24th Apr 2006 07:02
Peter Hambro Mining PLC24 April 2006 Preliminary results for the year ended 31 December 2005 Peter Hambro Mining PLC ("PHM" or the "Group") announces its preliminary resultsfor the year ended 31 December 2005. Financial Highlights: US$ '000 2005 2004 change-------------------------- ---------- --------- --------Turnover (inc. share of Joint Ventures) 114,579 85,502 +34%Operating Profit 17,490 22,703 -23%Retained Profit for the Year 13,255 15,318 -13%Earnings per ordinary share (US$) 0.17 0.22 -23%Shareholders' Funds 239,925 200,134 +20%Net Cash pre leasing / sale & lease back 10.4 21.7 -52% Operating Highlights 2005 2004 change-------------------------- ---------- --------- --------Attributable Gold Production 249,000 oz 209,000 oz +19%GIS Cash Operating Costs (US$/oz) 125.4 106.9 +17%GIS Total Cash Costs (US$/oz) 158.7 134.7 +18% Chairman's Statement: - "The Group has had another excellent year with production growth and increasesin the quality and quantity of the Group's reserve and resource base. Asindicated in our trading update in March 2006, inflationary pressures on ourinput costs and accounting items have resulted in somewhat lower earnings pershare than we had hoped for. "Total attributable gold production increased by nearly a fifth and wasfractionally ahead of forecast. Pokrovskiy production increased by 21% andcontributions from new assets now make up 6% of the total. The average pricereceived for gold was US$442 / oz during 2005, a 10% increase on that achievedin 2004. The market price today is more than US$620 /oz. "The Group's development and exploration activities were concentrated onproviding the understanding of the gold-in-the-ground necessary to meet our "onemillion ounce per year" production target for 2009. This includes explorationwork to reclassify appropriate 'less-certain' P category resources into'better-defined' C category reserves. "Of particular note is the success of the process engineers with the resource atPokrovka 2, hitherto considered as a less than 1.0 grams per tone low-graderesource, where the proposed addition of a simple pre-washing technique wouldincrease the grade delivered to the mill to c. 8.0 grams per tonne. At Pioneerthe geologists are developing a new structural interpretation of the deposit andthis was recently confirmed by the finding of another high-grade zone - similarto Apophysis 1 - with average grades of over c. 222.0 grams per tonne over c.8.5 metres. At Malomir the previous estimates have been confirmed and enlargedby exploration and a new ore zone recently identified on the far side of thevalley. "In addition to this, the exploration work on Novogodnee Monto and other depositsin our licence area in the Yamal region has progressed well and it is gratifyingto note that SRK, in its report to the Board, shares our enthusiasm for the newYamal licence areas when it says that the two licences will in due courseconfirm the existence of ore grade mineralization containing in excess of 5million ounces of gold. "2005 saw the start of an expansion programme aimed at achieving the "one millionounce per annum" gold production target set for 2009. This programme requirednew investment in training and manning for the development of Malomir, as wellas at Pioneer and Pokrovskiy flanks. Repairs and refurbishment of equipmentgenerally destined for the new projects was also a major expense item. Some ofthese expenditures, largely because they were not specifically identifiable fora particular project, have been charged as operating expenditure this yearcontributing to a short-term down-turn on earnings per share. The combination ofthese two elements meant that the Group's earnings at US$13.3 million (2004US$15.3 million) were somewhat lower than we had anticipated. "Whilst industry-wide external affects on operating costs, such as wageinflation, fuel, energy and plant consumables cost increases are resulting ininflationary pressures, I am pleased that the Pokrovskiy mining operation, overwhich we have direct control, is nevertheless still reported to be Russia'slowest cost major gold mine. Cost control and asset optimisation remain keypriorities. These negative effects are, at present, balanced by the improvementin the Rouble price of gold and by economies of scale. "The successful placement and issue of the US$140m convertible bonds hasincreased confidence in the Group's ability to realise its 2009 productiontarget by providing the necessary finance for construction and development. Theissue