A Russian company exploiting Armenia’s largest gold mines has reported a sharp rise in output last year and pledged to raise production levels further after modernizing its gold smelter in the southern town of Ararat.
The GeoProMining group purchased the Ararat Gold Recovery Company, now called GPM Gold, in from Indian investors in 2007. The company, which has exclusive rights to the massive gold deposits at Sotk, eastern Armenia, stood idle at the time. Large-scale production operations there resumed only in 2010.
In an interview with the Regnum news agency, the GeoProMining chairman, Roman Khudoliy, said GPM Gold nearly doubled gold production to 40,000 ounces last year. He said it plans to smelt 120,000 ounces of gold next year.
Khudoliy added that the Russian group will make $200 million in additional capital investments in its Armenian subsidiary for that purpose. He said the bulk of them will be channeled in the ongoing capital reconstruction of the Ararat smelter built in Soviet times. The plant’s modernization is due to be completed in 2013.
Government statistics confirm a significant increase in gold production by GPM Gold and several other firms mining gold in smaller deposits elsewhere in Armenia. According to the Customs Service, Armenian gold exports rose, in physical terms, by 62 percent to over 1.6 tons in January-September 2011.
Armenia - A gold smelter in Ararat reconstructed by Russia's GeoProMining group.
The National Statistical Service (NSS) reported last month that total export revenue from precious metals and gem diamonds was up by as much as 46 percent percent, at over $196.4 million, in 2011.
The Armenian gold mining industry, dominated by foreign investors, has greatly benefited from the current record-high prices of gold in the global markets.
Despite rising production volumes and earnings, GeoProMining has had a rather bumpy ride in Armenia. In November 2010, the Armenian parliament’s Audit Chamber urged the government to revoke the company’s operating licenses for what it called mismanagement and serious legal violations. In particular, it claimed that the Russians’ 2008 licensing agreement with the Armenian Ministry of Energy and Natural Resources was signed in violation of the country’s mining legislation and regulations.
GeoProMining rejected the accusations and said it will take the parliamentary body to court. But with the Armenian government essentially ignoring the Audit Chamber’s recommendations, the scandal seems to have been laid to rest.
GPM Gold has also been at odds with Armenian environment protection groups. They cried foul last year after company began building a gold ore crusher at Sotk, not far from the ecologically vital Lake Sevan. Armenian law bans any manufacturing activity involving toxic emissions in the vicinity of Sevan.
“On the whole, it is comfortable to do business in Armenia,” Khudoliy told Regnum. “Armenia’s mining industry has a great potential for development.”
GeoProMining also owns another Armenian company that mines copper and molybdenum in the southeastern Syunik province. It also has extensive interests in neighboring Georgia’s mining sector.