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Peter Hambro Mining (POG)

  Print      Mail a friend       Annual reports

Monday 18 April, 2005

Peter Hambro Mining

Final Results

Peter Hambro Mining PLC
18 April 2005

                        Preliminary results for the year
                             ended 31 December 2004

Peter Hambro Mining PLC announces its preliminary results for the year ended 31
December 2004.

Financial Highlights:
US$ '000                                      2004             2003    change
------------------------                 -----------      -----------  --------
Turnover (inc. share of Joint Ventures)     85,502           54,260        +58%
Operating Profit                            22,703           13,795        +65%
Retained Profit for the Year                15,318           10,383        +48%
Earnings per ordinary share (US$)             0.22             0.18        +22%
Shareholders' Funds                        200,134          115,633        +73%
Net Cash pre leasing/sales&lease back         21.7            (16.5)         -

Operating Highlights                          2004             2003    change
------------------------                 -----------      -----------  --------
Attributable Gold Production            209,000 oz       148,789 oz        +40%
GIS Cash Operating Costs (US$/oz)            106.9            104.5         +2%
GIS Total Cash Costs (US$/oz)                134.7            131.6         +2%


Peter Hambro, Executive Chairman, said: -

"A 58% increase in turnover together with a 65% increase in operating profit is
a remarkable result for the year; and thanks and congratulations are due to all
members of the team responsible for such success.

The result was achieved by increasing production from the resin-in-pulp plant -
up by 25% to 132.7 thousand ounces of gold - and by controlling Gold Institute
Standard operating costs - up only 2% to $106.9 per ounce of gold. Savings from
economies of scale, together with new equipment, improved blasting techniques
and optimisation of mining operations outweighed increases in input costs.

The Group's engineering and construction team again excelled themselves by
implementing the 50% increase in processing capacity of the resin-in-pulp plant
to 1.5 million tonnes per annum; on time and on budget and without disrupting
production of the existing facility. The increased capacity came on stream in
October 2004, at a capital cost of c.US$4 million, and its full effect on
production should have an impact in 2005.

It is planned that a further increase in production capacity will be implemented
during 2005, with an expected similar capital cost and that this will take the
annual through-put of the plant to 2.2 million tonnes per year, starting in

It should be noted that the excellent results were achieved from only 38% of the
planned 100,000 tonne high-grade sample from Pioneer. The trial mining test was
successful and we discovered that the ore was amenable to gravity separation.
The 37,700 tonnes of ore delivered to the mill had an average grade of 8.36 g/t,
a significant proportion of which was contained in visible particles. These are
heavier than those normally treated in the plant. The extra weight reduced
recovery to 67% as the material was temporarily trapped in the mill liners and
spiral classifier bed. However the resulting increase in gold-in-circuit was
largely recovered in January and February 2005.

Pokrovskiy Rudnik management are considering the possible inclusion of a gravity
separation circuit in the plans for the production increase at the plant.

The joint ventures have performed well and for 2004 the Group's share of the
results of the Omchak joint venture with Susumanzoloto increased to 65%. The
Rudnoye joint venture contributed production for the first time. It is still
early days for the Chagoyansk collaboration with Rio Tinto but aeromagnetic
surveying and reinterpretation of recently acquired historic geochemical and
other data indicate the possibility of a 10 million ounce deposit.

The Group's forecast, which has always been successfully met in the past, of
attributable gold production for 2005 is 271,000 ounces.

The Group's laboratory capacity was insufficient to handle assaying both samples
emanating from increased material moved and the wealth of exploration samples,
and consequently production grade-control was prioritised. The 75,000 back-log
of samples this caused has delayed drill result input into the reserve and
resource calculation process. Happily this backlog is now reduced to 10,000 as
the Group's new laboratory facilities - some of the largest in Russia - are now
on stream.

Because of the backlog, publication of the full reserve and resource statement
for Pokrovskiy and Pioneer is planned for mid-summer and it is expected that
this will include Micromine-based JORC Code numbers for Pioneer for the first
time. In spite of the delay, it is still pleasing to note that exploration
results to hand show an increase in C category reserves of 32% to 7.4 million
ounces and overall reserves and resources by 43% to 78 million ounces. However
it should be noted that much of this increase comes from acquisitions made
during the year.

