Final Results
Hambledon Mining PLC
22 June 2006
HAMBLEDON MINING PLC
Final Results
Mining operations commenced
Hambledon Mining plc ('Hambledon' or the 'Group' or the 'Company'), an
AIM-listed mining and exploration company developing precious metal deposits in
Kazakhstan, announces its results for the year ended 31 December 2005 and that
mining operations have commenced at Sekisovskoye.
Highlights:
O Mining operations commenced in June 2006 with pre-stripping and
stockpiling of ore from North Pit
O JORC resource estimate has doubled to 2.7 million oz of gold
O Recent underground drilling shows numerous new gold zones
O Comparison of recent drilling results with earlier Soviet samples
shows a 19% increase in gold content; confirming evidence of
consistent underestimation of resource
O Updated geological and mine model of open pit areas being finalised
O Initial production to be around 40,000 oz per annum rising to over
100,000 oz when underground ore is treated
Nicholas Bridgen, Chief Executive of Hambledon Mining plc, commented:
'During the year the Group has made excellent progress. The gold JORC resource
estimate has increased significantly, to 2.7 million oz, and mining operations
have commenced.
'The outlook for the Group, which was already good, has been improved enormously
by the additional resource identified. This has allowed us to increase the
planned capacity of the plant which will lower the unit costs and take advantage
of the increased gold price'.
ENQUIRIES: 22 June 2006
Hambledon Mining plc
Nicholas Bridgen, Chief Executive Tel: +44 (0) 207 870 6367
Bankside Consultants Tel: +44 (0) 207 367 8888
Michael Spriggs / Michael Padley
About Hambledon Mining plc
Hambledon Mining plc is an AIM listed mining and exploration company developing
precious metal deposits in the mineral-rich Altai region of East Kazakhstan.
Its subsidiary TOO Sekisovskoye holds two adjacent licence areas, Sekisovskoye
and Tserkovka, with JORC gold resources estimated at 2.7 million ounces and
additional non-compliant Soviet classified resources of 0.7 million ounces. TOO
Sekisovskoye has also been informed that it will be awarded two more adjacent
territories known as Glinka and Krugliachka. Mine preparation has commenced and
construction of an 850,000 tpy treatment plant has started. New exploration
areas are being evaluated and an updated mine model is being prepared.
Chairman's Statement
Review
Since 1 January 2005 we have made excellent progress and this has continued into
the current financial year.
Following good early results from the drilling programme and feasibility study
the board approved the fast-track development of the open pit project in March
2005. Since then, equity finance totalling £15 million has been raised to fund
the development and we can now announce that mine preparation and pre-stripping
have commenced.
In June 2005 we announced that analysis of the early 2005 surface drilling
programme had resulted in a 45% increase in the JORC resource estimate at
Sekisovskoye. Over the following months further drilling from surface and
underground has encountered many new gold-bearing zones. Although the full
re-modelling of the resource, necessitated by the more recent underground
drilling programme, has not yet been completed, two early conclusions have been
drawn.
First, the additional confidence in the extension zones of Sekisovskoye, which
were formerly reflected only in the Soviet resource category P1, has enabled our
geological consultants to re-classify this within our JORC resource estimate.
This means that our JORC resource at Sekisovskoye is now estimated to stand at
2.7 million ounces of gold plus 4.4 million ounces of silver, a further 100%
increase over the June 2005 level.
Second, the statistical basis has now been established to confirm previous
evidence that the former Soviet drill samples were some 19% lower than the
equivalent grades obtained by our own drilling programmes, suggesting the
likelihood that an uplift of this factor could be applied globally to former
Soviet drill sample results.
Progress with the permitting of the project has been excellent, the highlights
of which were the approval of our technical process and our General Resource
Estimate in April 2006.
In February 2006 the decision was taken to expand the design capacity of the
plant to 850,000 tonnes per year, enabling the output of over 40,000 ounces of
gold per year at the open pit stage, rising to over 100,000 ounces per year once
the underground ore, which is of higher grade, is substituted in the same
process plant.
In view of the longer projected pit life, the decision was also made to purchase
our own mining fleet rather than rely on subcontractors. This fleet has been
procured and is now operational. Initially, it is being used for site
preparation and the pre-stripping of the open pit areas, with the additional
benefit that the waste material can be used in construction of the tailings dam.
