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Peter Hambro Mining (POG)

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Friday 06 February, 2009

Peter Hambro Mining

Recommended Merger of PHM and

RNS Number : 9070M
Peter Hambro Mining PLC
06 February 2009
 



6 February 2009


NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN INTO OR FROM THE UNITED STATES OR ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF ANY SUCH JURISDICTION


Recommended Merger of Peter Hambro Mining and Aricom


Summary


  • Following yesterday's announcements of a possible Merger of Peter Hambro Mining and Aricom and the successful Placing of 16 million Peter Hambro Mining shares at a price of 450 pence raising approximately US$105 million (before expenses) and today's announcement that Peter Hambro Mining has agreed to purchase a total of US$87 million nominal of the Gold Exchangeable Bonds, the Independent Board Committees are pleased to announce that they have reached agreement on the terms of a recommended Merger of the two companies by which all of the issued share capital of Aricom will be acquired by Peter Hambro Mining.
  • The Merger will create a mining industry leader in the Far East of Russia with operations in both gold and iron ore with a pro forma combined market capitalisation (including the Placing Shares) of approximately US$1.15 billion.
  • Following the Merger, the Enlarged Group will be well funded, with a pro forma unaudited cash balance of approximately US$302 million (with US$25 million attributable to Peter Hambro Mining, US$257 million attributable to Aricom and US$15 million attributable to the Placing Proceeds (after deduction of equity placing fees and the consideration to be paid for the acquisition of 48.3 per cent. of Peter Hambro Mining's outstanding Gold Exchangeable Bonds)) as at 31 December 2008, and pro forma unaudited net cash of US$5 million as at such date.
  • The Merger will enable Peter Hambro Mining to implement its existing strategy of pursuing near term growth of gold production while allowing for the development of Aricom's large iron ore assets once project finance and iron ore markets recover.  Peter Hambro Mining will continue to seek to create value for shareholders and, in line with its recent practice, to provide a return to shareholders as appropriate in the form of dividends.
  • Under the terms of the Merger:
  • Aricom Shareholders will receive one fully paid New Peter Hambro Mining Share in exchange for 16 fully paid Aricom Shares; and

  • each Aricom Share is valued at 36.6 pence (using the closing price per Peter Hambro Mining Share on 4 February 2009 of 585 pence); and

  • each Aricom share is valued at 24.9 pence (using the price per Peter Hambro Mining Share on 8 January 2009 (being the last day prior to the start of the offer period) of 398 pence.

  • Following completion of the Merger and the Placing:
  • existing Peter Hambro Mining Shareholders will hold 47.4 per cent. of the Enlarged Group calculated on an undiluted basis;

  • Aricom Shareholders will hold 43.2 per cent. of the Enlarged Group calculated on an undiluted basis;

  • the Placees will hold 9.4 per cent. of the Enlarged Group calculated on an undiluted basis;

  • subject to satisfying eligibility criteria, Peter Hambro Mining intends to make an application to obtain a primary listing on the Official List as soon as possible; and

  • the Enlarged Group will be led by a team comprising Peter Hambro as Executive Chairman, Pavel Maslovskiy as CEO and Brian Egan as CFO and the non-executive directors are expected to be Sir Rudolph Agnew, Sir Malcolm Field, Lord Guthrie, Peter Hill-Wood and Sir Roderic Lyne.

  • Peter Hambro Mining is the second largest producer of gold in Russia, with attributable gold production in 2008 of c. 393,000 oz and is one of the lowest cost producers of gold worldwide.  Aricom engages in the mining and development of iron ore deposits and the production and trading of iron ore in the Far East of Russia to serve the Russian and Chinese  markets.
  • Peter Hambro Mining has received irrevocable undertakings from each of the Aricom Directors to vote or procure the vote in favour of the resolutions to be proposed at the Scheme Court Meeting and the Aricom EGM in respect of their own beneficial holdings, representing approximately 9.38 per cent. of the existing issued share capital of Aricom. The undertakings given by the Aricom Directors cease to be binding if the Scheme is withdrawn, unless Peter Hambro Mining exercises its right to announce a takeover offer of the entire issued share capital of Aricom, in which case it shall cease to have effect on the withdrawal or lapsing of the takeover offer. 
  • Aricom has received irrevocable undertakings from Pavel Maslovskiy, Peter Hambro, Sir Rudolph Agnew and Peter Hill-Wood to vote or procure the vote in favour of the resolutions to be proposed at the Peter Hambro Mining EGM in respect of their own beneficial holdings (with the exception of any beneficial holdings which are held by Goldman Sachs as nominee pursuant to a stock lending agreement).
  • Because a number of individuals (including Peter Hambro and Pavel Maslovskiy) are directors and/or shareholders of both companies, Peter Hambro Mining and Aricom have each constituted committees of independent directors for the purposes of the Merger. 
  • It is intended that the Aricom Shares will be acquired by way of a Court sanctioned scheme of arrangement under Part 26 of the Companies Act.  
  • The Merger is conditional upon, among other things, certain Russian regulatory conditions being fulfilled to the reasonable satisfaction of Peter Hambro Mining and Aricom, the passing of resolutions by Peter Hambro Mining Shareholders and Aricom Shareholders and the sanction of the Court.
  • Peter Hambro Mining and Aricom intend to post the Scheme Document as soon as practicable after the publication of the Aricom 2008 preliminary results and completion of Peter Hambro Mining's annual production forecast update, both of which are expected to be published by early to mid-March.
  • Sir Rudolph Agnew, Senior Independent Director of Peter Hambro Mining, stated:

    "Combining Peter Hambro Mining's near term gold production assets with Aricom's significant available cash resources and iron ore assets will create a mining industry leader in the Far East of Russia. We believe it offers the opportunity for a transaction where the whole is substantially greater than the sum of its parts."

  • Sir Malcolm Field, Senior Independent Director of Aricom, stated; 

    "I am confident this merger will deliver significant benefits from combining the current and prospective gold interests of Peter Hambro Mining with the longer term development of Aricom's valuable iron ore assets. It will enhance the market position of the group creating scale and a platform for growth leading to significant increase in value for shareholders of both companies."


The summary forms part of and should be read in conjunction with this announcement and Appendices.  Appendix I of the announcement sets out the conditions and principal further terms of the Offer. Appendix II of the announcement contains information on sources and bases used in the announcement.  Appendix IV of the announcement sets out the holdings of certain Peter Hambro Mining Directors in Peter Hambro Mining Shares before and after the Placing, and the Placing Shares which they have agreed to subscribe.  .Certain terms used in the announcement are defined in Appendix V of the announcement.


Investor Contacts: Peter Hambro Mining


Alya Samokhvalova

+44 (0) 20 7201 8900


Investor Contacts: Aricom


Charlie Gordon

+44 (0) 20 7201 8939


JPMorgan Cazenove, financial adviser, nominated adviser, corporate broker, sole bookrunner, co-lead manager and placing agent to Peter Hambro Mining


Ian Hannam

+44 (0)20 7588 2828

Patrick Magee

+44 (0)20 7588 2828

Joe Seifert

+44 (0) 20 7588 2828


Liberum Capital, financial adviser and Rule 3 adviser to Peter Hambro Mining


Chris Bowman

+44 (0) 20 3100 2228

Clayton Bush

+44 (0) 20 3100 2227

Tom Fyson

+44 (0) 20 3100 2230


Morgan Stanley & Co. Limited, financial adviser and Rule 3 adviser to Aricom


Peter Bacchus

+44 20 7425 8000

Richard Allan

+44 20 7425 8000

Laurence Hopkins

+44 20 7425 8000


Canaccord Adams, financial adviser and corporate broker to Aricom


Robert Finlay

+44 20 7050 6500

Mike Jones

+44 20 7050 6500

Guy Blakeney

+44 20 7050 6500


Merlin, media contacts for Peter Hambro Mining


David Simonson and Tom Randell

+44 (0) 20 7653 6620


Abchurch, media contacts for Aricom


Charlie Jack and George Parker

+44 (0) 20 7398 7700


JPMorgan Cazenove and Liberum Capital, which are authorised and regulated in the United Kingdom by the Financial Services Authority, are acting exclusively for Peter Hambro Mining and no-one else in connection with the possible Merger and will not be responsible to anyone other than Peter Hambro Mining for providing the protections afforded to clients of JPMorgan Cazenove or Liberum Capital or for providing advice in relation to the Merger.


Morgan Stanley is acting exclusively for Aricom and no-one else in connection with the matters described in this announcement and will not be responsible to anyone other than Aricom for providing the protections afforded to clients of Morgan Stanley nor for providing advice in relation to the possible Merger or any other matter described in the announcement.


Canaccord Adams is acting exclusively for Aricom and no-one else in connection with the Merger described in this announcement and will not be responsible to anyone other than Aricom for providing the protections afforded to clients of Canaccord Adams nor for providing advice in relation to the possible Merger or any matter related to the possible Merger.


Canaccord Adams is acting exclusively for Peter Hambro Mining and no-one else in connection with the Placing referred to in this announcement and described fully in the Placing announcement and will not be responsible to anyone other than Peter Hambro Mining for providing the protections afforded to clients of Canaccord Adams nor for providing advice in relation to the Placing or any matter relating to the Placing.


The announcement of which the above summary forms part is not intended to, and does not, constitute or form any part of an offer to sell or an invitation to purchase or subscribe for any securities or the solicitation of an offer to buy or subscribe for any securities pursuant to the Offer or otherwise nor shall there be any sale, issuance or transfer of the securities referred to in the announcement in the United States or any jurisdiction in contravention of applicable law. The Offer will be made solely on the basis of the Scheme Document, which will contain the full terms and conditions of the Offer. The Scheme Document will be posted to those shareholders able to receive it in due course. Any response in relation to the Offer should be made only on the basis of the information in the Scheme Document Aricom Shareholders receiving the formal documentation in relation to the Merger are advised to read it carefully, once it has been dispatched as it will contain important information.


The availability of the Offer to Aricom Shareholders who are not resident in and citizens of the United Kingdom may be affected by the laws of the relevant jurisdictions in which they are located or of which they are citizens. Such persons should inform themselves of, and observe, any applicable legal or regulatory requirements of their jurisdictions. Further details in relation to overseas shareholders will be contained in the Scheme Document.


The announcement has been prepared in accordance with English law and the Code and information disclosed may not be the same as that which would have been prepared in accordance with the laws of jurisdictions outside England. The Offer will be subject to the applicable rules and regulations of the London Stock Exchange and the Code.  The Offer relates to the shares in an English company and is proposed to be made by means of a scheme of arrangement provided for under company law of the United Kingdom. Aricom is not subject to the Securities Exchange Act of 1934, as amended (the "Exchange Act").  A transaction effected by means of a scheme of arrangement is not subject to the proxy and tender offer rules under the Exchange Act. Accordingly, the Offer is subject to the disclosure requirements and practices applicable in the UK to schemes of arrangement, which differ from the disclosure requirements of the US proxy and tender offer rules.  Financial information included in the relevant documentation will have been prepared in accordance with accounting standards applicable in the UK that may not be comparable to the financial statements of US companies.  If Peter Hambro Mining exercises its right to implement the Offer by way of a takeover offer, the Offer will be made in compliance with applicable US laws and regulations, including applicable provisions of the tender offer rules under the Exchange Act.


