Lydian Anticipates Big Reduction in Operating Costs at Amulsar

Lydian International Ltd. (TSX:LYD) announced plans to change the current mine design at its Amulsar gold project, located in Armenia. The company has engaged consultants to make the update, which will reflect “anticipated revised and improved projects economics.” That could include a reduction in operating costs of up to $100 million.

As quoted in the press release:

For the purposes of the feasibility study set out in the 2014 Technical Report, AMC designed haul roads and pit ramps consistent with the then current Armenian legislation requirements, which limited mine ramp gradients to a maximum of 7%. Under the newly enacted regulations in Armenia, the maximum allowable ramp gradient for haul roads has been increased to 10%. This change will not affect the safety of mining operations. Moreover, reducing pit sizes will result in a decrease of barren rock volumes mined, reducing the associated environmental impact of planned production at Amulsar.

As a result of this legislative change, Lydian has engaged AMC to redesign the open pits at Amulsar mine based on design parameters that contemplate an increase of the maximum permitted haul road gradient from 7% to 10%. This work is in process, however, AMC has prepared a conceptual level estimate on the effect of the change in ramp gradient on the Mineral Reserve and mining costs of the project. The Company expects the proposed changes in ramp gradients will have the following key effects on the 2014 Technical Report over the life of mine:

• Reduced mining operating costs by approximately $100 million, which includes the effects of lowering the strip ratio (waste to ore) from 2.8:1 to 2.5:1 and reducing haul distances;
• The potential for a minor increase in ore mined and recoverable gold ounces through deepening of the pits; and
• A possible minor reduction in the total mine fleet requirement.

Howard Stevenson, president and CEO of Lydian, commented:

This legislative change is very positive for Armenia’s mining sector and consistent with good international mining practice. For Lydian, we expect favourable improvements in several areas of mining operations and environmental impact. We anticipate reduced mining of waste rock by up to 30 million tonnes, more than a 10% decrease. While more work is required, based on work completed to date, management estimates that this could lower total cash costs to about $600 per ounce of gold produced, while decreasing the environmental impact of our operations.

We are also hopeful to demonstrate additional economic improvements from our ongoing value engineering program and review of potential construction packages. Our value engineering focus has been on reducing capital costs without adversely affecting operating costs. The possibility of moving from self-mining to contract mining is also under review.

Click here to read the full Lydian International Ltd. (TSX:LYD) press release.