of the bonds also allows the Group to be less reliant on obtaining projectfinance in order to fund its developments. "With a forecast production of 250,000 ounces in 2006 we are now approximately aquarter of the way towards delivering our million ounce target in 2009 and ourestimates of the economics of this plan, which were discussed in the Group'sAnalysts' Workshop in January 2006, remain substantially unchanged. "In spite of the cost pressures - and particularly with worldwide gold pricesremaining strong - I believe that we can look forward to a successful future." Enquiries:Alya Samokhvalova or Marianna Adams +44 (0) 207 201 8900Peter Hambro Mining www.peterhambro.com David Simonson or Tom Randell +44 (0) 207 653 6620Merlin Consolidated Profit and Loss Account for the year ended 31 December 2005(expressed in US $'000s) 2005 2004 $'000 $'000 Turnover: Group and share of joint ventures 114,579 85,502Less: share of joint ventures' turnover (23,330) (23,394)Group turnover 91,249 62,108Net operating expenses (73,759) (39,405) Operating profit 17,490 22,703 Profit on disposals of interest in businesses 3,822 -Loss on disposals of interest in joint venture (413) - Share of operating profit in joint ventures 2,324 4,829Amortisation of goodwill in joint ventures (1,046) (954) Profit on ordinary activities before interest and other income 22,177 26,578 Interest payable and similar charges (5,953) (3,661) Other income 3,807 1,387 Profit on ordinary activities before taxationGroup 19,194 20,916Joint ventures 837 3,388 20,031 24,304 Taxation on profit on ordinary activities (6,032) (8,253) Profit on ordinary activities after taxationGroup 13,985 13,801Joint ventures 14 2,250 13,999 16,051 Minority interestsGroup (527) (326)Joint ventures (217) (407) Profit retained for the year 13,255 15,318 Earnings per ordinary share $0.17 $0.22Diluted earnings per ordinary share $0.17 $0.21 Consolidated Balance Sheet for the year ended 31 December 2005(expressed in US $'000s) 2005 2004 $'000 $'000Fixed assetsIntangible assetsGoodwill (176) (2,776)Other intangible assets 102,231 80,653Capitalised exploration and development expenditure 30,555 10,251Tangible assetsProperty, plant and equipment 74,959 60,579 Investments 448 1,399Investments in joint ventures: Goodwill 1,467 2,821Share of gross assets 17,313 21,366Share of gross liabilities (8,171) (10,188)Loans - 3,400 218,626 167,505Current assetsStock and work in progress 23,521 17,294Debtors 31,273 17,784Cash at bank and in hand 144,534 25,854 199,328 60,932 Creditors, amounts falling due within one year (18,909) (15,607) Net current assets 180,419 45,325 Total assets less current liabilities 399,045 212,830 Creditors, amounts falling due after one year Due to former shareholders of subsidiary - (3,486)Long-term borrowings (2,250) (4,655)Finance lease liabilities falling due after one year - (243)Guaranteed Convertible Bonds 2010, 7.125% (133,920) - (136,170) (8,384) Provisions (18,426) (2,182) Net assets 244,449 202,264 Capital and reservesEquity shareholders' funds 239,925 200,134 Minority interests 4,524 2,130 244,449 202,264 Consolidated Statement of Cash Flow for the year ended 31 December 2005(expressed in US $'000s) 2005 2004 $'000 $'000 Net cash inflow from operating activities 15,719 20,532Returns on investments and servicing of financeInterest received 1,971 892Interest paid (1,292) (2,965)Interest element of finance leases (81) (1,111)Dividends paid to minority shareholders (4,901) (113) Net cash outflow from returns on investments and servicing of finance (4,303) (3,297) Taxation paid (3,401) (4,223) Capital expenditure and financial investmentPurchase of tangible assets (20,919) (20,393)Expenditure on research/development and mineral properties (19,610) (9,181)Sales of other investments (17) 2Proceeds on disposal of tangible assets 86 25Loan granted (4,011) (4,523)Loan repayments 18,055 2,149 Net cash outflow on capital expenditure and financial investment (26,416) (31,921) Acquisitions and disposalsPurchase of subsidiary undertakings (12,057) (11,785)Cash acquired with subsidiaries 814 103Proceeds from sales of subsidiary undertakings - 2,112Investments in joint ventures - (3,817) Net cash outflow on acquisitions and disposals (11,243) (13,387) Cash outflow before financing (29,644) (32,296) Management of liquid resources and financingCapital element of finance leases (652) (6,114)Receipts from borrowings 162,673 56,376Repayments of amounts borrowed (35,034) (76,124)Net receipts from issuing shares 