Aricom is organised under the laws of England and Wales. All of the directors of Aricom are residents of countries other than the United States, and most of the assets of Aricom are located outside of the United StatesPeter Hambro Mining is organised under the laws of England and Wales. You may not be able to sue Aricom or Peter Hambro Mining in a non-US court for violations of US securities laws.


The New Peter Hambro Mining Shares have not been, and will not be, registered under the US Securities Act of 1933, as amended (the "Securities Act"), or under the securities laws of any state, district, province or other jurisdiction of the United States or any other Restricted Jurisdiction. No regulatory clearances in respect of the New Peter Hambro Mining Shares have been, or will be, applied for in any state, province, territory or jurisdiction other than the United Kingdom. Accordingly, unless an exemption under relevant securities laws is applicable, the New Peter Hambro Mining Shares are not being, and may not be, offered, sold, resold, delivered, distributed or otherwise transferred, directly or indirectly, in or into the United States or any other Restricted Jurisdiction or to or for the account or benefit of any resident of the United States or any other Restricted Jurisdiction. The New Peter Hambro Mining Shares are being offered in reliance upon the exemption from the registration requirements of the Securities Act provided by Section 3(a)(10) thereof and upon issuance thereof will generally be capable of being resold without restriction under the Securities Act by former Aricom Shareholders who are not affiliates of Peter Hambro Mining and have not been affiliates of Peter Hambro Mining within 90 days prior to the issuance of New Peter Hambro Mining Shares under the Scheme. 


The Placing Shares have not been, and will not be, registered under the Securities Act or under the securities laws of any state of the United States. The Placing Shares will only be offered pursuant to an exemption from, or in transactions not subject to, the registration requirements of the Securities Act. Neither the SEC nor any securities commission of any state of the United States has approved or disapproved of the Placing or passed upon the merits or fairness of the Placing. Any representation to the contrary is a criminal offence in the United States.


Cautionary and Forward-Looking Statements


This announcement contains a number of "forward-looking statements" relating to Peter Hambro Mining and Aricom and the business sectors in which they operate.  Generally, the words "will", "may", "should", "continue", "believes", "expects", "intends", "anticipates", "forecast", "plan" and "project" or similar expressions identify forward-looking statements. Such statements reflect the relevant company's current views with respect to future events and are subject to risks, assumptions and uncertainties that could cause the actual results to differ materially from those expressed or implied in the forward-looking statements. Many of these risks, assumptions and uncertainties relate to factors that are beyond the companies' abilities to control or estimate precisely, such as future market conditions, changes in general economic and business conditions, introduction of competing products and services, lack of acceptance of new products or services and the behaviour of other market participants.  Although Peter Hambro Mining believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct.  Aricom Shareholders should not, therefore, place undue reliance on these forward-looking statements, which speak only as of the date of this announcement.


Dealing disclosure requirements


Under the provisions of Rule 8.3 of the Code, if any person is, or becomes, "interested" (directly or indirectly) in, one per cent or more of any class of "relevant securities" of Aricom or Peter Hambro Mining, all "dealings" in any "relevant securities" of that company (including by means of an option in respect of, or a derivative referenced to, any such "relevant securities") must be publicly disclosed by not later than 3.30pm (London time) on the London business day following the date of the relevant transaction. This requirement will continue until the date on which the Offer becomes, or is declared, unconditional as to acceptances or lapses or is otherwise withdrawn or on which the "offer period" otherwise ends. If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire an "interest" in "relevant securities" of Aricom or Peter Hambro Mining, they will be deemed to be a single person for the purpose of Rule 8.3 of the Code.


Under the provisions of Rule 8.1 of the Code, all "dealings" in "relevant securities" of Aricom or Peter Hambro Mining by Peter Hambro Mining or Aricom, or by any of their respective "associates" must also be disclosed by no later than 12.00 noon (London time) on the London business day following the date of the relevant transaction.


A disclosure table, giving details of the companies in whose "relevant securities" "dealings" should be disclosed, and the number of such securities in issue, can be found on the Takeover Panel's website at www.thetakeoverpanel.org.uk.


"Interests in securities" arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in the price of securities. In particular, a person will be treated as having an "interest" by virtue of the ownership or control of securities, or by virtue of any option in respect of, or derivative referenced to, securities.


Terms in quotation marks are defined in the Code, which can also be found on the Panel's website. If you are in any doubt as to whether or not you are required to disclose a dealing under Rule 8, please consult the Panel's website at www.thetakeoverpanel.org.uk or contact the Panel on telephone number +44(0)20 7638 0129; fax number +44(0)20 7236 7013.


The Peter Hambro Mining Directors accept responsibility for all the information contained in this Announcement except for that information for which the Aricom Directors accept responsibility. To the best of the knowledge and belief of the Peter Hambro Mining Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this document for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information.


The Aricom Directors accept responsibility for all information in this Announcement relating to Aricom, the Aricom Group and its directors. To the best of the knowledge and belief of the Aricom Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this document for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information.

  NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN INTO OR FROM THE UNITED STATES OR ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF ANY SUCH JURISDICTION



6 February 2009


RECOMMENDED MERGER OF PETER HAMBRO MINING AND ARICOM

 

1. Introduction


Following yesterday's announcements of a possible Merger of Peter Hambro Mining and Aricom and the successful Placing of 16 million Peter Hambro Mining shares at a price of 450 pence raising approximately US$105 million (before expenses) and today's announcement that Peter Hambro Mining has agreed to purchase a total of US$87 million nominal of the Gold Exchangeable Bonds, the Independent Board Committees are pleased to announce that they have reached agreement on the terms of a recommended Merger of the two companies by which all of the issued share capital of Aricom will be acquired by Peter Hambro Mining.


  • The Merger will create a mining industry leader in the Far East of Russia with operations in both gold and iron ore with a pro forma combined market capitalisation (including the Placing Shares) of approximately US$1.15 billion.

  • Following the Merger, the Enlarged Group will be well funded, with a pro forma unaudited cash balance of approximately US$302 million (with US$25 million attributable to Peter Hambro Mining, US$257 million attributable to Aricom and US$15 million attributable to the Placing Proceeds (after deduction of Placing transaction costs and the consideration to be paid for the acquisition of 48.3 per cent. of  Peter Hambro Mining's outstanding Gold Exchangeable Bonds)) as at 31 December 2008, and pro forma unaudited net cash of US$5 million as at such date.

  • The Merger will enable Peter Hambro Mining to implement its existing strategy of pursuing near term growth of gold production while allowing for the development of Aricom's large iron ore assets once project finance and iron ore markets recover.  Peter Hambro Mining will continue to seek to create value for shareholders and, in line with its recent practice, to provide a return to shareholders as appropriate in the form of dividends.


Following completion of the Merger and the Placing:


  • existing Peter Hambro Mining Shareholders will hold 47.4 per cent. of the Enlarged Group calculated on an undiluted basis;

  • Aricom Shareholders will hold 43.2 per cent. of the Enlarged Group calculated on an undiluted basis;

     

  • the Placees will hold 9.4per cent. of the Enlarged Group calculated on an undiluted basis;

     

  • subject to satisfying eligibility criteria, Peter Hambro Mining intends to make an application to obtain a primary listing on the Official List as soon as possible; and

     

  • the Enlarged Group will be led by a team comprising Peter Hambro as Executive Chairman, Pavel Maslovskiy as CEO and Brian Egan as CFO and the non-executive directors are expected to be Sir Rudolph Agnew, Sir Malcolm Field, Lord Guthrie, Peter Hill-Wood and Sir Roderic Lyne.

2. Terms of the Merger


The Merger provides for the acquisition of the Aricom Shares to be effected by way of a Court sanctioned scheme of arrangement under Part 26 of the Companies Act involving a capital reduction of Aricom under section 135 of the Companies Act 1985.


The purpose of the Scheme is to enable Peter Hambro Mining to acquire the whole of the issued and to be issued ordinary share capital of Aricom. Under the terms of the Scheme, if the Scheme becomes effective, all Aricom Shares will be cancelled and Aricom Shareholders will receive:


in exchange for 16 fully paid Aricom Shares
one fully paid New Peter Hambro Mining Share


Peter Hambro Mining Shares to be issued to Aricom Shareholders under the Merger will be eligible to receive any dividend declared by Peter Hambro Mining at any time after the date of their issue.


Fractions of New Peter Hambro Mining Shares will not be allotted to Aricom Shareholders.  Entitlements to New Peter Hambro Mining Shares will be rounded down to the nearest whole Peter Hambro Mining Share.


The Merger values each Aricom Share at:


  • 36.6 pence and Aricom's existing ordinary share capital at approximately US$629 million (in each case using the closing price per Peter Hambro Mining Share on 4 February 2009 of 585 pence); and

  • 24.9 pence and Aricom's existing ordinary share capital at approximately US$428 million (in each case using the price per Peter Hambro Mining Share on 8 January 2009 (being the last day prior to the start of the offer period) of 398 pence.


The market capitalisation of Aricom on 5 February 2009 (on the basis of the closing price on that day of 26.0 pence) was approximately US$447 million.


The Merger will be subject to the conditions and further terms set out in the paragraphs contained in Appendix 1 to this announcement and to be set out in the Scheme Document.

 

3. Independent Board Committees


Because a number of individuals (including Peter Hambro and Pavel Maslovskiy) are directors and/or shareholders of both companies, Peter Hambro Mining and Aricom have each constituted committees of independent directors for the purposes of the Merger. 


The Independent Peter Hambro Mining Board Committee consists of Sir Rudolph Agnew (as Chairman), Andrey Maruta, Alya SamokhvalovaPeter Hill-Wood and Lord Guthrie.


The Independent Aricom Board Committee consists of Sir Malcolm Field (as Chairman), Brian Egan, Martin Smith, Sir Roderic Lyne and Tony Redman.

 

4. Background to and reasons for the Merger


Independent Peter Hambro Mining Board Committee 


The Independent Peter Hambro Mining Board Committee believes that the Merger would result in the Enlarged Group being in a stronger strategic and financial position than either of the current Peter Hambro Mining and Aricom are as separate entities.


The Independent Peter Hambro Mining Board Committee believes that the Enlarged Group's cash (including the Placing Proceeds) could be used to eliminate or reduce the exposure to certain of Peter Hambro Mining's short-term obligations (in particular, by effecting further purchases of the Gold Exchangeable Bonds).


The Independent Peter Hambro Mining Board Committee believes that the Merger would deliver significant benefits as a result of combining the currently producing and prospective gold interests of Peter Hambro Mining with the iron ore assets and significant available cash resources of Aricom. Benefits include:


  • streamlining operations and infrastructure shared by Peter Hambro Mining and Aricom;

  • administrative cost savings;

     

  • ensuring the Enlarged Group is well funded; and

     

  • increased near term cash flow from Peter Hambro Mining's operating businesses generated by using Aricom's significant available cash resources to meet Peter Hambro Mining's near term plans and in due course to support Aricom's capital investment programme and finance the Enlarged Group's further growth.


The Independent Peter Hambro Mining Board Committee believes achieving these benefits would be facilitated by the shared Anglo-Russian culture, management and directors, shareholders and head offices of both companies.