Procurement of the major equipment for the process plant has already begun. The
crushing plant equipment is being manufactured in China and will be delivered
shortly. A local construction firm is building the conveyors and support
structure, to be ready for assembly on site later this year. This will
initially be used to crush waste to produce aggregates for use in construction
before commencing normal production when the process plant is started.
The gold price has been volatile and after rising strongly to exceptional
levels, has recently fallen back to a level which is still some 30% above the
level a year ago and remains very profitable for the company.
I am pleased to report that the hard work of the Group's employees, together
with help from the gold price, has been rewarded with a significant rise in the
share price.
Outlook
Our future prospects have benefited from several factors. Of most significance,
the JORC resource base, from which future production will be drawn, has
increased substantially. The expansion of the design capacity of the plant has
not only increased the potential design output but also reduced the anticipated
unit costs by the use of bigger, more cost effective, self owned and operated
equipment.
All of these factors make a future expansion of the process plant more likely.
Expansion from the current design capacity of 850,000 tonnes per year to around
one million tonnes per year could be carried out relatively simply by adding
further milling and leach tank capacity. This would open up the possibility of
producing from both open pit and underground concurrently, and the treatment of
any mineralisation which may be developed from exploration of Tserkovka and
other new territories.
The most important task facing the Company is now to complete the construction
of the process plant. Operating in Kazakhstan carries risks and uncertainties
that make accurate predictions as to timing and costs difficult, and a shortage
of engineering capacity has caused some delays, but the project team has made
consistent progress and I look forward to the start of operations with increased
confidence.
George Eccles
20 June 2006
Review of Projects - Sekisovskoye
Summary
• The JORC-based gold resource has doubled since our last update in June 2005
(which was, itself, 45% higher than at the start of 2005). This is
attributable to the upgrading of the former Soviet prognosticated resource at
Sekisovskoye. A further update to reflect the recent underground drilling is
being prepared.
• Underground drilling conducted in late 2005 shows numerous new gold zones and
these results are now being evaluated.
• An external mining feasibility study was completed for the open pit project in
October 2005. Detailed pit design was completed by our in-house mining team
but is currently being updated in respect of the new resource model and
current gold prices.
• Comparison of the now significant number of recent drill-hole samples with
former Soviet drill-hole sampling in the same zones shows an overall increase
of 19% in gold content, confirming previous evidence that the Soviet drilling
underestimated the Sekisovskoye resource by this magnitude.
• The conceptual milling facility design was completed in Australia and detailed
engineering and initial construction are now underway for an 850,000 tonnes
per annum treatment facility.
• The Sekisovskoye ore resource and feasibility study was approved by the State
Committee on Ore Resources, putting 25 tonnes of gold and 37 tonnes of silver
onto the State Balance record.
• Mining licences have been received, allowing the start of mining operations.
• A complete mining fleet has been purchased and mining operations have
commenced. Initial mining will focus on pre-stripping waste material from the
North Pit which is required for the configuration of the tailings dam and ore
stockpile area.
• Feasibility work continues on the underground mine design, with the
expectation of accessing high grade material from Ore Zone 11 in 2007 via a
decline access roadway.
Introduction
The Sekisovskoye deposit was selected for further development for a number of
reasons. The deposit had undergone substantial development during Soviet times
and had significant Soviet classified resources. The main gold zones outcrop in
a low hill, providing easy initial access, but gold-bearing mineralisation
continues to a depth of at least 950 metres. The mineralisation is mainly
free-milling and therefore simple to treat via carbon-in-leach cyanidation
technology with gravity recovery of coarse gold. It has a low sulphide content
with no arsenic or other deleterious elements, giving relatively few
environmental concerns.
The project site is located near Sekisovka village which is only some
40 kilometres from the major regional city of Ust Kamenogorsk (capital of
East Kazakhstan Oblast) on a well-maintained sealed road. Ust Kamenogorsk has
an international airport as well as connections to both major highway and rail
links (including the Trans-Siberian Railway). Several high voltage power lines
run through the area, providing cheap electricity. Sekisovka village has
telephone and internet services while the area in general is home to several
major mining enterprises, ensuring a supply of experienced and relatively
low-cost labour.
The mineral rights to the Sekisovskoye deposit are held by the 100% owned
subsidiary TOO Sekisovskoye.
