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Peter Hambro Mining (POG)

  Print      Mail a friend       Annual reports

Monday 23 January, 2006

Peter Hambro Mining

Trading Statement

Peter Hambro Mining PLC
23 January 2006

23rd January 2006

                             2005 Trading Statement

Peter Hambro Mining plc ("PHM" or "the Group") issues this statement as an
unaudited update on 2005 trading and in advance of its full year results

Highlights for 2005

   •Group attributable gold production increased by 19% to c.249,000 ounces
   •Pokrovskiy gold production increased by 20.7%
   •Significant attributable production received for the first time from Amur
    region affiliates and subsidiaries strengthening the Group's regional
   •Completion of assay laboratory construction giving largest laboratory
    capacity in Russia
   •Processing of ore at Pioneer proves effectiveness of choice of ore
    extraction technology
   •US$140m convertible bond issued for construction and development finance
   •Average realised sales price of US$442/oz during 2005 was 10% higher than
    in 2004

Attributable Production                   2005           2004       Change
Amur Region
   Pokrovskiy                            185.7          153.8        20.7%
   Amur NE Assets                          4.2              -        n/a
   Rudnoye JV                              7.8              -        n/a
Omchak JV
   Magadan Assets                         49.6           55.4       -10.4%
   Amur Assets                             2.0              -        n/a
TOTAL                                    249.3          209.3        19.0%

Chairman's comments

Commenting on the above, Peter Hambro, Executive Chairman, said:
"It is a pleasure to provide an update on another excellent year's trading for
the Group, with attributable production increased by nearly a fifth and
fractionally ahead of our 2005 forecast. The Group continues to expand with its
principal operation at Pokrovskiy increasing production by 21% and contributions
from new assets now forming 6% of the total.

We are now a quarter of the way towards delivering our million ounces in 2009
and, having delivered on all the Group's total production targets to date, we
hope to maintain this unbroken record."


Pokrovskiy & Pioneer

Pokrovskiy Deposit

2005 was a successful year at Pokrovskiy. As envisaged, the Pokrovskiy team has
achieved the positive results shown in all the production figures. Foremost
amongst the achievements has been the increase in gold production by 21% versus

The following points highlight the success in 2005:
• Advanced stripping carried out in 2004 and 2005, together with optimised 
  planning and mining using the MicroMine geological computer software has 
  contributed to the processing of higher quality ore;
• Renewal of mining and transportation equipment provided stability and allowed 
  successful completion of project planning and implementation. During the first 
  half of 2005, 5 Belaz dump trucks with a 45 tonne capacity and 2 CAT D6R
  bulldozers were acquired, in addition to mining equipment purchased in 2004;
• The work carried out in 2004 to expand the plant led to stable operation of 
  all units, which provided for an increase in production and productivity. 2005 
  Resin in Pulp ("RIP") ore processing in 2005 amounted to 1.4 million tonnes of 
  ore (compared with 1.17 million tonnes in 2004). All indicators showed plant 
  work for 2005 corresponding to projected figures and capacity levels;
• During 2005 the RIP's desorption processing unit was improved in order to 
  achieve a more complete extraction of silver. As a result, the extraction of 
  silver doubled in the fourth quarter and is scheduled to continue at this 
  improved rate;
• The process of double stacking the heap-leach was tested in 2004 and in 2005 
  showed good gold extraction results. Ore processed by the heap-leach in 2004 
  showed a 60% recovery rate but was subsequently left on the pad where in 2005 
  a further 15% recovery from this ore was achieved. Due to the Group's calendar 
  reporting period, recovery is shown at 60% in 2004 but this extra recovery at 
  15% reduces the 2005 recovery when in reality the number would be in excess of 
  70% for the continuous period; and
• The enhancement in heap-leach technology has preserved production costs at 
  last year's level despite gold grades in the heap-leach ore being 22% lower 
  than in 2004 (1.8g/t - 2004 vs. 1.4g/t - 2005). The enhanced technology allows
  economic treatment of grades lower than originally anticipated which will 
  consequently allow an increase in the reserve base of the deposit.