21,337 69,185 Net cash inflow from financing activities 148,324 43,323 Increase in cash at bank and in hand 118,680 11,027 2005 Operating Highlights • Group attributable gold production increased by 19% to c.249,000 ounces • Pokrovskiy gold production increased by 20.7% • Significant attributable production received for the first time from Amur region affiliates and subsidiaries strengthening the Group's regional position • Completion of assay laboratory construction giving what we believe to be the largest private laboratory capacity in Russia • Processing of ore at Pioneer proves effectiveness of choice of ore extraction technology Production Pokrovskiy & Pioneer Pokrovskiy Deposit 2005 was a successful year at Pokrovskiy. As envisaged, the Pokrovskiy team has achieved the positive results shown in all the production figures. Foremost amongst the achievements has been the increase in gold production by 21% versus 2004. The following points highlight the success in 2005: • Advanced stripping carried out in 2004 and 2005, together with optimised planning and mining using the MicroMine geological computer software has contributed to the processing of higher quality ore; • Renewal of mining and transportation equipment provided stability and allowed successful completion of project planning and implementation. During the first half of 2005, 5 Belaz dump trucks with a 45 tonne capacity and 2 CAT D6R bulldozers were acquired, in addition to mining equipment purchased in 2004; • The work carried out in 2004 to expand the plant led to stable operation of all units, which provided for an increase in production and productivity. 2005 Resin in Pulp ("RIP") ore processing in 2005 amounted to 1.4 million tonnes of ore (compared with 1.17 million tonnes in 2004). All indicators showed plant work for 2005 corresponding to projected figures and capacity levels; • During 2005 the RIP's desorption processing unit was improved in order to achieve a more complete extraction of silver. As a result, the extraction of silver doubled in the fourth quarter and is scheduled to continue at this improved rate; • The process of double stacking the heap-leach was tested in 2004 and in 2005 showed good gold extraction results. Ore processed by the heap-leach in 2004 showed a 60% recovery rate but was subsequently left on the pad where in 2005 a further 15% recovery from this ore was achieved. Due to the Group's calendar reporting period, recovery is shown at 60% in 2004 but this extra recovery at 15% reduces the 2005 recovery when in reality the number would be in excess of 60% for the continuous period; and • The enhancement in heap-leach technology has preserved production costs at last year's level despite gold grades in the heap-leach ore being 17% lower than in 2004 (1.8g/t - 2004 vs. 1.5g/t - 2005). The enhanced technology allows economic treatment of grades lower than originally anticipated which will consequently allow an increase in the reserve base of the deposit. PHM Schedule Units 2005 2004 Pokrovskiy deposit Total material moved '000 m3 5,248 4,540 Including advanced stripping '000 m3 1,180 1,028 Ore mined '000 tonnes 1,393 1,045 Grade g/t 3.6 3.4 Gold '000 oz 159.8 113.7 Including rich ore '000 tonnes 899.0 608 Grade g/t 4.7 4.5 Gold '000 oz 135.7 88.5 Pioneer deposit Total material moved '000 m3 836 228 Ore mined '000 tonnes 133 43 Grade g/t 3.5 7.6 Gold '000 oz 15.0 10.4 PHM Processing Schedule Units 2005 2004 Resin In Pulp plant Ore from Pokrovskiy pit '000 tonnes 899 673 Grade g/t 4.7 4.2 Gold '000 oz 136 90.6 Ore from stockpiles '000 tonnes 444 454 Grade g/t 2.8 3.1 Gold '000 oz 39.4 45.5 Pioneer (bulk sample) '000 tonnes 53 38 Grade g/t 5.7 8.4 Gold '000 oz 9.7 10.1 Total milled '000 tonnes 1,397 1,165 Grade g/t 4.1 3.9 Gold '000 oz 184.9 146.2 Recovery % 91.5 90.7 Gold recovered '000 oz 169.2 132.7 Heap leach Ore stacked '000 tonnes 714 620 Grade g/t 1.5 1.8 Gold '000 oz 38 35.3 Recovery % 48.9 60.0 Gold recovered '000 oz 16.5 21.3 TOTAL Total gold recovered '000 oz 185.7 153.9 Pokrovskiy Rudnik - Operating Cost Analysis 2005 2004 Variance 1H 2005 Gold Institute Standard Direct Mining & Processing Expenses 95.0 73.0 30.1% 97.8 Refinery & Transportation cost 4.5 6.1 4.3 By-product credits (0.9) (0.2) (0.3) Other 26.8 28.0 47 Cash Operating Cost 125.4 106.9 17.3% 148.8 Royalties 27.1 22.7 25.2 Production taxes 6.2 5.1 7.1 Total Cash cost 158.7 134.7 17.8% 181.1 Non-cash movement in stock 28.6 12.4 15.1 Depreciation/Amortization 42.4 37.2 47.7 Total Production