Operational Update

RNS Number : 1019U

Hambledon Mining PLC

11 May 2008

 

                              HAMBLEDON MINING PLC
                                   (AIM: HMB)

                        Sekisovskoye Exports First Gold
                               Operational Update


Hambledon Mining plc ('Hambledon' or the 'Group' or the 'Company'), the
AIM-listed gold mining and processing company operating in Kazakhstan, is
pleased to report its first export of gold from Sekisovskoye and the positive
results of the study into the underground resource.


Highlights:

Sekisovskoye

   ·32.3 kilogrammes of dore, containing 8.2 kilogrammes of gold, has been
    exported and sold

   ·All aspects of the processing plant operating well

   ·Study confirms economic viability of underground mining

   ·Combined annual output (open pit and underground) of around 100,000
    ounces per year expected

   ·Underground mining potential of 2.9 million tonnes at 4.70 g/t (433,000
    ounces) based on all resource categories

Ognevka

   ·Production initially disappointing but outlook positive


Sekisovskoye processing operations

Some 32 kilogrammes of dore, containing 8.2 kilogrammes of gold, have been
poured at Sekisovskoye since the start of operations and these have been
exported to Metallor's refinery in Switzerland and sold.

The plant has been operating well since the restart of processing in April.
Production has been limited by the impact of very wet weather on the clay-like
material, however, for the last few days, weather conditions have been excellent
and the ore has dried out. This problem is not expected to recur once the
clay-containing near-surface ore has been mined and processed. The mills have
now been tested at full capacity and are requiring lower power than expected,
indicating that they are comfortably capable of operating at the planned level.
They are currently being operated at 80% of capacity but will be turned up to
full power as the remaining parts of the plant are fully tested.

All other parts of the plant have been operating normally and metallurgical
recoveries are in the region of 85% - 90%, as expected. Upon the achievement of
steady-state operations, the Falcon concentrator and associated regrind mill
will be started, whereupon recovery can be expected to rise to the planned 92%.


Sekisovskoye underground study and reserve

The Company has completed a preliminary study into the feasibility of
underground mining, using the resource model compiled by the Company's 
independent geological consultants, design and costing input from AMC
Consultants and other internally generated inputs.

The underground Resource is made up of over 200 distinct mineralised zones
containing 4.5 million tonnes @ 5.1 g/t. For the purposes of the study, it was
decided to focus on the largest 34 zones only, which contain 74% of the ore
tonnes and 76% of the gold content. The remaining smaller zones will be
incorporated into future mine plans when more detailed mine planning is
undertaken.

AMC developed a mine design system utilizing a twin decline system to access the
western and central mineralized zones. These two zones are approximately 200m
apart and the declines are connected at 100m vertical intervals for operational
simplicity. The geo-technical study showed that it is possible to utilize a mass
mining technique and sub-level open stoping was chosen with stopes subsequently
backfilled to provide long term stability. These methods should allow for an
annual mining tonnage of up to 500,000 tonnes of ore during the peak years of
mining.

Although a detailed mining reserve has not yet been formalised, from the 34
ore-bodies within both Indicated and Inferred categories of resource, an
estimated total of 2.9 million tonnes could be mined at a diluted grade of 4.7
grammes per tonne, for a total of 433,371 contained ounces of gold (plus
additional silver which was not included in the study).

The cost analysis carried out as a part of the study determined that total Mine
Operating Cost (total cost of mining, processing and administration) will be
some $64 per tonne of ore, though this is only partially based on the lower
costs of operating in Kazakhstan compared with Australia. The total cash
investment, including working capital, necessary to get the underground mine
into production, would be $22m, though the Company is working on a development
schedule that will proceed in stages to suit the approvals system operating in
Kazakhstan and will use more local, FSU and Chinese equipment. The likely
up-front investment, including working capital, will be just $3.0 million, which
will be financed by local borrowing and internally generated profits.

