Major Precious Metals’ update on Skaergaard project in Greenland
Junior Major Precious Metals had been granted a new mineral exploration licence in March which increased the size of Skaergaard to 877sq.km.
Major Precious Metals has outlined an updated resource for its Skaergaard project in Greenland, which it describes as one of the largest known palladium deposits outside South Africa and Russia. Skaergaard’s resources now comprise an indicated 81.6 million tonnes at 2.1g/t palladium-equivalent for 5.5 million ounces Pd-eq; and an inferred 217.3Mt at 2.05g/t for 14.4Moz Pd-eq.
The company said updated mineralisation modelling, more detailed examination of the deposit and today’s higher metal prices had resulted in “significant positive increases” to the tonnages and contained metal, at higher overall grades relative to the 2013 estimate. The 2013 resource had used a US$1,400/oz gold price and $560/oz for palladium, compared with the $1,800/oz and $1,725/oz assumed respectively this month.
Major Precious Metals said it was planning up to 15,000m of infill drilling this year and a preliminary economic assessment. The company, formerly Eastern Zinc, completed its acquisition of Skaergaard from Platina Resources in November.
Meanwhile Greenland faces a battle to win back investor confidence following the election win earlier this month by anti-uranium mining party Inuit Ataqatigiit, which has formed a coalition government. The company announced it had entered a shareholder rights plan with National Securities Administrators Ltd, to ensure shareholders were treated fairly “in the event of a take-over bid”. It said this was not adopted in response to “any actual or threatened” proposal.
Mining and indigenous communities across the world
While in recent decades’ great progress has been made in terms of securing minority rights across the globe, many companies worldwide continue to overlook the needs of indigenous communities. In particular, the geological and environmental negative externalities produced as a result of intensive mining are “a major cause of displacement for minorities and indigenous people across the world, with many unable to secure compensation and protections due to discrimination”, according to Jasmin Qureshi from Minority Rights Group International.
In 1990, the United Nations Global Consultation on the Right to Development stated that “the most destructive and prevalent abuses of indigenous rights are the direct consequences of development strategies that fail to respect their fundamental right of self-determination”. Ever since technology began increasing the demand for what can often be scarce raw materials, mining companies have been pushed to adopt more land- and capital-intensive approaches to extraction, in many case at the expense of indigenous communities residing in resource- and mineral-rich areas.
Multiple recent events corroborate Jasmin Qureshi’s statement. In Morocco, ever since Africa’s biggest silver mine was set up in the country’s Imider region, the Amazigh community residing in the area has witnessed significant difficulty in accessing water. Available water has been either diverted to mining activities or, when it does eventually reach the Amazigh community, presents high levels of pollution. Consequentially, agricultural activity been seriously affected, with far lower crop yields making the lives of the Amazigh incredibly hard.
For eight years, from 2011-19, Amazigh activists occupied the Aleppan Mountain above the silver mine, cutting off a pipeline delivering water to it. The protests quickly became tied into a global socio-economic and environmental consciousness about indigenous rights. The occupation came to an end last year when protesters decided to switch to more peaceful means of protest against the mine’s major shareholder, the Société Nationale d’Investissement (SNI), a private holding company owned by Morocco’s royal family, but not before achieving some positive change in terms of infrastructure investment and social services for the community. The plight of the Amazigh is similar to that of the Puutu Kunti Kurrama and Pinikura people in Western Australia, where the mining giant Rio Tinto destroyed two rock shelters – both Aboriginal sites of major historical and archeological importance – with two controlled blasts in order to have access to what it termed “higher volumes of grade-one ore”. The company completely neglected the desires of the Puutu Kunti Kurrama and Pinikura, who repeatedly presented Rio Tinto with the urgency of preserving the sites right up until the blasts.
In a recent submission to an Australian Senate inquiry into the destruction of the rock shelters, Rio Tinto acknowledged that “various opportunities were missed to re-evaluate the mine plan in light of this material new information” on the significance of one of the sites. It also repeated earlier public comments that the destruction of the rock shelters, dubbed Juukan 1 and Juukan 2, “should not have occurred”. Although the Moroccan and Australian cases are far from unique, there is growing evidence that mining companies – and, perhaps more importantly, their investors – do appear to be realising that only by working with and not against indigenous communities can they achieve both profit and peaceful coexistence.
According to a report from the European Bank for Reconstruction and Development (EBRD), whose own independent accountability mechanism was in 2015 forced to investigate the bank’s compliance with its environmental and social standards at a mine it financed in the Gobi-Altai region of Mongolia, “the importance of involving local communities in mining projects is today recognised as best practice for maximising the benefits for affected communities”. Forward-looking investors have embraced this principle on the basis that mining initiatives should be viewed as opportunities for indigenous peoples rather than human-rights violations.