Consolidated Profit and Loss Account for the year ended 31 December 2004
(expressed in US $'000s)

                                                                2004      2003
                                                               $'000     $'000

Turnover: group and share of joint ventures                   85,502    54,260
Less: share of joint ventures' turnover                      (23,394)  (10,605)
                                                              --------  --------
Group turnover                                                62,108    43,655
Net operating expenses                                       (39,405)  (29,860)
                                                              --------  --------

Operating profit                                              22,703    13,795

Profit on disposals of discontinued operations                     -       930

Share of operating profit in joint ventures                    4,829     3,690
Amortisation of goodwill in joint ventures                      (954)     (391)
                                                              --------  --------

Profit on ordinary activities before interest and other       26,578    18,024

Interest payable and similar charges                          (3,661)   (2,536)

Other income                                                   1,387       769
                                                              --------  --------

Profit on ordinary activities before taxation
Group                                                         20,916    13,082
Joint ventures                                                 3,388     3,175
                                                              --------  --------
                                                              24,304    16,257

Taxation on profit on ordinary activities                     (8,253)   (5,270)
                                                              --------  --------

Profit on ordinary activities after taxation
Group                                                         13,801     8,738
Joint ventures                                                 2,250     2,249
                                                              --------  --------
                                                              16,051    10,987

Minority interests
Group                                                           (326)     (193)
Joint ventures                                                  (407)     (411)
                                                              --------  --------

Profit retained for the year                                  15,318    10,383
                                                              --------  --------

Earnings per ordinary share                                    $0.22     $0.18
Diluted earnings per ordinary share                            $0.21     $0.17

Consolidated Balance Sheet as at 31 December 2004
(expressed in US $'000s)
                                                              2004        2003
                                                             $'000       $'000
Fixed Assets
Intangible assets
Goodwill                                                    (2,776)          -
Other intangible assets                                     80,653      71,173
Capitalised exploration and development expenditure         10,251       2,159
Advanced stripping                                           1,597           -
Tangible assets
Property, plant and equipment                               60,579      39,163

Investments                                                  1,399           2
Investments in joint ventures:
Goodwill                                                     2,821       2,969
Share of gross assets                                       21,366      14,445
Share of gross liabilities                                 (10,188)     (8,135)
Loans                                                        3,400       2,614
                                                            -------     -------
                                                           169,102     124,390
Current Assets
Stock and work in progress                                  15,697      11,355
Debtors                                                     17,818      13,621
Cash at bank and in hand                                    25,854      14,827
                                                             -------     -------

                                                            59,369      39,803

Creditors, amounts falling due within one year             (15,641)    (42,144)
                                                            -------     -------

Net Current Assets/(Liabilities)                            43,728      (2,341)
                                                            -------     -------

Total Assets less Current Liabilities                      212,830     122,049

Creditors, amounts falling due after one year

Due to former shareholders of subsidiary                    (3,486)     (3,284)
Long-term borrowings                                        (4,655)          -
Finance lease liabilities falling due after one year          (243)       (895)
                                                            -------     -------

                                                            (8,384)     (4,179)

Provision for liabilities and charges                       (2,182)     (1,504)
                                                            -------     -------

Net Assets                                                 202,264     116,366
                                                            -------     -------

Capital and Reserves
Share capital - ordinary shares                              1,193       1,010
Share premium                                              154,252      85,252
Merger reserve                                               8,755       8,755
Contingent reserve on acquisition                            6,304       6,304
Share incentive reserve                                         40          40
Profit and loss account                                     29,590      14,272
                                                            -------     -------

Equity shareholders' funds                                 200,134     115,633

Minority interests                                           2,130         733
                                                            -------     -------

                                                           202,264     116,366
                                                            -------     -------

Consolidated Statement of Cash Flow for the year ended 31 December 2004
(expressed in US $'000s)

                                                             2004         2003
                                                            $'000        $'000

