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Peter Hambro Mining (POG)

  Print      Mail a friend       Annual reports

Thursday 21 September, 2006

Peter Hambro Mining

Interim Results

Peter Hambro Mining PLC
21 September 2006

                             PETER HAMBRO MINING plc
                                 Interim Results

Peter Hambro Mining plc is pleased to present the results of a successful half 
year's activity.

                               6 months to  6 months to    Variance 12 months to
                                 30/6/2006    30/6/2005  for period   31/12/2005
Total attributable 
gold production, oz*               108,363      102,178          6%      249,000
Pokrovskiy Rudnik                             
gold production, oz                 93,600       84,600         11%      185,700
Pokrovskiy Rudnik average 
gold price received (US$/oz)        US$573       US$422         36%       US$442
Pokrovskiy Rudnik Cash 
Operating Cost (GIS US$/oz)         US$135       US$149         -9%       US$125
Operating profit, US$'000           19,890        8,022        148%       17,490
Earnings per share, US$              0.140        0.079         77%         0.17
*Total attributable gold production is comprised of production of the Group's 
subsidiaries, share of production in joint ventures and other investments.


Results for the first six months of 2006 (the "Period") for Peter Hambro Mining Plc 
("PHM" or "the Group") compared to the equivalent period of 2005:

•   The Group attributable gold production increased by 6% to 108,363 oz 
    (first 6 months of 2005 - 102,178oz);

•   Average realised gold sales price was US$573/oz - up by 36% (first 6 
    months of 2005 - US$422/oz). The Group remains unhedged;

•   Gold Institute Standard Cash Operating Costs at Pokrovskiy were 9% 
    lower than the same period during the previous years at US$135/oz 
    (first 6 months of 2005 - US$149/oz); 

•   Operating profit c.US$20m - 148% up compared to the same period of 
    2005 (first 6 months of 2005 - c.US$8m);

•   Pokrovskiy gold recoveries have recently increased due both to a number 
    of technological improvements and longer leach times;

•   Pioneer confirmation work shows excellent correlation between geochemical 
    and geophysical predictions.  Out of 22 predictions of high-grade ore 
    columns, 8 have been explored so far and 8 confirmed;

•   The full feasibility study documentation on Pioneer is expected to be 
    submitted to the State Committee on Reserves and Resources for approval 
    in March 2007 following their preliminary visit to the site.  Heap leach 
    production scheduled to start in 2007 with first recoveries in the forth quarter;

•   Malomir - major ore column discovered at North-East end of the Diagonal zone;

•   The full feasibility study documentation on Novogodnee Monto is expected 
    to be submitted to the State Committee on Reserves and Resources for 
    approval by the end of 2006; 

•   Positive results received from the ten active exploration programmes.

Chairman's Statement

The first six months of 2006 have been very satisfactory; and it is particularly 
gratifying to be able to report a 148% increase in pre-tax profits and a 77% i
ncrease in earnings per share compared to the same period last year.  This was 
achieved in a year with unusually cold weather conditions in Russia.

The result is also remarkable because Pokrovskiy's GIS cash operating costs 
decreased, on a like for like basis, by 9% while the prices of its consumables 
have risen sharply.  Cement is up by 37%, diesel is up by 26%, cyanide by 18%, 
explosives by 14% and electricity by 7%.  The decrease in costs has been achieved 
by further improvement in expenditure controls at the operational level and the 
improvement of profit-oriented financial discipline.  In addition, efficient use 
of waste material for the construction of haul roads to Pioneer lowered GIS costs 
by approximately US$17/oz. 

The Group is always conscious of the health and safety risks inherent in the mining 
industry and has not allowed cost control and profit maximisation to compromise 
its efforts to use best practice in the all important need to look after its employees 
and the environment.

Fortunately the price of gold was also buoyant during the period but the average 
36% increase in the Group's sale price is only a small part of its increased 

Progress on the Group's new near-term production targets at Pioneer, Malomir, 
Pokrovskiy flanks and Yamal properties is on track and an increase in earnings 
fits the Group's objective of having profitable production as the platform for 
its substantial organic growth programme. By the middle of 2007 it is anticipated 
that the Group will have received approvals of mining plans on three new properties.
Exploration on the Group's extensive portfolio of longer term projects has 
continued and on several there are preliminary indications of potential to host 
the next Pioneer or Malomir.  However the near-term projects have been given higher 
priority for the time being.

The Group has received its semi-annual report produced by independent geological 
consultants, Resource Computing International and the geological information in 
the half-year results is derived from this report.

To my mind, the most important element of this report is the confirmation of our 
geologists' resource predictions at Pioneer based on geochemical and geophysical 
survey results.  Here the Group's geologists forecast 22 high-grade ore columns 
and so far, on the 8 sites they have explored, we have achieved a 100% success 
ratio. The State Commission on Reserves and Resources made a preliminary visit to 
Pioneer and, following this, it is expected that the feasibility study, which is 
due to be delivered in the first quarter of 2007, will be based on lower cut-off 
grades and greater mining depths than our previous expectations and contains the 
restated reserves and resources.  

I hope that the geological information we have included will give shareholders 
an insight into the extent of the exceptional exploration portfolio that the 
Group has acquired in Russia at a time when many Western producers are finding 
it hard to replace mined out reserves.  Organic growth of this nature remains 
the core of our growth strategy while, at the same time, we continue the development 
of our near-term assets. 

Prospects for the remainder of the year are encouraging, as production is slightly 
ahead of our forecasts, and the world-wide price of gold continues to reflect the 
fears of investors about stagflation and geopolitical instability.

Peter Hambro  
Executive Chairman

Group Operations Report 


During the Period, 93,600oz of gold were recovered compared to 84,600oz during 
the same period of 2005 due to achievement of stable operations at the gold 
extraction plant at the newly increased throughput capacity of 1.8mtpa of ore.  
Work continues on further expansion, to bring the throughput capacity of the 
plant to 2.2mtpa of ore, in the second half of the year.

Pokrovskiy operations achieved a remarkable decrease in unit operating costs, in 
spite of increases in raw material and energy costs of c.20%, average rouble 
appreciation of c.3% and the mining of harder ore.  This was the result of an 
improved comprehensive cost control policy.

In addition to the equipment bought in 2004-2005, a further five 45-tonne 
capacity Belaz trucks were acquired and put into use. 

Pokrovskiy Rudnik Processing Operations

                                       6 months to 30 June
                                 Units    2006      2005*   Var %
Resin in Pulp Plant            
Ore from pit                    t '000   608.5      410**    +48%
Average grade                      g/t    3.85        4.9    -21%
Ore from warehouse              t '000   108.5          -    n/a
Average grade                      g/t    4.14          -    n/a
Ore from stockpile              t '000   101.5        281    -64%
Average grade                      g/t     3.0        2.4    +25%
Total milled                    t '000     818        691    +18%
Average grade                      g/t     3.8        3.9     -3%
Gold content                   oz '000    99.6       86.5    +15%
Recovery rate                        %    86.6%      92.2%    -6%
Gold recovered                 oz '000      86         80     +8%
Heap Leach            
Ore stacked                     t '000     345        341     +1%
Average grade                      g/t     1.0        1.4    -29%
Gold content                   oz '000      11         16    -31%
Recovery rate                        %   68.3%      31.0%   +120%
Gold recovered                 oz '000       7          5    +40%
Gold recovered                 oz '000    93.6       84.6    +11%
* Certain comparative numbers have been rounded up.
** Comparative number includes c.7,500 tonnes of ore from Pioneer deposit.


Pokrovskiy Rudnik Mining Operations

                                       6 months to 30 June 
                                 Units    2006        2005   Var %
Total material moved            m3'000   2,624       2,427     +8%
Ore mined                       t '000     889         616    +44%
Average grade                      g/t     3.2         3.7    -14%
Gold content                   oz '000    90.9        73.8    +23%
Including high 
grade ore                       t '000   608.5         402    +51%
Average grade                      g/t    3.85         4.9    -21%
Gold content                   oz '000    75.5          64    +18%
Note: Comparative numbers for Pokrovskiy Rudnik Mining Operations in 2005 have 
been amended relative to previous disclosure to reflect the fact that data provided 
for Pioneer mining operations is now shown separately (see below).

Resin in Pulp Plant

818,000 tonnes of ore were treated through the mill in the first half of the year 
- 18% more than during the same period of 2005 - and the plant's capacity reached 
an annual rate of 1.8 million tonnes of ore in June 2006.  Works on the planned 
plant expansion and production streamlining are expected to be completed in the 
second half of the year with the final capacity of 2.2mtpa.