Geology and mineralisation
The deposit occurs in the northwest marginal zone of the 40 thousand km(2) Rudny
Altai Palaeozoic metallogenic belt that occupies the eastern border of
Kazakhstan and the Altaisky region of Russia. The mineral hosting intrusives
are of late Devonian age.
Gold is associated with hydrothermal alteration of the breccia zone matrix and
also with hydrothermal sulphide veining. A high percentage of the gold occurs
as intergrowths and free grains, with only a minor percentage locked within
sulphides. Gold particles can be coarse, up to 0.4 mm, and this contributes to
an erratic grade distribution, in addition to the effect of unmineralised
breccia fragments.
Drilling and resource estimate
The evaluation of the drilling data obtained in the 2004 drilling programme
resulted in a change in the development philosophy of Sekisovskoye. The results
of updated mine modelling and design indicated that an initial open pit project
would be a highly profitable precursor to the development of the higher grade
underground ore-zones. For this reason, the upper levels (to a maximum depth of
240 m) of the Sekisovskoye deposit have been modelled to a cut-off of 0.5
grammes per tonne, suitable for open pit mining, and the lower levels to 2
grammes per tonne, reflecting the higher cost of underground mining. The
modelled zones within the proposed open pit currently make up only some 7% of
the total Sekisovskoye/Tserkovka resource, the majority of which will be mined
from underground.
Hambledon's extensive diamond drilling programmes have intersected many new gold
bearing horizons and continual evaluation and modelling of the favourable
gold-hosting breccia pipe has resulted in a much larger structure, with a 10%
volume increase since June 2005. As a result of the above encouraging trends,
Computer Resource Services (CRS) evaluated the Soviet P1 resource situated along
strike and down-dip of the modelled gold zones and has judged that a sufficient
understanding of the gold occurrences has allowed this resource to be added to
the 'inferred' JORC resource category. It is from this category that further
drillhole sampling may allow upgrading to the 'indicated' class for ore reserve
assessment. The resource statement reflects this change but does not yet
reflect the remodelling which is currently taking place as a result of the
latest underground drilling results.
A new update of the orebody model is being prepared, following which an update
of the resource statement for the open pit area will be released.
Whilst the full analysis of the results of the underground drilling programme
has not yet been completed, preliminary results demonstrate noteworthy increases
in gold occurrences and confirm previous observations that Hambledon's sample
gold grades are statistically 19% higher, at a gold cut-off grade of 0.5g/t,
than the old Soviet surface drillhole results in the same area. CRS, the
Group's independent geological consultants, now conclude that a global increase
in gold grade of about 20%, vis-a-vis the Soviet resource is likely.
Highlighted gold intersections from the recent underground drilling programme
using 0.5g/t Au cut-off:
Drillhole Distance (m) Length (m) Au g/t
From To
D46 15.0 19.2 4.2 13.8
D47 37.5 57.0 19.5 3.0
D50 13.1 32.0 18.9 3.0
D52 77.7 98.6 20.9 3.5
D54 28.0 38.5 10.5 5.9
Project approvals
As part of the approval process for the project, a General Resource Estimate for
Sekisovskoye was submitted and has recently been approved by the State
Commission for Mineral Reserves of the Republic of Kazakhstan. The Kazakhstan
approval process requires that an estimate of resources be submitted, together
with mining, processing and other information, broadly equivalent to a western
style feasibility study. This estimate is reviewed by experts appointed by
VosKazNedra, the regulatory body in East Kazakhstan oblast, and by the Ministry
of Energy and Mineral Resources. The approved resource is based on a smaller
part of the resource base than is used for the overall JORC statement contained
in the Annual Report.
The effect of the approval is that the resources have been entered into the
State Balance, which allows the progression to the mining stage of the subsoil
use contract. This is a fundamental step that represents the most significant
and time-consuming hurdle in the process by which mining operations in
Kazakhstan are approved.
Following this, an official 'licence to mine' has been granted thus amending the
Subsoil Use Agreement to include mining activities as well as exploration.
Further approvals are still required, principally concerning the final
environmental impact and the tailings dam design, but these are well in hand.
Infrastructure
Infrastructure requirements will be minor as the deposit is located close to a
main road, giving easy access to Ust Kamenogorsk from where staff, supplies and
equipment can be obtained. An adequate power supply exists from a nearby power
grid and only a short overhead power line to the project site and related
substation must be installed. Water and telephone connections are available.
