aricom plc
annual report and accounts
2004
1011 grosvenor place
london 
sw1x 7hh
t 44 0207 201 8939
f 44 0207 201 8938
w wwwaricomplcuk
aricom plc annual report and accounts 2004 aricom was founded to exploit the
china and russia tio 2 opportunity 
the group is developing two stand
alone projects that will ultimately
combine to form a lowcost vertically
integrated titanium dioxide production
and marketing business focused on 
the highgrowth markets of china 
and russia
the first of these projects is a mining
and beneficiation operation based 
on the kuranakh deposit in the far 
east of russia producing ilmenite
concentrate and iron ore in the 
form of titanomagnetite concentrate
the second project is the construction 
of a 7000080000tpa titanium dioxide
processing plant which will source 
its ilmenite feedstock from kuranakh
and sell final tio 2 products to the paint
plastics and paper sectors in china 
and russia
the group’ s planned operations are 
in the amur region in the far east of
russia close to the key chinese market
aricom a future lowcost
vertically integrated
producer of highquality
titanium dioxide serving 
highgrowth markets in
china and russia
aricom plc annual report and accounts 2004
directors
sir malcolm field
chairman
tom swithenbank 
chief executive officer
peter howes
finance director
yuri makarov
executive director
peter hambro
nonexecutive director
pavel maslovsky
nonexecutive director
company secretary and
registered office
anna karolina subczynska
1011 grosvenor place
london 
sw1x 7hh
registered number
4897906
principal place of business
1011 grosvenor place
london 
sw1x 7hh
auditors
deloitte  t ouche llp
hill house
1 little new street
london
ec4a 3tr
bankers
the royal bank of scotland
119121 victoria street
london 
sw1e 6ra
solicitors
norton rose
kempson house
camomile street
london
ec3a 7an
nominated advisers 
and brokers
canaccord capital europe limited
27 upper brook street
london
w1k 7qf contents
01 operational highlights
02 chairman’s statement
04 aricom at a glance
06 chief executive’s review
14 finance director’s review
16 board of directors
17 director’s report
18 statement of directors’ responsibilities
18 corporate governance
19 independent auditor’s report 
20 consolidated profit and loss account
21 consolidated balance sheet
22 company balance sheet
23 consolidated cash flow statement
24 notes to the financial statements
operational highlights
phase 1 of feasibility study on technical and economic
feasibility of a tio 2 business in russia completed by
ferrostaal with technical input from sachtleben
completed russian prefeasibility studies on the
mining and beneficiation operations at kuranakh 
and olekma
confirmation of the economic presence of 
iron ore in the form of titanomagnetite at the 
kuranakh deposit
indications of the presence of gold and zircon 
at kuranakh
offtake agreements signed for the future sale of
aricom’ s mine products 
placing of 3825m shares completed in march 2005
raising approximately us20m us18m net of costs
p 1 aricom plc annual report and accounts 2004 p 2 aricom plc annual report and accounts 2004
chairman ’s
statement 
future strategy
in november 2004 we announced that
following extensive research studies
during 2004 we have been able to confirm
not only the market opportunity described
in the aim admission document in
december 2003 but also that there is
substantial potential for us to fulfil our
vision of becoming a vertically integrated
tio 2 producer 
the future strategic direction for aricom
is to be delivered in two stages
• the construction and development of
the mining operation at kuranakh and
the beneficiation plant at olekma
• the construction of a processing plant
to produce 7000080000 tonnes per
annum of tio 2 pigment
tom swithenbank our chief executive
officer provides details of delivery of
these plans in his ceos report when
both of these stages are completed we
will have unlocked the benefits of being 
a vertically integrated tio 2 producer 
the cash expenditure during 2004 is
described by peter howes our finance
director in his report it has been a year
mainly of investment expenditure on the
future direction of the group since the
year end we have completed a successful
placing of 3825 million shares at 28p
raising approximately us20 million
us18 million net of expenses providing
cash facilities to complete the technical
and economic feasibility study for the
mining project and to undertake certain
preparatory works at olekma and
kuranakh in addition to funding ongoing
operational expenditure for the group
through to the first quarter of 2006
dear shareholder  
it is a great pleasure to present our
first annual report and accounts
covering the progress we have
made during the period from
september 2003 to december
2004 2004 has been a busy year
for the management of aricom as
it has sought to lay the foundations
for the transformation of the
company into a fully fledged
operating entity 
sir malcolm field
chairman p 3 aricom plc annual report and accounts 2004
anglorussian partnership
the strong links with peter hambro
mining plc and its considerable
experience and operational success in 
the far east of russia is helping aricom
to establish a strong anglorussian
partnership which is essential to our
future success  
we are building a strong management
team in both the uk and russia during
the year we were delighted to welcome 
to the board mr yuri makarov who is
responsible for developing and managing
our mining operation
aricom values
we are establishing a valuebased culture
founded on safe work practices for our
employees and conducting business in a
sustainable socially and environmentally
responsible way we want our employees
to experience the personal satisfaction
that comes with high performance and
recognition we want our shareholders
to realise superior returns on their
investment and to know their company
operates best practice corporate
governance this is the culture we
intend to create across this young and
growing company
future investment
the successful fundraising of
approximately us20m us18m net 
of expenses completed in march 2005
will enable us to fund the next stages of
developing the mine at the kuranakh
deposit and part of the construction at 
the mine site of a beneficiation plant 
the completion of this work is currently
intended to be funded by further equity
andor debt financing to be sought later
this year 
we are most grateful for the support of
our shareholders and thank you for the
confidence you have shown in us
sir malcolm field
chairman
market positioning
aricoms plan is to become a lowcost
vertically integrated producer of high
quality tio 2 serving the highgrowth
markets of russia and china we 
are encouraged by the planning and
development work we have undertaken
on the mining programme we are
enthusiastic about its potential to provide
goodquality ilmenite ore and iron 
ore in the form of titanomagnetite the
presence of iron ore has substantially
changed the economics of the mining
project with indicated returns exceeding
managements original expectations we
are very enthusiastic about the prospects
for the mine as a profitable and cash
generative business particulary given 
the recently announced price increases 
in excess of 70 for existing iron ore
producers the recent discovery of gold 
and zircon albeit not yet quantified 
could offer another potential source 
of substantial revenue our plan for 
the mining operation as a standalone
operation should provide good returns 
to investors and will be an important
source of competitive advantage to our
tio 2 processing operation
the key foundations for the establishment
of a vertically integrated lowcost producer
of high quality tio 2 are being put in place
and will be developed further in 2005
they cover the mine located at olekma
close to the chinese border the
favourable findings from our geological
studies regarding our products the
suggested location of our tio 2 processing
plant at tynda and the further development
of our whollyowned marketing and
distribution company chemelt
we have yet to finalise arrangements 
with a technology licence provider for 
our processing plant but i am pleased to
report we are continuing our discussions
with a number of very interested parties
and expect to conclude a deal over the
course of the coming year 
we remain confident with our assumptions
of continuing strong growth in both
the russian and chinese markets and
increasing demand for our products
work completed in 2004
• review by dalgeofizika of the
historical work carried out on the
resource base at kuranakh
• detailed exploration of zone 3 of
the saikta deposit at kuranakh 
by dalgeofizika
• mine plan by gornoobogatitelni
t echnologies for the exploitation of
zone 3 of the saikta deposit
• economic plan on the development
of zone 3 by vnipiprom t echnology
• hydrogeological study by gidek
• study on the appropriate technology
for the beneficiation of ilmenite and
titanomagnetite ore at kuranakh 
by vims 
• study on the technological properties
and concentration of titanomagnetite
ore from kuranakh by dvims 
• study on the suitability of kuranakh
ore for the production of titano
magnetite and ilmenite concentrates
by studiengesellschaft für
eisenerzaufbereitung
“since the year end we
undertook a successful
fundraising of us20m
us18m net of expenses”
sir malcolm field p 4 aricom plc annual report and accounts 2004
aricom at
a glance
the amur region is located in the far east 
of russia on the border with china locating
aricom’s operations in amur allows the
group to benefit both from the cost
advantages of locating in russia as well 
as from the proximity to its key intended
markets russia and china thus reducing
the costs of transporting the final product 
to the end customers these should allow
aricom to be cost competitive in its 
chosen markets
the market
we work in
the aricom plan
aricom
locations
vertical integration
traditionally the tio2 feedstock and
production sectors have been distinct
from one another with tio2 producers 
in america for example often sourcing
their raw material in africa or australia
aricom is proposing to bridge this gap
by becoming a verticallyintegrated
producer of titanium dioxide producing
ilmenite feedstock from its proposed
mine at kuranakh to feed its intended
tio2 processing plant a site for which
has been identified at tynda the
proximity of the operations to one
another minimises transportation 
costs and should ensure a ready 
supply of raw material
mining 
beneficiation
producing feedstock for aricom’s planned
tio2 processing operations and iron ore 
for the iron and steel industries
processing
producing highquality titanium dioxide at
low cost for sale into china and russia
marketing
to manage the sales of aricom’s 
future production of tio2
aricom operation 
titanium dioxide is a white pigment used 
primarily in the paints plastics and paper
industries the global titanium dioxide market
generates approximately us8bn of annual sales
based on the production of 45m tonnes per year 
following a wave of consolidation in the 1990s 
the top five producers hold 73 of global
production capacity with 75 of total capacity
located in north america and western europe 
whilst the markets in western europe and 
north america are deemed to be mature the
developing markets of russia and china are
seeing very attractive growth in tio 2 consumption
these are the markets that aricom is focusing on p 5 aricom plc annual report and accounts 2004
tio 2 processing products
titanium dioxide pigment
end user info
paints
plastics 
paper
a proposed mining and beneficiation operation based at kuranakh in the amur region
producing 240000tpa of ilmenite concentrate and 660000tpa of iron ore in the form of
titanomagnetite concentrate based on the annual extraction of 22mtpa of ore the
ilmenite concentrate is to feed aricom’s proposed titanium dioxide processing plant 
the titanomagnetite concentrate a form of iron ore is to be sold to chinese clients 
two conditional offtake agreements have been signed for the sale to china national gold
corporation of a minimum of 3300000 tonnes of titanomagnetite concentrate and 
360000 tonnes of ilmenite concentrate once the mine comes on stream the presence of
gold and zircon has also been indicated in the tailings of the beneficiation process and
additional work has been commissioned to ascertain the economic viability of extracting
these two products
aricom is proposing to build a 7000080000tpa titanium dioxide processing plant in the amur
region a prefeasibility study carried out by ferrostaal ag the german engineering company
with technical input from sachtleben the german titanium dioxide producer has shown the
economic and technical feasibility of the project the company is currently in discussions with
a number of parties regarding the provision of technology for the production of tio2 the plant
is intended to produce a highquality pigment at low cost for sale into the markets of china
and russia
4q07
current
aricom intends to focus its sales of tio2 into the markets of china and russia 
a whollyowned trading and distribution company chemelt was established in 
moscow in 2002 which currently trades third party titanium dioxide products in 
the russian market chemelt has been posting encouraging growth and is 
laying the foundations of aricom’s distribution network in russia for the sale 
of its intended future production of titanium dioxide
business activity products expected start of production
4q08
ti02 global market
1dupont 22
2millenium 15
