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Peter Hambro Mining (POG)

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Thursday 27 August, 2009

Peter Hambro Mining

Half Yearly Report

RNS Number : 0816Y
Peter Hambro Mining PLC
27 August 2009
 



Peter Hambro Mining plc

Half-Year Report for the period ended 

30 june 2009



Peter Hambro Mining Plc ("PHM", the "Company" or the "Group") is pleased to present its results for the six months ended 30 June 2009 (the "Period").

  

Financial Highlights

US$ millions

6 months to 30 June

Year ended 31 December 2008

2009

(unaudited)

2008

(unaudited)

Variance

Group Revenue

214

146

47%

382

Gold Revenue

193

107

80%

288

Underlying EBITDA*

111

60

85%

136

Underlying EBITDA Margin**

52%

41%

11%

36%

Profit for the period

75

15

400%

23

Earnings per Ordinary share (basic)

US$0.61

US$0.18

239%

US$0.27

Operating Highlights

Total attributable gold production (000'oz) ***

223

145

54%

394

Gold sold 

(000'oz)

210

119

76%

341

Group average gold price received (US$/oz)

917

901

2%

845

Pokrovskiy Mine gold production (000'oz) ****

92

92

(0.4%)

190

Pokrovskiy Mine Total Cash Costs

(US$/oz) *****

281

309

(9%)

293

 Pioneer Mine gold production 

(000'oz)

118

39

203%

151

Pioneer Mine Total Cash Costs 

(US$/oz) *****

222

n/a

n/a

226

Group's Total Cash Costs (US$/oz)

254

329

(23%)

320


* Underlying EBITDA is earnings before fair value changes, financial income, financial expenses, foreign exchange differences, taxation, depreciation and amortisation (see note 26 to the Interim Financial Statements).

**Underlying EBITDA margin is underlying EBITDA as a percentage of revenue

*** Total attributable gold production, in this table and elsewhere in this report, is comprised of 100% of production from the Group's subsidiaries, and the relevant share of production in joint ventures. 

**** In H1 2009, some of the gold from Pioneer deposit was processed through the Pokrovskiy mill. Pioneer gold processed through the Pokrovskiy mill is included in the Pioneer production figures. Figures for 2008 are restated accordingly.


***** The "Total Cash Costs" measurements by mine replace the previously used Gold Institute Standard ("GIS") cash cost breakdown. Numbers for the previous periods have been restated accordingly. See page 3 of the Financial Review for details of what comprises Total Cash Costs. 


  Financial Highlights:

  • Underlying EBITDA increased by 85% to US$111 million (H1 2008: US$60 milliondriven by a strong operating performance with total attributable production increasing to 222,600 ounces54% higher than in H1 2008; 

  • Net Profit for the Period increased from US$15 million in H1 2008 to US$75 million. This includes a US$23 million gain on repurchase of Gold Exchangeable Bonds;

  • The Group's Total Cash Costs per ounce decreased by 23% (US$254/oz in H1 2009 versus US$328/oz in H1 2008) due to an increase in the Group's production and the depreciation of the Rouble. 

Development Highlights

  • Pioneer gold mine expansion works on track with the second mill expected to achieve full capacity in September 2009;

  • Malomir gold project development programme on track for commissioning in the second half of 2010

  • A pre-feasibility study for Albyn gold deposit envisages a 56.6% Internal Rate of Return ("IRR") and US$308 million NPV discounted at 10% for the project, based on full capacity production of 205,000 ounces of gold from 2012;

  • Trial operations commissioned at Tokur in order to test a future processing method for the deposit.  

  • A pre-feasibility study accomplished for Petropavlovskoye and Novogodnee Monto deposits;

  • Kuranakh's beneficiation plant on track for commissioning at the end of 2009;

  • Continued progress on analysis of iron ore projects and discussions on K&S and Garinskoye with focus on off-take agreements and financing from providers of external development finance.

Exploration Highlights

  • Pioneer - three new high grade ore columns at Bakhmut and Andreevskaya and new ore body Vostochnaya identified; 

  • Malomir - two new non-refractory ore bodies parallel with and similar to Quarzitovoye identified.

Corporate Highlights

  • The acquisition of Aricom plc and placing to raise US$105 million (before expenses) completed; 

  • Purchase of a total of $127 million nominal amount of 7% exchangeable bonds at an average price of US$95 plus accrued interest from a number of investors. Following these purchases, US$53 million nominal exchangeable bonds remain outstanding at 30 June 2009;

  • Move from AIM to the London Stock Exchange plc's Main Market and inclusion in FTSE 250 index;

  • Subject to the Group maintaining its success through the second half, the Board has taken a decision to recommend a dividend for the full year which will be payable in the second quarter of 2010;

  • Proposal for Peter Hambro Mining PLC to be re-named Petropavlovsk PLC to reflect the evolution of the Group;

  • The Board is confident that the Group is on track for delivery of its target 500,000 ounces production for the full year 2009 as well as continuing rapid expansionary progress at the Pioneer and Malomir deposits.  

 



CHAIRMAN'S STATEMENT 

Peter Hambro, Chairman said:

"This year we celebrate the fifteenth anniversary of Peter Hambro Mining and it is pleasing that we are able to report such a successful period as we reach this milestone. The net profit for the first half of 2009 is US$75 million, which reflects an increase of some 400% over the same period last year and is approximately 3 times more than the US$23 million net profit for the whole year in 2008. This success is the result of a 80% increase in gold sales to US$193 million, the successful repurchase of Gold Exchangeable Bonds at a US$23 million gain, strong gold price, a disciplined cost performance and the depreciation of the Rouble. 

In particular, we have continued with our policy of focusing on profitable production with the Group's EBITDA margin rising to over 50% for the first half of 2009 versus 41the previous half year despite only a 2% rise in the half-on-half gold price and higher levels of Russian inflation albeit assisted by the Rouble depreciation. Moreover, the rapid and successful ramp up of our projects has allowed for a decrease of the Group's overhead costs on a unit of production basis thus maintaining our costs at the low end of the worldwide industry scale. This trend is likely to continue in future as the Group's steep growth contributes more and more profitable ounces to the overall production. Today we are giving a breakdown of total costs by mine, enhancing transparency, which we hope will be appreciated by the market. 

At Pokrovskiy, production was in line with the previous year at nearly 92,000 ounces. With Total Cash Costs of US$281/oz, the mine continues its important role in our results and as a base for the development of other assets of the Group in the region.

At Pioneer, the development of the processing plant continued smoothly with production increasing by 203%and the Total Cash Costs reducing by 2% against those for the full year 2008 resulting in Total Cash Costs of US$222/oz. This positions the Pioneer mine well amongst the lowest cost producers in the world. The second phase of development of the processing plant is on schedule and I am confident that this too will have a marked effect on our profitability. The results of ongoing exploration activities at Pioneer during the period increased the reserves and resources base, thus extending mine life. In particular, two new ore bodies with high grade samples that were previously identified by geochemical work were confirmed and a continuation of the high grade Andreevskaya ore column has been established.

At Malomir, many of the major infrastructural and equipment requirements are complete and I remain confident that production will begin in the second half of 2010. The recent exploration results identified a potential for additional non-refractory resources, which could allow for the mine to work using simpler, direct cyanidation technology for a longer period.

Today's report gives an overview of one of our next gold mining projects, Albyn, which I believe represents a very exciting development for the future. It is located in the same cluster of deposits as Malomir in the north-east of the Amur region and we can look forward to its technologically simple ores making a contribution to gold production from 2012. Our forecast annual production at full capacity for this deposit has almost doubled to 205,000 ounces.

I am also pleased to report that in H1 2009 the trial operations were commissioned at Tokur in order to test a future processing method for the deposit.  We also accomplished a pre-feasibility study for the Petropavlovskoye and Novogodnee Monto deposits, allowing us to compile an initial plan of development for these deposits.

 

The non-precious metals division continues to make significant progress and I believe that with the current economic success of China, the iron ore projects in particular will deliver significant shareholder value from their impressive size and their proximity to the Sino-Russian border. Kuranakh moves forward towards production later this year and discussions with potential project development partners for K&S and Garinskoye continues.

During the Period, PHM took steps to strengthen its balance sheet, including the acquisition of Aricom and the US$105 million (before expenses) equity placing. During the first half of the year, the Group has also purchased US$127 million nominal value of its Gold Equivalent Exchangeable Bonds.  

With the current gold price providing expectations of good cash flow over the next few quarters, we are in a strong financial position to address our future growth plans. In addition, the Russian banking system has stabilised and the Group has secured a new US$60 million long-term loan facility with Sberbank.

The Board places great importance on returning money to investors out of profits.  Accordingly the Directors intend, subject to the Group maintaining its success through the second half, to recommend a dividend for the full year which will be payable in the second quarter of 2010.

In fifteen years, the nature of our business has changed almost beyond recognition from a gold mining junior to a major multi-mine, multi-commodity business and today's results bear witness to the benefits of these developments. As a result, the Board has decided that the existing company name no longer reflects the true nature of the business and we have today recommended that, subject to shareholder approval, the name of the Company be changed to Petropavlovsk PLC. Recognising that almost all our assets and employees are in Russia, we have chosen Petropavlovsk because it is a Russian name with a powerful historical significance.  From the Petropavlovsk fort in the west in St. Petersburg to the city of Petropavlovsk-Kamchatskiy in the east, Petropavlovsk is a name known across Russia.  At the same time its derivation from the names Peter and Paul continues to link the business name to Pavel and I as the Group's founders and we both look forward to contributing to the continuing success of the Group under its new identity.

Overall, I believe the Group is in the strongest position since its inception.  We have taken, decisively, the necessary steps to weather the financial storms that have affected so many and I am confident that currently we have the appropriate strategy to continue to take advantage of a range of opportunities in both our precious and non-precious metals divisions.

For the remainder of the year we are on track to reach our 500,000 oz production target. In order to achieve this we will ramp up the second circuit at Pioneer in the second half, and while this will impact unit costs to a degree, we remain confident of a strong outcome for the full year".


Conference Call 

There will be a conference call today (27 August 2009) to discuss the announcement at 14:00 (BST). 


The conference ID is 25807316 and the dial-in numbers are as follows:

  • UK Free Call Dial In: 0800 694 0257

  • USA free call: 1866 966 9439

  • Russia free call: 8108 002 097 2044

  • International Dial in: +44 (0) 1452 555 566

A replay file will be available upon request from Tuesday, 1 September 2009. 


Enquiries:

Peter Hambro Mining Plc

Alya Samokhvalova - Group Head of External Communications

Charles Gordon - Investor Relations Officer

Rachel Tuft - Investor Relations Officer

+44 (0) 20 7201 8900


Merlin

David Simonson 

Tom Randell 


+44 (0) 20 7653 6620

  Financial Review

Group results

Following the acquisition of Aricom plc completed on 22 April 2009, the Group's results for H1 2009 comprise the results of PHM operations for the six months to 30 June 2009 together with the results of Aricom operations from 22 April 2009 to 30 June 2009. 


The Group's revenue increased by 47% to US$214 million in H1 2009 compared to US$146 million in H1 2008, with revenue from the precious metals division increasing up 80from US$107 million to US$193 million. The increase in revenue from the precious metals division was mainly attributable to a higher number of ounces sold and 2% increase in the average gold price realisedThe increase in revenue from the precious metal division was partially offset by a reduction in revenue from services historically provided to Aricom (which are intra-group following the completion of the acquisition of Aricom), as well as expected reduction in external revenues from engineering and other services. 


The Group earned US$88 million operating profit (H1 2008: US$41 million). This is mainly due to an increase in operating profit from the gold operationsoffset by central administration costs in the UK and Russia and foreign exchange losses on net monetary assets denominated in Roubles. Central administration costs increased by US$4 million (from US$16 million in H1 2008 to US$20 million in H1 2009) primarily due to the one off costs of admission to the Main Market of the London Stock Exchange of US$5 million.


Net profit for the Period increased by 400% to US$75 million from US$15 million in H1 2008, primarily as a result of US$51 million increase in EBITDA, US$23 million gain recognised on the redemption of the Gold Exchangeable Bonds and fair value gains on derivatives of US$2 million (H1 2008: fair value losses of US$10 million). This was partly offset by foreign exchange losses and higher taxation due to the increased overall profitability and deferred tax charges.

