412042 Amulsar Project Lydian Resource and Reserves Final

7/21/2019 412042 Amulsar Project Lydian Resource and Reserves Final

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AMC Consul tan ts (UK) LimitedRegistered in England and WalesCompany No 3688365

Level 7, Nichols ons HouseNicholsons Walk, MaidenheadBerkshire SL6 1LDUNITED KINGDOMT +44 1628 778 256F +44 1628 638 956E [email protected]

AMULSAR GOLD PROJECT

ARMENIA

TECHNICAL REPORT MINERAL RESOURCE UPDATE AND RESERVE ESTIMATE Ufor

Lydian International Limited

TSX: LYD

Prepared by

G. David Keller, P. Geo.: AMC Consultants (UK) Limi ted

Gary Patrick, MAusIMM CP (Met): Metallurg Pty Ltd.

Herb Welhener, MMSA-QPM: Independent Mining Consult ants, Inc

Richard E. Kiel, P.E.: Golder Asso ciates Inc.

Peter R. Lemke, P.E.: Golder Assoc iates Inc

John Maxwell Eyre, CEnv: North Coast Consu lting Limit ed

Joseph M. Keane, P.E.: SGS-KD Engineering

In accordance with the Requirements

of National Instrument 43-101,


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LYDIAN INTERNATIONAL L IMITED Amulsar Gold Project

DATE AND SIGNATURE PAGE

This report has been prepared and signed for by the following Qualified Persons (withmeaning of National Instrument 43-101). The effective dates for this report are 18 Aprifor the resource estimate and 28 November 2012 for the reserve estimate.

Signed the 21 April 2013

G David Keller, P.Geo.Principal Geologist

AMC Consultants (UK) Limited

Gary Patrick, MAusIMM CP (Met)Metallurg Pty Ltd.

Herb Welhener, MMSA-QPMIndependent Mining Consultants, Inc

Richard E. Kiel, P.E.Golder Associates Inc.

Peter R. Lemke, P.E.Golder Associates Inc

John Maxwell Eyre, CEnv


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1 SUMMARY

Introduction

This technical report for the Amulsar gold project, in the south-central region of Ahas been prepared by AMC Consultants (UK) Limited (AMC) of Maidenhead, Lydian International Limited (Lydian). The report has been prepared in accordance

requirements of National Instrument 43-101 (NI 43-101), Standards of DisclosMineral Projects, of the Canadian Securities Administrators (CSA) for lodgement CSAs System for Electronic Document Analysis and Retrieval (SEDAR). This rerequired to support an update of the estimation of mineral resources for the AmGold Project, as announced by Lydian in a press release issued 5 March 2013. effective dates of this report are 18 April 2013 for the mineral resource estimate anNovember 2012 for the mineral reserve estimate. Revised mineral reserves basedthe current mineral resources are being developed. The mineral reserve estim

stated in this report represent those derived from a previous mineral resource estimaeffective date 28 November 2012.

From 2008 to December 2012, Lydian drilled 383 reverse circulation and 507 diacore drillholes, totalling 110,561 metres of drilling, and chip sampled 358 lines formetres of sampling, on the Amulsar gold project. This has allowed the delineatmajor lithological units and structures that were used to model mineralizatioestimate mineral resources for the project.

The Amulsar gold project is located in south-central Armenia approximately 11south-west of the capital Yerevan and covers an area of approximately 98 square The property is covered by three Prospecting Permissions. A mining licence cover

Amulsar area. Core shed facilities, sample processing, and offices for the projeclocated in the nearby town of Gorayk near the southern boundary of the project area

Exploration and mining licences for the Amulsar project comprise the SaravaGorayk and Khatchkar Prospecting Permissions. A new mining licence granted f

project, that is valid until 2034 and permits extensions to the licence as new resouhas been approved. All prospecting permits and mining licences are held 100Geoteam CJSC, an Armenian registered Closed Joint Stock Company. Geoteamowned 100% by Lydian Resources Armenia, a wholly-owned subsidiary of International Limited.

Th A l i i iti ll id tifi d b th A i S i t E d


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Volcanic and volcano-sedimentary rocks of this system comprise a mixed marineterrigenous sequence that developed as a near-shore continental arc between southern margin of the Eurasian Plate, and the northern limit of the Neo-Tethyan OThe Neo-Tethyan Ocean closed and subduction ceased along this margin in the EOligocene when a fragment of continental crust was accreted with the Eurasian pl

The Amulsar deposit is hosted in a sequence of Eocene-Oligocene volcanogenic r

of basaltic to dacitic composition, containing two distinct volcano-sedimentary The Lower Volcanic unit (LV) is dominated by massive porphyritic andesite. Thalso contains abundant coarse volcaniclastic members in some project areas. Upper Volcanic unit (UV) is characterized by coarse volcaniclastic breccia occwithin debris flow channels, incised into a thick package of finer grained volcanrocks, including immature feldspathic sandstone. Andesitic lava flows form a component and also appear to occur in erosional channels. The UV unidisconformably over the LV unit.

Pervasive host fracturing has been produced during an interval of both east- and wdirected thrusting, producing a broad mild antiformal fold across Amulsar projecThe abundance of host fracturing is likely controlled by the differential strength inproduced by the focusing of pre-mineralization silica-alunite alteration into the pbreccia units. Mineralization is focused within a local zone of highly complex defornear the crest of the antiform. At least two intervals of post-mineralization extenfaulting dissect the antiformal structure, such that the original ore system ipreserved within large discrete north-east trending grabens that cross the These larger structures have been disrupted by north-west trending extensio

Gold mineralization at Amulsar is thought to have been a late event in the developof the deposit, occurring dominantly within the silica-alunite altered volcano-sedimbreccia units of the UV unit. Mineralization is also associated with iron oxide-fracture surfaces and heavily oxidized faults that cut the silica-alunite alterationmineralization is believed to be associated with iron oxide coatings, fillings and hydbreccias in late stage brittle fractures, and faults within a thrust and fold complex.

Silver mineralization is present at the Amulsar project, but the genesis and distributiis not well understood. Silver mineralization does not correlate with gold minerali

Average silver grades range from 2 g/t to 5 g/t and locally can occur in the 100 200 g/t range.


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Exploration and Data Management

Exploration on the Amulsar project was initiated with a joint venture between LydiNewmont Mining Inc. in the period from 2008 to 2010. Newmont coapproximately 150 line Km of ground magnetic surveys, and 54.6 line Km of inpolarization and resistivity surveys during the joint venture period.

After the project was acquired by Lydian in 2010, all exploration activity was maby Geoteam CJSCa wholly-owned subsidiary of Lydian.

Geoteam has completed an extensive programme of surface geological mapping the project. In conjunction with the surface mapping programme Geoteam has collapproximately 358 (1,337 m) surface channel samples and 171 (50 m) trench samChannels samples are cut from outcrop faces cleared of vegetation, talus and lrock. The average length of channel samples is about 2 metres, with approximately of samples less than 3 metres in length.

In early 2012, Lydian commissioned a structural geological study of the depoDr Rod J. Holcombe and associates to review drill core and reverse circulation csurface geological and structural mapping, and to assess drillhole structural dathree-dimensional conceptual model of the deposit was generated, based on re-logdata and the integration of surface mapping and drillhole data, and has resultedmajor revision of the geological understanding of the deposit.

Exploration under the Newmont joint venture comprised diamond core drilling, rcirculation drilling and geophysical surveys completed from 2008 to early 2010. this period exploration drilling was carried out in the Erato and Artavasdes-ATigranes areas. A total of 31 diamond core (4,363 m) and 175 reverse circulation (22,809 m) were completed.

All exploration activity on the Amulsar project is managed through Geoteam, Lysubsidiary in Armenia. From 2010 onwards Geoteam has conducted an aggre

programme of core and reverse circulation exploration drilling over the Artav Arshak, Tigranes and Erato areas, completing a total of 218 core and 317 revcirculation drillholes for total of drilled lengths of 33,422 m and 45,476 respectively.

Geoteam exploration personnel follow procedures outlined in a comprehensive mfor di mond drilling Di mond drilling oper tions re s per ised b Geote m geo


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Specific gravity measurements were made by Geoteam at the project core shed, locin the town of Gorayk. Measurements were restricted to diamond core samples using a wax-sealed core water-immersion method.

