Peter Hambro Mining PLC
20 July 2005
20 July 2005
Peter Hambro Mining Plc ("PHM" or the "Group") issues this trading statement as
an update and in advance of its results for six months to 30 June 2005 ("the
Period"). A full results announcement will be issued in September 2005.
Highlights for the Period include:
• Pokrovskiy Mine production of 84,600oz of gold for the Period. Plant
production is up 48% and total production up 41% on the same period for 2004;
• Omchak Joint Venture total production up 4% with attributable production of
17,015oz of gold for the Period. 36% up on the same period for 2004;
• PHM attributable production of 102,178oz 41 % up on the same period for 2004;
• The Group is on track to meet its 271,000oz per annum production target
• Operating costs, in US$/oz, at Pokrovskiy were in line with the previous year;
• Average realised sales price of US$422/oz which is 7% higher compared to the
same period last year;
• Further expansion at Pokrovskiy announced and work commenced; and
• Fundraising to raise US$140m has been launched meeting the greater part of
PHM's expected external finance requirements to reach the 2009 million ounce
Commenting on the announcement, Peter Hambro, Executive Chairman, said:
"Again I congratulate all concerned at the Group's operations as we report
another period of delivery on all our targets on time and on budget.
Pokrovskiy's 2004 50% expansion to 1.5mtpa has been successfully implemented
and the recently announced interim expansion to 2.2mtpa should result in a
tripling of capacity since 2002. Gold production at Pokrovskiy continues to be
highly profitable and I am glad that we have begun the implementation of this
interim expansion contributing towards the million ounce target.
I am also pleased to report that we have ticked another box in the development
checklist for delivery of our million ounce production target in 2009. Our fund
raising should meet the greater part of our project finance requirements for
Pokrovskiy Rudnik continued to build on the success achieved during 2004;
84,600oz of gold was produced versus 60,000oz in the same period for 2004. The
Company is pleased to report that it has maintained low unit operating costs
through economies of scale and mining optimisation, despite increases in raw
material costs and an appreciating Rouble.
The use of MicroMine to manage operational grade control, together with over one
million tonnes of advanced stripping carried out in 2004, allowed for the mining
of high quality ore. During the period, the Group commenced preparations for the
expansion of the mining works to fulfil the one million ounce production target
which includes the renewal, maintenance and expansion of its mining fleet.
Overall, the material delivered from the pit had a gold content showing an
increased of 61%.
Pokrovskiy Rudnik Mining Operations
6 months to June 30th
-------- --------- ------- --------
Units 2005 2004 Var %
Total material moved m3 '000 2,755 2,104 +31%
Ore mined t '000 652 438 +49%
Average grade g/t 3.7 3.5 +6%
Gold content oz '000 77.0 49.6 +55%
Including high grade ore t '000 424 304 +39%
Average grade g/t 4.9 4.2 +17%
Gold content oz '000 66.6 41.4 +61%
--------------- --------- --------- ------- -------
Processing operations - Resin in Pulp plant
The plant capacity was increased by 50% in late 2004. During the Period 691,000
tonnes were processed through the plant, compared with 506,000 in the first half
of 2004, representing a 37% increase year-on-year. The increased capacity from
1mpta to 1.5mtpa at the mill has allowed the Group to carry out essential
maintenance on the circuits which optimises operations, will increase the life
expectancy of the mill liners and allows full production at full capacity
Further expansion work to 2.2mtpa has been announced and is already ongoing. The
Group announced that it will be further increasing the capacity of the mills
with expected completion of works in the third quarter of 2006. The expansion
work will encompass the construction of a further SAG mill and the increase in
capacity of the resin circuits. It is expected that the existing mill building
will have sufficient space to house the extra machinery and hence costs are
expected to be only c.US$5m in total. This is an interim expansion toward the
larger growth of operations to fulfil Pokrovskiy and the Pokrovskiy flanks'
contribution towards the one million ounce target. Analysis on the larger
expansion possibilities is ongoing and will be announced on completion.
Double stacking introduced to the heap leach process over the last year resulted
in significant increases in recovery rates which allows the treatment of ore
previously considered to be non-economical. A by-product of this is that there
may be possible increases in the reserve base of the deposit to incorporate the
lower grade that it is now possible to treat economically. During the Period,
the Pokrovskiy heap-leach processed 1.4g/t material as opposed to 1.8g/t in the
same period of 2004. The 30.7% (down from 35%) recovery for the Period reflects
the late start to the heap leach season due to weather conditions.