 

Basic earnings per share ("EPS") was 61c per share increasing by 239compared to 18c per share in H1 2008, increased by the one off gain resulting from the purchase of  Gold Exchangeable Bonds. 


Today the Group is providing mine by mine Total Cash Coasts. The Group believes that this increased disclosure will enhance shareholders' understanding of the Group operations. 


Precious metals operations 


 

Pokrovskiy

Pioneer 

Alluvials

Other

H1 2009

Total

H1 2008

Total

 

$ '000

$ '000

$ '000

$ '000

$ '000

$ '000

Revenue

 

 

 

 

 

 

 

Gold sales (000'oz)*

 

    100,621

     109,428

 

-

 

-

   

 210,049

    118,800

Gold sales

92,253

100,327

-

192,580

107,039

Silver sales

192

1,565

60

- 

1,817

376

Other external sales

-

-

-

46

46

1,979

Total Group revenue from external customers

92,445

101,892

60

46

194,443

109,394








Expenses





 

 

Operating cash expenses 

21,347

16,816

338

386

38,887

29,667

Refinery and transportation

708

797

- 

- 

1,505

905

Royalties

5,543

5,956

- 

- 

11,500

6,848

Other taxes

669

742

23

- 

1,433

1,620

Total cash costs*

28,267

24,311

361

386

53,325

39,040

 

 

 

 

 

 

 

General overheads





2,278

2,874

Impairment





2,739

3,197

Non-cash stockpile adjustment





5,668

4,451

Depreciation and amortisation





9,676

7,787

 

 

 

 

 

 

 

Total net operating expenses





73,686

57,349

 

 

 

 

 

 

 

Share of results in joint ventures

 

 

 

 

1,014

(2,182)

 

 

 

 

 

 

 

Operating profit 





121,771

49,863

Group's total Cash Costs*





254

329


*Total cash costs derived as the Total Cash Costs for the precious metals segment divided by the total of number of ounces of gold sold. 


Non precious metals and other operations 

Non-precious metals and other operations in total generated a loss of US$6.6 million for H1 2009 compared to US$0.7 million profit in H1 2008 of which US$2 million was attributable to losses in relation to the Aricom Group operations since its acquisition on 22 April 2009. The remaining losses were mainly attributable to the engineering division.  In addition from 22 April 2009, the Group incurred overhead expenses in relation to Aricom of US$1.million which are included in the Central Administration Costs.


Net Debt

At 30 June 2009, the Group's Net Debt reduced to US$79 million from US$389 million at 31 December 2008. The reduction in Net Debt was due to the placing of 16 million PHM shares, the acquisition of Aricom plc and cash generated from operations.

During the Period, the Group purchased US$127 million nominal amount of its 7% Gold Exchangeable Bonds and repaid US$24 million of short-term borrowingsAs at 30 June 2009, the Group held US$165 million of cash.


Capital and Exploration expenses

During the first half of the year, the Group incurred a total of US$93 million of capital expenditure predominantly on the development of the Pioneer, Malomir and Kuranakh projects and the acquisition of the Ushumun coal deposit. Exploration expenditure comprised of US$13 million, which was incurred mainly in relation to exploration of the Pokrovskiy, Pioneer and Malomir flanks. Capital expenditure in the second half of the year is expected to be in the order of US$120 million.


Cost reporting

As the Group has become a multi-commodity producer, the decision has been taken to report Total Cash Costs per mine in future, replacing the Gold Institute Standard ("GIS") measure previously used.  The previous years costs have been restated accordingly and for comparison purposes, the GIS numbers are also included for the Pokrovskiy Mine

Outlook

For the remainder of the year the Group is on track to reach our 500,000 oz production target. In order to achieve this a ramp up of the second circuit at Pioneer needs to be maintained in the second half of the year. While this will impact unit costs to a degree, the Group remains confident at a strong outcome for the full year.

GROUP OPERATIONS REPORT 

Precious Metals Division 

Pokrovskiy mine

All of the Pokrovskiy deposit's operations performed in line with expectations in the first half, yielding 101,100 ounces of gold production (including 9,400 ounces of Pioneer ore processed at the Pokrovskiy Mill) at Total Cash Costs of US$281/oz compared to 127,800 ounces (including 35,700 ounces of Pioneer ore processed at the Pokrovskiy Millin the first half of 2008 at US$309/ozRecovery rates at the RIP plant in the first half were slightly reduced due to the large proportion of primary material in the blend for the mill. Some of the decrease in ore (24% compared with H1 2008) stacked at the heap-leach pads was due to unfavourable weather conditions in May and June.



Operating results


6 months to 30 June

Units

2009

2008

Var. %

Mining operations


Total material moved

2, 641

2,899

(8.9%)

Ore mined 

`000 t

972

1,059

(8.2%)

Average grade

g/t

2.8

3.2

(12.5%)

Gold content

`000 oz

87.5

107.5

(18.6%)

Processing operations


Resin in Pulp Plant


Ore from pit

`000 t

572

632

(9.5%)

Average grade

g/t

3.9

4.3

(9.3%)

Ore from stockpile

`000 t

263

125

110.4%

Average grade

g/t

3.9

3.6

8.3%

Pioneer Ore 

`000 t

35

81

(56.8%)

Grade

g/t

10.0

15.8

(36.7%)

Total milled

`000 t

870

837

3.9%

Average grade

g/t

4.2

5.3

(20.8%)

Gold content

`000 oz

116.2

142.4

(18.4%)

Recovery rate

%

83.9%

86.7%

(3.2%)

Gold recovered

`000 oz

97.5

123.5

(21.1%)

Heap Leach


Ore stacked

`000 t

311

410

(24.1%)

Average grade

g/t

0.8

0.8

-

Gold content

`000 oz

8

11

(27.3%)

Recovery rate

%

44.0%

39.0%

12.8%

Gold recovered

`000 oz

3.6

4.3

(16.3%)

Total





Gold recovered

`000 oz

101.1

127.8

(20.9%)

including





Pokrovskiy*

`000 oz

91.7

92.1

(0.4%)

Pioneer*

`000 oz

9.4

35.7

(73.7%)

* In H1 2009, some of the gold from Pioneer deposit was processed through Pokrovskiy mill. Pioneer gold processed through Pokrovskiy mill is included in the Pioneer production figures. Figures for H1 2008 are restated accordingly.


Costs


As the Group has become a multi-commodity producer, the Board believes that "Total Cash Costs" measurements by mine should replace the previously used GIS cash cost breakdown. The figures for H1 2008 have been restated accordingly to give a true comparator for H1 2009 figures and for reconciliation purposes, the comparable GIS breakdown for H1 2009 is also included.

 

Pokrovskiy costs*
 
US$/oz
6 months to 30 June 2009
6 months to 30 June 2008
Variance
Operating cash expenses
212
231
(8.2%)
Refinery and transportation cost
7
8
(12.5%)
Cash operating costs
219
239
(8.4%)
State Royalties
55
58
(5.2%)
Other taxes
7
12
(41.7%)
Total Cash Costs
281
309
(9.1%)


*Including costs of Pioneer ore processed through the Pokrovskiy mill. 


During the first half of 2009, Pokrovskiy mining costs decreased by 17% in comparison with H1 2008 while processing costs at Pokrovskiy decreased by 11%helped by the depreciation of the RoubleThe decrease in costs was achieved despite inflation causing electricity costs to rise by 26%, chemical reagents costs to rise in the range from 41% to 108% and consumables costs to rise in the range from 25% to 39%. Cash operating expenses were also impacted by lower grades processed through the mill (18.4% decrease compared to the same period in 2008), and lower recoveries, down by 3.2% .


As refinery and transportation costs are mainly dependant on the amount of gold produced and the gold price, these constituents of Total Cash Costs remained broadly flat. State royalties amounted to 6% of Pokrovskiy's US$92.3 million gold revenue. Other taxes are not directly associated with production and, with the overall increase of production from Pokrovskiy and Pioneer, their share within unit costs decreased. 


Pokrovskiy's administrative overheads decreased by 51% from US$5.5 million in H1 2008 to US$2.7 million in H1 2009 due to the commissioning of the Pioneer operations allowing for the partial allocation of these Pokrovskiy costs to Pioneer, and a weaker Rouble.


As a result of the above, Total Cash Costs per ounce were down by 9%, from US$309/oz in H1 2008 to US$281/oz in the current Period.


2009 GIS versus Total Cash Costs comparison


The table below demonstrates the difference in approach to cost calculation according to the GIS and Total Cash Costs methodologies. The main difference is in the treatment of overhead costs which are not directly associated with mine operations.  The Group's new reporting policy provides for disclosure of Total Cash Costs inclusive of both direct and indirect costs. Net operating expenses were adjusted for US$1.4 million or U$14/oz of overheads incurred but not directly associated with the Pokrovskiy operations. Silver credits of US$15.6/oz were excluded from the full cost analysis and shown as part of revenue. 


Pokrovskiy

6 months to 30 June 2009

US$/oz

Full 

GIS

Operating cash expenses

212

198

Silver credits

0

(16)

Refinery and transportation cost

7

7

Cash operating costs

219

189

State Royalties

55

55

Other taxes

7

7

Total cash costs

281

251



Pioneer mine

Pioneer's growing importance in the Group was emphasised in the first half with 108,700 ounces (excluding 9,400 ounces of Pioneer ore processed at the Pokrovskiy Mill) produced at Total Cash Costs of US$222/oz. 

Pit development at the central section of the Andreevskaya zone is continuing, with the pit now at 60 metres depth. 

Due to the presence of very high grade areas (grades up to 1kg/tonne) at Andreevskaya and in order to provide stable grades for mill feed, ore from Andreevskaya is blended twice in a process. Firstly, this is achieved within the pit through accurate mine planning and secondly, at an intermediate stockpile immediately before ore is sent to the plant. The resulting grade stability through the mill has ensured a reduction of losses into the tailings dam.

The new plant performed consistently and in line with its internal design parameters proving the chosen technology. 


Pioneer     


6 months to 30 June

Units

2009

2008

Var. %

Mining operations

Total material moved

`000 m3

3,503

1,258

178.5%

Ore Mined

`000 t

399

174

129.3%

Grade

g/t

10.1

9.5

6.3%

Gold

`000 oz

129.0

52.8

144.3%

Processing operations

Ore from pit

`000 t

60

-

-

Average grade

g/t

3.7

-

-

Ore from stockpile

`000 t

261

88

196.6%

Average grade

g/t

13.1

2.5

424.0%

Total milled

`000 t

321

88

264.8%

Average grade

g/t

11.3

2.5

352.0%

Gold content

oz `000

116.6

7.1

1,542.3%

Recovery rate

%

93.2%

43.7%

113.3%

Gold recovered

oz `000

108.7

3.1

3,406.5%


Costs


During the Period the Total Cash Costs at Pioneer amounted to US$222/oz, which establishes the mine as one of the lowest cost gold operations in the worldDuring the first six months of 2009 as a result of mining operations at Pioneer, 3,503m3 of material was moved. Due to the higher grades being produced by the Andreevskaya pitthe decision was taken to process all ore throughout 2009 via the RIP plant without using the heap-leach operations. During H2 2009 production is expected to increase progressively as the second circuit is being brought on line. Over time, the mine's capacity is expected to increase by five times in the mid-term although much lower grade material is set to be introduced. Over this period Total Cash Costs are not expected to alter significantly as the significant reduction in grade compared to those at Andreevskaya will be accompanied by a similar reduction in the stripping ratio. In addition, the usage of heap-leach technology combined with sorption leaching during the summer period is also expected to reduce two-fold the processing costs per tonne of ore.


Pioneer*

6 months to 30 June

US$/oz

2009

Operating cash expenses 

154

Refinery and transportation cost

7

Cash operating costs

161

State Royalties

54

Production taxes

7

Total cash costs

222

*No meaningful comparison for H1 2008 as the mine worked at ramp-up phase

Pioneer development 

During the Period, the second mill and associated equipment were installed and testing of the mills and pumps commenced. The second mill is expected to work at its full designed capacity in September 2009. Construction of the third mill of the same capacity has started and it is expected to be in production in the second half of 2010further expanding the mine to the full designed capacity. 