PHM Schedule
                                          Units               2005        2004
Pokrovskiy deposit
    Total material moved                 '000 m3             5,248       4,540
        Including advanced               '000 m3             1,180       1,028
    Ore mined                          '000 tonnes           1,393       1,045
        Grade                              g/t                 3.6         3.4
        Gold                             '000 oz             159.8       113.7
    Including rich ore                 '000 tonnes           899.0         608
        Grade                              g/t                 4.7         4.5
        Gold                             '000 oz             135.7        88.5
Pioneer deposit
    Total material moved                 '000 m3               836         228
    Ore mined                          '000 tonnes             133          43
        Grade                              g/t                 3.5         7.6
        Gold                             '000 oz              15.0        10.4

PHM Processing Schedule
                                       Units                  2005        2004
Resin In Pulp plant

   Ore from Pokrovskiy pit          '000 tonnes                899         673
     Grade                              g/t                    4.7         4.2
     Gold                              000 oz                  136        90.6

   Ore from stockpiles              '000 tonnes                444         454
     Grade                              g/t                    2.8         3.1
     Gold                             '000 oz                 39.4        45.5

   Pioneer (bulk sample)            '000 tonnes                 53          38
     Grade                              g/t                    5.7         8.4
     Gold                             '000 oz                  9.7        10.1

   Total milled                     '000 tonnes              1,397       1,165
     Grade                              g/t                    4.1         3.9
     Gold                             '000 oz                184.9       146.2
     Recovery                            %                    91.5        90.7
     Gold recovered                   '000 oz                169.2       132.7

Heap leach

   Ore stacked                      '000 tonnes                714         620
     Grade                              g/t                    1.5         1.8
     Gold                             '000 oz                   38        35.3
     Recovery                            %                    48.9        60.0
     Gold recovered                   '000 oz                 16.5        21.3

     Total gold recovered             '000 oz                185.7       153.9

Pioneer Deposit

Work at Pioneer focused on three areas: developing reserves, stripping open pit
areas and further processing of technological sample.

Work commenced on the stripping operation to remove all surface material on the
first major ore column at the junction of Apophysis 1 and the main orebody.
Further work has recently commenced on the second identified ore column. A total
amount of 836,000m(3) of material was moved at Pioneer during 2005.

Further small scale processing of the Pioneer ore was undertaken at the
Pokrovskiy mill to prove how amenable the ore is to economic gold extraction.
During 2005, 53,156 tonnes of Pioneer ore were processed at the Pokrovskiy plant
with an average gold content of 5.7g/t. This sample yielded a recovery rate of
90% proving the effectiveness of the ore extraction technology used.

Amur North East

Tokur Rudnik

OAO "ZDP Koboldo" - a 91.7% subsidiary of OOO "Tokurskiy Rudnik"- produced
4,180oz of gold in 2005. Koboldo produces gold from alluvial deposits in the
North East of the Amur Region in close proximity to the Tokur and Malomir
deposits. Koboldo was acquired by the Group in 2004 and benefits from a skilled
local labour force and developed infrastructure.

Portfolio Assets

Omchak Joint Venture

During 2005, CJSC Omchak ("Omchak") produced gold through its subsidiary
companies in two Russian regions - the Magadan and the Amur regions. The total
production of gold was 51,600oz and was achieved by the exploitation of the
Shkolnoye deposit (CJSC Nelkobazoloto, Magadan region) and more than 25 smaller

At Shkolnoye, 54,000 tonnes of ore were extracted from the underground mine and
then processed at the onsite processing plant. The ore grade was found to be

During the exploration of the alluvial deposits, 4.0 million m3 of gold bearing
sands were enriched using washing equipment. The average grade of gold was
0.5-0.65 g/m3.

At the Shkolnoye deposit more than 1,000m of underground work was executed,
providing access to estimated resources of c.97,000oz of gold at the levels of
500m-700m which should provide for stable mining works and mill feed over the
next few years. More than 1,000m of drill holes were drilled at alluvial
deposits and 200,000m3 of trenching undertaken.

The joint venture also undertook a process of updating the mining and
exploration fleet. For the Shkolnoye mine, a dump truck was acquired for the
transportation of ore from underground operations to the plant, as well as
equipment for underground drilling and a load-hauler; the alluvial gold
operations have been ordered a Kamatsu D375 bulldozer and five Libcher loaders.

Omchak acquired various alluvial gold deposits in the Amur region in 2005. These
deposits were selected as they were favourably priced and because they suit the
skill base of the Omchak team. The estimated reserves and resources of these
deposits amount to more than c.64,300oz of alluvial gold. Drilling and mining
works are being carried out in order to increase production.

