aricom plc
annual report 2008
anglorussian industrial commodities
aricom plc annual report 2008 aricom is developing mineral assets 
in russia’s far east with a current 
focus on iron ore and ilmenite for 
the highgrowth markets of china
road and railway connecting kuranakh operations with olekma annual report 2008 aricom plc
01
group overview
business review
corporate governance
financial statements
contents
group overview
01 highlights
04 geography
06 aricom’s unique position
08 timeline
10 chairman’s statement
11 chief executive ofﬁcer’s review
business review
14 kuranakh project
17 ks project
20 garinskoye
22 ks and garinskoye combined 
feasibility study
24 bolshoi seym project
25 kostenginskoye and garinskoye 
flanks projects
26 giproruda
27 titanium sponge plant
28 infrastructure
31 2008 report on health safety and 
the environment
36 board of directors
corporate governance
40 financial review
42 corporate governance
46 audit committee report
48 directors’ remuneration report
53 directors’ report
61 statement of directors’ 
responsibilities
financial statements
62 independent auditors’ report to the 
members of aricom plc
63 consolidated income statement
64 consolidated statement of 
recognised income and expense
65 consolidated balance sheet
66 consolidated cash flow statement
67 notes to consolidated financial 
statements 2008
95 parent company financial 
statements 2008
96 independent auditors’ report to the 
members of aricom plc
97 company balance sheet
98 notes to financial statements
103 deﬁnitions and glossary of 
technical terms
104 directors and advisers 
highlights
strong cash balance of us257 million at year end
first sales of preconcentrate iron ore achieved 
at kuranakh
kuranakh crushing and screening plant operational 
although sales of preconcentrate suspended until 
beneﬁciation plant operational in h2 2009
combined feasibility study completed for ks 
and garinskoye projects however progress delayed 
due to slow project ﬁnance markets
two acquisitions completed extending ks 
and garinskoye projects
titanium sponge joint venture established in china 
with chinalco
bridge project across amur river approved by 
chinese and russian governments
economic downturn leading to falling commodity 
prices and challenging project ﬁnance market
impairment charge of us386 million in recognition 
of downturn and consequential delay to projects
proposed recommended merger of peter hambro 
mining and aricom announced
key financial information
year ended year ended year ended year ended
31 december 31 december 31 december 31 december
2005 2006 2007 2008
net assets 17688 527405 1142396 757866
net cash equivalents and 
shortterm investments 566 89668 498478 257822
net lossproﬁt 3748 2582 111 426600
lossearnings per share 003 001 000 038
all ﬁgures in the above table are in us’000 except eps which is in us per share 
aricom plc’s key performance indicators are contained within the above table and 
selected highlights annual report 2008 aricom plc
02
group overview
mining operations at kuranakh annual report 2008 aricom plc
03
group overview
business review
corporate governance
financial statements annual report 2008 aricom plc
04
mongoli a
ch i n a
russ i a
amur
uk
s ve e m l ng and d ve dev
us g y p oj r r r sia d s 
e e eg e ne mine o ource o st t
o o f of fk g h d gio f of
a as wel ctu ruc tr str ns rt in or c ty e p p p
g l he om o c ho n o g g g g m
s com ustri du c c d
kuranakh – 100 owned ks – 100 owned garinskoye – 996 owned
geology medium sized titanomagnetite iron
ore and ilmenite deposit
development stage mining commenced and ﬁrst sales 
achieved completion due in h2 2009
forecast production annual average sales estimates of 
900ktpa iron ore and 290ktpa ilmenite
at full production
geology large magnetite iron ore deposit
development stage combined ks and garinskoye
feasibility study completed alternative 
development plans in place
future production potential annual average production estimate
of 36mtpa iron ore concentrate and 
potential to beneﬁciate to pig iron 
under combined scenarios
geology large magnetite iron ore deposit
development stage combined ks and garinskoye
feasibility study completed 
conﬁrmation drilling completed
future production potential annual average production estimate 
of 46mtpa iron ore concentrate and
potential to beneﬁciate to pig iron 
under combined scenarios
ore being loaded into crushing and screening
plant at kuranakh new federal road next to ks a a view of garinskoye annual report 2008 aricom plc
05
n
   
 30 000 
2 

i 15 000   
l e g e n d
ﬁreprevention regulations
2arrangement of the key production facilitiesto be designed by sti is made with
py titanium sponge plant the ﬁrst phase capacity is 15 000 tpy provided by sami institute
1this drawing is based on the general layout of former cement works site of 30 000 
n o t e s 
a consideration of the most practical and process links and meeting sanitation and
access rail road of former cement works
eastern jiamusi station
dasian road
dasian road
greenland
greenland
greenland
to mudanjiang river
sunsing street
to jianan substation
sunsing street to highway 221
liquefaction station
to tongjiang rive
to tunsan road
ve
ch i n a
russ i a
amur
eao
vladivostok
nakhodka
grodekovo
blagoveshchensk
zabaikalsk
chita
harbin
sovetskaya gavan
kuranakh
titanium sponge
ks
bolshoi seym
port
garinskoye
bridge
group overview
business review
corporate governance
financial statements
bolshoi seym – 49 associate titanium sponge plant – 
65 joint venture
infrastructure projects
geology medium sized ilmenite and magnetite
iron ore deposit
development stage early stage exploration
future production potential two concentrates ilmenite and iron ore 
titanomagnetite
creation of the joint venture in china with chinalco
completion of preliminary design of processing plant and equipment
start of works at project site in jiamusi tenders launched for plant and machinery 
bridge intention to participate in the
construction of a bridge over the 
amur river between russia and china
port viability of design and construction of 
a 7mtpa iron ore transhipment terminal
in russia’s far east under review
transsiberian railway
other rail routes
border
 key
a view of bolshoi seym deposit plan of proposed plant layout current port at sovetskaya gavan 06
annual report 2008 aricom plc
aricom’s unique position
projects people
kuranakh generates ﬁrst revenues combined ks and garinskoye feasibility study completed
kostenginskoye and garinskoye flanks acquisitions completed providing natural 
expansion potential to the ks and 
garinskoye projects respectively
portfolio
aricom’s pipeline of mining projects as well as 
its infrastructure opportunities has focused the 
group on creating a low cost anglorussian 
industrial commodities champion crucial 
construction and operational experience has 
been obtained at the kuranakh mine which 
generated its ﬁrst revenues in june 2008 
the key ks and garinskoye projects have 
taken further developmental steps with the 
completion of the combined feasibility study 
there remains the opportunity to move further 
up the value chain through aricom’s titanium 
sponge joint venture and the potential to 
upgrade ks’s processed iron ore to pig iron
continuing focus on the challenge of recruitment and training of local talent 
management incorporating russian operational expertise and western market 
and corporate experience
by 31 december 2008 985 people were employed by the group
a cornerstone of the company’s development 
is our people as the portfolio develops 
aricom has increased its recruitment drive 
with various initiatives including advertising 
campaigns management training programmes 
and university scholarships mostly 
concentrated on the amur and eao regions 
preconcentrate from kuranakh being loaded onto wagons at olekma mining supervisor at kuranakh 07
annual report 2008 aricom plc
mongolia
ch i n a
russi a
amur
group overview
business review
corporate governance
financial statements
geography infrastructure
close proximity to russianchinese border long term freight advantage compared to global industrial commodities producers
china remains the key market for aricom with 
the beneﬁt of local rail transportation aricom 
continues to believe that the combination of an 
abundance of mineral resources and proximity 
to china is a valuable combination of geology 
and geography the nearby heilongjang 
region of china has a number of steel plants 
and in the medium term the chinese market 
for iron ore is expected to grow further
advantageous location of projects close to transsiberian and bam railroads
access to locally generated hydroelectric power and the national grid
potential for further cost advantages through construction of planned bridge 
south of ks into china
rail
all of the assets within the portfolio are planned 
to be connected to the rail network both the 
transsiberian and bam railways pass through 
the amur region with the transsiberian 
continuing into the eao and running some 4km 
from the planned plant site for the ks deposit 
this proximity to rail infrastructure is expected 
to give aricom signiﬁcant cost advantages
power
aricom’s proposed operations are in areas 
that have access to the national grid and to 
the power provided from hydroelectric power 
stations located in this part of russia
port
aricom is studying the viability of design 
and construction of a 7mtpa iron ore port 
in russia’s far east to provide access 
to the global sea borne market
regional map of russianchinese border bam railway at kuranakh annual report 2008 aricom plc
08
timeline
2008
january
completion of a 
feasibility study for 
development of a 
titanium sponge 
production plant and 
the execution of a 
binding memorandum 
of understanding with 
chinalco the largest 
nonferrous metals 
company in china
march
acquisition of 
options to purchase 
kostenginskoye and 
garinskoye flanks 
licences providing 
signiﬁcant natural 
expansion potential 
to the existing ks 
and garinskoye 
projects respectively 
may
formal process 
commenced for 
the funding of 
construction and 
development for the 
ks and garinskoye 
iron ore projects
june
aricom achieves 
ﬁrst revenue from 
kuranakh project
preconcentrate from kuranakh being loaded onto wagons at olekma annual report 2008 aricom plc
09
group overview
business review
corporate governance
financial statements
2009
august
titanium sponge 
joint venture with 
chinalco established
september
acquisition of 
garinskoye flanks 
and kostenginskoye 
licences completed
october
completion of 
combined feasibility 
study for garinskoye 
and ks projects 
proving viability 
of both projects 
and independently 
reviewed by industry 
leading consultants
february
announcement of 
the ﬁrm intention 
of peter hambro 
mining to pursue a 
recommended merger 
with aricom which 
will upon completion 
create a mining 
industry leader in the 
far east of russia
november
aricom signs 
memorandum of 
understanding with 
mcc relating to 
the construction 
of a beneﬁciation 
plant at ks
february
aricom announces 
a revised ks 
development plan annual report 2008 aricom plc
10
chairman’s s
aricom’s portfolio of assets has seen a number of signiﬁcant 
advances during 2008 and it was therefore disappointing
not to see them reﬂected in the yearonyear share price 
performance which was understandably impacted by the
global economic crisis
in 2008 we saw our ﬁrst sales revenue at kuranakh and whilst the
contribution from these early stage sales was not material the
testing of the group’s logistics division has been invaluable and has
proved our ability to produce and ship our product to market i am
conﬁdent that we will be fully commissioned by the end of 2009 at
both the kuranakh and olekma plants which will see production of 
two proﬁtable products
in october we published the feasibility studies on the combined
ks and garinskoye project which showed an attractive investment
return whilst maintaining a maximum funding requirement similar to
that announced a year earlier this was the culmination of a year’s
work and has been fully independently reviewed i believe this to
be a credit to the strength of the projects and the aricom team
external global market and credit factors have weakened 
perceptions of the global mining sector during the last quarter of 
2008 and in recognition of this new paradigm we are reworking
the project economic analysis in order to develop a more efﬁcient
funding structure preconcentrate sales at kuranakh have been 
suspended due to a weakening of demand although demand for 
our ﬁnal products remains strong
despite the share price performance over the last quarter 
i believe that the fundamentals supporting the aricom investment 
proposition remain strong and that we are arguably better 
positioned than many of our peers with an enviable cash position
at the start of 2009 of over a quarter of a billion dollars and
no debt
due to the current crisis as with many other mining companies the
board of aricom has reviewed the company’s portfolio of assets
and has provided for impairment where it is considered appropriate 
to do so in aricom’s situation this ﬁgure is material due to the 
sharp economic downturn and movement in the group’s share
price particularly versus the balance sheet value of the group’s
assets further information on impairment provisions is detailed in
the financial review on page 40
i would like to thank all the people who work within the group and
to welcome those who joined during 2008  whilst we are doing
our utmost to reduce costs i believe that one of the company’s 
most valuable assets is our human resource and we will continue to 
grow our key skill base as we move toward positive cash ﬂows 
with cautious optimism i believe that aricom begins 2009 from a 
solid base we have a strong balance sheet and a number of very 
large deposits within a full spectrum of mining development and 
delineation that are situated in close proximity to the border of 
one of the world’s largest growth markets in the second half of the
year we will be producing from our kuranakh project retaining our 
cost advantages into a local market from where demand for our 
products continues to remain strong
on 6 february 2009 it was announced that the independent board 
committees of aricom plc and peter hambro mining plc ‘phm’ 
had 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 independent
aricom board committee considered the merger to represent
an attractive opportunity to aricom shareholders as it will allow 
them to beneﬁt from i an enhanced market position scale and
growth platform and operational and strategic synergies through 
shared infrastructure of closely located operations ii cashﬂow
from the enlarged group’s portfolio of producing assets which 
would help fund the investment required for aricom’s longerterm 
development plans and iii the potential for signiﬁcant increase in
value of both peter hambro mining and aricom it is intended that 
the merger will be effected by way of a court sanctioned scheme 
of arrangement under part 26 of the companies act 2006 the
merger is conditional upon among other things certain russian 
regulatory conditions being fulﬁlled to the reasonable satisfaction 
of both companies the passing of the necessary resolutions by the 
shareholders of both companies and the sanction of the court
it is anticipated that if the conditions outlined above are fulﬁlled
the merger will complete in late april aricom intends to hold its 
annual general meeting after the expected date of completion 
of the merger  if the merger does not progress as anticipated
the annual general meeting may be held before completion 
of the merger in which case shareholders will be informed of 
arrangements for the annual general meeting
dr pavel maslovskiy
chairman
dr pavel maslovskiy left with jay hambro right annual report 2008 aricom plc
11
group overview
business review
corporate governance
financial statements
chief executive ofﬁcer’s review
capturing value by vertical integration
with all aricom projects we have explored the potential to 
move up the value chain into downstream processing in order 
to maximise the return the most advanced area in which we are 
addressing this capture of further value is the joint venture with 
chinalco to process kuranakh’s ilmenite into titanium sponge 
during 2008 the two parties ﬁnalised the joint venture agreement 
and entered into the ﬁrst stage of construction  
in addition our largest vertical integration project is our plan to 
upgrade our iron ore concentrate to direct reduced iron using 
the itmk3 process owned by kobe steel with whom we are in 
discussions this high valueadded product is in considerable 
demand in the local market and we are also in discussions with a 
number of potential construction partners
another area in which we have moved away from direct mining 
operations to utilise our current portfolio of assets and the 
availability of local expertise is the inhouse mining engineering 
institute giproruda the 163 specialists employed by girproruda 
carry out work on both aricom and third party projects and 
generate a proﬁt line for the group as well as aiding our internal 
analytical process  
balance sheet
aricom enters 2009 with a cash balance of us257 million and no 
debt  cash management has become a priority during the year 
and we have tried to maintain both a diversity of low risk banking 
exposure and blend of dollar and rouble deposits this has resulted 
in a relatively low return on investment and foreign exchange losses 
due to the weakening rouble
cash conservation is a priority for the group and a macro review of 
budgets and capital expenditure is in place all project decisions 
are under review pending funding progress
outlook
particularly in this market i would draw shareholders’ attention 
to the risk section contained in this report however i share my 
chairman’s cautious optimism in believing that aricom begins  
2009 well placed with strong mining assets a strong cash balance 
and a growing human resource i would like to thank everyone 
within the aricom group for all their hard work and i am conﬁdent 
that we can achieve our targets for 2009 and will continue to unlock 
shareholder value
jay hambro
chief executive ofﬁcer
the year in review saw aricom make signiﬁcant progress at key 
stages of project development and despite the weakened 
commodity markets the potential for our portfolio of assets to 
deliver long term shareholder value remains in place the key  
to unlocking this value is suitable funding
value creation in the mining portfolio
kuranakh advanced from mining to ﬁrst production during the year 
and despite signiﬁcant delays we are now seeing good progress 
at the olekma beneﬁciation plant with commissioning expected in 
the second half of 2009 the successful sales of preconcentrate 
demonstrated our logistics division’s ability to deliver to market 
whilst the crushing and screening plant is now capable of operating 
at a capacity of 1mtpa
aricom’s full feasibility study the results of which were published 
in october proved the value and viability of the ks project and 
was then independently reviewed for the beneﬁt of potential 
project ﬁnanciers the mine plan shows a life of 40 years on current 
reserves at an average mining rate of 10mtpa construction work 
on basic infrastructure at site has commenced and good progress 
is being made on relevant permitting and approvals
at garinskoye conﬁrmation drilling has been completed resulting 
in a proven minelife of 25 years at 10mtpa the initial capital outlay 
at garinskoye has been minimised by reducing the initial scope of 
operations at site to a mining crushing and screening facility the 
resultant preconcentrate would then be transported to the ks 
project where it would be blended with ks ore to generate a 65 
concentrate the study also shows a pleasing correlation of russian 
reserve estimates to the internationally accepted jorc standard  
the announcement of our combined feasibility study coincided 
with the initial peak in concerns on global credit markets and hence 
we have now reviewed further optimisations to reduce signiﬁcantly 
external funding requirements  
growth by acquisition
value accretive acquisitions remain an integral element of aricom’s 
growth strategy and during 2008 aricom acquired strategic 
extensions to both the ks and garinskoye projects although the 
potential investment return from these acquisitions is long term 
the size of the resource acquired lifts garinskoye and ks to a size 
that is equivalent to a tier 1 world class project annual report 2008 aricom plc
12
business review
aricom’s ﬂeet of volvo trucks at kuranakh annual report 2008 aricom plc
13
corporate governance
financial statements
group overview
business review annual report 2008 aricom plc
14
amur
kuranakh project
first sales of iron ore pre concentrate achieved
crushing and screening plant operational
initial development of open pit completed 
progress on construction of beneﬁciation plant and 
infrastructure 
background picture atlas copco drill at kuranakh
inset picture conveyor at the crushing and screeing plant at kuranakh
reserves and resources
kuranakh gkz
 saikta ore mt grade  fe mt
b 55 329 18
c1 189 320 61
c2 118 330 39
total 362 324 118
jorc
ore mt grade  fe mt
measured – – –
indicated 379 321 122
inferred – – –
total 379 321 122
 srk and wai found the reserves to be generally jorc compliant additional exploration of the
other six ore bodies is scheduled in order to increase the estimated resources available for mining annual report 2008 aricom plc
15
corporate governance
financial statements
business review
group overview
kuranakh project 
titanomagnetite deposit nearing commissioning
location
north west amur region
ownership
llc olekminsky rudnik – 100 aricom subsidiary
licence area
85km²
life of mineable reserves
15 years
number of ore zones
two with six more suggesting exploration
expected per annum production
09mtpa titanomagnetite 029mtpa ilmenite
background
llc olekminsky rudnik ‘olekminsky rudnik’ the 100 owned 
subsidiary of aricom holds the licence for the exploration and 
development of the kuranakh ilmenite and titanomagnetite deposit 
in the north west of the amur region kuranakh was acquired in 
december 2003 from peter hambro mining plc
mining 
the stripping of overburden and mining of ore continued 
throughout the year at the saikta open pit mining was 
concentrated on the 740–770 elevation benches with the majority 
of ore coming from the 740 bench as budgeted a surveyed 
total of 789500m³ of overburden and 100500t of ore had been 
moved by the end of the year with the majority of the overburden 
material being used to build the haulroads in and around the site 
approximately 89000 linear metres of blast holes had been drilled 
by 31 december 2008 
mining equipment
three ekg5a electric rope shovels have been working in the open 
pit with the remaining two expected to be operational in the ﬁrst 
half of 2009 the following mining equipment was delivered during 
the year
20 volvo a40e articulated trucks – all commissioned and operational
one atlas copco dml overburden drill anfo truck 10t capacity – commissioned and permitted and six howo preconcentrate haulage trucks processing 
kuranakh crushing and screening plant
despite the bad weather conditions including extremely low 
temperatures in the ﬁrst and last quarters of 2008 the construction 
works at the crushing and screening plant proceeded during the 
spring and summer all of the required equipment was purchased 
from chinese and ukrainian companies delivered to site and 
installed two cone crushers and one magnetic separator were 
commissioned in october 2008 and as a result the ﬁrst stage 
of the crushing and screening plant was commissioned and 
subsequently produced more than 10000t of preconcentrate 
out of this nearly 6000t was sold although production from the 
plant was subsequently suspended temporarily in december a 
further two cone crushers and three magnetic separators were 
commissioned in december and by the end of the year all of the 
plant buildings were fully enclosed and heated 
at full capacity 24mt of ore will be crushed annually to produce 
18mt of preconcentrate 
2008 progress
first shipments of preconcentrate
on 19 june 2008 aricom announced that it had completed the ﬁrst 
product sales from kuranakh the shipped product was an iron ore 
preconcentrate that was mined and processed from the kuranakh 
deposit this was an initial sale from previously stockpiled material 
which was delivered by truck from kuranakh to the aricom loading 
yard at the olekma railway station 
regular shipments of iron ore preconcentrate from the crushing 
and screening plant amounting to 5864t were delivered in 
october and november in early december owing to the rapidly 
deteriorating market conditions no longer supporting the economic 
value in selling preconcentrate sales were suspended to await 
commissioning of the olekma processing plant in mid2009 by 
31 december 2008 13500t of preconcentrate had been produced 
and 10015t had been shipped
mining truck at kuranakh annual report 2008 aricom plc
16
kuranakh project continued
olekma process plant site
despite the overall delay generally good progress was achieved 
on construction throughout the year notwithstanding exceptionally 
cold weather in the ﬁrst and last quarters of 2008 further delays 
were experienced due to the late delivery of the electrostatic 
separators but by the end of december 2008 all processing 
equipment had arrived at the site and was ready for installation
speciﬁc progress on construction during 2008 included
completion of the outer shell of the main process building 300t of structural steel
completion of all internal frameworks including overhead bridge cranes
completion of internal thermal cladding and installation of heaters and
commencement of the concrete foundation platforms for equipment
construction and commissioning of the entire process plant is 
expected to be completed during h2 2009
infrastructure
support facilities 
the majority of the administrative accommodation and other 
associated support infrastructure was completed and in operation 
by the year end construction of the fourth accommodation 
block and transitional galleries between levels should be 
completed shortly whilst the heating and water treatment 
systems are operational and the site laboratory and site 
shop are almost complete
rail connection
completion of the assembly works associated with the rail tracks 
for the three site sidings and the spur line to the bam mainline is 
expected early in 2009 
human resources
recruitment for all levels of management and operational 
personnel is proceeding on schedule the human resources 
department made visits to various training institutes in the amur 
and other regions as well as conducting an extensive advertising 
campaign both in the russian far east and major university cities 
in addition aricom has commenced a full management training 
programme to attract young graduates to the operations at the 
end of 2008 the kuranakh project had a total staff of 576 working 
at kuranakh tynda and in the blagoveschensk regional ofﬁce
accommodation block at kuranakh annual report 2008 aricom plc
17
amur
corporate governance
financial statements
business review
group overview
ks project 
completion of the ks and garinskoye feasibility study 
signing of the mou with mcc for the construction of the 
beneﬁciation plant
site preparation and initial construction programme 
commenced
background picture an overhead view of ks
inset picture exploration drilling at sutara
reserves and resources
gkz
kimkan ore mt grade  fe mt
a 178 359 64
b 694 355 246
c1 1022 355 363
c2 323 352 114
total 2217 355 787
sutara est pre gkz approval
c1 3693 327 12076
jorc
ore mt grade  fe mt
measured – – –
indicated 1659 338 562
inferred 831 329 274
total 2490 335 835
measured – – –
indicated 2480 309 766
inferred 582 309 180
total 3062 309 946
 formally reviewed by wai february 2007 for prefeasibility study and now inputted into
micromine model
 jorc estimate as independently reviewed by wai further exploration work ongoing at sutara annual report 2008 aricom plc
18
ks project magnetite iron ore deposit in development
location
obluchensky district of the eao
ownership
ks gok – 100 aricom subsidiary
licence area
kimkanskoye 224km² sutarskoye 27km²
life of mine
25–40 years
number of ore zones
kimkan 7 sutara 3
expected per annum production
36mtpa iron ore 25mtpa direct reduced iron
background
the ks ‘kimkanskoye’  ‘sutarskoye’ deposits were ﬁrst 
identiﬁed in the early 1950s and 1960s and are located close to 
both the transsiberian railway 4km and the chinese border 
c60km the licences over the two deposits were granted to 
llc rubicon now known as ks gok in february 2006 and have 
a term of 20 years which is extendable with the consent of the 
licensing authority in april 2006 aricom acquired an option to 
purchase 50 of llc rubicon which holds the licences in june 
2006 aricom acquired the 50 interest in ks not subject to 
the option and subsequently exercised the option and completed 
the transaction in august 2007 consequently owning 100 of 
the ks project
2008 progress
exploration
drilling
geological exploration works were completed at kimkanskoye 
‘kimkan’ and continued at sutarskoye ‘sutara’ with ﬁve 
exploration borehole drills being used overall by the end of 
december 2008 c21000 linear metres of drilling and 47000m³ of 
trenches were completed all geological and geotechnical drilling 
is expected to be completed by mid 2009
hydrogeology
during 2008 six hydrogeological boreholes were drilled lined 
and capped ready for pumping in may 2008 gkz conﬁrmed 
water pumping potential of 5000m³ per day following extensive 
test pumping of underground aquifers and water analysis 
the hydrological works at the kimkan river and hydrological 
exploration works at sutara are ongoing and results are expected 
during the ﬁrst quarter of 2009
geotechnical
geotechnical exploration for the accommodation camp and the 
process plant sites and in the area of the tailings management 
facility was completed in the ﬁrst quarter of 2008 and tree 
clearance commenced in the areas approved by the federal 
authorities at the kimkan deposit a local construction company 
tested the overburden stripping material to determine whether it 
can be used for construction purposes with results due shortly
reserves and resources
in september 2008 aricom completed the conversion of 
ks reserve and resource calculations from the russian gkz 
classiﬁcation to the internationally accepted jorc classiﬁcation 
exploration camp at ks
jorc resources of the kimkan deposit cutoff grade 25 fe total
speciﬁc
volume tonnage weight fe total
category ‘000m³ ‘000 m³t 
indicated 49641 165826 33 338
inferred 25693 83120 32 329
total 75334 248946 33 335
jorc resources of the sutara deposit ore body 1 cutoff grade 24 fe total
speciﬁc
volume tonnage weight fe total
category ‘000m³ ‘000 m³t 
indicated 72944 248011 34 309
inferred 17116 58197 34 309
total 90060 306208 34 309 annual report 2008 aricom plc
19
corporate governance
financial statements
group overview
business review
new federal road next to ks
procurement and construction
aricom held discussions with a number of local and international 
companies regarding the construction contracts for processing 
and infrastructure negotiations focused on local contractors 
for the smaller more numerous infrastructure contracts roads 
rail connections power and water supplies and international 
contractors for the larger contract for constructing the mine and 
process plants 
the contract negotiations for the processing plant culminated 
in october 2008 with aricom entering into a nonbinding 
memorandum of understanding with china metallurgical group 
corporation ‘mcc’ mcc are one of the largest equipment 
manufacturers in china and a leading chinese contractor to 
the metals and mining industry the mou provides the basis for 
discussions between aricom and mcc concerning the signing of 
an engineering procurement and construction agreement ‘epc’ 
contract based on an internationally recognised form of contract 
such as the international federation of consulting engineers 
fidic for ﬁxed price epcturnkey projects 
negotiations with equipment manufacturers to supply both the 
ks and garinskoye projects with crushers screens ball mills 
magnetic separators and specialised vehicles took place during 
the second half of the year 
by the end of december 2008 construction work had commenced 
on access roads and site clearing for a temporary construction camp
social and environmental
public consultation
two public consultations on the project were organised in may 
and june 2008 in conjunction with the eao government and 
the local district administration a preliminary consultation 
gathered approximately 70 local citizens potential employees 
and representatives of the authorities whilst the main public 
hearing attracted 155 participants the issues discussed at both 
meetings included the social and environmental impacts of the 
project regional infrastructure development and employment 
opportunities participants unanimously supported the project
human resources
at the end of december 2008 118 people were employed in the 
regional ofﬁce in birobidjan and at the ks project site annual report 2008 aricom plc
20
amur
garinskoye
completion of initial exploration drilling
completion of public enquiry background picture a view of garinskoye
inset picture a view of garinskoye
reserves and resources
gkz
garinskoye ore mt grade  fe mt
a 225 427 96
b 613 432 265
c1 1277 408 521
c2 1773 408 723
total 3888 413 1605
jorc equivalent
ore mt grade  fe mt
measured – – –
indicated 2440 342 835
inferred 1469 316 464
total 3909 332 1299
 jorc estimate as independently reviewed by wai annual report 2008 aricom plc
21
corporate governance
financial statements
group overview
business review
garinskoye
magnetite iron ore deposit in development
location
mazanovsky district in central amur
ownership
9958 aricom
licence area
12km²
life of mine
40 years
number of ore zones
one
expected per annum production
46mtpa iron ore
background
in october 2006 rosnedra the federal subsoil service initiated 
a tender for the licence to mine iron ore at the garinskoye 
deposit following the acquisition of an initial 7022 interest in 
garinskoye in september 2007 pursuant to an agreement dated 
march 2007 in december 2007 aricom conditionally agreed to 
increase its ownership in garinskoye to 9958 in february 2008 
a further 2926 owned by olis constructions limited ‘olis’ was 
purchased by aricom 
2008 progress
exploration
drilling
conﬁrmation and geotechnical drilling was ongoing throughout 
2008 and by the end of december a total of 2091 linear metres 
had been completed the geotechnical study of potential pit 
wall stability began in march and is being performed by a st 
petersburg based company this will continue throughout the 
winter drilling season and results are expected in early 2009
procurement and construction
negotiations with equipment manufacturers to supply both the 
ks and garinskoye projects with crushers screens ball mills 
magnetic separators and specialised vehicles took place during 
the second half of the year 
the geotechnical research and work necessary for receiving 
approvals for the construction of the access roads and other 
infrastructure commenced in july the survey and design works 
for the ﬁrst stage of the construction of the access roads will 
commence in the ﬁrst half of 2009 
environmental studies
a contract was signed with a local environmental specialist 
to prepare the preliminary environmental impact study for 
the garinskoye project this study based on the results of 
environmental baseline conditions was ﬁnished in october and 
the results will be incorporated into the ﬁnal ovos report russian 
environmental impact assessment to be issued in 2009 the 
results of the preliminary study concluded that despite impacts on 
the environment and the local populace the overall social impact 
of the project will be beneﬁcial and will result in improvements to 
regional infrastructure and an increase in local employment
public consultations
the garinskoye public enquiry took place on 4 december 2008 
with over 250 attendees from the local communities administration 
and related stakeholders aricom gave presentations on project 
development environment and employment opportunities whilst 
a number of local stakeholders had concerns over the effect of 
a large industrial project on an otherwise rural environment the 
majority of attendees were supportive
human resources
aricom has embarked upon a programme to select local high 
school students for further education and training the students 
will receive an aricom scholarship to study at universities in russia’s 
far east and will be guaranteed employment at the end of their 
study period by 31 december 2008 17 people were employed on 
the garinskoye project in blagoveschensk
a view of garinskoye annual report 2008 aricom plc
22
background
in october 2008 aricom completed and published the results of 
its combined ks and garinskoye feasibility study 
the study envisaged both ks and garinskoye being developed 
by open pit mining methods both mining ore at the rate of 10mtpa 
and both delivering their ore to feed a single optimised processing 
plant to be located at ks the study also included plans to 
commission a direct reduced iron ‘dri’ facility at the ks project 
site utilising iron ore concentrate feed from the processing plant to 
produce iron nuggets
the study received positive independent review by industry 
leading consultants including wardell armstrong international and 
hatch engineering and in addition jorc reserve estimates were 
independently generated for ks and garinskoye which showed 
good correlation to historical estimates
process
the central processing plant at ks would process both the 
preconcentrated ore from garinskoye 726mtpa and the 
runofmine ore from the kimkan and sutara pits 10mtpa with 
annual production of 82mtpa of iron concentrate at 65 fe 
approximately 375mtpa of that concentrate will be sent to the 
proposed dri plant for further processing the balance some 
455mtpa will be sold as concentrate 
the dri plant which will be located in the same industrial complex 
as the processing plant is expected to use the kobe steel ltd 
owned ‘itmk3’ technology which uses a coal based rotary hearth 
furnace to form iron nuggets at full production this plant should 
produce 25mtpa of iron nuggets which will be sold in this form
ks and garinskoye combined feasibility study
infrastructure
the ks project is located close to the transsiberian railway and 
the road and energy network the full feasibility study proposes 
that aricom will reconstruct a small section of historic railway 
connection and loadingunloading facilities the main area of 
infrastructure required is a camp for approximately 1100 people 
and relevant heating water and electricity supplies
the garinskoye project is located approximately equidistant 
between the transsiberian and bam railways the optimised study 
has looked at the local area in detail in order to reduce the original 
cost of constructing a railway connection to garinskoye from one of 
the national networks aricom commissioned a study from a north 
american contractor for the construction of a 124km cable belt 
conveyor connecting garinskoye to a spur from the transsiberian 
railway at shimanovsk where aricom would build a storage area 
and loading facilities the second main area of infrastructure 
required is a camp for approximately 500 people and relevant 
heating water and electricity supplies
mineable reserve analysis
the company used a russian contractor to construct detailed 
mine plans for both the ks and garinskoye projects using both 
historical geological data as used in the gkz reserve and resource 
data and the more recent conﬁrmation drilling that aricom 
has undertaken the following table sets out this information 
and highlights the good correlation between the historical 
mineable reserves to what has been redrilled and 
independently reviewed recently
gkz mineable jorc mineable
gkz reserve estimate reserve estimate estimated mine life
resource estimate   
garinskoye 388mt at 413 223mt at 385 220mt at 379 25 years
ks 564mt at 337 539mt at 337 377mt at 318 40 years
total 953mt at 367 762mt at 351 597mt at 340 40 years
 conﬁrmed by gkz in 1956 for kimkan deposit and calculated but not conﬁrmed for the sutara deposit
 conﬁrmed by gkz in 1956
 mineable reserve estimated as gkz a  b  c1 categories
 mineable reserve estimate as independently reviewed by wai
 mine life as estimated by aricom studies at forecast annual mining capacity and based on reserves before the addition of resources and halo areas
drilling at ks annual report 2008 aricom plc
23
corporate governance
financial statements
group overview
business review
geological exploration camp at sutarskoye
capital expenditure
the maximum capital expenditure requirements for the differing phases of the various projects are detailed below 
to concentrate on to dri
us million ks garinskoye ks total
design  other   29 37 88 154
infrastructure   157 549 7 713
mining 7447na121
beneﬁciation   276 69 971 1316
total 53670210662304
the majority of these estimates are based on actual quotations 
received for the purpose of this analysis all capital expenditure 
totals are shown as preproduction and so do not include ongoing 
sustaining capital expenditure which is expected to be on average 
us10 million per annum 
construction contracts
the working assumption is that aricom manages a number of 
subcontractors for the construction and development of the 
necessary infrastructure and initial mining operations
in november 2008 the company entered into a nonbinding 
memorandum of understanding ‘mou’ with china metallurgical 
group corporation ‘mcc’ one of the largest equipment 
manufacturers in china and a leading chinese contractor to the 
metals and mining industry the mou relates to the construction 
of the central processing plant at ks and provides the basis for 
discussions between aricom and mcc concerning the signing of 
an engineering procurement and construction agreement ‘epc’ 
contract based on an internationally recognised form of contract 
such as the international federation of consulting engineers 
‘fidic’ for ﬁxed price epcturnkey projects
the dri plant would be the subject of a separate contract and 
aricom has received a proposal from an international contractor
revised ks 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 ks 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 ks operation has been developed 
based upon mining ore at an initial capacity of 35mtpa increasing 
in year seven to 10mtpa to be delivered to a processing plant 
producing 11mtpa of saleable iron ore concentrate at a grade of 
658 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 075mtpa of iron ore concentrate to 
produce 05mtpa of dri nuggets
the ks 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 in the cost of the processing 
plant and nearly 80 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 us70 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 reduction versus the 
original plan
any option to reduce the size of the ks 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 versus the original plan overall capital 
expenditure for the reduced ks project to progress to the start
up stage is estimated to be approximately us420 million us116 
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 ks is under constant review to minimise 