Lydian has a sample preparation facility which is adjacent to core shed facilitGorayk. The facility includes two jaw crushers, two rotary splitters, two high-cpulverizers, and two drying ovens. Sample preparation facilities at Gorayk operated

September 2008 to 2010, and then were restarted in late 2011. Prior to establishingfacility, and during the period between 2010 and late 2011, all samples were sent toRomania SRL laboratories in Rosia Montana for sample preparation. New containesample preparation facilities provided by ALS Chemex were installed in late 2011Gorayk laboratory is owned and operated by Geoteam.

Geoteam performs routine checks on laboratory submissions, upon import tdrillhole management Century Systems, Fusion database. On an ongoing basis QA

data is analysed using Fusion plots for standard, scatter, and quantile qFailures in quality-control data are identified by Geoteam database managersdiscussed with field geological personnel. Critical failures result in the resubmissassay batches, or ten samples that precede the failed sample.

Lydian provided assay quality-control data for gold and silver assays for the Amproject, which AMC reviewed using scatter plots; HRD, HARD, ranked HARquantile quantile plots to evaluate field duplicates, pulp duplicates, and umpire samBlank and certified reference material data were plotted on time-series plots usingstandard deviations as data limits for reference material plots.

Based on the data provided, AMC concludes that assay analytical results fo Amulsar project are appropriate for the estimation of mineral resources.

AMC also completed a check of database assay values with assay certificates suppby Lydian, and a separate check with assay certificates sent directly from the alaboratories to AMC. AMC randomly selected assay values for validation. Approxi

10% of the gold and silver assays were checked with assay certificates supplieLydian, and 2% of gold and silver assays were checked with assay certificates fromanalytical laboratories. No errors were found. AMC concludes that the Amulsar passay drillhole data provided by Lydian is appropriate for the estimation of mresources.

ll l


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Mineral Resource Estimate

The resource database used to evaluate the mineral resources for the Amulsar prowas provided as MSExcel spreadsheet exports from Lydians Fusion database systThese spreadsheets contained all information for diamond core and reverse circuldrillholes, and chip samples for the project. The database consists of 1,154 drilland channel samples collected in exploration work undertaken between 2007 and 2

The data comprises 298 diamond drillholes (40,017 m), 498 reverse circulation dril(69,380 m), and 358 channel samples (1,337 m). Drilling and chip sampling were cout in the Tigranes, Artavasdes, Arshak and Erato areas of the Amulsar project.

The geological history of the Amulsar deposit has resulted in a complex of strucpositioned blocks of upper and lower volcanic rock units. Mineralization is predomconfined to rocks of Upper Volcanic unit (UV). Mineralization in the Lower Volca(LV) are generally not mineralized, except near contacts with mineralized UV rorelated mineralized structures.

The UV unit was subdivided into two, comprising the Erato sub unit to the north, a Artavasdes-Arshak-Tigranes (AAT) sub unit to the south. The two units are structdistinct, with the Erato unit having a slightly lower tenor of gold mineralization.

Rocks of the LV unit were assumed to occur in all areas outside of the Upper Voland colluvium wireframes. The extent of the lower volcanic unit was modelled bybased on the extent of drilling over the Amulsar project. Exploration targets outsthe Erato and AAT areas were excluded.

The drillholes and chip sample database used for estimation of resources consist91,830 gold and silver assays, and 1,148 specific gravity measurements. determined that the most appropriate method of representing specific gravity average the specific gravity values for each main unit modelled.

Drillholes for each of the four zones, Erato and AAT, Upper Volcanic, and

Volcanic units were composited to 1 metre to provide common support for statanalysis and estimation for gold and silver data. Approximately 93% of assay samwere sampled at 1 metre intervals or less.

Based on statistical analysis of the Erato and AAT composites, it was found tcombined dataset of UV and LV units for each Erato and AAT zones providedst ble d t sets for indic tor riogr ph nd G ssi n tr nsform of gold comp


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were generated for both gold and indicator thresholds. Traditional semi-variogramsused as the spatial model for Erato and AAT zones. Gold indicator variograms used to estimate gold grades, while gold variograms were used to derive changsupport correction factors. Omni-directional variograms or variograms that model and semi-major axes are considered the most appropriate for estimating the UV unit

Gold grades were estimated using a multiple indicator kriging (MIK) estimator, usin

gold composites for each of the Erato and AAT UV zones. As the combined LV ancomposite set of grades for each of the Erato and AAT zones is more statistically stthese were used to estimate gold into each of the Erato and AAT models. A panel mwith the dimensions of 20 m E 20 m N 10 m elevation was used for the eaczone MIK estimates. In preparation for ranking of localized estimates, gold gradesestimated by OK into a target SMU model with the dimensions 10 m N 10 m E elevation. These estimates also utilized the combined (LV and UV) composites for and AAT zones.

Gold grades were estimated in three estimation runs using progressively larger seellipsoid ranges for the Erato and AAT zones. The search ellipsoid for the Eratowas inclined at 10 to the north to reflect a dip trend observed in mineralizatiosimilar trends were observed in the AAT zone.

A change-of-support adjustment was applied in order to produce resource estimatesreflect the anticipated level of mining selectivity. When estimating local recovresources, the objective is to obtain the proportion of mineralization above a partcut-off grade (pseudo tonnage), within panels that are large enough to achieve a roestimation.

A localized MIK (LMIK) SMU model was generated using the MIK SMU-histogram, and partitioning the estimated tonnage and metal from the MIK panel mevenly into SMU blocks within the panel. In this manner, grades are mapped intoof the SMU-sized blocks, thereby replicating the targeted mining selectivity. Rankthe SMU-sized blocks within a panel is based on SMU grades estimated by ord

kriging (OK).

Gold grades were estimated by OK for the Lower Volcanic unit using ocomposites. No distinction was made between Erato and AAT areas for these estimaThree estimation runs were completed using progressively expanded ellipsoid seranges.


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The Mineral Resources have been estimated using the Canadian Institute of MiMetallurgy and Petroleum (CIM) Standards on Mineral Resources and ResDefinitions and Guidelines prepared by the CIM Standing Committee on RDefinitions and adopted by CIM Council, and procedures for classifying the reresources were undertaken within the context of the Canadian Securities AdministrNational Instrument 43-101 (NI 43-101).

Estimated resources have been classified with consideration of the following criteria Quality and reliability of raw data (sampling, assaying, surveying).

Confidence in the geological interpretation.

Number, spacing, and orientation of intercepts through mineralized zones.

Knowledge of grade continuities gained from observations and geostaanalyses.

The likelihood of material meeting economic mining constraints over a rareasonable future scenarios, and expectations of relatively low selectivmining.

Gold mineralization at the Amulsar deposit is characterized by short-range continparticularly if considering grades above potentially economic cut-offs. It is, theimportant to identify low-confidence areas which have been estimated by one odrillholes in an isolated area, regions at depth where estimates are highly influence

a single drillhole, or regions that have been estimated at longer distances fromdrillholes. AMC does not consider these areas as resources, and therefore, usingboundary between the UV second and third estimation runs as a guide, AMC devela wireframe which constrained the extent of reportable estimated resources.boundary also excluded blocks estimated by isolated drillholes, or blocks estimatedrillholes that are significantly isolated from other drillholes at depth. This wireframapplied to the final block model containing UV and LV estimates, and all blocksthis boundary were removed from the model as unclassified material.

Indicated resources were classified on the basis of a wireframe enclosing drillinwas closely spaced (approximately 45 m), and included holes drilled vertically ainclined angles, demonstrating vertical and horizontal continuity. The wireframe owas drawn to enclose a continuous zone of mineralization, and relatively high numcomposites used to make each block estimate.


