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Peter Hambro Mining (POG)

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Thursday 17 June, 2004

Peter Hambro Mining


Peter Hambro Mining PLC
17 June 2004

 Proposed acquisition of Ametistovoye, a construction stage asset, with Russian
C1 & C2 Reserves of approximately 1.7 million ounces of gold and over 5 million
                                ounces of silver

17th June 2004

Peter Hambro Mining PLC, the London based and mining company traded on AIM,
announces that it has signed a memorandum of understanding to acquire the
company that holds the licence for the Ametistovoye Deposit in Kamchatka located
in the Russian Far East.

Reserves and Resources

The Ametistovoye deposit hosts a C category reserve base of approximately 1.7
million ounces of gold and approximately 5.3 million ounces of silver. The
official reserves and resources of the Ametistovoye deposit, approved by Russian
government Committee on Natural Resources protocol No.324 dated 24 May 1994,
were as follows:-

   I                                 I        C1    I         C2 I
   I Ore                 '000 t      I   1,724.4    I    2,126.1 I
   I Gold                '000 oz     I     848.4    I      838.5 I
   I Gold grade           g/t        I      15.3    I       12.3 I
   I Silver              '000 oz     I   2,241.6    I    3,029.2 I
   I Silver grade         g/t        I      40.4    I       44.3 I

The feasibility study of the deposit also shows the possibility of a further P1
category resource of at least 1 million ounces of gold. Additional drilling and
evaluation of the flanks of the deposit will be required to confirm any
additional resources.

Purchase Price of US$25 million

The memorandum of understanding with respect to the acquisition was signed on
31st May 2004 at which time a deposit of US$200,000 was paid. Conditional upon
the satisfactory completion of due diligence, the obtaining of all necessary
corporate and legal approvals and entry into definitive documentation, Peter
Hambro Mining will pay a total of US$25m in cash for the entire issued share
capital of the licence holder and for the relevant geological information and
the feasibility study of, the Ametistovoye deposit. Part of the proceeds of
Peter Hambro Mining's recent fund raising will be used to fund this acquisition.
Peter Hambro Mining is already in discussions with a number of banks regarding
project finance for the construction of a mine at Ametistovoye.


The deposit is located in the Penzhinsky area of the Koryak Autonomous Region
(north of Kamchatka). The deposit is linked to the nearest population centres
Tilichiki and Korf by 180km of dirt road. Tilichiki and Korf both have a seaport
and an airport, of which the latter remains open year-round. The population of
the area is mainly occupied in the mining of alluvial platinum and gold deposits
as well as in fishing and processing of marine products.

Specialists from the Peter Hambro Mining Group believe that the region is
suitable for a mining operation of this type. Kamchatka is a traditional gold
mining region and the income generated by the industry is important to the local
economy. The deposit is at considerable distance from national parks and nature
reserves, and in an area with a developing mining industry. An independent
environmental opinion suggests development of the deposit will not have a
negative environmental impact in the region which conforms to Peter Hambro
Mining's stated aim of operating to World Bank approved standards.


The deposit was first discovered in 1968 and covers an area of 11km2. 
Exploration work on the deposit was conducted until 1994. During this period the
following work was carried out:-

   • trenches and pitting      899,625m3
   • core drilling             167,365m
   • underground development    13,225m

Feasibility Study

Ametistovoye has a feasibility study establishing the viability of exploiting
the deposit. A mine with production of c.400,000 tonnes is estimated to require
c.US$60-70million, and forecasts annual gold production of c.150,000 ounces and
silver production of more than 300,000 ounces for a period of 8-9 years from the
current reserves. The geochemical properties and characteristics of the ore from
the Ametistovoye deposit were studied by laboratory samples, bulk samples and
pilot scale testing in research centres in Russia & Canada. The ore belongs to
the same technological type and can be treated using sorption or a
gravitation-sorption process. Estimated recovery is at more than 93% of gold and
c.80% of silver.


The feasibility study assumes production using underground mining. Peter Hambro
Mining's Omchak team has extensive of experience in underground mining and it is
planned that this team would be involved with the construction, development and
operation of Ametistovoye. The feasibility study suggests mining costs similar
to that of the Pokrovskiy Mine, where Peter Hambro Mining built its first
operation in the Amur Region.

Commenting on the acquisition, Peter Hambro, Executive Chairman of the Group

"In the year of our tenth anniversary of doing business in Russia it is with
great pleasure that we announce the acquisition of another quality gold mining
asset in the Russian Far East. Buying Ametistovoye, a deposit with substantial
reserves and more importantly a feasibility study that demonstrates its
significant potential will facilitate a major advance for Peter Hambro Mining
since it will add more readily mineable reserves to our already impressive
gold-in-the-ground portfolio. It also shows, once again, Peter Hambro Mining's
ability to find world-class gold deposits at a cost per ounce well below that
paid in the West. Once completed, the Ametistovoye acquisition will give us
mineable reserves at approximately c.US$14 per reserve ounce.

Construction of the mine is expected to commence shortly after the proposed
acquisition and we would hope to have the mine in production during 2006.

Mining specialists will note that the exploration work that has been done at
Ametistovoye - almost 900,000 cubic metres of trenching, 167 kilometres of
drilling and 13 kilometres of underground development - would cost in the west
as much as our total acquisition cost of the deposit. This further exemplifies
the number of high quality but low cost mining opportunities in Russia."


Alya Samokhvalova                                   +44 (0) 20 7201 8900
Investor Relations, Peter Hambro Mining

Tom Randell / David Simonson                        +44 (0) 20 7653 6620

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