Due to the high standard of works undertaken in 2004-2005 for the plant's expansion, 
the resultant increased capacity of the mill allowed economic processing of lower 
grade material and increased the total gold produced.  Previously this material 
would have been treated using heap leach technologies which have lower recovery 
rates than the plant.  

An increase in the gold price enabled treatment of lower grade material not previously 
included in the Group's reserves.    
Some decrease in recovery rates compared to the same period last year (86.6% in 
2006 vs. 92.2% in 2005) can be explained by a significant proportion of primary 
ore being treated through the mill.  Technological improvements made to the resin 
in pulp plant in the first half of the year in order to increase recovery rates 
from the primary ores resulted in an increase in recovery rates in July and August 
to 93%. The Group continues to embrace the improvement of technologies and expects 
to meet its budgeted recovery level of 91% in the second half of 2006.  

Heap Leach Operations

Test work carried out during last year in order to improve heap leach technology 
proved successful, allowing the application of new methods this year on a larger 
scale. These new methods involve ore being left on heap leach pads throughout the 
winter until spring for further leaching and ore for the following year's treatment 
being stacked on pads during autumn of the previous year. This method allowed the 
start of the leaching one month earlier than in the previous year and produced 
2,000oz of additional gold from these test works, significantly improving recovery 
rates at the pads under test from 30.7% in the first half of 2005 to 68.3% in the 
same period of 2006. This will give the Group an opportunity to treat a larger 
amount of low grade ore through the heap leach process and also to increase recovery 
rates using this process.  

It should be noted, however, that the exceptionally cold last winter in Russia 
caused the stacking of new ore on the pads to be delayed by approximately one 
month and that heap leach production is generally higher in the warmer, second 
half of the year.

Gold Institute Standard ("GIS") Operating Cost Analysis

The Group reports and breaks down Pokrovskiy Rudnik's operating costs according 
to the internationally recognised GIS following the industry's best practices.

The GIS cost analysis for the period is as follows:
                                                         6m to      6m to    Variance     12m to 
                                                       30/6/06    30/6/05               31/12/05
Pokrovskiy Rudnik 
All figures reported in US$ per oz of gold produced
Direct mining expenses                                    92.9       97.8          -5%        95
Third-party smelting, refining            
and transportation costs                                   6.4        4.3          49%       4.5
By-product credits                                        (0.5)      (0.3)         67%      (0.9)
Other                                                     36.4         47         -23%      26.8
Cash Operating Costs                                     135.2      148.8          -9%     125.4
Royalties                                                 36.8       25.2          46%      27.1
Production taxes                                           7.7        7.1           8%       6.2
Total Cash Costs                                         179.7      181.1          -1%     158.7
Non-cash movement in stock                                22.9       15.1          52%      28.6
Depreciation/Amortisation                                 52.4       47.7          10%      42.4
Total Production Costs                                   255.0      243.9           5%     229.7

Despite increasing input costs, with cement up by 37%, diesel up by 26%, cyanide 
by 18%, explosives by 14% and electricity by 7%, the total direct mining costs 
were kept in line with the previous period due to implementation of a tighter 
expenditure control at the operational level and employing improved profit-oriented 
financial discipline.  An increase in the number of ounces produced also improved 
the cost per ounce figure.

Royalties and refining/transportation costs are in direct correlation with the 
gold price hence the increase in these costs in the first half of 2006 in comparison 
with the same period in the previous year.

Depreciation and amortisation expenses have changed in line with the increase of 
production assets caused by the plant and mine fleet expansion.

Non-cash movement reflects the cost of mining incurred in the previous periods 
but accounted for in the first half of 2006 when the actual gold was produced.


Test mining operations at Pioneer during the first half of 2006 were aimed at 
finalising geological exploration of the deposit and preparation for its full 
scale exploitation.  

Pioneer Test Mining Operations
                                             6 months to 30 June 
                                      Units   2006   2005   Var %
Total material moved                m3 '000    392    328    +20%
Ore mined                            t '000     13     36    -64%
Average grade                           g/t    1.3    2.8    -54%
Gold content                        oz '000    0.5    3.2    -84%

During the course of the first half of the year, metallurgical studies of Pioneer 
ore have continued, utilising capacity at the Pokrovskiy main treatment plant and 
the heap leach facility. 

Infrastructure planning at Pioneer (for the location of leach pads, process equipment 
and ancillary buildings) is completed, and the supply of power has been commissioned, 
comprising a 4MW first stage substation and power line to Pioneer from Pokrovskiy. 
Contracts for the supply of the equipment were signed during the first half 2006. 

The feasibility study is scheduled to be finalised in the first quarter of 2007 
and subsequently submitted to the State Committee on Reserves and Resources for 

Omchak Joint Venture ("Omchak JV")

Through its subsidiaries the Omchak JV produced c.23,000oz of gold.  As almost 80% 
of the gold produced by the Omchak JV is from alluvial deposits, the majority of 
production occurs during the warmer second half of the year and the exceptionally 
cold weather in the area exacerbated the seasonality of the production. The Group's 
attributable share of production was 11,500oz. This was 32% less compared to the 
same period in the previous year due to the Group's previously announced decreased 
share in the Omchak JV, which was down from 65% to 50% in December 2005.  This 
decrease did not affect profitability of the Group because it was offset by an 
increased production at the higher-yielding Pokrovskiy mine.

OOO Zeyazoloto and OOO Noviye Tekhnologii, which were acquired by the Omchak JV 
in 2005, had a successful six months together producing in total c.1,447oz gold. 
Alongside their successful production activities, these companies were also involved 
in the acquisition of local licences for the right to explore and produce alluvial 
gold at local deposits. New licensed areas acquired in this process have confirmed 
reserves that are expected to yield a planned annual production of alluvial gold 
in the Amur region of an additional c.10,000oz gold per year starting in 2007 for 
some five years.

The Uduma deposit located in the Sakha Republic (Yakutia) was also acquired by 
Omchak in 2005. Evaluation works were carried out at this deposit in order to 
complete an audit of reserves and resources and produce a detailed production plan 
for 2007 and 2008 by the end of this year.  

At the Verkhne-Aliinskoe gold property in the Chita Region, acquired by Omchak JV 
in 2005, preliminary development and exploration continues including environmental 
studies, and topographical survey works concerning the reclamation of land in 
accordance with the conditions set out in the licence agreements.

Group Exploration and Development Report

The exploration and development report does not constitute a reserves and resources 
update for the Group, as the latter is provided each year in the second quarter 
of the year. The purpose of this report is to provide an update on the Group's 
active exploration activities in the extensive portfolio of license areas belonging 
to the Group.

Pokrovskiy deposit area and flanks

During the first half of 2006 all exploration works at the main Pokrovskiy deposit 
were concentrated on pit expansion and optimisation.  The previously discussed 
"ore bridge" or "saddle" between Glavnoye and Ozernoye ore bodies has been mined, 
thereby merging the two pits, and the potential for a pit expansion to the east 
has been confirmed.   The study to redesign the merged pit for expansion and deepening 
started in the first half of the year, and is expected to be completed before year 
end. The expected increase in reserves and resources by virtue of this expansion 
and deepening should be included in the year end reserve/resource review. 

Work on the flanks of Pokrovskiy was carried out both on inner (Pokrovka-2, 
Verkhne-Sergeevsky, Dalniy and Vodorazdelny zones) and outer (Zeltunak, Velikiye 
Luzhki, Proletarskiy) areas.  Licences covering the outer flanks of Pokrovskiy 
were acquired by the Group at the end of 2005.

Inner Flanks

Pokrovka-2 (fanglomerates)

Active exploration works have been launched on this area where an entirely new 
type of mineralisation in 'fanglomerates' (conglomerate rocks interpreted as flood 
deposits which have fanned out) was identified as a result of 2005 exploration 
works. Results of drilling and trenching on this area confirmed that these 
potentially constitute a large resource. A second significant mineralised zone 
that had previously been identified in the basement rock below the fanglomerates 
in the east of Pokrovka-2 has now been confirmed in a series of drill holes as 
a flat-lying structure at relatively shallow depths of 50-60m. Grades in two holes 
reach values of 3 - 25g/t, but many assays are still awaited from these holes.

Fanglomerate bulk sampling is to be done in extra large trenches - channels 5m 
deep and 15m wide, to provide representative samples during the second half of 2006.


During the first half of 2006 a significant north-south trending structure was 
explored. A series of drill holes drilled by the predecessors found gold (up to 
3-16g/t, with average likely to be 1.5-2g/t) and silver. This prospective zone 
extends below the fanglomerates southwards and is planned to be drilled by the 
Group in the second half of 2006.


