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The Rise, Collapse and Bizarre Afterlife of Armenia’s Teghut Copper Mine

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The European Exit: Why Aurubis Matters More Than Ever

Once VTB’s sanctions burden is lifted and the asset is legally “cleaned”, Teghut could take its place in the premium segment of the European market.

Aurubis, Europe’s largest copper producer, is not only facing rising demand — it has raised its annual forecast to €475 million — but is also expanding capacity, with €400 million invested in a new plant in Pirdop, Bulgaria. At the same time, the company urgently needs to diversify its supply chains amid a raw material shortage.

For Teghut, the main incentive is the “green premium”. Aurubis is a leader in low-carbon production and holds Copper Mark certification. It pays suppliers significantly above market prices for raw material with a verified environmental footprint and responsible sourcing.

Exiting VTB’s control removes the main sanctions barrier. That would give Teghut access to a high-margin European sales channel and could make a return to European buyers such as Aurubis commercially attractive.

What The Asset Might Be Worth — And Why KPMG Was Worried

(The KPMG concern is documented. The valuation is the author’s own.)

After the 2017 default of Teghut, VTB initiated a comprehensive financial and operational turnaround of the copper-molybdenum plant. As part of its asset protection strategy, the bank consolidated debt obligations, pursued court enforcement of collateral, and brought in a new management team to address critical risks — including long-term work to reinforce the tailings dam.

Today, Teghut’s balance sheet shows total borrowings of more than $414.6 million (162.1 billion drams), classified as short-term and repayable on demand at any time. The 2024 financial statements reflect the end of a stabilisation phase. Revenue reached $144 million (compared to 2014 plans of $182 million), and the plant achieved planned production volumes. But deep financial stress remains, with negative net assets of $199 million. The annual interest burden exceeds $31 million.

To report formal profitability, the shareholder restructured part of the debt through capitalisation, allowing Teghut to post a net profit of $8.8 million, operating profit (EBIT) of $26.9 million, and fixed assets of $180 million.

From KPMG’s 2024 audit report:

“The company has bank loans of 162.1 billion drams, repayable on demand due to breaches of loan covenants, which required their classification as current liabilities… As a result, the company has negative equity of (77.9 billion drams) and total liabilities exceeding total assets by 77.4 billion drams. As noted in Note 2(b)… these conditions indicate a material uncertainty that may cast significant doubt on the company’s ability to continue as a going concern.”

Given the current owner’s sanctions status and substantial operating costs — including the monthly placement of 30,000–35,000 tonnes of rock to maintain the safety of a 47-million-tonne tailings dam — the fair enterprise value of the asset is estimated at $120–150 million. This implies a 4.5–5.5x EBITDA multiple, in line with international practice for distressed assets, and represents a payment of roughly 28–35 per cent of the nominal claim. The discount reflects the buyer’s assumption of long-term environmental risks and dam monitoring obligations. The dam’s total capacity is 190 million tonnes.

After a change of ownership and the removal of sanctions, there is potential for significant margin improvement. Optimising logistics and redirecting exports to European markets could eliminate the discounts currently imposed by supply chains routed through Iran and Russia, raising effective selling prices by 15–20 per cent. Combined with a projected 10–15 per cent rise in global copper prices and the ability to scale production under a licence valid until 2031, normalised operating profit could reach $55–65 million, offering a strong return on invested capital after the asset is legally cleaned.

Teghut’s 2015 plan targeted $182 million in revenue from mining 13 million tonnes of ore per year — implying efficiency of $14 per tonne. Today, because of sanctions-related discounts and difficult logistics, the plant generates only about $11 per tonne ($144 million in 2024 revenue). Acquiring the asset and removing it from VTB’s sanctions shadow would recover those “lost” $3 per tonne. At full capacity, that translates into an additional $40 million of net operating profit per year.

Possible Transaction Structures Around A Sanctioned Creditor

(Speculation ahead — but the kind that fits the facts a little too well.) 