Double stacking allowed the Company to carry out the heap leach maintenance
schedule in a more optimal way without disrupting the production process. On
completion of the maintenance work (during 2006), the capacity of the heap leach
should be increased to 1mtpa.
Pokrovskiy Rudnik Processing Operations
6 months to 30 June
--------- --------- ------- -------
Units 2005 2004 Var %
Resin in Pulp Plant
Ore from pit t '000 409.5 304 +35%
Average grade g/t 4.9 4.2 +17%
Ore from stockpile t '000 281 202 +39%
Average grade g/t 2.4 2.8 -14%
Total milled t '000 691 506 +37%
Average grade g/t 3.9 3.7 +5%
Gold content oz '000 86.5 59.6 +45%
Recovery rate % 92.2 90.3 +2%
Gold recovered oz '000 79.8 53.9 +48%
Ore stacked t '000 341.0 309.0 +10%
Average grade g/t 1.4 1.8 -22%
Gold content oz '000 16.0 17.7 -10%
Recovery rate % 30.7% 35% -12%
Gold recovered oz '000 4.8 6.2 -23%
Gold recovered oz '000 84.6 60.0 +41%
--------------- --------- --------- ------- -------
Table showing the breakdown of gold production at Pokrovskiy Rudnik by month for
the six months to 30 June 2005 vs 2004 (ounces)
Month 2005 2004
January 13,695 7,398
February 11,226 6,855
March 12,811 9,661
April 11,321 9,005
May 16,657 11,243
June 18,890 15,838
Total 84,600 60,000
Omchak Joint Venture
Production from the currently 65%-owned Omchak Joint Venture (the "Omchak JV")
is ahead of target for the year. In the Period the Omchak JV produced 26,177oz
(25,081oz in the first half year 2004). The production attributable to PHM of
17,015oz increased 36% compared to the period 2004 due to the increase of the
Company's stake in the Omchak JV and an increase in the joint venture assets'
production. The seasonal character of the majority of Omchak JV's operations
shifts the main production towards the second part of the year. As disclosed in
the 2004 annual report, dependent on the dividend payment by the asset holding
entities, the production attributable to PHM may reduce by 20-30,000 ounces if
Omchak's assets deliver an enhanced dividend cashflow to the Group.
The management team of the Omchak JV aimed to increase the reserve base through
new acquisitions and expansions to new regions. In May 2005, the Omchak JV
announced its success in the auction of the combined exploration and mining
licence over the Verkhne-Alliinskiy gold property in the Chita Region of Russia.
The licence is estimated to contain gold reserves and resources of 76,000oz and
593,000oz in Russian categories C1 and C2 respectively and silver reserves and
resources of 138,000oz and 752,000oz in Russian categories C1 and C2
In the Amur Region the Omchak JV's subsidiary OOO "Noviye Tekhnologii" started
preparatory works for the commencement of production on five licence areas
acquired during 2004. Works during the Period were concentrated mainly on
preparation of machinery for the production season and approval of mining plans.
Mining works commenced in May 2005 and included stripping and the preparation of
machinery for the washing of gold bearing sands.
Exploration and Development Report
Further exploration works were undertaken on the Pokrovskiy deposit and its
flanks in order to confirm the geochemical gold anomalies identified by a
geochemical modelling study undertaken by the Vladivostok consultancy firm
Ecotsentr. Work at the Pokrovskiy flanks, contiguous to the existing Pokrovskiy
pit shell, focussed on extending strike from the existing mine along fault
extensions, and confirming mineralisation at previously identified gold
The Verkhnesegeevsky anomaly has been tested with 31 drill holes up to 150m deep
covering 10.24 hectares. Incomplete results show individual 1m samples of
between 1.0g/t and 3.4g/t, while at Nadvigoviy 44 holes to a depth of up to 120m
and covering an area of 9.12 hectares have returned isolated grades of 0.8 to
5.5g/t over approximately one metre. Both areas continue to be assessed.
Further work on extensions of known orebodies - Novoye and Zeiskoye - has shown
increases to known structures with intersections including 4g/t over 4m and 0.7g
/t over 14m. At Molodyezhnoye high silver grades of up to 582.2g/t have been
encountered. Further work is being planned.
PHM is producing a separate release on the Pioneer deposit today. Please see
www.peterhambro.com for a copy of this report.
