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Peter Hambro Mining (POG)

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Wednesday 05 November, 2008

Peter Hambro Mining

Q3 2008 Production Report (Re

RNS Number : 5604H
Peter Hambro Mining PLC
05 November 2008
 



The following amendment has been made to the ' Q3 2008 Production Report' announcement released today at 07.00 GTM under RNS Number: 4695H.
 
Under the section headed “Financial Analysis” the second sentence stated that “A cash flow model was constructed based on the mining of Proven and Probable reserves derived from Measured and Indicated resources” should be read as “A financial analysis model was constructed based on the production schedule provided by PHM which utilises the Russian Standard Classified reserves”.
 
All other details remain unchanged.
 

The full amended text is shown below.

 

05 November 2008

Q3 2008 Production Report

Mineral Expert's Report 

Postponement of Move to Main Market

 

Peter Hambro Mining Plc (the "Company" or "PHM" and together with its subsidiaries the "Group") is pleased to announce its production results for the quarter and for the nine months ended 30 September 2008.

 


Attributable Production


3 months ended 30 September 2008

3 months ended 30 September 2007

Variance

 

Au, oz

Au, oz


Amur Region

 

 


Pokrovskiy, including Pioneer bulk sampling

72,950

60,821

20%

Pioneer

17,169

-

n/a

Alluvials

13,847

9,857

40%

Joint Ventures




Rudnoye 

1,720

1,152

49%

Omchak 

17,948

21,852

(18%)

TOTAL

123,634

93,682

32%

 




Attributable Production


9 months ended 30 September 2008

9 months ended 30 September 2007

Variance

 

Au, oz

Au, oz


Amur Region

 

 


Pokrovskiy, including Pioneer bulk sampling

200,750

177,633

13%

Pioneer

20,769

n/a

Alluvials

18,638

13,760

35%

Joint Ventures




Rudnoye 

2,175

1,284

69%

Omchak 

26,382

33,207

(21%)

TOTAL

268,714

225,884

19%

Total attributable gold production, in the above tables and elsewhere in this document, is comprised of 100% of production from the Group's subsidiaries and the relevant share of production in joint ventures and other investments. PHM's direct and indirect interest in Pokrovskiy Rudnik, and any interest held by Pokrovskiy Rudnik, is 98.61%.


Highlights

  • Production

    • In the three months ended 30 September 2008, attributable gold production increased by 32% as compared to the same period in 2007 mainly due to the consistent improvements in production at the Pokrovskiy mine, as well as the commissioning of the new plant at Pioneer which came online in June/July 2008;

    • The Group's total attributable gold production for the nine months ended 30 September 2008 increased by 19% compared to the same period of the previous year; and

    • Preliminary production statistics for October 2008 indicate an overall Pokrovskiy and Pioneer production of 36,400 oz with production from Pioneer almost doubling to 12,100 oz compared to September 2008 production of 6,600 oz.

  • Development

    • The Group is carefully reviewing exploration, construction and maintenance expenditure for 2009 with a view to maximising capital availability for the Group's priority expansion and development projects - Pokrovskiy, Pioneer and Malomir. Malomir and Pioneer expansion plans remain on track with production at Malomir due to commence in the first half of 2010 and Pioneer's second crushing and grinding line due to come online in the first half of 2009.

  • Main Board Move

    • The Company today also announces that it has decided that for the time being it will postpone its application for admission of its ordinary shares to the Official List of the UK Listing Authority and to trading on the Main Market of the London Stock Exchange (the "Main Market")PHM announced in January 2007 that it was working towards a move from AIM to the Main Market, which it expected to occur during 2008. In light of the present extraordinary conditions in the financial markets, the Board of PHM sees little benefit for the Company or its shareholders in making the move to the Main Market this year. However, the Company and its advisers will continue to keep under review the option of pursuing such a move at a later date.
  •  JORC Reserves and Resources 
    • In connection with the proposed move to the Main Market, a mineral expert's report has been prepared by Wardell Armstrong International Ltd ("WAI"). A summary of this report, which states the Group's reserves and resources at the Pokrovskiy, Pioneer and Malomir deposits to JORC classification standards  together with reserves and resources to  the  Russian  Standard  Classification System on other deposits, is set out below and the full report will be placed later today on the Company's website at www.peterhambro.com.

A summary of these mineral resources and ore reserves is given in Table 1 below. 





Table 1: Summary of Mineral Resources and Ore Reserves Estimates 

for Pokrovskiy, Pioneer, and Malomir

Estimated in accordance with the guidelines of the JORC Code (2004)1,2,3


Category


Tonnage

(kt)

Grade

(g/t Au)

Metal

(kg Au)

Metal

(koz Au)

Resources

Measured

28,239

1.42

40,005

1,285

Indicated

78,618

1.22

95,999

3,087

Measured+Indicated

106,856

1.27

136,004

4,372

Inferred

143,170

0.98

140,256

4,510

Reserves*

Proven+Probable

83,900

1.33

111,400

3,582

* Reserves included within the Measured and Indicated resources only

All statements of reserves and resources set out in this Summary are calculated on the basis of 100% ownership. Pokrovskiy, Pioneer and Malomir are 98.61% attributable to PHM