Cost 229.7 184.3 24.6% 243.9 In 2005, material and input costs at Pokrovskiy mine experienced upwards pressure from external factors. For Pokrovskiy, fuel, energy and plant consumables priceshave increased by 36%, 26% and 30% respectively. The Group was actively implementing cost optimisation programmes and, as a result of tight internal cost control, the 2005 Gold Institute Standard ("GIS") Cash Operating Cost for Pokrovskiy is c.US$125/oz. - a rise of only c.17% compared to 2004. The Cash Operating Cost is c.16% below our previously reported cash operating cost per ounce for the first six months of 2005. Pioneer Deposit Work at Pioneer focused on three areas: developing reserves, stripping open pit areas and further processing of the technological sample. Work commenced on the stripping operation to remove all surface material on the first major ore column at the junction of Apophysis 1 and the main orebody. Furtherwork has recently commenced on the second identified ore column. A total amount of 836,000m(3) of material was moved at Pioneer during 2005. Further small scale processing of the Pioneer ore was undertaken at the Pokrovskiy mill to prove how amenable the ore is to economic gold extraction. During 2005,53,156 tonnes of Pioneer ore were processed at the Pokrovskiy plant with an average gold content of 5.7g/t. This sample yielded a recovery rate of 90% proving theeffectiveness of the ore extraction technology used. Omchak JV 2005 2004 Nelkobazoloto - Shkolnoye Deposit Ore mined tonnes '000 54.7 50.9 Ore processed tonnes '000 54.2 65.0 Ounces produced ounces '000 18.7 27.4 Berelekh Waste rock stripped m(3) '000 8,724 9,311 Sands processed m(3) '000 3,957 3,764 Ounces produced ounces '000 57.2 61.5 Noviye Tekhnologii and Zeyazoloto Waste rock stripped m(3) '000 381.2 - Sands processed m(3) '000 222.4 - Ounces produced ounces '000 3.1 - Total gold production ounces '000 79.0 88.9 PHM attributable (50%) ounces '000 51.6 57.0 During 2005, CJSC Omchak ("Omchak") produced gold through its subsidiary companies in two Russian regions - the Magadan and the Amur regions. The total attributable production of gold was 51,600oz and was achieved by the exploitation of the Shkolnoye deposit (CJSC Nelkobazoloto, Magadan region) and a number of smaller deposits. At Shkolnoye, 54,000 tonnes of ore were extracted from the underground mine and then processed at the onsite processing plant. The ore grade was found to be 10-15g/t. During the exploration of the alluvial deposits, 4.0 million m3 of gold bearing sands were enriched using washing equipment. The average grade of gold was 0.5-0.65 g/m3. At the Shkolnoye deposit more than 1,000m of underground work was executed, providing access to estimated resources of c.97,000oz of gold at the levels of 500m-700m which should provide for stable mining works and mill feed over the next few years. More than 1,000m of drill holes were drilled at alluvial deposits and 200,000m3 of trenching undertaken. The joint venture also undertook a process of updating the mining and exploration fleet. For the Shkolnoye mine, a dump truck was acquired for the transportationof ore from underground operations to the plant, as well as equipment for underground drilling and a load-hauler; the alluvial gold operations have ordered a Kamatsu D375bulldozer and five Libcher loaders. Omchak acquired various alluvial gold deposits in the Amur region in 2005. These deposits were selected as they were favourably priced and because they suit theskill base of the Omchak team. The estimated reserves and resources of these deposits amount to more than c.64,300oz of alluvial gold. Drilling and mining works arebeing carried out in order to increase production. Omchak made two acquisitions in the Chita region during 2005. In accordance with the terms of the Verkhne-Alliinskiy deposit licence agreements, Omchak has collated and analysed the historical geological data, and has completed the preparation of anexploration plan. In accordance with the licence, drilling is expected to commence in July 2006. Ahead of submission of exploration plans and preparation of reserves for State Geological Committee approval, core drilling of around 12,000m and trenching of 120,000m3 is required. In 2005 Omchak suffered from a larger rise in input costs since it is partly an alluvial operator with c.40% of its costs being fuel and energy related. It also experienced significant foreign exchange translation losses. Omchak's GIS total cash costs have increased by