Lydian International Announces Robust Feasibility Study for Its Low-Cost Amulsar Gold Project in Armenia

Lydian International Ltd. (TSX:LYD) ("Lydian" or "the Company"), a gold-focused
mineral exploration and development company, is pleased to report the results
from its resource update and feasibility study at its Amulsar gold project in
Armenia. All figures are in US Dollars unless otherwise stated.


Highlights of the Feasibility Study (base case using $1,200/oz gold)



--  Proven and probable open pit mineral reserves of 2.26 million ounces
    gold and 9.63 million ounces silver 
--  Average life-of-mine (LOM) waste to ore ratio of 2.23:1 (1.80:1 years 1
    to 3) 
--  12 year LOM with expansion in year four from a nominal-ore feed rate of
    5 million tonnes per year to 10 million tonnes per year 
--  Steady state annual gold production for years 1 to 3 of 118,341 ounces
    per year and for years 4 to 12 of 186,047 ounces per year via heap-leach
    processing  
--  Average LOM cash operating cost of $468.5/oz 
--  Pre-tax net present value (NPV) of $646 million at a 5% discount rate
    generating an internal rate of return (IRR) of 27.7% 
--  Estimated start-up capital cost of $269.6 million



At a gold price of $1,500, pre-tax NPV at a 5% discount rate is in excess of
$1.05 billion and the IRR is 38.1%. Further opportunities exist to improve
project economics through additional exploration drilling, resource conversion
and engineering options.


Dr. Tim Coughlin, President and CEO of Lydian International states "The
completion of this feasibility study is a major accomplishment for the Company.
With 2.3 million reserve ounces of gold, the Amulsar deposit is Armenia's
largest as yet undeveloped grassroots gold deposit and will be one of the
country's top tax generators. The total workforce required during operation is
estimated at around 550 direct employees, with about 600 employees and
contractors needed during the construction period. Exploration drilling
continues with the aim being to add new reserve ounces and we are currently
working on the remaining key deliverables, which include the Environmental and
Social Impact Assessment and further permits and licenses. We are implementing
international best practise in the area of environmental management, health and
safety, and community development as well as building partnerships and
developing local businesses. Current ongoing consultations with local
communities and engagement with all national stakeholders is an important aspect
of the social license to operate at Amulsar. Our team is focused on building an
exemplary mine of which Armenia, our local communities and the Company can be
proud." 


Project Assumptions and Parameters



Assumptions                                                                 
Gold Price ($/oz)                                                      1,200
Foreign Exchange Rate (ARM/US$)                                          389
Electricity ($/kWh)                                                     0.06
Tax Deductible Royalty "Top Line" Charge (%)                             4.0
Tax Deductible Royalty "Bottom Line" Charge (%)                         12.5
Corporation Tax (%)                                                     20.0
(thus in broad terms the bottom line charge is a combined 30%)              
                                                                            
Mine Parameters (LOM)                                                       
Mine Life (years)                                                         12
Average Strip Ratio (waste:ore)                                         2.23
Average Gold Grade (g/t)                                                0.75
Average Silver Grade (g/t)                                              3.27
Total Contained Gold (M oz)                                             2.26
Total Contained Silver (M oz)                                           9.63
Estimated Gold Recovery (%)                                             88.6
Estimated Silver Recovery (%)                                           36.9
Total Recovered Gold (M oz)                                             2.03
Total Recovered Silver (M oz)                                           3.68
Average Annual Silver Production (oz)                                306,706
                                                                            
Steady State Average Annual Gold Production Yrs 1 to 3 (oz)          118,341
Steady State Average Annual Gold Production Yrs 4 to 12 (oz)         186,047
                                                                            
Costs                                                                       
Initial Capital ($M)                                                   269.6
Sustaining and Mine Closure Capital ($M)                               146.5
Average Operating Cost LOM ($/oz)                                      468.5
                                                                            
Financial Analysis                                                          
NPV 5% Discount Pre-Tax ($M)                                           646.0
IRR Pre-Tax (%)                                                         27.7
Pre-Tax Payback Period (years)                                             4



Amulsar Mineral Reserves 

The mineral reserve estimate was established by tabulating the undiluted tonnes
and grades of proven and probable material within the designed final pit that is
scheduled as ore to the crusher over the mine life. A floating cone algorithm
(independently verified by Whittle optimizations) was used to determine the
final pit design and internal phase designs. The floating cone optimization
algorithm is a commonly used and accepted industry tool for providing guidance
to mine design. The estimated proven and probable reserves total 2.26 million
ounces.