Net cash inflow from                                       
operating activities                                       20,532       11,785
Returns on investments
and servicing of finance
Interest received                                             892          463
Interest paid                                              (2,965)      (3,721)
Interest element of finance leases                         (1,111)        (301)
Dividends paid to minority shareholders                      (113)        (140)
                                                            -------      -------

Net cash outflow from returns on                           
investments and servicing of finance                       (3,297)      (3,699)

Taxation Paid                                              (4,223)      (3,264)

Capital Expenditure
and Financial Investment
Purchase of tangible assets                               (20,393)      (8,539)
Expenditure on research and development                    (9,181)      (2,144)
Investments acquired                                            -       (3,736)
Proceeds on sales of investments                                2        4,562
Proceeds on disposal of tangible assets                        25            -
Loans issued                                               (1,894)      (3,804)
Loans issued to joint venture undertakings                   (480)        (340)
                                                            -------      -------

Net cash outflow on capital expenditure                   
and financial investment                                  (31,921)     (14,001)

Acquisitions and Disposals
Purchase of subsidiary undertakings                       (11,785)      (6,002)
Cash acquired with subsidiaries                               103          179
Proceeds from sales of subsidiary undertakings              2,112          (22)
Investments in joint ventures                              (3,817)      (3,623)
                                                            -------      -------

Net cash outflow on acquisitions and disposals            (13,387)      (9,468)

Cash outflow before Financing                             (32,296)     (18,647)

Financing Activities
Capital element of finance leases                          (6,114)      (1,099)
Receipts from borrowings                                   56,376       59,254
Repayments of amounts borrowed                            (76,124)     (51,728)
Net receipts from issuing shares                           69,185       25,659
                                                            -------      -------

Net cash inflow from financing activities                  43,323       32,086
                                                            -------      -------

Increase in cash at bank and in hand                       11,027       13,439
                                                            -------      -------

Analysis of consolidated Net Cash as at 31 December 2004

                                            Other      Exchange    
                 At 1 Jan. 04   Cash Flow   non-cash   movement   At 31 Dec. 04
                    $'000        $'000      $'000       $'000         $'000
                   --------     --------   --------    --------     ---------

Cash in hand
and at the bank     14,827      11,027          -           -        25,854

Debt due within
one year           (31,295)     27,298          -        (141)       (4,138)

                   --------    --------    --------    --------     ---------
Net Cash
pre leasing / sales      
& lease back       (16,468)     38,325          -        (141)       21,716
                   --------    --------    --------    --------     ---------
Finance leases /
sales & lease       
back                (2,007)    (1,436)     (5,002)          -        (8,445)
                   --------    --------    --------    --------     ---------
Net Cash inc.
leasing            (18,475)     36,889     (5,002)       (141)       13,271
                   --------    --------    --------    --------     ---------

Post Balance Sheet Items

The Group has entered into the following transactions which have a material
affect on the Group's assets:
-         As foreseen in the December 2004 announcement, in April 2005 PHM
          succeeded in meeting the stringent requirements of the World Bank 
          environmental and social guidelines sufficiently such that the IFC 
          invested US$15 million by subscribing for 1,448,545 of new PHM shares 
          and has been granted an option to subscribe an additional US$15 
          million at a 25% premium. The recently subscribed funds have 
          significantly increased PHM's net cash balance.
-         The Group announced in February 2005 that it had been successful in
          the auction of the licence over the Malomir gold property. PHM paid 
          RuR22m (c.US$0.79m) for the licence. Further to the acquisition cost 
          of the licence, the Group's exploration budget has been amended as 
          work and funds are directed towards developing Malomir as it is a key 
          development target for the Group.

Operating Highlights

   •Attributable gold production during 2004 increased by 40% to c.209,000
   •Successful completion of 50% expansion of Pokrovskiy plant capacity. This
    lead to a decision to undertake a further interim expansion to increase
    capacity to 2.2 million tonnes a year to be commissioned in the second half
    of 2006 at a cost of c.US$4m
   •Almost constant cost per ounce profile in an environment of increasing
    input costs
   •Generation of JORC standard reserves and resources of Pokrovskiy pit
    shell demonstrating reliability of Russian system of classification
   •Doubling of attributable production from Omchak Joint Venture


Attributable total gold production for 2004 increased by 40% to c.209,000 ounces
(2003 production: c.149,000 ounces). The increase represents a 3% improvement on
the Group's forecast for the year, released in April 2004.