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Mineral Resources for the Amulsar project have been estimated in conformitygenerally accepted CIM Estimation of Mineral Resource and Mineral ReservesPractices guidelines and are classified according to the CIM Standards on MResources and Reserves: Definition and Guidelines (December, 2005). At a cgrade of 0.35 g/t gold, the Mineral Resources are estimated at 52.4 Mt at 1.05 g(1.77 million ounces) of Measured category, 18.1 Mt at 1.02 g/t Au (0.59 million oof Indicated category, and 58.0 Mt at 0.93 g/t Au (1.73 million ounces) of I

category resources.Table 1.1 Mineral Resource Statement for the Amulsar Project, Armenia,

Consul tants (UK) Limi ted, 5 March, 2013

Classification Quantity (tonnes) GoldGrade (g/t)Silver

Grade (g/t)ContainedGold (toz)

Measured 52,400,000 1.05 4.19 1,769,000

Indicated 18,100,000 1.02 3.25 593,000 Inferred 58,000,000 0.93 2.87 1,734,000

Total Measured andIndicated 70,500,000 1.05 3.95 2,379,000

Total Inferred 58,000,000 0.93 2.87 1,734,000 1. The effective date of the Mineral Resource Statement is 5 March 2013.2. A cut-off grade of 0.35 g/t gold for this project based on gold price of US$1,200 per troy ounce of gold and a

an open-pit mining scenario.3. Figures have been rounded to the appropriate level of precision for the reporting of Indicated and Inferred Re

in the upper and lower volcanic units.4. Due to rounding, some columns or rows may not compute exactly as shown.5. Mineral Resources in this resource statement are not Mineral Reserves do not have demonstrated economic via

The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title, socio-political, marketing, or other relevant issues. Mineral Reserves have been previously reported for thisusing a prior Mineral Resource statement

Mineral Reserves

A mineral reserve estimate for the Amulsar project was developed from the results o2012 feasibility study for the project using a concurrent mineral resources and mreserves estimate authored by Herb Welhener MMSA-QPM of Independent MConsultants, Inc. The reported mineral resources and reserves were contained in athe Amulsar Resource update and Heap Leach Feasibility Study completed byEngineering for Lydian. The report for the study was dated 3 September 201amended 28 November 2012 The mineral reserve will be revised for Mineral Reso


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drilling is limited and insufficient drill data exists to classify material as either meor indicated. The Mineral Reserves for 3 September 2012 are presented in Table 1.2

Table 1.2 Mineral Reserves* Represent the Diluted Ore Scheduled to the Cru3 September 2012

Category Ore kt Contained Recoverable Contained

Gold g/t Silver g/t Gold g/t Silver g/t Gol d oz Silver oz GProven 51,143 0.801 3.37 0.713 1.31 1,317,000 5,541,000 1,172,000

Probable 43,751 0.692 3.15 0.609 1.08 973,000 4,435,000 857,000

Proven+Probable 94,894 0.750 3.27 0.665 1.21 2,290,000 9,976,000 2,029,000

*Mineral Reserves in this table rely on Mineral Resources reported on 3 September 2012. Reserves for the Mineral Resources reported 5 March 2013 are currently in progress .

Mining

This section has not been revised to reflect work or studies that had been completethe time of the Mineral Resources reported on 5 March 2012. This section wupdated as part of a feasibility study currently underway and due for complet

August 2013.

Mining of the Amulsar deposit is planned to be accomplished with conventional op

mining methods. Over 12 years, 7 phases covering the Artavasdes, Tigranes and Eore bodies are sequenced to arrive at an ultimate pit geometry containing the projreserve. Mineralization extends to the surface in the Tigranes ore body where mining begins; as a result, minimal pre-stripping of 729,000 tonnes is required toadequate ore feed to the crusher. Artavasdes and Tigranes areas are mined aheadthe Erato area which requires more waste stripping to expose the ore.

During the initial 3 years of mining, ore is scheduled from the pit as direct feed crusher at a rate of 5 million tonnes of ore per year. In Year 3, crusher capacdoubled with a crusher expansion and 10 million tonnes of ore per year are sent tcrusher starting in Year 4. The average stripping ratio in the first 3 years of min1.8:1 waste:ore. Beginning in Year 4, the stripping ratio increases to 2.35:1continues at that ratio to Year 10.

A small low grade stockpile is generated near the crusher in Year 2 of mining T


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drills. Loading and hauling of material from the pit will be accomplished with afleet of Cat 6018s (RH90) and 6030s (RH120) hydraulic excavators and Cat 777trucks. An auxiliary fleet of D10 track dozers, 834 wheel dozers, a 16m Grader, CATwater truck, 992 front end loader and CAT 336 back-hoe are also required for mThese machines are planned for dump construction, road constructionmaintenance, pit cleanup and miscellaneous jobs.

The waste dump facility (WDF) will consist of the waste dump (WD), and an equalization basin (IEB), wastewater treatment plant (WWTP), and evaporation(EP), located downgradient of the WD and utilized for the collection and treatmmine-influenced water draining from the WD.

The WD will be constructed in three phases. The WD phase areas will be 465,500506,800 m2 and 360,100 m2 for Phases 1, 2 and 3, respectively, for a total WD ar1,332,400 m2. Waste material will be deposited on the WD in nominal 8 m thicThe WD may be constructed in sub-phases to minimize initial capital costs aoptimize water management within the IEB and flows to the WWTP.

The WD will be lined with a 0.45-m minimum thickness compacted low permeabiliner. An underdrain system will be constructed within the WD footprint beneath tliner to drain groundwater/subsurface seepage to the IEB and prevent the seepage fentering the waste pile above the WD base liner. Rainfall and snowmelt water withWD (contact water) will be collected by an overdrain system constructed above thbase liner and routed to the IEB.

The IEB was sized in accordance with the project design criteria to store thunderdrain and overdrain flows, and to provide flow control to the WWTP. The Ihave a composite liner system comprised of High Density Polyethylene (Hgeomembrane underlain by a 0.3-m minimum thickness compacted low-permeabilitliner.

The WWTP will receive water from the IEB. Treatment processes have been devel

based on the projected water quality characterization of the combined flows froWD underdrains and overdrains. The IEB and WWTP capacities have been designaccommodate high flows associated with snowmelt, with operation of the WWTconstant rate for about eight months per year. Final treated effluent water quality taare to be determined. The WWTP effluent is projected to comply with Armaximum allowable concentration (MAC) Category II standards. Category III sta( l i ) h b id d b h l d i d i i


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Treated water will be discharged to the Vorotan River. Secondary waste sludge chemical precipitation will be disposed on site. Solids accumulated in the EP mremoved for disposal or disposed in-place at the end of the WWTP life.

Recovery Methods

This section is based on 2012 feasibility study for the project completed by

Engineering for Lydian. This section has not been revised to reflect work or studiehad been completed at the time of the Mineral Resources reported on 5 March 2This section will be updated as part of a feasibility study currently underway and dcompletion in August 2013.

Run-of-mine ore will be hauled from the open pit to the three stage crushinglocated in close proximity to the mine. Haulage distance from the open pit to the rmine stockpile is 1 km or less. The crushing plant consists of primary crushing thro

jaw crusher, secondary crushing through a cone crusher, and tertiary crushing throupair of cone crushers. The circuit will reduce ROM ore from minus 700 mm top sizproduct of 80 percent passing 12 mm and is designed to process ore at a rate of 5 M

In the first year of operation 3.75 Mtpa will be processed and 5 Mtpa in yeaInstallation of a duplicate crushing circuit ramps up production to 10 Mtpa in Yeathe end of the life of the project.

Crushed ore will be transported approximately 3.5 km on an overland conveyor

distributed along the north side of the leach pad. Pebble lime will be added to thwhile on the overland conveyor. A tripper conveyor will deliver the ore from the ovconveyor to a series of twenty four portable conveyors. A stacking conveyor wilthe ore on the leach pad in lifts of a nominal thickness of 8 m.

The HLF will consist of a leach pad and collection ponds. The leach pad wconstructed in three phases with the ultimate ore heap amount of 95 Mt stacked in tstages. The pad phases will be expansions to the north and each phase will be div

into two cells for a total of six cells for the ultimate pad. The Phase 1 pad area w479,690 m2 and the Stage 1 heap capacity will be 18 Mt, suitable for the first 3.3 of operation. The Phase 2 pad area will be 465,000 m2 and the Stage 2 heap capacit

will be 27 Mt to provide capacity through Year 6. The Phase 3 pad area will be 46m2 and the Stage 3 heap capacity will be 50 Mt. The ultimate pad area will be 1,40m2 nd ill ccommod te 95 Mt of ore he p ith nomin l m im m he p height


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The Amulsar Gold Project covers an area of 130 km2, located in south central ArmCurrently paved roads are available to the town of Jermuk and a 15 km dirt roavailable from Jermuk to the mine site. Long term accommodation will be provihouse up to 200 people on site and the remaining personnel will reside in existing hin Jermuk. The contractor will be responsible for his own construction camp. Curresmall exploration camp is available at site which utilizes a portable generator.

There is good infrastructure surrounding the Amulsar project. This includes the highway between Yerevan and Iran, high tension power lines and substations, apipeline from Iran, year round water from the Vorotan River and a fibre optic icable. As a consequence of the project location on the top of a mountain ridreasonable amount of infrastructure will need to be constructed during pdevelopment. Mobile phones work on most parts of the project area. Out of cosupplies, material and equipment can be shipped to the ports of Poti or Batumi, Geothen trucked through Georgia and Armenia to the Amulsar project site.

