Gold Miner Has Iron Grip
// Gold producer forms an iron ore company in Russia
Ferrous metallurgy
British gold producer Peter Hambro and his partner Pavel Maslovsky are founding an iron ore company in Russia. They intend to combine their iron assets in the Jewish Autonomous District with the Aricom Co., which will produce titanium magnetite ore in the Russian Far East. They intend to build an ore processing plant comparable in capacity to Mechel's Korshunovsky plant. The concentrate will not be used by Russian metallurgists, however. All of it will be exported to China.
Hambro and Maslovsky sold 1.6 percent in Peter Hambro Mining for about $9 million last year and used the money to buy the licenses to develop the large Kimkanskoe and Sugarskoe deposits in the Jewish Autonomous District, with industrial reserves of 558 million metric tons of iron ore. The rights to the deposits will be added to the authorized capital of Aricom, in which Hambro and Maslovsky are minority shareholders. To carry this out, Aricom will acquire the option to buy 50 percent participation in the deposits from Hambro and Maslovsky and pay for it with 13.4 percent of the company's stock. That stock will be obtained through a supplemental emission of 18 million shares. The cost of the option will be $9 million and give Aricom the right for two years to make the purchase for no more than $61 million. If the deal is made at the maximum price, Hambro and Maslovsky will increase their share in Aricom to 68 percent.
Aricom split off from Peter Hambro Mining in 2003. It is developing the Kuranakhskoe titanium magnetite deposit in Amur Region and building a plant to produce titanium dioxide with a capacity of 70,000-80,000 tons per year. The company's capitalization is $50 million. Hambro and Maslovsky own 34 percent of the company and the rest of it belongs to institutional investors like Credit Suisse First Boston and Merrill Lynch. A large quantity of iron ore is present at the Kuranakhskoe deposit, which is why the iron assets are being consolidated with Aricom.
Dmitry Belikov, Maria Cherkasova
All the Article in Russian as of Jan. 17, 2006
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