ICMI Intl. Cons. Min

    RNS Number : 7714H
  International Consolidated Min. Inc
  10 November 2008
   

    10 November 2008

    INTERNATIONAL CONSOLIDATED MINERALS INC. 
    ("ICMI" or "the Company")


    Operations commence at Pachapaqui Mine, Peru

    &

    Completion of a US$6 million tranche of up to a proposed US$15 million debt facility


    Highlights:

    *     Start up at Pachapaqui commences at a rate of 300 tonnes per day ("tpd") in advance of the Company's schedule to begin production
in the first Quarter of 2009.
    *     On track to build up from 300 tpd to 800 tpd of ore processing in the first Quarter of 2009.
    *     ICMI plans to further expand the Pachapaqui operations from 800 tpd to 1,500 tpd by the end of 2009 and to 8,200 tpd by mid 2012.
    *     Environmental Impact Study required for expansion to 8,200 tpd is already underway.
    *     An initial US$6m tranche has been completed as part of up to a proposed US$15 million debt facility, which will be used for
working capital purposes and for upgrading the production capacity at the Pachapaqui Mine to 800 tpd.
    *     Extension of redemption date for certain shares subject to deferred redemption.


    International Consolidated Minerals Inc. (AIM & BVL: ICMI), through its South American mining company, ICM Pachapaqui S.A.C. ("ICM
Pachapaqui"), is pleased to announce that it commenced mining operations and concentrate production at its Pachapaqui Mine in Peru on 5
November 2008. This start up phase is in advance of the Company's planned schedule to begin production in the first Quarter of 2009.

    Early production commencement
    Gradual rehabilitation of the Pachapaqui site in preparation for production start up has been ongoing since ICMI acquired the property
in 2006. The 10-month program of reconstruction of the on-site offices, accommodations and kitchen facilities, and the final installation of
the on-site communications and computer LAN systems, was completed in August 2008, thereby facilitating the hiring and retention of a
skilled professional work force. Refurbishment of the Company's two hydro plants, concentrator plant, and site facilities began in early
2008 and was ramped up using contractors under ICM Pachapaqui's supervision and direction during September and October 2008. To date the
crushing, grinding and flotation sections of the concentrator have been totally revamped enabling a processing capacity of 800 tpd of mine
ore. Upgrading of the thickening and filtering sections and instrumentation will continue over the coming months of operation. The
concentrator will be run and operated by ICM Pachapaqui's personnel. Trucking of the three concentrates (zinc, lead and copper with payable silver and gold) over the paved highways 375 km to Callao will be
completed by a contractor using a specialised and safe concentrate truck fleet.
    Underground mining contractors mobilised to the mine site in early September 2008 and have continued with tunnel development in
anticipation of stope mine ore production, scheduled to begin later this month. 
    In addition to new mine ore production, there are presently over 20,000 tonnes of stockpiled ore at the mine site, sufficient for 1�
months of concentrator processing operations during start up. The current production schedule aims to build up from 300 tpd to 800 tpd of
ore processing in the first Quarter of 2009. Tunnel development and mining operations by specialised underground mining contractors will
continue. Mine planning and engineering, ore grade quality control, and management and direction of the mining contractors' activities will
be completed by ICM Pachapaqui personnel.

    Increased production set for 2009
    The Company currently intends to further expand its Pachapaqui operations from 800 tpd to 1,500 tpd by the end of 2009 and to 8,200 tpd
by mid 2012. Approximately 90 per cent of the ICM Pachapaqui workforce required for 800 tpd operations is already at site (currently,
approximately 180 people) and this will marginally build up to the full size required for 1,500 tpd in due course. Mining contractor
workforces (currently, approximately 200 people) will be increased as production requires over the coming months and throughout 2009. The
contractors for plant construction and erection will continue upgrading the concentrator plant facilities in parallel with concentrating
operations through 2009. The Company has all of the necessary governmental permits for 1,500 tpd, and has retained Walsh Peru S.A. to
complete the Environmental Impact Study ("EIS") and assist in obtaining the permits required for the longer term expansion of the Pachapaqui
operations to 8,200 tpd.  EIS compilation is already underway.
    Management believes that the Company is well positioned to compete in the production of mineral concentrates and metals markets, even
under the current macro economic conditions. Due to the configuration and metals grades of the project's ore bodies and the mine's
advantageous location, once fully established and operating ICM Pachapaqui's operating costs are anticipated to be very competitive in the
world base metals mining industry. 