cash outﬂow whilst keeping some positive momentum on 
project development annual report 2008 aricom plc
24
amur
bolshoi seym project titanomagnetite exploration deposit
background picture a view of bolshoi seym deposit
location location
tyndinski district 40km to south 
of kuranakh
ownership ownership
49 aricom 51 managing company 
intergeo llc ‘intergeo’
licence area licence area
26km²
life of mine life of mine
na
number of ore zones number of ore zones
na
expected per annum production expected per annum production
na
background
in february 2006 aricom entered into 
a heads of agreement with timia a 
company related to interros which is 
the major shareholder in ojsc norilsk 
nickel the heads of agreement 
related to the establishment of a new 
holding company for llc uralmining 
‘uralmining’ the company that owns 
the licence to develop the bolshoi 
seym deposit the holding company is 
49 owned by aricom and 51 owned 
by timia with aricom appointing the 
general director of uralmining 
2008 progress
exploration
drilling
the drilling operations have been 
conducted on a pattern 200m long by 
100m wide 49 inclined boreholes were 
drilled during the year on nine cross
sections most of the drilling operations 
were concentrated in the eastern ore 
zone and one crosssection was drilled 
that intersected the ore bodies of the 
western ore zone geophysical logging 
was conducted in all of the boreholes the 
drilling results to date indicate that the ore 
bodies have a thickness of between 10 to 
30m the ore bodies have been explored to 
a depth of 400m
the ﬁeldworks completed by 31 december 
2008 included
geologicalenvironmental works on analysis of the baseline conditions 
environmental samples were sent to the 
center of hygiene and epidemiology 
37375 linear metres of drilling works were completed including four 
hydrogeological boreholes 852m
17526 core samples were taken and the analytical results of 10732 samples were 
received by urangeo the subcontractor 
responsible for sample analysis
7800m³ of trenching works were 
completed
3952m 3
 of trench samples were 
completed and analysis results obtained 
for 498 samples and
two technological samples were sent to analytical laboratories – 23t were sent 
to apatity and 315t were sent to 
udokan
the project is under review
reserves and resources
gkz
bolshoi seym ore mt grade  fe mt
c2 2700 180 486
p1 4300 178 765
total 7000 179 1251
jorc equivalent
ore mt grade  fe mt
indicated – – –
inferred 2700 180 486
total 2700 180 486
 kulakov 1988 estimate
note these values are geological cutoffs and tend to deﬁne the margins of mineralisation wai is
satisﬁed with this methodology adopted by aricom annual report 2008 aricom plc
25
amur
corporate governance
financial statements
group overview
business review
background picture a view of garinkskoye
kostenginskoye and 
garinskoye flanks projects
background
in march 2008 aricom acquired options 
to purchase two licences close to the 
existing ks and garinskoye projects 
the options were acquired from two 
cypriot companies which indirectly held 
the licences with two cash payments 
of us225 million paid at the time of 
the announcement subsequently in 
september the options were exercised 
and a further payment was made 
consisting of the allotment and issue of 
10937500 21875000 in total ordinary 
shares of £0001 each in the capital of 
the company ‘consideration shares’ 
credited as fully paid to the sellers
kostenginskoye
the kostenginskoye licence covers an 
area located approximately 25km to the 
south of aricom’s ks project this will 
provide signiﬁcant natural expansion 
potential to the existing project at ks
to date preliminary site surveying and 
aerial magnetometer surveys have taken 
place at kostenginskoye the programme 
for the exploration of the deposit was 
developed by aricom and approved by the 
local khabarovsky region authorities and 
will commence in q1 2009 it will include
bore hole drilling – a exploration – 39585m
– b technological – 4780m
– c hydro geological – 2800m
– d sterilisation – 500m
trenching – 159600m³ geomagnetic surveying – 125km² and sampling – 17641 samples garinskoye flanks
the garinskoye flanks licence covers an 
area of 3530km² immediately surrounding 
aricom’s current garinskoye licence aricom 
is preparing and reviewing the exploration 
programme
reserves and resources
gkz
kostenginskoye ore mt grade  fe mt
abc1c2 1639 316 518
p1p2 1000 316 316
total 2639 316 834
garinskoye gkz
flanks ore mt grade  fe mt
abc1c2 63 413 26
p1p2 9750 413 4026
total 9813 413 4052
jorc equivalent
kostenginskoye ore mt grade  fe mt
indicated – – –
inferred 1639 316 518
total 1639 316 518
garinskoye jorc equivalent
flanks ore mt grade  fe mt
indicated – – –
inferred 63 413 26
total 63 413 26 annual report 2008 aricom plc
26
giproruda
background
based in st petersburg and employing 163 people at 31 
december 2008 giproruda is one of russia’s most respected 
mining design institutes specialising in the analysis and design of 
both open pit and underground mining projects giproruda has 
considerable experience in extreme mining geological and climatic 
conditions aricom holds a 703 interest in giproruda
iron ore is a key area of the institute’s expertise this will be of 
speciﬁc beneﬁt in the analysis and design of a number of aricom’s 
future and existing development projects giproruda continues its 
work programme for other customers and estimates that it currently 
has a 60 market share in the project design services sector in the 
russian mining sphere
completion of the garinskoye prefeasibility study
completion of the new hydrometallurgical laboratory
2008 progress
during 2008 giproruda conducted studies on
the garinskoye feasibility study as described previously a far east russian oil and gas project for a third party and a gold project for a third party all the main key performance indicators for 2008 exceeded 
the forecast results by between 15 and 30 with three of 
the institute’s design projects being approved by the federal 
authorities in 2008 giproruda also introduced new technology for 
design and cost accounting and an it modernisation programme 
including the purchase of the latest mine planning software
hydrometallurgical laboratory
in december 2008 giproruda opened their new hydrometallurgical 
laboratory in st petersburg this state of the art laboratory is 
equipped with the latest hydrometallurgical test equipment from 
switzerland the focal point of this new facility is the installation 
of three autoclaves for heat and pressure testing of ores there 
are two specialised ecological systems in the laboratory which 
purify the autoclave emissions and thus allow the laboratory to be 
sited close to the centre of st petersburg the laboratory will be 
available for third party test work from the ﬁrst quarter of 2009
computerised design annual report 2008 aricom plc
27
amur
corporate governance
financial statements
group overview
business review
titanium sponge plant downstream chinese joint venture
location location
jiamusi city china
ownership ownership
65 aricom 35 aluminium corporation of china ‘chinalco’
background 
in order to capture additional proﬁt margins available in the 
processing of ilmenite to be produced by kuranakh in june 2006 
aricom signed a memorandum of understanding with chinalco
the largest nonferrous metal company in china and the owner of 
china’s largest titanium metal processing plant for the design and 
development of a titanium sponge production plant in china 
aricom will provide the joint venture with capital ilmenite from
its kuranakh project and expertise in titanium resources and
technology chinalco will provide capital technologies proﬁciency 
in engineering design construction and metal production and 
ensure offtake of the titanium sponge to be produced by
the plant
2008 progress
project approval by the chinese authorities and creation 
of the joint venture
during the ﬁrst half of 2008 aricom and chinalco completed
all necessary surveying at site and ﬁled an application with the
chinese authorities for the establishment of a joint venture in 
jiamusi city heilongjiang province china the relevant approvals 
from the ministry of environmental protection the ministry for 
land and resources china ministry of commerce and crucially 
the china national development and reform committee were
subsequently obtained in the summer and in september 2008 
the joint venture now called heilongjiang jiatai titanium co was 
registered and received its business licence on 10 september 
2008 the ofﬁcial ceremony of laying the foundation stone was
conducted and the ﬁrst board meeting was held
the joint venture commenced negotiations with the chinese banks 
on the issue of project ﬁnancing during the fourth quarter 2008
design
the basic design of the processing plant and necessary equipment
was completed by the state titanium and design institute of 
ukraine sti in june 2008 whilst the preliminary design of the 
whole plant is expected to be completed by shenyang aluminium
and magnesium institute sami in the ﬁrst half of 2009 
the full detailed design of the plant will be completed jointly by sti 
and sami in september 2009
site preparation and construction
construction exploration works are being carried out by a company
from xian which commenced a drilling programme and seismic 
surveys at the construction site in november 2008 in preparation 
for the start of the main construction programme which is
currently expected to be in the spring of 2009 site levelling
has already begun 
several tenders have already been sought for the procurement 
of the plant and machinery and the joint venture still expects full 
commissioning of the plant by the end of 2010 
this project is under review
creation of the joint venture with chinalco completion of preliminary design of processing plant and equipment
start of works at project site in jiamusi tenders launched for plant and machinery titanium sponge opening ceremony in jiamus city annual report 2008 aricom plc
28
eao
infrastructure
background picture an overhead view of the sovetskaya gavan bay
inset picture current port at sovetskaya gavan proposed bridge site annual report 2008 aricom plc
29
corporate governance
financial statements
group overview
business review
background
aricom is participating in the project for a bridge over the amur 
river the site is close to the russian town of nizhneleninskoye 
and the chinese town of tongjiang the river at this location has 
an approximate width of 1km and a maximum depth of between 
approximately 5 to 6m the russian railway network has a 
connection to the town of nizhneleninskoye from the transsiberian 
railway station at the capital of the eao birobidjan this connects 
the network to nizhneleninskoye where there is an established 
crossing point of the riverborder this crossing is currently served 
by a natural ice bridge for approximately three months of the year 
and a ferry for the remainder of the year
for aricom the presence of the new bridge suggests a saving in 
transport costs of approximately us40 per tonne of iron ore this 
bridge would also be available to other local industries and would 
be seen as a key advance for the local economy
2008 progress
intergovernmental approval
in 2008 the major focus was aricom’s involvement in progressing 
the intergovernmental agreement between russia and china by 
1 october 2008 all of the necessary approvals had been received 
from the relevant authorities and the documents were submitted 
by the ministry of transport to the government of the russian 
federation on 28 october 2008 at the meeting of the heads of 
governments of the russian federation and china the agreement 
was signed 
location
in the ﬁrst half of 2008 the location of the bridge and its overall 
design were ﬁnalised a wide range of geodetic geological and 
hydrological tests have being carried out at the project site 
working meetings were conducted between russian and chinese 
design companies both in birobidjan and in tongjiang during which 
the order of design works the bridge parameters and the future 
cooperation plan were agreed
a local design company has started the topographic surveying of 
the bridge site and further construction and infrastructural design 
the st petersburg bridge institute is working on the technical 
requirements for bridge construction 
further development
as no state ﬁnancing has been designated for this project and 
there has been no precedent in russia of having a privatelyfunded 
crossborder bridge consultations are currently being held by 
the russian state institute of comparative law in order to agree 
upon a legal framework when the legal framework has been 
deﬁned an investment proposal will be formed and construction 
can commence on the basis of current preliminary plans and 
assuming availability of ﬁnance construction of the bridge could be 
completed by 2013
the capacity of the existing railroad between birobidjan and 
nizhneleninskoye will not be enough to satisfy the cargo 
throughput of the bridge works on reaching an agreement with 
jsc ‘russian railways’ on upgrading the railroad from birobidjan 
to leninsk are ongoing 
infrastructure bridge ‘nizhneleninskoye – tongjiang’
consolidated intergovernmental agreement approved 
bridge location speciﬁed artist’s impression of bridge annual report 2008 aricom plc
30
2008 progress
special economic zone status
following a successful tender the land is expected to be granted 
special economic zone ‘sez’ status the status is awaiting 
conﬁrmation from a governmental decree after which sgmtp 
will be able to complete the formalities of applying for a status 
of a resident company in the zone such companies will enjoy a 
number of governmental beneﬁts including state ﬁnancing of the 
modernisation of the railway construction of a marshalling yard 
near the port and improvements in the power grid capacity other 
beneﬁts include lower taxes and importexport duties depending 
on the commodity
in october 2008 the federal agency for sezs visited the area to 
meet with local authorities and study the scope and volume of 
infrastructure works to be carried out at government expense 
in december 2008 at a meeting of the maritime panel of the 
russian federal government first deputy prime minister sergey 
ivanov stressed that the development of sezs for ports and their 
adjacent infrastructure as well as the promotion of publicprivate 
partnership in the development of the zones was and will be 
among the top priorities of the russian government maritime panel 
and federal agency for sezs
future development
in preparation for the construction sgmtp is applying for a licence 
that would allow it to act as the construction supervisor
in 2009 aricom will continue dialogue with potential strategic 
partners and also study the possibility of teaming up with other 
bulk commodity producers to jointly construct and operate the 
bulk terminal
container terminal
in 2008 aricom began plans for the potential construction 
of a container terminal in addition to the bulk terminal situated 
inside the sez the container terminal could be a separate 
commercial project which would use the same railway branch 
and marshalling yard 
the bam has the potential to be a faster rail link to europe than 
the transsiberian railway from the other ports in russia’s far east 
such as nakhodka and vladivostok in addition the sovetskaya 
gavan gulf has better depths and manoeuvring capabilities 
allowing reception of vessels with deadweight of more 
than 200000t
aricom is currently talking to a number of potential strategic 
partners regarding the ﬁnancing of construction and the 
management of the port
infrastructure sea terminal in the sovetskaya gavan gulf
sovetskaya gavan won a tender to manage a special seaport economic zone
active interest from potential partners background
in order to reduce transport costs and to improve the number 
of logistical options for the group’s mining projects aricom is 
studying the viability of the design and construction of an iron 
ore transhipment terminal in russia’s far east the terminal would 
provide facilities for the unloading of incoming railway carriages 
temporary storage of ore and loading ore onto sea transport for 
further shipment to the global seaborne market
the new terminal is expected to be constructed in the area of 
the existing sovetskaya gavan sea port situated in the sovetsko
gavanski municipal district of khabarovsk krai located at the 
terminus of the bam sovetskaya gavan was proposed as the 
location of the new port in view of its proximity to aricom’s 
mining projects convenient access to the bam and favourable 
hydrological and meteorological conditions
the project is supported by the russian federal government and 
the khabarovsk krai local government both of which have included 
it in their long term development plans for the region in addition 
it is also taken into account by the russian railways in their 
development plans for the bam given the small scale of existing 
industrial enterprises in the sovetskogavanski municipal district 
the terminal may become a landmark enterprise in the area
aricom has established a whollyowned subsidiary limited 
company sovetskaya gavan sea trade port ‘sgmtp’ in 
khabarovsk krai the company leased a plot of land of 100 
hectares on maria cape in sovetskaya gavan bay where the 
terminal may be sited 
a preliminary feasibility study for the bulk terminal and the adjacent 
railway infrastructure was completed by the russian design 
institute npo gidroteks in 2007
aerial view of sovetskaya gavan gulf annual report 2008 aricom plc
31
corporate governance
financial statements
group overview
business review
2008 report on health safety 
and the environment annual report 2008 aricom plc
32
introduction
aricom recognises that sustainable development is based upon 
two key issues firstly that everyone – companies employees 
families communities administrations and political organisations 
– is connected and secondly that these interconnections exist 
within the natural environment what happens in one has an impact 
– both positive and negative – on the other aricom acknowledges 
this and acts accordingly consequently we are integrating the 
standards of sustainable development into everything we do 
including the design and evaluation of projects mine planning and 
decommissioning and methods of raising ﬁnancial capital to fund 
our projects 
health safety and environmental management
aricom is a developing company which realises that its health 
safety and environment hse responsibilities increase with the 
corresponding increase in the scale of its activities we comply with 
both russian legislation guided by the environmental protection 
agency of the russian federation ‘rosprirodnadzor’ and with 
international good practice the international finance corporation 
performance standards on social and environmental sustainability 
and environmental health and safety guidelines 
aricom considers health safety and environment as one of its 
major priorities and has formed a hse committee at the level of 
the board of directors the committee comprises four directors 
including two nonexecutive directors one of whom is the 
chairman of the committee the chairman of aricom and the 
technical director the body monitors performance and ensures 
that we act consistently across all of our projects in relation to hse 
during 2008 we have employed a number of hse specialists 
including an environmental manager based in moscow who leads 
the team of ecological engineers and environmental specialists 
at the kuranakh ks and garinskoye projects this department 
coordinates aricom’s daytoday hse activities
aricom has appointed independent consultants wardell 
armstrong international who visit our projects located in the 
russian far east twice a year they report directly to the board 
of directors
requirements
aricom works in strict compliance with the legislation of the russian 
federation and fully supports compliance with good international 
industry practice giip and with ifc performance standards and 
world bank guidelines our hse personnel ensure that all of our 
projects have the necessary documentation licences and permit 
approvals in accordance with the laws regulations and other 
requirements where local legislation does not require an adequate 
level of hse performance aricom conducts its activities in a 
manner that is consistent with the relevant international standards 
and practices taking into account cultural and social features 
additionally aricom and the ifc have developed an environmental 
and social action plan to monitor our performance in meeting 
international standards 
health and safety procedures
aricom drafted hse procedures in 2007 and continued their 
reﬁnement and implementation in 2008 these procedures were 
ﬁrst introduced at the kuranakh project and are being introduced 
at ks and garinskoye project management is responsible for 
adapting these procedures to site speciﬁc requirements which 
ensures effective and consistent implementation throughout all 
our projects
health management
our employees are our major asset and their health is paramount 
our personnel contractors and visitors have access to adequate 
medical and ﬁrst aid services as appropriate to the location and 
nature of the operations aricom acknowledges the presence of 
inherent occupational health risks associated with the nature of 
our operations including noise dust hazardous materials and 
vibration alcoholism and drug abuse and insect borne diseases 
such as encephalitis sitebased health management schemes 
including regular checkups access to preventive medicines and 
health advice are being established to protect employees and 
contractors from health hazards associated with their employment 
each aricom project site is establishing a department responsible 
for industrial and labour safety which includes on site medical 
ﬁre and emergency specialists local communities’ health issues 
relevant to the company operations are also identiﬁed and 
managed by our human resources departments 
site based health management
where appropriate aricom employees and contractors undergo 
regular assessments to ensure their ﬁtness for work for the 
purpose of minimising health risks at site operators of machinery 
receive a short medical checkup at the beginning and the end of 
each shift the annual occupational health assessment and ongoing 
monitoring and medical surveillance programmes are conducted 
by competent specialists for all employees in 2008 we introduced 
a drug and alcohol management programme designed to increase 
employee awareness of the dangers of these substances
2008 report on health safety 
and the environment annual report 2008 aricom plc
33
corporate governance
financial statements
business review
group overview
occupational safety
aricom strives to prevent any kind of injury at our sites and 
maintains the highest level of safety in line with its commitment to 
occupational safety in the company the aricom board makes the 
site management accountable for compliance with safety policies 
leadership and awareness
employees receive regular instruction to increase their awareness 
of potential safety risks with site safety managers ensuring that 
staff have a clear understanding of these risks and the appropriate 
response measures to be taken following recruitment but prior 
to taking up employment aricom educates future employees in 
hse awareness this education and training is documented and 
refresher courses take place annually personal safety protective 
equipment pspe is required at all sites with management of each 
site responsible for the type of pspe needed and its deployment
safety performance
at kuranakh and ks we have introduced systems to coordinate 
measure and track our safety performance the project managers 
report monthly to the technical director and provide all of the 
relevant information on accidents incidents and lost time injury 
frequency rates 
other safety control measures include site visits and audits from 
external consultants management observations and inspections 
as well as safety communications meetings and toolbox talks 
accidents
between january 2007 and february 2008 aricom maintained an 
accident free record we regret to announce that in february 2008 
an accident took place at kuranakh involving two aricom personnel 
who were injured whilst felling trees in october 2008 during 
the loading of iron ore concentrate onto a rail wagon one of our 
employees was injured by falling rocks later in the same month 
an environmental technician was hurt in an accident involving the 
personnel bus all employees made a full recovery
lost time injury frequency
in 2008 aricom employees completed 89591 working mandays 
and 210 working mandays were lost due to work related accidents
environmental protection 
all of our projects are being developed in the russian far east 
where the ﬂora and fauna are relatively untouched we are very 
aware of our environmental responsibilities and are implementing 
high standards to protect the surrounding landscape from any 
impact from our mines for example we do not utilise hazardous 
chemicals in any of our operations
environmental risks
the primary sources of potential impact on the environment will 
come from
mining operations processing operations tailings management facilities and solid waste landﬁlls and waste dumps the baseline conditions studies and impact assessments carried 
out at the sites showed that aricom’s activities present no risks with 
irreversible ecological consequences 
the speciﬁc risks that require attention include
decrease of the drainage basin areas of local rivers as a result of the construction of tailings dams
contamination from nitrogen dioxide no 2
 carbon monoxide 
co and nonorganic dust
contamination of soil and plant cover with nonorganic dust environmental pollution with iron and other heavy metals which will cause potential changes in the acidity of components of 
the environment
hydrodynamic impact on the underground water reservoirs which are a source of local water supplies and
the physical and mechanical impacts on the soil and plant resources of the region caused by the destruction of the fertile 
layer of soil and vegetation in the construction areas
environmental management
the evaluation of risks to the environment as identiﬁed in the 
baseline assessments has resulted in the formulation of action 
plans these prescribe the basic obligations of the company with 
respect to
management of the quality of atmosphere effective use of water resources actions for the protection of health and safety of personnel management of extreme emergency situations the organisation of an environmental monitoring system during the period of construction and development of the projects and
plans for community involvement the management plans for the protection of the environment 
health and safety detail the measures for the reduction and control 
of the critical risks the monitoring and control of these critical risks 
will be conducted throughout the life of the project from initial 
construction to project closure  annual report 2008 aricom plc
34
to reduce the impacts on the atmosphere air and water resources 
we are
employing dustsuppression measures at the open pits waste dumps and all major roads 
process plants and the heating plants are being ﬁtted with dustgas treatment equipment to prevent harmful exhaust gas 
emissions 
recycling more than 80 of the kurankah’s process plant water needs and
using the liquid phase of tailings dumps after settlement and pit run off waters for dustsuppression
social development
introduction
aricom is working closely with the local communities and 
indigenous groups in order to ensure that the regional inhabitants 
share in our success
recruitment and training programme
as we grow and develop we are constantly providing new job 
opportunities for the local people 985 people were employed by 
aricom at the end 2008
2008 saw the continuation of our extensive recruitment campaign 
for all levels of management and operators the human resources 
department made visits to various training institutes in the amur 
and other regions as well as conducting an extensive advertising 
campaign both in the russian far east and major university cities 
aricom has also commenced a full graduate training programme 
the programme is targeted at the selection and training of young 
talented graduates as potential senior managers the training 
programme lasts for two to three years during which time the 
management trainees are given a full understanding of all of 
aricom’s activities as well as a period of ‘onthejob’ training in 
addition aricom initiated an evaluation programme to select high 
school students who will receive an aricom scholarship to study 
at the russian far east universities the students will specialise 
in geology mining engineering geoenvironmental studies and 
economics aricom will guarantee the students employment on 
completion of their study period at the end of 2008 eleven 
students had been awarded aricom scholarships and had 
commenced their university studies 
local communities 
aricom works in close collaboration with the local communities 
and other stakeholders our goals are to maintain transparent and 
open communication and consultation with the stakeholders we 
identify and address the needs concerns and expectations of our 
stakeholders and encourage the local communities to participate 
and contribute to our mutual beneﬁt aricom believes that it is 
important that we conduct our activities and operations in a way in 
order to respect traditional rights values and cultural heritage
our sites are often located in the poor and remote areas of 
the russian far east more than half of the local people in our 
regions are unemployed and many live under difﬁcult conditions 
assistance to the local people in remote communities through 
education training and job opportunities is good for the future of 
both the communities and aricom 
the company maintains proactive and open consultation and 
communication with the governments authorities and local 
communities we have an active public disclosure strategy 
whereby all the concerns complaints and relevant external 
communications related to the hse aspects of the company 
are recorded and registered such concerns are acknowledged 
and investigated and afterwards reported back to the relevant 
stakeholders mechanisms are in place to resolve a conﬂict if it 
arises through consultation and participation directly with the 
stakeholders or their representatives 
at kuranakh ks and garinskoye aricom has conducted public 
consultations aricom briefs the people in the locations near 
the construction and operation and makes them aware of 
the activities implemented and welcomes any initiatives on 
future developments
2008 report on health safety 
and the environment continued annual report 2008 aricom plc
35
corporate governance
financial statements
business review
group overview
hse statistics
2006 2007 2008
employees
direct employment   228 467 970
contractors   250 250 275
number of jobs created or preserved – 240 970
number of women in mining  12 31 161
percentage of employees from oblast 88 81 82
percentage of employees from 
local community   0 5 8
percentage of nationals in 
top management   77 79 79
number of employees receiving training 18 96 198
initiatives to hire and train 
local workers    yes yes yes
community
access to infrastructure
number of waterelectricity
gas connections   – – 5
number of power substations built – 2 –
kilometres of roads built  23 46 21
purchases from local suppliers  – – –
local suppliersme development 
programme    yes yes yes
2006 2007 2008
environmental and social impacts
environment
displacement of other activities   no no no
incidentsproblems   no no no
community consulted about plan   yes yes yes
social
direct adverse health impacts 
from operations   no no no
indirect eg hivaids health impacts no no no
nuisance eg noise dust etc impacts 
on community   no no no
increased tensionsalcoholism   no no no
acceptance by locals    yes yes yes
community engagement
frequency of consultations  quarterly quarterly quarterly
community say in social spending no no no
community development plan   no no in
    progress
independent community fund in place no no no
planning for project closure
project closure plans    yes yes yes
plans for community beyond closure no no no
plans public and consulted about   yes yes yes annual report 2008 aricom plc
36
board of directors
1 pavel maslovskiy
chairman
pavel is deputy chairman and chief operating ofﬁcer of peter 
hambro mining plc and is chairman of ojsc pokrovskiy rudnik 
pavel was formerly assistant professor at moscow state aircraft 
technology institute
2 jay hambro 
chief executive ofﬁcer
jay hambro joined aricom in july 2006 previously jay was director 
of business development at peter hambro mining plc during 
peter hambro mining plc’s rapid evolution from junior exploration 
company to the second largest and one of the lowest cost gold 
producers in russia prior to joining peter hambro mining jay 
was a manager of the metals  mining corporate ﬁnance team 
within hsbc investment bank jay began his career in the resource 
ﬁnance team at nm rothschild  sons ltd following a bsc in 
business management jay is a nonexecutive director of peter 
hambro mining plc
3 brian egan
chief financial ofﬁcer
brian egan was appointed finance director in july 2007 he was 
the group chief financial ofﬁcer of gloriajeans corporation a 
leading russian apparel manufacturer and retailer and has over 15 
years’ experience in senior ﬁnancial roles he was previously vp of 
finance of the emea regioningredients division with associated 
british foods plc financial director of georgiapaciﬁc ireland 
limited and chief financial ofﬁcer of cocacola hbc russia he is 
a member of the institute of chartered accountants in ireland
4 yuri makarov
operations director
yuri makarov was appointed to the aricom board in 2004 until 
this appointment yuri was the adviser to the chairman of ojsc 
pokrovsky rudnik a subsidiary of peter hambro mining plc prior to 
this he was the commercial director of nt computers in moscow 
russia he has been actively involved in aricom’s development 
since its incorporation yuri is a qualiﬁed systems engineer from the 
moscow state aircraft technology institute
5 martin smith
technical director
martin smith joined aricom in june 2006 as technical director with 
responsibility for overseeing all the technical aspects of aricom’s 
mine developments he has more than 25 years’ operational and 
corporate management experience across the global mining 
industry having begun his career as a mining engineer at anglo 
american corporation south africa martin has led important 
projects mining coal base and precious metals for some of 
the leading mining and exploration companies including kier 
international costain mining and shell international
6 sir malcolm field
senior nonexecutive director
sir malcolm field was formerly ceo of wh smith plc and a 
nonexecutive director of scottish and newcastle mepc the 
stationery ofﬁce and evolution beeson gregory and a number of 
private companies he was most recently chairman of the caa and 
tube lines ltd sir malcolm is the senior independent director of 
hochschild mining plc
7 peter hambro
nonexecutive deputy chairman
peter hambro was a banker and then deputy managing director 
of mocatta and goldsmid he founded peter hambro ltd as a 
mining ﬁnance house in london he is together with pavel one 
of the founding shareholders and the chairman of peter hambro 
mining plc
8 sir roderic lyne
nonexecutive director
sir roderic lyne was appointed to the board in october 2006 
sir roderic served as british ambassador to russia from january 
2000 until august 2004 when he retired from the diplomatic 
service after 34 years he now works as a consultant principally 
advising businesses on russia and the cis he is an advisor to 
bp plc and to jpmorgan chase a member of the council of the 
royal institute of international affairs a member of the board 
of the russobritish chamber of commerce and of the board of 
governors of kingston university
9 tony redman
nonexecutive director
tony redman worked at anglo american from 1970 to 2008 
in 1979 he moved to the anglo coal division where he was 
appointed managing director in 1996 and chairman in 2002 in 
2005 he became group technical director of anglo american plc 
he was also a nonexecutive director of anglo platinum limited 
listed on the johannesburg stock exchange and a director of 
anglo american south africa limited he retired from anglo 
american at the end of 2008 annual report 2008 aricom plc
37
financial statements
business review
corporate governance
group overview
1
4
7
2
5
8
3
6
9 annual report 2008 aricom plc
38
corporate governance and 
financial statements annual report 2008 aricom plc
39
business review
financial statements
corporate governance
group overview annual report 2008 aricom plc
40
financial review
results of operations
the group made a loss after tax for the year of us4266 million 
compared to a proﬁt after tax in 2007 of us01 million the current 
year’s loss includes an impairment charge of us3864 million 
the group recognised revenue from operations of us97 million 
during the year ended 31 december 2008 2007 us49 million 
comprising us92 million 2007 us49 million of revenue 
generated from its engineering services company giproruda and 
sales of iron ore preconcentrate of us05 million from kuranakh 
2007 nil
administration expenses have increased as expected from 
us249 million to us309 million primarily due to an increase 
in salary costs consultancy costs rent and general overheads in 
connection with the expansion of the group’s activities average 
staff numbers for the year increased from 228 in 2007 to 641 
in 2008 
due to the current world economic crisis as with many other 
mining companies the board reviewed the company’s portfolio 
of assets and provided for impairment where it considered it 
prudent to do so consequently an impairment provision 
of us3864 million was recognised by the group 
the key assumptions to the impairment review are described in 
note 8 to the consolidated financial statements
investment revenues
income from investments and cash balances has decreased from 
us215 million in 2007 to us155 million in 2008 due to lower 
interest rates earned on deposits and lower average cash balances 
held throughout the year 
finance costs
finance costs increased from us06 million in 2007 to us232 
million in 2008 this is primarily due to the adverse impact of 
foreign exchange differences on the group’s rouble denominated 
funds in the second half of 2008 which more than eliminated 
exchange difference on deposits held in russian rouble 
denominated funds accumulated during the ﬁrst six months of 
2008 the group’s policy had been to hold a substantial portion of 
cash in russian roubles in order to hedge against russian rouble 
denominated capital and operating expenditure
tax
a tax charge recognised for the year of us56 million 2007 
us20 million credit relates primarily to the reduction in the 
deferred tax asset on deductible temporary differences due to 
foreign exchange movements of us44 million and tax on the 
operating proﬁt generated by giproruda being us07 million 
financial position
the group’s balance sheet at 31 december 2008 and comparatives 
at 31 december 2007 are summarised in the table below
  2008 2007
  us’000 us’000
noncurrent assets 468189 569768
current assets 310493 594681
total assets 778682 1164449
current liabilities 16175 13174
noncurrent liabilities 4641 8879
total liabilities 20816 22053
net assets 757866 1142396
net assets decreased by us3845 million to us7579 million 
primarily due to an impairment provision of us3864 million 
recognised against kuranakh and the combined ks and 
garinskoye projects the impairment is described in more detail 
in note 8 to the consolidated financial statements
noncurrent assets have decreased by us1016 million mainly 
due to additions to property plant and equipment being capital 
expenditure of us1081 million the acquisition of 2936 minority 
interest in the garinskoye licence for us1107 million the 
acquisition of the kostenginskoye and garinskoye flanks licences 
for us539 million our equity share of the titanium sponge joint 
venture of us204 million offset by an impairment provision of 
us3864 million 
current assets have decreased by us2842 million mainly due 
to a reduction in shortterm investments and cash and cash 
equivalents of us2407 million and the shortterm us651 million 
loan receivable from olis being offset against the purchase 
consideration for the acquisition of the remaining 2926 interest 
in lapwing there is an increase in current receivables and 
inventory due to the start up at kuranakh 
acquisition of assets
during the year the group completed the acquisition of a further 
2936 interest in lapwing from olis and pbo handelsges mbh 
‘pboh’ and completed the acquisition of a 100 interest in the 
kostenginskoye and garinskoye flanks licences 
these acquisitions are described in further detail in note 33 to the 
consolidated financial statements
property plant and equipment 
a further us1081 million was invested in property plant and 
equipment during the year mainly related to the construction at 
kuranakh following the completion of the acquisition of a further 
2936 interest in garinskoye approximately us1107 million was 
allocated to mining properties and leases annual report 2008 aricom plc
41
however due to a potential delay in the planned development of 
various projects primarily because of a slow project ﬁnancing 
market and forecast weaker iron ore prices an impairment 
provision of us3864 million was recognised by the group against 
the kuranakh project us865 million and the combined ks and 
garinskoye project us2999 million the impairment is described 
in more detail in note 8 to the consolidated financial statements
cash flows
cash and cash equivalents and shortterm investments decreased 
by us2407 million to us2578 million 2007 us4985 million
the net cash outﬂow from operating activities for 2008 was us519 
million 2007 us129 million reﬂecting increased costs associated 
with the group’s commencement of mining activities at kuranakh 
and administrative costs associated with the further development 
of the other projects net cash used in investing activities was 
us700 million 2007 us2818 million comprising mainly of 
us208 million paid as our contribution to the share capital of 
titanium sponge jv us450 million paid for the options to acquire 
kostenginskoye and garinskoye flanks and capital expenditure of 
us1085 million 2007 us767 million offset by proceeds from 
the disposal of shortterm investments of us1133 million 2007 
us108 million and investment income of us165 million 2007 
us165 million 
the group has a cash balance which is managed in accordance with 
a board approved treasury policy and spread across a number of 
ﬁnancial institutions in order to reduce the exposure to any one 
counterparty the majority of the cash balance is held with highly 
rated uk based institutions
the group holds deposits in us dollars gb pounds and russian 
roubles as appropriate so as to hedge against currency exposures 
however rapid depreciation of the russian rouble against the 
us dollar at the end of 2008 affected the cash holdings of the 
group the total effect of the retranslation of foreign currency 
denominated balances in 2008 resulted in a foreign exchange 
