5th Dec 2006 16:47
Aricom PLC05 December 2006 Press Release 5 December 2006 Aricom plc ("Aricom" or "the Group") Results of the Garinskoye Licensing Tender Aricom plc (AIM: TIO), the Anglo-Russian developer of mineral resources, todayannounces that the Amur Oblast Territorial Department on the Use of Subsoil hasnotified OOO Amur Mining, a company connected to the Group that its submissionto the tender for the combined exploration and extraction licence over theGarinskoye iron ore property in the Amur Region, Far East Russia (the "Licence")contained the best terms. The tender was held in Blagoveshensk on 5 December2006. Amur Mining's tender offer for the Licence was RuR500 million (c.US$19million). Aricom expects to be in a position to purchase a controlling interestin OOO Amur Mining on a cost reimbursement basis, subject to any relevantregulatory approvals. The results of the tender will have to be formally approved by the LicensingCommission of Rosnedra (the Agency on the Use of Subsoil of the Ministry ofNatural Resources of the Russian Federation) in Moscow, which process will takesome additional time. Aricom expects to make an additional announcement once theLicence is issued. The licence area is estimated to contain iron ore reserves and resources of388.8 million tonnes of Russian category A, B and C ore with an average grade of41.7% and 2,590 million tonnes of Russian resource category P1 and P2. Of theA, B and C1 category reserves, 39% (82.5 million tonnes) is defined as 'richore' and contains an average grade in excess of 50% Fe of which 67.7 milliontonnes have an average grade of 55.7% Fe. Aricom believes that the deposit could be developed into a large scale open pitiron ore mining and concentrating operation on the following basis. Developmentof the project is expected to commence in 2007. Initial work will focus on acomprehensive programme of confirmation drilling. Subject to and followingsuitable positive results from this, a feasibility study should be potentiallycompleted in early 2008 and the project could be in operation as early as2010-2011. As magnetite is the predominant source of iron at Garinskoye, the ore could beconcentrated using the same process as at Aricom's Kuranakh project, in thenorth east of the Amur Region. This should result in an initial production ofstandard iron ore fines averaging +/- 65% iron which could then be developedinto a number of premium products including standard pellets, pig iron, directreduced iron (DRI) and hot briquetted iron (HBI). Jay Hambro, Chief Executive of Aricom plc, commented: "Garinskoye is an extremely exciting asset with enormous potential. We believethe deposit has the ability to produce up to twelve million tonnes per year ofpremium iron ore concentrate as early as 2010 and is located 225km from theRussian-Chinese border and approximately 65km from the two large regionalrailroads. We very much hope that the formal approval process will confirm the tenderresult and we will be able to complete the process of acquisition adding thisexciting asset to the Group's portfolio. Whilst developing the Group's existingassets remains a priority, a key objective for the management team is tocontinue to make value adding acquisitions that will further enhance the Group'sreserve base. " - Ends - For further information:Aricom plcJay Hambro, Chief Executive Tel: +44 (0) 20 7201 [email protected] www.aricom.plc.uk AbchurchCharlie Jack/ George Parker Tel: +44 (0) 20 7398 [email protected] www.abchurch-group.com Garinskoye Deposit - Summary of the Project Location The Garinskoye deposit is situated in the Mazanovsky District, Amur Oblast,150km northeast of Svobodny and 65km southwest of the Baikal-Amur main railwayline. The area is a sparsely populated upland taiga terrain with large areas ofmarshland and an elevations range from 250 to 500m above sea level. The deposit lies equidistant from both the Trans-Baikal Railway (TBR) and theBaikal-Amur Mainline (BAM). The deposit has no existing transportation linkswith either of the main railway lines and no metalled road access. The nearestrailway station, Shimanovsk TBR, is approximately 100km from the deposit. History Exploration of the area was started in 1949 with the discovery of the deposit byaeromagnetic