Peter Hambro Mining PLC
26 February 2007
26 February 2007
Production Plan Update
Peter Hambro Mining plc ("PHM" or "the Group") will publish, at an Analyst
Workshop to be held today at 11:00am, updated business plans for its Pioneer
deposit and a review of progress at its other deposits. The presentation of the
business plans and progress review will be published simultaneously on the
company's website www.peterhambro.com and the presentation will be webcast.
An executive summary of the second half 2006 semi-annual independent review of
the Exploration & Development work of the Group commissioned by the Board of
Directors will be made available at www.peterhambro.com.
Highlights of the Presentation
- Following comprehensive drilling, trenching and trial
mining there is a substantially increased confidence in reserves and resources.
This should enable large scale mining to commence in 2007.
- Development programme results in forecast production of
3.2m ounces in aggregate over 13 years. Russian reserves and resources estimate
is similar to 2006 estimate 69.6m tonnes at 1.6g/t in C2 and 15.4m tonnes at
2.1g/t in P1 containing c.4.7m oz of gold in aggregate but this year is not
reliant on the inclusion of any P2 resources.
- Highly positive economic mine plan based on Micromine, a
JORC compliant software programme.
- High-grade ore zones (columns) predictions have been
confirmed by drill intersections but detailed exploration will only be
undertaken during the mining process. Additionally both Russian and JORC
methodology ignores areas of extreme high grades. Accordingly there is a
possibility that the production economics will improve once mining is underway.
- Exceptionally high grades of gold newly identified at
Andreevskaya ore body within the Pioneer complex.
• Average grade 32.8 g/t for 450 metres length to depth of 90 metres and
open at depth and at both ends.
• Estimated so far to contain 550,000 ounces of gold.
• The ore body is open at depth and both ends; it has already been traced
for an additional 730m strike length.
- Processing plan to include:
• Substantial 2.9mt of ore per annum heap leach operation at Pioneer.
• Construction of large 5.2mt of ore per annum RIP plant at Pioneer (not
trucking high-grade ore to Pokrovskiy as previously planned).
• Modular expansion of mill forecast to treat primary ore from 2014.
- Production start-up is on schedule for Q4 2007.
- Capital expenditure forecast to December 2009 of US$87m is
generally in line with last year's US$81m.
- Further expansion plans to include the expansion of the
plant totalling US$53m by 2013.
- Forecast mining and processing operating costs at the
lower end of previous estimates.
- Extensive development programme underway with
infrastructure construction and confirmation exploration (drilling,
trenching and trial mining).
- Estimates this year based entirely on new detailed
exploration and all data from predecessors is excluded.
- Development programme has provided further confidence in
estimation of reserves and resources.
- 2007 estimates exclude steep-dipping high-grade ore zones
poorly sampled by the drill holes.
- Shallow open-pit constructed for exploration purposes is
planned to be used for pilot-scale production.
- Greater volumes of mineralised material identified.
- Further evidence supporting existence of 2 additional ore
zones has led geological team to delineate 3 deposits in total.
- Development programme success leads to requirement for
further analysis of central and other deposits.
- Detailed implementation plan for Malomir (similar to
Pioneer) is being developed and is intended to be released before the year end.
- 2008 start-up postponed for 6-12 months.
Pokrovskiy and Flanks
- Exploration continues, with good grades identified.
Update on development plans expected to be available in the second half of 2007.
- Promising results from new areas acquired at the beginning
of 2006 were received.
- Estimated project plans and economics unchanged pending
completion of analysis.
- Feasibility studies on Novogodnee Monto and
Petropavlovskoye nearing completion, investment decision is expected in the
fourth quarter of 2007.
- Ozernoye exploration results established presence of reefs
containing gold, PGM and base metals which could be extremely valuable.
Possibility of Bushveld style PGM mineralisation.
- Current internal economic planning suggests a maximum
external funding requirement of c.US$100 million in the period from Q3 2007 to
Q4 2008. Plans are underway to support this requirement with project or
corporate debt. Other than normal working capital facilities and the
convertible bond the Group has no debt outstanding.
Commenting on the announcement, Peter Hambro, Executive Chairman of the Group
"Pioneer has shown its strength yet again; with our previous estimates being
confirmed by the development programme and exploration success at Andreevskaya,
with an average grade of 32.8 grammes of gold per tonne of ore, demonstrating
the predictive capabilities of our geological team. This announcement contains
detailed plans for the next-stage development of our assets - most immediately
bringing into production the Pioneer deposit - and I believe that the level of
detail we are providing should give confidence about the project.
