BASE METALS LLC TO INVEST USD 20 MILLION IN NAGORNO

UNCLAS YEREVAN 001062 SIPDIS SENSITIVE SIPDIS E.O. 12958: N/A TAGS: ECON EMIN EINV AM SUBJECT: BASE METALS LLC TO INVEST USD 20 MILLION IN NAGORNO KARABAKH Sensitive but unclassified. Please protect accordingly. ¶1. (U) Base Metals LLC., an Armenian-registered and Lichtenstein-based private company, announced plans to invest an additional USD 20 million in its copper and gold mining operations in the village of Drmbon in Nagorno Karabakh (NK). According to press reports, the company employs a majority of the village population and is the most lucrative business and largest taxpayer in the region. Base Metals belongs to the Vallex Group of companies which also includes the Armenian Copper Program (ACP),Vallex Mining, Vallex Stone, Vallex IT, and the Mining and Metallurgy Institute. ¶2. (SBU) Base Metals conducted a geological survey of the Drmbon deposit in 2002 and completed construction of an ore-dressing plant at the site in September 2003. The company's press secretary is quoted in the press saying that at end of 2005, Base Metals had invested a total of USD 15 million in NK. Head of the ACP Planning Department Artak Manukyan told us (during a conversation on other issues) that the Drmbon plant's current monthly output amounts to 1,200 tons of copper concentrate, which is then transported to the ACP-owned smelter in Alaverdi, Armenia, for further processing. The final product of the Alaverdi smelter, gold-rich blister copper, is primarily exported to the European market. ¶3. (U) According to a recent press statement made by Executive Director of Base Metals LLC Artur Mkrtumyan, the mine is one of the largest foreign investments in NK. The mine employs approximately 1,000 people at an average monthly salary of USD 300 and operates on a 24-hour schedule. Mkrtumyan estimated that the deposits at the site were sufficient to support expanded operations for the next 20 years and told the press that Base Metals was continuing to explore for new deposits throughout NK. EVANS