2 Numbers may not add up exactly due to rounding 

3 The Inferred category includes the figures from the Pokrovka-3 pit which were omitted from the equivalent table in the Interim Results for the period ended 30 June 2008



Peter Hambro, Executive Chairman of PHM said:

"We have taken the decision to postpone the move of our listing and I am sure that, in the present difficult market conditions, it is the right one. We have waited to see if things would improve in the short term but, although there are now some signs of optimism returning, we are a long way from the conditions that previously prevailed.  We have decided, however, to publish the full Mineral Expert's Report that was commissioned as part of that process.   I believe that this will enable shareholders to reach a clearer understanding of how the Company's JORC based reserves and resources compare to those of western mining companies.  For our principal three assets, the aggregate of the resources compares favourably, with 8.2Moz projected from the Russian  Standard  Classification  System compared to 8.9Moz projected from JORC. Within this we have an audited JORC reserve base of 3.6Moz. In addition we have published the details of the Group's attributable gold production for the first nine months of the year. It is our intention to report production on a quarterly basis from now on. I am pleased to say that we remain on track to meet our 2008 forecast production of between 350,000 to 400,000 ounces and would draw your attention to the preliminary production results for October and the doubling of production from the Pioneer deposit.

While we fully understand that we are in an industry that is suffering from significant escalation in operating costs, we remain confident that PHM will continue to operate in the lowest quartile of the global gold production cost curve.

In the meantime, development of Pokrovskiy, Pioneer and Malomir continues as planned."


exECUTIVE SUMMARY OF THE Mineral Expert's Report

WAI has been commissioned by PHM to prepare a Mineral Expert's Report for PHM's portfolio of principal assets in the Amur, Yamal and Buryatia regions of Russia.


For this report, the resources and reserves of PHM have been estimated using both the guidelines of the JORC Code (2004) and the Russian Standard Classification System. The resources and reserves for the principal assets of Pokrovskiy, Pioneer and Malomir have been estimated in accordance with the guidelines of the JORC Code (2004), whilst the remainder are classified under the Russian Standard Classification System.



RESOURCE SUMMARY


Concurrently with resource estimates prepared under Russian requirements, PHM has also estimated Mineral Resources and Reserves in accordance with the guidelines of the JORC Code (2004) for the principal ore zones within the Pokrovskiy and Pioneer deposits. These have been reviewed by WAI, and in addition, WAI has prepared a resource estimate for the Malomir deposit using Datamine® geological modelling software in accordance with the guidelines of the JORC Code (2004).


WAI has taken the mineral resources prepared in accordance with the Russian Standard Classification System for those assets where no Micromine® models are available. WAI has reviewed Russian Standard Classification System estimates for Albyn, Quartzite and Ozhidaemoe (Malomir deposit), together with estimates for the Pokrovskiy flanks, in order to give an expert opinion on which part of these resources can be classified as mineral resources as defined by the JORC Code (2004). 


Summaries of the mineral resources and reserves attributed to PHM in the Amur Region are presented in the tables below. These tables are not alternatives to each other, but comprise those resources that have been prepared in accordance with the JORC Code (2004) and those that have been prepared in accordance with the Russian Standard  Classification  System.  



PHM Proven and Probable Mineral Reserves1 

Classified in accordance with the guidelines of the JORC Code (2004) (WAI July 2008)


Ore

(Mt)

Grade

(g/t)

Contained Gold

Stripping Ratio

(t Waste:t Ore)

(kg)

(oz)

Pokrovskiy Total

5.6

2.05

11,500

369,733

4.2:1

   Andreevskaya

2.8

3.66

10,400

334,368

11.7:1

   Bakhmut, Yuzhnaya and Promezhutochnaya

24.7

1.03

25,500

819,843

4.8:1

Pioneer Total

27.5

1.30

35,900

1,154,211

5.5:1

Malomir Total

50.8

1.26

64,000

2,057,646

3.6:1

Total PHM Reserve

83.9

1.33

111,400

3,581,590

4.3:1


Above reserves are inclusive of resources and based on a US$650/oz gold price.


PHM Mineral Resources

Classified in accordance with the guidelines of the JORC Code (2004) (WAI July 2008)

Type

Category

Pokrovska-12 (Pokrovskiy)

Pokrovska-32  (Pokrovskiy)

Andreevskaya 2 (Pioneer)

Tonnage

(kt)

Grade

(g/t Au)

Metal

Tonnage

(kt)

Grade

(g/t Au)

Metal

Tonnage

(kt)

Grade

(g/t Au)

Metal

(kg Au)

(koz Au)

(kg Au)

(koz Au)

(kg Au)

(koz Au)

Oxide

(0.4g/t Au COG)

Measured

51

2.11

108

3





327

7.44

2,429

78

Indicated

478

1.74

832

27





73

4.54

330

11

Measured + Indicated

529

1.78

940

30





399

6.91

2,759

89

Inferred

5,707

1.11

6,335

204





21

5.13

109

3.5

Sulphide

(0.4g/t Au COG)