Ore processing at Pokrovskiy produced c.154,000 ounces, a 27% increase over 2003
levels. This was facilitated by:
-         Pokrovskiy's new milling circuit, which enlarges the through-put
          capacity by 50% to 1.5 million tonnes per annum, was commissioned as 
          planned in October 2004.
-         New mining equipment (including ten Belaz 45 tonnes capacity dump
          trucks and two Komatsu-Demag hydraulic excavators with shovel 
          capacities of 10 and 5.7 cubic metres respectively) allowed the mining 
          operations to fulfil the demands of the expanded plant and a general 
          optimisation of mining operations.
-         Implementation of a double-stacking technology in heap leach 
          operations increased the recovery rates in this process from 45% in 
          2003 to up to 60% in 2004.
-         Use of a Micromine computer geological model for operational planning
          of mining works, which increased efficiency of the deposit development.

The Group has a 2009 production target of 1 million ounces. The Group's
attributable 2005 production target is 271,000 ounces with Pokrovskiy increasing
production by 15% to contribute 176,800 ounces to the total. It is intended to
provide further details on this forecast in the Group's Annual Report &

The successful commissioning of Pokrovskiy's planned 50% increase in milling
capacity to 1.5 million tonnes per year took place in October 2004 at a cost of
c.US$4 million. As an interim step towards the delivery of PHM's 2009 target of
one million ounces per annum production, the Group has decided to construct a
further production line at the Pokrovskiy RIP plant. This construction has an
estimated cost of c.US$4m and would take total Pokrovskiy milling capacity to
2.2 million tonnes per year during the second half of 2006. The existing mill
building was designed with further expansions in mind - the key foundations have
already been put in place and there is ample space for the equipment. The Group
is considering the merits of including a gravity separation circuit at the head
of this production line in order that further high grade Pioneer ore can be
treated effectively at Pokrovskiy.

PHM Mining Schedule
                                          Units               2004         2003
Pokrovskiy deposit
    Total material moved                 '000 m3             4,540        3,831
        Including advanced               '000 m3             1,028            -
    Ore mined                          '000 tonnes           1,045        1,053
        Grade                              g/t                 3.4          3.5
        Gold                             '000 oz             113.7        116.9
    Including rich ore                 '000 tonnes             608          656
        Grade                              g/t                 4.5          4.5
        Gold                             '000 oz              88.5         95.4
Pioneer deposit
    Total material moved                 '000 m3               228            -
    Ore mined                            '000 m3                43            -
        Grade                              g/t                 7.6            -
        Gold                             '000 oz              10.4            -

Pioneer Bulk Sample
The trial mining of ore from the Pioneer deposit, using the Pokrovskiy mill, was
carried out successfully. The results have allowed the Group to develop the
pre-feasibility study on the Pioneer deposit.

The study showed there was significant content of visible, large gold particles
in the ore and, during processing at the Pokrovskiy mill, these were found to
accumulate and remain in the milling process rather than flow with the invisible
particles to the leach tanks. This anomaly made the gold recovery slower than
expected during the period. Accordingly the gold in the process circuit, for
which PHM does not take an accounting credit, was unusually high at the year
end. This gold in circuit increased gold production during the first quarter of
2005 accordingly.

The key findings of the study are as follows:
-         Pioneer ore is susceptible to milling and processing in a similar
          manner to that used at Pokrovskiy
-         The coarser grained fraction is amenable to gravity separation, a well
          proven and low cost method of extracting gold from ore which should 
          allow an overall recovery process with a similar rate to that at 
-         The initial results from processing led the Group to curtail the size
          of the bulk sample from 100,000 tonnes. The potential addition of a 
          gravity circuit in the interim expansion planned at the Pokrovskiy 
          mill would allow processing of the Pioneer high grade orebody.

