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Lydian may need new environmental, social assessment for Amulsar gold project

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Lydian may need new environmental, social assessment for Amulsar gold project

Toronto-listed gold project developer Lydian International Ltd. Aug. 30 criticized comments made by an independent environmental consultancy to the Armenian government about its blockaded Amulsar site in the south of the Caucasian republic as it faces the prospect of having to prepare a new environmental and social impact assessment.

In an Aug. 30 press release, the beleaguered company "expressed deep disappointment" with comments made by Earth Link & Advanced Resources Development, or ELARD, during a Aug. 29 conference call with Prime Minister Nikol Pashinyan's office.

The prime minister's spokesman, Vladimir Karapetyan, earlier told S&P Global Market Intelligence that the call would be "another important development in defining the attitude of the government regarding the fate of the project." Without providing a likely timeline, he added: "We also expect [a] final conclusion of the Ministry of Environment on the need to do a new environmental impact assessment."

Lydian characterized ELARD's call with the government as a "regrettable performance", pillorying the consultancy's "apparent lack of capacity to review and analyze complex details". In contrast, two of the authors of a previous independent environmental report on Amulsar, Roger Smart and Andrea Gerson of Blue Minerals Consultancy, described the latest investigation as professional and comprehensive to Market Intelligence.

Lydian, nevertheless, commended ELARD's tentative conclusions about the project's potentially low impact on the largest source of fresh water in the Caucasus, Lake Sevan. Amulsar's impact on nearby water resources, including those of the spa town of Jermuk just a few miles away, have featured prominently among a host of environmental concerns.

The project's mine pits and barren rock storage facility would lie within Lake Sevan's immediate impact zone, according to ELARD's report.

A fourth environmental audit could even be on the cards after the third independent appraisal failed to break the deadlock.

Pashinyan endorsed the project on Aug. 19 following the latest environmental audit, completed by ELARD earlier in the month. However, shortly thereafter, he asked the Ministry of the Environment to review the Special Investigative Committee of Armenia's assessment of Lydian's response to the latest audit, following further protests about the unpopular project.

The ministry's review is geared towards ascertaining the need for a new environmental impact assessment, or EIA, Lydian reported Aug. 22.

Asked how the government's stance towards the project in the mountainous south of Armenia currently stands, CFO Bill Dean told Market Intelligence: "It is tricky to speculate what politicians will do in any circumstance, and so Lydian can only take at face value what the PM has said publicly."

The company published an environmental and social impact assessment in May 2015, which was amended and approved a year later. Construction of the mine had been briefly underway before locals and environmental activists blocked off the site in June 2018 in the wake of Armenia's regime change. Activists continue to block the three main access routes to the site, Dean confirmed.

In April 2017, U.S.-based Armenian chemical-environmental engineer Harout Bronozian contracted a group of experts to produce an independent environmental assessment of the gold mine, having first learned of the project in 2014 when Lydian held promotional events for the Armenian diaspora in the U.S.

Two of the authors of that report, Roger Smart and Andrea Gerson, told Market Intelligence that a full consideration of ELARD's audit requires a new environmental and social impact assessment, or ESIA: "It sets out the inadequacies and incorrect interpretation of testing and modelling in the original Lydian ESIA in detail with potential consequences of planning based on this information."

According to Blue Minerals, Lydian's response to ELARD's audit ignored the fundamental inadequacies related to the characterization of acid rock drainage, known as ARD, identified in the previous independent assessments, "namely that their ARD characterization is seriously inadequate and that planning for ARD control based on this is unacceptable in international best practice."

There are, however, other seriously incorrect assumptions in Lydian's original ESIA, Blue Minerals said, highlighting the company's preference for passive treatment of acid rock drainage during operations and "insufficient" mine closure plans.

"The reviewers anticipate substantial concentrations of ammonia and nitrate in water from the [heap leach facility], as well as high salt concentrations," another of the Bronozian report's authors André Sobolewski told Market Intelligence.

"I feel that the potential problems with this water (heap rinsate and/or drawdown) have been neglected, perhaps due to the higher prominence of the acid drainage problem, but these problems are far more substantive than Lydian understands or is willing to admit," Sobolewski said. "Their use of a passive system to treat this water seems almost like an afterthought, whereas I feel that this water will require a separate treatment plant operated for more than 20 years. If it continues to be neglected, Armenians will be saddled with an expensive problem."

Asked by the government whether the mine could safely be exploited, ELARD's report read: "The ESIA/EIA assessments are deficient and corresponding conclusions are unreliable. Accordingly, the question of whether exploitation of the ore deposit can conclusively be considered safe cannot be answered."