c.17% to c.US$360/oz for 2005. Amur North East Tokur Deposit OAO "ZDP Koboldo" - a 91.7% subsidiary of OOO "Tokurskiy Rudnik"- produced 4,180oz of gold in 2005. Koboldo produces gold from alluvial deposits in the North East of the Amur Region in close proximity to the Tokur and Malomir deposits. Koboldo was acquired by the Group in 2004 and benefits from a skilled local labour force anddeveloped infrastructure. Rudnoye Joint Venture OOO "Odolgo" - a 100% subsidiary of ZAO "Rudnoye" - produced 2,366oz (attributable 1,160oz) of gold in 2005. Odolgo is active in the production of gold from alluvialdeposits within the licence areas of the Rudnoye joint venture. Exploration & Development The Group publishes this summary table and update on progress in Exploration & Development ahead of a fuller report which will be contained in the Annual Report &Accounts. The Board of Directors commissions a semi-annual independent review of the Exploration &Development work of the Group and the Group's reserve and resource estimates. In light of the considerable progress made during the period, the executive summary of this report will be made available at www.peterhambro.com. Peter Hambro Mining Group Reserves & Resources SummaryAs at 1-1-06 Category Ore Gold Content '000 t kg oz'000 @ 1-1-05 Reserves C1* 30,729 61,578 1,980 2,098 C1+C2 1,269 11,332 364 445 C2 134,678 208,043 6,689 4,933 TOTAL 166,676 280,953 9,033 7,476 Resources** P1 150,584 301,479 9,693 8,442 P2 262,270 523,225 16,822 27,617 P2+P3 810,541 1,361,381 43,769 29,589 P3 648,000 714,000 22,956 4,903 TOTAL 1,871,395 2,900,085 93,240 70,551 Reserves & Resources TOTAL 2,038,071 3,181,038 102,273 78,027* C1 includes a small area of B category reserve at the Tokur deposit.** It should be remembered that of the P Category Resources, P1 is always supported by drilling whereas this is not necessarily the case for P2 and P3. "Million Ounce Target" Exploration & Development Update PHM published updated business plans for the Pokrovskiy Flanks, Pioneer and Malomir deposits in January 2006. The findings of the reports supported the Group's target of a production rate of one million ounces of gold per annum in 2009 and provided more clarity as to the expected development and subsequent relevant contribution of each asset. Based on these plans the Group intends to further develop each of the primary assets and to invest the capital required to meet the production targets. Exploration highlights for 2005 at these four areas include: Pokrovskiy Deposit & Flanks: - 9,000m of drilling was completed on the Pokrovskiy deposit. Emphasis was placed on expansion of the open pit reserves at Pokrovka-1, and exploration of the recently identified fanglomerate deposit in the Pokrovka-2 area. - Pokrovka-1 work has proved extensions of the ore bodies, both laterally and at depth with potential for pit expansion to the east, with which to exploit an ore bridge between the Glavnoye and Ozernoye ore bodies. - Drill hole evidence for a high-grade extension of the Glavnoye ore body, at grades of 6g/t down to the 120m level (200m below surface). - Trenches and drill holes along the Sergeevsky fault (NE of Pokrovka-1) at locations indicated by the 3D geochemical model have identified significant mineralisation, thus validating the geochemical modelling method and identifying exploration targets. - There are significant new findings at Pokrovka-2 of an entirely different type of deposit - effectively an ancient placer, rather than a hard-rock deposit - termed a fanglomerate. This has been explored to identify a C2 reserve of c.220,000 ounces at 0.8 g/t to a depth of 60m, and a further P1+P2 resource of 831,000 ounces. Although low-grade, it is easily enriched by washing away the fine matrix, as most of the gold is contained within coarse fragments (from sand up to boulder size) of the primary ore body. Preliminary independent test-work shows c.10% of the material remains after simple washing and this material holds c.70% of the gold, showing an average grade of c.8g/t. The present reserve and resource estimates are based on exploration of only a very small portion of the total mapped outcrop area (4km2) of the fanglomerate, so the total is expected to be larger, extending from Pokrovka-2 south-westwards to the Nadvigovy area. - Exploration also continues in other areas. Notably drill holes and trenches along the Sergeevsky fault (NE of Pokrovka-1) at locations indicated by the 3D geochemical model have identified significant mineralisation. The