PHM Processing Schedule
                                       Units                  2004        2003
Resin In Pulp plant

   Ore from Pokrovskiy pit          '000 tonnes                673         661
     Grade                              g/t                    4.2         4.4
     Gold                              000 oz                 90.6        93.1

   Ore from stockpiles              '000 tonnes                454         202
     Grade                              g/t                    3.1         3.6
     Gold                             '000 oz                 45.5        23.4

   Pioneer (bulk sample )           '000 tonnes                 38           -
     Grade                              g/t                    8.4           -
     Gold                             '000 oz                 10.1           -

   Total milled                     '000 tonnes              1,165         863
     Grade                              g/t                    3.9         4.2
     Gold                             '000 oz                146.2       116.6
     Recovery                            %                    90.7        90.9
     Gold recovered                   '000 oz                132.7       106.0

Heap leach

   Ore stacked                      '000 tonnes                620         503
     Grade                              g/t                    1.8         2.1
     Gold                             '000 oz                 35.3        34.1
     Recovery                            %                    60.0        44.8
     Gold recovered                   '000 oz                 21.3        15.3

     Total gold recovered             '000 oz                153.9       121.2

Pokrovskiy Rudnik - Operating Cost Analysis
                                               2nd half 2004     2004     2003
                                                      US$/oz   US$/oz   US$/oz

Per Russian Operating Costs Reporting
  Pokrovskiy Operating Cost                              n/a    135.8    136.0

Per Gold Institute Standard for Reporting
Production Costs

  Direct mining expenses *                              55.8     73.0     80.3
  Third-party smelting, refining and                     
  transportation                                         6.2      6.1      3.7
  By-product credits                                    (0.2)    (0.2)    (0.3)
  Other                                                 30.4     28.0     20.8

  Cash Operating Costs                                  92.2    106.9    104.5

  Royalties                                             22.3     22.7     22.1
  Production taxes                                       3.9      5.1      5.0

  Total Cash Costs                                     118.4    134.7    131.6

  Non-cash movement in stock                            15.2     12.4      7.6
  Depreciation/Amortisation                             36.3     37.2     35.8

  Total Production Costs                               169.9    184.3    175.0

* includes processing costs

Operating costs per ounce have remained relatively constant when compared to the
10% increase of input costs. This was achieved thanks to the increased
production rate at the RIP plant, together with constant production support
costs and mining optimisation that allowed a reduction of 10% in direct mining

An increase in fixed costs, which is reflected in the "Other" line of the above
table, is primarily a result of the additional insurance costs for the heavy
mine equipment (excavators, pit haulers and bulldozers) and the third milling
circuit at the RIP plant. Other portions of increased costs relate to the
increased number of employees and associated items that are currently included
within the Pokrovskiy mine cost base but are more related to exploration and
development at the Company's other assets. The Company's aim is to separate
these costs by asset during 2005.

Omchak JV Production Report
Nelbazoloto-Shkolnoye Deposit *
                                             --------     --------     --------
                                                2004         2003         2002
Ore mined              '000 tonnes              50.9         42.5         40.5
Ore processed          '000 tonnes              65.0         56.6         35.6
Ounces produced        '000 oz                  27.4         36.6         20.3
                                              --------     --------     --------
Berelekh *
                                              --------     --------     --------
                                                2004         2003         2002
Waste Rock stripped    m3 '000               9,310.5      9,547.0      9,675.0
Sands processed        m3 '000               3,764.2      3,589.0      3,733.0
Ounces produced        Oz '000                  61.5         59.9         62.4
                                              --------     --------     --------               

Total                  Oz '000                  88.9         96.5         82.7
                                              --------     --------     --------
Attributable to Peter Hambro Mining             57.0         28.1          n/a
                                              --------     --------     --------

* Production figures are for 100% of each asset . PHM's share is set out below.

The Omchak joint venture assets, located in the Magadan Region produced c.88,900
ounces of which PHM's attributable share was c.57,000 ounces. PHM's interest in
Omchak increased from 50% to 65% with effect from April 2004, in accordance with
the terms of joint venture agreement.

