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Peter Hambro Mining (POG)

  Print      Mail a friend       Annual reports

Thursday 15 April, 2004

Peter Hambro Mining

Final Results

Peter Hambro Mining PLC
15 April 2004



                             Peter Hambro Mining PLC

                              Preliminary results
                      for the year ended 31 December 2003

Peter Hambro Mining PLC announces the preliminary results for the year ended 31
December 2003.

Financial Highlights:

US$ '000                                            2003                 2002
----------------------                        ------------          -----------
Retained Profit for the Year                      10,383                5,104
Shareholders' Funds                              115,633               48,071
Net Debt                                          18,475               24,161

Operating Highlights                                2003                 2002
----------------------                        ------------          -----------
Attributable Gold Production                  148,789 Oz            69,900 Oz

Reserves and Resources                              2003                 2002
----------------------                        ------------          -----------
Russian Category C Reserves               5.3 Million Oz       4.0 Million Oz
Russian Category P Resources             50.3 Million Oz       8.4 Million Oz

                              Total      55.6 Million Oz      12.4 Million Oz


Peter Hambro, Executive Chairman, said: -

"Fulfilling our objective of producing 120,000 ounces in the new plant's first
year of full operation is a major achievement and the resultant doubling of
retained profits to more than US$10 million is gratifying. The plant is
presently running at slightly better than its 1 million tonne per year design
capacity and, with the 50% up-grade expected to be operational before the end of
2004, the prospects for next year are good. Our forecast for Group attributable
production for 2004 is 204,000 ounces.

Exploration at Pokrovskiy, Pioneer and Tokur has yielded good results, with
greater confidence being achieved in the Group's resource definition and 5.3
million ounces now in the Russian C1/C2 reserve categories. Total reserves and
resources for the Group have increased to more than 55 million ounces, but it
should be noted that much of the increase is in the geochemically predicted
Russian P2 and P3 resource categories at Tokur. In view of the importance
attributed by the Board to the Reserves and Resources figures the Board has
decided to commission an independent review thereof.

Our priority remains the increase of production; but it is interesting to note
that, even with our reserves and excellent infrastructure at Pokrovskiy,
achieving an increase is not a speedy process. This is true for all gold mining
interests and shows how time consuming it is for the industry to respond to
price movements."

Enquiries:

Peter Hambro, Executive Chairman                          +44 20 7201 8900
Alya Samokhvalova, Director of External Communications
Peter Hambro Mining plc
David Simonson / Tom Randell                              +44 20 7653 6620
Merlin



Consolidated Profit and Loss Account for the year ended 31 December 2003
========================================================================

                                                                2003      2002
                                                               $'000     $'000

Turnover: group and share of joint ventures                   54,260    22,774
Less: share of joint ventures' turnover                      (10,605)        -
                                                              --------  --------
Group turnover                                                43,655    22,774
Net operating expenses                                       (29,860)  (12,312)
                                                              --------  --------

Operating profit                                              13,795    10,462

Profit on disposals of discontinued operations                   930         -

Share of operating profit in joint ventures                    3,690         -
Amortisation of goodwill in joint ventures                      (391)        -
                                                              --------  --------

Profit on ordinary activities before interest and other       18,024    10,462
income

Interest payable and similar charges                          (2,536)   (1,640)

Other income                                                     769       613
                                                              --------  --------

Profit on ordinary activities before taxation
Group                                                         13,082     9,435
Joint ventures                                                 3,175         -
                                                              --------  --------
                                                              16,257     9,435

Taxation on profit on ordinary activities                     (5,270)     (639)
                                                              --------  --------

Profit on ordinary activities after taxation
Group                                                          8,738     8,796
Joint ventures                                                 2,249         -
                                                              --------  --------
                                                              10,987     8,796

Minority interests
Group                                                           (193)   (3,692)
Joint ventures                                                  (411)        -
                                                              --------  --------

Profit retained for the year                                  10,383     5,104
                                                              ========  ========

Earnings per ordinary share                                    $0.18     $0.16
Diluted earnings per share                                     $0.17     $0.15




Consolidated Balance Sheet as at 31 December 2003
=================================================
                                                              2003       2002
                                                             $'000      $'000
Fixed Assets
Intangible assets
Goodwill                                                         -     17,790
Other intangible assets                                     71,173      3,743
Capitalised exploration and development expenditure          2,159      1,156
Tangible assets
Property, plant and equipment                               39,163     45,996

Investments                                                      2        637
Investments in joint ventures:
Goodwill                                                     2,969          -
Share of gross assets                                       14,445          -
Share of gross liabilities                                  (8,135)         -
Loans                                                        2,614          -
                                                             -------    -------

                                                           124,390     69,322
Current Assets
Stock and work in progress                                  11,355      7,501
Debtors                                                     13,621      4,868
Cash at bank and in hand                                    14,827      1,388
                                                             -------    -------