3 kerr mcgee 13
4huntsman 13
5kronos 10
6isk 5
7kemira 3
8 others 19
 us8bn market
45m tpa tio2 production
 t op 5 producers hold 73 
of the global market
 75 production capacity in 
weurope and namerica
 tightly held technology
 china and russia seeing high 
growth in tio2 consumption
mining
kuranakh is located 35kms from the
settlement of olekma which is on
the baikal amur magistral bam
railway  it is this proximity to a key
russian rail line which allows mine
products to be moved economically
processing
a site has been identified for the
location of the tio2 processing plant
at tynda which is situated 440kms
from olekma via the bam railway
tynda has a population of 45000 
and offers the amenities and 
access to labour water and 
energy required for the successful
operation of a processing plant
marketing
chemelt operates from moscow
serving a russian client base its
location allows it to access the most
important russian clients which 
are principally located in european
russia it also maintains links with
its key suppliers in ukraine saudi
arabia and israel
–– ––– – 1
–– ––– – 2
–– ––– – 3 4–– ––– –
6–– ––– –
7–– ––– –
8–– ––– –
5–– ––– –
mine products
ilmenite concentrate 
titanomagnetite
concentrate iron ore
possible coproducts
zircon
goldcontaining ores
possible coproducts
copperas
gypsum p 6 aricom plc annual report and accounts 2004
chief
executive’s
r eview 
i am pleased to
report on aricom’s first
year of development
towards becoming
a lowcost vertically
integrated producer
of highquality titanium
dioxide to serve the
markets of russia
and china
tom swithenbank
chief executive
the market opportunity
titanium dioxide is a “quality of life”
product – as people become wealthier
the appearance of the products they 
use becomes more important and
consumption of tio 2 increases
commensurately this is particularly
relevant to us as we address developing
markets where we are witnessing the
rapid growth of a middle class such as
russia and china
this is one of the key reasons why aricom
intends to focus primarily on the markets
of russia and china these markets have
posted strong economic growth over
recent years and we believe we have
identified a real opportunity to participate
in that growth 
per capita consumption of titanium
dioxide in russia and china is very low
compared to levels in the developed
markets we estimate per capita
consumption in russia to be around 04kg
per capita and in china around 035kg per
capita us and western european per
capita consumption of titanium dioxide
are respectively 40kg and 26kg
suggesting that there is a considerable
consumption gap to bridge whilst we 
do not believe that per capita consumption
in these markets will attain us or 
even western european levels anytime
soon we do see considerable growth
opportunities for this product in both 
of these countries 
this is clearly reflected in the growth
statistics available to us between 1997
and 2002 tio 2 consumption in china grew
by 219 per annum on a compound
basis the equivalent figure in russia was
139 in both instances titanium dioxide
consumption growth exceeded general
economic growth measured by gdp
suggesting that titanium dioxide provides
an ideal vehicle to gain leveraged
exposure to the growth of both of these
dynamic economies
the size of the markets in russia and
china are estimated at 70000tpa and
450000tpa respectively titanium dioxide
is not currently produced on an industrial
scale in russia and users of the product
import almost 100 of their needs the
ukrainian producers gak titan and ooo
sumikhimprom are traditionally the most
important suppliers of tio 2 to the russian
market in china the domestic production
base is fragmented amongst numerous
small and inefficient producers of lower
grade pigments 
since the admission to trading of aricom’s
shares on the london stock exchange’s
aim market in december 2003 and the
associated acquisition of peter hambro
mining group’s titanium assets we have
been working hard to lay the foundations 
of our business 
an important step was achieved in march
2005 with the successful placing of an
additional 3825 million shares with
investors in the uk and europe which
raised approximately us20 million
us18m net of expenses to fund the
next stage of our development these
funds will be used to initiate the
construction of the mining and
beneficiation operations at olekma 
and kuranakh and to provide the 
group with working capital
aricom looks to the success of peter
hambro mining plc as a model for its own
development combining skills available
both in russia and the uk to create a 
true anglorussian partnership during
the last year the company formed an
operating subsidiary ooo aricom 
which is located in russia and headed 
by yuri makarov who is primarily
responsible for managing aricom’s
mining and marketing operations 
in russia 
what is titanium dioxide
when most people think of titanium 
they do so in its metallic form in fact 
over 90 of titanium feedstock is
processed into titanium dioxide tio 2 
a white pigment used extensively in the
paints plastics and paper industries as
well as in a host of other products such
as pharmaceuticals and cosmetics 
it is its hiding power – its ability to mask
other colours – that makes it a prime
ingredient for paints and other coatings 
it is valued in the paper industry where
“showthrough” needs to be minimised
and in plastics where tio 2 is used
to cover up the translucency of the
base resin p 7 aricom plc annual report and accounts 2004
promising profitable and cashgenerative
mining project in addition indications
were received in the final quarter on 
the possible presence of gold and zircon
in the tailings from the beneficiation
process we are currently working to
ascertain how much of each element may
be available at the deposit and how best
to extract each of them from the tailings
it is on the basis of these positive findings
that management has developed a two
stage approach to the overall project we
are aggressively pursuing the development
of the mine and beneficiation operations
which represent the first stage of the
project and look forward to achieving
positive operating cash flows from 
late 2007 
concurrent to this we are developing 
the plan for the construction of the
processing plant which forms the 
second stage of aricom’s development
programme one of the key elements 
of this second stage is the choice of
technology to be used to produce titanium
dioxide aricom has received a technology
proposal and is in discussions with a
number of other parties for technology
licensing these discussions are expected
to be concluded during 2005 at which
point the design phase of the plan will 
be initiated this phase is expected to 
last 912 months subject to obtaining 
the required funding construction of 
the processing plant is expected to be
initiated in 2006 so production can
commence in late 2008 at which point
aricom would reach its objective of
becoming a verticallyintegrated producer
of titanium dioxide 
gak titan
aricom continues to express an interest 
in participating in a joint venture with 
gak titan the ukrainian tio 2 producer 
aricom previously held an option to
acquire occidental titanium company
ltd an english company which based 
on a memorandum of understanding 
was intended to be a participant in 
a proposed joint venture with gak 
titan the proposal was and remains
interesting to the management of 
aricom as it would open up a further
opportunity to capture a share of the
regional tio 2 pigment markets however 
a lack of clarity and a substantial 
increase in the political risk ahead of 
the presidential elections in ukraine
resulted in no action being taken by
aricom in relation to these arrangements
we are currently considering the situation
in light of the election of president
yushchenko in january 2005 
a proprietary study we commissioned in
2004 indicates that 54 of tio 2 demand in
china is now imported three quarters of
global tio 2 production capacity is located
in the traditional markets of western
europe and north america yet the highest
growth market is in china if current
growth rates are maintained china will
surpass the us as the largest market 
for tio 2 within a decade but concerns 
over technology leakage and the difficult
operating environment in china have
dissuaded major producers of tio 2 from
locating production in the market itself
we believe that this reluctance by the
majors to move aggressively to satisfy
chinese demand has created an
opportunity for aricom
the plan
by locating our operations in russia’s
amur region we can develop a
production facility to serve both the
chinese and the russian markets 
the ability to produce tio 2 cost effectively
is key to the success of the project
allowing us to price competitively relative
to imported materials locating in russia
should allow us to operate more cost
effectively than many other players in the
market and by being in or close to the
markets we wish to serve we can reduce
the cost of transportation to the end user 
by producing our own feedstock we 
should be in a position to acquire 
the key raw material for the production 
of tio 2 at a lower cost and more reliably
than buying it from third parties the
construction of a modern plant should
also allow us to maximise cost efficiency
by designing from new
the aricom project is composed of three
parts mining processing and marketing
together providing the intended vertical
integration the mining operations based
on the ilmenite deposit at kuranakh 
are to supply the ilmenite feedstock to 
the planned titanium dioxide processing 
plant a suitable site for the plant has
been identified in tynda also in the 
amur region the final products are 
to be supplied to end users through a
marketing operation founded on the
current activities of chemelt aricom’s
wholly owned titanium dioxide trading
company based in moscow 
work carried out over 2004 on the
economic presence of iron ore in the
form of titanomagnetite at the deposit 
at kuranakh suggests that aricom can
develop a mining operation which will 
not only produce ilmenite feedstock 
for a tio 2 processing plant but also
titanomagnetite concentrate for sale to
third parties these findings point to a
tio 2 supply and demand in china
and russia vs gdp growth
cagr 1997  2000
china
russia
00 50 100 155 200 250
450000tpa
70000tpa
•
tio2 consumption growth
•
gdp growth
per capita tio 2 
consumption kg 2000
exsoviet
republics
north 
africa
eastern 
europe
east asia
western
europe
north
america
01 2 3 4 5 p 8 aricom plc annual report and accounts 2004
phase 1 the kuranakh mine
we are proposing to develop 
an openpit mining operation 
at kuranakh and construct a
beneficiation plant at the mine 
site to produce the concentrates 
of ilmenite and titanomagnetite
chief 
executive’s 
r eview
continued
mining p 9 aricom plc annual report and accounts 2004
mining
olekminsky rudnik a 74 owned
subsidiary of aricom plc holds an
exploration and mineral licence to develop
the ilmenitetitanomagnetite deposit at
kuranakh in the north west of the amur
region in the far east of russia the
licence extends to 2027 the deposit is
situated on the north western flank of the
kalarskiy massive approximately 35km
from the settlement of olekma crucially
olekma is on the baikal amur magistral
bam the railway which links to the
russian eastern seaboard as well as to
the transsiberian railway and into china
and western russia this railway will be
used to transport the mine products to
the proposed titanium dioxide processing
plant and to third party consumers
aricom is proposing to develop an open
pit mining operation at kuranakh and
construct a beneficiation plant at the 
mine site to produce the concentrates 
of ilmenite and titanomagnetite as well 
as a transfer station and living quarters 
at olekma a road and electricity
transmission line will also be laid to link
the mine and olekma a business plan
prepared by vnipiprom points to a capital
cost of us56 million to develop mining
operations capable of extracting 22
million tonnes per annum of ore and
processing these into 240000 tonnes 
per annum of ilmenite concentrate and
660000 tonnes per annum of iron ore in
the form of titanomagnetite concentrate
based on these target production rates
the cash costs are currently estimated at
us24 per tonne of ilmenite concentrate
and us13 per tonne of titanomagnetite
concentrate the recently announced
price increases in excess of 70 for
existing iron ore producers confirm our
enthusiasm for the prospects for the 
mine as a profitable and cashgenerative
business the completion of the placing 
in march 2005 raising approximately
us20 million before expenses 
has allowed aricom to initiate the
development of these operations the
remaining capital costs of the project 
will require further funding
the beneficiation process is being
developed by two related russian
institutes vims and dvims based on
widely available technology which is 
being adapted to suit the characteristics
of the kuranakh ore the technology to 
be used is wellproven and the mining
and beneficiation operations are being
designed to operate all year round it 
was a prerequisite for the viability of the
proposed project that the quality of the
ilmenite concentrate to be produced
through the beneficiation process would
be suitable for the production of tio 2 
expected products
ilmenite concentrate
titanomagnetite concentrate
possible coproducts
zircon
gold
beneficiation process
the beneficiation process is being
developed by the russian institute vims
