12th Oct 2006 07:01
Peter Hambro Mining PLC12 October 2006 Acquisition of 80% of OJSC Irgiredmet Offer to be extended for remaining 20% 12th October, 2006 Peter Hambro Mining Plc ("PHM" or the "Group") announces that on 11th October2006 it acquired an 80% equity holding in OJSC Irgiredmet ("Irgiredmet") for acash consideration of US$40m. Irgiredmet is one of the best known Russian laboratory research and scientificconsulting companies and is based in Irkutsk. The Irgiredmet laboratoriesprovide a range of services in the testing, development and optimisation ofgold, precious metals and diamond projects. PHM intends to extend the offer tothe holders of the remaining 20% of Irgiredmet's equity on the same terms,implying a total acquisition value of $50m and it is estimated that theacquisition of the remaining 20% of Irgiredmet's equity will be completed inearly 2007. The acquisition will be financed from PHM's existing cash resources. Established in 1871, Irgiredmet is located in the city of Irkutsk; which is themajor city and centre of scientific excellence in Eastern Siberia. Irkutsk iswell connected to the key industrial cities in Russia and to PHM's mainoperating assets in the Amur region by air, main roads and the Trans-Siberianrailway. Irgiredmet serves gold explorers and producers in Russia and elsewherewith mine planning and evaluation, infrastructure design, process andmetallurgical test-work, bulk sampling, project evaluation and feasibilitystudies. With over 130 years of history, it has a wealth of information,intellectual capital and expertise that gives it a leading position in theRussian gold industry. PHM considers that Irgiredmet will provide a number of key benefits to theGroup, including: •Intellectual capital and experience: the company employs 285 staff, including 33 doctors of science, with extensive experience in the field of gold mining. The highly skilled workforce and the significant increase in laboratory testing capacity are expected greatly to assist the Group as it continues to make progress on its large portfolio of near-term and longer-term development assets. •Additional laboratory capacity: Irgiredmet's monthly analysis capacity is approximately 20,000 tests by melting and atomic absorption; 9,000 multi-element analysis tests via atomic emission; and 3,000 multi-element analysis tests using X-ray/fluorescent methodology. •Optimization of PHM's existing mining operations and projects: with its technological innovations and strong science-based culture, it is expected that Irgiredmet will improve PHM's operating efficiency and technological and operating capabilities. •Project pipeline: The Group already has an extensive project pipeline and Irgiredmet is expected to be able to provide the Group and its clients with opportunities, from within its existing contracts and client-base, for two-way collaboration and cooperation. Client confidentiality will be respected at all times. Peter Hambro, Executive Chairman of Peter Hambro Mining Plc, commented: "It is a great step forward for Peter Hambro Mining to join forces with therenowned team of scientists from such a highly respected institute. By bringingIrgiredmet into the Peter Hambro Mining fold we greatly strengthen our technicalexpertise and I very much look forward to us working together on our projects.However our joint development plans respect the confidential nature ofIrgiredmet's work and the third-party work will, of course, retain thediscretion necessary for successful implementation. "The gold rush in the Russian Federation has caused a manpower shortage,particularly among senior, technically qualified managers, and the acquisitionof Irgiredmet helps us to cope with this. Significantly, improved access toIrgiredmet's sampling facilities will enable us to speed up test work on thematerials coming from Malomir and Pioneer, as we seek to bring these near-termassets into production as part of our rapid development plan." Enquiries: Alya Samokhvalova Peter Hambro Mining Plc Director of External Communications +44 (0) 207 201 8900 Tom Randell / Maria Suleymanova Merlin +44 (0) 207 653 6620 Notes to Editors: •Irgiredmet's full name is Open Joint Stock Company "Irkutskiy Institute for Scientific Research of Precious and Rare Metals and Diamonds". As well as being well connected to other regions in Russia by main roads and the Trans-Siberian Railway, it is also served by Irkutsk International airport. The site is easily accessible from PHM's main operating assets in the Amur region. •During the Soviet era it functioned as the leading state research centre for the gold mining industry in Russia and the former Soviet Union and took an active part in the majority of Russian gold and diamond projects. •The company was privatized in 1993, at which time 89.2% of the issued share capital was owned by current and former employees. •Irgiredmet provides a wide range of test-work, design and specialized services from geology and mining to mineral processing and metallurgy. It provides R&D expertise, testwork and process optimization for precious and base metals and diamonds. The activities range from initial investigations to process development and design, construction and commissioning of industrial mines and plants. Moreover it offers a full range of facilities for sample preparation and characterization, comminution, gravity, flotation, physical separation, smelting, leaching, purification and metals recovery and tails detoxification. •Irgiredmet consists of ten specialized laboratories, a project design division, pilot plant testing facilities, an analytical centre, a commercial centre, a scientific and technical information division, a division of patents and licensing, an advertising and marketing division and a secondary metals processing division. •Irgiredmet employs highly qualified staff with a wide range of skills, including geologists, mining, design, metallurgical and chemical engineers. Every year Irgiredmet executes about 150 contracts for its clients. •In the twelve months to December 31, 2005 Irgiredmet's Russian audited accounts showed sales of 278m roubles ($9.8m) and a profit before tax of 39.8m roubles ($1.4m) and at June 30, 2006 the company had net assets of 70.7m roubles ($2.6m). The audited accounts have been prepared on a historical cost basis and thus do not reflect the value of some assets, notably the large real estate which is let to third parties. A valuation of the property by an independent property valuation surveyor, such as would be required under IFRS Accounting Standards, gives an estimated value of $42m. These real estate assets, which are a residue of the privatisation era in Russia, are not considered as core to Irgiredmet's or the Group's business. For further information on Irgiredmet see http://irgiredmet.ru/en/about.php. PHMaccepts no responsibility for the content of this website or for any relianceplaced on the information contained in it. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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