An existing building has been acquired and renovated for use as the mine office
to cover mining and milling operations, engineering support, accounting,
procurement, human resources and exploration functions as well as a temporary
laboratory.
Project infrastructure will involve the aforementioned power line and upgrading
of existing roads. Water for operations will come from dewatering of open pit
and underground mines. Groundwater in the area is of potable quality and
requires no treatment other than standard chlorination for drinking water
purposes.
Mine planning
The initial mine plan was based on an ore-body model, developed in Datamine,
which was optimised using Whittle4D software to produce an optimum pit shell.
This shell was used as the basis for the development of a mine design. At a
processing rate of 850,000 tonnes per annum this would give an open pit life of
between 4 and 5 years. Since then, numerous further optimisation studies using
higher gold prices and updated ore-body models have resulted in pit shells of up
to 260,000 ounces, though some of these ounces may be more efficiently mined
from underground.
During the winter season of 2005/2006, over 4,000 metres of core have been
drilled from underground and further significant mineralisation was intersected.
A revised open pit model is being prepared based on the new data while on-going
optimisation studies are routinely carried out at the currently prevailing gold
price.
A study was carried out to determine the best way in which the mining should
proceed. Quotes were obtained from local mining contractors while a 'first
principles' estimate of the unit mining cost was conducted. This study showed
that there were significant cost savings to be generated by purchasing the
mining fleet and carrying out the mining on an owner-operator basis.
The mining fleet, consisting of all new equipment, was ordered in early 2006.
Two Hitachi Zaxis 850H hydraulic excavators from Japan and four (out of an
eventual total of seven) 45-tonne Belaz haul trucks have already been delivered.
Prestripping at the east end of the North Pit and site preparation have begun.
The remainder of the mining fleet, including an Atlas Copco ROC L7 CR drill
rig, a Dressta front end loader, bulldozers and ancillary equipment will be
delivered later in June 2006. All mining activities will be conducted and
supervised by Group personnel.
Mining will incorporate standard drill and blast techniques. Ore grade material
will be mined and hauled to a storage area adjacent to the mill crushing plant.
Lower grade material will be stockpiled for later treatment while waste material
will be used for tailings dam construction or otherwise placed in dumps.
Processing
Metallurgical testwork was carried out in Australia and Kazakhstan. The results
support the very high recoveries encountered in previous testing and an average
recovery of 92% is expected using a conventional Carbon In Leach (CIL) circuit.
The ore contains no environmentally deleterious components and environmental
testing supports the expectation that there will be no acid rock drainage
issues.
The circuit consists of a 3-stage crushing plant followed by primary and
secondary grinding with gravity recovery and fine grinding of the gravity
concentrate. The gravity concentrate will be leached in a small, dedicated
intensive cyanidation circuit. A 6-stage CIL cyanidation leach system will
recover the gold and silver from the ore and concentrate through adsorption onto
activated carbon. The carbon is eventually 'stripped' and the precious metals
are electrodeposited onto cathodes. The cathodes are ultimately smelted into
dore bullion for shipment to a refinery. Tailings will be detoxified prior to
placement in a tailings storage facility. Processing costs are expected to be a
little over US $6 per tonne.
The planned ore throughput for the open pit ore is 850,000 tonnes per annum to
produce approximately 40,000 ounces of gold per annum. The same plant will be
capable of treating underground ore which, being of higher grade, will result in
production of over 100,000 ounces of gold per annum, although there is the
ability to further increase the throughput of underground ore with the addition
of extra grinding and leaching capacity.
Engineering
Definitive metallurgical testwork and process design was completed in Australia
in late 2005. Completion of conceptual design has enabled orders to be placed
for the major long lead process plant items: crushing plant, grinding mills,
gravity concentrator, slurry pumps and agitators. The crushing equipment will
be delivered to site in July 2006 and crushing is expected to begin in autumn.
The remaining process equipment is now being manufactured for delivery to site
in the second half of 2006.
After initially experiencing problems locating experienced design engineers TOO
Sekisovskoye has recruited a team of engineers in Ust-Kamenogorsk to complete
the final detailed design and to supervise and manage the construction of the
processing facility. Construction of the process plant will be undertaken by
local Kazakhstan engineering companies. Processing equipment has been sourced
from Russia, China, Canada, South Africa, Australia and Kazakhstan depending on
quality, reliability and relative cost factors.