Community relations issues are currently handled by HSEC senior staff, a development manager, and a community liaison officer and a good understandilocal issues and sensitivities has been established.

A detailed strategy for accommodating construction personnel, employees and secpersonnel during the construction period will be developed during the dengineering effort.

The Project is located in the catchments of three rivers Vorotan, Arpa and Darbsections of catchments of Vorotan and Arpa rivers fall under the Lake Sevan Law azones of non-immediate impact, where mining and processing are not restricted.

Environmental and Social Impact

The Environmental and Social Impact Assessment (ESIA) prepared for this pconsiders the proposed mining of the Tigranes and Artavasdes deposits at Amu

together with associated mine waste management, mineral handling, heap leacgold extraction and ancillary activities, to produce gold-silver bullion corresponPhases 1, 2 and 3 of the mining operations of a period of approximately 10 years the commencement of ore extraction, followed by reclamation and closure of the Environmental and social studies required with respect to mining operations at Eratrequire full assessment in an ESIA addendum to be completed at a later stage ofP j t


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Review of alternatives for siting various project facilities, taking into regulatory, environmental, biodiversity, cultural properties, social and comhealth and safety issues.

Defining the environmental and social impacts associated with construction, operation and mine closure and reclamation.

Incorporating mitigation measures into detailed design to eliminate or m

impacts to an acceptable level and consider appropriate alternatives. Develop key Framework Management Plans with input to the site s

Environmental and Social Action Plan (ESAP) for the delivery of the Project

Framework Mine Closure Plan and measures for post-mining management.

The findings of the draft ESIA concluded the following:

Environmental impacts range from Negligible to Major, in the absence of mitiThrough the implementation of detailed mitigation measures, together with adherenmanagement plans in the ESAP, it is considered that any potential reenvironmental impacts can be reduced to a range Negligible to Moderate. Resenvironmental impacts include dust generation, generation of greenhouseemissions, conversion of land reducing habitat available for avian, flora and species and changes to landscape and topography. If left unmitigated, the project whave the potential to cause surface and groundwater contamination, however extenmitigation measures have been developed which will manage any potential impac

an acceptable level.

Social impacts are both positive and negative. Positive impacts relate to improvemin local livelihoods through direct employment by the project, as well as kneconomic growth; and macroeconomic benefits through taxation, land rent and revenues paid by Lydian. These positive impacts range from Minor to Moprovided enhancement measures (such as stakeholder engagement, transparency agovernance) are implemented. Negative impacts relate to economic displacement

result of land take; localized inflation driven by higher incomes in the region; comcohesion issues between mine employees and other local residents; potentiamigration of job-seekers; managed disturbance of archaeological sites; and commhealth impacts, including higher risk sexual practices. With mitigation, negative imrange from Negligible to Moderate.

Th ff ti i l t ti f th iti ti tli d i th ESIA i


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Capital costs for the project were estimated by IMC for mining, KDE for the procplant/infrastructure and Golder for the leach pad, collection ponds, waste dump fawastewater treatment plant, and for mine closure and rehabilitation.

The capital expenditures for the Amulsar Project processing facility will occur phases; Years 1 to 3 is Phase I and Years 4 through the remaining years is PhaseBesides the Phase II process plant expansion sustaining costs are incurred for the le

pad, mining fleet and waste dump.The initial and sustaining capital costs are summarized in Table 1.2.


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Table 1.2 Total Initial And Future Sustain ing Project Capital Costs

Item Initi al cos t (US$) Sustainingcost (US$)*

Mining Cost 8,791,700 17,189,800 2

Process Plant Cost 228,568,063 26,872,254 255,4

Waste Water Treatment Plant - 19,078,412 19,0

Leach Pads 15,687,450 31,814,488 47,

Waste Dump 16,575,893 14,302,181 30

Closure and Reclamation 37,221,477 37

Total Initial and Future Sustaining Project Cost 269,623,106 146,478,612* Sustaining costs include the majority of the capital costs associated with the Phase II expansion.

Operating Costs

This section is based on 2012 feasibility study for the project completed byEngineering for Lydian.

Operating costs for the project were estimated with input from KDE, IMC and GThese costs over the life of the mine are summarized in Table 1.3.

Table 1.3 Life-of-Mine Cash Operating Cost

Item US$/Tonne Ore

Mining 6.29

Processing 2.92

Waste Water Treatment Plant 0.13

G & A 0.47

Cash Operating Cost 9.81


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Table 1.4 Economic Highlights

Average stacked gold grade g/t 0.75

Steady state annual gold production (Yr 1-3) oz 118,34

Steady state annual gold production (Yr 4-12) oz 186,04

Life of Mine from production start yr 1

Planned Steady State Production Rate (Yr 1-3) tpd 15,000Planned Steady State Production Rate (Yr 4-12) tpd 30,000

IRR Pre tax % 27

NPV Pretax (5% discount rate) US$M 646

Payback period from start of production yr 4.0

NPV Pretax (0% discount rate) US$M 1,121

Initial Capital Cost US$M 26

Total Capital Cost US$M 41

Cash Costs US$/oz 468

Metallurgical Gold Recovery % 88

Total Mined Gold to Leach Pad Moz 2.2

The financials for the base case mining options are summarized in Table 1.5.

Table 1.5 Economic Analys is Summary - US$ Pre-Income Tax Cash Flow

US $ x 1000

US $/t Resource

Mine Gate Value of All Resource Net ofTransportation and Refining

2,424,680 25.55

Mining Operating Cost (596,959) (6.29)

Processing Cost (277,116) (2.92)

Waste Water Treatment Plant (12,276) (0.13)

General & Administration (44,407) (0.47)

Royalties (Newmont Payment) (20,000) (0.21)

Cash Operating Cost (950,757) (10.02)

Cash Operating Cash Flow 1 473 923 15 53


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Table 1.6 Summary of Key Financial Parameters (Sensitiv ity to Gold Price)

Gold Pri ce, US$/oz 1,100 1,200 1,300 1,400

NPV(5), (000's) 512,504 645,976 779,448 912,920

IRR, Pre-Taxes 23.8% 27.7% 31.3% 34.8%

Payback, Operating Years 4.5 4.0 3.7 3.4

Conclusion and Recommendations

The Amulsar high-sulphidation epithermal gold-silver deposit has been definedresult of systematic exploration activities undertaken over a period from 2008 to More recently, surface geological and structural mapping, supported by a database of orientated core measurements, has resulted in an improved understandof the geology and mineralization of gold and silver for the deposit. In turn, thallowed the estimation of resources to better reflect the geology and mineralicharacteristics of the deposit. Exploration work for the project is professionally manusing procedures that meet generally accepted, industry best practices. The project been explored by; geophysical techniques, diamond core and reverse circulation driand chip sampling. In 2012, a structural study over the Amulsar propertcommissioned by Lydian. This study necessitated a major reinterpretation of geand mineralization constraints for the project.

In the absence of clear mappable controls of mineralization an LMIK estimatochosen as the most appropriate methodology to estimate gold resources for the UV Gold mineralization for the LV unit is limited and overall subordinate mineralization, and therefore, an OK estimator was used for this unit. mineralization is not well understood, probably unrelated to gold and significantgrade. An OK approach to estimating silver for the UV and LV zones was deappropriate.

Based on review of exploration data and the estimation of resources, AMC conc

that mineral resources can be expanded at depth for the UV rocks to the south-eathe Arshak area, and at depth in the Erato, Tigranes and Artavasdes areas. Furexploration will require reverse circulation drilling and some diamond core driprovide structural information. Continuing work on a structural analysis of the projbe important to the accurate estimation of resource, and a better geolunderstanding of mineralization for the Amulsar project.


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A structural study of the Amulsar project, initiated in 2012, has provided imdirections in understanding the Amulsar project and should be continued. Providstructural framework for the deposit is considered by AMC as ongoing procexploring and defining more mineral resources for the project.

AMC recommends a combination of infill drilling and step-out drilling to systemextend known areas of mineralization. The infill drilling strategy is suggeconcentrate on delineating measured and indicated by drilling areas classifieinferred by resources, by increasing the drill to a nominal spacing of 40 m spacing with both inclined and vertical holes. In some areas, more closely-spdrilling may be required to better define structural or lithological contacts, or areas mineralization becomes diffuse. Step-out drilling should concentrate on extmineralization to the south-west of the Arshak area, and extending mineralizatdepth in the Erato, Tigranes and Artavasdes areas.

