Tuesday, 25 September

Turmoil Surrounds Armenian Gold

"Alrosa failed to agree on the acquisition of Ararat Gold Recovery Company (AGRC) with Sterlite Industries Limited," Arminfo reported on January 11, 2006. According to the news agency, Alrosa, a Russian diamond mining company, expressed an interest in acquiring the Armenian Gold Recovery Company. They failed to agree on the deal, however. According to the report, the negotiations were held in Yerevan between the representatives of the Indian Sterlite Industries Limited and Alrosa.

"The sides failed to agree because Alrosa offered a very low price for AGRC. It should be noted that AGRC is a wholly owned subsidiary of Sterlite Industries Limited. In recent years the Indian company has invested more than 40 million USD in AGRC," Arminfo reported.

Our sources have informed us that the Russians offered 25 million US dollars for the deal. They also promised an additional 10 million US dollars apart from the deal.

Specialists in the area believe that the Russians will eventually achieve their goal if they have decided to get hold of the project. Alrosa is a state-owned company, one of the largest companies in the world dealing with diamond exploration, mining, production and sales. Alrosa controls 100% of diamond production in Russia, and 23% in the world.

"If this Russian monster gets hold of this, one of the biggest gold mines in Armenia, the issue of constructing a gold processing plant in Sotk will be resolved immediately. No one in Armenia can oppose the strategic partner," said an official in Armenian Ministry of Trade and Economic Development who wished to remain anonymous.

According to our information, the Republic of Armenia has large debts to Alrosa, which may also affect the fate of the Armenian gold project.

Apparently, Anil Agarwal, the main owner of AGRC, is not happy with AGRC officials. AGRC director Sanjay Dalmia was dismissed from his position "as per his tendered resignation" on January 9, 2006.

Furthermore, Agarwal postponed a trip to Armenia scheduled for January 15, 2005. The main reason for the trip was to have a meeting with President Robert Kocharyan. According to our information, he hoped to convince the president to facilitate a permit for building a new gold processing plant in the Lake Sevan basin. Kocharyan turned down Agarwal's request for a meeting.

Our source in the ministry also told us that the president of Multi Group, Gagik Tsarukyan, has expressed an interest in acquiring AGRC. Foreign companies have done so as well, but they apparently failed move forward once they had reviewed AGRC documents.

An unprecedented increase in gold prices has likely contributed to this turmoil surrounding Armenian gold mines.

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