                                                            39,803     13,757

Creditors, amounts falling due within one year             (42,144)   (22,726)
                                                             -------    -------

Net Current Liabilities                                     (2,341)    (8,969)
                                                             -------    -------

Total Assets less Current Liabilities                      122,049     60,353

Creditors, amounts falling due after more than one year
Due to former shareholders of subsidiary                    (3,284)    (3,043)
Long-term borrowings                                             -     (7,578)
Finance lease liabilities falling due within one to three
years                                                         (895)    (1,121)
                                                             -------    -------

                                                            (4,179)   (11,742)

Provision for liabilities and charges                       (1,504)         -
                                                             -------    -------

Net Assets                                                 116,366     48,611
                                                             =======    =======

Capital and Reserves
Share capital - ordinary shares                              1,010        751
Share premium                                               85,252     34,636
Merger reserve                                               8,755      8,755
Contingent reserve on acquisition                            6,304          -
Share incentive reserve                                         40         40
Profit and loss account                                     14,272      3,889
                                                             -------    -------

Equity shareholders' funds                                 115,633     48,071

Minority interests                                             733        540
                                                             -------    -------

Capital employed                                           116,366     48,611
                                                             =======    =======




Consolidated Statement of Cash Flow for the year ended 31 December 2003
========================================================================

                                                             2003         2002
                                                            $'000        $'000

Net cash inflow from                                       11,785        6,890
operating activities
Returns on investments
and servicing of finance
Interest received                                             463           21
Interest paid                                              (3,721)        (948)
Interest element of finance leases                           (301)        (235)
Dividends paid to minority shareholders                      (140)           -
                                                            -------      -------

Net cash outflow from returns on                           (3,699)      (1,162)
investments and servicing of finance

Taxation Paid                                              (3,264)           -

Capital Expenditure
and Financial Investment
Purchase of tangible assets                                (8,539)     (11,665)
Purchase of intangible assets                              (2,144)      (1,152)
Investments acquired                                       (3,736)        (629)
Proceeds on sales of investments                            4,562            -
Proceeds on disposal of tangible assets                         -           16
Loans issued                                               (3,804)         (76)
Loans issued to joint venture undertakings                   (340)           -
                                                            -------      -------

Net cash outflow on capital expenditure                   (14,001)     (13,506)
and financial investment

Acquisitions and Disposals
Purchase of subsidiary undertakings                        (6,002)          (8)
Cash acquired with subsidiaries                               179            -
Sales of subsidiary undertakings                              (22)           -
Purchase of interest in joint ventures                     (3,623)           -
                                                            -------      -------

Net cash outflow on acquisitions and disposals             (9,468)          (8)

Cash outflow before Financing                             (18,647)      (7,786)

Financing Activities
Capital element of finance leases                          (1,099)      (1,344)
Receipts from borrowing                                    59,254       11,400
Repayments of amounts borrowed                            (51,728)      (4,912)
Net receipts from issuing shares                           25,659        2,669
                                                            -------      -------

Net cash inflow from financing activities                  32,086        7,813
                                                            -------      -------

Increase in cash at bank and in hand                       13,439           27
                                                            =======      =======



2003 Operating Highlights
=========================

Attributable Group production of 148,789 ounces more than double that of 2002
(2002- 69,900 ounces). Forecast attributable Group production for 2004 of
204,000 ounces.

POKROVSKIY RUDNIK
-         PLANT
•Successful full commissioning of new plant
•New crusher and concentrator pushes production capacity over 1 million
 tonnes per year
-         MINING
•Amalgamation of the three original pits has created efficiency gains and
 a 10% reduction of mining costs
•Ore blending and selective processing of ore via plant or heap leach has
 increased productivity and profit
•Introduction of resin sorption ion-exchange process for the heap leach
 has improved recovery and reduced cost
-         PRODUCTION
•Production increased by 74% and exceeded forecasts
•Gold Institute Standard Cash Operating Costs of US$104.5/oz for
 Pokrovskiy Rudnik production during 2003. Russian reported operating costs
 remain constant at US$136/oz.


OAO Pokrovskiy Rudnik


                                        Units             2003            2002
MINING
     Total material moved        cubic metres            3,831           3,463
                                         '000
     Economic ore                 tonnes '000            1,053           1,375
          Grade                           g/t              3.5             4.1
          Gold content                oz '000            116.9           177.1
     of which rich ore            tonnes '000              656             824
          Grade                           g/t              4.5             5.3
          Gold content                oz '000             95.4           136.9

PLANT
     Milling                            t/day            3,552           2,011
     Ore from pit                 tonnes '000              661             128
          Grade                           g/t              4.4             6.1
     Ore from stockpile           tonnes '000              202              23
          Grade                           g/t              3.6             3.5
     Total milled                 tonnes '000              863             150
          Grade                           g/t              4.2             5.7
          Gold content                oz '000              117              27
          Recovery                          %             90.9            92.4
     Gold produced                    oz '000              106              25