A geochemical anomaly in the Dalniy area of the extreme north-west of the licence 
area is being explored, currently by trenching. A line of 6 holes have been drilled 
in this area and gold has been found in two of the holes. In the winter, once the 
ground is hard enough, it is intended to drive more trenches across this area.

To the south, between the Verkhne-Sergeevsky area and Pokrovka-1, a flat-lying 
gold-mineralised zone has been identified below the dacite sill. This could be 
significant as so far almost all mineralisation at Pokrovka has been above or 
within the sill. 14 holes have been drilled in this area, which should allow the 
definition of a new Russian category P1 resource to be given in next year's annual 
reserves and resources update.


This area is located south-west of Pokrovka-1, close to the Trans-Siberian railway 
line. A geochemical anomaly identified in 2005 was further investigated by trenching 
and drilling in the first half of the year. It has now been interpreted as a number 
of parallel southward-dipping thrusts with gold mineralisation, mostly low-grade 
but with isolated assays up to 3 and 4g/t. Further holes with a northward inclination 
are planned to be drilled here in the second part of 2006 in order to define 
intersections more precisely. Along with this, it is planned also to drill a series 
of shallow holes in order to explore an interpreted north-east south-west mineralised 

Outer flanks

Active exploration works in an outer set of prospects under a recently acquired 
licence ('Zheltunak') were launched in the first half of 2006. This licence covers 
a number of separate 'outer flanks' areas at distances of 5-15km from Pokrovka.
Zheltunak area

Geophysical and lithogeochemical studies have been completed and trenching is 
planned in the second half of 2006 to explore a mineralised zone trending south-east 
- north-west.

Old data from previous trench exploration indicates grades up to 40g/t in the 
north central area of the licence. The mineralisation is of classic volcanic-hosted 
epithermal type, and a series of shallow drill holes are planned to be drilled to 
confirm the earlier results.

Velikiye Luzhki

Geological and geochemical survey work has been completed, and a series of shallow 
drillhole sections are to be drilled. Because of soft ground conditions, further 
exploration work (in particular, trenching) is planned for the winter. Discoveries 
so far indicate the presence of mineralisation with grades up to 11.8g/t in isolated 
samples. Trench data from previous studies indicates intersections up to 7m at 
18g/t, and 14m at 2.26g/t, with many additional lower grade intersections.


This area is adjacent to the Trans-Siberian railway, opposite the Nadvigovy area 
in the south-west corner of the Pokrovskiy licensed area. 

Permission has now been received for exploration work to begin. Geological mapping 
has shown grey shales with 'rusty' alteration and silicification, and the limited 
data from previous work indicates gold grades up to 1.5g/t. However, structurally 
this area is prospective, lying on the intersection of a fault parallel to the 
Sergeevsky fault, the mineralised structure which passes through the central 
Pokrovka-1 area. Exploration work is to be launched in the second half of 2006.


During the first half of the year three new ore columns (Bakhmut 2, Yuzhnaya 
south and Yuzhnaya further south) earlier predicted by geochemical modelling were 
confirmed by deep drilling and one new column (Andreevskaya, located 1 km to the 
east of Yuzhnaya zone) was intersected. This brings the total number of columns 
up to 8 (three on Yuzhnaya, two on Promezhutochnaya, two on Bakhmut and new 
Andreevskaya) out of 22 identified by the geochemical model.

Further exploration works at Andreevskaya, Zapadnaya, Zvezdochka and Yuzhnaya 
zones confirmed existence of mineralisation and delivered promising results.  

The large open pit developed on the Promezhutochnaya zone has now been taken to 
a depth of 10m depth where coarse visible gold has been identified, similar to 
that identified on the first ore column at Bakhmut.  The excellent correlation 
between the predictive geochemical model and actual results bodes particularly 
well for the Andreevskaya zone where a predicted 2km eastwards extension has been 
confirmed in trenches, with a zone width of up to 20m indicated by shallow drillhole 

As part of the feasibility study, 6 metallurgical samples have been collected 
varying in size from 139 kilograms to 2 tonnes. Three of these are of primary 
ore, from drillholes, and three of oxidised ore, from trenches. These samples 
have been sent for analysis to Irgiredmet, a Russian research and project design 
scientific institution, and to the Tula institute. One set of results has been 
received from a trench oxide sample; the others are expected in the very near 

A new Micromine model on the three main ore zones was completed in June 2006, 
and the results from this will be included in the end of year reserve/resource 

During the first half of 2006, the State Committee on Reserves and Resources 
(the "GKZ") inspectors visited and reviewed exploration works at Pioneer 
undertaken by the Company's geologists.  This inspection was done in advance of 
the required submission to the GKZ of the full feasibility study documentation 
due in the first quarter of 2007. Inspectors noted the high quality of work 
undertaken and agreed with the geological interpretation of the deposit's 
mineralisation by the Company's Chief Geologist.     

The GKZ established that the resources should be estimated to a depth of 300m 
rather than the 200m hitherto assumed and a further recommendation to use a cut-off 
grade of 0.4g/t for the report was given which should yield an increase in reserves 
in absolute terms. This will require deeper drilling of some of the holes. The 
GKZ also expect to see some work to establish Russian Category C2 resources beyond 
the initial pit area, in zones Andreevskaya, Zapadnaya, Zvezdochka, and Yuzhnaya. 
With the exception of Yuzhnaya this will require additional work beyond that 
already planned.  

In the second half of 2006 exploration will be focused on Bakhmut and Promezhutochnaya 
which will form part of the basis of the Feasibility Study, due for completion at 
the end of the first quarter of 2007. This will then be submitted to the GKZ, 
along with Russian Category C2 estimates for significant sections of the Yuzhnaya, 
Andreevskaya, Zapadnaya and Zvezdochka zones outside of the planned initial pit 

Collection and processing of representative bulk samples of primary ore will 
also be undertaken in the second half of 2006 with a shaft to be sunk to perhaps 
50-60m depth from the pit base (at Bakhmut). Preparations for this have already 


During exploration/confirmation works on the deposit it was established that the 
mining licence area for the deposit encompasses two major gold deposits of differing 
geology and ore types:

•   The Diagonal zone, to the south of the east-western Malomir fault where 
    gold mineralisation is hosted by quartz veins and stockworks as well 
    as disseminated in crush zones, with associated pyrite and arsenopyrite.

•   The Quartzite zone where mineralisation, which was originally thought 
    to be a continuous low-grade dissemination within the granitoids, now 
    appears to be in the form of higher grade zones in both granitoids and 
    metasomatites, and associated with a series of crush zones: i.e. much 
    more similar to the main Diagonal zone mineralisation.

A new Micromine model for the central section of the Diagonal zone was started in 
the first half of the year and is expected to be completed in the second half of 
the year, and should allow the release of new JORC compliant resource estimates. 

Within the central zone, where revised and increased reserve of 28t of gold (from 
the previously estimated 22t) on a 400m length of the central part of Diagonal 
zone was reported in March, a large shallow open cut 220m x 300m in extent has 
been excavated, in order to establish the geometry and continuity of the ore zones. 
This has broadly confirmed the geological interpretation but has also yielded a 
favourable surprise in that a mineralised branch structure has been discovered 
which extends below the Diagonal thrust. This means that there is a possibility 
for mineralisation to be present below the thrust and within parallel known ore 

A further 5,000m of drilling and 5,000m of trenching are intended before the end 
of 2006 on the central Malomir licence and on the flanks of the Diagonal zone. 

Exploration has been carried out also on flanks at Malomir deposit with a 
geological report to be prepared by the first quarter of 2007. 

It has also been established (by trenching and wide spaced drilling) that the 
diagonal zone remains open to both the south west and north east. 

On the Quartzite zone, initial assay results from the first three trenches, have 
shown that the presence of the high-grade intervals located within areas of low 
grade material. 

Results so far include the following trench intersections:

•   Trench 202: 3 intersections - 19m at 3g/t, 5m at 2g/t, 1m at 7.7g/t

•   Trench 201: 2 intersections - 25m at 1+ g/t, 17m at 3g/t. Coarse visible 
    gold in quartz metasomatites was found.

An extensive trenching and drilling programme is scheduled for the second half 
of the year.


Latest exploration work on the deposit is disappointing, and it seems now that, 
although the original gold content of approximately 150,000oz of Russian Category 
C1 and C2 reserves was confirmed by the exploration works, there is little likelihood 
of this becoming a project of the size and quality which the Group is likely to 
exploit. Discussions are being held within the Group with a view to disposal of 
this asset.


