17th Jul 2006 07:01
Aricom PLC17 July 2006 17 July 2006 2006 First Half Trading Update Aricom plc ("Aricom" or "the Group") issues this statement as an update ontrading for the first six months of 2006 in advance of the interim resultsannouncement expected in September. Highlights include: * Good progress on Kuranakh project development with road construction and camp completion.* Completed acquisition of interests in major new iron ore assets at Kimkanskoye and Sutarskoye and project development work begun.* 49% of Bolshoi Seym ilmenite and magnetite deposit asset acquired.* Aricom further strengthens management team with new Chief Executive, Technical Director and local management.* US$158m equity fund raising completed in March - provided significant capital injection to accelerate Group development. Sir Malcolm Field, Chairman commented: "I am pleased that the Group continues to show excellent progress in theconstruction and development of the Kuranakh project. The first steps of theoperations in particular have moved on impressively and as work begins on theactual mining and processing units, we move an important step closer toproduction which is planned within the next eighteen months. Aricom has entered a new exciting phase of its development with the acquisitionof the Kimkanskoye and Sutarskoye deposits. These deposits are impressive insize and with their geographical proximity to the world's largest iron orecustomer, China, they are particularly attractive to the Group - a factevidenced by the competition for their ownership. The strength of the Aricom asset portfolio is the result of nearly three yearsof hard work from the team. I believe that Aricom has now achieved the criticalmass to be a major participant in the market for the supply of iron ore andtitanium into Russia and China. With our extensive future programme of operations, I am confident theappointment of Jay Hambro and Martin Smith will strengthen further our executiveteam and they will add significant value in this critical stage of Aricom'sdevelopment." Enquiries:Jay Hambro Aricom plc +44 (0) 207 201 8914Tim Grey The Millbrook Partnership +44 (0) 207 520 9455 Project Update KuranakhConstruction is underway and on schedule for completion within 18 months.Kuranakh is an ilmenite and titanium magnetite project 74% owned by Aricom andlocated c.440km north west of Tynda in the Amur region of Far East Russia.Having made excellent progress in the construction of all project infrastructureand in readying the site for the development of the processing and miningfacilities, the project team is due to commence production at an ore throughputrate of c.2.4mtpa within c.18 months. Geology and ReservesAlthough the geology of the deposit is well known due to extensive explorationcampaigns during the Soviet period, Aricom has completed a significant amount ofadditional confirmation drilling as part of the development of the project.Exploration work to date has allowed the identification and segregation of threeseparate ore bodies within the current licence area - only two of which arerequired to support a presently estimated 15 year mine life. Eight discrete ore zones (Nos. 1-8) have been located within the first orebodyin an area of approximately 5km strike length over a width of 1.5km. The miningoperations will concentrate on Ore Zones 1 and 3, for the duration of theproject, as they have the lowest stripping ratio (1.3m3 of overburden per tonneof ore). The scope for increasing and upgrading the reserves in the Kuranakhdeposit, as a whole, is good. Aricom has completed the programme of exploration and confirmation drilling andhas taken more than 1,000 trench samples, 1,350 core samples and 1,500kg of bulksamples from the deposit in order to calculate the reserves and confirmmetallurgy. The gabbro intrusive igneous host rocks contain the titanomagnetite and ilmeniteore within distinct blocks determined by the intersection of faults. The faultsare orientated both NE-SW and E-W and play an important part in defining the orezones and sites that may contain additional mineralisation. Typical ore densityis 3.6t/m3 whilst the overburden tends to be less dense at 2.8t/m3 and naturalcleavage in the rocks should make them easily amenable to good blastfragmentation. Construction ProgrammeThe construction programme is now well advanced. Kapstroy, the independentcontracting team hired by Aricom and who were also responsible for constructingthe Pokrovskiy gold project in the same region, now have 250 people working atthe Kuranakh construction site. CampThe construction camp has been completed to an exceptionally high standard andincludes a number of the permanent buildings that will be used during the earlyyears of mine operation. The stores and workshop buildings, and someaccommodation units are already in use by permanent Aricom staff as well as theonsite contractors. RoadThe required 34km haul road is now nearly half completed. The road connects theprocess plant site at Olekma to the mining site at the Kuranakh deposit and hasreached the 15km mark. The haul road is due to reach the Kuranakh river at the23km mark by mid-August at which point a 65m span steel bridge is to be erected.This bridge has been prefabricated offsite and is currently in the process ofbeing transported from Irkutsk. PlantWhen completed, the process plant will use a conventional wet magneticseparation method to separate the magnetic titanomagnetite from the non-magneticilmenite. The main process plant site is located on the north side of the haulroad from Olekma to Kuranakh at the 4.5km mark. The area for the plant has beenpartially cleared. The initial layer of the tailings dam has been completed onthe south side of the haul road opposite the plant. The site is in a naturaldepression in the surrounding landscape and as such is an ideal area in which toplace the process plant tailings as it requires minimal dam wall construction. PowerThe nearest high voltage transmission line is only 1km away and Kapstroy hasbegun connecting this and creating the substation at Olekma. The substationrequired to convert the incoming 220kV to 35kV is already under construction andis located close to the process plant site. All transformer foundations havebeen completed and the main 220/35kV transformer is on site. The towers carryingthe transmission lines from the existing 220kV line to the new sub station havebeen completed and now only require the transmission cable to be strung. Treeclearing along the route of the lower voltage (35kV) line to the mine site hascommenced. MineOperations will be surface open pit mining. The site for the initial open pitoperation is highly suitable for this type of truck and shovel mining operation.The Kuranakh pit will lie on a moderately steep sided hill. A trialexcavation has been completed in order to establish the top of the mine whichwill be at an elevation of approximately 1,000m above sea level. The bottom ofthe mine will be at an elevation of 750m which should allow for short downhillhauls for the waste trucks. ProcessingAricom is planning to construct a pre-crushing and dry magnetic separation plantfor the run of mine ore close to the mining operations. The site isconveniently situated between the two ore zones planned for mining at this time.Site preparation has started and the majority of the trees have been cleared.There is a large flat area to the northeast of the site available for thedisposal of the oversize (>12mm) fraction non magnetic waste from this crushingplant. The magnetic fraction and non magnetic undersize (Related Shares:
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