As the EBRD report points out, “Offsetting adverse impacts has in the past tended to take the form of philanthropic investment for local projects and initiatives such as the construction of a new hospital or support to the local school football team. However, a more strategic approach to community investment has emerged over the past decade, particularly among the major global mining companies. This focuses on careful engagement, from the earliest stages of the mine project cycle, with local community stakeholders to help identify common long- term strategic socio-economic development aims for the local communities as well as gaps in the existing market”.
One mining giant that took on this commitment is Cameco, operating in the Saskatchewan region in Canada. For more than 25 years now, Cameco has been operating in cooperation with local indigenous communities, with the company committed to providing native people with “sustainable benefits through employment, education and training” through “robust community engagement and strategic community investments with a long term positive outcome”. This funding, which amounts to 14 million Canadian dollars in donations to northern aboriginal groups over the past decade, and active engagement through information sessions and ad-hoc projects, is seen by Cameco “both as a practical necessity and the right thing to do”.
This conscious approach to mining in indigenous-inhabited lands surely has long-term impacts on the indigenous social fabric. In the Strategic Assessment of Development of the Arctic report, requested by the European Commission, experts highlight how environmental, social and economic outcomes are “inherently intertwined”. This entails that, in order for mining companies to effectively tackle the issue of preserving the rights of indigenous people, all three have to be addressed jointly. This interrelation is particularly relevant when it comes to mining sites in the Arctic region, where indigenous communities base their lifestyle on a delicate equilibrium of coexistence with an already endangered ecosystem.
The degree of complexity raised by this interrelation poses a significant challenge to companies operating in the north-eastern part of Russia. Norilsk Nickel (Nornickel), the world’s largest producer of palladium and high-grade nickel, has experienced first-hand how complex it is to tackle corporate social responsibility commitments from different angles at once.
Albeit committed to providing support to the local fauna, Nornickel can’t hide from a history of ecological damage to the Artic ecosystem. Nonetheless, the mining giant’s recent statements and actions leave scope for reassessing its role as a company aiming to set a whole new standard. In addition to supporting Arctic researches and nature reserves, it has recently started a more closely-monitored cooperation with indigenous populations residing in the Taymir Peninsula.
So far, Nornickel has signed agreements with three organisations representing indigenous people. These agreements include a five-year programme of financial and strategic support totalling two billion roubles (around 22 million euros) which will be devoted to the preservation of indigenous traditional activities, as well as to improving infrastructure, housing, and education. One of the signatories of the agreement was Grigory Ledkov, president of the Association of Indigenous Minorities of the North, Siberia and the Far East of the Russian Federation, who is extremely confident that these agreements will usher in a new phase of cooperation between Nornickel and indigenous communities.
“This can serve as an example for other companies, as it emphasises the importance of preserving the habitat of indigenous people and protecting our values and traditions,” he says.
These agreements could also provide a push for more effective implementation of several federal laws covering indigenous rights, already present in Russian Legislation.
Professor Bill Bowring, who teaches human rights and international law at Birkbeck College at the University of London, says it could “protect the traditional living habitat and traditional way of life of indigenous small peoples, to preserve and promote their cultural identity and to ensure biological diversity in the territories of traditional environmental management”.
The Murmansk region in northwest Russia is the land where the Sami people have lived for thousands of years. Niikko Sommer, an expert in Sami culture at the University of Texas, says: “a timeless theme for the Sami has been their exploitation. They have been consistently taken advantage of by outsiders for their land and resources.”
In 2020, 19 Sami communities (out of 37) received funds from Nornickel, which also tried to amplify the voice of the community by financing the publication of an almanac including the oeuvre of 26 Sami authors in 2019. A more conscious approach to collaboration could therefore significantly improve lifestyles in terms of environmental, social and economic conditions after centuries of such exploitation. According to Sommer, “modern legislation and environmental policies may give a glimmer of hope to the Sámi and environmentalists worldwide.” With its recent commitments, Nornickel could thus pave the way for a more proactive approach to the actualisation of such norms, as well as ensuring that indigenous people rights in the Taymir peninsula and the Murmansk region are respected.
Grigory Ledkov affirms that: “”We live in Russia and we see the whole situation,” suggesting perhaps that well-meaning but not always well-informed outsiders sometimes miss the bigger picture.
A similar attitude towards what were viewed as “interfering outsiders” was also for many years present among the people of the Romanian town of Roșia Montana. There, the Roşia Montană Gold Corporation (RMGC, majority-owned by a Canadian company, Gabriel Resources) was close to building Europe’s largest gold mine, before protests across the country eventually forced the Romanian government to halt the construction of the mine, which some locals had hoped would create thousands of jobs in one of Romania’s most deprived areas.
Many of those who protested, complained locals, enjoyed comfortable lives in Romania’s cities. A film was even made to put the case for the project: Mine Your Own Business. With the mine now in eternal limbo and unlikely to ever be constructed, RMGC is asking the Romanian state for 4.4 billion US dollars in compensation, while locals – both those who were in favour of the project and those who were against – are still uncertain of their future. It is an example of how everyone can lose out when no common ground can be reached. It is cases such as Roșia Montana that make Nornickel’s agreements with the indigenous people of the Arctic Circle of paramount importance, as they may serve as a test case for future best practice.
