building armenia’s largest gold mine - academy & finance · the company assumes no obligation...

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


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


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


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


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


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

http://www.lydianinternational.co.uk/

Amulsar Gold Deposit Features


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


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


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


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


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


Drill-string

projections,

down-hole

reserve grade

intersections

Orthogonal section


Funding Considerations for Amulsar


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


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


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


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


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


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


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


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]

building armenia’s largest gold mine - academy & finance · the company assumes no obligation...

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