An exploration programme to provide the basis for the above recommendationcomprise of approximately 34,000 metres of reverse circulation drilling and 6,000 mdiamond drillholes. The estimated cost including ancillary costs is estimaUS$6,400,000.

Recommended metallurgical testwork for the project are the following columntests:

Further column leach tests be carried out on metallurgical composites fro

Erato deposit. Drillholes and sample intervals should be selected based upoupdated Mineral Resource Estimate and open-pit design prepared by AMC.

Carry out a single refrigerated column leach test on a mixed Tigranes/Artavcomposite sample, to simulate the effect of cold climate on leach performan

Carry out column leach tests on a run-of-mine ore sample to determinpotential metallurgical leach performance; and

Conduct additional column leach tests on low-grade material of 0.2 g/t Au a

g/t Au.Positive results from this feasibility study, based on the mineral reserve estimatesSeptember 2012, suggest that the Amulsar project be advanced towards detengineering at an estimated cost of US$ 9.5 million.

Mining t Am ls r ill be b con ention l open pit methods ith 90 tonne h l tr


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Social engagement should continue towards defining opportunities foremployment. Preparation should continue towards preparation for implementation Environmental and Social Action Plan.

The Engineering, Procurement and Construction Schedule should be optimizedwork should commence on a Project Execution Plan. Key personnel should be including a construction manager familiar with in-country construction contractors.


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CONTENTS

1 SUMMARY

2 INTRODUCTION

3 RELIANCE ON OTHER EXPERTS

4 PROPERTY DESCRIPTION AND LOCATION

4.1 Location ............................................................................................4.2 Property Description .........................................................................4.3 Ownership .........................................................................................4.4 Tenement ...........................................................................................4.5 Armenian Mining Legislation ...........................................................4.6 Royalties ............................................................................................4.7 Newmont Joint Venture Agreement .................................................4.8 Environmental ...................................................................................

5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTUPHYSIOGRAPHY

5.1 Accessibility ......................................................................................5.2 Physiography .....................................................................................5.3 Climate ..............................................................................................5.4 Infrastructure ....................................................................................

6 HISTORY

7 GEOLOGICAL SETTING AND MINERALIZATION 7.1 Regional Geology .............................................................................7.2 Local Geology ...................................................................................

7.2.1 Alteration .............................................................................7.2.2 Structure ...............................................................................7.2.3 Mineralization ......................................................................

8 DEPOSIT TYPES

9 EXPLORATION 9.1 Introduction .......................................................................................9.2 Newmont Joint Venture (2007 2010) ...........................................9.3 Lydian (2010-2012) ...........................................................................9.4 Methodology .....................................................................................

9.4.1 Channel Samples ..................................................................h l


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11 SAMPLE PREPARATION, ANALYSES AND SECURITY 11.1 Sampling Method and Approach ......................................................

11.1.1 Specific Gravity Measurements ...........................................11.1.2 Diamond Drill Core Samples ...............................................11.1.3 Reverse Circulation Hole Samples .......................................

11.2 Sample Preparation and Analysis .....................................................11.2.1 Amulsar Assay Quality Control Procedures.........................

11.3 AMC Comments ...............................................................................

12 DATA VERIFICATION 12.1 Verification by Lydian ......................................................................12.2 Verification by AMC .........................................................................

12.2.1 Twinned Hole Review ..........................................................12.2.2 Potential Gold Assay Bias in Drilling Methods ....................12.2.3 Site Visit ...............................................................................12.2.4 Verification of Analytical Quality Control Data ..................

12.2.5 Assay Database Verification .................................................13 MINERAL PROCESSING AND METALLURGICAL TESTING

13.1 SGS Lakefield Research (2008) ........................................................13.2 SGS Mineral Services UK Ltd. (2009) .............................................

13.2.1 -75 m Bottle Roll Leach Tests ...........................................13.2.2 -2 mm Bottle Roll Leach Tests.............................................13.2.3 Column Leach Tests .............................................................

13.3 Wardell Armstrong International (2010) ...........................................

13.4 Wardell Armstrong International (2011) ...........................................13.5 Kappes Cassiday & Associates (2012) .............................................13.6 Kappes Cassiday & Associates (2013) .............................................13.7 Metallurgical Samples and Locations ...............................................

14 MINERAL RESOURCE ESTIMATES 14.1 Overview of Estimation Strategy ......................................................14.2 Geological and Assay Database ........................................................14.3 Geological Modelling and Interpretation ..........................................14.4 Specific Gravity ................................................................................14.5 Topography .......................................................................................14.6 Resource Database ............................................................................14.7 Compositing, Capping and Declustering ..........................................14.8 Gold Indicator Statistics ....................................................................14 9 Variography


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15 MINERAL RESERVE ESTIMATES 15.1 Floating Cones ..................................................................................15.2 Final Pit Design ................................................................................15.3 Mineral Reserve Estimate .................................................................

16 MINING METHODS 16.1 Pit and Phase Design .........................................................................16.2 Mine Schedule ...................................................................................

16.3 Waste Movement ...............................................................................16.4 Low Grade Stockpiles .......................................................................16.5 External Haul Roads and Time Sequence Drawings ........................16.6 Mining Equipment Fleet ....................................................................

16.6.1 Drill and Blast ......................................................................16.6.2 Load and Haul ......................................................................16.6.3 Ancillary Equipment ............................................................16.6.4 Personnel ..............................................................................

17 RECOVERY METHODS 17.1 Crushing Facility ...............................................................................

17.1.1 Primary Crushing .................................................................17.1.2 Secondary Crushing .............................................................17.1.3 Tertiary Crushing .................................................................17.1.4 Stacking ................................................................................

17.2 Heap Leach Facility ..........................................................................17.2.1 Leach Pad .............................................................................

17.3 Process Plant .....................................................................................17.3.1 Carbon Adsorption ...............................................................17.3.2 Carbon Acid Wash ...............................................................17.3.3 Carbon Stripping ..................................................................17.3.4 Carbon Regeneration ...........................................................17.3.5 Carbon Handling ..................................................................17.3.6 Electrowinning and Smelting ..............................................17.3.7 Reagent Handling ................................................................

18 INFRASTRUCTURE 18.1 Existing Infrastructure and Services ..................................................

18.1.1 Location ...............................................................................18.1.2 Site Access and Roads .........................................................18.1.3 Buildings ..............................................................................18 1 4 Resources & Infrastructure


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18.2.3.4 Evaporation Pond ..............................................18.2.4 Accommodations .................................................................18.2.5 Roads & Site Access ............................................................18.2.6 NonProcess Buildings ........................................................

18.3 Water Source .....................................................................................18.3.1 Potable Water Supply ...........................................................18.3.2 Raw Water Distribution System ...........................................18.3.3 Process Water Supply ..........................................................18.3.4 Sewage Waste Water Treatment ....................................

18.4 Waste Disposal ..................................................................................

19 MARKET STUDIES AND CONTRACTS 19.1 Marketing Studies ..............................................................................19.2 Contracts ...........................................................................................

20 ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COIMPACT

20.1 Location, Environmental and Social Setting .....................................20.2 ESIA and Permitting .........................................................................

20.2.1 Scope of the ESIA ................................................................20.2.2 Republic of Armenia Environmental Impact Assessment ....20.2.3 Permits and Licensing ..........................................................

20.3 Significant Project Consumption and Releases ................................20.4 Environmental Context .....................................................................

20.4.1 Geology and Soils ................................................................

20.4.2 Radioactivity ........................................................................20.4.3 Seismicity ............................................................................20.4.4 Water Resources ...................................................................20.4.5 Biodiversity ..........................................................................20.4.6 Air Quality ...........................................................................20.4.7 Noise and Vibration .............................................................20.4.8 Visual and Landscape Aspects .............................................

20.5 Environmental and Social Impact Assessment (ESIA) .....................

20.5.1 Environmental Impact Assessment ......................................20.5.2 Summary of Environmental Impacts ....................................

20.6 Social Context and Baseline .............................................................20.6.1 Archaeology and Cultural Heritage ......................................20.6.2 Demographic, Land-Use, Family Structure and Migration P20.6.3 Household income ...............................................................


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21.1 Mine Capital Costs ...........................................................................21.2 Mine Operating Costs ........................................................................21.3 Process Capital Costs ........................................................................

21.3.1 Direct Costs ..........................................................................21.3.2 Indirect Costs .......................................................................21.3.3 Contingency and Accuracy ..................................................21.3.4 Exclusions ............................................................................

