

Tigranes Whole Core - 61769 1.60 1.16 92 9 <0.05 2.0

Artavasdes Whole Core - 61770 1.38 4.77 85 9 0.17 2.0

Artavasdes Whole Core - 61771 0.76 3.91 89 8 <0.05 2.0

Artavasdes Whole Core - 61772 0.45 8.90 92 93 0.17 2.0

Tigranes Whole Core - 61773 0.76 1.75 75 66 0.27 1.8

Average gold leach recoveries for the bulk samples, half core and full core column leach tests were 90.0%, 94.6% and 91.9% respectively, after 6070 days of leaching. The calculated gold recovery to doré for the Tigranes and Artavasdes deposits is 88.1%, and 86.3%. Silver recovery to doré for the Tigranes and Artavasdes deposits is calculated to be 30.3% and 31.8% respectively.

Average cyanide and lime consumption for the column leach tests was 0.20 kg/t and 2.01 kg/t ore.

The gold leach curves for the bulk, half, and full core composites are represented graphically in Figures 13.1 to Figure 13.3. These figures indicate that the leach kinetics is rapid, with 70% of the recoverable gold leached within 10 days (40 days in full scale heap).



Figure 13.1 Gold Leach Curves (Bulk Composite)

Figure 13.2 Gold Leach Curves (Half Core Composites)



Figure 13.3 Gold Leach Curves (Whole Core Composites)

13.6 Kappes Cassiday & Associates (2013)

As part of the testwork requirements for the updated mineral resource estimate for Erato, KCA carried out a metallurgical testwork programme consisting of fine/coarse cyanidation bottle roll leach (simulating conventional CIL), and column leach tests (simulating heap leaching). The testwork programme was conducted on master composites prepared from selected intervals taken from half core – representing Erato drillholes located within the starter and final pit shells.

The fine and coarse bottle roll cyanidation leach tests were conducted at -75µm and -25 mm respectively, whilst the column leach tests were conducted at a P80 of -12.5 mm.

Results of the fine/coarse bottle roll cyanidation leach tests and the column leach tests are summarized in Table 13.9 and Table 13.10.

Average gold leach recoveries for the half core column leach tests were 88.3%, after 62 days of leaching. The gold recovery to doré for the Erato deposit is 84.5%. Silver recovery to doré for the Erato deposit is 14.9%. Average cyanide and lime consumption for the column leach tests was 0.49 kg/t and 1.09 kg/t ore. The gold leach curves for whole core are represented graphically in Figure 13.4. This figure indicates that the leach kinetics is rapid, with 70% of the recoverable gold leached within 10 days (40 days in full scale heap).



Table 13.9 KCA Column Tests

Deposit Sample – KCA Sample

Number

Calculated Head Assay (g/t)

Extraction % Reagent

Consumption (kg/t)

Au Ag Au Ag NaCN Ca(OH)2

Erato Split Core - 62513 1.12 2.23 87% 26% 0.62 1.51

Erato Split Core - 2522 0.95 2.79 85% 18% 0.47 1.01

Erato Split Core - 62525 1.01 2.67 88% 11% 0.50 1.01

Erato Split Core - 62528 1.14 1.90 95% 14% 0.51 1.00

Erato Split Core - 62531 0.80 2.16 93% 26% 0.41 1.00

Erato Split Core - 62534 1.04 2.27 82% 25% 0.43 1.01



Table 13.10 Fine/Coarse Cyanidation Leach Tests (Erato)

KCA Sample No.

KCA Test No.

Description Liberation

Size

Calculated Head (gms)

Au/MT

Extracted gms

Au/MT

Avg. Tails,gms

Au/MT

Au Extracted %

Leach Time

(hours)

Consumption NaCN kg/MT

Addition Ca(OH)2,

kg/MT

62513 62537 A DDA-030, 0.94 gms Au/MT -12.5 mm 1.011 0.801 0.210 79% 96 0.19 1.10

62514 62537 B DDA-030, 1.07 gms Au/MT -12.5 mm 0.849 0.642 0.207 76% 96 0.11 0.50

62515 62537 C DDA-278, 0.96 gms Au/MT -12.5 mm 1.091 0.859 0.231 79% 96 0.13 0.70

62516 62537 D DDA-276, 1.06 gms Au/MT -12.5 mm 1.101 1.005 0.096 91% 96 0.11 0.90

62517 62538 A DDA-290, 0.81 gms Au/MT -12.5 mm 0.748 0.667 0.081 89% 96 0.11 0.50

62518 62538 B DDA-340, 1.04 gms Au/MT -12.5 mm 1.042 0.746 0.297 72% 96 0.13 0.70

62513 62539 A DDA-030, 0.94 gms Au/MT -75 µm 1.088 1.042 0.046 96% 96 0.23 2.50

62514 62539 B DDA-030, 1.07 gms Au/MT -75 µm 1.039 0.888 0.151 85% 96 0.20 1.00

62515 62539 C DDA-278, 0.96 gms Au/MT -75 µm 1.039 0.961 0.077 93% 96 0.67 1.50

62516 62539 D DDA-276, 1.06 gms Au/MT -75 µm 1.086 1.032 0.054 95% 96 0.76 2.00

62517 62540 A DDA-290, 0.81 gms Au/MT -75 µm 0.821 0.765 0.057 93% 96 0.22 1.00

62518 62540 B DDA-340, 1.04 gms Au/MT -75 µm 1.073 1.011 0.063 94% 96 0.54 1.50



Figure 13.4 Erato Gold Leach Curves (Half Core Composites)

13.7 Metallurgical Samples and Locations

The metallurgical testwork programmes as outlined in Section 1 to Section 1.7 have been carried out on bulk, half and full core composite samples from the three main deposits.

A summary of the various metallurgical samples, their respective crush size, drillhole number, and deposit location is detailed in Table 13.11.

The location of the drillholes from which metallurgical composites have been prepared, and which represent ore from the Tigranes, Artavasdes and Erato deposits are shown in Figure 13.5 and Figure 13.6.



Table 13.11 Metallurgical Testwork Composite Summary

Testwork Programme

Year Deposit No. Crush Size

mm DDH #

Core Size

Sample Description

SGS 2010 3 -38 Mix Half Composites A, B & C

3 -19 Mix Half Composites A, B & C

SGS 2010 12 -12 to -38 Mix Half Composites A & B

WAI 2011 Tigranes 1 -12 MC070 Full Met drillhole

Artavasdes 1 -12 MC071 Full Met drillhole

Erato 1 -12 MC068 Full Met drillhole

Litho 4 -12 Full Met drillhole

KCA 2012 Tigranes 1 -12.5 Bulk Outcrop sample

Artavasdes 1 -12.5 Bulk Outcrop sample

Tigranes 1 -12.5 DDAM 130 Full Met drillhole

1 -12.5 DDAM 137 Full Met drillhole

1 -12.5 DDAM-174 Full Met drillhole

Artavasdes 1 -12.5 DDAM-140 Full Met drillhole



Tigranes 1 -12.5 DDA-018 Half Geological reserve

1 -12.5 DDA-055 Half Geological reserve


Artavasdes 1 -12.5 DDA-033 Half Geological reserve

Mixed 1 -12.5 DDA-022/DDA-055 Half Geological reserve

1 -12.5 DDA-035/DDA-055 Half Geological reserve

1 -12.5 DDA-046/DDA-076 Half Geological reserve

KCA 2013 Erato 1 -12.5 DDA-030 Half Geological reserve






Total 46



Figure 13.5 Tigranes and Artavasdes Metallurgical Sample Drillhole Location Map



Figure 13.6 Erato Metallurgical Sample Drillhole Location Map



14 MINERAL RESOURCE ESTIMATES

14.1 Overview of Estimation Strategy

Lydian International Limited (Lydian) commissioned AMC Consultants (UK) Limited (AMC) to evaluate the mineral resources for the Amulsar gold project. The Mineral Resources Statement presented in this report represents an update to mineral resources previously evaluated by Independent Mining Consultants Inc. (IMC) documented in a report titled “2012 Mineral Resource Estimate, Amulsar Gold Project” 3 March 2012.

Gold grades for the UV unit were estimated using multiple indicator kriging (MIK). MIK was considered an appropriate estimation method for the Amulsar deposit, which is typified by short-scale grade continuity mineralization and broad low-grade zones of mineralization within the UV unit. An extension of MIK, localized multiple indicator kriging (LMIK) is a robust estimation approach that allows the estimation of targeted selective mining units (SMU) within larger panels, and is suitable for estimation within relatively broadly-spaced datasets.

Gold grades for the LV unit were estimated using ordinary kriging (OK) into a sub-blocked SMU model for the unit. Silver grades were also estimated using ordinary kriging (OK) for all UV and LV units. Silver grades were estimated into sub-blocked SMU models for each unit.

AMC used Datamine, Isatis and GSLib software for the resource estimation study.

14.2 Geological and Assay Database

The resource database used to evaluate the mineral resources for the Amulsar project was provided as MSExcel spreadsheet exports from Lydian’s Fusion database system. These spreadsheets contained all information for diamond core and reverse circulation drillholes, and chip samples for the project. The database consists of 1,154 drillholes and channel samples collected in exploration work undertaken between 2007 and 2012. The data is comprised of 298 diamond drillholes (40,017 m), 498 reverse circulation drillholes (69,380 m), and 358 channel samples (1,337 m). Drilling and chip sampling were carried out in the Tigranes, Artavasdes, Arshak and Erato areas of the Amulsar project.

Drillhole data was comprised of gold and silver assays, lithological codes updated for the current interpretation, alteration data, structural orientations and descriptions. Lydian also provided geotechnical data for diamond core drillholes included RQD, core recovery, and fracture counts measurements. Chip sample data contained only gold and silver assay values. The resource data provided by Lydian was validated by:

Reviewing collar and downhole survey data;

Checking the minimum and maximum values for each field in the borehole database and confirming those values outside of expected values;

Checking for gaps, overlaps, and out of sequence intervals;



Generating boreholes in Datamine, and then reviewing boreholes on a section-by-section basis to ensure that mineralization and alteration are consistent with drilling.

Following this review, AMC considers that the Amulsar database provided by Lydian is sufficiently reliable to interpret with confidence the boundaries of the gold and silver mineralization, and that the assay data is sufficiently reliable to support resource estimation.

14.3 Geological Modelling and Interpretation

The Amulsar deposit has a complex history of structural events, including an initial antiform fold over the deposit resulting from east- and west-directed thrusting and related complex deformation, and two episodes of extensional faulting within large north-easttrending grabens. This has resulted in a complex of structurally positioned blocks of upper volcanic and lower volcanic rocks. Mineralization is predominantly confined to rocks of the Upper Volcanic unit (UV). Mineralization in the Lower Volcanic unit (LV) are generally not mineralized, except near contacts with mineralized UV rocks or related mineralized structures.

The contacts of the Upper Volcanic unit are difficult to determine on a property-wide scale because of the complex structural history. Therefore, the unit was modelled within structural blocks outlined by a detailed structural interpretation of the deposit. Wireframes of the UV unit were modelled by extending wireframe triangles of interpreted structural block wireframes to drillhole lithological intersections comprising the top and bottom contacts of UV. Lithological contacts are complicated by small-scale variations in lithology and faulting. Contacts were snapped to drillhole intersections as much as possible, however, due the complexity of the deposit, in some cases contacts needed to be interpreted through a number of drillhole intersections without being snapped to each interval intersection.

Lydian also generated a wireframe model of near-surface colluvium material, including talus and weathered rock. As the deposit is located in mountainous terrain, these units can be of variable areal extent and depth. This material was modelled on the basis of only larger areas logged as colluvium. Similar to the Upper Volcanic wireframe, contacts were snapped to drillhole intersections as much as possible, but due to complexity and variable coding of lithology, these wireframes were interpreted over a number of drillhole intersections in some cases.

Resources were not estimated for the colluvium unit. AMC considers this material low-grade or waste.

The UV unit was subdivided into two, comprising the Erato sub unit to the north and the Artavasdes-Arshak-Tigranes (AAT) sub unit to the south as shown in Figure 14.1. The two units are structurally distinct, with the Erato unit having a slightly lower tenor of gold mineralization.

Rocks of the LV unit were assumed to occur in all areas outside of the Upper Volcanic and colluvium wireframes. The extent of the lower volcanic unit was modelled by AMC



based on the extent of drilling over the Amulsar project. Exploration targets outside of the Erato and AAT areas were excluded. .

Lydian generated the UV and colluvium wireframe interpretation models for the deposit. AMC reviewed the models, and worked with Lydian through a number of iterations to develop the final wireframe models used for the resource estimate.

Figure 14.1 Wireframe Models for Amulsar Project and Interpreted Faults

Note: Interpreted faults in magenta

14.4 Specific Gravity

AMC determined that the most appropriate method of representing specific gravity is to average the specific gravity values for each main unit modelled. Summary statistics for specific gravity for each unit is provided in Figure 14.2.

Erato

AAT



Figure 14.2 Summary Statistics for Specific Gravity Measurements by Zone*

Note: *100=Erato UV, 200=AAT UV, 300=LV, 400=Colluvium

14.5 Topography

Lydian provided point data files for the Amulsar project in DXF format, covering the mineralization areas modelled by AMC. The topography data was based on surveys undertaken by Lydian, and AMC generated a topography wireframe based on the point data.

14.6 Resource Database

The drillholes and chip sample database used for estimation of resources consists of 91,830 gold and silver assays, and 1,148 specific gravity measurements. The drillhole database excludes 92 geotechnical, metallurgical and condemnation drillholes – which were not assayed for gold and silver, or were not assayed using the same techniques used for all other samples (i.e. metallurgical bore holes).

Drillhole intervals for each of the four zones were coded using the wireframe models for Erato and AAT, UV, LV, and colluvium wireframe models. Due to wireframe configurations, some intervals lying on the wireframe boundaries were duplicated in one



of the four zones. These duplicates were removed from one dataset according to the following criteria:

All duplicated intervals coded by the colluvium wireframe were assigned to either UV or LV units;

Duplicated intervals coded in both UV and LV units were assigned to the appropriate dataset units, based on lithological coding. Duplicated intervals coded as LV lithologies were removed from the Upper Volcanic dataset, and duplicated intervals coded as any other lithologies were assigned to the Upper Volcanic dataset.

All unsampled intervals within the database were assigned a trace value of 0.0025 g/t for gold and 0.005 g/t for silver.

14.7 Compositing, Capping and Declustering

Drillholes for each of the four zones, Erato and AAT, Upper Volcanic, and Lower Volcanic units were composited to 1 metre to provide common support for statistical analysis and estimation for gold and silver data. Approximately 93% of assay samples were sampled at 1 metre intervals or less. Summary statistics for gold and silver assays and composites are provided in Appendix B.

Based on statistical analysis of the Erato and AAT composites, it was found that a combined dataset of UV and LV units for each Erato and AAT zones provided more stable datasets for indicator variography and Gaussian transform of gold composite data. These combined datasets were used for variography and the estimation of grades for the UV model only. The LV unit is estimated using composites from only the LV unit.

Log probability plots and the spatial distribution of composites were reviewed for the combined UV and LV gold composites. Analysis indicates that capping of high gold grades for the AAT areas is appropriate for the estimation of resources so that the influence of high-grade outlier values is reduced. The AAT composites were capped at 20 g/t gold. Erato gold composites were not capped. LV composites used to estimate LV grades were not capped.

Similarly, for silver composites, log probability and the spatial distribution of composite grades were reviewed for UV and LV datasets separately. Analysis indicates that capping of high silver grades is appropriate for the LV and Erato UV composites. LV composites are capped at 60 g/t Ag, and Erato UV composites were capped at 35 g/t Ag. AAT UV composites are not capped.

Analyses of silver and gold composites show that there is no correlation between the two metals. A possible conclusion that may be drawn from this lack of correlation is that, mineralization conditions, or events for gold and silver were probably very different.

A cell declustering method was undertaken to reduce the impact of varying sampling densities on the global mean of gold grades for the Erato and ATT UV-LV composites. For the Erato zone a declustering cell size of 90 m by 90 m by 15 m was used, and for the AAT zone 95 m by 95 m by 5 m for the AAT zone, for northing, easting and elevation



coordinates. Declustered composite data is used in variography and change-of-support calculations.

Gold composites for the LV unit and silver composites for LV and UV units were not declustered prior to variography.

14.8 Gold Indicator Statistics

Conditional statistics were generated for the Erato and AAT zones using combined UV and LV gold composites and used to determine intra-class mean grades to be used for post-processing of model panel grade estimates. Eleven indicator thresholds were selected for each of the two UV zones, as they were considered sufficient to discretize both the sample and metal values.

Eleven gold indicator thresholds were selected for modelling the Erato and AAT UV zones. The selected thresholds represent the entire grade range, and therefore, the spatial variability of the mineralization. Indicators and summary statistics are presented in Table 14.1.



Table 14.1 Summary of Amulsar Combined UV and LV Gold Indicator Statistics

Metal Zone Indicator Number

Indicator Threshold Au [gpt]

Threshold Quantile

No. Of Composites

Minimum Maximum Mean

Au 200 - - 25,424 0.00 0.03 0.01

1 0.028 40.00 8,783 0.03 0.05 0.04

2 0.049 60.00 17,273 0.05 0.13 0.08

3 0.13 65.00 4,253 0.13 0.17 0.15

4 0.166 70.00 4,354 0.17 0.22 0.19

5 0.215 80.00 8,571 0.22 0.37 0.28

6 0.371 85.00 4,307 0.37 0.52 0.44

7 0.516 90.00 4,308 0.52 0.78 0.63

8 0.775 95.00 2,145 0.78 1.00 0.88

9 0.996 97.00 3,863 1.00 2.02 1.39

10 2.02 99.00 1,719 2.02 4.32 2.83

11 4.32 99.50 797 4.32 20.00 8.16

Au 100 - - 18,863 0.00 0.03 0.01

1 0.03 40 7,717 0.03 0.12 0.06

2 0.12 65 1,437 0.12 0.16 0.14

3 0.21 70 1,392 0.16 0.21 0.18

4 0.28 75 1,318 0.21 0.28 0.24

5 0.39 80 1,414 0.28 0.39 0.33

6 0.56 85 1,302 0.39 0.56 0.46

7 0.74 90 724 0.56 0.74 0.64

8 1.00 92.5 682 0.74 1.00 0.85

9 1.46 95 585 1.00 1.46 1.19

10 2.88 97 746 1.46 3.93 2.25

11 3.93 99.5 169 3.93 40.80 8.13

14.9 Variography

A suite of experimental gold variograms were generated and modelled for the Erato and AAT subzone declustered composites (using combined UV and LV data). Variograms were generated for both gold and indicator thresholds. Traditional semi-variograms were used as the spatial model for Erato and AAT zones. Gold indicator variograms were used to estimate gold grades, while gold variograms were used to derive change-of- support correction factors.

Omni-directional variograms, or variograms that model major and semi-major axis, are considered the most appropriate for estimating the UV units, because:

Structural trends and faults related to mineralization are present in a number of different orientations;

Mineralization is, in part, associated with lithology changes, brecciation, and fractures that are not continuous over large distances (i.e. 100 m in general);



Anisotropic orientations in trial variograms are weakly controlled by data configuration (drilling pattern), and ranges for major, semi-major and normal axis are similar.

AMC used omni-directional variograms for gold and indicator variograms for the AAT UV zone and omni-directional variograms for major and semi-major axis for the Erato UV zone indicators, with anisotropy for the Z direction. An omni-directional variogram was also used for the LV zone, using a traditional variogram with Gaussian transform data. A summary of variogram models for the project is provided in Table 14.2. Examples of the variograms models are presented in Figure 14.2 and Figure 14 3.

AMC also used omni-directional variograms for silver composites for the AAT UV, Erato UV and LV domains. Gaussian transforms of silver composites were used for traditional variograms. Examples of silver variogram models are presented in Figure 14.3 and Figure 14.4.



Table 14.2 Summary of Variogram Models Amulsar Project

DATAMINE ROTATION

VARIABLE ZONE SUBZONE C0 CC Structure Model Rx [m] Ry [m] Rz [m]

Au UV 100 0.1300 0.1220 Spherical 35 35 35 90 20 0

0.1450 Spherical 90 100 65

Au UV 200 0.1700 0.2170 Exponential 8 8 8 0 0 0

0.2970 Exponential 53 53 53

0.0680 Spherical 300 300 300

Au LV 300 0.3000 0.4000 Spherical 42 42 42 0 0 0

0.3000 Spherical 150 150 150

Au(0.03) UV 100 0.0110 0.0080 Spherical 20 20 30 90 0 0

0.0170 Spherical 35 35 70

Au(0.12) UV 100 0.0110 0.0080 Spherical 20 20 30 90 0 0

0.0170 Spherical 35 35 70

Au(0.16) UV 100 0.0110 0.0080 Spherical 20 20 30 90 0 0

0.0170 Spherical 35 35 70

Au(0.21) UV 100 0.0215 0.1260 Spherical 25 25 55 90 0 0

Au(0.28) UV 100 0.0215 0.1000 Spherical 20 20 60 90 0 0

Au(0.39) UV 100 0.0050 0.0570 Spherical 20 20 55 90 0 0

Au(0.56) UV 100 0.0063 0.0577 Spherical 16 16 40 90 0 0

Au(0.74) UV 100 0.0063 0.0577 Spherical 16 16 40 90 0 0

Au(1.00) UV 100 0.0063 0.0577 Spherical 16 16 40 90 0 0

Au(1.46) UV 100 0.0063 0.0577 Spherical 16 16 40 90 0 0

Au(3.93) UV 100 0.0063 0.0577 Spherical 16 16 40 90 0 0

Au(0.028) UV 200 0.0550 0.0760 Exponential 30 30 30 0 0 0

0.0320 Spherical 105 105 105

0.0707 Spherical 300 300 300


0.1060 Exponential 95 95 95

0.0400 Spherical 270 270 270


0.0547 Spherical 100 100 100


0.0550 Spherical 83 83 83


0.0580 Spherical 67 67 67

Au(0.371) UV 200 0.0500 0.0739 Spherical 49 49 49 0 0 0

Au(0.516) UV 200 0.0500 0.0440 Spherical 43 43 43 0 0 0

Au(0.775) UV 200 0.0250 0.0389 Spherical 43 43 43 0 0 0

Au(0.996) UV 200 0.0132 0.0346 Spherical 42 42 42 0 0 0

Au(2.020) UV 200 0.0090 0.0105 Spherical 38 38 38 0 0 0

Au(4.320) UV 200 0.4615 0.5385 Spherical 38 38 38 0 0 0

AG UV 100 0.1900 0.8100 Spherical 135 135 135 0 0 0

AG UV 200 0.2300 0.2580 Exponential 40 40 40 0 0 0

0.3530 Spherical 160 160 160 0 0 0

0.1590 Spherical 530 530 530 0 0 0

AG LV 0.2400 0.4000 Exponential 35 35 35 0 0 0

0.3600 Spherical 126 126 126 0 0 0



Figure 14.3 Variogram Models for Upper Volcanic Unit, Erato Zone

A Gold variogram model

B Gold indicator variogram model at 0.120 g/t Au

A

B



Figure 14.4 Silver Variogram Models for Erato and AAT UV Zones

A: Erato UV model

B: AAT UV model

A

B



Figure 14.5 Silver Variogram Model for LV Zone

14.10 Block Model Parameters

Two block models were generated for the Amulsar project. A panel model for the MIK estimation of UV unit gold grades is comprised of a block size of 20 m E × 20 m N and 10 m elevation. The target smallest mining unit (SMU) block model for this unit is a block size of 10 m E x 10 m N x 5 m elevation. Estimation procedures used parent model blocks for both panel and SMU models, while mineral resources were reported in a sub-blocked SMU model.

Mineral resources for the lower volcanics are estimated using a sub-blocked SMU model. Mineral resources for silver are also estimated using a sub blocked model of UV and KV zones. Block model definitions are presented in Table 14.3.

Table 14.3 Amulsar Project Block Model Definition

Model Coordinate Origin (m) Block Size (m) No. of Blocks

SMU Northing: 559700 10 292

Easting: 4396300 10 430

Elevation: 2300 5 164

Panel Northing: 559700 20 146

Easting: 4396300 20 215

Elevation: 2300 10 82



14.11 Estimation Procedures

14.11.1 Gold Estimates for Upper Volcanic Units

Gold grades were estimated using a MIK estimator, using 1 m gold composites for each of the Erato and AAT UV zones. As the combined LV and UV composite set of grades for each of the Erato and AAT zones is more statistically stable, these were used to estimate gold into each of the Erato and AAT models. A panel model with the dimensions of 20 m E × 20 m N × 10 m elevation was used for the each UV zone MIK estimates. In preparation for ranking of localized estimates, gold grades were estimated by OK into a target SMU model with the dimensions 10 m N × 10 m E × 5 m elevation. These estimates also utilized the combined (LV and UV) composites for Erato and AAT zones.

Gold grades were estimated in three estimation runs using progressively larger search ellipsoid ranges for the Erato and AAT zones, as outlined in Table 14.4. The search ellipsoid for the Erato zone was inclined at 10° to the north to reflect a dip trend observed in mineralization. No similar trends were observed in the AAT zone.

A change-of-support adjustment was applied in order to produce resource estimates that reflect the anticipated level of mining selectivity. When estimating local recoverable resources the objective is to obtain the proportion of mineralization above a particular cut-off grade (pseudo tonnage) within panels that are large enough to achieve a robust estimation. Estimation was conducted by MIK-based panel model (20 m N × 20 m E × 10 m elevation). A selective mining unit (SMU) of 5 m E × 5 m N × 5 m RL was then estimated – applying a two-staged indirect log-normal\affine change-of-support methodology.

The panel estimates was subjected to a series of corrections to reflect the change-of-support:

Lognormal change-of-support

Readjustment to retain permanence of the distribution.

Affine correction to ensure variance target is met.

A global change-of-support was generated using discrete Gaussian change-of-support and compared against results generated in the MIK model. The final change-of-support coefficients (f) applied to the domains are shown below:

Erato Upper Volcanic zone, 0.50

ATT Upper Volcanic zone, 0.40

A localized MIK (LMIK) SMU model was generated using the MIK SMU-corrected histogram, and partitioning the estimated tonnage and metal from the MIK panel model evenly into SMU blocks within the panel – this methodology is based on work by Abzalov (2006). In this manner, grades are mapped into each of the SMU-sized blocks, thereby replicating the targeted mining selectivity. Ranking of the SMU-sized blocks within a panel is based on SMU grades estimated by ordinary kriging. Comparative grade tonnage checks between the MIK and the LMIK models were completed as part of



the verification process. Visual review and statistical reviews of the LMIK model were also completed prior to accepting the final model. Tonnage and grade plots for the Erato and AAT UV Zones are presented in Figure 14.6 and Figure 14.7.

14.11.2 Gold Estimate for Lower Volcanics

Gold grades were estimated by ordinary kriging (OK) for the Lower Volcanic unit using only LV composites. No distinction was made between Erato and AAT areas for these estimates. Three estimation runs were completed using progressively expanded ellipsoid search ranges. Estimation parameters for this unit are outlined in Table 14.4.

14.11.3 Silver Estimates for Upper and Lower Volcanic Units

Silver grades were estimated for the Upper and Lower Volcanic units using silver composites separately for each zone. Capped composites for the Erato UV zone are used to for estimation of silver grades in the Erato UV model. Uncapped composites are used to for estimation of silver grades in the AAT UV model. Capped composites are used for estimation of silver grades in the LV model; no distinction is made between Erato and AAT areas for these estimates. Three estimation runs were completed using progressively expanded ellipsoid search ranges. Silver grades were estimated using an OK estimator. Estimation parameters for silver are also summarized in Table 14.4.

14.11.4 Specific Gravity

Specific gravity values were assigned to each estimated model on the basis of the average specific gravity measurements in each of the estimated models. Average values assigned to each zone are:

Erato Upper Volcanic zone: 2.30

AAT Upper Volcanic zone: 2.38

Lower Volcanics: 2.32



Table 14.4 Gold and Silver Estimation Parameters

Ranges [m] Search Ellipse

Rotation*

VARIABLE Estimator Zone Subzone Estimation

Run Minimum Maximum

Octant Search

SVx [m]

SVy [m]

SVz [m]

Z AXIS

X-AXIS

Y-AXIS

Maximum Composites per Drillhole

Au OK UV 100 1 12 80 none 60 60 20 100 10 0 not used

2 12 40 none 120 120 40 not used

3 4 20 none 240 240 80 not used

Au OK UV 200 1 12 60 none 60 60 20 0 0 0 not used

2 12 40 none 120 120 40 not used

3 12 30 none 360 360 120 not used

Au OK LV 1 12 60 none 60 60 20 0 0 0 3

2 12 40 none 120 120 40 3

Au MIK UV 100 1 12 80 none 60 60 20 100 10 0 not used

2 12 40 none 120 120 40 not used

3 4 20 none 240 240 80 not used

Au MIK UV 100 1 12 60 none 60 60 20 0 0 0 not used

2 12 40 none 120 120 40 not used

3 12 30 none 360 360 120 not used

Ag OK UV 100 1 12 80 none 60 60 20 0 0 0 not used

2 12 40 none 120 120 40 not used

3 12 20 none 360 360 120 not used

Ag OK UV 200 1 12 60 none 60 60 20 0 0 0 not used

2 12 40 none 120 120 40 not used

3 12 30 none 360 360 120 not used

Ag OK LV 1 12 60 none 60 60 20 0 0 0 3

2 12 40 none 120 120 40 3

*Datamine convention rotations



Figure 14.6 Tonnage and Grade Plot for Erato Upper Volcanic Zone LMIK Estimate

Figure 14.7 Tonnage and Grade Plot for AAT Upper Volcanic Zone LMIK Estimate

Cross-sections of the Amulsar model with estimated gold and silver grades are provided in Figure 14.8 and Figure 14.9.

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

0

20

40

60

80

100

120

140

0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 2.00

Grade [gpt]

Relative

Tonnage

Cut‐Off Grade [gpt]

Change of Support Tonnage

LMIK Estimate Tonnage

LMIK Estimate Grade

Change of Support Grade

0.0

1.0

2.0

3.0

4.0

5.0

6.0

0

20

40

60

80

100

120

0.00 0.50 1.00 1.50 2.00 2.50 3.00

Grade [gpt]

Relative

Tonnage

Cut‐Off Grade [gpt]

Change of Support Tonnage

LMIK Estimate Tonnage

Change of Support Grade

LMIK Estimate Grade



Figure 14.8 Cross-section of Amulsar Gold Deposit Sub Unit Block Model



Figure 14.9 Cross-section of Amulsar Gold Deposit Gold Grade Block Model



Figure 14.10 Figure 14.10 Cross-section of Amulsar Gold Deposit Silver Grade Block Model



14.11.5 Validation

Validation checks were completed for the Erato and AAT UV zone estimates for both MIK and LMIK gold estimates including:

Comparisons of mean grades of declustered composites and estimated model grades;

Swath plots of declustered composites and LMIK model estimates;

Grade and tonnage curves for declustered composites with change-of-support targeted on the SMU variance (global change of support) LMIK model estimates.

Validation checks were also completed for LV zone gold and silver estimates, and Erato and AAT UV zone OK estimates including:

Comparisons of mean grades of declustered composites with estimated model grades;

Swath plots of declustered composites and OK model estimates;

Validation checks confirm that block model estimates for gold and silver for the Amulsar project are appropriate, and reasonably reflect the underlying sampling data.

14.12 Resource Classification

The Mineral Resources have been estimated using the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions and adopted by CIM Council, and procedures for classifying the reported resources were undertaken within the context of the Canadian Securities Administrators National Instrument 43-101 (NI 43-101).

Estimated resources have been classified with consideration of the following criteria:

Quality and reliability of raw data (sampling, assaying, surveying).

Confidence in the geological interpretation.

Number, spacing, and orientation of intercepts through mineralized zones.

Knowledge of grade continuities gained from observations and geostatistical analyses.

The likelihood of material meeting economic mining constraints over a range of reasonable future scenarios, and expectations of relatively low selectivity of mining.

Gold mineralization at the Amulsar deposit is characterized by short range continuities, particularly if considering grades above potentially economic cut-offs. This short-scale continuity is controlled by the lithological heterogeneity of the deposit. Complex structural histories, including a major thrusting event, followed by at least two extensional events have increased the spatial complexity of mineralization for the



deposit. This is supported by indicator variography for higher gold grades for the Upper Volcanic unit, with ranges typically less than 40 m.

It is, therefore, important to identify low-confidence areas which have been estimated by one or two drillholes in an isolated area, regions at depth where estimates are highly influenced by a single drillhole, or regions that have been estimated at longer distances from any drillholes. AMC considers that estimates based on these circumstances do not meet the requirements of Inferred category resources. Using the boundary between the UV second and third estimation runs as a guide, AMC developed a wireframe which constrained the extent of reportable estimated resources. The boundary also excluded blocks estimated by isolated drillholes or blocks estimated by drillholes that are significantly isolated from other drillholes at depth. This wireframe was applied to the final block model containing UV and LV estimates, and all blocks below this boundary were removed from the model as unclassified material.

Indicated resources were classified on the basis of a wireframe enclosing drilling that was closely spaced (approximately 45 m), and included holes drilled vertically and at inclined angles, demonstrating vertical and horizontal continuity. The wireframe outline was drawn to enclose a continuous zone of mineralization and relatively high number of composites used to make each block estimate. These outlines were designed around areas that showed lateral continuity exceeding 150 m. Indicated classification was extended to include overlying or underlying blocks of the Lower Volcanic unit.

Resources classified as Measured were contained within the indicated wireframe, but where block grades are estimated by 50 or more composites. The Measured classification encompassed only blocks in the Upper Volcanic unit.

Resources classified as Inferred comprise all remaining blocks not classified as Measured or Indicated.

The likelihood of the resource being potentially economic was tested by generating an optimized pit shell around the classified resources using:

Pit slope angle of 45 degrees

Gold price assumption of $1,200 per troy ounce of gold

14.13 Mineral Resource Statement

Mineral Resources for the Amulsar project have been estimated in conformity with generally accepted CIM “Estimation of Mineral Resource and Mineral Reserves Best Practices” guidelines and are classified according to the “CIM Standards on Mineral Resources and Reserves: Definition and Guidelines” (December, 2005). At a cut-off grade of 0.35 g/t gold, the Mineral Resources are estimated at 524 Mt at 1.05 g/t Au (1.77 million ounces) of Measured category, 181 Mt at 1.02 g/t Au (0.59 million ounces) of Indicated category, and 580 Mt at 0.93 g/t Au (1.73 million ounces) of Inferred category resources.

The Mineral Resource Statement was prepared by G. David Keller, P.Geo. (APGO#1235), of AMC Consultants (UK) Limited (AMC), an “independent Qualified Person” as this term is defined in National Instrument 43-101. The effective date of the



Mineral Resource Statement is 5 March 2013. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. There is no certainty that all, or any part of, the Mineral Resources will be converted into Mineral Reserves. AMC is unaware of any environmental, permitting, legal, title, taxation, socio-economic, marketing, political, or other relevant issues that may materially affect the Mineral Resources.

Table 14.5 Mineral Resource Statement for the Amulsar Project, Armenia, AMC Consultants (UK) Limited, 5 March, 2013

Classification Quantity (tonnes) Gold

Grade (g/t) Silver

Grade (g/t) Contained Gold (toz)


Measured 52,400,000 1.05 4.19 1,769,000 7,059,000

Indicated 18,100,000 1.02 3.25 593,000 1,888,000

Inferred 58,000,000 0.93 2.87 1,734,000 5,351,000

Total Measured and Indicated

70,500,000 1.05 3.95 2,379,000 8,949,000

Total Inferred 58,000,000 0.93 2.87 1,734,000 5,351,000

1. The effective date of the Mineral Resource Statement is 5 March 2013.




5. Mineral Resources in this resource statement are not Mineral Reserves do not have demonstrated economic viability. The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues. Mineral Reserves have been previously reported for this project using a prior Mineral Resource statement

14.14 Previous Resource Estimates

Resources for the Amulsar project were previously estimated by Independent Mining Consultants Inc. (IMC), as presented in the KD Engineering Report “Amulsar Resource Update and Heap Leach Feasibility Study,” in 2012. Mineral resources were reported at a cut-off grade of 0.40 g/t Au, with the following assumptions:

Gold price US$1,200 per troy ounce of gold;

Processing costs of US$3.00 per tonne;

Mining costs of US$6.00 per tonne.

The IMC Mineral Resource Statement for the Amulsar project is presented in Table 14.6.



Table 14.6 Mineral Resource Statement for the Amulsar Gold Project, Independent Mining Consultants Inc., 3 September, 2012

Classification Quantity (Mt) Gold Grade (g/t) Silver Grade (g/t)

Measured 36.5 1.00 3.82

Indicated 32.2 0.95 3.84

Inferred 35.5 0.92 4.01

Measured + Indicated 68.8 0.98 3.83

Mineral resources estimated by AMC comprise an increase of Measured and Indicated resources of 1.7 million tonnes, with increased gold grade from 0.98 g/t to 1.05 g/t gold and an increase in silver grades from 3.83 g/t to 3.95 g/t. Inferred resources increased from the previous resource by 22.8 million tonnes, with a corresponding minor decrease in gold grades from 0.98 to 0.93. Measured resources increased by 15.9 million tonnes from the previous estimate, gold grades increased marginally from 1.00 g/t to 1.05 g/t, and an increase in silver grades from 3.82 g/t to 4.19 g/t. However, Indicated resources decreased by 14.1 million tonnes with a corresponding increase in gold grades from 0.95 g/t to 1.02 g/t, and a marginal decrease in silver grades from 3.84 g/t to 3.24 g/t.

The change in mineral resources can be attributed to the following factors:

Major reinterpretation of project geology, where mineralization is essentially constrained to the new UV unit;

The interpretation of structural blocks used to model the mineralized UV unit;

Estimation of mineral resources using a different methodology;

Classification of mineral resources based on a number of factors including; structural and lithological complexity of mineralization, ranges of higher grade indicator variography, and continuity of mineralized zones.

The major geological and structural reinterpretation of the Amulsar project necessitated a different approach to the estimation of mineral resources, as well the classification of mineral resources.

14.15 Grade Sensitivity Analysis

The mineral resource for the Amulsar project is sensitive to the selection of the reporting cut-off grade. To illustrate this sensitivity, the global quantities and grade estimates are presented in Table 14.6 at different gold cut-off grades. The reader is cautioned that the figures presented in this table should not be misconstrued with a Mineral Resource Statement. The figures are presented only to show the sensitivity of the block model estimates to the selection of cut-off grades. Table 14.7 and Figure 14.11 present the sensitivity as grade and tonnage plots.