based on wellknown technology  the
process will be capable of being run 
yearround
mining operations
primary dry
separation
crushing grinding
classification
wet magnetic
separation
grinding
gravity separation
drying
electric separation
ilmenite concentrate
overburden
titanomagnetite
concentrate
tailings
goldzircon
a study by the specialist german ore
research centre studiengesellschaft 
für eisenerzaufbereitung and tests by
sachtleben gmbh have confirmed that
the ore can be processed into a feedstock
suitable for tio 2 production
tests on samples from the tailings from
the beneficiation works have shown that
gold and zircon may also be present 
at the kuranakh deposit if these are
confirmed to be available in economic
quantities this could add to the projected
revenues from aricom’s mining business
additional costs of extraction could be 
low given that both elements are already
concentrated into the tailings of the
beneficiation process further work has
been commissioned to investigate the
resources available and the potential
costs of extraction 
the kuranakh licence area covers three
major ore zones called saikta baltylakh
and saibalakh most of the work carried
out so far has been on the ore zones in
the saikta deposit which is made up of a
series of at least eight discrete ore bodies
exploration on saikta was initiated in 
1982 by soviet state geological institutes
and has been continued by aricom 
over the course of the past 18 months
dalgeofizika one of the independent
russian research institutes working with
aricom has completed a review of the
exploration works carried out to date and
has concluded that aricom has sufficient
reserves under the russian reserves
classification system to last for an initial
16 years of production at 22m tonnes per
annum of ore extraction the estimated
resource base yields sufficient resources
for at least 50 years of production at the
same target production levels
a fiveyear exploration plan for the
kuranakh licence area has been
developed to extend the proven reserves
and resources available to the group 
for future production
wardell armstrong international the uk
based energy and minerals consultant
has completed a technical review of the
geological work carried out to date as
well as the proposed mine plan and
beneficiation process and have confirmed
that they support the conclusions drawn
to date
aricom’s mining and beneficiation
operations are expected to come into
production in late 2007 conditional
offtake agreements were signed in
january 2005 with china national gold
corporation these agreements are
described in the marketing section of 
this report
ore outcrop at kuranakh p 10 aricom plc annual report and accounts 2004
phase 2 the tio
2
processing plant
the plant will be designed to produce
high quality pigments for domestic 
and export markets with a focus on
russia and china
processing
chief 
executive’s 
r eview
continued p 11 aricom plc annual report and accounts 2004
technology from existing producers and 
is currently in discussions with a number
of parties regarding the licensing of such
technology the group has an offer in
place but is considering all options before
reaching a final decision on technology
we believe that this is an area where 
we will be fully rewarded for taking 
the appropriate time to conclude the 
best agreement
a suitable site has been identified for 
the location of the processing plant at
tynda 440kms on the bam railway from
olekma this direct rail link between 
the mine and the processing plant should
allow the cost effective transport of
feedstock tynda is a town with a
population of 45000 and offers the
amenities and infrastructure required for
the operation of a plant of this nature and
size the local authorities are keen to
attract investment into the area and are
assisting aricom with its plans
processing
the second stage of aricom’s strategy
involves the construction of a 70000
80000 tonnes per annum titanium dioxide
processing plant it is intended that the
plant will be designed to produce high
quality pigments for domestic and 
export markets with a focus on russia
and china
the first phase of a bankable feasibility
study was completed in december 2003
by the german engineering company
ferrostaal ag with technical input from
the german titanium dioxide producer
sachtleben gmbh this concluded that
the development of a verticallyintegrated
titanium dioxide project was technically
and economically feasible in the amur
region based on the production of
ilmenite concentrate at kuranakh 
the plan originally envisaged the
development of a 50000 tonne per 
annum plant with a view to a subsequent
doubling of capacity discussions with
ferrostaal have led to the conclusion 
that an initial 7000080000 tonnes of
annual capacity would be equally feasible
and this now forms the basis of aricom’s
plans for the processing plant 
the global tio 2 production sector is highly
concentrated with the top 5 producers
representing 73 of global capacity and
the restricted availability of technology is
one of the key barriers for new entrants
into the tio 2 sector  aricom is seeking to
acquire sulphate route production
sulphate process
ilmenite
digestion
hydrolysis
heat
filtration
clarification
wet grinding
coating
dry grinding
dry grinding
crystallisation
cool
sulphuric acid
ti0 2 rutile or anatase grade
reduction
calcination
ti0s0 4 solution
uncoated ti0 2 pigment
coating materials
finished ti0 2 pigment
copperas
fes0 47h 20
scrap iron
nuclei p 12 aricom plc annual report and accounts 2004
chemelt 
chemelt aricom plc’s whollyowned
titanium dioxide trading company 
was established in 2002 to test the
market for titanium dioxide in russia 
mark eting
chief 
executive’s 
r eview
continued p 13 aricom plc annual report and accounts 2004
chemelt’s role is an important one 
as whilst developing into a successful
business in its own right it is laying 
the foundations and establishing the
relationships that aricom will require
when it looks to distribute its own
titanium dioxide products in the russian
market we are very pleased with the
progress the company is making
aricom is currently examining its options
for distribution into china clearly this is
an important step for the group and is
potentially related to the licensing route
that the group ultimately chooses 
we intend to develop our distribution
strategy for china over the course of 2005 
aricom has also been active in marketing
the products it expects to produce from 
its mining and benefication operations 
at kuranakh aricom’s subsidiary ooo
aricom signed two conditional offtake
agreements in january 2005 with china
national gold corporation a group
headquartered in beijing with substantial
interests in gold mining international
minerals trading and engineering
contracting these agreements provide
for ooo aricom to supply china national
gold corporation a total of a least 360000
tonnes of ilmenite concentrate over one
and a half years and at least 3300000
tonnes of titanomagnetite concentrate
over five years the agreements will 
come into effect once aricom secures 
the required financing to complete its
kuranakh mining project and deliveries
are scheduled to start in late 2007 
when the planned mining operations 
are expected to come on stream it is
intended that all of the production of the
planned kuranakh mine will be supplied
to china national gold corporation for 
the life of these agreements the shorter
duration of the ilmenite contract reflects
aricom’s objective to establish its own tio 2
plant to which the ilmenite would be
supplied once it becomes operational
marketing
chemelt aricom plc’s whollyowned
titanium dioxide trading company was
established in 2002 to test the market for
titanium dioxide in russia
by becoming actively involved in the
market aricom has been able to develop
an understanding of the dynamics and
practices of the market not only in russia
but also in the wider global arena 
the russian market has been
traditionally dominated by the ukrainian
producers the historic source of tio 2
under the soviet system it is for this
same historic reason that russia has 
no domestic production of titanium
dioxide on an industrial scale forcing
russian consumers to import virtually 
all of their needs although the ukrainian
hold on these markets has been
diminishing in recent years their role
remains important we estimate that 
the ukrainians continue to supply
approximately 60 of russian demand
chemelt has been acting as an official
distributor for gak titan the larger of 
the two ukrainian producers since 2003
and has been appointed as a favoured
partner for 2005 
by representing such an important player
on the russian market chemelt has
successfully increased the penetration 
of its distribution network developing its
client list to 125 over the course of 2004
and increasing its sales by 50 over 
the same period chemelt has been
aggressive in its pricing tactics to gain 
an initial foothold in the russian market
but is expected to break even in 2005
the company has also worked to increase
the range of products it offers to its
customers chemelt has introduced to 
the russian markets the products of
cristal the saudi arabian tio 2 producer
addressing the increasing demand for
higher quality products from its clients 
it is currently exploring the possibility 
of distributing chinese products in 
the russian market and examining
complementary products to sell into 
the russian paints and plastics sectors
paint and plastics producers are the key consumers of ti0 2 p 14 aricom plc annual report and accounts 2004
finance director’s
r eview 
the company was formed 
on 12 september 2003 
these financial statements are 
for the period from formation 
to 31 december 2004
peter howes
finance director
reporting period
the company was formed on 12
september 2003 these financial
statements are for the period from
formation to 31 december 2004 
acquisitions
on 31 december 2003 the company
acquired 100 of the shares in russian
titan company limited “rtc” which on
the same date had acquired 100 of the
shares in ooo chemelt and 74 of the
shares in ooo olekminsky rudnik
the companies were acquired from 
peter hambro mining group
t urnover
group turnover consists of the turnover
from the trading operations of chemelt 
in russia chemelt was acquired on 
31 december 2003 and consolidated from
that date chemelt’s turnover for 2004 is
shown in these financial statements and
represents an increase of 50 over 2003
chemelt’s turnover for 2003 was reported
as us2126000 in the financial
statements of peter hambro mining plc
for the year ended 31 december 2003
titanium dioxide revenues accounted for
90 of turnover with 10 coming from
the sale of other pigments t otal tonnage
of tio 2 sold reached 1947t compared to
1600t in 2003 
results of operations
losses after tax and minority interests
were 4254m which represents a loss
per share of 006  p 15 aricom plc annual report and accounts 2004
t axation
there was a small tax charge for the 
year as the russian operations generated
a tax profit on some transactions no
deferred tax asset has been recognised
balance sheet
total shareholder funds were us23m 
the expenditure on the feasibility studies
for the mine and the intended processing
plant at tynda has been capitalised as has
the cost of geological exploration leading
to an increase in the reserve and resource
base all expenditure of a non capital
nature has been expensed
cash resources and borrowings
the cash and bank balances were
us12m at 31 december 2004 the
balances were held in a mixture of
currencies the net debt position was
us27m
on 17 march 2005 borrowings were
reduced by repaying substantially all of
the peter hambro mining  plc loan
following the placing which was approved
by shareholders on 11 march 2005 funds
and facilities are sufficient to allow the
group to carry on its business for at least
12 months from the date of approval of
these financial statements however in
order to fund the development of the mine
and the processing plant additional funds
will have to be raised during 2005
chemelt broke even at the operating 
level this is a good result which will form
the base for the planned expansion in
2005 as the company builds on the
relationships and contacts it has made 
to convert these into sales 2004 saw an
increase in the working capital needs as
chemelt started to buy in stock from the
middle east and also china to provide
customers in russia with a choice of
products from both sulphate 
and chloride route manufacturers
interest
the group incurred interest charges of
us283000 as a result of debt incurred 
to invest in the purchase of the mine
licence and the development of both 
the mine project and the plans for 
the processing plant
interest of us23000 has been
capitalised to the project exchange gains
on monetary assets totalled us220000
and interest receivable amounted to
us67000 resulting in a net interest
receivable of us27000 in the profit 
and loss account
capital expenditure
capital expenditure during the period 
was us54m including the acquisition 
of the mining licence at kuranakh and 
the bankable feasibility study phase 1 
for the construction of a tio 2
processing plant
net assets
net assets of the group at 31 december
2004 were us28m retained losses for
the period were us43m net debt at 
31 december 2004 was us27m
firm placing and open offer
during the period the company raised 
in aggregate us77m after the balance
sheet date the company raised a further
us20m before expenses through a
placing of 38250000 shares at 28p