The original design of the Pioneer mills provided for the usage of a sorption circuit during the winter periods (six months) and a combination of sorption circuit and heap leach during summer period(six months). For the first grinding circuit this envisaged a capacity of 55,000 tonnes per month using sorption technology and 110,000 tonnes a month when heap leach technology is used in combination with sorption.  As heap-leach operations were not used in the course of 2009 due to the higher grades from the Andreevskaya pit, the first grinding circuit worked at 660,000tpa capacity.The second and third circuits' capacity is 125,000 tonnes each per month using sorption technology during the winter period and 250,000 tonnes each per month using both sorption and heap-leach technologies during the summer periodThis results in 2,250,000 tpa capacity for each of the second and third grinding circuits.


Therefore, the overall total capacity of Pioneer plant using combined technology is 5,490,000 tpa.

 

Alluvial Production 

The Group`s alluvial mining operations, OAO ZDP Koboldo, ZAO Amur Dore and OOO Elga, produced 5,400 ounces of gold in the first half of 2009, which was a 13% increase on the same period in 2008. There were no sales of the production from alluvial operations during the Period. 

Extensive exploration was carried out at seven new sites with the potential to add to current gold reserves. Historically, the main share of annual alluvial operations production comes in the second half of the year. 


Joint Ventures 

Omchak Joint Venture

Omchak produced 14,000 ounces of gold in the first half of 2009, in line with expectations. PHM`s attributable share of production was 7,000 ounces. Due to seasonal effects the majority of the JV's production comes in the second half of the year.


Omchak exploration activities are concentrated on four main projects: three of them are located in the Zabaikalskiy Krai and one in the Irkutsk region. Exploration works at the Verkhne-Aliinskoye deposit were completed with a feasibility study approving reserves in the C1 and C2 categories of about 590,000 ounces at 10g/t. An additional 500,000 ounces of category P1 resources were estimated as a result of exploration work. The deposit is expected to be developed via underground operations.  


Exploration works at Bukhtinskaya ore field are ongoing with initial estimates of around 1 million ounces of P2 resources at 4-5 g/t. Initial exploration studies assessed around 2 million ounces of gold of P1 and P2 categories at the Kuliinskiy ore field whilst athe Birusinskiy licence area estimates of 980,000 ounces at 3-5g/t and 670,000 ounces at 2g/t of P2 resources were made based on work carried out by the Group's predecessors.


 Amur Region Joint Venture

In the first half of 2009, Odolgo JV (formerly the Rudnoye JV) produced approximately 900 ounces with PHM having a 50% attributable share of production.

Project update

Malomir Deposit 

The rapid development of the Malomir project continued in the first half of 2009. The project's power lines and all main internal roads were completed with construction of other support facilities also progressing according to plan. The sites for the plant and tailings dam have been prepared and construction of the main plant area has started.


The first part of the new mining fleet has been delivered for advanced stripping to commence at the Quarzitovoye deposit. Further deliveries are due by October 2009 and, with the majority of contracts already signed, it is expected that all remaining equipment will be delivered to the site between November 2009 and March 2010. The project is on schedule for the commissioning in the second half of 2010.


Tokur Deposit 

At the Tokur deposit, exploration continues on the main ore body. Trial operations were commissioned in H1 2009 in order to test a future processing method for the deposit.  This envisages a re-processing of dumps from the old Tokur underground mine using a new x-ray separation technology, as the ore at the dumps bears the same technological characteristics as the main ore body. The resulting product yields 4.5 g/t of material suitable for direct mill feed. This material is currently stockpiled until the main mining and processing operations commenceGold recovery was 72% and the throughput of the classifier/separator complex was 850 tonnes of ore per day. A portion of alluvial gold was also produced during the process in line with the production schedule reported by the Group previously.


Albyn Deposit 

As a result of exploration works and metallurgical tests by the Group a pre-feasibility study has been completed for the deposit. A summary of the important aspects of the study are listed below.


Reserves and Resources:


Russian Classification Reserves and Resources: 

Zone

Category

Ore, 000't

Grade, g/t

Gold, oz

Albyn east

C2

13,720

2.6

1,160,127

Albyn east

P1

1,500

2.6

125,402

Albyn west

P1

2,020

2.8

183,280

TOTAL

C2+P1

17,240

2.65

1,468,809



Mining: 

Open pit operationsAverage stripping ratio for the life of the mine is 11.7:1 t/t (within a framework of the optimal pit).


Mining schedule:

Set out below is a production schedule for the deposit. Subject to the Board's investment decision, the commissioning of the plant is planned for July 2011. 


Units

2011

2012

2013

2014

2015

2016

Ore

'000 t

700

2,800

2,800

2,800

2,800

2,800

Grade*

g/t

2.5

2.5

2.5

2.5

2.5

2.5

Recovery

%

91

91

91

91

91

91

Gold

'000 oz

51

205

205

205

205

205


*Average grades calculated taking into account losses and dilution


Technology:

Metallurgical studies of Albyn ores have established that the gold is contained in a simple extractable form. Metallurgical studies are based on several blend 500 kilogramme samples. Tests showed that by using gravitational technology it is possible to recover 91.3% of gold and a direct cyanidation technology yield 94% recovery of gold.


Plant

Throughput of 2.8 million tonnes per annum is envisaged using three stage crushing and grinding in ball mills to produce a concentrate. Gold is recovered via gravity circuit followed by cyanidation of the concentrate. It is planned to build two parallel processing lines simultaneously. 


A financial model run at a constant US$850/oz gold priceRUR32/US$ exchange rate and on the current capital expenditure estimate of US$16million results in the following cost and IRR profiles: 


Financials


Total Cash Costs for the life of the mine (US$/oz)

347

Internal Rate of Return (%)

57%

NPV @10% (US$m)

308

Payback period

3 years


 

The Company believes that the results of the study are accurate to within c.20%. A full engineering and design study is planned to be completed during the course of 2010.


Yamal

Novogodnee Monto, Petropavlovskoye, and Toupugol-Khanmeishorskaya area


The Group is assessing the projects located in the Yamal region and is attempting to optimise the project return with a minimum capital expenditure.


The majority of fieldwork at Petropavlovskoye and on the Toupugol-Khanmeishorskaya exploration areas was finished in 2008. Two reports on these assets have been completed for submission to the Yamal Local Commission on reserves and resources. Some or the information included in the current project scenario is set out below but may materially change depending on further analysis regarding other local projects and the opportunity to further optimise the regional resource base.

A summary of the current pre-feasibility study for Petropavlovskoye and Novogodnee Monto is set out below.


Reserves and Resources:


Russian Classification Reserves and Resources: 

Category

Ore, 000't

Grade, g/t

Gold, oz

C1+C2

16,399

1.19

627,000

P1

7,715

3.0

743,000

C1+C2+P1

24,114

1.77

1,370,000


Mining: 

Open pit operationsAverage stripping ratio for the life of the mine is 9.5:1 t/t (within a framework of the optimal pit).


Mining schedule:

Set out below is a production scenario for the deposit. Subject to the Board's investment decision and suitable finance, commissioning of the plant is planned for the second half of 2012. 90% of the overburden stripping is expected to be producing high quality gravel which can be used as construction aggregates. The project envisages production of 1.2 million tonnes per annum of construction material which is expected to substantially improve the project's economics.



Units

Year 1

Year 2

Year 3

Year 4

Year 5

Ore

'000 t

1,300

2,600

2,600

2,600

2,600

Grade

g/t

2.0

1.6

1.4

1.4

1.4

Recovery

%

82

82

82

82

82

Gold

'000 oz

92

145

125

125

125


Technology:

Metallurgical studies of Yamal ores established that the gold is contained in moderately difficult extractable form. Tests showed that a combination of flotation and cyanidation technologies yields overall recovery of 82%.


Plant

Throughput of 2.6 million tonnes per annum is envisaged using primary crushing in a jaw crusher followed by two stage grinding in SAG and ball mills and flotation followed by cyanidation of the concentrate. It is planned to build two parallel processing lines simultaneously. 


Exploration Report

During the first half of the year, exploration was focused on the Group's main projects which will contribute to the production plan until 2012. total of 320,064m³ of trenching and 1,957 metres of drilling was carried out by the Group during the first six months of 2009.  


Pokrovskiy flanks

As a result of exploration work at the Pokrovskiy deposit's internal flanks, the Pokrovka-2 resource/reserve model was completed and a report on the reserves and resources for Bazoviy, Vodorazdelniy, and Pokrovka-2 was submitted for State approvalThe Group's estimate is 280,000 ounces of contained gold in Russian C2 category reserves in the flanks areas (Pokrovka-2, Vodorazdelniy and Bazoviy) which have been sufficiently explored. All these areas can be mined by shallow open pits with low stripping ratio.


Active exploration continues at the main Pokrovskiy pit area for potential pit expansion at depth. Exploration in the outer flanks areas is now concentrated on the Zheltunakskaya area. Drilling in the west of this area has indicated an ore-bearing zone above the thrust surface. It is possible that this is the displaced upper part of an ore body lying below the thrust surface and current work has already identified a cross section with a thickness of 8 metres at an average grade of 6g/t.

Metallurgical testwork on a combined sample of primary and oxidised ore from Luzhki exploration area has been carried out to provide the basis for a shallow open pit supplying additional ore to the Pokrovskiy mill.


Pioneer  

Further exploration work at the Pioneer licence area yielded very positive results. With a significant increase in reserves and resources at already identified areas due to infill drilling, the Group has also encountered three further enriched areas (ore columns) at zones Bakhmut and Andreevskaya. 

The central ore column of the Andreevskaya zone has been followed to a depth of 180 metres and is still open at depth. The current pit base is 60 metres from the surface. 

In the north-east ore column, two sub-parallel ore zones have been defined, which contain visible gold and high-grade intersections including 1.7 metres at 366g/t, 6.2 metres at 53g/t and 7.7 metres at 55g/t. The maximum assayed sample grade in this area is 859g/t and the gold occurs largely in quartz veinlets. This ore zone is also open at depth and the south-west ore column also remains open at depth and to the north-east. 

In addition to the previous three columns at Andreevskaya, a new fourth high grade ore column was confirmed with gold grades of up to 40.0g/t for 2 metres thickness. This ore column was traced for 200 metres and is open in all directions.

In addition, at the far north-eastern end of Andreevskaya, a new ore body has been defined and there is significant potential for the Andreevskaya reserves/resources base to be substantially expanded with 65,000 ounces of Russian C2 reserves already defined during the first half of 2009.

Exploration works at other areas of the deposit identified further ore body, Vostochnaya. It is an extensive stockwork zone with thickness of 180 metrescontaining about 10 ore intervals with thicknesses of 1.8-35 metres and grades between 0.5-33.4 g/t. This ore zone is expected to provide a useful source of material to blend with high-grade Andreevskaya ore. There are grades up to 84.3g/t in this zone and it is located less than 500 metres from the mill. The resource is open westwards and at depth, and there is also the possibility of some extension eastwards 60,000 ounces of C2 reserves were established at this area. 

Infill drilling at the Bakhmut zone defined two new ore columns in this area, with anticipated grades in the region of 40-50g/t. Bakhmut C2 reserves of 196,000 ounces have been established.


Malomir 


Exploration work at Malomir in the first half of 2009 concentrated on the Quarzitovoye ore zone where confidence in the level of reserves has improved. Some enriched areas at depth were also identified with the potential to be developed as an underground mining operation in future. Exploration continues in and around this zone and current Quarzitovoye reserves estimates are expected to be revised upwards in due course.


200 metres to the east of Quarzitovoye, a new parallel ore body was identified with thicknesses between 5.1-20.7 metres and average grades varying between 1.24-4.65g/t with mineralisation open in all directions. Some samples from this ore body are reaching 100g/t. Initial testwork suggests that the ores here are not refractory and have similar metallurgical properties to those at Quarzitovoye; which would prolong the period of simple recovery from direct cyanidation technology. 