Independent Aricom Board Committee 

The Independent Aricom Board Committee considers the Merger to represent an attractive opportunity for Aricom Shareholders.

The Independent Aricom Board Committee has examined Aricom's long-term development plans, funding requirements and the current state of project finance and capital markets.  The Independent Aricom Board Committee believes Aricom's project pipeline is attractive. However, given current market conditions it is currently expected to take significant investment over several years in order to generate returns on these projects.  Against this background, the Merger allows Aricom Shareholders to maintain an interest in Aricom's assets as well as gaining exposure to Peter Hambro's attractive portfolio of producing assets and their associated near term earnings and cash flow.

The Merger will allow Aricom Shareholders to benefit from:

  • enhanced market position, scale and growth platform and operational and strategic synergies through shared infrastructure of closely located operations;

  • cashflow from the Enlarged Group's portfolio of producing assets which would help fund the investment required for Aricom's long-term development plans; and

  • the potential for a significant increase in value of both Peter Hambro Mining and Aricom.

5. Capital expenditure


The Enlarged Group, with its increased cash resources, will have greater flexibility in terms of the timing and amount of its capital expenditure. The capital expenditure plans for the Enlarged Group will be a matter for the Enlarged Group to finalise upon completion of the Merger. However, Peter Hambro Mining currently expects to:


  • continue the development of its Pioneer and Malomir assets as highlighted in the Peter Hambro Mining trading update dated 26 January 2009;

  • announce its annual update on production plans in the first quarter of 2009;

  • complete the construction of Kuranakh beneficiation plant and to commence production and sales of concentrate during 2009; and

  • incur expenditure on Aricom's iron ore projects at a level that allows for a later development of the K&S and Garinskoye assets while observing commercial and legal requirements for the preservation of the licences.


The rationale for this strategy is to preserve the inherent value in, and the ability to accelerate development of, these projects once the project finance and iron ore markets recover.

 

6. Revised K&S development plan


Due to the current global economic crisis and the resulting significant downturn in the availability of debt financing, Aricom has sought to optimise the construction and development phasing of the K&S and Garinskoye projects to bring smaller, less capital intensive, mining and processing operations into production at the earliest possible time whilst maintaining attractive returns. 


An updated analysis of the K&S operation has been developed based upon mining ore at an initial capacity of 3.5mtpa (increasing in year seven to 10mtpa) to be delivered to a processing plant producing 1.1mtpa of saleable iron ore concentrate at a grade of 65.8% Fe. The analysis also assumes that two years after the start of the processing plant, a DRI plant, employing the Kobe Steel ITmk3 technology, would process 0.75mtpa of iron ore concentrate to produce 0.5mtpa of DRI nuggets.  


The K&S analysis shows that significant project optimisation can be achieved by reducing the initial capacity of the processing and DRI plants, with the modular nature of both allowing expansion at a later date.  This should achieve an immediate capital expenditure reduction of approximately 70 per cent. in the cost of the processing plant and nearly 80 per cent. in the DRI plant versus the original plan. Further reductions can be achieved in capital expenditure for site infrastructure with the reduced size of the operation allowing a very significant saving of approximately US$70.0 million to be made to the original plan of building additional railway infrastructure near to the pit. The total infrastructure saving, which also includes reductions in the size of the accommodation camp and the tailings facilities, represents an approximately 50 per cent. reduction versus the original plan.


Any option to reduce the size of the K&S operation would also reduce capital expenditure required at the mining site itself. The sequential mining of the project's three pits (Kimkanskoye Central, Kimkanskoye West and Sutarskoye) makes it possible to reduce initial capital investments in the mining equipment such as drill rigs, excavators, bulldozers and mine trucks. The total mining reduction is approximately 60 per cent. versus the original plan. Overall capital expenditure for the reduced K&S project to progress to the start-up stage is estimated to be approximately US$420.0 million, US$116.0 million less than envisaged under the original plan. 


This reduced capital expenditure gives the project significant option value. Financial and iron ore markets will continue to be monitored by the Enlarged Group for evidence that the projected economic requirements of the study are in place.  In the interim, the work programme at K&S is under constant review to minimise cash outflow whilst keeping some positive momentum on project development.

 

7. Peter Hambro Mining Shareholder Approval and Recommendation of the Independent Peter Hambro Mining Board Committee


The Independent Peter Hambro Mining Board Committee is receiving financial advice on the Merger from JPMorgan Cazenove.  JPMorgan Cazenove has an existing relationship with Aricom and, as a consequence, is a connected party to Aricom. Liberum Capital is therefore providing independent advice to the Independent Peter Hambro Mining Board Committee on the Merger for the purposes of Rule 3 of the Code.


The Independent Peter Hambro Mining Board Committee, which has been so advised by Liberum Capital and JPMorgan Cazenove, considers the terms of the Merger to be fair and reasonable. In providing financial advice to the Independent Peter Hambro Mining Board Committee on the Merger, Liberum Capital and JPMorgan Cazenove have taken into account the commercial assessments of the Independent Peter Hambro Mining Board Committee.


JPMorgan Cazenove is not providing financial advice to Aricom on the Merger.


The Merger is conditional on the approval by Peter Hambro Mining Shareholders of the Peter Hambro Mining Resolutions at an extraordinary general meeting of Peter Hambro Mining. The Independent Peter Hambro Mining Board Committee intends unanimously to recommend that Peter Hambro Mining Shareholders vote in favour of the Peter Hambro Mining Resolutions, as they intend to do in respect of their own beneficial holdings of 27,500 Peter Hambro Mining Shares (representing as at the date of this announcement, in aggregate, approximately 0.034 per cent. of the existing issued ordinary share capital of Peter Hambro Mining).

 

8. Aricom Shareholder approval and recommendation of the Independent Aricom Board Committee


The Independent Aricom Board Committee is receiving financial advice on the Offer from Morgan Stanley and Canaccord Adams. Canaccord Adams has an existing broking relationship with Peter Hambro Mining and, as a consequence, is a connected party to Peter Hambro Mining. Morgan Stanley is therefore providing independent advice to the Independent Aricom Board Committee for the purposes of Rule 3 of the Code.


The Independent Aricom Board Committeewhich has been so advised by Morgan Stanley and Canaccord Adams, considers the terms of the Offer to be fair and reasonable. In providing advice to the Independent Aricom Board Committee, Morgan Stanley and Canaccord Adams have taken into account the commercial assessments of the Independent Aricom Board Committee.


The Independent Aricom Directors intend unanimously to recommend that Aricom Shareholders vote in favour of the Scheme at the Scheme Court Meeting and the Aricom EGM, as they have irrevocably undertaken to do themselves in respect of all their own beneficial holdings of 1,338,622 Aricom Shares (representing as at the date of this announcement, in aggregate, approximately 0.11 per cent. of the existing issued share capital of Aricom).


Aricom Shareholders considering voting in favour of the Scheme are referred to the investment considerations which will be set out in the Scheme Document.  If Aricom Shareholders are in any doubt as to the action they should take, they should seek their own financial advice from an independent financial adviser.

 

9. Information on Peter Hambro Mining


Peter Hambro Mining is focused on the acquisition, exploration and development of gold deposits and the production of gold in Russia Peter Hambro Mining's principal operations are located in the Amur Region in the Far East of Russia, where it has operated since 1994. Peter Hambro Mining is also active (itself or through joint ventures) in other areas of Russia including Yamal, Buryatia, Magadan, Chita and Irkutsk Peter Hambro Mining is the second largest producer of gold in Russia (by production volume), with attributable gold production in 2008 of c. 393,000 oz and is one of the lowest cost producers of gold worldwide. Peter Hambro Mining's Pokrovskiy Mine has one of the lowest GIS total cash costs and GIS total production costs in Russia.


Peter Hambro Mining's primary operations are its Pokrovskiy and Pioneer producing mines, Malomir (a development project), and its exploration projects at the Pokrovskiy Satellite Deposits and Albyn deposits, all of which are in the Amur Region, and the Novogodnee Monto and Petropavlovskoye deposits in Yamal.


The Peter Hambro Mining Group includes various in-house services companies and contractors that currently meet the majority of its geological, exploration and construction needs and also provide some services under contracts to third parties.


For the 12 month period to 31 December 2007, the Peter Hambro Mining Group had revenue of US$226.4 million (2006:US$157.8 million) and operating profit of US$67.5 million (2006: US$50.7 million) representing an operating margin of 29.8 per cent. (2006: 32.2 per cent.).


Peter Hambro Mining's interim results for the period to 30 June 2008 were announced on 22 September 2008. These showed unaudited revenue of US$146.4 million (period to 30 June 2007: US$93.1 million) and operating profit of US$32.0 million (period to 30 June 2007: US$36.3 million) representing an operating margin of 21.9 per cent. (period to 30 June 2007: 39.0 per cent.).


Peter Hambro Mining is headquartered in London and its shares are traded on AIM.

 

10. Information on Aricom


Aricom engages in the mining development of iron ore deposits and the production and trading of iron ore in the Far East of Russia to serve the Russian and Chinese markets Aricom was formed in late 2003 in order to develop the Kuranakh ilmenite and titanomagnetite deposit 


Aricom owns seven licences in the Far East of Russia and China: the Kuranakh (100 per cent. interest), Bolshoi Seym (49 per cent. interest), Garinskoye (99.6 per cent. interest) and Garinskoye Flanks (100 per cent. interest) iron ore and ilmenite deposits in Amur, the K&S (100 per cent. interest) and Kostengingskoye iron ore deposits (100 per cent. interest) in the Evreyskaya Avtonomnaya Oblast (EAO) and the Titanium Sponge Plant joint venture (65 per cent. interest) in North East China. 


In October 2008, Aricom completed and published the results of its combined K&S and Garinskoye feasibility study, which envisaged both K&S and Garinskoye both producing at the rate of 10mtpa and delivering their ore to feed a single optimised processing plant to be located at K&S. Also included in the feasibility study were plans to commission a direct reduced iron facility at the K&S project site utilising iron ore concentrate feed from the processing plant to produce iron nuggets.  Aricom has sought to optimise the construction and development phasing of the K&S and Garinskoye projects to bring smaller, less capital intensive, mining and processing operations into production at the earliest possible time whilst maintaining attractive returns.


For the 12 month period to 31 December 2007, Aricom had sales of US$4.9 million (2006: nil) and operating losses of US$22.7 million (2006: US$7.5 million).


Aricom's interim results for the period to 30 June 2008 were announced on 6 August 2008.  These showed revenues of US$4.2 million (2007: nil) and operating losses of US$14.6 million (2007: US$6.0 million). Losses for the six month period were US$2.5 million (2007: US$5.3 million).


Due to the current world economic crisis, as with many other mining companies, the Board of Aricom is reviewing the Company's portfolio of assets and will provide for impairment where it is considered prudent to do so. Details of any impairment provision will be reported in the Aricom Group's full financial results expected on or around 25 February 2009.


Aricom is headquartered in London and its shares have been admitted to the Official List.