which was approved at an egm on 
11 march 2005
currency movements
the group’s main currency exposure 
is to the russian rouble sterling and 
the euro
during the period the rouble appreciated
against the dollar which also weakened
against sterling and the euro
the main us dollar exchange rates at 
31 december 2003 and 31 december 
2004 were
31 december 31 december
2003 2004
us  rouble 2945 2775
sterling  us 17842 19160
euro  us 12597 13538
all of the group’s loans are denominated
in us dollars available cash is put on
deposits of appropriate maturities in the
main operating currencies of the group 
in order to protect against adverse
exchange rate movements
exchange gains from holding euro and
sterling cash during the year offset the
losses from the euro and sterling
liabilities incurred resulting in a net
exchange gain for the period of
us220000 and german from london university’s
school of slavonic and east european
studies peter speaks fluent russian 
and german
04 yuri makarov executive
yuri makarov was appointed to the board
on 26 april 2004 until this appointment
yuri was the adviser to the president of
ojsc pokrovsky rudnik a subsidary 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 the development
of the company’s titanium dioxide
business since 2002 yuri is a qualified
systems engineer from the moscow state
aircraft t echnology institute
05 peter hambro nonexecutive
peter hambro has been executive
chairman of peter hambro mining plc
since 1994 and is a director of ojsc
pokrovsky rudnik peter was fomerly 
a banker and gold trader 
06 pavel maslovsky nonexecutive
pavel maslovsky has been deputy
chairman of peter hambro mining plc
since 1994 and is chairman of ojsc
pokrovsky rudnik pavel was fomerly
assistant professor at moscow state
aircraft t echnology institute
p 16 aricom plc annual report and accounts 2004
board of
directors
01 sir malcolm field chairman
sir malcolm field was formerly chief
executive of wh smith plc retiring in
1996 and a nonexecutive director of
scottish and newcastle mepc the
stationery office and evolution beeson
gregory as well as a number of private
companies he was chairman of the civil
aviation authority caa between 1996
and 2001 and is currently chairman of
tube lines ltd one of the london
underground consortia he is also an
external policy adviser to the department
of transport
02 t om swithenbank  chief executive
tom swithenbank has been active 
as an investor in the central and eastern
european region since 1995 initially as 
a proprietary trader for west merchant
bank and subsequently as an asset
manager for westlb asset management
until 2001 he has also worked as a
consultant advising private equity
investors on eastern european strategy
he has a joint honours bachelor’s degree
in russian and german from durham
university and a masters in finance from
london business school he speaks
fluent russian german and french
03 peter howes finance director
peter howes has over eight years of
experience working and living in russia
and eastern europe initially as an audit
manager and management consultant at
coopers  lybrand and subsequently as
finance director of the latvian operations
of rmc group plc he was divisional
finance director of the uk cement
division of rmc group plc before setting
up his own consultancy company in 2003
predominantly advising large corporations
on internal financial controls and
procedures peter qualified as a chartered
accountant in 1993 having gained a joint
honours bachelor’s degree in russian
01 02 03
04 05 06 report and financial statements
the directors present their report and the audited financial
statements for the period from the date of incorporation 
12 september 2003 to 31 december 2004
principal activity
the principal activity of the group is the development of a vertically
integrated mining processing and marketing titanium dioxide
group based in russia and predominantly serving the russian 
and chinese markets
results review of the business and future prospects
the consolidated profit and loss account is set out on page 20 
the directors’ report should be read in conjunction with the
chairman’ s statement chief executive’ s review and financial
review on pages 2 to 15 which include information about the
group’ s business and performance during the period and an
indication of future prospects
the directors have not recommended a dividend
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 
directors
the directors who held office during the period are set out below
lucienne james limited 
appointed 12 september 2003 resigned 12 september 2003
the company registration agents limited 
appointed 12 september 2003 resigned 12 september 2003
philip w leatham 
appointed 12 september 2003 resigned 12 december 2003
andrey maruta 
appointed 12 september 2003 resigned 12 december 2003
sir malcolm field 
appointed 12 december 2003
tom swithenbank 
appointed 12 december 2003
peter hambro 
appointed 12 december 2003
dr pavel maslovsky 
appointed 12 december 2003
peter howes 
appointed 31 december 2003
yuri makarov 
appointed 26 april 2004
directors’ interests
the beneficial interests of the directors and connected parties in
the share capital of the company as at 31 december 2004 and at
18 march 2005 were as follows
31 dec 04 18 mar 05
ordinary shares of £0001 each
sir malcolm field 500000 500000 
peter hambro 11485461 12135461 
dr  pavel maslovsky 32618730 33268730 
no shares were held by any directors at incorporation other 
than subscriber shares the shares held on 18 march 2005 reflect
holdings post the share placing on 16 march 2005
the directors held no interests in any other group companies
auditors
following incorporation the board of directors initially appointed
moore stephens as the group’ s auditors on 16 october 2003
during the period deloitte  t ouche llp were appointed by the
board to fill a casual vacancy after moore stephens stepped down
a resolution to approve the appointment of deloitte  t ouche llp
and to authorise the directors to fix their remuneration will be
proposed at the forthcoming extraordinary general meeting
signed on behalf of the board
sir malcolm field
chairman
approved by the board on 18 march 2005
director’s report
for the period ended 31 december 2004
p 17 aricom plc annual report and accounts 2004 p 18 aricom plc annual report and accounts 2004
united kingdom company law requires the directors to prepare
financial statements for each financial period which give a true
and fair view of the state of affairs of the company and the group
as at the end of the financial period and of the profit or loss of the
group for that period in preparing those financial statements 
the directors are required to
• select suitable accounting policies and then apply 
them consistently
•make judgements and estimates that are reasonable 
and prudent
•state whether applicable accounting standards have been
followed and
•prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company and
the group will continue in business
the directors are responsible for maintaining proper accounting
records which disclose with reasonable accuracy at any time 
the financial position of the company and the group and enable
them to ensure that the financial statements comply with the
companies act 1985 they are also responsible for the system of
internal control safeguarding the assets of the company and the
group and hence for taking reasonable steps to prevent and detect
fraud and other irregularities
statement of directors’ responsibilities
the directors are aware of the combined code applicable to listed
companies as a company which is quoted on aim the company 
is not required to comply with the combined code but all the
directors intend to comply with its main provisions as far as is
practicable having regard to the size of the group
board structure and its committees
the board comprises 3 executive directors and 3 nonexecutive
directors including the chairman the board meets regularly
throughout the year and as issues arise which require board
attention
biographies of the directors are set out on page 16 of this 
annual report
the chairman conducts board and shareholder meetings and
ensures that all directors are properly briefed in a timely
manner  the directors are responsible for formulating reviewing
and approving the group’s strategy budgets major items of
capital expenditure and senior personnel appointments  there
is an agreed procedure for the directors to take independent
professional advice at the company’s expense to have access 
to the company secretary and to receive appropriate training
where necessary 
there are formal and transparent procedures for the appointment
of new directors to the board in place and appointments are
made on merit against objective criteria all directors are required
to retire by rotation at least every three years when they can offer
themselves for reelection if eligible  in view of the size of the
company the directors do not consider the combined code
recommendation to establish a nomination committee
appropriate at present the company has established audit and
remuneration committees
audit committee
an audit committee has been established and currently
comprises peter hambro and pavel maslovsky with the chief
executive and finance director in attendance it meets at least
twice a year and is responsible for ensuring that the financial
performance of the group is properly reported on and monitored
it liaises with the auditors and reviews the reports from the
auditors relating to the accounts and internal control systems
remuneration committee
a remuneration committee has been established and currently
comprises peter hambro and pavel maslovsky with the chairman
in attendance it reviews the performance of the executive
directors and sets the scale and structure of their remuneration
on the basis of their service agreements with due regard to the
interests of the shareholders and the performance of the group
the remuneration committee also makes recommendations to
the board concerning employee incentives including the allocation
of share options to employees directors of the group are not
permitted to participate in discussions or decisions of the
committee concerning their own remuneration
relations with shareholders
communications with shareholders are considered important 
by the directors the executive directors regularly speak to
investors and analysts during the year  press releases have also
been issued throughout the year and since the balance sheet
date in relation to proposals and keeping investors informed
about the group’s progress 
the company also maintains a website on the internet –
wwwaricomplcuk which is regularly updated and contains 
a wide range of information about the group
internal controls
the board acknowledges that it is responsible for establishing and
maintaining the group’ s system of internal controls and for
reviewing its effectiveness the procedures which are reviewed 
on a regular basis include financial operational and compliance
matters the internal control system is an ongoing process for
identifying evaluating and managing the significant risks faced 
by the group and is designed to meet the needs of the group 
it can only provide reasonable and not absolute assurance against
material misstatement or loss the noard has considered the
need for an internal audit function but does not consider it
necessary at the current time
going concern
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
corporate governance p 19 aricom plc annual report and accounts 2004
independent auditor’s report 
to the shareholders of aricom plc
we have audited the financial statements of aricom plc for the
period ended 31 december 2004 which comprise the consolidated
profit and loss account the balance sheets the consolidated 
cash flow statement and related notes 1 to 25 these financial
statements have been prepared under the historical cost
convention and the accounting policies set out therein
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 auditor’ s report and for no other purpose t o 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 and
the financial statements in accordance with applicable united
kingdom law and united kingdom accounting standards are set
out in the statement of directors’ responsibilities
our responsibility is to audit the financial statements in
accordance with relevant united kingdom legal and regulatory
requirements and auditing standards
we report to you our opinion as to whether the financial
statements give a true and fair view and are properly prepared in
accordance with the companies act 1985 we also report to you if
in our opinion the directors’ report is not consistent with the
financial statements if the company has not kept proper
accounting records if we have not received all of the information
and explanations we require for our audit or if information
specified by law regarding directors’ remuneration and
transactions with the company and the group is not disclosed
we read the directors’ report and other information contained in
the annual report as described in the contents section and
consider whether it is consistent with the audited financial
statements we consider the implications for our report if we
become aware of any apparent misstatements or material
inconsistencies with the financial statements 
basis of audit opinion
we conducted our audit in accordance with united kingdom
auditing standards issued by the auditing practices board an