Ongoing feasibility of the underground
The feasibility study into the development of the underground ore zones is
continuing. Based on an earlier prefeasibility study, a mining cash cost of US
$22 per tonne (including mining overheads) was envisaged for a combination of
cut and fill and shrinkage methods at typical international prices. The cost
was some 30% less when local equipment, labour, fuel and power costs were
applied. Since then, the Group's own exploration programmes have contributed
further to understanding the deposit and cheaper open-stoping methods are now
being considered. Even at the higher cut and fill costs, the start-up of
underground mining is likely to greatly increase the gold production rate and
lower the cash cost of production compared with those of the open pit.
Initial underground mining will focus on accessing the near-surface, high grade
Ore-body 11. This ore-body extends under the Sekisovskoye river so is not
easily accessible via open pit mining. A decline access roadway will be
constructed to access the upper part of the ore-body in late 2007 or early 2008.
Although underground mine production will start at relatively low rates, the
higher average grade will greatly increase the profitability of the project.
When the existing decline access roadway and related facilities have been
upgraded, the Group can access Ore-body 11 from below while working to tie in
with the new decline. At that point, full-scale underground mining can begin.
Exploration
In June of 2005 the Group was granted a 3-year exploration licence for the
Tserkovka territory which surrounds the original Sekisovskoye lease area and
adds some 29 km2 to the total licence area. In addition, in November 2005, we
received notification that the additional areas of Krugliachka and Glinka will
be added to the overall Tserkovka licence area by formal extension. We are
still awaiting the formal documentation, but planning for evaluation of the
properties is underway for the 2006 season.
Limited exploration drilling was conducted by the Group at Tserkovka during 2005
with additional drilling planned for 2006 at both Tserkovka and the additional
areas.
Tserkovka
The territory immediately surrounds the Company's existing deposit,
Sekisovskoye, and contains four known mineralised deposits named Tserkovka,
Feodulikha, and two areas designated only as Area 4 and Area 5. All these areas
were ostensibly similar to the Sekisovskoye deposit, indicating that any
mineralisation from them is likely to be free-milling and treatable in the same
plant as Sekisovskoye. Each of the deposits lies within a maximum distance of
4 kilometres from Sekisovskoye, close to the main road between Ust Kamenogorsk
and Ridder, so infrastructure requirements for any future development would be
relatively low.
At Tserkovka itself, previous Soviet-era exploration revealed nine mineralised
bodies as identified by mapping-drilling, trenching, pitting and underground
exploration from over a kilometre of underground tunnels. Records from the
conclusion of the Soviet exploration in 1980 showed the resources only in
contained metal terms which cannot be converted to tonnes and grades until
additional supportive archives have been retrieved.
The non-compliant resource amounted to:
Category C2: 4.5 tonnes (145,000 ounces)
Category P1 (prognosticated): 7.5 tonnes (241,000 ounces)
Total C2 + P1: 12 tonnes (386,000 ounces)
The Tserkovka deposit is essentially 'on strike' with the Sekisovskoye orebodies
and favourable breccia styles host both the Sekisovskoye and Tserkovka deposits.
It has been maintained by both former Soviet and the Group's geologists that
additional ore-zones may subcrop between the two deposits. Therefore, the
potential for more discoveries along this five kilometre strike distance is
hopefully high.
Only limited drilling appears to have been carried out at the other sites during
Soviet times. The Soviet estimated resources, on a non-compliant resource
totalled:
Category P1 (prognosticated): 10-12 tonnes (322,000-386,000 ounces)
In 2005 the Group evaluated available documentation and selected drill targets
in Area 5 and at the Tserkovka prospect. The data review suggested that Area 4
and Feodulika were unlikely to contain sufficient mineralisation to justify
drilling at this stage. This was confirmed to a depth of 100 metres in Area 4
by sterilisation drilling conducted as part of the project's tailings storage
facility site evaluation.
In 2005, the Group drilled 18 holes from surface at Tserkovka and one hole in
Area 5 representing 1,963 metres and 273 metres respectively. All holes were
either NQ or HQ diamond core. Nothing of significant interest was intersected in
Area 5, so additional drilling in that area has been postponed.
At Tserkovka, mineralisation similar to Sekisovskoye was intersected together
with some interesting near-surface silver mineralisation. Based on the data
obtained from the 2005 programme and a review of additional Soviet exploration
results, a programme of 12 holes for a total of 1,800 metres is planned for the
2006 season.