 

11. Board of Directors and Employees


The Enlarged Group will be led by a team comprising Peter Hambro as Executive Chairman, Pavel Maslovskiy as CEO and Brian Egan as CFO and the non-executive directors are expected to be Sir Rudolph Agnew, Sir Malcolm Field, Lord Guthrie, Peter Hill-Wood and Sir Roderic Lyne.  The terms of the service or consultancy agreements for the proposed new directors of Peter Hambro Mining are yet to be determined but will be subject to approval by the remuneration committee of the Peter Hambro Mining Board.


Peter Hambro Mining and Aricom attach great importance to retaining the skills and expertise of their management and employees. The Independent Board Committees of Peter Hambro Mining and Aricom believe that, although the combination of similar functions may lead to some operating restructuring, the increased size and strength of the Enlarged Group will offer attractive career prospects for its employees.


Peter Hambro Mining intends to safeguard fully the existing employment rights of employees of both Peter Hambro Mining and Aricom.

 

12. Aricom Warrants, Aricom IFC Options 


The terms of the Merger will extend to holders of Aricom Shares issued or transferred prior to the Scheme Effective Date pursuant to the exercise of options granted under the Aricom Share Option Scheme.  In addition Peter Hambro Mining will in due course make appropriate proposals to the holders of Aricom Warrants, Aricom IFC Options and Aricom employee share options. The incentive and remuneration structure for employees will be reviewed by the board of the Enlarged Group. 

 

13. Implementation Agreement 


Peter Hambro Mining and Aricom have entered into the Implementation Agreement, which contains certain obligations in relation to the implementation of the Scheme and the conduct of Aricom's operations prior to the Scheme Effective Date or termination of such agreement.


Under the Implementation Agreement, Aricom has agreed with Peter Hambro Mining an inducement fee of approximately £3.7 million, being an amount equal to one per cent. of the value of the Offer calculated by reference to the price to be received per Aricom Share multiplied by the fully diluted equity share capital of Aricom at the time of the announcement, but taking into account only those options that are "in the money" (and otherwise as such term is understood by the Panel).


The inducement fee shall be payable by Aricom if, in summary:

 
(a)            the Offer lapses or is withdrawn or (with the consent of the Panel) is not made and before that time the unanimous and unqualified recommendation by the Independent Aricom Directors to Aricom Shareholders to vote in favour of the Scheme and the Aricom EGM Resolutions at or prior to the Scheme Court Meeting or the Aricom EGM (as appropriate) or, as the case may be, the Takeover Offer, is not provided in the Scheme Document or any offer document in relation to a Takeover Offer or the unanimous and unqualified recommendation by the Independent Aricom Directors is withdrawn, qualified or adversely amended at any time following the release of this announcement;
(b)            the Offer lapses or is withdrawn or (with the consent of the Panel) is not made and before that time a competing proposal by a third party which is not acting in concert with Peter Hambro Mining is announced (whether or not on a pre-conditional basis and whether pursuant to Rule 2.4 or Rule 2.5 of the Code or otherwise) and:
(i)       such competing proposal becomes effective or is declared wholly unconditional or is otherwise completed; or
(ii)      the Independent Aricom Directors or all the directors of Aricom (as the case may be) recommend or announce their intention to recommend that Aricom Shareholders agree, vote in favour of, or accept such competing proposal;
(c)            Aricom enters into an agreement or arrangement which would constitute a frustrating action under Rule 21 of the Code, if such agreements or arrangements cause the Offer to lapse or be withdrawn;
(d)            at any time after approval of the Scheme by Aricom Shareholders at the Court Meeting but before the delivery of the court orders to effect the Scheme and/or the Scheme Capital Reduction to the Registrar, the Aricom Independent Directors, whether or not in exercise of their fiduciary duties, decide not to proceed with the Scheme;
(e)            without the consent of Peter Hambro Mining, Aricom withdraws the Scheme prior to the Meetings or takes steps to defer (or adjourn) the holding of the Scheme Court Meeting or the Aricom EGM or the court hearings to approve the Scheme and the Scheme Capital Reduction to a date later than the date falling six months from the date of this announcement or such other date as may be agreed between the parties (subject to the consent of the Panel and the sanction of the Court). 

The Implementation Agreement can be terminated in certain circumstances, including by either party if the other party is in material breach of the Implementation Agreement.

 

14. Transactions with Major Shareholders, Related Party Transaction and Substantial Transaction


The Merger, if completed, will under the AIM Rules be a related party transaction for Peter Hambro Mining in respect of each Peter Hambro Mining Director (together with any applicable associates) who holds Aricom Shares and Lansdowne Partners Ltd. The number of Aricom Shares, Aricom Warrants and Aricom LTIP Awards (as the case may be) held by Peter Hambro Mining Directors is set out in paragraph 20.  The Merger if completed will also constitute a substantial transaction for the purpose of the AIM Rules.


The Peter Hambro Mining Directors (save for Peter Hambro, Pavel Mavlovskiy, Sir Rudolph AgnewJay Hambro, Alexei Maslovsky and Peter Hill-Wood), who have consulted with Peter Hambro Mining's nominated adviser, JPMorgan Cazenove, and with Liberum Capital, consider that the terms of the Merger are fair and reasonable insofar as Peter Hambro Mining Shareholders are concerned.

 

15. Irrevocable Undertakings


Peter Hambro Mining has received irrevocable undertakings from each of the Aricom Directors to vote or procure the vote in favour of the resolutions to be proposed at the Scheme Court Meeting and the Aricom EGM in respect of their own beneficial holdings, representing approximately 9.4 per cent. of the existing issued share capital of Aricom. The undertakings given by the Aricom Directors cease to be binding if the Scheme is withdrawn, unless Peter Hambro Mining exercises its right to announce a takeover offer of the entire issued share capital of Aricom, in which case it shall cease to have effect on the withdrawal or lapsing of the takeover offer. 


Aricom has received irrevocable undertakings from Pavel Maslovskiy, Peter Hambro, Sir Rudolph Agnew and Peter Hill-Wood to vote or procure the vote in favour of the resolutions to be proposed at the Peter Hambro Mining EGM in respect of their own beneficial holdings (with the exception of any beneficial holdings which are held by Goldman Sachs as nominee pursuant to a stock lending agreement) representing 21.3 per cent. of the existing issued share capital of Peter Hambro Mining.


Further details of these irrevocable undertakings are set out in Appendix III to this announcement.

 

16. Gold Exchangeable Bonds


Peter Hambro Mining has today announced that it has purchased a total of $87 million nominal of the Gold Exchangeable Bonds at an average price of US$95.00 plus accrued interest from a number of investors.

 

17. Structure of the Scheme


It is intended that the acquisition of the Aricom Shares will be effected by way of a Court sanctioned scheme of arrangement under Part 26 of the Companies Act. The Scheme is an arrangement between Aricom and the Aricom Shareholders and is subject to the approval of the Court.


The purpose of the Scheme is to provide for Peter Hambro Mining to become the owner of the whole of the issued ordinary share capital of Aricom. This is to be achieved by the cancellation of all the Scheme Shares and the application of the reserve arising from such cancellation, in paying up a new number of Aricom Shares (which is equal to the number of Scheme Shares cancelled) and issuing the same to Peter Hambro Mining, in consideration for which the Scheme Shareholders will receive consideration on the basis set out above.


To become effective, the Scheme requires, amongst other things, the approval by a majority in number of Scheme Shareholders representing at least 75 per cent. in value of all Scheme Shares held by such Scheme Shareholders voted, either in person or by proxy, at the Scheme Court Meeting, together with the sanction of the Court and the passing by the Scheme Shareholders of a special resolution necessary to implement the Scheme at the Aricom EGM. In addition, both the Scheme must be approved by the Court and the Scheme Capital Reduction must be approved by the Court.


Once the necessary approvals from the Aricom Shareholders have been obtained and the other Conditions have been satisfied or (where applicable) waived, the Scheme will become effective upon the confirmation of the Scheme Capital Reduction by the Court and registration of the Reduction Court Order by the Registrar of Companies.


Upon the Scheme becoming effective, it will be binding on all Scheme Shareholders, irrespective of whether or not they attended or voted at the Scheme Court Meeting or the Aricom EGM.


The Scheme is subject to certain conditions and certain further terms referred to in Appendix I of this announcement and to be set out in the Scheme Document.  These conditions include:


  • the approvals of the Aricom Shareholders referred to above;

  • the sanction and confirmation of the Court referred to above;

  • the Scheme becoming effective by no later than 6 months after the date of this announcement or such later date as Peter Hambro Mining and Aricom may agree with (where applicable) the consent of the Panel and the approval of the Court, failing which the Scheme will lapse;

  • approval by the Peter Hambro Mining Shareholders of all resolutions necessary to approve, implement and effect the Merger;

  • certain Russian regulatory approvals; and 

  • admission of the New Peter Hambro Mining Shares to trading on AIM or to listing on the Official List and to trading on the Main Market.


The Aricom Shares will be acquired pursuant to the Scheme fully paid and free from all liens, charges, equities, encumbrances, rights of pre-emption and any other interests of any nature whatsoever and together with all rights attaching thereto, including voting rights and the rights to receive and retain in full all dividends and other distributions declared, made or paid on or after the date of their issue.


Peter Hambro Mining reserves the right to elect to implement the Offer by way of a Takeover Offer. In such event, such Offer will be implemented on the same terms (subject to appropriate amendments including (without limitation) an acceptance condition set at 90 per cent. (or such less percentage, being more than 50 per cent., as Peter Hambro Mining shall decide) of the shares to which such offer relates), so far as applicable, as those which would apply to the Scheme.


Further details of the Scheme, including an indicative timetable for its implementation, together with how Scheme Shareholders may participate in the Scheme Court Meeting and Aricom EGM, will be contained in the Scheme Document.

 

18. Delisting and re-registration 


Upon or shortly after the Scheme becoming effective, the London Stock Exchange will be requested to cancel trading in Aricom Shares on the London Stock Exchange's market for listed securities and the UK Listing Authority will be requested to cancel the listing of the Aricom Shares from the Official List. 


On the Scheme Effective Date, share certificates in respect of the Aricom Shares will cease to be valid and should be destroyed. In addition, entitlements to Aricom Shares held within the CREST system will be cancelled on the Scheme Effective Date.


Following the Merger and subject to satisfying eligibility criteria, Peter Hambro Mining intends to make an application to obtain a primary listing on the Official List as soon as possible.

 

19. Conditions to the Merger


The Merger is subject to certain conditions, which are set out in full in Appendix I of this announcement.

 

20. Interests in Aricom securities held by Peter Hambro Mining and its concert parties


Pavel Maslovskiy is interested in 87,779,094 Aricom Shares. This figure includes the current holdings of Pavel Maslovskiy, his close relatives, related trusts and companies associated with, or in which, Pavel Maslovskiy is interested.


Peter Hambro is interested in 87,601,729 Aricom Shares. This figure includes the current holdings of Peter Hambro, his close relatives, related trusts and companies associated with, or in which, Peter Hambro is interested.


Peter Hill-Wood is interested in 612,500 Aricom Shares, all of which are held by him.


Sir Rudolph Agnew is interested in 160,000 Aricom Shares. This figure includes the current holdings of Sir Rudolph Agnew, his close relatives, related trusts and companies associated with, or in which, Sir Rudolph Agnew is interested.