audit includes examination on a test basis of evidence relevant 
to the amounts and disclosures in the financial statements 
it also includes an assessment of the significant estimates 
and judgements made by the directors in the preparation of the
financial statements and of whether the accounting policies are
appropriate to the circumstances of the company and the group
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 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 
financial statements
opinion
in our opinion the financial statements give a true and fair view 
of the state of the affairs of the company and the group as at 
31 december 2004 and of the group’ s loss for the period then
ended and have been properly prepared in accordance with the
companies act 1985
deloitte  t ouche llp
chartered accountants and registered auditors
london
18 march 2005 p 20 aricom plc annual report and accounts 2004
consolidated profit and loss account
for the period ended 31 december 2004
2004
notes 000
t urnover 2 3199
cost of sales 3003
gross profit 196 
selling expenses 162
administrative expenses 2776
other operating expenses net 1556
operating loss 4298
net interest receivable 6 27
loss on ordinary activities before taxation 3 4271
t axation 7 9
loss on ordinary activities after taxation 4280
minority interest 15 26
loss on ordinary activities after taxation and minority interest 4254
notes 2004
basic and diluted loss per ordinary share 20 006
proforma basic loss per ordinary share 20 004
there are no recognised gains or losses other than those included in the profit and loss account
the above results all relate to continuing operations aside from certain management and administrative functions all operations were
acquired in the period see note 17
the notes on pages 24 to 36 form an integral part of these financial statements
the company has taken advantage of section 230 of the companies act 1985 not to publish its individual profit and loss account 
the company’ s result for the period is disclosed in note 14 p 21 aricom plc annual report and accounts 2004
consolidated balance sheet
at 31 december 2004
2004
notes 000
fixed assets
t angible assets 8 5435
5435
current assets
stock 572
debtors due within one year 9 492
debtors due after more than one year 9 297
cash at bank and in hand 1157
2518
creditors amounts falling due within one year 10 1753
net current assets 765
total assets less current liabilities 6200
creditors amounts falling due after one year 11 3400
net assets 2800 
capital and reserves
called up equity share capital 12 169
share premium 13 6403
profit and loss account 13 4254
equity shareholders’ funds 13 2318
minority interests 15 482
total capital employed 2800
these financial statements were approved by the board of directors on 18 march 2005 and signed on its behalf by
t swithenbank p howes
director director
the notes on pages 24 to 36 form an integral part of these financial statements p 22 aricom plc annual report and accounts 2004
company balance sheet
at 31 december 2004
2004
notes 000
fixed assets
t angible assets 8 1067
investments 19 4
1071
current assets
debtors 9 5480
cash at bank and in hand 715
6195
creditors amounts falling due within one year 10 955
net current assets 5240
total assets less current liabilities 6311
creditors amounts falling due after one year 11 3400
net assets 2911
capital and reserves
called up equity share capital 12 169
share premium 14 6403
profit and loss account 14 3661
equity shareholders’ funds 14 2911
these financial statements were approved by the board of directors on 18 march 2005 and signed on its behalf by
t swithenbank p howes
director director
the notes on pages 24 to 36 form an integral part of these financial statements p 23 aricom plc annual report and accounts 2004
consolidated cash flow statement 
for the period ended 31 december 2004
2004
notes 000
net cash outflow from operating activities 16a 3915
returns on investments and servicing of finance
interest received 67
interest paid 283
net cash outflow from returns on investments and servicing of finance 216
t axation –
capital expenditure and financial investment
purchase of tangible fixed assets 2508
acquisitions and disposals
purchase of subsidiary undertakings 17 2617
cash acquired with subsidiaries 17 24 
net cash outflow on acquisitions and disposals 2593
cash outflow before financing 9232
financing
receipts from borrowings 3597
gross receipts from issuing ordinary and preference shares 7827
preference shares redeemed 88
share issue costs 1167
net cash inflow from financing activities 10169
increase in cash at bank and in hand 16b 937 p 24 aricom plc annual report and accounts 2004
notes to the financial statements
1 principal accounting policies
the company was incorporated on 12 september 2003 and on 31 december 2003 obtained admission to the aim market of the london
stock exchange
the group presents its first financial statements for the period from 12 september 2003 to 31 december 2004 the year end is 
31 december 
a principles of consolidation
the company has two subsidiaries brasenose services limited and russian titan company limited rtc which are holding
companies incorporated in cyprus and are 100 beneficially owned by aricom plc 
indirect russian incorporated subsidiaries ooo chemelt is 100 and ooo olekminsky rudnik is 74 owned by rtc ooo aricom 
is 100 owned by brasenose services limited the results and balances of all group entities are consolidated in these financial
statements from the date of acquisition or formation ooo chemelt and ooo olekminsky rudnik were acquired from peter hambro
mining plc on 31 december 2003 ooo aricom was registered on 18 august 2004
b acquisitions
on the acquisition of a business including an interest in a subsidiary undertaking fair values are attributed to the net separable assets
where the cost of acquisition exceeds the fair values attributable to such net assets the excess purchase consideration is capitalised in
the balance sheet in the year of acquisition
to the extent that such excess purchase consideration relates to the acquisition of mining properties and leases that amount is
capitalised within tangible fixed assets as mining properties and leases other excess purchase consideration relating to the acquisition
of subsidiaries is capitalised as goodwill within intangible fixed assets and is amortised over its estimated useful life up to a maximum 
of 20 years provision is made for any impairment
c comparative figures
comparative figures have not been provided as this is the group’ s first accounting period 
d basis of accounting
the financial statements have been prepared under the historical cost convention and in accordance with applicable uk accounting
standards and law
e currency of financial statements
the financial statements have been presented in us dollars as this is the group’ s functional currency  the us dollar is also 
the functional currency of all group subsidiaries and consequently there are no unrecognised foreign exchange gains or losses 
on consolidation
in the financial statements of individual group companies transactions in currencies other than the local functional currency are
translated into local currency at the exchange rates ruling at the date of transaction or where forward exchange contracts are in place
at contractual rates monetary assets and liabilities denominated in other currencies at the balance sheet date are translated into local
currency at year end exchange rates or at a contractual rate if applicable
all exchange differences are included in the profit and loss account
the us dollar rates of exchange applicable to the period are as follows
closing average
us  russian roubles 277487 285714
pound sterling  us 19160 179546
euro  us 13538 122675
f t angible fixed assets – mining properties and leases 
the costs of mining properties and leases which include the cost of acquiring and developing mining properties and mineral rights are
capitalised as tangible fixed assets in the year in which they are incurred
when a decision is taken that a mining property is viable for commercial production all further 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
in circumstances where a property is abandoned the cumulative capitalised costs relating to the property are written off in the period
commercial reserves are proved and probable reserves changes in the commercial reserves affecting unit of production calculations
are dealt with prospectively over the revised remaining reserves p 25 aricom plc annual report and accounts 2004
notes to the financial statements
continued
1 principal accounting policies continued
g exploration and evaluation costs
exploration and evaluation expenditure is charged to the profit and loss account as incurred except in respect of deposits where
•it is expected that the expenditure will be recouped by future exploitation or sale or
• substantial exploration and evaluation activities have identified a mineral resource and these activities have reached a stage which
permits a reasonable assessment of the existence of commercially exploitable reserves
where either of the above conditions are met direct expenditure is capitalised once production begins capitalised costs are written off to
the profit and loss account so as to spread them over total proven and probable reserves on a unitsofproduction basis
h 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
plant and machinery 1020
office equipment 310
computer equipment 4
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
i investments
investments are stated at cost less provision for impairment
j stock and work in progress
titanium dioxide and other pigments ready for sale are valued at the lower of cost and net realisable value 
k revenue recognition
revenue is recognised at the point of transfer of ownership of finished products as specified in the sales contracts 
l cost of sales 
cost of sales includes the cost of purchased product transport and other direct expenses 
m t axation
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 
there is no recognised deferred tax at 31 december 2004 p 26 aricom plc annual report and accounts 2004
notes to the financial statements
continued
1 principal accounting policies continued
n financial instruments
financial assets and liabilities are recognised on the group’ s balance sheet when the group has become party to the contractual
provisions of the instrument 
o interest capitalisation
where appropriate interest incurred in financing the acquisition of specific assets is capitalised and included in the cost of the asset 
the interest is amortised over the useful life of the asset in line with the group depreciation policy for that asset class and once the
asset comes into use
p pensions
the group 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
2 t urnover
the turnover is attributable to the one principal trading activity which is carried on through chemelt all proceeds are receivable in the
ordinary course of business and are recorded exclusive of va t 
3 loss on ordinary activities before taxation
the loss on ordinary activities before taxation is stated after charging
2004
000
directors’ emoluments 915
staff costs 495
total staff costs note 4 1410
depreciation of owned assets 21
auditors’ remuneration – deloitte  t ouche llp 
– group 53
– company 20
4 employee information
2004
000
staff costs
wages and salaries 1260
social security 120
other pension costs 30
1410 
the average number of persons employed during the period including executive directors was made up as follows
united kingdom 3
russia 26
29
the period over which the average has been calculated was since incorporation for employees in the uk and since the acquisition of the
operating companies for employees in russia
5 directors’ emoluments
2004
000
emoluments 895
company contributions to pension schemes 20
915 p 27 aricom plc annual report and accounts 2004
notes to the financial statements
continued
5 directors’ emoluments continued
elements of remuneration
the main elements of the remuneration of the chairman and the directors were paid in sterling and were as follows
tot al 
basic other emoluments 
salary pension benefits for directors
£000 £000 £000 £000
tom swithenbank  126 6 1 133
peter howes  95 5 5 105
yuri makarov  48 – – 48
sir malcolm field 100 – – 100
dr pavel maslovsky 40 – – 40
peter hambro 40 – – 40
tot al 449 11 6 466
t om swithenbank’ s annualised salary is £120000 pa
 other benefits for peter howes include meeting part of the costs of relocation amounting to £3769
 yuri makarov’ s remuneration is for the period from 26 april 2004 at which point he became an executive director of the company  
mr makarov’ s annualised salary is £50000 per annum from the company and an additional rouble salary of rur1800000 per
annum from ooo aricom
the remuneration of the highest paid director was £133000
no other director received any remuneration from the company for their services as a director  
share options
the executive directors and the nonexecutive chairman have been awarded options as follows over the company’ s shares
number of
date shares under exercise period over 
of grant option price which exercisable
sir malcolm field 31122003 1000000 £015 31122006 30122013
tom swithenbank 31122003 850000 £015 31122006 30122013
peter howes 31122003 400000 £015 31122006 30122013
none of the directors’ options were exercised or lapsed during the period
these options were issued in accordance with the aricom plc unapproved share option scheme
