More Gold Deposits Found in Armenia

YEREVAN (RFE/RL)–A U.S. company mining gold and other non-ferrous metals in Armenia has announced the discovery of massive deposits which should significantly boost the country’s gold production in the coming years.

The Connecticut-based Global Gold Corporation said this week it has “uncovered a significant gold and silver discovery” in the Tukhmanuk property in the central Aragatsotn region which it acquired in 2005. "We are positively delighted with this new discovery for ourselves and for Armenia,” Global Gold’s chairman and chief executive, Van Krikorian, said in a statement.

The statement gave no estimates as to the physical volume of Tukhmanuk’s gold and silver reserves. But industry sources told RFE/RL that they are comparable to those of Armenia’s largest gold mines at Zod, a mountainous area east of the Lake Sevan.

Armenian Minister of Energy and Natural Resources Armen Movsisian welcomed the reported discovery, in a further sign of its significance. "Armenia has a rich potential for precious metal mining, and I am happy to congratulate Global Gold on this discovery and its plans to continue development,” the Global Gold statement quoted Movsisian as saying. “Foreign investors should know that this government is here to help, and we are glad that our own experts have played a role in assisting the company here."

The statement stressed that the deposits were explored and ascertained only in Tukhmanuk’s central section that covers 2.2 square kilometers of land. The total area of the property is 51.5 square kilometers.

Global Gold began open-pit mining operations and built an ore-processing plant there in 2007 on the basis of Soviet-era geological estimates of Tukhmanuk’s gold reserves. It now claims to have found much wider “areas of mineralization” containing high concentrations of precious metals than were previously thought to exist there.

According to the Global Gold statement, the so-called gold “veins” are up to 25 meters wide and more than 300 meters long, making them similar in size to Zod’s. The Zod mines are believed to contain at least 220 metric tons of gold.

The mines, which are part of the Ararat Gold Recovery Company (AGRC), have largely stood idle ever since their former, Indian owner, Vedanta Resources, fell out of with the Armenian government in January 2007. Vedanta denied fraud charges brought against it before selling AGRC to a Georgian subsidiary of the Russian financial-industrial group Promyshlennye Investory in December 2007.

Despite record-high international prices for gold, the new owner has so far failed to reactivate the Zod mines as well as AGRC’s ore smelter in the southern town of Ararat. The company’s chief executive, Vartan Vartanian, attributed the bizarre hiatus to repairs at AGRC facilities and the railway transporting ore from Zod to Ararat. Speaking to RFE/RL on Thursday, Vartanian claimed that AGRC has continued to employ and pay at least 500 workers in the past 20 months. He said the company could resume its operations as early as on November 1.

Industry sources are skeptical about these assurances. Some claim that Promyshlennye Investory too has decided to sell its potentially lucrative Armenian subsidiary to another foreign investor. Vartanian denied this, however.

Unlike AGRC, Global Gold does not smelt ore in Armenia and plans to continue to export only ore concentrates in the near future. Company officials said on Thursday the new discovery at Tukhmanuk necessitates a major expansion of the local plant’s ore-processing capacity currently standing at 100,000 tons per year.

They also reaffirmed Global Gold’s plans to invest $32 million in another property which is located in the southeastern Syunik region and is rich in gold, silver and zinc. Most of the planned investment is to go into the construction of an ore-processing plant in the area.


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