survey. Between 1950 and 1955, extensive exploration was carriedout by Soviet geologists and included drilling, trenching and underground shaftwork. In 1955, the GKZ (State Committee for Reserves) approved an originalreserve and resource estimate of 388.8 million tonnes. Between 1982 and 1984,Dalgeophysica identified additional resources with a further programme ofaeromagnetic surveying and in 1993 additional potential resources of 2,590million tonnes were further estimated. Reserves and Resources This summary is taken from the information provided to the licence tenderparticipants as well as the following documents: Merloni Group LLC - "Study for Garinskoye Deposit" UralGiproRuda Report - "Project works for Garinskoye Deposit" St Petersburg GiproRuda - "Report for Garinskoye Deposit" In 1955, GKZ classified Garinskoye as a Type III deposit (complex, with variabledistribution of minerals) and approved the following reserves based on theRussian classification system: A 22.5 MT (million tonnes)B 61.3 MTC1 127.7 MTC2 177.3 MTTotal (A+B+C1+C2) 388.8 MT The total of 388.8 million tonnes had an average grade of 41.7% Fe, 0.21% P and1.13% S. The "Rich" ore (39% of the tonnes within A, B and C1) had an average grade inexcess of 50% Fe of which 67.7 million tonnes had an average grade of 55.7% Fe.The "Average" ore (61% of the tonnes within the same categories) had an averagegrade of 32.64% Fe. The Dalgeophysica aeromagnetic survey in the 1980's showed various ironanomalies on and around the Garinskoye deposit. Following further analysis, in1993, GKZ approved additional iron resources of 540 million tonnes in P1 and2,050 million tonnes in P2. Aricom estimates that the waste associated with mining these reserves, in allcases, is less than 1.2 cubic metres per tonne of ore and averages 1.15 m3/t. -although this cannot be independently verified at this point. Metallurgy In 1984/5, Sibelectrostal carried out a series of electro magnetic separationtests on two 500kg samples of Garinskoye ore. These tests produced a concentratewith a grade of 69.6% Fe, 0.02% P and 0.07% S. They determined that thisconcentrate was most suitable as a feedstock for a metallisation process toproduce smelted rolled iron or processed using direct electrometallurgicalmethods for high-quality steel production. Geology The 1950's exploration works included more than 500 drill holes, 65,000 cubicmetres of sampling from trenches and a number of shafts and underground tunnels.This work concluded that the deposit was a complex interbedding of shales,magnetite ores and limestone which would suggest a skarn type deposit especiallyas the ore zone had been subjected to contact metamorphism (transformation intogranite) at the boundaries. Multiple (56) orebodies were identified ranging in thickness from 2 - 49.3m andfrom 80 - 1,500m long. Mineralisation was determined to reach to a depth of 500mand that all of the orebodies dipped steeply at 70 - 90 degrees with anorth-easterly strike. Although three types of ore were identified: magnetite, magnetite-hematite, anda magnetic pyhrrotite, only the magnetite was considered to have any industrialsignificance. Within the main magnetite group, the secondary minerals wereidentified to be mainly hematite, martite, and muscovite The magnetite was classified into three grades: • "Rich" (Fe > 50%) which comprised 39% of balanced reserves in categories A+B+C1; • "Average" (Fe from 20 to 50%) which comprised 61% of the balanced reserves in same categories; • "Poor" (unbalanced (low grade) with Fe from 15 to 20%) which comprised 21% of the total sum of balanced and unbalanced reserves. In addition Rich ores were classified as having a low-phosphate (P < 0.15%)content. St Petersburg Giproruda Review 2006 - it was noted that the Rich and Averageores were interbedded very often and supplemented each other in dip anddirection. However, the richer ores were more concentrated at depth which wouldmake the selective mining of these ores possible in the later years of minedevelopment. Selective mining of high grade ore during the earlier years of mine developmentmay be possible by stocking and reclaiming from stockpiles. - Ends - 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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