A similar enriched zone was also identified 400 metres to the west from Quarzitovoye ore body and exploration work is ongoing.


Kirovskiy


Very promising results were received from exploration work in the Kirovskiarea within the Solovyevskiy licence area which is owned by the Group as part of the Odolgo joint venture. Three ore zones were identified at this licence area. Preliminary estimates suggest around 1 million ounces of Russian P1 resource. Some grades are up to 200 g/t at 2 metres thickness.


Non-Precious Metals Division

Kuranakh Project

As the Kuranakh beneficiation plant nears the commissioning stage, the project team has completed a sizable area of advanced stripping and has finalised the commissioning of the crushing and screening plant.

Mining was concentrated entirely on the Saikta open pit and by the end of June 2009 the pit had reached a depth of 80m. During the period, the total volume of overburden and ore mined was 719,300m³ including 44,200 tonnes of ore which was stockpiled for further processing. 

The plant did not process ore during the first half of 2009 due to the suspension of sales of pre-concentrate to China in late 2008. The stockpiled reserves of ore reached 109,000 tonnes by the end of the period. 

Construction has continued at the Olekma beneficiation plant site. The concrete foundation plinths are complete and the majority of the larger equipment has been installed including the ball mills, thickeners and driers. The majority of the support facilities are complete including administrative buildings, the accommodation blocks and the canteen.  All of the remaining equipment necessary for completion of the plant has been delivered to the site and the plant is on schedule for commissioning at the end of 2009.  At full capacity the beneficiation plant should produce 900,000tpa of titanomagnetite and 290,000tpa of ilmenite.

The Group has entered into a Memorandum of Understanding with a Chinese steel producer located in Heilongjiang, the area across the Sino-Russian border from the Amur Region and EAO, to process the titanomagnetite concentrate produced by the Kuranakh project beneficiation plant at Olekma. This concentrate contains a significant quantity of vanadium pentoxide which is a valuable commodity used in the hardening of steel. The proposed joint venture foresees the construction of a plant adjacent to our partner's current operations which would generate significant value by leaching the vanadium whilst leaving the titanomagnetite for use in the normal steel blast furnace. The project partners have commissioned a design study which is expected later in 2009.


K&S and Garinskoye Projects

In October 2008 the Group presented the results of the K&S and Garinskoye Combined Feasibility Study that detailed the construction of a combined iron ore and metal processing plant at K&S, capable of producing 17 million tpa of iron ore. Since then the Group has internally created production rate options that are dependent on the extent of incoming funds.  Mining rates were varied from 3.5mtpa to 20mtpa and processing options that vary from producing concentrate only through to producing a fully metallised Direct Reduced Iron.  


During the Period the following key milestones were achieved:

  • Receipt of all permits and approvals for construction;

  • Geotechnical research for construction facilities has been completed;

  • Water reserves have been confirmed and usage permissions have been obtained;

  • Environment and Social Public consultations and hearings on the project have been carried out;

  • Receipt of technical specifications for connecting electric lines and rail connections;

  • The design of the process plant and accommodation camp has been completed;

  • Clearing and preparation of area for construction of the process plant, accommodation camp, temporary base and roads has been completed;

  • A new office has been constructed at Birobidjan.

Progress at the K&S project is closely correlated with discussions with third parties to attract the finance required to develop the project to the production phase. Negotiations took place during the first half of the year with a number of prospective partners to develop and finance an Engineering Procurement Construction Management (EPCM) contract as well as an off-take agreement for the iron ore produced from the project. Discussions continue and now include financing options.  The recent increase in the local spot price for iron ore has increased interest in the projects. Because the negotiations are at a sensitive stage the Group has decided that a more detailed report on the progress and possible future development of its major iron ore assets should only be made once the outcome is clearer.


As part of the iron ore development plan the Group has recently acquired the Ushumun coal deposit, situated in the EAO approximately 40km to the south of Birobidjan, for this reason.  This would be source of coal for the Group's heating plant requirements and for the metallisation plant to be built at K&S. 


Titanium Sponge Plant

This project is located in Jiamusi CityChina and is a 65% PHM owned joint venture with our partner, Chinalco, holding 35% interest.  The Shenyang Aluminium Magnesium Institute (SAMI) completed the design work for of the titanium sponge plant in June 2009. The total investment requirement is estimated at US$363 million

The start-up date for the manufacture of slag is currently scheduled in the second half of 2010 with the first titanium sponge production scheduled for mid-2011. The Group has proposed that the plant should be built by an engineering subsidiary of Chinalco with a turnkey EPCM contract.

Offers have been received from three Chinese banks and we expect the project to be funded on a normal project finance basis.  



Change of name

Over fifteen years, the nature of the Group's business has changed almost beyond recognition from a gold mining junior to a major multi-mine, multi-commodity business. As a result, the Board has decided that the existing company name no longer reflects the true nature of the business and has recommended that, subject to shareholder approval, the name of the Company be changed to Petropavlovsk PLC. Recognising that almost all Group's assets and employees are in Russia, the Directors have chosen Petropavlovsk because it is a Russian name with a powerful historical significance.  From the Petropavlovsk fort in the West in St. Petersburg to the city of Petropavlovsk-Kamchatskiy in the east, Petropavlovsk is a name known across Russia.  At the same time its derivation from the names Peter and Paul continues to link the business name to Peter Hambro and Pavel Maslovskiy as the Group's founders. 

The Notice for the EGM, at which a resolution regarding the change of name will be proposed, will be sent to shareholders tomorrow and will also be available on the Company's website www.peterhambro.com. The EGM will be held at 10.00 a.m. on 14 September 2009 at 11 Grosvenor PlaceLondon SW1X 7HH.



RISKS AND UNCERTAINTIES


The exploration for and development of natural resources is a speculative activity that involves a high degree of risk. The Directors believe that the principal risks and uncertainties detailed on pages 28-29 of the annual report for the year ended 31 December 2008 remain. These risks and uncertainties as well as other risks and uncertainties arising from the acquisition of Aricom Plc that are material for the remaining six months of the financial year are summarised below:

  • Geology and reserves risk - the Group's operations will be subject to all of the hazards and risks normally encountered in the exploration and evaluation of mineral deposits;

  • Commodity price risk - changes in the market price for gold and iron-ore as well as current gold sales arrangements may adversely affect the Group's financial performance and cash flows; 

  • Competition from other gold and iron-ore companies; 

  • The Group may not be able to finance its planned capital expenditures;

  • Project development risk - risk of economic feasibility of production changing throughout the project development from the initial phases of exploration until production is possible which could have an adverse effect on the Group's business, operations and financial performance. 

  • Implementation of new projects - the implementation of certain of the Group's projects depends on agreements with third parties and involves governments' consents. There is no certainty that these will be achieved;

  • The estimation of reserves and resources is subject to significant uncertainties and the estimates may be subject to restatement; 

  • In the event of non-compliance with terms of licences, the Group's exploration, development and production licences may be suspended or revoked prior to their expiration, or not extended, which may severely curtail the Group's exploitation of the affected mineral deposits; 

  • Operational considerations - a failure or delay in completion of operational goals on time and within budget may impact the Group's business, operations and financial performance;

  • Environmental regulations - Health, safety, environmental and other regulations, standards and expectations evolve over time and unforeseen changes could have an adverse effect on the Group's earnings and cash flows.

  • Lack of infrastructure may adversely affect the Group's ability to develop its resources;

  • Labour - the Group faces the risk of increased liabilities in case of accidents due to operations carried out under potentially hazardous conditions and the risk that it will be unable to retain or recruit required qualified personnel for its operations;

  • Dependence on key personnel - there is a risk from the significant reliance on the Group's key senior management team whereby the loss of one or more key personnel could have an adverse effect on the Group;

  • Uninsured risks - due to a number of reasons the Group's insurance policies contain exclusions and limitations on coverage;

  • Currency risk - the Group's results could be adversely affected by changes in the exchange rates between the currencies in which it operates;

  • Gold equivalent exchangeable bonds and convertible bonds - there is a risk of early repayment obligations in the event of a breach of the provisions and/or other events of default;  

  • Risks relating to jurisdictions in which the Group operates; 

  • China - the Group has exposure to the Chinese economy and to the state of diplomatic relations between Russia and China

  • Litigation - legal proceedings may arise from time to time in the course of the Company's business;

  • Major shareholders may have a material effect on the outcome of the voting on shareholder resolutions; 

  • Securities - there are risks relating to the Group's securities, including liquidity and investment risks.

The risks noted above are not intended to be presented in any assumed order of priority. If any of these risks and uncertainties, together with possible additional risks and uncertainties of which the Directors are currently unaware or which they consider not to be material in relation to the Company's business, actually occur, the Company's business, financial position or operating results could be materially and adversely affected. It should be noted that this list is not exhaustive and that certain other risk factors may apply.




Notes to the Condensed Consolidated Financial Statements

for the period ended 30 June 2009


Forward-looking statements

This release may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this release and include, but are not limited to, statements regarding the Group's intentions, beliefs or current expectations concerning, among other things, the Group's results of operations, financial position, liquidity, prospects, growth, strategies and expectations of the industry.  

By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Forward-looking statements are not guarantees of future performance and the development of the markets and the industry in which the Group operates may differ materially from those described in, or suggested by, any forward-looking statements contained in this release. In addition, even if the development of the markets and the industry in which the Group operates are consistent with the forward-looking statements contained in this release, those developments may not be indicative of developments in subsequent periods. A number of factors could cause developments to differ materially from those expressed or implied by the forward-looking statements including, without limitation, general economic and business conditions, industry trends, competition, commodity prices, changes in law or regulation, currency fluctuations (including the US dollar and Rouble), the Group's ability to recover its reserves or develop new reserves, changes in its business strategy, political and economic uncertainty.  Save as required by the Listing and Disclosure and Transparency Rules, the Company is under no obligation to update the information contained in this release.



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. 




 


Responsibility Statement



We confirm that to the best of our knowledge:



  • the condensed set of financial statements has been prepared in accordance with IAS 34 "Interim Financial Reporting";

        b.    the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events

               during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

 

        c.    the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties'

               transactions and changes therein).



By order of the Board




Peter C P Hambro                    Brian Egan

Director                                       Director


 

 

 

Independent Review Report to Peter Hambro Mining PLC



We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2009 which comprises the condensed consolidated income statement, the condensed consolidated statement of recognised income and expense, the condensed consolidated statement of changes in equity, the condensed consolidated balance sheet, the condensed consolidated cash flow statement and related notes 1 to 27. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.


This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.


Directors' responsibilities


The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.


As disclosed in note 2, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting," as adopted by the European Union.


Our responsibility


Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.


Scope of Review 


We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.


Conclusion


Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2009 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.




 


Deloitte LLP

Chartered Accountants

LondonUnited Kingdom

26 August 2009

 

 

 

 

PETER HAMBRO MINING PLC

Condensed Consolidated Interim Income Statement



  


Note

Six months to

30 June 
2009

(unaudited)

US$'000


Six months to

30 June
 2008

(unaudited)

US$'000


Year ended 
31 December

 2008


US$'000








      Group revenue


214,082


146,390


381,688








     Net operating expenses

5

(126,964)


(102,765)


(296,139) 



87,118


43,625


5,549








Share of results of joint ventures 


862


(2,182)


(1,261)








    Operating profit


87,980

41,443


84,288







Fair value change on derivatives

18

1,999


(10,036)


(18,307)

Financial income

8

26,729


4,788


7,709

      Financial expenses

9

(13,904)


(15,084)


(33,302)








Profit before taxation


102,804


21,111









Taxation 

6

(28,158)


(6,331)


(17,643)








Profit for the period


74,646


14,780









     Attributable to:







     - equity shareholders of PHM plc


74,217


14,367


22,002

    - non-controlling interests


429


413


743








     Earnings per share 







     Basic

7

US$0.610


US$0.177


US$0.271

     Diluted

7

US$0.591


US$0.177


US$0.271




The accompanying notes are an integral part of this condensed consolidated interim financial information.  


