building armenia’s largest gold mine - academy & finance · the company assumes no obligation...
TRANSCRIPT
Building Armenia’s
Largest Gold Mine
February 2013
www.lydianinternational.co.uk TSX:LYD
Forward Looking Statements This presentation contains projections and forward looking information that involve various risks and uncertainties regarding future events. Such forward-looking information
can include without limitation statements based on current expectations involving a number of risks and uncertainties and are not guarantees of future performance of the
Company. These risks and uncertainties could cause actual results and the Company’s plans and objectives to differ materially from those expressed in the forward-looking
information. Actual results and future events could differ materially from anticipated in such information. These and all subsequent written and oral forward-looking information
are based on estimates and opinions of management on the dates they are made and expressly qualified in their entirety by this notice.
The Company assumes no obligation to update forward-looking information should circumstances or management’s estimates or opinions change. This presentation does not
constitute an offer to sell or a solicitation of an offer to buy any securities of the Company within the United States or otherwise.
Information concerning estimates of minerals reserves and resources
The mineral reserve and resource estimates reported in this presentation were prepared in accordance with Canadian National Instrument 43-101 standards of disclosure for
mineral projects (‘NI 43-101’), as required by Canadian Securities Regulatory Authorities. For United States reporting purposes, the United States Securities and Exchange
Commission (‘SEC’) applies different standards in order to classify mineralization as a reserve. In particular, while the terms ‘measured’, ‘indicated’ and ‘inferred’ mineral
resources are required pursuant to NI 43-101, the SEC does not recognize such terms. Canadian standards differ significantly from the requirements of the SEC. Investors are
cautioned not to assume that any part or all of the mineral deposits in these categories constitute or will ever be converted into reserves. In addition, ‘inferred’ mineral
resources have a greater amount of uncertainty as to their existence and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of
any inferred mineral resource will ever be upgraded to a higher category. Under Canadian Securities laws, issuers must not make any disclosure of results of an economic
analysis that included inferred mineral resources, except in rare cases.
Under the guidelines of NI 43-101, the following qualified persons participated in a feasibility project for the Amulsar project.
The following individuals are Qualified Persons as defined by the CIM Definition Standards November 22, 2005 and Section 5.1 of National Instrument 43-101 Standards of
Disclosure for Mineral Projects, Form 43-101F1 and Companion Policy 43-101CP.
Mr. Joseph M. Keane, P.E. of KD Engineering has responsibility for the report contents and preparation and all matters relating to the design and costs of the processing
facility. Mr. Keane visited the property May 2011. He has relied upon other experts for specific information in the Feasibili ty Study.
Mr. Richard Kiel, P.E. of Golder Associates, has responsibility for all matters relating to the HLF and WDF, the introduction, the geotechnical and the update extracted from the
NI-43-101 Preliminary Economic Assessment entitled “Development of Amulsar Heap Leach Facility”. Mr. Kiel visited the property in June, September and October, 2011 and
again in July, 2012.
Mr. Pete Lemke, P.E. of Golder Associates has responsibility for all matters relating to the Wastewater Treatment Plant design.
Mr. Herb Welhner, MMSA-QPM, of Independent Mining Consultants, has responsibility for all matters relating to geology, drilling, open pit and mine design.
Mr. John Eyre, FRICS MIMMM MIQ Cenv of Wardell Armstrong International, has responsibility for all matters relating to the Environmental and
Social Impact Assessment and visited the property in June 2010 and 2011.
www.lydianinternational.co.uk 2
Corporate Snapshot
www.lydianinternational.co.uk 3
Note: 6.84M warrants and options include 3.53M of Directors and Employee warrants and options
US$5m is due to Newmont as at 31/12/12 and payable by 31/12/13 with 10% simple interest
On production Lydian has the option of paying Newmont: a 3% NSR; 20 quarterly payments of US$1M; or, a one off payment of ~US$15.6M
SYMBOL TSX: LYD
Shares in Issue 126.86m
Warrants & Options 6.84m
Fully Diluted 133.70m
52 week High / Low C$2.75 / C$1.80
Market Cap (at C$2.05) C$260m
Cash Position (31/01/2013) C$31.2m
Debt C$0m
Top 10 Shareholders Shares %
Van Eck Associates 13.15 10.4
Amber Capital 11.41 9.0
IFC 10.30 8.1
EBRD 9.04 7.1
Franklin Advisers 4.98 3.9
Mackenzie Financial Corp. 4.73 3.7
GCIC 2.12 1.7
RBC Asset Management 1.86 1.5
First Eagle Management 1.67 1.3
Invesco Canada 1.45 1.1
Experienced Management Team
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Dr Hayk Aloyan (Managing Director Armenia) PhD Ore Deposit Geology; 16-yrs experience,
formerly Deputy Chief of Geological Survey in
Armenian Mining and Metallurgical Institute, widely
published on Armenian metallogenesis, specialist in
resource estimation.