21.4 Process Operating Costs ...................................................................21.5 Waste Dump Facility Capital Costs ..................................................21.6 Heap Leach Facility Capital Costs ...................................................21.7 Wastewater Treatment Plant Operating and Capital Costs ................21.8 Closure and Reclamation Cost Estimate ...........................................21.9 Newmont Agreement (Royalty) .......................................................

21.9.1 Working Capital ...................................................................

22 ECONOMIC ANALYSIS

22.1

Owner Operating Mining Case .........................................................23 ADJACENT PROPERTIES

23.1.1 Seismicity and Seismic Hazards ..........................................23.2 Preliminary Geochemical Assessment ..............................................

23.2.1 Static Testing ........................................................................23.2.2 Kinetic Testing .....................................................................23.2.3 Spent Ore Characterization ..................................................

24 INTERPRETATION AND CONCLUSIONS

25 RECOMMENDATIONS

26 REFERENCES

TABLES

Table 2.1 Persons who Prepared or Contributed to this Technical Report ........

Table 4.1 Summary of Amulsar Project Licences .............................................Table 10.1 Summary of Drilling Completed for the Amulsar Project ................Table 11.1 Summary of Laboratory Independent Assay Quality Control SampleTable 12.1 Drillholes Examined by AMC ..........................................................Table 13.1 Whole Ore Cyanidation Leach Tests .................................................Table 13.2 Coarse Ore Cyanidation Leach Test .................................................


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Table 14.3 Amulsar Project Block Model Definition ..........................................Table 14.4 Gold and Silver Estimation Parameters .............................................Table 14.5 Mineral Resource Statement for the Amulsar Project, Armenia

Consultants (UK) Limited, 5 March, 2013 ........................................Table 14.6 Mineral Resource Statement for the Amulsar Gold Project, Indep

Mining Consultants Inc., 3 September, 2012 ....................................Table 14.7 Global Model Quantities and Grade Estimate, Amulsar Project .......Table 15.1 Floating Cone Inputs .........................................................................Table 15.2 NPV of Floating Cone Geometries Evaluated at US$1,200/oz A

US$20/oz Ag .....................................................................................Table 15.3 Material Contained within Floating Cone Geometries .....................Table 15.4 Mineral Reserves Represent the Diluted Ore Scheduled to the CrushTable 16.1 Phase Design Criteria ........................................................................Table 16.2 Comparison of Designed Phase Tonnes against $900 Cone Tonnes

0.25 g/t Recovered Gold Cut-Off ......................................................Table 16.3 Comparison of Designed Phase Tonnes against US$900 Cone Tonn

a 0.25 g/t Recovered Gold Cut-off ....................................................Table 16.4 Material Movements Total Annual Summary ...................................Table 16.5 Waste Movement Required for Mine Schedule .................................Table 16.6 Summary of Mine Mobile Equipment Fleet Life of Mine ................Table 16.7 Salaried Staff Labor Requirements ....................................................Table 16.8 Mine Hourly Labor Requirements ....................................................Table 18.1 Summary of Operations Personnel ....................................................Table 18.2 Mine Power Requirements (by Area) ................................................

Table 20.1 Republic of Armenia Permits Required for Development of AmulsaTable 20.2 Average Water Requirements ............................................................Table 20.3 Summary of findings from the Environmental Impact Assessment ..Table 20.4 Summary of Social Impacts ..............................................................Table 20.5 Environmental, Community and/or Health & Safety Design Pr

Measures and Best Management Techniques ....................................Table 21.1 Summary of Mine Capital Costs ($US x 1000) ................................Table 21.2 Summary of Mine Operating Costs - Total Dollars ($US x 1000) ....

Table 21.3

Summary Process Plant Initial Capital Cost ......................................Table 21.4 Summary Process Plant Sustaining Capital Cost ...............................Table 21.5 Process Plant Operating Cost Estimate Summary .............................Table 21.6 Operating Cost Estimate - Heap Leach Consumables .......................Table 21.7 Maintenance ......................................................................................Table 21.8 Water .................................................................................................


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Table 25.1 Estimated Costs for Recommended Exploration Programme ...........Table 25.2 Estimated Costs for Detailed Engineering Study ..............................

FIGURES

Figure 4.1 Location Map for Amulsar Project ....................................................Figure 4.2 Amulsar Project Land Tenure Map ....................................................Figure 5.1 Typical Amulsar Physiography .........................................................Figure 5.2 Amulsar Project Infrastructure ..........................................................Figure 7.1 Regional Geology, Upper Eocene to Lower Oligocene Calc-

Magmatic Arc System .......................................................................Figure 7.2 Geological Map of Amulsar Project .................................................Figure 7.3 Amulsar Geological Cross-section A-A, Erato Area .........................Figure 7.4 Amulsar Geological Cross-section B-B, Tigranes Area ...................Figure 7.5 Amulsar Geological Cross-section C-C, Artavasdes .......................Figure 7.6 Amulsar Geological Cross-section D-D, Erato and Tigranes Areas Figure 7.7 Examples of Gold Mineralization in Core Samples, Drillhole DDA-Figure 10.1 Location of Drillholes and Chip Samples .........................................Figure 10.2 Drilling Operations Amulsar Project .................................................Figure 10.3 Drillhole Marker for RCG-001 .........................................................Figure 11.1 Station for Measuring Specific Gravity at Gorayk Core Shed FacilitFigure 12.1 Histogram Plot for Gold Assays (Length Weighted) for Core

Reverse Circulation (B) Drillholes ....................................................

Figure 12.2 Quantile Quantile Plot for Gold Assays (Length Weighted) for CReverse Circulation Drillholes ...........................................................Figure 13.1 Gold Leach Curves (Bulk Composite) ..............................................Figure 13.2 Gold Leach Curves (Half Core Composites) ....................................Figure 13.3 Gold Leach Curves (Whole Core Composites) .................................Figure 13.4 Erato Gold Leach Curves (Half Core Composites) ...........................Figure 13.5 Tigranes and Artavasdes Metallurgical Sample Drillhole Location MFigure 13.6 Erato Metallurgical Sample Drillhole Location Map ........................

Figure 14.1

Wireframe Models for Amulsar Project and Interpreted Faults .........Figure 14.2 Summary Statistics for Specific Gravity Measurements by Zone* ...Figure 14.3 Variogram Models for Upper Volcanic Unit, Erato Zone ..................Figure 14.4 Silver Variogram Models for Erato and AAT UV Zones ...................Figure 14.5 Silver Variogram Model for LV Zone ................................................Figure 14.6 Tonnage and Grade Plot for Erato Upper Volcanic Zone LMIK Esti


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Figure 16.1 Phases Sliced at 2830 m Elevation ....................................................Figure 16.2 Cross Sections of Designed Phases Showing Gold Grade in Block MFigure 16.3 Graphical Presentation of Mine Schedule .........................................Figure 16.4 Pit Backfill at End of Mine Life ........................................................Figure 16.5 Proposed Stockpiles at the End of Year 10 ........................................Figure 16.6 End of Production .............................................................................Figure 16.7 End of Year ........................................................................................Figure 16.8 End of Year 5 .....................................................................................Figure 16.9 End of Year 10 ...................................................................................Figure 16.10 End of Year 12 ...................................................................................Figure 17.1 Amulsar Overall Flowsheet ...............................................................Figure 18.1 Mine Senior Management Staff ........................................................Figure 18.2 Proposed Overall Site General Arrangement Layout ........................Figure 20.1 Footprint of Mine Development (Throughout the Operational Life) Figure 20.2 State Sanctuaries and Important Bird Areas in relation to the

Exploration License ..........................................................................Figure 22.1 Amulsar Gold Project Pre-Tax Sensitivity IRR ..................................Figure 22.2 Amulsar Gold Project Pre-Tax Sensitivity NPV@5% ........................