Across the world, not least in Morocco, Western Australia, and Romania, others will be monitoring the outcome closely.
Protests against Rio Tinto’s future lithium mine in Serbia
Protest was organized in front of the Rio Tinto’s premises in Serbian city Loznica. The citizens of Loznica demanded an urgent suspension of all activities related to the construction of the jadarite/lithium mine and the abandonment of the lithium exploitation project near their city.
Citizens are protesting because they do not know what the ore flotation will look like, how and where the tailings from the mine will be deposited and what impact it will have on the environment, and they express fear that it will be harmful to the environment and health. The protest was organized by the informal citizens’ association for the protection of Gornji Jadra and the Podrinje Anti-Corruption Team (PAKT). Miroslav Mijatović from PAKT told Sputnik that this is only the first protest that there will be more of them, because the health of their children is more important than any “artificial economic progress”.
He states that Rio Tinto came to Serbia with a “long tradition of violating human rights and violating the environment.” He estimates that the opening of the mine will close life in Gornji Jadar, that low-skilled jobs will be created, and fertile land will be lost.
According to him, the potential danger of an environmental accident is much greater than the local one, and the consequences can be felt within a radius of 150 kilometers, which means that not only Loznica is endangered, but also Šabac and Belgrade.
He states that in the past few years, the Faculty of Mining and Geology has earned 100 million and 500 thousand dinars from Rio Tinto, the Faculty of Mechanical Engineering 12 million, the Faculty of Civil Engineering 10, and the Institute of Public Health Belgrade 13.1 million dinars, institutions are auditing all the studies done so far, because the people cannot trust the institutions paid for by Rio Tinto.
The most important request of the protest organizers is the holding of a referendum of the citizens on whether they are for or against the mine.
“Citizens must be asked whether or not they want a mine and under what conditions,” said Mijatović.
Rio Tinto invested half a billion
The mining company, Rio Tinto, whose headquarters are in London, has been present in Serbia since 2007.
In July 2017, Rio Tinto signed a Memorandum of Understanding with the Government of Serbia on the project for the development of lithium and pine deposits “Jadar”, and in the middle of last year it announced that it would start exploiting lithium in four years. According to the plan, a feasibility study for the project should be completed by the end of this year.
Rio Tinto has so far invested almost half a million dollars in research. According to “Bloomberg”, the estimated reserves of lithium in Serbia are the largest in Europe, and preliminary research suggests that it could be 200 million tons. The American Geological Institute speculates that it is as much as a million tons of lithium.
Velocity’s gold project in Bulgaria gets positive prefeasibility results
The results of the prefeasibility study further de-risks the project and provide opportunities for additional project enhancements as Velocity advances the project towards production, said Keith Henderson, Velocity president and CEO.
Canadian mineral exploration company Velocity Minerals said that it has received positive prefeasibility study results for the Rozino gold project located in southern Bulgaria. The study establishes the Rozino deposit as supporting an economic open pit mine operation with gold recovery by a combination of on-site concentration in a flotation plant and further processing to produce a gold-silver doré in the existing processing plant located in the Bulgarian town of Kardzhali, 85 km away from Rozino, where doré would be produced, Velocity said in a statement earlier.
The prefeasibility study financial model base case returns an after-tax net present value at a 5% discount rate of 163 million Canadian dollars ($124.3 million/105.2 million euro) and an after-tax internal rate of return of 27.4%, the mineral exploration company noted.
In addition to returning positive economic results, the study also outlines significant benefits, including shortened permitting timelines and capital cost efficiencies, as the existing processing plant in Kardzhali is currently operational, it has sufficient capacity to process concentrate from Rozino and its use reduces total capital cost requirements for the gold project.
Furthermore, on-site development at Rozino only requires permitting for mining, flotation concentration, and disposal of relatively benign waste rock and tailings. The area of disturbance has been kept relatively compact to facilitate reclamation and closure, Velocity noted.
“The prefeasibility study presents financial results for the Rozino gold deposit as currently defined. Exploration work is ongoing aiming to discover and define additional mineralization within the 145 sq m exploration licence and at Velocity’s other option properties in the region, which could potentially fit into a Hub and Spoke development model,” said Keith Henderson.
Velocity’s strategy envisages the development of a low cost “Hub and Spoke” operation in southeast Bulgaria whereby multiple gold projects produce gold concentrates for trucking to an existing, central processing plant for the production of doré. Other than Rozino, the projects referred to in the “Hub and Spoke” development model do not have defined resources nor is there is any guarantee that resources will be defined, the company’s statement read.
Over the next 12 months, Velocity will continue to aggressively explore the exploration properties in the surrounding area, aiming to discover and define mineral resources as part of its strategy, the CEO said.
Velocity Minerals completed the acquisition of 70% interest in Bulgaria’s Tintyava Property, which holds the Rozino gold deposit, from local company Gorubso-Kardzhali in 2019, through delivery of a PEA.
