MINING IN ARMENIAMinistry of Energy Infrastructures

and Natural Resources, RA

OUTLINE

INDUSTRY OVERVIEW

REGULATORY FRAMEWORK

CURRENT OPERATIONS

WHY ARMENIA?

Mining in Armenia

• Mining announced as priority along with IT, Banking and Tourism

• Armenia applied to join EITI

• Government of Armenia sees dinamic mining industry as opportunity to:

✓ Strengthen economic efficiency and stability

✓ Recovery other industries (cable and machine engineering)

✓ Development of heavy industry, agriculture, construction materials.

• Currently negotiations are underway with investors for the construction of

copper smelter in Armenia.

INDUSTRY OVERVIEW

10 operating mines in Armenia

Main commodities copper, molybdenum, gold, iron, lead, zinc, silver

as well as a range of other metals

Over 120 exploration permits of metallic minerals

Mining and Downstream processing contributes to ~4% of GDP and over

50% of exports

Strong cluster supported by professional education delivered by Yerevan

State University and National Polytechnic University of Armenia with their

specialized departments of Geology and Metallurgy (500-1000 graduates

annually)

REGULATORY

FRAMEWORK

MINING REGULATIONS

Both exploration

and mining

permit areas can

be expanded at

licensee’s

request

Clearly defined

procedures for

obtaining

exploration and

mining permits

Guaranteed

right to obtain

mining permit

with successful

exploration

Exploration permit

(geological investigation

rights) being provided for

up to 3 year period, with

the possibility to extend 3

times by 2 years each. An

extension by one more

year is possible after the

approval of reserves, for

the purpose of preparing

mining program

Mining permit for up

to 50 years, with the

possibility to extend

further (with no

practical limitations)

REGULATORY

FRAMEWORK

EXPLORATION RIGHTS

Exploration

permit

Exploration

agreement

Exploration

plan

Exploration

rights

Application for Exploration permit to be

accompanied by the Exploration plan

And initial EIA (including Environmental

Action Plan)

EIA approval within 30 days

Exploration permit granted within 60 days

From the application date

Exploration agreement (including EAP)

signed within 10 days

Explorations concluded with reserve

assessment approved by State Reserve

Committee)

REGULATORY

FRAMEWORK

EXPLORATION PERMITES FOR METALLIC DEPOSITS

REGULATORY

FRAMEWORK

MINING RIGHTS

Mining

permitMining

agreement

Mining

plan

Mining

rights

Process initiated by the receipt of ToR for

EIA from the Ministry of Nature Protection

Application for Mining rights shall include

Mine plan, ESIA, Mine closure plan

Technical safety expertise and EIA

Expertise conducted by relevant

Government bodies

Mining permit granted within 180 days

from the application date

Mining agreement (including EMP) signed

within 10 days

Mining

assignment

MINING POLICIES

Exploration and Mining rights transferable upon formal approval of the

Government

Exploration and Mining rights can be pledged with a notice to the

Government

Transparent royalty regime (basic royalty at 4% of Mine revenue, plus

12.5% of profits)

Grandfathering for three years for changes in royalty and taxation regime

The Government of Armenia committed to implementing the EITI standard

and currently the process is well underway

CURRENT

OPERATIONSSOME OF PAST AND PRESENT INTERNATIONAL PLAYERS

Cronimet

Ferrolegierungen

(Germany)

GeoProMining

(Russia)

Lydian International

(UK/USA/Canada)

Dundee Precious

Metals

(Canada)

Polymetal

(Russia)

Centerra Gold

(Canada)

Orogen Gold

(UK)

CURRENT

OPERATIONSMINING EXPORTS

$ mln

CURRENT

OPERATIONS

EXPORT GEOGRAPHY, 2015

(INCLUDING DOWNSTREAM PROCESSING)

$ mln

97

41

97

79

164

123

CANADA

NETHERLANDS

GERMANY

BULGARIA

CHINA

OTHERS

CURRENT

OPERATIONS

EXPORT STRUCTURE

(INCLUDING DOWNSTREAM PROCESSING)

data for 2015

Copper concentrates

Precious metals

Blister copper

Ferro-alloys

Others2%

9%

11%

17%

61%

WHY

ARMENIA?STRENGTHS

Industry specific competitive taxation

system

High Score (38) on the WB Doing

Business Ranking

Streamlined and fast licensing procedures

EITI implementation

Highly educated workforce