the remuneration committee will in its discretion determine which eligible directors and employees are to be granted options and the
number of shares to be comprised in such options
options will not normally be exercisable until three years from the date of its grant and then only if the participant remains in
employment with the group
the midmarket price of the company’ s ordinary shares at 31 december 2004 was £0375 the range of prices of the company’ s
ordinary shares during the period since admission to aim was £0206 to £051 p 28 aricom plc annual report and accounts 2004
notes to the financial statements
continued
6 net interest receivable
2004
interest payable and similar charges 000
bank loan interest 90
other loan interest and charges 193
283
less finance cost capitalised 23
260
foreign exchange gain 220
interest receivable 67
27
7 t ax on loss on ordinary activities
2004
000
current taxation 9
deferred taxation –
9
factors affecting tax charge for the current period
loss on ordinary activities before tax 4271
t ax at 30 thereon 1281
expenditure for which no tax benefit is recognised at 30 thereon 1290
current tax charge for the period 9
factors that may effect tax charges of future periods
at the end of the period the group had accumulated tax losses amounting to 1300000 in the holding company and 600672 in the
russian subsidiary companies which may be available to carry forward to offset against future income
no deferred tax asset has been recognised in respect of the losses the asset would be recoverable if suitable taxable profits were to
arise in future periods
8 t angible fixed assets
a group
equipment mining assets
fixtures plant and properties and under
and fittings machinery leases construction t otal
000 000 000 000 000
cost at 12 september 2003 –––––
acquisitions 7 26 2080 816 2929 
additions 72 – 8 2451 2531 
writedowns 4 – – – 4
cost at 31 december 2004 75 26 2088 3267 5456 
accumulated depreciation at 12 september 2003 –––––
charge for the period 21 – – – 21
accumulated depreciation at 31 december 2004 21 – – – 21
net book value at 12 september 2003 –––––
net book value at 31 december 2004 54 26 2088 3267 5435
at 31 december 2004 23000 cumulative capitalised interest was included within assets under construction in the above table p 29 aricom plc annual report and accounts 2004
notes to the financial statements
continued
8 t angible fixed assets continued
b company
equipment fixtures assets under
and fittings construction t otal
000 000 000
cost at 12 september 2003 –––
additions 43 1032 1075
cost at 31 december 2004 43 1032 1075
accumulated depreciation at 12 september 2003 –––
charge for the period 8 – 8
accumulated depreciation at 31 december 2004 8 – 8
net book value at 12 september 2003 –––
net book value at 31 december 2004 35 1032 1067
included in assets under construction is us103 million relating to the acquisition of a feasibility study from peter hambro mining
group in respect of mining and processing the titanium deposits in ooo olekminsky rudnik
9 debtors
group company
2004 2004
000 000
trade debtors 217 –
va t recoverable within one year 136 32
amounts due from group companies – 5444
other debtors 3–
prepayments and accrued income 136 4
492 5480
va t recoverable after one year 297 –
789 5480
the va t recoverable after one year principally relates to the va t incurred in respect of the mine project in russia which can only be
reclaimed once the asset comes into use
10 creditors amounts falling due within one year
group company
2004 2004
000 000
bank loans 499 –
trade creditors 271 245
t ax and social security 25 33
other creditors 10 –
accruals and deferred income 948 677
1753 955
bank loans represent a draw down of 499000 under an unsecured credit facility from expobank which is repayable in full on 
29 december 2005 the facility attracts interest at a rate of 15 pa  p 30 aricom plc annual report and accounts 2004
notes to the financial statements
continued
11 creditors amounts falling due after one year
group company
2004 2004
000 000
loan from peter hambro mining plc 3400 3400
this loan bears interest at 8 and is repayable on 31 december 2008 it is secured by a charge over the ordinary shares in rtc
12 called up equity share capital
the company was incorporated with an authorised share capital of £3000000 divided into 3000000 ordinary shares of £1 each of which
two were issued to the subscribers to the memorandum of association on 16 october 2003 the share capital of the company was
decreased from 3000000 ordinary shares to 300000 by the cancellation of 2700000 shares of £1 each on the same date the existing
300000 ordinary shares issued and to be issued were subdivided into 300000000 ordinary shares of £0001 each
on 12 december 2003 the authorised share capital of the company was increased by the creation of an additional 200000000 ordinary
shares of £0001 and 66755962 ordinary shares were issued for cash at par value
on 31 december 2003 under a placing and open offer an additional 26694055 ordinary shares of £0001 were issued for £015 per share
as part of the placing and open offer an option to subscribe for 1666667 ordinary shares was granted this option was exercised at
£015 per share on 10 february 2004 increasing the issued share capital to 95118684 ordinary shares
as a result of these transactions a share premium of 6402663 after expenses of 1166790 was created 
on 16 october 2003 the authorised share capital of the company was increased by the creation of 50000 redeemable preference shares
of £1 each these shares were issued on the same date for £12500 on 12 december 2003 the balance of £37500 due for the shares
was paid on the same date the shares were redeemed and cancelled
redeemable ordinary
preference shares shares
2004 2004
000 000
allotted called up and fully paid
issued during the period 88 169
redeemed during the period 88 –
at the end of the period – 169
par value £100 £0001
no of shares no of shares
thousands thousands
authorised 50 500000
issued during the period 50 95119
redeemed during the period 50 –
at the end of the period –95119
share options held by directors are disclosed in note 5 directors’ emoluments p 31 aricom plc annual report and accounts 2004
notes to the financial statements
continued
13 group combined statement of reserves and reconciliation of movement in shareholders’ funds
share share profit and
capital premium loss account t otal
000 000 000 000
at 12 september 2003 ––––
loss for the period – – 4254 4254
issue of share capital 169 7570 – 7739
share issue costs incurred in period – 1167 – 1167
at 31 december 2004 169 6403 4254 2318
14 company combined statement of reserves and reconciliation of movement in shareholders’ funds
share share profit and
capital premium loss account t otal
000 000 000 000
at 12 september 2003 ––––
loss for the period – – 3661 3661
issue of share capital 169 7570 – 7739
share issue costs incurred in period – 1167 – 1167
at 31 december 2004 169 6403 3661 2911
15 minority interest
000
at 12 september 2003 – 
minority interest on acquisition of subsidiary undertaking 508 
minority interest in net loss of subsidiary undertaking 26
at 31 december 2004 482 
16 notes to the cash flow statement
a reconciliation of operating loss to net cash outflow from operating activities
2004
000
operating loss 4298
depreciation charges 21
write down of fixed assets 4
increase in debtors 349
increase in creditors 1231
increase in stock 524
net cash outflow from operating activities 3915
b analysis of change in net debt
acquisition foreign 
opening cash excluding exchange closing
balance flow cash movement balance
000 000 000 000 000
cash at bank and in hand – 937 – 220 1157
debt due after more than one year – 3400 – – 3400
debt due within one year – 197 302 – 499
– 2660 302 220 2742 p 32 aricom plc annual report and accounts 2004
notes to the financial statements
continued
16 notes to the cash flow statement continued
c reconciliation of net cash flow to movement in debt
000
increase in cash 937
increase in debt 3597
increase in net debt resulting from cash flows 2660
loans and acquired with subsidiaries 302
foreign exchange movements 220
increase in net debt for the period 2742
net debt at beginning of period –
net debt at end of period 2742
17 acquisition of subsidiary undertakings
russian titan company limited rtc
on 31 december 2003 the company acquired 100 of the shares in rtc a company based in cyprus which on the same date had
acquired 100 of the shares in ooo chemelt and 74 of the shares in ooo olekminsky rudnik these companies were acquired from
the peter hambro mining group details of net assets acquired by rtc are as follows
ooo
ooo fair value olekminsky fair value
chemelt adjustment t otal rudnik adjustment t otal
000 000 000 000 000 000
mining properties and leases – – 6 2074 2080
assets under construction – – 816 816
other fixed assets 6 6 27 27
stocks 32 32 16 16
debtors 301 31 270 170 170
cash 24 24 – –
creditors due within one year 312 312 4 4
long term loan 32 32 1151 1151
net assets 19 31 12 120 2074 1954
aricom share of assets acquired 12 1446
consideration
consideration and payment 20 2597
receipt of rights to long term loan 32 1151
12 1446
goodwill arising on acquisition – –
the loss after tax for ooo chemelt and ooo olekminsky rudnik for the year ending 31 december 2003 were respectively 5071 
2002 nil and 51000 2002 38000 loss p 33 aricom plc annual report and accounts 2004
notes to the financial statements
continued
18 related parties
the operations of aricom plc were formerly part of peter hambro mining group and as such there are a number of continuing arms 
length contracts which were reviewed and approved by the directors and shareholders before being entered into the transactions and
balances with peter hambro mining group are set out below
amount due
income fromdue to 
expenditure 2004
related party description 000 000
peter hambro mining plc and subsidiaries loan facility – 3400
peter hambro mining plc and subsidiaries feasibility study 1212 –
peter hambro mining plc and subsidiaries recharge of expenses 624 70
peter hambro mining plc and subsidiaries purchase of subsidiaries 2617 –
peter hambro mining plc and subsidiaries management services 109 56
peter hambro mining plc and subsidiaries interest on loan 193 –
peter hambro mining plc and subsidiaries professional advice 9 –
peter hambro mining plc and subsidiaries spare parts 5 –
peter hambro mining plc and subsidiaries recharge of expenses 194 194
peter hambro mining plc and subsidiaries cessation agreement 105 –
peter hambro mining plc and subsidiaries rent 91 26
the group also has an unsecured loan with expobank peter hambro and pavel maslovsky have options over part of the share capital of
expobank the transactions and balances with expobank are set out below
amount due
income fromdue to 
expenditure 2004
description 000 000
expobank loan facility – 499
expobank interest 90 –
peter hambro mining plc and its subsidiaries and expobank are considered to be related parties due to peter hambro’ s and 
pavel maslovsky’ s interests in both those companies and in aricom plc
19 investments
2004
000
shares in subsidiaries at cost 4
the company and the group have the following material subsidiaries and other significant investments that were consolidated in these
financial statements
principal effective
country of principal country of proportion of
principal subsidiary incorporation activity operation shares held
brasenose services ltd cyprus holding company cyprus 100
russian titan company limited cyprus holding company cyprus 100
ooo chemelt russia trading company russia 100
ooo aricom russia management company russia 100
ooo olekminsky rudnik russia mining russia 74
20 loss per ordinary share
a basic and diluted loss per ordinary share
loss for the year 000 4254
weighted average number of ordinary shares 75632851
basic and diluted loss per ordinary share  006
basic and diluted eps are the same because the only outstanding share options are antidilutive as the group has made a loss p 34 aricom plc annual report and accounts 2004
notes to the financial statements
continued
20 loss per ordinary share continued
b proforma loss per ordinary share
loss for the year 000 4254
proforma weighted average number of ordinary shares 94910351
proforma loss per ordinary share  004
the group did not trade until its shares were admitted to trading on aim on 31 december 2003 and made the acquisitions as disclosed 
in note 17 the proforma weighted average has been calculated as if the period began on 31 december 2003 and not the date of 
the company’ s formation
21 commitments and contingent liabilities
the group and the company had no commitments or contingent liabilities at the balance sheet date
22 currency and commodity price risk
although the group is headquartered in the united kingdom sterling denominated monetary assets and liabilities at 31 december 2004
were not significant
because of the location of its operating activities in russia the russian subsidiary undertakings are necessarily involved in russian
rouble transactions and have rouble denominated balances the group incurs operating costs in roubles and the group’ s borrowings 
at 31 december 2004 were largely denominated in us dollars available cash is put on deposits of appropriate maturities in the main
operating currencies of the group in order to protect against adverse exchange rate movements in so far as is possible
the world market for titanium dioxide is principally denominated in us dollars
23 financial instruments
a financial assets and liabilities
the interest rate profile for group’ s financial liabilities was