Rally for environmental threat of Amulsar Gold Mine in Armenia
Amulsar is a mountain in southern Armenia which is the source of two major rivers. It is also the source of a network of dams and tunnels designed to feed Lake Sevan, the largest freshwater source in Armenia. A British mining firm, Lydian International Limited, discovered gold in Amulsar in 2006 and has been trying construct a mine there since 2016. Though it has yet to open, the Amulsar gold mine’s presence has coincided with the emergence of severe environmental crises in the surrounding region. Efforts to open a gold mine in Amulsar have met with stubborn resistance from the local population. Residents of Vayotz Dzor province — where the mine is to be opened — have been blockading the area around the mine since May 2018, preventing construction vehicles from accessing the site. Furthermore, they accuse Lydian of skirting environmental regulations, using improper business practices, and conducting corporate extortion.
Opponents of the mine believe that Lydian’s project has and will cause profound and irreversible environmental damage to their region and the country. They have made it clear that the only acceptable solution to this crisis is the total closure of the mine and the withdrawal of Lydian’s mining operations from the country.
Scores of demonstrators from the Armenian Environmental Front (AEF) and the Save Amulsar movement assembled in front of the Armenian National Academic Theatre of Opera and Ballet. The rally was composed of Yerevan locals and a group of activists and concerned citizens from the southern resort town of Jermuk, who had travelled to Yerevan in a 200-car motorcade organized by Save Amulsar. The goal of the rally was simple: to raise awareness of the environmental threat to Amulsar, and to protest government inaction.
Over the course of the rally, demonstrators were shadowed by a veritable army of Special Unit police officers who surrounded the peaceful demonstrators and blockaded the entrances to government buildings. Speeches were routinely interrupted by loudspeaker announcements from police patrol cars, reminding demonstrators to maintain social distancing and to don masks in accordance with the law. Rally goers in turn tried to drown out the PA announcements with the chanting of slogans and the sound of drums. Demonstrators from Jermuk were photographed by police officers, and a few individuals were ticketed for not wearing masks. All of this combined to produce a frosty government reception for the environmental activists.
Cause for Concern
Lydian’s entry into Armenia predates the Velvet Revolution. Despite immediate local resistance, Lydian pushed on, safe in the knowledge that any resistance to its operations would immediately be suppressed by local authorities. Blockades were attempted prior to the revolution but were quickly dismantled by police forces. But by 2018, the situation had changed drastically.
Armenia’s Velvet Revolution caused significant shifts in the status quo, ushering in Nikol Pashinyan’s premiership and promising a new era of democratization and transparency. Additionally, an uncontrolled explosion at the gold mine led to contaminated black water flowing from local taps. This was just one incident in a chain of environmental crises which emerged in the years following the commencement of construction. Since Lydian’s arrival in the region, repeated explosions at the mine have coated surrounding communities in dust. To make matter worse, the mine’s presence has severely disrupted local industries such as dairy farming, fisheries, and agricultural activities. The threat posed by the project to Armenia’s fresh water supplies continues to be a major concern, as noted by Armen Saghatelyan, director of the National Academy of Sciences of Armenia. Mining, Saghatelyan explains, can cause the release of acidic water and toxins, which can poison freshwater sources.
Catalyzed by the results of the peaceful revolution in Yerevan, local villagers began to organize resistance to Lydian. A round-the-clock blockade was put in place on the May 18, blocking roads leading to the mine. This time local police did not intervene, and the blockade continues to the present day and construction has halted. However, the crisis is far from resolved, as Lydian has now resorted to threats of arbitration. The mining company is considering litigation against Armenia in a $-billion investor state dispute settlement (ISDS). Such corporate court cases are often handled via a process of secret tribunals whose decision cannot be appealed. Since this means that Armenia – whose allotted government budget in 2020 was $4 billion— could face up to 2 billion dollars in fines, this threat has been quite a potent weapon for Lydian.
Government Response/ Political Division
Following the 2018 Velvet Revolution, the government was generally uncooperative with Lydian. It refused to remove the blockade, and temporarily suspended Lydian’s rights to operate in Armenia, pending an environmental audit of the Amulsar mine by an international consultancy group. The consultancy group hired for this audit, Earth Link and Advanced Resources Development (ELARD), released its report to the public in a live teleconference in August of 2019. In summarizing its findings, ELARD found that the data collected by Lydian in surveys of Amulsar was insufficient for a mining project of the proposed size. Furthermore, it found that Lydian had used this incomplete data to make oversimplified and unsupported conclusions.
The report also found that the potential risks of water pollution were small and could be mitigated. In this vein, ELARD issued 16 recommendations for Lydian concerning mitigating measures. Following the release of the ELARD report, the Armenian government appeared to side with Lydian, as Prime Minister Nikol Pashinyan announced his intention later in August to restore rights of operation. Pashinyan argued that the ELARD report proved conclusively that the risks of water contamination were minimal and could be mitigated. To bolster these claims, the incumbent government pointed to the environmental audit’s 16 recommendations, and the fact that Lydian claimed to be working towards compliance with them.