 




PETER HAMBRO MINING PLC

Condensed Consolidated Interim Statement of Recognised Income and Expense 




 




Six months to

30 June 
2009

(unaudited)

US$'000


Six months to

30 June
 2008

(unaudited)

US$'000


Year ended 
31 December

 2008


US$'000








Profit for the period


74,646


14,780









Income and expense recognised directly in equity:







Revaluation of available-for-sale financial investments


(478)


-


-

Tax effect on revaluation of available-for-sale financial investments


134


-


-

Exchange differences on translating foreign operations


(1,516)


-


-

Net expense recognised directly in equity


(1,860)


-


-








Total recognised income for the period


72,786


14,780









Attributable to:







- equity shareholders of PHM plc


72,123


14,367


22,002

non-controlling interests


663


413


743













The accompanying notes are an integral part of this condensed consolidated interim financial information.  




PETER HAMBRO MINING PLC

Condensed Consolidated Statement of Changes in Equity


Total attributable to equity holders of the Company




Share

capital

Share premium

Merger reserve

Own shares

Retained earnings

Convertible bonds

Share based payments reserve 

Translation reserve

Other reserves

Total 

Non-controlling interests

Total equity

 

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$' 000

US$'000

US$'000

US$'000

US$'000

US$'000

Balance 

at 1 January 2008

1,311

35,082

-

-

122,208

1,583

-

-

176,722

336,906

5,950

342,856

Recognised income and expenses

-

-

-

-

14,367

-

-

-

-

14,367

413

14,780

Dividends 

-

-

-

-

-

-

-

-

(12,074)

(12,074)

-

(12,074)

Balance 

at 30 June 2008 (Unaudited)

1,311

35,082

-

-

136,575

1,583

-

-

164,648

339,199

6,363

345,562

Balance 

at 1 January 2009

1,311

35,082

-

-

144,210


1,583

-

-

153,728

335,914

6,412

342,326

Recognised income and expense

-

-

-

-

74,217

-

-

(1,750)

   (344)

72,123

663

72,786

Transfer to retained earnings (a)

-

-

-

-

153,728

-

-


(153,728)

-

-

-

Share based payments

-

-

-

-

-

-

697

-

-

697

-

697

Share placing - 16 million Ordinary share

232

104,564

-

-

-

-

-

-

-

104,796

-

104,796

Costs associated with placing of 16 million Ordinary share

-

(5,240)

-

-

-

-

-

-

-

(5,240)

-

(5,240)

Shares issued in exchange for 100% share capital of Aricom plc (note 25)

1,079

-

570,071

-

-

-

-

-

-

571,150

-

571,150

Warrants and option issued in relation to acquisition of Aricom plc (note 25)

-

-

-

-

-

-

-


6,969

6,969

-



6,969

LTIP award in relation to acquisition of Aricom plc (note 25) 

-

-

-

-

-

-

934

-

-

934

-

934

Own shares acquired through business combination with Aricom plc 

-

-

-

(14,003)

-

-

-

-

-

(14,003)

-

(14,003)

Acquisition of shares in subsidiaries 

-

-

-

-

-

-

-

-

-

-

4,214

4,214

Balance 

at 30 June 2009 (Unaudited)

2,622

134,406

570,071

(14,003)

372,155

1,583

1,631

(1,750)

6,625

1,073,340

11,289

1,084,629



  • Following cancellation of the Share Premium Account of the Company registered on 25 August 2005, the amount of US$176,722 thousand was transferred to Other Distributable Reserves. The balance of US$ 153,728 thousand outstanding at 31 December 2008 is distributable and was transferred to Profit and Loss Account of the Company and shown as part of the consolidated Retained Earnings, accordingly.  


PETER HAMBRO MINING PLC

Condensed Consolidated Interim Balance Sheet


 



Note

At 30 June

2009

(Unaudited)

U$'000


At 30 June

2008

(Unaudited)

US$'000


At 31 December 2008


US$'000

Assets







Non-current assets







Goodwill


21,675


21,739


21,675

Intangible assets

10

144,512


200,243


225,446

Property, plant and equipment

11

868,668


302,060


342,261

Interests in joint ventures

25

28,565


6,529


7,427

Available-for-sale investments

12

3,530


960


972

Inventories

13

17,063


20,012


19,078

Trade and other receivables

14

6,862


18,433


19,790

Derivative financial instruments

18

-


9,970


1,875

Deferred tax assets


11,254


9,672


17,057



1,102,129


589,618


655,581








Current assets







Inventories

13

87,142


65,231


72,332

Trade and other receivables

14

129,164


105,208


84,775

Derivative financial instruments

18

1,239


-


-

Cash and cash equivalents

15

165,478


82,827


26,444



  383,023


253,266


183,551








Total assets


1,485,152 


842,884


839,132








Liabilities







Current liabilities







Trade and other payables

16

(51,281)


(68,616)


(42,142)

Current income tax liabilities


(3,910)


(3,093)


(638)

Borrowings

17

  (78,677) 


(50,552)


(220,946)

Derivative financial instruments

18

 (8,655)


-


(42,476)



(142,523)


(122,261)


(306,202)








Net current assets/ (current liabilities)


240,500


131,005


(122,651) 









Non-current liabilities







Borrowings 

17

(157,275)


(310,601)


(152,778)

Derivative financial instruments

18

-


(42,300)


-

Deferred tax liabilities


(94,637)


(20,520)


(32,580)

Provision for close down and restoration costs


(6,088)


(1,640)


(5,246)



(258,000)


(375,061)


(190,604)








Total liabilities


(400,523)


(497,322)


(496,806)








Net assets


1,084,629


345,562


342,326








Equity







Share capital


2,622


1,311


1,311

Share premium


134,406


35,082


35,082

Merger Reserve


570,071


-


-

Treasury shares


(14,003)


-


-

Convertible bonds


1,583


1,583


1,583

Share based payments reserve


1,631


-


-

Translation reserve


(1,750)


-


-

Other reserves


6,625


164,648


153,728

Retained earnings 


372,155


136,575


144,210

Equity attributable to the shareholders of PHM plc


1,073,340


339,199


335,914

Non-controlling interests 


  11,289


6,363


6,412








Total equity


1,084,629


345,562


342,326

 

 


The accompanying notes are an integral part of this condensed consolidated interim financial information.  

This condensed consolidated interim financial information was approved by the Directors on 26 August 2009.


Peter C P Hambro        Brian Egan

Director                           Director

 

 

PETER HAMBRO MINING PLC

Condensed Consolidated Interim Cash Flow Statement

 

 

 





Note

Six months to

30 June
 2009

(Unaudited)

US$000

Six months to

30 June
 2008

(Unaudited)

US$000

Year to

31 December 2008


US$000

Cash flows from operating activities





Cash generated from/(used in) operations

19

67,537

(2,231)

58,582

Interest paid


(14,724)

(9,657)

(26,909)

Income tax paid


(11,777)

(7,181)

(14,871)

Net cash from/(used in) operating activities


41,036

(19,069)

16,802






Cash flows from investing activities





Acquisitions of subsidiaries, net of cash acquired

25

229,358

(5,634)

(6,032)

Purchase of property, plant and equipment and intangible assets


(68,905)

(53,093)

(103,082)

Proceeds from disposal of property, plant and equipment


257

398

2,428

Exploration and evaluation expenditure


(12,783)

(32,123)

(58,309)

Purchase of available-for-sale investments


(3,048)

-

-

Loans granted 


(2,513)

(31,577)

(34,909)

Loan repayments received 


707

2,922

6,670

Interest received


1,536

4,810

5,751

Net cash from/(used in) investing activities


144,609

(114,297)

(187,483)






Cash flows from financing activities





Proceeds from issuance of Ordinary shares, net of transaction costs 


99,556

-

-

Buy back of exchangeable bonds

17

(120,650)

-

-

Repayments of borrowings


(24,065)

(74,600)

(253,810)

Proceeds from borrowings


-

109,647

299,047

Dividends paid to company's shareholders


-

-

(22,994)

Capital element of finance leases


-

(35)

-

Net cash (used in)/from financing activities


(45,159)

35,012

22,243






Net increase/(decrease) in cash and cash equivalents in the period


140,486

(98,354)

(148,438)

Effect of exchange rates on cash and cash equivalents


(1,452)

2,739

(3,560)

Cash and cash equivalents at beginning of period

15

26,444

178,442

178,442

Cash and cash equivalents at end of period 

15

165,478

82,827

26,444


The accompanying notes are an integral part of this condensed consolidated interim financial information.  

 

 


PETER HAMBRO MINING PLC

Notes to the Interim Financial Statements

for the period ended 30 June 2009




1.     General information


Peter Hambro Mining plc (the "Company") is a company incorporated in Great Britain under the Companies Act 1985. The address of the registered office is 11 Grosvenor Place, London SW1X 7HH.


These condensed consolidated interim financial statements are for the six months ended 30 June 2009. The interim financial statements are unaudited.


The information for the year ended 31 December 2008 does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. This information was derived from the statutory accounts for the year ended 31 December 2008, a copy of which has been delivered to the Registrar of Companies. The auditors' report on those accounts was not qualified and did not include reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report and did not contain a statement under section 237(2) or 237(3) of the Companies Act 1985.



2.    Basis of preparation


The annual financial statements of the Company and its subsidiaries (the "Group") for the year ended 31 December 2008 were prepared in accordance with IFRSs as adopted by the European Union.


The condensed set of Financial Statements included in this half-yearly financial report has been prepared using accounting policies consistent with those set out in the annual financial statements for the year ended 31 December 2008 and in accordance with IAS 34 'Interim Financial Reporting', as adopted by the European Union.


Changes in accounting policies


Starting from 1 January 2009, the Group has adopted International Financial Reporting Standard 8 "Operating Segments", International Accounting Standard 1 "Presentation of Financial Statements" (revised 2007), and International Accounting Standard 23 "Borrowing Costs" (revised 2007).


IAS 1 (revised 2007) requires the presentation of 'non-owner changes in equity' to be presented separately from owner changes in equity. The Group has chosen to present two statementsthe income statement and statement of recognised income and expenses which includes items of comprehensive income. As a result, a statement of recognised income and expenses (statement of comprehensive income) has been included in the primary statements.  


IFRS 8 requires operating segments to be determined based on the Group's internal reporting to the Chief Operating Decision Maker which is then used to allocate resources to the segments and to assess their performance. In contrast, the predecessor standard (IAS 14 "Segment Reporting") required the Group to identify two sets of segments, business and geographical, based upon a risk and rewards approach. A summary of the changes to the operating segments identified is set out in Note 4.


IAS 23 (revised 2007) requires capitalisation of borrowing costs directly attributable to the acquisition, construction, or production of a qualifying asset as part of the cost of that asset. In contrast, the predecessor standard IAS 23 (revised 1993) allowed the option of immediately expensing those borrowing costs which has been used by the Group as its accounting policy. The change in accounting policy resulted in capitalisation of borrowings costs attributed to the Group's development and construction projects; such costs comprised US$ 346 thousand during the six months ended 30 June 2009. 


Comparatives


Following the adoption of IFRS 8, as well as the acquisition of Aricom plc on 22 April 2009 (note 25), the composition of the Group's reportable segments has changed. The comparative information for the six months ended 30 June 2008 and the year ended 31 December 2008 has been restated accordingly.  


Certain other comparatives for the six months ended 30 June 2008 and the year ended 31 December 2008, in addition to those resulting from adoption of IFRS 8, have been re-classified, to ensure comparability with the classifications adopted in the interim financial statements for the six months ended 30 June 2009.  


Going concern


The Directors have reviewed the Group's cash flow forecasts and operating projections as part of their consideration of going concern. These forecasts are primarily susceptible to gold price fluctuations over the next 12 months. Consideration has also been given to the Group's contractual capital commitments and its ability to meet the potential repayment of the following facilities during the next twelve months:

 

- The option of the remaining US$ 53 million exchangeable bond holders to exchange the bonds into the cash equivalent of 53,000 Troy ounces any time from 19 October 2009; and


- The $140 million convertible bonds that are due to be repaid in August 2010 (if they are not converted by the holders prior to this date at the conversion price of £7.24).  


