30th Mar 2007 07:02
Aricom PLC30 March 2007 Press Release 30 March 2007 Aricom plc ("Aricom" or "the Group") Completion of Garinskoye Planned Acquisition Programme Aricom plc (AIM: TIO), the Anglo-Russian developer of mineral resources, todayannounces that further to its announcement on 5 December 2006, it hasconditionally agreed to acquire a controlling interest of 60% in the Garinskoyeiron ore deposit Furthermore it has also been granted an option to acquire afurther 25% interest in the deposit. Proposed Transaction LLC Garinsky Mining & Metallurgical Complex (previously known as OOO Amurmining)("Garinsky"), the company holding the licence for the Garinskoye deposit, isowned by Lapwing Ltd, a Cyprus based company ("Lapwing"). Aricom has agreed tosubscribe for new shares in Lapwing (the "Subscription") which, followingadditional subscriptions being made by Aricom's co-shareholders at the sameprice, would result in Aricom holding a 60% interest in Lapwing. TheSubscription is conditional principally on the consent of the Russian FederalAnti-Monopoly Service. Aricom's co-shareholders, none of whom are relatedparties, are people and institutions who worked with Aricom to achieveGarinsky's success in the tender process and hence have been given theopportunity to participate in the potential success of the Garinskoye project onthe same terms as Aricom. Lapwing is issuing shares to raise US$45 millionwhich represents the total costs incurred by Garinsky and Lapwing in the tenderprocess, of which US$19 million was paid for the licence itself. Aricom's 60%share of this fund raising is a cash consideration of US$27 million. It isintended that the US$45 million cash raised will be used to repay all Lapwingand Garinsky's debts. Following completion of the Subscription, Aricom will control the explorationand development programme for the project. For the first twenty four monthsfollowing the Subscription, the annual budgets should not exceed US$5 million.Following the Subscription, Aricom will provide a twenty four month US$10million loan facility to Lapwing in order to fund the annual budgets on normalcommercial terms including an interest rate of 10%. This loan is repayable froma further subscription from shareholders or as otherwise agreed by the Board.All expenditure following the second anniversary of the Subscription shall befunded by Lapwing's shareholders or in such other manner as determined by theBoard. Any shareholder not paying their proportionate share of expenditure willbe subject to dilution pro-rata according to prior deemed expenditure and actualcontributions of the shareholders and not the then valuation of the Company. Aricom has also been granted an option to acquire, from the co-shareholderswhich following the various subscriptions will hold a 25% interest in Lapwing,that 25% interest for US$100m. The option has an exercise period of two yearsalthough this would be brought forward to 90 days following the receipt of apositive feasibility study for Garinskoye, the generation of US$50 million inaggregate net profit or a change of control in Aricom. The option premium isUS$19.7 million which is non-refundable and is due for payment concurrently withthe completion of the Subscription. Garinskoye Work Programme Aricom has begun the construction of an exploration camp at Garinskoye and hasmoved a drill rig to the site. The initial drilling programme will be focussedon proving the presence of the high grade zones as well as the amenability ofthe high grade area to early stage direct shipping. Aricom is working on ascoping study of the project and expects to publish the results of this duringApril 2007. - Ends - For further information:Aricom plcJay Hambro, Chief Executive Tel: +44 (0) 20 7201 8939 www.aricom.plc.uk Canaccord AdamsRobert Finlay / Chris Bowman Tel: +44 (0) 20 7050 6500 www.canaccordadams.com AbchurchCharlie Jack / George Parker Tel: +44 (0) 20 7398 7700 www.abchurch-group.com Notes to Editors Aricom plc is a leading developer of Russian metal and mining assets, focusingon iron ore and ilmenite production and delivery. The Company was establishedin September 2003 to develop projects, situated in the north west of the AmurRegion, in Russia's Far East. These projects are set to service the Chinese andRussian commodity market. Aricom currently operates three projects in the Amur region and the adjoiningJewish Autonomous Region. The Company's projects Kuranakh, K&S and Bolshoi Seymhave combined estimated reserves and resources of over one billion tonnes ofIron Ore and Ilmenite ores. The location of the Company's deposits offer asignificant logistical advantage being close to the Trans-Siberian-Express andthe Baikal-Amur Magistral railways. In 2005, 700 million tonnes of iron ore were shipped globally, of that 300million (43%) was shipped to China. It is currently estimated that China is oncourse to have imported 300 million tonnes of ore by the end of 2006 tofacilitate its demand for steel production. In June 2006, Aricom announced aMemorandum of Understanding with China's largest nonferrous metal companyChinalco, to co-operate in the design and development of a Titanium Spongeproduction plant in China. Aricom is headquartered in London, with a highly experienced board of directorscomposed of British and Russian citizens. The company's shares were admitted totrading on the AIM Market in December 2003 and trade under the symbol TIO.L. Forfurther information please visit www.aricom.plc.uk This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Orogen Gold