It is reported that Russia's No 2 gold producer Peter Hambro Mining plc moved on Friday to dispel concerns about its debt by making a USD 534 million all share offer for Aricom and using funds from an equity raising to pay off some debt.

Peter Hambro's offer of one of its shares for 16 Aricom shares valued Aricom at about USD 534 million based on Thursday's closing prices, representing a premium of 19% from Aricom's closing price of 26 pence on Thursday.

A takeover of, iron ore producer Aricom will give the gold producer access to USD 257 million in cash at Aricom.

Mr Rudolph Agnew, senior independent director of Peter Hambro said "Combining Peter Hambro Mining's near term gold production assets with Aricom's significant available cash resources and iron ore assets will create a mining industry leader in the Far East of Russia. The merger will create a mining industry leader in the Far East of Russia with operations in both gold and iron ore with a pro forma combined market capitalization of approximately USD1.15 billion."

Aricom was demerged from the group in 2003, with Mr Peter Hambro's son Mr Jay in the chief executive's chair.