Lydian talks Amulsar construction in Q1 reportAfter the markets closed today Lydian International released its Q1 results for the period ending March 31, 2018. Of interest are the following two sections:
Financing {A –} On March 9, 2018 Lydian reduced its future potential commitments by exercising its option under the Newmont Royalty Agreement to terminate the 3% Net Smelter Return royalty and in lieu thereof, elected the quarterly payment option to pay to Newmont the aggregate sum of $20 million, without interest, in 20 equal quarterly installments of $1 million commencing on the first day of the third calendar month following the start of commercial production. During Q1 2018 and to the date of this report, additional debt draws of $62.8 million were received. Management also focused on developing additional financing alternatives to provide for the estimated project cost of $425 million, support cash flow requirements through ramp-up as production commences at Amulsar, and maintain adequate contingency.
As announced previously, pre-operational costs at Amulsar are estimated at $425 million. Considering management's construction schedule prepared in April 2018, which reflects production commencing in Q4 2018 and ramp-up continuing into 2019, Lydian anticipates an additional funding requirement of $65 million. This estimate is sensitive to several key risk factors, a) including potential further changes to the schedule to achieve production and ramp up to a point of positive cash flow, b) additional pre-operational costs, and c) upcoming contractual commitments. Management continues to assess its funding requirements considering these and other risk factors.
Armenian Government Developments {A –} In 2015 the Armenian Constitution was amended, whereby effective April 2018 the government would change from a Presidential to a Parliamentary system. On April 17, 2018, Serzh Sargsyan, Armenia's President for the preceding 10 years, was elected by Parliament as the new Prime Minister, effectively establishing a third term as head of state. Following 10 days of peaceful protests initiated by Nikol Pashinyan, Prime Minister Sargsyan voluntarily resigned on April 23, 2018 and a new Parliamentary election was set for May 1, 2018. Mr. Pashinyan, who sought election as Prime Minister in the May 1 election, failed to receive a majority vote by Parliament. Thereafter, Mr. Pashinyan was elected Prime Minister through a subsequent election on May 8, 2018. He will now begin forming a new government. These developments to date, have had minimal impact on construction activities at Amulsar.