We are now well underway with our substantial growth programme. I hope that
with regular and full disclosure of both our production plans and the
exploration and development results at each project, we will strengthen market
confidence in the team's ability to deliver on our forecasts."
There will be a conference call at 14:00 (London time) today 26th February 2006
entitled "Production Review Announcement".
Details to access the conference call are as follows:
The dial-in number in the UK will be: 0845 245 3471 and internationally it will
be +44(0)1452 542 300.
Replay will be available after the call has finished for seven days on 0845 245
5205 in the UK and on +44(0)1452 550 000 internationally with the access code in
both cases 8366978#.
Alya Samokhvalova, Director of +44(0)207 201 8900
External Communications www.peterhambro.com
or Marianna Adams at Peter Hambro Mining
David Simonson or Tom Randell at Merlin +44(0)207 653 6620
Patrick Magee at JP Morgan Cazenove +44(0)207 155 4525
The presentation will contain the following updated estimates of capital
expenditure, resources and expected production profile.
US$'mln as reported in 2007 US$'mln as reported in 2006
Pioneer* 140 81
Malomir 112 112
Pokrovskiy 134 134
Others 7 -
TOTAL 393 327
*US$140m includes US$87m spent up to December 2009 vs. US$81m as reported in
2006 in view of plans to construct resin-in-plant (RIP). The remaining capex of
US$53m will be spent between 2010 and 2013 on expansion and development of the
plant to process primary ore.
Pioneer reserves and resources
Ore zone Au, Ore, Grade, Au, Ore, Grade,
('000oz) ('000t) g/t ('000oz) ('000t) g/t
Bakhmut 717 16,608 1.3 203 1,160 5.4
Promezhutochnaya 371 6,985 1.7 124 2,750 1.4
Yuzhnaya 2,003 45,480 1.4 421 10,900 1.2
Andreevskaya 574 543 32.8 286 600 15.0
TOTAL 3,665 69,616 1.6 1,034 15,410 2.1
Group production profile, '000oz
2006 2007 2008 2009
Pokrovskiy 206 198 191 191
Pioneer - 19 144 395
Malomir - - 95 286
Other 11 10 50 80
Pokrovskiy Flanks - - - 165
TOTAL 217 227 480 1,117
Attributable production numbers exclude production from JVs. Total attributable
production in 2006 was c.261,000 ounces.
All references to reserves, resources, and exploration results that were
included in the release were approved for release by Dr Stephen Henley, C Eng.,
PhD, FIMMM, FGS, Managing Director of Resources Computing International Ltd, who
has more than 26 years experience in the field of activity concerned and is a
Competent Person. Dr Henley has consented to the inclusion of the material in
the form and context in which it appears.
Past performance of the Company or its shares cannot be relied on as a guide to
Some statements contained in this release and the associated presentation or in
documents referred to in it (the Documents) are or may be forward-looking
statements. Actual results may differ from those expressed in such statements,
depending on a variety of factors.
Any forward-looking information contained in the Documents has been prepared on
the basis of a number of assumptions which may prove to be incorrect, and
accordingly, actual results may vary. Investors must be aware that only
Pokrovskiy main pit and Pioneer reserves have been approved by the Russian
authorities as extractable. However the assumptions used in the Documents are
based on other reserves having been approved for extraction. No assurances may
be given that the Russian licensing authorities will approve any of the Group's
other reserves for extraction. Any mining, engineering and business plans
prepared by the Group are based on the Group's interpretation and understanding
of the current business, regulatory or political circumstances in Russia and in
the gold market and may be subject to change should any of these circumstances
The Documents do not constitute, or form part of or contain any invitation or
offer to any person to underwrite, subscribe for, otherwise acquire, or dispose
of any shares in Peter Hambro Mining plc or advise persons to do so in any
jurisdiction, nor shall they, or any part of them, form the basis of or be
relied on in any connection with or act as an inducement to enter into any
contract or commitment therefore. No reliance may be placed for any purpose
whatsoever on the information or opinions contained in the Documents or on their
completeness and no liability whatsoever is accepted for any loss howsoever
arising from any use of these documents or its contents otherwise in connection
This press release and associated presentation has been prepared in compliance
with English law and English courts will have exclusive jurisdiction over any
disputes arising from or connected with this presentation.
The content of this press release has been approved by JP Morgan Cazenove as
nominated adviser to the Group.
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