The new importance of Malomir and the difficulty of equipment access on the 
rugged terrain of Tokur lowered the exploration priority for the deposit with the 
team of geologists and equipment transferred to the Malomir site.  However it is 
not expected that this will affect the Group's compliance with the terms of licences 
for the deposit. Currently manual trenching continues at the site.  


Acquired in 2005, this is a prospective area located south-east of Tokur and 
Voroshilovskoye deposits. Initially three prospective areas here have been identified.

Preliminary exploration work was started here in the first half of 2006 and a full 
scale exploration programme should proceed in the second half starting with trenching 
and drilling in the central area where, from old drillhole data, mineralisation 
is already known to extend to at least 150m depth. Russian category P1 resources 
of 5t gold (c.160,000oz), at an average grade of 5-6g/t, are received from a small 
central zone from old data, but the potential there is estimated by the Group's 
Chief Geologist for up to 20t.

Other Amur region projects   

Exploration at the Group's portfolio assets - Izvestkovaya Sopka, Adamikha, Gar II 
and Bryantinskaya - remains at a very early stage. Nevertheless, new data available 
at each is very encouraging in that gold mineralisation is being identified - in many 
cases with high-grade assays. Within a further 6 months, each of these four areas 
should yield substantial quantities of real trenching and drilling assay data, and 
an indication of the size of potential resources.  

Some of these licence areas could contain the next major Pioneer or Malomir. Hence, 
for the future organic growth of the company, even though completion of current 
exploration work at Pioneer, Malomir, and Pokrovskiy flanks has taken priority 
in order to achieve short-term targets, the exploration efforts on these licences 

Izvestkovaya Sopka   

An exploration licence for this area in the central Amur oblast, 150km east of 
Pokrovskiy Rudnik, was acquired in 2005. In the first half of 2006 detailed mapping 
including geochemical and geophysical (magnetic) surveys was completed over the 
whole licence area (4.5km2), which identified gold anomalies on the north side 
of the deposit.   

A number of ore bodies have been identified with the mineralisation currently 
open in all directions.

In the eastern area of the licence (zone Shirokinskaya) there are polymetallic 
massive sulphide ores (pyrhotite/magnetite/chalcopyrite/pyrite) associated with 
skarnoids, and coarse gold at grades of up to 2.2g/t.  

In the far south-western part of the licence area, a single trench (no.516) has 
intersected significant ore intervals (at 16.6g/t over 19m and 5.2g/t over 1m). 
The main fieldwork is scheduled to be finished by the end of 2006 with a report 
to be prepared in the first half of 2007 on preliminary exploration with 
recommendations on ongoing exploration and evaluation.

Gar II   

This is an exploration licence area of 92 km2 in the central Amur oblast 30km to 
the north-west from Izvestkovaya Sopka which was acquired by the Group in 2005. 
During the first half of 2006, trenching, shallow drilling and geochemistry were 
carried out. Within this area, lithogeochemistry has been done in two areas of 
10km2 in total. Trenching is continuing, and before the end of 2006 deep drilling 
is to start. 


This is an exploration licence area (with a total area of 240km2) located 40km 
east of Izvestkovaya Sopka and 190km east of Pokrovka, in the central Amur oblast 
and was acquired by the Group in 2005. So far only preliminary exploration work 
has been carried out. Trenching and drilling are due to start in the second half 
of 2006, though an initial 4 trenches are to be opened in the northern area 
imminently, together with a series of shallow mapping holes in an attempt to 
locate the hard-rock source of major placer gold deposits that start from this 

In the southern mineralised area epithermal quartz veins and stockworks in 
Cretaceous volcanics with gold grades up to 2g/t have been found.

Bryantinskiy (Solnechnoye)   

This licence area (with a total area of c.150km2) was acquired by the Group in 
2005. It is located in the far north of the Amur region. During the first half 
of 2006 a complete geochemical survey of the area was finalised indicating clear 
secondary gold and silver anomalies. There were also some trenches explored with 
gold assays resulting up to 9 - 15g/t. 

Drilling and trenching continued in this area during the summer despite the 
problems of soft ground. Deeper drilling is expected to commence in the second 
half of the year. A preliminary estimate of resources in the Bryantinskaya 
licence area is about 50t of gold (1.5moz).  A preliminary exploration report is 
scheduled to be produced in the first quarter of 2007.


During the first half of 2006 a report on the result of geological exploration 
with computation of the Russian reserves category C2 was produced and sent to 
Amur Regional Committee on Reserves and Resources for their consideration. The 
deposit is estimated (with some additional exploration) at up to 10t of gold 
(300,000oz) reserves or more. There is a further similar structure 3km to the 
north of the explored metamorphic zone which is planned for further exploration 
works in 2006.  

First production from the deposit is scheduled for the second half of 2007 at a 
production rate of 200kg, i.e. 6,000oz per annum.

Yamal Region Assets

Novogodnee Monto

During the first half of 2006 works on the Novogodnee Monto deposit were 
concentrated on the finalisation of a feasibility study and its submission to 
GKZ. It is expected that approval to start mining will be received by the end of 

The Petropavlovskoye deposit

This deposit is located 1km west of Novogodnee Monto and parallel to it. Extensive 
drilling carried out in 2005 to delineate the central portion of the deposit as 
well as to establish its northerly and southerly continuations was continued in 
the first half of 2006 by excavation in the central part of the deposit with the 
purpose of gaining an understanding of the geological structure of this zone. 
Information obtained from it shows a thick zone (50m - 200m wide) trending 
north-south, crossed by east-west quartz veins at intervals of 3-4m, containing 
high gold grades (7-10g/t, compared with an average of 1+ g/t for the zone as a 
whole). Knowledge of the presence of these 'ladder veins' helps greatly in 
planning further exploration of the zone. 


Within the Toupugol exploration area (near the western margin of the licence area, 
5km west from Novogodnee Manto), this year's exploration works have discovered a 
completely new area of lenses of magnetite ore similar to that at Novogodnee Monto; 
so far of unknown size, and with intersected gold grades up to 2.3 - 6g/t. Similar 
grades are seen in all of the magnetite ores found so far in this area. Exploration 
at this area of significant interest will be continued in the second half of the year. 
Yamalskaya Gornaya Kompaniya (YGK)   

Yamalskaya Gornaya Kompaniya holds a series of exploration licences in the Yamal 
region in a line both to the north and south of Novogodnee Monto, parallel to 
the river Ob. 

This is a range of assets in a variety of different geological settings, with 
potential for large base-metal and polymetallic resources, as well as significant 
precious-metal (gold, platinum group metals "PGM") potential to be explored.

Yarshor-Laptayeganskaya area

The licence area is 26.5km by 6km, located 20-30km north-east of the Novogodnee 
Monto deposit, along a thrust belt which contains metasomatised black slates 
intruded by beresitised granitoids, hence referred as "Malomir 2" by the Group's 
Chief Geologist because of the similarity of the geological setting. The zone is 
over 26km in length, and thus significantly larger than the known extent of Malomir. 
Assay data from a small number of samples indicate grades of up to 1g/t. However, 
the first set of new trenches have been completed with a number of samples containing 
visible coarse gold, hence the grades are likely to be considerably higher. There 
are also geological reasons to expect the presence of PGMs. 


The Ozernoye deposit consists of Bushveld-style ultrabasics with reefs of PGM 
mineralisation containing platinum, palladium, and also gold and silver. Potential 
by-product copper grades in sulphides are from 0.5-2.5%, and up to 2-5% vanadium 
is also reported. Individual reefs with disseminated sulphides are up to 5m in 
thickness. Individual zones with disseminated sulphides are 1,500-3,400m long 
with up to 50m outcrop wide. One zone so far explored is known to be continuous 
along strike for 1.5km and down dip for 200m, open in all directions. 

Russian Category P1 resources are 100,000oz of gold, 200,000oz of platinum and 
palladium, and 40,000t of copper, with potential resources estimated at up to 
1moz of gold, similar for platinum  and palladium, plus 2mt of copper.

Sibileiskaya area

This consists of skarns around a granitoid massif. Exploration drilling has started. 
One intersection so far has yielded a gold grade of 285g/t within the skarn. 
Further results are awaited.

Exploration work on the Toupugol/Khanmeishorskaya licence area continues; work 
at Petropavlovskoye is proceeding well, with increased understanding of the 
geology. Discovery of gold-bearing magnetite zones within the western Toupugol 
area is encouraging. It is expected that more detailed information will be 
available for the Group's annual update on exploration and development due to be 
announced during the first half of 2007.