data received so far further validates the Group's geochemical modelling method and has identified areas for more intensive exploration in 2006. Pioneer Deposit: - Exploration in 2005 has proved a number of additional ore columns similar to Apophysis 1 and the ore column at the NE end of Promezhutochnaya zone. - On the three main ore zones (Bakhmut, Promezhutochnaya, and Yuzhnaya) 2005 exploration drilling and trenching, and completion of all outstanding assays, has allowed the conversion of most of the P1+P2 resources to C2 reserves. C2 reserves are more than doubled and none remain in the P2 category. There is a decline in estimated grade and contained gold, but this is more than compensated for by additional resources now discovered elsewhere in the Pioneer licence area. It is also expected that additional ore columns along the main ore zones will provide increased reserves. - In Yuzhnaya zone, apart from the previously postulated (and now proved) ore column at the northern end (explored intensively in 2004-5) there is now evidence for a second ore column 800m to the south. It has been intersected in two trenches and 10 drill holes. - With commissioning of the new laboratory facilities, the assay backlog has now been cleared and positive results obtained for a number of the Pioneer satellite zones. In two of these in particular, significant gold mineralisation has been found: in Zapadnaya zone, three trenches and one drill hole have intersected up to 3m thickness at 10g/t. - A new structural interpretation for Pioneer has been developed, recognising the coincidence of the several discovered ore columns with the intersection of regularly spaced fracture systems. This conceptual model can now be used, in combination with other methods including the 3D geochemical modelling, for identification of further exploration targets. One of the most promising of these, to be explored in 2006, is Andreevskaya to the south-east of the main Pioneer deposits. A drill-hole at a point predicted by the new structural model, in an analogous position to Apophysis 1, has intersected a zone with very high grades averaging 222.7 g/t over a downhole interval of 8.5 metres, with two samples assaying over 1,000 g/t. Malomir Deposit: - Exploration trenching (197,000m3) and drilling (2,632m) during 2005 concentrated on confirmation and extension of reserves on the Diagonal zone. Further to this the Group's Tokur laboratory is now entirely committed to assaying Malomir samples. - A central area 480m along strike has been re-evaluated. Previous estimates are confirmed and both grade and tonnage are higher than anticipated, with a 20% increase in contained gold in one 480m-long section of the Diagonal zone. - A significant new finding is that near the NE end of the Diagonal zone, at the junction with several overlying branch thrusts, there is a thick high-grade ore column not previously recognised, with trench sample assays indicating 15g/t over 4 m thickness, and a total ore thickness of 93 m at 1.8g/t. - Core drilling continues in 2006 with 4 rigs operating, and trenching is to be extended westwards along the Diagonal zone. - Studies are to be conducted in 2006 to identify markers for the primary zone, a possible semi-oxidised zone, and oxidised zone, and metallurgical testing will be carried out on a bulk sample to be collected from each ore type - provisionally one primary ore sample from below 100m depth, and one oxide-zone sample from above 100m. Completion of this testing, together with parallel hydrogeological, engineering, geological, topographic surveys, and environmental studies, are also to be conducted in 2006, which will allow the appropriate P1 resources to be converted to C2 reserves, and subsequent preparation of mine planning documents for formal approval. - Tailings from abandoned placer operations in the Malomir valley will also be tested for easily extractable gold. - A new zone, named the Quartzite Zone, has been identified across the river valley from the Diagonal Zone. Trenching and drilling is planned on 5 of the metasomatised granitoid masses which constitute the Quartzite zone. Previous data from one of these established a large low-grade resource and metallurgical tests demonstrated the feasibility of cyanide leaching, with 80% recovery from 10mm crushed material. Although the other bodies have not yet been systematically sampled, all available assays show grades of at least 0.3 g/t, with low sulphide content. The Quartzite zone is believed