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Lydian faces further defaults due to continued blockade of Amulsar project

Armenian gold project developer Lydian International Ltd. on Aug. 12 reported a US$68.98 million loss for the first half as it warned of the possibility of further events of defaults.

A sustained blockade of the company's unpopular Amulsar project in southern Armenia by local environmental activists has scuppered Lydian's attempts to develop the site since mid-2018, straining agreements with its creditors.

The company recorded US$18.1 million of "dislocation-related expenses" for the three months ended June 30, taking the total for the first half to US$40.1 million. The largest component of the expenses was interest and financing costs of US$11.4 million in the second quarter, which reached US$27.8 million over the half, according to an Aug. 12 news release.

Environmental concerns have also plagued the project since at least 2013. Lydian is awaiting the results of a recently completed third environmental audit commissioned by the Armenian government, which covers the project's impact on geology, biodiversity and water. The government said Aug. 8 that it had received the results and would come to a conclusion shortly.

Lydian said the project's future depends not only on access to the site being restored but on the government "resolving the disputes it has created with the company." Once it can access the site, the company will also need additional time and funding to take Amulsar to the point of positive cash flow.