The Armenian Weekly. YEREVAN—The Anglo-Canadian mining consortium Lydian International has confirmed that its stock ticker was delisted from the Toronto Stock Exchange earlier this year. The company insists that this move is standard procedure as it reemerges from restructuring proceedings under the protection of the Companies’ Creditors Arrangement Act (CCAA).
Lydian applied for CCAA protection in December 2019 as fallout from continued blockades of the Amulsar gold mining site by environmentalists hindered efforts to raise additional capital to cover operational expenses. The mining giant lost access to liquidity from its existing credit facilities on December 20, 2019, when forbearance agreements with lenders expired. Under CCAA proceedings, which continued until January 23, Lydian regained access to previously restricted cash supplies and has been revising its previous capital structure and finances, which it judges to be no longer viable due to the unforeseen effects of the 18-month long blockade of the mining site.
Anna Saghabalyan, a spokesperson for Lydian, told the Armenian Weekly in an email statement that under current projections, the company has access to enough liquidity to operate through the spring, as talks continue to secure additional cash injections. However they haven’t ruled out other options such as a sale of their claim on the Amulsar mining site, refinancing or even launching arbitration proceedings against the government of Armenia for breach of contract in order to recuperate damages for investors.
The mining consortium was formed in 2006 to explore Amulsar gold deposits in the Armenian province of Vayots Dzor before being awarded excavation rights to the site by the Armenian Government in 2012. The company’s local subsidiary Lydian Armenia LLC has ranked among Armenia’s top taxpayers for several years and is responsible for the single largest foreign investment in the country’s history. Operations on the site have effectively been at a standstill since environmentalist groups, taking advantage of the confusion following the Velvet Revolution, blocked access to the mine just weeks before it was scheduled to begin extraction. The environmentalists have accused the mining company of gaining the mining claim through illicit means and have voiced their concerns that ore extraction operations so close to underground water sources would contaminate the water supply for much of the country, among other environmental considerations.
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Lydian has repeatedly refuted those accusations citing at least two on-site and independently conducted environmental impact studies backing its claim to operating under the strictest internationally established environmental standards. The stalled construction project forced the company to lay off almost 700 local workers last year while its Armenian subsidiary continued to pay local and national taxes.
Lydian officials had expected authorities to finally clear access to the mining site following Prime Minister Nikol Pashinyan’s public call for the illegal blockade to be lifted back in September 2019. The Armenian government commissioned a third environmental impact study which, despite controversy over interpretations of its conclusions, largely supported the deduction that the mine could be exploited with minimal environmental impact. The company’s experts estimated at the time that simply bringing the site up to operability would take at least seven months, while exploitation couldn’t start for at least a year after that.
However, despite several court injunctions ruling the unlawfulness of the blockade and reaffirming Lydian’s right to exploit the site, authorities have failed to remove the protesters. The Prime Minister has also called for the need to restore rule of law in the region as recently as last month. Lydian Armenia LLC CEO Hayk Aloyan says he’s frustrated with Armenian authorities for failing to act in accordance with court orders. “Not only has this situation impacted Lydian, thousands of its shareholders, employees, contractors and community members, it has also adversely impacted Armenia’s investment reputation and the economy of the country,” he told the Armenian Weekly. “We call on the Armenian government to take immediate action to restore the rule of law and to reveal those behind this continuing illegality.”
Editor’s Note 02/06/2020: The article has been amended to clarify that Lydian was incorporated in 2006, while the rights to the site were awarded in 2012.