Jay Hambro is interested in 110,000 Aricom Shares and is the holder of 135,000 Aricom Warrants. He has also been granted options over 2,500,000 Aricom Shares, exercisable at 42 pence per Aricom Share.  Jay Hambro is a participant in the Aricom LTIP, pursuant to which he has been granted options over 2,000,000 Aricom Shares at an allocation price of 62 pence (allocated in October 2007) and options over 2,000,000 Aricom Shares at an allocation price of 20 pence (allocated in October 2008). 


Karolina Subczynska is a participant in the Aricom LTIP pursuant to which she has been granted options over 1,000,000 Aricom Shares at an allocation price of 20 pence (allocated in October 2008).

 

21. UK and Overseas Shareholders


Unless otherwise determined by Peter Hambro Mining, the Offer will not be made, directly or indirectly, in or into, or by the use of mails or by any means or instrumentality (including, without limitation, by means of telephone, facsimile, telex, internet or other forms of electronic communication) of interstate or foreign commerce of, or any facility of a national state or other securities exchange of any Restricted Jurisdiction and the Offer will not be capable of acceptance by any such use, instrumentality or facility or from within those jurisdictions. Accordingly, copies of this announcement and formal documentation relating to the Offer are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, transmitted, distributed, sent or accessed in or into or from any Restricted Jurisdiction. Persons receiving this announcement (including without limitation custodians, nominees and trustees) should observe these restrictions and must not mail or otherwise forward, transmit, distribute or send it in or into or from any Restricted Jurisdiction. Doing so may render invalid any purported acceptance of the Offer.


The availability of the Offer to persons who are not resident in and citizens of the UK may be affected by the laws of the relevant jurisdictions in which they are located or of which they are citizens. Such persons should inform themselves of, and observe any, applicable legal or regulatory requirements of their jurisdictions. Further details in relation to overseas shareholders will be contained in the Scheme Document.

 

22. Issued Share Capital


As at close of business on 5 February 2009, Peter Hambro Mining had in issue 81,155,052 Peter Hambro Mining Shares (ISIN reference number GB0031544546), $US140,000,000 7.125 per cent. guaranteed convertible bonds due 2012 guaranteed by Peter Hambro Mining and convertible into Peter Hambro Mining Shares (ISIN reference number X50224133099) and 11,820 ADRs (relating to issued shares) (ISIN reference number US71602M1045).


As at close of business on 5 February 2009, Aricom had in issue 1,182,863,763 Aricom Shares (ISIN reference number GB0033990283) and 133,000,000 Aricom Warrants (ISIN reference number GB00BIXF5K38).


Peter Hambro Mining is being advised by JPMorgan Cazenove Limited and Liberum Capital and its legal advisers are Norton Rose LLP.  Aricom is being advised by Morgan Stanley and Canaccord Adams and its legal advisers are Linklaters LLP.

 

23. General


Peter Hambro Mining reserves the right, subject to the prior consent of the Panel, to elect to implement the acquisition of the Aricom Shares by way of takeover offer (as such term is defined in section 979 of the Companies Act).  In such event, such takeover offer will be implemented on the same terms (subject to appropriate amendments), so far as applicable, as those which would apply to the Scheme Furthermore, if sufficient acceptances of such offer are received and/or sufficient Aricom Shares are otherwise acquired, it is the intention of Peter Hambro Mining to apply the provisions of section 979 of the Companies Act to acquire compulsorily any outstanding Aricom Shares to which such offer relates.


The Merger will be subject to the Conditions and certain further terms set out in Appendix I and the further terms and conditions set out in the Scheme Document when issued.


The bases and sources of certain information contained in this announcement are set out in Appendix II.


The availability of the Merger to persons not resident in the UK may be affected by the laws of the relevant jurisdiction.  Any persons who are subject to the laws of any jurisdiction other than the UK should inform themselves about and observe any applicable requirements.


Certain terms used in this announcement are defined in Appendix V.


  

