Lydian International (TSE:LYD) has begun this year’s drill program at the Amulsar gold project in Armenia.
The latest round of work will help convert resources into reserves, and will also help to extend the boundaries of the known deposit, which is still open at depth and along strike.
It will drill a total of 20,000 metres using a reverse circulation drill rig and a diamond drilling rig. Originally 40,000 metres were planned.
Lydian is also working on an updated feasibility study, including a new mine layout, and that is on-track for completion early in the third quarter. The company also says the permitting process is progressing and the authorities are well informed and fully engaged.
In the meantime, due diligence work is being carried out by potential project financiers, with commercial banks and major shareholders visiting the proposed mine site recently.
Delegates from Lydian’s two major shareholders, the World Bank’s International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD), visited earlier this month.
The purpose of the visit was to review the project as part of their due diligence ahead of making a decision on contributing to project financing.
Amulsar, with 1.85mln ounces of the precious metal in the measured category and a further 1.8mln indicated and inferred, is shaping up to be a world class gold property.
The economics reveal just how viable it is. All-in costs are US$750 per ounce against an average of US$1,211 for other producers, said Canadian broker RBC.
On the more widely used cash cost measure, Lydian also scored better than its rivals at US$469 per ounce compared to a global average of US$738, said RBC.
Tim Coughlin, Lydian’s chief executive, said recently the comparison showed “how remarkably robust the project is”.
RBC based its calculation on last year’s feasibility study and included mining, corporate and administration costs, sustaining capital expenditure (capex), exploration costs, royalties and transportation.
Coughlin added: “Work continues on optimising design, production and overall cost parameters at Amulsar with a feasibility study update expected in the third quarter of this year.
“In these markets it helps to have all bases covered so as well as providing a "scaled-up" scenario which maximises debt-capacity and reduces payback, this study will also test a "scaled-down" option for Amulsar which invokes trucking as opposed to the conveying of ore for the initial production years of the mine.”
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