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Howard Stevenson: “Amulsar is truly a premium project”

Howard Stevenson
Howard Stevenson

Photo: Mediamax


Mediamax’s interview with Howard Stevenson, President and CEO of Lydian International
 
- Lydian recently announced financing deal for the Amulsar project. What does the package include and when do you plan to start operation?

- I am very glad to announce that we have secured a financing deal. The Orion Mine Finance and Resource Capital Groups are international financing institutions focused on financing mining projects worldwide including in countries like Canada, the US etc.

We are pleased to have Orion and RCF as financial partners at Amulsar. The Financing provides over 75% of the construction funds needed for Amulsar. We plan to fill the remainder by arranging equipment financing of about $ 70 million and through a limited-size public equity offering.

Plan to start construction during the spring of 2016 so long as the public equity offering can be completed.

- There is always the perception in Armenia that once there is a mining project, there are many institutions or international companies eager to obtain the project to make money. However, it looks like it took almost a year to find financing. Why is it so?

- Mining, especially a greenfield project, if built properly, in line with international environmental, health and safety standards, is an extremely capital intensive industry. Building a mine may cost from several hundred million to several billion dollars and all of that capital must be invested before one dollar is earned back. Considering the price fluctuations in commodity markets it is a high risk proposition. So despite the myth, in reality mining doesn’t imply super-profits. Especially in periods when metal prices are down and sentiment in the sector is poor, like now, banks, financial Institutions and investment funds are very cautious about projects they invest into. They need to be sure the mine will be able to pay back any debt and also to provide a return on capital invested.

Amulsar is an attractive project. But as I said, gold prices were extremely vulnerable during the last couple of years. Investor behavior all over the world was very conservative and both retail investors and large investment firms were cautious to invest. It takes a lot of effort to attract investments into new mining projects these days and thanks to the work of our great team and the fact that Amulsar is truly a premium project, we finally secured the investment package for construction. 

- Are IFC and EBRD still participating? Will the company still follow IFC performance standards?

- Both IFC and the EBRD are Lydian shareholders, and yes we will continue to comply with performance standards and requirements. Our new investors also invest only into projects that are compliant with Equator Principles so our adherence to those standards is assured.

I want to emphasize that the company is compliant with industry best practice not only because that is what the investors expect but also because that is our commitment and belief.

Personally I have been managing mining projects worldwide for 25 years and I do believe that it is not only important but also beneficial to implement industry best standards.  A mining project that implements world-class environmental, social, health and safety standards is far more successful. Clean and well-managed operation means greater employee satisfaction, higher efficiency, less loss and more productivity. And of course we highly value stakeholder support and the trust of our communities that has been obtained through demonstrating every day our commitment to high environmental and social standards even at exploration stage.

- Speaking of stakeholders. Many in the Amulsar surrounding communities are expecting the project to start as they expect jobs that are extremely needed especially at this time of economic austerity. How about other stakeholders, country-wide? What does the country get?

- Obviously we are talking about one of the largest investment projects in the country. This means not just jobs in the communities, but multiplier effects on the economy. The activity of contractors, suppliers and service providers will create visible economic impact. Of course, when the production starts we are going to be a large taxpayer. But what I want to emphasize is Amulsar’s importance as an opportunity to change the perception of the industry in the country.

We strongly believe that Amulsar is going to be a high class project that will raise the bar for mining projects management in Armenia. It is also an opportunity to feature Armenia as a country open for international investments. In today’s tough economic situation raising investor confidence is one of the main challenges for any country. And this refers to investments in any area, not just mining. Our very dedicated and professional team believe that the project will bring a lot of positive changes to the country and that was the driving force behind the team’s enthusiasm for all these years from exploration to start of the construction hopefully very soon.

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