loss of us226 million the group has implemented a new legal 
structure and new treasury policies in order to help minimise future 
foreign exchange exposure 
a positive economic effect of russian rouble and gb pound 
depreciation is the reduction in operating costs in us dollar 
equivalent
events after the balance sheet date
on 6 february 2009 the respective independent committees of 
the boards of directors of peter hambro mining plc ‘phm’ and 
aricom announced that they had 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 phm in 
exchange for shares in phm
following completion of the merger existing shareholders of phm 
and aricom will hold 568 and 432 of the enlarged group 
respectively calculated on an undiluted basis
the merger provides for the acquisition of 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 scheme’ 
the purpose of the scheme is to enable phm 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 one fully paid new phm share in exchange for 16 fully paid 
aricom shares
the merger valued each aricom share at 366 pence using the 
closing price per phm share on 4 february 2009 of 585 pence 
being the last day before phm announced its cash placing 
309 pence using the closing price per phm share on 5 february 
2009 of 495 pence being the last day prior to the announcement of 
a ﬁrm intention to make an offer and it valued each aricom share 
at 249 pence using the price per phm share on 8 january 2009 
being the last day prior to the offer period of 398 pence
going concern basis
as at 31 december 2008 the group had cash balances of 
us2578 million given the challenging project ﬁnance market the 
directors are reviewing all operating costs and capital expenditure 
plans to ensure that signiﬁcant further expenditures over and above 
those currently committed will not be committed until further 
funding is assured 
in connection with the proposed merger the board has reviewed 
projections of the enlarged group and following the placing is 
satisﬁed that the enlarged group will have sufﬁcient funds for the 
foreseeable future 
accordingly at the time of approving the consolidated financial 
statements there is a reasonable expectation that the group has 
adequate resources to continue in operational existence for the 
foreseeable future for this reason the directors continue to adopt 
the going concern basis in preparing the ﬁnancial statements
brian egan
chief financial ofﬁcer
25 february 2009
group overview
business review
corporate governance
financial statements 42
annual report 2008 aricom plc
the combined code
the group is committed to high standards of corporate governance the uk listing authority requires all listed companies listed on a 
regulated market to disclose how they have applied the principles of and complied with the provisions of the combined code on 
corporate governance published by the financial reporting council in june 2006 the ‘combined code’ this report together with the 
directors’ report directors’ remuneration report and audit committee report indicates how the company has applied the principles of 
good governance of the combined code throughout the year ended 31 december 2008 or where the company has not complied with 
the combined code explains the reasons why
statement of compliance
the group has been in compliance with the provisions of section 1 of the combined code throughout the year ended 31 december 2008 
save that as set out in more detail below
the board does not contain sufﬁcient independent nonexecutive directors to comprise half the board excluding the chairman the chairman is not independent for the purposes of the combined code and the committees of the board have not been made up of at least three independent nonexecutive directors the board is responsible for ensuring an appropriate level of corporate governance and intends to the extent otherwise disclosed to 
continue to comply with the main provisions of the combined code
the board
the group is led and controlled by the board of directors the board currently consists of a nonexecutive chairman four executive 
directors and four nonexecutive directors three of whom are considered to be independent under the combined code but all of whom 
the board judges to be independent as explained below the board believes that it is appropriate to have a senior independent director 
and sir malcolm field fulﬁls this role
details of the individuals’ skills and experience are contained in the directors’ biographies on page 36
the group meets regularly on at least four scheduled occasions during each year and more frequently if necessary in 2008 there were six 
scheduled board meetings 15 unscheduled board or committee meetings four audit committee meetings ﬁve remuneration 
committee meetings two nomination committee meetings and ﬁve hse committee meetings the attendance by directors who held 
ofﬁce throughout the year was as follows
unscheduled
scheduled board audit remuneration nomination hse
board committee committee committee committee committee
brian egan 6 15 4–– 4
sir malcolm field
1234
  634525
jay hambro 6 144325
peter hambro
12
  613515
sir roderic lyne
1234
  634525
yuri makarov 5 2 1 – – 5
pavel maslovskiy
34
  642225
martin smith
4
6 4––– 5
membership of committees throughout the year under review
1 member of the audit committee
2 member of the remuneration committee
3 member of the nomination committee 
4 member of the hse committee 
other directors attended meetings of the committees by invitation
the unscheduled board or committee meetings in 2008 were held to issue formal approvals or deal with other matters of a routine or 
administrative nature which did not require attendance of the full board such meetings are usually attended by jay hambro and brian 
egan and consequently their attendance at meetings is higher than other directors
in addition there were 12 executive committee meetings in 2008 attended by brian egan jay hambro yuri makarov and martin smith
the board is responsible for the determination and monitoring of the group’s strategic aims and values the direction and control of the 
group and the management of the capital structure and will also ensure that the necessary ﬁnancial and human resources are and will 
continue to be in place to enable the group to meet its objectives the board works closely with the operational management to achieve 
the group’s objectives
the board has adopted a formal schedule of matters reserved for its decision such matters include
responsibility for strategy and management including longterm objectives approval of budgets review of performance changes to structure and capital approval of accounting policies and of ﬁnancial results responsibility for sound systems of internal control approval of major investments and contracts approval of material press releases and communications with shareholders review of board composition on recommendations by the nomination committee review of remuneration policy on recommendations by the remuneration committee delegations of authority corporate governance matters and approval of group policies corporate governance annual report 2008 aricom plc
43
individual directors may seek independent advice at the expense 
of the company within certain limits
the company maintains appropriate directors’ and ofﬁcers’ 
liability insurance
chairman and chief executive
the roles of chairman and chief executive are clearly separated 
and have been set out in writing the chairman is responsible for 
ensuring that the directors receive accurate timely and clear 
information for facilitating the effective contribution of the 
nonexecutive directors and ensuring a constructive relationship 
between all directors the chief executive is responsible for 
the effective leadership of the management team in running 
the business 
the chairman holds discussions with nonexecutive directors 
without the executive directors being present the independent 
nonexecutive directors meet without the chairman being present 
at least annually to appraise the performance of the chairman
the chairman and chief executive ensure there is appropriate 
communication with shareholders and participate in regular and 
ongoing visits to major shareholders
board balance and independence
the board believes that it has sufﬁcient members to contain a 
balance of experience and skills but is not so large as to be 
unwieldy the board includes a balance of executive and non
executive directors such that no individual or group of individuals 
can dominate the board’s decision making no one individual has 
unfettered powers of decision however the combined code 
recommends that at least half the board excluding the chairman 
should comprise independent nonexecutive directors and since 
there is no majority of nonexecutive directors excluding the 
chairman the company does not comply with the combined code 
in this area
the board keeps the membership of committees under review to 
ensure gradual refreshing of skills and experience the board is 
satisﬁed that all directors have sufﬁcient time to devote to their 
roles and that it is not placing undue reliance on key individuals
the board has carefully considered the guidance criteria on 
independence of nonexecutive directors under the combined 
code and in relation to the year under review the board considers 
two of the nonexecutive directors sir malcolm field and sir 
roderic lyne to be independent of the company as deﬁned by the 
combined code however two of the nonexecutive directors 
peter hambro and pavel maslovskiy the chairman would not be 
viewed as independent and therefore the company did not comply 
with the combined code in this respect however the board 
believes that independence is not a state of mind that can be 
measured objectively and given the character judgement and 
decision making process of the individuals involved the board 
believes that these directors can be considered independent 
further to the appointment of tony redman on 1 january 2009 
three of the ﬁve nonexecutive directors will be considered 
independent as deﬁned by the combined code tony redman has 
been appointed as a member of the audit hse remuneration and 
nomination committees
the majority of the members of the nomination committee and 
the remuneration committee are independent nonexecutive 
directors given the size of the company the board believes that 
having a remuneration committee comprised of three members 
and an audit committee comprised of four members is 
appropriate however the combined code recommends that all 
members of the audit committee and at least three members of 
other committees should be independent nonexecutive directors 
and until the appointment of tony redman only two members 
were deemed independent under the combined code
the board reviews the independence of the directors annually and 
all new appointments will be made after consideration of the 
independence of proposed new directors 
sir malcolm field has been appointed as the senior independent 
director and is available to shareholders if they have concerns 
which contact through the normal channels has failed to resolve 
or for which such contact would be inappropriate
information and professional development
the board is supplied with regular and timely information in a form 
and of a quality that enables it to discharge its duties all directors 
are encouraged to make further enquiries of the executive 
directors or management as they feel appropriate 
the chairman ensures that all directors continually update their 
skills and knowledge and develop the familiarity with the 
company’s operations needed to fulﬁl their role for example by 
brieﬁngs by executive management and regular board reporting 
the company provides the necessary resources for developing and 
updating all directors’ knowledge and capabilities both on 
appointment and subsequently as necessary in addition board 
committees are provided with sufﬁcient resources plus the power 
to coopt such additional support as they may require from time to 
time to undertake their duties 
all directors have access to the services of a professionally 
qualiﬁed and experienced company secretary who is responsible 
for information ﬂows to the board facilitating induction and 
assisting with professional development as required ensuring 
compliance with board procedure and applicable laws and 
regulation and advising the board on corporate governance 
matters the appointment or removal of the company secretary 
is a board decision
performance evaluation
the board has introduced a formal performance evaluation 
procedure for the board as a whole and for the committees the 
directors complete performance questionnaires relating to the 
board and committees which are collated and reviewed by the 
senior nonexecutive director prior to the board which will 
consider and review the ﬁndings of this process annually the 
remuneration committee is responsible for the performance 
review of directors and the independent nonexecutive directors 
are responsible for the performance evaluation of the chairman 
reelection of directors
the board formally reviews succession plans for all key 
management roles including executive directorships on 
an ongoing basis 
all directors are required by the company’s articles of association 
to submit themselves to shareholders for reelection at the ﬁrst 
annual general meeting after their appointment and thereafter by 
rotation at least once every three years at this year’s annual 
general meeting it is intended that tony redman will stand for 
reelection following his appointment to the board on 1 january 
2009 the directors retiring by rotation are pavel maslovskiy peter 
hambro and jay hambro in addition the appointment of each 
director is reviewed by other members of the board prior to that 
director seeking reelection at a forthcoming annual general 
meeting biographical details of all directors are included on 
page 36
group overview
business review
corporate governance
financial statements 44
annual report 2008 aricom plc
board committees
the board has established ﬁve committees and provides sufﬁcient resources to enable them to undertake their duties membership of 
these committees as at 31 december 2008 is shown below
health 
safety  
audit remuneration nomination environmental executive
nonexecutive directors
sir malcolm field  chairman chairman chairman member –
peter hambro member member–––
sir roderic lyne  member member member chairman –
dr pavel maslovskiy  – – member member –
executive directors
brian egan –––– member
jay hambro –––– member
yuri makarov –––– member
martin smith – – – member member
terms of reference of these committees are available on the company’s website at wwwaricomplcuk
appointments to the board and the nomination committee
the board follows a procedure for the appointment of directors including an induction programme for the director concerned
aricom has established a separate nomination committee which is chaired by sir malcolm field and the other members are sir roderic 
lyne dr pavel maslovskiy and with effect from 1 january 2009 tony redman the nomination committee will regularly review 
the structure size and composition of the board and make any recommendations to the board where necessary the nomination 
committee is responsible for succession planning of directors and for the identiﬁcation and nomination of candidates to ﬁll 
vacancies where necessary
appointments are made on merit and against objective criteria in the case of candidates for nonexecutive directorships care is taken to 
ascertain whether they have sufﬁcient time available to meet their board and where relevant committee responsibilities as part of this 
process candidates disclose all other time commitments and on appointment undertake to inform the board of any changes the terms 
and conditions of appointment of all directors are available for public inspection
tony redman was appointed as a non executive director on 1 january 2009 in considering the appointment of a new director the 
nomination committee appointed an external consultant odgers in which sir malcolm field had declared an interest since he was a 
director of this company the committee reviewed a number of candidates provided by odgers but agreed that the most suitable 
candidate was mr redman who had been recommended to the board by an independent party
the chairman is the chief operating ofﬁcer of peter hambro mining plc and director of various subsidiary companies in the peter hambro 
mining group the chief executive ofﬁcer is a nonexecutive director of peter hambro mining plc changes to these commitments will be 
reported to the board
remuneration and the remuneration committee
while the board is ultimately responsible for directors’ remuneration the remuneration committee consisting solely of nonexecutive 
directors is responsible for determining the remuneration and conditions of employment of executive directors and senior executives 
directors abstain from decisions determining their own remuneration a report on directors’ remuneration including a more detailed 
description of the role and activities of the remuneration committee is set out on pages 48 to 52
the company’s policy is that no compensation will be payable when a director’s appointment is terminated for reasons of 
unsatisfactory performance 
the company has in place a long term incentive plan which was established during 2007 contrary to combined code requirements 
shareholder approval was not sought since there was no legal requirement to seek such approval as at the time of adoption the company 
was not listed on the main board however details were included in the listing document 
accountability and audit and the audit committee
the board pays careful attention to ensuring that all documents released by the group and the company including the annual report 
present a fair and accurate assessment of the group and the company’s position and prospects
the board is responsible for the group and the company’s system of internal controls excluding associates and conducts an annual 
review to identify and evaluate risk including ﬁnancial operational and compliance risk and to review the effectiveness of the system of 
internal controls such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives and can only 
provide reasonable and not absolute assurance against material misstatement or loss in accordance with the revised turnbull guidance 
the board conﬁrms that there is an ongoing process for identifying evaluating and managing the signiﬁcant risks faced by the company 
and the board is satisﬁed that the system of internal controls has operated effectively throughout the year and that it has taken any 
necessary actions to address any issues arising 
corporate governance continued annual report 2008 aricom plc
45
the company has established an audit committee and a report 
by this committee is set out on pages 46 to 47
the audit committee reviews an internal controls report at each 
meeting and the company’s governance and control policy and 
procedure manual is reviewed and updated regularly and circulated 
to the board and senior management for review 
the audit committee routinely receives reports relating to the 
external audit process and discusses matters of internal control 
the audit committee reviews non audit services provided by the 
external auditors details of which are disclosed in note 10 on 
page 78 the committee is satisﬁed that the objectivity and 
independence of the auditors is maintained
hse committee
the health safety and environmental committee consists of four 
nonexecutive directors and one executive director and is 
responsible for aricom’s staff the communities within which the 
company operates and to the environment of the project areas
aricom’s environmental health safety and social policies are 
designed to comply with both russian regulatory requirements as 
implemented under the supervision of the environmental 
protection agency of the russian federation ‘rosprirodnadzor’ 
and with international good practice the company uses best 
endeavours to comply with the international finance corporation 
‘ifc’ performance standards on social and environmental 
sustainability as well as with the ifc environmental health and 
safety ‘ehs’ guidelines the ifc which invested in the group in 
2007 undertakes a full environmental and social audit of our 
operations on a regular basis and maintains strong communication 
with the hse committee
during 2007 the company appointed wardell armstrong 
international ‘wai’ as independent hse auditors they will 
conduct biannual site visits and reviews and report directly to the 
board of directors through the hse committee
executive committee
the executive committee consists of the four executive directors 
and is responsible for the day to day management of the company 
and for ensuring that the overall objectives set out by the board 
are achieved 
the committee ensures that the board is kept up to date on all 
material events and makes recommendations regarding business 
objectives and the strategic direction and control of the company 
the committee also ensures coordination between senior 
managers manages the company’s operational ﬁnancial and 
administration performance and is responsible for the assessment 
and management of risk
related party transactions
the company has established procedures to ensure that all 
transactions with related parties are reviewed and approved by 
members of the management and the board who have no conﬂict 
of interest in the given transaction where appropriate due to 
the required level of authority transactions are reviewed by a 
committee of members of the board who are independent of the 
transaction full details of the related party transactions are given 
in note 39 to the consolidated financial statements
relations with shareholders
the combined code encourages a dialogue with institutional 
shareholders based on the mutual understanding of objectives 
the directors including the nonexecutive directors have regular 
and ongoing communication with institutional shareholders and 
executive directors participate in investor roadshows visits to 
shareholders and scheduled half yearly updates feedback from 
these visits is reported to the board to ensure that the board 
understands the views of major shareholders in addition the 
chairman routinely offers shareholders the opportunity of meeting 
with either himself the chief executive or the senior independent 
director to discuss governance strategy or any other matters 
shareholders wish to raise 
the company maintains a website at wwwaricomplcuk which is 
regularly updated and contains a wide range of information about 
the group
the combined code encourages boards to use the annual general 
meeting to communicate with investors and to encourage their 
participation the board welcomes as many shareholders as 
possible to attend the annual general meeting and shareholders 
are given the opportunity at the annual general meeting to discuss 
any issues of interest or concern including performance 
governance or strategy with the directors
at general meetings the chairman will announce the level of 
proxies lodged on each resolution the balance for and against 
and abstentions after it has been dealt with on a show of hands 
a separate resolution will be proposed at the annual general 
meeting in respect of each substantially separate issue the 
chairman of the audit remuneration and nomination committees 
will deal with matters relating to those committees
approval
this report was approved by the board of directors of aricom plc 
and signed on its behalf by
heather williams fcis
company secretary
25 february 2009
group overview
business review
corporate governance
financial statements annual report 2008 aricom plc
46
summary of the role of the audit committee
the audit committee is appointed by the board from the non
executive directors of the company and has deﬁned terms of 
reference the audit committee’s terms of reference include 
matters indicated by the combined code and are available on the 
company’s website the audit committee is responsible for
monitoring the integrity of the ﬁnancial statements of the company and any formal announcements relating to the 
company’s ﬁnancial performance reviewing signiﬁcant ﬁnancial 
reporting issues and judgements in respect of the preparation 
of the halfyearly and annual ﬁnancial statements preliminary 
results and related formal statements before submission to 
the board
reviewing the group’s internal ﬁnancial controls and unless expressly addressed by the board itself the group’s internal 
control and risk management systems
reviewing the consistency of changes in and compliance with accounting policies and practices the judgements and 
assumptions of management signiﬁcant ﬁnancial reporting 
issues and judgements estimates and judgements made by the 
company taking into account the views of the external auditor 
signiﬁcant adjustments 
reviewing the going concern assumption reviewing the methods used to account for signiﬁcant or unusual transactions
reviewing the clarity and completeness of disclosures in ﬁnancial statements
reviewing material information related to the ﬁnancial statements including the business and ﬁnancial review and 
corporate governance statements
ensuring compliance with the requirements of the uk listing authority and with other applicable legal requirements
discussing problems and reservations arising from the preparation and audit of such ﬁnancial statements and any 
matters which the external auditors may wish to discuss in the 
absence of management where necessary including discussion 
of any major issues which arose during the audit any accounting 
and audit judgements levels of errors identiﬁed during 
the audit
reviewing the company’s arrangements for its employees to raise concerns in conﬁdence about possible wrongdoing in 
ﬁnancial reporting or other matters and reviewing the 
company’s procedures for detecting fraud
making recommendations to the board for a resolution to be put to the shareholders for their approval in general meeting in 
relation to the appointment of the external auditors and the 
approval of the remuneration and terms of engagement of the 
external auditors
reviewing and monitoring the external auditors’ independence and objectivity and the effectiveness of the audit process 
taking into consideration relevant uk professional and 
regulatory requirements 
assessing annually the external auditors’ qualiﬁcations expertise and resources and the effectiveness of the audit 
process including a report from the external auditors on their 
internal quality procedures and
developing and implementing a policy on the engagement of the external auditors to supply nonaudit services taking into 
account relevant guidance regarding the provision of nonaudit 
services by the external audit ﬁrm
the audit committee is required to report its ﬁndings to the board 
identifying any matters in respect of which it considers that action 
or improvement is needed and make recommendations as to the 
steps to be taken
composition of the audit committee
the members of the audit committee are
name date of appointment
sir malcolm field chairman 1 august 2006
peter hambro 12 december 2003
sir roderic lyne 3 october 2006
tony redman 1 january 2009
membership of the committee is reviewed by the chairman of the 
committee and the company chairman who is not a member of 
the audit committee at regular intervals and they recommend new 
appointments to the committee the committee is currently 
comprised of four nonexecutive directors and two members 
constitute a quorum the board considers that the chairman of the 
committee has recent and relevant ﬁnancial experience through his 
career in business and his appointment to other boards
the company has a policy of providing training to directors where 
required ongoing training can include attendance at formal 
conferences internal brieﬁngs brieﬁngs by external advisers and 
visits by directors to operations in the business
the board expects the audit committee members to have an 
understanding of
the principles of contents of and developments in ﬁnancial reporting including the applicable accounting standards
key aspects of the group’s operations including corporate policies group ﬁnancing and systems of internal control
matters that inﬂuence or distort the presentation of accounts the principles of and developments in company law sector speciﬁc laws and other relevant corporate legislation
the role of internal and external auditing and risk management the regulatory framework for the group’s businesses and environmental and social responsibility best practices meetings
the audit committee meets at least twice a year and has an 
agenda linked to events in the group’s ﬁnancial calendar including 
a review of the group’s annual and half yearly results the review of 
the internal controls of the group and ensuring that the ﬁnancial 
performance of the group is properly reported on and monitored 
the agenda is predominantly cyclical and is approved by the audit 
committee chairman in advance of each meeting each audit 
committee member has the right to require reports on matters of 
interest in addition to the routine items
the chief executive ofﬁcer the chief financial ofﬁcer and a 
representative of the external auditors are invited to attend 
meetings of the audit committee and attended all audit 
committee meetings held in 2008 senior management present 
such reports as are requested by the committee to enable it to 
discharge its duties
overview of the actions taken by the audit committee to 
discharge its duties
since the beginning of 2008 the audit committee has
reviewed the ﬁnancial statements for the year ended 31 december 2007 the interim report for the period ended 
30 june 2008 and the ﬁnancial statements for the year ended 
31 december 2008 the committee received reports from the 
external auditors on their audits of the annual reports and 
accounts and review of the interim report
reviewed and agreed the scope of the audit work to be undertaken by the external auditors
audit committee report annual report 2008 aricom plc
47
recommended to the board the fees to be paid to the external auditors for their audit of the 2008 accounts
reviewed the letters of representation provided to the external auditors relating to the ﬁnancial periods ended 31 december 
2007 30 june 2008 and 31 december 2008
reviewed the letters of engagement relating to the review and audit for the ﬁnancial periods ended 30 june 2008 and 31 
december 2008 respectively
reviewed the legal and ﬁnancial structure of the group reviewed the going concern status of the group and the ability to publish a going concern statement in the report  accounts 
for the year ended 31 december 2008
review of the requirements relating to the impairment of the group’s assets
reviewed the accounting treatment relating to the group’s projects and to the ltip allocations and
reviewed the risks associated with the group’s business external auditors
the audit committee is responsible for the development 
implementation and monitoring of the group’s policy on external 
audit the policy assigns oversight responsibility for monitoring the 
independence objectivity and compliance with ethical and 
regulatory requirements to the audit committee and daytoday 
responsibility to the group finance director 
the group’s policy on external audit sets out the categories of 
nonaudit services which the external auditors will and will not be 
allowed to provide to the group subject to de minimis levels and 
audit committee chairman approval in emergency situations
to fulﬁl its responsibility regarding the independence of the 
external auditors the audit committee reviewed
the changes in key external audit staff in the external auditors’ plan for the current year
the arrangements for daytoday management of the audit relationship and
the overall extent of nonaudit services provided by the external auditors in addition to their case by case approval of the 
provision of nonaudit services by the external auditors
to assess the effectiveness of the external auditors the audit 
committee reviewed
the external auditors’ fulﬁlment of the agreed audit plan and variations from the plan and
the robustness and perceptiveness of the auditors in their handling of the key accounting and audit judgements
as a consequence of its satisfaction with the results of the activities 
outlined above the audit committee has recommended to the 
board that the external auditors are reappointed
internal audit function
the group does not currently have an internal audit function since 
the scale and operations of the group are such that there is 
currently deemed no requirement for an internal audit function 
the audit committee is required to review the group’s internal 
ﬁnancial controls and where required review the group’s internal 
control and risk management systems and statement on internal 
control systems prior to endorsement by the board
overview
as a result of its work during the year the audit committee has 
concluded that it has acted in accordance with its terms of 
reference and has ensured the independence and objectivity of the 
external auditors
it is intended that the chairman of the audit committee will be 
available at this year’s annual general meeting to answer any 
questions about the work of the committee
approval
this report was approved by the audit committee and signed on 
its behalf by
sir malcolm field
chairman of the audit committee
25 february 2009
group overview
business review
corporate governance
financial statements annual report 2008 aricom plc
48
introduction
this report is prepared in gb pounds ‘gbp’ or ‘£’ as the company 
is headquartered in england has gb pound functional currency 
and the directors are predominantly paid in that currency
the report describes how the board has applied the principles 
relating to directors’ remuneration
the board has prepared this report in accordance with the 
requirements of schedule 7a to the companies act 1985 it is 
intended that an ordinary resolution to approve this report will be 
put to the members at this year’s annual general meeting but the 
directors’ remuneration is not conditional upon the resolution 
being passed the report has been divided into separate sections 
for audited and unaudited information
unaudited information
remuneration committee
the remuneration committee is chaired by sir malcolm field and 
the other members throughout the year under review were peter 
hambro and sir roderic lyne with effect from 1 january 2009 
tony redman replaced peter hambro as a member of the 
remuneration committee
none of the members of the remuneration committee has any 
personal ﬁnancial interest other than as shareholders or dayto
day involvement in running the business the remuneration 
committee makes recommendations to the board 
the remuneration committee is responsible for the review of the 
performance of the executive directors the remuneration and 
conditions of employment of executive directors and senior 
executives are determined by the remuneration committee 
directors abstain from decisions determining their own 
remuneration the remuneration committee works with the chief 
executive on all aspects of remuneration except his own and sets 
the remuneration of the chief executive the scale and structure of 
the executive directors’ remuneration is approved on the basis of 
their performance the performance of the company and their 
service agreements with due regard to the interests of the 
shareholders and the company as a whole the remuneration 
committee can make recommendations to the board concerning 
employee incentives 
bearing in mind the provisions of the combined code the 
remuneration committee is required to review at least annually the 
remuneration package comprising base salary any performance
related element of salary or bonus participation in share option 
schemes and other beneﬁts of each executive director as 
proposed by the chief executive or previously agreed by the 
remuneration committee
the remuneration committee is required at least once a year to 
review its own performance constitution and terms of reference to 
ensure it is operating at maximum effectiveness and recommend 
any changes it considers necessary to the board
remuneration policy for the executive directors
the group operates in a highly competitive marketplace for senior 
skilled management which places a strong emphasis on above 
average rewards for outstanding performance an overriding 
objective is to ensure that the approach to remuneration is simple 
and clear
executive remuneration packages are prudently designed to 
attract motivate and retain directors of the calibre needed to 
develop and run the group’s businesses and to reward them for 
enhancing value to shareholders the performance measurement 
of the executive directors and key members of senior management 
and the determination of their annual remuneration package are 
undertaken by the committee
as a result the company’s policy is that a substantial proportion 
of the remuneration of the executive directors should be 
performancerelated in structuring the executive directors’ 
remuneration the remuneration committee’s expectation 
is that the split between performance based and ﬁxed would 
be 6040
the company’s remuneration policy is that the remuneration is 
decided annually by the remuneration committee
there are ﬁve main elements of the remuneration package for 
executive directors and senior management
basic annual salary beneﬁtsinkind performance based bonus payments share option incentives and pension arrangements executive directors are entitled to accept appointments outside 
the company providing that the chairman’s permission is obtained 
in advance of any such appointment jay hambro is also a non
executive director of peter hambro mining plc and received 
and retained an annual fee of £61000 for the year ended 
31 december 2008
basic salary
each executive director’s basic salary is reviewed by the 
committee at the beginning of each year and when an individual 
changes position or responsibility in deciding appropriate levels 
the committee considers the group as a whole and relies on 
objective research which gives uptodate information on a 
comparator group of companies it is intended that executive 
directors’ contracts of service will be available for inspection 
at the annual general meeting
awards 20082009
basic salary awards were made as follows for executive directors
  year ended year ended
  31 december 31 december 
  2008 2007
  £’000 £’000
brian egan 218 81
1
jay hambro 275 208
yuri makarov 204 159
martin smith 185 141
1 brian egan was appointed as a director with effect from 31 july 2007
at the january 2009 salary review no salary increases were 
awarded to directors
beneﬁtsinkind
the executive directors receive certain beneﬁtsinkind for 
example car allowance and private medical insurance
directors’ remuneration report annual report 2008 aricom plc
49
annual bonus payments
the committee establishes speciﬁc objectives that must be met for 
each ﬁnancial year if a performancerelated bonus is to be paid the 
objectives for 2008 are shown below the committee believes that 
any incentive compensation awarded should be tied to the 
interests of the company’s shareholders account is also taken of 
the relative success of the different parts of the business for which 
the executive directors are responsible and the extent to which the 
strategic objectives set by the board are being met the maximum 
performancerelated bonus that can be paid is 100 of basic 
annual salary in exceptional circumstances speciﬁcally described 
the remuneration committee can award bonuses above 100 of 
annual salary 
bonus awards 2008
the objectives and achievements for 2008 covered the following
the need for signiﬁcant advances with ks and garinskoye projects through moving from scoping to bankable feasibility 
the favourable project economics were presented to 
shareholders and to the market in october 2008 this 
independent result justiﬁed the judgement made by executive 
management at the time of acquiring the asset full bonus for 
this objective was awarded
the acquisition of valuable strategic assets of kostenginskoye and garinskoye flanks in july 2008 a successful bid presented 
by management against considerable opposition full bonus 
was awarded
although slightly delayed the start of the crushing and screening plant at kuranakh overall successful operational 
delivery but with a reduced bonus award
progressing further to the establishment of the jv with chinalco an important strategic partner for the development of titanium 
sponge where plant construction has commenced and which is 
on course to start production in 2010 a bonus was awarded for 
ﬁnding an appropriate partner and establishing joint venture 
arrangements
the swift implementation of a cost cutting exercise and conserving of cash 
against the achievement of the above objectives the delivery of the 
beneﬁciation plant at kuranakh has been delayed to mid 2009 no 
bonus was awarded in respect of this objective
executive directors may earn annual incentive payments of up to 
75 of their basic salary chief executive 100 together with the 
beneﬁts of long term share option incentives
incentive payments for the year ended 31 december 2008 varied 
between 45 and 60 of basic salary 10 of which was required 
to be taken in shares purchased in the market by recipients within 
one month of the announcement of the 2008 results and to be held 
for not less than 12 months from the date of the purchase of the 
shares see table on page 51
share options
during the year ended 31 december 2003 following approval at 
the annual general meeting the company established a share 
option scheme the ‘share option scheme’ the reason for the 
scheme was to incentivise the executive directors the committee 
had responsibility for supervising the scheme and the grant of 
options under its terms
there were no performance criteria to be met as it was considered 
that the share price performance was the best indicator of 
performance of the executive directors and the options granted 
could be exercised by the issue of new shares after a period of 
three years from the date the option was granted thereafter the 
option could be exercised for the rest of its life without further 
test normally provided the grantee is still in employment with 
the company
the exercise price of the options granted under the above scheme 
would be equal to the market value of the company’s shares at the 
time when the options were granted 
the company’s policy has been to grant options to directors at the 
discretion of the remuneration committee taking into account 
individual performance normally up to a maximum of two times 
annual salary it has been the company’s policy to phase the 
granting of share options rather than to award them in a single 
large block to any individual other than on commencement 
of employment
no amendments are proposed to be made to the terms and 
conditions of any entitlement of a director to share options 
no further options over ordinary shares will be granted under 
the company’s existing share option scheme following the 
establishment of the long term incentive plan see below
long term incentive plan 
during the year ended 31 december 2007 the company 
established a long term incentive plan ‘ltip’ to operate in 
conjunction with an employee beneﬁt trust ‘ebt’ to provide an 
effective and ﬂexible means of holding assets for the beneﬁt of 