Measured

1,905

2.14

4,077

131

1,463

1.36

1,987

64

2,294

2.33

5,344

101

Indicated

3,469

2.01

6,969

224

1,012

0.73

738

23

1,576

2.00

3,153

172

Measured + Indicated

5,374

2.06

11,046

355

2,474

1.10

2,725

87

3,869

2.20

8,498

273

Inferred

7,267

1.3

10,050

323

991

0.58

570

18

3,271

1.70

5,575

179

TOTAL 1

Measured

1,956

2.13

4,185

134

1,463

1.36

1,987

64

2,621

2.97

7,773

250

Indicated

3,947

1.98

7,801

251

1,012

0.73

738

23

1,649

2.11

3,483

112

Measured + Indicated

5,903

2.03

11,986

385

2,474

1.10

2,725

87

4,270

2.64

11,256

362

Inferred

12,974

1.26

16,385

527

991

0.58

570

18

3,292

1.73

5,684

183

Note:

1 - TOTAL includes Oxide at 0.4g/t Au COG and Sulphide at 0.4g/t Au COG

2 - WAI audit of PHM Micromine® resource models







PHM Mineral Resources 

Classified in accordance with the guidelines of the JORC Code (2004) (WAI July 2008)

Type

Category

Pioneer 2

Malomir 3

Tonnage

(kt)

Grade

(g/t Au)

Metal

Tonnage

(kt)

Grade

(g/t Au)

Metal

(kg Au)

(koz Au)

(kg Au)

(koz Au)

Oxide

(0.4g/t Au COG)

Measured

5,210

0.94

4,921

158





Indicated

3,842

0.82

3,147

101





Measured + Indicated

9,052

0.89

8,068

259





Inferred

11,688

0.73

9,253

276





Sulphide

(0.6g/t Au COG)

Measured

9,750

1.19

11,638

374

7,239

1.31

9,501

305

Indicated

11,012

1.15

12,715

408

57,156

1.19

68,115

2,190

Measured + Indicated

20,762

1.17

24,353

782

64,395

1.21

77,616

2,495

Inferred

26,676

1.00

26,767

859

87,549

0.94

82,262

2,645

TOTAL 1

Oxide

(0.4g/t Au COG) + Sulphide

(0.6g/t Au COG) 

Measured

14,960

1.11

16,559

532

7,239

1.31

9,501

305

Indicated

14,854

1.07

15,862

510

57,156

1.19

68,115

2,190

Measured + Indicated

29,814

1.09

32,421

1,042

64,395

1.21

77,616

2,495

Inferred

38,364

0.92

35,355

1,137

87,549

0.94

82,262

2,645

Note:

1 - Includes Oxide at 0.4g/t Au COG and Sulphide at 0.6g/t Au COG

2 - WAI audit of PHM Micromine® resource models

3 - WAI Datamine® estimate based on PHM sample database


PHM also evaluates mineral resources in accordance with the Russian Standard Classification Systemwhich classifies into A, B, C1 and C2 resource/reserve categories, as well as P1, P2 and P3 "prognostic" resource categories.  

PHM Resources and Reserves Summary - Russian Standard Classification System

(PHM Annual Report 2007 - As at 01/01/08)


B + C1 

C2

P1

Deposit

Category

Tonnage

(kt)

Grade

(g/t Au)

Metal

Tonnage

(kt)

Grade

(g/t Au)

Metal

Tonnage

(kt)

Grade

(g/t Au)

Metal

(kg Au)

(koz Au)

(kg Au)

(koz Au)

(kg Au)

(koz Au)

Pokrovskiy

Main

Balance

4,450

4.23

18,824

605

576

3.94

2,269

73

1,540

3.90

6,000

193

Off Balance

8,162

1.0

8,162

262

23

0.91

21

0.7





Stockpiles

Balance

4,259

1.33

5,665

182









Off Balance

3,924

0.73

2,865

92









RIP Tailings

Balance

7,067

0.42

2,968

95









Inner Flanks

Balance





92

3.91

360

12





Off Balance





11,430

1.20

13,716

441

2,730

1.70

4,641

149

Fanglomerates

Off Balance





3,100

1.00

3,100

100

2,560

0.80

2,048

66

Upper Luzhki

Balance









3,550

2.00

7,100

228

Anatolievsky

Balance









400

2.50

1,000

32

Pokrovskiy Totals

Balance

15,777

1.74

27,457

882

338

3.90

2,605

96

5,490

2.57

17,755

442

Off Balance

12,086

0.97

11,027

354

14,553

1.16

16,837

541

5,290

1.27

6,689

215


Pioneer






72,658

1.61

116,979

3,761

21,760

1.63

35,469

1,140

Malomir






51,770

1.55

80,326

2,580

38,708

1.40

54,258

1,742

Tokur 


3,932

3.24

12,740

410

8,851

2.36

20,888

672

15,010

3.40

51,034

1,641

Albyn










12,968

3.90

50,575

1,626

Novogodnee

Monto

Balance 

4,878

1.14

5,560

179

817

2.00

1,634

53

1,960

4.70

9,212

296

Off Balance





185

1.04

192

6.6





Toupugal


7,630

1.40

10,682

343

6,661

1.52

10,125

326

7,900

5.80

45,820

1,473

Ozernoye Au 










2,300

1.00

2,300

74

PGM's










2,300

1.50

3,450

111

Amur Region 





1,366

8.49

11,597

373

2,063

7.43

15,328

493

GROUP TOTAL (Excl. PGM's)

44,303

1.54

67,466

2,168

157,529

1.66

261,101

8,409

115,749

2.49

287,823

9,253


POKROVSKIY 


The mineable reserves at Pokrovskiy are based on geological resources and have been economically optimised using cut-off grades based on gold prices of US$650 to US$750/oz. WAI has re-run the optimisation process using the same parameters as PHM and the results were found to be within acceptable limits. The table below summarises the reserves under JORC (2004) guidelines at Pokrovskiy at three different gold prices.


