Aricom taps the market
Article Date: May 10 2007As suggested by Growth Company Investor in March, Aricom is seeking up to £263 million for Russian iron ore projects.
Aricom, headed by Jay Hambro and originally a spin-off from Peter Hambro Mining, hopes to raise between £245 million and £263 million by issuing 351 million shares and around 117 million warrants for one new share each in a placing handled by JPMorgan Cazenove and Canaccord Adams. The company, which has also announced plans to move from AIM to the Full List this year, said the placing, if approved by shareholders, would fund initial development of the K&S and Garinskoye iron ore projects in far eastern Russia.
Aricom has said in the past that K&S, with estimated iron ore reserves of more than 550 million tonnes, could require pre-production capital expenditure in the region of £400 million. Previous estimates held that Garinskoye, with a possible 388 million tonnes, might need £600 million to reach full production capacity.
Now, however, the company said ‘third party studies’ suggest using cash flow from the early productive stages of these projects should cut overall capital requirements significantly to £250 million or more over the next 12 to 24 months. Aricom said it has received ‘credit-approved commitment letters’ from four financial institutions to provide project finance for another project, Kuranakh, where it expects production to begin ‘on time and within budget’ in the fourth quarter of this year.
Recommended by Growth Company Investor at 38.5p in February last year and again at 58p in March, Aricom shares now stand at 72p, down 6.25p on the placing news. There is scope for further gains over the medium to long term, as long as sector sentiment and fundamentals do not change radically.
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