The Directors are confident that the Group has sufficient liquidity and cash resources in order to meet these commitments and repayments. If gold prices were to decline over the intervening period the Group would pursue the refinancing of the convertible bond in order to maintain sufficient cash resources. Management are confident that such refinancing, if any required, would be successful. This is further demonstrated by the Group successfully obtaining a loan of $60 million with Sberbank of the Russian Federation subsequent to period end as set out in Note 27.  

 

After making appropriate inquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the half-yearly condensed financial statements. 



3.    Foreign currency rates

The rates of exchange used to translate balances from other currencies into US Dollars were as follows (currency per US Dollar):



30 June 

2009

30 June
 2008

31 December
2008

GB Pounds Sterling

0.61

0.50

0.69

Russian Rouble

31.29

23.46

29.38



4.    Segmental information 


Business segments 


The Group has 4 reportable segments under IFRS 8: 


  • Precious metals segment, comprising gold operations at different stages, from field exploration through to mine development and gold production. The Gold segment includes the Group's principal mines (Pokrovskiy, Pioneer), the Group's alluvial operations, the Group's operations under Rudnoye and Omchak joint-ventures as well as various gold projects at the exploration and development stages.

  • Non-precious metals segment, comprising iron ore projects. The Iron segment includes the Kuranakh project, the K&S project, the Garinskoye project and the Bolshoy Seym project as well as the Kostenginskoye and Garinskoye Flanks projects. 
  • Exploration, comprising in-house geological exploration expertise performed by the Group's exploration companies Regis and Dalgeologiya. 

  • Construction and Engineering segment, comprising in-house construction and engineering expertise. The Construction and Engineering segment includes construction performed by the Group's specialist construction company Kapstroi and the engineering and scientific operations represented by PHM Engineering, Irgiredmet and Giproruda. 

  • The Other segment primarily includes revenue generating activity to procure materials such as reagents and consumables and equipment to third parties undertaken by Irgiredmet as well as development of chromite deposits undertaken by Sever-Chrome, the Group's interest in JV arrangements with Chinalco for design, and development of a titanium sponge production plant in China and various infrastructure projects. 


The Group has changed the composition of its reportable segments from 1 January 2009, following the adoption of IFRS 8, as well as following acquisition of Aricom plc on 22 April 2009. 


The key changes in the basis of segmentation from the financial statements for the year ended 31 December 2008 are set out below:

 

  • Projects at the exploration stage have been moved from the 'Exploration and Evaluation' segment reported in the financial statements for the year ended 31 December 2008 into the 'Gold' segment. This change primarily affected segmental assets, namely, exploration and evaluation expenditure capitalised and shown within the intangible assets category. 
  • Construction and engineering in-house expertise, which has been identified as a separate segment under IFRS 8,  was included in the  'Construction and other services' segment reported in the financial statements for the year ended 31 December 2008
  • The acquisition of Aricom plc has resulted in a new reportable segment 'Non-precious metals'




Segment information about the Group's reportable segments is presented below.  Amounts reported for the prior year have been restated to conform with the requirements of IFRS 8.



Six months to 30 June 2009 


 

Precious 

metals  

Non-precious 

metals 

Exploration

Construction and Engineering 

Other

Consolidated


US$'000

US$'000

US$'000

US$'000

US$'000

US$' 000








Gold sales

192,580

-

-

-

-

192,580

Silver sales

1,817

-

-

-

-

1,817

Iron sales


-

-

-

-

-

Other external sales

46

-

1,037

10,606

7,996

19,685

Total Group revenue from external customers

194,443

-

1,037

10,606

7,996

214,082








Inter-segment sales

3,277

-

9,577

32,257

13,886

58,997








Net operating expenses 

(73,686)

(954)

(2,749)

(12,081)

(10,323)

(99,793)

Share of results in joint ventures

1,014




(152)

862

Segment result

121,771

(954)

(1,712)

(1,475)

(2,479)

115,151

Central administration 






(19,949)

Foreign exchange losses






(7,222)

Operating profit 






87,980

Fair value change on derivatives






1,999

Financial income






26,729

Financial expenses






(13,904)

Taxation




 


(28,158)

Profit for the period




 


74,646






 

Precious 

metals 

Non-precious 

metals 

Exploration

Construction and engineering

All other

Consolidated


US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

Segment Assets

681,901

393,903

17,053

69,673

117,567

1,280,097

Goodwill






21,675

Deferred tax assets






11,254

Derivative financial instruments






1,239

Unallocated cash






146,213

Loans given






29,065

Consolidated total assets






1,489,543









Six months to 30 June 2008


 

Precious 

metals 


Exploration

Construction and Engineering 

Other

Consolidated


US$'000

US$'000

US$'000

US$'000

US$' 000







Gold sales

107,039

-

-

-

107,039

Silver sales

376

-

-

-

376

Iron sales

-

-

-

-

-

Other external sales

1,979

784

24,267

11,945

38,975

Total Group revenue from external customers

109,394

784

24,267

11,945

146,390







Inter-segment sales

1,442

14,794

18,715

10,185

45,136







Net operating expenses

(57,349)

(2,202)

(24,965)

(9,163)

(93,679)

Share of results in joint ventures

(2,182)




(2,182)

Segment result

49,863

(1,418)

(698)

2,782

50,529

Central administration 





(16,318)

Foreign exchange gains





7,232

Operating profit 





41,443

Fair value change on derivatives





(10,036)

Financial income





4,788

Financial expenses





(15,084)

Taxation



 


(6,331)

Profit for the period



 


14,780




 

Precious 

metals  

Exploration

Construction and engineering

All other

Consolidated


US$'000

US$'000

US$'000

US$'000

US$'000

Segment Assets

540,147

23,732

53,365

121,047

738,291

Goodwill





21,739

Deferred tax assets





9,672

Derivative financial instruments





9,970

Unallocated cash





36,590

Loans given





26,622

Consolidated total assets





842,884









Year ended 31 December 2008


 

Precious 

metals 

Exploration

Construction and Engineering 

Other

Consolidated


US$'000

US$'000

US$'000

US$'000

US$' 000







Gold sales

288,029

-

-

-

288,029

Silver sales

383

-

-

-

383

Iron sales

-

-

-

-

-

Other external sales

2,368

6,027

50,418

34,463

93,276

Total Group revenue from external customers

290,780

6,027

50,418

34,463

381,688







Inter-segment sales

3,744

30,558

39,718

23,145

97,165







Net operating expenses 

(150,705)

(8,759)

(50,007)

(31,241)

(240,712)

Share of results in joint ventures

(1,261)

-

-

-

(1,261)

Segment result

138,814

(2,732)

411

3,222

139,715

Central administration 





(30,414)

Foreign exchange losses





(25,013)

Operating profit 





84,288

Fair value change on derivatives





(18,307)

Financial income





7,709

Financial expenses





(33,302)

Taxation



 


(17,643)

Profit for the period



 


22,745




 

Gold 

Exploration

Construction and engineering

All other

Consolidated


US$'000

US$'000

US$'000

US$'000

US$'000

Segment Assets

618,675

20,119

51,692

76,990

767,476

Goodwill





21,675

Deferred tax assets





17,057

Derivative financial instruments





1,875

Unallocated cash





5,479

Loans given





25,570

Consolidated total assets





839,132








  


5.    Net operating expenses and profit 



Six months to

30 June
2009

Six 

months to

30 June
2008

Year ended

31 December 2008


US$'000

US$'000

US$'000

Net operating expenses:




Cost of sales (a)

77,372

70,700

198,495

Impairment charges

2,739

3,197

3,240

Administration expenses (b) 

39,868

35,274

70,174

Foreign exchange losses/ (gains)

7,222

(7,232)

25,013

Other net operating (income)/ expense

(237)

826

(783)

 

126,964

102,765

296,139

(a)


Six months to

30 June
2009

Six 

months to

30 June
2008

Year ended

31 December 2008


US$'000

US$'000

US$'000

Cost of Sales: 




Staff costs

20,386

28,996

58,503

Fuel

6,301

8,082

19,508

Materials

18,751

18,432

52,302

Depreciation

7,619

5,975

13,472

Electricity

3,059

2,305

5,307

Royalties

11,499

6,848

17,410

Smelting and transportation costs

1,505

905

4,666

Other costs

6,789

9,709

24,265

Movement in work in progress and bullion in process attributable to gold production 

(3,803)

(17,580)

(14,014)

Goods for resale

5,266

7,028

17,076


77,372

70,700

198,495


(b)


Six months to

30 June 
2009

Six 

months to

30 June
2008

Year ended

31 December 2008


US$'000

US$'000

US$'000

Administration expenses: 




Staff costs 

9,760

10,135

17,139

Depreciation (admin)

5,814

4,348

8,812

Directors' emoluments

2,394

1,989

5,853

Professional fees 

3,671

3,620

6,633

Bank charges

445

598

1,562

Insurance 

1,024

806

1,788

Office rent 

2,267

1,363

2,011

Travel and entertainment 

1,252

1,762

3,902

Other 

8,755

9,629

18,565


35,382

34,250

66,265

Costs incurred in relation to the admission to the main board of London Stock Exchange 


4,486

1,024

3,909


39,868

35,274

70,174

 


6.    Taxation on profit on ordinary activities




Six 

months to

30 June 
2009

Six 

months to

30 June
2008

Year ended

31 December 2008



US$'000

US$'000

US$'000

Current tax





UK corporation tax (28%; six months ended 30 June 2008: 29%; year ended 31 December 2008: 28.5%)(a)


729

801

(917)

Russian tax (20%; six months ended 30 June 2008 and year ended 31 December 2008: 24%)(b)

 

17,561

 11,464

 19,974



18,290

12,265

19,057

Deferred tax





Reversal and origination of timing differences

 

9,868

(5,934)

(1,414)

Total tax charge

 

28,158

6,331

17,643


  • The corporation tax rate in the United Kingdom changed from 30%, to 28% effective 1 April 2008

  • The corporation tax rate in Russia changed from 24% to 20% effective 1 January 2009

 

7.    Earnings per Ordinary share



Six 

months to

30 June 
2009

Six 

months to

30 June
2008

Year ended

31 December 2008





 

US$'000

US$'000

US$'000

Profit for the period attributable to equity holders of PHM plc

74,217

14,367

22,002

Interest expense on convertible bonds, net of tax

4,031

(a)

(a)

Profit used to determine diluted earnings per share

78,248

14,367

22,002






No of shares

No of shares

No of shares

Weighted average number of Ordinary shares

121,599,705

81,155,052

81,155,052

Adjustment for assumed conversion of convertible bonds

10,855,564

(a)

(a)

Weighted average number of Ordinary share

for diluted earnings per share

132,455,269

81,155,052

81,155,052






US$

US$

US$

Basic earnings per Ordinary share

0.610 

 0.177

0.271

Diluted earnings per Ordinary share

0.591 

 0.177

0.271


  •  The Group has issued convertible bonds which could potentially dilute basic earnings per Ordinary share in the future but were not included in the calculation of diluted earnings per share because they were anti-dilutive for the periods ending on 30 June 2008 and 31 December 2008.


As at 30 June 2009, the Group had 1,498,041 (30 June 2008 and 31 December 2008: nil) potentially dilutive options over Ordinary shares and 8,312,463 (30 June 2008 and 31 December 2008: nil) potentially dilutive warrants which were anti-dilutive for the period ending 30 June 2009 and were not included in the calculation of diluted earnings per share, accordingly.



