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Edik Baghdasaryan

Can Armenia’s Mining Sector be Properly Monitored?

Government Turns to Tarnished Companies for Aid

An inter-departmental working body was formed in Armenia on February 3, 2011, at the behest of RA Prime Minister Tigran Sargsyan.

This new agency will participate in the annual Prospectors & Developers Association of Canada (PDAC) convention and trade show to take place in Toronto from March 6-9. The PDAC represents the interests of the Canadian mineral exploration and development industry.

In 2010, the show attracted about 22,000 attendees from more than 100 countries.

In his decision, PM Sargsyan proposed that the Armenian Canadian Chamber of Commerce assist Armenia in renting exhibit space at the trade show and take steps to guarantee the necessary finances for the Armenian delegation's participation. PM Sargsyan noted that businesses attending the convention would have to pay their own way.

The Armenian delegation will consist of Mr. Armen Movsissyan, Minister of Energy and Natural Resources (MENR); Mr. Suren Khachatryan, Governor of Syunik; Mr. Areg Galstyan, Deputy Minister, MENR; Mr. Vardan Vardanyan, Head Geological Department, MENR; Mr. Gevork Hovsepyan, Head of the Geological Fond

Now, let's take a look at which forms will have to fund the Armenian delegation and its work. They are Caldera Resources, Dundee Precious Metals, GeoProMining and Lydian International. All four are members of the PDAC and two are in serious trouble in Armenia.

The RA Control Chamber (the Armenian equivalent of the U.S. General Accounting Organization), uncovered a host of violations at GeoProMining (GPM) and petitioned the government to suspend the company operating license. The RA government has yet to issue its decision.

It strikes me as more than a bit odd that new investment scenarios will be discussed with GPM in Toronto even while the Armenian government is deliberating whether or not to pull its license

Dundee Precious Metals, another Canadian-based company, owns Deno Gold Mining a company in the news of late with labor and other problems. Deno operates a gold, silver and copper mine and processing plant in Kapan, Armenia.

Deno Gold plans to launch open pit mining at the Shahumyan concession. Local environmentalists are naturally revving up the opposition to prevent such an operation.

When we went to the Ministry of Nature Protection and asked how many on-site environmental inspections had been conducted at the mine in Kapan, Acting Administration Head Edgar Pirumyan responded that inspections were carried out in 2008, 2009 and 2010 and that environmental violations had been recorded.

Over the period in question, Deno Gold was fined some 300,000 AMD for the infractions.

Now, let me talk about a document leaked to Hetq by a source within the Ministry.

According to the document, inspections at Deno Gold were conducted based on the October 27, 2010 directive by Minister Aram Harutyunyan.

An examination of ore amounts from the mine during the period of October 1, 2009, to October 1, 2010, was made. The examination was lasted from October 27 to December 3 of 2010.

An examination of the actual amounts shown that when it came time to pay environmental and natural resource usage fees, in the first quarter of 2010, the company failed to include 152,2 tons of Zinc, 22.7 tons of lead, 38.81 kilos of gold and 100 kilos of silver.

According to the RA Law on Concessions, the inspection unit found that the company must pay the balance in the accounting period in question. The amounts and minerals in question are all in the findings.

The ruling was drawn up by Artur Gevorgyan, Deputy Head of the State Environmental Inspectorate; Levon Petrosyan, Head of the Syunik Regional Environmental Inspectorate; Senior State Inspector Rubik Hovhannisyan; and Marianna Baghdasaryan, a Specialist First Class at the Syunik Inspectorate.

Representing Deno Gold were Ross Overal, Simon Navasardyan and Hasmik Mkrtoumyan.

Deno Gold Mining was fined 250 million AMD for the violations uncovered by the inspection.

But it now appears that this ruling has disappeared. It is a question to be answered by the prime minister and law enforcement.

Doesn't the whole thing smell fishy?

Here you have two mining companies, who have been fined for numerous violations in Armenia, and now the government is requesting that they pick up the travel tab for the Armenian delegation to the Toronto mining conference.

I guess you could say that the Armenian government will be beholden to these mining companies...if it wasn't already.

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