In late April 2026, VTB chief Andrei Kostin publicly announced that the sale of the Teghut mine was nearing completion. Armenia’s RFE/RL service, citing sources, named Konstantin Sokolov as the likely buyer. Kostin’s statement was not mere PR. It signalled that three key issues had been resolved: a payment mechanism acceptable to a sanctioned bank, proof of funds from the buyer (with initial payments in the range of 10–20 per cent of the deal value, or $12–30 million), and a deadline. That deadline is 1 April 2027, when tighter Russian Central Bank rules will force VTB to shed non-core assets faster.

The buyer of VTB’s debt would likely be an offshore company with a nominal non-resident shareholder (Russian, Emirati, Chinese, etc.). Such a structure falls outside OFAC’s blocking sanctions as long as it has no US operations and avoids dollar settlements. It creates a veneer of cleanliness while leaving room for shadow capital transit. Sokolov may be repeating a template he used to buy Viva Armenia (formerly MTS Armenia) from sanctioned oligarch Vladimir Yevtushenkov. According to Hetq.am, 75 per cent of that deal went to Zhe Zhang, a citizen of China and Malta, leaving Sokolov as a minority shareholder and the public face of Viva Armenia.

The problem: how to pay VTB. Its regional subsidiaries — VTB Armenia and VTB Bank Georgia — are under US and UK sanctions. Anyone wiring them euros or dollars would trigger sanctions automatically. Using a bank close to Sokolov, such as Amiobank, as a direct payment channel would be reckless. So what is the alternative?

On 25 February 2022, the day after Russia’s invasion of Ukraine and the first round of US blocking sanctions against VTB, Georgia’s prime minister Irakli Garibashvili made a statement that, four years later, may be the key to the entire Teghut deal.

“Georgia does not intend to participate in these sanctions, as this would only seriously harm our country and our people. I want to state clearly and unequivocally that Georgia, in its national interest, will not participate in financial and economic sanctions.”

Garibashvili stressed that Georgia would be guided solely by its national interests, even while expressing “full solidarity and support for Ukraine”. Then, on 26 February 2022, the National Bank of Georgia (NBG) went further. It acknowledged that VTB’s local subsidiary had been sanctioned and that from 26 March it could no longer process dollars, euros or pounds. But it added that it had a plan to keep the bank running.

“The bank is solvent and the interests of its depositors are fully protected. Should the bank need additional liquidity, the NBG is ready to provide it with the necessary financial resources.”

This meant one thing: Georgia not only refused to enforce sanctions in words but also created a mechanism to support a sanctioned VTB entity on its own soil.

In 2024, Bank of Georgia Group PLC (part of Lion Finance Group) completed its $306 million acquisition of Armenia’s Ameriabank. Bank of Georgia itself is 99.96 per cent owned by Lion Finance Group PLC, a London-listed FTSE 250 company. Its major institutional shareholders include Georgia Capital, M&G Plc, Dimensional Fund Advisors, JPMorgan Asset Management and BlackRock.

Bank of Georgia is one of the largest lenders to Georgia’s real economy. Its multi-billion dollar corporate loan portfolio includes direct financing of the ports of Poti and Batumi — the very gateways through which Teghut exports its copper and molybdenum concentrate.

A curious coincidence: Bank of Georgia and Aurubis share some of the same major institutional investors, including BlackRock and JPMorgan — a reminder that even supposedly isolated regional assets often remain connected, indirectly, to the same global pools of capital.

Our hypothesis about the deal’s structure sounds far‑fetched at first — but it is also coherent and logical. It assumes unpublicised but plausible support at the Russian–Georgian–Armenian intergovernmental and interbank level, allowing a buyer to purchase debt from a sanctioned VTB. Payments could theoretically be structured through regional financial channels less exposed to the western clearing system. If, as was assumed above, an advance payment has already been made, the debt purchase could be finalised within months.

Bankruptcy As A Tool: Wiping The Slate Clean

(Speculation ahead — but the kind that fits the facts a little too well.)