Exploration & Development

PHM Group Reserves & Resources Summary
As at 1-1-05
                            Category                 Ore         Gold Content
                                                  '000 t           kg   oz'000

Reserves                     B+C1+C2                 512        6,857      220
                              C1+C2               81,434      170,800    5,491
                               C2                 24,164       51,422    1,653
                              TOTAL              106,110      229,079    7,365

Resources                      P1                 75,204      181,038    5,821
                              P1+P2              298,762      502,478   16,155
                            P1+P2+P3             205,109      599,600   19,278
                               P2                110,650      391,500   12,587
                              P2+P3              148,060      367,265   11,808
                               P3                 56,750      152,500    4,903
                              TOTAL              894,535    2,194,381   70,551

Reserves & Resources          TOTAL            1,000,645    2,423,460   77,916

The 2004 exploration programme included the mobilisation of 10 drill rigs,
generating a total of over 53,000 metres of core samples along with 133,000
cubic metres of trench samples.

As a result of the considerable backlog of assaying created prior to the
expansion of the Group's analytical facilities, the update of reserves and
resources at Pokrovskiy and Pioneer to Russian and JORC standards are now only
expected to be available in July 2005.

Exploration assets

The Group has reclassified its exploration portfolio into three regions:
-         Pokrovskiy/Pioneer;
-         Amur North East Belt; and
-         Yamalzoloto.


Planning of exploration activities centred on supporting the Group's ambition to
develop these two sites into one operatiing unit capable of producing 1 million
ounces per annum from 2009. The scope of exploration works during 2004 was
focused on collecting sufficient information to enable PHM to make production
decisions in the second half of 2005.


At the Pokrovskiy main orebody a total of 74 drillholes (5,718m) were drilled on
close spacing, leading to an increase in reserves of 45,000 ounces.

The JORC reconciliation of reserves at Pokrovskiy pit-shell (published December
2004) was undertaken as part of the implementation of a Micromine model for the
deposit. Under the JORC system there is a 34% increase in the quantity of gold
in the mineable reserve when compared to Russian standards and the ore tonnage
more than doubles. This comparison clearly demonstrates that the Russian reserve
evaluation, used by PHM is conservative.

Work at the areas referred to as "Pokrovskiy flanks" was hindered due to the
marshy condition of the terrain but considerable amounts of data was still
obtained. A total of 9,873m was drilled and a further 1,200m3 trenched, in an
effort to define better the previously estimated 7.6 million ounces of gold
resource of P Category. Four main areas have been identified - Zeyskoye,
Glavnoye, Nadvigovy and Verkhne-Sergeevskiy. An extensive drill programme is
still active but the data is still not sufficiently advanced to support the
declaration of an enhanced resource in these areas at this time.


At Pioneer, during late 2004 the Group commenced trial mining in the vicinity of
the Bakhmut / Apophysis No 1 area of Pioneer, which had previously been
identified as a high grade area. Much of the exploration effort at Pioneer was
therefore in support of this trial mining. A total of 11,142m of drilling was
carried out on Pioneer with 66,000m3 of trenching, yielding 17,091 samples.

Further examination of the Bakhmut / Apophysis No 1 area has led to the
delineation of a further 2 sub-parallel offshoots. Apophysis No 1 is now
believed to approximate a "tadpole" shape structure in plan, approximately
50-55m long (cut-off grade 1g/t on a 280m long structure), 80% of which would be
termed the "body", to a depth of 240m. Grades in the 42m wide "body" reach as
high as 513g/t with an average of 9.3g/t, while the "tail" grades up to 140g/t
with an average of 4.5g/t. However, analysis of larger scale samples shows that
the assay technique used underestimates the gold content, with the actual
recovered gold in the larger tests being 80% greater than that estimated from
the present sampling method. It is thus planned to re-sample representative
areas to re-determine grade.