Amulsar Mineral Reserves at $1,200/oz and a variable cut-off grade by year  
                                                                            
Reserve              Tonnes  Gold Grade       Silver                        
category            ('000s)       (g/t)  Grade (g/t)     Gold oz   Silver oz
----------------------------------------------------------------------------
                                                                            
Proven               51,143       0.801         3.37   1,317,000   5,541,000
                                                                            
Probable             37,106       0.789         3.43     941,000   4,092,000
----------------------------------------------------------------------------
                                                                            
Total (P&P)          88,249       0.796         3.40   2,258,000   9,633,000
----------------------------------------------------------------------------



The table below shows the mineral resources at various cut-off grades:



Amulsar Mineral Resource Estimate                                           
                                                                            
                                                     Gold             Silver
Resource          Cut-off     Tonnes     Grade     Ounces    Grade    Ounces
Category            Grade (millions)  (g/t Au)     ('000) (g/t Ag)    ('000)
----------------------------------------------------------------------------
Measured (M)         0.75       15.4      1.64        812     4.97     2,459
                      0.5       27.7      1.18      1,053     4.18     3,720
                      0.4       36.5      1.00      1,180     3.82     4,489
                      0.3       50.2      0.83      1,332     3.45     5,574
                      0.2       70.7      0.66      1,496     3.11     7,065
----------------------------------------------------------------------------
Indicated (I)        0.75       13.0      1.57        655     4.78     1,995
                      0.5       23.9      1.13        866     4.14     3,178
                      0.4       32.2      0.95        986     3.84     3,977
                      0.3       46.4      0.77      1,143     3.48     5,189
                      0.2       71.1      0.59      1,339     3.13     7,155
----------------------------------------------------------------------------
Total (M&I)          0.75       28.4      1.61      1,467     4.88     4,454
                      0.5       51.6      1.16      1,919     4.16     6,898
                      0.4       68.8      0.98      2,166     3.83     8,466
                      0.3       96.6       0.8      2,475     3.47    10,763
                      0.2      141.9      0.62      2,835     3.12    14,220
----------------------------------------------------------------------------
Inferred             0.75       15.0      1.45        696     4.56     2,196
                      0.5       26.8      1.08        927     4.39     3,779
                      0.4       35.5      0.92      1,052     4.01     4,580
                      0.3       48.1      0.77      1,192     3.65     5,645
                      0.2       73.9      0.59      1,395     3.12     7,410
----------------------------------------------------------------------------
The Mineral Reserves and Mineral Resources have been prepared in accordance 
with Canadian Securities Administrators National Instrument 43-101 Standards
of Disclosure for Mineral Projects ("NI 43-101") and the Canadian Institute 
of Mining ("CIM") definitions for Mineral Resources.                        
                                                                            
The Mineral Resource estimate for the Amulsar Project was calculated under  
the supervision of Gary Anthony Patrick, BSc (Chemistry/Extractive          
Metallurgy), MAusIMM CP, the Company's Development Manager, a Qualified     
Person as defined by NI 43-101, and who supervised the preparation of and   
verified and approved the technical disclosure in this news release.        



Mineral resources that are not mineral reserves do not have demonstrated
economic viability. Mineral resource estimates do not account for mineability,
selectivity, mining loss and dilution. These mineral resource estimates include
inferred mineral resources that are normally considered too speculative
geologically to have economic considerations applied to them that would enable
them to be categorized as mineral reserves. There is also no certainty that
these inferred mineral resources will be converted to measured and indicated
categories through further drilling, or into mineral reserves, once economic
considerations are applied.


The feasibility study database includes drilling data from the 2007 to 2011
drilling programs. The mineral resource is based on drilling completed through
the 2011 drill season and includes a total of 665 core and reserve circulation
holes. 