Table 14.7 Global Model Quantities and Grade Estimate, Amulsar Project

Resource Classification Cut-off Grade

[g/t Au] Gold Grade

[g/t] Quantity [t]

Contained Gold [toz]

Measured + Indicated 0.00 0.27 353,500,000 3,068,000

0.05 0.46 202,200,000 2,990,000

0.10 0.63 140,500,000 2,846,000

0.20 0.78 107,700,000 2,702,000

0.30 0.95 81,100,000 2,476,000

0.35 1.05 70,500,000 2,379,000

0.40 1.14 61,600,000 2,258,000

0.50 1.32 49,000,000 2,078,000

0.80 1.83 28,200,000 1,660,000

1.00 2.11 21,800,000 1,476,000

1.50 2.91 11,500,000 1,072,000

3.00 4.74 3,700,000 564,000

5.00 6.26 1,400,000 277,000

Inferred 0.00 0.09 924,000,000 2,674,000

0.05 0.32 245,800,000 2,529,000

0.10 0.48 151,400,000 2,337,000

0.20 0.64 103,500,000 2,130,000

0.30 0.82 70,100,000 1,847,000

0.35 0.93 58,000,000 1,734,000

0.40 1.02 49,900,000 1,636,000

0.50 1.20 37,800,000 1,458,000

0.80 1.75 19,400,000 1,090,000

1.00 2.04 14,400,000 944,000

1.50 2.82 7,400,000 674,000

3.00 4.71 2,300,000 347,000

5.00 5.70 1,000,000 185,000



Figure 14.11 Global Grade and Tonnage Curves, Amulsar Project

‐1

1

3

5

7

9

11

13

15

17

19

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

9,000,000

10,000,000

0.00 0.50 1.00 1.50 2.00 2.50 3.00

Gold Grade [gpt]

Quantity [100xt]

Cut‐Off Grade [gpt Au]

MEA+IND Quantity

INF Quantity

MEA+IND Grade

INF Grade



15 MINERAL RESERVE ESTIMATES

A mineral reserve estimate for the Amulsar project was developed from the results of the 2012 feasibility study for the project using a concurrent mineral resource estimate and has not been revised for later mineral resource estimates. The mineral reserve is reported as being current at 3 September 2012. The mineral reserve will be revised as part of a feasibility study currently underway and due for completion in August 2013.

The mineral reserve is the total of all proven and probable category ore that is planned for production. Section 16 details the mine plan and schedule that have been determined to be the most economic method of extracting this reserve. The mineral reserve was established by tabulating the diluted tonnes and grades of proven and probable material within the designed final pit geometry that is scheduled as ore to the crusher over the mine life. A floating cone algorithm (independently verified by Whittle optimizations) was used to determine the final pit design and internal phase designs.

15.1 Floating Cones

The floating cone optimization algorithm is a commonly used and accepted industry tool for providing guidance to mine design. The algorithm applies an estimate of costs and recoveries along with overall pit slope angles to establish theoretical economic breakeven pit wall locations.

Economic input applied to the cone algorithm is based on the Preliminary Economic Assessment (PEA) and subsequent estimates as it was one of the first steps in the development of the mine plan. However, the cone geometries should be considered as a guide as they do not necessarily account for minimum safe mining widths or access to sequential phases. The important result of the cones is the quantification of the relative changes in geometry between the cones as a function of increasing metal prices and or costs. Lower metal prices result in smaller pits which provide guidance to the design of the initial and internal phase designs as these are usually indicative of high value areas of the deposit. The change in cone geometry as metal prices are increased indicates the best directions for the succeeding phase expansions to the ultimate pit.

A suite of floating cones was generated using gold prices between US$ 1200/oz. and US$ 400/oz. with two goals in mind: Firstly, to determine the extents of the ultimate pit as well as the contained gold within; and secondly to provide guidance for the optimum interim cutbacks for the initial years of mining. The parameters in Table 15.1 were used as inputs when generating the floating cones. The metal recoveries and costs used for the pit definition are preliminary and different than the metal recoveries and costs generated by the Feasibility Study because pit definition is one of the initial steps of developing a mine plan. The mining costs resulting from the Feasibility Study given in Section 21.2 and final recoveries presented in Table 13.30 are the inputs that were applied to the financial model.



Table 15.1 Floating Cone Inputs

Gold Price $400 to $1,200/oz (in $100/oz increments)

Silver Price 1/60*Gold Price ($20/oz when gold is $1,200/oz)

Mining Cost Waste $2.98/t

Ore $1.98/t

Processing Cost Artavasdes/Tigranes $3.18/t

Erato $3.38/t

Recovery

Deposit Gold Silver

Artavasdes 84.86 39.88

Tigranes 89.35 23.27

Erato 93.72 58.51

Refining Charges $0.15/gm gold

Inc. Haulage Cost $0.02/t/bench (below 2800 m elevation)

Discounting 0.5%/bench

Overall Slopes

Volcanics 42˚

Andesite 27˚

Colluvium 29˚

Grades less than 0.15 gm Au/t have an applied recovery of 0%

Processing costs were provided by KDE and are based on a 10 Mt/year throughput rate. Costs for processing ore from Erato were increased by an additional US$ 0.20/t to account for the longer distance for ore to be hauled to the crusher from the pit.

A mining cost of US$ 1.98/t for waste, was derived from the PEA when the waste rock dump was sited on the eastern edge of the Amulsar ridge in relatively close proximity to the pits. As the waste dump has been relocated due to geotechnical constraints to a location approximately 4.5 km north of Tigranes/Atavasdes an additional US$ 1.00/t was added to the waste mining cost.

The inter-ramp slope angles are by lithology:

Volcanics = 45o for slopes with dip azimuths ranging from 90-360°

42o for slopes with dip azimuths ranging from 0-90°,

Andesite = 30o and

Colluvium = 29o

For the floating cone runs, the interramp slopes were reduced by approximately 3o to account for haul roads in the pit walls. Slope angles used were recommended by Golder in their June 2012 Pit Slope Design Report (Golder, 2012c).

Figure 15.1 illustrates the US$ 900/oz cone that was used as guidance for the ultimate pit boundary. Figure 15.2 depicts the cones between US$ 400/oz and US$ 1200/oz sliced at an elevation of 2830. This figure can be compared with a slice of the phases in



the following section at the same elevation. Figure 15.3 shows cross sections of the US$ 400, 600 and 900/oz cones whose section lines are given in Figure 15.2.

Figure 15.1 $900/oz Floating Cone used for Ultimate Pit Design



Figure 15.2 US$ 400-US$1200/oz Floating Cones Sliced at 1830m Elevation



Figure 15.3 Cross Sections of $400, $600, and $900/.oz Au Cones

A A’

B B’

C C’



15.2 Final Pit Design

The final pit design is based on the shell generated by the US$ 900/oz cone as a result of the evaluation of the discounted net value at US$ 1200/oz gold and US$ 20/oz silver prices for all of the cone geometries. Cones were evaluated at discount rates of 0%, 5% and 10%, using the US$ 1200/oz gold and US$ 20/oz silver metal prices and the same cost estimates that were used in generating the floating cones. Table 15.2 shows the results of the cone evaluations.

The cones above US$ 900/oz. showed no increase in contained value for the additional material mined. This is also a function of the estimation being data limited as the cone at US$900/oz captures ore up to where drilling is limited and insufficient drill data exists to classify material as either measured or indicated. Essentially at $900/oz gold price the ore body is robust enough that all material in the current block mode is extracted meaning that extensions to the orebody at depth have a high likelihood of being economic in the future.

Table 15.3 shows the resulting tonnages contained within the cone shapes. Material above a cutoff of recoverable 0.25 g/t gold is reported as economical material. The results of the cone evaluation are presented graphically in Figure15.4.

Table 15.2 NPV of Floating Cone Geometries Evaluated at US$1,200/oz Au and US$20/oz Ag

Gold Price for Cone Run

$/oz

NPV @ $1,200/oz no discount $1,000's

NPV @ $1,200/oz 5% discount

$1,000's

NPV @ $1,200/oz 10% discount

$1,000's

400 906,500 851,500 800,500

500 1,220,000 1,139,000 1,063,000

600 1,376,000 1,280,000 1,192,000

700 1,626,000 1,500,000 1,385,000

800 1,749,000 1,601,000 1,468,000

900 1,761,000 1,611,000 1,477,000

1,000 1,760,000 1,610,000 1,475,000

1,100 1,759,000 1,608,000 1,472,000

1,200 1,755,000 1,604,000 1,468,000



Table 15.3 Material Contained within Floating Cone Geometries

Gold Price for

Cone Run

Economic Material

Rec. Au>0.25 g/t

Contained MetalRecoverable

Metal Recoverable Ounces Waste Total

$/oz kt Au g/t Ag g/t Au g/t Ag g/t Au Ag kt kt

400 33,775 0.959 4.23 0.832 1.54 903,461 1,672,272 37,312 71,087

500 50,997 0.884 4.02 0.771 1.55 1,264,124 2,541,365 66,682 117,679

600 62,691 0.831 3.84 0.725 1.45 1,461,282 2,922,563 90,268 152,959

700 82,141 0.790 3.52 0.694 1.37 1,832,779 3,618,023 151,247 233,388

800 90,653 0.796 3.44 0.704 1.37 2,051,850 3,992,946 193,760 284,413

900 92,983 0.790 3.42 0.698 1.36 2,086,651 4,065,680 204,229 297,212

1,000 94,652 0.785 3.40 0.694 1.35 2,111,932 4,108,226 215,274 309,926

1,100 96,618 0.780 3.40 0.690 1.35 2,143,374 4,193,557 227,968 324,586

1,200 97,708 0.778 3.40 0.687 1.35 2,158,130 4,240,867 235,966 333,674

Figure 15.4 Results of Floating Cone Evaluations

A drawing of the final pit is presented in Figure 15.5 at the same scale for comparison against the $900/oz floating cone in Figure 15.1. This pit is the end result of mining 7 internal phases that are described in more detail in Section 16.



Figure 15.5 Ultimate Pit



15.3 Mineral Reserve Estimate

The mineral reserve for the project is the proven and probable material that is sent to the crusher over the life of the mine. Due to the location of the Amulsar deposit on the top of a ridge the construction of a sizeable low grade stockpile near the crusher is difficult. A stockpile of approximately 655,000 tonnes is generated in the second year of mining due to the grade of material being economic but not sufficient to displace higher grade ore which averages above the 0.35g/t recovered cutoff grade. Since no other low grade stockpile is generated during the mine life, the reserves for the project are a total of the undiluted ore sent to crusher during mining and the stockpile generated in Year 2.

The proven and probable mineral reserves for the project are presented in Table 15.4.

Table 15.4 Mineral Reserves Represent the Diluted Ore Scheduled to the Crusher

Category Ore kt

Contained Recoverable Contained Recoverable

Gold g/t

Silver g/t

Gold g/t

Silver g/t

Gold oz

Silver oz

Gold oz

Silver oz

Proven 51,143 0.801 3.37 0.713 1.31 1,317,000 5,541,000 1,172,000 2,154,000

Probable 43,751 0.692 3.15 0.609 1.08 973,000 4,435,000 857,000 1,526,000

Proven + Probable

94,894 0.750 3.27 0.665 1.21 2,290,000 9,976,000 2,029,000 3,680,000

*Material in Year 2 above 0.30 g/t recoverable gold stockpiled 1.The gold and silver recoveries vary by deposit area based on the metallurgical test work. A recoverable grade for gold and silver is assigned in the block model and used for tabulations.

The mineral reserve tonnes and contained ounces stated in Table 15.4 include a dilution factor of 7%. The dilution is comprised of 6,645 kt of material with a contained gold grade of 0.15 g/t and contained silver grade of 1.5 g/t. These dilution grades are supported by the average grade of metal in the model blocks enveloping the scheduled undiluted ore. The surrounding blocks average 0.21 g/t gold and 2.2 g/t silver (when any surrounding inferred material is zeroed)



16 MINING METHODS

This section is based on the 2012 feasibility study for the project completed by K D Engineering for Lydian. The report for the study was dated 3 September 2012 and amended 26 November 2012. This section has not been revised to reflect work or studies that had been completed at the time of the Mineral Resources reported on 5 March 2012. This section will be updated as part of a feasibility study currently underway and due for completion in August 2013.

Mining of the Amulsar deposit is planned to be accomplished by conventional open pit, truck and shovel mining methods. As part of the mine plan, consecutive mine phases were designed in accordance with the outputs from the sequential floating cones. A schedule for the mining of the phases has been developed that moves higher gold production forward in the mine life to reduce payback periods whilst maintaining material movements that effectively utilize the selected equipment.

The schedule delivers ore to the crusher at a rate of 5 million tonnes per annum in the first three years of mine life, increasing to 10 million tonnes per annum following a crusher capacity increase in the later part of Year 3. After crushing, the ore will be delivered via conveyor to the heap leach pad for cyanide leaching.

The steps for the development of the mine plan were as follows:

1. Floating cone guidance to phase design

2. Phase designs

3. Mine production schedule (strategy to maximize project return on investment)

4. Waste material allocation.

5. External haul road design

6. Time sequence mine plan drawings

7. Equipment and Manpower requirements

16.1 Pit and Phase Design

Phases were designed using the floating cones outlined in the previous section as guidance. The two initial phases were designed based on the $400/oz cones with the ultimate pit extents guided by the US$ 900/oz cone. No significant value was gained by increasing the size of the ultimate pit beyond the US$ 900/oz cone, although it is expected that the ultimate pit will increase as a function of ongoing drilling onsite, which will upgrade potential resource into indicated and inferred categories.

The following criteria were followed when designing the mining phases:



Table 16.1 Phase Design Criteria

Bench Height 10 m

Interramp Slopes recommended by Golder

Volcanics

Andesite

Colluvium

42-45 double benched

30 single bench

29 single bench

Road Width 25 m

Road Gradient 8 % (maximum of 10%)

The majority of haul roads were designed to a lower than industry standard gradient of 8 percent, to make hauling conditions safer in icy winter conditions. In some instances, short segments of the haul roads were increased to 10% gradients to achieve desired pit geometries. Sequential phases were designed with at least 100 m of bench width between push backs to allow sufficient operating room for mining equipment.

A total of seven phases are scheduled to be mined to arrive at the current design ultimate pit limit. The Artavasdes and Tigranes areas are mined out with five phases and the Erato area is mined in two phases. When sequencing the phases, preference was given to phases having the lowest cost per ounce of gold produced so as to maximize cashflow in the early years of the project. Except for the last year of mining, more than one phase is active at any given period of time to provide adequate ore exposure while stripping areas for future ore release.

Table 16.2 is a comparison of the designed ultimate pit tonnage with the tonnage contained in the US$ 900 floating cone; ore tonnages are undiluted. The material difference between the floating cone and the final pit design is less than 5% which is in line with industry standard and is a function of ramp design and operational constraints which are difficult to quantify via floating cone or Whittle.

Figure 16.1 shows the pit phases sliced at 2830 m elevation for comparison with the cones sliced at the same elevation in Figure 16.2.



able 16.2 Comparison of Designed Phase Tonnes against $900 Cone Tonnes at a 0.25 g/t Recovered Gold Cut-Off

Volume Boundary

Rec. Au cut-off g/t

Mat. > cut-off ktonnes

Rec. Au g/t

Rec. Ag g/t

Rec. Au oz.

Rec. Ag oz.

Waste ktonnes

Total Mat. ktonnes

Strip. Rat. w/o

$900 Cone 0.25 92,983 0.698 1.36 2,087 4,066 204,229 297,212 2.20

Ultimate Pit 0.25 89,710 0.697 1.36 2,011 3,912 216,896 306,606 2.42

% Difference -3.65 -0.10 -0.27 -3.75 -3.92 5.84 3.06 9.15



The individual phase tonnages are shown in Table 16.3 at a recovered gold cut-off grade of 0.25 g/t on an undiluted basis.

Table 16.3 Comparison of Designed Phase Tonnes against US$900 Cone Tonnes at a 0.25 g/t Recovered Gold Cut-off

Phase

Mat > cut Ktonnes

recAu g/t

recAg g/t

Recoverable Oz. Waste kt

Total kt

SR W/O Au Ag

Ph1a 4,697 0.849 0.48 128,211 72,487 5,337 10,034 1.14

Ph1 7,083 0.953 0.81 217,024 184,459 10,169 17,252 1.44

Ph2 21,733 0.713 1.97 498,204 1,376,523 44,242 65,975 2.04

Ph3 13,869 0.696 1.56 310,350 695,613 28,382 42,251 2.05

Ph4 18,534 0.592 0.84 352,768 500,549 46,194 64,728 2.49

Art/Tig_Tot 65,916 0.711 1.34 1,506,557 2,829,631 134,324 200,240 2.04

Erato ph1 9,186 0.564 1.63 166,572 481,406 16,713 25,899 1.82

Erato 14,608 0.72 1.28 338,159 601,172 65,859 80,467 4.51

Erato Tot 23,794 0.660 1.42 504,731 1,082,578 82,572 106,366 3.47

Total 89,710 0.697 1.36 2,011,288 3,912,209 216,896 306,606 2.42

As the three separate deposits of Artavasdes, Tigranes and Erato have different gold recoveries, a recovered gold variable was inserted in the resource block model (based on the deposit wireframes) on a block by block basis to facilitate more accurate mining and economic modeling. For mine scheduling and reporting purposes, the recovered gold grade has been used instead of the contained gold grade as this allows consideration for recovery in planning and prevents lower value ore from having priority over higher value ore.



Figure 16.1 Phases Sliced at 2830 m Elevation



Figure 16.2 Cross Sections of Designed Phases Showing Gold Grade in Block Model



16.2 Mine Schedule

The seven phase designs were scheduled to deliver 5 million tonnes of ore per annum in the first three years of mine life and 10 million tonnes per annum for the remainder of the mine life starting in Year 4 upon completion of the expanded crusher facilities. Waste stripping was scheduled far enough in advance that at any given time, there is sufficient ore exposed to provide a continuous feed to the crusher from the pit without stockpiling. At the projected crushed ore rates, the operation has a 12 year mine life including mining from the pit and the re-handling of the stockpile accumulated in the second year of mining.

Several criteria were considered when generating the mine schedule:

Maximizing the project NPV by varying the cutoff grades by period to move the highest value ounces forward in the mine life:

Targeting consistent production of over 200,000 ounces of recoverable gold a year from the heap for the first 3 years following the upgrade to the crushing facility in Year 3.

Matching and keeping consistent the material movement rates to correspond with realistic loading units outputs to ensure maximum usage of mine capital

Minimizing ore stockpiling because of the lack of accessible locations for stockpiles in the vicinity of the crusher and to reduce costs associated with rehandling.

At US$ 1200/oz. the marginal cutoff grade per tonne of ore is approximately 0.09 grams per tonne.

Marginal Cut-off Grade = (ProcessCost+G&A Cost) = $3.38/t = 0.087g/t Gold Price ($/g) $38.58/g

As the modeling of the ore body shows large continuous volumes of economic grades, no ore loss has been applied to the schedule as mining is scheduled at a much higher cutoff than the true internal cutoff grade. Consequently scheduled ore is rarely bounded by truly uneconomic material and as such ore loss due to strict dilution control measures is unlikely.

Dilution of the higher grade ore will occur and has been modeled in the schedule by including an additional 7 percent at a grade of 0.15 g/t. This material is included to account for some mixing of higher grade material with lower grade but still economic material at the interfaces of the ore boundaries. The 0.15 g/t dilution grade is below the lowest cutoff grade for any of the given years which ranges between .20 g/t and 0.35 g/t recovered gold.

To account for this dilution, 93 percent of the desired ore tonnage was scheduled for any given time period and the additional 7 percent was assumed to be dilution incurred in the mining process at the grade of 0.15 g/t. For example, in Year 4, 9,300 ktonnes at a head grade of 0.73 g/t contained gold are scheduled to the crusher. It was modeled that an additional 700 ktonnes of dilution will also be sent to the crusher in Year 4 with an



assumed grade of 0.150 g/t contained gold. This is a realistic estimate for dilution as 5,659 ktonnes of material greater than 0.15 g/t but less than the cutoff grade of 0.280 g/t are sent to the waste dump in this period. The average head grade of this economic but “sub-grade” material is 0.246 g/t recoverable gold. Life of mine, the average block grade of blocks bounding scheduled ore blocks is .22 g/t recoverable gold.

The resulting mining and crusher feed schedule with material movements is provided in Table 16.3. Cutoff grade for material sent to the crusher is always maximized well above the true breakeven cutoff grade in an effort to increase gold produced for a given throughput in time. In Year 2 of mining, a small low grade stockpile is generated when the crusher cutoff grade is 0.35 g/t recoverable gold. This is to keep a consistent mining rate as well as maximize the grade of material fed to the crusher in early years.

The cutoff grade for the low grade stockpile in this period is 0.30 g/t recoverable gold. This material is planned for re-handle to the crusher in Years 10 and 12. In total, 385,000 tonnes of ore is stockpiled in pre-production and re-handled to the crusher in the first quarter of crusher operation. A graphical representation of the schedule is given in Figure 16.3 showing ore tonnes sent to crusher, waste tonnes mined, and recoverable gold grade sent to the heap leach pad.

The drop in ounce production in Years 7 - 10 is a result of the commencement of mining in the early stages at Erato. As the drill density at Erato is less, a larger proportion of the material inside the ultimate pit shell is in the inferred category and hence cannot be included in this study. It is expected that as exploration activities continue in 2012 and 2013, more material will be upgraded from inferred and this drop in ounces produced can be reduced. Increased understanding of the Erato orebody will also lead to more optimized stage designs which will also improve the production schedule in the later years.



Table 16.4 Material Movements Total Annual Summary

Parameter yr1 yr2 yr3 yr4 yr5 yr6 yr7 yr8 yr9 yr10 yr11 yr12 Total

Cut-off Grade rec. Au 0.28 0.35 0.30 0.28 0.26 0.26 0.26 0.24 0.22 0.20 0.26 0.25

Total Mined (bcm) 4,317,300 6,452,700 6,411,300 14,113,500 14,269,100 14,371,100 14,348,400 14,379,800 14,325,400 14,299,800 12,824,800 549,500 130,662,700

Total Mined (t) 10,064,000 15,127,000 15,193,000 33,466,000 33,500,000 33,500,000 33,500,000 33,500,000 33,500,000 33,500,000 30,433,000 1,323,000 306,606,000

Waste Mined (bcm) 2,735,997 4,065,867 4,311,687 9,936,188 10,081,896 10,164,218 10,132,056 10,152,273 10,097,873 10,304,795 8,664,585 156,005 90,803,440

Waste Mined (t) 6,314,000 9,471,880 10,193,000 23,466,000 23,500,000 23,500,000 23,500,000 23,500,000 23,500,000 23,959,000 20,433,000 375,000 211,711,880

Ore Mined (bcm) 1,581,303 2,386,833 2,099,613 4,177,312 4,187,204 4,206,882 4,216,344 4,227,527 4,227,527 3,995,005 4,160,215 393,495 39,859,260

Ore Mined (t) 3,750,000 5,655,120 5,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 9,541,000 10,000,000 948,000 94,894,120

Stkpl Rehandle (bcm) 162,066 - - - - - - - - 193,141 - 82,559 437,766

Stkpl Rehandle (t) 385,000 - - - - - - - - 459,000 - 196,120 1,040,120

Au

Ore Grade (Au) Insitu (g/t) 0.915 0.966 0.957 0.730 0.812 0.870 0.639 0.658 0.549 0.562 0.815 1.508 0.750

Ounces (Au) Insitu (Oz) 110,375 175,557 153,784 234,711 261,160 279,822 205,529 211,505 176,540 172,454 262,012 45,973 2,289,423

Ore Grade (Au) Rec. (g/t) 0.806 0.849 0.837 0.630 0.701 0.753 0.561 0.578 0.493 0.521 0.764 1.414 0.665

Ounces (Au) Rec (Oz) 97,217 154,365 134,631 202,544 225,501 241,967 180,275 185,957 158,656 159,688 245,558 43,086 2,029,444

Ag

Ore Grade (Ag) Insitu (g/t) 2.12 3.16 5.02 4.85 3.76 3.94 3.43 3.00 2.27 2.14 2.35 3.20 3.27

Ounces (Ag) Insitu (Oz) 255,464 574,921 806,334 1,558,899 1,209,553 1,265,710 1,104,352 963,816 728,417 656,738 754,352 97,612 9,976,166

Ore Grade (Ag) Rec. (g/t) 0.64 0.97 1.56 1.54 1.19 1.25 1.19 1.02 1.00 1.19 1.37 1.87 1.21

Ounces (Ag) Rec (Oz) 77,656 176,065 251,430 495,976 384,109 400,444 383,821 327,271 320,700 364,514 441,372 57,113 3,680,473

Strip Ratio (W:O) 1.68 1.67 2.04 2.35 2.35 2.35 2.35 2.35 2.35 2.51 2.04 0.40 2.23

Material Processed Total

Tonnes Crushed (t) 3,750,000 5,000,000 5,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 1,144,120 94,894,120

Au

Feed Grade Insitu (g/t) 0.915 1.046 0.957 0.730 0.812 0.870 0.639 0.658 0.549 0.553 0.815 1.310 0.750

Feed Ounces Insitu (Oz) 110,375 168,122 153,784 234,711 261,160 279,822 205,529 211,505 176,540 177,667 262,012 48,195 2,289,423

Feed Grade Rec. (g/t) 0.806 0.920 0.837 0.630 0.701 0.753 0.561 0.578 0.493 0.511 0.764 1.224 0.665

Feed Ounces Rec. (Oz) 97,217 147,858 134,631 202,544 225,501 241,967 180,275 185,957 158,656 164,249 245,558 45,032 2,029,444

Ag

Feed Grade Insitu (g/t) 2.12 3.27 5.02 4.85 3.76 3.94 3.43 3.00 2.27 2.15 2.35 3.05 3.27

Feed Ounces Insitu (Oz) 255,464 525,125 806,334 1,558,899 1,209,553 1,265,710 1,104,352 963,816 728,417 691,955 754,352 112,192 9,976,166

Feed Grade Rec. (g/t) 0.64 1.00 1.56 1.54 1.19 1.25 1.19 1.02 1.00 1.17 1.37 1.68 1.21

Feed Ounces Rec (Oz) 77,656 160,632 251,430 495,976 384,109 400,444 383,821 327,271 320,700 375,437 441,372 61,622 3,680,473



Figure 16.3 Graphical Presentation of Mine Schedule

16.3 Waste Movement

At Amulsar, the distance from the pit to the waste dump is approximately 4.5 km. The waste dump, designed by Golder, has a design capacity of 158 million tonnes with room for expansion subject to environmental approvals. Over the mine life, 150.5 million tonnes of waste are sent to the dump. At the end of the mine life, an opportunity to back fill the pits becomes available. This has three benefits, namely:

Decreasing the haulage requirements which reduce operating costs.

Increasing total waste storage capacity with minimal environmental impact and.

The prevention of the formation of pit lakes after mining is complete.

In total, 61.1 million tonnes primarily from the latter stages of Erato are scheduled to be backfilled into the Artavasdes and Tigranes pits. Figure 16.4 shows the final planned backfill of the mining phases. Table 16.4 outlines the waste movements based on the schedule.

In Years 4, 5 and 6, waste material is sent to a waste stockpile east of the Artavasdes pit. This material below the cutoff grade in Years 4 through 6 is stockpiled rather than sent to the waste dump to prevent an unnecessary spike of trucks during these years. It is re-handled to the pit backfill in Year 11 when more truck shifts are available.



Figure 16.4 Pit Backfill at End of Mine Life



Table 16.5 Waste Movement Required for Mine Schedule

Period To Dump ktonnes

To bkfill ktonnes

To Stkpl ktonnes

Total Waste Moved ktonnes

Yr1 6,314 6,314

Yr2 9,472 9,472

Yr3 10,193 10,193

yr4 19,666 3,800 23,466

yr5 19,700 3,800 23,500

yr6 23,500 23,500

yr7 23,500 23,500

yr8 23,500 23,500

yr9 8,862 14,638 23,500

yr10 5,875 18,084 23,959

yr11 20,433 20,433

yr12 7,975 7,975

Total 150,582 61,130 7,600 219,312

16.4 Low Grade Stockpiles

As discussed previously, a small low grade stockpile was designed near the crusher to hold 655,000 tonnes of low grade material between 0.30 g/t and 0.35 g/t mined in the second year of mining. This provides a buffer of approximately 3 weeks of feed capacity to the crusher should mining in the pit be interrupted for an extended period. If not rehandled earlier, this lower grade tonnage is scheduled to be sent to the crusher at the end of mine life.

Figure 16.5 shows the proposed stockpiles at the end of Year 10 in the mine life.



Figure 16.5 Proposed Stockpiles at the End of Year 10



16.5 External Haul Roads and Time Sequence Drawings

As all three deposits daylight at the top of hills, initial access to the phases will be with external haul roads. One main waste dump access road has been designed to handle all material from the Tigranes / Artavasdes pit as well as the Erato pit later in the mine life. Temporary haul roads will be used to terrace down the hillside until such time as the pit no longer daylights, at approximately 2900RL to 2850RL. At this point permanent internal haul roads and ramps will be constructed to ensure access to the deeper benches extracted later in the mine life.

The design of haul roads and the planned pit progression can be seen in Figures 16.6 through 16.10.



Figure 16.6 End of Production



Figure 16.7 End of Year



Figure 16.8 End of Year 5



16.6 Mining Equipment Fleet

Mine mobile equipment was selected to meet the production requirements as outlined in Table 16.3. Although operations are targeted to run 365 days per annum, it has been assumed that inclement weather will render this impossible for 35 days per annum. Consequently, mining activities are scheduled for 330 days per annum. Shift lengths for production personnel will be 11 hours with two shifts in a day. Maintenance personnel both for fixed plant and mobile equipment will work 12 hour shifts, day shift and night shift. Refueling and minor maintenance work / servicing will be performed in the 2 hours between shifts. The bulk of the lost mining days are planned to occur in the winter months during the first and fourth quarters. A three crew rotation is planned for the Armenian workforce consisting of 14 days on and 7 days off. Expatriates will be working a 9 weeks on, 3 weeks off roster.

16.6.1 Drill and Blast

Blast hole drilling will be carried out with a fleet of Sandvik DP1500i drills. These machines are versatile rigs capable of drilling vertical through to horizontal holes of diameter 80mm – 140 mm. Due to the undulating terrain in the early years of mining these smaller track mounted rigs were given preference to larger blasthole rigs to provide flexibility in blast design and allow easier access across the deposit. Although contractors exist in country to provide drilling services, for the purposes of this study it has been assumed that Lydian will purchase and operate these machines.

It is planned to drill 127 mm holes at 3.68 meter spacing. These drill holes will be sampled and assayed for ore control. Dry blast holes will be loaded with ANFO and wet holes with emulsion. A number of suppliers exist in country for the provision of explosives and Lydian has already completed preliminary discussions regards the supply and management of ANFO, emulsion and packaged explosives in country. Capital costs have been allocated to account for the construction of magazines and the purchase of specialized explosives trucks. However, this is primarily due to the early stages of negotiations with in country suppliers; it is likely that Lydian will ultimately outsource the explosives supply and management.

16.6.2 Load and Haul

In Years 1-3 the primary loading units will be one 180t Cat 6018 and one 290t Cat 6030 hydraulic backhoe excavator. These will be supplemented by an additional, Cat 6018 and Cat 6030 hydraulic backhoe excavators in Year 4.

The smaller machines were chosen in the earlier years to better facilitate the mining of the hillside. Backhoe configuration was chosen in preference to face shovel as it allows for greater selectivity during ore mining as well as providing increased flexibility during the construction phase and early years of mining. A number of these machines are already in use elsewhere in Armenia and it is expected that access to trained operators and mechanics will be simpler due to their prevalence.

For the expansion to 10Mtpa in Year 4, Cat 6030s were chosen as they allow for greater production due to their increased size but offer sufficient similarities in terms of controls etc that upgrading the skills of existing operators should not be overly arduous.



An additional Caterpillar 992K loader has been included in the loading units for stockpile re handling to the crusher and other ancillary work. This machine may be used as a substitute for the Cat 6018 excavators if required.

Hauling of material from the pit to the crusher, dump and stockpiles will be accomplished with 90t Caterpillar 777G Haul Trucks. The 777G truck is considered an optimum match for the Cat 6018 excavator and its versatility and size will offer considerable advantages in the early years of mining as well as construction. Current capital and operating cost estimations assume that the Cat 777G is used for the duration of the mine life. However, subject to exploration drilling and increases in ultimate pit size and mine life, consideration may be given to utilizing 135t Cat 785 trucks as a match for the Cat 6030 excavators in Year 4.

Haul truck productivity was based on a detailed haul time simulation over measured haul profiles. Truck performance characteristics were based on Caterpillar published truck specifications for the Cat 777G model. Haul profiles were measured for each material type, from each pushback to each destination on a quarterly/yearly basis. These profiles account for the gradient and design of the haul road so as to accurately model truck speed and cycle times for each period in the mine schedule.

Equipment productivity for excavators and ancillary equipment was calculated on a shift basis based on Amulsar rock and operating conditions. Productivity for each machine was calculated based on shift length, planned and unplanned stoppages, machine utilization, and operator effectiveness. Calculated productivities were then benchmarked against comparable machines in similar environments.

The productivity per shift and the tonnage requirements set the number of operating shifts needed per year to move the material. Availability and utilization were applied to determine the required number of operating units and overall fleet size which can be viewed in Table 16.5.

16.6.3 Ancillary Equipment

Caterpillar D10 tractor dozers have been selected as the primary materials handling option for the waste dump, the stockpiles, road construction and for in pit operations. To supplement the track dozers, Caterpillar 824 wheel dozers will be used in loading areas and on haul roads to keep floors clean and free of debris that may damage tyres. A Caterpillar 16M grader will also be purchased to manage haul roads and dumps to ensure optimum performance from trucks and reduce maintenance costs.

Dust suppression will be provided by a Caterpillar 777G water truck that will source water from catchment areas adjacent to the haul road, waste dump and crushing facility. Light construction work, trenching and general housekeeping will be handled using a Caterpillar 336 excavator.

Table 16.6 summarizes the mine mobile equipment fleet for the mine life.



Table 16.6 Summary of Mine Mobile Equipment Fleet Life of Mine

Equipment Requirements by Time Period

Equipment Type

Time Period

Yr-1

Yr1

Yr2

Yr3

Yr4

Yr5

Yr6

Yr7

Yr8

Yr9

Yr10

Yr11

Yr12

Sandvik DP1500 Drill 0 3 2 3 7 7 7 7 7 7 7 6 1

10.0 cu m Exc 0 1 1 1 2 2 2 2 2 2 2 2 2

17.0 cu m Exc 0 1 1 1 2 2 2 2 2 2 2 2 2

Cat 777 Haul Truck 0 19 19 20 37 37 37 37 34 25 24 24 18

Cat D10 Track Dozers 1 3 3 3 3 3 3 3 3 3 3 2 2

Cat 824G Wheel Dozer 1 1 1 1 1 1 1 1 1 1 1 1 1

Cat 16M Motor Grader 1 1 1 1 1 1 1 1 1 1 1 1 1

Cat 777 Water Truck 1 1 1 1 1 1 1 1 1 1 1 1 1

Cat 992G Wheel Loader 1 1 1 1 1 1 1 1 1 1 1 1 1

Cat 336DL Excavator 1 1 1 1 1 1 1 1 1 1 1 1 1

TOTAL 6 32 31 33 56 56 56 56 53 44 43 41 30

16.6.4 Personnel

Salaried staff requirements are expected to be 44 persons per year; 16 expatriates and 28 nationals (Table 16.7). Labor requirements for operations and maintenance increase to approximately 208 persons in the last quarter of Year 1. Labor requirements remain in the lower 200’s of persons until Year 4 when the labor required increases to 345 persons. The persons required remains in the mid 300’s until Year 8 when the personnel requirements begin to decrease. An allowance for vacation, sickness and absenteeism (VSA) is included in the overall labor requirement. Table 16.8 is a summary of the mine operations and maintenance personnel requirements.



Table 16.7 Salaried Staff Labor Requirements

JOB TITLE Personnel by Time Period

Yr -1 Yr1 Yr2 Yr3 Yr4 Yr5 Yr6 Yr7 Yr8 Yr9 Yr10 Yr11 Yr12

Mine Manager 1 1 1 1 1 1 1 1 1 1 1 1

MINE

OPERATIONS:

Mine

Superintendant

Mine Leading

1 1 1 1 1 1 1 1 1 1 1 1 1

2 6 6 6 6 6 6 6 6 6 6 6 6

2 2 2 2 2 2 2 2 2 2 2

1 3 3 3 3 3 3 3 3 3 3 3 3

Mine Operations Total 4 12 12 12 12 12 12 12 12 12 12 12 10

MINE

MAINTENANCE:

Maint. Manager

Maint.

Superintendent

Maint. Lead Hand

1 1 1 1 1 1 1 1 1 1 1 1 1

1 1 1 1 1 1 1 1 1 1 1 1 1

1 3 3 3 3 3 3 3 3 3 3 3 3

1 2 2 2 2 2 2 2 2 2 2 2 2

1 3 3 3 3 3 3 3 3 3 3 3 3

Mine Maintenance Total 5 10 10 10 10 10 10 10 10 10 10 10 10

MINE ENGINEERING:

Technical Services

Super. Senior Mine

Engineer Mining

Engineer

Surveyor

1 1 1 1 1 1 1 1 1 1 1 1 1

1 1 1 1 1 1 1 1 1 1 1 1 1

1 2 2 2 2 2 2 2 2 2 2 2 2

1 2 2 2 2 2 2 2 2 2 2 2 2

1 3 3 3 3 3 3 3 3 3 3 3 3

Mine Engineering Total 5 9 9 9 9 9 9 9 9 9 9 9 9

MINE GEOLOGY:

Senior Mine Geologist

Grade Control Geologist

Sr Geotechnical

Engineer Geotechnical

Engineer

1 1 1 1 1 1 1 1 1 1 1

3 3 3 3 3 3 3 3 3 3 3

1 1 1 1 1 1 1 1 1 1

1 1 1 1 1 1 1 1 1 1

6 6 6 6 6 6 6 6 6 6 6

Mine Geology Total 0 10 12 12 12 12 12 12 12 12 12 12 0

TOTAL PERSONNEL 14 42 44 44 44 44 44 44 44 44 44 44 30



Table 16.8 Mine Hourly Labor Requirements

JOB TITLE Personnel by Time Period

Yr-1 Yr1 Yr2 Yr3 Yr4 Yr5 Yr6 Yr7 Yr8 Yr9 Yr10 Yr11 Yr12

MINE OPERATIONS:

Drill Operator

Shovel Operator

Loader Operator

Haul Truck Driver

Track Dozer Operator

Wheel Dozer Operator

Grader Operator

Service Crew

Blasting Crew Floating Operator Laborer

0 9 9 9 18 18 18 18 18 18 18 17 2

0 3 3 3 6 6 6 6 6 6 6 5 6

0 3 3 3 6 6 6 6 6 6 7 6 6

0 54 56 59 109 110 111 111 101 73 71 71 54

1 6 6 6 6 6 6 6 6 6 6 5 4

0 2 2 2 3 3 3 3 3 3 3 2 1

1 3 3 3 3 3 3 3 3 3 3 3 3

4 12 12 12 12 12 12 12 12 12 12 12 9

6 6 6 6 6 6 6 6 6 6 6

3 3 3 3 3 3 3 3 3 3 3 3

6 6 6 6 6 6 6 6 6 6 6

Operations Total 6 107 109 112 178 179 180 180 170 142 141 136 88

MINE MAINTENANCE:

Mechanic

Welder

Electronics Tech.

Fuel & Lube Man

Tire Man

Laborer

2 41 42 43 74 74 74 74 69 56 55 52 29

1 20 21 21 36 36 36 36 33 27 27 26 14

1 6 7 7 11 11 11 11 10 9 8 8 5

2 6 6 6 6 6 6 6 6 6 6 6 6

2 6 6 6 6 6 6 6 6 6 6 6 6

1 3 3 3 3 3 3 3 3 3 3 3 3

Maintenance Total 9 82 85 86 136 136 136 136 127 107 105 101 63

VS&A at 10% 2 19 19 20 31 32 32 32 30 25 25 24 15

TOTAL LABOR 17 208 213 218 345 347 348 348 327 274 271 261 166

Maint./Operations Ratio 1.50 0.77 0.78 0.77 0.76 0.76 0.76 0.76 0.75 0.75 0.74 0.74 0.72



17 RECOVERY METHODS

This section is based on the 2012 feasibility study for the project completed by K D Engineering for Lydian. The report for the study was dated 3 September 2012 and amended 26 November 2012. This section has not been revised to reflect work or studies that had been completed at the time of the Mineral Resources reported on 5 March 2012. This section will be updated as part of a feasibility study currently underway and due for completion in August 2013. Development of the Amulsar Project will be conducted in two phases:

Phase I is the construction of a facility to process ore at a rate of 5 Mtpa.