    Initial tranche of debt facility completed 
    The Company is also pleased to announce the signing, on 7 November 2008, of an initial US$6 million facility as part of the creation of
up to a proposed US$15 million debt facility, in the form of secured loan notes (the "Notes") due in November 2009. The Notes carry a coupon
of 12 per cent per annum and may be redeemed at the Company's option prior to their maturity at 121 per cent of the principal amount
outstanding plus accrued interest.  On 7 November 2008, the Company issued US$6 million of Notes, of which US$2.5 million has been
subscribed by Platinum Partners Value Arbitrage Fund, L.P. ("PPVA"), an existing substantial shareholder in the Company, US$1 million has
been subscribed by Taghmen Ventures Limited ("TVL"), a company in which Greg Smith, Executive Chairman and CEO of ICMI has a beneficial
interest, and US$2.5 million has been subscribed by Millennium Global Special Situations Americas Fund Limited ("MGSSA"), a substantial
shareholder and company to which Jesse M. Rodriguez, a non-executive director of the Company, provides investment advisory services.
    The Notes will have warrants attached to subscribe for 1 ordinary share in the capital of the Company ("Warrants"). The Warrants are
issued to subscribers of the Notes on the basis of 1 Warrant for every US$1 of Notes subscribed, and may be exercised for a period of 3
years from 7 November 2008, at an exercise price of �1.146 per Warrant. The Warrants may be 'put' back to the Company between the second and
third year of their life at a price of US$0.20 per Warrant, creating a liability of US$1.2 million for the Company based on the 6 million
Warrants issued to PPVA, TVL and MGSSA to date pro rata to their initial US$6 million subscription of Notes as set out above.
    This facility will be used for general working capital purposes and for upgrading the production capacity of the Pachapaqui Mine from
300 tpd to 800 tpd.

    Extension of certain 'For and Redeem' Shareholder Redemption Rights 
    As set out in the Company's annual accounts for its financial year ended 31 December 2007, prior to the reverse takeover of Platinum
Diversified Mining Inc. in September 2007, shareholders of the Company had the option to vote on the proposed acquisition of International
Consolidated Minerals Limited. 3,563,720 shares that voted 'FOR AND REDEEM' were subject to deferred redemption, and are entitled to receive
a coupon equal to 10 per cent  per annum on the value of the shares, as well as the redemption of the value of the share. The value of the
shares was set at US$8.00 each. Redemption will occur on 13 March 2009 and interest accrues until the Company redeems the shares, a third
party purchases the shares (as directed by the Company) or if the rights to redemption are forfeited by the shareholders concerned. 
    As at 7 November 2008, PPVA, a substantial shareholder and a subscriber to the aforementioned Notes, holds 2,063,528 of these shares,
and has agreed to extend the redemption date to 7 November 2009, on the basis they receive an increased coupon equal to 32 per cent per
annum on the value of the shares for the period of the extension i.e. from 14 March 2009 to 7 November 2009 or, if earlier, redemption (the
"Extended Shares"). The Company intends to seek a similar extension from holders of the remaining 1,500,192 shares.
    The Notes and the Extended Shares are secured over all of the assets of the Company.
    The new debt facility and the extension of the redemption date and increased coupon for certain of the deferred redemption shares, as
set out above, are considered to be "Related Party" transactions under the AIM Rules as they are with companies associated with directors
and/or substantial shareholders of the Company. The independent directors of ICMI (excluding for the purposes of the new debt facility Greg
Smith and Jesse Rodriguez, who are both interested parties in this transaction) consider, having consulted with Strand Partners Limited,
that the terms of the transactions are fair and reasonable insofar as the Company's shareholders are concerned.