2004
fixed rate interest
borrowing free tot al
000 000 000
us dollar 3899 – 3899
3899 – 3899
the weighted average interest rate on the group’ s interest bearing borrowings for the period was 89
the interest rate profile for group’ s financial assets was
2004
fixed floating
rate rate interest total
000 000 free 000
euro – 471 – 471
gbp – 225 – 225
rouble – 431 – 431
us dollar –30 – 30
– 1157 – 1157
the fair values and book values of the group’ s financial assets and liabilities are not materially different p 35 aricom plc annual report and accounts 2004
notes to the financial statements
continued
23 financial instruments continued
b undrawn borrowing facilities
the group has various borrowing facilities available to it the undrawn committed facilities available at 31 december 2004 were 
as follows
2004
000
expiry date
one to two years 351
more than two years 2600
2951
c net foreign currency monetary assets and liabilities
the main currencies of the group include the us dollar uk pounds sterling russian rouble and the euro the analysis of the net
monetary assets and liabilities below indicates the group’ s exposures in various operating companies that are denominated in
currencies other than the functional currency of the company  these exposures represent the transactional exposures that may give 
rise to net currency gains and losses recognised in the profit and loss account 
net foreign currency monetary assetsliabilities 
us eur total
as at 31 december 2004 000 000 000
functional currency of entity
us – 471 471
tot al – 471 471
d maturity of financial liabilities
2004
000
in one year or less 499
in more than two years but not more than five years 3400
3899 p 36 aricom plc annual report and accounts 2004
notes to the financial statements
continued
24 segmental information
loss before 
tax and 
minority net 
turnover interest assets
a by class of business 000 000 000
trading 3199 223 416
mine development –389 5953
corporate – 3659 3569
tot al turnover 3199
loss on ordinary activities before taxation 4271
net assets 2800
loss before
tax and
minority net
turnover interest assets
b geographical analysis by origin 000 000 000
united kingdom – 3659 3569
russia 3199 612 6369
tot al turnover 3199
loss on ordinary activities before taxation 4271
net assets 2800
turnover by destination was not materially different from turnover by origin
25 post balance sheet events
after the period end the company raised further capital through a placing of 38250000 shares at 28p to provide the company with
sufficient funds to continue the development of its plans
in january 2005 ooo aricom signed conditional offtake agreements with china national gold corporation the agreement provides for
ooo aricom to supply to china national gold corporation a total of at least 360000 tonnes of ilmenite concentrate over one and a half
years and at least 3300000 tonnes of titanomagnetite concentrate over five years starting in 2007
on 5 march 2005 olekminsky rudnik a subsidiary entered into finance leasing arrangements with expoleasing a branch of expobank
the capital value of the lease amounts to 25m
on 17 march 2005 the group reduced the balance of the loan outstanding to peter hambro mining plc to 10 the balance as at 
31 december 2004 was 34m the 6m loan facility with peter hambro mining plc remains in place and expires on 31 december 2008 aricom was founded to exploit the
china and russia tio 2 opportunity 
the group is developing two stand
alone projects that will ultimately
combine to form a lowcost vertically
integrated titanium dioxide production
and marketing business focused on 
the highgrowth markets of china 
and russia
the first of these projects is a mining
and beneficiation operation based 
on the kuranakh deposit in the far 
east of russia producing ilmenite
concentrate and iron ore in the 
form of titanomagnetite concentrate
the second project is the construction 
of a 7000080000tpa titanium dioxide
processing plant which will source 
its ilmenite feedstock from kuranakh
and sell final tio 2 products to the paint
plastics and paper sectors in china 
and russia
the group’ s planned operations are 
in the amur region in the far east of
russia close to the key chinese market
aricom a future lowcost
vertically integrated
producer of highquality
titanium dioxide serving 
highgrowth markets in
china and russia
aricom plc annual report and accounts 2004
directors
sir malcolm field
chairman
tom swithenbank 
chief executive officer
peter howes
finance director
yuri makarov
executive director
peter hambro
nonexecutive director
pavel maslovsky
nonexecutive director
company secretary and
registered office
anna karolina subczynska
1011 grosvenor place
london 
sw1x 7hh
registered number
4897906
principal place of business
1011 grosvenor place
london 
sw1x 7hh
auditors
deloitte  t ouche llp
hill house
1 little new street
london
ec4a 3tr
bankers
the royal bank of scotland
119121 victoria street
london 
sw1e 6ra
solicitors
norton rose
kempson house
camomile street
london
ec3a 7an
nominated advisers 
and brokers
canaccord capital europe limited
27 upper brook street
london
w1k 7qf aricom plc
annual report and accounts
2004
1011 grosvenor place
london 
sw1x 7hh
t 44 0207 201 8939
f 44 0207 201 8938
w wwwaricomplcuk
aricom plc annual report and accounts 2004


Summary:
 p 6 aricom plc annual report and accounts 2004
chief
executive’s
r eview 
i am pleased to
report on aricom’s first
year of development
towards becoming
a lowcost vertically
integrated producer
of highquality titanium
dioxide to serve the
markets of russia
and china
tom swithenbank
chief executive
the market opportunity
titanium dioxide is a “quality of life”
product – as people become wealthier
the appearance of the products they 
use becomes more important and
consumption of tio 2 increases
commensurately this is particularly
relevant to us as we address developing
markets where we are witnessing the
rapid growth of a middle class such as
russia and china
this is one of the key reasons why aricom
intends to focus primarily on the markets
of russia and china these markets have
posted strong economic growth over
recent years and we believe we have
identified a real opportunity to participate
in that growth 
per capita consumption of titanium
dioxide in russia and china is very low
compared to levels in the developed
markets we estimate per capita
consumption in russia to be around 04kg
per capita and in china around 035kg per
capita us and western european per
capita consumption of titanium dioxide
are respectively 40kg and 26kg
suggesting that there is a considerable
consumption gap to bridge whilst we 
do not believe that per capita consumption
in these markets will attain us or 
even western european levels anytime
soon we do see considerable growth
opportunities for this product in both 
of these countries 
this is clearly reflected in the growth
statistics available to us between 1997
and 2002 tio 2 consumption in china grew
by 219 per annum on a compound
basis the equivalent figure in russia was
139 in both instances titanium dioxide
consumption growth exceeded general
economic growth measured by gdp
suggesting that titanium dioxide provides
an ideal vehicle to gain leveraged
exposure to the growth of both of these
dynamic economies
the size of the markets in russia and
china are estimated at 70000tpa and
450000tpa respectively titanium dioxide
is not currently produced on an industrial
scale in russia and users of the product
import almost 100 of their needs the
ukrainian producers gak titan and ooo
sumikhimprom are traditionally the most
important suppliers of tio 2 to the russian
market in china the domestic production
base is fragmented amongst numerous
small and inefficient producers of lower
grade pigments 
since the admission to trading of aricom’s
shares on the london stock exchange’s
aim market in december 2003 and the
associated acquisition of peter hambro
mining group’s titanium assets we have
been working hard to lay the foundations 
of our business 
an important step was achieved in march
2005 with the successful placing of an
additional 3825 million shares with
investors in the uk and europe which
raised approximately us20 million
us18m net of expenses to fund the
next stage of our development these
funds will be used to initiate the
construction of the mining and
beneficiation operations at olekma 
and kuranakh and to provide the 
group with working capital
aricom looks to the success of peter
hambro mining plc as a model for its own
development combining skills available
both in russia and the uk to create a 
true anglorussian partnership during
the last year the company formed an
operating subsidiary ooo aricom 
which is located in russia and headed 
by yuri makarov who is primarily
responsible for managing aricom’s
mining and marketing operations 
in russia 
what is titanium dioxide
when most people think of titanium 
they do so in its metallic form in fact 
over 90 of titanium feedstock is
processed into titanium dioxide tio 2 
a white pigment used extensively in the
paints plastics and paper industries as
well as in a host of other products such
as pharmaceuticals and cosmetics 
it is its hiding power – its ability to mask
other colours – that makes it a prime
ingredient for paints and other coatings 
it is valued in the paper industry where
“showthrough” needs to be minimised
and in plastics where tio 2 is used
to cover up the translucency of the
base resin p 7 aricom plc annual report and accounts 2004
promising profitable and cashgenerative
mining project in addition indications
were received in the final quarter on 
the possible presence of gold and zircon
in the tailings from the beneficiation
process we are currently working to
ascertain how much of each element may
be available at the deposit and how best
to extract each of them from the tailings
it is on the basis of these positive findings
that management has developed a two
stage approach to the overall project we
are aggressively pursuing the development
of the mine and beneficiation operations
which represent the first stage of the
project and look forward to achieving
positive operating cash flows from 
late 2007 
concurrent to this we are developing 
the plan for the construction of the
processing plant which forms the 
second stage of aricom’s development
programme one of the key elements 
of this second stage is the choice of
technology to be used to produce titanium
dioxide aricom has received a technology
proposal and is in discussions with a
number of other parties for technology
licensing these discussions are expected
to be concluded during 2005 at which
point the design phase of the plan will 
be initiated this phase is expected to 
last 912 months subject to obtaining 
the required funding construction of 
the processing plant is expected to be
initiated in 2006 so production can
commence in late 2008 at which point
aricom would reach its objective of
becoming a verticallyintegrated producer
of titanium dioxide 
gak titan
aricom continues to express an interest 
in participating in a joint venture with 
gak titan the ukrainian tio 2 producer 
aricom previously held an option to
acquire occidental titanium company
ltd an english company which based 
on a memorandum of understanding 
was intended to be a participant in 
a proposed joint venture with gak 
titan the proposal was and remains
interesting to the management of 
aricom as it would open up a further
opportunity to capture a share of the
regional tio 2 pigment markets however 
a lack of clarity and a substantial 
increase in the political risk ahead of 
the presidential elections in ukraine
resulted in no action being taken by
aricom in relation to these arrangements
we are currently considering the situation
in light of the election of president
yushchenko in january 2005 
a proprietary study we commissioned in
2004 indicates that 54 of tio 2 demand in
china is now imported three quarters of
global tio 2 production capacity is located
in the traditional markets of western
europe and north america yet the highest
growth market is in china if current
growth rates are maintained china will
surpass the us as the largest market 
for tio 2 within a decade but concerns 
over technology leakage and the difficult
operating environment in china have
dissuaded major producers of tio 2 from
locating production in the market itself
we believe that this reluctance by the
majors to move aggressively to satisfy
chinese demand has created an
opportunity for aricom
the plan
by locating our operations in russia’s
amur region we can develop a
production facility to serve both the
chinese and the russian markets 
the ability to produce tio 2 cost effectively
is key to the success of the project
allowing us to price competitively relative
to imported materials locating in russia
should allow us to operate more cost
effectively than many other players in the
market and by being in or close to the
markets we wish to serve we can reduce
the cost of transportation to the end user 
by producing our own feedstock we 
should be in a position to acquire 
the key raw material for the production 
of tio 2 at a lower cost and more reliably
than buying it from third parties the
construction of a modern plant should
also allow us to maximise cost efficiency
by designing from new
the aricom project is composed of three
parts mining processing and marketing
together providing the intended vertical
integration the mining operations based
on the ilmenite deposit at kuranakh 
