Lydian International (LYD-T) likes to arrive early.
Following its nose for geological potential in transitional markets is the hallmark of the British company and the scent has landed it squarely in the nether regions of Eastern Europe.
“We pile in, boots and all,” Lydian chief executive Tim Coughlin says of the company’s corporate strategy. “It’s the classic example of the first mover strategy.”
First mover strategy indeed, but with the backing of some experienced players.
The company counts Newmont Mining (NMC-T, NEM-N) and the International Finance Corporation (the private equity branch of the World Bank) as its two largest shareholders.
And while the World Bank clearly has an interest in seeing capital, and the development that follows it, move into places like Armenia and Kosovo the two countries Lydian is active in — Newmont’s interest falls more on the geological side of things.
Being one of the first western companies into Armenia gave Lydian the chance to make a big new discovery, and it may just have done that at its Amulsar gold project.
While it is still early days a National Instrument 43-101 compliant resource estimate is due out by the end of the year drill results are indicating a project that Coughlin says is conservatively shaping into a one million ounce plus project.
Gold at the site was discovered by Lydian geologists, Coughlin among them, during a drive along what was once the legendary Silk Road. Recognizing severe alteration on the exposed face of the mountain, the team pulled their vehicle over and got to taking some samples.
What they had discovered was and oxidized-high sulphidation gold system that stretches at least 3 km.
The most recent drill results came at the end of July and were highlighted by one hole hitting 2.3 grams over 77 metres. Prior holes had returned 20 metres at 9.9 grams gold and 23 metres at 9.3 grams gold per tonne.
The results are part of the first drill program the site has seen, and will do 20,000 metres worth of drilling. Coughlin says the company is currently about 30% through the total.
Of the 19 holes that have been assayed thus far, all but two hit mineralization.
Also boding well for the long term success of the project is the fact that heap-leach simulation tests indicated 94% to 97% gold recovery.
The joint venture with Newmont on the project is a 50%-50% contribution. Newmont has two options to increase its interest. The first is an option to earn a further 20% by funding the project through to feasibility; the second option allows Newmont to earn a further 10% by funding through to commercial production.
Newmont’s movement on the project was also helped along by Armenia’s development as country. It is now a member of the world trade organization (WTO) and a signatory to the international convention on investment disputes.
Coughlin says its mining laws are solid and protect Lydian against any future changes to regulations as the company can opt to abide by the prevailing law at the time it began operations.
Other miners have taken notice.
The country’s blossoming into an investor friendly nation has lured the likes of Freeport McMoRan (FCX-N) and Dundee Precious Metals (DPM-T) to name a few.
As for its other area of interest, Kosovo, it has acquired zinc projects along a trend that was once Europe’s largest zinc producing areas.
While recognition of Kosovo’s declaration of independence at the beginning of the year remains divided with Western powers like the U.S., France and Britain recognizing its sovereignty and Russia and former Soviet block countries not the European Union, while not coming down on one side or the other, has sent in a mission to maintain the rule of law.
And importantly for Lydian, the mining law was written under the counsel of the World bank, and Coughlin says the company’s recent renewal of a 2 year exploration licence is evidence of its stability.
So even while Kosovo presently known more for the war of the 90s and its quest for independence now, it is striving to return to its position as one of the key mining regions in the Balkans.
Lydian is doing its part by working on three projects in there.
But its key asset is the Drazhnje zinc project. The site was proved up by Yugoslav geologist through the 1980s but was abandoned with the rising ethnic unrest in 1988.
It was left with a non-compliant historical resource of 4.7 million tonnes grading 4.9% zinc and 2.4 % lead.
Lydian has confirmed the higher grades of the Yugoslav resource with highlight interests of 21 metres grading 15.54% zinc, 3.56% lead, 0.19 grams gold and 50.12 grams silver and 36.6 metres grading 6.68% zinc, 3.16% lead, 0.11 grams gold and 38.16 grams silver.
Coughlin says the company has also identified a possible down-faulted extension on the northern and southern sides of the deposit.
The company is currently cleaning out and de-watering adits left by the Yugoslavs with underground drilling expected to begin imminently.
It plans to have a NI-34-101 compliant inferred resource for the project by the end of the year.
In Toronto on Aug. 22 Lydian shares were trading for 30. Its shares have moved between 25 and $1.35 over the last 52 week period and it has roughly 40 million shares outstanding.