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Aricom Plc CEO Jay Hambro Seeks $1 Billion for K&S and Garinskoye mines

By Amarendra Bhushan for CEOWORLD Magazine Updated:October 8, 2008 Become a writer!

Aricom Plc. estimated the maximum net external funding requirement for the K&S and Garinskoye mines at $1.0 billion and said a completed feasibility study and independent review over the project has proved its viability in a number of scenarios.

The project has a base case net present value of around $2.1 billion and an internal rate of return of about 21 percent.

The company said it can now move the financing process forward with confidence and progress discussions with banks, contractors and other partners. Aricom expects to hold about $254 million in balance cash at year-end and has estimated

project funding net of this amount. Shares in miner Aricom fell by more than a quarter after it announced the completion of feasibility studies at its K&S and Garinskoye iron ore projects in the Amur province of Russia.

Aricom said the studies showed a base case net present value of about $2.1bn and an estimated maximum external funding requirement of about $1bn.

“Aricom has succeeded in proving the viability of K&S and Garinskoye in a number of scenarios and has also had the analysis independently reviewed,” chief executive Jay Hambro said.

He continued: “The step forward from initial feasibility study to bankable feasibility study is often a time when value is eroded through detailed analysis and the application of current economic conditions.”

He said the company was considering ways of reducing development plans to cope with capital constraints.

However, he remained confident on the market Aricom operates in. “Despite the global financial turmoil, I believe the outlook for iron ore remains robust,”

‘In the short-term, further solutions for reducing development plans in line with available capital are being considered,’ chief executive Jay Hambro said. He added that the outlook for iron ore remains robust despite the global credit market crisis.

Jay Hambro Bio (Profile)

Chief Executive Officer

Jay Hambro joined Aricom in July 2006. Previously Jay was Director of Business Development at Peter Hambro Mining plc during Peter Hambro Mining plc’s rapid evolution from junior exploration company to the second largest, and one of the lowest cost, gold producers in Russia. Prior to joining Peter Hambro Mining, Jay was a manager of the Metals & Mining corporate finance team within HSBC Investment Bank.

Jay began his career in the resource finance team at NM Rothschild & Sons Ltd following a BSc in Business Management. Jay is a non-executive director of Peter Hambro Mining plc.