Incidentally, there are past connections between the current government and Lydian. Current President Armen Sarkissian previously served as director of Lydian International Ltd. Amidst rumors that he remained a Lydian shareholder, President Sarkissian categorically denied any connections to Lydian in a conversation with protestors in 2018.
On the Ground
When speaking to rally goers, the discord between the government and activists seemed palpable. Whereas Pashinyan’s government has argued that the ELARD report gives them no recourse to bar Lydian from operating in Armenia, the activists at the rally disagreed with that assertion. To them, the report was far from a glowing recommendation of Lydian’s operations, but was rather an indictment of their substandard practices. Activists also argued that the report indicated that Lydian had failed to enact necessary mitigating practices to reduce the risk of their mine causing environmental pollution. They saw no reason to trust that Lydian would now become compliant in its mining operations it hadn’t observed prior to the environmental audit.
Several people interviewed from both Jermuk and Yerevan said they wanted nothing less than the total cessation of the companies’ mining operations in the country. As Anna Nikoghosyan of AEF stated, “the government has all the necessary facts and reports to unconditionally close Lydian’s mine.” Nikoghosyan also pointed to Lydian’s dealings in Georgia and their lack of an established reputation as further red flags. Prime Minister Pashinyan at one point supported the mine by stating that booting Lydian out of the country would reduce the incentive for foreign investment in Armenia. But the rally-goers were not swayed by this angle either. Levon Galstyan, a coordinator who has been with AEF for a decade and is a postgraduate candidate of the National Academy of Sciences, balked at this argument. Galstyan retorted, “I will support any foreign investment that brings growth to Armenia and builds its future. I will never accept however an investment that would poison our water, destroy our nature, and destroy our future in the name of profit. To me that is akin to selling one of my kidneys for a buck.” Garik, a demonstrator from Jermuk chimed in, saying “We all know this mine is a real threat to people’s health and to nature. We must defend our land and our mountains, as we have lost so much [land], we cannot lose more.”
An interesting aspect of this rally was that it revealed a wide range of different causes finding common purpose in the Save Amulsar movement. Whilst the most prominent faction of demonstrators was environmentalists, the rally also included a significant number of LGBT+ activists. This issue resonates with other activist groups due to the common themes it shares. In their minds, the movement to save Amulsar is also a movement to preserve democracy, and to ensure the dignity and health of all human beings. In other words, the rally-goers seek more than just to save a mountain: they seek to normalize a narrative in Armenian society that values the lives of people over profit, that elevates the voices of the voiceless, and calls to account those that abuse their power. As one self-proclaimed queer activist named Artak explained, “this movement affects all vulnerable people, and all those who oppose a lack of privacy, and police brutality.”
In the eyes of demonstrators, the post-revolution government had squandered a great deal of good will on this issue, not only by siding with Lydian, but also by remaining generally silent. As Nikoghosyan, an AEF activist, explained, “We are very disappointed with our government, our MPs, and our PM Pashinyan. They have had time to see the truth, but they aren’t holding Lydian accountable. This is quite embarrassing, and it shows that real democracy lives in Amulsar, not in Yerevan”.
Berkeley Energia soon to construct uranium mine in Spain
The only pending approval required to commence full construction of the uranium mine in Spain is the authorisation for construction for the uranium concentrate plant as a radioactive facility (NSC II), said Australia-listed Berkeley Energia. This means that Berkeley is one permit away from starting full construction of the four-million-pound-a-year Salamanca uranium mine.
The company announced that the Municipality of Retortillo had granted its urbanism licence (UL), which is the land use permit needed for construction works. In late March, the company submitted updated official documentation in relation to the NSC II and has since held a number of meetings with the Nuclear Safety Council (NSC) technical team.
Berkeley said it was preparing written responses to some queries the NSC had and that it would complete this task in the coming weeks. Following submission of the written responses, the next step in the process would be for the NSC technical team to finalise its report and submit it to the NSC board for ratification. Last month, the NSC issued a favourable report for the extension of the validity of the initial authorisation for the uranium concentrate plant as a radioactive facility (NSC I). NSC I was granted in September 2015, with a five-year validity period.
The Ministry for Ecological Transition and the Demographic Challenge has to approve the authorisation and set its duration period.
The definitive feasibility study has reported that over an initial ten-year period the project is capable of producing an average of 4.4-million pounds a year of uranium, at a cash cost of $13.30/lb and a total cash cost of $15.06/lb during steady state.
Berkeley stated that the mine would guarantee Spain and the European Union an internal supplier, which would produce the equivalent of 10% of Europe’s total consumption.