Complex of Chemical Laboratories

Pokrovskiy laboratory

In April of 2006 a new automatic sample preparation complex from Hammersley 
(New Zealand) was installed which allowed for the capacity of the laboratory to 
be increased from 10,000 samples a month up to 12,000 samples a month. This 
laboratory is dedicated to analysis of samples from Pokrovskiy, Pokrovskiy 
flanks, Pioneer and Odolgo. 

Tokur laboratory 

In order to comply with the increased amount of exploration works at the Malomir 
deposit the assay capacity of this laboratory was doubled in May 2006 from 3,000 
up to 6,000 samples a month. This laboratory analyses samples from Tokur, Malomir 
and Voroshilovskoye.

Blagoveshensk laboratory

This laboratory has a planned capacity of 3,000 assays a month and 6,000 
geochemical samples a month.  At this laboratory in the first half of 2006 the 
development of the department of mineralogical analyses has been commissioned 
and work on the first stage has already commenced.


The Labytnangy laboratory has an installed capacity of 5,000 assays a month and 
3,000 geochemical samples a month.

Currently 100% of the Company's analytical requirements are fulfilled in its own 
laboratories. The analysis generally takes 1 month from the taking of the sample 
to receipt of the result.  

Gold Price/Treasury

The Group's average realised gold price for the period was US$573/oz, up 36% 
against US$422/oz during the first six months of 2005. The Russian rouble 
strengthened against the US Dollar by 6% during the Period and was RuR27.0789/US$ 
at 30 June 2006 (RuR28.04/US$ - 30/6/05, RuR28.78/US$ - 31/12/05). The US$3.9m 
of exchange gain (versus US$0.3m of exchange loss in the comparable period of the 
last year) the Group enjoyed is partially a result of a more efficient treasury 
policy. The Group has a policy of no long term gold forward sales or hedging.

Conference Call

A conference call to discuss the announcement will be hosted by Peter Hambro, 
Executive Chairman, Alexey Maslovskiy, Director, Business Development and Andrey 
Maruta, Finance Director, Peter Hambro Mining plc, on Thursday, 21 September 2006 
at 14:00 UK time. 

Details to access the conference call are as follows:
The Dial-in number in the UK will be: 0845 245 3471 and internationally will be 
+44 (0) 1452 542 300 with the Conference ID in both cases: 6013254.

Replay will be available after the call has finished for seven days on 
0845 245 5205 in the UK and on +44 (0) 1452 55 00 00 internationally with the 
access code in both cases 6013254#.


Peter Hambro Mining Plc                                 +44 (0) 20 7201 8900
Alya Samokhvalova, Director of External Communication
Mariana Adams, Investor Relations

David Simonson / Tom Randell                            +44 (0) 20 7653 6620
Maria Suleymanova                                       +44 (0) 798 528 2492

In this interim report we present financial items such as "cash operating costs", 
"total cash costs" and "total production costs" that have been determined using 
industry standards as per the Gold Institute and are not measures under generally 
accepted accounting principles in the United Kingdom ("UK GAAP"). An investor 
should not consider these items in isolation or as alternatives to any measure 
of financial performance presented in accordance with UK GAAP either in this 
document or in any document incorporated by reference herein.

While the Gold Institute has provided definitions for the calculation of "cash 
operating costs", "total cash costs" and "total production costs", the definitions 
of certain non-GAAP financial measures included herein may vary significantly 
from those of other gold mining companies, and by themselves do not necessarily 
provide a basis for comparison with other gold mining companies. However, we 
believe that total cash costs and total production costs in total by mine and 
per ounce by mine are useful indicators to investors and management of a mine's
performance because they provide a very useful indication of a mine's profitability, 
efficiency and cash flows. They also show the trend in costs as the mine matures 
over time and on a consistent basis. These costs can also be used as a benchmark 
of performance to allow for comparison against other mines of other gold mining 

                            PETER HAMBRO MINING plc


                      FOR THE PERIOD ENDED 30th JUNE 2006

                           Registered number: 4343841

                          Independent Review Report to

                            PETER HAMBRO MINING plc

We have been instructed by the Company to review the financial information of
Peter Hambro Mining plc for the period ended 30 June 2006 which comprises the
Summarised Consolidated Profit and Loss Account, Summarised Consolidated Balance
Sheet, Summarised Consolidated Statement of Cash Flows, and the related notes 1
to 19. We have read the other information contained in the interim report and
considered whether it contains any apparent misstatements or material
inconsistencies with the financial information.

This report is made solely to the Company in accordance with guidance contained
in Bulletin 1999/4 "Review of interim financial information" issued by the
Auditing Practices Board. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the Company, for our work,
for this report, or for the conclusions we have formed.

Directors' responsibilities

The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the AIM
Rules of the London Stock Exchange which require that the accounting policies
and presentation applied to the interim figures should be consistent with those
applied in preparing the preceding annual accounts except where any changes, and
the reasons for them, are disclosed.

Review work performed

We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of Group management and applying
analytical procedures to the financial information and underlying financial data
and based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with International Standards on Auditing (UK and
Ireland) and therefore provides a lower level of assurance than an audit.
Accordingly we do not express an audit opinion on the financial information.

Review conclusion

On the basis of our review we are not aware of any material modifications that
should be made to the financial information of Peter Hambro Mining plc as
presented for the six months ended 30 June 2006.

St. Paul's House,                                 MOORE STEPHENS LLP
Warwick Lane, London                              Registered Auditor
EC4M 7BP                                       Chartered Accountants

21 September 2006

                             PETER HAMBRO MINING plc

                Summarised Consolidated Profit and Loss Account
                        for the period ended 30 June 2006

                             (expressed in US $'000)

                                     Six months to  Six months to      Year to
                                      30 June 2006   30 June 2005  31 December 
                                             $'000          $'000        $'000

Turnover: group and share
of joint ventures                           63,108         42,311      114,579
Less: share of joint
ventures' turnover                          (4,084)        (6,034)     (23,330)
                                          ----------     ----------  -----------
Group turnover                    2         59,024         36,277       91,249

Operating profit                  3         19,890          8,022       17,490

Profit on disposal of
interest in business                             -              -        3,822
Loss on disposal of
interest in joint venture                        -              -         (413)
Share of operating profit
of joint ventures                              (88)         1,040        2,324
Amortisation of goodwill
in joint ventures                             (413)          (514)      (1,046)

Interest payable and
similar charges                   4         (6,181)          (932)      (5,953)

Interest receivable and
similar income                               4,440            466        3,807
                                          ----------     ----------  -----------

Profit on ordinary activities
before taxation
Group                                       18,350          7,795       19,194
Joint ventures                                (702)           287          837
                                          ----------     ----------  -----------
                                            17,648          8,082       20,031

Taxation on profit on
ordinary activities               5         (6,511)        (2,147)      (6,032)
                                          ----------     ----------  -----------

Profit on ordinary activities
after taxation
Group                                       11,973          6,470       13,985
Joint ventures                                (836)          (535)          14
                                          ----------     ----------  -----------
                                            11,137          5,935       13,999

Minority interests                             (19)           (41)        (744)
                                          ----------     ----------  -----------

Profit retained for the
period                           13         11,118          5,894       13,255
                                          ==========     ==========  ===========

Earnings per ordinary
share                            17         $0.140         $0.079        $0.17
Diluted earnings per share       17         $0.138         $0.075        $0.17

There are no recognised gains or losses other than those included in the profit
and loss account.

The accompanying notes are an integral part of this profit and loss account.