 




Results of the Economic Optimisation

of the Pokrovskiy Open Pit

Classified iaccordance with the JORC Code (2004) - 

WAI (July 2008)


Gold Price (US$/oz)

650

700

750

Total




Total Rock Mass, kt

29,000

29,100

30,500

Orekt

5,600

5,600

5,700

Grade, g/t

2.05

2.05

2.02

Total Metal kg

11,458

11,494

11,519

Total Metal, koz

368

370

370

Waste, kt

23,400

24,100

24,800

Stripping Ratio (tOre/tWaste)

4.2:1

4.3:1

4.4:1

RIP Processing




Ore to RIP Plant, kt

3,900

4,200

4,400

Grade, Au g/t

2.70

2.57

2.49

Total Metalkg

10,518

10,718

10,861

Total Metal, koz

338

345

349

Economic Cut-Off-Grade, g/t

0.44

0.42

0.41

Heap Leach Processing




Ore to Heap Leach, kt

1,7

1,4

1,3

Grade, Au g/t

0.56

0.54

0.51

Total Metalkg

94

776

658

Total Metal, koz

30

25

21

Economic Cut-Off-Grade, g/t

0.29

0.28

0.27


The Proven and Probable reserves derived by WAI under JORC (2004) guidelines at Pokrovskiy are based on US$650/oz gold price are 5.6Mt of ore at an average grade of 2.05g/t Au (economic COG of 0.4g/t) and require that 23.4Mt of waste be removed to access the orebody at a stripping ratio of 4.2:1.  A significant further Inferred resource exists within the deposit.


PHM's current mining schedule is primarily based on reserves reported under the  Russian  Standard Classification System, which gives an inventory of mineable material of 15.9Mt at an average grade of 1.95g/t of gold and requires that 42.3Mt of waste be removed to access the orebody. This mining schedule also includes 274koz of gold of B+C1 reserves from stockpile material It is planned that the current rate of production will continue until 2012 when the existing open pit will be exhausted. After 2012, production will move to a series of smaller open pits termed the Pokrovskiy Flanks which are currently estimated at 553koz Au of C2 resources. The average grade of the flank deposits is lower than the current Pokrovskiy pit. It is planned that from 2013 to 2019 2.0Mt/pa at an average grade of 1.1g/t of gold will be processed in the resin-in-pulp plant and 0.6Mtpa, at the same average grade of 1.1g/t of gold, will be processed via the heap leach facility.


The mining schedule for Pokrovskiy is optimised to balance ore mining, waste mining and average grade each year. The mining rate and amount of blending required is not significantly different to the current operational practices and therefore WAI considers the schedule to be both practical and achievable. It should be noted however, that the Pokrovskiy Flanks deposits are not included in the block models reviewed by WAI. WAI believes that if these resources are modelled they are highly likely to be classed as Inferred at best under JORC Code (2004) guidelines.  


Overall, the Pokrovskiy plant operations are run efficiently and in line with best international practice.


PIONEER


The reserves at Pioneer are based on the geological resources and have been economically optimised using a cut-off grade based on a gold price of US$650/oz. WAI has re-run the optimisation process using the same parameters as PHM and the results found to be within acceptable limits.  

 

The Pioneer mine consists of four main open pits, Yuzhnaya, Promezhutochnaya, Bakhmut and Andreevskaya. The results of the economic optimisation are displayed in the tables below.

 

 

Results of the Economic Optimisation of Bakhmut, Yuzhnaya 

and Promezhutochnaya Open Pits1

Classified in accordance with the JORC Code (2004) - WAI (July 2008)

Parameters

Gold Price (US$/oz)

650

700

750

Total Rock Mass, kt

142,845

155,664

162,013

Waste, kt

118,174

128,639

133,689

Oxidized Ores

Ore, kt

9,765

9,783

9,804

Grade, g/t

0.84

0.85

0.85

Total Metal, kg

8,292

8,303

8,314

Total Metal, koz

267

267

267

Economic Cut-Off Grade, g/t

0.2

0.16

0.15

Primary Ores

Ore, kt

14,902

17,242

18,520

Grade, g/t

1.15

1.09

1.06

Total Metal, kg

17,175

18,809

19,549

Total Metal, koz

551

605

629

Economic Cut-Off Grade, g/t

0.5

0.45

0.42

Total

Ore, kt

24,671

27,025

28,324

Grade, g/t

1.03

1.00

0.8

Total Metal, kg

25,437

27,112

27,863

Total Metal, koz

818

872

896

Stripping Ratio (tOre/tWaste)