In the third year of operation Phase II will be constructed to increase throughput to 10 Mtpa for year four. The Phase II expansion will essentially entail installation of a duplicate Phase I facility, though some of the unit operations and ore handling equipment will be initially installed to support the 10 Mtpa processing rate.

The Overall Flowsheet is shown below in Figure 17.1.

Figure 17.1 Amulsar Overall Flowsheet

17.1 Crushing Facility

Ore is processed through three stages of crushing to a target crush size of 100 percent minus 12 mm.



17.1.1 Primary Crushing

Run-of-mine ore is delivered to the primary crusher feed hopper, or adjacent stockpile, by rear-dump haul trucks. A static grizzly screen above the hopper limits the top size of rock fed to the crusher to 700 mm. Below the hopper, an apron feed transfers ore at a controlled rate to the vibrating grizzly screen. Grizzly screen oversize, plus 100 mm material, feeds the primary jaw crusher. Grizzly screen undersize joins the crusher product on the primary crusher discharge conveyor which feeds the primary crusher transfer conveyor taking the ore to the second stage of crushing. The primary crushing circuit reduces the size of run-of-mine from a maximum of 700 mm to approximately 80 percent passing 165 mm. The rock breaker is installed to serve the static grizzly and the monorail crane and air compressor support jaw crusher operation. Dust is controlled at the feed pocket by water sprays and at the screens and transfer points by dust collection/filtration in the bag house. Tramp iron is removed from the crushed product by way of the magnet mounted above the discharge of the discharge conveyor.

In the Phase II expansion, the entire primary crushing circuit is duplicated except both phases share a common run-of-mine stockpile, dust bag house, air compressor and transfer conveyor.

17.1.2 Secondary Crushing

Primary crushed product is fed into the coarse ore storage bin. Two apron feeders transfer the ore to the coarse ore transfer conveyor which feed ore at a controlled rate to the secondary vibrating screen deck. The screen deck oversize, plus 100 mm and plus 28 mm, is fed to the secondary cone crusher. Screen deck undersize joins the secondary crusher product on a transfer conveyor for delivery to the third stage of crushing. Secondary crushing reduces the primary crushed product to approximately 80 percent passing 32 mm. The crane and air compressor is installed to support crushing operations and dust is controlled at the screen deck and crusher by collection/filtration.

The Phase II expansion shares the coarse ore storage bin, crane, air compressor and product transfer conveyor with Phase I, but requires installation of two additional apron feeders, one vibrating screen deck and one secondary cone crusher.

17.1.3 Tertiary Crushing

Secondary crushed product is discharged onto the fine ore screen tripper conveyor and delivered to the fine ore screen feed bin. The belt feeder delivers ore from the bin to the double deck vibrating screen. Screen oversize, plus 30 mm and plus 17 mm, reports to the screen oversize tripper conveyor and discharged into the tertiary crusher feed bin.

Two belt feeders deliver the screen oversize material to two tertiary short cone crushers. The tertiary crushed product is discharged onto the fine ore screen tripper conveyor and re-circulates back to the vibrating screen. The screen undersize, approximately 80 percent passing 12 mm, reports to the fine ore collection conveyor which discharges onto the fine ore transfer conveyor. The fine ore transfer conveyor delivers ore to the crushed ore tripper conveyor and into the crushed ore surge bin. Four belt feeders transfer crushed ore from the surge bin to the overland conveyor. Tertiary crushing is



supported by the air compressor and crane hoist. Dust is controlled at all transfer points, the screen and crushers by collection/filtration.

The Phase II expansion requires installation of two second tertiary vibrating screens with belt feeders and two additional tertiary cone crushers with belt feeders.

17.1.4 Stacking

The current overland conveyor system consists of three connecting overland conveyors, followed by a series of twenty four portable conveyors, ending with a radial stacking conveyor. The first conveyor is approximately 4 Km in length and spans from the crushing plant to the northwest corner of the heap leach pad. The second conveyor is approximately 1.2 Km in length and continues south along the west side of the heap leach pad. The third conveyor is approximately 1.2 Km and includes a tripper conveyor. The tripper provides stacking capability over the area of the pad without a need to increase the number of portable conveyors.

The overland conveyor system was designed by a third party vendor, Paakkola Conveyors OY. The 4 kilometer main conveyor has a proposed straight line routing down the mountain from the crushing plant to the heap leach pad. Paakkola proposed this routing due to the complexity of placing bends in the conveyor, which would require 900 times the belt, resulting in a minimum of approximately 1 kilometer in length to place a curve in the conveyor. Utilizing multiple shorter conveyors would require more maintenance and conveyor components (e.g. drives, drive ends, tail ends, etc.). The trade-off of using a curved conveyor or multiple conveyors versus the suggested straight routing resulted in no advantages in cost savings or required earthworks. The succeeding overland conveyors also have proposed straight-line routing design based on the same criteria. Ore is discharged from the stacking conveyor onto the heap leach pad in 8 meter high lifts.

Pebble lime is added on the overland conveyor from a storage silo via screw feeders with the rate of lime addition varying with tonnage.

17.2 Heap Leach Facility

Golder completed and submitted to Lydian a separate document detailing a feasibility-level design and cost estimate for the heap leach facility including the leach pad and collection ponds (Golder, 2012c). Prior to selecting the final location (known as Site 6), a thorough review of Heap Leach Facility Site Alternatives Analysis (Golder, 2012j) was undertaken jointly by Golder, WAI and Geoteam.

Heap leaching consists of stacking the crushed ore on the leach pad in 8m lifts and leaching each individual lift to extract the gold and silver. Barren leach solution (BLS) containing approximately 0.5 g/l sodium cyanide (approximately 250 ppm free cyanide) is applied to the ore heap surface using drippers at an application rate of 10 l/h/m2. The overall leaching cycle for the ore is at least 140 days total with 30 days of primary leaching, 80 days of secondary leaching and 30 days of leaching as a buried lift. This is equivalent to a solution-to-ore application ratio of 3 cubic meters per tonne of ore. Leaching commences as the BLS piping is installed on the surface of the first heap lift with a sufficient area to accommodate the applied solution flow rate.



The solution percolates through the ore to the impermeable pad liner where it collects in a network of perforated solution collection drain pipes installed within a 0.6 meter thick granular cover drain fill layer above the liner. The leaching process is carried out as a two-stage counter-current leach in order to maximize the gold tenor to the gold recovery process. Leach solution of intermediate strength is used as recycle leach solution (ILS) to leach freshly stacked ore. This produces a higher gold grade pregnant leach solution (PLS) reporting to the pregnant pond.

17.2.1 Leach Pad

The lined leach pad will be constructed in three phases to provide an ultimate ore heap of 95 Mt stacked in three stages. Each pad phase will be divided into two cells for a total of six cells.

The Phase 1 (Starter) pad will be constructed at the southern end of the gently sloping plateau at Site 6 with grade fill placed to maintain pad grades between 0.5% and 3% to accommodate the stability requirements. In addition to stability considerations, the grading in Phase 1 accommodates the solution drainage requirements and provides a sufficient surface to stack the first ore lift on the Phase 1 pad to accommodate the active leaching area requirement. The toe fill will extend within the central valley of the site northward from the southern pad toe limits until it daylights into the existing ground.

Ore will be stacked on the Phase 1 pad in a maximum of seven 8 m thick, horizontal lifts to develop a Stage 1 ore heap with a capacity of 18 Mt during the initial 3.3 years of operations. The Phase 1 leach pad will have an area of 479,690 m2 and the Stage 1 heap will have a top surface elevation of 2,229 m. The Phase 1 leach pad may be constructed in sub-phases to further minimize initial capital costs.

The Phase 2 leach pad will consist of a 465,000 m2 expansion of the pad to the north, providing for the stacking of the Stage 2 ore heap above the Stage 1 ore heap and Phase 2 leach pad. The Stage 2 ore heap will consist of five additional horizontal lifts above the Stage 1 ore heap level and will have a nominal top surface elevation of 2269 m. The Stage 2 ore heap will add capacity for an additional 27 Mt, which is projected to occur through the end of Year 6 of operations.

The Phase 3 leach pad will consist of a final 461,120 m2 expansion of the leach pad to the north, providing for the stacking of the Stage 3 ore heap above Stages 1 and 2 and the Phase 3 leach pad in horizontal lifts for a nominal maximum heap height of 72 m above the ultimate leach pad, with the heap top lifts stepped to match the sloping pad grade. Stacking of the Stage 3 ore heap is projected to continue through sloping pad grade. Stacking of the Stage 3 ore heap is projected to continue through Year 11 of operations to provide an approximate total ore heap capacity on the Ultimate pad of 95 Mt.

If additional leachable ore is identified beyond the Stage 3 ore heap capacity, a fourth pad expansion to the north may be constructed. Up to 120 Mt of ore heap may be stacked on the pad including the Phase 4 expansion. The pad will have a basal composite liner system consisting of a 2-mm (80-mil) linear low-density polyethylene (LLDPE) geomembrane underlain by a 0.3-m minimum thick compacted low-permeability soil liner. The geo-membrane will be smooth in most areas and will include



a double-side textured strip along the downgradient toe of the pad to enhance heap stability.

The drainpipe network above the leach pad liner will be embedded within the 0.6 m thick liner cover drain fill composed of free-draining, hard, and durable granular material. Solution and storm runoff flows collected by the drainpipe network in each pad cell will be routed via transfer pipes through the leach pad cell spillways to the process ponds, and will be directed by valve control to either the pregnant or intermediate ponds. A limited and targeted leak collection and recovery system (LCRS) will be constructed beneath the leach pad composite liner that will consist of a series of transmissive drains connected to down-gradient sumps. The LCRS drains will be underlain by a secondary LLDPE geo-membrane liner. Should a leak ever occur through the pad liner and be intercepted by the LCRS drain, it would flow through the drain to the LCRS sump located at the low point of each pad cell, where it would be removed via a pump. The LCRS will be constructed beneath the pad areas where the highest potential for elevated hydraulic head and/or concentrated flows occur, e.g., at the down-gradient cell divider berm locations and beneath the primary solution collection pipes.

A stock-proof mesh fence with locking gates will be constructed around the perimeter of the leach pad to prevent wildlife from reaching the pad and ore heap. An additional purpose of the fence is for public safety and to deter unauthorized access into the pad area.

Collection Ponds

The collection ponds consist of process (PLS and ILS) ponds and a storm event (storm) pond sized in accordance with the project design criteria. Additionally, an overflow pond will be constructed down-gradient of the storm pond. The collection ponds and overflow pond will be constructed during the Phase 1 leach pad construction. The collection pond crest elevation will be approximately 15 m lower than the pad’s lowest point for cut and fill quantity optimization.

Solution and storm water flows from the pad cells will be routed to the process ponds. A common divider berm will be constructed between the pregnant and intermediate ponds for solution and storm water overflow conveyance between these ponds. A spillway will be constructed between the intermediate pond and the storm pond for storm water overflow conveyance to the storm pond.

The combined process pond capacity is approximately 94,600 m3 to bottom of freeboard depth. The storm pond capacity is approximately 218,040 m3 to bottom of freeboard depth.

The process ponds are sized to contain 8 hours of normal operational solution flow and 24 hours of solution drain-down flow from the ore heap for the Ultimate pad in case of operational shutdown due to pump failure or power loss. Considering a maximum solution flow rate of 2,848 m3/hr the 8 hours of normal operational storage and 24 hours of emergency drain-down storage require 22,784 m3 and 68,352 m3, respectively, for a combined volume of 91,136 m3. The approximate process pond capacity of 94,600 m3 exceeds this combined volume, and therefore the ponds provide for full passive containment below their freeboard for these flows.



The storm pond was sized to accommodate project design criteria of 150% of the 100-year, 24-hour design storm event runoff from the Ultimate pad and collection pond areas. Considering a 100-year, 24-hour design storm depth of 95 mm and an ultimate area of approximately 1,405,800 m2 across which precipitation would be collected, 150% of the design storm over this area would generate a maximum runoff of 200,330 m3 (assuming no uptake into the heap). The storm pond capacity of approximately 218,040 m3 exceeds this design runoff volume, and therefore the storm pond provides for full containment below its freeboard of the design contingency containment criteria.

The storage capacity of the process ponds and storm pond were also evaluated against the expected inflows that would occur during the wettest month on record. A maximum monthly precipitation of 213.8 mm was observed in the 41 years of precipitation data. This precipitation would generate a maximum containment volume of 300,560 m3 from the ultimate facility. The heap is expected to retain a portion of this volume through uptake of the ore from the delivered water content of 3% to its field capacity water content of 10%. Considering an ore stacking rate of 10 Mtpa (833,300 Mt per month), the ore will uptake approximately 58, r or so300 m3 of wate lution during this month. Considering 8 hours of normal operational flow storage (22,800 m3), 300,600 m3 of water from precipitation, and 58,300 m3 of water or solution uptake into the heap, the net volume in the ponds at the end of the wettest month on record would be 265,000 m3. The approximate combined process ponds and storm pond capacity of 312,640 m3 exceeds this net volume, and therefore the ponds would provide for full containment below their freeboard during this month.

An additional overflow pond will be constructed downgradient of the storm pond to contain potential overflow discharge from the storm pond, should a low probability event or series of events ever occur that exceed the project design containment criteria.

The process ponds will have a composite double geo-membrane liner system comprised of top (primary) and bottom (secondary) geo-membranes, with an intermediate LCRS layer. The bottom geo-membrane will be underlain by a 0.3 m thick compacted low-permeability soil liner. The bottom geo-membrane will be a 2-mm (80-mil) thick smooth LLDPE and the top geo-membrane will be a 2-mm (80-mil) thick single-side textured high-density polyethylene (HDPE) with texturing at top for traction (as a safety consideration). The LCRS between the two geo-membranes will be a transmissive geo-composite that is connected to a LCRS sump. Should a leak ever occur through the top geo-membrane, it would flow through the geo-composite to the LCRS sump, where it would be removed via a pump. The design intent of the LCRS is to ensure that no hydraulic head occurs on the bottom geo-membrane, thereby removing any driving force required for seepage to occur through that geo-membrane.

The storm pond will have a composite liner system consisting of 2-mm (80-mil) single-side textured HDPE geomembrane with texturing at top for traction, underlain by 0.3-m minimum thickness compacted low-permeability soil liner. A 0.3 m thick layer of cover fill will be placed at the bottom of the storm pond to protect the exposed geomembrane liner from wind and weather damage considering that this pond will be empty under normal operating conditions.

The overflow pond will be lined with a 0.3 m thick compacted low-permeability soil liner.



A stock-proof mesh fence with locking gates will be constructed around the perimeter of the collection ponds to prevent wildlife from reaching the fluids in the ponds. An additional purpose of the fence is for public safety and to deter unauthorized access into the collection ponds area.

Top netting will be provided above the process ponds fence to prevent birds from accessing the fluids in the ponds. If occasional bird access still occurs, additional deterrent will be employed by using floating plastic balls.

17.3 Process Plant

The process plant consists of an ADR Plant, electrowinning cells, a refinery and reagent handling equipment. For the Phase II expansion, essentially a duplicate carbon adsorption train of five stages and electrowinning cell will be installed; the refinery and reagent handling facilities will be initially sized to accommodate the increase in metal production.

The entire process plant designed by Summit Valley Technologies treats seven tonne batches of pregnant 6 x 16 mesh carbon. The plant processing steps include carbon adsorption, carbon acid wash, carbon stripping, carbon regeneration, carbon handling, sodium cyanide and sodium hydroxide mix/storage, electrowinning, and refining.

The sourcing, transportation, handling, use and disposal of any hazardous substances will be regulated in accordance with relevant framework management plans prepared in accordance with international best practice to support the ESIA submission.

Brief descriptions of each processing step are presented below.

17.3.1 Carbon Adsorption

Pregnant leach solution is pumped into the ADR plant, passes over a trash screen, and enters the bottom of the first carbon adsorption column. The solution flows up through the bed of carbon, over the column top and down into the bottom of the second carbon adsorption column. This is repeated for a total of five carbon adsorption stages and the design is such that solution flows by gravity through the columns. Upon exiting the fifth stage of adsorption the solution, now barren, flows through a carbon safety screen and into the barren solution surge tank. Barren solution is pumped back to irrigate the heap leach pad.

The carbon flows through the five stages of adsorption counter-current to the solution. Periodically, once or twice per day, carbon is pumped from the first carbon adsorption column to the acid wash vessel, or alternatively, the strip vessel. Carbon from the second carbon adsorption column is pumped into the first column, the third into the second, and so on. Fresh or regenerated column is added to the fifth carbon adsorption column. Wire samplers are installed on the pregnant and barren leach solution lines. The adsorption plant contains a safety shower and a sump with pump to return solution to the fifth carbon adsorption column.



For the Phase II expansion, a duplicate set of carbon columns is installed with associated screens, pumps, and samplers though shares the Phase I sump, shower and barren solution surge tank.

17.3.2 Carbon Acid Wash

Loaded carbon is preferably pumped to the acid wash vessel prior to stripping. The acid wash vessel, constructed of fiberglass reinforced plastic, holds seven tonnes of carbon. Hydrochloric acid, diluted to approximately 3 to 5 percent, recirculates through the carbon bed for a period of one to two hours. Caustic solution is pumped into the vessel to neutralize the acid followed by fresh water. The caustic solution and wash water report to the neutralization tank which is pumped to the barren solution tank via the carbon safety screen. The washed carbon is pumped to the desorption circuit. The acid wash circuit is supported by the safety shower, the sump with pump to return solution to the neutralization tank and the exhaust fan to vent acid fumes to the atmosphere.

The Phase II expansion does not require modification to the acid wash circuit.

17.3.3 Carbon Stripping

Metal is desorbed from the carbon in the strip vessel. The strip vessel holds seven tonnes of carbon and operates under conditions of elevated temperature and pressure. Barren strip solution flows up through the bed of carbon, strips gold from the carbon, and then flows through a carbon bucket trap, a plate and frame heat exchanger to exchange heat with the barren strip solution, another trim heat exchanger to further cool the solution before reporting to the electrowinning cell feed tank. Following electrowinning the discharge solution reports to the barren strip solution tank. Caustic and sodium cyanide are added to the barren solution, which is pumped through the plate and frame heat exchanger, past an electric immersion heater, and back into the bottom of the strip vessel. Once or twice per day, the stripped carbon is transferred preferably to the kiln dewatering screen for thermal regeneration, or alternatively, to the carbon sizing screen to be returned to the adsorption circuit. The stripping circuit is supported by the safety shower, wire samplers on the barren and electrowinning feed solutions and the sump with pump to discharge solution to the adsorption circuit trash screen.

In the Phase II expansion, an additional strip vessel with all auxiliary equipment is installed except for the sump and safety shower.

17.3.4 Carbon Regeneration

Stripped carbon is pumped to the kiln dewatering screen. Transfer solution and fine carbon flow to the carbon fines tank. Carbon sized above 16 mesh reports to the kiln feed bin. By way of the screw feeder, the carbon is passed into the rotating carbon reactivation kiln. Under a steam atmosphere and at temperatures between 550 and 650 degrees Celsius, organic fouling is removed from the carbon. Carbon exits the kiln and reports to the carbon quench tank. The reactivated carbon is pumped to the carbon sizing screen. Transfer water and fine carbon report to the carbon fines tank. The carbon sized above 16 mesh reports to the activated carbon storage tank and, as required, is pumped back into the fifth carbon adsorption column.



17.3.5 Carbon Handling

The virgin activated carbon is attritioned prior to being introduced into the adsorption circuit. The carbon is placed into the carbon attrition tank with process solution and mechanically agitated for 20 to 30 minutes. This process breaks off any platelets or sharp corners of the particles, which would have easily broken off while in the adsorption column. Fines generated in this step can amount to 3 to 5 percent of the initial carbon weight. The attritioned carbon is pumped to the carbon sizing screen. Properly sized carbon falls into to the activated carbon storage tank. Fine carbon and transfer solution report to carbon fines tank. The carbon slurry in the fine carbon storage tank is pumped to the filter press. The filtrate flows to the barren solution surge tank. The filter cake is packaged in 50-gallon drums for off-site shipment and treatment

17.3.6 Electrowinning and Smelting

The electrowinning feed solution is pumped from the feed tank into the electrowinning cell. Cell electrical power is supplied by the rectifier. Metal is deposited from solution onto stainless steel mesh cathodes. The metal free solution flows to the electrowinning cell discharge surge tank and from there to the barren strip solution tank. Periodically, the sludge is washed from the cell cathodes and is pumped to the plate and frame filter press. The filtrate reports to the barren strip solution tank. The filter cake is placed into the electric retort. Dry cake is blended with flux in the flux mixer and then smelted in the induction bullion furnace.

The slag is periodically reprocessed in the furnace though is ultimately disposed of on the leach pad. The doré is packaged for off-site shipment. The gold room operations are supported by the exhaust fan over the electrowinning cell, the dust collector over the furnace, the high pressure water sprayer and the sump with pump discharging spill/wash solution to the barren solution strip tank.

In the Phase II expansion an additional electrowinning cell and rectifier will be installed.

17.3.7 Reagent Handling

In addition to the aforementioned lime silo, facilities are provided to handle the bulk caustic and sodium cyanide. Raw water and sodium hydroxide briquettes, or flakes, are added to the caustic mix tank to a make-up concentration of 25 percent. The caustic/mix transfer pump re-circulates the solution and then transfers it to the sodium cyanide mix tank. Sodium cyanide is added to the mix tank to obtain a 20 percent concentration. This concentrated solution is transferred to the sodium cyanide storage tank and distributed to the barren solution surge tank and the barren strip solution tank. This reagent handling station is supported by a safety shower and the sump pump discharge reporting to the barren solution surge tank.

Metering pumps and lines deliver anti-scalant directly from 50-gallon drums to the barren solution surge tank.

A pump and solution line delivers concentrated hydrochloric acid from standard drums or carboys to the dilute acid tank.



18 INFRASTRUCTURE

18.1 Existing Infrastructure and Services

18.1.1 Location

The Amulsar Gold Project covers an area of 130 km2, located in south central Armenia.

18.1.2 Site Access and Roads

The Amulsar area is located 170 km by sealed road from the capital city of Yerevan, and 15 km by gravel track from the town of Jermuk or 4 km from the town of Gorayk. The license area straddles the boundary between Vayots-Dzor and Syunik provinces and incorporates part of the main highway south from Yerevan into Iran.

For the Amulsar project the road will be upgraded from Gorayk to the plant and mine site to allow for heavy loads. In addition a new bridge will be constructed over the Vorotan River. The road from Jermuk to the plant and mine site will also be upgraded however this road is not intended for heavy loads.

18.1.3 Buildings

An employee camp owned by Geoteam will be established at the site. The camp will have capacity for 200 people in single and shared person accommodation units and the facilities include a kitchen, laundry, office, workshop, warehouses, sewage treatment plant, diesel and fuel tanks / mess building and diesel generator. The remaining employees will live in the nearby towns of Jermuk or Gorayk.

Geoteam has also established an exploration sample preparation and core/sample storage facility in the village of Gorayk.

It is assumed the contractor will provide a temporary camp to house approximately 550 people located either near the process plant or in a nearby town. Senior management will also have a small camp in a nearby town for management, vendors and equipment vendors.

Additional non-process buildings are discussed in Section 18.2.7.

18.1.4 Resources & Infrastructure

Infrastructure near the project site is very good. The town of Jermuk is 15 km to the north and the village of Gorayk some 6 km to the south east of the Amulsar project.

There is good infrastructure surrounding the Amulsar project. This includes the main sealed highway between Yerevan and Iran, high tension power lines and substations, a gas pipeline from Iran, year round water from the Vorotan River and a fibre optic internet cable. As a consequence of the project location on the top of a mountain ridge, a reasonable amount of infrastructure will need to be constructed during project development. In order to ‘fast track’ the project consideration will be given to constructing portable or skid mounted equipment.



18.1.5 Communications

The exploration camp is currently serviced by satellite dish based internet and TV connection. Mobile phones work on most parts of the project area and a telephone connection is available at the exploration camp.

18.1.6 Personnel

As part of the company’s commitment to adding value to the local communities and building capacity in Armenia, the bulk of the steady state Amulsar workforce will be Armenian. Ideally, the majority of the workforce will be sourced from the four local towns, Gorayk, Gndevaz, Jermuk and Saravan. However, given the lack of extractive industry in these community’s it is expected that a significant percentage of the highly skilled workforce, i.e. engineers, geologists, metallurgists, mechanical and electrical tradesmen with mining and processing experience will need to be recruited from Yerevan and other regional centers in the country. Positions that cannot be filled locally will be staffed with suitably qualified expatriates on fixed term contracts, with the ultimate goal of developing qualified Armenia individuals for these jobs. Initial expatriate numbers are expected to be less than 10% of the workforce with a reduction targeted to less than 5% as local staff gain the necessary skills to replace them.

All Armenian operations staff will work a 14 days on 7 days off roster. Personnel recruited locally will continue to be based in their home town, whilst those recruited from greater Armenia as well as expatriates will be accommodated in housing provided by the company in close proximity to the mine. Expatriate personnel will work a 9 weeks on 3 weeks off roster.

The bulk of the workforce, approximately 85%, will be employed in the mining and processing departments. As on the job training is possible during the construction period is it expected that come commissioning, the mine operations roles such as equipment operator, drill and blast assistant, survey assistant and service crew will be filled almost entirely by local villagers. Training of mobile maintenance personnel will be supported by the local Caterpillar dealer, Zeppelin who have specialized training facilities in Russia as well as extensive experience on other mine sites in Armenia.

Processing personnel for operation and maintenance of the crushers, ADR plant and conveyors will, in all likelihood be sourced from other mining and heavy industrial projects in Armenia. As Amulsar is the first gold heap leach project in the country, external expertise in the form of expatriates will be required to set operating procedures and train the local workforce in the early years.

Literacy rates in Armenia are exceptionally high, over 99% for the adult population. This rate, coupled with Universities in Yerevan offering degrees in engineering, mining, geology and finance, amongst other things means that there is a readily accessible pool of graduates with the appropriate skills to fill the technical and support functions at the mine. Again, in the early years they will be supported by experienced expatriates to set up operating procedures but in time this requirement will reduce and it is expected that the bulk of middle management at the mine will be Armenian.



Salaries have been benchmarked against comparable operations in Armenia and it is expected that given the working roster Amulsar should be able to attract and retain people from outside the local region.

The total workforce during operation is estimated at around 550 employees. The total workforce during construction is estimated at 600.

Construction activities will be split into two categories, earthworks, which include the heap leach and waste dump construction and fabrication, which will encompass the crushers, ADR plant, overland conveyor and associated infrastructure.

Earthworks associated with the heap leach and waste dump will be completed by local Armenian contractors with assistance from company equipment on the bulk excavations. Assessment of local contractors in country has been undertaken and a number of firms exist that have the capability to complete this work.

Specialized fabrication work associated with the heavy infrastructure will require significantly more expatriate assistance. It is expected that an international firm will be awarded an EPCM (Engineer, Procure, Construct, Manage) contract to facilitate the installation of the crushers, conveyor and ADR plant. This firm will employ the bulk of the expatriates required for the construction of the project. A part of their mandate will be to maximize the employment of local personnel and to utilize local sub-contractors where suitable skills exist.

Housing for construction personnel will be at a dedicated camp onsite sized according to the construction requirements. The workforce overflow during the peak construction period would be housed in Jermuk, which would be in the region of 400 people by current estimations. Post construction, the construction camp would be used during operations to accommodate about 200 Armenian staff. It is anticipated that expatriate and the non-local Armenian management workforce expected to be in the region of 150 people will be staying at Jermuk. The balance will be leaving in nearby towns.

Table 18.1 below summarizes the personnel required during operations by department.



Table 18.1 Summary of Operations Personnel

Department Number of Personnel

Mining 350

Processing 134

Logistics & Finance 27

Environment, Health and Safety 19

Site Administration & Security 22

Total 552

Throughout the construction and operations phase of Amulsar, the company intends to develop the following through its recruitment and training practices:

Improvement of local skills to facilitate initiatives that benefit both Amulsar and the local community;

The development and dissemination of international best practices to the company and contractor workforces;

Investment in local businesses to upgrade their ability and increase the amount of goods and services sourced from local communities around the mine.

A summary of the senior management on the mine site during steady state operations can be viewed Figure 18.1.



Figure 18.1 Mine Senior Management Staff



18.1.7 Power Supply

The country has ample electric power from nuclear, hydro and heat electro-power plant sources. Power lines and sub-station infrastructure are located in close proximity to the project area. There is also a hydro-electric power plant on the Vorotan River, which is in the final stages of construction and will have an installed capacity of 1.8 MW. There are plans to increase the capacity to 2 MW.

Power is not currently reticulated to the Project site although domestic usage power is available at neighbouring main towns to the south and east. The supply of power in Armenia is controlled by the Armenian Electrical Networks company (AEN) that owns the distribution channels of the country in an arrangement whereby in this region power is purchased from the AEN distribution grid at 35 kV, stepped down at AEN owned substations and reticulated as required to consumers.

Based on a study by the local Power Network Design Institute, power for the project will be fed from two sources - 220/110/35 kV “Yeghegnadzor” and 100/35/10 kV “Sisakan” substations through a 110 kV overhead line. There is a 35kV line option from “Gorayk” substation, however, it has low reliability due to frequent power outage and using this line will result in energy losses.

A two-chain 12 km 110 kV overhead power line will be constructed for power supply to the mine site. This line will connect to “Sisakan” 110 kV overhead line, which in its turn is connected on one side to 110 kV rods of the “Sisyan” 110/35/10 kV substation, and on the other side to 110 kV rods of the “Gndevaz”, “Vorotan 3” and “Vorotan 2” 110 kV substations and to “Yeghegnadzor” 220/110/35 kV substation. In addition to these lines, in case of this option, a 12 km 35 kV overhead single-chain line will be built and connected to “Gorayk” 35 kV overhead line.

The 110kV rated utility transmission lines will be the primary source for supplying power to the mine site. The additional 35kV line option will serve backup power in case the 110 kV line fails. The 35kV line will be capable of supplying power to only few processes in the plant to keep critical equipment on-line for facilitating a safe shut-down or for keeping critical processes in operation till the primary source of power can come on-line. The utility transmission voltage (110 kV and 35kV) will be stepped down to 6kV, at the main substation, for reticulation around the site. From there the power would be distributed to the crushing plant, waste dump area and water treatment plant, conveying and stacking system, and the ADR plant. All these areas will have their own dedicated transformers, where the 6 kV power will be stepped down to 400/220 V.

18.1.8 Power Distribution

Upon review of the most recently proposed equipment list, a total electrical load of approximately 22.6 MW was determined. The electrical load is summarized in Table 18.2.



Table 18.2 Mine Power Requirements (by Area)

Mine Power Requirements (by Area)

Area Electrical Load (MW)

Crushing Plant 6.7

Overland Conveying + Stacking 4.9

Solution Management Pumps 3.1

ADR Plant + Camp 4.0

Water Treatment Plant + River Pump Station 1.35

Exploration Camp + Offices + Mine Shops 0.8

Reserve capacity (Future additions) 1.75

Total 22.6

The electrical system upon entering the mine site will be configured as a radial type system. The utility transmission line voltage (110 kV and 35 kV) will be stepped down to 6 kV at the mine main substation, via two 25 MVA, 3 phase, 50 Hz transformers. These transformers will provide power to a 6 kV switchgear consisting of a main circuit breaker, a tie breaker and several feeder breakers for distributing power to the crushing area, waste dump area & water treatment plant, overland conveying and stacking, heap leach area, ADR plant and camp site.

The mine main substation is located in the crushing area. The crushing area power requirements include primary crushing, secondary crushing, tertiary crushing and screening, lime addition, administration offices, warehouse and mine pit requirements. The 6 kV overhead power line to the waste dump area will distribute power to the water treatment plant, exploration camp and other facilities in those areas. There will be three (3) 6 kV overhead transmission lines running along the overland conveyor route; the first to provide power for overland conveying and stacking, the second to provide power to the heap leach area and ADR plant, and the third to provide power for pumping river (raw) water, camp site and other miscellaneous buildings in the area.

Depending on the load, the distribution voltage of 6KV will be utilized directly (operating voltage for motors greater than 200 kW) or it will be further stepped down to a 400 VAC, 3-phase, 3-wire system for feeding motors below 200 kW. The 400 VAC will be further stepped down to feed lighting loads at 400/230VAC and 120 VAC to facilitate instrumentation requirements and general office equipment (receptacles, computers, printers, etc.). Power distribution design will follow the federal, state and local standards.

The mine site will be provided with a grounding grid to which all building steel, equipment, etc. will be connected for safety. This grounding grid will consist of a #4/0 AWG bare copper conductor buried below ground connecting all items previously mentioned. All above ground connections except connections to building steel will be mechanical type connections so that equipment can be removed or replaced easily. All underground connections including those to building steel will be of the thermoweld type. A test well will be provided for periodically measuring / testing the resistance of the ground grid. Grounding design will follow the federal, state and local standards.



Lighting will be of the high intensity discharge type. High pressure sodium type light fixtures will be utilized for exterior areas and high bay interior applications. Metal halide lighting fixtures will be utilized indoors for low bay application and where color rendition is a factor. Fluorescent lighting fixtures will be used in interior applications such as office lighting, electrical rooms, etc. All areas will be equipped with emergency light fixtures utilizing battery packs which will provide a minimum of 90 minutes of illumination. Lighting levels will be designated by the Illumination Engineering Society (IES) published guidelines.

A computer based data gathering system, Supervisory Control And Data Acquisition System (SCADA), will be incorporated in the control and monitoring of all process operations. The SCADA system will use remote termination devices to channel appropriate control and monitoring signals from field locations back to the central processing unit (CPU) computer where an operator can physically operate equipment from his computer work station. The SCADA system will be based on equipment types preferred and designated by the Owner. The configuration of the SCADA will be based on the latest industrial standards. A programmable logic controller (PLC) system will be installed in respective areas, gathering information from the input and output signals from instruments and motor control equipment. The SCADA will process and record all communications with respective PLCs. An uninterruptable power supply (UPS) will provide power to each PLC.

Standby diesel generators will be provided to handle emergency situations at the heap leach pad area and ADR plant, respectively. These generators will be connected on the secondary side of the distribution transformer in respective areas. A 4000 kW generating station at the heap leach pad will provide power to select solution management pumps and other equipment that may affect the process production line should they stop operating. A 1000 kW, 480V rated generator at the ADR plant will provide power to agitators, sump pumps and other equipment that may affect the process production line should they stop operating. A 225 kW generator by the water treatment plant and one more 225 kW unit by the crushing plant for emergency situations.

18.2 Site Development

The Project will require development at the following major locations:

The mining areas

The mine surface facilities, including the mine administration building, truck shop, mine workshops, refuelling area, mine control areas and explosives yard

The crushing plant area

The ADR plant, leach pad and storage ponds

Waste dump and water treatment plant

Road and site access

Power line tie into the local utility

Raw water sourcing and distribution



The ESIA team provided input into the site selection and design decisions for all major infrastructure to ensure that environmental and social considerations inform the mine design process.

The following describes the engineering site preparation requirements at each location. The proposed overall general arrangement layout drawing is shown in Figure 18.2.



Figure 18.2 Proposed Overall Site General Arrangement Layout



Mine Surface Facilities The mine service area will be supplied with power by an overhead power line from the plant. The mine administration and warehouse will be connected to the main PABX at the administration building. An optical fibre cable will connect mine service area computers to the main server. Potable water will be supplied from the water treatment facility at the plant.

The mine operations services area will include the following facilities:

Mine Administration Office

Cleaning

Mine Cafeteria

Heavy vehicle workshop / store and washdown bay

Light vehicle workshop

Heavy vehicle fuelling station

Light vehicle fuel station

Fuel storage

Magazine

18.2.1 Crushing Plant

The ROM pad and crushing plant will be located to the North of the main open pit.

Sub-surface conditions will be further defined with additional geotechnical testing for building foundations and will be supervised by Golder. This drilling is in addition to the extensive geotechnical work already undertaken and is scheduled to be completed by the end of the 2012 drilling season.

The crushing plant site will be cleared and grubbed to remove organic material, contoured for drainage and then capped with laterite to allow heavy vehicle traffic during construction. There is extensive laterite available in the area.

18.2.2 Leach Pad and Collection Ponds

The leach pad and ponds are described in the heap leach facility write-up in Section 17.2.

18.2.3 Waste Dump Facility

The waste dump facility (WDF) at Site 13 consists of the waste dump (WD), and an influent equalization basin (IEB), wastewater treatment plant (WWTP), and evaporation pond (EP), located downgradient of the WD and utilized for the collection and treatment of mine-influenced water draining from the WD. Diversion channels will be constructed upgradient of the WDF to divert storm and snowmelt runoff from upstream catchments away from the WD, IEB, WWTP and EP.



18.2.3.1 Waste Dump

The WD will be constructed in three phases. The WD phase areas will be approximately 465,500 m2, 506,800 m2 and 360,100 m2 for Phases 1, 2 and 3, respectively, for a total WD area of 1,332,400 m2. Waste material will be deposited on the WD in nominal 8 meter thick lifts at the natural angle-of-repose of approximately 1.4H:1V. Benches with a nominal width of 16.8 m will be constructed between lifts to provide an overall exterior waste pile slope of 3.5H:1V, to be compatible with closure requirements.

The Phase 1 waste pile will be deposited on the Phase 1 WD in the southern portion of the Site 13 valley in 12 horizontal lifts to a top surface elevation of 2430 m. The Phase 1 waste pile is approximately 20 Mt and will be deposited during the initial two years of operations. The Phase 2 waste pile will be deposited north of the Phase 1 pile to fill the valley to elevation 2430 m. The Phase 2 waste pile is approximately 54 Mt to be deposited in three years. The Phase 3 waste pile will consist of depositing nine additional horizontal lifts above the Phases 1 and 2 waste pile to a top surface elevation of 2502 m. The Phase 3 waste pile is approximately 84 Mt to be deposited in six years, and will bring the total Phases 1, 2 and 3 waste pile capacity to approximately 158 Mt. This capacity may be reduced slightly when considering access ramps within the waste piles and operational constraints. The WD may be expanded higher up the hillside to the southwest to accommodate additional waste material.

The WD will be lined with a 0.45 meter thick compacted low-permeability soil liner. An underdrain system will be constructed within the WD footprint beneath the soil liner to drain groundwater/subsurface seepage to the IEB and prevent the seepage from entering the waste pile above the WD base liner. The WD will have 1.5 meter high perimeter berms to prevent rainfall and snowmelt water within the WD that comes in contact with the waste pile (contact water) from overflowing the WD. This water will be collected by an overdrain system constructed above the WD base liner and routed to the IEB.

18.2.3.2 Influent Equalization Basin

The IEB was sized in accordance with the project design criteria to store 24 hours of the WD maximum estimated underdrain flow plus overdrain flow from the 100-yr/24-hr storm event (snowmelt and precipitation), and to provide flow control to the WWTP. The IEB storage capacity is approximately 739,400 m3 to the 0.6-m freeboard depth. The IEB will be constructed during the Phase 1 WD construction by building an earthen dam across the narrow valley downgradient of the WD. The dam crest elevation will be approximately 5 m lower than the WD downgradient toe elevation.

Groundwater/subsurface seepage flow from the WD underdrains and rainfall/snowmelt contact water from the WD overdrains will be routed to the IEB. The collected water will be pumped from the IEB where it will be tested for compliance with discharge criteria, and if needed, routed to the WWTP for treatment.