Appendix I

Conditions and Further Terms of the Merger


Part A - Conditions of the Acquisition 

1      The Acquisition will be conditional upon the Scheme becoming unconditional and becoming effective, subject to the Code, by no later than 6 August 2009 or such later date (if any) as Peter Hambro Mining and Aricom may, with the consent of the Panel, agree and (if required) the Court may allow.
2      The Scheme will be conditional upon:
(A)          approval of the Scheme by a majority in number of the Scheme Shareholders entitled to vote and present and voting, either in person or by proxy, at the Scheme Court Meeting or at any adjournment of such meeting, representing no less than 75 per cent in value of the Scheme Shares so voted;
(B)           all resolutions in connection with, or necessary to approve and implement, the Scheme as set out in the notice of the Aricom EGM being duly passed by the requisite majority at the Aricom EGM or at any adjournment of that meeting;
(C)           the sanction of the Scheme and the confirmation of the Scheme Capital Reduction (in either case, without modification or with modification as agreed by Aricom and Peter Hambro Mining) by the Court and:
(i)            the delivery for registration of office copies of the Court Orders and the minute of the Scheme Capital Reduction attached thereto to the Registrar of Companies; and
(ii)           the registration of the Reduction Court Order by the Registrar of Companies; and
(D)           all resolutions necessary to approve, implement and effect the Acquisition being duly passed at the Peter Hambro Mining EGM (or at any adjournment thereof) as set out in the notice of the Peter Hambro Mining EGM;
3      In addition, Peter Hambro Mining and Aricom have agreed that, subject to Part B below, the Scheme will also be conditional upon the following Conditions and, accordingly, the necessary actions to make the Scheme effective will not be taken unless such Conditions (as amended if appropriate) have been satisfied (and continue to be satisfied pending the commencement of the Scheme Court Meeting) or, where permitted, waived (or, in each case, any other customary pre-admission conditions with the consent of the Panel):
(a)             
(i)       admission of the New Peter Hambro Mining Shares to trading on AIM becoming effective in accordance with the AIM Rules or if Peter Hambro Mining so determines (subject to the consent of the Panel) the London Stock Exchange agreeing to admit such shares to trading on AIM subject to the allotment of such New Peter Hambro Mining Shares and/or the Scheme becoming or being declared unconditional in all respects; or
(ii)      admission of the New Peter Hambro Mining Shares to the Official List, in accordance with the Listing Rules, and the admission of the New Peter Hambro Mining Shares to trading on the London Stock Exchange's main market for listed securities in accordance with the Admission and Disclosure Standards of the London Stock Exchange becoming effective or, if Peter Hambro Mining so determines and subject to the consent of the Panel (if required), the UK Listing Authority agreeing to admit the New Peter Hambro Mining Shares to the Official List and the London Stock Exchange agreeing to admit such shares to trading on its main market for listed securities subject only to (i) the allotment of such shares and/or (ii) the Acquisition becoming effective;
(b)            in Russia, 
(i)       any necessary consents or approvals having been granted either unconditionally or subject to such conditions, obligations, undertakings or modifications as shall be reasonably acceptable to Peter Hambro Mining and Aricom, by (A) FAS and any other relevant authorities applying the merger control laws of such jurisdiction and (B) the Governmental Commission on Control over Making Foreign Investments in the Russian Federation as required by the provisions of Federal Law of the Russian Federation No. 57-FZ dated 29 April 2008 "On the procedures for making foreign investments into commercial entities of strategic significance for the national defence and security";
(ii)      all or any relevant waiting periods in such jurisdiction having expired, lapsed or been terminated as appropriate;
(iii)     any necessary governmental, regulatory or exchange control consents required to implement the Scheme having being granted either unconditionally or subject to such conditions, obligations, undertakings or modifications as shall be acceptable to Peter Hambro Mining;
(c)            save as fairly disclosed in Aricom’s annual report and accounts for the year ended 31 December 2007 or as publicly announced by Aricom prior to the Announcement Date or as fairly disclosed by Aricom (or by Aricom’s financial, legal or accounting advisers) to Peter Hambro Mining (or in writing to Peter Hambro Mining’s financial, legal or accounting advisers specifically in their capacity as Peter Hambro Mining’s advisers and in relation to the Acquisition) prior to the Announcement Date, no Third Party having decided or given notice of a decision to take, institute or threaten any action, proceeding, suit, investigation, enquiry or reference, or having required any action to be taken, or otherwise having done anything, or having enacted, made or proposed and there not continuing to be outstanding any statute, regulation, decision or order which would:
(i)            make the Acquisition or its implementation or the acquisition by Peter Hambro Mining of any Aricom Shares, or the acquisition of control of Aricom, by any member of the Wider Peter Hambro Mining Group, void, illegal or unenforceable under the laws of any relevant jurisdiction, or otherwise, directly or indirectly, restrain, restrict, prohibit, challenge, delay, hinder or otherwise interfere with the same, or impose material additional adverse conditions or obligations with respect thereto, or otherwise challenge or require amendment to the terms of the Scheme or the Acquisition;
(ii)           require, prevent or delay the divestiture by any member of the Wider Peter Hambro Mining Group or by any member of the Wider Aricom Group of all or any portion of their respective businesses, assets or properties or impose any limitation on the ability of any member of the Wider Peter Hambro Mining Group or any member of the Wider Aricom Group to conduct their respective businesses (or any part of them) or to own or control their respective assets or properties or any part of them to an extent in any such case which is material in the context of the Wider Peter Hambro Mining Group or the Wider Aricom Group in either case taken as a whole;
(iii)           impose any material limitation on, or result in a delay in, the ability of any member of the Wider Peter Hambro Mining Group, directly or indirectly, to acquire or to hold or to exercise effectively all or any rights of ownership in respect of shares, loans or other securities (or the equivalent) in any member of the Wider Aricom Group or to exercise management control over any such member;
(iv)           save pursuant to the Scheme or sections 974 to 991 of the Companies Act 2006, require any member of the Wider Peter Hambro Mining Group or the Wider Aricom Group to acquire, or offer to acquire, any shares or other securities (or the equivalent) in any member of the Wider Aricom Group;
(v)            require a divestiture by Peter Hambro Mining or any member of the Wider Peter Hambro Mining Group of any shares or other securities (or the equivalent) in Aricom;
(vi)           materially limit the ability of any member of the Wider Peter Hambro Mining Group or the Wider Aricom Group to co-ordinate or integrate its business, or any part of it, with the business or any part of the business of any other member of the Wider Peter Hambro Mining Group or of the Wider Aricom Group;
(vii)          save pursuant to the Scheme or sections 974 to 991 of the Companies Act, result in any member of the Wider Aricom Group ceasing to be able to carry on business under any name which it presently does so to an extent which is materially adverse in the context of the Wider Aricom Group taken as a whole; or
(viii)         otherwise adversely affect in any material respect any or all of the businesses, assets, liabilities, profits or prospects of any member of the Wider Peter Hambro Mining Group or any member of the Wider Aricom Group (including any action which would or might adversely affect or prejudice any of the status, licences, authorisations, exemptions or consents of any member of the Wider Peter Hambro Mining Group or of the Wider Aricom Group),
and all applicable waiting and other time periods during which any such Third Party could decide to take, institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference under the laws or regulations of any relevant jurisdiction in respect of the Acquisition having expired, lapsed or been terminated;
(d)            all authorisations, orders, recognitions, grants, consents, licences, confirmations, clearances, certificates, exemptions, permissions and approvals (“Authorisations”) necessary or appropriate in any relevant jurisdiction for or in respect of the Acquisition or the proposed acquisition of all or any Ordinary Shares or other securities in, or control of, Aricom by any member of the Wider Peter Hambro Mining Group other than as referred to in condition 3(a) above having been obtained on terms and in a form satisfactory to Peter Hambro Mining from all appropriate Third Parties or persons with whom any member of the Wider Aricom Group or the Wider Peter Hambro Mining Group has entered into contractual arrangements and all such Authorisations, together with all Authorisations necessary to carry on the business of any member of the Wider Aricom Group remaining in full force and effect at the time at which the Scheme becomes otherwise unconditional and there being no indication of any intention to revoke, withdraw, suspend, restrict, withhold or modify or not to grant or review any of the same;
(e)            all necessary or appropriate filings or applications having been made in connection with the Acquisition other than as referred to in condition 3(a) above, and all appropriate waiting periods (including extensions thereof) in respect of the Acquisition or its implementation under any applicable legislation or regulations in any relevant jurisdiction having expired, lapsed or been terminated (as appropriate) and all statutory or regulatory obligations in any relevant jurisdiction having been complied with in connection with the Acquisition or the acquisition by any member of the Wider Peter Hambro Mining Group of any shares or other securities in, or control of, Aricom;
(f)            save as fairly disclosed in Aricom’s annual report and accounts for the year ended 31 December 2007 or as otherwise publicly announced by Aricom, prior to the Announcement Date or as fairly disclosed by Aricom (or by Aricom’s financial, legal or accounting advisers) to Peter Hambro Mining (or in writing to Peter Hambro Mining’s financial, legal or accounting advisers specifically in their capacity as Peter Hambro Mining’s advisers and in relation to the Acquisition) prior to the Announcement Date, there being no provision of any agreement, authorisation, arrangement, lease, licence, permit or other instrument to which any member of the Wider Aricom Group is a party or by or to which any such member or any of its assets may be bound, entitled or subject, which, in each case, in consequence of the Acquisition or the proposed acquisition by any member of the Wider Peter Hambro Mining Group of any shares or other securities (or the equivalent) in Aricom or because of a change in the control or management of any member of the Wider Aricom Group, would or might result, in a manner which could or might be material in the context of the Wider Aricom Group taken as a whole, in:
(i)       any monies borrowed by or any other indebtedness (actual or contingent) of, or grant available to, any member of the Wider Aricom Group, being or becoming repayable or being capable of being declared repayable immediately or prior to their or its stated maturity date or repayment date or the ability of any such member to borrow monies or incur any indebtedness being withdrawn, prohibited or inhibited or becoming capable of being withdrawn, prohibited or inhibited;
(ii)      any such agreement, authorisation, arrangement, licence, permit or other instrument or the rights, liabilities, obligations or interests of any member of the Wider Aricom Group thereunder being terminated or adversely modified or affected or any onerous obligation or liability arising or any adverse action being taken or arising thereunder;
(iii)     any assets or interests of any member of the Wider Aricom Group being or falling to be disposed of or charged or ceasing to be available to any such member or any right arising under which any such asset or interest could be required to be disposed of or charged otherwise than, in any such case, in the ordinary course of business;
(iv)      the creation or enforcement of any mortgage, charge or other security interest over the whole or any part of the business, property or assets of any member of the Wider Aricom Group, or any such mortgage, charge or other security interest (whenever arising or having arisen) becoming enforceable or being enforced;
(v)      the rights, liabilities, obligations or interests of any member of the Wider Aricom Group in, or the business of any such member with, any person, company, firm or body (or any agreements or arrangements relating to any such interest or business) being terminated, or adversely modified or adversely affected;
(vi)      the value of any member of the Wider Aricom Group or its financial or trading position or profits or prospects being prejudiced or adversely affected;
(vii)     any member of the Wider Aricom Group ceasing to be able to carry on business under any name under which it presently does so; or
(viii)    the creation or assumption of any liability, actual or contingent, by any member of the Wider Aricom Group other than in the ordinary course of business,
and no event having occurred which, under any provision of any agreement, authorisation, arrangement, lease, licence, permit or other instrument to which any member of the Wider Aricom Group is a party or by or to which any such member or any of its assets are bound, entitled or subject, would be reasonably likely to result in any of the events referred to in sub-paragraph (i) to (viii) of this paragraph (e);
(g)           since 31 December 2007 and save as fairly disclosed in Aricom’s annual report and accounts for the year then ended or as otherwise publicly announced by Aricom prior to the Announcement Date or as fairly disclosed by Aricom (or by Aricom’s financial, legal or accounting advisers) to Peter Hambro Mining (or in writing to Peter Hambro Mining’s financial, legal or accounting advisers specifically in their capacity as Peter Hambro Mining’s advisers and in relation to the Acquisition) prior to the Announcement Date, no member of the Wider Aricom Group having:
(i)       issued or agreed to issue or authorised or proposed or announced its intention to authorise or propose the issue of additional shares of any class or securities convertible into or exchangeable for, shares of any class or rights, warrants or options to subscribe for, or acquire, any such shares or convertible securities (save as between Aricom and wholly-owned subsidiaries of Aricom and save for the issue of Aricom Shares pursuant to or in connection with rights granted before the date of this Announcement under the Aricom Share Plans);
(ii)      (save for Aricom Shares held in treasury and sold or transferred pursuant to the exercise of options granted under the Aricom Share Plans prior to the Announcement Date) sold or transferred or agreed to sell or transfer any Aricom Shares held in treasury;
(iii)     recommended, declared, paid or made or proposed to recommend, declare, pay or make any bonus issue, dividend or other distribution whether payable in cash or otherwise other than dividends (or other distributions whether payable in cash or otherwise) lawfully paid or made by any wholly-owned subsidiary of Aricom to Aricom or any of its wholly-owned subsidiaries;
(iv)      other than pursuant to the Acquisition (and save for transactions between Aricom and its wholly-owned subsidiaries and save for transactions in the ordinary course of business) entered into, implemented, effected, varied, authorised or proposed or announced its intention to implement, effect, authorise or propose any merger, demerger, reconstruction, amalgamation, scheme, commitment or acquisition or disposal of assets or shares or loan capital (or the equivalent thereof) in any undertaking or undertakings in any such case that is material in the context of the Wider Aricom Group taken as a whole;
(v)      (save for transactions between Aricom and its wholly-owned subsidiaries and save for transactions in the ordinary course of business) disposed of, or transferred, mortgaged or created any security interest over any asset or any right, title or interest in any asset that is material in the context of the Wider Aricom Group taken as a whole or authorised, proposed or announced any intention to do so;
(vi)      (save as between Aricom and its wholly-owned subsidiaries) made or authorised or proposed or announced an intention to propose any change in its loan capital;
(vii)     (save as between Aricom and its wholly-owned subsidiaries or transactions under existing credit arrangements or in the ordinary course of business) issued, authorised, or proposed or announced an intention to authorise or propose, the issue of or made any change in or to the terms of any debentures or become subject to any contingent liability or incurred or increased any indebtedness;
(viii)    (save for transactions between members of the Aricom Group) purchased, redeemed or repaid, or announced any proposal to purchase, redeem or repay, any of its own shares or other securities or reduced or made any other change to or proposed the reduction or other change to any part of its share capital;
(ix)     entered into or varied or terminated or authorised, proposed or announced its intention to enter into or vary any material contract, arrangement, agreement transaction or commitment (whether in respect of capital expenditure or otherwise) which is of a long term, onerous or unusual nature or magnitude or which is or is likely to be restrictive on the business of any member of the Wider Aricom Group or the Wider Peter Hambro Mining Group or which involves or is likely to involve an obligation of such a nature or magnitude or which is other than in the ordinary course of business;
(x)      entered into or varied the terms of, or made any offer (which remains open for acceptance) to enter into or vary the terms of, any contract, service agreement or arrangement with any director or senior executive of any member of the Wider Aricom Group (save as agreed by Peter Hambro Mining in writing);
(xi)     terminated or varied the terms of any agreement or arrangement between any member of the Wider Aricom Group and any other person in a manner which would or might reasonably be expected to have a material adverse effect on the financial position or prospects of the Wider Aricom Group taken as a whole;
(xii)    proposed, agreed to provide or modified the terms of any share option scheme, incentive scheme or other benefit relating to the employment or termination of employment of any person employed in the Wider Aricom Group (save as agreed by Peter Hambro Mining in writing);
(xiii)    made or agreed or consented to any significant change to the terms of the trust deeds and rules constituting the pension scheme(s) established for its directors, employees or their dependants or to the benefits which accrue, or to the pensions which are payable, thereunder, or to the basis on which qualification for, or accrual or entitlement to, such benefits or pensions are calculated or determined or to the basis upon which the liabilities (including pensions) of such pension schemes are funded or made, or agreed or consented to, any change to the trustees, including the appointment of a trust corporation;
(xiv)    been unable, or admitted in writing that it is unable, to pay its debts or having stopped or suspended (or threatened to stop or suspend) payment of its debts generally or ceased or threatened to cease to carry on all or a substantial part of its business;
(xv)     (other than in respect of a member of the Wider Aricom Group which is dormant and was solvent at the relevant time) taken or proposed any corporate action, or had any legal proceedings threatened or instituted against it for its winding-up (voluntarily or otherwise), dissolution or reorganisation or for the appointment of a receiver, administrative receiver, administrator, trustee or similar officer of all or any material part of its assets or revenues or any analogous or equivalent steps or proceedings in any relevant jurisdiction having been taken or had any such person appointed;
(xvi)    (other than in respect of capital contributions or capitalisations between Aricom and wholly-owned subsidiaries of Aricom) waived or compromised or settled any claim otherwise than in the ordinary course of business which is material in the context of the Wider Aricom Group as a whole;
(xvii)   (other than in connection with the Scheme) made any alteration to its memorandum or articles of association or other constitutional documents which has not been filed with the Registrar of Companies prior to the Announcement Date; or
(xviii)  entered into any contract, agreement, commitment or arrangement or passed any resolution or made any offer (which remains open for acceptance) with respect to or announced any intention to, or to propose to, effect any of the transactions, matters or events referred to in this condition (f);
(h)            since 31 December 2007 and save as fairly disclosed in Aricom’s annual report and accounts for the year then ended or as otherwise publicly announced by Aricom (or its financial, legal or accounting advisers) prior to the Announcement Date or as fairly disclosed by Aricom (or by Aricom’s financial, legal or accounting advisers) to Peter Hambro Mining (or in writing to Peter Hambro Mining’s financial, legal or accounting advisers specifically in their capacity as Peter Hambro Mining’s advisers and in relation to the Acquisition) prior to the Announcement Date:
(i)       there having been no material adverse change or deterioration in the business, assets, financial or trading position or profits or prospects or operational performance of any member of the Wider Aricom Group;
(ii)      no litigation, arbitration proceedings, prosecution or other legal proceedings or investigations having been threatened in writing, announced, instituted or remaining outstanding against or in respect of any member of the Wider Aricom Group or to which any member of the Wider Aricom Group is or is reasonably likely to become a party (whether as a claimant, defendant or otherwise) and no enquiry or investigation by any Third Party against or in respect of any member of the Wider Aricom Group having been commenced, announced or threatened in writing by or against or remaining outstanding in respect of any member of the Wider Aricom Group in each case which would or might reasonably be expected to have a material adverse effect on the Wider Aricom Group taken as a whole;
(iii)     no contingent or other liability having arisen which would or might reasonably be expected to adversely affect any member of the Wider Aricom Group to an extent which is material in the context of the Wider Aricom Group taken as a whole; and
(iv)      no steps having been taken and no omissions having been made which are likely to result in the withdrawal, cancellation, termination or modification of any licence held by any member of the Wider Aricom Group, which is necessary for the proper carrying on of its business and which is material in the context of the Wider Aricom Group taken as a whole;
(i)            since 31 December 2007 and save as fairly disclosed in Aricom’s annual report and accounts for the year then ended or as otherwise publicly announced by Aricom prior to the Announcement Date or as fairly disclosed by Aricom (or by Aricom’s financial, legal or accounting advisers) to Peter Hambro Mining (or in writing to Peter Hambro Mining’s financial, legal or accounting advisers specifically in their capacity as Peter Hambro Mining’s advisers and in relation to the Acquisition) prior to the Announcement Date, Peter Hambro Mining not having discovered:
(i)       that any financial, business or other information concerning the Wider Aricom Group publicly announced or disclosed at any time by or on behalf of any member of the Wider Aricom Group to the Wider Peter Hambro Mining Group, is misleading, contains a misrepresentation of any fact or omits to state a fact necessary to make that information not misleading and which in any case, is material in the context of the Wider Aricom Group taken as a whole;
(ii)      that any present member of the Wider Aricom Group or any partnership, company or other entity in which any member of the Wider Aricom Group has a significant economic interest and which is not a subsidiary undertaking of Aricom, is subject to any liability, contingent or otherwise which is material in the context of the Wider Aricom Group taken as a whole;
(iii)     any information which affects the import of any information disclosed at any time by or on behalf of any member of the Wider Aricom Group to an extent which is material in the context of the Wider Aricom Group taken as a whole;
(iv)      that any past or present member of the Wider Aricom Group has not complied with all applicable legislation, regulations or other requirements of any relevant jurisdiction with regard to the use, treatment, storage, disposal, discharge, spillage, leak or emission of any waste or hazardous substance or any substance likely to impair the environment or harm human health, or otherwise relating to environmental matters or that there has otherwise been a emission, discharge, disposal, spillage or leak of waste or hazardous substance or any substance likely to impair the environment or harm human health (whether or not the same constituted a non-compliance by any person with any such legislation or regulations, and wherever the same may have taken place) on or from any land or property of any description or other asset now or previously owned, occupied or made use of by any past or present member of the Wider Aricom Group or in which any such member may now or previously have had an interest which would, in any case, be likely to give rise to any liability (whether actual or contingent) on the part of any member of the Wider Aricom Group which is material in the context of the Wider Aricom Group taken as a whole; and
(v)      that circumstances exist (whether as a result of the making of the Announcement or otherwise) which would be likely to lead to any Third Party instituting, (or whereby any member of the Wider Aricom Group would be likely to be required to institute), an environmental audit or take any steps which would in any such case be likely to result in any actual or contingent liability to improve or install new plant or equipment or to make good, repair, reinstate or clean up any property of any description or other asset now or previously owned, occupied or made use of by any member of the Wider Aricom Group, or in which any such member may now or previously have had an interest, which is material in the context of the Wider Aricom Group taken as a whole.
    

