Orogen Gold Regulatory News (ORE)

31 Jan 2005 07:00

Aricom PLC31 January 2005 ARICOM PLC 31 January 2005 Conditional Offtake Agreements signed with China National Gold Corporation for proposed production from Kuranakh Aricom plc is pleased to announce that, in anticipation of progressing thedevelopment of its Kuranakh deposit, its Russian subsidiary, OOO Aricom, hassigned two conditional offtake agreements with China National Gold Corporation. The agreements provide for OOO Aricom to supply to China National GoldCorporation a total of at least 360,000 tonnes of ilmenite concentrate over oneand a half years and at least 3,300,000 tonnes of titanomagnetite concentrateover five years. The agreements will come into effect once Aricom secures therequired financing to complete its Kuranakh mining project, and deliveries arescheduled to start in 2007 when the planned mining operations are intended tocome on stream. It is intended that all of the production of the plannedKuranakh mine will be supplied to China National Gold Corporation for the lifeof these agreements. The shorter duration of the ilmenite contract reflects theGroup's objective to establish its own TiO2 plant to which the ilmenite would besupplied once it becomes operational. China National Gold Corporation is a group headquartered in Beijing, withsubstantial interests in gold mining, international minerals trading andengineering contracting. Commenting, Sir Malcolm Field, Chairman, Aricom plc, said: "I am extremely pleased to have reached this strategically important agreementwith China National Gold Corporation and believe the opportunities to supplyindustrial raw materials in the region remain very exciting. We see ChinaNational Gold Corporation as a valuable partner for the future in what webelieve will be a key market for Aricom. We believe that once the Kuranakh mineis completed, this partnership will enable the company to secure substantialrevenues to underpin its aim to become a low-cost vertically-integrated titaniumdioxide producer focused on the markets of Russia and China." The Kuranakh Deposit OOO Olekminsky Rudnik, the 74%-owned subsidiary of Aricom plc, holds anexploration and mining licence to develop an 85km2 area at Kuranakh in the northwest of the Amur Region. The ilmenite-titanomagnetite deposit lies 35km from thesettlement of Olekma, which is on the Baikal Amur Magistral rail line, whichconnects to the Eastern Russian seaboard, as well as to the Trans-Siberianrailway line and the rest of Russia and China. Deliveries under the agreementswith China National Gold Corporation would be made by rail. Aricom is proposing to develop mining and beneficiation operations at Kuranakhto extract a target 2.2 million tpa of ore, which would be processed at the minesite into an estimated 240,000tpa of ilmenite concentrate, a feedstock for theproduction of titanium dioxide (TiO2), and an estimated 660,000tpa oftitanomagnetite concentrate, a form of iron ore. The company intends to financethis project through a mixture of equity and debt. Dalgeofizika, a Russian State geological consultancy company, has completed anassessment of the exploration work carried out at Kuranakh to date and hasproduced an estimate of the Group's total reserve for the licence area under theRussian classification system of 35.45m tonnes of ore at C2 and a globalresource of 0.8m tonnes at P1 and 79.37m tonnes at P2. The reserve figure of35.45m tonnes suggests sufficient reserves for 16 years of production at thetarget extraction rate of 2.2mtpa. Aricom is continuing with its explorationprogramme, which, if successful, would increase the Group's reserves. Initial studies on an indicated presence of gold and zircon in the tailings fromthe beneficiation process suggest additional revenue flows might be achievable.It is not possible at this stage to confirm whether these indications arerepresentative of the Kuranakh Deposit as a whole and further testing hastherefore been commissioned. The proposed development of the Kuranakh deposit represents the first stage inAricom's plans to become a vertically-integrated producer of titanium dioxidefocused on the markets of China and Russia. The ilmenite concentrate from themining and beneficiation operations is intended to act as a feedstock for aproposed 70,000-80,000tpa sulphate-route titanium dioxide processing plant, forwhich a potential site has been identified at Tynda, also in the Amur Region.The construction of the TiO2 processing plant would represent the second stagein Aricom's development. The company is currently in discussions with a numberof companies with a view to obtaining the required TiO2 processing technologyand has already received one technical proposal for the provision of all therequired technology and the construction of the plant. Enquiries: Tom Swithenbank/ Sir Malcolm Field Aricom plc 020 7201 8939 Tom Randell/David Simonson Merlin 020 7653 6620 This information is provided by RNS The company news service from the London Stock Exchange