Canadian Gold Pool at International Arbitration Tribunal – Kazakhstan wins the lawsuit
After nearly 20 years from the termination of the contract, in 2016, Gold Pool initiated a United Nations Commission on International Trade Law (UNCITRAL) arbitration proceedings against Kazakhstan based on the Canadian-Soviet bilateral investment treaty. The treaty was signed two years before Kazakhstan claimed its independence – allegedly making it the legal successor to the treaty. The Kazakh Ministry of Justice press service reported that on July 30 the International Arbitration Tribunal issued a unanimous decision on the immunity and dismissal of the case initiated in 2016 by Gold Pool, a Canadian junior mining company, against Kazakhstan.
The plaintiff claimed $917 million regarding the agreement on trust management of the Kazakhaltyn national gold mining and processing enterprise.
“The Gold Pool lawsuit is another attempt by so-called ‘investors’ to make money on arbitration, based on doubtful facts. The decision of the arbitration tribunal is a confirmation that Kazakhstan is forming a modern legal system that is capable of withstanding such hostile corporate actions,” said Kazakh Minister of Justice Marat Beketayev.
According to the statement, Gold Pool received management of Kazakhaltyn in March 1996 to pay off the company’s debts, restore and modernize production, create a favorable financial environment and an effective market strategy. The Canadian company, however, failed to follow its contractual obligations.
Kazakhstan terminated the contract in August 1997 after repeated systematic violations. Gold Pool responded with a lawsuit against the Kazakh government in international commercial arbitration under a management agreement. The case did not take any procedural steps and expired in 2000.
The Kazakh side strengthened its position on the absence of any obligations under the treaty after a scrupulous analysis of interstate agreements archival documents, among other documents. One of the key contributing papers was the legislative framework of the 1990s, which had undergone significant changes at the time of the filing of the arbitration claim.
The tribunal ordered the plaintiff to reimburse Kazakhstan for all the costs incurred in the arbitration process.
The Kazakh Ministry of Justice and Curtis, Mallet-Prevost, Colt & Mosle international law firm represented Kazakhstan’s interests in this case.
Russian mining company Norilsk had a second environmental issue
The first spill of Norilsk Nickel happened on May 29, and was so extensive that the Russian President Putin declared it a national emergency. The massive oil spill was spreading online via social media before local authorities in Russia were informed. Less than two months after this massive oil spill in the Arctic, Russian company Norilsk Nickel has once again caused environmental devastation with an oil leak.
This time, the mining company leaked approximately 45 tons of fuel into the ground as well as a nearby lake and stream. The short time between these two spills is reflective of the rising temperatures around the globe, the impacts of which are being felt most strongly in the Arctic. According to the Wall Street Journal, Nornickel claims that the thawing permafrost, previously frozen for millennia, is to blame for these accidents. Still, the company will work with public and private partners to rebalance the ecosystem. Actions to clean up these spills, while necessary, are not enough. More must be done to prevent these accidents that will otherwise become more common amid an increasingly unpredictable climate.
While the local authorities have reported oil leakage into a lake and stream, Nornickel has announced “no threats to life and health of people in the territory,” and promised that the spill has been contained and will be cleaned up as soon as possible. While 45 tons is far less than the 20 000 tons that spilled in the May 29 fuel leak, there is a concern that such accidents are becoming more common. A project director at Greenpeace in Russia, Vladimir Chuprov, expressed this fear: “We are worried that these accidents have begun to occur too often.” According to the CBC, small leaks like this most recent one are ‘a chronic issue’ in Russia’s Arctic and typically are covered up before they receive international attention.
The massive oil spill on May 29 was spreading online via social media before local authorities in Russia were informed, reports the CBC, and prompted President Putin to publicly chastise the company: “If you had changed [the fuel tank] on time, there would not have been this ecological damage.” Additionally, Putin requested $2 billion in damages from Nornickel and signed new legislation that would require companies like Nornickel to put sufficient financial resources towards preventing and eliminating any future spills. Nornickel, while vowing to clean up the accident, has contested the $2 billion fine. According to Russia’s Ecology Minister, “it’s very likely this huge amount will not be paid,” however, “if Nornickel refuses to pay big money, they will get an even worse image, not only in Russia but on a global scale.”
The reaction from the Russian government was appropriate, but whether it was an empty gesture to save its public image ahead of the 2021 Arctic Council or will result in greater accountability remains to be seen. Public outcry over oil spills is an incentive for oil companies to take more precaution; however, it may also increase the number of cover-ups that occur. Nornickel should pay the full $2 billion fine, both to show that the company understands the gravity of the spill and to serve as a reminder that accidents like these will not be easily forgiven.
This most recent oil spill of 45 tons only received international coverage for its proximity to the May 29 accident. Otherwise, it may have been covered up and taken care of quickly, given its relatively low amount of fuel spilled. However, this should not be allowed to continue to happen. If international attention and significant damages are needed to make large mining companies adopt more stringent maintenance practices, then any spills, large or small, should be reported. As climate change continues to alter the structure of the land, these practices will become even more critical.