The IEB will have a composite liner system consisting of 2-millimeter (80-mil) thick single-side textured HDPE geomembrane with texturing at top for traction, underlain by 0.3-meter thick compacted low-permeability soil liner. An underdrain system will also be constructed within the IEB footprint beneath the liner to drain groundwater/subsurface



seepage to a collection sump located downgradient of the IEB. Water collected in the sump will be tested for quality and released if non-impacted, or pumped to the IEB if the water quality criteria are exceeded.

18.2.3.3 Wastewater Treatment Plant

The WWTP will receive water from the IEB. Treatment processes have been developed based on the projected water quality characterization of the combined flows from underdrains and overdrains. The IEB and WWTP capacities have been designed to accommodate high flows associated with snowmelt, with operation of the WWTP at a constant rate for about eight months per year. Final treated effluent water quality targets are to be determined. The WWTP effluent is projected to comply with Armenian maximum allowable concentration (MAC) Category II standards. Category III standards (more lenient) have been considered, but the conceptual design and cost estimation for the WWTP is conservatively based on the more stringent Category II effluent targets.

The design flow rate for the WWTP is 182 m3/hr. The WWTP will operate 24 hours per day, seven days per week for eight months per year (roughly April through November). High flows in spring will accumulate in the IEB and will be gradually worked off through the drier summer months. The final unit operation in the wastewater treatment process is a spray-enhanced solar evaporation pond. Use of the evaporation pond limits the operational season for water treatment. The IEB, WWTP and EP are conceptually sized with capacity to treat twelve months of accumulated flow in the 8-month operating season.

The contaminants of potential concern (COPCs) are based on comparison of the projected influent water quality characterization and the Category II discharge standards. COPCs include metals, sulfate, and suspended solids. Treatment operations for these COPCs include:

Chemical precipitation (lime treatment) for metals removal.

Microfiltration for suspended solids removal.

Reverse osmosis for sulfate removal.

All ancillary equipment (chemical reagent feeds) have been included in conceptual design, as well as secondary waste handling equipment (dewatering chemical precipitation sludge).

Treated water will be discharged to the Vorotan River. Secondary waste sludge from chemical precipitation will be disposed on site. Solids accumulated in the evaporation pond may be removed for disposal or disposed in-place at the end of the WWTP life.

The WWTP is expected to operate in post-closure mode for some period of time, currently estimated at 10 years. Further study of post-closure flows from the overdrains and underdrains is needed to more accurately predict post-closure water treatment requirements and duration of operations.



18.2.3.4 Evaporation Pond

Reverse osmosis brine from the WWTP will drain by gravity to the EP for evaporation. The EP was sized to meet the brine storage requirements. The EP storage capacity is approximately 61,420 m3 to bottom of the 0.6-m dry freeboard depth. The EP will be constructed during the Phase 1 WD construction by excavating into the sloping terrain on the uphill side and filling earthen embankments on the downhill side. The pond crest elevation will be 20 m higher than the IEB crest level.

The EP will have a composite liner system consisting of 2-millimeter (80-mil) single-side textured HDPE geomembrane with texturing at top for traction, underlain by 0.3-meter minimum thickness compacted low-permeability soil liner. An ultrasonic system will be provided for the EP to prevent birds from accessing the fluid in the pond.

A stock-proof mesh fence with locking gates will be constructed around the perimeter of the IEB, WWTP and EP for public safety and to deter unauthorized access into the waste water treatment area. The fence will also prevent wildlife from reaching the fluid in the ponds.

18.2.4 Accommodations

The final strategy for accommodating all construction personnel, employees and security personnel during the construction period will be defined as part of the detail engineering effort. The basis of the cost estimate included an allowance to house 200 Lydian employees on-site and the remaining employees in nearby towns. Employees who live outside the area would be placed in hotels while local employees could live in existing accommodations. The contractor will provide housing for all construction personal and this cost was included in the construction labor rate.

Prior to detail engineering of the on-site housing facility potential vacant or run down housing opportunities will be investigated in Jermuk.

18.2.5 Roads & Site Access

For supplies, material and equipment can be shipped to the ports of Poti or Batumi, Georgia then trucked through Georgia and Armenia to the Amulsar project site. Airfreight through the Zvartnots International Airport in Yerevan is also possible.

There is a sealed road from Yerevan to the Iranian border passing to the south of the project area and a sealed spur road to the town on Jermuk. The current project access is gained via a gravel/dirt road from the Jermuk road. A further gravel/dirt road runs along the Vorotan river valley to the town on Gorayk. The sealed roads to the site turn-off are adequate for all Project transport requirements. The existing gravel/dirt site access road to the mine site will need to be widened over its entire length of 20 km as noted below, and maintained for all weather operation, providing the main means of access to the mine site and associated infrastructure The gravel/dirt road from Gorayk can also be used to access the Amulsar site and will also require upgrading.



The roads required for the Project are:

Plant access road

Village access road

Leach pad & ponds access roads

Waste dump and WTP area roads

Mine haul roads

Borefield access road

18.2.6 Non–Process Buildings

The following non process buildings have been included in the capital cost estimate:

Administration and engineering building

Plant Warehouse / Workshops

Maintenance Shop

Mine Truck shop

Lube Storage

General Storage

Truck Wash Station

Guard Gate

Gas Pump Building

Explosive magazine

Camp including the following;

- Dining Area

- Sleeping Quarters

- General Store

- Laundry

- Infirmary

- Sewage Treatment plant

Laboratory services for exploration, the mine and process facilities will be supplied by ALS Minerals (ALS). ALS has expressed interest in constructing a laboratory either on site or in close proximity to serve not only the mine but other regional requirements. Based on an analytical requirement volume and determinations estimate, ALS will supply and staff the laboratory accordingly. Lydian will make payments monthly to ALS for the analytical support. For the FS, this monthly cost is estimated as the staffing cost of a Chief Chemist, two additional chemists, four assayers and four sample preparation technicians plus US$10 per sample and 40,000 samples per year.



18.3 Water Source

The water source for the project will come from the Vorotan River with potable water delivered as required. A sitewide water balance was prepared as part of the Integrated Water Studies by Golder and adequate supply is available for production, makeup water, and general use in supplementing mine infrastructure needs for additional requirements such as dust control.

18.3.1 Potable Water Supply

Potable water will be used for drinking water, cleaning, change rooms, laboratory water and safety showers.

Potable water is not required for the process requirements.

The design potable water demand is 115 m3/day based on 300 l/person per day in the staff quarters and 40 l/day for staff not resident in the quarters. A further 70 m3/d will be required within the plant (ablutions, laboratory, safety showers, etc). Accordingly, a supply of 370 m3/d has been allowed and will be purchased from local community supplies.

18.3.2 Raw Water Distribution System

Based on the water balance study and hydrological assessment, there is adequate raw water available from the Vorotan River. An abstraction permit will be required in accordance with Armenian legislation and at this time it appears there is no reason to suspect that this will not be granted. KDE has included a raw water storage and distribution system for the project that pumps to the following areas;

ADR Plant Area

Camp Area

Water Treatment Plant

Truck shop area

Crusher Area

Mine Area

In order to minimise the number of services it is proposed to provide firewater via the raw water system. A diesel driven pump will start automatically on loss of raw water pressure to provide a secure fire service. A minimum volume of water will be held in the raw water pond at all times.

For exploration drilling purposes Geoteam currently holds a water use permit from a small pond on the western side of the pit.

Raw water required for the operation of the plant will be sourced from the Vorotan River. It is assumed that the well for raw water will be located on the shore of the river somewhere downstream of the hydro-electric power plant. The tentative location for the extraction well is shown on site plan. A perforated pipe with an installed pump (i.e,



sump) will be buried adjacent to the river and surrounded with drainage gravel to allow water to flow into the sump and be pumped through the delivery piping system. A local contractor will be utilized to design and build the extraction well to assure this meets local codes.

The exact location of the extraction well will be determined during the detailed engineering phase of the project and after getting necessary environment permits. Geoteam is completing the permitting process required to source water from the river for this project.

The water is pumped at the required rate to an adjacent tank located out of the flood plain. From the storage tank, the water will then be pumped to ADR and crushing plant through 4 and 3 km high pressure buried pipeline with a booster pump station if required

The electrical power of 6 kV will be brought to site by a overhead power line spurred from ADR plant which then will be stepped down to 400V for use.

18.3.3 Process Water Supply

Process water will be prepared at the process plant and will be recycled to the extent possible. Makeup water will be kept to a minimum. Process water quality will be monitored and, provided it is acceptable, will be used in the following areas:

Leach pond

Screen sprays

Carbon transfer

Process plant washdown

18.3.4 Sewage Waste Water Treatment

Sewage waste water treatment will be required at the man camp, ADR process plant, crushing plant, truck shop and contact water treatment plant area. An allowance was included with the building costs to include a septic system for each of these facilities.

In the event that geotechnical testing indicates that a septic system is not appropriate due to ground conditions then a pre-engineered sewage waste water treatment system would be placed at the man camp and sewage from the other locations would be hauled to this facility for treatment. Regardless of the type of sewage treatment facility required this facility will be designed to meet local regulatory requirements.

18.4 Waste Disposal

Two landfill disposal sites will be constructed in accordance with the EU Landfill Directive for non-hazardous and hazardous waste. The sites are small and would be adjacent to each other within the Rock Allocation Area.

Engineering requirements for a hazardous waste landfill/cell are a basal and side wall liner with a permeability and thickness equivalent to 1 x 10-9 m/sec at 5m thick.



Engineering requirements for a non-hazardous waste landfill/cell are a basal and side wall liner with a permeability and thickness equivalent to 1 x 10-9 m/sec at 1m thick.

The Directive states that where the geological barrier does not naturally meet the above conditions, it can be completed artificially, but must be no less than 0.5m thick (again on the base and side walls) and be of equivalent standard (i.e. for a hazardous waste landfill/cell it would have to be equivalent to 1 x 10-9 m/sec at 5m and for a nonhazardous landfill/cell equivalent to 1 x 10-9 m/sec at 1m).

Non-hazardous waste generation is estimated to be less than 5,000 t. Hazardous waste generation is estimated to be considerably less. The landfills would be constructed with leachate management and treatment systems.



19 MARKET STUDIES AND CONTRACTS


19.1 Marketing Studies

The product from the Amulsar Project will be doré bars containing a mixture of gold and silver and other impurities. The precious metal content of the bars is estimated to be between 90 and 99 percent gold plus silver. Doré bars produced at the mine will be weighed and assay samples collected. These high grade samples will be analyzed both on site and at an independent laboratory. The weight of the bar combined with the assay values allows the calculation of the ounces of gold plus silver contained in each bar and thus the overall value. Typically gold and silver doré bullion is sold through commercial banks and metal dealers. Sales prices are obtained on the World Spot or London fixes and are easily transacted.

The doré bars will be shipped by a secure carrier to a precious metal refinery, probably located in Europe or Asia. Upon arrival at the refinery, the bars are weighed and samples are taken to determine the precious metal content. The refiner will schedule periodic processing of the Amulsar doré in separate crucibles. The products from the refinery are separate refined gold and silver ingots known as good delivery bars. The option exists to take physical metal or to employ a trading account to monetize the bullion.

Once the mine has established an operating history at the refinery, payment of typically 90 percent of the estimated shipment value will be forwarded at the company's account at the commercial bank that manages the gold and silver sales for the company as the bullion is transferred from the company to the secure carrier. Usually the company CFO manages the account as a source of immediate funds or, alternately, gold and silver can be kept in inventory. Typical shipping and refining costs are approximately US$ 5 per ounce of gold refined.

19.2 Contracts

As of this writing, the company has not entered into contractual agreements with civil contractors or engineering, procurement and construction management contractors. However, potential contractors have been interviewed and shortlisted.



20 ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY IMPACT


Wardell Armstrong International (WAI) was instructed by Lydian International Limited (Lydian) to undertake an Environmental and Social Impact Assessment (ESIA) of the Amulsar Gold Project in the Republic of Armenia (RoA). This reporting process involved the following key steps:

Preparation of a Scoping Study by WAI - to set out the main project parameters, outline national legislative and international best practice requirements and identify any potential environmental and social impacts;

Baseline data collection - designed in accordance with the above, with data collection principally undertaken by in-country specialists with input from WAI (in relation to the social baseline conditions), Golder (contributing to seismicity and water resources).

Impact prediction, assessment and mitigation, with regular interaction with the Amulsar Feasibility Study (FS) team; culminating in the:

- Preparation of the ESIA document - disclosure draft due for submission in Q3 2012;

- Preparation of Framework Environmental and Social Management Plans, Stakeholder and Community

- Engagement Plan and Framework Mine Closure Plan; these framework management plans set out principles and outline management strategies for Lydian, and form the basis of an Environmental and Social Management System to be developed and adopted by Lydian for the Amulsar gold Project.

In order to produce an ESIA to satisfy international requirements, WAI’s remit has been to review and incorporate data and reports collected and prepared by Geoteam, Golder and other FS contributors, together with various appointed Armenian and international specialists. Significant specialist contribution has been provided by Dr. Clive Hallett (acid rock drainage), Eddie Jewell Associates (noise data modelling), SKM Colin Buchanan (traffic impact assessment), Environmental Resources Management Group (archaeology and cultural heritage), Dr. Joanna Treweek (biodiversity), Shape Consulting Limited (community health) and Radman Associates (Radiation Protection Advisors). Therefore, in addition to the above listed reports, various supporting deliverables and activities have also been undertaken throughout the ESIA process. These include formal and informal stakeholder engagement and the iterative integration of environmental and social considerations within Project design and development. Information provided by third parties has been referenced as appropriate and has been detailed in full in the ESIA.



Where relevant, key environmental and social aspects have been included and identified throughout this FS. The focal elements of the ESIA process are summarized in this Section and the full ESIA is presented as a separate document. Aspects covered in the ESIA, such as geology, geotechnics, geochemistry and seismicity are fully detailed in the ESIA and geochemistry and seismicity have been further discussed in Section 24. For completeness this report should be read in conjunction with the full version of the ESIA (WAI Report No. EO-52-0088-2); and the Scoping Study (WAI Report No. EO-52-0088-1, February 2011).

It should be noted that, whilst exercising all reasonable diligence in checking and confirming it, WAI has relied upon the data presented by others in undertaking the ESIA and cannot comment on the adequacy of actual field sampling undertaken, laboratory procedures or any interpretation of data by others. Some of the documents reviewed by WAI have been translated from Armenian, necessitating WAI to interpret and use the information with caution.

Erato

The ESIA has been undertaken for the extraction and processing of ore from Tigranes and Artavasdes up to and including Year 12 of the Project. Whilst resource drilling has been undertaken at Erato, currently the resource is indicated only and has not been included within the ESIA.

In terms of the FS, the economic contribution and resource allocations associated with the commencement of mining of Erato in Year 7 of the Project has been identified, in that provision has been made for the waste from Erato to be accommodated in the current WD, with potential for progressive backfilling of Tigranes and Artavasdes open pit. Similarly, Erato ore will form the late stages of the proposed development of HLF. However, the environmental and social studies required with respect to mining operations at Erato will require full assessment in an ESIA addendum to be completed at a later stage of the Project. Additional studies will necessitate the consideration of baseline data, including biodiversity field studies, hydrogeological field data and modeling, soils and land capability assessments, together with further ARD characterization and extended visual impact analysis. Stakeholder engagement would also take place to inform and explain the nature of these studies.

20.1 Location, Environmental and Social Setting

The Project is located in central southern Armenia and straddles two administrative provinces, or Marzesr, namely Vayots-Dzor and Syunik. The Project area is largely open in nature with no areas of woodland and is characterised by a temperate climate of long cold winters and short relatively cool summers.

The landscape ranges in altitude from approximately 1500masl to a ridge of 2988masl, where the gold deposits are located (Amulsar Mountain). Elevated areas are rocky rounded mountain ridges with steep sided slopes, leading to large undulating plateaus and river valleys, some of which are locally incised by gorges of the Rivers Arpa and Vorotan. The environment is relatively pristine, being unaffected by any industry in the immediate area, and is characterised by grassed foothill meadows, prairies and sub-alpine to alpine landscapes as the elevation increases. The River Vorotan and



associated catchment is located within the licence area. The Vorotan feeds the Spandaryan Reservoir, located approximately 2.5km to the south of the proposed heap leach facility (HLF).

There are a number of ephemeral and permanent surface water features in the foothills of the Project area, supporting a range of natural and semi-natural habitat and fauna. The land use within the Project area includes; seasonal grazing pasture (moderately high elevations within the alpine meadow grasslands), hay cropping and winter grazing (lower elevations, supporting sub alpine meadow grasslands). Local residents and visitors make use of the Vorotan, Arpa and Darb river systems for recreational fishing. A small proportion of local residents also hunt for recreation within the Project area.

Three rural communities with a combined population of approximately 2000 people lie within the Project vicinity. These include the communities of Saravan (consisting of the villages of Saravan, Saralanj and Ughedzor, which is only inhabited during the summer months), Gorayk and Gndevaz. The communities of Saravan and Gndevaz are in Vayots Dzor Marz, some 5 - 9 km west and southwest of the deposit. Gorayk village is located in Syunik Marz, and lies approximately 5km southeast of the deposit. The main livelihood is subsistence agriculture.

The closest city is Jermuk (which includes the associated village of Kechut) which is located approximately 14 km to the north-west of the proposed open pit. Jermuk and Kechut together have approximately 6000 residents. Jermuk is endowed with natural hot springs and several renowned health resorts and spas. Jermuk hosts an established mineral water plant and emerging tourist industries.

20.2 ESIA and Permitting

20.2.1 Scope of the ESIA

The ESIA fully describes the policy, legal and administrative framework under which the Project will be developed and under which the assessment was carried out, as well as a description of the Project covering geographical, ecological, social and temporal aspects. It includes baseline data describing the physical, biological, cultural and historical conditions and the environmental and social impacts associated with project implementation. Mitigation measures needed to minimize impacts to an acceptable level are presented, as well as an analysis of feasible alternatives. Key framework management plans covering environmental, health and safety, social management and community development have been formulated and presented, together with an Environmental and Social Action Plan for the delivery of the Project from construction to operation and eventual closure.

The integration of the ESIA team with the specialists engaged in the FS has allowed many potential impacts to be prevented or designed out at early stages of the study. Similarly, the integration process provides the means for appropriate and practical mitigation measures to be included in the designs.

While the submission of the international ESIA is not an Armenian regulatory requirement (the Armenian EIAs (ShMAGs) fulfill this role), the ESIA will be made available to the Ministry of Nature Protection and other Government departments. The



ESIA will also be circulated to relevant financial institutions and made available publicly in both Armenian and English language versions. Public input is welcomed and will be considered in the decision-making process of the relevant financial institutions. In this regard the findings of this study will be used in the compilation of the final ShMAG documentation, based on the detailed design of the project, and submitted for approval by the government authorities.

The ESIA is prepared in line with the requirements of an international standard ESIA, specifically the International Finance Corporation Performance Standards (IFCPSs) and the European Bank of Reconstruction and Development’s Performance Requirements (EBRD-PRs). The objective is that the Project will be acceptable to IFC and EBRD, and other financial institutions that are signatories to the Equator Principles (EPFIs). In January 2012 the IFC introduced updated Performance Standards, and it is these 2012 PSs that have been applied in the compilation of the ESIA.

The Equator Principles apply the IFC’s environmental and social screening criteria, to reflect the magnitude of impacts understood as a result of assessment:

Category A - Projects with potential significant adverse social or environmental impacts that are diverse, irreversible or unprecedented and may affect an area broader than the site facilities subject to physical works;

Category B - Projects with potential limited adverse social or environmental impacts that are few in number, generally site-specific, largely reversible and readily addressed through mitigation measures; and

Category C - Projects with minimal or no social or environmental impacts.

The IFC and EBRD have been investors in Lydian International since the company began early exploration activities on the Project. Accordingly the ESIA examines the potential environmental measures needed to prevent, negate, minimize, mitigate or compensate for adverse effects, and to improve environmental performance, whilst seeking to optimize the positive benefits that the Project may accrue. On the grounds of the Project being classifiable as Category A, the ESIA is required to integrate environmental and social considerations into Project design and to conduct consultation and disclosure accordingly.

Although the Amulsar Project has the potential to incur environmental and social impacts, the ESIA and this Section of the FS demonstrates that these are manageable to avoid, prevent or to reduce to acceptable levels, in accordance with Armenian and international standards.

20.2.2 Republic of Armenia Environmental Impact Assessment

The requirements under the RoA Environmental Impact Assessment procedure (ShMAG) are slightly different in terms of process, method and presentation, to those required of an ESIA by international funding agencies. Therefore two processes were undertaken, following parallel paths and based on common baseline data and project parameters.



WAI has provided input into the conceptual ShMAG reports for the crushing, conveying and heap leach facility (HLF). Under Armenian law the mining operation and the HLF/ADR operations are permitted separately and thus require separate submissions. The ShMAG reports have been prepared by in-country experts ‘Eco Audit LLC’, based on baseline data principally provided by Geoteam.

20.2.3 Permits and Licensing

Subsequent to the exploration phase, and prior to development of the mine, several permits and licenses will be required. These include those outlined in Table 20.1 below.



Table 20.1 Republic of Armenia Permits Required for Development of Amulsar Mine

License/Permit Title Application/Provision Status Comment

Mining Licence To permit extraction of ore Granted. Valid until 2034.

Technical Safety Approve that the design follows all Armenian safety regulations. Granted. Valid until the life of the ML, unless there are changes in the design of the Open Pit operations.

Rock Allocation Area Change in land use from agriculture to industrial required to accommodate all mining infrastructure and get construction permit

Granted for open pit, waste rock dumps & crushing. Valid until 2034. Once the Concession Agreement is signed with the Government, the new RAA will be granted which will include all the HLF and parts of general infrastructure. As part of RAA the land status change will be done automatically after RAA is granted with defined limits.

Water abstraction & discharge licence To permit the use and the discharge of water. No application has been made as yet. The company has a water extraction permit for exploration activities.

Air emission permit To permit the emissions to the Air. Not yet applied for. The company has air emission permit for exploration activities.

Explosives permit (store, transport, use To permit the use and the storage of the explosives material. The Company will contract a company that will have both blasting and storage permits. As such, Geoteam will not need to get these permits.

ICMC cyanide supplier compliance Company is committed to become ICMI compliant, thus the transporter and the producer should be compliant as well.

d The Company will purchase CN from a producer that is ICMC compliant, or working on becoming compliant, taking professional advice from a ICMI Lead Auditor to ensure that viable options are in line with the ICMC..

Construction and Architecture permits To get the approval that all the design corresponds to Armenian Standard and Norms.

Not yet applied for.

Gas and power use designs and construction expertise and permits

To permit the gas and power use. Not yet applied for.

Waste Passports To give the class of hazard to the different waste types and permit the location of the waste and its disposal.

Not yet applied for.



20.3 Significant Project Consumption and Releases

The ESIA details the effects and influences of the Project, which are significant for the environmental and social impacts (both positive and negative). The most significant are summarized here and detailed in the ESIA:

Land Take - the Rock Allocation Area (the area within which mining activities are authorized) will be approximately 4,700 hectares (ha). While Lydian intends to maintain seasonal nomadic grazing access to the majority of land under its control, and grazing does not occur on all of the 4,700 hectares due to altitude and topography restrictions, at least a small proportion of land currently in use for grazing is likely to be sterilized, either permanently or temporarily.

Permanent sterilization would occur at the:

Waste rock dump and

HLF

Temporary sterilization will result from the development of mine infrastructure which will be in place for the period of mining and includes the following elements:

Waste rock stockpile

Waste water treatment plant & basins

Conveyor

Utilities

Mine camp

HLF ponds

Truck shop

Exploration camp

Maintenance shop & offices

Explosives magazine; and

Road to crusher

Certain haul routes and access roads will be retained as a part of the mine reclamation plan for longer term maintenance and aftercare management. The ESIA provides details of the footprint for individual areas within the mine site. In summary (see Figure 20.1), during operations, it is estimated that the area of direct disturbance from the development of the mine and associated infrastructure will be in the order of 510 hectares. However, because elements of the infrastructure such as haul roads, the conveyor and site access roads will also reduce access for grazing and other recreational activities, it is estimated that a further area of approximately 260 hectares will be indirectly affected as consequence of fencing and bunding. In addition, there will be approximately 270 hectares where access to grazing land will be restricted by controlled passage of animals via crossing points on mine haul roads.



Figure 20.1 Footprint of Mine Development (Throughout the Operational Life)

1

1



Labor and Services - Approximately 600 people will be directly employed during construction, 550 during various phases of the operation and 20 for closure care and maintenance. In addition, where services are outsourced, local contractors will be offered the opportunity to bid for tenders.

Energy and Diesel Consumption - Total electrical load is estimated to be 22.6MW. Total diesel consumption will be 9 million litres /year (based on consumption estimated in year 2 of the Project).

Air Emissions - Dust is defined as particulates from 1 to 75 micrometers in size, however, 95 percent of dust will normally be over 30 micrometers in size and will be subject to aerodynamic and gravitational effects, which determine the distance they travel before settling out of suspension. Main Project dust sources will be open pit excavations, crushing plant/overland conveyor, ore stacking and associated haulage and deposition activities. The latter is chiefly haulage of waste rock from the open pit to the waste rock dumps and ore from the pit to the run-of-mine (ROM) ore stockpile and crushing facility.

Greenhouse Gas Emissions - The calculated annual emissions of CO2 and other greenhouse gases are predicted to be 91,900 Total CO2e/yr (tonnes), predominantly from grid electricity consumption for crushing and grinding (c.67,800 tonnes per annum) and diesel consumption (c. 24100 tonnes per annum). Greenhouse gas generation has been based on published data, however it should be noted that there is no coal power generation in Armenia, which relies on a combination of nuclear, hydroelectric and gas.

Water Uses and Discharges - Total water requirements for processing (including HLF, crusher and dust suppression water) will average 1.9 Mm3 per year during Phase 1, rising to 3.2 Mm3 per year during Phase 2. Average requirements are broken down on Table 20.2. This water will be sourced from the Vorotan River. Water for domestic and potable needs, requiring a supply of 136,000m3/yr abstracted from a combination of local spring supplies and Vorotan River, which may be shared with the new Gorayk water supply. Water sourcing and requirements are further detailed in the Water Balance prepared as part of the Integrated Water Studies by Golder.



Table 20.2 Average Water Requirements

Water Requirement m3/hour m3/day Supply Source

Potable water at camp 15.4 370 Local springs (share with new Gorayk supply) or Vorotan River

2 x hoppers at crusher site 45.8 1100 Dust suppression pond/Influent equalization basin (IEB)

General dust suppression 19.7

22 (4 months/year)

272 (4 months/year)

472 (4 months/year)

Dust suppression pond/IEB

Process water for leaching - Phase 1

147 3,528 Vorotan River

Process water for leaching - Phase 2

147 3,528 Vorotan River

SUM (assumes summer season during Phase 2)

374.9 8,998

Water discharge from the site will be from the WWTP, which treats the water to an acceptable standard, and is designed to release water to the Vorotan catchment at a maximum rate of 182m3/hour.

The HLF will be a closed system, and no discharge will occur from this area. Foul water from the mine camp will be treated to a high standard, and released to the Vorotan catchment.

Principal Wastes - The mine will generate diverse waste streams throughout all development phases, including solid construction wastes, domestic and technical (processing and assaying wastes) wastes, domestic effluents and runoff waters. Liquid waste streams (effluents and residual liquids) will not be released to the environment unless they conform to Armenian regulatory requirements and internationally recognised concentrations. The management of wastes will be undertaken in line with the various framework management plans, accompanying the ESIA.

Waste Rock - The geochemical characterisation study, reported in full in the ESIA, identifies that the majority of Amulsar waste rock lithologies have some Acid Forming and Metal Leaching potential. All waste rock will be placed on the waste rock dump sited to the north of the mine (see Figure 20.1) and contact waters will be treated in a WWTP. Due to known properties of the waste rock, the WWTP has been designed to capture, divert and neutralise all associated contact waters to meet the regulatory standards.



Detailed design and operation will be informed by an Acid Rock Drainage Management Plan.

Water Treatment Sludge - These comprise the residues from the treatment of surface water run-off and leachates from the waste rock dump. The sediments are removed as a sludge containing metal hydroxides. This volume of sludge is insignificant, with annual productions in the order of 69t/year (equivalent to 49m3 /year). The sludge will be re-incorporated in the Waste Dump.

Ore - Ore will be stacked on the HLF which will be operated as a closed system with adequate environmental protection (as described in Table 20.5). ARD test work has been undertaken on ore material showing that it is also acid forming and metal leaching and plans have been designed to manage this acid generation. Any ROM stockpile will be of very short residence time, small-scale, lined, and include runoff collection/diversion to a storage facility in order that contact waters are treated prior to discharge.

Hazardous Materials & Reagents - These will include sodium cyanide (NaCN), lime, caustic soda (NaOH) and hydrochloric acid (HCl), together with diesel oil. Appropriate signage and MSDS will be used. Chemical-specific first aid training will be provided to staff. The use, transport, storage and handling of cyanide at the site will be controlled by documented management procedures and formal management plans and procedures in accordance with the International Cyanide Management Code (ICMC) and the ESIA framework Cyanide Management Plan. Measures to avoid, respond to and treat spills and emergency situations are outlined in the ESIA framework Spill Prevention and Emergency Response Plan.

20.4 Environmental Context

20.4.1 Geology and Soils

The Amulsar high sulfide gold deposit is hosted in an Upper Eocene to Lower Oligocene calc-alkaline magmatic-arc system. Detailed regional and site-specific geology, together with the current block model, has been summarized in preceding chapters and is detailed within the ESIA.

Soil types, broad characteristics and indicative pH have been identified in the general Project area and over 2,000 exploration soil samples have been tested for heavy metal content. Targeted samples have also been tested for extended environmental suites including potentially toxic heavy metals ions and cations, radiological parameters, hydrocarbons, cyanide and microbiology. A geotechnical soil sampling regime within the proposed footprints of major mine infrastructure has been undertaken. This data is considered in detail in the ESIA with respect to the assessment of impacts on soil quality and land use.

20.4.2 Radioactivity

It is understood that some residents in the Project vicinity are concerned about the impact of radioactivity arising from the Project as ‘radioactive dust’ or in the form of radon. The main source of dust from proposed mining activities will be from disturbed rock, and to a lesser extent, soil. Uranium (U) and Thorium (Th) concentrations from



over 2,000 samples of soil and 46,000 samples of rock (ore and waste) have been provided by Geoteam from their extensive exploration programme undertaken across the licence area.

The measured U and Th concentrations have been reviewed by Radman Associates (Radman), a UK-based firm of accredited Radiation Protection Advisors and the concentrations have been compared with typical reported levels of these elements in Armenian soils (United Nations Scientific Committee on the Effects of Atomic Radiation, UNSCEAR).

Household surveys for baseline radon levels were conducted in households in the villages of Gorayk, Saravan, Saralanj and Gndevaz. The measurements were taken in 149 locations in December 2010 until March 2011.

20.4.3 Seismicity

Armenia is situated within the Caucasus region in the vicinity of the Alpine-Himalaya seismic belt and at the juncture of the African, Arabian and Indian tectonic plates. It is a global region of moderate to high historic earthquake activity. The Amulsar license is located within a seismically active region of the Arabia-Eurasia plate boundary zone.

Detailed studies evaluating the regional seismic profile and seismic hazard class of the Project area were completed by Golder and were included in their report titled Earthquake Hazard Assessment and Seismic Parameters for the Amulsar Gold Project (Golder, 2012b), summarized in Section 24.

The results of this study have been used to develop appropriate seismic design criteria for major mine infrastructure in accordance with international and Armenian guidance and building codes.

20.4.4 Water Resources

Groundwater Characteristics

The bedrock of the mountain and proposed open pit has been shown by hydraulic testing to have a low permeability. Exploration has shown that the alteration of bedrock to clay is extensive, and therefore the low permeabilities measured are likely to be representative of the bulk geology of the open pit. The mountain-top topography of the proposed open pit further reduces the groundwater inflow potential, since, unlike a flat or valley setting, there are no adjacent water-bearing strata which would drain towards the excavation; at least for the majority of the open pit’s life. A 2D groundwater model has been generated for the open pit, and indicates a maximum groundwater inflow of approximately 850 m3/day (9.8 L/sec).

Hydraulic testing at the WD has indicated that this is a groundwater discharge area, with marginally higher groundwater inflows, but the aquifer here can still only be considered of local importance here. The HLF area is situated within poorly-fractured basalts, and also does not have significant groundwater potential. Neither the WD or HLF construction will involve excavation into the saturated subsurface.



Infiltration of precipitation is limited by the low permeability of the geology, leading to the development of many low-flow, short-pathway local mountain springs at the open pit and WD areas. Twelve springs have been identified within the WD and open pit areas, but it is likely that the number of active springs varies according to season. Four of the springs appear to support/be associated with an area of suspended marsh. Another spring drains to the Benik Pond within the Darb catchment, west of the mountain. There are reportedly more springs at the WD area and, as discussed below, Gorayk village.

Groundwater quality and flow (pathways and volumes), together with a calibrated groundwater model, Conceptual Site Model and side-wide water balance are presented in the ESIA.

Surface Water Characteristics

The Project licence area is bisected approximately north-south by a catchment divide, with the Darb catchment (a subcatchment of the Arpa) to the west, and the Vorotan catchment to the east. Virtually all Project activities will take place within the Vorotan River catchment. River flows at both of these catchments have been significantly altered by human intervention, including the following:

The Vorotan River has a tunnel at Spandaryan reservoir which diverts flow to Kechut Reservoir (as part of measures to augment the flow at Lake Sevan). It is understood that the flow entering Kechut Reservoir from the tunnel is approximately 30 L/second. Since the water intake at Spandaryan has not been opened since the tunnel was completed (in 2003) due to geotechnical difficulties, the water flowing from the tunnel outlet is assumed to be groundwater.

Within the Darb catchment, to the north-west of Amulsar Mountain, is a small pond, referred to as ‘Benik Pond’. The pond is approximately 1ha in area, and is noteworthy for its naturally low pH and wetland biodiversity. It is interconnected with local springs and surface water channels.

As identified previously, of the proposed main infrastructure associated with the Project, only a portion of the open pit will be located within the Arpa Darb catchment. The heap leach facility (HLF), waste dump (WD) and most roadways will be situated within the Vorotan catchment. The surface water quality, Conceptual Site Model, runoff and drainage characteristics of the Project area are outlined in detail in the ESIA.

Lake Sevan is the largest lake in Armenia, and in the Caucasus Region. Its basin makes up one sixth of the total territory of Armenia. The lake water is of unusually high quality for a lake of its size and position. During the Soviet period, flows were artificially increased from the lake, leading to dramatic falls in lake surface area, and, among other impacts, a decline in biodiversity and water quality. The lake remains an important national resource for water supply, electricity, fishing and recreation. Measures to restore the quality and size of the lake have been ongoing since the 1980s, and have included flow-augmentation tunnel interconnections with the adjacent Arpa River basin (which has an, as yet, uncommissioned flow-augmentation tunnel from the Vorotan River basin).



Community Water Supplies

Drinking water for the village of Gorayk is supplied by three groundwater springs originating in pasture land north east of the village. A new groundwater source is envisaged to be developed by the village administration, as there are existing water quality issues with the current supply. Drinking water is currently also used for irrigation. Water for animals is sourced from groundwater filled storage tanks on the outskirts of the village.

The Saravan village cluster is connected to the regional water mains for drinking water. This water is shared with livestock. A multitude of groundwater springs are used for irrigation water.

There is a reported pipeline and canal, fed by the headwaters of the River Vorotan (upstream of the Project licence area), which supplies the village of Gndevaz with irrigation water. This essentially transfers a portion of the flow from the Vorotan catchment, to the Arpa catchment.

Drinking water for Gndevaz is supplied through a water intake pipe which was installed in the downstream section of an adjacent spring. This is further outlined in the ESIA.

20.4.5 Biodiversity

Protected Areas and Areas of International Significance

The Project is located below the southern edge of the Caucasus Mixed Forests (CMF), which is a Global 200 Ecoregion (238 Ecoregions have been identified by WWF as priority areas for global conservation because of their important biodiversity). The Caucasus Mixed Forest Ecoregion covers a wide area of 170,300 sq. km including portions of Georgia, Russia, Azerbaijan as well as Armenia. It has been assigned a status of ‘critical/endangered' due to rapid land use changes, including widespread deforestation. The Project site itself does not currently support forests of the type prioritized within the Ecoregion.

The 2010 IUCN Red List of Threatened Species identifies around 50 species of globally threatened animals in the Caucasus region as a whole. The whole of Armenia is within a Birdlife International Endemic Bird Area, which covers an area of 170,000 km2 and includes portions of Azerbaijan, Georgia, Iran, Russia and Turkey. The EBA is important for several restricted-range species as well as breeding populations of raptors and reflects the importance of the Caucasus as a center of bird endemism. Armenia provides important habitat for many migratory bird species as part of an international flyway between Africa and Europe, notably migratory raptors.

There are two Important Bird Areas (IBAs) in the vicinity of the Project:

Jermuk and Gorayk IBAs (see Figure 20.2). The IBAs constitute “Key Biodiversity Areas” according to the definition in IFC Performance Standard 6 and have been identified at national level using the globally standardized criteria which underpin the KBA methodology. The Concession Area partially overlaps with Gorayk IBA and the proposed Heap Leach Pad location (Site 6) is located partially within it. The IBA was



designated primarily for its breeding colony of lesser kestrel Falco naumanni and the boundary represents the limits of an assumed hunting area around the breeding colony. The status of lesser kestrel on the IUCN Red List has decreased from Vulnerable down to Least Concern though it is still listed as Vulnerable on the Armenian Red List and the only breeding colony in the country is at Gorayk, making it important in a national context. Gorayk IBA also was identified because of a large number of other species including Egyptian Vulture (Neophron percnopterus) which is listed as Endangered by IUCN as well as several other raptor species and a large number of passerine and wetland birds.

The closest National Park to the site is the Sevan National Park located approximately 44km to the north- north west of the Project. Three specially protected Natural Areas (2 are only proposed and one is active) are located in the vicinity of the Project as illustrated in Figure 20.2, below: Jermuk (proposed) is 2.9km north west of the WD, Herher Open Woodland (proposed) is 5.1km, west north west of the WD and Jermuk Hydrological (operational) is 6.4km, north of the WD. WWF has put forward proposals to develop an additional National Park encompassing these State Reserves and the Jermuk Important Bird Area. These proposals are still under discussion.

There are several wetland habitats present within the Project area, generally within the Vorotan River, its valleys and tributaries form an extensive network of surface drains within the Project area. Habitats include the Benik pond, River Vorotan and tributaries, suspended marsh and mires wet meadow; some of which form part of the functioning ecosystem supporting the species identified within the IBA.

Protected Species

The Project affects four main vegetation types: alpine meadows, sub-alpine meadows, mountain steppe and steppe grassland. There are also some wetlands. Mount Amulsar is at an elevation of 2988m asl and has alpine vegetation. The mine pit and crushing plant are located in areas above 2,100m with rocky outcrops, scree slopes and alpine vegetation, including one plant which is included in the Armenian Red Data Book. Other mine components are located on sub-alpine meadows and steppe grassland. Vegetation has been analyzed using satellite imagery in the ESIA and further details of the density of vegetation within each of the project components have been considered.

Desk top information indicates several IUCN listed and Armenian Red Book (1990) species which have a high potential occurrence in the Project area. The Armenian Red Book was updated in 2010. Field studies confirmed the presence of 9 plant species which were listed in the 1990 Red Book but which were removed from the 2010 version. In 2012, a Red Book (2010) plant species (potentilla porphyrantha) was identified in the area of the open pit, and further baseline work is being conducted to clarify the importance of the Amulsar population in a national context. The Project Area supports seven species of bird that are listed in the Armenian Red Data Book and one which is listed as an endangered species in the IUCN Red List. Further details of the ornithological studies are presented in the ESIA.