employees and their families and providing valuable longterm 
beneﬁts contributions to the ebt will be at the discretion of the 
remuneration committee which will also recommend allocations 
under the ltip the ebt is administered and operated by an 
independent trustee a second allocation under the ltip was 
implemented during the year ended 31 december 2008
the potential beneﬁciaries of the ltip include a number of the 
executive directors see table below and also some senior 
managers within the group
the shares allocated to the ebt under the ltip vest three years 
from the date of allocation and a number of preset objectives will 
need to be fulﬁlled for the ltip to vest the full details of these 
objectives contain commercially sensitive information and must be 
fulﬁlled in order for the shares to vest in full the remuneration 
committee expects to publish the objectives in detail at the time 
of vesting 
the objectives under the allocations cover the delivery of mining 
and production levels of ilmenite and titanomagnetite from 
kuranakh the delivery of an appropriate ﬁnancing package to 
fund both the ks and garinskoye projects through to the 
commencement of mining operations the appointment of 
contractors to build the necessary infrastructure and the 
achievement of predetermined operating proﬁt levels in addition 
the implementation of these developments must be conducted to 
the standards set by the hse committee of the board for safety 
health environment and communities 
group overview
business review
corporate governance
financial statements annual report 2008 aricom plc
50
the structure of the ltip is that on each allocation a subsidiary of 
aricom will provide an interest free loan to the ebt to enable the 
ebt to subscribe for new ordinary shares in aricom at market value 
these ordinary shares will be held by the ebt on behalf of the 
potential participants for the vesting period together with any 
aricom shares already held by the ebt which have not previously 
been allocated under the ltip these shares are therefore held by 
the ebt on behalf of the potential participants for the vesting 
period and should the remuneration committee advise the 
trustees that the ltip objectives have been successfully achieved 
the shares will be sold the loan repaid and the gains on the shares 
passed to the participants subject to the provisions of the ebt 
shares are not allotted directly to the participants of the scheme
the allocations made under the ltip are disclosed on page 52
the following rules have been set for the operation of the ltip 
the maximum number of ordinary shares that may be allocated under the ltip shall not exceed at any time 5 of the company’s 
issued share capital 
the number of ordinary shares which may be held in the ebt shall not at any time exceed 5 of the company’s issued 
share capital 
no further options over ordinary shares will be granted under the company’s existing share option scheme and 
awards under the ltip will be subject to agreed performance conditions as established by the remuneration committee 
however completion of the performance conditions can be 
waived by the trustees at their sole discretion but having regard 
to any recommendations by the remuneration committee in 
circumstances where such conditions have become either 
inappropriate or overly onerous by external circumstances 
pension arrangements
executive directors have their own pension arrangements and are 
not members of a company pension scheme 
the company has agreed to make contributions equivalent to 
between 15 and 175 of basic salary into the personal approved 
pension schemes of the directors and employees amounts paid to 
directors are set out in the schedule of directors’ emoluments and 
compensation on page 51
directors’ contracts
it is the company’s policy that executive directors should have 
contracts for an indeﬁnite term providing for up to a maximum of 
one year’s notice however it may be necessary occasionally to 
offer longer notice periods to new directors where this arises it is 
the company’s policy to reduce the notice period to one year 
within two years of appointment of the director the service 
contract of jay hambro who was appointed a director in 2006 
provides for a notice period of 12 months all other executive 
directors have contracts which are subject to either three or six 
months’ notice by either party 
it is intended that tony redman pavel maslovskiy peter hambro 
and jay hambro be proposed for reelection at this year’s annual 
general meeting their notice periods and those of the other 
directors are as follows 
date of contract notice period
executive directors
brian egan 10072007 6 months
jay hambro 01092006 12 months
yuri makarov 26042004 3 months
martin smith 04042006 6 months
nonexecutive directors
sir malcolm field 01012007 3 months
peter hambro 12122003 3 months
sir roderic lyne 26092006 3 months
dr pavel maslovskiy 12122003 3 months
tony redman appointed 01012009  04082008 3 months
in the event of early termination the directors’ contracts 
provide for compensation up to a maximum of basic salary 
for the notice period no compensation will be payable when 
a director’s appointment is terminated for reasons of 
unsatisfactory performance
nonexecutive directors
all nonexecutive directors have speciﬁc terms of engagement 
and their remuneration is determined by the board and based on 
independent surveys of fees paid to nonexecutive directors of 
similar companies the basic fee paid to each nonexecutive 
director in the year was £30000 the nonexecutive directors 
receive further fees for additional work performed for the company 
in respect of membership of the remuneration committee 
nomination committee health safety and environmental 
committee and audit committee the additional fees paid to 
nonexecutive directors are at a rate of £10000 for membership of 
the audit committee and hse committee £5000 for chairmanship 
of the audit committee and hse committee £5000 for 
membership of the remuneration committee and nomination 
committee and £2500 for chairmanship of the remuneration 
committee and nomination committee the chairman of the 
company is paid a further £65000 and the senior nonexecutive 
director a further £15000 nonexecutive directors were not able 
to participate in the company’s share option scheme with the 
exception of options granted at the initial listing of the company 
on aim in 2003
directors’ interests in contracts of signiﬁcance 
none of the directors have interests in contracts of signiﬁcance 
with the company or with any of its subsidiaries
related party contracts are set out in note 39 to the consolidated
financial statements
audited information
aggregate directors’ remuneration
the total amounts for directors’ remuneration were as follows
  2008 2007
  £’000 £’000
emoluments 1668 1788
compensation for loss of employment  – 30
gains on exercise of share options  – 440
contributions to personal pensions  89 73
directors’ remuneration report continued annual report 2008
51
aricom plc
directors’ emoluments and compensation
the main elements of the remuneration of the chairman and the directors were paid in sterling except for yuri makarov as noted below 
and were as follows
basic salary other total total
fees pension beneﬁts bonus 2008 2007
£’000 £’000 £’000 £’000 £’000 £’000
executive directors
brian egan 218 22 18 103 361 171
jay hambro 275 48 3 165 491 525
yuri makarov 204 – 1 90 295 311
martin smith 185 19 3 83 290 297
nonexecutive directors
sir malcolm field  85––– 85 84
peter hambro 60––– 60 60
sir roderic lyne  65––– 65 64
dr pavel maslovskiy  110––– 110 109
former director
peter howes 13 1–– 14 270
1215 90 25 441 1771 1891
basic salaryfees includes fees paid to nonexecutive directors in respect of membership of committees as set out above
brian egan was appointed as a director of the company with effect from 31 july 2007 and his salary included in the aggregate ﬁgure above reﬂects this he is entitled to a car allowance of £12000 per annum which is included in other beneﬁts above
yuri makarov’s salary includes a rouble salary of rur 2160000 from aricom llc sir malcolm field’s fees for the eight months to august 2008 were paid to a third party anne charlton limited peter howes resigned as a director of the company with effect from 31 july 2007 and was awarded a payment of £30000 as compensation for loss of employment in 2007
the remuneration of the highest paid director was £491000 2007 £525000 the bonus ﬁgures are inclusive of the 10 bonus deferral as explained above a special bonus was paid in 2007 in recognition of the work involved relating to the admission of the company’s shares and warrants to 
the ofﬁcial list of the financial services authority and to trading on the main market of the london stock exchange plc and in relation 
to the fundraising in 2007 this bonus was approved by the remuneration committee and was paid in addition to the company’s annual 
bonus policy
directors’ share options
aggregate emoluments disclosed above do not include any amounts for the value of options to acquire ordinary shares in the company 
granted to or held by the directors 
details of options over shares for directors who served during the year are as follows
share options
the current share options held by directors and the movement during the year is set out below 
number of number of
shares under shares under
option as at granted exercised option as at
1 january during during 31 december
2008 the year the year 2008
executive directors
jay hambro 2500000 – – 2500000
martin smith 400000 – – 400000
yuri makarov 800000 – – 800000
former director
peter howes 400000 – 400000 –
the options outstanding were issued in accordance with the aricom plc share option scheme the exercise price is 42 pence and the 
exercise dates are between 19 july 2009 and 19 july 2012
there have been no variations to the terms and conditions or performance criteria for share options during the ﬁnancial year
options granted under the share option scheme are not subject to performance criteria as explained above the market price of the 
ordinary shares at 31 december 2008 was £0076 and the range during the year was £00523 to £106
group overview
business review
corporate governance
financial statements 52
annual report 2008 aricom plc
180 aricom
ftse 250
ftse all share
ftse 350 metals  mining
160
140
120
190
80
60
jan
2004
aug
2004
apr
2005
nov
2005
jul
2006
feb
2007
oct
2007
may
2008
dec
2008
40
20
0
source bloomberg 31 december 2008
long term incentive plan
the following awards were made to directors under the ltip in october 2007 and october 2008 following recommendations by the 
remuneration committee to the trustees of the ebt
date of award number price term
brian egan october 2007 2000000 £062 3 years
october 2008 2000000 £020 3 years
jay hambro october 2007 2000000 £062 3 years
october 2008 2000000 £020 3 years
yuri makarov october 2007 2000000 £062 3 years
october 2008 2000000 £020 3 years
martin smith october 2007 2000000 £062 3 years
october 2008 2000000 £020 3 years
the above are maximum possible allocations subject to the vesting period and the attainment of objectives as described above the 
above allocations refer to the ltip units and do not refer to numbers of shares each ltip unit entitles the beneﬁciary to potentially 
participate in any potential upside in the share price but does not entitle the beneﬁciary to the underlying shares
performance graph unaudited
the directors consider that the most appropriate measure of the company’s performance is its share price compared with the ftse 350 
metals  mining index the ftse all share index and the ftse 250 index
a graph showing the company’s share price compared with the ftse 350 metals  mining index the ftse all share index and the 
ftse 250 index from the date of admission to trading on aim until 31 december 2008 is shown below
aricom vs ftse 250 ftse all share and ftse 350 metals  mining
approval
this report was approved by the board of directors of aricom plc and signed on its behalf by
sir malcolm field
chairman of the remuneration committee
25 february 2009
directors’ remuneration report continued annual report 2008 aricom plc
53
report and financial statements
the directors present their report and the audited ﬁnancial 
statements for the year ended 31 december 2008 comparatives 
are for the year ended 31 december 2007 the consolidated 
ﬁnancial statements have been prepared under international 
financial reporting standards ‘ifrs’
principal activity
the principal activity of the group is the development of a 
vertically integrated mining processing and marketing group 
concentrating on industrial commodities the main activities and 
assets of the group are in russia and the group predominantly 
serves the russian and chinese markets
enhanced business review
the enhanced business review of the group has been covered by 
the disclosures contained in the chairman’s statement on page 10 
the chief executive ofﬁcer’s review on page 11 the financial 
review on pages 40 to 41 and this directors’ report on pages 
53 to 60
the key performance indicators review has been covered by the 
disclosures contained on page 1
results review of the business and future prospects
the consolidated income statement is set out on page 63 the 
directors’ report should be read in conjunction with the chairman’s 
statement on page 10 the chief executive ofﬁcer’s review on 
page 11 and the financial review on pages 40 to 41 which include 
information about the group’s business and performance during 
the period and an indication of future prospects events 
subsequent to 31 december 2008 are set out in note 40
the directors have not recommended the payment of a dividend 
2007 nil
events since the balance sheet date
details of events occurring since 31 december 2008 are set out in 
note 40 to the consolidated financial statements
risk factors
the exploration for and development of natural resources is a 
speculative activity that involves a high degree of risk the 
directors believe that in particular readers of this report should be 
aware of these risks and uncertainties if any of these risks and 
uncertainties together with possible additional risks and 
uncertainties of which the directors are currently unaware or which 
they consider not to be material in relation to the company’s 
business actually occur the company’s business ﬁnancial position 
or operating results could be materially and adversely affected it 
should be noted that this list is not exhaustive and that certain 
other risk factors may apply
in addition ﬁnancial risk management disclosures have been made 
in note 38 to the conslidated financial statements
the group may not be able to finance the group’s planned 
capital expenditures
the group’s business requires signiﬁcant capital expenditures 
including in exploration and development production transport 
reﬁning and meeting the group’s obligations under environmental 
laws and regulations
however in the next two to ﬁve years the group expects to ﬁnance 
a substantial part of these capital expenditures out of the proceeds 
of the placing in june 2007 and from external borrowings no 
assurance can be given that the group will be able to raise the 
ﬁnancing required for its planned capital expenditures on a 
secured basis or otherwise on acceptable terms or at all if the 
group is unable to raise the necessary ﬁnancing the group will 
have to reduce its planned capital expenditures any such 
reduction could adversely affect the group’s ability to develop any 
of its mineral resources if the reductions are severe enough the 
group may not be able to commence operations at one or more 
of its licensed territories 
if the group does not perform mineral exploration programmes 
required by the terms of the relevant licences these licences may 
be revoked or may lapse and it will lose all interest that it has in 
these deposits the group’s ability to obtain outside ﬁnancing will 
depend in part upon the prices of ilmenite and iron ore and the 
industry’s perception of their future price and other factors outside 
its control cash constraints and strategic considerations may also 
lead the group to dispose of all or part of its interests in some of its 
projects or mineral rights or to seek third parties jointly to develop 
one or more projects
geology and reserves
the exploration for and development of mineral deposits involves 
signiﬁcant uncertainties and the group’s operations will be subject 
to all of the hazards and risks normally encountered in such 
activities in addition any metals exploration programme entails 
risks relating to the location of economically viable orebodies the 
development of appropriate metallurgical processes the receipt of 
necessary governmental permits and the construction of mining 
and processing facilities no assurance can be given that any 
metals exploration programme will result in any new commercial 
mining operation or in the discovery of new resources
geological hazards and risks include unusual and unexpected 
geological formations rock falls ﬂooding and other climatic 
conditions any one of which could result in damage to or 
destruction of the group’s facilities damage to life or property 
environmental damage or pollution and legal liability which could 
have a material adverse impact on the business operations and 
ﬁnancial performance of the company although precautions to 
minimise risk will be taken even a combination of careful 
evaluation experience and knowledge may not eliminate all of the 
hazards and risks
as is common with all exploration ventures there is also 
uncertainty and therefore risk associated with the group’s 
operating parameters and costs these can be difﬁcult to predict 
and are often affected by factors outside the group’s control with 
all metals and minerals operations there is uncertainty and 
therefore risk associated with operating parameters and costs 
resulting from the scaling up of extraction methods tested in pilot 
conditions metals and minerals exploration is speculative in nature 
and there can be no assurance that any potential deposits 
discovered will result in an increase in the group’s mineable 
resource base in addition it may take many years from the initial 
phase of exploration and drilling before production is possible 
during this time the economic feasibility of exploiting a discovery 
may change as a result of changes in metal andor mineral 
market prices
directors’ report
group overview
business review
corporate governance
financial statements annual report 2008 aricom plc
54
implementation of new projects
the group has had limited business activity to date and its mining 
interests have not yet been fully developed into commercial 
production implementation of the group’s projects will in most 
cases require inter alia conclusion of agreements with third parties 
and government consents there is no certainty that any of these 
will be achieved and thus no certainty that these projects can be 
implemented or that they will be successful were they to be 
implemented in pursuing the proposed projects the company 
may ﬁnd itself in competition with companies with more 
substantial resources
prices and demand
the group’s earnings are intended to be principally derived from 
the mining and processing of metal bearing ores and are therefore 
related to the market prices of such metals and related products 
iron iron ore and titanium dioxide are currently trading at levels 
that are signiﬁcantly lower than during recent years and there is no 
certainty that these prices will be maintained although the group’s 
anticipated costs of mining and production are expected to be 
relatively low by world standards the group’s ability to achieve or 
maintain earnings pay dividends in the future and undertake 
capital expenditure may be affected if the price of iron iron ore 
and titanium dioxide remain at current levels
the group is targeting the chinese market for a signiﬁcant 
proportion of its future sales a decline in chinese demand andor 
an increase in chinese domestic production or other competition 
could adversely affect the group’s performance and prospects
the group’s mineral licences may be challenged which may 
prevent or severely curtail the group’s use of the affected 
mineral deposits
the group’s mineral rights may be challenged or impugned and 
insurance for these rights may not be available or the group may 
elect not to be so insured because of high premium costs the 
group does not carry title insurance each sovereign state is the 
sole authority able to grant mineral exploration andor exploitation 
rights and the group’s ability to maintain extraction rights on some 
of the group’s properties is dependent inter alia on the russian 
government’s policy and rules for use of subsoil title to the land 
plots on which the group has subsoil exploration and extraction 
rights may be affected by among other things undetected 
defects in addition a variety of factors beyond the group’s control 
may preclude the group from operating its mineral rights as 
permitted or not allow the group to enforce its mineral rights with 
respect to any of its deposits despite having the right to explore 
and develop them
the licensing regime in russia for the exploration extraction and 
production of minerals is governed primarily by the subsoil law 
and regulations promulgated thereunder the group’s licences 
provide that they may be revoked if the group fails to comply with 
any of the licence requirements such as minimum work 
commitments if the group does not make timely payments of 
levies and taxes for the use of the subsoil if the group 
systematically fails to provide information if the immediate licence 
holders go bankrupt or if the group fails to fulﬁl any capital 
expenditure or production obligations or both
there have been press reports that the russian government is 
considering proposals involving the replacement of the current 
subsoil licensing system with a new system based on civil law 
regulated agreements between subsoil users and the state it is not 
yet clear whether these proposals will be implemented and what 
effect this would have on the group’s operations there is a risk 
that the implementation of these or any other proposals which will 
change the russian subsoil licensing system may have an adverse 
effect on the group’s business
the group’s exploration development and production licences 
may be suspended or revoked prior to their expiration
generally compliance with various government regulations 
requires the group to obtain permits issued by russian 
governmental agencies some permits require periodic renewal or 
review of their conditions the group cannot predict whether the 
group will be able to renew these permits or whether material 
changes in permit conditions will be imposed nonrenewal of a 
permit may cause the group to discontinue the operations 
requiring the permit and the imposition of additional conditions on 
a permit may cause the group to incur additional compliance costs 
either of which could have a material adverse affect on the group’s 
ﬁnancial condition and results of operations additionally the 
group may not be able to or may voluntarily decide not to comply 
or may not have complied in all respects with the licence 
requirements for some or all of its licences if the group fails to fulﬁl 
the speciﬁc terms of any of its licences or if the group operates in 
the licence areas in a manner that violates russian law regulators 
may impose ﬁnes on the group or suspend or revoke its licences 
any of which could have a material adverse effect on its operations
reserves and resources may be subject to restatement
the resource and reserve estimates contained on page 25 are 
estimates of the resources and reserves in the ground on the 
group’s existing licensed territories the group’s ore resources and 
reserves are estimates based upon many factors including
the results of exploratory drilling and an ongoing sampling of the ore bodies
past experience with mining properties and the experience of the person making the reserve estimates because the group’s ore resource and reserve estimates are 
calculated based on current estimates of production costs and 
product prices they should not be interpreted as assurances of the 
economic life of the group’s deposits or the proﬁtability of the 
group’s future operations resource and reserve estimates may 
require revisions based on the deﬁnitive exploration ﬁgures and 
actual production experience furthermore a sustained decline in 
relevant market prices could render ore resources and reserves 
containing lower grades andor mineralisation uneconomic to 
recover and ultimately require a restatement of reserves and 
resources
any failure of the reserves and resources to meet the group’s 
recovery expectations may have a materially adverse effect on the 
group’s business ﬁnancial condition and results of operations the 
mineral expert’s report on the mineral assets of the group is a 
review based on data provided by the group much of which 
originated from soviet research undertaken in the 1950s and 1960s 
the data and its interpretation could be inaccurate resulting in 
higher levels of required initial investment 
payment and other obligations
under the exploration licences and other contractual agreements 
to which the group companies are or may in the future become 
parties such companies are or may become subject to payment 
and other obligations if such obligations are not complied with 
when due in addition to any other remedies which may be 
available to other parties this could result in dilution or forfeiture 
of interests held by such companies
from time to time some of the russian companies in the group 
may have negative net assets as deﬁned under russian 
accounting standards
there are certain requirements under both the federal law ‘on 
limited liability companies’ and the federal law ‘on joint stock 
companies’ that require companies to have net assets that are 
more than its charter capital in common with a number of other 
groups in the russian mining and exploration sector a number of 
the group’s subsidiaries may have negative net assets especially 
those in the early stages of exploration and which are prior to the 
directors’ report continued annual report 2008 aricom plc
55
development mining andor production stage and those 
subsidiaries may or may not voluntarily decide not to rectify 
the situation 
if a group subsidiary has negative net assets there is a risk that 
russian tax authorities and other interested parties may bring a 
claim to liquidate such a company but there are a number of 
examples where russian courts have not upheld such claims on the 
grounds that the relevant company has paid its debts as they fell 
due andor has subsequently become proﬁtable andor has 
received a capital contribution to render that company negative 
asset positive under russian law however there is no guarantee 
that russian courts will continue to decide in this way in which 
event one or more of the group’s companies could be the subject 
of a court order to be liquidated which would among other 
matters result in the loss of any mineral licence held by such 
company and result in adverse consequences for the rest of the 
group even if the group does take any necessary steps available 
to it to remedy this situation to the extent permissible under 
russian law there can be no certainty that the russian tax 
authorities will not seek to bring a claim in any event
an additional risk exists in respect of any of the group’s joint 
venture participations or any other investment of the group which 
is less than a 100 subsidiary which have negative net assets since 
there can be no assurance that the group’s partners or the other 
shareholders in such joint ventures will take the same steps as 
the group to remedy a deﬁciency in such joint venture entity’s 
negative net assets in which case their share might have to be 
funded by the group
currency risk
the company’s functional currency is gb pounds and it presents 
its accounts in us dollars ‘us’ the majority of the company’s 
subsidiaries have a us functional currency but a large part of 
the group’s expenses is denominated in rur which has been 
depreciating against the us dollar for the last 6 months the group 
also has expenses and income denominated in other currencies 
including those of the jurisdictions in which it operates the 
group’s ﬁnancial condition and results of operations could be 
adversely affected by changes in the exchange rates between 
currencies in which it operates
the expenditure relating to the planned titanium sponge plant in 
china is expected to be met in part in chinese yuan adverse 
movements in the usrmb exchange rate could impact the 
group’s proﬁtability
counterparty risk
the group has us257 million of cash and cash equivalents the 
majority of which is deposited with major uk ﬁnancial institutions 
with credit ratings of ba1 or above for operational reasons the 
group holds deposits with banks in russia one of which a related 
party has no ofﬁcial credit rating see note 38 to the consolidated 
financial statements for further details
environmental regulations
the group’s operations are subject to the extensive environmental 
risks inherent in the mining and processing industry
although the directors believe that the subsidiaries are in 
compliance in all material respects with any applicable 
environmental laws and regulations and hold all necessary 
approvals licences and permits under those laws and regulations 
there are certain risks inherent in their activities and those which 
the group will undertake in the future such as risks of accidental 
spills leakages or other unforeseen circumstances that could 
subject the group to extensive liability in addition the group is 
subject to checks including spot checks by various regulators 
including rosprirodnazor the environmental regulator in russia
environmental legislation and permitting requirements are likely to 
evolve in a manner which will require stricter standards and 
enforcement increased ﬁnes and penalties for noncompliance 
however the group is unable to predict the effect of additional 
environmental laws and regulations which may be adopted in the 
future including whether any such laws or regulations would 
materially increase the group’s cost of doing business or affect its 
operations in any area
during the conduct of operations the group is subject to regular 
inspections and reporting requirements for a range of issues 
relating to environmental pollution and must comply with 
maximum acceptable concentrations determined by state 
authorities for air quality water quality soils and sediments any 
issues identiﬁed in such inspections or reporting processes andor 
any breach of these requirements could have adverse 
consequences for the group
access rights to mining tenements land rights and third 
party rights
there may be cases where the group requires additional rights to 
access or to exploit future mining projects 
in accordance with the russian legislation and terms commonly 
included in licence agreements a licence holder is obliged to 
obtain rights to the part of licensed area where certain geological 
works are carried out this requires the licence holder obtaining 
lease agreements and mine allotment acts in respect of those areas 
to ensure it has all of the required land rights the lease 
agreements must also be registered with the state to be 
enforceable together “land rights” if the land rights are not 
obtained ﬁnes can be imposed on licence holders
obtaining the required land rights can be a long drawn out and 
bureaucratic process for licence holders for reasons beyond their 
control the company and its subsidiaries may not always have the 
required land rights at the time of commencing their mining 
operations or for periods of time where agreements expire in 
relation to land rights
permitting
both ahead of the commencement of operations by aricom 
including at kuranakh where certain permits remain to be obtained 
and during the conduct of operations a range of permits are 
required to be obtained from different authorities and the ovos 
must be approved by state environmental experts additionally 
certain activity must be discussed in advance with local 
communities and other interested persons
any failure to obtain or delay in obtaining any permits or 
approvals could adversely affect the group’s investment plans and
or operations which could in turn adversely affect the group
operational considerations
the group’s operational targets are subject to the completion of 
planned operational goals on time and according to budget and 
are dependent on the effective support of the group’s personnel 
systems procedures and controls any failure of these may result in 
delays in the achievement of operational targets with a consequent 
material adverse impact on the business operations and ﬁnancial 
performance of the company
the location of the kuranakh ks garinskoye and bolshoi seym 
deposits means that climatic conditions have an impact on 
operations and in particular severe weather could disrupt the 
delivery of supplies equipment and fuel it is therefore possible 
that exploration and extraction activity levels might ﬂuctuate as a 
result of meteorological factors
group overview
business review
corporate governance
financial statements annual report 2008 aricom plc
56
unscheduled interruptions in the company’s operations due to 
mechanical or other failures or industrial relations related issues or 
problems or issues with the supply of goods or services could have 
a serious impact on the ﬁnancial performance of those operations
lack of infrastructure may adversely affect the group’s ability 
to develop its resources
the group’s current and proposed reserves and resources are 
situated in areas lacking infrastructure required to develop and 
operate the group’s reserves and resources the group must invest 
heavily in the construction of the required mining and auxiliary 
infrastructure such as roads loading terminals railways connecting 
to the bam andor transsiberian railways and staff living quarters 
construction and operation of this infrastructure will require 
substantial capital expenditure by the group and no assurance can 
be given that the market conditions will continue to make such 
investments viable
kuranakh and bolshoi seym are located in close proximity to the 
bam railway which is operated by a state owned company ojsc 
russian railways stateowned infrastructure in russia largely dates 
back to soviet times and much has not been adequately funded 
and maintained over the last 1520 years particularly affected are 
the rail and road networks building stocks and power generation 
and transmission currently the russian government sets rail tariffs 
and may further increase these tariffs as it has done in the past the 
group could be adversely affected by insufﬁcient capacity on the 
bam railway
although the construction of a crossborder rail bridge in close 
proximity to ks may be beneﬁcial to the group’s operations there 
is no certainty that the necessary funding will be forthcoming or 
such a bridge will be constructed
labour
certain of the group’s operations are carried out under potentially 
hazardous conditions whilst the group intends to continue to 
operate in accordance with relevant health and safety regulations 
and requirements the group remains susceptible to the possibility 
that liabilities might arise as a result of accidents or other 
workforcerelated misfortunes some of which may be beyond the 
group’s control
the group is undertaking a substantial recruitment programme to 
staff its increasing operations if the group is unable to recruit the 
required personnel with the required skills this could adversely 
affect the group’s investment plans andor operations which could 
in turn adversely affect the group signiﬁcant increases in labour 
costs could adversely affect the group
uninsured risks
the group as a participant in exploration and mining programmes 
may become subject to liability for hazards that cannot be insured 
against which could exceed policy limits or against which it may 
elect not to be so insured because of high premium costs the 
group may incur a liability to third parties in excess of any 
insurance cover arising from pollution or other damage or injury
the group does not have full coverage for all of its plant and 
facilities for business interruption for thirdparty liability in respect 
of property and for environmental damage arising from accidents 
on its property or relating to its operations until the group 
decides to obtain full insurance coverage there is a risk that losses 
and liabilities arising from such events could signiﬁcantly increase 
its costs and have a material adverse effect on its business results 
of operations and ﬁnancial condition
project development risks
there can be no assurance that the company will be able to 
manage effectively the expansion of its operations or that the 
group’s current personnel systems procedures and controls will 
be adequate to support the group’s operations any failure of 
management to manage effectively the group’s growth and 
development could have a material adverse effect on the group’s 
business ﬁnancial condition and results of operations
there is no certainty that all or any of the elements of the group’s 
current strategy will develop as anticipated
dependence on key personnel
the group’s business is dependent on retaining the services of a 
small number of key personnel of the appropriate calibre as the 
business develops there is no assurance that the group will be 
able to attract and retain such key personnel the success of the 
group is and will continue to be to a signiﬁcant extent dependent 
on the expertise and experience of the directors and senior 
management and the loss of one or more could have a materially 
adverse effect on the group
litigation
legal proceedings may arise from time to time in the course of the 
company’s business the directors cannot prevent litigation being 
brought against the company or any of its subsidiaries in future 
from time to time
risks relating to the jurisdictions in which the group operates
economic political judicial administrative taxation or other 
regulatory factors
the group may be adversely affected by changes in economic 
political judicial administrative taxation or other regulatory 
factors in the areas in which the group will operate and holds its 
major assets as well as other unforeseen matters the jurisdictions 
in which the company operates may in some cases have less 
established judicial systems a more volatile political environment 
andor more challenging trading conditions than in some other 
parts of the world unlawful selective or arbitrary government 
action could have a material adverse effect on the group’s business 
and prospects
the group is subject to a broad range of taxes imposed at the 
federal regional and local levels including but not limited to 
income tax mineral extraction taxes royalty tax sales tax property 
tax social taxes and road use tax laws related to these taxes such 
as the russian tax code have been in force for a short period 
relative to tax laws in more developed market economies 
therefore the implementation of these tax laws by different tax 
authorities and courts is often unclear andor inconsistent 
accordingly few precedents with regard to the interpretation of 
these laws have been established the group seeks legal and tax 
advice and seeks to comply with all the relevant tax laws and 
regulations to the best of its abilities however no assurances can 
be made that tax authorities andor courts will apply various tax 
laws and regulations in a way consistent with that taken by the 
group if the tax authorities andor courts adopt a different 
interpretation of various tax laws and regulations the group may 
have to pay signiﬁcantly higher taxes and impose additional 
burdens and costs on the group’s operations including 
management resources which could have a material adverse effect 
on the group’s business
the group’s assets are located in russia a country which is still 
moving from a command to marketdriven economy while this 
process of change is establishing in russia a more westernstyle 
business environment there are still substantial differences 
between it and more developed economies and countries 
including a volatile ﬁnancial system political andor economic 
instability andor lack of transparency and both these differences 
and the ongoing processes could adversely affect the group 
and its operations ethnic religious historical and other divisions 
have on occasion given rise to tensions armed conﬂict and 
terrorist activity
directors’ report continued annual report 2008 aricom plc
57
any spread of violence or terrorism or political measures taken to 
counter them could hinder the operation and the expansion of the 
group’s business various recent developments in russia including 
the tightening of state control over the economy have caused some 
concern in relation to the investment climate in the country and no 
assurances can be given that various steps taken or being debated 
in the russian government will not affect investment into russia or 
the public perception thereof
china
the company will be exposed to the chinese economy and 
to the state of diplomatic relations between russia and china 
deterioration in the chinese economy andor in the trading 
environment could adversely affect the trading position of the 
company similarly the imposition of export controls in russia 
or import controls in china could adversely affect the 
company’s operations
legal and regulatory environment
there is no guarantee that the group will be successful in all 
attempts to obtain mining licences there is no guarantee of the 
terms of any future mining licence the exploration and extraction 
activities of the group are subject to various laws governing 
prospecting development production taxes labour standards and 
occupational health site safety toxic substances and other matters 
although the directors believe that the group’s exploration 
activities are currently carried out in accordance with all applicable 
rules and regulations relevant to the current stage of development 
and that the group holds all necessary approvals licences and 
permits under those laws and regulations for its current activities 
no assurance can be given that new rules and regulations will not 
be enacted or that existing rules and regulations will not be applied 
in a manner which could limit or curtail exploration production or 
development amendments to current laws and regulations 
governing operations and activities of exploration for and 
extraction of mineral resources or more stringent implementation 
thereof could have a material adverse impact on the business 
operations and ﬁnancial performance of the group
in some cases existing or future licences cover or will cover only 
the extraction of speciﬁed minerals in such cases the exploitation 
of other minerals may require additional licences to be obtained 
and there can be no certainty that these will be forthcoming
risks relating to the aricom securities
liquidity
although the aricom securities are listed on the ofﬁcial list this 
should not be taken as implying that there will be a liquid market in 
the aricom securities an investment in the aricom securities may 
therefore in certain circumstances be difﬁcult to realise
the company can give no assurance that an active trading market 