The Company also continues to carry out its planned drilling program for 2012
and also plans to carry out additional drilling with the goal of increasing
mineral reserves. 


Mining and Production

Mining of the Amulsar deposit is planned to be accomplished with conventional
open pit mining methods. Over 12 years, seven phases covering the Artavasdes,
Tigranes and Erato ore bodies are sequenced to arrive at an ultimate
pit-geometry containing the project's Reserve. Mineralization extends to the
surface in the Tigranes ore body where initial mining begins; as a result,
minimal pre-stripping of 729,000 tonnes is required to have adequate ore feed to
the crusher. Artavasdes and Tigranes areas are mined ahead of the Erato area
which requires more waste stripping to expose the ore. 


During the initial three years of mining, ore is scheduled from the pit as
direct feed to the crusher at a nominal rate of five million tonnes of ore per
year. In year three, crusher capacity is doubled with a crusher expansion and 10
million tonnes of ore per year will be sent to the crusher starting in year
four. The average stripping ratio in the first three years of mining is 1.8:1
waste:ore. Beginning in year four, the stripping ratio increases to 2.35:1 and
continues at that ratio to year 10.


The pit-design has resulted in a mine plan containing 94.9 million tonnes at a
LOM average grade of 0.75 g/t gold. The mine plan has more tonnage at a lower
grade than the mineral reserve because a nominal 7% dilution has been added to
the plan. Total production over a 12-year mine life is estimated to be 2.04
million ounces, averaging 169,100 ounces per year (plus an average of 306,700
silver). The LOM waste:ore average ratio is estimated at 2.23:1.


A summary of the annual mine production plan is outlined in the table below:



----------------------------------------------------------------------------
                    Gold  Silver                                            
         Ore Mined  Grade  Grade  Production  Production        Waste  Strip
Year      (tonnes)  (g/t)  (g/t)   Gold (oz) Silver (oz)     (tonnes)  Ratio
----------------------------------------------------------------------------
Yr1      3,750,000  0.915   2.12      82,634      66,008    6,314,000   1.68
----------------------------------------------------------------------------
Yr2      5,655,120  0.966   3.16     135,333     142,832    9,471,880   1.67
----------------------------------------------------------------------------
Yr3      5,000,000  0.957   5.02     137,056     234,784   10,193,000   2.04
----------------------------------------------------------------------------
Yr4     10,000,000  0.730   4.85     186,717     442,877   23,466,000   2.35
----------------------------------------------------------------------------
Yr5     10,000,000  0.812   3.76     217,152     400,081   23,500,000   2.35
----------------------------------------------------------------------------
Yr6     10,000,000  0.870   3.94     240,416     400,242   23,500,000   2.35
----------------------------------------------------------------------------
Yr7     10,000,000  0.639   3.43     196,132     393,682   23,500,000   2.35
----------------------------------------------------------------------------
Yr8     10,000,000  0.658   3.00     175,571     321,747   23,500,000   2.35
----------------------------------------------------------------------------
Yr9     10,000,000  0.549   2.27     165,254     322,288   23,500,000   2.35
----------------------------------------------------------------------------
Yr10     9,541,000  0.562   2.14     164,266     365,338   23,959,000   2.51
----------------------------------------------------------------------------
Yr11    10,000,000  0.815   2.35     224,540     422,309   20,433,000   2.04
----------------------------------------------------------------------------
Yr12       948,000  1.508   3.20     104,375     168,287      375,000   0.40
----------------------------------------------------------------------------
Total   94,894,120   0.75   3.27   2,029,446   3,680,475  211,711,880   2.23
----------------------------------------------------------------------------
                                                                            
Note: In year two of mining, a small low grade stockpile is generated when  
the crusher cut-off grade is 0.35 g/t recoverable gold. This is to keep a   
consistent mining rate as well as maximise the grade of material fed to the 
crusher in early years. The cut-off grade for the low grade stockpile in    
this period is 0.30 g/t recoverable gold. This material goes to the crusher 
in years 10 to 12. In total, 385,000 tonnes of ore is stockpiled in pre-    
production and re-handled to the crusher.                                   
                                                                            