4.79:1

4.76:1

4.72:1

 



Results of the Economic Optimisation

of the Andreevskaya Open Pit1

Classified iaccordance with the JORC Code (2004) - WAI (July 2008)

Factors

Gold Price (US$/oz)

650

700

750

Total Rock Mass, kt

35,922

37,123

37,038

Waste, kt

33,089

33,985

33,570

Ore, kt

2,833

3,138

3,468

Grade, g/t

3.66

3.36

3,08

Economic Cut-Off Grade, g/t

0.42

0.39

0.36

Total metal, kg

10,360

10,532

10,676

Total metal, koz

333

339

343

Stripping Ratio (tOre/tWaste)

11.7:1

10.8:1

9.7:1



1 Numbers may not add up exactly due to rounding 


The Pioneer reserves as derived by WAI are based on a US$650/oz gold price. This gives combined Proven and Probable reserves of 27.5Mt at an average grade of 1.30g/t Au and requires that 151.2Mt waste be removed to access the orebodies.


The Pioneer mining schedule derived by PHM using the Russian Standard Classification  System expects production to reach a maximum rate of 6.1Mtpa of ore by 2010, but the production rate is expected to reduce slightly towards the end of the mine life in 2017. The average grade over the life of the mine is expected to be 1.6g/t Au, but this varies between 2.6g/t at the beginning of the operation to 1.7g/t Au in 2017, mainly due to the influence of the Andreevskaya open pit, which has a much higher average grade than Bakhmut, Yuzhnaya and Promezhutochnaya.  


The mining schedule proposed for Pioneer is optimised to balance ore mining, waste mining and average grade each year. Mining will take place from four separate open pits and will thereafter be blended in the combined processing facilities. WAI considers the proposed schedule to be both practical and achievable given PHM's experience and management expertise gained through the Pokrovskiy operations. It should be noted, however, that the combined mining schedule includes Inferred resources and as such, less reliance can be placed on proposed tonnage and grades in the latter parts of the schedule. WAI believes it is appropriate for these future resources to be included in the long term schedule as a guide only, pending further exploration work.


WAI has examined the testwork results and PHM development plans and is in general agreement with the results. However, WAI considers that more testwork should be undertaken, particularly with regard to the pressure oxidation of the sulphide concentrates to establish operating criteria and costs and also to investigate alternative methods if applicable.


MALOMIR


The Malomir project is an advanced stage development project and as such, much technical work still needs to be completed in order to accurately estimate essential parameters used in the reserve calculation. WAI has calculated a preliminary reserve for Malomir based on the current geological resources, but this calculation relies upon preliminary assumptions, particularly metallurgical. The results of the preliminary economic optimisation and reserve calculation are shown in the table below.



 


Results of the Economic Optimisation

of the Malomir Open Pit

Classified iaccordance with the JORC Code (2004) - WAI (July 2008)

Parameters

Gold Price (US$/oz)

650

700

750

Total Rock Mass, kt

231,982

256,969

248,078

Waste, kt

181,220

200,243

223,892

Ore, kt

50,762

56,726

60,186

Grade, g/t

1.26

1.22

1.21

Total Gold, kg

63,994

69,333

72,616

Total Gold, koz

2,057

2,229

2,335

Stripping Ratio, t ore/t waste

3.57:1

3.53:1

3.72:1

Economic COG, g/t

0.59

0.54

0.50


The proposed mining schedule for Malomir derived from PHM's Russian Standard  Classification  System reserves is based on a US$650/oz gold price. This gives indicative preliminary reserves of 50.8Mt at an average grade of 1.26g/t Au and requires that some 181Mt of waste be removed to access the ore body at a stripping ratio of 3.57:1. 


The reserves calculated at Malomir, and therefore the open pit design, must be considered as preliminary only, as there is still much work to be done in terms of metallurgical testing and cost estimation.  


At this early stage, however, WAI is of the opinion that Malomir represents a significant open pit mineable resource which has a high potential of becoming a profitable operation in the near future, subject to the planned test work yielding the results expected.  


PHM intends to start mining at Malomir in the first half of 2010. The preliminary schedule will be to mine 3.0Mt of ore in 2010, 4.0Mt in 2011 and ramping up to 6.0Mtpa from 2012 onwards. Given PHM's experience in developing and mining Pokrovskiy and in commissioning the Pioneer project, the development and mining schedule for Malomir is realistic and achievable. The size of the task is certainly within PHM's capabilities and there are no natural impediments such as terrain or location. The area has established lines of communication and is amenable to open pit mining.


The Malomir ore is known to be predominantly refractory and has been subjected to several detailed metallurgical test programmes. There are three different ore type categories within the deposits, namely Oxide, Transition and Primary. The testing of the orebody is continuing and pilot scale tests are on-going through 2008.


The Primary and Transition ore types are highly refractory due to the significant levels of gold associated with sulphide minerals (up to 40%). Various processing options were considered to treat the flotation concentrates and PHM selected Pressure Oxidation ("POX") as the most suitable method, following comminution and flotation.