Krugliachka and Glinka
As mentioned, the Group has sought to expand its exploration base into nearby
prospects that are similar to Sekisovskoye and may be treated in the same or an
expanded treatment plant. Two mineralised areas in the vicinity, known as
Krugliachka and Glinka, cover a combined area of approximately 10 square
kilometres. After submitting a formal application to the authorities, the Group
has been informed by the Ministry of Energy and Mineral Resources that these
areas can be considered to be part of the Sekisovskoye-Tserkovka ore trend and
therefore will be granted as an extension of the Tserkovka exploration area
without a tender. Formal authorisation of the extensions has yet to be
received.
Both Krugliachka and Glinka prospect areas are in agricultural/pastoral
countryside near to surface infrastructure (roads and power lines).
Krugliachka lies 8 km to the northwest of Sekisovskoye and appears to have the
potential to be another deposit of the Sekisovskoye type, though exploration is
at an early stage. Soviet exploration included surface and trench samples. The
gold content of several surface samples indicated grades of up to 5 g/t. The
Soviet geologists recommended trenching and shallow drilling in the hope of
discovering zones of secondary enrichment below the oxidised cap, similar to the
high grade area of Sekisovskoye that was mined in Soviet times. The Group's
exploration team has prepared a programme of diamond core drilling and surface
sampling for 2006.
Glinka lies some 8 km north-northwest of Sekisovskoye. The local population has
mined kaolin clay from the area and samples taken from the kaolin pit walls
indicate the possible presence of payable goldpolymetallic mineralisation.
Based on Soviet exploration including surface sampling, trench samples and
relatively deep test pits (up to 15 metres in depth), the deposit appears to be
more akin to existing polymetallic deposits in the Ridder area (80 km northeast
of Sekisovskoye).
The current plan for 2006 exploration at Glinka includes more surface and trench
samples as well as a continuing review of Soviet data.
Mineral resources
This estimate of the mineral resources of the Sekisovskoye deposit has been
prepared under the JORC Code and is an update to the resource as reported in
November 2005. A fully revised summary will be announced once the analysis of
the recent drilling data has been completed.
Gold Silver
Location Resource tonnes g/t g/t Contained g/t Contained
category (million) cut-off metal metal
oz * oz *
Sekisovskoye upper Indicated 10.59 0.5 1.6 544,762 3.2 1,086,438
levels Inferred (b) 10.56 1.6 543,219 3.0 1,018,536
(above 250m level)
Sekisovskoye deeper Indicated 2.21 2.0 5.1 362,371 6.2 440,529
levels Inferred (b) 7.16 5.2 1,197,036 7.1 1,634,415
Sekisovskoye Indicated 3.40 0.5 0.7 76,519 1.4 153,037
marginal deeper
levels (a) Inferred 0.96 0.6 18,519 1.2 37,038
Totals Indicated 16.20 1.9 983,652 3.2 1,680,004
Inferred 18.68 2.9 1,758,774 4.5 2,689,989
Total Inf + Ind 34.88 2.4 2,742,426 3.9 4,369,993
* Troy oz = 31.10348
(a) underground low grade material associated with high grade gold zones
(b) includes resources that have been defined beyond the current limits of the
grade model.
Note:
In addition, resources in our new licence areas of Tserkovka, Feodulikha and
Areas 4 & 5 contain former Soviet-based resources of C2 and P1 totalling some
740,000 ounces of gold. It is expected that some of these resources can be
categorised under the JORC Code after assessment of the current exploration
drilling results.
Qualified person
This estimate of the mineral resources has been prepared by Roger Rhodes B.Sc.,
M.Sc., MIMMM, independent geological consultant with Computer Resource Services
(CRS). He has over 35 years of relevant experience and is a qualified person
for the purpose of reporting resources under the JORC Code and the AIM Rules.
Mr Rhodes has reviewed the resource information given in the annual report and
consents to its inclusion in the form and context in which it appears.
This estimate of the mineral resources does not comprise part of the audited
financial statements.