Two species of dorcadion beetle (D. Bistriatum and D. Sevangense – the latter of which is listed in the Armenian Red Book), the IUCN Vulnerable Apollo butterfly (Parnassius



apollo) and rock viper (Montivpera raddei – also included in the Armenian Red Book) have been identified in the license area. No Red Listed fish have been observed.

There are some other globally endangered species which are known to have used the area in the past. These include the Caucasus leopard (an endangered subspecies) and the Bezoar goat. Brown bear (included in the Armenian Red Data Book) has been recorded in the vicinity of the Vorotan River near the proposed HLP location. This is regarded as a keystone species in the region, though its populations have declined dramatically and it is now likely to be a rare visitor. Together with Bezoar Goat It is one of the mammal species targeted for action in Armenia in the recently issued Conservation Plan for the Caucasus Ecoregion (WWF 2012). Moufflon and Bezoar goat are known to occur within the Jermuk area and NGO’s have queried their presence in the project site, however they have not been identified by field studies. The Caucasus leopard is likely to be locally extinct. Evidence of the brown bear (Ursus arctos) has been found in the Project area.

Ecosystem Services

In terms of ecosystem services, foothill grasses and other species provide seasonal grazing for sheep and cows in foothill zones where homeopathic species are also known to occur. A questionnaire has been undertaken to assess which areas are foraged by local people for plants and the types used for household/dietary and medicinal purpose. The results provide information on the relative abundance and local availability of the species used and have been used in the assessment of impacts on ecosystem services and informal land uses.

Grasslands support seasonal grazing for sheep and cows; in the foothill zones medicinal species are also known to be present. A questionnaire has been undertaken to assess which areas are foraged by local people for wild plants and the types used for household/dietary and medicinal/homeopathic purpose. The results provide information on the relative abundance and local availability of the species used and have been used in the assessment of impacts on ecosystem services and informal land uses.

Habitat Designation

The license area is largely open in nature with a relatively high density of surface water features.

Most land within the concession area is “natural” habitat according to the definition in IFC PS6. The relatively large footprint of the Project means that achieving No Net Loss of natural habitat is likely to require consideration of offset activities.

IFC Performance Standard 6 (2012) sets out criteria for identifying areas which might constitute “critical habitat”. The site as a whole could potentially constitute critical habitat under criterion:

i) Because it provides habitat of significant importance to a globally Endangered species (Egyptian vulture);

and possibly under criterion;



ii) Because it provides habitat for globally significant concentrations of migratory species.

Additional criteria referred to in IFC PS6 Guidance Notes which could potentially apply are: “Concentrations of Vulnerable (VU) species in cases where there is uncertainty regarding the listing, and the actual status of the species may be EN or CR” and “Habitat necessary for the survival of keystone species”.

Additional baseline studies are being conducted to further refine the impact assessment on biodiversity values at the Amulsar project. If critical habitat is confirmed, biodiversity offsets will be developed to ensure no net loss occurs, focusing on areas which could support the species and habitats which are being impacted. One option for an appropriate offset may be to support the development of the Jermuk National Park. Impacts to protected floral species will also be minimized through project design where possible.

A Biodiversity Management Plan is being developed at present and will define clear management and mitigation strategies for all biodiversity impacts and outline a comprehensive monitoring plan. The results of continuing biodiversity studies will be reported in the ESIA.



Figure 20.2 State Sanctuaries and Important Bird Areas in relation to the Project Exploration License



20.4.6 Air Quality

There are no significant urban or industrial emission sources within the area, and therefore the existing levels of related gasses (SO2, NOx, hydrocarbons, smoke particulates, etc) are low to very low.

Baseline monitoring of particulates (total deposition) and gases (including SO2 NOx, CO, CH4 and volatile organic compounds) at the Project and nearest communities will continue and will be supplemented by construction and operational monitoring in order to assess and control (if necessary) emissions to air.

20.4.7 Noise and Vibration

There are no major urban centres or industrial activities in the region that would result in significant levels of noise. There is a small hydro-electric power plant located less than 1km to the east of the proposed waste rock dump (WD) site, however, noise emissions from this facility are considered to be negligible in the wider context of the Project area.

The M-2 public highway to the south of the Project experiences relatively constant traffic conditions over a 24 hour period, with some seasonal variation, however the baseline local traffic flows on the links in the study area are very low and within the study area and local village residential receptors, traffic noise is generally considered inaudible.

The baseline noise environment will be typical rural, and experiences very low background levels throughout the day and night.

Ground vibration and air overpressure results from blasting operations that take place at mining operations and certain other construction projects. There are no operations of a similar nature in the locality, therefore these potential impacts are absent in the current baseline conditions. The potential for effects associated with blasting fall into two categories; those causing human discomfort (nuisance) and those with the potential for causing damage to structures. The principal source of vibration and overpressure will result from blasting to remove rock from the open pit.

20.4.8 Visual and Landscape Aspects

The Project site is in a remote location, with small population in villages in the local area. The landscape is characterized by steep and rolling topography dominated by the Amulsar Mountain and the river valleys.

Landscape effects associated with a development relate to changes to the fabric, character and quality of the landscape and how that is perceived by stakeholders who have opinions on and/or will be potentially affected by the Project. This includes the surrounding communities, seasonal herders and visitors to the area. Jermuk markets itself as a spa town and which includes tourism and associated leisure activities such as skiing. Tourism necessitates that the overall value and importance of the area is considered from an aesthetic point of view.



20.5 Environmental and Social Impact Assessment (ESIA)

A comprehensive ESIA has been prepared and for the purpose of summarizing the potential impacts and approach to mitigation design and management the environmental and social impact analysis has been considered separately in Tables 20.3 and 20.4. The importance magnitude, in terms of significance, taking account of mitigation (i.e. the residual impact), has been defined as:

NEGLIGIBLE to MINOR: Not significant.

MODERATE: Not significant subject to suitable management or action plans, including potential for offsite enhancement; otherwise

MAJOR: Significant.

20.5.1 Environmental Impact Assessment

A summary of the environmental impacts from the ESIA are considered in Table

20.3.



Table 20.3 Summary of findings from the Environmental Impact Assessment

Potential Impact PHASE

Source & Description Inherent Impact Mitigation Residual Impact

Soil Quality Mountain meadow and pasture soils at elevation above 2000m. At lower elevations, the soils are generally, brown, black earths or alluvial in the Vorotan River valley. Soil quality will be affected by earthworks carried out by the Project.

Moderate Thin soil profile can be handled and stored using standard mining operations. Use of relatively long, low storage

mounds <3m in height, will enable long term storage for a

long period. Dressing side of mounds and grass seeding will reduce risk of erosion.

MINOR

Capability Soils support grassland also used generally for pasture, which are more fertile and can be farmed for longer periods of the year at lower elevations. Low capability, permanent grassland with low productivity, but valued for extensive summer pastures. Impact to soil capability through conversation of land use.

Moderate Area of direct disturbance is limited to and relatively small in comparison to the area available for extensive summer grazing. Mine design and operation, to maintain access to areas of grassland, particularly during the summer months.

MINOR

Groundwater Quality Potential risk of contamination of groundwaters from nitrogen compounds (blasting), ARD (waste dump), cyanide spillage and

seepage from HLF.

Moderate to major Blast design and good practice identified. Design criteria for design and operation of the waste dump. Mitigation

measures incorporated into the design of the WD and HLF

to cover operation and climatic conditions experienced.

MINOR

Quantity Construction and operation of the open pit is likely to affect groundwater flow regime, with resultant potential impact on spring and stream flow to the west of Mount Amulsar.

Moderate Mitigation incorporated into design combined with a water Management plan during operations.

MINOR

Risk from mine operation to impact supplies at the upgradient and distant Jermuk springs.

Major Vibration generated by blasting at site is of insufficient magnitude to impact the springs in any way.

NEGLIGIBLE

Surface water Quality Release of ARD, HLF overflow as a consequence of mine operations into surface waters.

Minor to moderate Risk assessment has been integrated into the design of site drainage and water treatment, based on analysis of materials obtained during site investigations.

NEGLIGIBLE

Potential impact on important secondary receptors – through tunnels interconnecting basins of Kechut Reservoir and Lake

Sevan.

Major Design measures in place for total containment of potential contaminants. In the event of leakage, contaminant concentrations would not be detectable in the secondary receptors.

NEGLIGIBLE

Quantity Reduction or increase in base flows, as a consequence of alteration in drainage patterns and control of drainage within the mine site

Moderate Construction of appropriate storage and treatment works to maintain allowable release rates during periods of high and low flow.

NEGLIGIBLE

Reduction in Vorotan River flows through abstraction of process water.

Moderate Potential impact greatest during summer low-flow, mitigated by operational management (preferential abstraction ofstored water from HLF stormwater collection pond).

MINOR

Flood risk Risk of flooding would primarily affect the operation of the mine and use of infrastructure

Negligible to moderate The potential for flood risk has been factored into all aspects of site design.

NEGLIGIBLE




Source & Description Inherent Impact Mitigation Residual Impact

Biodiversity Habitats The Project area has Alpine and Sub Alpine habitats as well as extensiveareas of montane steppe and steppe grasslands which are managed through extensive summer grazing. The habitats are “natural” according tothe definition in IFC PS6. The grassland communities are species rich andinclude some species of conservation priority, particularly in the alpine communities.

Moderate The Project has a large footprint of disturbance on natural habitatwith high species richness which is extensive in Armenia but also declining rapidly in Armenia and is threatened globally. There will be a residual impact requiring measures through a biodiversity action plan to achieve no net loss.

MODERATE

Flora The vegetation is generally important because of its species richness, ratherthan because it supports individual species of high conservation priority.The Project affects one plant species Potentilla porphyrantha which islisted as Critically Endangered in the Armenian Red Book.

Moderate/ Major A species action plan is being developed which is likely to include measures to protect a proportion of the population and efforts to translocate individuals located within the Project footprint.

MODERATE

Fauna The diversity of habitats, combined with the presence of abundant water andlow levels of disturbance and human modification have contributed to a richdiversity of species. These include species which are included in the IUCNRed List and the Armenian Red Data Book. Animal species will be exposedto loss of habitat through the Project’s physical footprint, increased levels of disturbance and other indirect impacts associated with mining and mineral processing.

Moderate/ Major There is some potential for off-site mitigation to maintain, and insome cases enhance biodiversity within the locality taken as awhole.

MINOR/ MODERATE

Birds The Project area is part of a global flyway and is particularly importantfor migratory and breeding raptors, including Egyptian Vulture which is Endangered on the IUCN Red List. Other species are listed as Vulnerableand are included in the Armenian Red List. Parts of the Project affect Gorayk IBA directly, which is considered critical habitat. The valley of the River Vorotan outside the IBA boundary provides important supportinghabitat for many of the listed species in the Gorayk IBA.

Major The location of the HLF has been subject to assessment of detailed design alternatives and the current proposed location is considered to be the only feasible design. Measures will be needed to offset the resulting loss of hunting area for lesser kestrel (a primary reason for designation of Gorayk IBA). Some species such as corncrake will be difficult to provide mitigation for. Species listed in the IBA which will be affected by the Project will be included in aBiodiversity Action Plan supported by monitoring.

MODERATE

Air Quality Dust Emissions of dust result from surface mining activities, including overburden /rock and ore extraction, haulage and processing. In addition, fugitiveemissions of dust result from areas of bare and disturbed ground in dry windyconditions. Vulnerable receptors include: flora and fauna, surface water, andhuman communities in terms of nuisance and potential health impacts. A veryhigh proportion of fugitive dusts will settle within a short distance from theemission point or source. The mine activities are remote from humansettlements and the land close to the mine is not subject to intensiveagricultural usage.

Negligible to Moderate Dust management plan to prevent release of particulates into thearea surrounding the site. Long term monitoring will enable analysisof the effectiveness of the management plan and provides feedbackto manage operational procedures and seek alternatives to minimizeemission of particulates over the life of the mine

NEGLIGIBLE

Gaseous emissions Acid gases from vehicle exhaust fumes related to construction, extraction, loading and haulage operations. Vulnerable receptors include human receptors. However, these activities do not take place within a close proximity to settlements.

Negligible Regular maintenance and scheduling of all vehicles used at themine. Site speed restrictions on haul roads to reduce optimizevehicle use and fuel efficiency.

NEGLIGIBLE




Source & Description Inherent Impact

Mitigation Residual Impact

Greenhouse gases Greenhouse gas emissions derive from onsite diesel use from mobile plan, oil and gas for heat. Offsite source derives from electrical usage for static plant, conveyors, lighting and general industrial and business uses.

The local environment is vulnerable to climate change, in relation to natural habitats, duration of snow cover and change in mean annual, mean and maximum daily temperatures.

Minor Of the fuel sources, operational procedures should be directed towards the efficient use of diesel and heating oil that result in lower GHG emissions/kW.

Electrical supply in Armenia is principally sourced from nuclear and gas, with future projects to develop both geothermal and wind that should reduce the embedded GHG emissions associated with grid electrical supply.

MINOR

Noise Emissions associated with operational plant within the mine. Vulnerable receptors include dwellings within settlements (closest is 5km distance), herders and summer grazing flocks, and disturbance to off-site wildlife.

Negligible to moderate

Site noise levels will be maintained within an acceptable range ofbetween 32 to 37 LAeq dBL. At these levels operations will beinaudible at nearest settlements and have a negligible effect onpotential disturbance of summer grazing and herding.

NEGLIGIBLE

Air Overpressure Blasting operations for extraction will result in instantaneous noise emission termed air over pressure. Due the remote location of the mine, there are limited human receptors; however there is the potential for disturbance of fauna and summer grazing herds.

Minor Blasting design and practice can be used to mitigate this impacts and actual emission can be controlled to a level between 94dBL and 109dBL.

MINOR

Vibration Ground vibration that result from the blasting operations. Due the remote location of the mine,there are limited human receptors; however there is the potential for disturbance of fauna andsummer grazing herds.

Negligible Blast pattern designed to prevent excessive vibration and negate

any potential.

NEGLIGIBLE

Landscape & visual Visual intrusion of activities Excavation of mining void and ancillary infrastructure – exposed and elevated ridge with viewsfrom surrounding areas with potential views towards the open pit from Saralanj to south.

Above ground structures and mounds, these are dispersed within the development area and tend to be visually confined, by surrounding relief. Structures and waste rock dump will be visually prominent close to, but not from visually important receptors – due to topography and distance separation.

Negligible to Moderate, depending on viewpoint

The footprint of direct disturbance has been defined and will bemaintained by delineating the outer boundary with a perimeter soilmound. Shape and seed the outer face of the mound.

Appropriate maintenance, as identified in ESAP directed to best practice in terms of the appearance of operational areas.

NEGLIGIBLE TO MINOR NEGLIGIBLE



20.5.2 Summary of Environmental Impacts

By adopting a wide range of impact management and mitigation measures, it is considered that any potential residual environmental impacts can be reduced to a moderate or low (or below) level. Mitigation measures include reduction of emissions by active dust control; biodiversity offset measures, blast limitation, water management and treatment, monitoring programs with stakeholders consultation and participation, good waste management practices, and progressive rehabilitation. Full mitigation measures are defined in the ESIA, which has been subject to an iterative process in parallel with mine design and operational practice. Therefore, mitigation measures that formed part of the design have been included in the development costs. In addition, there are a range of associated management plans which will be incorporated into the design and operations, through procedures, as well as Lydian’s ESMS. Early adoption of management plans allows for efficiency of design and therefore the potential for cost savings and these have been considered during the iterative process of site design.

20.6 Social Context and Baseline

20.6.1 Archaeology and Cultural Heritage

A phased assessment has been undertaken by in-country experts. The initial desk study phase for the Project area (5000ha) did not indicate the presence of any sites or features of cultural or archaeological significance within the license. However, subsequent reconnaissance surveys revealed the presence of several features of potential archaeological interest, such as tombs and kurghans (graves). Most features are located away from areas of proposed maximum disturbance and some appear to be already disturbed and degraded.

Currently none of the features identified are thought to necessitate in-situ preservation which could affect the progression of development. All features are being recorded by a State archaeologist; working in concert with international archaeologists. Appropriate measures will be identified for off- or on-site preservation, as appropriate.

20.6.2 Demographic, Land-Use, Family Structure and Migration Patterns

The study area for socio-economic considerations is comprised of the villages of Gorayk, Saravan (including Saralanj and Ughedzor), and Gndevaz, all of which lie within a 9km radius around the Project, as well as the city of Jermuk (and the associated village of Kechut), located 14km from the Project. Socio-economic baseline data were obtained through reconnaissance visits, a household survey covering all rural households and a sample of Jermuk households, a number of focus groups with community members, as well as semi-structured interviews with a range of community members, community leaders and administrators.

The rural settlements within the study area have a naturally aesthetic setting, while Jermuk has a more urban character, with greater density of buildings and people. As a spa town it also has a few iconic estates.

The total population of the study area is circa 8000 people; over 6000 of these people live in the city of Jermuk (including the associated village of Kechut) and about 2000 in



the three rural communities of Gndevaz, Saravan and Gorayk. The total figure includes an estimated 60 seasonal (summer) herders based in Ughedzor and in many other locations in and around the Project area, with main herder camps being focused around the proposed site of the waste dump and HLP.

Armenia is ethnically homogeneous and the study area follows this trend – over 99% of study area residents are Armenian Christian. As seasonal and permanent, international and domestic migration is an important factor in Armenia’s population mix and trends, the national census distinguishes between the legally registered resident population (de jure) and actually resident (de facto) population. The figures above refer to de jure or registered residents, except for the seasonal herders, whose numbers have been estimated by WAI.

The de facto populations of Gorayk and Saravan are skewed in favour of working age women, showing high out-migration among working age men. Gndevaz also experiences male out-migration, but to a lesser extent. Jermuk residents tend to migrate permanently. All except Gorayk are depopulating communities; Gorayk’s migration trend has reversed since 2008 and it now has a slowly growing population. Discussions with stakeholders suggest that the reversal in the migration trend relates, at least in part to employment opportunities within Geoteam.

Household sizes tend to be large in the study area, with the majority of rural areas averaging 5-7 members, while Jermuk averages 3-4 members per family. Family life and family allegiance are important to the local communities. Often family units consist of different generations, with sons bringing their wives into the family home. Mother and daughter-in-law relationships are paramount, with the mother-in-law managing the household assisted by daughters and daughters-in-law. Although women have an important role in the household, men are regarded as the head of the family and community affairs are predominantly managed by men. There is no evidence of generation conflict, with young men and women performing their roles within the extended household.

20.6.3 Household income

The livelihood strategies of the local households are multiple and flexible, with household members engaging in a multitude of subsistence and cash based activities. In general, women engage in subsistence food production and agricultural product-based small scale business (cheese, butter). Men take care of crop and fodder cultivation and seek formal employment where available. The majority of household income levels are under AMD 70,000, with Gndevaz reporting the lowest proportion of households with earnings under this threshold compared to Saravan and Gorayk. Gndevaz also has a small proportion of relative wealthy households with monthly incomes of AMD 300,000 – 400,000.

Agriculture, animal husbandry and agricultural products (such as cheese) are the major economic activities in the villages of Gorayk, Gndevaz and Saravan. The majority of Kechut residents rely on their vegetable gardens for subsistence, but a small proportion are formally employed in Jermuk. Settlement level information for all the settlements mentioned above has been incorporated into the impact assessment process. Barriers to economic growth have also been identified. Potential employment in the mining



industry is seen both as a benefit for the unemployed and as a deterrent to agricultural growth.

Economic activity in Jermuk is based on tourism and local services. Tourism development potential in Jermuk has been explored by a development plan produced by USAID and endorsed by Jermuk administration.

20.6.4 Land Use

The predominant land use in the vicinity of the mine site is agro-pastoral use, including cattle grazing, cultivating grains and other crops, fruit orchards, bee-keeping and hay cropping. Agricultural land is subdivided into arable land, hayfields, irrigated arable land, agricultural lands and pasture. Within the Project area, the majority of the land use is for extensive summer grazing. At lower elevations, in the Vorotan River valley, grazing takes place over a longer period of the year and summer grass is conserved for winter hay feed. Rural residents tend to change the landscape through small-scale interventions, without recourse to authorities or community leaders. This includes creating irrigation channels, dammed ponds and vehicle tracks on previously pristine land. Non-agricultural land uses include foraging for plants and mushrooms, collecting firewood, as well as hunting and fishing for recreation. Residential and commercial land uses exist within individual settlements; most residences also have small vegetable gardens.

20.7 Social Impact Assessment

A summary of the impacts from the ESIA are considered in Table 20.4. The assessment identifies positive (beneficial) impacts and whether these can be enhanced through appropriate management and engagement. In addition, potential adverse impacts have been identified and mitigation measures identified that would reduce or negate the impacts.



Table 20.4 Summary of Social Impacts

Potential Impact

Description Inherent Impact

Rating Mitigation/ Enhancement Residual Impact

RatingDemographics Improved housing

conditions House-building due to in-migration and greater incomes would add flexibility to the housing market in the longer term. Vacant homes would also likely be occupied and improved, thereby improving housing stock.

Negligible beneficial

No mitigation required. NEGLIGIBLE BENEFICIAL

Increase in family stability Retention of local labor in the area would increase family stability. This would particularly benefit families where one or more members migrate elsewhere for work.

Minor beneficial

Enhancement Preferential recruitment of de jure residents of study area. Local residents supported in finding local work in mine off-shoot businesses.

MODERATE BENEFICIAL

Decrease in community cohesion

In-migration, differential income levels and competition for project benefits would result in community cohesion issues.

Major adverse

Mitigation Expatriates and majority of non-local employees housed in mine camp. Local recruitment and training in construction phase.

All residents and groups within study area to be considered for local recruitment, training, community development funding and other benefits.

Two-way communication.

Eligibility for benefits reviewed periodically.

Strict regulations for respectful interaction.

Formal negotiations only by specialist trained staff. Company culture to encourage positive integration with local community.

MODERATE ADVERSE

Weakening of traditional leadership structure

Shift in the balance of wealth and power would undermine traditional leadership and influence structures.

Minor to Moderate adverse

Mitigation Hamaynk leaders involved in community development and investment decisions as well as low-skilled labor recruitment processes. Programme of engagement through to commencement of construction and beyond

CLC’s maintained and reinforced.

Individual grievances re-routed through CLCs and Hamaynks.

MINOR ADVERSE

Increase in crime and vice Increased economic inequality and the influx of new people into the area would increase levels of crime and vice.

Women, children, youth and elderly people are especially vulnerable.

Moderate adverse

Mitigation ‘Zero Tolerance’ policy for gambling, drugs and visiting prostitutes, for Amulsar employees.

Financial management advice to employees on methods for saving rather than disposing of income.

Provision / improvement of sports and recreation facilities available to employees and members of the community.

Cooperation with Hamaynk and police in anticipating and preventing crime and vice.

MINOR ADVERSE

Livelihoods & economics

Macroeconomic benefits Land taxes to Hamaynks and revenues and other taxes tothe government of Armenia will result in macroeconomic benefits.

Moderate beneficial

Enhancement: The existing programme run by Geoteam to support financial management skills within the town Mayors and councils will improve the benefits achieved by this financial windfall.

MAJOR BENEFICIAL

Improved local livelihoods Direct and indirect job creation will lead to improvements in local livelihoods.

Minor beneficial

Enhancement Within the timetable, financial and technical skills requirements and constraints, the Amulsar project will maximise the employment of local residents.

MODERATE BENEFICIAL



Potential Impact



Rating Increased links to markets /

avenues for commerce The Project will generate an increase in the flow of people in and out of the study area, thereby bringing consumers closer to local traders and producers in agricultural products and tourism services.

Moderate beneficial

Enhancement Employees, contractors and visitors encouraged to use local goods and services, as company policy and culture.

MODERATE BENEFICIAL

Inflation Significantly higher pay scales for project employees as compared to local residents would result in inflation in essential goods.

Local residents who do not receive benefits from the project (employment or other) will be disproportionately affected.

Major adverse

Mitigation Local recruitment, as well as boosts to the agriculture and tourism sector as discussed above.

MODERATE ADVERSE

Economic Displacement, including: loss of access to source of livelihood; loss of right to change / harness natural resources; overall decrease in land available for agricultural livelihoods

Land take and restriction of access to a proportion of company-controlled land will result in economic displacement of some seasonal herders, local herders and foragers.

Moderate adverse

A Full Livelihoods Restoration Plan being prepared – outcome still to be assessed.

MODERATE to MINOR ADVERSE (subject to finding of the plan)

Community Health

Communicable disease linked to poor environmental/social conditions

Introduction of communicable diseases into the area by the incoming workforce.

Overcrowding due to in-migration of family members.

Minor to Moderate adverse

Mitigation Community health information system (CHIS) to monitor health statistics of acute and chronic respiratory disease and TB.

Health systems strengthening (HSS) to improve TB case detection and case management in local dispensaries.

Develop and maintain site based TB policies and programmes. This can include TB screening at pre-employment.

Maintain outbreak/pandemic preparedness and response plans

MINOR ADVERSE

Water , sanitation and waste related disease

Potential pollution of water used by local residents by project activities.

In-migration and use of water for industrial processes will increase the demand for potable water in the area.

Moderate adverse

Mitigation Water quality and environmental management and surveillance from the project.

Ensure an effective potable water supply to the Project that does not influence local supply and similarly, effective waste water management from the mine operations and accommodation camp.

Conduct information education and communication (IEC) campaigns in the workforce on proper water use, hygiene and sanitation.

MODERATE BENEFICIAL



Potential Impact



Rating High risk sexual practices,

STIs including HIV/AIDS Increase in the ability to transmit STIs; either from transport workers or through promotion of movement of people in an out of the study area.

Disposable income will increase which may increase the potential for forms of transactional sex to occur (see crime and vice).

Major adverse

Mitigation Develop a HIV/AIDS policy and programme that incorporates considerations for both the workplace and community.

Develop a monitoring system on key HIV and STI indicators in the local health care facilities.

Support local IEC campaigns on HIV and STI awareness

HIV and STI prevention programmes for long distance truck drivers and drivers of light duty vehicles.

Develop local gender empowerment and IEC programmes to reduce the potential risk of increased transactional sex in the area.

MODERATE ADVERSE

Food and Nutrition Food inflation in the area may result due to supply and demand impacts from the Project.

Minor adverse

Mitigation Ensure adequate access to local agricultural and grazing land through planned offsets as required.

Consider periodic food inflation surveys.

Undertake specific nutritional surveillance through data in the local health centres as well as in adults.

This data should be fed into the proposed CHIS.

MINOR ADVERSE

Non communicable diseases (NCDs)

The Project development is unlikely to play a significant direct role in increasing NCDs other than the potential to improve the local economic situation, which may result in poor lifestyle practices as a result of increase disposal incomes.

Moderate adverse

Mitigation Support health education programmes as part of community based outreach programmes.

As part of the medical surveillance activities in the workforce screen for NCD’s. Initiate wellness programmes in the workplace for the prevention of chronic diseases through management of modifiable risk factors.

MODERATE BENEFICIAL



Potential Impact



Rating Injuries and accidents Project may increase transport corridor injuries through road

traffic accidents. An improved economy in the area may allow more people to be in a position to afford motorised transport with a potentially increased risk for accidents.

Major adverse

Mitigation Develop community security and safety management plans for the Project.

Contractor management for project transport vehicles.

Strictly enforce the drug and alcohol policy for all project associated vehicles.

Work with the Armenian Roads Directorate (or its local representatives) to identify accident prone areas for pedestrians. Clear signage, targeted at both traffic and pedestrians (different sets of signage may be required at some points) will be installed at the accident prone points identified.

All haulage drivers should undertake appropriate training courses and drive with consideration that there may be animals present on roads. Employees in general must be aware of how they drive around site and into villages in general. Signage targeted at pedestrians will either be pictorial or in Armenian, and will be located to allow maximum visibility for pedestrians.

MINOR TO MODERATE ADVERSE

Environmental Health Determinants

Project effects, releases and effluents may impact environmental quality in a range of ways. (Please refer Table 20.5).

Minor to Major adverse

Mitigation Develop appropriate environmental management and monitoring programmes addressing each environmental parameter that is likely to be affected. (Please refer to Table 20.5).

MINOR ADVERSE

Social Determinants of Health Project may improve local livelihoods, thereby affecting health and well-being.

Moderate beneficial

Enhancement Evaluate opportunities to support local economic development with a local on improved quality of life and perceived well-being.

MAJOR BENEFICIAL

Project may reduce community cohesion, affecting health and well-being.

Moderate beneficial

Mitigation Effective communication strategies to ensure the communities are aware and understand the Projects planned and current activities.

Perform regular perception studies which include elements on perceived wellbeing and quality of life.

MODERATE BENEFICIAL

Health Services and Systems Adverse effects of increased demand from workforce and other in-migrants.

Major adverse

Mitigation Develop and maintain a workplace occupational and primary health care centre to cater for the health care needs of the construction workforce.

In operations it may be beneficial supporting local HSS to upgrade the facilities so that primary health care is managed off site and only the occupational health service is performed on site.

Monitor the demographic changes in the immediate Project area and work with local health authorities to determine if the available health facilities are adequate for the needs of the community based on these changes which have been created by the Project.

MAJOR BENEFICIAL



Potential Impact



Rating Mine site accidents Some activities on the mine site will be hazardous to human

health. Major adverse

Mitigation Areas of the mine site closed to third parties will be marked by clear pictorial signage, as well as written signage in Armenian and Russian. Lydian will investigate soft barriers for dissuading livestock from parts of the site livestock, as far as feasible given biodiversity impacts of such barriers.

Mine site safety awareness for third parties will be included as a theme in ongoing formal and informal community engagement modules.

Through mine site management and internal communications, employees and contractors will be given up to date information on third party activity hubs on and around the mine-controlled area, in order to avoid accidents.

MINOR ADVERSE

Security conflicts Potential conflicts between mine site security forces and third parties.

Moderate adverse

Mitigation Training will be provided for security staff, aimed at inculcating a culture of non- aggressive assertion. A small number of security and other staff will be trained in conflict mediation.

Strict controls will be applied on the use of arms; a ‘zero tolerance’ policy will be applied on the use of arms outside of a small number of specific security duties (e.g. gold room security). The use of their mine issued arms by security staff in extracurricular activities, such as shooting, will be strictly prohibited.

Appropriate compensation arrangements will be carried out where required.

MINOR ADVERSE

Archaeology and Cultural Heritage

Initial assessment of the Project area (5000ha) did not indicate the presence of any sites or features of cultural or archaeological. The most recent reconnaissance surveys undertaken by international experts, have revealed the presence of several features of potential archaeological interest, such as tombs and kurghans

Minor to Moderate

At present, in-country experts are in the process of completing a phased assessment. The features that have been identified are being excavated but are known to be located away from areas of proposed maximum disturbance, with some of the sites showing signs of being disturbed and degraded. Findings of the on-going excavation will provide further details on the overall importance of features on site, although at present it is understood that in-situ preservation which could affect the progression of development will not be necessary. State archaeologists will record all features prior to construction, with appropriate measures developed for off- or on-site preservation.

MINOR (initial assessment to verified once final report from experts are made available).



20.7.1 Summary of Social Impact Assessment

Historically, the region has not seen any mining activity. Extractives industry activities closest to the site include a small quarry close to Gorayk, with larger mine operations present in the south of Armenia. During exploration activities and stakeholder engagement, it has become apparent that local people are generally supportive of the Project.

The potential benefits from employment are welcomed, however in some settlements (Gorayk and Saravan) community expectations are high. It is also the case in Jermuk as it is a tourism and spa important to Armenians.

Other positive impacts relate to improvements in local livelihoods through direct employment by the Project, as well as knock-on economic growth; and macroeconomic growth through taxation, land rent and other revenues paid by Lydian. Positive impacts range from minor to moderate; provided enhancement measures are implemented.

With appropriate mitigation, residual adverse impacts range from negligible to moderate and include health impacts around water and sanitation, non-communicable diseases, as well as health services, have been assessed as positive impacts after mitigation, which mainly relates to information, education and communication programs.

Effective implementation of the mitigation measures defined in the ESIA will be essential to derive and maintain positive benefits associated with the Project through the construction and operational phases. Lydian’s social strategy and on-going community development measures are expected to provide additional benefits to local communities, over and above Project impacts.

Social impacts at mine closure stage have also been assessed; depopulation, economic decline and breakdown of some community services are the main impacts expected. Mitigation measures have been identified and involve progressive social investment, community development, economic diversification and capacity building activities within the operational stage.

The details of mitigation and enhancement measures are considered in the ESIA; the associated management plans have been defined and will be incorporated into operational controls, as well as Lydian’s ESMS.

20.8 Consideration of Alternatives

During the feasibility stage of the Amulsar Project a review of the potential project design alternatives was undertaken in line with the requirements (rationale) of the Project. These requirements are listed below:

Extraction and processing technologies and techniques;

Siting of major Project facilities (heap leach pad, waste rock dump etc)

Infrastructural options i.e. road development;

Auxiliary facility options i.e. shift camp; and



The ‘zero alternative’ (whereby the Project does not take place at all).

The ESIA summarizes the key decision process to reach the Project design as presented in this FS.

Due to the potential environmental impacts associated with a HLF and waste rock dump, a considerable resource was assigned to the site-selection process for these items of infrastructure. The identification of a suitable site to accommodate these items of infrastructure has key environmental, social and economic implications for the viability of the Project. The process is detailed in the ESIA.

20.9 Environmental, Health and Safety Project Design Parameters

Project infrastructure, especially those facilities which will hold (either temporarily or permanently) or move large volumes of materials, can present a health and safety risk or can cause considerable environmental contamination if they are not appropriately designed, or if they fail.

The successful integration of this FS and ESIA has involved a dynamic approach throughout the studies. One aspect of this integration involved the circulation by WAI (Guidance on Environmental, Health and Safety Design Criteria, October 2011) of a compendium of qualitative and quantitative environmental, health and safety (EHS) design criteria to the FS team. This document contained a series of relevant environmental design values (EDVs) for design of the Project, including those relating to water quality, effluents, air quality/atmospheric conditions, noise, vibration, waste, hazardous materials and soil quality. The proposed engineering design and operating measures of the major mine infrastructure are therefore in line with international best practice and relevant environmental criteria.

20.9.1 Amulsar Mine EHS Engineering Measures

ESIA and FS process were iterative and dynamic. Environmental and Social Assessment influenced project design. In consequence a number of potential impacts were designed out, the summary in Table 20.5 provides an overview of the engineering measures incorporated into the design of Amulsar Mine infrastructure which prevent or limit releases and effects and in so doing afford direct and/or indirect protection to the environment, community and worker health and safety. Any operational practices which are inherited by virtue of these designs, and which contribute to environmental and worker wellbeing, are also outlined.

It should be noted that the findings of the impact assessments will include additional mitigation and management measures which should be applied to the detailed design, construction, operation and closure phases of the Project. These are outlined within the various ESIA framework management plans and the Environmental and Social Action Plan (ESAP) and will underpin Geoteam’s operational Environmental, Social Management and Health and Safety Systems as the Amulsar mine develops. Therefore, this section does not detail all standard, site-wide management techniques which will be employed, such as those relating to mining and hauling.



The design of the major infrastructure at Amulsar mine includes measures to ensure the integrity of the structures in relation to ground conditions present and in order to counter the predicted seismic risk. These are outlined in the HLF Feasibility Design Report (Golder, 2012d) and earlier sections of the FS. These have been considered in the evaluation of Project risks and these measures are not reiterated here. The environmental and social considerations associated with the assessment of suitable locations for the HLF and WD are outlined in the Consideration of Alternatives chapter of the ESIA and were included in a rigorous site selection exercise.

The design, engineering and management measures outlined in Table 20.5 are designed to prevent or reduce to acceptable levels, the release of any potentially harmful substances to the surrounding environment under normal operating conditions. Consideration is also given to extreme weather events (rainfall, snowmelt and flooding, as appropriate). Standard operating procedures will also limit environmental and occupational exposure.

Amulsar Mine includes items of proposed mine infrastructure which hold or use significant volumes of materials and/or hazardous substances. Design measures and operational parameters have been incorporated in these facilities in order to prevent, or reduce to acceptable levels, potentially harmful releases or effects and in so doing afford direct and/or indirect protection to the environment, community and worker health and safety. Table 20.5 below, identifies and summarizes these elements from the FS designs. Any operational practices which are inherited by virtue of these designs, and which contribute to environmental and worker wellbeing, are also outlined.



Table 20.5 Environmental, Community and/or Health & Safety Design Protection Measures and Best Management Techniques

Heap Leach Facility – Leach Pad, Collection Ponds and Adsorption, Desorption and Recovery (ADR) Plant

ICMC Compliance Lead Auditor verification of design plans (WAI, Ref. CAB/SH/ZT520088/001, February 2012) against Institute Standard of Practice 4.8.

Internal Audit Protocol checklist developed (Golder, 2011).

WAI ESIA framework Cyanide Management Plan with priority actions for Code compliance.

Operational design Zero discharge (closed system management of process solution, storm runoff and snowmelt flows).

Ecological, Community and Worker Health and Safety

Fencing and signage around leach pad and collection pond perimeter to prevent access to dangerous areas and contain a buffer to prevent foraging and grazing in the vicinity of the pad. Fencing and security at ADR Plant to control access Mechanical staking of ore, mixing and application of cyanide, minimized worker exposure. Maintenance and operations staff provided appropriate PPE and ICMC training. Implementation of ICMC compliant Cyanide Management and Heap Leach Facility Management Plans. Targeted cyanide application via drip emitters, limiting atomization and windblow. Saturated pad, controlled stacking, progressive rehabilitation, inhibiting dust emission.

Fencing around pad and collection pond perimeter will be stockproof (mesh) to prevent access to larger mammals, including livestock. Process ponds will be covered with nets to deter and protect avian life. Lighting will be directional to minimize effect.

Leach Pad

Water resource protection

The composite liner is designed to prevent seepage of cyanide solution to underlying soils and groundwater. It has been desig ned to inhibit any basal seepage to, in line with recommended thresholds. The composite liner comprises (base to top):

o 30cm thick compacted soil liner of adequate (low) permeability (k < 1 x 10-8 m/sec); and o 2mm thick linear low density polyethylene (LLDPE) geomembrane

Groundwater monitoring wells will be installed down-gradient and intermediate to the River Vorotan and around the HLF periphery prior to construction.

The pad will use a cyanide solution of 250ppm. The usual limit of all discharges is 1ppm and ICMC threshold for discharges t o surface waters (0.5 mg/l WAD) should a leak occur under abnormal conditions. Any planned discharges of eventual detoxification will need to meet these thresholds.

The HLF is located outside of the 100-year flood plain which will prevent surface water contamination in predictable flood conditions.

Clean surface runoff water (precipitation and snowmelt) from upstream catchments will be diverted away in diversion channels and discharged to the River Vorotan. Contact runoff water will be diverted down-gradient

to single-lined collection ponds and/or the WWTP influent equalization basin

5m setback between the pad perimeter berm crests and the ore heap toes to reduce the risk of process solution release due to upset conditions during operations;

Solution control An enhanced solution collection system will minimize solution recovery and reduce the risk of losses by minimized hydraulic head on the underlying liner (0.6m maximum). This consists of:

o A network of collection pipes within a minimum 60cm thick free-draining granular fill layer; and o 2mm thick LLDPE geomembrane ‘rubsheets’ beneath large diameter collection pipes to reduce wear and damage to the pad liner.

Solution and storm runoff flows from leach pad cells via transfer pipes to pregnant and intermediate ponds.