for the warrants will be sustained should the warrant holders 
decide to exercise their warrants this would result in a dilution of 
the interests of the shareholders at the time of the issue of any 
ordinary shares pursuant to such exercise
investment risk
prospective investors should be aware that the value of an 
investment in the company may go down as well as up in addition 
there can be no certainty that the market price of an investment in 
the company will fully reﬂect its underlying value the price at 
which investors may dispose of their aricom securities may be 
inﬂuenced by a number of factors some of which may be related to 
the company and some not investors may realise less than the 
original amount invested
joint venture arrangements may not be finalised
the group has a minority interest in the bolshoi seym deposit and 
the bolshoi seym joint venture arrangements are yet to be ﬁnalised
the group has a 49 interest in uralmining a russian company 
holding the licence to develop the bolshoi seym deposit the 
group is in the process of negotiating a joint venture agreement 
with the proposed other participant in uralmining kmt a company 
related to the interros investment group a large russian private 
investment company if implemented the joint venture agreement 
will provide certain minority protections for aricom if the joint 
venture is not entered into the company will remain as a minority 
shareholder in uralmining without any additional contractual rights 
in respect of the bolshoi seym deposit
the titanium sponge project may not proceed
in august 2008 chinalco the largest nonferrous metal company in 
china and owner of china’s largest titanium metal processing plant 
signed an agreement with aricom for the design and development 
of a titanium sponge production plant in china in order to 
progress this project additional equity contributions are required 
from both aricom and chinalco and a project ﬁnance facility is also 
required if the equity contributions or project ﬁnance are not made 
available the project will not proceed 
if at some stage the capital expenditure requirements operating 
costs or titanium sponge price levels are such that the project 
appears unproﬁtable the project may not proceed
possible merger with peter hambro mining plc
conditions to the offer may not be satisﬁed or approved
the offer once made to aricom shareholders will contain certain 
conditions and those conditions may not be satisﬁed at the time 
phm may decide in its absolute discretion to waive or amend those 
conditions alternatively the offer may be terminated or may lapse 
the offer may be made by phm but not approved as required by 
the court if implemented by way of a scheme the current 
intention or by the required percentage of shareholders of aricom 
or phm or if fas approval is not received if this occurs the 
conditions may not be satisﬁed and the offer to aricom 
shareholders may be terminated or may lapse
change of control
there is a risk that certain contracts of the group may contain 
change of control provisions and in connection with certain of 
those contracts there is a risk that the proposed merger could 
constitute a change of control there is a risk that a disgruntled 
party or creditor may bring an action claiming there has been a 
change of control there is a risk that contracts where change of 
control provisions will be invoked that the group cannot deal with 
those adverse effects before any proposed merger these effects 
may have adverse consequences for the enlarged entity
general
the risks noted above are not intended to be presented in any 
assumed order of priority
supplier payment policy
the group does not follow any speciﬁc external code or standard 
on payment terms instead responsibility for determining payment 
terms is delegated to the individual businesses within the group 
which take into account local market and industry practice as a 
group the policy for determining payment terms is either to agree 
terms of payment at the start of a binding contract or to ensure that 
the supplier is aware of the individual businesses’ usual payment 
terms payment is made in accordance with contractual and other 
legal obligations and reﬂects local market practices the company 
is a holding company and as such has few suppliers 
trade creditor days of the group at 31 december 2008 were 14 
days 2007 23 days
charitable and political contributions
the group did not make any charitable or political donations in 
2008 2007 nil
group overview
business review
corporate governance
financial statements 58
annual report 2008 aricom plc
directors
the directors who held ofﬁce at any time during the year under review are set out below
brian egan chief financial ofﬁcer
sir malcolm field senior nonexecutive director
jay hambro chief executive ofﬁcer
peter hambro nonexecutive deputy chairman
sir roderic lyne nonexecutive director
yuri makarov operations director 
dr pavel maslovskiy chairman
martin smith technical director
tony redman was appointed as a nonexecutive director with effect from 1 january 2009
directors’ interests
the beneﬁcial interests of the directors and connected parties in the share capital of the company as at 1 january 2008 31 december 
2008 were as follows
1 january 31 december
2008 2008
ordinary shares of £0001 each
sir malcolm field  1205000 1205000
brian egan – 107622
peter hambro 92601729 87601729
jay hambro – 110000
sir roderic lyne  26000 26000
yuri makarov – 110000
dr pavel maslovskiy  92779094 87779094
warrants
sir malcolm field  35000 35000
jay hambro 135000 135000
no other directors had an interest in the shares of the company as at 31 december 2008 the directors held no interests in any other 
group companies there have been no changes in the above holdings since 31 december 2008
the current share options held by directors and the movement during the year is set out below 
number of number of
shares under shares under
option as at granted exercised option as at
1 january during during 31 december
2008 the year the year 2008
executive directors
jay hambro 2500000 – – 2500000
yuri makarov 800000 – – 800000
martin smith 400000 – – 400000
former director
peter howes 400000 – 400000 –
details of allocations made to directors under the companies long term incentive plan are given below
date of award number
1
price term
brian egan october 2007 2000000 £062 3 years
october 2008 2000000 £020 3 years
jay hambro october 2007 2000000 £062 3 years
october 2008 2000000 £020 3 years
yuri makarov october 2007 2000000 £062 3 years
october 2008 2000000 £020 3 years
martin smith october 2007 2000000 £062 3 years
october 2008 2000000 £020 3 years
1 the above allocations refer to ltip units and not refer to the numbers of shares
the above are maximum allocations subject to the attainment of objectives further details of the company’s long term incentive plan 
are set out in the directors’ remuneration report on pages 48 to 52
directors’ report continued annual report 2008 aricom plc
59
appointment of directors
with regard to the appointment and replacement of directors the 
company is governed by its articles of association the combined 
code the companies act 2006 and related legislation 
directors may be appointed by the company by ordinary resolution 
or by the board on recommendation of the nomination 
committee a director appointed by the board holds ofﬁce only 
until the next following annual general meeting and is then eligible 
for election by the shareholders but is not taken into account in 
determining the directors or the number of directors who are to 
retire by rotation at that meeting
the company may in accordance with and subject to the 
provisions of the companies act 2006 by ordinary resolution of 
which special notice has been given remove any director before 
the expiration of this term of ofﬁce 
directors’ indemnities
the company has made no qualifying third party indemnity 
provisions nor any qualifying pension scheme indemnity provisions 
for the beneﬁt of its directors or the directors of its associated 
companies during the year ended 31 december 2008 or which 
remain in force at the date of this report other than directors’ and 
ofﬁcers’ insurance
powers of directors
subject to the company’s memorandum of association the 
articles of association the prevailing legislation and any directions 
given by special resolution the business and affairs of the 
company will be managed by the directors who may exercise all 
such powers of the company the powers of directors are further 
described in the schedule of matters reserved for the board 
copies of which are available on request and in the corporate 
governance statement on pages 42 to 45
the company has authority to issue shares under its articles of 
association and it is intended that an ordinary resolution will be 
proposed at this year’s annual general meeting to authorise 
directors to allot ordinary shares up to a maximum aggregate 
nominal amount of £415064 this represents the aggregate of one 
third of the nominal value of the ordinary shares in issue as at the 
date of this report and of the ordinary shares subject to existing 
options it is intended that a further resolution is to be proposed 
which will disapply the statutory preemption rights for issues of 
ordinary shares for certain purposes
further details of the above will be contained in the notice of 
annual general meeting
repurchase of shares
the company was granted authority to repurchase up to 5 of its 
issued share capital at the annual general meeting held on 18 april 
2008 this authority will expire at the conclusion of this year’s 
annual general meeting unless renewed at that meeting the 
company has not made use of this authority during the year under 
review it is intended that the board will seek shareholder approval 
at this year’s annual general meeting for the authority to 
repurchase up to 5 of the issued share capital
further details of the above will be contained in the notice of 
annual general meeting
amendment of articles of association
the company’s articles of association may be amended by special 
resolution of shareholders
capital structure
details of the company’s authorised and issued share capital 
together with details of the movements in the company’s issued 
share capital during the year are shown in note 30 to the accounts 
the company has one class of ordinary share which carries no 
rights to ﬁxed income ‘shares’ 
rights and obligations attaching to shares
the rights attaching to the shares are governed by the articles 
of association and prevailing legislation there are no speciﬁc 
restrictions on the size of a holding
subject to any rights or restrictions attached to any shares on a 
show of hands every shareholder present in person or by proxy or 
being a corporation present by a duly authorised representative 
shall have one vote and on a poll every shareholder who is present 
in person or by proxy shall have one vote for every share held by 
the shareholder
restrictions on voting
no shareholder shall be entitled to vote at any general meeting or 
class meeting in respect of any shares held by him if any call or 
other sum then payable by him in respect of that share remains 
unpaid currently all issued shares are fully paid in addition no 
member shall be entitled to vote if he failed to provide the 
company with information concerning interests in those shares 
required to be provided under the companies act 2006
deadlines for voting rights
votes are exercisable at the general meeting of the company in 
respect of which the business being voted upon is being heard 
the notice of the annual general meeting will specify the 
deadline for appointing a proxy or proxies to vote in relation to 
resolutions to be passed at this year’s annual general meeting
transfer of shares
the transfer of shares is governed by the general provisions of the 
articles of association and prevailing legislation
there are no restrictions on the transfer of the shares other than as 
set out in the articles of association and i certain restrictions may 
from time to time be imposed by laws and regulations for example 
insider trading laws and ii pursuant to the listing rules of the 
financial services authority whereby certain directors ofﬁcers and 
employees of the company require the approval of the company 
to deal in the shares
shareholder agreements
the directors are not aware of any agreements between holders of 
the company’s shares that may result in restrictions on the transfer 
of securities or on voting rights or any arrangements by which 
with the company’s cooperation ﬁnancial rights carried by 
securities are held by a person other than the holder of the 
securities no person has any special rights of control over the 
company’s share capital 
shares held by the employee beneﬁt trust
shares held by the aricom plc employee beneﬁt trust abstain 
from voting
group overview
business review
corporate governance
financial statements annual report 2008 aricom plc
60
notiﬁable share interests
at the date of this report the company had been notiﬁed of the 
following direct and indirect interests in excess of 3 of its issued 
share capital
number of 
shareholder shares held 
lansdowne partners limited 109770746 928
malavasia enterprises inc 102981366 871
the capital group of companies  100833005 852
pavel maslovskiy and associates  87779094 742
peter hambro and associates 87601729 741
jpmorgan asset management  62046534 525
morstan nominees ltd 
morgan stanley group 54716335 463
legal  general 52012101 440
credit suisse securities europe ltd  42934621 363
the company has not received notiﬁcation that any other person 
holds 3 or more of the company’s issued share capital
employees
the group maintains a policy of providing employees with 
information about the company and regular meetings are held 
between management and employees to allow exchanges of 
information and ideas
the group is committed to provide equal opportunity for 
individuals in all aspects of employment the group gives every 
consideration to applications for employment by disabled persons 
where the requirements of the job may be adequately ﬁlled by a 
disabled person where existing employees become disabled it is 
the company’s policy wherever practicable to provide continuing 
employment under similar terms and conditions and to provide 
training career development and promotion wherever appropriate
company branches outside the uk
the company has maintained a branch in china since august 2008
change of control
a change of control of the company following a takeover bid may 
cause a number of agreements to which the company or any of its 
trading subsidiaries is party such as commercial trading contracts 
joint venture agreements banking arrangements to take effect 
alter or terminate in the context of the potential impact on the 
group none of these agreements is considered to be signiﬁcant
conﬂicts of interest
the companies act 2006 allows directors of public companies to 
authorise conﬂicts and potential conﬂicts of interest of directors 
where the articles of association contain a provision to that effect 
shareholders approved amendments to the company’s articles of 
association at the annual general meeting held on 15 april 2008 
which included provisions giving the board the authority to 
authorise matters which may result in the directors breaching their 
duty to avoid a conﬂict of interest directors of the company who 
have an interest in matters under discussion at board meetings are 
required to declare this interest and to abstain from voting on the 
relevant matters any related party transactions are approved by a 
committee of the board consisting solely of independent directors 
in addition the directors will be able to impose limits or conditions 
when giving any authorisation if they think this is appropriate
directors’ report continued
directoremployee agreements for compensation
in circumstances where a director loses ofﬁce as a result of a 
change of control of the company following a takeover bid certain 
directors are entitled to six months’ pay as compensation for loss 
of ofﬁce
health safety and the environment
the board has established the health safety and environmental 
committee which is responsible for aricom’s staff the communities 
within which the company operates and the environment impact of 
the group
further details on the group’s activities in this area are given in the 
corporate governance report on pages 42 to 45
auditors
in the case of each of the persons who are directors of the 
company at the date when this report was approved
so far as each of the directors is aware there is no relevant audit information of which the company’s auditors are unaware and
each of the directors has taken all the steps that he ought to have taken as a director in order to make himself aware of any 
relevant audit information and to establish that the company’s 
auditors are aware of that information
this conﬁrmation is given and should be interpreted in accordance 
with the provisions of section 234za of the companies act 1985
deloitte llp have expressed their willingness to continue in ofﬁce 
as auditors and it is intended that a resolution to reappoint them 
will be proposed at this year’s annual general meeting
approval
this report was approved by the board of directors of aricom plc 
and signed on its behalf by
heather williams fcis
company secretary
25 february 2009 annual report 2008 aricom plc
61
directors’ responsibilities
the directors are responsible for preparing the annual report 
directors’ remuneration report and the ﬁnancial statements 
company law requires the directors to prepare such ﬁnancial 
statements in accordance with the companies act 1985 and article 
4 of the ias regulation the ﬁnancial statements for the group 
have been prepared in accordance with ifrss as adopted by the 
european union 
international accounting standard 1 requires that ﬁnancial 
statements present fairly for each ﬁnancial year the company’s 
ﬁnancial position ﬁnancial performance and cash ﬂows this 
requires the faithful representation of the effects of transactions 
other events and conditions in accordance with the deﬁnitions and 
recognition criteria for assets liabilities income and expenses set 
out in the international accounting standards board’s ‘framework 
for the preparation and presentation of financial statements’ in 
virtually all circumstances a fair presentation will be achieved by 
compliance with all applicable international financial reporting 
standards directors are also required to
properly select and apply accounting policies present information including accounting policies in a manner that provides relevant reliable comparable and understandable 
information and
provide additional disclosures when compliance with the speciﬁc requirements in ifrs is insufﬁcient to enable users 
to understand the impact of particular transactions other 
events and conditions on the entity’s ﬁnancial position and 
ﬁnancial performance
the directors are responsible for keeping proper accounting 
records which disclose with reasonable accuracy at any time the 
ﬁnancial position of the company for safeguarding the assets for 
taking reasonable steps for the prevention and detection of fraud 
and other irregularities and for the preparation of a directors’ 
report which complies with the requirements of the companies 
act 1985
the directors are responsible for the maintenance and integrity of 
the corporate and ﬁnancial information included on the company’s 
website legislation in the united kingdom governing the 
preparation and dissemination of ﬁnancial statements differs from 
legislation in other jurisdictions
each of the directors whose names and functions are listed on 
page 104 conﬁrm that to the best of their knowledge
the group ﬁnancial statements which have been prepared in accordance with ifrss as adopted by the european union give 
a true and fair view of the assets liabilities ﬁnancial position and 
loss of the group and
the directors’ report taken together with the chairman’s statement and chief executive ofﬁcer’s review includes a fair 
review of the development and performance of the business 
and the position of the group together with a description of the 
principal risks and uncertainties that it faces
after making enquiries the directors are satisﬁed that the group 
has adequate resources to continue in operational existence for the 
foreseeable future for this reason the directors continue to adopt 
the going concern basis in preparing the financial statements
approval
this report was approved by the board of directors of aricom plc 
and signed on its behalf by
dr pavel maslovskiy
chairman
25 february 2009
statement of directors’ responsibilities
group overview
business review
corporate governance
financial statements annual report 2008 aricom plc
62
independent auditors report 
to the members of aricom plc
we have audited the group ﬁnancial statements of aricom plc 
for the year ended 31 december 2008 which comprise the 
consolidated income statement the consolidated statement of 
recognised income and expense the consolidated balance sheet 
the consolidated cash flow statement and the related notes 1 to 
41 these group ﬁnancial statements have been prepared under 
the accounting policies set out therein we have also audited the 
information in the directors’ remuneration report that is described 
as having been audited
we have reported separately on the parent company ﬁnancial 
statements of aricom plc for the year ended 31 december 2008 
this report is made solely to the company’s members as a body in 
accordance with section 235 of the companies act 1985 our audit 
work has been undertaken so that we might state to the company’s 
members those matters we are required to state to them in an 
auditors’ report and for no other purpose to the fullest extent 
permitted by law we do not accept or assume responsibility to 
anyone other than the company and the company’s members as a 
body for our audit work for this report or for the opinions we 
have formed
respective responsibilities of directors and auditors
the directors’ responsibilities for preparing the annual report the 
directors’ remuneration report and the group ﬁnancial statements 
in accordance with applicable law and international financial 
reporting standards ifrss as adopted by the european union are 
set out in the statement of directors’ responsibilities
our responsibility is to audit the group ﬁnancial statements in 
accordance with relevant legal and regulatory requirements and 
international standards on auditing uk and ireland
we report to you our opinion as to whether the group ﬁnancial 
statements give a true and fair view whether the group ﬁnancial 
statements have been properly prepared in accordance with the 
companies act 1985 and article 4 of the ias regulation and 
whether the part of the directors’ remuneration report described 
as having been audited has been properly prepared in accordance 
with the companies act 1985 we also report to you whether in our 
opinion the information given in the directors’ report is consistent 
with the group ﬁnancial statements the information given in the 
directors’ report includes that speciﬁc information presented in 
the chairman’s review ceo’s review and financial review that is 
cross referred from the enhanced business review section of the 
directors’ report 
in addition we report to you if in our opinion we have not received 
all the information and explanations we require for our audit or if 
information speciﬁed by law regarding directors’ remuneration and 
other transactions is not disclosed
we review whether the corporate governance statement reﬂects 
the company’s compliance with the nine provisions of the 2006 
combined code speciﬁed for our review by the listing rules of the 
financial services authority and we report if it does not we are 
not required to consider whether the board’s statements on 
internal control cover all risks and controls or form an opinion on 
the effectiveness of the group’s corporate governance procedures 
or its risk and control procedures
we read the other information contained in the annual report as 
described in the contents section and consider whether it is 
consistent with the audited group ﬁnancial statements we 
consider the implications for our report if we become aware of any 
apparent misstatements or material inconsistencies with the group 
ﬁnancial statements our responsibilities do not extend to any 
further information outside the annual report
basis of audit opinion
we conducted our audit in accordance with international standards 
on auditing uk and ireland issued by the auditing practices 
board an audit includes examination on a test basis of evidence 
relevant to the amounts and disclosures in the group ﬁnancial 
statements and the part of the directors’ remuneration report to 
be audited it also includes an assessment of the signiﬁcant 
estimates and judgements made by the directors in the 
preparation of the group ﬁnancial statements and of whether the 
accounting policies are appropriate to the group’s circumstances 
consistently applied and adequately disclosed
we planned and performed our audit so as to obtain all the 
information and explanations which we considered necessary in 
order to provide us with sufﬁcient evidence to give reasonable 
assurance that the group ﬁnancial statements and the part of the 
directors’ remuneration report to be audited are free from 
material misstatement whether caused by fraud or other 
irregularity or error in forming our opinion we also evaluated the 
overall adequacy of the presentation of information in the group 
ﬁnancial statements and the part of the directors’ remuneration 
report to be audited
opinion
in our opinion
the group ﬁnancial statements give a true and fair view in accordance with ifrss as adopted by the european union of 
the state of the group’s affairs as at 31 december 2008 and of 
its loss for the year then ended
the group ﬁnancial statements have been properly prepared in accordance with the companies act 1985 and article 4 of the 
ias regulation 
the part of the directors’ remuneration report described as having been audited has been properly prepared in accordance 
with the companies act 1985 and
the information given in the directors’ report is consistent with the group ﬁnancial statements 
deloitte llp
chartered accountants and registered auditors
london
25 february 2009  annual report 2008
63
aricom plc
2008 2007
notes us’000 us’000
revenue 6 9674 4938
cost of sales 6009 3153
impairment charge  8 386450 –
gross lossproﬁt         382785 1785
distribution costs  258 –
administrative expenses
listing costs – 3951
share based payments  36 482 1086
other administrative costs  9 30407 19900
other operating income  200 475
share of associate’s proﬁtloss  19 850 59
share of joint venture’s loss  20 444 –
operating loss         413326 22736
investment revenues  12 15532 21453
finance costs 13 23224 602
loss before tax         421018 1885
tax chargebeneﬁt  14 5582 1996
lossproﬁt for the year 426600 111
attributable to
equity holders of the parent  427377 1040
minority interest  777 929
426600 111
lossearnings per share
basic 16 us038 us000
diluted 16 us038 us000
consolidated income statement
for the year ended 31 december 2008
group overview
business review
corporate governance
financial statements 64
annual report 2008 aricom plc
consolidated statement of recognised income and expense
for the year ended 31 december 2008
2008 2007
us’000 us’000
exchange differences on translation of foreign operations  15138 2168
equity element of deferred tax arising on share options  – 199
net expenseincome recognised directly in equity      15138 2367
lossproﬁt for the year 426600 111
total recognised income and expense for the year 441738 2478
attributable to
equity holders of the parent  441722 3208
minority interests  16 730
441738 2478 annual report 2008
65
aricom plc
2008 2007
notes us’000 us’000
noncurrent assets
goodwill – 58
other intangible assets  17 613 427
property plant and equipment  18 440157 561438
investment in associates  19 3704 2854
interest in joint ventures  20 20387 –
deferred tax asset  21 – 4879
other noncurrent assets  22 3328 112
468189 569768
current assets
inventories 23 8481 2015
trade and other receivables  24 44190 29077
loan receivable from a related party  24 – 65111
shortterm investments  25 – 91791
cash and cash equivalents  26 257822 406687
310493 594681
total assets         778682 1164449
current liabilities
trade and other payables  27 14993 12728
current tax liability  1182 446
16175 13174
net current assets         294318 581507
noncurrent liabilities
deferred tax liability  21 2422 5014
other noncurrent liabilities  28 111 1571
longterm provisions  29 2108 2294
4641 8879
total liabilities        20816 22053
net assets         757866 1142396
equity
share capital 3032 2265 2147
share premium account  32 1183520 1130638
own shares 3132 24801 20256
share option reserve  32 10955 10378
translation reserve  32 12376 1969
other reserves  32 29600 9900
retained loss 32 435623 8307
equity attributable to equity holders of the parent 753540 1126469
minority interest  32 4326 15927
total equity 32 757866 1142396
the ﬁnancial statements were approved by the board of directors and authorised for issue on 25 february 2009 they were signed on its 
behalf by
g j hambro    b egan
director     director
25 february 2009    25 february 2009
consolidated balance sheet
as at 31 december 2008
group overview
business review
corporate governance
financial statements 66
annual report 2008 aricom plc
consolidated cash flow statement
for the year ended 31 december 2008
2008 2007
notes us’000 us’000
net cash used in operating activities 34 51948 12866
investing activities
interest received  16487 16505
investment management fees paid  186 –
income received on derivative ﬁnancial instrument  – 637
proceeds on disposal of shortterm investments  113328 10770
proceeds on disposal of property plant and equipment  98 6
purchases of property plant and equipment  108493 76656
purchases of other noncurrent assets  205 –
acquisition of licences net of cash acquired  33 44976 –
acquisition of minority interest  – 11237
acquisitions of subsidiaries net of cash acquired  – 6348
cash acquired upon acquisition of interest in lapwing limited  – 427
purchase of shortterm investments  22855 99346
purchase of option in lapwing limited – 19700
loan to lapwing limited  – 27600
loan advanced to olis constructions limited  – 65000
repayment of the remainder of a loan issued to olis after completion of the acquisition 
of their 2926 interest in lapwing excluding interest  1950 –
loan advanced to associate  2953 4217
loans issued to employees  640 –
other loans issued  1011 –
joint venture share capital contribution  20 20812 –
repayment of loan issued 245 –
net cash used in investing activities 70023 281759
financing activities
debt arrangement costs  – 557
proceeds on issue of shares  120 639462
listing costs – 3951
share issue costs  47 24916
net cash from ﬁnancing activities 73 610038
net decreaseincrease in cash and cash equivalents for the year     121898 315413
cash and cash equivalents at beginning of year 406687 89668
effect of foreign exchange rate changes  26967 1606
cash and cash equivalents at end of year       257822 406687 annual report 2008
67
aricom plc
1 general information
aricom plc is a company incorporated in great britain under the companies act 1985 the address of the registered ofﬁce is given on 
page 104 the nature of the group’s operations and its principal activities are set out in the directors’ report on page 53 to 60
these ﬁnancial statements are presented in us dollars because that is the currency of the primary economic environment in which the 
group operates the functional currency of the parent entity is gb pound entities with functional currencies other than us dollars are 
included in accordance with the policies set out in note 3
2 adoption of new and revised standards and interpretations 
in the current year the group has adopted ifric 11 ifrs2 group and treasury share transactions which is effective for annual reporting 
periods beginning on or after 1 march 2007 there was no impact of the adoption of ifric 11 
standards and amendments applicable to the group which are effective for reporting periods beginning after the date of these 
ﬁnancial statements
international accounting standards iasifrs effective date
ias 1 – amendment – presentation of ﬁnancial statements a revised presentation 1 january 2009
ias 23 – amendment – borrowing costs 1 january 2009
ifrs 2 – amendment – share based payments vesting conditions and cancellations 1 january 2009
ifrs 8 – operating segments 1 january 2009
the directors are in the process of assessing the impact of adoption of these standards and interpretations in future periods on the 
ﬁnancial statements of the group
standards and amendments applicable to the group which are effective for reporting periods beginning after the date of these ﬁnancial 
statements and that have not been endorsed by the eu
ias 27 – amendment – consolidated and separate ﬁnancial statements 1 july 2009
ifrs 3 – revised – business combinations 1 july 2009
ifrs 1  ias 27 – amendment – cost of an investment in a subsidiary jointly controlled entity or associate 1 january 2009
the directors are in the process of assessing the impact of adoption of these standards and interpretations in future periods on the 
ﬁnancial statements of the group
3 signiﬁcant accounting policies
basis of accounting
the ﬁnancial statements have been prepared in accordance with ifrss adopted by the european union and therefore the group ﬁnancial 
statements comply with article 4 of the eu ias regulation
these ﬁnancial statements have been prepared on the historical cost basis except for the revaluation of certain ﬁnancial instruments the 
principal accounting policies adopted are set out below
as explained in the financial review on page 41 management assessed the group’s ability to continue as going concern and these 
ﬁnancial statements have been prepared on the going concern basis
basis of consolidation
the consolidated financial statements incorporate the ﬁnancial statements of the company and entities controlled by the company and 
its subsidiaries as at the balance sheet date control is achieved where the company has the power to govern the ﬁnancial and operating 
policies of an investee entity so as to obtain beneﬁts from its activities the results of subsidiaries acquired or disposed of during the year 
are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal as 
appropriate minority interests in the net assets of consolidated subsidiaries are identiﬁed separately from the group’s equity therein 
minority interests consist of the amount of those interests at the date of the original business combination or acquisition of ore deposits by 
way of a corporate vehicle and the minority’s share of changes in equity since the date of the combination losses applicable to the 
minority in excess of the minority’s interest in the subsidiary’s equity are allocated against interests of the group except to the extent that 
the minority has a binding obligation and is able to make an additional investment to cover the losses
where necessary adjustments are made to the ﬁnancial statements of subsidiaries to bring the accounting policies used into line with 
those used by the group
all intragroup transactions balances income and expenses are eliminated on consolidation
business combinations and goodwill
the acquisition of subsidiaries is accounted for using the purchase method the cost of the acquisition is measured at the aggregate of 
the fair values at the date of exchange of assets given liabilities incurred or assumed and equity instruments issued by the group in 
exchange for control of the acquiree plus any costs directly attributable to the business combination the acquiree’s identiﬁable assets 
liabilities and contingent liabilities that meet the conditions for recognition under ifrs 3 business combinations are recognised at their 
fair value at the acquisition date except for noncurrent assets or disposal groups that are classiﬁed as held for resale in accordance with 
ifrs 5 non current assets held for sale and discontinued operations which are recognised and measured at fair value less costs to sell
goodwill arising on acquisition is recognised as an asset and initially measured at cost being the excess of the cost of the business 
combination over the group’s interest in the net fair value of the identiﬁable assets liabilities and contingent liabilities recognised
notes to the consolidated financial 
statements 2008
group overview
business review
corporate governance
financial statements 68
annual report 2008 aricom plc
3 signiﬁcant accounting policies continued
if the group’s interest in the net fair value of the acquiree’s identiﬁable assets liabilities and contingent liabilities exceeds the cost of the 
business combination the excess is recognised immediately in proﬁt or loss
the interest of minority shareholders in the acquiree is initially measured at the minority’s proportion of the net fair value of the assets 
liabilities and contingent liabilities recognised
purchases of a minority interest in a controlled entity
the cost of the acquisition is measured at the aggregate of the fair values of assets given at the date of exchange liabilities incurred or 
assumed and equity instruments issued by the group in exchange for shares purchased in a controlled entity plus any costs directly 
attributable to the transaction the identiﬁable assets liabilities and contingent liabilities of a controlled entity are recognised at fair value 
at the date of the exchange transaction but only to the extent of the proportion of equity acquired
goodwill arising on the purchase of shares in a controlled entity is recognised as an asset and initially measured at cost being the excess 
of the additional cost of shares over the increase of group’s interest in the net fair value of the identiﬁable assets liabilities and contingent 
liabilities recognised 
if the increase in group’s interest in the net fair value of the acquiree’s identiﬁable assets liabilities and contingent liabilities exceeds the 
cost of the shares purchase the excess is recognised immediately in proﬁt or loss
goodwill
goodwill arising on consolidation represents the excess of the cost of acquisition over the group’s interest in the fair value of the 
identiﬁable assets and liabilities of a subsidiary associate or jointly controlled entity at the date of acquisition goodwill is initially 
recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses goodwill which is 
recognised as an asset is reviewed for impairment at least annually any impairment is recognised immediately in the income statement 
and is not subsequently reversed
for the purpose of impairment testing goodwill is allocated to each of the group’s cashgenerating units expected to beneﬁt from the 
synergies of the combination cashgenerating units to which goodwill has been allocated are tested for impairment annually or more 
frequently when there is an indication that the unit may be impaired if the recoverable amount of the cashgenerating unit is less than the 
carrying amount of the unit the impairment loss is allocated ﬁrst to reduce the carrying amount of any goodwill allocated to the unit and 
then to the other assets of the unit prorata on the basis of the carrying amount of each asset in the unit an impairment loss recognised 
for goodwill is not reversed in a subsequent period
on disposal of a subsidiary associate or jointly controlled entity the attributable amount of goodwill is included in the determination of 
the proﬁt or loss on disposal
acquisition of assets
frequently the acquisition of mining licences are effected through a nonoperating corporate structure as these structures do not 
represent a business it is considered that the transactions do not meet the deﬁnition of a business combination accordingly the 
transaction is accounted for as the acquisition of an asset the net assets acquired are recognised at cost
where the group has full control but does not own 100 of the assets then a minority interest is recognised the assets continue to be 
carried at cost and changes in those values are recognised in equity
other intangible assets
other intangible assets represent licensed intellectual property purchased in relation to the processing of titanium sponge these 
intangibles are measured at cost and are amortised on a straight line basis over their estimated useful life which is a period of up to 10 
years but dependent upon the startup date of the titanium sponge plant
investments in associates
an associate is an entity over which the group is in a position to exercise signiﬁcant inﬂuence but does not control or have joint control 
through participation in the ﬁnancial and operating policy decisions of the investee signiﬁcant inﬂuence is the power to participate in the 
ﬁnancial and operating policy decisions of the investee but is not control or joint control over those policies
the results and assets and liabilities of associates are incorporated in these ﬁnancial statements using the equity method of accounting 
except when classiﬁed as held for sale see below investments in associates are carried in the balance sheet at cost as adjusted by 
postacquisition changes in the group’s share of the net assets of the associate less any impairment in the value of individual investments 
losses of the associates in excess of the group’s interest in those associates are not recognised
any excess of the cost of acquisition over the group’s share of the fair values of the identiﬁable net assets of the associate at the date of 
acquisition is recognised as goodwill within the investment any deﬁciency of the cost of acquisition below the group’s share of the fair 
values of the identiﬁable net assets of the associate at the date of acquisition ie discount on acquisition is credited in the income 
statement in the period of acquisition
where a group company transacts with an associate of the group proﬁts and losses are eliminated to the extent of the group’s interest in 
the relevant associate losses may provide evidence of an impairment of the asset transferred in which case appropriate provision is made 
for the impairment
interests in jointventures
a joint venture is a contractual arrangement whereby the group and other parties undertake an economic activity that is subject to joint 
control that is when the strategic ﬁnancial and operating policy decisions relating to the activities of the joint venture require the 
unanimous consent of the parties sharing control
notes to the consolidated financial statements 2008 continued annual report 2008
69
aricom plc
3 signiﬁcant accounting policies continued
where a group entity undertakes its activities under joint venture arrangements directly the group’s share of jointly controlled assets and 
any liabilities incurred jointly with other venturers are recognised in the ﬁnancial statements of the relevant entity and classiﬁed according 
to their nature liabilities and expenses incurred directly in respect of interests in jointly controlled assets are accounted for on an accrual 
basis income from the sale or use of the group’s share of the output of jointly controlled assets and its share of joint venture expenses 
are recognised when it is probable that the economic beneﬁts associated with the transactions will ﬂow tofrom the group and their 
amount can be measured reliably 