                            PETER HAMBRO MINING plc
            Summarised Consolidated Balance Sheet as at 30 June 2006
                             (expressed in US $'000)

                                                30 June 31 December    30 June
                                                   2006        2005       2005
                                                  $'000       $'000      $'000
Fixed Assets
Intangible assets
Goodwill                                           (176)       (176)    (2,953)
Mineral properties                              102,323     102,231     79,675
Capitalised exploration and
development expenditure                          47,447      30,555     15,961
Tangible assets
Property, plant and equipment                    84,977      74,959     66,332

Investments                               6         764         448        561
Investments in joint ventures:
Goodwill                                          1,129       1,467      2,428
Share of gross assets                            21,952      17,313     25,607
Share of gross liabilities                      (13,219)     (8,171)   (14,622)
                                                 --------    --------   --------
                                                245,197     218,626    172,989
Current Assets
Stock and work in progress                       33,538      23,521     23,430
Debtors                                7, 10     38,296      31,273     22,808
Cash at bank and in hand                 10     142,284     144,534     24,865
                                                 --------    --------   --------
                                                214,118     199,328     71,103
Creditors, amounts falling due
within one year                        8, 10    (31,873)    (18,909)   (14,453)
                                                --------    --------   --------

Net Current Assets                              182,245     180,419     56,650
                                                --------    --------   --------

Total Assets less Current
Liabilities                                     427,442     399,045    229,639

Creditors, amounts falling due after
more than one year                     9, 10   (134,407)   (136,170)    (3,911)
Provision for liabilities and
charges                                  11     (19,542)    (18,426)    (2,783)
                                                --------    --------   --------
Net Assets                                      273,493     244,449    222,945
                                                ========    ========   ========

                            PETER HAMBRO MINING plc
      Summarised Consolidated Balance Sheet (continued) as at 30 June 2006
                             (expressed in US $'000)

                                              30 June  31 December     30 June
                                                 2006         2005        2005                           
                                                $'000        $'000       $'000
Capital and Reserves
Share capital                          12       1,298        1,273       1,220
Share premium                          12      17,797            -     168,946
Other distributable reserve                   176,722      176,722           -
Merger reserve                                  8,755        8,755       8,755
Contingent reserve on acquisition               3,152        3,152       6,304
Share incentive reserve                             -            -          40
Equity reserve on bonds                         1,583        1,583           -
Profit and loss account                        59,558       48,440      35,486
                                             --------     --------    --------
Equity shareholders' funds             13     268,865      239,925     220,751
Minority interests                              4,628        4,524       2,194
                                             --------     --------    --------
                                              273,493      244,449     222,945
                                             ========     ========    ========

The accompanying notes are an integral part of this balance sheet.

These financial statements were approved by the Directors on 21 September 2006

P.C.P. Hambro

                            PETER HAMBRO MINING plc
                Summarised Consolidated Statement of Cash Flows
                        for the period ended 30 June 2006

                            (expressed in US $'000)

                               ------------       ----------          ----------
                       Note   Six months to    Six months to             Year to         
                               30 June 2006     30 June 2005         31 December
                                    $ '000s          $ '000s             $ '000s
                               ------------       ----------          ----------

Net cash inflow from   
operating activities     14        11,545             6,968              15,719

Net cash outflow from
returns on investments             
and servicing of finance           (4,357)           (4,427)             (4,303)

Taxation paid                      (3,894)           (1,604)             (3,401)

Capital expenditure               (32,397)          (20,893)            (40,529)

Financial investment                3,021             5,041              13,708

Acquisitions and disposals           (991)              143             (10,838)
                                   -------            ------             -------

Cash outflow before         
financing                         (27,073)          (14,772)            (29,644)

Cash inflow from increase 
in debt and lease 
financing             15, 16        7,001              (940)            126,987

Net receipt from
issuing shares                     17,822            14,723              21,337
                                  -------            ------             -------
(Decrease)/increase in
cash at bank and in hand           (2,250)             (989)            118,680
                                  =======             ======            =======

                            PETER HAMBRO MINING plc

                  Summarised Consolidated Financial Statements

                       for the period ended 30 June 2006


1. Principal Accounting Policies

a)       Basis of preparation

The interim financial statements have been prepared on the basis of the
accounting policies expected to apply for the financial year to 31 December 2006
and are consistent with the accounting policies set out in the Group's financial
statements for the year ended 31 December 2005. The interim financial statements
are unaudited but have been reviewed by the auditors and their report is set out
on page 1. The interim financial statements do not comprise statutory accounts
within the meaning of Section 240 of the Companies Act 1985. The comparative
figures for the year ended 31 December 2005 are derived from the statutory
accounts filed with the Registrar of Companies. The auditors' report on the
statutory accounts was unqualified and did not contain a statement under Section
237 of the Companies Act 1985.

b)       Basis of consolidation

The financial statements consist of Peter Hambro Mining plc (the "Company") and
its respective subsidiary undertakings (the "Group"). On the acquisition of a
business, including an interest in a subsidiary undertaking, fair values are
attributed to the Group's share of net separable assets. Where the cost of
acquisition exceeds the fair values attributable to such net assets the
difference is treated as purchased goodwill and capitalised in the balance sheet
in the year of acquisition.

c)       Comparative figures

Certain comparative figures have been restated to be consistent with the current
period's presentation.

2. Turnover

Turnover represents the earnings from the provision of goods and services within
the Group's ordinary activities, exclusive of Value Added Tax.                                

3. Operating profit

                                                    30 June         30 June
                                                       2006            2005
                                                      $'000           $'000
                                                        ---             ---

Operating profit                                     19,890           8,022
                                                   --------        --------

                                                     19,890           8,022
                                                   --------        --------

Operating profit includes a foreign exchange gain of US$3.9 million arising on
the translation of the Group's results into US dollars (six months of 2005:
foreign exchange loss US$0.3 million). Also refer to the monetary assets and
liabilities analysis in Note 10.

4. Interest Payable and Similar Charges
                                                  30 June 2006    30 June 2005
                                                         $'000           $'000

Finance lease charge                                        12              53
Bank loan interest                                         309             564
Bonds interest payable                                   4,988               -
Bonds issue finance costs amortisation                     410               -             
Other loan interest                                        106              93
Share of joint ventures' interest payable and
similar charges                                            369             239
                                                        --------        --------

                                                         6,194             949
Less finance cost capitalised                              (13)            (17)
                                                        --------        --------

                                                         6,181             932
                                                        --------        --------

5. Taxation on profit on ordinary activities

                                                  30 June 2006    30 June 2005
                                                         $'000           $'000

Current tax:
Foreign tax (24%)                                        5,283             765
                                                         -------         -------

Total current tax                                        5,283             765
                                                         -------         -------

Deferred tax:
Origination and reversal of timing differences           1,094             561
                                                         -------         -------

Total deferred tax                                       1,094             561
                                                         -------         -------

Tax related to joint venture Omchak
Profit tax (24%)                                             8             207
Deferred tax charge                                        126             614
                                                         -------         -------
                                                           134             821
                                                         -------         -------
Tax related to joint venture Rudnoye
Profit tax (24%)                                             -               -
                                                         -------         -------
                                                             -               -
                                                         -------         -------

Tax on profit on ordinary activities                     6,511           2,147
                                                         -------         -------

6. Investments

                                                        30 June    31 December
                                                           2006           2005
                                                          $'000          $'000

Investments - other                                         708            447
Shares in subsidiaries and joint ventures                    56              1
                                                         --------      ---------

                                                            764            448
                                                         --------      ---------

The Company and the Group have the following material subsidiaries and other
significant investments, which were consolidated in these financial statements.

 Principal          Country of      Principal           Principal      Effective
 subsidiary        incorporation    activity           country of     proportion
 and joint                                              operation     of shares
  venture                                                                held

Held directly by the Company

Eponymousco Ltd   United Kingdom   Holding Company    United Kingdom     100%

Resources  Ltd    United Kingdom   Holding Company    United Kingdom     100%

Peter Hambro
Mining Group
Finance Ltd         Guernsey       Finance Company    United Kingdom     100%

Yamal Holdings Ltd   Cyprus        Holding Company        Cyprus         100%

Peter Hambro 
Mining (Cyprus) Ltd  Cyprus        Holding Company        Cyprus         100%

ZAO Management            
Company PHM          Russia        Holding Company        Russia         100%

                                   exploration and
OOO Olga              Russia            production        Russia         100%

                                   exploration and
OAO Pokrovskiy Rudnik Russia            production        Russia         98.6%

ZAO ZRK Omchak                     exploration and
(Joint Venture)       Russia            production        Russia          50%
6. Investments (continued)

Principal            Country of          Principal      Principal      Effective
subsidiary and    incorporation           activity     country of  proportion of
joint venture                                           operation    shares held

Held indirectly via 100% owned subsidiaries

OOO Tokurskiy                     exploration and
Rudnik                  Russia         production        Russia            100%
                                  exploration and   
OOO GRK Victoria        Russia         production        Russia            100%
                                  exploration and
OAO ZDP Koboldo         Russia         production        Russia           91.7%
                                      Project and 
ZAO PHM Engineering     Russia           services        Russia             75%
OOO Obereg              Russia           services        Russia            100%
                                  exploration and
OOO Spanch              Russia         production        Russia            100%
                                  exploration and
ZAO Amur Dore           Russia         production        Russia            100%

6. Investments (continued)

Principal subsidiary      Country of    Principal     Principal        Effective
and joint venture      incorporation     activity    country of    proportion of
undertakings                                          operation      shares held

Held indirectly via Pokrovskiy Rudnik
                                  exploration and
OAO YamalZoloto   Russia               production        Russia           98.7%
OOO NPGF Regis    Russia                     work        Russia             51%
ZAO Rudnoye                       exploration and
(Joint Venture)   Russia               production        Russia             49%
OOO Kapstroy      Russia             Construction        Russia           98.7%

OAO Yamalskaya              Construction and Gold
Gornaya Kompania                  exploration and
("YGK")           Russia               production        Russia           73.9%

                                  exploration and     
ZAO Region        Russia               production        Russia           98.7%
Held indirectly via YGK
                                  exploration and
ZAO SeverChrome   Russia               production        Russia           73.9%

In March 2006 Peter Hambro Mining (Cyprus) Ltd acquired 100% of OOO Spanch and
ZAO Amur Dore for a consideration of US$9,000 and US$1,085,000 respectively. OOO
Spanch and ZAO Amur Dore have been consolidated in these financial statements.