The drop in ounce production in Years 7 to 10 is a result of the            
commencement of mining in the early stages at Erato. As the drill density at
Erato is less, a larger proportion of the material inside the ultimate pit  
shell is in the inferred category and hence cannot be included in this      
study. It is expected that as exploration activities continue, more material
will be upgraded from inferred and this drop in produced ounces can be      
reduced.                                                                    



The Company has selected mine mobile equipment to meet the production
requirements of the Amulsar mine development schedule. Blast holes will be
drilled with Sandvik DP1500i drills. Loading and hauling of material from the
pit will be accomplished with a mixed fleet of Caterpillar 6018's (RH90) and
6030's (RH120) excavators and Caterpillar 777 haul trucks. An auxiliary fleet of
dozers, graders, water trucks and loaders has also been sourced from Caterpillar
to assist in construction and ongoing maintenance works in the mine.


Metallurgy and Recovery 

Column tests were conducted at a 100% minus 12.5mm crush size without
agglomeration, at varying column heights from two to four meters, and for leach
cycles up to 75 days. Gold extraction in the columns averaged 91% with average
sodium cyanide and lime consumptions of 0.2 and 2 kg/t respectively. Solution to
ore ratio was used to scale these results, as well as one column test from
previous testing, to predict the rate and ultimate levels of gold extraction for
each of the Amulsar deposits. Interpretation of the metallurgical testing also
drove the project design towards tertiary crushing, permanent leach pad, and
precious metal recovery by carbon adsorption.


Run-of-mine ore will be hauled from the pit to the three stage crushing plant
located in proximity to the mine. Haulage from pit to crushing is 1km or less.
The circuit will reduce ROM ore from minus 700mm top size to a product of 80%
passing 12mm and is designed to process ore at a rate of 5 Mtpa. In the first
year of operation 3.75 Mtpa will be processed and 5 Mtpa in year two.
Installation of a duplicate circuit ramps up production to 10 Mtpa for year four
and through the life of the project. 


Crushed ore will be transported approximately 3.5km on an overland conveyor to
be distributed along the north side of the leach pad. The heap leach facility
will consist of a leach pad and collection ponds. The leach pad will be
constructed in three phases with the ultimate ore heap amount of 95 Mt stacked
in three stages.  


The primary leach cycle will be 30 days and the secondary 80 days. Leaching of
precious metal from the ore will continue as the leached ore is buried by
consecutive lifts. After 30 days of buried lift leaching, 140 total leach days,
the predicted overall recovery will be attained with an overall leach solution
to ore ratio exceeding 3 m3/t.


Infrastructure

Surface facilities include a camp, maintenance shop and other supporting
infrastructure.


There is good infrastructure surrounding the Amulsar project. This includes the
main sealed highway between Yerevan and Iran, high tension power lines and
substations, a gas pipeline from Iran, year round water from the Vorotan River
and a fibre optic internet cable.


Operating Costs

Operating cash costs over the life of the project are expected to average
$468.48/oz (this includes a post-production payment to Newmont which is payable
in one of three ways: a single payment of US$15.6 million on commercial
production, on-going 3% NSR or make 20 quarterly payments of US$1 million each.
The model assumes the last option as preferred).




                            ------------------------------------------------
                                        LOM Average             First 3yrs  
----------------------------------------------------------------------------
Item                           $/Tonne Ore Leached      US$/oz        US$/oz
----------------------------------------------------------------------------
Mining                                        5.50      257.11        241.18
----------------------------------------------------------------------------
Mine Cost Lease                               0.79       37.04         91.18
----------------------------------------------------------------------------
Processing                                    2.92      136.55        140.59
----------------------------------------------------------------------------
Waste Water Treatment Plant                   0.13        6.05          9.43
----------------------------------------------------------------------------
G & A                                         0.47       21.88         31.37
----------------------------------------------------------------------------
Cash Operating Costs                          9.81      458.63        513.75
----------------------------------------------------------------------------
Newmont Payment                               0.21        9.85         33.80
----------------------------------------------------------------------------
Total Operating Costs                        10.02      468.48        547.55
----------------------------------------------------------------------------



Capital Cost Estimates

The feasibility study is based on capital pricing as of the first half of 2012.
The level of accuracy of the capital costs estimates is within +/-15% for
feasibility studies.


