Below is a non-official translation of a Vallex Group statement regarding the Teghout tailings dam.

Summarizing the statement, Vallex Group claims it reported its concerns about the stability of the tailings dam to the government as early as July 2018. Given that it no longer owns the Teghout Mining Complex, Vallex Group disavows any responsibility for any future tailings dam accident, placing the burden squarely on the shoulders of VTB Bank.

Responding to inquiries by interested public representatives about the safety of the Teghout Mining Complex and media references to this issue, the Vallex Group and its separate companies report:

Parallel to the creation and commissioning of the Teghout Mining Complex, the Teghout CJSC (hereinafter the Company) has implemented environmental and health and occupational safety management systems in accordance with ISO 14001. International Standards 2004 (Environmental) and OHSAS 18001: 2007 (Health Protection and Occupational Safety).

The Company's compliance with these standards has been verified by certificates issued by TÜV (Germany) on September 5, 2017, specialized and internationally recognized in the field.

Within the framework of the requirements of the aforementioned management systems implemented by the Company in October-November 2017, the Company has initiated seismic and static stability survey and evaluation for this purpose involving the following internationally recognized, specialized organizations: the British In Situ Site Investigation Services (www.insitusi.com); the  USA Global Resource Engineering (www.global-resource-eng.com) and the Australian ATC Williams (www.atcwilliams.com).

The conclusions of the above organizations stated that the further operation of the Teghout processing plant, without raising the level of tailings dam sustainability and ensuring seismic and static safety, would pose a real risk of damage to the dam. Therefore, urgent steps must be taken to ensure the stability and safety of the tailing dump in Teghout.

It is worth noting that an in-depth study of the conclusions provided shows that the need for tailings dam security cannot in any way be reduced as a result of the temporary disruption of the tailings operation. According to the findings, the dangers of tailings dam sustainability will not be substantially reduced even if the plant is operated at significantly lower volumes.

Fully aware that the VTB Bank (hereinafter referred to as the Bank) may not assess the situation objectively and that the Vallex Group may lose the decades-old mining complex it created, we regarded the health and safety of the population of the region a priority and we halted ore extraction and enrichment in the mining complex as of January 12, 2018. In parallel, we continued to service and maintain existing production capacities, plant equipment ,and  property.

We have constantly and promptly informed the Bank about the problems associated with the tailing dump, the inevitable termination of the operation of the Teghout Mining Complex and the resumption of preconditions.

 In a letter to the Bank dated July 23, 2018, Vallex Group companies reiterated their interest in resuming ore mining in the Teghout Mining Complex, stressing that it could be done only in compliance with international technical and environmental standards. The letter also outlined the steps needed to ensure the safe re-operation and long-term operation of the Teghout mining complex, minimizing the above risks.

Unfortunately, the Bank did not objectively assess the identified real risk, as a result of which Vallex Group lost control of the Company's Teghout Mining Complex and also appeared in numerous legal suits with the Bank.

Considering that the issue concerns the life and health of the population of a number of communities of Lori Province,  The Company informed Armenian government authorities (Nature Protection, Emergency Situations, and the former Ministries of Energy and Natural Resources)  about tailings dam sustainability issues in July 2018 with official letters for proper accounting and further oversight, while providing all specialized organizations involved copies of reports. All of the above reports and documents related to the tailings stability issue, along with other documents relating to the Company's operations, have also been properly provided to the Company's new management appointed by the Bank.

Knowing that the Company, on behalf of its current shareholders and executive body, has actually restarted the Teghout Mining Complex, we further state that Vallex Group currently has no control and/or influence over the Teghout Mining Complex and cannot be held responsible for the possible collapse of the tailings dam or its consequences.

Vallex Group of Companies

Department of Information and Public Relations