joint venture arrangements that involve the establishment of a separate entity in which each venturer has an interest are referred to as 
jointly controlled entities the group reports its interests in jointly controlled entities using the equity method of accounting as described 
in ‘investment in associates’ above 
any goodwill arising on the acquisition of the group’s interest in a jointly controlled entity is accounted for in accordance with the group’s 
accounting policy for goodwill arising on the acquisition of an associate as described in ‘investment in associates’ above 
where the group transacts with its jointly controlled entities proﬁts and losses are accounted for as in ‘investment in associates’ above 
revenue recognition
revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and 
services provided in the normal course of business net of discounts vat and other salesrelated taxes
sales of goods are recognised when goods are delivered and title has passed
interest income is accrued on a time basis by reference to the principal outstanding and at the effective interest rate applicable which 
is the rate that exactly discounts estimated future cash receipts through the expected life of the ﬁnancial asset to that asset’s net 
carrying amount
revenue from engineering contracts is recognised in accordance with the group’s accounting policy on engineering contracts as set 
out below
engineering contracts
where the outcome of a contract can be estimated reliably revenue and costs are recognised by reference to the stage of completion of 
the contract activity at the balance sheet date the stage of completion is measured by reference to estimates of work performed to date
where the outcome of a contract cannot be estimated reliably contract revenue is recognised to the extent of contract costs incurred 
where it is probable they will be recoverable contract costs are recognised as expenses in the period in which they are incurred
when it is probable that total contract costs will exceed total contract revenue the expected loss is recognised as an expense immediately
leasing
leases are classiﬁed as ﬁnance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the 
lessee all other leases are classiﬁed as operating leases
the g roup as lessor
equipment and other assets may be leased to contractors under an operating lease for use in the construction of mining properties 
amounts due from lessees under these operating leases are set off against the cost of construction in the period to which they relate
rental income from operating leases is recognised on a straightline basis over the term of the relevant lease initial direct costs incurred in 
negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straightline basis 
over the lease term
the g roup as lessee
assets held under ﬁnance leases are recognised as assets of the group at their fair value or if lower at the present value of the minimum 
lease payments each determined at the inception of the lease the corresponding liability to the lessor is included in the balance sheet as 
a ﬁnance lease obligation lease payments are apportioned between ﬁnance charges and reduction of the lease obligation so as to 
achieve a constant rate of interest on the remaining balance of the liability finance charges are charged directly against income unless 
they are directly attributable to qualifying assets in which case they are capitalised in accordance with the group’s general policy on 
borrowing costs see page 70
rentals payable under operating leases are charged to income on a straightline basis over the term of the relevant lease
foreign currencies 
the individual ﬁnancial statements of each group company are presented in the currency of the primary economic environment in which it 
operates its functional currency for the purpose of the consolidated ﬁnancial statements the results and ﬁnancial position of each group 
company are expressed in us dollars which is the presentation currency for the consolidated ﬁnancial statements
in preparing the ﬁnancial statements of the individual companies transactions in currencies other than the entity’s functional currency 
foreign currencies are recorded at the rates of exchange prevailing on the dates of the transactions at each balance sheet date 
monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet 
date nonmonetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the 
date when the fair value was determined nonmonetary items that are measured in terms of historical cost in a foreign currency are 
not retranslated
group overview
business review
corporate governance
financial statements 70
annual report 2008 aricom plc
3 signiﬁcant accounting policies continued
exchange differences arising on the settlement of monetary items and on the retranslation of monetary items are included in the income 
statement for the year exchange differences arising on the retranslation of nonmonetary items carried at fair value are included in the 
income statement for the year
for the purpose of presenting consolidated ﬁnancial statements the assets and liabilities of the group’s foreign operations which have a 
functional currency other than us dollars are translated at exchange rates prevailing on the balance sheet date income and expense items 
are translated at the average exchange rates for the year unless exchange rates ﬂuctuate signiﬁcantly during that year in which case the 
exchange rates at the date of transactions are used exchange differences arising if any are recognised within equity and transferred to 
the group’s translation reserve such translation differences are recognised as income or as expenses in the year in which the operation is 
disposed of
goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity 
and translated at the closing rate 
borrowing costs
borrowing costs directly attributable to the acquisition construction or production of qualifying assets which are assets that necessarily 
take a substantial period of time to get ready for their intended use or sale are added to the cost of those assets until such time as the 
assets are substantially ready for their intended use or sale investment income earned on the temporary investment of speciﬁc borrowings 
pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation
all other borrowing costs are recognised in proﬁt or loss in the year in which they are incurred
retirement beneﬁt costs 
the company does not operate a pension scheme however payments are made to deﬁned contribution retirement beneﬁt schemes for 
certain employees and these are charged as an expense as they fall due 
taxation
the tax expense represents the sum of the tax currently payable and deferred tax
the tax currently payable is based on taxable proﬁt for the year taxable proﬁt differs from net proﬁt as reported in the income statement 
because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never 
taxable or deductible the group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by 
the balance sheet date
deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the 
ﬁnancial statements and the corresponding tax bases used in the computation of taxable proﬁt and is accounted for using the balance 
sheet liability method deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are 
recognised to the extent that it is probable that taxable proﬁts will be available against which deductible temporary differences can be 
utilised such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the 
initial recognition other than in a business combination of other assets and liabilities in a transaction that affects neither the tax proﬁt nor 
the accounting proﬁt
deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries except where the group 
is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the 
foreseeable future
the carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable 
that sufﬁcient taxable proﬁts will be available to allow all or part of the asset to be recovered
deferred tax is calculated at the tax rates that are expected to apply in the year when the liability is settled or the asset is realised 
deferred tax is charged or credited in the income statement except when it relates to items charged or credited directly to equity in 
which case the deferred tax is also dealt with in equity
deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax 
liabilities and when they relate to income taxes levied by the same taxation authority and the group intends to settle its current tax assets 
and liabilities on a net basis
exploration and evaluation expenditure
the costs of exploration properties and leases which include the cost of acquiring prospective properties and exploration rights are 
capitalised as intangible assets 
exploration and evaluation expenditure is capitalised within exploration and evaluation properties until such time that the activities have 
reached a stage which permits a reasonable assessment of the existence of commercially exploitable reserves when they are transferred to 
mining properties and leases capitalised exploration and evaluation expenditure is assessed for impairment in accordance with the 
indicators of impairment as set out in ifrs 6 exploration for and evaluation of mineral reserves in circumstances where a property is 
abandoned the cumulative capitalised costs relating to the property are written off in the year
property plant and equipment
m ining properties and leases
the costs of mining properties and leases which include the cost of acquiring and developing mining properties and mineral rights are 
classiﬁed as tangible assets from the time that a resource estimate is available and it is the group’s intention to exploit the value of the 
property through the development and production of the available resource 
notes to the consolidated financial statements 2008 continued annual report 2008
71
aricom plc
3 signiﬁcant accounting policies continued
preproduction expenditure is capitalised until the mining property is capable of commercial production from that point capitalised 
mining properties and lease costs are amortised on a unit of production basis over the total estimated remaining commercial reserves of 
each property or group of properties
commercial reserves are proven and probable reserves changes in the commercial reserves affecting unit of production calculations are 
dealt with prospectively over the revised remaining reserves 
mining properties and leases are reviewed for impairment annually and any impairment charge is taken to the income 
statement accordingly
for open pit operations the removal of overburden and waste materials referred to as stripping is required to obtain access to the 
ore body 
such costs when incurred prior to the commencement of production are deferred on the balance sheet and charged to operating proﬁt 
over the life of the mine 
when incurred after the commencement of commercial production such costs are deferred based on the ratio obtained by dividing the 
tonnage of the waste mined by the quantity of the ore mined ‘stripping ratio’ stripping costs incurred in the period are deferred to the 
extent that the current period stripping ratio exceeds the lifeofmine ratio for each mine such deferred costs are then amortised in 
subsequent periods to the extent that the period’s stripping ratio falls below the lifeofmine ratio the lifeofmine ratio is based on the 
mineable reserves of the mine 
the lifeofmine wastetoore ratio is a function of an individual mine’s pit design and therefore changes to that design will generally result 
in changes to the ratio changes in other technical and economic parameters that impact reserves will also have an impact on the 
lifeofmine ratio even if they do not affect the mine’s pit design changes to the lifeofmine ratio are accounted for prospectively 
deferred stripping costs are included within noncurrent assets as ‘deferred stripping costs’
other property plant and eq uipment
other tangible ﬁxed assets are recorded at cost net of accumulated depreciation depreciation is provided on all such tangible ﬁxed 
assets at rates calculated to write off the cost or valuation of each asset on a straightline basis over its expected useful life or the life of the 
relevant licence whichever is less as follows
average life in years
buildings 50
plant and machinery  7–20
ofﬁce equipment  3–10
computer equipment  4–6
until they are brought into use ﬁxed assets and equipment to be installed are included within assets under construction
the helicopter is recorded at cost net of accumulated depreciation calculated at rate based on the actual ﬂight hours as a proportion of 
total recommended ﬂight hours
the cost of maintenance repairs and replacement of minor items of tangible ﬁxed assets are charged to the income statement as incurred 
renewals and asset improvements are capitalised upon sale or retirement of tangible ﬁxed assets the cost and related accumulated 
depreciation are eliminated from the ﬁnancial statements any resulting gains or losses are included in the income statement
i mpairment of tangible and i ntangible assets excluding g oodwill
at each balance sheet date the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any 
indication that those assets have suffered an impairment loss if any such indication exists the recoverable amount of the asset is 
estimated in order to determine the extent of the impairment loss if any where the asset does not generate cash ﬂows that are 
independent from other assets the group estimates the recoverable amount of the cashgenerating unit to which the asset belongs 
the recoverable amount is the higher of fair value less costs to sell and value in use in assessing value in use the estimated future cash 
ﬂows are discounted to their present value using a pretax discount rate that reﬂects current market assessments of the time value of 
money and the risks speciﬁc to the asset for which the estimates of future cash ﬂows have not been adjusted
if the recoverable amount of an asset or cashgenerating unit is estimated to be less than its carrying amount the carrying amount of the 
asset cashgenerating unit is reduced to its recoverable amount an impairment loss is recognised as an expense immediately unless the 
relevant asset is carried at a revalued amount in which case the impairment loss is treated as a revaluation decrease
where an impairment loss subsequently reverses the carrying amount of the asset cashgenerating unit is increased to the revised 
estimate of its recoverable amount but so that the increased carrying amount does not exceed the carrying amount that would have been 
determined had no impairment loss been recognised for the asset cashgenerating unit in prior years a reversal of an impairment loss is 
recognised as income immediately unless the relevant asset is carried at a revalued amount in which case the reversal of the impairment 
loss is treated as a revaluation increase
details of the assumptions used when assessing the impairment of the group’s tangible assets and the effect of those assumptions can 
be found in note 8 to the consolidated financial statements
group overview
business review
corporate governance
financial statements 72
annual report 2008 aricom plc
3 signiﬁcant accounting policies continued
restoration rehabilitation and environmental costs
an obligation to incur site restoration and rehabilitation costs arises when environmental disturbance is caused by the development or 
ongoing production of a mining property such costs arising from the decommissioning of plant and other site preparation work 
discounted to their present value are provided for and capitalised at the start of each project as soon as the obligation to incur such costs 
arises these costs are charged against proﬁts over the life of the mine through the depreciation of the asset and the unwinding of the 
discount on the provision depreciation is included in operating costs while the unwinding of the discount is included as ﬁnancing costs
changes in the measurement of a liability relating to the decommissioning of plant or other site preparation work are added to or 
deducted from the cost of the related asset in the current period
inventories
inventories and work in progress are valued at the lower of cost and net realisable value cost comprises direct materials and where 
applicable direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and 
condition cost of raw materials and consumables is determined on the ﬁrstinﬁrstout fifo basis net realisable value represents the 
estimated selling price less all estimated costs of completion and costs to be incurred in marketing selling and distribution
financial instruments
financial assets and ﬁnancial liabilities are recognised on the group’s balance sheet when the group becomes a party to the contractual 
provisions of the instrument
financial assets
financial assets are classiﬁed into the following speciﬁed categories ﬁnancial assets ‘at fair value through proﬁt or loss’ ‘heldtomaturity’ 
investments ‘availableforsale’ ﬁnancial assets and ‘loans and receivables’ the classiﬁcation depends on the nature and purpose of the 
ﬁnancial assets and is determined at the time of initial recognition the group does not hold any ﬁnancial assets which meet the deﬁnition 
of a heldtomaturity investment or availableforsale ﬁnancial asset
financial assets at fair v alue through proﬁt or loss
financial assets are classiﬁed as ﬁnancial assets at fair value through proﬁt or loss ‘fvtpl’ where the group acquires the ﬁnancial asset 
principally for the purpose of selling in the near term the ﬁnancial asset is a part of an identiﬁed portfolio of ﬁnancial instruments that the 
group manages together and has a recent actual pattern of short term proﬁt taking as well as all derivatives that are not designated as 
effective hedging instruments financial assets at fair value through proﬁt or loss are stated at fair value with any resultant gain or loss 
recognised in proﬁt or loss the net gain or loss recognised in proﬁt or loss includes any dividend or interest earned on the ﬁnancial asset
effective i nterest m ethod
the effective interest method is a method of calculating the amortised cost of a ﬁnancial asset and of allocating interest income over the 
relevant period the effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the 
ﬁnancial asset or where appropriate a shorter period
loans and receivables
trade receivables loans and other receivables that have ﬁxed or determinable payments that are not quoted in an active market are 
classiﬁed as loans and receivables loans and receivables are measured at amortised cost using the effective interest method less any 
impairment interest income is recognised by applying the effective interest rate except for shortterm receivables when the recognition 
of interest would be immaterial
i mpairment of financial assets
financial assets other than those at fvtpl are assessed for indicators of impairment at each balance sheet date financial assets are 
impaired where there is objective evidence that as a result of one or more events that occurred after the initial recognition of the ﬁnancial 
asset the estimated future cash ﬂows of the investment have been impacted for loans and receivables the amount of the impairment is 
the difference between the asset’s carrying amount and the present value of estimated cash ﬂows discounted at the original effective 
interest rate
the carrying amount of the ﬁnancial asset is reduced by the impairment loss directly for all ﬁnancial assets with the exception of trade 
receivables where the carrying amount is reduced through the use of an allowance account when a trade receivable is uncollectible it is 
written off against the allowance account changes in the carrying amount of the allowance account are recognised in proﬁt or loss
cash and cash eq uivalents
cash and cash equivalents comprise cash on hand and demand deposits and other shortterm highly liquid investments that are readily 
convertible to a known amount of cash and are subject to an insigniﬁcant risk of changes in value
trade receivables
trade receivables are measured on initial recognition at fair value and are subsequently measured at amortised cost using the effective 
interest rate method appropriate allowances for estimated irrecoverable amounts are recognised in proﬁt or loss when there is objective 
evidence that the asset is impaired the allowance recognised is measured as the difference between the asset’s carrying amount and the 
present value of estimated future cash ﬂows discounted at the effective interest rate computed at initial recognition
i nvestments
investments are recognised and derecognised on a trade date where a purchase or sale of an investment is under a contract whose terms 
require delivery of the investment within the timeframe established by the market concerned and are initially measured at fair value 
including transaction costs
notes to the consolidated financial statements 2008 continued annual report 2008
73
aricom plc
3 signiﬁcant accounting policies continued
other investments are classiﬁed as either heldfortrading or availableforsale and are measured at subsequent reporting dates at fair 
value where securities are held for trading purposes gains and losses arising from changes in fair value are included in net proﬁt or loss 
for the year for availableforsale investments gains and losses arising from changes in fair value are recognised directly in equity until 
the security is disposed of or is determined to be impaired at which time the cumulative gain or loss previously recognised in equity is 
included in the proﬁt or loss for the year impairment losses recognised in proﬁt or loss for equity investments classiﬁed as availablefor
sale are not subsequently reversed through proﬁt or loss impairment losses recognised in proﬁt or loss for debt instruments classiﬁed as 
availableforsale are subsequently reversed if an increase in the fair value of the instrument can be objectively related to an event 
occurring after the recognition of the impairment loss
financial liabilities and equity
financial liabilities and equity instruments are classiﬁed according to the substance of the contractual arrangements entered into
financial liabilities
financial liabilities are classiﬁed as either ﬁnancial liabilities at ‘fair value through proﬁt or loss’ or other ﬁnancial liabilities
financial liabilities at fv tpl
financial liabilities are classiﬁed as fvtpl where the ﬁnancial liability is either held for trading or it is designated as at fvtpl
a ﬁnancial liability is classiﬁed as held for trading if
it has been incurred principally for the purpose of disposal in the near future or it is a part of an identiﬁed portfolio of ﬁnancial instruments that the group manages together and has a recent actual pattern of shortterm proﬁttaking or
it is a derivative that is not designated and effective as a hedge instrument a ﬁnancial liability other than a ﬁnancial liability held for trading may be designated as at fvtpl upon initial recognition if
such designation eliminates or signiﬁcantly reduces a measurement or recognition inconsistency that would otherwise arise or the ﬁnancial liability forms part of a group of ﬁnancial assets or ﬁnancial liabilities or both which is managed and its performance is evaluated on a fair value basis in accordance with the group’s documented risk management or investment strategy and information 
about the group is provided internally on that basis or
it forms part of a contract containing one or more embedded derivatives and ias 39 financial instruments recognition and 
measurement permits the entire combined contract asset or liability to be designated as at fvtpl
financial liabilities at fvtpl are stated at fair value with any resultant gain or loss recognised in proﬁt or loss the net gain or loss 
recognised in proﬁt or loss incorporates any interest paid on the ﬁnancial liability
other financial liabilities
other ﬁnancial liabilities are initially measured at fair value net of transaction costs other ﬁnancial liabilities are subsequently measured at 
amortised cost using the effective interest method with interest expense recognised on an effective yield basis the effective interest 
method is a method of calculating the amortised cost of a ﬁnancial liability and of allocating interest expense over the relevant period the 
effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the ﬁnancial liability 
or where appropriate a shorter period
trade payables
trade payables are initially measured at fair value and are subsequently measured at amortised cost using the effective interest 
rate method
eq uity i nstruments
an equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities equity 
instruments issued by the company are recorded at the proceeds received net of direct issue costs
sharebased payments
the group has applied the requirements of ifrs 2 sharebased payment in accordance with the transitional provisions ifrs 2 has been 
applied to all grants of equity instruments after 7 november 2002 that were unvested as of 1 january 2005
the group issues equitysettled and cashsettled sharebased payments to certain employees and under various contracts with third 
parties equitysettled sharebased payments are measured at fair value excluding the effect of non marketbased vesting conditions at 
the date of grant the fair value determined at the grant date of the equitysettled sharebased payments is expensed on a straightline 
basis over the vesting period based on the group’s estimate of shares that will eventually vest adjusted for the effect of non marketbased 
vesting conditions
fair value is measured by use of a blackscholes model the expected lives used in the models have been adjusted based on 
management’s best estimate for the effects of nontransferability exercise restrictions and behavioural considerations
a liability equal to the portion of the goods or services received is recognised at the current fair value determined at each balance sheet 
date for cashsettled share based payments
employee beneﬁt trust
the carrying value of shares held by the employee beneﬁt trust are recorded as treasury shares shown as a deduction to 
shareholders’ equity
group overview
business review
corporate governance
financial statements 74
annual report 2008 aricom plc
4 critical accounting judgements and key sources of estimation uncertainty
in the process of applying the group’s accounting policies which are described in note 3 management has made the following 
judgements that have the most signiﬁcant effect on the amounts recognised in the ﬁnancial statements
impairment of assets
the group reviews the carrying value of its intangible assets and property plant and equipment to determine whether there is any 
indication that those assets are impaired in making assessments for impairment assets that do not generate independent cash ﬂows are 
allocated to an appropriate cash generating unit ‘cgu’ the recoverable amount of those assets or cgu is measured at the higher of 
their fair value less costs to sell and value in use 
management necessarily applies its judgement in allocating assets to cgus in estimating the probability timing and value of underlying 
cash ﬂows and in selecting appropriate discount rates to be applied within the value in use calculation subsequent changes to cgu 
allocation or estimates and assumptions in the value in use calculation could impact the carrying value of the respective assets
management has concluded that ks and garinskoye are a single cgu for the purposes of impairment as it is expected that ore from the 
garinskoye ore body will be processed through the ks plant and there would be no market for the preconcentrate
provision for restoration rehabilitation and environmental costs
costs arising from site restoration works and the decommissioning of plant discounted to their present value are provided for and 
capitalised at the start of each project as soon as the obligation to incur such costs arises the provision is based on estimates prepared 
by external consultants management uses its judgement and experience to provide for these costs the ultimate costs of site restoration 
and decommissioning are uncertain and cost estimates can vary in response to many factors including changes to relevant legal 
requirements the emergence of new restoration techniques or experience at other mine sites the expected timing and extent of 
expenditure can also change for example in response to changes in ore reserves or processing levels as a result there could be 
signiﬁcant adjustments to the provisions established which would affect future ﬁnancial results
assumptions related to the valuation of sharebased payments
in order to value options granted the group has made judgements as to the volatility of its own ordinary shares the probable life of the 
options granted and the time of exercise of those options aricom has also made a judgement as to which methodology to use in valuing 
the options in each case
estimation of percentage completion of engineering contracts at giproruda
to estimate the percentage completion of engineering contracts and therefore determine the amount of contract revenue and associated 
costs to recognise requires that management makes an assessment of the stage of completion of the contract activity at the balance sheet 
date the directors consider that these estimates are made by suitably qualiﬁed project managers
tax provisions 
assessing the outcome of uncertain tax positions requires judgments to be made regarding the result of negotiations with and enquiries 
from tax authorities in a number of jurisdictions the assessments made are based on advice from independent tax advisers and the status 
of ongoing discussions with the relevant tax authorities 
deferred tax 
recognition of deferred tax assets requires management to assess the likelihood that future tax proﬁts will be available which the deferred 
tax asset can be utilized to offset this requires management to assess future proﬁts of the business and the likelihood and timing of 
these amounts 
5 foreign currency rates
the rates of exchange applicable to the year are as follows
    2008

2007
closing average closing average
russian rouble gb pounds  4262 4586 4901 5104
russian rouble us dollars  2938 2485 2455 2558
us dollar gb pounds  146 183 198 198
the representation of ﬁgures in us dollars should not be construed as meaning that underlying amounts can or will be settled in dollars
6revenue
an analysis of the group’s revenue is as follows
2008 2007
us’000 us’000
revenue from operations
preconcentrate sales  501 –
investment revenues see note 12  15532 21453
engineering contracts revenue  9173 4938
rental income see note 15  1231 452
total revenue 26437 26843
notes to the consolidated financial statements 2008 continued annual report 2008
75
aricom plc
7 segmental information
business segments 
for management purposes during the year the group was organised into three operating divisions – mine development engineering 
services and corporate these divisions are the basis on which the group reports its primary segment information 
principal activities are as follows
mine development – the development of the group’s mines in russia engineering services – activities conducted by the group’s subsidiary giproruda this entity was acquired during 2007 and was accounted for as an associate between 8 june 2007 and 12 july 2007 following which the group received full voting rights and 
accounted for this investment as a subsidiary and
corporate – the head ofﬁce activities of the group segment information about these businesses is presented below 
mine engineering
development services corporate eliminations consolidated
2008 us’000 us’000 us’000 us’000 us’000
revenue
external sales 501 9173 – – 9674
intragroup sales  – 2221 – 2221 –
total revenue 501 11394 – 2221 9674
impairment charge  386450 – – – 386450
result
operating lossproﬁt  405959 3287 10436 624 413732
share of joint venture’s loss  – – 444 – 444
share of associate’s proﬁt  850––– 850
segment result  405109 3287 10880 624 413326
investment revenues  15532
finance costs 23224
loss before tax  421018
tax charge 5582
tax expense on joint venture’s and associate’s proﬁt  –
loss after tax 426600
mine engineering
development services corporate eliminations consolidated
2007 us’000 us’000 us’000 us’000 us’000
revenue
external sales – 4938 – – 4938
intragroup sales  – 360 – 360 –
total revenue – 5298 – 360 4938
result
operating lossproﬁt  9775 1271 13969 204 22677
share of associate’s loss  127 100 – – 27
segment result  22704
investment revenues  21453
finance costs 602
loss before tax  1853
tax credit 1996
tax expense on associate’s proﬁt  32
proﬁt after tax  111
all intersegment transfers were made at prevailing market rates
group overview
business review
corporate governance
financial statements 76
annual report 2008 aricom plc
7 segmental information continued
other information 
mine engineering
development services corporate consolidated
2008 us’000 us’000 us’000 us’000
capital additions  103657 175 4296 108128
acquisition of minority interest  110707 – – 110707
acquisition of licences  53931 – – 53931
depreciation and amortisation  2404 399 15 2818
balance sheet
assets
segment assets  485463 17550 9144 512157
investment in associate  3704 – – 3704
investment in joint venture  – – 20387 20387
unallocated assets  – – – 242434
consolidated total assets  778682
liabilities
segment liabilities  9990 1291 5931 17212
unallocated liabilities  – – – 3604
consolidated total liabilities  20816
mine engineering
development services corporate
1
consolidated
2007 us’000 us’000 us’000 us’000
capital additions  49841 59 4108 54008
acquisition of minority interest  12148 – – 12148
acquisition of licences  51836 – – 51836
acquisition of subsidiary – assets acquired  – 12165 – 12165
change in value of deferred consideration  18492 – – 18492
change in estimated consideration  7456 – – 7456
depreciation and amortisation  609 239 11 859
balance sheet
assets
segment assets  569787 16100 65357 651244
investment in associate  2854 – – 2854
unallocated assets  – – – 510351
consolidated total assets  1164449
liabilities
segment liabilities  9765 4697 2131 16593
unallocated liabilities  – – – 5460
consolidated total liabilities  22053
1 corporate assets include us39 million capitalised in respect of the titanium sponge project this project is managed by corporate and thus these 
capitalised costs are recognised in that segment
unallocated assets and liabilities are as follows
unallocated assets

unallocated liabilities
2008 2007 2008 2007
us’000 us’000 us’000 us’000
unallocated assetsliabilities    
cash equivalents  241906 344176 – –
shortterm investments   – 91791 – –
loan receivable from a related party  – 65111 – –
loan receivable from an associate  – 4288 – –
other receivables  528 106 – –
current tax liability  – – 1182 446
deferred tax assetsliabilities  – 4879 2422 5014
total unallocated assetsliabilities 242434 510351 3604 5460
notes to the consolidated financial statements 2008 continued annual report 2008
77
aricom plc
7 segmental information continued
geographical segments
the group’s operations are located in russia china and the united kingdom the group’s mine development division is located in russia 
the group’s corporate activities are carried out in russia and the united kingdom
the group has certain treasury and management functions which are located in cyprus transactions are mostly intragroup speciﬁcally 
intragroup loans and the holding of investments in group companies these transactions are eliminated upon consolidation and as such 
the group does not report cyprus as a separate geographic segment at 31 december 2008 and 31 december 2007
the group has a joint venture in china established in september 2008 the group also has a representative ofﬁce in china
all engineering sales revenues for the current and previous year were earned from customers located in russia all mine development 
revenue was earned from chinese customers
the following table is an analysis of the carrying amount of segment assets and additions to property plant and equipment analysed by 
the geographical area in which the assets are located
unallocated
united corporate
russia kingdom china assets total
2008 us’000 us’000 us’000 us’000 us’000
carrying amount of segment assets  506047 1248 28953 242434 778682
additions to property plant and equipment  103832 4296 – – 108128
unallocated
united corporate
russia kingdom assets total
2007 us’000 us’000 us’000 us’000
carrying amount of segment assets  588741 65357 510351 1164449
additions to property plant and equipment  137085 4108 – 141193
8impairment 
due to the current world economic crisis falling commodity prices and the slow project ﬁnance market the board has reviewed the 
company’s portfolio of assets for impairment 
the group completed impairment testing for all of its cashgenerating units ‘cgus’ at 31 december 2008 and identiﬁed that a provision 
was required against certain cgus due to a potential delay in the development of projects due to the unavailability of project ﬁnancing 
andor weaker forecast iron ore prices following the decision to develop ks and garinskoye as a single project they have been assessed 
as a single cgu an impairment provision of us865 million was recognised against the kuranakh project and a provision of us2999 
million recognised in relation to the combined ks and garinskoye cgu 
for the purposes of testing for impairment recoverable amounts have been determined as value in use being estimated future cash ﬂows 
discounted to their present value based on a number of assumptions the key assumptions are presented in the table below 
discount rate posttax 155
discount rate pretax 194
average russian inﬂation rate for the years 2009–2030 46
average rurus exchange rate for the years 2009–2030 482
average titanomagnetite concentrate prices for the years 2009–2024 ustonne 778
average ilmenite prices for the years 2009–2024 ustonne 1253
average pig iron prices for the years 2009–2030 ustonne 4616
forecast inﬂation rates and sales prices for titanomagnetite concentrate ilmenite and pig iron were provided by independent sources the 
impairment tests are particularity sensitive to changes in discount rate commodity prices and foreign exchange rate changes to these 
assumptions would result in changes to impairment charges which could be material
9 loss for the year
the loss for the year has been arrived at after charging
2008 2007
us’000 us’000
staff costs note 11  18772 11446
rent and utilities  3201 1209
depreciation of property plant and equipment expensed note 18  1174 859
travel and entertainment  2403 1594
write down of inventory  1170 –
cost of inventory recognised as an expense  123 –
loss on disposal of ﬁxed assets  201 134
listing costs – 3951
listing expenses in 2007 represent costs associated with the admission of the company’s ordinary shares and warrants to the ofﬁcial list 
of the financial services authority and to trading on the london stock exchange plc’s main market for listed securities the ‘listing’ in 
october 2007 no new shares or warrants were issued at the time of listing and hence listing costs have been recognised in the income 
statement rather than directly in shareholders’ equity as would have occurred if new shares had been issued at the time of listing
group overview
business review
corporate governance
financial statements 78
annual report 2008 aricom plc
10 auditors’ remuneration
the analysis of auditors’ remuneration is as follows
2008 2007
us’000 us’000
fees payable to the company’s auditors for the audit of the company’s annual accounts 334 260
fees payable to the company’s auditors for the audit of previous years  88 71
fees payable to the company’s auditors and their associates for the 
audit of subsidiaries statutory accounts pursuant to legislation 103 42
total audit fees         525 373
tax services 64 230
fees for reporting accountants services  – 1056
other services
interim review fee  84 51
accounting advice  198 91
offer assistance in preparation for listing  – 141
other services  57 –
total nonaudit fees         403 1569
11 staff costs
the average number of employees including executive directors was
2008 2007
number number
mine development  472 147
engineering services  157 72
corporate 12 9
641 228
their aggregate remuneration comprised
us’000 us’000
wages and salaries  16415 8939
pension costs 183 150
social security and other beneﬁts  1692 1271
sharebased compensation plans  482 1086
18772 11446
12 investment revenue
2008 2007
us’000 us’000
interest income from cash and cash equivalents  13546 14327
income on ﬁnancial assets carried at fair value through proﬁt and loss  1413 3351
interest on investments held to maturity  1 5
interest on other loans and receivables 572 865
proﬁt arising on settlement of derivatives  – 363
15532 18911
net foreign exchange gain  – 2542
total investment revenue  15532 21453
related party income included in the above total investment revenues  2933 2668
13 finance costs
2008 2007
us’000 us’000
other ﬁnance costs  186 580
net foreign exchange loss 22636 –
unwinding of discount on provisions and noncurrent liabilities  402 22
total ﬁnance costs  23224 602
there are no related party ﬁnance costs in the above total ﬁnance costs foreign exchange loss primarily relates to the foreign exchange 
differences on the group’s rouble denominated funds
notes to the consolidated financial statements 2008 continued annual report 2008
79
aricom plc
14 tax
2008 2007
us’000 us’000
current tax expense  2709 637
deferred tax expensecredit  2873 2633
5582 1996
uk corporation tax is calculated at the blended rate of 285 2007 30 of the estimated assessable proﬁt for the year due to the change 
in the rate of uk corporation tax from 30 to 28 on 6 april 2008
taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions from 2009 the corporation tax rate in 
russia changes from 24 to 20 
the charge for the year can be reconciled to the loss per the income statement as follows
2008 2007
us’000 us’000
loss before tax  421018 1885
tax at the uk corporation tax rate of 285 2007 30  119990 566
tax effect of share of associates’ proﬁtloss  204 40
tax effect of share of jointly controlled entities’ loss 124 –
tax effect of losses not recognised  10847 213
tax effect of expenses that are not deductible in determining taxable proﬁt  99361 1323
tax effect of utilisation of tax losses not previously recognised  – 1077
losses carried back  547 –
effect in changes in tax rates  453 –
effect of different tax rates of subsidiaries operating in other jurisdictions  19226 1127
adjustments in respect of prior years  71 –
other foreign exchange movements  1776 –
foreign exchange movements in respect of deductible temporary differences  6629 1460
beneﬁts from previously unrecognised temporary differences  – 1596
tax expensecredit for the year  5582 1996
in addition to the amount charged to the income statements in 2007 deferred tax relating to the equity component of sharebased 
payments amounting to us199000 has been credited directly to equity see note 21
15 operating lease arrangements
the group as a lessee
2008 2007
us’000 us’000
minimum lease payments under operating leases recognised as an expense in the year  2886 689
at the balance sheet date the group had outstanding commitments for future minimum lease payments under noncancellable operating 
leases which fall due as follows
2008 2007
us’000 us’000
within one year  1381 1044
in the second to ﬁfth years inclusive  4583 5967
5964 7011
the group as a lessor
the group earned property rental income during the year of us1231000 2007 us452000 on a building owned by a subsidiary of the 