Mr Gary Patrick (Consultant Metallurgist) BSc Metallurgy/Chemistry: 22-yrs experience in
mining ranging from operations, to project
management and process design. Specializes in
gold and base metals. Has worked in Central Asia,
Former Soviet Union, South America and in
Australia.
Mr Roderick Corrie (Chief Finance Officer) BA Cambridge, MA (Cantab), Associate member of
the Chartered Institute of Bankers, Member of the
Securities Institute; Strategic advisor and financier
with a variety of companies.
Tim Richards (Mine Manager) 12-yrs mining experience across Australia, Africa
and Europe. He has broad experience in open pit
mining ranging from scoping and feasibility studies,
detailed mine design, through to operations and
mine management at a senior level. He has a B.Eng
(Hons) from the University of Queensland, Australia
majoring in mining.
Dr Tim Coughlin (Chief Executive Officer) MSc Exploration and Mining, PhD structural geology;
23-yrs international experience, Australia, PNG,
America’s, Russia, Africa. Held senior positions with
major mining companies, lead country entry-
exploration programs in Russia, Eastern Europe,
Colombia, Ecuador and Bolivia.
Mr Didier Fohlen
(Senior VP, Sustainability & Governance) Engineering Degree School of Geology and Mines of
Nancy; 31-yrs experience in exploration, mining
operations and mine closure, with focus on
environmental, social and governance. 15-yrs in the
World Bank Group working on mining investments,
interacting with major mining companies. Significant
experience in Europe and the Former Soviet Union.
Lydian remains focused on optimising and developing a scalable gold
project at Amulsar….
Project Summary
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Reserves(1) 2.3Moz Gold at 0.8 g/t Proven and Probable
9.98Moz Silver at 3.4 g/t Proven and Probable
Resources(2)
0.2Moz Gold at 1.0 g/t in Measured and Indicated
1.1Moz Gold at 0.9 g/t in Inferred
Historic resource conversion rate 93%
Processing Open Pit, Heap-Leach Project
Low waste:ore ratio; good recovery
Project Economics Robust Feasibility Study completed in Sept 2012:
NPV US$646M, IRR 28% (at US$1200/oz gold)
Infrastructure All necessary infrastructure in place for mining activities – roads, power, water
Permitting / Licences Mining Licence Contract awarded to 2034
Permitting well advanced
Exploration Potential Room to grow – deposit remains open in all directions
Next Steps
Review layout options in light of anticipated resource expansion
Resource upgrade
Detailed engineering and new reserve
(1) Sept 2012 US$900 pit shell, 0.3 g/t gold cut-off
(2) Sept 2012, 0.4 g/t gold cut-off
Achievements to Date
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Owns 100% of the mineral rights through its now fully
owned subsidiary, Geoteam CJSC
Completed over 110,000m of RC and diamond drilling since
2007
Added Measured and Indicated Resources of 2.2Moz and
Inferred Resources of 1.1Moz gold
(0.4 g/t gold cut-off) since 2007
Maintained a strong supportive shareholder base including
IFC and EBRD
Well established relationships with Government of Armenia
Gained support of local stakeholders
Advanced the permitting and licencing process
Published a Bankable Feasibility Study (Sept 2012) with
robust economics
Lydian discovered the Amulsar area in
2005 and has since accomplished a
number of objectives
Armenia
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Democratic presidential republic
– Presidential Election Feb 2013
Member of WTO since 2003
Mineral resources 60% by value
of exports
New World Bank guided Mining
Law, effective January 2012
Amulsar is located 170km from
the capital, Yerevan
Taxes
o Tax Deductible Royalty
‘Top Line’ Charge – 4%
o Tax Deductible
Royalty ‘Bottom Line’
Charge – 12.5%
o Corporate Tax – 20%
Equivalent to approx. total 30%
Corporation Tax
Note: Please see www.lydianinternational.co.uk for a detailed explanation on the Armenian mining taxes
Amulsar Gold Deposit Features
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Open-Pit, Heap Leach Project
High Sulphidation Gold Deposit (similar to
Yanacocha, Pierina and Veladero)
Entirely Oxide
Structurally Controlled
Approximate near-side scale
Feasibility Summary
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Gold Price ($/oz) US$1200 US$1500
NPV @5% ($ M) 646 1,059
IRR % 28.0 38.5
Payback (yrs) 4.0 3.1
Amulsar 2012 Mine Plan
Open-Pit Reserves (M oz) 2.3
Strip Ratio (waste:ore) 2.23
Gold Recoveries (%) 88
Average Grade (g/t) 0.75
Estimated Mine Life (yrs) 12
Average Production (oz/yr) 169,000
Average Cash Cost (US$/oz) 468.5
Initial Capex (US$M) 269.6
Sustaining Capex (US$M) 146.5
Mining Cost (US$) 1.66
Production Start Q2/3 2015
Note: Gold Price assumption is US$1,200/oz for life of mine. US$900 pit shell
Moving Amulsar Forward
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Heap Leach location Analysis o Heap leach location analysis by Golder to identify alternative sites to host more