8.     Financial income




Six 

months to

30 June 
2009

Six 

months to

30 June
2008

Year ended

31 December 2008



US$'000

US$'000

US$'000

Interest income


3,598

4,788

7,709

Gain on redemptions of exchangeable bonds (note 17)


23,131

-

-



26,729

4,788

7,709





9.    Financial expenses

    



Six 

months to

30 June 
2009

Six 

months to

30 June
2008

Year ended

31 December 2008



US$'000

US$'000

US$'000

Interest expense:





- Bank borrowings


3,424

1,258

5,466

- Exchangeable bonds 


4,759

8,293

16,606

- Convertible bonds


5,599

5,496

10,994

Unwinding of discount on environmental obligation

 

122

37

236



13,904

15,084

33,302



10.    Intangible assets

 
Malomyr
Albyn
Tokur
Yamal deposits
Flanks of Pokrovskiy
Kostenginskoye
Others(a) 
Total
 
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
At 1 January 2009
41,308
10,390
61,549
62,973
21,635
-
27,591
225,446
Additions
-
1,040
24
1,839
1,414
3
2,453
6,773
Assets acquired through business combination with Aricom plc (note 25) 
-
-
-
-
 
27,381
610
27,991
Assets acquired through other business combinations (note 25)
-
-
-
-
 
-
845
845
Impairment for the period
-
-
(2,702)(b)
-
-
-
(37)
(2,739)
Transfer to mine development costs
(40,172)
-
(58,871)
(14,761)
 
-
-
(113,804)
Reallocation 
(1,136)
-
 
-
1,136
-
-
-
At 30 June 2009
-
11,430
-
50,051
24,185
27,384
31,462
144,512


 

a.  Represent amounts capitalised in respect of a number of projects in the Amur and Buryatia regions.

b. An impairment charge of US$ 2,702 thousand was recognised during the six months ended 30 June 2009 in connection with flanks of Tokur deposit, following the expiration of the licence and decision to abandon exploration and write off associated exploration and evaluation costs previously capitalised



11.    Property, plant and equipment



Mine development costs

Mining assets

Non-mining assets

Capital construction in progress

Total 



US$'000

US$'000

US$'000

US$'000

US$'000

Cost






At 1 January 2009

1,184

258,136

120,985

36,925

417,230

Additions

28,308

11,634

5,011

41,534

86,487

Transfers from intangible assets

113,804

-

-

-

113,804

Transfers from capital construction in progress

849

14,856

7,278

(22,983)

-

Reallocation

6,564

-

(4,552)

(2,012)

-

Assets acquired through business combination with Aricom plc (note 25)

303,431

-

29,318

10,346

343,095

Exchange difference

-

-

(1,999)

-

(1,999)

Disposals

(173)

(201)

(753)

(28)

(1,155)

At 30 June 2009

453,967

284,425

155,288

63,782

957,462







Depreciation and impairment






At 1 January 2009

-

54,453

20,516

-

74,969

Charge for the period

-

7,560

6,828

-

14,388

Reallocation

(587)

-

587

-

-

Exchange difference

-

-

(88)

-

(88)

Disposals

(4)

(184)

(287)

-

(475)

At 30 June 2009

(591)

61,829

27,556

-

88,794







Net book value 






At 1 January 2009

1,184

203,683

100,469

36,925

342,261

At 30 June 2009

454,558

222,596

127,732

63,782

868,668


Property, plant and equipment with a net book value of US$42.2 million (30 June 2008: US$26 million and 31 December 2008: US$49.8 million) have been pledged to secure borrowings of the Group.



12.     Available-for-sale investments


In March 2009, the Group acquired 6,166,666 new shares in Rusoro Mining Limited ("Rusoro") as part of an equity placing by Rusoro for consideration of US$ 3,048 thousand. The Group's stake in the share capital of Rusoro as enlarged by the placing is c.1.1%


13.    Inventories




30 June 
2009

30 June
2008

31 December 2008



US$'000

US$'000

US$'000

Current





Stores and spares


46,969

35,113

44,700

Work in progress


31,256

23,767

23,436

Bullion in process

 

8,917

 6,351

  4,196  

Total current inventories 

 

87,142

 65,231

72,332






Non-current





Work in progress

 

17,063

 20,012

19,078

Total non-current inventories

 

17,063

20,012

19,078






Total inventories

 

104,205

85,243 

91,410



14.    Trade and other receivables




30 June 
2009

30 June
2008

31 December 2008



US$'000

US$'000

US$'000

Current





Advances to suppliers 


52,736

50,693

30,481

VAT recoverable


31,381

23,303

24,073

Trade receivables 


6,404

5,322

3,857

Loan to Omchak Joint Venture


4,519

2,770

3,046

Exchangeable loan to Rusoro 

 

15,603

-

-

Other loans receivable


2,222

5,419

2,734

Advances paid on resale and commission contracts 


10,011

1,153

12,673

Other debtors

 

6,288

16,548

7,911



129,164

105,208

84,775

Non-current





Loan to Odolgo join venture (formerly, Rudnoye Joint Venture)


6,197

6,231

  6,089  

Exchangeable loan to Rusoro 

 

-

12,202

13,701

Other 


665

-

-



6,862

18,433

19,790



  15.   Cash and cash equivalents




30 June 
200
9

30 June
200
8

31 December 2008



US$'000

US$'000

US$'000

Cash at bank and in hand


25,886

22,573

22,792

Short-term bank deposits


93,889

19,940

3,652

Money market funds (a) 


45,067

-

-

Promissory notes and other liquid investments


636

40,314

-



165,478

82,827

26,444

  • Investments in money market funds are held for the purposes of diversification of risk. Accordingly, as these funds are available on demand and have insignificant risk of change in value they are classified as cash equivalents. The credit risk on money market funds is limited because the counterparties are investment funds with high credit-ratings assigned by international credit-rating agencies. These investment funds are managed in accordance with approved investment criteria, requiring that investments have certain credit ratings and limiting the concentration of investment in any one security.



16.   Trade and other payables




30 June 
200
9

30 June
200
8

31 December 2008



US$'000

US$'000

US$'000

Trade payables


15,844

10,895

  11,519

Advances from customers


1,159

15,450

   1,772

Advances received on resale and commission contracts


8,542

1,194

  7,438

Accruals and other payables


25,736

29,003

21,413

Dividends payable (note 21)


-

12,074

-



51,281

68,616

42,142



17.    Borrowings



30 June
 2009

US$'000

30 June
 2008

US$'000

31 December 2008

US$'000

Borrowings at amortised cost




Convertible bonds

141,275

140,145

140,663

Exchangeable bonds (a)

48,600

160,855

162,863

Bank loans

46,077

60,153

60,198

Other loans 

-

-

10,000

 

235,952

361,153

373,724





Amount due for settlement within 12 months

78,677

50,552

220,946

Amount due for settlement after 12 months

157,275

310,601

152,778

 

235,952

361,153

373,724


  • During the six months ended 30 June 2009, the Group purchased a total of $127 million nominal amount of its 7% exchangeable bonds at an average price of US$95.00 plus accrued interest from a number of investors. Following these purchases a total of $53 million nominal exchangeable bonds remain outstanding at 30 June 2009. 

18.    Derivative financial instruments



30 June
 2009

US$'000

30 June
 
2008

US$'000

31 December 2008

US$'000

Derivative financial assets - Rusoro Embedded Derivative 




Fair value of the Rusoro Embedded Derivative at the beginning of the period and at inception 

  1,432 

6,560

6,560

Fair value change

(469)

1,000

(5,128)


  963  

7,560

1,432





Derivative financial assets - Rusoro Call Option 




Fair value of the Call Option at the beginning of the period and at inception 

443

1,780

1,780

Fair value change

(167)

630

(1,337)


276

2,410

443





Total derivative financial assets

1,239

9,970

1,875





Derivative financial liabilities - Exchangeable Bonds Embedded Derivatives




Fair value of Gold Exchangeable Bonds Embedded Derivatives at the beginning of period

(41,400)


(30,634)

(30,634)

Fair value change

2,705

(11,666)

(10,766)

Reduction of the derivative financial liability as a result of purchase of exchangeable bonds (note 17)

30,040

-

-


(8,655)

(42,300)

(41,400)





Derivative financial liabilities - Foreign Currency Forward Contract 




Fair value of the foreign currency forward contract at the beginning of the period and at inception

(1,076)

-

-

Fair value change

(70)

-

(1,076)

Reduction of the derivative financial liability as a result of settlement of the host contract

1,146




-

-

(1,076)





Total derivative financial liabilities 

(8,655)

(42,300)

(42,476)

 


19    Notes to the cash flow statement


(a)    Reconciliation of profit before tax to operating cash flow 



Six 

months to

30 June 
2009

Six 

months to

30 June
2008

Year ended

31 December 2008


US$'000

US$'000

US$'000

Profit before tax

102,804

21,111

40,388





Adjusted for:




Financial income

(26,729)

(4,788)

(7,709)

Financial expenses

13,904

15,084

33,302

Share of results in joint ventures

(862)

2,182

1,261

Depreciation

13,433

10,323

22,284

Loss on disposals of property, plant and equipment

226

1,850

1,605

Exchange losses/(gains) in respect of investment activity

836

(32)

2,838

Exchange (gains)/losses in respect of cash and cash equivalents 

1,452

(2,739)

3,560

Net fair value change on gold equivalent exchangeable bonds

(2,705)

11,666

10,766

Net fair value change on Rusoro Embedded Derivative and Call Option

636

(1,630)

7,541

Impairment of intangible assets

2,739

3,197

3,240

Impairment of property, plant and equipment

-

171

-

Write-down of inventories to net realisable value

-

1,961

-

Amortisation charge included in the cost of inventories

(468)

9

(1,253)

Other non-cash items

4,191

392

379

Operating profit before working capital changes

109,457

58,757

118,202





Increase in trade and other receivables 

(31,036)

(40,946)

(24,516)

Increase in inventories 

(8,449)

(33,593)

(36,537)

(Decrease)/ increase in trade and other payables

(2,435)

13,551

1,433

Net cash inflow/(outflow) from operating activities

67,537

(2,231)

58,582

 


(b)    Major non cash transactions


The principal non-cash transaction is the issue of shares, share options and warrants as consideration for the acquisition of Aricom plc (note 25) 

 

 20.    Analysis of net debt



At 1 January 2009

Acquisition of Aricom plc

Net cash movement

Exchange movement

Non-cash changes

At 

30 June  2009

 

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

Cash and cash equivalents

26,444

231,477

(90,991)

(1,452)

-

165,478

Debt due within one year

(220,946)

-

153,802

135

(11,668)

(78,677)

Debt due after one year

(152,778)

-

1,102

-

(5,599)

(157,275)

Embedded derivatives within exchangeable bonds (note 18)

(41,400)

-

-

-

32,745

(8,655)

Net debt

(388,680)

231,477

63,913 

(1,317)

15,478

(79,129)




21.    Dividends




Six

 months to

30 June 
2009

Six 

months to

30 June
2008

Year ended

31 December 2008

 

 

US$'000

US$'000

US$'000

Amounts recognised as distributions to equity holders in the period:










Final dividend for the year ended 31 December 2007 of 7.5 pence per share 


-

12,074

12,166

Interim dividend for the year ended 31 December 2008 of 7.5 pence per share


-

-

10,828



-

12,074

22,994




22.      Share capital




30 June 2009

30 June 2008

31 December 2008


No of shares

'000

US$'000

No of shares

 '000

US$'000

No of shares '000

US$'000

Authorised:







Ordinary shares of £0.01 each

350,000


120,000


120,000









Allotted, called up and fully paid:







At the beginning of the period

81,155

1,311

81,155

1,311

81,155

1,311

Issued during the period

89,928

1,311

-

-

-

-


171,083

2,622

81,155

1,311

81,155

1,311

Details of the Ordinary shares in issue at the commencement of the period, Ordinary shares issued during the period, and Ordinary shares in issue at the period-end are given in the table below.


 

Date

Description

No of shares

'000

1 January 2009

Number of Ordinary shares in issue at the commencement of the period

81,155

5 February 2009

Placing of new Ordinary shares

16,000

22 April 2009

Issue of Ordinary shares to shareholders of Aricom plc in exchange for 100% share capital of Aricom plc 

73,928

30 June 2009

Number of Ordinary shares in issue at the end of the period

171,083



The Company has one class of Ordinary shares which carry no right to fixed income.


22.      Share capital (continued)


Warrants in issue


On the acquisition of Aricom plc, the Company issued 8,312,463 warrants in consideration for the transfer of the Aricom warrants to the Company (note 25). Each warrant confers the right to subscribe for one Ordinary share of PHM plc at an exercise price of £12.80, which is an equivalent of the exercise price of £0.80 per Aricom warrant, adjusted by the exchange ratio of one PHM warrant for every 16 Aricom warrants. These warrants expire on 9 June 2010. 