Armenian gold mine Amulsar – EBRD investment finished
Lydian International’s Amulsar gold mining project in southern Armenia has been under blockade for the past two years, by local people and environmental activists. They blocked access to the mine in the wake of the country’s 2018 ‘Velvet Revolution’. Now European Bank for Reconstruction and Development investment in a controversial $400m gold mine in Armenia is to end, a new assessment by the bank’s complaint body states.
News that the EBRD’s investment is due to end comes as protests have been renewed at the Amulsar site in recent weeks, after the Lydian group hired a new private security firm and removed a trailer belonging to activists.
The London-based development bank has funded exploration, drilling and feasibility studies and environmental and social mitigation measures by Lydian since 2009, and has been targeted with criticism by civil society groups over its support for the company.
“The EBRD owes the public a proper statement expressing its position on the project and current developments,” said Fidanka McGrath, EBRD policy officer at CEE Bankwatch Network. “The recent despicable provocation by Lydian’s security company [at Amulsar] is only a sign of the reputational damage that this investment will continue to inflict on the EBRD, even after its shareholdings in Lydian International are wound up.”
The Amulsar blockade has led to a complex standoff between Armenia’s government, headed by former protest leader Nikol Pashinyan, Anglo-Canadian mining company Lydian International and protest participants themselves. The standoff has also drawn in the mine’s international backers, including the EBRD, as well as the UK and US governments.
The ongoing blockade and a government-ordered environmental audit have prevented Lydian, Armenia’s largest foreign investor, from completing work at the mine, as well as causing it financial difficulties. An assessment report by the EBRD’s Independent Project Assessment Mechanism (IPAM), published on 7 August, states that the bank’s investment will be “terminated” as part of Lydian’s corporate restructuring process.
After Lydian’s lenders revoked their agreement to suspend the company’s interest and principal payments, which had been initiated as a result of the Amulsar blockade, the group is now owned by its three senior lenders, resource investment firms Orion Resource Partners, Osisko Mining and Resource Capital Funds. Lydian’s existing parent company in Jersey, in which EBRD held a 5% shareholding, is being liquidated as part of this restructuring. The IPAM report states that EBRD “has no financial interest” in restructured Lydian’s new parent company, which is incorporated in Canada, and the completion of the Jersey proceedings “will result in the termination of EBRD’s shareholding”.
Writing on Facebook, Lydian Armenia stated that “EBRD and other shareholders ceased to be part of the Amulsar programme exclusively as a result of domestic illegality in Armenia”, and that the company would continue to observe the development bank’s environmental standards.
“The EBRD can still redeem itself by speaking up in support of democracy and by working with the Armenian government to remedy the environmental harm and social conflicts caused by the project,” said Fidanka McGrath. “Either way the bank will have to answer for its failure to ensure proper consultations with affected communities.”
Disagreements over the potential environmental and social harm of the Amulsar mine, which is 75% complete, have animated much of the public tension over the flagship mining project. Campaigners have cited concerns over the mine’s potential impact on environmental damage, local tourism and social change, and a petition signed by 26,000 people has called on the mine’s financial backers, including the EBRD, to divest. In 2017, the International Finance Corporation, the World Bank’s development arm, withdrew its funding from Lydian International, stating that its investment was no longer necessary.
Lydian calls the mine blockade illegal, and has accused the Armenian government of “inaction” over the situation. In March 2019, Lydian notified Armenia of a potential international arbitration dispute under British and Canadian bilateral investment treaties over what it calls an “ongoing campaign by the Armenian Government targeting Lydian’s investments in Armenia”. Lydian, originally based in Jersey, states it has followed the highest international standards on environmental mitigation and protection for the proposed mine – as required by EBRD, which has been invested in the company since 2009.
“There is no environmental issue here, it has grown into a political issue,” Lydian Armenia director Hayk Aloyan said in a recent interview. “The entire world follows the situation in Armenia, where the most environmentally-sound mining investment project has become hostage to political games.”
The unfinished mine was set to employ 750 people once it came online, Lydian states, with another 3,000 jobs created by local companies linked to the mining operation. Company projections put the number of its tax and royalty contributions to the Armenian state budget at €432 million through the ten-year operation of the mine.
The EBRD IPAM report comes in response to a complaint by residents of the local tourist town of Jermuk, as well as five non-governmental organisations in May this year. They claim that Lydian had “failed to ensure that the project complies with the requirements of the bank’s Environmental and Social Policy”, and that they had “already experienced serious environmental harm from the project, resulting from pollution of water, air and land”.
The EBRD stated in response to the complaint that “environmental and social due diligence on the Project was undertaken and that the issues presented in the Request had been adequately addressed by the Company”. The report did not state Lydian’s position on the specifics of the complaint, but that the company “had indicated their willingness… to move discussions with stakeholders forward and with the intent of resolving issues”.
In its summation, IPAM stated that “Problem Solving would offer limited potential for a constructive dialogue… due to the lack of trust between the Parties”, and that the “Parties share irreconcilable differences in their own principles”.