capacity as resource continues to expand
o Scalable options where initial trucking to reduce capex and commissioning time
prioritised
Crusher Modification o Crusher trade off study completed by SNC-Lavalin to provide possibility of increasing
throughput at anytime throughout mine life with capex neutral gyratory cone crusher
Site Layout Optimisation o Additional mine planning to ensure final development plans maximise the projects value
o Revisiting aspects of site layout due to potential increased reserve and impact on
proposed footprint
Resource Update
o Drilling in 2012 successfully identified new gold, both below and adjacent to
current pit designs
The Company has carried out additional studies with a view to further
optimising project economics, including…
Eliminating Phase II Ramp Up
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By possibly eliminating the Phase II ramp up and commencing initial production at 10
Mtpa from day one:
Increases ounces in early years (increased project debt capacity)
Earlier payback
Lower overall project cost as construction is in one phase only
Lower cost per ounce
$26
$54
--$4
$13
$2 -- -- -- -- ----
$20
$40
$60
$80
$100
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10 Yr 11 Yr 12
Ca
pe
x (
US
$m
m)
10Mtpa Case Base Case
$337
$282
124
247 248 253 248
168176
144
206 203
13
--
83
135 137
187
217
240
196
176165 164
225
104
--
60
120
180
240
300
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10 Yr 11 Yr 12
Go
ld P
rod
uc
tio
n (
ko
z)
10Mtpa Case Base Case
Global Projects Peer Comparison
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Notes: Data includes projects between 1.0 and 12.0 million ounces gold only, Lydian production based on expanded operation
Source: Modified image from Metals Economics Group, Company Reports to incorporate 10mt start up production
Production Metrics position Amongst Global Heap Leach Development Projects
Reserve Grade Upside
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Drill-string
projections,
down-hole
reserve grade
intersections
Orthogonal section
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Funding Considerations for Amulsar
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Debt solutions: Recent studies suggest the
Project will support significant commercial debt
o Working assumption continues to be two-
thirds debt and one-third equity
o could include: ECA, IFI Lending,
commercial bank debt
Equity financing: will depend on share price
and could include a quasi-equity component e.g.
precious metal streams or convertibles
Lydian continues to work with its
financial advisors to find the most
favourable solution to funding Amulsar…
14 Banks have conducted site visits
to Amulsar, Management continues to
have dialogue with interested lending
banks and IFIs
Permitting Process
Working towards Production
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2012 2013 2014 2015
Complete BFS
Construction
Detailed Engineering Studies
Production expected
late-2015
Construction of haul roads and site Infrastructure due to start early 2013
Engineering contract to be awarded H1 2013
PCM contract to be awarded Q3 2013
Detailed engineering studies for infrastructure completed by Q4 of 2013, heap leach
and waste dump earlier
On-going Exploration
Commissioning
Recruit Operating Team
Update BFS
Corporate Social Responsibility Initiatives
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3 local communities, approx. 1,400 residents
Water
o Irrigation systems
o Drinking water upgrades
Infrastructure
o Natural gas supply
o Garbage collection
o Tree nursery
o Community building renovations
Medical
o Medical equipment supplied
Education
o Kindergarten renovation
o “Kinderwall” internet access
o Geology and Engineering bursaries
o Chess Academy
Direct employment
o 150 local staff
Partnerships
o Oxfam; Support to Communities
o HDP Foundation
o Counterpart International
Lydian In Summary
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Supportive shareholder base
Strong financial position
Experienced management and operating
team with recruitment well advanced
Robust Feasibility Study (NPV:
US$656mm)
Short term resource upgrade and
engineering options to maximise
potential
Permitting milestones on-going
Clear timeline to production in 2015
On-going exploration activity
Appendix
Permits and Licences
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March 2009 Nov 2011 Feb 2012 Estimated Date Q1
2014
Pit approved
over
approximately
600k oz gold.
Rock
Allocation
Area (RAA, or
mine footprint)
over pit and
prospect
areas.
New
resources,
pit-outline
and
Mining
Licence
approved.
EIA
approved
for original
Heap
Leach
location,
crushing
and
Conveying
facility
and ADR
Plant.
EIA approval
for open-pit
mining and
location of
waste dump
facility.