The initial capital costs are estimated at $269.6 million. Sustaining capital
expenditures over the operation's mine life are estimated at $146.5 million
which includes $37.2 million for mine closure. The total capital cost is
estimated at $416.1 million.


The mining cost estimate for the truck fleet and mobile equipment is based on
pricing received from the tendering process. 


The cost breakdown for pre-production capital expenditures, assuming an owner
operator scenario, is shown below:




----------------------------------------------------------------------------
                                           Initial   Sustaining             
Item                                        cost $       cost $      Total $
----------------------------------------------------------------------------
Mining Cost                              8,791,700   17,189,800   25,981,500
----------------------------------------------------------------------------
Process Plant Direct Cost              228,568,063   26,872,254  255,440,318
----------------------------------------------------------------------------
Waste Water Treatment Plant                          19,078,412   19,078,412
----------------------------------------------------------------------------
Leach Pads                              15,687,450   31,814,488   47,501,938
----------------------------------------------------------------------------
Waste Dump                              16,575,893   14,302,181   30,878,074
----------------------------------------------------------------------------
Closure and Reclamation                              37,221,477   37,221,477
----------------------------------------------------------------------------
Total Initial and Future Sustaining                                         
 Project Cost                          269,623,106  146,478,612  416,101,718
----------------------------------------------------------------------------
Note: Sustaining costs include the majority of the capital costs associated 
with the Phase II expansion                                                 



Financial Analysis

The financial analysis for the base case (at a gold price of $1,200/oz), which
assumes an owner's operation, indicates a pre-tax NPV at a 5% discount rate of
$646.0 million with an IRR of 27.7% and a payback of four years. The project is
expected to generate $1.12 billion in pre-tax operating cash flow (after the
first 12-years) at $1,200/oz gold price. At a gold price of $1,500, pre-tax
operating cash flow is expected to be around $1.73 billion.


The table below outlines key sensitivities for the pre-tax NPV and IRR of the
Amulsar project.




                                  ------------                              
                                  ------------                              
                                     Base Case                              
Discount Rate         Undiscounted          5%       10%                    
--------------------------------------------------------                    
NPV pre-tax (US$M)         1,121.6       646.0     366.8                    
----------------------------------============----------                    
                                                                            
                                                                            
                                  ------------                              
                                  ------------                              
Gold Price, $/oz          US$1,100    US$1,200  US$1,300  US$1,400  US$1,500
----------------------------------------------------------------------------
NPV @5%, ($ M)                 513         646       779       913     1,046
----------------------------------------------------------------------------
IRR %                         23.8        27.7      31.3      34.8      38.1
----------------------------------------------------------------------------
Payback (yrs)                  4.5         4.0       3.7       3.4       3.1
----------------------------------============------------------------------
                                                                            
Capex change                  +10%                  -10%                    
----------------------------------============----------                    
NPV @ 5% ($M)                  611         646       681                    
IRR (%)                       25.2        27.7      30.5                    
----------------------------------============----------                    
                                                                            
Operating Cost change         +10%                  -10%                    
----------------------------------============----------                    
NPV @ 5% ($M)                  582         646       710                    
IRR (%)                       25.7        27.7      29.7                    
----------------------------------============----------                    
                                                                            
Gold Recovery change          +10%                  -10%                    
----------------------------------============----------                    
NPV @ 5% ($M)                  806         646       486                    
IRR (%)                       32.0        27.7      23.0                    
----------------------------------============----------                    



Moving Forward - Opportunities

The Company intends to carry out additional studies with a view to further
optimizing project economics, including:




--  Potentially upgrading existing inferred mineral resources to mineral
    reserves 
--  Expanding the current mineral resources through exploration drilling 
--  Eliminating the Phase II ramp up and commencing initial production at 10
    Mtpa 
--  Comparing the installation of a single gyratory versus two jaw crushers 
--  Reviewing key infrastructure layout and configuration



The international Environmental and Social Impact Assessment is expected to be
publicly disclosed in November 2012. Stakeholder engagement will continue
throughout the project development at every key stage.