The Company has been advised that the Malomir flotation concentrates could be effectively processed using autoclave oxidation and cyanidation.  This view was based on the studies carried out by Irgiredmet on similar flotation concentrates from Pioneer which had a gold grade of 25-30g/t Au and sulphur content of 21%. It was predicted that autoclave treatment of the flotation concentrates at temperatures of 200-220°C at pressures of 2.5-3.0MPa for 1-2 hours, using 80% oxygen, would result in 97-98% oxidation of the sulphur and arsenic minerals present. Subsequent leaching of the oxidised concentrate would give a gold recovery of not less than 95%.  Overall gold recovery is expected to be approximately 80%, with a flotation recovery of 82-84%.


WAI has inspected the testwork programmes and concurs that the chosen flowsheet is appropriate.  However, further work is required to verify the various assumptions made, particularly as more details of the orebodies emerge. 


YAMAL

A considerable amount of exploration has been undertaken by PHM on all of the licence areas; however, with the exception of Novogodnee-Monto (gold and iron), Zapadnoye (chromite) and the intensive exploration of Petropavloskoye in 2007 (a gold deposit which lies inside the Toupugol-Khanmeishorsky licence area), only those resources classified in the prognostic P category under the Russian Standard Classification System have been identified in the other licence areas.


Russian Standard Classification System resource and reserve estimates have been undertaken by PHM on the Novogodnee Monto, Petropavloskoye and Zapadnoye deposits. WAI has reviewed the exploration work undertaken by PHM (density of drilling and trenching over each project as a whole) and considers that both these deposits show considerable merit and potentially may well support the development of mining projects. A summary of the Mineral Resources and Reserves held by PHM in the Yamal Region are presented in the tables below.



Resource and Reserve Summary - Russian Standard Classification System

Yamalzoloto 

(PHM Annual Report as at 01/01/08)


Gold

Magnetite

Gravel

Site

Category

Tonnage (kt)

Grade

(g/t)

Metal

(kg)

Tonnage (kt)

Grade

(FeMgt%)

Metal

(kt)

Tonnage

(000's m3)

Novogodnee Monto

Metasomatic Zones

C1

64

3.80

244




11,279

C2

472

2.59

1223




13,828

Magnetite Ores

C1

4814

1.11

5,324

4,814

41.16

1,981


C2

345

1.22

419

529

41.61

220


Skarn

P1

1,960

4.67

9,144





Toupugol-Khanmeishorsky Area

Petropavlovskoye

C1

7,630

1.40

10,665





C2

6,661

1.52

10,156





P1

5,000

6.00

30,015





Karyerniy

P1

1,000

10.0

10,000





Karachentseva

P1

667

4.50

3,000





Anomalny

P1

833

6.00

5,000





Toupugolsky

P1

437

8.00

3,500





Khanmeishorsky

P1

2,657

3.50

9,300










Resource and Reserve Summary - Russian Standard Classification System

Yamal Mining Company

(PHM Annual Report as at 01/01/08)

Ozernoye-Pyatirechenskaya Area


Gold

Platinoids

Other

Site

Category

Tonnage (kt)

Grade

(g/t)

Metal

(kg)

Tonnage

(kt)

Grade

(g/t)

Metal (kg)


Ozernoye

P1

2,300

1.0

2,300

2,333

1.50

3,500

P2

-

-

-

6,667

1.50

10,000

Rudnogorskaya Area

Rudniy-Gorkiy-3

P1

1,667

1.50

2,500

-

-

-

-

-

-

Elkashor








Copper








Tonnage

(Mt)

Metal

(%)

Metal

(kg)

P2

-

-

-

-

-

-

8.0

0.10

800








Molybdenum








Tonnage

(Mt)

Metal

(%)

Metal

(kg)

P2







8.0

0.06

200

Yarshor-Laptayeganskaya Area

Sandy Bay

P1

1,000

10

10,000

-

-

-

-

-

-


PHM proposes to extract gold and magnetite from the Novogodnee Monto deposit using traditional metallurgical processing routes. 405ktpa of ore is expected to be treated at a grade of 1.06g/t Au and 42.3% Fe.  Principally, gold will be processed by leaching flotation concentrates with cyanide. The gold content within the leached solutions will be further upgraded by electro-winning and smelted to produce a gold and silver alloy (doré), containing 70% Au and 30% Ag. It is intended that magnetite will be concentrated to produce a product containing 68.9% Fe using magnetic separation technology.


Based on results of metallurgical testing undertaken at the Petropavlovskoye deposit it was recommended that the Petropavlovskoye ore should be treated using flotation with subsequent cyanidation of the flotation concentrate.  


FINANCIAL ANALYSIS


WAI has conducted a financial analysis of PHM's mining operations over the next 2.5 years. A financial analysis model was constructed based on the production schedule provided by PHM which utilises the Russian Standard Classified reserves. The results are summarised in the table below.

 

 

Summary of the PHM Group Financial Analysis



2008

2009

2010


Unit

Q3 and Q4

Q1 - Q4

Q1 - Q4

Gold Produced

kg

5,828

15,910

25,014

Gold Produced

Tr. oz

187,395

511,576

804,309

Total Revenue

US$m

159.3

434.8

627.4

Total Capital Expenditure

US$m

72.1

142.5

100.2

    2010 Revenue figures include an estimated US$24.2M from aggregate sales.

The assets included in the above table are the reserves at Pokrovskiy, Pioneer, Malomir, Yamal and Placers Deposit. All have also been classified in accordance with the guidelines of the JORC Code (2004).

