Our first Armenian operation

Quick facts

Location Kapan province, Armenia
Ownership 100%
Mining underground
Processing 750 Ktpa flotation + offtake
Reserves (JORC) 0.7 Moz GE, 4.2 g/t average grade
Resources (JORC) 1.9 Moz GE, 5.9 g/t average grade
Production start date 2003 (operated by Polymetal since 2016)
Employees 1,043
Key highlights 2017
50 Koz Production (GE)
530 Kt Ore processed
US$871 GE/oz Total cash costs


The Kapan mine was acquired by Polymetal in 2016, making it our first operating asset in Armenia. With a low acquisition price and significant potential for operational turnaround and implementation of our hub-based strategy, Kapan represents an excellent entry point into a geologically attractive and politically stable region. The asset comprises a fully mechanised underground mine with a current capacity of approximately 400 ktpa, the Lichkvaz deposit, a conventional 750 ktpa flotation concentrator and various infrastructure facilities. The operation produces gold-copper-silver and zinc concentrates sold to international markets and is expected to contribute more than 100 Koz of GE per year once it is fully ramped up.

Since its acquisition, several improvement measures are being implemented in order to debottleneck the underground mine and improve concentrator utilization to 650 ktpa by 2H 2017 and to 900 ktpa by 2H 2018 (including feed from Lichkvaz). In addition, various integration activities and modifications to operating practices are being put in place and include changes to the motivation system, productivity gap analysis, as well as targeted in-fill drilling.

Location History Geology and Mineralisation Operations Reserves and Resources Exploration

The mine is located in the town of Kapan (population of 40,000) in a well-developed mining area in the south-eastern corner of Armenia, approximately 320 km south of the capital city of Yerevan. The town is on the national road network with stable grid access. The area surrounding the operation hosts a number of other prospective deposits, including the 100%-owned high-grade Lichkvaz gold deposit located approximately 70 km from Kapan and 380 km from Yerevan.


First artisanal mining activities in the Kapan area can be traced back to the the mid 1800’s, while industrial scale exploitation only began in 1923 at the Shahumyan deposit by a state owned company. Under their control, approximately 230,000 tonnes of ore was mined from the Shahumyan deposit by 1953, when mining was redirected towards the neighbouring Centralni deposit, transferring the Shahumyan deposit into an exploration phase. As a result of a large and focused exploration program, the first GKZ mineral resource estimate was prepared for the Shahumyan deposit in 1976. Development of the deposit ceased around 1990 due to the collapse of the Soviet Union, but resumed in 1994. By 2003, approximately 2,165 Kt of ore was mined underground. In 2006, the asset was acquired by Dundee Precious metals. In 2007, Dundee was awarded the Kapan exploration license, which Polymetal acquired in 2016.

The Kapan project is located within the relatively under-explored Lesser Caucasus, part of the extensive Tethyan orogenic belt that can be traced from central Europe, across parts of the Middle East and South Asia. The mineralization of the deposit is characterized by narrow, steeply dipping and east-west striking polymetallic vein sets (Cu-Zn-Pb-Au-Ag) that are surrounded by a wide zone of argillic alteration and disseminated mineralisation up 10-25 m wide. Mineralisation is primarily semi-massive to massive sphalerite, pyrite, chalcopyrite, galena and bornite and occasionally, found with the latter mineral assemblage of tennantite, tetrahedrite, enargite, chalcocite, covellite, Pb, Au, Ag, Bi tellurides and native gold and silver.

The Lichkvaz gold deposit is a part of the Tethyan Belt and is timed to Debaklinsky fault zone which has sub-meridional stretch. The gold sulfide mineralisation is localised in the tectonic structures of the northeastern strike, which extends for about 1 km. The mineralised bodies within the mineralised zones do not have sharp boundaries and are delineated by sampling. The mineralisation-bearing zone is traced for 950 meters along strike and is not closed off in either direction. The vertical scale of the mineralization is more than 600 meters and is open depth. True thickness of ore bodies vary from 1 to 10 m with an average of 4 m, and the maximum depth is about 400 m from the surface.The material composition of the ore is a characteristic of disseminated and vein-disseminated deposits with gold-copper-polymetallic mineralisation.


Kapan comprises a fully mechanized underground mine with a capacity of approximately 400 Ktpa that is mined via sub-level open stoping. Broken material is then loaded onto load-haul-dump (LHD) vehicles and hauled to the surface for further processing.

The underground mine is currently undergoing several improvement measures aimed at de-bottlenecking the mine to increase its capacity.

Metallurgical tests at Kapan confirmed the viability of the existing on-site circuit where, following two-stage crushing and grinding, ore is processed via a 750 Ktpa conventional flotation plant that produces two concentrates — copper/pyrite concentrate and zinc concentrate, both containing gold and silver material. Produced concentrates are bagged and shipped off to third party off-takers.

Ore Reserves Tonnage, Mt Gold grade, g/t Silver grade, g/t Copper grade, % GE grade, g/t Gold, Koz Silver, Moz Copper, Kt GE, Koz
Kapan 4.1 2.1 40 1.7 4.3 274 5.2 17.4 558
Lichkvaz 1.0 3.2 21 0.3 3.9 111 740 2.9 134
Total 5.1 - - - 4.2 385 6.9 20.3 692
Mineral Resources Tonnage, Mt Gold grade, g/t Silver grade, g/t Copper grade, % GE grade, g/t Gold, Koz Silver, Moz Copper, Kt GE, Koz
Kapan 8.4 2.9 62 0.7 6.1 771 16.6 55.6 1,632
Lichkvaz 1.6 4.1 32 0.3 5.0 212 1.6 5.4 257
Total 10.0 - - - 5.9 983 18.3 61.0 1,889

  • At Kapan, Polymetal prepared an initial JORC-compliant reserve estimate as at January 1, 2018, which comprises 558 Koz GE at an average grade of 4.3 g/t. Additional mineral resources were estimated at 1,632 Koz GE at an average grade of 6.1 g/t.
  • At Lichkvaz (70 km from Kapan) an initial JORC-compliant reserve estimate was prepared by Polymetal and comprised 134 Koz GE at 3.9 g/t, while additional mineral resources amounted to 257 Koz GE at 5.0 g/t.