Amur North East Belt
In February 2005 the Group announced that it was successful in the auction of
the combined exploration and mining licence over the Malomir gold property in
the North East of the Amur Region, Far East Russia. This acquisition was another
step in the Group's long-term strategy of combining several gold properties in
the North East area of Amur region to help to benefit from operational
synergies. Previously the Group held licences for two areas adjacent to the
deposit which it had explored for two years. The Diagonal Zone, at the centre of
the Malomir licence area, was extensively explored by Soviet geologists. Since
the Group's registration of the licence for the deposit in May 2005 construction
of a man camp and relevant infrastructure has commenced to aid exploration and
the development work. PHM has initiated an extensive programme of confirmation
and other drilling to form the basis of a pre-feasibility study.
Trenching and drilling has been carried out area in the Glavniy fault zone and
on the flanks of the Tokur deposit with 980.5m of core drilling and 2,831.9m3 of
trenching accomplished. The results of this work are expected later this year.
As planned, detailed exploration continued in the area with 8,896m3 of
trenching. The results of the geochemical exploration, trenches and drill holes
have now been received by the Group and are being processed. The geophysical and
geochemical results identify two prospective ore structures. Within the two
newly identified structures, gold grades reaching 8.8 - 11.3g/t have been
indicated from grab sampling. Trenching has already intersected the indicated
orebody with visible gold noted at surface.
The main focus of works on Novogodnee Monto and Petropavlovskoye deposits during
the Period was on the preparation of information for the pre-feasibility study -
to be finalised by early 2006. The study will be prepared by the leading Russian
consulting institution ZNIGRI. The metallurgical tests carried out by this
institution were almost completed during the period. The recommended processing
flow sheet shows magnetic separation followed by gravity and flotation with
subsequent cyanidation of concentrate and tails. It is expected that recoveries
of c.92% of gold, c.50% of silver and c.77% of iron are achievable. There is
also 13% pyrite concentrate recovery containing 67% cobalt with an average grade
In addition to the established gold reserves and resources, included in the
pre-feasibility study calculations the deposit is estimated to contain 6.2
million tonnes of iron ore at 40%, including 4.9 million tonnes located within
the boundaries of gold mineralisation.
Two drill holes located 600 and 750 meters to the north of the Petropavlovskoye
deposit intersected similar types of mineralisation. Similar types of ore were
also found in an old stone quarry nearby. Gold grades found as a result of
exploration works reach 75.0g/t. The surface area is mainly represented by
lower grades (1.0 - 2.5g/t) with areas of high grade material (8.0 - 82.0 g/t).
The density of the drill hole grid is not sufficient yet to outline ore
bodies. Metallurgical studies showed recovery rates of 74.5% of gold and 64% of
silver using the method of direct cyanidation. These tests continue.
Further to the detailed exploration of Novogodnee Monto and Petropavlovskoye for
the pre-feasibility study, exploration work was undertaken on the seven other
prospective areas that were identified by an independent hydro-geochemical
survey. The study covers all licensed area and the results of it were acquired
by Yamalzoloto as the basis for planning future exploration works.
Further exploration works were carried out on the company's other exploration
and development assets including Izvestkovaya Sopka, Zheltunak, Olga, Gar II,
Adamikha, Odolgo, Bryantinskiy.
Field work is ongoing and trench sample assay results are already being
received. Two samples gave gold grades of 1.94g/t (on 1m width) and 0.45g/t (on
0.3m interval). Further trenches were dug for confirmation of the
aero-geophysical survey which identified potassium anomalies and the data from
the works done by previous explorers which indicated a high gold-bearing
A drilling programme commenced on the areas identified through aero-geophysical
survey, 6 of 10 planned drill holes have been drilled with results expected
later in the year.
The Group's average realised gold price for the period was US$422/oz, up 7%
against US$393/oz in the first six months of 2004. The Rouble strengthened
against the Dollar by one percent during the Period and was RuR28.67/US$ at 30
June 2005 (RuR29.03/US$ - 30/6/04). The Group has a policy of no long term gold
forward sales or hedging.
Fundraising to raise US$140m has been launched meeting the greater part of PHM's
expected external finance requirements to reach the 2009 million ounce
A conference call to discuss today's trading update will be hosted by Peter
Hambro, Executive Chairman of Peter Hambro Mining plc, today at 11:00 am UK
Details to access the conference call are as follows:
The dial-in number in the UK will be: 0845 245 3471 and internationally it will
be +44 (0) 1452 542 300.
Replay will be available after the call has finished for seven days on 0845 245
5205 in the UK and on +44 (0) 1452 55 0000 internationally with the access code
in both cases 7694438#.
Alya Samokhvalova +44 (0) 20 7201 8900
Investor Relations, Peter Hambro Mining
David Simonson / Tom Randell +44 (0) 20 7653 6620
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