Yesterday, after the market close, Lydian International Ltd. (Stock Profile – TSX:LYD) released the results of a feasibility study for its 100%-owned Amulsar heap leach gold project in Armenia.

The study estimates average annual production of 184,000 oz per year at total cash costs of US$468/oz over a 12-year mine life based on reserves of 2.3 Moz grading 0.80 g/t Au. Pre-production capital costs were estimated at US$270 million and total life-of-mine sustaining capital was forecasted at US$147 million.

According to TD Securities mining analyst Daniel Earle, this event is a positive impact for the company. Mr. Earle writes, “The results were in line with our expectations and confirm to us that the company possesses one of the most robust development-ready gold projects of a significant size globally. With what we view to be relatively modest development costs, owing to heap leach processing and good infrastructure, the project benefits from low capital intensity relative to its production potential; this, together with its scale, make it a particularly attractive acquisition target – in our view.”

He also says, “We believe that permitting risk is the major limiting factor in the valuation of the company’s shares and several significant steps remain in the process (with completion expected by Q1/13), including: 1) approval of the EIA for planned mine closure activities; 2) approval of the Environmental and Social Impact Assessment (ESIA); 3) issuance of the Rock Allocation Area (essentially rezoning to Industrial from Agricultural), and 4) receipt of a Concession Agreement.”

Analyst Daniel Earle raised his 12-month target price for Lydian International to $3.50/share (up from $3.00/share) and, after incorporating the results of the feasibility model, calculated the NAV (5% discount rate) at $4.24/share (up from $3.86/share).