Omchak made two acquisitions in the Chita region during 2005. In accordance with
the terms of the Verkhne-Alliinskiy deposit licence agreements, Omchak has
collated and analysed the historical geological data, and has completed the
preparation of an exploration plan. In accordance with the licence, drilling is
expected to commence in July 2006. Ahead of submission of exploration plans and
preparation of reserves for State Geological Committee approval, core drilling
of around 12,000m and trenching of 120,000m3 is required.

Rudnoye Joint Venture

OOO "Odolgo" - a 100% subsidiary of ZAO "Rudnoye" - produced 2,366oz
(attributable 1,160oz) of gold in 2005. Odolgo is active in the production of
gold from alluvial deposits within the licence areas of the Rudnoye joint

Exploration & Development

The Group's exploration report will form part of the update that will be given
to shareholders at the end of the month.

Reserves & Resources

As usual, a full update on the Group's reserves and resources is intended to be
published at the same time as its Annual Report and Accounts.

PHM Summary Schedule of Exploration Work
Site               Exploration mapping  Trenches   Drilling    Samples generated
                               km2         m3      running m
Pokrovskiy Rudnik                -          -       56,330.3           18,017
Flanks of Pokrovskiy
deposit                          -       28.9       15,918.4           14,824
Pioneer                        6.1      115.9       23,736.4           25,006
Malomir                          -      197.2        2,632.0            9,418
Other                        398.5        137        6,937.9           34,912
Yamalzoloto                      -       13.7       41,163.9           18,652
Total:                       404.6      492.7      146,718.9          120,829

Assay Laboratories

By the end of February 2005 all construction work, extensions and modernisation
of the Group's chemical assay laboratories were complete and all the
laboratories began processing at designed capacity:

   •Pokrovskiy chemical laboratory
      •10,000 samples per month (assay sampling)
      •Processing samples from Pokrovskiy, Pokrovskiy flanks, Pioneer and 
   •Tokur chemical laboratory
      •3,000 samples per month (assay sampling)
      •Processing samples from Tokur, Malomir and Voroshilovskoye.
   •Blagoveschensk chemical laboratory
      •3,000 samples per month (assay sampling)
      •Processing samples from Chagoyan
      •6,000 samples per month (geochemical analysis) from all deposits.
      •The Blagoveschensk laboratory also acts as a reference facility for
       all the Group's remaining laboratories.
      •X-ray analysis of polymetallic ore was also introduced at the 
       Blagoveschensk laboratory.
   •Yamalzoloto chemical laboratory
      •Pre-commissioning work is being undertaken for the eventual launch of the 
       laboratory at Labitnang (Yamalzoloto) with a productivity of 5,000 
       samples a month (assay sampling) and 3,000 samples a month (geochemical 

All of the analytical work on samples from the Group's deposits in the Amur
Region is carried out in these laboratories. Results of the analysis are
generally received no more than one month after the sample is taken for
geological testing.

"NPGF Regis"

The Group's subsidiary Regis carried out a considerable amount of work in the
development of the Group's in-house geological exploration team and assets. The
provision of modern drilling equipment and qualified geologists, will during
2006 provide the Group with the following services:

   •Deep core-drilling - 5,000 running metres per month;
   •Shallow (test) drilling - 3,000 running metres per month;
   •Trench digging - 100,000m(3) per month;
   •In-house surveying service, equipped with the modern equipment with the
    use of GPS systems; and
   •In-house group of geological statisticians - specialists in computer

Corporate affairs

The Group's average realised gold price for 2005 was US$441.83/oz, up 10%
against that achieved in 2004. The Rouble weakened against the Dollar by 4%
during the period and was RUR28.78/US$ at 31 December 2005 (RUR27.75/US$ - 31/12
/04). The Group has a policy of no long term gold forward sales or hedging.
A fundraising to obtain US$140m through a convertible bond issue was completed
in August 2005. It should provide the greater part of PHM's expected external
finance requirements to reach the 2009 one million ounce production target. This
fundraising significantly increased the Group's interest expense charges for the
second half of 2005.

                                    - Ends -


Alya Samokhvalova / Marianna Adams
Director of External Communications, Peter Hambro Mining    +44 (0)20 7201 8900

Tom Randell
Merlin                                                      +44 (0)20 7653 6620

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