Mining Licence and Rock Allocation Area (RAA) granted. Mining Licence valid until 2034 with extensions permitted as new resources are approved. Four year construction period from Sept 26, 2012. Must mine at least 2.6Mt ore per year.
Drafting and
submission of Erato
EIA after resource
approval and
Detailed Engineering
documents required
for construction
Mine Closure Plan
EIA to be submitted
minimum of two
years before mine
closure
July 2012 Sept 2012
Independent
Review of the
Final ESIA
requested by
the Ministry
of Nature
Protection.
Q3 2013
ML,
CA & RAA
(2009)
New
Resources
& ML
EIA
Approved
Processing
EIA Approval Open Pit
and Waste Dump
EIA &
Detailed
Engineering
Approvals
Mining
Licence
Concession
Agreement
And RAA
Independent
Review
of
ESIA
EIA
Approval
for new
HLF
location
Drafting &
submission
of EIA to
MNP -
Approval
expected
Q3 2013
Q2/Q3 2013
Development and Production Team
www.lydianinternational.co.uk
Tony Nicotra (Production Manager ) Advanced Certificate in Extractive Industries; over 20-
yrs experience with a range of commodities focusing
in the last six years primarily on Gold, Copper and
Iron Ore mostly in Western Africa - Sierra Leone,
Mauritania, DRC Congo and South Kalimantan
Borneo Indonesia. Specialist in providing leadership
and direction to operations staff to ensure safety and
efficient operations to achieve production targets.
Carl Nicholas
(Site Environmental Manager) MSc Environmental Diagnosis, BSc (Hons)
Biodiversity Conservation and Management; Seven
years experience including five at Scott Wilson Ltd.,
as an environmental specialist on a number of
mine-related projects and two years with Tasiast
Mauritanie Ltd., (Kinross) as Environment Manager
responsible for all environmental reporting and
permitting requirements for the site.
Murray Wright
(Logistics and Supply Manager) C.P.P. from Purchasing Management Association of
Canada, C.P.M. from Institute for Supply
Management (ISM); 20-yrs experience in logistics,
purchasing and supply chain management, including
two years at Kansanshi Mine, Zambia and most
recently at Tasiast Mauritanie Ltd., (Kinross);
responsible for management of camp for approx.
2000 mine staff.
Stephen Ainsworth
(Health, Safety and Training Manager) IOSH Health and Safety Technician and member of
the Institute of Occupational Health & Safety; 42-yrs
experience in the mining industry, including open pit
and underground mining operations, supervision and
management. Specialises in working in remote
locations (CIS countries), assisting in training, safety
and productivity improvements, development and
implementation of supervisory and management
systems in post-Soviet mining companies. Stephen
lives in Armenia and has worked with a number of in-
country mining companies.
21
Non Executive Board Members
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Mr Gordon Wylie (Chairman) Grad Dip Mining Engineering, Management
Diploma (UNISA); 31-yrs experience, from
1998-2005 as AngloGold-Ashanti’s Global
Exploration Manager. Instrumental
in developing the company’s “New Frontiers
Strategy” into highly prospective but poorly
prospected higher risk regions such as
DRC, Colombia, China and Laos.
Mr Peter Mullens (Director) BSc Geology; 21years of extensive mining
and exploration industry experience. Successfully
developed 4 Canadian listed exploration
companies. Strong experience of commercial
aspects, ore reserves, financial evaluations, mine
planning, JV negotiations, and financing of junior
exploration companies.
Mr Marc Henderson (Director) CFA; More than 20 years experience running
junior mining companies. CEO of Aquiline
Resources until sold to Pan American for $625
million in 2009. Currently CEO of Laramide
Resources (TSX:LAM).
Analyst Coverage
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Institution Analyst Updated Target C$
Tara Hassan February 2013 3.75
John Hayes November 2012 -
Andrew Mikitchook September 2012 4.75
Leily Omoumi September 2012 4.00
Shane Nagle October 2012 4.25
Jonathan Guy September 2012 3.00
Vanessa Gravina September 2012 4.00
Mike Kozak September 2012 4.25
Daniel Earle September 2012 3.50
Craig Stanley June 2012 3.25
Contact Information
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Donna Pugsley
(Investor Relations)
BA Hons degree in Media
Communications and Publishing.
Over 2 years experience in Trust
Administration and Public Relations.
Lydian International Limited
Ground Floor, Charles House,
Charles Street,
St. Helier,
Jersey JE2 4SF
Tel: +44 (0) 1534 715 473
Fax: +44 (0) 1534 758 708
Website: www.lydianinternational.co.uk
Winner of the
Mining Journal
Outstanding
Achievement Award
2011
E-mail: [email protected]