Peter Hambro Mining PLC
12 October 2006
Acquisition of 80% of OJSC Irgiredmet
Offer to be extended for remaining 20%
12th October, 2006
Peter Hambro Mining Plc ("PHM" or the "Group") announces that on 11th October
2006 it acquired an 80% equity holding in OJSC Irgiredmet ("Irgiredmet") for a
cash consideration of US$40m.
Irgiredmet is one of the best known Russian laboratory research and scientific
consulting companies and is based in Irkutsk. The Irgiredmet laboratories
provide a range of services in the testing, development and optimisation of
gold, precious metals and diamond projects. PHM intends to extend the offer to
the holders of the remaining 20% of Irgiredmet's equity on the same terms,
implying a total acquisition value of $50m and it is estimated that the
acquisition of the remaining 20% of Irgiredmet's equity will be completed in
early 2007. The acquisition will be financed from PHM's existing cash resources.
Established in 1871, Irgiredmet is located in the city of Irkutsk; which is the
major city and centre of scientific excellence in Eastern Siberia. Irkutsk is
well connected to the key industrial cities in Russia and to PHM's main
operating assets in the Amur region by air, main roads and the Trans-Siberian
railway. Irgiredmet serves gold explorers and producers in Russia and elsewhere
with mine planning and evaluation, infrastructure design, process and
metallurgical test-work, bulk sampling, project evaluation and feasibility
studies. With over 130 years of history, it has a wealth of information,
intellectual capital and expertise that gives it a leading position in the
Russian gold industry.
PHM considers that Irgiredmet will provide a number of key benefits to the
•Intellectual capital and experience: the company employs 285 staff,
including 33 doctors of science, with extensive experience in the field of
gold mining. The highly skilled workforce and the significant increase in
laboratory testing capacity are expected greatly to assist the Group as it
continues to make progress on its large portfolio of near-term and
longer-term development assets.
•Additional laboratory capacity: Irgiredmet's monthly analysis capacity is
approximately 20,000 tests by melting and atomic absorption; 9,000
multi-element analysis tests via atomic emission; and 3,000 multi-element
analysis tests using X-ray/fluorescent methodology.
•Optimization of PHM's existing mining operations and projects: with its
technological innovations and strong science-based culture, it is expected
that Irgiredmet will improve PHM's operating efficiency and technological
and operating capabilities.
•Project pipeline: The Group already has an extensive project pipeline and
Irgiredmet is expected to be able to provide the Group and its clients with
opportunities, from within its existing contracts and client-base, for
two-way collaboration and cooperation. Client confidentiality will be
respected at all times.
Peter Hambro, Executive Chairman of Peter Hambro Mining Plc, commented:
"It is a great step forward for Peter Hambro Mining to join forces with the
renowned team of scientists from such a highly respected institute. By bringing
Irgiredmet into the Peter Hambro Mining fold we greatly strengthen our technical
expertise and I very much look forward to us working together on our projects.
However our joint development plans respect the confidential nature of
Irgiredmet's work and the third-party work will, of course, retain the
discretion necessary for successful implementation.
"The gold rush in the Russian Federation has caused a manpower shortage,
particularly among senior, technically qualified managers, and the acquisition
of Irgiredmet helps us to cope with this. Significantly, improved access to
Irgiredmet's sampling facilities will enable us to speed up test work on the
materials coming from Malomir and Pioneer, as we seek to bring these near-term
assets into production as part of our rapid development plan."
Alya Samokhvalova Peter Hambro Mining Plc
Director of External Communications +44 (0) 207 201 8900
Tom Randell / Maria Suleymanova Merlin
+44 (0) 207 653 6620
Notes to Editors:
•Irgiredmet's full name is Open Joint Stock Company "Irkutskiy Institute
for Scientific Research of Precious and Rare Metals and Diamonds". As well
as being well connected to other regions in Russia by main roads and the
Trans-Siberian Railway, it is also served by Irkutsk International airport.
The site is easily accessible from PHM's main operating assets in the Amur
•During the Soviet era it functioned as the leading state research centre
for the gold mining industry in Russia and the former Soviet Union and took
an active part in the majority of Russian gold and diamond projects.
•The company was privatized in 1993, at which time 89.2% of the issued
share capital was owned by current and former employees.
•Irgiredmet provides a wide range of test-work, design and specialized
services from geology and mining to mineral processing and metallurgy. It
provides R&D expertise, testwork and process optimization for precious and
base metals and diamonds. The activities range from initial investigations
to process development and design, construction and commissioning of
industrial mines and plants. Moreover it offers a full range of facilities
for sample preparation and characterization, comminution, gravity,
flotation, physical separation, smelting, leaching, purification and metals
recovery and tails detoxification.
•Irgiredmet consists of ten specialized laboratories, a project design
division, pilot plant testing facilities, an analytical centre, a commercial
centre, a scientific and technical information division, a division of
patents and licensing, an advertising and marketing division and a secondary
metals processing division.
•Irgiredmet employs highly qualified staff with a wide range of skills,
including geologists, mining, design, metallurgical and chemical engineers.
Every year Irgiredmet executes about 150 contracts for its clients.
•In the twelve months to December 31, 2005 Irgiredmet's Russian audited
accounts showed sales of 278m roubles ($9.8m) and a profit before tax of
39.8m roubles ($1.4m) and at June 30, 2006 the company had net assets of
70.7m roubles ($2.6m). The audited accounts have been prepared on a
historical cost basis and thus do not reflect the value of some assets,
notably the large real estate which is let to third parties. A valuation of
the property by an independent property valuation surveyor, such as would be
required under IFRS Accounting Standards, gives an estimated value of $42m.
These real estate assets, which are a residue of the privatisation era in
Russia, are not considered as core to Irgiredmet's or the Group's business.
For further information on Irgiredmet see http://irgiredmet.ru/en/about.php. PHM
accepts no responsibility for the content of this website or for any reliance
placed on the information contained in it.
This information is provided by RNS
The company news service from the London Stock Exchange