Consolidated profit and loss account
For the year ended 31 December 2005
Notes Year ended Year ended
31 December 31 December 2004
2005
£000's £000's
Administrative expenses
exceptional expenditures - (96)
other administrative expenses (836) (331)
Operating loss (836) (427)
Net interest and similar items 249 (11)
Loss on ordinary activities before and after (587) (438)
taxation and transferred to reserves
Retained loss for the financial period (587) (438)
Loss per ordinary share (UK pence per share) 3 (0.24) (0.22)
Diluted loss per share (UK pence per share) 3 (0.24) (0.22)
All results are derived from ongoing activities
The Company has taken advantage of Section 230 of the Companies Act 1985 not to
publish its individual profit and loss account.
Consolidated balance sheet
As at 31 December 2005
Notes Year ended Year ended
31 December 31 December 2004
2005
£000's £000's
Fixed assets
Intangible assets 52 672
Tangible assets 3,060 19
3,112 691
Current assets
Debtors 213 13
Cash at bank and in hand 4,021 1,263
4,234 1,276
(444) (418)
Creditors: amounts falling due within one year
Provisions for liabilities and charges (1,127) -
Net current assets 2,663 858
Net assets 5,775 1,549
Capital and reserves:
Called up equity share capital 262 200
Share premium account 6,820 2,069
Merger reserve (148) (148)
Profit and loss account (1,159) (572)
Equity shareholders' funds 4 5,775 1,549
These financial statements were approved by the board of directors on 20 June
2006 and signed on its behalf by
Nicholas Bridgen
Chief Executive
Consolidated cash flow statement
For the year ended 31 December 2005
Notes Year ended Year ended
31 December 31 December
2005 2004
£000's £000's
Net cash outflow from continuing operating (889) (428)
activities
Returns on investments and servicing of
finance
Interest received 150 27
Interest paid (21) (16)
Miscellaneous non operating income 17 -
146 11
Capital expenditure and financial investment
Payments to acquire intangible fixed assets (988) (435)
Payments to acquire tangible fixed assets (277) (18)
(1,265) (453)
Net cash outflow before financing (2,008) (870)
Financing
Issue of ordinary share capital in the year 4,813 2,119
(net of share issue expenses)
Share issue expenses relating to previous (47) -
years
Increase in net cash in the period 2,758 1,249
Analysis and reconciliation of net funds
As at 31 Cash flow Other non As at 31
December cash changes December
2004 2005
£000's £000's £000's £000's
Cash at bank and in hand 1,263 2,737 21 4,021
Debt due within one year (274) 21 (50) (303)
Net funds 989 2,758 (29) 3,718
Statement of total recognised gains and losses
For the year ended 31 December 2005
31 December 2005 31 December 2004
£000's £000's
Loss for the financial period (587) (438)
Currency translation differences on - (2)
foreign currency net investments
Total recognised gains and losses (587) (440)
relating to the financial period
Reconciliation of movements in equity shareholders' funds
For the year ended 31 December 2005
31 December 2005 31 December 2004
£000's £000's
Total recognised gains and losses (587) (440)
New capital subscribed (net of costs) 4,813 2,119
Net change in equity shareholders' funds 4,226 1,679
Opening equity shareholders' funds 1,549 (130)
Closing equity shareholders' funds 5,775 1,549
Notes
1. Basis of preparation
The consolidated financial information for the Group has been prepared under the
historical cost convention in accordance with applicable United Kingdom Law and
Accounting Standards. The policies have remained unchanged from the previous
year.
2. Revenue
The Group is engaged in the exploration and development of gold and silver
deposits in East Kazakhstan and has no trading revenue.
3. Earnings per share
31 December 2005 31 December 2004
Unaudited Unaudited
£000's £000's
Loss for the period (587) (438)
Weighted average number of ordinary shares 246,854,369 199,765,328
Loss per ordinary share (UK pence per share) (0.24) (0.22)
Diluted loss per share (UK pence per share) (0.24) (0.22)
4. Post balance sheet events
Issue of shares
On 2 March 2006 a placing of 104,000,000 new ordinary shares at 10p per share
raised £10.4 million before expenses (expenses £0.4 million). The funds will be
applied to develop the Sekisovskoye project.
Construction of processing facilities
The Group has placed orders for key components of the processing facility
including crushers and ball mills for delivery in mid June 2006.
5. Dividends
The directors are not proposing to pay a dividend.
The Report and Accounts for the year to 31 December 2005 are being posted to
shareholders and are available to the public from the Company's Registered
Office: Daws House, 33 - 35 Daws Lane, London, NW7 4SD.
This information is provided by RNS
The company news service from the London Stock Exchange
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