During 2004 PHM the Group's laboratory capacity was enhanced in order to match
the quantity of exploration samples. The laboratory expansions were completed
only in January 2005 and there is still a large backlog of exploration sample

Amur North East Belt - Tokur/Malomir/ Voroshilovskoye

This group of deposits is located on the Mongolo-Ochotsky geological belt with a
distance of c.60 km between them. Likely synergies of developing these three
projects together as a group lead the company to consider them as one
operational unit.


Further exploration works have been undertaken on the flanks of Malomir during
2004 which allowed further extension of the Diagonal or Malomirskoye orezones to
the north-west by 2-4 km. In February 2005 Pokrovskiy Rudnik won an auction for
the exploration and mining licence for the centre of Malomir deposit, thereby
adding another 35 km2 to the existing license for the flanks which covers 37 km2.


Exploration works on the Voroshilovskoye deposit were focused on the area of the
previous working. These include: -

• 9 trenches with an interval of 160-180 m (32,000 m3)
• 34 drill holes (6,078m) on an area of 16 km2 (40% of the licensed territory)
• Detailed geochemical and geophysical exploration works were undertaken
• 7,707 samples were taken, of which 60% have been analysed to date.

Based on this work, a resource estimate of 2.5 million ounces in P2 and P3
categories was made.


The Tokur deposit was explored by

   •32 drillholes (3,552m)
   •15 trenches (9,500m3)
   •Detailed geophysical and geochemical work was carried out on 30 km2
   •4,993 trenching and core samples and 6,000 small coring geochemical
    samples were taken of which 80% were analysed to date.

As a result of this work the Glavniy fault ore-zone was undertaken on two areas
of 2.8 km and 1.0 km at intervals of 40-320m. The zone was not tested below a
depth of 100m.. As a result of exploration works during the period, part of the
P1 resource in the Glavniy fault was upgraded from category P1 to category C2.


Novogodnee Manteau was acquired in April 2004. This project is located in the
Yamal district, inside the Arctic Circle and some 2 hours flying time from

Exploration expenditure on this project to date has been approximately US$
4.5million, covering: -

   •16,000m of drill holes,
   •10,000 m3 of trenching and
   •13,000m of lithogeochemistry, as well as associated test work.

The results of this work (which include: the discovery of additional resources
and new ore bodies in the licence area; potential move to open pit mining; and
commercial quantities of other metals such as cobalt and iron ore) are

The Group commissioned a report on Yamalzoloto from SRK, the UK based mining
consultants, in January - due to the constant flow of new information from the
extensive ongoing exploration work, the remit of the report has been expanded
and work is ongoing.

Portfolio Assets - selected highlights


The Chagoyansk deposit is the subject of a collaboration with Rio Tinto. During
2004 the licensed area was surveyed by aero-geophysics at a scale 1:10,000.
Several structures with potential to be mineralised zones were identified from
this study. Furthermore the assaying of historic drill samples and study of
historic data has supported the company's belief in existence a substantial
deposit. A drill and trench programme has been agreed for 2005 and is underway.
Work to date has supported the establishment of a prognostic P2 resource at


Exploration works in 2004 focused on establishing reserves required for trial
mining on this area. The central part of the ore-zone was explored in detail at
intervals of 300m. Gold on this deposit is coarse with irregular distribution
meaning that large-scale sampling is needed for analysis.

Annual Report & Accounts

The Group intends to publish and distribute the Company's Annual Report and
Accounts for the year ended 31 December 2004 on 18th May 2005.

This report will contain a more detailed analysis of the work undertaken by the
Group during the period, notes to the accounts and a breakdown, by deposit, of
the Group's Reserves and Resources and production.

Conference Call
There will be a conference call on Monday April 18th 2005 at 11am (London time)
and the dial in numbers are as follows:

UK Dial in:     0845 245 3471
International:  +44 (0) 1452 542 300

To replay the call after the event please dial.
UK Dial in:     0845 245 5205
International:  +44 (0) 1452 55 00 00
Replay Access:  5584700#


Alya Samokhvalova                                             +44 20 7201 8900
Director of External Communications, Peter Hambro Mining plc

Tom Randell / Maria Suleymanova                               +44 20 7653 6620

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