Leak prevention A Limited and targeted Leak Collection and Recovery System (LCRS) will be installed at the base of the pad, beneath liner, in areas were the highest potential for elevated hydraulic head and/or concentrated flows occur. This system will enable the capture and diversion of any abnormal leaks in a closed system and provide a stimulus for additional monitoring protocols to be implemented. The LCRS comprises (interconnecting):

o Transmissive drains underlain by a secondary geomembrane liner to; o Down-gradient sumps at the low point of each pad cell with; o Sump pumps which remove any leaked solution in a zero closed system.

Solution Ponds




Pregnant and Intermediate process solution ponds will have conventional composite double-geomembrane liner system composed of upper (primary) and lower (secondary) geomembranes, with an intermediate highly transmissive LCRS layer. The lower (secondary) geomembrane will be a 2mm smooth LLDPE geomembrane underlain by a 30cm thick compacted, adequate (low) permeability (k < 1 x 10-8 m/sec) soil liner. The upper (primary) geomembrane will be a 2mm single-side textured (for traction) HDPE geomembrane. Flow to either pregnant or intermediate ponds will be controlled by valves. Drain pipe capacity is for the predicted solution flow plus infiltration from the 100-yr/24-hr storm. Process ponds designed with sufficient capacity to contain 8 hours of normal operational solution flows plus conta inment of 24 hours of solution draindown from the ore heap in case of operational shutdown due to pump failure or power loss The LCRS will be a highly transmissive geocomposite layer between the geomembranes on pond slopes and bottoms, connected to a LCRS sump. Geocomposite will be a 5mm geonet heat-laminated on both sides with 270 gr/m² non-woven geotextile. Should a leak ever occur through the primary geomembrane, it would flow through the geocomposite to the LCRS sump, where it would be removed via a pump. The design intent of the LCRS is to ensure that no hydraulic head occurs on the secondary (lower) geomembrane, thereby removing any driving force required for seepage to occur through that geomembrane. Divider berm (3m wide and 1m deep below pond crest) between pregnant and intermediate ponds for solution and storm runoff.

Spillway from intermediate pond to storm event pond for storm runoff overflow.

Storm Ponds


Storm Event Pond

Capacity for 150% of the 100-yr/24-hr storm flow from the leach pad and collection pond areas. Composite liner system comprising (bottom to top) a 30cm of adequate (low) permeability (k < 1 x 10-8 m/sec) soil layer overlain by a 2mm single-side textured (for traction) HDPE geomembrane and a 30cm minimum compacted thickness of cover fill in pond base (to anchor geomembrane against high winds).

Overflow Pond

Downgradient of the Storm Event Pond with interconnecting spillway to divert and contain overflow discharge from the Storm Event Pond, should a low probability event or series of events occur that exceed the project

design containment criteria. The Overflow Pond provides an added 39,000 m3 of containment capacity and will be lined with a 30cm minimum compacted thickness of low-permeability (k < 1 x 10-8 m/sec) soil. The overflow pond should also be empty during normal operating conditions except for water from direct rainfall or snowfall

ADR Plant

Ore Crushing and Transportation

Operational status Zero emissions at housed crushing complex (closed system management of dust emissions).


The crushing complex is housed and will minimize fugitive dust by use of covers, guards on drop points and conveyors, together with an active dust extraction system, to maintain a clean air working environment. A continuous water spray system will be utilized at each of the two primary dump hoppers. Water sprays will add approximately 100 gpm per dump hopper.

The overland conveyor will be covered and fitted with minimal transfer stations. Transfer stations will be at remote locations and drop points will be sealed. A bin vent (small dry dust collector) can be installed at each drop point which would collect the dust and drop it back on the conveyor. Water mist spray system will be used in summer months on the grasshopper (mobile) conveyors and radial stacker. Lighting will be directional to minimize effect. Overland conveyor will follow topography to reduce visibility.

Waste Dump Facility – Dump, Collection Ponds and Water Treatment Plant

Waste Dump (WD)

Operational Status Controlled and treated discharge only


Fencing and signage around WD and collection pond perimeter to prevent access to dangerous areas. Fencing will be stockproof (mesh) to prevent access to larger mammals, including livestock. Mechanical staking of waste will minimize worker exposure.

Maintenance and operations staff provided appropriate PPE and ICMC training. Implementation of ARD Management Plan Progressive contouring, rehabilitation and seeding of dump to reduce dust and prevent contact water pathway and ARD generation. Contact pond will be covered with nets to deter and protect avian life.

Lighting will be directional to minimize effect. Waste dump will use topography to reduce visibility to latter phases of development. The latter stages of development of the north face of the dump will be stepped back to the south to lessen its visibility.

Water Resource Protection

The WD liner will comprise a 45mm thick low-permeability (k < 1 x 10-9 m/s) compacted soil layer above the underdrains to provide separation of the non-contact subsurface seepage from the overlying contact water from the waste material.



Underdrains Primary underdrains will be constructed in main drainages, secondary in tributary drainages and at locations of seeps and swa les (and connect to primary underdrains). Tertiary underdrains constructed in flatter portions of WD valley bottom and connected to primary underdrains. Underdrains will intercept and route subsurface water beneath the WD to the influent equalization basin (IEB) located downstream of the WD. Underdrain flow will be estimated based on available drainage flow data collected by Lydian in 2012 during the spring runoff season.

Overdrains An overdrain system located at the base of the WD, above the soil liner, in those areas where the potential for concentrated flow occurs, will convey contact water that percolates through the waste material to the IEB downgradient of the WD. Primary overdrains will be constructed at locations of main drainages within the WD site, secondary at locations of tributary drainages within the WD site and connect to primary overdrains. Tertiary overdrains will be constructed within the WD footprint at 30-m centres and connect to secondary and primary overdrains. Overdrains will convey the combined maximum spring snowmelt flow and 100-yr/24-hr design storm flow.

Progressive clay capping of dump to reduce snow melt/rainwater infiltration and minimize ARD.

Perimeter berms and diversion channels will route non-contact storm and snow meltwater runoff from upstream catchments away from the WD and collection ponds.

Collection Ponds

Influent Equalization Basin (IEB)

The IEB will have a composite liner system comprising 30cm compacted low-permeability (k < 1 x 10-8 m/sec) soil overlain by a 2mm HDPE geomembrane. Sized for 24-hr storage of maximum underdrain flow plus overdrain flow from the 100-yr/24-hr storm event (snowmelt and precipitation), and to provide flow control to the WWTP

Evaporation Pond (EP)

The EP will have a composite liner system comprising 30cm compacted low-permeability (k < 1 x 10-8 m/sec) soil overlain by a 2mm HDPE geomembrane. Sized to provide for maximum evaporation of the reverse osmosis brine

Waste Treatment Plant

Water Resource Protection

Treatment process will regulate concentration of water to required national Maximum Allowable Concentrations. Sludge containing metal hydroxides will be removed and incorporated in the lined WD.

Other

Site-wide Surface Water Management

Clean surface runoff water (precipitation and snowmelt) from upstream catchments will be diverted away in diversion channels and discharged to the River Vorotan. Contact runoff water will be diverted down-gradient to

single-lined collection ponds and/or the WWTP influent equalization basin

Site-wide Dust Management

Water will be sprayed on the haul roads, access tracks and active surfaces. Salt will be utilized during winter months. Drill rigs will use shrouds and/or water flush.

Flyrock and dust will be minimized by controlled during blasting regime.

Radon Management

All buildings (especially those with confined spaces and dormitories) will include standard radon barriers, as a precautionary y measure. This will include installation of a suitable gas impermeable membrane (e.g. 300 micrometre (1200 gauge) polyethylene sheet, prefabricated welded barriers and self-adhesive bituminous-coated sheet products) and on-going monitoring to access the need for any active radon reduction measures.



20.10 Environmental and Social Management System

Lydian is developing a Social and Environmental Management System (ESMS), which outlines its commitments to environmental and social management, mitigation and monitoring. At this stage, these are largely existing procedures and broad commitments which will be updated as the Project moves forward.

The ESMS will ultimately comprise numerous plans and policies for the implementation, monitoring and reviewing of the environmental, health, safety and community impact mitigation measures identified in the ESIA and ensure that they are adequately implemented. Final ESMS plans should be reviewed periodically and updated over the life of the Amulsar Project. The review should take into consideration internal and external reviewer and stakeholder comments, any regulatory changes, amendments in mining operations and any process which will affect the content and scope of the plan in question.

At present a raft of framework management plans have been prepared to support the ESIA submission. The objective of a framework plan is to contextualise and objectify relevant findings from the ESIA in a format which conforms to international best practice and can be easily adapted and expanded by the Company for practical implementation. In so doing, the framework plan will form a template for the development of full operational plans to form part of Lydian’s ESMS. Those framework plans prepared for the ESIA are those which are considered priorities for the Amulsar Project and are:

Stakeholder Engagement Plan;

Community Development Plan;

Biodiversity Management Plan;

Dust Management Plan;

Waste Management Plan;

Cyanide Management Plan;

Spill Prevention and Emergency Response Plan;

Acid Rock Drainage Plan;

Water Management Plan; and

Mine Closure and Rehabilitation Plan;

In addition, the Influx Management Plan, Livelihood Restoration Plan and Cultural heritage Plan will be developed prior to the commencement of development.

Lydian will develop a framework Occupational Health and Safety (OHS) management plan, which outlines its main policies and intentions at this stage, in line with the requirements of IFC Performance Standard 2 on Labour and Working Conditions. This aims to protect health, wellbeing and safety of the workers. Lydian will also develop other ancillary management plans, such as a Contractor Management Plan, prior to construction.



20.11 Environmental and Social Monitoring Plan

Lydian will build on the existing environmental and social baseline monitoring programme via the introduction of targeted and refined monitoring regimes for the construction, operation, closure and post-closure mine phases. This will initially be achieved via the preparation of a framework Environmental and Social Monitoring Plan (ESMP). The purpose of this plan chapter is to outline the key on-going monitoring requirements identified by the ESIA process to evaluate the environmental and social performance of the Project.

The overall objectives of the monitoring plan activities are to:

Ensure regulatory requirements are met;

Check that impacts do not exceed Project, national and international standards thresholds;

Verify predictions made in the ESIA by obtaining real time measurements;

Verify that mitigation measures are effective and implemented properly;

Identify, track and provide early warning of potential environmental impacts;

Regulate process efficiency of mining activities;

Inform future operations; and

Contribute to continuous improvement of Project E&S management.

Mitigation and management measures outside of design controls will be incorporated into Lydian’s operational Environmental and Social Management System (ESMS)

20.12 Reclamation, Closure and Rehabilitation

For a mining project to leave a positive contribution to the sustainable development of a community or region, closure objectives and impacts must be considered from Project inception. Closure and reclamation goals include:

Future public health and safety are not compromised;

Any residual environmental impacts are minimized and that environmental resources will not be subjected to related physical and chemical deterioration over the long term;

After-use of the site is beneficial and sustainable in the long term and acceptable to the mine owners, the local communities and the regulatory authorities;

Any adverse impacts on the local communities are minimised;

All socio-economic benefits are maximised; and

Closure and rehabilitation will be fully funded without recourse to the public purse.



In accordance with international best practice for the mining industry and the environmental policy of Lydian, a framework Mine Closure and Rehabilitation Plan (fMCRP) has been developed for the Amulsar site as part of ESIA phase of the Project. Detailed closure and rehabilitation costs including, engineering planning and environmental monitoring have been developed by Golder (Golder, 2012h). A summary of these costs are included in Chapter 21.0.

20.13 Planned Future Work

A program of planned future work (an Environmental and Social Action Plan) with recommended timelines has been developed, to classify aspects identified in the ESIA which will need further development. This action plan deals with the recruitment of Health, Safety, Environment and Community Management Personnel, in tandem with the development and expansion of environmental, health, safety and social policies, plans and procedures, designed to enable operations at Amulsar to be undertaken in line with both RoA requirements and international best practice guidance. For the development of the Amulsar Project, Lydian International and its subsidiary Geoteam will consider the following activities:

Building local capacity to launch initiatives that benefit both the company employees and the local communities and locally hired employees.

Developing and disseminating good international practices with Armenian contractors working during construction and operation.

Facilitating community engagement throughout the life of the Amulsar project;

Promoting and encouraging participatory planning and monitoring for community development.

Working with local entrepreneurs to identify the business case for investing in the communities around the mine.

Increasing participation of local businesses in the supply chain through use of local/affected community resources.

In addition Geoteam will work with the Government of Armenia and international organizations such as IFC, EBRD and other organizations with respective expertise (Counterpart International, other implementing partners that work with Geoteam) on:

Building local government capacity to manage tax/royalty payments to improve community welfare;

Ensure transparent accountability/reporting by local governments on tax/royalty payments and funds allocated for social programs;

Support civil society organizations to ensure that local governments are accountable for how they spend tax and social program resources per EITI approach;

Ensure community contribution for Geoteam-supported social programs.

Finally Geoteam will put a strong emphasis on local procurement in Armenia in order to secure the purchase of goods and services from local businesses. It will allow the development of small and medium enterprises (SMEs) giving local communities the



chance to participating in new opportunities. These activities also known as business linkages, local supplier development, local food supply, local content or local sourcing, local procurement is favored by Lydian International as a strategic business tool.



21 CAPITAL AND OPERATING COSTS


The capital cost for mine mobile equipment was developed assuming an owner operated and purchased fleet.

21.1 Mine Capital Costs

Mine Equipment

The mine equipment capital cost estimate includes the following:

Mine major equipment

Mine support equipment

Initial spare parts and engineering equipment

Table 21.1 is a summary of the mine capital costs, including preproduction development capital expense. Year -2 reflects the early costs incurred when committing to purchase the equipment. The costs in Year -1 are, for the most part, the balance of the price of equipment after it is delivered to the site and commissioned. Year 1 shows the remainder of the initial capital investment for the mine equipment needed to start mining.

Preproduction development capital shown in Table 21.1 is the operating cost of constructing access to the initial mining benches and stripping waste rock to expose ore for mining. Preproduction development capital is discussed in more detail in the next section.

Table 21.1 Summary of Mine Capital Costs ($US x 1000)

Category

Initial Capital Sustaining

Capital Total

CapitalYear -2 Year -1 PP Q1Yr1

Q3-4 Total

Major Equipment 3,034 25,296 5,076 10,148 46,414 35,023 78,577

Support Equipment 133 1,064 1,527 70 2,794 2,949 5,743

Engineering/Safety Equipment 0 0 200 0 200 200 400

Shop Tools 0 0 0 0 0 0 0

Spare Parts 0 1,394 0 0 1,394 0 1,394

TOTAL 3,167 27,754 6,803 10,218 50,802 38,172 86,114

Note: Physical structures such as the mine shop and warehouse, and fuel storage facilities are included in the plant/infrastructure capital costs.

Note: Shop tools are carried in the KDE cost estimate

Note: Two initial Cat D10 dozers are not included in capital costs as Lydian has already purchased these machines



The following is noted:

The capital costs are shown in second quarter 2012 US dollars.

A contingency was not included in the mine capital costs.

The major mine equipment costs reflect firm quotes from Cat Zeppelin Armenia and provided by Lydian International. The costs include assembly and freight.

Support equipment costs reflect dealer budget quotes for new equipment. The quotes were sourced in the US.

Caterpillar equipment will be purchased through a lease arrangement with payments spread over 5 years. The cost of this lease is detailed as a separate line item in the financial models. Lease costs are expected to be a 2 percent fee and 7 percent interest. A deposit of 20 percent on all pieces of equipment has been included in the capital estimate with the residual included as operating cost.

Preproduction Development

Mine preproduction development costs are based on the estimated mine operating costs during the preproduction period. Pit development is required to expose adequate ore by the start of commercial production. The pit development capital cost of $3.7 million includes the following:

Developing access roads from the main haul roads to the pit.

Stripping waste rock to expose sufficient ore to sustain production.

All mine labor, salaried and hourly.

Consumables such as fuel, parts, tires, etc.

An allowance for mine related overheads.

An allowance for general operating expenses in the mine offices.

Blasting supplies and loading of explosives.

All mine functions to deliver material to the dumps or crusher.

Material quantities (ore and waste material) were calculated based on the mine plan developed by IMC. The quantities are based on phased pit designs scheduled to meet commercial production requirements. Pit development costs are based primarily on operating and maintenance costs for equipment and for the labor conducting the work. Additional costs include the cost of drilling and the supply and initiation of explosives materials for blasting. All inputs and assumptions for the preproduction development costs are the same as those listed in the next section; Mine Operating Costs.

21.2 Mine Operating Costs

Operating costs for the mine include all the parts, consumables (fuel, explosives, oils and lubricants), and labor costs associated with mine supervision, operation, and maintenance. The IMC operating cost estimate is a first principles calculation based on the scheduled equipment working shifts, the labor work schedule, number of personnel, and labor rates. Table 21.2 lists the mine operating costs by category.



The mine operating costs include:

All mine labor, salaried and hourly

Consumables, fuel, parts, tires, etc.

An allowance for mine related overheads.

An allowance for general operating expenses in the mine offices.

Blasting supplies and loading of explosives.

All mine functions to deliver material to the dumps or crusher.

Development and maintenance of mine haul roads where haul trucks travel.

The following factors form the basis for the operating cost calculations:

Local unit costs for consumable items such as diesel fuel, lubricants, and tires.

Local salary and hourly labor rates, including benefits, were used. The rates were provided by Lydian International.

Hourly operating personnel were determined based on the mine equipment requirements for the pit development plan.

Salaried employees were based on engineering and supervisory personnel needed to operate the mine.

Costs for spare parts were based on estimates found in “Mine and Mill Equipment Costs, An Estimator’s Guide” published by InfoMine USA.

General operating supplies for the mine and engineering department, and supplies to maintain and operate maintenance support equipment are covered by a US$ 0.02 per total tonne allowance. The allowance is applied to the general mine cost center and again to the general maintenance cost center.

Mining operating costs are heavily dependent on haul distance and significant cost savings are realized in the latter years of the mine life through in pit dumping of waste from Erato pit into the Tigranes / Artavasdes pit. This reduces the amount of trucks required to meet production targets which leads to a smaller workforce reducing labor costs as well as reduced maintenance costs due to a smaller truck fleet.



Table 21.2 Summary of Mine Operating Costs - Total Dollars ($US x 1000)

Mining

Year

Total Material

(kt)

Drilled/ Blasted (kt) Drilling Blasting Loading Hauling Auxiliary General

Mine

General

Maint. G&A TOTAL Cost/ Tonne of Total Mat'l

-1 0 0 0 0 0 0 59 0 6 145 210 0.000

Yr1 10,449 10,064 1,337 3,039 1,785 7,883 2,937 1,362 994 3,942 23,278 2.228

Yr2 15,127 14,472 1,920 4,333 2,598 11,163 3,448 1,708 1,138 4,094 30,401 2.010

Yr3 15,193 15,193 2,012 4,544 2,607 12,360 3,341 1,723 1,147 4,210 31,945 2.103

yr4 33,466 33,466 4,415 9,910 5,732 24,201 3,608 3,112 1,925 4,385 57,287 1.712

yr5 33,500 33,500 4,418 9,920 5,736 24,429 3,607 3,113 1,926 4,386 57,535 1.717

yr6 33,500 33,500 4,417 9,920 5,736 24,529 3,607 3,113 1,926 4,388 57,635 1.720

yr7 33,500 33,500 4,418 9,920 5,736 24,542 3,502 3,113 1,926 4,388 57,544 1.718

yr8 33,500 33,500 4,416 9,920 5,735 22,321 3,501 3,113 1,905 4,361 55,272 1.650

yr9 33,500 33,500 4,417 9,920 5,736 16,257 3,502 3,113 1,858 4,294 49,098 1.466

yr10 33,959 33,500 4,418 9,920 5,827 15,661 3,269 3,061 1,863 4,290 48,309 1.423

yr11 30,433 30,433 4,025 9,019 5,218 15,751 2,728 2,993 1,783 4,049 45,567 1.497

yr12 9,119 948 126 278 1,562 3,402 654 341 416 939 7,717 0.846

TOTAL 315,246 305,576 40,338 90,641 54,009 202,499 37,763 29,865 18,813 47,870 521,797 1.655

PERCENT 7.7% 17.4% 10.4% 38.8% 7.2% 5.7% 3.6% 9.2% 100.0%



21.3 Process Capital Costs

A summary of the crushing, process plant and associated infrastructure initial and sustaining capital costs is shown in the following Tables 21.3 and 21.4 respectively. These tables include direct costs, indirect costs, and a contingency. That the capital costs estimate does not include sunk costs such as drilling, metallurgical testwork, prior studies undertaken to date.



Table 21.3 Summary Process Plant Initial Capital Cost

Description Total Cost, US$

DIRECT COSTS

Area 00 – General Site Area 21,837,718

Area 10 – Primary Crushing 9,292,897

Area 13 – Secondary Crushing 17,718,611

Area 15 – Tertiary Crushing 21,353,411

Area 17 – Product Storage 8,856,745

Area 19 – Ore Stacking 43,741,582

Area 20 – Heap Leach 2,565,469

ADR Plant 12,056,620

Area 30 – Solution Management 3,321,685

Area 90 – Auxiliary Equipment 2,563,015

Infrastructure

Buildings / Camp 8,080,563

Access Roads & Bridge 6,350,000

Power Supply by Utility 2,160,000

Main Substation (Crushing Plant) 2,698,460

Power Distribution 1,625,260

Water Distribution 250,000

SUB-TOTAL DIRECT 164,472,036

INDIRECT COSTS

Engineering 8,377,550

Procurement 2,330,000

Construction Management 5,487,600

Construction Indirect Costs include: 541,952

Field Office Expense

Training

Startup

Initial Fill & Reagents 2,467,100

Spare Parts 8,223,600

Owner’s Cost 5,000,000

Mobile Equipment 1,855,000

SUB-TOTAL INDIRECT 34,282,802

TOTAL DIRECT AND INDIRECT 198,754,838

Contingency – 15% 29,813,226

TOTAL 228,568,063



Table 21.4 Summary Process Plant Sustaining Capital Cost

Description Total Cost

DIRECT COSTS

Area 10 – Primary Crushing 3,701,334

Area 13 – Secondary Crushing 5,299,245

Area 15 – Tertiary Crushing 6,073,276

Area 17 – Product Storage -

Area 19 – Ore Stacking -

Area 20 – Heap Leach 861,873

ADR Plant 1,858,778

Area 30 – Solution Management 1,308,870

Area 90 – Auxiliary Equipment -

SUB-TOTAL DIRECT 19,103,376

INDIRECT COSTS

Engineering -

Procurement 350,000

Construction Management 2,150,100

Construction Indirect Costs incl: 40,002

Field Office Expense -

Training -

Startup -

Initial Fill & Reagents -

Spare Parts 723,700

Owner’s Cost 1,000,000

Mobile Equipment -

SUB-TOTAL INDIRECT 4,263,802

TOTAL DIRECT AND INDIRECT 23,367,178

Contingency - 15% 3,505,077

TOTAL 26,872,254



21.3.1 Direct Costs

The direct capital costs were based on the following documents:

Design Criteria

Equipment List

Budget Quotations for major equipment

K D Engineering Equipment Database for minor equipment and material

Discussions with the Armenian electrical power company for unit costs to deliver power from the nearest available source.

Local material and labor rates provided by client

Engineering Drawings performed by KDE: Flowsheet, General Arrangement, Civil, and Electrical

The direct costs exhibited in this estimate include infrastructure, buildings, materials and equipment and the associated installation labor for the detailed construction activities set forth below:

Equipment Costs

An equipment list was developed and incorporated into the cost estimate. The estimate for equipment was developed from the following sources:

Written or e-mailed budgetary estimates from vendors for major equipment.

KDE Historical data and budget costs from similar projects for miscellaneous equipment or material.

The cost of installing the equipment and materials were based on the estimated manpower for each piece of equipment.

Direct Labor Rates

The craft base wages prepared for the Amulsar project are based on labor surveys conducted in Yerevan, Armenia with several major Armenian contractors. The labor rates used in the cost estimate are composite rates and they are considered as all inclusive for the Amulsar project. The contractor has included costs for a separate construction camp on the project site to house and feed his construction team. To account for the lower productivity a multiplier of two (2) was used for the labor man-hour cost. To account for skilled labor, such as mill rights, welders and pipe fitters, a multiplier of two (2) was used. The total average built up labor rate including the productivity and unskilled labor multipliers utilized in the cost estimate are shown below:



Total Average Labor Rate including consumable materials $10.50

Construction Labor Factor – multiplier of 2 was used $21.00

Productivity Factor – multiplier of 2 was used $42.00

Total Average built-up Labor Rate in cost estimate $42.00

Currency

The basis for the capital cost estimate pricing was second quarter (Q2) 2012 costs. All estimated costs were expressed in United States Dollars (US$). The foreign currency exchange rate that was used for the report is $AMD 389 equals US$ 1.

Units of Measure

Metric units were used throughout the estimate, with some exceptions such as conveyor widths and piping which assumes nominal sizing.

Site Development

Currently the site is undeveloped except for a small exploration camp and minimal roads for the exploration drills and mobile equipment. The Project will require development at the following major locations:

The mining areas including a truck shop and haul roads for ore and waste.

Waste dump and associated water treatment plant

Three stage crushing and screening plant area

Overland conveyor and stacker from crushing plant to leach pad

ADR Process plant area and engineering, administration offices, shops, warehouse and owners camp.

Leach pad, solution management system and ponds.

Infrastructure including electrical power, fresh water and access roads to the project site.

Capital costs associated with the development of the waste dump and heap leach facility are presented in the design reports by Golder (July and August, 2012). In addition, both capital and operating costs for the wastewater treatment plant are also presented in the design report by Golder (July, 2012).

Site Preparation and Earthwork

The terrain is mountainous and fairly steep in some areas of construction. Access roads are primitive and will need to be further developed to develop the mine property. The soil in this area is not adequate for major foundations without performing over-excavation and structural backfill to develop a working surface to install major concrete foundations. A preliminary geotechnical report was prepared by Golder (Golder, 2012a) and an additional geotechnical investigation and program is underway to support the detailed



engineering design and will be completed prior to designing equipment foundations. Excavation and back fill for overland conveyor will also be required for the project and will be finalized during the detail engineering effort.

Owners Camp

Geoteam will install a man camp adjacent to the Process plant area which will house 200 people. The cost of a new standalone Owners camp and dining facility was included in the capital cost estimate. Additional housing will be provided in nearby towns as required for the project. KDE recommended that a local engineering company be utilized to assure local codes are considered.

Concrete

Concrete work is detailed in the capital cost estimate with the volumes taken off the general arrangement drawings. There is a total of 20,000 cubic meters of concrete required for the total project at a cost of approximately US$ 150 per cubic meter installed. This was based on discussions with contractors and a budgetary proposal provided by Horizon-95, a local Armenian contractor. An additional allowance to meet the particular specifications they will be required to meet compared to similar projects they have performed. This will require on-site batch plants and certified aggregate and sand.

Structural Steel

Structural and miscellaneous steel was estimated based on the weight and man-hours required to fabricate. Unit pricing of US$ 4,000 per metric tonne was developed from local Armenian contractors and steel fabricators located in Yerevan, Armenia. This cost is inclusive of the steel fabrication and steel erection. After review of the local fabrication shops it appears they have adequate facilities to fabricate the approximately 4,000 metric tonnes of structural steel required for this project.

Mechanical Equipment

The equipment in the flowsheet and associated equipment list was the basis of the equipment included in the capital cost estimate. The unit cost to install this equipment was estimated for each line item in the detailed equipment list. Items such as steel tanks or chute work were developed based on estimated weights times the unit costs discussed with steel fabricators. Corrosive liquids will be minimal on this project and therefore steel coatings were based on similar facilities.

Material Handling (Overland Conveyor System)

Conveyor equipment duty specifications were prepared and sent to conveyor design/build suppliers. Paakkola was selected and has provided basic engineering and an associated cost estimate for the conveyor system. In addition Paakkola has provided volumes for cut and fill for this conveyor routing option. KDE has reviewed this proposal and recommended to revise the routing at the beginning of this conveyor to reduce the slope of the conveyor and has added an allowance for additional transfer towers in the



cost estimate. This will be the basis for a request for quotation to additional conveyor vendors at the detail engineering level.

Piping

P&ID’s were prepared which defined the piping size and identified all major and overland piping required for the project. These pipelines were estimated based on length and unit pricing for similar projects.

Construction Equipment

After review of the available construction rental equipment available locally it was decided that an additional search is required to determine if there is adequate rental equipment available in country for this project. It may be necessary to bring in additional construction equipment for this project. During the meeting with contractors in Yerevan and reviewing their construction equipment at job sites and their equipment yards it was decided to increase the allowance in the cost estimate to include some out of country equipment.

Raw, Potable and Process Water

Raw, potable, and process water is discussed in detail in Section 18 of this report. Water will be sourced from a sump adjacent to the Vorotan River and will be pumped to a fresh water tank near the process plant. From there it will be distributed throughout the mine site as required. Minimal potable water is required for this project and it will either be purchased or a small potable water system will be installed.

Electrical and Instrumentation

Electrical power supply work consists of installing a 12 km, double circuit 110 kV transmission line (as a primary source) and a 12 km, single circuit 35 kV line (as a backup source, for emergency situation only). Electrical on-site distribution work consists of a main substation that includes two transformers stepping down the utility voltage (110 kV and 35kV) to 6 kV for power distribution via a 6 kV rated switchgear. Power is distributed, by means of overhead pole-lines to the crushing plant, overland conveying & stacking, process plant, solution management pumping, water supply & water treatment plant, administrative offices, mine shops, exploration camp and man camp.

Site distribution includes overhead power-line, step-down transformers, electrical switchgear and motor control centers, grounding, lightning protection, cable tray, supports, wire and cable, terminations, plant and site lighting, back-up power systems, and other miscellaneous electrical controls, components, equipment, and systems. Refer to Sections 18.1.7 and 18.1.8 for details on power supply, power distribution and power requirements.

Electrical material take-offs were based on process equipment list and electrical single line diagrams. Equipment costs, bulk material pricing and labor costs were determined using K D Engineering’s historical database and recent projects.



Instrumentation work consists of mine site instruments and programmable logic control (PLC) system, instrument supports, cables, terminations, telecommunication systems, installation of site instruments and interconnection from field devices to PLC. Software development and testing is included in the PLC package.

Quantities and pricing of instruments and control devices have been estimated using K D Engineering’s historical database and recent projects. Ancillary items (field wire, tubing, connectors, fittings, junction boxes, minor supports, fasteners) were quantified based on factored values.

Freight

Freight costs were estimated using a seven percent (7%) factor of the plant equipment costs.

21.3.2 Indirect Costs

Indirect costs required in this estimate include the following items in the capital cost:

EPCM was based on actual quotations for the detail engineering portion of the project. KDE and Samuels Engineering have provided a detailed estimate for this portion of the project and these numbers are included in the cost estimate. This effort includes the following:

- Detailed Engineering

- Procurement

- Construction Management

Construction Camp and associated dining facility was included in the built up labor rate and therefore was not included as a separate item in the indirect costs. The Owners man-camp was included in the direct costs.

Field Office Expenses during the construction phase of the project will utilize the engineering and administration offices so additional temporary facilities will not be required. This will however move the capital expense up for these buildings.

Training and Startup was included in the capital cost and was estimated based on having 2 process/training engineers on site for an 8 week period. 34 weeks of Vendor services were included in the engineering effort.

Initial Fill & Reagents costs were estimated using a one and half percent (1.5%) factor of the installed plant equipment costs.

Spare parts costs were estimated using a five percent (5%) factor of the installed plant equipment cost.

Owners Costs were included in the estimate and were provided by the Owner. An allowance of US$ 5 Million dollars was included.

Mobile Equipment was included in the indirect costs. Twenty pickup trucks were included along with ten large vans, two forklifts, two cranes and an ambulance.



21.3.3 Contingency and Accuracy

The KDE crushing and process plant portion of the cost estimate includes a 15 percent contingency for project unknowns and identified risks. Contingency is a necessary part of the cost estimate and KDE utilized 15 percent based on the fact that less than 10 percent of the engineering is completed to date. KDE believes the estimated contingency amount will be spent during the life of the project for identified risks and unknown items.

KDE has not performed a statistical analysis of the crushing plant and process plant accuracy of the capital cost estimate. KDE believes, based on previous experience with similar projects, there is a high confidence that the accuracy of the process portion of the FS capital cost estimate will end up between -10 percent and +15 percent of the KDE capital cost estimate.

21.3.4 Exclusions

KDE has excluded the following items from the process plant estimate and they are included elsewhere:

Permits, royalties and licenses

Environmental testing and monitoring

Metallurgical testing

Escalation and Insurances

Taxes, duty and import fees

Reclamation costs which are included in the Preliminary C&R Plan by Golder (July, 2012)

Allowance for design growth or specification changes

21.4 Process Operating Costs

Annual and unit process operating cost estimates for Phase I (5 million tonnes per year) and Phase II (10 million tonnes per year) process operation are summarized in Table 21.5.



Table 21.5 Process Plant Operating Cost Estimate Summary

Cost

Centre

Phase I (5 Mtpa) Phase II (10 Mtpa)

Annual Cost (US$)

Unit Cost (US$)/tonne Ore Treated

Cum


Annual Cost (US$)


Cum


Yerevan Administration Labour

1,946,743 0.39 0.39 1,946,743 0.19 0.19

Site Labour 2,058,495 0.41 0.80 2,058,495 0.21 0.40

Plant Labour 2,518,302 0.50 1.30 2,906,456 0.29 0.69

Plant Consumables 7,552,827 1.51 2.82 14,705,654 1.47 2.16

Power & Energy 3,973,892 0.80 3.61 4,960,780 0.55 2.71

Mechanical 4,094,810 0.82 4.43 4,823,883 0.48 3.19

Water 47,925 0.01 4.44 95,850 0.01 3.20

G&A USD 4,005,238 0.81 4,005,238 0.41

PROCESS USD 18,187,756 3.63 27,492,623 2.80

TOTAL USD 22,192,995 4.44 USD/t 31,497,862 3.20 USD/t

Unit Cost Gold Ounces Produced 173 USD/oz 122 USD/oz

Net Gold Cash Revenue 1,027 USD/oz 1,078 USD/oz



Reagent cost estimates are shown in Table 21.6. The reagent consumption rates are based on metallurgical testwork and on similar projects.



Table 21.6 Operating Cost Estimate - Heap Leach Consumables

Section

Phase I (5 Mtpa) Phase II (10 Mtpa)

InstalledPower kW

Power Demand kW

Annual Cost (US$)

kWh/t Installed

Power kW

Power Demand kW

Annual Cost (US$)

kWh/t

Area 10 - Primary Crushing 614 461 140,709 0.5628 1,019 764 231,269 0.4625

Area 13 - Secondary Crushing 2,018 1,670 531,592 2.1264 2,145 1,743 554,895 1.1098

Area 15 - Tertiary Crushing 1,847 1,624 518,856 2.0754 3,182 2,864 915,132 1.8303

Area 17 - Lime Addition 210 157 50,216 0.2009 210 157 50,216 0.1004

Area 19 - Ore Stacking 4,970 3,728 1,556,157 6.2246 4,970 3,728 1,556,157 3.1123

Area 20 - Heap Leach 2,163 1,097 457,817 1.8313 4,252 2,193 915,634 1.8313

Area 1 - Carbon Adsorption 6 4 338 0.0014 8 6 578 0.0012

Area 2 - Acid Wash 8 6 1,859 0.0074 8 6 1,859 0.0037

Area 3 - Carbon Strip 2 2 240 0.0010 2 2 240 0.0005

Area 4 - Strip Solution Handling 386 285 118,611 0.4744 386 285 118,611 0.2372

Area 5 - EW & Refining 185 139 40,364 0.1615 245 183 59,056 0.1181

Area 6 - Carbon Regeneration & Handling 149 112 45,935 0.1837 149 112 45,935 0.0919

Area 7 Reagent Mix / Storage 14 9 3,748 0.0150 14 9 3,748 0.0075

Area 30 Barren Solution Pumping 1,848 1,224 507,451 2.0438 3,640 2,433 507,451 2.0314

Area 90 - Auxiliary Equipment - - - - - - - -

Total Heap Lech Power Cost (per annum) 3,973,892 4,960,780

Power Consumption 15.91 10.94

Cost per Tonne Ore 0.80 0.55



Wear material cost estimates are provided in Table 21.7.

Table 21.7 Maintenance

Tonnage 5 Mtpa 10 Mtpa Source of Information

Total Equipment Installed Cost, US$ 81,896,207 96,477,659 Capital Cost Estimate

Maintenance Percentage, % 5.00 5.00 Other Projects

Annual Maintenance Cost, US$ 4,094,810 4,823,883 Calculated

Cost per Tonne, US$/t 0.82 0.48 Calculated

The process water cost estimate, shown in Table 21.8, is based on the calculated consumption and the delivered water price of $0.05 per tonne.

Table 21.8 Water

Tonnage 5 Mtpa 10 Mtpa

Tonnes water per tonne ore 0.1917 0.1917

Cost, US$ per tonne water 0.05 0.05

Annual Maintenance Cost 47,925 95,850

Cost per Tonne, US$/t 0.01 0.01

21.5 Waste Dump Facility Capital Costs

Initial and sustained capital costs for construction of the Waste Dump Facility are summarized in Table 21.9.

Table 21.9 Waste Dump Facility Cost Estimate, US$

Description Year -1 Year 2 Year 3 Year 5 Total

Earthwork 8,797,041 3,440,942 3,634,038 2,561,569 18,423,589

Geosynthetics 2,438,279 340,682 77,729 75,118 2,931,807

Pipework 1,126,758 390,042 186,900 130,986 1,834,686

Miscellaneous 111,000 0 16,000 0 127,000

Total Material and Labor 12,463,077 4,171,166 3,914,667 2,767,673 23,317,083

Detailed Engineering 373,892 125,150 39,147 27,677 565,866

Construction QA/QC 623,154 208,583 195,733 138,384 1,165,854

Contingency 3,115,769 1,042,917 978,667 691,918 5,829,271

Total 16,575,893 5,548,316 5,128,213 3,625,651 30,878,074



21.6 Heap Leach Facility Capital Costs

Initial and sustained capital costs for construction of the Heap Leach Facility are summarized in Table 21.10.

Table 21.10 Heap Leach Facility Cost Estimate, US$

Description Year -1 Year 1 Year 3 Year 6 Total

Earthwork $9,299,830 $2,966,005 $5,723,198 $5,566,826 $23,555,859

Geosynthetics $2,717,551 $1,634,014 $3,196,464 $3,212,211 $10,760,239

Pipework $337,468 $122,644 $1,615,046 $934,501 $3,009,658

Miscellaneous $55,600 $0 $42,800 $41,800 $140,200

Total Material and Labour $12,410,449 $4,722,662 $10,577,507 $9,755,337 $37,465,956

Detailed Engineering $372,313 $141,680 $105,775 $97,553 $717,322

Construction QA/QC $620,522 $236,133 $528,875 $487,767 $1,873,298

Earthwork Construction Contingency

$1,817,572 $733,954 $1,422,833 $1,384,489 $5,358,848

Geosynthetics, Pipework and Misc. Construction Contingency

$466,593 $263,499 $728,146 $628,277 $2,086,514

Total $15,687,450 $6,097,928 $13,363,137 $12,353,423 $47,501,938

21.7 Wastewater Treatment Plant Operating and Capital Costs

TThe Wastewater Treatment Plant (WWTP) capital and operating cost (CAPEX and OPEX) estimates are summarized in Table 21.11. The feasibility design and cost estimates were based on achieving compliance with RoA MAC Category II standards at the point of discharge. On August 28, 2012, Lydian was informed by regulatory officials that WWTP treated effluent quality can likely include an allowance for a mixing zone with the point of compliance being 500 m downstream of the discharge point. Golder’s preliminary assessment of the impact of this anticipated change in the regulatory point of compliance is that construction and operation of the water treatment plant could likely be deferred for a minimum of one year. Due to this late notification in the interpretation of regulatory compliance and the associated impact on the design criteria, a revised WWTP design will need to be developed during detailed engineering. Pending results of further evaluation, the revised WWTP design may be simplified to either eliminate advanced treatment operations (reverse osmosis and ion exchange) or provide advanced treatment to be used only on an “as needed” basis. Secondary waste (reverse osmosis brine and ion exchange regenerant) handling via enhanced evaporation may also be reduced or eliminated. CAPEX and OPEX estimates are expected to be reduced as a direct result of the reduction of the WWTP treatment process requirements. The design of the Influent Effluent Basin is also expected to require modifications that may include separate internal ponds and a system to provide for monitoring prior to discharge.