In Conclusion

Lydian International Ltd.'s Board of Directors has accepted the Amulsar gold
project's Feasibility Study and has instructed management to implement the
Study's recommendations, further develop and bring the Amulsar gold project to
commercial production. 


Qualified Persons for Feasibility Study

The resource update and feasibility study was prepared by the following
independent engineering firms:




--  KD Engineering, under the direction of Mr. Joseph M. Keane, P.E;
    responsible for overall report contents and preparation and all matters
    relating to the design and costs of the processing facility.  
--  Golder Associates, under the direction of Mr. Richard Kiel, P.E;
    responsible for all matters relating to the HLF and WDF, the
    introduction, the geotechnical and the update extracted from the NI-43-
    101 Preliminary Economic Assessment entitled "Development of Amulsar
    Heap Leach Facility" and Mr. Pete Lemke, P.E; responsible for all
    matters relating to the Wastewater Treatment Plant design. 
--  Independent Mining Consultants, under the direction of Mr. Herb
    Welhener, MMSA-QPM; responsible for all matters relating to geology,
    drilling, open pit and mine design. 
--  Wardell Armstrong International, under the guidance of Mr. John Eyre,
    FRICS MIMMM MIQ CEnv; responsible for all matters relating to the
    Environmental and Social Impact Assessment.



An NI 43-101 compliant Technical Report will be filed on the Company's website
and on SEDAR within 45 days.


This release has been reviewed and approved by Mr. Joseph M. Keane, P.E, and
Pete Lemke, P.E of KD Engineering, Mr. Richard Kiel, P.E of Golder Associates,
Herb Welhener, MMSA-QPM of Independent Mining Consultants and John Eyre, FRICS
MIMMM MIQ CEnv of Wardell Armstrong International, in each case, a "qualified
person" as that term is defined in NI 43-101. This release has also been
reviewed and approved for the Company by Gary Anthony Patrick, BSc
(Chemistry/Extractive Metallurgy), MAusIMM CP, the Company's Development Manager
and a "qualified person" as that term is defined in NI 43-101. 


About Lydian International

Lydian is a gold-focused mineral exploration and development company with
expertise employing "first mover" strategies in emerging exploration
environments. Currently Lydian is focused on Eastern Europe and, in particular,
developing its flagship Amulsar gold project in Armenia. Lydian also has a
pipeline of promising early-stage gold and base metal exploration projects in
the Caucasus regions.


Lydian's management team has a track record of success in grassroots discovery,
in acquiring and developing undervalued assets, and in building companies.
Lydian has a strong social agenda and a unique understanding of the complex
social and political issues that characterise emerging environments. The
Company's significant shareholders include the International Finance Corporation
which is a member of the World Bank Group and the European Bank for
Reconstruction and Development. More information can be found on Lydian's web
site at www.lydianinternational.co.uk.


Caution regarding forward-looking information: 

This news release may contain certain information that constitutes
forward-looking statements. Forward-looking statements are frequently
characterised by words such as "plan," "expect," "project," "intend," "believe,"
"anticipate" and other similar words, or statements that certain events or
conditions "may" or "will" occur and include statements regarding the Company's
intended planned exploration. Forward-looking statements are based on the
opinions and estimates of management at the date the statements are made, and
are subject to a variety of risks and uncertainties and other factors that could
cause actual events or results to differ materially from those projected in the
forward-looking statements. These factors include the inherent risks involved in
the exploration and development of mineral properties, the uncertainties
involved in interpreting drilling results and other geological data, fluctuating
metal prices and other factors described above and in the Company's most recent
annual information form under the heading "Risk Factors" which has been filed
electronically by means of the Canadian Securities Administrators' website
located at www.sedar.com. The Company disclaims any obligation to update or
revise any forward-looking statements if circumstances or management's estimates
or opinions should change. The reader is cautioned not to place undue reliance
on forward-looking statements.