 Part B - Terms of the Acquisition      

 

1        The Acquisition will not proceed if, before the date of the Scheme Court Meeting and the Aricom EGM: (a) the Acquisition is referred to the Competition Commission in the United Kingdom; (b) the European Commission initiates proceedings under Article 6(1)(c) of the Merger Regulation in relation to the Acquisition; or (c) there is a reference to the Competition Commission following a referral by the European Commission under Article 9.1 of the Merger Regulation. 
2                If the Acquisition is a Takeover Offer and lapses in accordance with paragraph 1 above not only will such Acquisition cease to be capable of further acceptance but also the Aricom Shareholders and Peter Hambro Mining will thereafter cease to be bound by prior acceptances.
3                Peter Hambro Mining reserves the absolute right to elect to implement the Acquisition by way of a takeover offer (as such term is defined in Part 28 of the Companies Act 2006). In such event, such offer will be implemented on the same terms so far as applicable (subject to appropriate amendments, including (without limitation and subject to the consent of the Panel) an acceptance condition set at 90 per cent. (or such lesser percentage (being more than 50 per cent.) as Peter Hambro Mining may decide) in nominal value of the Aricom Shares to which such offer relates.
4                The Scheme will be governed by English law and be subject to the exclusive jurisdiction of the English courts, to the conditions set out above and the further terms set out in the Scheme Document.
5                Subject to the requirements of the Panel or the Court, Peter Hambro Mining reserves the right to waive, in whole or in part, all or any of conditions 3(a) to 3(l) inclusive. The Scheme will not become effective unless all Conditions have been fulfilled or (if capable of waiver) waived or, where appropriate, have been determined by Peter Hambro Mining to be or remain satisfied by no later than the date referred to in condition 1 of Part A(or such later date as Peter Hambro Mining, Aricom the Panel and, if required, the Court, may allow).
6                Peter Hambro Mining shall be under no obligation to waive (if capable of waiver) or treat as fulfilled any of the conditions in paragraph 3 of Part A by a date earlier than the latest date specified above for the fulfilment thereof, notwithstanding that the other conditions of the Acquisition may at such earlier date have been fulfilled and that there are, at such earlier date, no circumstances indicating that any of such conditions may be incapable of fulfilment. Each of the conditions in paragraph 3 of Part A will be regarded as a separate condition and shall not be limited by reference to any other conditions. The Conditions are inserted for the benefit of Peter Hambro Mining and no Aricom Shareholder shall be entitled to waive any of the Conditions without the prior written consent of Peter Hambro Mining.
7                If Peter Hambro Mining is required by the Panel to make an offer for Aricom Shares under the provisions of Rule 9 of the Code, Peter Hambro Mining may make such alterations to the above conditions of the Acquisition as are necessary to comply with the provisions of that Rule.
8                The availability of the Acquisition to persons not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions. Persons who are not resident in the United Kingdom should inform themselves and observe any applicable requirements.

  Appendix II

Sources and Bases


a)      The pro forma combined market capitalisation of Peter Hambro Mining and Aricom is based  upon the undiluted number of Peter Hambro Mining Shares of 81,155,052, the 16,000,000 Placing Shares and the latest closing price of Peter Hambro Mining Shares on AIM on 5 February 2009 of 495 pence (converted into US$ as set out in paragraph (f) below) and the undiluted number of Aricom Shares of 1,182,863,763, the latest closing price of Aricom Shares on the Official List on 5 February 2009 of 26 pence (converted into US$ as set out in paragraph (f) below).
 
b)      The statement that the unaudited pro forma net cash of the Enlarged Group is US$5 million is derived from an estimate of Peter Hambro Mining's gross debt of US$370 million as at 31 December 2008 less US$78 million being the book value (US$87 million nominal value) of 48.3 per cent. of the Gold Exchangeable Bonds, less Peter Hambro Mining's cash of US$25 million less Aricom's cash of US$257 million and the net Placing Proceeds of US$15 million (after deduction of equity placing fees and the consideration to be paid for the acquisition of 48.3 per cent. of Peter Hambro Mining's outstanding Gold Exchangeable Bonds).
 
c)      The market price of Peter Hambro Mining Shares is the closing middle market quotation derived from AIM.
 
d)      The market price of Aricom Shares is the closing middle market quotation derived from the Official List.
 
e)      The calculation of the 73,928,985  New Peter Hambro Mining Shares to be issued as the consideration payable for the acquisition of Aricom is based upon Aricom's undiluted share capital of 1,182,863,763 shares on 5 February 2009 divided by 16 (being the exchange ratio under the Scheme).
 
f)       The US dollar : sterling exchange rate used in this announcement is 1.455.
 
g)      The percentage holdings of Aricom Shareholders, Peter Hambro Mining Shareholders and the Placees in the Enlarged Group is based on the existing undiluted ordinary share capital of Peter Hambro Mining and Aricom as set out in (a) above and the 16 million Peter Hambro Mining Shares to be issued pursuant to the Placing.


  

Appendix III

Irrevocable Undertakings


The following Aricom Directors have given irrevocable undertakings to vote in favour of the Aircom EGM Resolutions at the Aricom EGM and the Scheme Court Meeting in respect of the number of Aricom Shares set out below:


Name


Number of Aricom Shares


Brian Egan

107,622 (held in his own name)

George Jay Hambro

110,000 (held by HSBC Global Custody Nominee (UK) Ltd)

2,500,000 (held under the Aricom Share Option Scheme)

Martin Smith

400,000 (held under the Aricom Share Option Scheme)

Pavel Maslovskiy

10,268,465 (held by Macaria Investments Limited)

5,999,432 (held by Viscaria Investments Limited)

650,000 (held by Viscaria Investments Limited)

2,909,530 (held by Millennium Implementation Limited)

1,928,940 (held by Precious Metals Investments Limited)

66,022,727 (held by Philotus Holdings Limited)*

Peter Hambro

10,929,002 (held by Peter Hambro Limited)

10,650,000 (held by Peter Hambro Limited Crest Account)

66,022,727 (held by Philotus Holdings Limited)*

Sir Malcolm Field

605,000 (held by Roy Nominees Limited)

600,000 (held by Ruffer & Co A/C FIE007)

Sir Roderic Lyne

26,000 (held by Canaccord Adams Limited)

Tony Redman

-

Yuri Makarov

110,000 (held by HSBC Global Custody Nominee (UK) Ltd)

800,000 (held under the Aricom Share Option Scheme)


* Peter Hambro and Pavel Maslovskiy are each beneficially interested in half of these shares



These undertakings will continue to apply in the event that the Offer is implemented by way of a Takeover Offer. These undertakings remain binding in the event of a competing offer being made in relation to Aricom unless the Offer lapses or is withdrawn.

  Appendix IV

Dealing Disclosure



On 5 February 2009 Peter Hambro Mining announced the Placing pursuant to which certain Peter Hambro Mining Directors have agreed to subscribe for Placing Shares. The holdings of these directors in Peter Hambro Mining Shares before and after the Placing, and the Placing Shares which they have agreed to subscribe, are as follows.


Director

Number of shares held prior to placing

Per cent.

Number of shares purchased under the placing

Number of shares held following the placing

Per cent.