Table 21.11 Wastewater Treatment Plant Cost Estimates

Year Capital Cost US$

Operating Cost US$

1 19,078,412 1,116,000

2 - 1,116,000

3 - 1,116,000

4 - 1,116,000

5 - 1,116,000

6 - 1,116,000

7 - 1,116,000

8 - 1,116,000

9 - 1,116,000

10 - 1,116,000

11 - 1,116,000

Total 19,078,412 12,276,000

21.8 Closure and Reclamation Cost Estimate

Costs for closure and reclamation have been developed and the following schedule prepared assuming that closure and reclamation will commence in project year 13 and concurrent reclamation throughout the life of mine have not been evaluated in detail at the feasibility level. The cost estimate is summarized in Table 21.12.

Table 21.12 Closure and Reclamation Cost Estimate

Year Operating Cost US$

13 17,891,17414 12,519,45915 3,364,913

16 259,969

17 259,969

18 382,765

19 210,851

20 210,851

21 210,851

22 210,851

23 210,859

24 1,488,966

Total 37,221,477



21.9 Newmont Agreement (Royalty)

The cash flow model presented in Section 22 includes payments to Newmont as described in Section 4.

21.9.1 Working Capital

Working capital has been estimated for the project to reflect deficiencies in cash flow to cover operating expenses due to the delay between mining ore and receiving payment for bullion. This capital is shown in the Section 22 cash flow model but is not included in the financial analysis calculations. At the end of the project the working capital sums to zero.



22 ECONOMIC ANALYSIS


A pre-income tax economic analysis model was prepared. The model uses the production and cost estimates shown earlier in this report. Costs are in 2012 constant dollars. The economic analysis uses a gold sales price US$ 1,200 per ounce and a silver sales price of US$ 20.00 per ounce and plant estimated recoveries of 88.64 percent for gold for all PMM grades processed and 36.89 percent for silver based on a nominal average grade. Operating cost estimates and values for key design parameters that have been presented in previous sections of the FS were used as required. The economic analysis was done on an all equity financing basis.

22.1 Owner Operating Mining Case

Table 22.1 shows the project's pre-income tax internal rate of return and the project's pre-income tax net present values at discount rates from 0 to 20 percent.

Table 22.1 Owner Operated Mining Economic Analysis Summary

Internal Rate of Return (IRR), % 27.7

Net Present Values US$ x 1000

@ 0 % discount rate 1,121,616

@ 5 % discount rate 645,976




Table 22.2 summarizes the project's revenue, costs and pre-income tax cash flow and also shows the values in units of resource processed and saleable gold ounces.



Table 22.2 Owner Operated Mining Economic Analysis Summary - Before Tax Cash Flow and Unit Values

$US x 1000 $US/t Resource

$US/oz Gold

Mine Gate Value of All Resource et of Transportation andRefining

2,424,680 25.55 1,194.75

Mining Operating Cost (596,959) (6.29) (294.15)

Processing Cost (277,116) (2.92) (136.55)

Waste Water Treatment Plant (12,276) (0.13) (6.05)

General & Administration (44,407) (0.47) (21.88)

Royalties (Newmont Payment) (20,000) (0.21) (9.85)

Cash Operating Cost (950,757) (10.02) (468.48)

Cash Operating Cash Flow 1,473,923 15.53 726.27

Capital Cost including Pre-Production Development (416,102) (4.38) (205.03)

Pre-Income Tax Cash Flow 1,057,821 11.15 521.24

Table 22.3 shows the economic analysis for this FS study.



Table 22.3 Cash Flow Schedule

Year -2

Year -1

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13

Year 14

Year 15

Year 16

Year 17

Year 18

Year 19

Year 20

Year 21

Year 22

Year 23

Year 24

Total

TOTAL OPEN PIT Resources Mined tonnes 3,750,000 5,655,120 5,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 9,541,000 10,000,000 948,000 94,894,120

Gold g/t 0.915 0.966 0.957 0.730 0.812 0.870 0.639 0.658 0.549 0.562 0.815 1.508 0.750

Silver g/t 2.12 3.16 5.02 4.85 3.76 3.94 3.43 3.00 2.27 2.14 2.35 3.20 3.27

Waste tonnes 6,314,000 9,471,880 10,193,000 23,466,000 23,500,000 23,500,000 23,500,000 23,500,000 23,500,000 23,959,000 20,433,000 375,000 211,711,880

Total Mined tonnes 10,064,000 15,127,000 15,193,000 33,466,000 33,500,000 33,500,000 33,500,000 33,500,000 33,500,000 33,500,000 30,433,000 1,323,000 306,606,000

TOTAL RESOURCE PROCESSED

Resources Processed

tonnes

3,750,000

5,000,000

5,000,000

10,000,000

10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 1,144,120 94,894,120

Gold g/t 0.915 1.046 0.957 0.730 0.812 0.870 0.639 0.658 0.549 0.553 0.815 1.310 0.750

Silver g/t 2.12 3.27 5.02 4.85 3.76 3.94 3.43 3.00 2.27 2.15 2.35 3.05 3.27

TOTAL RECOVERY

Gold Recovery

% 88.08%

87.95%

87.55%

86.30%

86.35% 86.47% 87.71% 87.92% 89.87% 92.45% 93.72% 93.44% 88.64%

Silver Recovery % 30.40% 30.59% 31.18% 31.82% 31.76% 31.64% 34.76% 33.96% 44.03% 54.26% 58.51% 54.93% 36.89%

TOTAL METAL RECOVERABLE

Gold Recoverable

ounces

97,217

147,858

134,631

202,544

225,502 241,967 180,275 185,958 158,656 164,249 245,558 45,032 2,029,446

Silver Recoverable ounces 77,656 160,632 251,431 495,977 384,109 400,445 383,822 327,272 320,700 375,437 441,372 61,622 3,680,475

Silver/Gold Ratio 0.8 1.1 1.9 2.4 1.7 1.7 2.1 1.8 2.0 2.3 1.8 1.4 1.8

Cumulative Recoverable Gold

ounces

97,217

245,075

379,706

582,250

807,752 1,049,718 1,229,993 1,415,951 1,574,606 1,738,855 1,984,413 2,029,446

Cumulative Recoverable Silver

ounces

77,656

238,289

489,719

985,696

1,369,805 1,770,250 2,154,072 2,481,343 2,802,044 3,177,481 3,618,853 3,680,475

Initial Year Percent of Recoverable Metal Recovery Factor

%

85.00

81.67

81.67

80.00

78.33 79.17 80.83 75.83 75.83 76.67 75.83 100.00

Second Year Percent of Recoverable Metal Recovery Factor

%

15.00

18.33

18.33

20.00

21.67 20.83 19.17 24.17 24.17 23.33 24.17 24.17

Gold Recovered ounces 82,634 135,333 137,056 186,717 217,152 240,416 196,132 175,571 165,254 164,266 224,540 104,375 2,029,446

Silver Recovered ounces 66,008 142,832 234,784 442,877 400,081 400,242 393,682 321,747 322,288 365,338 422,309 168,287 3,680,475



Year -2 Year -1 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12

Revenue COMMODITY PRICES Gold $/ounce 1,200.00 1,200.00 1,200.00 1,200.00 1,200.00 1,200.00 1,200.00 1,200.00 1,200.00 1,200.00 1,200.00 1,200.00

Silver $/ounce 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00 20.00

GROSS SALES Gold $ 99,161,343 162,399,797 164,467,187 224,060,998 260,582,057 288,498,818 235,358,102 210,684,611 198,304,530 197,119,182 269,447,583 125,250,458 Silver $ 1,320,157 2,856,632 4,695,686 8,857,539 8,001,618 8,004,847 7,873,638 6,434,937 6,445,768 7,306,759 8,446,182 3,365,743

REFINING & TRANSPORTATION Gold $ (433,831) (710,499) (719,544) (980,267) (1,140,047) (1,262,182) (1,029,692) (921,745) (867,582) (862,396) (1,178,833) (547,971) $/ounce (5.25) (5.25) (5.25) (5.25) (5.25) (5.25) (5.25) (5.25) (5.25) (5.25) (5.25) (5.25)

Silver $ (48,895) (105,801) (173,914) (328,057) (296,356) (296,476) (291,616) (238,331) (238,732) (270,621) (312,822) (124,657) $/ounce (0.74) (0.74) (0.74) (0.74) (0.74) (0.74) (0.74) (0.74) (0.74) (0.74) (0.74) (0.74)

PAYABLES Gold % 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 Silver % 90.00 90.00 90.00 90.00 90.00 90.00 90.00 90.00 90.00 90.00 90.00 90.00

NET REVENUE Gold $ 98,727,512 161,689,298 163,747,643 223,080,731 259,442,011 287,236,636 234,328,411 209,762,866 197,436,948 196,256,786 268,268,750 124,702,487 $/ounce 1,194.75 1,194.75 1,194.75 1,194.75 1,194.75 1,194.75 1,194.75 1,194.75 1,194.75 1,194.75 1,194.75

Silver $ 1,144,136 2,475,748 4,069,595 7,676,534 6,934,735 6,937,534 6,823,820 5,576,946 5,586,332 6,332,524 7,320,024 2,916,977 $/ounce 17.33 17.33 17.33 17.33 17.33 17.33 17.33 17.33 17.33 17.33 17.33

Total Net Revenue $ 99,871,648 164,165,045 167,817,238 230,757,265 266,376,746 294,174,171 241,152,230 215,339,812 203,023,280 202,589,310 275,588,774 127,619,465 Operating Costs

Mining Cost $ 210,380 23,278,162 30,400,519 31,945,050 57,286,719 57,534,950 57,635,301 57,544,095 55,271,608 49,097,542 48,308,680 45,566,725 7,717,436 $/tonne 6.21 6.08 6.39 5.73 5.75 5.76 5.75 5.53 4.91 4.83 4.56 6.75

Mining Cost Lease $ 593,571 5,531,934 8,444,993 9,084,763 14,842,885 14,249,314 9,310,952 6,397,892 5,947,514 189,391 189,391 189,391 189,391 - $/tonne 2.25 1.82 2.97 1.42 0.93 0.64 0.59 0.02 0.02 0.02 0.02 -

Processing $ 13,612,500 18,150,000 18,150,000 28,000,000 28,000,000 28,000,000 28,000,000 28,000,000 28,000,000 28,000,000 28,000,000 3,203,537 $/tonne 3.63 3.63 3.63 2.80 2.80 2.80 2.80 2.80 2.80 2.80 2.80 2.80

Waste Water Treatment Plant

$ 1,116,000.00 1,116,000.00 1,116,000.00 1,116,000.00 1,116,000.00 1,116,000.00 1,116,000.00

1,116,000.00

1,116,000.00

1,116,000.00 1,116,000.00 -

$/tonne 0.30 0.22 0.22 0.11 0.11 0.11 0.11 0.11 0.11 0.11 0.11 - General & Administration $ 3,037,500 4,050,000 4,050,000 4,100,000 4,100,000 4,100,000 4,100,000 4,100,000 4,100,000 4,100,000 4,100,000 469,089

$/tonne 0.81 0.81 0.81 0.41 0.41 0.41 0.41 0.41 0.41 0.41 0.41 0.41

Royalties (Newmont payment)

$ 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 - -

-

-

$/tonne 1.07 0.80 0.80 0.40 0.40 - - - - Total Operating Cost $ 593,571 5,742,313 53,489,155 66,801,281 74,103,935 108,752,033 104,061,902 97,249,193 96,707,609 88,676,999 82,502,933 81,714,071 78,972,115 11,390,062

Operating Profit Operating Profit $ (593,571) (5,742,313) 46,382,493 97,363,764 93,713,303 122,005,233 162,314,844 196,924,977 144,444,622 126,662,813 120,520,347 120,875,239 196,616,659 116,229,402

$/gold ounce 561.30 719.44 683.76 653.42 747.47 819.10 736.47 721.44 729.30 735.85 875.64 1,113.57 Capital Costs

Mining Cost - Purchase $ 199,000 3,060,500 2,455,000 443,000 2,733,000 65,000 345,000 56,000 1,388,000 8,000 196,000 - - -

Mining Cost - Down Payment 593,600 4,938,600 2,913,200 639,800 5,758,400 - - - 189,400 - - - - -

Process Plant Direct Cost $ 82,236,018 82,236,018 19,103,376

Process Plant Indirect Cost & Contingency

$ 32,048,014 32,048,014 7,768,879 Waste Water Treatment

Plant $ 19,078,412

Leach Pads $ 15,687,450 6,097,928 13,363,137 12,353,423 Waste Dump $ 16,575,893 5,548,316 5,128,213 3,625,651 Closure and Reclamation $ Total Capital Cost $ 115,076,632 154,546,474 30,544,540 6,631,116 53,855,004 65,000 3,970,651 12,409,423 1,577,400 8,000 196,000 0 0 0

Working Capital Costs

Changes to Working Capital

$ (22,767) (197,486) 8,342,714 6,046,389 111,018 5,118,292 3,794,390 3,089,204 (5,374,600) (2,333,217) (1,016,045) (4,725) 7,543,612 (25,096,780)

Pre-Income Tax Cash Flow Pre-Income Tax Cash Flow $ (115,670,203) (160,288,787) 15,837,953 90,732,648 39,858,299 121,940,233 158,344,193 184,515,554 142,867,222 126,654,813 120,324,347 120,875,239 196,616,659 116,229,402

$/gold ounce 670.44 290.82 653.07 729.19 767.49 728.42 721.39 728.12 735.85 875.64 1,113.57

Cumulative Pre-income Tax Cash Flow

$ (115,670,203) (275,958,991) (260,121,038) (169,388,390) (129,530,092) (7,589,859) 150,754,334 335,269,888 478,137,110 604,791,923 725,116,270 845,991,509 1,042,608,168 1,158,837,570

Payback, operating years 4.0 Pre-Income Net Present Values and Rate of Return

NPV @ 0% discount rate $ 1,121,616,094 NPV @ 5% discount rate $ 645,975,968 NPV @ 10% discount rate $ 366,765,059 NPV @ 15% discount rate $ 197,648,946 NPV @ 20% discount rate $ 92,454,288

IRR 27.7%



Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 Year 21 Year 22 Year 23 Year 24 Total Revenue

COMMODITY PRICES Gold $/ounce 1,200.00 Silver $/ounce 20.00

GROSS SALES Gold $ 2,435,334,667 Silver $ 73,609,507

REFINING & TRANSPORTATION

Gold $ (10,654,589)

$/ounce (5.25) Silver $ (2,726,278)

$/ounce (0.74)

PAYABLES Gold % 100.00 Silver % 90.00

NET REVENUE Gold $ 2,424,680,078 $/ounce 1,194.75

Silver $ 63,794,906 $/ounce 17.33

Total Net Revenue $ 2,488,474,985 Operating Costs

Mining Cost $ 521,797,166 $/tonne 5.50

Mining Cost Lease $ 75,161,381 $/tonne 0.79

Processing $ 277,116,037 $/tonne 2.92

Waste Water Treatment Plant $ 12,276,000 $/tonne 0.13

General & Administration $ 44,406,589 $/tonne 0.47

Royalties (Newmont payment) $ 20,000,000 $/tonne 0.21

Total Operating Cost $ - - - - - - - - - - - 950,757,173 Operating Profit

Operating Profit $ 1,537,717,812 $/gold ounce 757.70

Capital Costs Mining Cost - Purchase $ 10,948,500 Mining Cost - Down Payment 15,033,000 Process Plant Direct Cost $ 183,575,411

Process Plant Indirect Cost & Contingency

$ 71,864,906

Waste Water Treatment Plant $ 19,078,412 Leach Pads $ 47,501,938 Waste Dump $ 30,878,074 Closure and Reclamation $ 17,891,174 12,519,459 3,364,913 259,969 259,969 382,765 210,851 210,851 210,851 210,851 210,859 1,488,966 37,221,477 Total Capital Cost $ 17,891,174 12,519,459 3,364,913 259,969 259,969 382,765 210,851 210,851 210,851 210,851 210,859 1,488,966 416,101,718

Working Capital Costs Changes to Working Capital $

Pre-Income Tax Cash Flow Pre-Income Tax Cash Flow $ (17,891,174) (12,519,459) (3,364,913) (259,969) (259,969) (382,765) (210,851) (210,851) (210,851) (210,851) (210,859) (1,488,966) 1,121,616,094

$/gold ounce 552.67

Cumulative Pre-income Tax Cash Flow

$ 1,140,946,396 1,128,426,937 1,125,062,024 1,124,802,055 1,124,542,086 1,124,159,321 1,123,948,470 1,123,737,620 1,123,526,769 1,123,315,918 1,123,105,060 1,121,616,094



Sensitivity Analysis

The project's pre-income tax internal rate of return sensitivity relative to incremental changes in metal prices, recoveries, grades and costs are shown in Table 22.4 and Figure 22.1

Table 22.4 Rate of Return Sensitivity

Percent Changes

-20% -15% -10% -5% Base 5% 10% 15% 20%

Gold Price 17.8% 20.5% 23.0% 25.4% 27.7% 29.9% 32.1% 34.1% 36.2%

Silver Price 27.5% 27.5% 27.6% 27.6% 27.7% 27.8% 27.8% 27.9% 27.9%

Gold Recovery 17.9% 20.5% 23.0% 25.4% 27.7% 29.9% 32.0% 34.1% 36.1%

Silver Recovery 27.5% 27.5% 27.6% 27.6% 27.7% 27.8% 27.8% 27.9% 27.9%

Gold Grade 17.9% 20.5% 23.0% 25.4% 27.7% 29.9% 32.0% 34.1% 36.1%

Silver Grade 27.5% 27.5% 27.6% 27.6% 27.7% 27.8% 27.8% 27.9% 27.9%

Operating Cost 31.6% 30.6% 29.7% 28.7% 27.7% 26.7% 25.7% 24.7% 23.7%

Capital Cost 33.9% 32.1% 30.5% 29.1% 27.7% 26.4% 25.2% 24.1% 23.1%

Figure 22.1 Amulsar Gold Project Pre-Tax Sensitivity IRR

The project's pre-income tax net present value, using a five percent discount rate, sensitivity relative to incremental changes in metal prices, recoveries, grades and costs are shown in Table 22.5 and Figure 22.2.



Table 22.5 NPV Sensitivity (US$ X 1000)

Percent Changes

-20% -15% -10% -5% Base 5% 10% 15% 20%

Gold Price 324,235 404,670 485,106 565,541 645,976 726,411 806,846 887,282 967,717

Silver Price 637,349 639,506 641,663 643,819 645,976 648,133 650,289 652,446 654,603

Gold Recovery 325,643 405,726 485,809 565,893 645,976 726,059 806,143 886,226 966,309

Silver Recovery 637,669 639,746 641,822 643,899 645,976 648,053 650,130 652,206 654,283

Gold Grade 325,643 405,726 485,809 565,893 645,976 726,059 806,143 886,226 966,309

Silver Grade 637,669 639,746 641,822 643,899 645,976 648,053 650,130 652,206 654,283

Operating Cost 774,792 742,588 710,384 678,180 645,976 613,772 581,568 549,364 517,160

Capital Cost 716,605 698,948 681,291 663,633 645,976 628,319 610,661 593,004 575,347

Figure 22.2 Amulsar Gold Project Pre-Tax Sensitivity NPV@5%

As seen in Tables 22.4 and 22.5, the project's pre-income tax rate of return is 27.7 percent and the project's pre-income tax net present value at a 5 percent discount rate is US$ 646.0 million. A ten percent increase in the gold price increases the estimated rate of return to 32.1 percent and increases the project's net present value, at a 5 percent discount rate, to US$ 806.8 million.

The sensitivity of the project to gold price in increments of US$ 100/oz is presented in Table 22.6.



Table 22.6 Summary of Key Financial Parameters (Sensitivity to Gold Price)

Gold Price, US$/oz 1,100 1,200 1,300 1,400 1,500

NPV(5), (000's) 512,504 645,976 779,448 912,920 1,046,392

IRR, Pre-Taxes 23.8% 27.7% 31.3% 34.8% 38.1%

Payback, Operating Years 4.5 4.0 3.7 3.4 3.1



23 ADJACENT PROPERTIES


There are no adjacent properties that are material to the estimation of resources for the Amulsar project. The information presented herein is considered to be sufficient for a feasibility study. It is anticipated that additional details regarding optimizing mining methods, metallurgical testwork and flowsheet development, permitting, waste dump and leach pad management, closure and rehabilitation design, and infrastructure items will be expanded upon in the detail engineering effort. Other studies in support of the Feasibility Study were prepared by Golder including the Integrated Water Studies (Golder, 2012i) which also used to support the ESIA, the Earthquake Hazard Assessment and Seismic Parameters (Golder, 2012b), and a Technical Memorandum on Phase II Kinetic Testing (Golder, 2012e). The information from the Golder Integrated Water Studies has been discussed within the context of Section 20.0. A brief discussion on the latter two topics is presented in the following subsections.

23.1.1 Seismicity and Seismic Hazards

Golder prepared a report titled Earthquake Hazard Assessment and Seismic Parameters for the Amulsar Project (Golder, 2012b) that provided a basic assessment of seismic hazards and developed the seismic design parameters for use by the various engineering teams for use in design of project infrastructure. The Amulsar gold project site is located within a mountainous, geologically complex, and seismically active region of the Arabia-Eurasia plate boundary zone. The northward motion of the Arabian plate and collision with the Eurasia plate has continued to generate crustal deformation that is manifest as active faulting and folding, period volcanic eruptions, and destructive earthquakes. Historic records indicate that at least 3,150 earthquakes have occurred in the region from 2150 BC to the end of August 2011. Armenian records indicate that the site has experienced strong to very strong shaking at least three times in the last 900 years.

A seismotectonic model containing 53 separate seismic sources is used to develop probabilistic and deterministic seismic hazard analyses specific to the Amulsar gold project site location. The Pambak-Sevan-Sunik fault Segment 4 (PSSF4) located approximately 10 km north of the Amulsar gold project area at its closest approach makes a strong contribution to the site hazard. The PSSF4 has an average long-term slip rate of 1.55±0.65 mm/yr., and is not known to have generated a major earthquake in historic time (approximately the last 10,000 years).

Seismic hazard analyses were performed at the heap leach facility, the crusher facility, the waste dump and the open pit sites. Probabilistic analyses yielded a 475- year return period PGA, typically defined as the Operational Base Earthquake (OBE), that ranges from 0.18 g and 0.20 g and a 2,475-year return period PGA, typically defined as the Maximum Event Earthquake for design purposes that ranges from 0.33 g and 0.40 g for



soil Site Class B at the four sites. Deterministic results PGA values of median PGA values ranging 0.22 g and 0.27 g across the four sites. Deterministic results PGA values of 84th percentile PGA values ranging 0.37 g and 0.47 g across the Other Relevant Data and Information

23.2 Preliminary Geochemical Assessment

Golder is performing a geochemical characterization program of waste material at the Amulsar site. The characterization work is being conducted to support the FS and the ESIA. The overall objective of this geochemical characterisation program is to evaluate the long-term effluent water quality resulting from interaction of the waste rock with the natural environment. The waste rock will contain material from the Erato, Tigranes, and Artavasdes pits, and is projected to be composed of 54% volcanics, 41% porphyry andesite, and 5% breccias. Water quality is evaluated in terms of acid rock drainage (ARD) and metals leaching (ML) potential.

The work has focused on waste materials available from samples obtained from the Tigranes and Artavasdes deposits. The results of initial static testing have been completed and kinetic testing is in progress. The report detailing the static testing evaluation included an initial program of acid base accounting (ABA), sample representativeness evaluation, and sample selection for kinetic testing. A second report provided initial water quality estimates based on short-term leach testing and evaluation of the solid-phase composition. Both reports were provided to support waste management and waste water treatment plant designs for the project.

23.2.1 Static Testing

The results of the Amulsar waste rock static characterization can be summarized as follows:

1) All three of the lithologies comprising the Amulsar waste rock show some potential to generate acidity and leach metals due to the existence of sulphides coupled with a fundamental absence of carbonate or other high solubility buffering phases.

2) Conservative estimates suggest that aluminum, boron, copper, cobalt, fluoride, iron, lead, manganese, nickel, selenium, silica, sulfate, strontium, vanadium, and zinc will be elevated in effluents emanating from the future waste rock pile. Results from the HCT tests will confirm if these constituents are indeed released in elevated concentrations over longer time periods under conditions more indicative of the natural environment and will provide an estimation of the rate ofrelease.

3) Two separate populations of samples are observed for the porphyry andesite and are distinguished by the mineralogical composition. Samples containing a high proportion of sulfate minerals show much less propensity to generate acid than those samples containing a high proportion of sulfide minerals. Therefore, total sulphur concentration should not be used as a cutoff criterion for PAG vs. NPAG material.

4) The volcanic and breccia samples contain alunite as the primary sulphur species and do not contain much pyrite. However, these lithologies still show some degree of acid potential; and.



5) Given their high sulfide composition, porphyry andesite samples show the strongest propensity to generate acid and leach metals. Leaching of most metals tends to increase with decreasing pH.

23.2.2 Kinetic Testing

Kinetic testing is ongoing, and is being conducted to verify whether the various ARD/ML potentials identified by static testing will indeed be realized over time, what the associated reaction rates (for sulfide oxidation, depletion of neutralization potential, mineral dissolution) are, and what the composition of long-term discharges will be. The kinetic testing will also be used to resolve any uncertainties identified during the static testing phase.

The kinetic testing results were completed through week 10 at the time that thisfeasibility study was finalized, are still of a preliminary nature, as the reactions being monitored are kinetically slow. A report on interim evaluation was prepared (Golder, 2012e) and is summarized herein and will be revisited after the minimum recommended timeframe for HC testing of 20 weeks has elapsed. Samples that appear to have reached a steady state will be identified and may be recommended for termination after 20 weeks of testing.

In general, the HC testing results to date indicate there is a potential for acid generation and metals leaching from rocks that contain significant pyrite, primarily porphyry andesite samples. Currently, the constituents of concern for long term water quality include aluminum, arsenic, cobalt, copper, iron, fluoride, iron, manganese, nickel, selenium, strontium, sulfate, vanadium, and zinc.

Additionally, samples where pyrite was not observed do not indicate a high acidgenerating or metals leaching potential. All humidity cells will be continued to be monitored to a minimum of 20 weeks to determine if acidic conditions will be reached and to estimate leachate concentrations after the onset of acidic conditions.

23.2.3 Spent Ore Characterization

Evaluation of spent ore samples generated from column leach tests suggests that most materials comprising the HLF facility will have ARD potential. Six of the seven spent ore samples have Neutralization Potential Ratio (NPR) values less than 1, meaning that they fall well into the Potentially Acid Generating (PAG) field. The average sulfide concentration of these six samples is greater than 0.5%.

Short term leach tests on the spent ore consisted of SPLP tests. The SPLP tests give an idea of material on the surface of the spent ore that can be mobilized via a first flush (ie. initial precipitation event), and suggest the following components will be mobile in exceedance of IFC or Armenian guidelines:

Fluoride: 0.11-0.21 mg/L (three samples in exceedance)

Aluminum: 0.15-0.48 mg/L (five samples)

Boron: 0.02 mg/L (one sample)

Copper: 0.005-0.01 mg/L (two samples)



Manganese: 0.01 mg/L (one sample)

Strontium: 0.012-0.017 mg/L (all samples)

Zinc: 0.014-0.042 mg/L (two samples)

It should be noted that for a number of the analytes, the lab detection limit was well above the standard (generally the Armenian standard, and not the IFC guidelines), thus it is difficult to tell for these analytes whether they are in exceedance when the lab lists them as below detect.



24 INTERPRETATION AND CONCLUSIONS

Geology and Resources

The Amulsar high sulphidation epithermal gold-silver deposit has been defined as a result of systematic exploration activities undertake over a period from 2007 to 2012. More recently, surface geological and structural mapping, supported by a large database of orientated core measurements, has resulted in an improved understanding of the geology and mineralization of gold and silver for the deposit. In turn, this has allowed the estimation of resources to better reflect the geology and mineralization characteristics of the deposit.

Exploration work for the project is professionally managed, using procedures that meet generally accepted industry best practices. The project has been explored by geophysical techniques, diamond core and reverse circulation drilling, and chip sampling. In 2012, a structural study over the Amulsar property was commissioned by Lydian. This study necessitated a major reinterpretation of geology and mineralization constraints for the project.

Mineral resources for the project are based on the interpretation of two major geological units which characterize the project. The UV unit is the primary host to gold and silver mineralization with mineralization in the LV unit limited to contacts with mineralized UV rocks and mineralized structures that pass through both UV and LV rocks. The disposition of UV and LV rocks are structurally complex, as the area has undergone a thrust faulting event which formed an antiform structure across the Amulsar area. The thrusting event was followed by two episodes of extensional faulting which have dissected the UV and LV units into a complex arrangement of structurally bounded blocks.

Mineralization at the Amulsar projects is related to faulting, porous and permeable lithological units within the UV, faulting and fractures, and relatively impermeable LV rocks acting causing ‘ponding’ of mineralizing fluids along UV-LV boundaries. As a result, mineralization within the UV unit is complex and difficult to map because of small scale variations in lithologies, fracture zones and a complex relationship to fault structures. Mineralization boundaries are difficult to define as they can grade from distinct mineralization to diffuse mineralization and because mineralization is too variable or short ranged to be mappable.

In the absence of clear mappable controls of mineralization an LMIK estimator was chosen as the most appropriate methodology to estimate gold resources for the UV unit. Gold mineralization for the LV unit is limited and overall subordinate to UV mineralization, and therefore, an OK estimator was used for this unit. Silver mineralization is not well understood, probably unrelated to gold and significantly low-grade. An OK approach to estimating silver for the UV and LV zones was deemed appropriate.

The confidence level between and within mineralized zones is variable, in part because of the inherent characteristics of gold and silver mineralization and structural complexity, and the variability of drilling from a nominal 40 m × 40 m drillhole spacing to 80 m × 80 m and larger drillhole spacing. AMC considers it prudent to classify resources based on



a range of factors including; estimation related parameters, drillhole spacing, continuity of mineralization that have been outlined, and defining classified resources as mineable shapes. On this basis, resources for the deposit have been classified in the Measured, Indicated and Inferred categories.

Resources have been defined at a cut-off grade of 0.35 g/t gold which is based on a gold price assumption of US$1,200 per troy ounce of gold.

Based on review of exploration data and the estimation of resources AMC concludes that mineral resources can be expanded at depth for the UV rocks to the south-east of the Arshak area, and at depth in the Erato, Tigranes and Artavasdes areas. Further exploration will require reverse circulation drilling and some diamond core drilling to provide structural information. Continuing work on a structural analysis of the project will be important to the accurate estimation of resource and a better geological understanding of mineralization for the Amulsar project.

Mining

Mining of the project deposit will be accomplished with conventional open pit mining methods. A mixed fleet of 10 and 17 cubic meter excavators is planned to load 90 tonne haul trucks.

Each year has been scheduled with 70 lost shifts to account of bad weather, holidays, etc. During an 11 hour shift, it is expected that there will be 532 operating minutes. A mechanical availability of 85% has been applied to all equipment to account for down time for machine repair. A utilization of equipment when it is available is also applied; this utilization factor is variable and based on the frequency a machine is expected to be used. If these assumptions of lost time are not exceeded, then the mining equipment requirements are sufficient for moving the material required by the proposed mine schedule.

There is some uncertainty in the mining productivities that can be achieved during winter weather at the Amulsar project. This has been given consideration during mine planning by significantly reducing the operating days available in the first and fourth quarters. Effectively, the first and fourth quarters have been planned with a month of lost operating days. If the winter weather is severe enough to stop operations more than 17 percent of the time, the mine operations may have difficulty in moving the tonnes required by the mine plan.

The steepness of terrain in the project area creates some difficulties in mine planning. Within close proximity of the pit, there are few suitable locations for dumps and stockpiles. The haul distance to the waste dump facility is approximately 4.5 Km. The opportunity to backfill some of the pits towards the end of mine life will reduce haulage costs and also reduce closure costs after mining is complete.

Appropriate slope stability examination has been completed for the Feasibility Study by Golder in their June 2012 Pit Slope Design Report. Pit slope angles are determined using “reasonably conservative assumptions” but as with any mining project there is always some risk involved in slope stability. As the initial phases are opened up, there will be an opportunity to have a better understanding of the rock mass’ response to



excavation. Slope angles can be adjusted for subsequent phases and blasting/excavating practices can be modified.

There are no foreseeable risks in mining of the Amulsar deposit that will upset the project economics. The pre-stripping required before ore production can begin is only 729,000 tonnes which keeps the pre-production mining costs low.

Mineral Processing

As gold recovery from the Amulsar metallurgical samples were sensitive to crush size up to a top size of 38 mm and as the project economics are sensitive to gold recovery, a ROM leach facility was not considered.

The Amulsar ore body is low grade. Preliminary studies completed to date indicate that it is not beneficial for gold to be extracted utilizing fine grinding as part of a beneficiation scheme. The differential gold extraction between heap leaching and fine grinding plus agitated leaching will not offset the capital and operating cost increases imposed by grinding. Therefore beneficiation techniques including agitation leaching has been eliminated as an option.

The major project risk is due to the fact that there are no existing heap leach gold mines currently operating in the country. Therefore there are also limited manpower resources available to operate the facilities. On a positive note, the Amulsar gold ore does not contain any deleterious elements and with appropriate training it is anticipated that operations will reach acceptable efficiencies.

Infrastructure

Additional work has been devoted to infrastructure components including power acquisition, road upgrading and fresh water development.

Electrical Power is available from the electrical grid inside Armenia at a distance of approximately 27 km from the project site. Initial discussions with the power company indicate that reliable power is available and preliminary design and associated cost has been provided to Lydian for this project.

There are currently dirt roads to the ADR and Mining facility that need to be upgraded. The cost for this effort was reviewed with local construction companies and included in the cost estimate.

Water is available from the Vorotan River by installing a perforated concrete sump along the river and pumping to a storage tank and is then distributed to the processing facilities.

Geotechnical – Heap Leach Facility and Waste Dump Facility

The results of the geotechnical site investigations, laboratory testing and engineering evaluation performed for the Amulsar Project indicate that the heap leach facility and waste dump facility can be developed at each of the selected sites. Development of the sites should be performed in conformance with detailed engineering designs and



construction specifications to be further developed based on the feasibility level engineering designs included in this FS. Review and approval from local Armenian agencies should be obtained as required prior to construction.

Environmental and Social

A number of environmental and social issues were identified through the ESIA scoping exercise and public consultations. The social and environmental issues identified were not prohibitive and contributed to defining the scope of work for further baseline studies to better characterise them and to provide strategies for mitigation designs. Risks associated with the Project design have been addressed via assessments, consultation and the preparation of detailed management plans to be implemented during the construction and operational phases of the Project.

The findings of the Scoping Study and the terms of reference for continuing work were presented, in May 2011, to the neighbouring communities as part of the public consultation and disclosure process. Key issues and observations were noted and appropriate actions were incorporated in the ESIA scope and programme of works. Lydian has commissioned several discrete studies in response to the findings of the Scoping Study and public consultation undertaken to date and has pledged support and resources to the actions identified.

The findings of the ESIA range from Negligible to Major, in the absence of mitigation. Through the implementation of detailed mitigation measures, together with adherence to management plans in the ESAP, it is considered that any potential residual environmental and social impacts can be reduced to a range Negligible to Moderate. The mitigation measures defined in ESIA together with the associated management plans have informed the project design and will be incorporated into operational procedures, as well as Lydian’s overarching ESMS, including health and safety issues.



25 RECOMMENDATIONS

Geology and Resources

The exploration procedures and protocols used by Lydian meet best industry practices and should be continued. Assay quality-control procedures are appropriate but could be strengthened with field duplicates for silver assays. It is AMC’s experience that operating a sample preparation facility provides many benefits to exploration companies without any compromises in assay integrity or reliability. Although AMC has found no issues with the current sample preparation laboratory at Gorayk, developing protocols where samples are passed to the preparation facility in a more formalized process will be beneficial.

It is AMC’s experience that the process of delivering samples from the core shed to the preparation facility should be undertaken in a similar manner to submitting samples to an outside laboratory. Some procedures that could be undertaken are:

Packaging sample bags from the core shed into sealed barrels or large bags that are then delivered to the laboratory;

Barrels or large bags are unpacked by laboratory staff;

Barcodes are assigned to each sample that enters the laboratory and used to log samples out of the laboratory.

A structural study of the Amulsar project initiated in 2012, has provided important directions in understanding the Amulsar project, and should be continued. AMC considers that structural studies of the deposit are a critical part of exploring and defining more mineral resources for the project.

AMC recommends a combination of infill drilling and step-out drilling to systematically extend known areas of mineralization. The infill drilling strategy is suggested to concentrate on delineating measured and indicated by drilling areas classified as inferred by resources, by increasing the drilling density to a nominal spacing of 40 m × 40 m spacing, with both inclined and vertical holes. In some areas, more closely spaced drilling may be required, to better define structural or lithological contacts or areas where mineralization becomes diffuse. Step-out drilling should concentrate on extending mineralization to the south-west of the Arshak area, and extending mineralization at depth in the Erato, Tigranes and Artavasdes areas.

A programme to provide the basis for the above recommendations is summarized in Table 25.1. The estimated costs include ancillary costs such as staff, logistics, and earthworks costs. The total cost for this programme is estimated at US$6,300,000.

Metallurgy

Metallurg Pty Ltd. recommends the following for column leach tests:

Further column leach tests be carried out on metallurgical composites from the Erato deposit. Drillholes and sample intervals should be selected based upon the updated Mineral Resource Estimate and open-pit design prepared by AMC.

Carry out a single refrigerated column leach test on a mixed Tigranes/Artavasdes composite sample, to simulate the effect of ‘cold climate’ on leach performance;



Carry out column leach tests on a run-of-mine ore sample – to determine the potential metallurgical leach performance; and

Conduct additional column leach tests on low-grade material of 0.2 g/t Au and 0.3 g/t Au.

Table 25.1 Estimated Costs for Recommended Exploration Programme

Description Estimated Cost US$

Reverse circulation Drilling, 34,000 metres 3,500,000

Diamond core drilling, 6,000 metres 1,400,000

Analytical costs 1,200,000

Resource update 200,000

Total 6,300,000

Mining

The following recommendations are made by IMC for future engineering work to either increase the accuracy of work performed or to explore opportunities for improvement of project economics.

There are some inconsistencies between the surveyed drill hole collars and the projected topography used in the project General Arrangement. When generating the block model, an adjusted topography was used that tied in with the drill hole collars so that resource numbers would be accurate. It is possible that there could be a minimal increase or decrease in waste stripping requirements in areas with sparse drilling. A survey controlled topography map that ties in with the drill hole collars should be produced.

