4th May 2007 07:01
Aricom PLC04 May 2007 Press Release 4 May 2007 Aricom plc ("Aricom" or "the Group") Completion of Garinskoye Scoping Study Aricom plc (AIM: TIO), the Anglo-Russian developer of mineral resources, todayannounces that it has received a completed scoping study on the Garinskoyeproject. This announcement is further to the announcement of 30 March 2007 inwhich we stated that Aricom has conditionally agreed to acquire 60% of theGarinskoye project, with an option to acquire a further 25%. Aricom has procured the preparation by Peter Hambro Mining Engineering of the "Garinskoye May 2007 Scoping Study" which has now been delivered to Aricom andis available to be downloaded from Aricom's website. The study reviews thehistoric data supporting the raw material base in conjunction with more recentstudies undertaken by Aricom on the mining operations and ore processingtechnology. Data underlying the study has been taken from the analysis of boththe Kuranakh and K&S projects, which have each been independently evaluated bySRK Consulting Ltd and Wardell Armstrong International Ltd respectively. The scoping study suggests that the project will support a 10mtpa miningoperation producing up to 6mtpa of concentrate of which 4.5mpta would beconverted into 3mtpa of pig iron. The scoping study suggests a net presentvalue of US$1,951m at a 10% discount rate and on similar economic assumptions tothose used in the recently published independent Competent Persons Report on theK&S project. Aricom now has a drill rig operating at Garinskoye and has already completed aquarter of the required confirmation drilling. The full results of thisdrilling await further testing but to date can be seen to support the historicestimates of reserves and resources. The historic reserve and resourceestimates support a mine life well in excess of 25 years. Completion of the scoping study allows Aricom to move to the more comprehensivefeasibility study stage of project development. It is expected that thefeasibility study will be undertaken by OJSC Giproruda in two stages to reflectthe proposed two stages of the development. The first stage will comprise thestudy of a small operation to extract and sell high grade ore after some initialbeneficiation and the second stage will be to study the construction andoperation of a 10mpta mining operation with an associated iron reduction plant.Aricom will work with Giproruda to seek to receive the complete bankablefeasibility study in the fourth quarter of 2007. On this basis it is estimatedthat the first stage of concentrate sales could commence in 2009 and fullproduction capacity could be reached in 2011. The capital expenditure requirement for the project to reach full productioncapacity is currently estimated to total US$1,275m. The financing requirementfor the project may be significantly lower after allowing for estimated cashflowto be generated from the first stage of operation and initial sales of thesecond stage. It is currently estimated that the first stage small scale miningoperation will require pre-production capital expenditure of US$50m and it isestimated it will generate an aggregate of in excess of US$100m of post taxoperating cashflow over the two years of operation. Capital expenditure for thesecond stage, to take the project to a production capacity of 10mtpa, iscurrently estimated to total a further US$1,225m of capital expenditure. Theseestimates may be modified after receipt of the relevant stages of thefeasibility study. Jay Hambro, Chief Executive Officer commented: "We believe that Garinskoye is a very exciting asset with significant potential.The scoping study suggests that the deposit has the ability to enable miningat a rate of 10 million tonnes per year of iron ore as early as 2011 which onthe basis of our most recently independently analysed economic assumptionsgenerates a net present value of close to two billion dollars. We continue toprogress the development of the project as quickly as possible." For further information:Aricom plc Jay Hambro, Chief Executive Tel: +44 (0) 20 7201 8939 www.aricom.plc.ukCanaccord Adams Robert Finlay / Chris Bowman Tel: +44 (0) 20 7050 6500 www.canaccordadams.comAbchurch Charlie 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:
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