are to supply the ilmenite feedstock to 
the planned titanium dioxide processing 
plant a suitable site for the plant has
been identified in tynda also in the 
amur region the final products are 
to be supplied to end users through a
marketing operation founded on the
current activities of chemelt aricom’s
wholly owned titanium dioxide trading
company based in moscow 
work carried out over 2004 on the
economic presence of iron ore in the
form of titanomagnetite at the deposit 
at kuranakh suggests that aricom can
develop a mining operation which will 
not only produce ilmenite feedstock 
for a tio 2 processing plant but also
titanomagnetite concentrate for sale to
third parties these findings point to a
tio 2 supply and demand in china
and russia vs gdp growth
cagr 1997  2000
china
russia
00 50 100 155 200 250
450000tpa
70000tpa
•
tio2 consumption growth
•
gdp growth
per capita tio 2 
consumption kg 2000
exsoviet
republics
north 
africa
eastern 
europe
east asia
western
europe
north
america
01 2 3 4 5 p 8 aricom plc annual report and accounts 2004
phase 1 the kuranakh mine
we are proposing to develop 
an openpit mining operation 
at kuranakh and construct a
beneficiation plant at the mine 
site to produce the concentrates 
of ilmenite and titanomagnetite
chief 
executive’s 
r eview
continued
mining p 9 aricom plc annual report and accounts 2004
mining
olekminsky rudnik a 74 owned
subsidiary of aricom plc holds an
exploration and mineral licence to develop
the ilmenitetitanomagnetite deposit at
kuranakh in the north west of the amur
region in the far east of russia the
licence extends to 2027 the deposit is
situated on the north western flank of the
kalarskiy massive approximately 35km
from the settlement of olekma crucially
olekma is on the baikal amur magistral
bam the railway which links to the
russian eastern seaboard as well as to
the transsiberian railway and into china
and western russia this railway will be
used to transport the mine products to
the proposed titanium dioxide processing
plant and to third party consumers
aricom is proposing to develop an open
pit mining operation at kuranakh and
construct a beneficiation plant at the 
mine site to produce the concentrates 
of ilmenite and titanomagnetite as well 
as a transfer station and living quarters 
at olekma a road and electricity
transmission line will also be laid to link
the mine and olekma a business plan
prepared by vnipiprom points to a capital
cost of us56 million to develop mining
operations capable of extracting 22
million tonnes per annum of ore and
processing these into 240000 tonnes 
per annum of ilmenite concentrate and
660000 tonnes per annum of iron ore in
the form of titanomagnetite concentrate
based on these target production rates
the cash costs are currently estimated at
us24 per tonne of ilmenite concentrate
and us13 per tonne of titanomagnetite
concentrate the recently announced
price increases in excess of 70 for
existing iron ore producers confirm our
enthusiasm for the prospects for the 
mine as a profitable and cashgenerative
business the completion of the placing 
in march 2005 raising approximately
us20 million before expenses 
has allowed aricom to initiate the
development of these operations the
remaining capital costs of the project 
will require further funding
the beneficiation process is being
developed by two related russian
institutes vims and dvims based on
widely available technology which is 
being adapted to suit the characteristics
of the kuranakh ore the technology to 
be used is wellproven and the mining
and beneficiation operations are being
designed to operate all year round it 
was a prerequisite for the viability of the
proposed project that the quality of the
ilmenite concentrate to be produced
through the beneficiation process would
be suitable for the production of tio 2 
expected products
ilmenite concentrate
titanomagnetite concentrate
possible coproducts
zircon
gold
beneficiation process
the beneficiation process is being
developed by the russian institute vims
based on wellknown technology  the
process will be capable of being run 
yearround
mining operations
primary dry
separation
crushing grinding
classification
wet magnetic
separation
grinding
gravity separation
drying
electric separation
ilmenite concentrate
overburden
titanomagnetite
concentrate
tailings
goldzircon
a study by the specialist german ore
research centre studiengesellschaft 
für eisenerzaufbereitung and tests by
sachtleben gmbh have confirmed that
the ore can be processed into a feedstock
suitable for tio 2 production
tests on samples from the tailings from
the beneficiation works have shown that
gold and zircon may also be present 
at the kuranakh deposit if these are
confirmed to be available in economic
quantities this could add to the projected
revenues from aricom’s mining business
additional costs of extraction could be 
low given that both elements are already
concentrated into the tailings of the
beneficiation process further work has
been commissioned to investigate the
resources available and the potential
costs of extraction 
the kuranakh licence area covers three
major ore zones called saikta baltylakh
and saibalakh most of the work carried
out so far has been on the ore zones in
the saikta deposit which is made up of a
series of at least eight discrete ore bodies
exploration on saikta was initiated in 
1982 by soviet state geological institutes
and has been continued by aricom 
over the course of the past 18 months
dalgeofizika one of the independent
russian research institutes working with
aricom has completed a review of the
exploration works carried out to date and
has concluded that aricom has sufficient
reserves under the russian reserves
classification system to last for an initial
16 years of production at 22m tonnes per
annum of ore extraction the estimated
resource base yields sufficient resources
for at least 50 years of production at the
same target production levels
a fiveyear exploration plan for the
kuranakh licence area has been
developed to extend the proven reserves
and resources available to the group 
for future production
wardell armstrong international the uk
based energy and minerals consultant
has completed a technical review of the
geological work carried out to date as
well as the proposed mine plan and
beneficiation process and have confirmed
that they support the conclusions drawn
to date
aricom’s mining and beneficiation
operations are expected to come into
production in late 2007 conditional
offtake agreements were signed in
january 2005 with china national gold
corporation these agreements are
described in the marketing section of 
this report
ore outcrop at kuranakh p 10 aricom plc annual report and accounts 2004
phase 2 the tio
2
processing plant
the plant will be designed to produce
high quality pigments for domestic 
and export markets with a focus on
russia and china
processing
chief 
executive’s 
r eview
continued p 11 aricom plc annual report and accounts 2004
technology from existing producers and 
is currently in discussions with a number
of parties regarding the licensing of such
technology the group has an offer in
place but is considering all options before
reaching a final decision on technology
we believe that this is an area where 
we will be fully rewarded for taking 
the appropriate time to conclude the 
best agreement
a suitable site has been identified for 
the location of the processing plant at
tynda 440kms on the bam railway from
olekma this direct rail link between 
the mine and the processing plant should
allow the cost effective transport of
feedstock tynda is a town with a
population of 45000 and offers the
amenities and infrastructure required for
the operation of a plant of this nature and
size the local authorities are keen to
attract investment into the area and are
assisting aricom with its plans
processing
the second stage of aricom’s strategy
involves the construction of a 70000
80000 tonnes per annum titanium dioxide
processing plant it is intended that the
plant will be designed to produce high
quality pigments for domestic and 
export markets with a focus on russia
and china
the first phase of a bankable feasibility
study was completed in december 2003
by the german engineering company
ferrostaal ag with technical input from
the german titanium dioxide producer
sachtleben gmbh this concluded that
the development of a verticallyintegrated
titanium dioxide project was technically
and economically feasible in the amur
region based on the production of
ilmenite concentrate at kuranakh 
the plan originally envisaged the
development of a 50000 tonne per 
annum plant with a view to a subsequent
doubling of capacity discussions with
ferrostaal have led to the conclusion 
that an initial 7000080000 tonnes of
annual capacity would be equally feasible
and this now forms the basis of aricom’s
plans for the processing plant 
the global tio 2 production sector is highly
concentrated with the top 5 producers
representing 73 of global capacity and
the restricted availability of technology is
one of the key barriers for new entrants
into the tio 2 sector  aricom is seeking to
acquire sulphate route production
sulphate process
ilmenite
digestion
hydrolysis
heat
filtration
clarification
wet grinding
coating
dry grinding
dry grinding
crystallisation
cool
sulphuric acid
ti0 2 rutile or anatase grade
reduction
calcination
ti0s0 4 solution
uncoated ti0 2 pigment
coating materials
finished ti0 2 pigment
copperas
fes0 47h 20
scrap iron
nuclei p 12 aricom plc annual report and accounts 2004
chemelt 
chemelt aricom plc’s whollyowned
titanium dioxide trading company 
was established in 2002 to test the
market for titanium dioxide in russia 
mark eting
chief 
executive’s 
r eview
continued p 13 aricom plc annual report and accounts 2004
chemelt’s role is an important one 
as whilst developing into a successful
business in its own right it is laying 
the foundations and establishing the
relationships that aricom will require
when it looks to distribute its own
titanium dioxide products in the russian
market we are very pleased with the
progress the company is making
aricom is currently examining its options
for distribution into china clearly this is
an important step for the group and is
potentially related to the licensing route
that the group ultimately chooses 
we intend to develop our distribution
strategy for china over the course of 2005 
aricom has also been active in marketing
the products it expects to produce from 
its mining and benefication operations 
at kuranakh aricom’s subsidiary ooo
aricom signed two conditional offtake
agreements in january 2005 with china
national gold corporation a group
headquartered in beijing with substantial
interests in gold mining international
minerals trading and engineering
contracting these agreements provide
for ooo aricom to supply china national
gold corporation a total of a least 360000
tonnes of ilmenite concentrate over one
and a half years and at least 3300000
tonnes of titanomagnetite concentrate
over five years the agreements will 
come into effect once aricom secures 
the required financing to complete its
kuranakh mining project and deliveries
are scheduled to start in late 2007 
when the planned mining operations 
are expected to come on stream it is
intended that all of the production of the
planned kuranakh mine will be supplied
to china national gold corporation for 
the life of these agreements the shorter
duration of the ilmenite contract reflects
aricom’s objective to establish its own tio 2
plant to which the ilmenite would be
supplied once it becomes operational
marketing
chemelt aricom plc’s whollyowned
titanium dioxide trading company was
established in 2002 to test the market for
titanium dioxide in russia
by becoming actively involved in the
market aricom has been able to develop
an understanding of the dynamics and
practices of the market not only in russia
but also in the wider global arena 
the russian market has been
traditionally dominated by the ukrainian
producers the historic source of tio 2
under the soviet system it is for this
same historic reason that russia has 
no domestic production of titanium
dioxide on an industrial scale forcing
russian consumers to import virtually 
all of their needs although the ukrainian
hold on these markets has been
diminishing in recent years their role
remains important we estimate that 
the ukrainians continue to supply
approximately 60 of russian demand
chemelt has been acting as an official
distributor for gak titan the larger of 
the two ukrainian producers since 2003
and has been appointed as a favoured
partner for 2005 
by representing such an important player
on the russian market chemelt has
successfully increased the penetration 
of its distribution network developing its
client list to 125 over the course of 2004
and increasing its sales by 50 over 
the same period chemelt has been
aggressive in its pricing tactics to gain 
an initial foothold in the russian market
but is expected to break even in 2005
the company has also worked to increase
the range of products it offers to its
customers chemelt has introduced to 
the russian markets the products of
cristal the saudi arabian tio 2 producer
addressing the increasing demand for
higher quality products from its clients 
it is currently exploring the possibility 
of distributing chinese products in 
the russian market and examining
complementary products to sell into 
the russian paints and plastics sectors
paint and plastics producers are the key consumers of ti0 2