Once the debt to VTB is settled, the asset will remain with VTB as a beneficial owner through offshore companies. Buying the stakes directly is risky. Something else is needed.

As KPMG’s 2022–2024 audits show, Teghut is objectively in a pre-bankruptcy state. The auditors recorded negative equity, a critical level of overdue debt, and systematic breaches of loan covenants. By international auditing standards, these are sufficient grounds to question whether the company can continue as a going concern.

Under these conditions bankruptcy could become one possible mechanism for restructuring liabilities and separating the asset from legacy obligations. Moreover, it prepares the enterprise for the next stage: a strategic sale of a “clean” asset to a new investor, free of encumbrances, debt and sanctions. In this scenario, the transaction ceases to be a purchase of distressed debt and becomes the acquisition of a ready-made resource base with a restarted licence — which explains the persistent interest from structures linked to Sokolov.

Armenian law does not explicitly prohibit non-residents from owning mining assets. Formally, anyone can be a buyer. However, since 2018, there has been a strict requirement to disclose ultimate beneficial owners in the public e-register.am. Any ambiguity in the ownership chain automatically becomes a target for legal challenges and a risk to the licence itself.

Under the most favourable conditions — government approval, no disputes, and a single major creditor — a bankruptcy procedure in Armenia could take as little as three to six months. This is a rare case where digitalisation (electronic courts, public registries) and government support turn bankruptcy into a mechanism for changing ownership.

New General Director Sergei Neruchev, a manager with deep experience in restructuring distressed mining and international assets under VTB’s oversight, is expected to steer Teghut through a similar process.

Sokolov, Trump’s Orbit, And The Nasdaq Bet On Armenia’s Copper

(Speculation ahead — but the kind that fits the facts a little too well.)

In 2026, the line between madness and reality remains blurred. Almost anything seems possible. The complex, hypothetical scheme to buy debt from a sanctioned VTB looks less like a shady adventure and more like a refined tool for entering an asset that may soon be sought after by public markets.

In April 2026, several global media outlets — including the Financial Times, The Northern Miner and Benzinga — reported that the sons of US President Donald Trump had acquired a stake in the Kazakh tungsten project Kaz Resources. The investment flowed through Dominari Securities into a construction company, Skyline Builders, followed by a merger with Cove Kaz Capital (which received $1.6 billion from the Trump administration to develop the deposit) and a listing on Nasdaq under the name Kaz Resources.

Applying the same logic to Teghut makes Sokolov’s motives clearer. For several years, he has tried to bring the Trump family into his business orbit — through funding the presidential campaign and attempts to involve them in the Pelagos Data Centres project.

The Kazakh deal shows that the Trump administration effectively encourages any kind of solution to gain access to critical mineral projects. Sokolov has support at the level of Armenia’s prime minister. For the Armenian government, stabilising Teghut appears to carry broader economic and strategic importance.

International funds such as BlackRock and JPMorgan would also be obvious candidates to become shareholders in such an asset.

All the structural elements are already in place. The hypothesis that Sokolov, moving in the orbit of Trump’s donors, is trying to pave Teghut’s way to global markets is no longer conspiracy theory. It is merely a description of today’s geopolitical reality — a reality in which private capital and state interests have become permanently and irreversibly intertwined.

We will see if it works. Place your bets — will the Teghut deposit ever appear on Nasdaq?

Disclaimer

The information presented in this article is based on publicly available sources, including financial statements, court records, media reports, and analytical materials. Some of the forward-looking statements, hypotheses regarding transaction structures, beneficial ownership, sanction evasion mechanisms, and potential future listings are the author’s own conclusions and educated assumptions (“fantasies”), not verified facts.

This content is provided for informational and research purposes only and does not constitute financial, legal, or investment advice. It should not be relied upon when making any investment decisions or entering into any agreements. The author does not guarantee the accuracy, completeness, or timeliness of the information. All parties mentioned are presumed innocent of any unproven allegations. The author disclaims any liability for any actions taken based on this material.

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