HEAP LEACH
     Leaching                           t/day            3,909           4,219
     Ore stacked                  tonnes '000              503             696
          Grade                           g/t              2.1             5.2
          Gold content                oz '000               34             113
          Recovery                          %             44.8            40.2
     Gold produced                    oz '000               15              45

      TOTAL   Recovered gold          oz '000              121              70
      ------- -----------           -----------      -----------      ----------



Omchak JV Operations Full Year Reports
======================================

Nelkobazoloto                    units                2003                2002       
- Shkolnoye Deposit

Material Moved                   t'000              42,459              40,500
                                
Ore Processed                    t'000              56,622              35,560
                                 
Ounces produced                  oz'000               36.6                20.3
                                 

Berelekh
---------
Material Moved/Stripped          t'000               9,547               9,675
                                 
Sands Processed                  t'000               3,589               3,733
                                 
Ounces produced                  oz'000               59.9                62.4
                                

TOTAL
------
Material Processed                t'000             60,211             39,293 
Ounces produced                   oz'000              96.5               82.7 


Peter Hambro Mining's share of production is 50% of the gold produced in the 5 
months following August 2003  
            ('000 oz)                 Omchak Joint Venture     Attributable to 
                                                           Peter Hambro Mining
Nelkobazoloto - Shkolnoye                             39.4                19.7
Deposit
Berelekh                                              16.9                 8.4
                                              ==============      ==============
                    TOTAL                             56.3                28.1
                                              --------------      --------------


2003 Exploration & Development Highlights
=========================================

2003 saw further expansion of the Group's exploration programme, with particular
achievements including:

   • a 33% increase in reserves and a 499% increase in resources, both over
     last year's annual statement
   • delineation of new ore shoots extending Pokrovskiy Rudnik and
     identification of targets around the flanks of the Pokrovskiy Rudnik
     deposit, adding a further 7.6 million ounces to reported Russian Category
     Resources
   • new exploration on 6 ore zones at Pioneer and evidence to support
     previous reserve and resource predictions
   • at the Tokur deposit, confirmation of a predicted gold-bearing
     mineralisation zone of the Glavniy Fault for 2km
   • completion of the Micromine database for Pokrovskiy Rudnik with the 3D
     model at Pokrovskiy Rudnik almost complete
   • prioritisation of sampling of mill throughput. A lack of available
     laboratory capacity and adverse weather conditions slowed work. However, a
     new Group laboratory in Blagovechensk has been acquired, with the aim of
     expediting work and reducing the backlog of assay samples.

Summary table of reserves and resources
Peter Hambro Mining plc, as at 1/1/2004
                             Gold Content 
                             ------------                      as at 1/1/2003
                     Ore        Gold, kg        Gold, oz             Gold, oz
                ('000 tonnes)        (kg)       ('000 oz)            ('000 oz)
Group Summary
C1                     28,737      69,468          2,233                1,575
C2                     53,803      95,050          3,056                2,375
P1                     70,058     139,154          4,474                  777
P2                    310,791     657,639         21,144                7,671
P3                    271,195     769,050         24,726                    -
TOTAL *               734,584   1,730,361         55,633               12,398
* Where data is aggregated as 2 classifications (e.g. C1 & C2), for this
summary we have reported the total as the lower of the two (i.e. C2)
* This Group total does not include Reserves and Resources from the Omchak JV

Annual Report & Accounts
We intend to publish and distribute the Company's Annual Report and Accounts for
the year ended 31 December 2003 at the end of this month.
This report will contain a more detailed analysis of the work undertaken by the
Group during the period and a breakdown, by deposit, of the Group's Reserves and
Resources and production.

Pioneer Reserve Bonus Scheme
The Pioneer Reserve Bonus Scheme units entitle the holders to an aggregate US$5
for every ounce added to the Category C1 and C2 reserves at Pioneer. Holders of
the units, who include Peter Hambro, Dr. Pavel Maslovsky and members of the
Russian management team, have made a proposal to the Company in which they have
offered to accept termination of this Scheme in return for a payment which may
be settled by the issue of new shares in Peter Hambro Mining plc.

The Company has decided that the amount of any settlement should be determined
by a committee of independent directors of Peter Hambro Mining plc and, the
holders have agreed a maximum aggregate payment of US$25 million, which may be
settled in shares in Peter Hambro Mining plc.

Pioneer reserves and resources, as at 1 January 2004, were reported by
Pokrovskiy Rudnik as 9.8 million ounces (US$49 million), of which 2.0 million
ounces (US$10 million) were in Category C.

Implementation of these arrangements will require inter alia shareholder
approval which may be sought at the forthcoming Annual General Meeting of the
Company, which is planned to be held in May 2004, or subsequently.




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