Lydian International completes fundraising, receives over $13 million gross

Lydian International Ltd (TSX: LYD) has completed its $10 million fundraising, plus an over-allotment of $1.5 million, raising gross proceeds of $11.5 million. The company had undertaken am underwritten public offering of 13.7 million shares priced at $0.73 each. Lydian raised the capital to finance the buy-out of the Amulsar Gold Project in Armenia from its joint venture partner, Newmont Mining (NYSE:NEM).

Concurrently, Lydian also completed its previously announced $1.778 million private placing with International Finance Corporation (IFC) - a member of the World Bank Group.

Amulsar sits within the Tethyan fold belt, one of the principal geological features in the northern hemisphere.  Extending from Central Europe and northern Africa across Turkey and the Middle East to the Himalayas and then on to the Far East and Indonesia. Stretching as it does across so many countries and cultures, many of which have been centres of political and geological upheaval over the centuries, the Tethyan belt is perhaps the least explored of all the earth’s major geological systems.

The offering shares were sold through a syndicate of underwriters who were co-led by Cormark Securities and Dundee Securities, and included Canaccord Capital and Dahlman Rose & Company.

Lydian’s geologists originally snapped up the Amulsar licence in Armenia in 2006 after spotting several signatures at surface that caught their attention while driving through the country.  It wasn’t long afterwards that Lydian brought Newmont Mining on board in a 50/50 joint venture to identify and advance grassroots discoveries in the wider region.

Later, by the first quarter of 2008, the Lydian and Newmont confirmed the project as a new gold discovery., and shortly afterwards a 20,000 meter drill program was initiated and assay results confirmed the project’s potential for a multi-million ounce gold deposit. By March 2009, the partner confirmed a maiden resource of 1 million ounces (inferred) at an average grade of 1 gram per tonne, and Lydian had added the IFC and the European Bank of Reconstruction and Development (EBRD) as strategic investors in the company.

Subsequently, just over 12 months later, and the resource at Amulsar has increased by another 40% to 1.4 million ounces, and metallurgical testwork results have confirmed that the project will likely operate as a low cost heap leach open pit mine.

In 2010, following the successful fundraisings and gaining total control of Amulsar, Lydian is planning another 16,000 meters of drilling, designed to both upgrade the current resource and expand the size of the overall resource.

Under the terms of the agreement with Newmont, announced March 1 2010, Lydian has 60 days to pay Newmont $5 million. A further $10 million is due in two additional instalments before December 31 2011 and December 31st 2012. Lydian will also pay Newmont a 3% new smelter royalty, or USD$20 million over the first five years of commercial production. The transaction effectively values Newmont’s interest in the project at USD$25 million using a 10% discount rate.

http://www.proactiveinvestors.com.au/companies/news/6499/lydian-international-completes-fundraising-receives-over-13-million-gross-6499.html