to have large potential gold resources and this area is becoming an important exploration target. PHM has made further progress at a number of other assets within the portfolio, each of which will be reported on in full within the Annual Report & Accounts.Of these, the most material progress has been made at the Yamal assets: Novogodnee Monto & Petropavlovskoye deposits and surrounding areas - Drilling in 2005 on the Novogodnee Monto and Petropavlovskoye deposits included 41,000m deep drill holes to complete the evaluation of the Novogodnee deposit and to delineate the central portion of the Petropavlovskoye deposit, plus 13,700m3 of trenching within the licence area. - Work is currently being completed on approvals for mining the main deposit (massive magnetite skarn with layers of gold-bearing sulphides) as a polymetallic operation for gold, iron, and cobalt. Current gold reserves and resources are 340,000 ounces (C1+C2) and 300,000 ounces (P1). - Unlike Novogodnee Monto, Petropavlovskoye is a gold-bearing quartz stockwork deposit 50-120m thick, with a central quartz 'leader' vein 1-4m thick with grades from 6-70 g/t, now found to be continuous along strike of 500m and to a depth of at least 200m in eight drillhole intersections. Beyond the 550m zone explored in detail, mineralisation has been established to continue for a further 1,500m northwards (with the central quartz vein intersected in three drill holes here too), and southwards for a further 850m. P1 category estimates for the central zone of 800,000 ounces contained gold and for the extensions of 320,000 ounces each, totalling 1,450,000 ounces contained gold (C2+P1 category) for the entire Petropavlovskoye deposit. - PHM has commissioned SRK Consulting (UK) Ltd to report on the overall licence area and specifically on Novogodnee Monto. The report supports the Group's estimated total reserves and resources and the relevant paragraph reads as follows: "Overall SRK considers that the two licences combined represent a valuable addition to the PHM portfolio and that it is reasonable to expect that the feasibility study at Novogodnee Manteau, combined with ongoing exploration of the Toupugol-Khanmeishorkaya, will in due course confirm the existence of ore grade mineralization containing in excess of 5 million ounces of gold." - It is intended that the final SRK report (or an executive summary thereof) will be available on the PHM website shortly. Yamalskaya Gornaya Kompaniya (YGK) - YGK, acquired during 2005, holds a series of exploration licences in the Yamal region in a line to both north and south of Novogodnee Monto, parallel with 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 (Au, PGM) potential to be explored. 2006 Production Forecast & Outlook PHM's budget for 2006 shows estimated attributable production of 250,000 ounces. This is a marginal increase on 2005 and is made up of 184,800oz from Pokrovskiy, 41,300oz from the Omchak JV and the remaining ounces from the Group's interest in other Amur region assets. Historically Pokrovskiy's operating costs have been relatively flat as the inflationary pressure on input costs were outweighed by the increasing economies of scale and cost optimisation programmes initiated at Pokrovskiy. During 2006 production levels are not forecast to increase markedly and consequently operatingcosts may well see upward pressure. PHM granted Queens Award for Enterprise The Board of Directors of the Group is delighted to announce that PHM has been granted the Queen's Award for Enterprise for the years 2006 to 2009 due to thecompany's outstanding success in international trade. It is one of the UK's most prestigious awards acknowledging business achievement. Annual Report & Accounts The Group intends to publish and distribute the Company's Annual Report and Accounts for the year ended 31 December 2005 on 16th May 2006. This report will contain a more detailed analysis of the work undertaken by the Group during the period, notes to the accounts and a breakdown, by deposit, of the Group'sReserves and Resources and production. Conference Call There will be a conference call on 24th of April 2006 at 2.00 pm (London time) and the dial in numbers are as follows: UK Dial in: 0845 245 3471International: +44 (0) 1452 542 300 To replay the call after the event please dial. UK Dial in: 0845 245 5205International: +44 (0) 1452 550 000Replay Access: 8192609# This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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