Economic Relations – Reliable Partner of the Republic of Armenia

Posted on Sep 26, 2011 in GPM in the media

Economic Relations – Reliable Partner of the Republic of Armenia

“Expert”
Alexey Bulanov
26 September 2011
unofficial translation Русский 

The President of GeoProMining Roman Khudoliy told Expert about the strategy of responsible development.

— When was your company founded? Which countries do you work in?
— GeoProMining was founded in 2001. Our first two acquisitions took place in 2005. One was Madneuli, one of the largest mining companies in Georgia, which develops the Madneuli gold-copper deposit; the other one was Quartzite, a producer of gold-silver Doré bars. Then in 2007 the Armenian assets were acquired. These are the Agarak Copper-Molybdenum Mine and GPM Gold, which develops the Sotk gold deposit and manages the Ararat Gold Extraction Plant. At the end of 2008 we acquired the Russian antimony and gold mining assets. One of them is Sarylakh-Surma, which incorporates the Sarylakh mine, where the antimony-gold ore is mined, and a processing plant. The other is Zvezda, which conducts mining at the Sentachan antimony gold deposit. So, we now work in three countries and represent a classic mining company.

— So, your main business is probably gold mining.
— That’s true, gold constitutes over a half of our financial indicators. Gold has always been an investment metal to a great extent. If demand for gold as an investment metal is exhausted, we can rely on appreciation of copper, antimony and molybdenum.
We diversify not only by metal but also by counties, where we work. Our assets are distributed in such a way that mining of a single metal is not concentrated in one country. Thus, we mine gold and copper in both Armenia and Georgia. Only antimony is all mined in Russia.

— In what condition were your current Armenian assets at the time of acquisition?
— In poor condition. For instance, when we bought GPM Gold from the Indian Vedanta Resources, the mine hadn’t been operating for several months. By acquiring this mine and relaunching it in the middle of the financial crisis we assumed serious investment risks and have coped with the set goal. We breathed new life into the enterprise, started introduction of a new technology and preserved jobs.
The situation at Agarak was similar, it had also been idle. We modernised it, equipped it, and in 2011 the company became profitable.

— What are priorities of developing the company in the region?
— For GeoProMining it is important that our investments not only improve efficiency and increase capacity of our operations, but also facilitate social and economic growth in the regions, where they are located, and help local communities to develop successfully and prosper. That’s why GeoProMining pays high attention to social policies. Our programme of corporate social responsibility called “Resursy vo Blago” (“Resources for the Benefit”) makes sure that the company takes into account not only interests of the shareholders, but also interests of employees, people living in the regions, where the companies operate, and interests of the government.
Regular communication with government bodies and local municipalities gives GPM an opportunity to promptly react to the needs of the inhabitants of Agarak, Vardenis and Ararat, and direct charity to those projects that are most crucial to the local people.
Part of our assets in Armenia are located in a special nature reserve area: the drainage basin of the Sevan lake. That’s why every action that intends development in this region is performed only after detailed advice from the environmental specialists. All measures suggested by the production modernisation programme comply with best international ecological standards. The evidence of this is participation in the project of leading world ecology experts from South Africa, namely Fraser Alexander, Epoch and Digby Wells Environment.

— What social activity does the company do in the places of operation?
— At the moment 1700 people work at the Agarak Copper Molybdenum Mine and GPM Gold. Initially employees of our Armenian enterprises, had distrust, caused by the behaviour of previous owners, but this distrust soon disappeared. Now their salaries are not only paid regularly, but also are some of the highest in the industry. After modernisation, having factored in expansion of the open pit and construction of the plant, we are planning to increase the number of employees at GPM Gold. This is important considering that subsidiaries of GeoProMining in Armenia are core town enterprises and provide jobs to 70%-80% of the labour pool of Agarak, Vardenis and Ararat.
We take active part in the life of the country, where we work. Thus, we have become the primary sponsor of the celebration of 20 years Independence of Armenia that will take place in October. We computerise local schools, pay monthly educational allowances to highly gifted students; we have financed the project of capital reconstruction of the House of Culture in Vardenis.
On top of that, we make efforts to support Russian language in the Armenian culture. Jointly with the Russian Embassy we set up interactive classes of Russian language, and we support the Russian Drama Theatre named after Stanislavski in Yerevan.