In June 2006 YGK set up a wholly owned company ZAO SeverChrome. ZAO SeverChrome
has been consolidated in these financial statements.

ZAO Region was set up in 2004 but its operational activity began in 2006. ZAO
Region has been consolidated in these financial statements.

                            PETER HAMBRO MINING plc
                  Summarised Consolidated Financial Statements
                        for the period ended 30 June 2006                                        
                                Notes (continued)

7. Debtors
                                                     30 June       31 December
                                                        2006              2005
                                                       $'000             $'000

Prepayments                                           11,410             8,950
VAT recoverable                                       13,712             9,480
Other debtors                                          7,276             5,630
Interest accrued                                       4,715             1,913
Due from Hainault Ltd                                      -             4,000
Due from Rudnoye joint venture                         1,070             1,007
Loans issued                                             113               293
                                                      --------         ---------

                                                      38,296            31,273
                                                      --------         ---------

8. Creditors, amounts falling due within one year

                                                        30 June    31 December
                                                           2006           2005
                                                          $'000          $'000

Trade creditors                                           2,835          4,139
Advances from customers                                   2,590              -
Tax liability                                             1,294          1,174
Finance lease liabilities                                    50            243
Accrued interest on Bonds issued                          3,879          3,879
Short term loans                                         12,524            174
Short term element of long term loans                       316          3,222
Due to former shareholders of subsidiary                    115              -
Other creditors                                           8,270          6,078
                                                         --------      ---------

                                                         31,873         18,909
                                                         --------      ---------

9. Creditors, amounts falling due after more than one year

                                                     30 June       31 December
                                                        2006              2005
                                                       $'000             $'000

Long term borrowing                                        -             2,250
Guaranteed Convertible Bonds                         134,407           133,920
                                                     --------         ---------

                                                     134,407           136,170
                                                     --------         ---------

In August 2005 the Group issued US$140 million of convertible bonds due in 2010
(the "Bonds"). The Bonds were issued at par by the Company's wholly owned
subsidiary Peter Hambro Mining Group Finance Ltd and are guaranteed by the
Company. The Bonds carry a coupon rate of 7.125% payable semi-annually in
arrears and can be converted into fully paid ordinary shares of 1p each of the
Company at the price of 756 p per share. If not converted or previously redeemed
the Bonds will be redeemed at par on or about 11 August 2010.

10. Monetary assets and liabilities

                                                        30 June    31 December
                                                           2006           2005
                                                          $'000          $'000

Debtors - US dollar                                       4,242          5,827
Debtors - Russian rouble                                 33,769         25,055
Debtors - GBP                                               285            391
Cash - US dollar                                        101,994        124,929
Cash - Russian rouble                                    32,728         15,409
Cash - GBP                                                7,562          4,196
                                                         --------      ---------

                                                        180,580        175,807
                                                         --------      ---------

Monetary assets - US dollar                             106,236        130,756
Monetary assets - Russian rouble                         66,497         40,464
Monetary assets - GBP                                     7,847          4,587
                                                         --------      ---------

                                                        180,580        175,807
                                                         --------      ---------

Creditors (short and long-term) - US dollar             139,161        143,772
Creditors (short and long-term) - Russian
rouble                                                   26,340          8,844
Creditors (short and long-term) - GBP                       779          2,463
                                                         --------      ---------

                                                        166,280        155,079
                                                        --------      ---------

The Russian rouble strengthened against the US Dollar by 6% during the first six
months of 2006 and was RuR27.08/US$ at 30 June 2006 (RuR28.78/US$ - 31/12/05).

11. Provision for liabilities and charges

                                                          30 June  31 December
                                                             2006         2005
                                                            $'000        $'000

Provision for restoration and
closing costs                                                 193          171
Deferred tax provision                                      4,349        3,255
RBS holders                                                15,000       15,000
                                                           --------  -----------

                                                           19,452       18,426
                                                           --------  -----------

Provision at 1 January                                     18,426        2,182

Charge for restoration cost                                    22           43
Deferred tax charge in profit and
loss account for period (Note 5)                            1,094        1,182
Deferred tax as a result of
acquisition                                                     -           19
Addition (RBS holders) *                                        -       15,000
                                                           --------  -----------

Provision at period end                                    19,542       18,426
                                                           --------  -----------

11. Provision for liabilities and charges (continued)

* One of the Company's subsidiaries, Pokrovskiy Rudnik, set up a Reserve Bonus
Scheme (the "Scheme") for certain senior Group executives of that company. The
Scheme was never fully implemented. Under the scheme participants were to be
awarded freely transferable 'Scheme units' at the end of each year from 2002 to
2012 based on US$5 per ounce of gold added to the designated reserves for the

Agreement has been reached with those entitled to participate in the Scheme (the
"Eligible Persons") for the Scheme not to proceed. The Independent Directors,
being Sir Rudolph Agnew, Peter Hill-Wood and Philip Leatham, having taken
professional advice and consulted with the Company's nominated adviser, have
agreed that the sum of US$15,000,000 in aggregate (the "Scheme Payment") is fair
compensation to the Eligible Persons for the Scheme not proceeding. The
Independent Directors also considered that this payment is less than the cost to
the Group (as determined by reference to the estimated net present value of the
ongoing payment obligations for the Company under the Scheme). The sum of
US$15,000,000 was subsequently paid in August 2006.

12. Share Capital

Ordinary shares                                  30 June 2006  31 December 2005
                                                          ---               ---          
                                                        $'000             $'000
                                                          ---               ---
Allotted, called up and fully paid:
At the beginning of the period                          1,273             1,193
Contingent shares issued in
relation to acquisition of Peter
Hambro Mining (Cyprus) Ltd                                  -                13
Shares issued in relation to
acquisition of C shares of
Eponymousco Ltd                                             -                40
Other new issues                                           25                27
                                                     --------         ---------
At the end of the period                                1,298             1,273
                                                     --------         ---------

Number of shares (par value £0.01)                     No'000           No'000

Authorised                                            100,000           100,000
                                                     --------         ---------

Issued at the beginning of the
period                                                 78,957            73,999
Contingent shares issued in
relation to acquisition of Peter
Hambro Mining (Cyprus) Ltd                                  -               750
Shares issued in relation to
acquisition of C shares of
Eponymousco Ltd                                             -             2,759
Other new issues                                        1,449             1,449
                                                     --------         ---------
At the end of the period                               80,406            78,957
                                                     --------         ---------

On 18 April 2006 the Company issued 1,448,545 ordinary shares at a price of
£6.875 per share pursuant to a Share Option Agreement with the International
Finance Corporation (the "IFC"). As a result of this transaction a share premium
of US$17.8m was created.

13. Equity shareholders' funds

                                          30 June 2006        31 December 2005
                                                 $'000                   $'000
                                                   ---                     ---

Opening balance                                239,925                 200,134
Issue of share capital                          17,822                  28,145
Issue of contingent shares                           -                  (3,152)
Equity reserve on bonds                              -                   1,583
Share incentive reserve                              -                     (40)
Profit for the period                           11,118                  13,255
                                              --------               ---------

                                               268,865                 239,925
                                              --------               ---------

The availability of the Group's reserves for distribution will be determined, to
the extent that they include reserves held in the Russian subsidiaries and joint
venture undertakings, by applicable legislation in Russia and in accordance with
their statutory financial statements, which are prepared in accordance with
Russian accounting regulations. These differ significantly from UK GAAP. The
distributable reserves may therefore differ significantly from the figure shown

14. Net Cash Inflow from Operating Activities

                                                 30 June 2006     30 June 2005
                                                        $'000            $'000
Cash received from customers                           61,214           36,366
Cash paid to suppliers and employees                  (36,761)         (21,446)
Other proceeds                                            409               34
Other expenses                                        (13,317)          (7,986)
                                                      ---------        ---------
Net cash inflow from operating activities              11,545            6,968
                                                      ---------        ---------

