Proactive investors

Amulsar Project - Armenia

The Amulsar project covers a region of high-sulphidation, epithermal-type gold mineralisation located in central Armenia and discovered by Lydian in 2006. It is an open pit heap leach project which is still open in all directions, including at depth, with all necessary infrastructure in place for mining activities such as roads, power, electricity and water. A bankable feasibility study was released in September 2012 and is in the process of being updated to incorporate new mine infrastructure layout changes to accommodate new found gold from the 2012 drill program with first gold pour now planned for late 2015 – early 2016.

As of September 2012 after the release of the Feasibility Study Report, Amulsar hosted a Proven and Probable reserve of 2.3M Oz Gold at 0.8 g/t and 9.98M Oz Silver at 3.4 g/t at a US$900 pit shell and 0.3 g/t cut off. Mineral reserves at Amulsar are commonly surrounded laterally and sometimes at depth by a halo of Inferred category resource. Gold resource estimates, at a 0.3 g/t gold cut-off are 1.9M Oz Gold at 1.0 g/t in Measured, 0.6 M Oz at 1.0 g/t Gold in Indicated and 1.8M Oz Gold at 0.8 g/t in Inferred. The 2012 drill program focused on infill drilling those areas of Inferred category resources residing within the current Feasibility Study pit-shell with the aim being to convert them to mineral reserves. The 2013 drill program of will continue this infill drilling as well as pushing for more exploration drilling especially at depth, to get a better understand of the upside potential in the deposit

Previous year resource estimates include -

• March 2009 - released the first NI 43-101 compliant inferred resource of 1M oz at Amulsar
• March 2010 – updated and increased the NI 43-101 compliant inferred resource to 1.4M oz
• April 2011 - increased the resource to 1.1M oz in Indicated and 1.4M oz in Inferred resource category
• January 2012 – further increased the resource to 68.2 Mt at 1.0 g/t Au (2.1M oz) of Indicated and 36.1 Mt at 0.9 g/t Au (1.1M oz) of Inferred Category resources based on a 0.40 g/t gold cut-off grade
• Herb Welhener, Vice President of Independent Mining Consultants Inc. Tucson, Az. prepared the mineral resource estimate in accordance with CIM guidelines

The licences are held 100% by Geoteam, an Armenian registered closed joint stock company. Geoteam CJSC is owned 100% by Lydian International Limited.

Armenia Overview

Armenia has a long and rich history and prides itself on being the first nation to formally adopt Christianity (early 4th century). Despite periods of autonomy, over the centuries Armenia came under the sway of various empires including the Roman, Byzantine, Arab, Persian, and Ottoman. Armenia gained its independence from the Soviet Union on 21st September 1991.

The country is located at the historic cross roads between Europe, the Middle East and Asia and is located on one of the branches of the Silk Road (see map). The country has a population of approximately 3 million and a land area of 29,800 km2. The international airport at Yerevan is well served by flights from Europe, the middle east and the former soviet union and there are good road links running through the country from Georgia in the north to Iran in the south (https://www.cia.gov/library/publications/the-world-factbook/geos/am.html).

The country is democratic and is currently experiencing steady economic growth. According to the Heritage Foundation / Wall Street Journal Index of Economic Freedom, the country has in the last decade recharged it’s economy by market liberalization and privatisation initiatives and a macroeconomic policy environment supported by low taxes and stable government spending. The regulatory framework is sound and an open trade regime with low tariffs facilitates the free flow of goods. In the 2011 index Armenia was ranked 36th freest in the world and 19th amongst the 43 countries in the European region, with its rating putting it above the world and regional averages.

There is an independent Judiciary and laws protecting foreign investors against legislative changes. Armenia is a member of the World Trade Organisation and is a signatory to the International Centre for Settlement of Investment Disputes (ICSID)(www.icsid.worldbank.org) Mining and metal processing have been undertaken in Armenia since ancient times. The modern mining industry was established during the Soviet Union period with major mining and refining complexes being established at Kadjaran, Kapan, Zod and Alovarde. The mineral potential of the country attracted Lydian attention initially in 2005 and subsequently the Amulsar gold deposit was discovered in 2006. Other international exploration and mining companies active in Armenia include Dundee Precious Metals Inc, Global Gold Corp, Cronimet and GeoProMining.

Kela Project - Georgia

The Kela project was rediscovered by Lydian geologists during reconnaissance exploration in 2010. Initial project-scale mapping and sampling has returned anomalous gold-only grab sample results of 1g/t to 4g/t gold over a strike distance of 2km and from numerous sub-parallel fault zones and hydrothermal breccia veins located structurally below an interpreted silica-cap. These faults are located adjacent to a pophyritic, pyrite-sericite altered quartz-diorite intrusion which returned anomalous gold values of up to 0.3 g/t gold in grab samples.

Lydian’s Kela License conditions require submission of an Environmental Impact Assessment and interim report on potential resources within 24 months. Lydian has had Georgia in its sights since early 2006 and has conducted various in-country investment and geological reviews. The country is considered highly prospective for gold and has entered a period of committed reform and rapid growth

Georgia Overview

Georgia is a sovereign state in the Caucasus region of Eurasia. Located at the strategically important crossroads where Asia meets Europe, it is bounded to the west by the Black Sea, to the north by Russia, to the southwest by Turkey, to the south by Armenia. The country maintains a good relation with most of its direct neighbors.

Georgia covers a territory of 69,700km² and its population is almost 4.7 million with its capital, Tbilisi located in the South east of the country. Georgia is a unitary, semi-presidential republic, with the government elected through a representative democracy. It is a democratic semi-presidential republic, with the President as the head of state, and Prime Minister as the head of government. There is also a growing U.S. and European Union influence in Georgia, notably through proposed EU and NATO membership, meaning Georgia’s young and energetic government are actively seeking and supporting direct foreign investment.

Georgia ranks 12th out of 183 economies on the World Bank’s Ease of Doing Business Index ahead of most European countries and just below Canada which ranks 7th. Georgia is a member of the World Trade Organization, a signatory to the International Convention for the Settlement of Investment Disputes and is 68th on Transparency Internationals Corruption Index (ahead of Brazil, Colombia and Peru).

Corporate tax in Georgia is 15% and a royalty on resource depletion is levied at 0.9 Georgian Lari (GEL) per gram of gold which equates to approximately 1.4%.