Euro Sun’s big gold mining project in Rovina Valley, Romania
Without doubt, one of the best jurisdictions to build a mine is the European Union. Not only do countries in the trading bloc boast advanced infrastructure and pro-mining laws, but also the E.U. framework establishes cross-border political stability and heavily promotes foreign direct investment.
Euro Sun Mining is primed and ready to develop Europe’s second largest gold resource – the 10 million ounce Rovina Valley Gold Project, and this exciting opportunity could be about to make investors a great deal of money.
The location of a major gold mining project is critical. A company can be sitting on the biggest metal resource in the world, but it doesn’t mean a thing if local law and civil unrest prevent its development. There’s a reason why high-quality projects are so rare in the world’s most attractive mining jurisdictions – most of them have already been taken. Institutional investors flock to back deposits of mineralization in safe regions, which promote natural resources development, because they know this gives them the best chance of developing a mine. This maximizes their chances of seeing a giant-sized return on investment.
Rovina Valley project
Euro Sun is the 100% owner of the Rovina Valley project in west-central Romania.
From a geological perspective, Romania is hugely prospective. The area where Rovina Valley sits is known as the “Golden Quadrilateral”. It is one of Europe’s largest gold-producing regions, with more than 55 million ounces having been pulled out of the ground since since Roman times.
Despite this, Romania hasn’t made much of a meaningful impact on the global mining investment world because state-owned businesses have dominated the development of its vast resources. Now this is changing.
Since joining the European Union in 2007, Romania’s compliance with the trading bloc’s rules and obligations has fostered a culture of improved governance principals at the state level. Over the years, this has created a friendly and incentive-based economic environment that has encouraged more and more international business. Soaring levels of foreign direct investment continue to propel Romania forward, and the country is currently on track to deliver the second-highest EU country GDP growth in 2020 and 2021. Against this backdrop, the floodgates for foreign investment into the country’s highly attractive mining industry have opened. And the catalyst was none other than Euro Sun Mining. In 2018, this company became the first-ever non-state-owned business to win a mining license from the Romanian government.
Euro Sun was able to succeed where others had failed, by approaching the development of Rovina Valley with a deeply-held commitment to sustainable Environmental, Societal, and Governmental principles:
-No cyanide will be used at Rovina Valley, and dry stack tailings will be used rather than wet tailings to reduce visual impact and water usage.
-The company will re-use existing infrastructure left over by the nearby, historic Barza mine, use renewable power sources, and confirm the absence of archaeological remains.
-Local communities will be engaged throughout Rovina Valley’s development and production to provide hundreds of jobs and remain the need for community resettlement.
Euro Sun has the green light to do everything from exploration to development, production, and commercialization at Rovina Valley.
Looking further forward, the support of the Romanian government opens the doors wide for the firm when it comes to future mining opportunities in Europe’s newest mining investment destination. It’s no surprise that institutional investors are falling over themselves to get exposure to Euro Sun. As recently as May 2020, the company upsized a bought deal public offering from C$12 million to C$20 million in response to extreme demand – it eventually raised C$22.3 million. As a result of this, Euro Sun now counts leading UK fund manager Ruffer as its leading shareholder with a 9% position. With the likes of Franklin Templeton and ASA Gold and Precious Metals also taking large stakes in the raise, close to a third of the company’s share capital now sits in institutional hands.
But it’s not just the firm’s location and permitting progress that has got these individuals excited; it’s also Rovina Valley’s quality.
The project hosts 10.11 million ounces of gold in the highly prized Measured and Indicated resources categories spread across three pits – Colnic, Rovina, and Ciresata. This makes it Europe’s second-largest gold deposit. Meanwhile, Euro Sun has also taken great steps to demonstrate the economic viability of its project. A preliminary economic assessment in 2019 gave the Colnic pit alone a pre-tax net present value of US$228.1 million and an internal rate of return of 15.4% at US$1,325/oz gold. At today’s >US$1,900/oz spot price, this NPV5 increases to more than US$700 million – and that’s not even factoring in the value of the Rovina deposit, which will be developed sequentially.
The Lassonde Curve
One indicator in particular suggests Euro Sun’s share price is about to go on a run much higher – the Lassonde Curve. The Lassonde Curve uses historical data to map out the typical valuation journey that mining projects take throughout their lifecycle – from early stage exploration to full mine development. According to the Lassonde Curve, the recent institutional investment in Euro Sun puts it on track for a massive re-rate as more heavyweight investors buy in throughout Rovina Valley’s construction and production.With Euro Sun on track to complete the remaining feasibility and development needed to become “shovel ready” by next year, its current C$0.47 share price and C$78.6 million market cap present an exciting opportunity.
And as if this was not enough, the company is entering this period at a time when gold stocks of every description are being propelled forward by the highest prices for the precious yellow metal ever seen. Year-to-date, the Euro Sun share price is up by nearly 70%. But with its rooting in a pro-mining European jurisdiction, ground-breaking state support, vast gold resource, and impressive institutional backing, this stock looks set to fly much higher.