Peter Hambro and associates

5,283,179

6.51

63,446

5,346,625

5.503

Jay Hambro and associates

-

-

4,444

4,444

0.005

Andrey Maruta and associates

-

-

3,333

3,333

0.003

Alya Samokhvalova and associates

-

-

150,000

150,000

0.154

Karolina Subczynska and associates

-

-

22,222

22,222

0.023



  Appendix V

Definitions



Acquisition 

the Merger

ADR

American Depository Receipt

AIM

the alternative investment market of the London Stock Exchange

AIM Rules

the AIM Rules for Companies and AIM Rules for Nomads

Announcement or announcement

this announcement made by Peter Hambro Mining under Rule 2.5 of the Code regarding the proposed acquisition of Aricom by means of the Scheme

Announcement Date

6 February 2009, being the date of this Announcement

Appendices

the appendices to this announcement

Aricom

Aricom plc

Aricom Directors

Pavel Maslovskiy, Jay HambroBrian Egan, Yuri Makarov, Martin Smith, Sir Malcolm Field, Peter Hambro, Sir Roderic Lyne and Tony Redman

Aricom EGM (or Aricom Extraordinary General Meeting)

 the general meeting of Aricom (and any adjournment thereof) to be convened in connection with the Acquisition

Aricom EGM Resolutions

resolutions to approve the Scheme, the reduction of Aricom's share capital and the amendment of Aricom's articles of association, together with the other resolutions set out in the Scheme Document

Aricom IFC Options

options granted to International Finance Corporation pursuant to which International Finance Corporation can subscribe for 17,076,372 Aricom Shares at an exercise price of 74 pence, subject to adjustment in accordance with the terms and conditions thereof

Aricom Group

Aricom and its Group

Aricom Long Term Incentive Plan or Aricom LTIP

the incentive plan established by Aricom in 2007, relating to awards which may be made to eligible senior managers and directors in the Aricom Group subject to the achievement of certain performance conditions

Aricom LTIP Awards

awards under the Aricom LTIP

Aricom Shareholder

a holder of Aricom Shares

Aricom Share Option Scheme

the Aricom plc Share Option Scheme approved by the shareholders of Aricom on 12 December 2003

Aricom Share Plans

the Aricom Long Term Incentive Plan and the Aricom Share Option Scheme

Aricom Shares

the existing unconditionally allotted or issued and fully paid Ordinary Shares and any further such Ordinary Shares which are unconditionally allotted or issued before the Scheme becomes effective

Aricom Warrants

warrants each of which gives the right to subscribe for one Aricom Share, constituted by a warrant instrument dated 4 June 2007

Business Day (or business day)

a day (excluding Saturdays, Sundays and UK public holidays) on which banks are generally open for business in London

Canaccord Adams

Canaccord Adams Limited

Capital Reduction Hearing

the hearing by the Court to confirm the Reduction of Capital at which the Reduction Court Order is expected to be granted

Code

the City Code on Takeovers and Mergers issued by the Panel

Companies Act

Companies Act 2006

Conditions

the conditions to the implementation of the Acquisition set out in Appendix I of this Announcement and Condition means any one of them

Court

the High Court of Justice in England and Wales

Court Orders

the Scheme Court Order and the Reduction Court Order

DRI plant

direct reduced iron plant

Effective Date

the date on which the Scheme becomes effective

Enlarged Group

Peter Hambro Mining Group as enlarged by the Merger

FAS

the Federal Anti-Monopoly Service of Russia, including its territorial divisions (or any relevant successor) 

Financial Services Authority

the UK Financial Services Authority

Garinskoye

an iron ore deposit field situated in the Mazanovsky Administrative District in the Amur Region in Russia's Far East

GIS

Gold Institute Standard

Gold Exchangeable Bonds

US$180 million of Gold Equivalent Exchangeable Bonds due 2012

Group 

in relation to any person, that person and any companies which are holding companies, subsidiaries or subsidiary undertakings of it or of any such holding company

holding company

has the meaning given to it in the Companies Act

IFC

International Finance Corporation

Implementation Agreement

the implementation agreement between Peter Hambro Mining and Aricom dated the date hereof in connection with the implementation of the Scheme

Independent Aricom Board Committee

the committee of the Board Committee of directors of Aricom comprising the Independent Aricom Directors

Independent Aricom Directors

the independent directors of Aricom and an Independent Aricom Director being any one such director

Independent Board Committees 

the Independent Peter Hambro Mining Board Committee and the Independent Aricom Board Committee

Independent Peter Hambro Mining Board Committee

the committee of the Board Committee of directors of Peter Hambro Mining comprising the Independent Peter Hambro Mining Directors

Independent Peter Hambro Mining Directors

the independent directors of Peter Hambro Mining and an Independent Peter Hambro Mining Director being any one such Director

JPMorgan Cazenove

JPMorgan Cazenove Limited

K&S

the Kimkanskoye and Sutaraskoye iron ore deposits field located in the Evreyskaya Avtonomnaya Oblast in the south-western part of Russia's Far East

Liberum Capital

Liberum Capital Limited

London Stock Exchange or LSE

London Stock Exchange plc or its successor

Main Market

the main market for listed securities of the London Stock Exchange

Merger

the proposed merger of Peter Hambro Mining and Aricom on the terms and conditions set out in this Announcement including by means of the Scheme as described in the Scheme Document (or by means of a takeover offer if Peter Hambro Mining so elects in accordance with the terms set out in Appendix I and subject to the consent of the Panel)

Merger Regulation

Council Regulation (EC) 139/2004

Morgan Stanley

Morgan Stanley & Co. Limited

mtpa

million tonnes per annum

New Peter Hambro Mining Shares

the new Peter Hambro Mining Shares to be allotted and issued to Aricom Shareholders as consideration for the cancellation of the Aricom Shares pursuant to the Scheme

Offer

the recommended offer by Peter Hambro Mining for the whole of the issued ordinary share capital of Aricom not already owned by Peter Hambro Mining on the terms and subject to the conditions to be set out in the Scheme Document including, where the context so requires, any subsequent revision, variation, extension or renewal of such offer

Official List

the official list of the UK Listing Authority 

Ordinary Shares

the ordinary shares of 0.1 pence each in Aricom

Panel

the Panel on Takeovers and Mergers

Peter Hambro Mining

Peter Hambro Mining Plc

Peter Hambro Mining Board

the board of directors of Peter Hambro Mining 

Peter Hambro Mining Directors

Peter Hambro, Jay Hambro, Dr Pavel Maslovskiy, Alexei Maslovskiy, Andrey Maruta, Alya Samokhvalova, Karolina Subczynska, Sir Rudolph Agnew, Peter Hill-Wood and Lord Guthrie

Peter Hambro Mining EGM

the extraordinary general meeting (or any adjournment thereof) of the holders of Peter Hambro Mining Shares to be convened to consider and, if thought fit, to approve the resolution(s) to be proposed thereat in connection with the Scheme (or, if relevant, the Takeover Offer) and such other matters as may be agreed between Peter Hambro Mining and Aricom as necessary or desirable for the purposes of implementing the Scheme (or, if relevant, the Takeover Offer)

Peter Hambro Mining Group

Peter Hambro Mining and its Group

Peter Hambro Mining Resolutions

the resolutions to be proposed at the Peter Hambro Mining EGM in connection with the Scheme (or, if relevant, the Takeover Offer) and such other matters as may be agreed between Peter Hambro Mining and Aricom as necessary or desirable for the purposes of implementing the Scheme (or, if relevant, the Takeover Offer)

Peter Hambro Mining Shareholder

a holder of Peter Hambro Mining Shares

Peter Hambro Mining Shares

ordinary shares in the capital of Peter Hambro Mining 

Placees

the placees under the Placing 

Placing

the placing of new ordinary shares in Peter Hambro Mining Limited announced on 5 February 2009

Placing Shares

the nePeter Hambro Mining Shares subject to the Placing 

Placing Proceeds

the proceeds of the Placing before expenses

Reduction Court Order

the order of the Court confirming the capital reduction under section 135 of the Companies Act 1985

Registrar of Companies (or Registrar)

the Registrar of Companies in England and Wales

Regulatory Information Service

an information dissemination provider approved by the Financial Services Authority and whose name is set out on a list approved by the Financial Services Authority

Restricted Jurisdiction

any jurisdiction where local laws or regulations may result in a significant risk of civil, regulatory or criminal exposure for Peter Hambro Mining or Aricom if information or documentation concerning the Offer is sent or made available to Aricom Shareholders in that jurisdiction

Russia

the Russian Federation

SEC

the Securities Exchange Commission

Scheme

the proposed scheme of arrangement to be made under Part 26 of the Companies Act 2006 between Aricom and the Scheme Shareholders (with or subject to any modification, addition or condition approved or imposed by the Court and agreed to by Aricom and Peter Hambro Mining), particulars of which will be set out in the Scheme Document

Scheme Capital Reduction

the proposed reduction of the ordinary share capital of Aricom provided by the Scheme under section 135 of the Companies Act 1985

Scheme Court Meeting

the meeting (and any adjournment thereof) of the holders of the Scheme Shares in issue at the Scheme Voting Record Time to be convened by order of the Court pursuant to Part 26 of the Companies Act 2006 to consider, and if thought fit, approve the Scheme (in its original form or with or subject to any modification, addition or condition approved or imposed by the Court)

Scheme Court Order

the order of the Court sanctioning the Scheme under Part 26 of the Companies Act 

Scheme Document

the document to be posted to the Aricom Shareholders as soon as practicable following the Announcement Date containing and setting out, amongst other things, the terms and conditions of the Scheme, certain information about Peter Hambro Mining and Aricom, the Scheme and the notices convening the Scheme Court Meeting and the Aricom EGM 

Scheme Effective Date

the date upon which the Scheme becomes effective in accordance with its terms

Scheme Shareholders

the holders of the Scheme Shares

Scheme Shares

means:

a)    the Aricom Shares in issue at the date of the Scheme Document;

b)    (if any) any Aricom Shares issued after the date of the Scheme Document and prior to the Scheme Voting Record Time; and

c)    (if any) any Ordinary Shares issued at or after the Scheme Voting Record Time and at or prior to 6.00 pm (London time) on the business day before the Capital Reduction Hearing either on terms that the original or any subsequent holders thereof shall be bound by the Scheme and/or in respect of which the original or any subsequent holders thereof are, or shall have agreed in writing to be, bound by the Scheme,

d)    in each case, excluding any Aricom Shares beneficially owned by and/or registered in the name of Peter Hambro Mining

Scheme Voting Record Time

the time and date specified in the Scheme Document by reference to which entitlement to vote on the Scheme will be determined

subsidiary and subsidiary undertaking

have the meanings given to them to be construed in accordance with in the Companies Act 2006 

Takeover Offer

a takeover offer as such term is defined in Section 974 of the Companies Act 

Third Party

a central bank, government or governmental, quasi-governmental, supranational, statutory, regulatory, environmental or investigative body, court, trade agency, professional association, institution, employee representative body or any other such body or person whatsoever in any jurisdiction

UK or United Kingdom

United Kingdom of Great Britain and Northern Ireland

UK Listing Authority

the Financial Services Authority in its capacity as the competent authority under the Financial Services and Markets Act 2000

US or United States

the United States of America, its territories and possession, any state of the United States and the District of Columbia

Wider Aricom Group

Aricom, its subsidiaries, subsidiary undertakings and associated undertakings and any other body corporate, partnership, joint venture or person in which Aricom and such undertakings (aggregating their interests) have a direct or indirect interest of 20 per cent or more of the voting or equity capital or the equivalent

Wider Peter Hambro Mining Group

Peter Hambro Mining, its subsidiaries, subsidiary undertakings and associated undertakings and any other body corporate, partnership, joint venture or person in which Peter Hambro Mining and such undertakings (aggregating their interests) have a direct or indirect interest of 20 per cent or more of the voting or equity capital or the equivalent



This information is provided by RNS
The company news service from the London Stock Exchange
 
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