In a letter to shareholders, Tim Coughlin, chief executive, said it had sufficient cash to fund itself near-term and has no plans currently to seek any equity or debt financing.
Additional funds, though, will be required to pay for the mine’s construction.
Options being considered include both traditional debt and equity project finance, and non-traditional alternatives such as a royalty or a silver by-product stream, he said.
“Management believes that, if Lydian receives its updated feasibility study and the necessary permits by the end of the second quarter 2013 as anticipated, it will be in a good position to draw down on such available alternative financing at that time.”
This would enable it to fund Amulsar’s development through 2013 and to second quarter 2014.
“In this scenario, Lydian would then seek to access traditional project financing in second quarter 2014 to complete its mine construction.”
The gold explorer expects this to consist of a combination of debt and equity, with early indications suggesting a 70% debt and 30% equity division.
Fourteen potential lenders, including current Lydian shareholders, International Finance Corporation and the European Bank for Reconstruction and Development, have expressed interest in providing the debt component of this project financing and have already visited Amulsar, said Coughlin.
Lydian has also received testimonials from several leading banks interested in financing the project, he added.
BNP Paribas said: "We remain very interested in raising the financing for Amulsar and welcome the additional studies that you are carrying to optimise the project,” adding that it remained on “stand-by for third quarter 2013”.
Dutch Bank ING added: “Subject to our internal approvals we would be keen to assist Lydian International in developing the first modern gold operation in Armenia.”
French bank Natixis said: “A project finance structure, by a club of commercial, and possibly multilateral, debt providers, is perceived by us as the right way forward to make this happen.”
Lydian said it understands that the banks want pay-back only (not market capital) and, accordingly, its production model anticipates commencing production at 10mln tonnes per annum (Mtpa) or even more annual production from year one, using a single primary gyratory cone crusher.
Under this model, the company would achieve about 250,000 ounces gold production in the first year of production and through life of mine, which would significantly increase the debt capacity of Amulsar.
"High-margin, robust gold development projects in supportive jurisdictions, such as Lydian’s Amulsar project, continue to be attractive to investors and financiers.
“Why? Because we believe that the existing market is principally about margin, and the cash costs at Amulsar at present are estimated to be merely US$$470/ounce," Coughlin said.
Lydian’s next steps at Amulsar are: to refine its mine-design options; complete a new mineral resource estimate based on 2012 drilling; update the feasibility study for Amulsar; and obtain necessary permits and commence a 40,000 metre drilling programme in May/June 2013.
Coughlin added that based on its own analysis, "At current estimated resources and reserves, cash costs of only $470/ounce and annual production of 250,000 ounces, Amulsar is in the top 15% of gold projects and in the top three heap leach development projects throughout the world."