15. Reconciliation of Net Cash Flow to Movement in Net Debt

                                                                  30 June 2006

Decrease in cash at bank and in hand                                    (2,250)
Cash inflow from increase in debt and lease financing                   (7,001)
Change in net debt resulting from cash flow                             (9,251)

Bonds issue cost amortisation                                             (487)
Movement in net debt in the period                                      (9,738)
Net debt at 1 January                                                    4,725
Net debt at 30 June                                                     (5,013)

16. Analysis of Net Debt

               At 1 Jan. 06  Cash Flow Other non-cash  Exchange  At 30 June 06
                                              changes  movement
                      $'000      $'000          $'000     $'000          $'000
                      -------    -------        -------  --------       --------

Cash in hand
and at the bank     144,534     (2,250)             -         -        142,284
Debt due
within one year        (174)   (12,350)             -         -        (12,524)
Debt due after     
one year           (140,000)         -              -         -       (140,000)
Less equity
component             1,583          -              -         -          1,583
Bonds issue
cost capitalised      4,497          -           (487)        -          4,010
                     -------    -------        -------  --------       --------
Net Cash pre
leasing /
sales & lease
back                 10,440    (14,600)          (487)        -         (4,647)
                     -------    -------        -------  --------       --------
Finance leases
/ sales &
lease back           (5,715)     5,349              -         -           (366)
                     -------    -------        -------  --------       --------

Net Cash inc.
leasing               4,725     (9,251)          (487)        -         (5,013)
                     -------    -------        -------  --------       --------

17. Earnings per ordinary share

                              Six months to     Six months to          Year to
                               30 June 2006      30 June 2005 31 December 2005
                                      $'000             $'000            $'000
Profit for the period US$'000        11,118             5,894           13,255
Weighted average number of
ordinary shares                  79,543,972        74,618,249       76,618,392
Earnings per ordinary share          $0.140            $0.079            $0.17
                                  ---------         ---------        ---------
Weighted average number of
ordinary shares                  79,543,972        74,618,249       76,618,392
C shares                                  -         2,759,368                -
Contingent shares                   750,000         1,500,000          750,000
                                  ---------         ---------        ---------
Weighted average number of
diluted shares                   80,293,972        78,877,617       77,368,392
                                  ---------         ---------        ---------
Diluted earnings per share           $0.138            $0.075           $0.017
                                  ---------         ---------        ---------

18. Business segment information

               Gold mining    Construction and  Exploration and     Corporate         Consolidated
                                other services       evaluation
             ------    ------   ------  ------   ------   ------   ------  ------    ------    ------
            6m 2006   6m 2005  6m 2006 6m 2005  6m 2006  6m 2005  6m 2006 6m 2005   6m 2006   6m 2005
              $'000     $'000    $'000   $'000    $'000    $'000    $'000   $'000     $'000     $'000
             ------    ------   ------  ------   ------   ------   ------  ------    ------    ------
Gold sales   51,477    35,455        -       -        -        -        -       -    51,477    35,455
Silver sales    286        63        -       -        -        -        -       -       286        63
sales             -         -    6,447     473      814      286        -       -     7,261       759
sales             -         -    3,244     384    3,969    1,179    3,212     961    10,425     2,524
             ------    ------   ------  ------   ------   ------   ------  ------    ------    ------
Subtotal     51,763    35,518    9,691     857    4,783    1,465    3,212     961    69,449    38,801
             ------    ------   ------  ------   ------   ------   ------  ------    ------    ------
sales)            -         -   (3,244)   (384)  (3,969)  (1,179)  (3,212)   (961)  (10,425)   (2,524)
             ------    ------   ------  ------   ------   ------   ------  ------    ------    ------
Total group
turnover     51,763    35,518    6,447     473      814      286        -       -    59,024    36,277
             ======    ======   ======  ======   ======   ======   ======  ======   =======    ======

18. Business segment information (continued)

               Gold mining     Construction and    Exploration and       Corporate         Consolidated
                                 other services         evaluation
             ------    ------    ------  ------    ------   ------    ------   ------    ------    ------
            6m 2006   6m 2005   6m 2006 6m 2005   6m 2006  6m 2005   6m 2006  6m 2005   6m 2006   6m 2005
              $'000     $'000     $'000   $'000    $'000     $'000     $'000    $'000     $'000     $'000
             ------    ------    ------  ------    ------   ------    ------   ------    ------    ------
Net operating expenses
expenses     18,738    16,208     6,689     418     1,011    1,117     6,273    3,152    32,711    20,895
expenses          -         -     2,804     368     3,853      838     1,287      961     7,944     2,167
Transport and
refining costs  578       365         -       -         -        -         -        -       578       365
Royalties     3,308     2,115         -       -         -        -         -        -     3,308     2,115
amortisation  4,716     4,012       165       7       104       12       580      476     5,565     4,507
             ------    ------    ------  ------    ------   ------    ------   ------    ------    ------
Subtotal     27,340    22,700     9,658     793     4,968    1,967     8,140    4,589    50,106    30,049
             ------    ------    ------  ------    ------   ------    ------   ------    ------    ------
sales)            -         -    (2,804)   (368)   (3,853)    (838)   (1,287)    (961)   (7,944)   (2,167)
Total group
expenses     27,340    22,700     6,854     425     1,115    1,129     6,853    3,628    42,162    27,882
             ------    ------    ------  ------    ------   ------    ------   ------    ------    ------
result       24,423    12,818      (407)     48      (301)    (843)   (6,853)  (3,628)   16,862     8,395
             ======    ======    ======  ======    ======   ======    ======   ======    ======    ======
(gain)/loss                                                                              (3,855)      295
                                                                                         ------    ------
expenses                                                                                    827        78
                                                                                         ------    ------
profit                                                                                   19,890     8,022
             ------    ------    ------  ------    ------   ------    ------   ------    ======    ======
operating      (501)      456         -       -         -        -         -        -      (501)      456
result       ------    ------    ------  ------    ------   ------    ------   ------    ------    ------
profit after
JVs                                                                                      19,389     8,478
                                                                                         ------    ------
expenses)                                                                                (6,181)     (932)
Interest and
similar income                                                                            4,440       536
taxes)                                                                                   (6,511)   (2,147)
interest)                                                                                   (19)      (41)
                                                                                         ------    ------
retained for
the period                                                                               11,118     5,894
========     ======    ======    ======  ======    ======   ======    ======   ======    ======    ======

18. Business segment information (continued)

                     Gold mining     Construction and    Exploration and        Corporate           Consolidated
                                       other services       evaluation
                  ------    ------    ------   ------    ------    ------     ------    ------     ------     ------
                 6m 2006   6m 2005  6m 2006   6m 2005   6m 2006   6m 2005    6m 2006   6m 2005    6m 2006    6m 2005
                   $'000     $'000    $'000     $'000     $'000     $'000      $'000     $'000      $'000      $'000
                  ------    ------    ------   ------    ------    ------     ------    ------     ------     ------
Segment assets   165,236    97,146    12,786    1,795    95,642    61,681    175,789    70,057    449,453    230,679
Group share of
gross assets
in JVs            23,081    28,035         -        -         -         -          -         -     23,081     28,035
                 -------    ------    ------   ------    ------    ------    -------    ------    -------    -------
total assets     188,317   125,181    12,786    1,795    95,642    61,681    175,789    70,057    472,534    258,714
                 -------    ------    ------   ------    ------    ------    -------    ------    -------    -------

liabilities       26,051    17,363     1,895    1,580     3,247     1,241    159,257     3,157    190,450     23,341
Group share of
liabilities in
JVs               13,219    14,622         -        -         -         -          -         -     13,219     14,622
                 -------   -------    ------   ------    ------    ------    -------    ------    -------    -------
liabilities      39,270    31,985     1,895    1,580     3,247     1,241    159,257     3,157    203,669     37,963
                 -------   -------    ------   ------    ------    ------    -------    ------    -------    -------

expenditures     22,936    16,288       227      234     8,937     3,623        297       748     32,397     20,893
                =======   =======    ======   ======    ======    ======    =======    ======    =======    =======

19. Post balance sheet events

An additional c.5,300 oz of gold which had been produced during the first half
was refined and sold in the week following the period end. The Group accounts
for gold that has yet to be processed and sold at the lower of cost or net
realisable value. Had this gold been refined and sold in the previous week,
first half net profit would have been about US$1.5 million higher.

As previously disclosed under Note 11 the amount of US$15,000,000 due to the RBS
holders was subsequently paid in August 2006.

Under the terms of the acquisition agreement of Peter Hambro Mining (Cyprus)
Ltd, Peter Hambro Mining plc issued 750,000 shares to Reagrove Services Ltd in
July 2006.

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

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