group giproruda the lease contracts are at ﬁxed rates for a period not exceeding three months at the balance sheet date the group 
had contracted with tenants for minimum lease payments due within the ﬁrst three months totalling us293000 2007 us1237000 due 
within the next year this rental income is shown net of the associated cost within other operating income
group overview
business review
corporate governance
financial statements 80
annual report 2008 aricom plc
16 lossearnings per share
the calculation of the basic and diluted lossearnings per share is based on the following data
lossproﬁt
2008 2007
us’000 us’000
lossproﬁt for the purposes of basic and diluted lossearnings per ordinary share
being net loss attributable to equity holders of the parent  427377 1040
number of shares
number number
‘000 ‘000
weighted average number of ordinary shares for the purposes of basic lossearnings per ordinary share 1133237 791263
effect of dilutive potential ordinary shares  – 12447
weighted average number of ordinary shares for the purposes of diluted lossearnings per ordinary share  1133237 803710
us us
basic lossearnings per ordinary share  038 000
diluted lossearnings per ordinary share  038 000
basic and diluted eps are the same at 31 december 2008 as the group made a loss for the year then ended as at 31 december 2008 the 
group had 20776372 2007 21176372 potentially dilutive options over ordinary shares and 133000000 2007 133000000 potentially 
dilutive warrants
17 other intangible assets
other intangible assets represent amounts paid during the years ended 31 december 2008 and 31 december 2007 to acquire licensed 
intellectual property in relation to the processing of titanium sponge this amount will be reimbursed in full by the jv upon assignment of 
the licence the group committed to acquire further us12 million of such intellectual property
18 property plant and equipment
mining
land and fixtures and plant and properties assets under
buildings equipment machinery and leases construction total
us’000 us’000 us’000 us’000 us’000 us’000
cost or valuation
at 1 january 2008  16769 3269 5405 446534 90941 562918
additions 756 7686 11213 – 88473 108128
acquisition of minority interest note 33  – – – 110707 – 110707
acquisition of licences see note 33  – 11 – 53827 93 53931
disposals – 36 154 27 – 217
writeoff of ﬁxed assets  –––– 156 156
transfers – 9163 3603 944 11822 –
foreign currency exchange difference  2042 202 32 57 2306 4639
at 31 december 2008  15483 19891 20035 610040 165223 830672
accumulated depreciation and impairment
at 1 january 2008  232 330 918 – – 1480
depreciation charge for the year  326 846 1631 15 – 2818
eliminated on disposals  – 12 42 – – 54
impairment – – – 306010 80381 386391
foreign currency exchange difference  65 32 23 – – 120
at 31 december 2008  493 1132 2484 306025 80381 390515
carrying amount
at 31 december 2008  14990 18759 17551 304015 84842 440157
notes to the consolidated financial statements 2008 continued annual report 2008
81
aricom plc
18 property plant and equipment continued
mining
land and fixtures and plant and properties assets under
buildings equipment machinery and leases construction total
us’000 us’000 us’000 us’000 us’000 us’000
cost or valuation
at 1 january 2007  3836 2221 3454 374617 37472 421600
additions 756 584 1920 1170 49578 54008
revaluation of minority interest  – – – 12148 – 12148
change in deferred consideration  – – – 18492 – 18492
change in estimated consideration  – – – 7456 – 7456
acquisition of subsidiary  11652 441 72 – – 12165
acquisition of licences  – 10 – 49641 2185 51836
disposals 91 8 45 221 – 365
writeoff of ﬁxed assets  –––– 144 144
transfers – 7 – 1857 1850 –
foreign currency exchange difference  616 14 4 – – 634
at 31 december 2007  16769 3269 5405 446534 90941 562918
accumulated depreciation and impairment
at 1 january 2007  22 105 495 – – 622
charge for the year  206 227 426 – – 859
eliminated on disposals  1 2 3 – – 6
foreign currency exchange difference  5 –––– 5
at 31 december 2007  232 330 918 – – 1480
carrying amount
at 31 december 2007  16537 2939 4487 446534 90941 561438
at 31 december 2008 us1507000 2007 us1507000 cumulative capitalised interest and borrowing costs were included within assets 
under construction in the above table the effective rate of interest capitalised in 2008 was nil 2007 nil depreciation of us1644000 
2007 us390000 relating primarily to assets used in the construction of the olekma plant was capitalised in the year 
no assets were held under ﬁnance leases either at 31 december 2008 or 31 december 2007
there are no restrictions on title and no property plant and equipment has been pledged as security
at 31 december 2008 the group had entered into contractual commitments for the acquisition of property plant and equipment 
amounting to us81660000 2007 us36749000 including the commitment to contribute us487 million to the share capital of the 
titanium sponge jv as disclosed in note 20
19 investment in associates
investments in associates held at 31 december 2008 relates to the group’s 49 ownership interest in the ordinary shares of llc 
uralmining ‘uralmining’ a company holding the licence to develop the bolshoi seym deposit 
this investment was previously recognised as a ﬁnancial asset investment held at cost as the group did not exercise signiﬁcant inﬂuence 
over this entity due to the management arrangements in place during july 2007 the group lent amounts to uralmining to fund its 
development programme and signiﬁcant inﬂuence was obtained at this time details of loan amounts receivable from uralmining at 
31 december 2008 and 31 december 2007 are set out in note 24
us’000
at 1 january 2008  2854
share of associate’s proﬁt  850
at 31 december 2008  3704
there was no revenue earned in 2008 2007 nil
us’000
at 1 january 2007  –
acquired 8148
transfer from financial asset investments  2981
transfer to subsidiary  8216
share of associate’s loss  59
at 31 december 2007  2854
group overview
business review
corporate governance
financial statements 82
annual report 2008 aricom plc
19 investment in associates continued
aggregated amounts relating to uralmining are set out below 
2008 2007
us’000 us’000
total assets 20981 12493
total liabilities  13422 6669
net assets 7559 5824
aricom share of net assets        3704 2854
share of proﬁtloss         850 127
20 interest in joint ventures
on 12 august 2008 a jv contract was signed between aricom plc and chinalco and approved by the chinese ministry of commerce in 
accordance with the terms of the jv agreement aricom will hold 65 of the jv and 35 will be held by chinalco with the parties having 
joint control and contributing rmb 4745 million c us695 million and rmb 2555 million c us37 million respectively the ﬁrst tranche 
of us208 million was paid by the group in september upon registration of the jv the second tranche is scheduled to be paid by 
3 march 2009 
us’000
at 1 january 2008  –
acquired on incorporation  20812
share of joint venture’s loss  444
foreign currency exchange differences  19
at 31 december 2008  20387
there was no revenue earned in 2008
aggregated amounts relating to the joint venture are set out below 
2008
us’000
total assets 33650
total liabilities  2285
net assets 31365
aricom share of net assets         20387
expenses          684
share of loss          444
21 deferred tax assets and liabilities
the following are the major deferred tax assets and liabilities recognised by the group and movements thereon during the current 
reporting year
timing unrealised
accelerated deferred mine difference undistributed foreign
tax development in cost sharebased proﬁts exchange
depreciation costs recognition payments subsidiaries gains tax losses total
us’000 us’000 us’000 us’000 us’000 us’000 us’000 us’000
at 1 january 2008  3449 4857 146 473 2521 946 1597 135
creditcharge to income  14 4942 290 437 2330 946 1527 3326
effect of change in tax rate on 
income statement  465 20 32 –––– 453
exchange differences  896 – 395 36 191 – 70 586
at 31 december 2008  2074 65 283 –––– 2422
certain deferred tax assets and liabilities have been offset the following is the analysis of the deferred tax balances after offset for 
ﬁnancial reporting purposes
2008 2007
us’000 us’000
deferred tax assets  – 4879
deferred tax liabilities  2422 5014
2422 135
at 31 december 2008 the group has unused tax losses of us43236000 which primarily expire at the end of 2017 no deferred tax asset 
has been recognised in respect of these losses as there is not sufﬁcient certainty that there will be sufﬁcient taxable proﬁt against which to 
offset these losses in the next two years
the group has not recognised deferred tax assets of us18247200 in respect of temporary differences arising on certain capitalised 
development costs a deferred tax asset of us6629000 in respect of the russian operations of the group was reversed due to signiﬁcant 
strengthening of the us dollar against the russian rouble during 2008
the russian corporation tax rate changed from 24 to 20 effective 1 january 2009 
temporary differences arising in connection with interest in associates are insigniﬁcant
notes to the consolidated financial statements 2008 continued annual report 2008
83
aricom plc
22 other noncurrent assets
2008 2007
us’000 us’000
deferred stripping costs  2453 –
vat recoverable in russia after more than one year 94 112
loans receivable  434 –
other noncurrent assets  347 –
3328 112
deferred stripping costs represent costs incurred and deferred based on the stripping ratio 494 for the current period to the extent it 
exceeds the lifeofmine ratio for saikta mine of 138 such deferred costs will be amortised in subsequent periods to the extent that the 
period’s stripping ratio falls below the lifeofmine ratio 
loans issued relate to amounts paid to employees of the group during 2008
vat recoverable in russia after more than one year as at 31 december 2008 principally relates to amounts paid in relation to prepayments 
for goods with long lead times which will not be recoverable until the goods have been delivered
23 inventories
2008 2007
us’000 us’000
work in progress  1191 –
materials 4640 1173
spare parts 2650 842
8481 2015
no inventories have been pledged as security at 31 december 2008 work in progress has been written down to its net realisable value 
resulting in a charge to the income statement of us117 million 
24 trade and other receivables
2008 2007
us’000 us’000
amounts due from customers under engineering contracts  2351 426
trade receivables  1807 1558
vat recoverable  16392 8670
other debtors  2117 1091
prepayments and accrued income  15155 13044
amounts owed by associate  6368 4288
44190 29077
loan receivable from a related party  – 65111
as at 31 december 2008 prepayments include us12862000 31 december 2007 us10822000 in relation to ﬁxed assets
amounts due from customers under engineering contracts are due for settlement within one year and relate to the long term contracts 
in progress
amounts included in trade receivables at 31 december 2008 relates to services performed under engineering contracts and invoiced to 
date no amounts are past due at the reporting date trade receivables are due for settlement between one and three months
the directors consider that the carrying value of trade and other receivables is approximately equal to their fair value
25 shortterm investments
2008 2007
us’000 us’000
financial assets at fvtpl  – 91669
heldtomaturity ﬁnancial asset promissory note  – 122
– 91791
in 2007 ﬁnancial assets carried at fair value through proﬁt or loss comprised highlyliquid investments under discretionary management 
service with a maturity of up to six years and shortterm deposits with varying maturities of between three to seven months during 2008 
the group disposed its ﬁnancial assets carried at fair value through proﬁt or loss and transferred funds to cash and cash equivalents at 31 
december 2008 the group did not hold any funds under discretionary management service and shortterm deposits 2007 us48899000 
and us42770000 respectively
the heldtomaturity ﬁnancial asset was a promissory note which matured in march 2008
further disclosures required under ifrs 7 financial instruments disclosures are set out in note 38
group overview
business review
corporate governance
financial statements 84
annual report 2008 aricom plc
26 cash and cash equivalents
cash and cash equivalents comprise cash held by the group and shortterm bank deposits with an original maturity of three months or less 
and shortterm highlyliquid investments in money market funds the carrying amount of these assets approximates their fair value
2008 2007
us’000 us’000
bank accounts and deposits  72299 84248
money market funds  185523 288044
money market portfolio  – 34395
257822 406687
investments in money market funds are held for the purposes of diversiﬁcation of risk accordingly as these funds are available on demand 
and have insigniﬁcant risk of change in value they are classiﬁed as cash equivalents further disclosures required under ifrs 7 financial 
instruments disclosures are set out in note 38
27 trade and other payables 
2008 2007
us’000 us’000
trade creditors  3933 1987
taxation and social security  908 541
other creditors  2172 2250
accruals and deferred income  3749 3502
fixed asset creditors and accruals  4231 4448
14993 12728
for trade creditors the average credit period on purchases of goods and services is 14 days 2007 30 days at 31 december 2008 trade 
creditors which are due for settlement within three months total us3812000 2007 us1682000 trade creditors due for settlement 
between three months and one year total us117000 2007 us305000
other creditors include the current portion of amounts owed to the administration of masanovskiy region as detailed in note 28 the 
current portion of this liability was us914000 at 31 december 2008 2007 us1059000 and will be settled in four to eight months
the directors consider that the carrying amount of trade payables approximates their fair value
28 other noncurrent liabilities
2008 2007
us’000 us’000
cashsettled share based payments see note 36  111 483
other noncurrent liabilities  – 1088
111 1571
other noncurrent liabilities at 31 december 2007 included the longterm portion of amounts owed to the administration of masanovskiy 
region in connection with obligations arising under the garinskoye licence of us922000 at 31 december 2008 all amounts payable to 
the administration of masanovskiy region are due within one year and included in current liabilities
29 longterm provisions
2008 2007
us’000 us’000
balance at the beginning of the year  2294 –
provision recognised in the year  – 2294
unwinding of discount  228 –
exchange difference  414
balance at the end of the year  2108 2294
the longterm provision recognised relates to mine closure site and environmental restoration costs for kuranakh based on estimates 
provided by external consultants in 2007 which form part of the technical economic model for kuranakh the expected timing of the cash 
outﬂows in respect of the provision is on the closure of mining operations expected to be after 2020 the provision recognised is for the 
present value of such costs
notes to the consolidated financial statements 2008 continued annual report 2008
85
aricom plc
30 share capital
    2008

2007
no of shares no of shares
’000 us’000 ’000 us’000
authorised
ordinary shares of £0001 each  2000000 – 2000000 –
allotted called up and fully paid
at 1 january 1119070 2147 453611 816
issued during the year  63794 118 665459 1331
1182864 2265 1119070 2147
details of the ordinary shares in issue at the commencement of the year ordinary shares issued during the year and ordinary shares in 
issue at the yearend are given in the table below
date description price £ no of shares
1 january 2008 number of ordinary shares in issue at the commencement of the period 1119069960
5 february 2008 issue of ordinary shares to pbo handels gmbh note 33 06875 252900
18 february 2008 issue of ordinary shares to olis constructions ltd note 33 0705 28265903
5 march 2008 exercise of share options granted to mr peter howes on 31 december 2003 015 400000
3 october 2008 issue of ordinary shares to myrtle corporate ltd and ardoryna 
commercial ltd note 33 023 21875000
15 october 2008 issue of ordinary shares to sg hambros the company’s ltip trustee 020 13000000
31 december 2008 number of ordinary shares on issue at the end of the year 1182863763
the company has one class of ordinary shares which carry no right to ﬁxed income
warrants in issue
on 4 june 2007 the company issued 133 million units each comprising three ordinary shares and one tradable warrant each warrant 
confers the right to subscribe for one ordinary share at a price of 80 pence subject to adjustment these warrants expire on 9 june 2010
issue of options
on 4 june 2007 the company completed a private placement with the ifc which included the issue of an option to subscribe for 
17076372 ordinary shares at an exercise price of 74 pence per share subject to adjustment the option expires on 4 june 2015 under the 
terms of the option agreement the expiry date may be modiﬁed if
a any time after the gross revenue from operations of the group exceeds us40 million and the volume weighted average closing price 
exceeds 160 of the exercise price or
b two years after the gross revenue from operations of the group exceeds us40 million and the volume weighted average closing price 
exceeds 130 of the exercise price
31 own shares
2008 2007
us’000 us’000
balance at 1 january  20256 –
acquired in the period  4545 20256
balance at 31 december  24801 20256
own shares represent ordinary shares held by the aricom plc employee beneﬁt trust ‘ebt’ to provide beneﬁts to employees under the 
longterm incentive scheme during the current year the ebt subscribed for 13000000 2007 16000000 shares in the company for 
consideration of us4545000 2007 us20256000
group overview
business review
corporate governance
financial statements 86
annual report 2008 aricom plc
32 reconciliation of changes in equity
share
share premium own retained share option translation other minority total
capital account shares loss reserve reserve reserves interests equity
us’000 us’000 us’000 us’000 us’000 us’000 us’000 us’000 us’000
balance at 1 january 2008 2147 1130638 20256 8307 10378 1969 9900 15927 1142396
loss for the period  – – – 427377 – – – 777 426600
exchange differences 
on translation of 
foreign operations  ––––– 14345 – 793 15138
shares acquired by ebt  22 4523 4545 ––––––
other shares issued  95 48287–––––– 48382
expenses on issue of 
equity shares  – 47 –––––– 47
exercise of share option 
by p howes 1 119 – 61 61 – – – 120
acquisition of 2926 minority 
interest in garinskoye note 33 –––––– 19700 11585 8115
sharebased payments  –––– 638––– 638
balance at 
31 december 
2008 2265 1183520 24801 435623 10955 12376 29600 4326 757866
share
share premium treasury shares to retained share option translation other minority total
capital account shares be issued loss reserve reserve reserves interests equity
us’000 us’000 us’000 us’000 us’000 us’000 us’000 us’000 us’000 us’000
balance at 
1 january 2007 816 263800 – 83798 9628 9857 – – 178762 527405
revaluation of 
minority interest ––––––– 9246 9246 –
acquisition of 
minority interest ––––––– 42575 183481 140906
minority interest 
at date of
acquisition –––––––– 15859 15859
total recognised 
income and
expense –––– 1040 – 1969 – 730 2279
option purchased 
over minority
interest ––––––– 19700 – 19700
equity element
of deferred 
tax arising on 
share options ––––– 199––– 199
sharebased 
payments ––––– 603––– 603
director’s options 
exercised –––– 281 281 ––––
shares issued in 
respect of deferred
consideration 130 102160 – 83798 ––––– 18492
shares acquired 
by ebt 33 20223 20256 –––––––
other shares 
issued 1168 769371––––––– 770539
expenses on issue 
of equity shares – 24916 ––––––– 24916
change in purchase
consideration of 
ks gok ––––––– 3729 3729 7458
balance at 
31 december 
2007 2147 1130638 20256 – 8307 10378 1969 9900 15927 1142396
the treasury shares reserve represents the cost of shares in aricom plc held by the ebt to satisfy awards under the group’s longterm 
incentive plan see note 36
notes to the consolidated financial statements 2008 continued annual report 2008
87
aricom plc
33 acquisitions
acquisition of minority shareholder’s interest in lapwing
on 17 january 2008 aricom agreed to acquire the 01 ownership interest in lapwing limited ‘lapwing’ the holding company that owns 
llc garinskiy mining and metallurgical complex ‘ggmk’ or ‘garinskiy’ which in turn holds the garinskoye licence from pbo handelsges 
mbh ‘pboh’ one of the minority shareholders in consideration for the acquisition of this minority interest aricom issued 843 ordinary 
shares for every 1 lapwing share held by pboh resulting in the issue of 252900 ordinary shares on 5 february 2008 when the market 
value was £06875 per ordinary share the total purchase consideration for the acquisition of this minority interest was us03million 
the transaction was completed on 5 february 2008 when the cost of net assets acquired other than the licence was us004 million the 
excess of the purchase consideration over this amount of 03m was allocated to mining properties and leases in accordance with the 
group’s accounting policy for acquiring minority interests in controlled assets 
acquisition of 2926 minority interest in lapwing and settlement of amounts owed by olis
on 15 february 2008 shareholder approval was obtained for the acquisition of olis’s 2926 interest in the issued share capital of 
lapwing the acquisition was completed on 15 february 2008 resulting in an increase in the 7022 interest in the project held by aricom 
uk at 31 december 2007 to 9958 including the 01 interest acquired on 5 february 2008 detailed above 
the total consideration comprised the issue of 28265903 ordinary shares at a market value of £0705 per share on 15 february 2008 the 
‘consideration shares’ the cash consideration comprising the net proceeds of the placing of 42750000 ordinary shares completed by 
the company on 18 december 2007 less an agreed allocation of costs incurred in respect of this placing and the option premium of 
us197 million paid in march 2007 
including acquisition costs the total purchase consideration for the acquisition of this minority interest was us1221 million
on 19 december 2007 the group entered into a loan agreement with olis lending an amount of us65 million the loan bore interest at a 
rate of 52 per annum and was repayable at the earlier of the date of completion of the proposed acquisition by aricom from olis of 
shares in lapwing and the maturity date of the loan being 30 june 2008 
the loan and respective interest were settled against the purchase consideration for the acquisition of olis’ 2926 ownership interest 
in lapwing
a summary of the total consideration and settlement of the loan outstanding is set out in the table below 
us’000 us’000
option premium paid in march 2007  19700
issue of the consideration shares  39084
cash proceeds from the placing shares  64221
agreed allocation of costs associated with the placing  1052
63169
total consideration payable to olis 121953
directly attributable legal costs  154
total consideration  122107
cash consideration payable  63169
the loan and respective interest outstanding on 15 february 2008  65543
residual amount payable by olis to aricom on 15 february 2008  2374
 at market value opening position and exchange rate at 15 february 2008
 including interest of us01million charged in 2007 and us04 million charged in 2008
on 18 march 2008 olis made a payment of us24 million to settle the residual loan balance outstanding plus related accrued interest 
the transaction completed on 15 february 2008 when the cost of the net assets acquired other than the licence was us112 million the 
excess of the purchase consideration over this amount was us1109 million which was allocated to mining properties and leases in 
accordance with the group’s accounting policy for acquiring minority interests in controlled assets 
acquisition of options to acquire kostenginskoye and garinskoye flanks licences
on 25 march 2008 the group entered into two option agreements enabling it subject to all conditions precedent being met to exercise 
options to purchase the entire share capital of rumier holdings ltd and guiner enterprises ltd both of which are cypriot registered 
companies together the ‘cypriot companies’ 
the cypriot companies hold 100 investments in llc optima and llc ekvador respectively both of which are russian registered 
companies together the ‘russian companies’ these russian companies held only the licences for the right to mine the kostenginskoye 
and garinskoye flanks deposits respectively and hence the acquisition was accounted for as an asset acquisition
the sellers of the cypriot companies were myrtle corporate ltd and ardoryna commerical ltd the ‘sellers’ which owned 51 and 49 
respectively of the share capital of the cypriot companies 
group overview
business review
corporate governance
financial statements 88
annual report 2008 aricom plc
33 acquisitions continued
the group paid a total non refundable option premium of an aggregate of us45 million cash to the sellers to acquire the options 
these options were exercised on 30 september 2008 and shares were issued on 3 october 2008 the combined consideration for both 
assets upon exercise of the options amounted to us45 million cash paid for the options and 21875000 ordinary shares in the company 
10937500 for each asset as detailed below 
consideration us’000
non refundable option premium  44976
issue of 21875000 ordinary shares in aricom plc at the market value of £023  8955
total 53931
 at market value opening position and exchange rate at 30 september 2008
34 notes to the cash flow statement
a reconciliation of operating loss to net cash outﬂow from operating activities
2008 2007
us’000 us’000
operating loss from continuing operations  413326 22736
adjustments for
depreciation of property plant and equipment  2818 859
depreciation capitalised  1644 390
loss on disposal of ﬁxed assets  201 134
impairment provision  386392 –
impairment of goodwill  58 –
write down of inventory to nrv  1170 –
share option and ltip expense  482 1086
share of associates’ proﬁtloss  850 59
share of jointly controlled entities loss  444 –
listing costs – 3951
other noncash adjustments  – 6
operating cash ﬂows before movements in working capital  24255 17031
increase in inventories  11253 1811
increasedecrease in receivables  18080 14785
increasedecrease in payables  3925 8619
cash used in operations before interest and tax  49663 12676
income tax paid  2285 190
net cash used in operating activities  51948 12866
b major noncash transactions
in february 2008 aricom plc issued 28518803 ordinary shares as part of the consideration to acquire a further 2936 of interest in the 
garinskoye project these ordinary shares were valued at us394 million using the opening market value of a share and the exchange rate 
at the transaction date 
the loan and interest receivable from olis amounted to us655 million at the transaction date and was offset against the cash part of 
consideration payable by aricom as part of the acquisition from olis of a further 2926 of interest in garinskoye project
an option premium of us197 million was paid in march 2007 to olis to acquire its interest in the garinskoye project and was included in 
total consideration at the transaction date 
in october 2008 aricom plc issued 21875000 ordinary shares as part of the consideration to acquire 100 of kostenginskoye and 
garinskoye ﬂanks licences these ordinary shares were valued as us896 million using the opening market value of a share and the 
exchange rate at the transaction date 
further details on these transactions are set out in note 33
35 contingent liabilities
the group is involved in legal proceedings with two minority shareholders in lapwing gatnom capital and finance ltd and 
om investments  finance ltd the claim was ﬁled in september 2008 in cyprus and the respondents are lapwing and aricom uk 
claimants allege their holdings in lapwing were improperly diluted as the result of the issuance of additional shares following a september 
2007 shareholders’ meeting claimants have asked the court to dissolve lapwing or alternatively to order that their shares be purchased 
at a price allegedly previously agreed upon or to be determined by an expert appointed by the court
the group’s defence is due to be submitted on march 12 2009 management believes that the claim is of a limited merit and therefore 
does not represent a material threat to the group 
at 31 december 2007 the group was involved in two related legal proceedings both of these proceedings were concluded in the 
group’s favour 
notes to the consolidated financial statements 2008 continued annual report 2008
89
aricom plc
36 sharebased payments
equitysettled directors’ share option scheme
the company has a share option scheme for directors of the group these options over ordinary shares were issued in accordance with 
the aricom plc share option scheme options granted under the share option scheme are not subject to performance criteria options 
are normally forfeited if the employee leaves the group there have been no variations to the terms and conditions or performance criteria 
for share options during the period
no options over ordinary shares were granted in 2008 and no further options will be granted under the share option scheme
details of the share options outstanding during the year are as follows
at 3 1 december 20 0 8
options outstanding 
exercise outstanding granted forfeited exercised at
price 1 january during during during 31 december
date of grant date exercisable £ 2008 the year the year the year 2008
31122003 31122006 to 28032008 015 400000 – – 400000 –
19072006 19072009 to 19012012 042 3700000––– 3700000
4100000 – – 400000 3700000
at 31 december 2007
options outstanding 
exercise outstanding granted forfeited exercised at
price 1 january during during during 31 december
date of grant date exercisable £ 2007 the year the year the year 2007
31122003 31122006 to 31122013 015 1000000 – – 1000000 –
31122003 31122006 to 28032008 015 400000––– 400000
31122003 31122006 to 28022007 015 850000 – – 850000 –
19072006 19072009 to 19012012 042 4100000 – 400000 – 3700000
6350000 – 400000 1850000 4100000
the options outstanding at 31 december 2008 had a weighted average exercise price of £042 and a weighted average remaining 
contractual life of 36 years
at 31 december 2008 the intrinsic value of the options granted on 19 july 2006 for which the vesting period had started is zero 
the inputs into the blackscholes model were as follows
options 
granted 
19 july
2006
weighted average share price gbp  044
weighted average exercise price gbp  042
expected volatility   9200
expected life in years  325
riskfree rate   483
expected dividends gbp  000
fair value per option gbp 0279
for options granted 19 july 2006 the expected volatility of the ordinary shares has been computed by calculating the standard deviation 
of the return index on a daily basis by reference to the expected time for exercising the option this was achieved using the historic price 
of the quoted ordinary shares over a restricted period for which the group was listed on aim ie 2 years 7 months and 18 days
the group recognised total expenses of us638000 in 2008 2007 us603000 related to equity settled share based 
payment transactions
cash settled longterm incentive plan and employee beneﬁt trust
during the year ended 31 december 2007 the group established a longterm incentive plan ‘ltip’ to operate in conjunction with an 
employee beneﬁt trust ‘ebt’ which holds shares in aricom plc for the beneﬁt of employees the participants
in october 2007 the ebt subscribed for 16 million shares in aricom plc at a price of £062 per ordinary share £9920000 the acquisition 
of these shares by the ebt was funded via a loan made by aricom treasury uk limited to the ebt in 2008 this loan was transferred to 
aricom services limited the loan is due for repayment in october 2017 or any other date agreed between the parties of the ordinary 
shares held by the ebt 11 million have been allocated under the ltip to directors and members of senior management in may 2008 a 
further 1 million have been allocated under the ltip to a member of senior management
in october 2008 the ebt subscribed for 13 million shares in aricom plc at a price of £020 per ordinary share £2600000 the acquisition 
of these shares by the ebt was funded via a loan made by aricom services limited to the ebt the loan is due for repayment in october 
2018 or any other date agreed between the parties of the ordinary shares held by the ebt a further 17 million have been allocated under 
the ltip to directors and members of senior management
group overview
business review
corporate governance
financial statements 90
annual report 2008 aricom plc
36 sharebased payments continued
the ltip has a qualiﬁcation period of three years and a number of nonmarket performance related conditions which need to be satisﬁed 
for the ltip to vest the shares in aricom plc will be held by the ebt on behalf of the participants for the vesting period and should the 
remuneration committee advise the trustees that the ltip objectives have been successfully achieved the shares will be sold and any 
gains from this sale net of repaying the loan to aricom services limited will be passed on to the participants 
the fair value of awards issued under the ltip is determined using the blackscholes model at the balance sheet date using the 
assumptions detailed in the table below 
awards awards awards
issued in issued in issued in
october 2007 may 2008 october 2008 
weighted average share price gbp  0076 0076 0076
weighted average exercise price gbp  062 080 020
expected volatility   10935 10935 9903
expected life in years  3 25 3
riskfree rate   150 150 213
expected dividends gbp  000 000 000
fair value per award gbp  00096 00073 00845
the group has recorded a credit of us156000 in 2008 2007 an expense of us483000 the intrinsic value at 31 december 2008 was 
zero 2007 us3056000
37 retirement beneﬁt schemes
the group does not operate any retirement beneﬁt schemes instead making deﬁned contributions to employees’ personal 
pension schemes 
the total cost charged to income of us183000 2007 us150000 represents contributions payable to these schemes by the group 
during the year 
38 financial instruments
capital and liquidity risk management
the group manages its capital to ensure that entities in the group will be able to continue as a going concern while maximising the return 
to stakeholders the capital structure of the group at 31 december 2008 consists of cash and cash equivalents and equity attributable to 
equity holders of the parent comprising issued capital reserves and retained earnings as disclosed in note 32
the group did not hold any debt as at either 31 december 2008 or 31 december 2007
externally imposed capital requirement
the group is not subject to externally imposed capital requirements
signiﬁcant accounting policies
details of signiﬁcant accounting policies and methods adopted including the criteria for recognition the basis of measurement and the 
basis on which income and expenses are recognised in respect of each class of asset ﬁnancial liability and equity instrument are disclosed 
in note 3 to the consolidated financial statements
categories of financial instruments
carrying carrying
value value
2008 2007
us’000 us’000
financial assets
cash and cash equivalents  257822 406687
fair value through proﬁt or loss
shortterm ﬁnancial assets investments  – 91669
heldtomaturity ﬁnancial asset  – 122
loans and receivables  27703 72461
financial liabilities
amortised cost – trade and other payables  15104 13421
financial risk management objectives
the board of directors monitors the ﬁnancial risks relating to the operations of the group these risks include market risk primarily 
currency and interest rate risk and credit risk 
foreign currency risk management
the group is exposed to foreign exchange risk associated with ﬂuctuations in the relative value of us dollars gb pounds  russian roubles 
and chinese rmb the group’s investment revenues are currently in us dollars and prospective revenues from operations will be 
denominated and settled in us dollars a proportion of capital and operational expenditure has been and is expected to be incurred 
in russian roubles accordingly the group’s ﬁnancial results may be affected by ﬂuctuations in the exchange rate between the russian 
rouble and the us dollar these risks are mitigated to the extent considered necessary by the board of directors through a combination 
of holding the relevant currencies and entering into forward contracts
notes to the consolidated financial statements 2008 continued annual report 2008
91
aricom plc
38 financial instruments continued
the carrying amounts of the group’s foreign currency denominated monetary assets and monetary liabilities at the reporting date are 
as follows
assets

liabilities
2008 2007 2008 2007
us’000 us’000 us’000 us’000
russian roubles  41170 57634 7524 8622
us dollars 2365 81458 3239 1624
gb pounds 1008 – 63 –
foreign currency sensitivity analysis
the group is mainly exposed to exchange rate movements between us dollars russian roubles and gb pounds the following table 
details the group’s sensitivity to a 20 2007 5 change in exchange rates of functional currencies of the group’s companies against the 
relevant foreign currencies the 20 rate represents management’s assessment of a reasonably possible change in foreign currency rates
us dollars currency impact

rouble currency impact

gb pound currency impact
2008 2007 2008 2007 2008 2007
us’000 us’000 us’000 us’000 us’000 us’000
proﬁt or loss 88 3009 5384 1856 152 2
the group’s sensitivity to foreign currency measured as impact by per cent change has decreased during the current year mainly due to 
the decreased holdings of russian rouble cash equivalents however due to the higher sensitivity rate applied the overall impact is higher 
in 2008 the group’s policy is to hold a portion of its cash equivalents in roubles to cover its exposure arising on capital and operational 
expenditure incurred in russian roubles when the russian rouble started to weaken rapidly at the end of 2008 the group reduced the 
portion held in russian roubles 
interest rate risk management
the group is exposed to interest rate risk through the holding of cash and cash equivalents including monies invested into money market 
funds the interest rates attached to these instruments are at ﬂoating rates the group also holds amounts on deposit with ﬁxed rates of 
interest attached the mix between ﬁxed and ﬂoating rate ﬁnancial assets limits the group’s interest rate risk the group’s exposure to 
interest rates on these ﬁnancial assets is detailed in the interest rate sensitivity section of this note 
interest rate sensitivity
the sensitivity analysis below has been determined based on the exposure to interest rates for the average balance of interest bearing 
ﬁnancial asset investments held during the year an increasedecrease of 1 in interest rates has been applied in this analysis 
if interest rates had been 1 higherlower and all other variables were held constant the group’s loss for the year ended 31 december 
2008 would decreaseincrease by 2578000 2007 the group’s proﬁt reported for the year ended 31 december 2007 would increase
decrease by us3380000
credit risk management
credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in ﬁnancial loss to the group the group 
has adopted a policy of only dealing with creditworthy counterparties the group’s exposure and the credit ratings of its counterparties 
are monitored by the board of directors and limits have been established to ensure that the aggregate value of transactions is spread 
amongst approved counterparties
the group’s principal ﬁnancial assets are cash and cash equivalents and trade receivables cash equivalents represent investments in 
money market funds and amounts held on deposit with ﬁnancial institutions
the credit risk on liquid funds held in current accounts and available on demand is limited because our counterparties are primarily banks 
with high creditratings assigned by international creditrating agencies
the credit risk on money market funds is limited because the counterparties are investment funds with high creditratings assigned by 
international creditrating agencies these investment funds are managed in accordance with approved investment criteria requiring that 
investments have certain credit ratings and limiting the concentration of investment in any one security
for operational reasons the group holds amounts on deposit with banks located in russia one of which is a related party as detailed in 
note 39 at 31 december 2008 amounts held on deposit with this bank were us19298000 maturing in january–february 2009 and 
representing 63 of total monetary assets held by the group
group overview
business review
corporate governance
financial statements 92
annual report 2008 aricom plc
38 financial instruments continued
the table below details major counterparties at the balance sheet date the associated credit ratings of the counterparty and details the 
investment guidelines where appropriate these excluding related parties represent 73 of total monetary assets held by the group at 
31 december 2008 65 at 31 december 2007 the table below excludes any cash balances held on current accounts
carrying carrying 
amount at amount at 
31 december 31 december
2008 2007
type of ﬁnancial asset counterparty currency rating us’000 us’000
cash equivalent ubs –jp morgan liquidity fund
1
usd aaam 27287 49492
cash equivalent hypovereinsbank –deposit accounts usd a 18432 –
cash equivalent goldman sachs – liquid reserves fund usd
2
usd aaam 52495 51441
cash equivalent morgan stanley – liquid reserves fund usd
2
usd aaam 8488 102982
cash equivalent rbs asset management – global treasury fund usd
2
usd aaf 65266 124761
cash equivalent rbs asset management – global treasury fund gbp
2
gbp aaf 31982 8861
cash equivalent barclays bank llc – deposit accounts usd ba1 17797 –
shortterm ﬁnancial 
assets at fvtpl expo bank – deposit accounts roubles baa2ru – 31166
cash equivalent asia paciﬁc bank
3
 – deposit accounts usd – 19298 –
shortterm ﬁnancial 
assets at fvtpl asia paciﬁc bank – deposits accounts roubles – – 11078
shortterm ﬁnancial 
assets at fvtpl ubs – money market portfolio bonds usd aaa – 48899
total 241045 428680
1 for securities that carry a longterm rating the subfund’s investments will generally be restricted to securities rated at least a2 by moody’s investors 
services‘moody’s’ or a by standard  poor’s corporation ‘sp’ for securities that carry a shortterm rating the quality will be at least prime1 as rated 
by moody’s or a1 by sp the subfund may also invest in unrated securities which are in the opinion of the investment manager of comparable quality 
the investment manager will seek to maintain the aaarating assigned by at least two rating agencies 
2 the minimum investment criteria for these funds require that investments have a minimum rating of a1 sp or p1 moody’s a minimum of 50 of the 
portfolio is invested in securities rated a1 by sp the investment managers are permitted to invest in ﬁxed rate securities with maturities up to 397 
days and ﬂoating rate notes with maturities up to two years however the weighted average maturity of the fund must be kept below 60 days
3 amounts held on deposit with asiapaciﬁc bank which is a related party as detailed in note 39 mature in januaryfebruary 2009 and attract interest at a 