At its maximum output of some 500,000 tonnes per year, some 70,000 ounces per
annum of gold could be recovered from the underground mine in addition to any
further tonnages from the existing open pit. If the well established indications
in the open-pit zones of a grade increase of some 20% (compared with Soviet era
exploration) continue underground, this can be expected to increase to some
84,000 ounces per year, giving a total of over 100,000 ounces per year when feed
from the existing open pit is limited to the amount required to fill the mill
capacity of 850,000 tonnes per year. In practice, means of de-bottlenecking the
process plant will be investigated and provision has already been made within
the mill building for an additional leach tank. Production from the open pit may
therefore be maintained at a higher rate and combined production may be higher.

Initial planning work has commenced to produce the documentation required to
obtain approval from the Kazakhstan Government to start the development.


Ognevka

Metallurgical recoveries and resulting concentrate grades from the treatment of
clinkers at Ognevka have been poor, and only limited output of saleable material
has been produced. This was initially attributed to over-activity of the
magnetiser and the already fine-ground physical properties of the clinkers.
However, the results of initial modifications to correct these defects were
disappointing. Further testwork has since been carried out to see why the
initial testwork results are not being replicated and this has lead to further
modifications, involving a further gravity-table separation of the carbon using
the existing shaking tables. These modifications have now been installed and are
being commissioned, though it will take some time before commissioning will be
completed and the results known.


However, improved commercial terms have been provisionally agreed with a Russian
smelter which will have the effect of allowing shipment of lower grade
concentrates. This will both make it easier for Ognevka to meet the required
specification, and enable a higher metallurgical recovery of copper, gold and
silver to be achieved. The sales prices for the main components of the
concentrate are likely to be slightly better than those previously expected.

Negotiations have started with the government owned, special-purpose
organisation for the holding and exploitation of sub-surface rights known as
SPK. The SPK has the power to take the rights to additional government-owned
clinkers with a view to creating a joint venture with the Company that will mine
such clinkers and supply them as raw-material to TOO Ognevka.

TOO Ognevka has obtained the documents proving ownership of some 1.65 million
tonnes of pegmatite tailings from previous operations, containing good grades of
lithium, niobium, tantalum and other high value metals. These tailings have been
surveyed and assayed, and bulk samples sent to a process testing facility in
Ukraine. Customs and other factors have delayed the start of this testwork and
the Company is considering other process testing options. Until such testwork
has been carried out, it is not possible to be certain of economic
recoverability and the Company has therefore decided not to place this resource
on its statement of estimated resources. The Company's pegmatite tailings lie
above much larger quantities of older government-owned tailings that the Company
will seek to obtain rights to if the testwork proves successful. An existing but
shut-down pegmatite mine lies underneath the Ognevka factory, and the Company
may also apply for the rights to this.

In the event that the testwork shows the pegmatite operation to be feasible, the
decision will then be made whether to convert the process plant back into
pegmatite treatment or to create a second product line, for which there is
already adequate space within the factory building.


Nick Bridgen, Chief Executive of Hambledon, said:

'Sekisovskoye is operational and is going very well and we've made our first
gold sales. The underground study looks good and we'll start on the first stage
as soon as we get the required permits.

'The initial production levels at Ognevka are disappointing but steps have been
put in place to upgrade the performance and we've secured a better sales
contract.

'The next two big events for Hambledon to look forward to are the start of
underground development and the proving up of the pegmatite resource at
Ognevka.'

                                                                     12 May 2008


Enquiries

Hambledon Mining plc                 Telephone: [phone]
Nick Bridgen

Bankside Consultants                 Telephone: [phone]
Michael Padley / Louise Davis

Seymour Pierce                       Telephone: [phone]
Nicola Marrin


Note to editors

Hambledon Mining plc is an AIM-listed gold mining and exploration company, which
is operating the Sekisovskoye gold mine and the Ognevka processing plant, both
of which are close to Ust Kamenogorsk in East Kazakhstan.

At Sekisovskoye, the Company is mining from an open pit and has constructed an
850,000 tonnes per year treatment plant. Production from the open pit will
average over 40,000 ounces per annum. As soon as steady production has been
achieved, the Company plans to develop the much larger underground resource that
is expected to lead to a combined production rate of around 100,000 ounces per
year.

The Ognevka processing plant is producing concentrates containing gold, silver,
copper, iron and coke from the re-treatment of zinc smelter residues.

 

END

 

 

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