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Armenia launches criminal case against Lydian for breaching gold mining contract

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Armenian prosecutors have launched a criminal case against mining company Lydian Armenia on suspicion of illegal mining at the giant Amulsar gold mine.

Lydian Armenia, which is 100%-owned by Armenia-focused Lydian International, is developing Amulsar, which has Armenia’s second largest gold deposits, with estimated mineral resources of 3.5mn measured and indicated gold ounces and 1.3mn inferred gold ounces, according to the company.

The case was launched three days after the Armenian Inspectorate for Nature Protection and Mineral Resources proposed that Lydian halt its mining operations at Amulsar pending a new environmental audit of the project.

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Armenia’s Prosecutor General’s Office said on August 30 that one of its departments had uncovered evidence of illegal mining.

Specifically, it claims that Lydian Armenia illegally extracted basalt at a depth of 0.5-10 metres over an area of three hectares, as well as clay ore on an area of two hectares at a depth of 0.5-8 metres.

This represented “illegal deviations from the mining contract”, resulting in “substantial damage” to the environment, the subsoil and the minerals deposited, with damages totalling AMD18mn (€32,000), prosecutors said in a statement. Lydian Armenia has thus been charged with a violation of the rules for the protection and use of subsoil.

Toronto-listed Lydian International has not yet commented on the charges, though on August 29 the company confirmed that it had received an inspection report for the Amulsar Gold Project from the Environmental and Mining Inspection Body in connection with previously announced compliance audits.

The company reported that it had received orders from the body’s head, Artur Grigoryan, to refrain from any mining-related activities until the Ministry of Nature Protection has conducted a study of ecological factors regarding Grigoryan’s statement that red-listed plants and animal species had been identified at the Amulsar Gold Project for the first time.

“The Company disagrees with this finding based on the Company’s previously accepted Environmental Impact Assessment and intends to take all necessary action to reverse this assertion, including appealing the issuance of the directive,” Lydian’s statement said, though its president and CEO Joao Carrelo added that it will “work with the Environmental and Mining Inspection Body to address its concerns and consider its recommendations.”

Construction of the Amulsar mine started back in 2016, with Lydian expected to invest $370mn in the project. However, the mine has been the subject of a campaign lasting several years by local environmental groups and local residents, who claim exploiting the deposit will jeopardise water resources in the area and threaten the population’s health.

Activists blocked the roads leading to the mine over the summer, preventing employees from accessing the mine, where machinery is reportedly left idle as there is no one to operate it.

Earlier this month, Lydian employees gathered outside the government building in Yerevan to appeal to the government to open the road and allow them to get to work. The situation escalated on August 27, when Lydian employees clashed with local residents near the resort town of Jermouk, Hetq reported, responding to the blockade of the mine by blocking the main highway to the town.

Source: intellinews

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