APPENDICES

APPENDIX A

SELECTED ASSAY QUALITY CONTROL PLOTS

APPENDIX B

SUMMARY STATISTICS FOR COMPOSITES AND CAPPED COMPOSITES

APPENDIX C

SWATH PLOTS

APPENDIX D

DETAILED MINERAL RESOURCE BY ZONE


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2 INTRODUCTION

This technical report for the Amulsar gold project, in the south-central region of Arhas been prepared by AMC Consultants (UK) Limited (AMC) of Maidenhead, Lydian International Limited (Lydian). The report was prepared by G. David KeGeo. Mineral reserves for this report are based on the Lydian International L

Amulsar Resource Update and Heap Leach Feasibility Study report prepared bEngineering on 3 September 2012 and amended 26 November 2012. Mineral resouin this report are based on the Amulsar Gold Project, Armenia for Lydian InternLimited report prepared by AMC on 18 April 2013.The report has been prepaccordance with requirements of National Instrument 43-101 (NI 43-101), StandaDisclosure for Mineral Projects, of the Canadian Securities Administrators (CSlodgement on the CSAs System for Electronic Document Analysis and Ret(SEDAR). This report is required to support an update of the estimation of mresources for the Amulsar Gold Project as announced by Lydian in a press relissued 5 March 2013. The effective date of this report is 18 April 2013 for mresources and 28 November 2013 for mineral reserves.

This technical report has been prepared by G. David Keller, P. Geo, of AMC,Patrick, AusIMM CP (Met) of Metallurg Pty Ltd; Herb Welhener, MMSA-Independent Mining Consultants, Inc.; Richard E. Kiel, P.E. of Golder AssociatePeter R. Lemke, P.E. of Golder associates Inc.; John Maxwell Eyre, CEnv of Coast Consulting Limited and Joseph M. Keane, P.E. of SGS-KD Engineering wmeet the requirements of a Qualified Person (QP), and are independent as defin

NI 43-101. Responsibilities of each QP for this report are summarized in Table 2.1visits conducted by each of the QPs is also summarized in this table.


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Table 2.1 Persons who Prepared or Contributed to this Technical Report

QualifiedPerson Position Employer

Date of SiteVisit

ProfessionalDesignation

Qualified Persons responsible for the preparation and si gning of this Technical Report

G. David Keller Principal

Geologist

AMCConsultants(UK) Limited

12 14

December 2012P.Geo.

JoiSecSec

join24-

Gary Patrick Director Metallurg PtyLtd.6 12

June 2011MAusIMM CP

(Met)

JoiSecJoi24-

Herb Welhener VicePresident

IndependentMiningConsultants,Inc.

June 21-23,2011 MMSA-QPM

JoiSec18.

andSec

Richard E. KielSeniorGeologicalEngineer

Golder AssociatesInc.

June 2011,September-

October 2011,May 2012,

November2012and April 2013

May 2011

P.E.

JoiSec21.Sec

Peter R. LemkeWaterTreatmentTechnicalLead

Golder AssociatesInc.

-P.E.

JoiSec21.Sec

John MaxwellEyre Director

North CoastConsultingLimited

June 2011 CEnv

JoiSec

join24-

Joseph M.Keane Associate

SGS- KDEngineering - P.E.

JoiSec19,por25,andSec

LYDIAN INTERNATIONAL L IMITED


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3 RELIANCE ON OTHER EXPERTS

AMC has not performed an independent verification of land title and tensummarized in Section 3 of this technical report. AMC did not verify the legalityunderlying agreement(s) that may exist concerning the permits or other agreemebetween third parties. AMC relies on Lydian to provide correct information on thtitle and tenure of the Amulsar gold project.

AMC was informed by Lydian that there are no known litigations potentially affec Amulsar project.



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4 PROPERTY DESCRIPTION AND LOCATION

4.1 Location

The Amulsar gold project is located in south-central Armenia approximately 1south-west of the capital Yerevan, and covers an area of approximately 98 square(Figure 4.1). The property is covered by three Prospecting Permissions. A mlicence covers the Amulsar area. Core shed facilities, sample processing, and officethe project are located in the nearby town of Gorayk, near the southern boundary oproject area.

Figure 4.1 Location Map for Amulsar Project



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4.2 Property Description

The Amulsar project is comprised of three exploration permits or ProspPermissions (PPs) and one mining licence. The three PPs, comprising; Saravan EHTV 29/043), Gorayk (No. EHTV 29/042), and Khatchkar (No. EHT-29/154), coproject and are presented in Figure 4.2. The Saravan and Gorayk licences were granby Ministry of Natural Resources in August 2007 with the Khatchkar PP granJanuary 2013.

In May 2009, a mining licence (No. SHATV-29/245) was granted by Ministry of Resources, and covers the Tigranes, Artavasdes and Arshak areas. Followingapplication to extend the mining licence, an extension for 25 years was approve22 November 2011 providing that an approved work programme is undertakenmineral resources are depleted within 16.5 years. A new mining licence andallocation area (RAA) was granted by Ministry of Natural Resources in September The RAA is an area designated for plant infrastructure and industrial use.

Figure 4.2 Amulsar Project Land Tenure Map



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O Amulsar Gold Project

4.3 Ownership

All PPs and mining licences are held 100% by Geoteam CJSC (Geoteam), an Armeregistered Closed Joint Stock Company. Geoteam is owned 100% by Lydian Resou

Armenia (Lydian Armenia) a wholly-owned subsidiary of Lydian International Limi

4.4 Tenement

Exploration and mining licences for the Amulsar project are summarized in TabThe Saravan and Gorayk PPs were awarded to Lydian at auction, and were graunder Armenian 2007 mining law providing five-years for exploration aextensions of two-years each, before a mining licence application needs submitted. The Khachakar Prospecting Permission (PP) was awarded at auction uthe Armenian mining laws of 2012.

Table 4.1 Summary of Amulsar Project Licences

Licence Type Name LicenceNumberPrevious Licence

Number HolderGrantDate

Prospecting Permission Saravan EHTV29/043 42Geoteam

CJSC08 August

2007

Prospecting Permission Gorayk EHTV29/042 41Geoteam

CJSC08 August

2007

Prospecting Permission Khachakar EHT-29/154 -Geoteam

CJSC31 January

2013

Mining Licence Amulsar SHATV-29/245 14/588 GeoteamCJSC 03 April2009

The new mining licence granted for the Amulsar project is valid until 2034, and pextensions to the licence as new resources are approved. The licence allows for a fyear construction period starting from 26 September 2012, and requires mproduction to start at least 2.6 million tonnes per year.

4.5 Armenian Mining Legislation

The World Bank has advised the Armenian Government on revisions to the MCodes, including royalties, which became part of the revised law adopted in Ja2012. A mining licence is valid for a period of up to 25 years, but the actual tbased on the mining plan submitted as part of the mining licence application, an



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Amulsar Gold Project

metal concentrates. If a company sells a cast product, or a product further convfrom concentrate, the revenue amount will be adjusted as per the following foprovided by Government of Armenia.

R= 4+(P/(I*8))*100, where; R is royalty in percentages

P is profit before tax

I is income (revenue) from sales

The royalty is calculated on an annual basis, but quarterly pre-payments must be ma

4.7 Newmont Join t Venture Agreement

On 23 April 2010, Lydian purchased from Newmont Mining Corporation all of Newinterest in the former joint venture between Lydian and Newmont known Caucasus Venture, including all of Newmonts interest in the Amulsar gold prop

Armenia. The consideration was a mixture of committed and contingent paymentscommitted payments included the issuance by Lydian of three million ordinary shaNewmont on the closing of the transaction, and three payments of US$5 millwhich; the first was paid in 2010, the second was due on 31 December 2011 and on 13 March 2012, together with interest owing thereon; and the third became due oDecember 2012. Lydian has notified Newmont that it has decided to defer makinthird instalment payment until no later than 31 December 2013. This deferred payamount of US$5 million will bear interest at the rate of 10% per annum, commencDecember 2012 until it is paid.

In addition, Lydian agreed to pay Newmont, following the start of commercial prodat the Amulsar project, a 3% net smelter royalty (NSR). However, at any time prior date, that is 20 days following commencement of commercial production, Lydian mits option, elect to buy out the 3% NSR and instead pay to Newmont the aggregateof US$20 million, without interest, in 20 equal quarterly instalments of US$1 commencing on the first-day of the third calendar month following the commercial production. Furthermore, Lydian has a one-time option prior

commencement of commercial production to prepay these quarterly instalmentssingle cash payment, using an annual discount rate of 10%. This equates to a sipayment of approximately US$15.6 million.

4.8 Environmental



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Environmental impact assessment for exploration activities, open pits, waste facility and heap leach facility.

Geoteam submitted a number of environmental impact reports (EIA) for explactivities and mining activities to the Concession Agency of Ministry of EnerNatural Resources (MENR) of the Republic of Armenia, support for exploration pand mining licence applications, and to the Ministry of Nature Protection (MNP) be2009 and 2013.

The reports to MENR are submitted on an annual basis, and are focused totally onactivities carried out per the work plan attached to the licence or permits and a seon the environment.