The gold price assumptions used in the cash flow model are as follows:

  • Short Term (2008/2009) - US$850/oz

  • Medium Term (2010/2011) - US$750/oz

  • Long Term (2012 and beyond) - US$650/oz. 



 

Enquiries:

Peter Hambro Mining Plc

Alya Samokhvalova 


JPMorgan Cazenove


Ian Hannam / Patrick Magee  


+44 (0) 20 7201 8900


+44 (0) 20 7155 2828

Merlin

David Simonson / Tom Randell / Anastasia Ivanova


+44 (0) 20 7653 6620


The contents of this announcement have been reviewed and approved for release by Dr. P. Newall, BSc,PhD, CEng, FIMMM, of Wardell Armstrong International. Dr. P. Newall has consented to the inclusion of the material in the form and context in which it appears.

This release has been reviewed by Dr. Stephen Henley, who is an independent geological advisor to the Board of Directors of Peter Hambro Mining Plc. Dr. Henley is qualified to act in the capacity of a Competent Person for the purposes of this statement. Dr. Stephen Henley holds a PhD in Geology (University of Nottingham, 1970). He is a Fellow of the Geological Society, a Fellow of the Institution of Materials, Minerals and Mining, and a Chartered Engineer.  He is also a Charter Member of the International Association for Mathematical Geology.  He has been employed in exploration, mining, academic and geological consultancy posts since 1970 and has participated in Competent Person studies on a variety of different minerals and types of deposit, including gold, polymetallic and chromite projects.

 

Forward-Looking Statements

This release contains forward looking statements relating to the Company's anticipated plans, resources, reserves and financial performance. The words "believe," "expect," "anticipate," "intend" and similar expressions identify forward-looking statements, but their absence does not mean the statement is not forward-looking. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that could cause actual results to differ materially from those anticipated in the forward-looking statements. You should not place undue reliance on these forward-looking statements. The forward-looking statements are made as of today's date and the Company assumes no obligation to update any such statements to reflect events or circumstances after the date hereof.

Glossary of Terms


"Ag"

chemical symbol for the element silver



"alluvial"

Detrital material which is transported by a river and deposited at points along the flood plain of a river



"arsenic"

metallic, steel-grey, brittle element. Chemical symbol, As



"Au"

chemical symbol for the element gold



"autoclave oxidation"

a high temperature and pressure process in which gold bearing sulphides are oxidised to render gold amenable to cyanide leaching



"Category A"

Soviet "ore reserves" where the reserves in place are known in detail. The boundaries of the deposit have been outlined by trenching, drilling, or underground workings. The quality and properties of the ore are known in sufficient detail to ensure the reliability of the projected exploitation.



"Category B"

Soviet "ore reserves" where blocks are delineated by mine workings on three or more sides 



"Category C1"

Soviet "ore reserves" whose blocks are delineated by mine workings above and below 



"Category C2"

Soviet "ore reserves extrapolated from Category C1 but with more complex geology or limited mine workings 



"Category P1-3"

Soviet "Prognostic" ore reserves extrapolated beyond more definable reserves and resources. The category is subdivided into three sub-categories P1 to P3, with the level of confidence decreasing progressively from sub category 1 to 3



"Cu"

the chemical symbol for copper



"cut-off-grade" or "COG"

lowest grade of mineralised material considered economic, used in the calculation of ore resources



"cyanidation"

metallurgical technique for extracting gold by leaching from low-grade ore, converting the gold to water soluble aurocyanide metallic complex ions



"cyanide leach"

chemical extraction method using a dilute cyanide solution to leach gold from the mineralisation



"Datamine®"

complex mining software used primarily for orebody modelling, resource estimation and pit optimisation



"deposit"

coherent geological body such as a mineralised body 



"doré"

unrefined gold. After being mined, the first stage in the purification process of the gold ore produces a cast bar (gold doré) that mostly comprises gold (up to >90%) with the remainder comprising silver, copper etc. 



"Fe"

chemical symbol for iron



"FIMMM"

Fellow of the Institute of Material, Mining and Metallurgy



"flotation"

mineral processing technique used to separate mineral particles in a slurry, by causing them to selectively adhere to a froth and float to the surface



"g/t"

gram per metric tonne



"grade"

relative quantity or the percentage of ore mineral or metal content in an ore body 



"heap leach"

process used for the recovery of metal ore from typically weathered low-grade ore. Crushed material is laid on a slightly sloping, impervious pad and uniformly leached by the percolation of the leach liquor trickling through the beds by gravity to ponds. The metals are recovered by conventional methods from the solution



"Indicated Resource"

as defined in the JORC Code, is that part of a Mineral Resource which has been sampled by drill holes, underground openings or other sampling procedures at locations that are too widely spaced to ensure continuity but close enough to give a reasonable indication of continuity and where geoscientific data are known with a reasonable degree of reliability. An Indicated Mineral resource will be based on more data and therefore will be more reliable than an Inferred resource estimate