    Marvin H. Pelley, President and COO of ICMI, commented:

    "Start up of the mining operations and concentrating production at Pachapaqui at an initial rate of 300 tpd is a major milestone in the
life of this project. We are ahead of schedule to be at 800 tpd in the first Quarter of 2009. Even at today's commodity prices, the forecast
low operating costs for the Pachapaqui Mine should enable us to produce positive earnings in the future and remain competitive in the
industry. 
    The upgrading works currently underway on the project will allow 1,500 tpd ore processing by the end of 2009 and the permitting process
is underway to expand this to 8,200 tpd by mid-2012, fully in line with our previously announced timetable and budget. 
    As previously announced, to date our exploration programme at Pachapaqui has revealed a preliminary estimated 52 million of additional
tonnes of mineral resources. It is anticipated that ore reserves converted from these resources will be sufficient for almost two decades of
production as currently planned. Once production operations have stabilised, exploration for further resources, will re-commence to
facilitate the expansion of future production at Pachapaqui and increase the mine's life."

    Greg Smith, Executive Chairman and CEO of ICMI, commented:
    "We are pleased to complete the first tranche of our financing transaction and procure an extension to part of the shareholder
redemptions due in March 2009, particularly in the current challenging financing and commodities markets.   
    We remain positive not only about the Pachapaqui project where we have only explored less than 5% of the entire property, but also the
general opportunities that Peru and elsewhere offer in terms of natural resources prospects. ICMI looks forward to a bright future in Peru.
In today's difficult market conditions, we remain determined to create further value for our shareholders by developing the Pachapaqui
project and through opportunistic acquisitions in the Americas. Tapping the potential of the Pachapaqui mine is part of that strategy, and
we have just taken a significant step forwards to that end by restarting production."

    Enquiries:
 International Consolidated Minerals 
 Greg Smith                   Chairman, CEO             Tel: +44 (0)20 7766 0085
 Pawan Sharma                 Executive Vice President  Tel: +44 (0)20 7766 0085
                              - Corporate Affairs
 Strand Partners Limited (Nominated Adviser)
 Simon Raggett                                          Tel: +44 (0)20 7409 3494
 Matthew Chandler                                       Tel: +44 (0)20 7409 3494
 Numis Securities (Joint Broker, London)
 John Harrison                                          Tel: +44 (0)20 7260 1254
 James Black                                            Tel: +44 (0)20 7260 1207
 Fox-Davies (Joint Broker, London)
 Richard Hail                                           Tel: +44 (0)20 7936 5234
 David Poraj-Wilczynski                                 Tel: +44 (0)20 7936 5226
 Credibolsa (Broker, Lima)
 Jorge Monsante                                         Tel: +511 313 2922 
 Pelham Public Relations (Public Relations, London)
 Charles Vivian                                         Tel: +44 (0)20 7743 6672
 Sergei Stephantsov                                     Tel: +44 (0)20 3178 6241
 Apoyo (Public Relations, Lima)
 Gabriel Ortiz de Zevallos                              Tel: +511 513 3040
 Gabriela Llosa                                         Tel: +511 513 3043

    ADDITIONAL INFORMATION ON INTERNATIONAL CONSOLIDATED MINERALS INC. 
    International Consolidated Minerals Inc. (AIM & BVL: ICMI) was formed in 2005 to pursue mineral exploration, development and production
with its initial attention in Latin America. ICMI's strategy is to focus on high-quality mining assets at an advanced stage of development.
In early 2006, ICMI acquired the Pachapaqui mining property in central Peru which contains appreciable high grade zinc, lead, copper, silver
and gold mineral reserves and resources. The property consists of 32 mining concessions of 2,105 hectares and one beneficiation concession
of 65 hectares on which is located mining infrastructure and equipment, hydro-electrical generating stations, offices and accommodations,
and concentrating plant facilities. In 2007, while conducting upgrades of the facilities, ICMI embarked on a drilling and exploration
geology programme, initially in one area on the Pachapaqui property, from which the Company has had tremendous success in locating and is
confident of proving up significant additional mineral reserves and resources. Further information is available from the Company's website at: http://www.icmi-inc.com.
    - END -

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