The option to stockpile low grade material should be studied before mining begins. This would require a 4th phase addition to the leach pad. Currently the mine schedule sends 36,654 ktonnes of material above a 0.15 g/t recoverable gold grade to the waste dump. This material is below the mining cut-off grade, but still generates positive economics. A suitable stockpile location needs further investigation.

Based on the number of trucks required to move the material scheduled in the mine plan, increasing the size of the haul trucks from 90 tonne to 140 tonne may be beneficial to the project economics and operation logistics. This would require a redesign of the phases to incorporate wider haul roads.

The option to model the ore body with 5 meter blocks versus 10 meter blocks should be evaluated.

Mineral Processing and Infrastructure

Further studies to improve the economics include the following:

- Further review the topography to minimize earthwork, foundation and conveying costs

- Conduct a more detailed review of a 10Mtpa production rate from day 1



- Single primary gyratory crusher versus two jaw crushers

- Review economics of crushing and conveying waste

- Prepare a detailed heap leach stacking schedule

- Optimize or value engineer the general arrangement drawings prior to beginning detailed engineering design

- Finalize crushing and process plant location

- Revise the WWTP design to be consistent with the anticipated modification of the regulatory water quality discharge criteria to include a mixing zone upgradient of the point of compliance, which is expected to be located 500 m downstream from the point of discharge. The result of this change in the regulatory point of compliance and inclusion of a mixing zone is that the water management components in the WDF design, namely the need for the Evaporation Pond and the design of the Influent Effluent Basin, will need to be reviewed and revised during detailed engineering to be consistent with the revised discharge criteria and change in WWTP design.

- Review WWTP current design to consider possibly reclaiming the treated water for use at the Heap Leap Facility. In the current design, the water treatment plant will be in operation at the beginning of the mine life and will run as required during the mine operation.

- Further geochemical and metallurgical quantitative analysis to determine if using reclaimed water will have unfavorable reactions with process solutions at the Heap Leach Facility. This will then have to be confirmed by further bench-scale column leach testing. The reclaimed water will likely have to be treated for various metals, sulfate and selenium.

- Further analysis of water balance to reduce treatment requirements by using a water conservation policy to reduce intake consumption.

- Utilize on-site mining equipment to supplement the contractor equipment for rough grading required for the access roads to the site. This same philosophy could be utilized for the bulk of the cut and fill required at the leach pad and ponds

- Coordinate with the local power company to optimize the power line routing from the closest reliable power source from the Armenian grid power.

Environmental and Social

Finalize Environmental and Social Management Plans based on the framework plans provided in the ESIA, and develop ESMS and Health and Safety Systems for the construction and operation phases.

Commence preparation of the operational procedures required to implement the ESAP, in line with detailed engineering procurement and construction schedule, consider opportunities to identify efficiency savings through this process.

Maintain programme of environmental monitoring and additional baseline observations for water, land and air quality, to target aspects of detailed design that would contribute to efficient mitigation design during detailed design and construction phase and eventually closure.



Continue the development and implementation of the Biodiversity Action Plan, to include additional surveys as required and continued monitoring and engagement with interested parties in order to design and initiate the potential offsite biodiversity benefits. Establish “benchmarks” for restoration to support and offset impacts resulting from construction and operation, as well as incorporate findings together with management planning for reclamation.

Continue consultations with stakeholders that depend on their livelihood or have an interest in the land within the Project area, prior to commencement of the construction programme, to form and continue effective working relations.

Maintain programmes of social engagement and community development to define the opportunities for integrating employment opportunities afforded by the construction programme with the local labor market.



Project Planning

Optimize the Engineering, Procurement and Construction Schedule and maximize working indoors in the winter months and performing the outdoor earthwork and concrete foundation efforts during the summer months.

Finalizing plant location trade off studies prior to beginning Detail Engineering.

Commence work on a project operating plant and project execution plan.

Begin hiring key personal to assist with monitoring and provide direction to the detail engineering consultants.

Hire a construction manager who is familiar with the in- country construction contractors who can match the services required with the most qualified contractors. It would also be beneficial if this person was familiar with the local unit construction material costs, steel fabrication and labor costs.

Confirm quality of work and availability of in-country contractors and steel fabricators and their ability to perform the installation services for this project ▪ Confirm mine equipment leasing agreement and obtain project financing.

The authors of this report are of the opinion that the character of the Lydian Amulsar Gold Project is of sufficient merit to commence with Detail Engineering beginning in October 2012.

It is recommended that the project be advanced to the Detail Engineering stage. Estimated costs for this level of study are summarized in Table 25.2.

Table 25.2 Estimated Costs for Detailed Engineering Study

Description Estimated Cost* US$

Mine Design 250,000 250,000

Mineral Processing & Infrastructure 8,000,000 8,000,000

Heap Leach and Waste Dump Facilities, Pit Slopes & Hydrology 1,000,000 1,000,000

In country miscellaneous engineering support 200,000

Total 9,450,000 *Based on recommendations dated 3 September 2011 and does not included exploration costs.



26 REFERENCES

Abzalov, M, 2006. “Localised uniform conditioning (LUC): A new approach for direct modeling of small blocks, in Mathematical Geology” The International Association for Mathematical Geology.

CSA Global, 2011. “Amulsar Gold Project, 43-101 Technical Report, Armenia”. Report prepared by CSA Global Pty Ltd. for Lydian International Limited.

Golder Associates Inc. 2011. International Cyanide Management Code Internal Audit Protocol, Amulsar, Project, Armenia. Prepared for Lydian International Ltd. Golder Project No. 113-81597FS.130-Rev0. 62 pp. September 16. 11381597FS_006_R_Rev0.

Golder Associates Inc. 2012a. Geotechnical Report, Crusher Area, Amulsar Gold Project, Central Armenia. Prepared for Lydian International Ltd. Golder Project No. 113-81597FS.140. 25 pp. February 28. 11381597FS_019_R_Rev1.

Golder Associates Inc. 2012b. Earthquake Hazard Assessment and Seismic Parameters for Amulsar Gold Project Site, Armenia. Prepared for Lydian International Ltd. Golder Project No. 113-81597FS. 29 pp. March 28. 11381597FS_025_R_Rev0.

Golder Associates Inc. 2012c. Feasibility Level Pit Slope Design Report, Amulsar Project, Armenia. Prepared for Lydian International Ltd. Golder Project No. 113-81597FS.220. 76 pp. June 25. 11381597FS_033_R_Rev0.

Golder Associates Inc. 2012d. Feasibility Design Report, Heap Leach Facility, Amulsar Gold Project, Central Armenia. Prepared for Lydian International Ltd. Golder Project No. 113-81597FS.120. 37 pp. July 3. 11381597FS_031_R_Rev0.

Golder Associates Inc. 2012e. Technical Memorandum: Phase II Kinetic Testing, Geochemical Characterisation Program – Amulsar Project, 10-week Interim Update. Prepared for Lydian International Ltd. 113-81597FS, Phase 340. July 9. 5 pp. 11381597FS_035_TM_Rev0.

Golder Associates Inc. 2012f. Wastewater Treatment Feasibility Evaluation, Amulsar Project, Armenia. Prepared for Lydian International Ltd. Golder Project No. 113-81597FS. 30 pp. July 20. 11381597FS_034_R_Rev0.

Golder Associates Inc. 2012g. Feasibility Design Report, Waste Dump Facility, Amulsar Gold Project, Central Armenia. Prepared for Lydian International Ltd. Golder Project No. 113-81597FS.120. 29 pp. July 27. 11381597FS_036_R_Rev0.

Golder Associates Inc. 2012h. Preliminary Closure and Rehabilitation Plan and Cost Estimate, Amulsar Gold Project. Prepared for Lydian International Ltd. Golder Project No. 113-81597FS.360. 20 pp. July 27. 11381597FS_039_R_Rev0.

Golder Associates (UK) Ltd. 2012i. Amulsar Open Pit Gold Project, Integrated Water Studies. Prepared for Lydian International Ltd. Golder Report No. 11514250168.502/A.0. 111 pp. August 2012



Golder Associates Inc. 2012j. Heap Leach Facility Site Alternatives Analysis, Amulsar Gold Project, Central Armenia. Golder Project No. 113-81597FS.150. 28 pp. February 29. 11381597FS_016_R_Rev0.

Holcombe, R. J., 2013. “Outline of methods and procedures in developing the Amulsar geological model.” Internal Lydian progress report.

K D Engineering, 2011. Amulsar Resource Update and Heap Leach Feasibility Study”. Report prepared by K D Engineering for Lydian International Ltd.


12042 Amulsar Project Lydian Resource and Reserves Final - May 2013

APPENDIX A

SELECTED ASSAY QUALITY CONTROL PLOTS


12042 Amulsar Project Lydian Resource and Reserves Final - May 2013 A1

Statistic Original Core Field Duplicates Project Amulsar Gold

Sample Count 1017 1017 Data Series 2008 ‐ 2012

Minimum 0.003 0.003 Data Type Field Duplicates Core

Maximum 22.000 18.350 Analytical Method Fire Assay

Mean 0.259 0.267 Detection Limit 0.0025 ppm

Median 0.0390 0.0410

Standard Deviation 0.9738 0.9278

Correlation Coefficient 0.915

Pairs ≤ 10% HARD 876 86%

y = 0.8717x + 0.0413R² = 0.837

0

5

10

15

20

25

0 5 10 15 20 25

Duplicate Assays [Au ppm]

Original Assays [Au ppm]

Bias Chart Diamond Core Field Duplicates

Au ppm assays

Regression Line

Amulsar Field Duplicates Core

y = 0.8717x + 0.0413R² = 0.837

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2



Bias Chart Pulp Duplicate Assay Pairs

Au ppm assays

Regression Line


‐100

‐80

‐60

‐40

‐20

0

20

40

60

80

100

0.001 0.01 0.1 1 10 100

HRD%

Mean of Pairs ‐ Au ppm

Mean versus Half Absolute Relative Deviation Plot

Au ppm

10% HRD

Zero

Linear (Au ppm)


0

10

20

30

40

50

60

70

80

90

100

0.001 0.01 0.1 1 10 100

HARD %




0

10

20

30

40

50

60

70

80

90

100

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

HARD [%

]

RANK

Ranked Half Absolute Deviation Plot


0.00

1.00

2.00

3.00

4.00

5.00

6.00

0.00 1.00 2.00 3.00 4.00 5.00 6.00

Du

pli

cate

Ass

ays

[Au

pp

m]


Q-Q Plot Pulp Duplicate Assay Pairs




Statistic Original RC Field Duplicates Project Amulsar Gold


Minimum 0.003 0.003 Data Type RC Field Duplicates



Median 0.0865 0.0840



Pairs ≤ 10% HARD 1310 81%

y = 1.0339x ‐ 0.007R² = 0.9127

0

2

4

6

8

10

12

14

16

18

0 2 4 6 8 10 12 14 16 18



Bias Chart RC Field Duplicate Assay Pairs

Au ppm assays

Regression Line

y = 1.0339x ‐ 0.007R² = 0.9127

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2




Au ppm assays

Regression Line

‐100

‐80

‐60

‐40

‐20

0

20

40

60

80

100

0.001 0.01 0.1 1 10 100

HRD%



0

10

20

30

40

50

60

70

80

90

100

0.001 0.01 0.1 1 10 100

HARD %



0

10

20

30

40

50

60

70

80

90

100

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

HARD [%]

RANK


0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00

Du

pli

cate

Ass

ays

[Au

pp

m]





Statistic Original Umpire Project Amulsar Gold


Minimum 0.005 0.005 Data Type Acme Umpire Sample



Median 0.0980 0.1070



Pairs ≤ 10% HARD 1449 90%

y = 0.9457x + 0.014R² = 0.9873

0

2

4

6

8

10

12

14

16

18

0 2 4 6 8 10 12 14 16 18

Duplicate Assays [Au g/t]

Original Assays [Au g/t]

Bias Chart Acme Umpire Assay Pairs

Au g/t assays

Regression Line

y = 0.9457x + 0.014R² = 0.9873

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2

Duplicate Assays [Au g/t]


Bias Chart Umpire Assay Pairs

Au g/t assays

Regression Line

0

10

20

30

40

50

60

70

80

90

100

0.001 0.01 0.1 1 10 100

HARD %

Mean of Pairs ‐ Au g/t


0

10

20

30

40

50

60

70

80

90

100

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

HARD [%]

RANK


‐100

‐80

‐60

‐40

‐20

0

20

40

60

80

100

0.001 0.01 0.1 1 10 100

HRD%

Mean of Pairs ‐ Au g/t


0.00

1.00

2.00

3.00

4.00

5.00

6.00

0.00 1.00 2.00 3.00 4.00 5.00 6.00

Du

pli

cate

Ass

ays

[Au

g/t

]





Amulsar Project Gold Blank and CRM Plots

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0.16

0.18

0.2

Au g/t

Sample Number

BLANKS

Expected Value Result Maximum Range

2

2.1

2.2

2.3

2.4

2.5

2.6

2.7

2.8

2.9

3

Au g/t

Sample Number

G302‐2

Certified Value Result ‐2StDeviation +2StDeviation

7.5

8

8.5

9

9.5

10

Au g/t

Sample Number

G302‐3


0.8

0.9

1

1.1

1.2

1.3

1.4

1.5

Au g/t

Sample Number

G307‐2


0.05

0.07

0.09

0.11

0.13

0.15

0.17

0.19

0.21

0.23

0.25

Au g/t

Sample Number

GLG304‐1


0.35

0.36

0.37

0.38

0.39

0.4

0.41

0.42

0.43

0.44

0.45

Au g/t

Sample Number

OxD57




Statistic Original Field Duplicate Project Amulsar Gold


Minimum 0.010 0.005 Data Type RC Field Duplicates

Maximum 100.000 100.000 Analytical Method ICP‐ME


Median 1.4000 1.4000



Pairs ≤ 10% HARD 944 65%

y = 0.909x + 0.2036R² = 0.9303

0

20

40

60

80

100

120

0 20 40 60 80 100 120

Duplicate Assays [Ag g/t]

Original Assays [Ag g/t]

Bias Chart Pulp Duplicate Assay Pairs

Ag g/t assays

Regression Line

Amulsar Ag Field Duplicates RC Coarse Rejects

y = 0.909x + 0.2036R² = 0.9303

0

2

4

6

8

10

12

14

16

18

20

0 2 4 6 8 10 12 14 16 18 20

Duplicate Assays [Ag g/t]



Ag g/t assays

Regression Line

‐100

‐80

‐60

‐40

‐20

0

20

40

60

80

100

0.001 0.01 0.1 1 10 100

HRD%

Mean of Pairs ‐ Ag g/t


0

10

20

30

40

50

60

70

80

90

100

0.01 0.1 1 10 100

HARD %

Mean of Pairs ‐ Ag g/t


0

10

20

30

40

50

60

70

80

90

100

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

HARD [%]

RANK


0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00

Du

pli

cate

Ass

ays

[Ag

g/t

]





Amulsar Project Silver Blank and CRM Plots

0

0.2

0.4

0.6

0.8

1

1.2

Ag g/t

Time Series

BLANKS

Expected Value Result Maximum

0.2

0.4

0.6

0.8

1

1.2

1.4

Ag g/t

Time Series

GBMS304‐4

Certified Value Result ‐2StDeviation +2StDeviation Mean

1

1.5

2

2.5

3

3.5

4

4.5

5

5.5

6

Ag g/t

Time Series

GBMS304‐4

Certified Value Result ‐2StDeviation +2StDeviation Mean



APPENDIX B

SUMMARY STATISTICS FOR COMPOSITES AND CAPPED COMPOSITES


12042 Amulsar Project Lydian Resource and Reserves Final - May 2013 B1



APPENDIX C

SWATH PLOTS


412042 Amulsar Project Lydian Resource and Reserves Final_gdk.docx C1

Swath plots for Erato UV Unit, SMU Model

0

1000

2000

3000

4000

5000

6000

7000

8000

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

5600

62

5601

82

5603

02

5604

22

5605

42

5606

62

5607

82

5609

02

5610

22

5611

42

5612

62

5613

82

5615

02

5616

22

5617

42

5618

62

No

. Co

mp

osi

tes

& V

olu

me

[m3]

Go

ld G

rad

e [g

/t]

Easting

Domain 100

Number of Composites Model Tonnes (Scaled down by 10000)

Declustered Grade Model Grade

0

1000

2000

3000

4000

5000

6000

7000

8000

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

4398

685

4398

805

4398

925

4399

045

4399

165

4399

285

4399

405

4399

525

4399

645

4399

765

4399

885

4400

005

4400

125

4400

245

4400

365

4400

485

No

. Co

mp

osi

tes

& V

olu

me

[m3 ]

Go

ld G

rad

e [g

/t]

Northing

Domain 100





Swath Plots for Erato UV Unit, SMU Model

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

0

0.05

0.1

0.15

0.2

0.25

0.3

2455

2515

2575

2635

2695

2755

2815

2875

No

. Co

mp

osi

tes

& V

olu

me

[m3]

Go

ld G

rad

e [g

/t]

Elevation

Domain 100





Swath Plots for AAT UV Unit, SMU Model

0

5000

10000

15000

20000

25000

30000

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

5607

85

5609

05

5610

25

5611

45

5612

65

5613

85

5615

05

5616

25

5617

45

5618

65

5619

85

5621

05

5622

25

5623

45

5624

65

No

. Co

mp

osi

tes

& V

olu

me

[m3 ]

Go

ld G

rad

e [g

/t]

Easting

Domain 200

Number of Composites Model Volume (Scaled down by 10000)


0

2000

4000

6000

8000

10000

12000

14000

16000

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

4396

585

4396

705

4396

825

4396

945

4397

065

4397

185

4397

305

4397

425

4397

545

4397

665

4397

785

4397

905

4398

025

4398

145

4398

265

4398

385

4398

505

4398

625

4398

745

4398

865

4398

985

No

. Co

mp

osi

tes

& V

olu

me

[m3]

Go

ld G

rad

e [g

/t]

Northing

Domain 200





Swath Plots for AAT UV Unit, SMU Model

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

2460

2520

2580

2640

2700

2760

2820

2880

2940

No

. Co

mp

osi

tes

& V

olu

me

[m3]

Go

ld G

rad

e [g

/t]

Elevation

Domain 200





APPENDIX D

DETAILED MINERAL RESOURCE BY ZONE


12042 Amulsar Project Lydian Resource and Reserves Final - May 2013 D1

Table D.1 Mineral Resources for the Amulsar Project by Zones

Zone Classification Quantity (tonnes) Gold Grade (g/t) Silver Grade

(g/t) Contained Gold (toz)


Erato UV Measured 9,500,000 0.93 2.53 284,000 772,000

Indicated 3,000,000 1.34 4.12 129,000 397,000

Measured+Indicated 12,500,000 1.03 2.91 414,000 1,169,000

Inferred 21,800,000 0.94 1.94 658,000 1,358,000

AAT UV Measured 42,900,000 1.08 4.56 1,490,000 6,290,000

Indicated 10,900,000 1.02 3.61 358,000 1,266,000

Measured+Indicated 53,800,000 1.07 4.37 1,851,000 7,561,000

Inferred 32,000,000 0.96 3.66 987,000 3,764,000

Erato LV Indicated 300,000 0.57 1.6 5,000 14,000

Inferred 1,100,000 0.59 3.2 21,000 115,000

AAT LV Indicated 3,900,000 0.83 1.68 104,000 210,000

Inferred 3,100,000 0.60 1.22 60,000 122,000




4. No Mineral Reserves have been estimated for the Amulsar Gold Project.

5. Mineral Resources in this Resource Statement are not Mineral Reserves do not have demonstrated economic viability. The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues. Mineral Reserves have been previously reported for this project using a prior Mineral Resource statement.

AMC Consultants (UK) Limited Registered in England and Wales Company No 3688365

Level 7, Nicholsons House Nicholsons Walk, Maidenhead Berkshire SL6 1LD UNITED KINGDOM

T +44 1628 778 256 F +44 1628 638 956 E [email protected]

ADELAIDE

+61 8 8201 1800

BRISBANE

+61 7 3230 9000

MELBOURNE

+61 3 8601 3300

PERTH

+61 8 6330 1100

TORONTO

+1 416 640 1212

VANCOUVER

+1 604 669 0044

MAIDENHEAD

+44 1628 778 256

www.amcconsultants.com

Registered office: 11 Welbeck Street, London, W1G 9XZ United Kingdom

CERTIFICATE OF QUALIFIED PERSON

G David Keller AMC Consultants (UK) Limited Level 7 Nicholsons House Nicholsons Walk Maidenhead, Berkshire, SL6 1LD United Kingdom Telephone: +44 1628 778 256 Fax: +44 1628 638 956 Email: [email protected]

I, G David Keller, do hereby certify that:

1. I am Principal Geologist for AMC Consultants (UK) Limited, Level 7 Nicholsons House, Nicholsons Walk, Maidenhead, Berkshire, SL6 1LD, UK.

2. This certificate applies to the Technical Report titled “Amulsar Gold Project, Armenia, Technical Report Mineral Resource Update and Reserve Estimate For Lydian International Limited” (the “Technical Report”) with the effective date 18 April 2013 for mineral resources and 28 November 2012 for reserves.

3. I graduated with a B.Sc. in Geology from University of Alberta in1986.

4. I am a Member of the Association of Professional Geoscientists of Ontario (#1235).

5. I have practiced my profession continuously since 1986, and have been involved in mineral exploration, mine geology and mineral resource consulting for a total of 27 years.

6. I have read the definition of “Qualified Person” set out in National Instrument 43-101 (“NI 43-101”) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfil the requirements to be a “Qualified Person” for the purposes of NI 43-101.

7. I am responsible for the preparation of all sections 1(jointly), 2 to 12, 14 and 24-25 (jointly) of the Technical Report.

8. I visited the property between 1214 December 2012.

9. I have not had any involvement with the property that is the subject of the Technical Report prior to my engagement as a geological consultant on technical matters, the results of which form part of the Technical Report.

10. I am independent of the issuer as described in Section 1.5 of NI 43-101.

11. I have read NI 43-101 and Form 43-101F1, and sections 1, 2-12, 14 and 24-25 of the Technical Report have been prepared in compliance with that instrument and form.

12. As of the effective date of the Technical Report, to the best of my information, knowledge and belief, all sections excluding Section 13 of the Technical Report contain all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

Dated the 21st day of May 2013

G David Keller P.Geo. Principal Geologist

Liman Mah, 25 Sokak, Sila Apartman 15-D-10, Konyaalti, Antalya, Turkey, 07070

Tel: +61 416 182 674 Mob: +90 507 261 9222


I, Gary Anthony Patrick, do hereby certify that:

1. I am the Principal Consultant for Metallurg Pty Ltd of: Liman Mah, 25 Sokak, Sila Apartman 15-D-10, Konyaalti, Antalya, Turkey, 07070

2. This certificate applies to the Technical Report titled “Amulsar Gold Project, Armenia, Technical Report Mineral Resource Update and Reserve Estimate For Lydian International Limited” (the “Technical Report”) with the effective date of 18 April 2013 for mineral resources and 28 November 2012 for mineral reserves.

3. I graduated with a BSc in Chemistry / Extractive Metallurgy from Murdoch University in October 1989.

4. I am a Charted Professional (Metallurgy) member of the Australasian Institute of Mining & Metallurgy.

5. I have worked as a metallurgist for a total of twenty-three (23) years since graduating from university. My mining expertise has been gained in all facets of metallurgy and processing, while working for gold projects in Australia. I have been a consulting metallurgist for my own company Metallurg Pty Ltd since 2004 and have worked on numerous projects in the Caucuses, Central Asia, Republic of China, and in Russia. I am well versed in the preparation of studies and have been study manager on a couple of gold development projects.

6. I have read the definition of “Qualified Person” set out in National Instrument 43-101 (“NI 43-101”) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfil the requirements to be a “Qualified Person” for the purposes of NI 43-101.

7. I am responsible for the preparation of Sections 13 of the Technical Report.

8. I visited the property between 6th-12th June, 2011.

9. I have not had any involvement with the property that is the subject of the Technical Report prior to my engagement as a metallurgical consultant on technical matters, the results of which form part of the Technical Report.

10. I am independent of Lydian International Limited as described in Section 1.5 of NI 43-101.

11. I have read NI 43-101 and Form 43-101F1, and Section 13 of the Technical Report have been prepared in compliance with that instrument and form.

12. As of the effective dates of the Technical Report, to the best of my information, knowledge and belief, Sections 13 of the Technical Report contain all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

Dated the 21st May 2013

Gary Anthony Patrick, BSc., MAusIMM CP (Met) Director - Metallurg Pty Ltd

INDEPENDENT

MINING CONSULTANTS, INC.

3560 E. Gas Road Tucson, Arizona 85714 USA

Tel: (520) 294-9861 Fax: (520) 294-9865


Herbert E. Welhener, Vice President, Independent Mining Consultant, Inc. located at 3560 E. Gas Road, Tucson, Arizona, 85714; telephone (520) 294-9861, fax (520) 294-9865; [email protected] I, Herbert E. Welhener, do hereby certify that:

1. I am currently employed by and carried out this assignment for Independent Mining Consultants, Inc. (IMC).

2. This certificate applies to the Technical Report titled “Amulsar Gold Project, Armenia, Technical Report Mineral Resource Update and Reserve Estimate For Lydian International Limited” (the “Technical Report”) with the effective date of 18 April 2013 for mineral resources and 28 November 2012 for mineral reserves.

3. I graduated with the follow degree from the University of Arizona: Bachelors of Science – Geology, 1973.

4. I am a Qualified Professional Member (Mining and Ore Reserves) of the Mining and Metallurgical Society of America (#01307QP) and I am a Registered Member of the Society of Mining, Metallurgy, and Exploration, Inc. (# 3434330RM) both recognized as a professional association as defined by NI 43-101.

5. I have worked as a mining engineer or geologist for 37 years since my graduation from the University of Arizona.

6. I have read the definition of “Qualified Person” set out in National Instrument 43-101 (“NI 43-101”) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “Qualified Person” for the purposes of NI 43-101.

7. I am responsible for Sections 15 – 16, 18.2.1, 21.1 and 21.2, and contributed to Sections 1, 24 and 25 of the Technical Report.

8. I have visited the Property on June 21 - 23, 2011. 9. I have had prior involvement with the property that is the subject of this Technical Report. I co-

authored the report titled “Amulsar Resource Update and Heap Leach Feasibility Study”, dated 3 September 2012 and amended on 26 November 2012.

10. I am independent of the issuers as defined by Section 1.5 of NI 43-101. 11. I have read NI 43-101 and Form 43-101F1, and Sections 15, 16, 18.2, 21.1 and 21.2 of the

Technical Report have been prepared in compliance with that instrument and form. 12. As of the effective dates of the Technical Report, to the best of my knowledge, information and

belief, Sections 15, 16, 18.2, 21.1 and 21.2 of the Technical Report contain all the scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

Dated this 21st day of May 2013

Herbert E. Welhener, MMSA-QPM Vice President

I:\11\81597-13\0100\0110 LTR\015-L1-Rev0\1138159713-015-L1-Rev0 AuthorCertKiel 20MAY13.docx

Golder Associates Inc. 44 Union Boulevard, Suite 300

Lakewood, CO 80228 USA Tel: (303) 980-0540 Fax: (303) 985-2080 www.golder.com

Golder Associates: Operations in Africa, Asia, Australasia, Europe, North America and South America

Golder, Golder Associates and the GA globe design are trademarks of Golder Associates Corporation

May 20, 2013 1138159713-015-L1-Rev0

Mr. G. David Keller, P.Geo. Principal Geologist AMC Consultants Ltd. Level 7, Nicholsons House Nicholsons Walk, Maidenhead Berkshire Sl6 1LD United Kingdom

RE: CERTIFICATE OF AUTHOR – RICHARD E. KIEL

Dear Mr. Keller:

As a co-author of this Technical Report and Mineral Resource and Reserve Update on the Amulsar Project for Lydian International Limited, St. Helier, Jersey, Channel Islands, I, Richard E. Kiel, do hereby certify that:

1. I am a Principal, and carried out this assignment, for Golder Associates Inc., 44 Union Boulevard, Suite 300, Lakewood, Colorado 80228, USA, tel. (303) 980-0540, fax (303) 985-2080, e-mail [email protected].

2. I hold the following academic qualifications:

B.Sc. (Geological Engineering), South Dakota School of Mines & Technology, USA, 1979

3. I am a registered Member of the Society for Mining, Metallurgy, and Exploration (SME).

4. I am a registered professional civil engineer in California, Nevada, Colorado, and Wyoming.

5. I have worked as a civil and geological engineer in the minerals industry for 22 years.

6. I am familiar with NI 43-101 and, by reason of education, experience, and professional registration, I fulfill the requirements of a Qualified Person as defined in NI 43-101. My work experience includes 20 years as a consulting engineer on precious metals, base metals, and rare earth oxides and 2 years as a geologist and engineer on an operating uranium mine. I have an additional 10 years of experience in a related industry (e.g., solid and hazardous waste management). I am qualified to prepare and review the engineering for the heap leach facility and waste dump facility, for mine closure and reclamation, and for geotechnical engineering aspects of the Amulsar project.

7. I have visited the property five times: in June 2011, in September/October 2011, in May and November 2012, and in April 2013.

8. This is the third Technical Report I have co-authored on the mineral property in question.

9. As of the date of this certificate, to the best of my knowledge, information, and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make this report not misleading.

mailto:[email protected]

Mr. G. David Keller, P.Geo. May 20, 2013 AMC Consultants Ltd. 2 1138159713-015-L1-Rev0

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10. I am responsible for the preparation of the Technical Report for the Heap Leach Facility, Waste Dump Facility, Geotechnical Engineering for Plant Facilities, and the Preliminary Closure and Rehabilitation Plan, as discussed in Sections 17 (17.2) and 18 (18.2.2 and 18.2.3), portions of Section 21 (21.5, 21.6, and 21.8), and Section 24. It should be noted that the information for which I am responsible and that is contained in this updated Technical Report references information contained in the 7 September 2012 Technical Report for the Amulsar Project as updated on 26 November 2012. An updated feasibility study is currently underway and due for completion in August 2013.

Sincerely,

GOLDER ASSOCIATES INC.

Richard E. Kiel, P.E. Senior Geological Engineer

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Golder Associates Inc. 44 Union Boulevard, Suite 300

Lakewood, CO 80228 USA Tel: (303) 980-0540 Fax: (303) 985-2080 www.golder.com

Golder Associates: Operations in Africa, Asia, Australasia, Europe, North America and South America

Golder, Golder Associates and the GA globe design are trademarks of Golder Associates Corporation

May 20, 2013 1138159713-015-L2-Rev0

Mr. G. David Keller, P.Geo. Principal Geologist AMC Consultants Ltd. Level 7, Nicholsons House Nicholsons Walk, Maidenhead Berkshire Sl6 1LD United Kingdom

RE: CERTIFICATE OF AUTHOR – PETER R. LEMKE

Dear Mr. Keller:

As a co-author of this Technical Report and Mineral Resource and Reserve Update on the Amulsar Project for Lydian International Limited, St. Helier, Jersey, Channel Islands, I, Peter R. Lemke, do hereby certify that:

1. I am the Water Treatment Technical Lead, and carried out this assignment, for Golder Associates Inc., 44 Union Boulevard, Suite 300, Lakewood, Colorado 80228, USA, tel. (303) 980-0540, fax (303) 985-2080, e-mail [email protected].


B.Sc. (Chemical Engineering), Rose-Hulman Institute of Technology, USA, 1977-1981

M.Sc. (Ecological Engineering), Colorado School of Mines, USA, 1986-1989

3. I am a registered professional environmental engineer in Colorado.

4. I have worked as an environmental engineer on remediation and industrial water/waste-water treatment projects for 22 years.

5. I am familiar with NI 43-101 and, by reason of education, experience, and professional registration, I fulfill the requirements of a Qualified Person as defined in NI 43-101. My work experience includes 22 years as a consulting engineer for environmental remediation and industrial wastewater treatment projects. Previous experience includes laboratory research in alternative fuels, and industrial production. I am qualified to prepare and review the engineering for the wastewater management and treatment engineering aspects of the Amulsar project.

6. This is the third Technical Report I have co-authored on the mineral property in question.

7. As of the date of this certificate, to the best of my knowledge, information, and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make this report not misleading.

8. I am responsible for the preparation of the Technical Report for the Wastewater Treatment Plant design, Sections 18.2.3.3, 18.2.3.4, and 21.7. It should be noted that the information for which I am responsible and that is contained in this updated Technical Report references information contained in the September 2012 Technical Report for the

Mr. G. David Keller, P.Geo. May 20, 2013 AMC Consultants Ltd. 2 1138159713-015-L2-Rev0

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Amulsar Project and that inclusion in this report is primarily for information purposes. An updated feasibility study is currently underway and due for completion in August 2013.

Sincerely,

GOLDER ASSOCIATES INC.

Peter R. Lemke, P.E. Water Treatment Technical Lead

Wardell Armstrong International Wheal Jane, Baldhu, Truro, Cornwall, TR3 6EH, United KingdomTelephone: +44 (0)1872 560738 Fax: +44 (0)1872 561079 www.wardell‐armstrong.com

Wardell Armstrong International is the trading name of Wardell Armstrong International Limited,Registered in England No. 3813172

Registered office: Sir Henry Doulton House, Forge Lane, Etruria, Stoke‐on‐Trent, ST1 5BD, United Kingdom

UK Offices: Stoke‐on‐Trent, Cardiff, Edinburgh, Greater Manchester, Liverpool, London, Newcastle upon Tyne, Sheffield, Truro, West Bromwich. International Offices: Almaty, Beijing

ENERGY AND CLIMATE CHANGE

ENVIRONMENT AND SUSTAINABILITY

INFRASTRUCTURE AND UTILITIES

LAND AND PROPERTY

MINING, QUARRYING AND MINERAL ESTATESWASTE RESOURCE MANAGEMENT


John Maxwell Eyre, Director, North Coast Consulting, Associate to Wardell Armstrong

International, Wheal Jane, Baldhu, Truro, Cornwall TR3 6EH, United Kingdom. Tel:

+44(0)1872 560738 Fax: +44(0)1872561079 E‐mail: jmeyre@north‐coast‐consulting.co.uk

I, John Maxwell Eyre, do hereby certify that:

1. I am an Associate Mining Environmental specialist for Wardell Armstrong International,

Wheal Jane, Baldhu, Truro, Cornwall TR3 6EH, United Kingdom

2. This certificate applies to the Technical Report titled “Amulsar Gold Project, Armenia,

Technical Report Mineral Resource Update and Reserve Estimate For Lydian International

Limited” (the “Technical Report”) with the effective date of 18 April 2013 for mineral

resources and 28 November 2012 for mineral reserves.


RICS (Direct Entry Examinations) Minerals Surveying North Staffordshire Polytechnic, UK

1975‐1978

4. I am a registered Fellow of the Royal Institution of Chartered Surveyors (Minerals and

Environment) Membership No. 00058203, a Member of the Institute of Mining, Materials

& Metallurgy, a Member of the Institute of Quarrying, a Member of the Institute of

Environmental Management and Assessment and a Chartered Environmentalist;

5. I have practiced my profession since 1978, and have been involved in the minerals

surveying and resource management profession for a total of 41 years. My work

experience includes 14 years in operations working at underground and surface mining

operations, 16 years as a Senior Lecturer at the Camborne School of Mines, University of

Exeter, 8 years as a consulting mining‐environmental director on precious and base metals,

energy and industrial minerals. I am qualified to review and comment on the

environmental and social matters relating to the Amulsar Project

6. I have read the definition of “Qualified Person” set out in National Instrument 43‐101

(“NI 43‐101”) and certify that by reason of my education, affiliation with a professional

association (as defined in NI 43‐101) and past relevant work experience, I fulfil the

requirements to be a “Qualified Person” for the purposes of NI 43‐101.

7. I am responsible for the preparation of Section 20 of the Technical Report and jointly wrote

Sections 1, 24 and 25.

8. Visited the property in June 2011.

2

9. I have not had any involvement with the property that is the subject of the Technical

Report prior to my engagement as a Mining Environmental Specialist Consultant on

technical matters, the results of which form part of the Technical Report.

10. I am independent of Lydian International Limited as described in Section 1.5 of NI 43‐101.

11. I have read NI 43‐101 and Form 43‐101F1, and Sections 1, 20, 24 and 25 of the

Technical Report have been prepared in compliance with that instrument and form.

12. As of the effective dates of the Technical Report, to the best of my information, knowledge

and belief, Sections 1, 20, 24 and 25 of the Technical Report contain all scientific and

technical information that is required to be disclosed to make the Technical Report not

misleading.

Dated the 21st May 2013

John Maxwell Eyre FRICS MIMMM MIQ MIEMA CEnv

Director,

North Coast Consulting Limited

Associate of Wardell Armstrong International Limited


I, Joseph M. Keane, P.E. do hereby certify that:

1. I am an Independent Mineral Processing Engineering Consultant for:

SGS Metcon/KD Engineering7701 N. Business Park DriveTucson, Arizona 85743Telephone: 520-579-8315Fax: 520-579-3686E-Mail: Joseph.Keanesgs.com

2. This certificate applies to the Technical Report titled “Amulsar Gold Project, Armenia, TechnicalReport Mineral Resource Update and Reserve Estimate For Lydian International Limited’ (the“Technical Report”) with the effective date of 18 April 2013 for mineral resources and 28November 2012 for mineral reserves.

3. I graduated with a degree of Bachelor of Science in Metallurgical Engineering from theMontana School of Mines in 1962. I obtained a Master of Science in Mineral ProcessingEngineering in 1966 from the Montana College of Mineral Science and Technology. In1989 I received a Distinguished Alumni Award from that institution.

4. I am a member of the Society for Mining, Metallurgy, and Exploration, Inc. (SME#1682600) and the Instituto de Ingenieros de Minas de Chile. I am a registeredprofessional metallurgical engineer in Arizona (#1 2979) and Nevada #5462).

5. I have practiced my profession since June 1962, and have been involved in metallurgicalengineering for a total of 51 years.

6. I have read the definition of “Qualified Person” set out in National Instrument 43-101 (“NI 43-101”)and certify that by reason of my education, affiliation with a professional association (as defined inNI 43-101) and past relevant work experience, I fulfil the requirements to be a “Qualified Person”for the purposes of NI 43-101.

7. I am responsible for the preparation of a portion of Section 1; Sections 17, 18, 19, 23; portions ofSections 21 and 22; and jointly Sections 24 and 25 of the Technical Report.

8. I visited the property between 21 and 28 May 2011.

9. I have not had any involvement with the property that is the subject of the Technical Report priorto my engagement as a Principal Metallurgical Engineer relating to technical matters, the resultsof which form part of the Technical Report.

10. I am independent of Lydian International Limited as described in Section 1.5 of NI 43-101.

11. I have read NI 43-101 and Form 43-101 Fl, and Sections 1, 17, 18, 19, 21, 22, 23, 24 and 25 ofthe Technical Report have been prepared in compliance with that instrument and form.

SGS North America Inc. SGS Metcon/KD Engineering7701 North Business Park Drive Tucson, AZ 85743 t (520) 579.8315 f (520) 579.7045 www.sgs.com

Page 1 of 2 Member of SGS Group

12. As of the effective dates of the Technical Report, to the best of my information, knowledge andbelief, Sections 1, 17, 18, 19, 21, 22, 23, 24 and 25 of the Technical Report contain all scientificand technical information that is required to be disclosed to make the Technical Report notmisleading.

—

Ir:4 ONMS

Josph M’Pri ipal Metallurgical Engineer

SGS North Amenca Inc. SGS MetconlKD Engineering7701 North Business Park Drive Tucson, AZ 85743 t (520) 579.8315 f (520) 579.7045 www.s9s.Com

Dated 17..—_’

Page 2 of 2 Member of SGS Group

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