Issue of options


On the acquisition of Aricom plc, the Company issued an option to IFC to subscribe for 1,067,273 Ordinary shares at an exercise price of £11.84 per share, subject to adjustments (note 25). The option expires on 25 May 2015, subject to adjustments.  

 


23    Related parties


Related parties the Group entered into transactions with during the reporting period 


Aricom plc ("Aricom") and its subsidiaries were considered to be related parties due to Mr Peter Hambro, Mr Jay Hambro and Dr Pavel Maslovskiy's shareholdings and directorships in those companies and in PHM plc. On 22 April 2009, Aricom plc became a subsidiary of the Group (note 25) and hence ceased to be a related party requiring disclosure. 


OJSC Asia-Pacific Bank ('Asia-Pacific Bank'), V.H.M.Y. Holdings Limited, OJSC M2M Private Bank ('M2M Private Bank') and OJSC Kamchatprombank ('Kamchatprombank') are considered related parties as Mr Peter Hambro and Dr Pavel Maslovskiy have an interest in these companies. 


Expobank LLC was previously considered a related party as Mr Peter Hambro and Dr Pavel Maslovskiy had an interest in this company. From July 2008, Expobank LLC ceased to be a related party as at that time it was acquired by Barclays Bank PLC.


OJSC Apatit ('Apatit'), a subsidiary of OJSC PhosAgro ('PhosAgro'), is considered to be a related party due to PhosAgro's minority interest and significant influence in the Group's subsidiary Giproruda.


Omchak Joint Venture and Odolgo Joint Venture (formerly, Rudnoye Joint Venture) are joint ventures of the Group and hence are related parties. 


Transactions with related parties the Group entered into during the six months ended 30 June 2009 and 30 June 2008 and the year ended 31 December 2008 are set out below. 


Trading Transactions


Related party transactions the Group entered into that relate to the day to day operation of the business are set out below. 

 




Sales to related parties

Purchases from related parties 


Six months to 

30 June 2009

Six months to 

30 June 2008

Year 

ended 
31 December 2008

Six months to 

30 June 2009

Six months to 

30 June 2008

Year 

ended 
31 December 2008








Aricom and its subsidiaries (a)

 







Construction and engineering services 

7,327

16,797

39,753

1,062

-

-

Exploration services 

102

601

1,306

25

-

-

Other 

871

1,917

6,136

915

2

4,620


8,300

19,315

47,195

2,002

2

4,620

Expobank







Sales of gold and silver

-

19,056

19,056

-



Sales and purchases of gold through metallic account

-

15,322

15,322

-

15,267

15,267

Other

-

-

-

-

128

128


-

34,378

34,378

-

15,395

15,395








Asian-Pasific Bank







Sales of gold and silver

-

-

1,642

-

-

-

Other

805

-

1,914

56

-

233


805

-

3,556

56

-

233








Trading transactions with other related parties







Engineering services to Apatit

204

-

-


-

-

Rent and other transactions with other entities owned by Mr Peter Hambro and/or Dr Pavel Maslovskiy 

153

-

-

366

89

546


357

-

-

366

89

546

  • Until 22 April 2009 when Aricom became a subsidiary of the Group


The outstanding balances with related parties at 30 June 2009, 31 December 2008 and 30 June 2008 are as follows:



Amounts owed by related parties

Amounts owed to related parties


30 June 2009

30 June 2008

31 December 2008

30 June 2009

30 June 2008

31 December 2008








Aricom and its subsidiaries

-

1,184

2,548

-

2,184

3,619

Other entities owned by Mr Peter Hambro and/or Dr Pavel Maslovskiy 

-

20

26

-

96

-

Apatit

-

-

-

-

-

-


-

1,204

2,574

-

2,280

3,619



Banking arrangements


The Group has current and deposit bank accounts with Asian-Pacific Bank. The Group previously held current and deposit bank accounts with Expobank. 


The bank balances at 30 June 2009, 30 June 2008 and 31 December 2008 are set out below:



30 June 

2009

30 June 

2008

31 December 

2008





Asian-Pacific Bank

29,800

1,571

4,423

Expobank

-

9,270

-


The Group previously held promissory notes issued by Asian-Pacific Bank and Expobank. The receivable balances outstanding at 30 June 2008 and 31 December 2008 amounted to US$36,017 thousand and US$nil, respectively. 



Financing Transactions


The Group received a number of loans from related parties details of which are set out below:  



Loans received from 

related parties

Interest on loans received from

related parties  

Loan and interest amounts 

owed to related parties 


Six months to 

30 June 2009

Six months to 

30 June 2008

Year 

ended 
31 December 2008

Six months to 

30 June 2009

Six months to 

30 June 2008

Year 

ended 
31 December 2008

30 June 2009

30 June 2008

31 December 2008











V.H.M.Y. Holding Limited

-

-

10,000

357

-

213

-

-

10,000

M2M Private Bank

-

-

9,250

441

-

317

-

-

9,250

Asian-Pacific Bank

-

-

700

-

-

23

-

-

700

Kamchatprombank

-

-

793

-

-

2

-

-

793


-

-

20,743

798

-

555

-

-

20,743


The Group provided a number of loans to joint-ventures (note 14) 




 24    Contingent liabilities


The Group is involved in legal proceedings with two minority shareholders in Lapwing, a subsidiary of the Company, Gatnom Capital and Finance Ltd and O.M. Investments & Finance Ltd. The claim was filed in September 2008 in Cyprus and the respondents are Lapwing and Aricom UK. Claimants allege their holdings in Lapwing were improperly diluted as the result of the issuance of additional shares following a September 2007 shareholders' meeting. Claimants have asked the court to dissolve Lapwing, or, alternatively, to order that their shares be purchased at a price allegedly previously agreed upon or to be determined by an expert appointed by the court. The respondents have filed their opposition to the claim, and the case is in the preliminary, pre-trial phase. No trial date has been set yetManagement believes that the claim is of limited merit and therefore does not represent a material threat to the Group.



25    Acquisitions 


Acquisition of Aricom 


On 6 February 2009, the Independent Board Committees of the Company and Aricom announced that they had reached agreement on the terms of a recommended all share offer to be made by the Company for the entire issued and to be issued share capital of Aricom (the "Merger"). 


The Merger provided for the acquisition of Aricom shares to be effected by way of a court sanctioned scheme of arrangement under Part 26 of the Companies Act 1985 involving a capital reduction of Aricom under section 135 of the Companies Act 1985 (the 'Scheme'). The purpose of the Scheme was to enable the Company to acquire the entire issued and to be issued Ordinary share capital of Aricom.


Under the terms of the Merger, Aricom Shareholders received one fully paid New Peter Hambro Mining Share in exchange for 16 fully paid Aricom Shares. 


The Merger was completed on 22 April 2009.


The total purchase consideration for the acquisition of Aricom was US$584,949 thousand. A summary of the total consideration is set out in the table below:




USD' 000

Issue of 73,928,985 Ordinary shares in PHM plc at the market value of £5.30 (a)

571,150

Issue of 8,312,463 warrants in PHM plc at the market value of £0.33 (a), (note 22)

3,999

Issue of an option to IFC to subscribe for 1,067,273 shares of PHM plc (b) (note 22)

2,970

LTIP award to replace LTIP awards of Aricom (b)

934

Directly attributable transaction costs

5,896



Total consideration

584,949

  • At market value opening position and exchange rate at 22 April 2009

  • Measured at fair value using valuation techniques

    

 The assets and liabilities as of 22 April 2009 arising from the acquisition of Aricom are set out below:



Carrying amount

Fair value adjustments

Fair value


USD' 000

USD' 000

US$' 000





Property, plant and equipment

423,286

(80,191)

343,095

Intangible assets

27,991

-

27,991

Investments in associates

4,282

(4,282)

-

Interests in joint ventures (c)

20,077

-

20,077

Available-for-sale investments (d)

-

14,003

14,003

Cash and cash equivalents

231,477

-

231,477

Inventories

11,990

(8,753)

3,237

Trade and other receivables

29,020

-

29,020

Trade and other payables

(17,854)

-

(17,854)

Deferred tax liability

(5,727)

(53,696)

(59,423)

Other assets and liabilities, net

4,435

(7,321)

(2,886)

Net assets acquired



588,737

Non-controlling interests



(3,788)





Group share of net assets acquired



584,949









Transaction costs settled in cash (e)



(5,896)

Cash and cash equivalents acquired



231,477

Cash inflow on acquisition



225,581

 

c. In accordance with the terms of the joint venture agreement between Aricom and Chinalco, signed and approved by the Chinese Ministry of Commerce on 12 August 2008, Aricom holds 65% of the joint venture and 35% is held by Chinalco, with the parties having joint control and contributing RMB 474.5 million and RMB 255.5 million respectively. The first tranche of US$20.8 million was paid by Aricom in September 2008. The remaining tranches are outstanding, with a dollar equivalent of contribution from Aricom being US$ 48.6 million as at 30 June 2009


d. Shares held by Employee Benefit Trust operating in conjunction with LTIP established by Aricom for the benefit of employees of Aricom, converted into shares of PHM plc at the date of acquisition.  

 

        e. Including liability of US$4,362 outstanding as at 30 June 2009 



25.     Acquisitions (continued)


Acquisition of Aricom (continued)


From the date of acquisition, Aricom contributed US$1,185 thousand to revenue and US$2,285 thousand to operating losses. If the acquisition of Aricom had been completed on 1 January 2009, Group profit attributable to equity holders of the Company would have been US$46,774 thousand while Group revenues for the six-month period ended 30 June 2009 would not have been significantly different from those reported in these interim financial statements. 



Acquisition of Verkhnetisskaya Ore Mining Company


On 26 February 2009, the Group entered into an agreement to acquire 69% of the share capital of Closed JSC Verkhnetisskaya Ore Mining Company for the total cash consideration of US$ 589 thousand.


The assets and liabilities arising from the acquisition of Verkhnetisskaya Ore Mining Company are set out below:





Carrying amount and 

fair value




US$' 000





Intangible assets



845

Cash and cash equivalents



4

Trade and other payables



(8)

Fair value of net assets acquired



841

Non-controlling interests



(252)





Total consideration



589









Purchase consideration settled in cash



589

Cash and cash equivalents acquired



(4)

Cash outflow on acquisition



585


From the date of acquisition, the contribution of Verkhnetisskaya Ore Mining Company to revenue and operating profit was not significant. If the acquisition of Verkhnetisskaya Ore Mining Company had been completed on 1 January 2009, Group revenues and Group profit attributable to equity holders of the Company for the six-month period ended 30 June 2009 would not have been significantly different from those reported in these interim financial statements.


26.    Reconciliation of non-GAAP measures



Note

Six 

months to 

30 June 2009

Six 

months to 

30 June 

2008

Year ended 

31 December 2008



US$'000

US$'000

US$'000

Profit for the period


74,646

14,780

22,745

Add/ (less):





Financial expense

9

13,904

15,084

33,302

Financial income

8

(26,729)

(4,788)

(7,709)

Foreign exchange losses/ (gains)

5

7,222

-(a)

25,013

Fair value change on derivatives

18

(1,999)

10,036

18,307

Taxation

6

28,158

6,331

17,643

Depreciation, amortisation and impairment

5

16,172

13,520

25,524

Other items


-

4,578(b)

1,562(c)

Underlying EBITDA


111,374

59,541

136,387


  • No adjustment for foreign exchange gains of US$ 7,232 thousand was made in arriving to underlying EBITDA for the six months ended 30 June 2008. 

  • Include bank charges of US$ 596 thousand reported within Financial expense items for the six months ended 30 June 2008, share of loss in joint ventures of US$ 2,182 thousand, loss on disposal of property, plant and equipment of US$ 1,850 thousand and other items. 

  • Bank charges of US$ 1,562 thousand reported within Financial expense items for year ended 31 December 2008 



27.     Subsequent events


On 10 July 2009, the Group signed an agreement with Sberbank of the Russian Federation for a long-term US$ 60 million loan effective from 1 September 2009. The loan bears an annual interest of 9.5% for the first two years following the commencement of the loan and 9% thereafter. 










 


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