"Inferred Resource"

as defined in the JORC Code, is that part of a Mineral Resource for which the tonnage and grade and mineral content can be estimated with a low level of confidence. It is inferred from the geological evidence and has assumed but not verified geological and/or grade continuity. It is based on information gathered through the appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes which may be limited or of uncertain quality and reliability



"JORC"

Joint Ore Reserves Committee of the Australian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals council of Australia



"kt"

kilo tonnes (1,000 tonnes)



"leached"

a rock that is in the process of being broken down by the action of substances dissolved in water



"leaching"

see cyanidation



"magnetics"

a geophysical technique used to measure the magnetic susceptibility of rocks



"magnetite"

an iron ore mineral, Fe3O4



"Measured Resource"

defined in the JORC Code, as that part of a Mineral Resource for which the resource has been intersected and tested by drill holes, underground openings or other sampling procedures at locations which are spaced closely enough to confirm continuity and where geoscientific data are reliably known. A measured resource estimate will be based on a substantial amount of reliable data, interpretation and evaluation which allows a clear determination to be made of the shapes, sizes, densities and grades



"metallurgical"

describing the science concerned with the production, purification and properties of metals and their applications



"metasomatism or metasomatic"

metamorphic change which involves the introduction of material from an external source



"Micromine®"

company that has developed innovative geological resource modelling software for the mineral resource industry since 1986



"mineral resource"

concentration or occurrence of material of intrinsic economic interest in or on the Earth's crust in such a form that there are reasonable prospects for the eventual economic extraction. The location, quantity, grade geological characteristics and continuity of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge. Mineral resources are sub-divided into InferredIndicated and Measured categories



"Mo"

chemical symbol for molybdenum



"Mt"

million tonnes



"off balance"

Russian Standard Classification System term defining uneconomic reserves



"on balance"

Russian Standard Classification System term defining commercially exploitable reserves but without mining dilution and recovery



"open pit"

large scale hard rock surface mine



"optimisation process"

process to define an open pit outline based on geotechnical and economic parameters



"ore"

mineral deposit that can be extracted and marketed profitably



"ore body"

mining term to define a solid mass of mineralised rock that can be mined profitably under current or immediately foreseeable economic conditions



"ore reserve"

the economically mineable part of a Measured or Indicated mineral resource. It includes diluting materials and allowances for losses which may occur when the material is mined. Appropriate assessments, which may include feasibility studies, have been carried out, and include consideration of and modification by realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the time of reporting that extraction could be reasonably justified. Ore reserves are sub-divided in order of increasing confidence into Probable and Proven 



"ounce" or "oz"

troy ounce (= 31.1035 grams)



"oxide"

a mineral formed by the direct union of an element with oxygen; e.g. corundum, hematite, magnetite and cassiterite



"oxide ore"

often known as secondary or supergene ore, which consists of alteration products of primary ore as a result of weathering or other surficial processes resulting from descending surface waters



"PGM"

Platinum Group Minerals. Characterised by high specific density, unusual resistance to oxidising and acid attack and high melting point. Includes platinum, ruthenium, rhodium, palladium, osmium and iridium 



"placer"

mineral deposit formed by the winnowing action of either water, or air to concentrate minerals of different mass by gravity separation



"plunge"

fold is said to plunge if the axis is not horizontal



"pluton"

igneous intrusion



"plutonic"

pertaining to igneous rocks formed at great depths



"polymetallic"

refers to a mineral deposit or occurrence with several metal sulphides, common metals include Cu, Pb, Zn, Fe, Mo, Au and Ag



"primary ore"

often known as hypogene ore, where ore minerals are deposited during the original period or periods of mineralisation.  Ore that has remained practically unchanged from the time of original formation



"pressure oxidation" or "POX"

a high temperature and pressure process in which gold bearing sulphides are oxidised to render gold amenable to cyanide leaching



"recovery"

proportion of valuable material obtained in the processing of an ore, stated as a percentage of the material recovered compared with the total material present



"refractory ore"

ore material that is difficult to treat for recovery of the valuable element



"reserves"

Proven: measured mineral resources, where technical economic studies show that extraction is justifiable at the time of the determination and under specific economic conditions. 

Probable: measured and/or indicated mineral resources which are not yet proven, but where technical economic studies show that extraction is justifiable at the time of the determination and under specific economic conditions 



"RIP"

Resin in Pulp; processing technique by which a resin medium is used to adsorb the desired element out of solution or pulp



"Russian Standard Classification System"

Means by which Russian reserves are assigned to classes based on the degree of reliability of data and indicate their comparative importance for the national economy



"stockpile"

an accumulation of ore or mineral formed to create a reserve for loading or when demand slackens or when the process plant is unequal to handling mine output



"strip ratio" 

the unit amount of spoil or waste that must be removed to gain access to a similar unit of ore or mineral material



"sulphide"

mineral containing sulphur in its non-oxidised form



"t"

metric tonne



"tailings"

material that remains after all metals/minerals considered economic have been removed from the ore 



"tpa"

tonnes per annum



"transition ore"

zone of an orebody where both oxide and sulphide/primary ore material exists



"trench sampling"

sampling of a trench cut through the rock, generally in the form of a series of continuous channels (channel samples)



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