The reports submitted to the MNP are done on a quarterly basis, and one annuallysummarizes the previous four ones. These are related to the environmental paymee.g. water consumed, air emissions, etc. After every approval from the re

environmental inspectorate based in Vayots Dzor Marz, Geoteam makes respepayments.

Lydian completed its first environmental impact assessment (EIA) for the Tideposits in December 2009. The EIA was one of the reports that supported the mlicence application.

In December 2011, Lydian conducted an EIA on the conceptual design of a heap lfacility (HLF) for the proposed operation located in the Vorotan Valley. The EIA cthe conceptual design of crushers, conveyor, heap leach pad and plant, withrespective locations. The EIA was presented to the public on 28 November 201December 2012, Geoteam was granted approval on the HLF location from the MNP

The EIA approval for open-pit mining for the Tigranes/Artavasdes areas and the loof the waste dump facility was approved in July 2012. The EIA for the Erato depobe submitted for approval by the MNP before the end of 2013.

The EIA submission for the open pit and the waste dump facility is part of the mlicence application requirements. EIA approvals are also required by the MNP, incladditional EIAs for other parts of the infrastructure like crushers, conveyors, anmetallurgical processing plant facilities.

In parallel Lydian is preparing an Environmental and Social Impact Assessment (E

LYDIAN INTERNATIONAL L IMITEDA l G ld j


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5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTUPHYSIOGRAPHY

5.1 Accessibility

The Amulsar gold project area is readily accessed from the national M2 highway passes near the project concessions. The M2 highway is the main connector for trfrom Yerevan to Iran. Road access from Yerevan to the Amulsar projapproximately 170 km of sealed highway and 15 km of gravelled local secondary ro

A currently unused airstrip is located at a nearby resort town of Jermuk, approxim45 Km from the project. The nearest international airport is at Yerevan, withscheduled international flights from Europe and Asia.

Lydian exploration work routinely operates from April to mid-December. Expactivity during the winter period is generally limited between December and Ma

snowfall in steep mountainous portions of the project areas.5.2 Physiography

The Amulsar project area is located in mountainous terrain with rounded peakridges. A dominant north-west south-east trending ridge extends about 7 km acrproperty. The ridge attains a maximum elevation of 2,988 m. Vegetation cover athe project consists of scrublands dominated by wild grasses and isolated shrubs. This good access over the property by drill roads and trails. Typical terrain for the parea is shown in Figure 5.1.

Armenia lies within a seismically active zone, with some areas having a high rmajor earthquakes. The last major quake was in 1988 in northern Armenia. The Amproject area is seismically active, with the most recent destructive earthquake brecorded in September 1931, at the township of Sisian some 30 km to the south-eathe prospect area. Destructive earthquakes have also been recorded in the ancient of Vayk, some 20 km to the west.

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Figure 5.1 Typical Amulsar Physiog raphy

Source: AMC, 2012Notes:

A. Erato and Tigranes areas, looking north-west.B. Arshak and Artavasdes areas, looking west

A

B

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access is generally possible only from March to November, and access for hmachinery is confined to the period from May to October/November.

5.4 Infrastructure

The Amulsar project infrastructure is generally well-developed with good road and networks. The Armenian M2 highway connects the project from Yerevan, and bothe project to the south-west. The village of Gorayk is located just off of the M2 higsouth of the project. Gravel roads provide local access to the project and the towJermuk to the north and Gorayk to the south. A map of infrastructure for the Aproject is shown in Figure 5.2.

A high-tension power line transects the southern limits of the project licence areaspower substations rated at 35 KVA and 110 KVA are located near the village of Go

A major gas pipeline from Iran to Armenia crosses the prospecting licences oeastern and north-eastern portions of the project. A fibre-optic communication

passes through the east and north-eastern parts of the project licences.Figure 5.2 Amulsar Project Infrastructure

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6 HISTORY

Due to its geological location, within a tectonically active collision zone betwe Arabian and Eurasian plates, Armenia has been endowed with large porphyrycopper-molybdenum deposits, and polymetallic and gold-bearing vein systems. Lscale metal production began in the early 19th century with the opening of the Aland Kapan polymetallic mines. In the 1950s, the Zangezur Copper-MolybdCombine developed the world-class Kajaran deposit in the south of Armenia, produces 3% of the worlds molybdenum output. The dissolution of the Soviet Ucoupled with low metal prices, severely disrupted Armenias mining industry 1990s, but a new legislative framework and improved market conditions ledsignificant upturn over recent years. Metal production comes from:

Kajaran (Cronimet) and Agarak (GeoProMining) copper-molybdenum pdeposits;

Kapan vein-type polymetallic deposit (Dundee Precious Metals) an

Shahumyan polymetallic deposit; Zod gold mine (GeoPro Mining)

Foreign mineral exploration companies active in Armenia include Global Gold, CResources, and Anglo African Minerals.

The Amulsar region was initially identified by the Armenian Soviet Exped1936 1937 as an area of secondary quartzite, which was deemed to host potent

a silica resource. Work aimed at testing the potential of a silica resource commence1946, with the development of small-scale exploration adits. This work concludethe alunite content of the silica was too high (up to 25%) and that, as such, the prwas of no interest as a source of quality silica. Further work in the early 1960s identhe secondary quartzite as metasomatic in origin, developed due to the replacemeintermediate-composition volcanic rocks (known regionally as the Amulsar Suite). 300 m of tunnelling and 640 m 3 of trenching were also completed during tmostly on the north-eastern side of the Amulsar ridge. Testing of a bulk s

concluded that the silica was of sufficient quality for the production of low-gradeVolumetric calculations made during this time estimated some 360 Mt of secoquartzite rock at Amulsar.

Research work by the Soviet Expedition continued at Amulsar during the 1979 1982 This work was focused principally on understanding and mappi



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7 GEOLOGICAL SETTING AND MINERALIZATION

7.1 Regional Geolog y

The Amulsar gold deposit is situated in south-central Armenia and is hosted in an UEocene to Lower Oligocene calc-alkaline magmatic-arc system that extends norththrough southern Georgia into Turkey, and south-east into the Alborz-Arc of Iran.

Volcanic and volcano-sedimentary rocks of this system comprise a mixed marineterrigenous sequence that developed as a near-shore continental arc between southern margin of the Eurasian Plate and the northern limit of the Neo-Tethyan OIn the Early Oligocene the Neo-Tethyan Ocean closed, and subduction ceased athis margin when a fragment of continental crust, known as the Sakarya contcollided at the trench axis and accreted with the Eurasian plate. The location of Amwithin this arc is shown in Figure 7.1.

7.2 Local GeologyThe Amulsar deposit is hosted in a sequence of Eocene-Oligocene volcanogenic rof basaltic to dacitic composition, containing two distinct volcano-sedimentary The Lower Volcanic unit (LV) is dominated by massive porphyritic andesite. Thalso contains abundant coarse volcaniclastic members in some project areas. Upper Volcanic unit (UV) is characterized by coarse volcaniclastic breccia occwithin debris flow channels, incised into a thick package of finer-grained volcanrocks, including immature feldspathic sandstone. Andesitic lava flows form a component and also appears to occur in erosional channels.

The UV unit lies disconformably over the LV unit, with clasts of the two units occuthe contact between the two units, forming what has been termed the mixed brlithological unit. This lithological unit is believed to represent a paleoweathering suThe geology of the Amulsar project area is shown in plan in Figure 7.2 and geolcross-sections in Figure 7.3 to Figure 7.6.



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Figure 7.1 Regional Geology, Upper Eocene to Lower Oligocene Calc-AlkMagmatic Arc System



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to be cut by the disconformity, which implies that the two alteration styles are unrin time.

7.2.2 Structure

Pervasive host fracturing occurred during an interval of both east- and west-dirthrusting, producing a broad mild antiformal fold across Amulsar project areabundance of host fracturing is likely controlled by the differential strength in

produced by the focusing of pre-mineralization silica-alunite alteration into the pbreccia units. Mineralization is focused within a local zone of highly complex defornear the crest of the antiform, where complex smaller-scale duplexes of both vhave interleaved parts of the Lower Volcanic with the Upper Volcanic sequenceleast two intervals of post-mineralization extensional faulting dissect the antistructure, such that the original mineralizing system is now preserved withindiscrete north-east trending grabens that cross the antiform. These larger struhave been disrupted by north-west trending extensional faults.

7.2

Documents

412042 Amulsar Project Lydian Resource and Reserves Final