Translated version nof this PSD: Armenian
Lydian has been preparing on the Amulsar Gold Mine for development for over five years and has now secured financing to start mine development. The Bank is providing Lydian with an equity injection, which will be earmarked for financing of the Environmental and Social Mitigation Measures (ESMM) (as defined in the ESAP, including financing a biodiversity off set programme and the construction of water treatment facility) and related activities.
The transition impact potential for the project is derived from:
i) Support to private sector development
The Company is one of the few private mining companies undertaking exploration in Armenia.
The Bank is supporting Foreign Direct Investment (FDI) in the extractive industry in the region and the development of a private sector start-up company contributing to the economic development of Armenia. The project may serve as a model for similar privately owned companies to enter the Armenian market.
ii) Setting standards for corporate governance and business conduct
The Bank's early stage involvement will allow shaping the Company's standards so that the project is implemented in accordance with best industry practices, including management of environmental and social aspects of the project. The adoption of such standards could also have a positive demonstration effect in the region. Lydian is committed to adopting applicable EBRD requirements for environmental, social, health and safety standards.
Lydian International Limited is a publically-held corporation, registered in Jersey, Channel Islands and listed on the Toronto Stock Exchange. Lydian owns a mining and a number of exploration assets in Armenia with Amulsar gold deposit being the key asset.
EBRD Finance Summary
The Bank plans to invest up to CAD 10.5 million to purchase the Company's shares as part of its capital increase. The funds will be used to finance ESMM undertaken as part of the project.
Environmental and Social Summary
The project has been Categorised A in accordance with the EBRD's Environmental & Social Policy (2014): the Bank's previous investments in Lydian were Categorised B as the proceeds were used for exploration activities whereby E&S risks were minor in extent and nature. Now that the mine is entering construction and operation phase the investment has been Categorised A, requiring an Environmental and Social Impact Assessment (ESIA) to be prepared and disclosed in accordance with the EBRD's Performance Requirements.
As an existing shareholder in the Company, the Bank together with an independent E&S consultant was closely monitoring project advancements including detailed review of the various iterations of the ESIA, numerous site visits, workshops and ongoing dialogue with the company and its advisors.
Several alterations to the mine plan have occurred over the last four years requiring respective modifications and re-disclosure of the project ESIA. The final version of the ESIA has now been completed and disclosed and public consultation is underway.
E&S Due Diligence undertaken by the independent consultant and the EBRD indicates that, although the Project presents a wide range of E&S challenges, the ESIA and the resulting mine can be structured to meet the EBRD's PRs. Issues identified during ESDD include:
Potential Impacts to strategically important surface water features: the use of cyanide at the Project's Heap Leach facility has caused significant concern amongst project stakeholders and government authorities resulting in a previous change in the mine configuration. The ESIA demonstrates the risks can be adequately managed from a technical view point.
Local communities and tourism: mining activities will result in permanent visual impacts and change of landscape through mountaintop removal and mine infrastructure construction. In addition, mine traffic, population influx and housing of the mine workforce will all impact local communities and the tourist potential of the area. Conversely the provision of jobs and opportunities for development of SMEs to the local population is one of the main project upsides which need to be carefully managed in order to maximize project benefits while managing realistic expectations.
Land acquisition procedures: land acquisition for the Project is largely complete and has been closely monitored by the Bank to ensure that Performance Requirement 5 has been met. - Biodiversity sensitivities: the mine will impact upon highly sensitive internationally protected flora (potentilla plant) and fauna (brown bear) and a biodiversity offset programme has been set out to meet the objectives of Performance Requirement 6. The programme proposed has been reviewed in detail and included in the ESAP with implementation to be closely supervised by the shareholder group.
- Local, national and international stakeholder concerns have been voiced throughout the project preparation and have been considered in the preparation of the final version of the ESIA. In addition, extensive Stakeholder Engagement activities have been undertaken and are ongoing in accordance with the Bank's PR10.
Notwithstanding E&S complexities of the Project, the ESIA demonstrated the Project can be structured to meet the Bank's requirements and the Company has committed to constructing and operating the mine in accordance with international best practice. One such commitment is the establishment of a national park as part of the biodiversity offset programme and the Bank's proceeds will be used to ensure that this commitment is completed. In addition, a passive wastewater treatment facility will be constructed to ensure protection of local water sources in perpetuity demonstrating that the EBRD investment will have E&S benefits in improving the E&S performance of the mine itself.
The Company and the shareholder group (including the Bank), made significant time and cost investments in the preparation of an ESIA that meets the Bank's Performance Requirements (and IFC's Performance Standards). The Project will be closely monitored by the Bank and other financiers with an independent E&S consultant reporting directly to the shareholder group.
There is an Environmental and Social Impact Assessment available for this project
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Text of the PIP
Project Complaint Mechanism (PCM)
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Please visit the Project Complaint Mechanism page to find information about how to submit a complaint. The PCM Officer (firstname.lastname@example.org) is available to answer any questions you may have regarding the submission of a complaint and criteria for registration and eligibility, in accordance with the PCM Rules of Procedure.