rate of 10 per annum no ofﬁcial rating of asiapaciﬁc bank is available
trade receivables consist mostly of amounts outstanding under engineering contracts held by a subsidiary in russia a credit evaluation 
is performed on these customers prior to the commencement of these contracts there were no balances past due at the reporting 
period end 
the group’s maximum exposure to credit risk without taking account of the value of any collateral obtained is limited to the carrying 
amount of ﬁnancial assets recorded in the ﬁnancial statements
liquidity risk management
ultimate responsibility for liquidity risk management rests with the board of directors at 31 december 2008 and 31 december 2007 the 
group did not hold any external borrowings and the group’s principal ﬁnancial liabilities were trade and other payables see note 27 for 
maturity details the board of directors monitors the level of liquid assets available to the group and the level of funding required to meet 
its short medium and longterm requirements 
39 related party transactions
transactions between the company and its subsidiaries which are related parties have been eliminated on consolidation and are not 
disclosed in this note transactions between the group and its other related parties are disclosed below all of the arrangements were 
carried out at arm’s length and have been reviewed by independent members of the board
during the year group companies entered into the following transactions with related parties who are not members of the group
related parties
peter hambro mining plc and its subsidiaries are considered to be related parties due to mr peter hambro mr jay hambro and dr pavel 
maslovskiy’s shareholdings and directorships in those companies and in aricom plc
mr peter hambro is a director and the beneﬁcial owner of peter hambro limited
expobank llc and ojsc asiapaciﬁc bank former llc amurpromstroybank are considered related parties as mr peter hambro and dr 
pavel maslovskiy have an interest in these companies from july 2008 expobank llc ceased to be a related party as at that time it was 
acquired by barclays bank plc
up to 15 february 2008 olis was considered to be a related party due its ownership interest in lapwing a subsidiary of the group as it 
held 2926 ownership interest in lapwing as set out in note 33
a subsidiary of cjsc phosagro ‘phosagro’ namely apatit ojsc ‘apatit’ is considered to be a related party due to phosagro’s minority 
interest and signiﬁcant inﬂuence in giproruda 
uralmining is an associate company see note 19
notes to the consolidated financial statements 2008 continued annual report 2008
93
aricom plc
39 related party transactions continued
banking arrangements with llc expobankand ojsc asiapaciﬁc bank
the group has bank accounts with llc expobank and ojsc asiapaciﬁc bank
the bank balances at 31 december 2008 and 31 december 2007 are set out below
2008 2007
us’000 us’000
llc expobank  – 39892
ojsc asiapaciﬁc bank  19298 11078
during the year the group earned interest on the balances held on accounts with the above banks of us2933000 2007 us2668000
the bank charges incurred with llc expobank and ojsc asiapaciﬁc bank during the year ended 31 december 2008 were us61000 
2007 us104000 
at 31 december 2008 and 31 december 2007 there were no loans outstanding from llc expobank and ojsc asiapaciﬁc bank 
in july 2008 barclays bank plc acquired 100 of llc expobank and so expobank is no longer a related party
loan provided to associate
the group provided uralmining with a loan see notes 19 and 24 for details the interest accrued on the loan is us428000 for the year 
ended 31 december 2008 2007 us45000
trading transactions
in addition to the transactions described above there were transactions set out below that related to the day to day operation  
of business
amounts owed by   amounts owed to 
sales

purchases

related parties

related parties
2008 2007 2008 2007 2008 2007 2008 2007
us’000 us’000 us’000 us’000 us’000 us’000 us’000 us’000
peter hambro mining plc  
and its subsidiaries
peter hambro mining plc  32 14 405 441 – – 26 8
ojsc irgiredmet  – – 672 61 – – 14 –
cjsc mc peter hambro mining  – – 913 1206 10 – 1389 1441
llc npgf regis  14 7 1316 308 1 2 511 –
llc obereg chop  11 – 278 165 10 – 34 –
cjsc peter hambro mining engineering 13 2 5714 2712 0 1 – 18
phm sng – 5 – – – 2 – –
cjsc pokrovsky rudnik  95 80 417 197 177 99 146 179
cjsc malomyrskiy rudnik 16 – – – 16 – – –
llc tokurskiy rudnik  54 – – – – – – –
dalgeologia 52 – 3654 – – – 495 –
kapstroy 8814 1558 37684 23730 319 114 626 1960
other related parties
peter hambro limited  – 10 467 481 – – 63 20
apatit ojsc 2120 831 – – 757 381 – –
andrey kostava  – – – – – 102 – –
odolgo 48 23 43 – 8 – – –
the amounts outstanding are unsecured and will be settled in cash no guarantees have been given or received 
remuneration of key management personnel
the remuneration of the directors who are the key management personnel of the group is set out below in aggregate for each of the 
categories speciﬁed in ias 24 related party disclosures
2008 2007
us’000 us’000
shortterm employee beneﬁts  2533 3006
postemployment beneﬁts 131 119
cashsettled awards under ltip  98 483
sharebased payments refer to note 36  638 603
3204 4211
the main elements of the remuneration of the directors were paid in sterling and are set out in the audited section of the directors’ 
remuneration report
the remuneration of the highest paid director was £491000 2007 £526000 
group overview
business review
corporate governance
financial statements 94
annual report 2008 aricom plc
40 events after the balance sheet date
on 6 february 2009 the respective independent committees of the board of directors of peter hambro mining plc ‘phm’ and aricom 
announced that they had 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 phm in exchange for shares in phm the merger is conditional upon among other things 
certain russian regulatory conditions being fulﬁlled to the reasonable satisfaction of both companies and passing of the necessary 
resolutions by the shareholders of both companies and the sanction of the court
the merger provides for the acquisition of 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 ‘scheme’ 
the purpose of the scheme is to enable phm 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 one 
fully paid new phm share in exchange for 16 fully paid aricom shares
the merger values each aricom share at 366 pence using the closing price per phm share on 4 february 2009 of 585 pence at 309 pence 
using the closing price of phm shares on 5 february 2009 of 495 pence and 249 pence using the closing price per phm share on 
8 january 2009 of 398 pence
41 group companies 
percentage of equity owned
subsidiary country of incorporation principal activity 2008 2007
brasenose services limited cyprus holding company 100 100
russian titan company limited cyprus holding company 100 100
kapucius services limited cyprus holding company 100 100
dardanius limited cyprus holding company 100 100
arﬁn limited cyprus financing 100 100
metellus limited cyprus holding company 100 100
lapwing limited cyprus holding company 9958 7022
expokom limited cyprus holding company 100 100
tenaviva limited cyprus holding company 100 100
esimanor limited cyprus holding company 100 100
rumier holdings lts cyprus holding company 100 100
guiner enterprises ltd cyprus holding company 100 100
aricom uk limited great britain holding company 100 100
aricom treasury uk limited great britain financing 100 100
aricom finance uk limited great britain financing 100 100
aricom b finance plc great britain holding company 100 100
aricom b limited great britain holding company 100 100
aricom b roubles treasury limited great britain financing 100 100
aricom roubles treasury uk limited great britain financing 100 100
aricom services limited great britain service company 100 100
ariva hk limited hong kong holding company 100 100
ariti hk limited hong kong holding company 100 100
llc aricom russia management company 100 100
llc olekminsky rudnik russia mining 100 100
llc kimkanosutarskiy gornoobogatitelniy kombinat russia mining 100 100
llc rubicon russia development company 100 100
cjsc sgmtp russia development company 100 100
llc tok russia dormant 100 100
ojsc giproruda russia engineering services 7028 7028
llc garinsky mining  metallurgical complex russia mining 9958 7022
llc kostenginskiy gornoobogatitelniy kombinat russia mining 100 100
llc orlovosokhatinsky gornoobogatitelniy kombinat russia mining 100 100
jointventure
heilongjiang jiatal titanium co ltd china production 65 –
associate
llc uralmining russia mining 49 49
notes to the consolidated financial statements 2008 continued annual report 2008 aricom plc
95
parent company financial statements 2008
statement of directors’ responsibilities
the directors have elected to prepare the parent company ﬁnancial 
statements in accordance with united kingdom generally accepted 
accounting practice united kingdom accounting standards and 
applicable law the parent company ﬁnancial statements are 
required by law to give a true and fair view of the state of affairs 
of the company and of the proﬁt or loss of the company for that 
period in preparing these ﬁnancial statements the directors are 
required to
select suitable accounting policies and then apply them consistently
make judgments and estimates that are reasonable and prudent
state whether applicable uk accounting standards have been followed
prepare the ﬁnancial statements on the going concern basis unless it is inappropriate to presume that the company will 
continue in business
the directors are responsible for keeping proper accounting 
records that disclose with reasonable accuracy at any time the 
ﬁnancial position of the company and enable them to ensure 
that the parent company ﬁnancial statements comply with the 
companies act 1985 they are also responsible for safeguarding 
the assets of the company and hence for taking reasonable steps 
for the prevention and detection of fraud and other irregularities
the directors are responsible for the maintenance and integrity 
of the corporate and ﬁnancial information included on the 
company’s website legislation in the united kingdom governing 
the preparation and dissemination of ﬁnancial statements may 
differ from legislation in other jurisdictions
group overview
business review
corporate governance
financial statements annual report 2008 aricom plc
96
we have audited the parent company ﬁnancial statements of 
aricom plc for the year ended 31 december 2008 which comprise 
the company balance sheet and the related notes 1 to 9 these 
parent company ﬁnancial statements have been prepared under 
the accounting policies set out therein
we have reported separately on the group ﬁnancial statements of 
aricom plc for the year ended 31 december 2008 and on the 
information in the directors’ remuneration report that is described 
as having been audited
this report is made solely to the company’s members as a body in 
accordance with section 235 of the companies act 1985 our audit 
work has been undertaken so that we might state to the company’s 
members those matters we are required to state to them in an 
auditors’ report and for no other purpose to the fullest extent 
permitted by law we do not accept or assume responsibility to 
anyone other than the company and the company’s members as 
a body for our audit work for this report or for the opinions we 
have formed
respective responsibilities of directors and auditors
the directors’ responsibilities for preparing the parent company 
ﬁnancial statements in accordance with applicable law and united 
kingdom accounting standards united kingdom generally 
accepted accounting practice are set out in the statement of 
directors’ responsibilities
our responsibility is to audit the parent company ﬁnancial 
statements and in accordance with relevant legal and regulatory 
requirements and international standards on auditing uk 
and ireland
we report to you our opinion as to whether the parent company 
ﬁnancial statements give a true and fair view and whether the 
parent company ﬁnancial statements have been properly prepared 
in accordance with the companies act 1985 we also report to you 
whether in our opinion the directors’ report is consistent with the 
parent company ﬁnancial statements 
in addition we report to you if in our opinion the company has not 
kept proper accounting records if we have not received all the 
information and explanations we require for our audit or if 
information speciﬁed by law regarding directors’ remuneration and 
other transactions is not disclosed
we read the other information contained in the annual report as 
described in the contents section and consider whether it is 
consistent with the audited parent company ﬁnancial statements 
we consider the implications for our report if we become aware of 
any apparent misstatements or material inconsistencies with the 
parent company ﬁnancial statements our responsibilities do not 
extend to any further information outside the annual report
basis of audit opinion
we conducted our audit in accordance with international standards 
on auditing uk and ireland issued by the auditing practices 
board an audit includes examination on a test basis of evidence 
relevant to the amounts and disclosures in the parent company 
ﬁnancial statements it also includes an assessment of the 
signiﬁcant estimates and judgments made by the directors in the 
preparation of the parent company ﬁnancial statements and of 
whether the accounting policies are appropriate to the company’s 
circumstances consistently applied and adequately disclosed
we planned and performed our audit so as to obtain all the 
information and explanations which we considered necessary in 
order to provide us with sufﬁcient evidence to give reasonable 
assurance that the parent company ﬁnancial statements are free 
from material misstatement whether caused by fraud or other 
irregularity or error in forming our opinion we also evaluated the 
overall adequacy of the presentation of information in the parent 
company ﬁnancial statements
opinion
in our opinion
the parent company ﬁnancial statements give a true and fair view in accordance with united kingdom generally accepted 
accounting practice of the state of the company’s affairs as at 
31 december 2008
the parent company ﬁnancial statements have been properly prepared in accordance with the companies act 1985 and
the information given in the directors’ report is consistent with the parent company ﬁnancial statements
deloitte llp
chartered accountants and registered auditors 
london
25 february 2009
independent auditors’ report 
to the members of aricom plc annual report 2008
97
aricom plc
2008 2007
notes us’000 us’000
fixed assets
intangible assets  4 613 427
tangible assets  5 6194 4290
investments 6 724692 925285
731499 930002
current assets
debtors due within one year  7 518 152988
cash at bank and in hand  32452 90462
32970 243450
creditors amounts falling due within one year  8 6042 4305
net current assets         26928 239145
total assets less current liabilities       758427 1169147
creditors amounts falling due after one year  8 80 518
provisions for deferred taxation        828 1124
net assets         757519 1167505
capital and reserves
called up equity share capital  3 2265 2147
share premium  3 1183520 1130638
share option reserve  3 10955 10378
translation reserve  3 75210 1525
other reserves  3 22200 –
proﬁt and loss account  3 386211 22817
equity shareholders’ funds        757519 1167505
the ﬁnancial statements were approved by the board of directors and authorised for issue on 25 february 2009 they were signed on its 
behalf by
g j hambro    b egan
director     director
25 february 2009    25 february 2009
company balance sheet 
as at 31 december 2008
group overview
business review
corporate governance
financial statements 98
annual report 2008 aricom plc
notes to the financial statements
1 accounting policies
the aricom plc the ‘company’ balance sheet and related notes have been prepared in accordance with united kingdom generally 
accepted accounting principles ‘uk gaap’ and in accordance with uk company law the ﬁnancial statements have been prepared 
on a historical cost basis
a summary of the principal accounting policies is set out below these have been applied consistently throughout the year and the 
preceding year
as permitted by section 230 of the companies act the proﬁt and loss account of the parent company is not presented as part of these 
ﬁnancial statements the loss after tax for the year of the parent company was us409089000 2007 proﬁt of us25600000
the company has taken advantage of the exemption from preparing a cash ﬂow statement under the terms of frs 1 cash 
flow statements
the company has taken advantage of the exemption from providing ﬁnancial instrument disclosures under the terms of frs 25 financial 
instruments disclosure and presentation
2 signiﬁcant accounting policies
other intangible assets
other intangible assets represent licensed intellectual property purchased in relation to the processing of titanium sponge these 
intangibles are measured at cost and are amortised on a straight line basis over their estimated useful life which is a period of up to 
10 years but dependent upon the startup date of the titanium sponge plant
other tangible fixed assets and depreciation
other tangible ﬁxed assets are recorded at cost net of accumulated depreciation depreciation is provided on all such tangible ﬁxed 
assets at rates calculated to write off the cost or valuation of each asset on a straightline basis over its expected useful life or the life of the 
relevant licence whichever is less as follows
average life in years
ofﬁce equipment  3–10
computer equipment  3–6
until they are brought into use ﬁxed assets and equipment to be installed are included within assets under construction
the cost of maintenance repairs and replacement of minor items of tangible ﬁxed assets are charged to the proﬁt and loss account 
renewals and betterments are capitalised upon sale or retirement of tangible ﬁxed assets the cost and related accumulated depreciation 
are eliminated from the financial statements any resulting gains or losses are included in the proﬁt and loss account
impairment of tangible and intangible assets excluding goodwill
at each balance sheet date the company reviews the carrying amounts of its tangible and intangible assets to determine whether there 
is any indication that those assets have suffered an impairment loss if any such indication exists the recoverable amount of the asset 
is estimated in order to determine the extent of the impairment loss if any where the asset does not generate cash ﬂows that are 
independent from other assets the company estimates the recoverable amount of the cashgenerating unit to which the asset belongs 
the recoverable amount is the higher of fair value less costs to sell and value in use in assessing value in use the estimated future cash 
ﬂows are discounted to their present value using a pretax discount rate that reﬂects current market assessments of the time value of 
money and the risks speciﬁc to the asset for which the estimates of future cash ﬂows have not been adjusted
if the recoverable amount of an asset or cashgenerating unit is estimated to be less than its carrying amount the carrying amount of the 
asset cashgenerating unit is reduced to its recoverable amount an impairment loss is recognised as an expense immediately unless the 
relevant asset is carried at a revalued amount in which case the impairment loss is treated as a revaluation decrease
where an impairment loss subsequently reverses the carrying amount of the asset cashgenerating unit is increased to the revised 
estimate of its recoverable amount but so that the increased carrying amount does not exceed the carrying amount that would have been 
determined had no impairment loss been recognised for the asset cashgenerating unit in prior years a reversal of an impairment loss is 
recognised as income immediately unless the relevant asset is carried at a revalued amount in which case the reversal of the impairment 
loss is treated as a revaluation increase
finance costs
finance costs of ﬁnancial liabilities are recognised in the proﬁt and loss account over the term of such instruments at a constant rate of the 
carrying amount
finance costs which are directly attributable to the construction of tangible ﬁxed assets are capitalised as part of the cost of those assets 
the commencement of the capitalisation begins when both ﬁnance costs and expenditures for the asset are being incurred and activities 
that are necessary to get the assets ready for use are in progress capitalisation ceases when substantially all the activities that are 
necessary to get the asset ready for use are complete annual report 2008
99
aricom plc
2 signiﬁcant accounting policies continued
foreign currencies
in preparing the ﬁnancial statements of the company transactions in currencies other than the company’s functional currency foreign 
currencies are recorded at the rates of exchange prevailing on the dates of the transactions at each balance sheet date monetary assets 
and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date nonmonetary 
items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value 
was determined nonmonetary items that are measured in terms of historical cost in a foreign currency are not retranslated
exchange differences arising on the settlement of monetary items and on the retranslation of monetary items are included in proﬁt and 
loss for the period exchange differences arising on the retranslation of nonmonetary items carried at fair value are included in proﬁt and 
loss for the period 
financial instruments
financial assets and ﬁnancial liabilities are recognised on the company’s balance sheet when the company becomes a party to the 
contractual provisions of the instrument
trade receivables
trade receivables are measured on initial recognition at fair value and are subsequently measured at amortised cost using the effective 
interest rate method appropriate allowances for estimated irrecoverable amounts are recognised in the proﬁt and loss when there is 
objective evidence that the asset is impaired the allowance recognised is measured as the difference between the asset’s carrying 
amount and the present value of estimated future cash ﬂows discounted at the effective interest rate computed at initial recognition
i nvestments
investments are recognised and derecognised on a trade date where a purchase or sale of an investment is under a contract whose terms 
require delivery of the investment within the timeframe established by the market concerned and are initially measured at cost including 
transaction costs
other investments are classiﬁed as either heldfortrading or availableforsale and are measured at subsequent reporting dates at fair 
value where securities are held for trading purposes gains and losses arising from changes in fair value are included in net proﬁt or loss 
for the period for availableforsale investments gains and losses arising from changes in fair value are recognised directly in equity until 
the security is disposed of or is determined to be impaired at which time the cumulative gain or loss previously recognised in equity is 
included in the proﬁt or loss for the period impairment losses recognised in proﬁt or loss for equity investments classiﬁed as availablefor
sale are not subsequently reversed through proﬁt or loss impairment losses recognised in proﬁt or loss for debt instruments classiﬁed as 
availableforsale are subsequently reversed if an increase in the fair value of the instrument can be objectively related to an event 
occurring after the recognition of the impairment loss
cash and cash eq uivalents
cash and cash equivalents comprise cash on hand and demand deposits and other shortterm highly liquid investments that are readily 
convertible to a known amount of cash and are subject to an insigniﬁcant risk of changes in value
taxation
provision is made for all foreseeable taxation liabilities
deferred taxation is calculated so as to recognise the expected future tax consequences of transactions and events recognised in the 
ﬁnancial statements of the current and previous periods with the following exceptions
provision is made for the tax that would arise on remittance of the retained earnings of overseas subsidiaries only to the extent that at the balance sheet date dividends have been declared and accrued as receivables and
deferred tax assets are recognised only to the extent that the directors consider that it is more likely than not that there will be taxable proﬁt from which the future reversal of the timing differences can be deducted
deferred tax is measured at the tax rates that are expected to apply in the periods in which timing differences reverse based on tax rates 
and laws enacted or substantially enacted at the balance sheet date 
pensions
the company does not operate either a deﬁned beneﬁt or a deﬁned contribution scheme for its employees contributions are made to 
individuals’ personal pension schemes where applicable under the terms of their employment contracts
sharebased payments
the company has applied the requirements of frs 20 sharebased payment in accordance with the transitional provisions frs 20 has 
been applied to all grants of equity instruments after 7 november 2002 that were unvested as of 1 january 2005
the company issues equitysettled and cashsettled sharebased payments to certain employees and under various contracts with third 
parties equitysettled sharebased payments are measured at fair value excluding the effect of non marketbased vesting conditions at 
the date of grant the fair value determined at the grant date of the equitysettled sharebased payments is expensed on a straightline 
basis over the vesting period based on the group’s estimate of shares that will eventually vest and adjusted for the effect of non market
based vesting conditions
fair value is measured by use of a blackscholes or binomial model as deemed most appropriate for each individual issue the expected 
lives used in the models have been adjusted based on management’s best estimate for the effects of nontransferability exercise 
restrictions and behavioural considerations
a liability equal to the portion of the goods or services received is recognised at the current fair value determined at each balance sheet 
date for cashsettled sharebased payments
group overview
business review
corporate governance
financial statements 100
annual report 2008 aricom plc
3 company combined statement of reserves and reconciliation of movement in shareholders’ funds
share share shares to share option proﬁt and translation other restated
capital premium be issued reserve loss account reserve reserves total
1
us’000 us’000 us’000 us’000 us’000 us’000 us’000 us’000
at 1 january 2008  2147 1130638 – 10378 22817 1525 – 1167505
total recognised income  –––– 409089 76735 – 485824
sharebased payments  ––– 638––– 638
directors’ options exercised  – – – 61 61–––
shares acquired by ebt  22 4523––––– 4545
other shares issued  96 48406––––– 48502
payment from a subsidiary in respect 
of the issue of shares  –––––– 22200 22200
share issue costs incurred in the year  – 47 ––––– 47
at 31 december 2008  2265 1183520 – 10955 386211 75210 22200 757519
at 1 january 2007  816 263800 83798 9857 3064 – – 355207
total recognised income  –––– 25600 1525 – 27125
recognition of tax on equity element 
of directors options  ––– 199––– 199
sharebased payments  ––– 603––– 603
directors’ options exercised  – – – 281 281–––
shares issued in respect of 
deferred consideration  130 102160 83798 –––– 18492
shares acquired by ebt  33 20223––––– 20256
other shares issued  1168 769371––––– 770539
share issue costs incurred in the year  – 24916 ––––– 24916
at 31 december 2007  2147 1130638 – 10378 22817 1525 – 1167505
 please see note 36 to the consolidated financial statements
please see note 30 to the consolidated financial statements for details regarding the share capital
please see note 31 to the consolidated financial statements for shares acquired by ebt
4 other intangible assets
other intangible assets represent amounts paid during the years ended 31 december 2007 and 31 december 2008 to acquire licensed 
intellectual property in relation to the processing of titanium sponge the useful life of these intangibles will be determined upon the start 
of production
at 31 december 2008 the company had entered into contractual commitments for the acquisition of intangible ﬁxed assets amounting to 
us1160000
5 tangible fixed assets
equipment other assets
ﬁxtures and ﬁxed under
ﬁttings assets construction total
us’000 us’000 us’000 us’000
cost or valuation
cost at 1 january 2008  109 176 4042 4327
additions 45 – 3864 3909
disposals 2 – – 2
assets written off  2 – – 2
translation difference  38 50 1906 1994
at 31 december 2008  112 126 6000 6238
accumulated depreciation
at 1 january 2008  37 – – 37
charge for the year  13 – – 13
disposals 2–– 2
assets written off  2–– 2
impairment losses  – – 11 11
translation difference  11 – 2 13
at 31 december 2008  35 – 9 44
net book value
at 31 december 2008  77 126 5991 6194
at 31 december 2007  72 176 4042 4290
at 31 december 2008 us118000 2007 us118000 cumulative capitalised interest and borrowing costs were included within assets 
under construction in the above table
at 31 december 2008 the company had entered into contractual commitments for the acquisition of tangible ﬁxed assets amounting 
to us8005000
notes to the financial statements continued annual report 2008
101
aricom plc
6investments
investments investments
in group into joint other
companies ventures investments total
us’000 us’000 us’000 us’000
at 1 january 2008  922144 – 3141 925285
additions 670707 20892 408 692007
disposals 484879 – 5 484884
impairment provision  403131 – – 403131
reclasses 155 – 155 –
translation difference  – 3723 862 4585
at 31 december 2008  704996 17169 2527 724692
additions to investments in group companies during the current year represent the cost of the company’s investment into joint ventures 
during the year and capital injections into group companies part of the capital injections were made in the course of the group 
restructuring when the company invested shares held in some cyprus subsidiaries shown in the disposals into aricom uk ltd the uk 
subsidiary in exchange for the aricom uk ltd shares allotment 
signiﬁcant changes to the company’s investment in group companies are outlined below
i the company acquired 01 in lapwing group subsidiary for us03 million in consideration for issue of 252900 shares on 5 february 
2008 see note 33 to the consolidated financial statements for details the investment was transferred to aricom uk ltd see iv later
ii the company acquired 2926 in lapwing group subsidiary for us1024 million on 15 february 2008 the company issued 
28265903 shares which accounted for us391 million and the remaining us632 million were settled in cash by aricom treasury uk 
ltd and compensated by aricom plc during february 2008 see note 33 for details the investment was transferred to aricom uk ltd 
see iv later
iiithe company entered into a joint venture agreement with chinalco and contributed an initial us208 million see note 20 for details
iv the company transferred investments in group companies at book value us4847 million in exchange for the allotment of shares in 
aricom uk ltd booked at us4281 million with the difference affecting translation reserve and contributed us15 million in cash to 
the share capital of aricom uk ltd 
v the company acquired shares in aricom treasury uk ltd another uk subsidiary amounting to us125 million in exchange for assigned 
loans provided to group companies
vi the company identiﬁed that impairment provision is required against the investments in aricom uk ltd and aricom finance uk ltd 
due to the impairment of the underlying investments held in the kuranakh project and in combined ks and garinskoye project see 
note 8 to the consolidated financial statements for details
other investments at 31 december 2008 relate primarily to the company’s investment in bolshoi seym
see note 20 to the consolidated financial statements for capital commitments the company had entered into regarding joint 
venture contracts
7debtors
2008 2007
us’000 us’000
debtors amounts falling due within one year
vat recoverable within one year  200 889
amounts due from group companies  208 151888
prepayments and accrued income  104 202
other debtors  6 9
518 152988
the directors estimate that the carrying amount of debtors approximates their fair value
group overview
business review
corporate governance
financial statements 102
annual report 2008 aricom plc
8 creditors
2008 2007
us’000 us’000
trade creditors  362 206
tax 232 46
social security  104 25
other creditors  528 20
accruals and deferred income  4580 3870
amounts due to group companies  236 138
6042 4305
creditors amounts falling due after more than one year
cashsettled sharebased payments  80 352
other creditors  – 166
80 518
the directors estimate that the carrying amount of creditors approximates their fair value
9 subsequent events
subsequent events have been disclosed in note 40 to the consolidated financial statements
notes to the financial statements continued annual report 2008 aricom plc
103
the following deﬁnitions apply throughout this report unless the 
context requires otherwise
‘aricom’ or the ‘company’ – aricom plc andor where applicable 
other members of the group
‘aricom securities’ – shares andor warrants
‘aricom uk’ – aricom uk limited a wholly owned uk subsidiary of 
the company
‘bam railway’ – baikal amur railway
‘board’ – the board of directors of the company
‘bolshoi seym’ – an iron ore and ilmenite deposit located in the 
tyndinskiy district of the amur region in which the company has 
an indirect 49  interest
‘chinalco’ – aluminium corporation of china
‘combined code’ – the combined code on corporate 
governance
‘dalgeophysica’ – russian state geological consultancy company 
fggup dalgeophysica aricom drilling exploration subcontractor
‘eao’ – evreyskaya avtonomnaya oblast in russia
‘ebt’ – employee beneﬁt trust
‘fas’ – the russian federal antimonopoly service
‘fe’ – iron
‘garinsky’ or ‘ggmk’ – llc garinsky mining  metallurgical 
complex formerly llc amurmining
‘garinskoye’ – an iron ore deposit ﬁeld situated in the mazanovsky 
administrative district in the amur region in russia’s far east
‘giproruda’ – ojsc institute for engineering of ore mining 
enterprises giproruda a russian engineering company a 
subsidiary of the company
‘gkz’ – state committee for reserves and resources of the 
russian federation
‘ifc’ – international finance corporation
‘ilmenite’ – a black or dark brown mineral which is a major 
source of titanium and used as a feedstock for the production 
of titanium dioxide
‘jorc’ – the australian code for reporting exploration results 
mineral resources and ore reserves 2004 version
‘ks’ – the kimkanskoye and sutaraskoye iron ore deposits ﬁeld 
located in the eao in the southwestern part of russia’s far east
‘kapstroy’ – llc kapstroy a subsidiary of phm
‘kimkanskoye’ – an iron ore deposit ﬁeld located in the 
obluchenski district of the eao in the southwestern part 
of russia’s far east constituting part of ks
‘ks gok’ – llc kimkanosutarskiy gornoobogatitelniy kombinat
‘kuranakh’ – titanomagnetite deposit ﬁeld located in the tynda 
district of the amur region in russia’s far east
‘kuranakh mine’ – the kuranakh titanomagnetite deposit the 
licence to develop which is held by llc olekminsky rudnik
‘kv’ – kilovolts
‘lapwing’ – lapwing limited
‘lse’ – london stock exchange
‘ltip’ – long term incentive plan
‘llc aricom’ – llc aricom a whollyowned russian subsidiary of 
aricom plc
‘magnetite’ – a ferromagnetic material form of iron oxide which is 
a valuable source of iron ore
‘mt’ – million tonnes
‘mtpa’ – million tonnes per annum
‘ojsc’ – open joint stock company
‘olekminsky rudnik’ – llc olekminsky rudnik a russian company 
which is an indirect wholly owned subsidiary of the company
‘olis’ – olis constructions limited
‘ovos’ – the russian equivalent of an environment impact 
assessment report
‘philotus’ – philotus holdings limited
‘phm’ – peter hambro mining plc
‘phme’ – peter hambro mining engineering a subsidiary of phm
‘sutarskoye’ – an iron ore deposit ﬁeld located in the obluchenski 
district of the eao in the southwestern part of russia’s far east 
constituting part of ks
‘t’ – tonnes
‘tio
2
’ – titanium dioxide
‘tpa’ – tonnes per annum
‘units’ – units each comprising 3 ordinary shares and 1 warrant 
issued pursuant to the 2007 placing
‘uralmining’ – llc uralmining a russian company which won the 
auction for and has been issued the licence to exploit the bolshoi 
seym titanomagnetite ore deposit
‘wai’ – wardell armstrong international ltd mining mineral and 
alternative energy consultants
all references in this document to laws and regulations are to 
english laws and regulations unless otherwise stated or as the 
context otherwise requires unless otherwise stated references to 
categories of reserves and resources are to russian categories of 
reserves and resources
all references to reserves and resources capital expenditure loans 
and valuations in this document are to 100 thereof unless 
otherwise stated notwithstanding that in certain cases the group’s 
percentage interest may be less than this
deﬁnitions and glossary of technical terms
group overview
business review
corporate governance
financial statements annual report 2008 aricom plc
104
directors and advisers
directors
dr pavel maslovskiy
chairman
mr peter hambro
nonexecutive deputy chairman
mr jay hambro
chief executive ofﬁcer
mr brian egan
chief financial ofﬁcer
mr yuri makarov
operations director
mr martin smith
technical director
sir malcolm field
senior nonexecutive director
sir roderic lyne
nonexecutive director
tony redman
nonexecutive director
company secretary and registered ofﬁce
heather williams fcis
1011 grosvenor place
london 
sw1x 7hh
registered number
4897906
principal place of business
1011 grosvenor place
london 
sw1x 7hh
joint brokers
canaccord adams limited
cardinal place
80 victoria street
london
sw1e 5jl
jpmorgan cazenove limited
20 moorgate
london
ec2r 6da
auditors
deloitte llp
2 new street square
london
ec4a 3bz
bankers
the royal bank of scotland
119121 victoria street
london 
sw1e 6ra
solicitors
norton rose llp
3 more london riverside
london
se1 2aq
registrars
capita registrars
northern house
woodsome park
fenay bridge
huddersﬁeld
west yorkshire
hd8 0la  wwwaricomplcuk
1011 grosvenor place
london sw1x 7hh
t 44 020 7201 8939
f 44 020 7201 8938


Summary:
 annual report 2008 aricom plc
11
group overview
business review
corporate governance
financial statements
chief executive ofﬁcer’s review
capturing value by vertical integration
with all aricom projects we have explored the potential to 
move up the value chain into downstream processing in order 
to maximise the return the most advanced area in which we are 
addressing this capture of further value is the joint venture with 
chinalco to process kuranakh’s ilmenite into titanium sponge 
during 2008 the two parties ﬁnalised the joint venture agreement 
and entered into the ﬁrst stage of construction  
in addition our largest vertical integration project is our plan to 
upgrade our iron ore concentrate to direct reduced iron using 
the itmk3 process owned by kobe steel with whom we are in 
discussions this high valueadded product is in considerable 
demand in the local market and we are also in discussions with a 
number of potential construction partners
another area in which we have moved away from direct mining 
operations to utilise our current portfolio of assets and the 
availability of local expertise is the inhouse mining engineering 
institute giproruda the 163 specialists employed by girproruda 
carry out work on both aricom and third party projects and 
generate a proﬁt line for the group as well as aiding our internal 
analytical process  
balance sheet
aricom enters 2009 with a cash balance of us257 million and no 
debt  cash management has become a priority during the year 
and we have tried to maintain both a diversity of low risk banking 
exposure and blend of dollar and rouble deposits this has resulted 
in a relatively low return on investment and foreign exchange losses 
due to the weakening rouble
cash conservation is a priority for the group and a macro review of 
budgets and capital expenditure is in place all project decisions 
are under review pending funding progress
outlook
particularly in this market i would draw shareholders’ attention 
to the risk section contained in this report however i share my 
chairman’s cautious optimism in believing that aricom begins  
2009 well placed with strong mining assets a strong cash balance 
and a growing human resource i would like to thank everyone 
within the aricom group for all their hard work and i am conﬁdent 
that we can achieve our targets for 2009 and will continue to unlock 
shareholder value
jay hambro
chief executive ofﬁcer
the year in review saw aricom make signiﬁcant progress at key 
stages of project development and despite the weakened 
commodity markets the potential for our portfolio of assets to 
deliver long term shareholder value remains in place the key  
to unlocking this value is suitable funding
value creation in the mining portfolio
kuranakh advanced from mining to ﬁrst production during the year 
and despite signiﬁcant delays we are now seeing good progress 
at the olekma beneﬁciation plant with commissioning expected in 
the second half of 2009 the successful sales of preconcentrate 
demonstrated our logistics division’s ability to deliver to market 
whilst the crushing and screening plant is now capable of operating 
at a capacity of 1mtpa
aricom’s full feasibility study the results of which were published 
in october proved the value and viability of the ks project and 
was then independently reviewed for the beneﬁt of potential 
project ﬁnanciers the mine plan shows a life of 40 years on current 
reserves at an average mining rate of 10mtpa construction work 
on basic infrastructure at site has commenced and good progress 
is being made on relevant permitting and approvals
at garinskoye conﬁrmation drilling has been completed resulting 
in a proven minelife of 25 years at 10mtpa the initial capital outlay 
at garinskoye has been minimised by reducing the initial scope of 
operations at site to a mining crushing and screening facility the 
resultant preconcentrate would then be transported to the ks 
project where it would be blended with ks ore to generate a 65 
concentrate the study also shows a pleasing correlation of russian 
reserve estimates to the internationally accepted jorc standard  
the announcement of our combined feasibility study coincided 
with the initial peak in concerns on global credit markets and hence 
we have now reviewed further optimisations to reduce signiﬁcantly 
external funding requirements  
growth by acquisition
value accretive acquisitions remain an integral element of aricom’s 
growth strategy and during 2008 aricom acquired strategic 
extensions to both the ks and garinskoye projects although the 
potential investment return from these acquisitions is long term 
the size of the resource acquired lifts garinskoye and ks to a size 
that is equivalent to a tier 1 world class project annual report 2008 aricom plc
12
business review
aricom’s ﬂeet of volvo trucks at kuranakh annual report 2008 aricom plc
13
corporate governance
financial statements
group overview
business review