Interim Results

24th Sep 2007 07:02

Peter Hambro Mining PLC24 September 2007 PETER HAMBRO MINING plc Interim Results Peter Hambro Mining plc ("PHM" or "the Group") is pleased to present the resultsof a successful half year's activity. HIGHLIGHTS 6 months to 6 months to Variance 12 months to 30/6/2007 30/6/2006 for period 31/12/2006-------------------------- ---------- ---------- -------- -----------Total attributable gold production, oz* 134,300 108,363 +24% 261,000Pokrovskiy mine gold production, oz 116,800 93,600 +25% 206,800Group average gold price received (US$/oz) US$652 US$573 +14% US$586 Pokrovskiy mine Cash Operating Cost US$115.8 US$134.4 (14%) US$134(GIS US$/oz)**Pokrovskiy mine Total Production Cost US$249.9 US$251.2 (1%) US$237(GIS US$/oz)**Operating profit, 35,335 20,242 +75% 49,623US$ '000 ***Earnings per share, US$*** 0.265 0.146 +82% 0.398-------------------------- ---------- ---------- -------- ----------- * Total attributable gold production is comprised of production from the Group's subsidiaries, share of production in joint ventures and other investments ** As restated due to impact of International Financial Reporting Standards ("IFRS") *** As restated under IFRS Gold Institute Standard ("GIS") RESULTS Results for the first six months of 2007 (the "Period") for Peter Hambro Miningplc compared to the equivalent period of 2006: • The Group's attributable gold production increased by 24% to 134,300 oz (first six months of 2006 - 108,363 oz); • Average realised gold sales price was US$652/oz, up by 14% (first six months of 2006 - US$573/oz). The Group remains unhedged; • Gold Institute Standard Costs at Pokrovskiy mine o Cash Operating Costs US$116/oz - 14% lower than the same period in 2006 (2006 - US$134/oz); o Total Production Costs US$249.9 - 1% lower than the same period in 2006 (2006 US$251 oz.) • Group operating profit increased by 75% to c.US$35.3 million compared to the same period of 2006 (first six months of 2006 - c.US$20.2 million); • The Group's second mine, Pioneer, was commissioned in September 2007 on schedule; • Group exploration activities on its large portfolio of exploration and development properties are producing promising results and these are being reviewed by the independent consultants, Wardell Armstrong International Limited. It is intended that this work will be finished in October 2007 and that the results, in the form of a Competent Person's Report, will be published as soon as they have been reviewed by the Board. This is expected to be in the fourth quarter of 2007; • Production from the Group's other developing operations totalled c.6,200 oz which is an 88% increase over the same period last year; • The Group's half year figures are published according to IFRS for the first time as part of its transition to IFRS reporting in line with the requirements of AIM. CHAIRMAN'S STATEMENT Dear Shareholder, Once again my colleagues at PHM have delivered an excellent result for the firsthalf of the year - and remember: the first half year is usually, because of thecold winters in the Amur Region, less productive than the second. An increasein turnover in 2007 of c.58% compared to the same period in 2006 is particularlycommendable as it results not only from higher sale prices for gold and silverbut, also, more importantly, from increased production. But what really countsis the bottom line. An increase in operating earnings of 75% to c.US$35 millionis a great achievement; above all because of the sustained control that has beenexercised on costs and which has been reflected in the increase in profit aftertax of 87% to c.US$22 million. The Pokrovskiy mine team has demonstrated its ability to control operating costsin an inflationary environment. An impressive 14% reduction in GIS cashoperating costs was due both to the processing of higher quality materialthrough the mill and also due to a number of measures introduced by themanagement of the mine. For example, expenses on petroleum, oil and lubricantsused for the mining fleet at the mine decreased by 6%, and expenses on chemicalsand consumables at the Pokrovskiy plant decreased by 4%. The strong rouble hashelped this, in part due to the consequent increase of its purchasing power fordollar denominated goods. The second half of the year has started well and investors will, I believe, beas delighted as I am that we have now brought our second major mine intoproduction. The commissioning of the Pioneer mine took place in Septemberaccording to the Company's schedule despite severe rainfall in the region. Thiswas another remarkable achievement for the Group's team of specialist engineers,mechanics and scientists and is another historic development for PHM. Althoughthe development plan is a modular process and the ramp up of production isexpected to take some time to reach its designed capacity, the firstcontribution from Pioneer will be a welcome addition to our full year results. The interim accounts that accompany this letter are the first that we haveissued under IFRS. In reporting in this way we have passed another milestone onthe way to joining the mainstream of international mining companies. It isinteresting to note that the overall difference between the results for theperiods under United Kingdom Generally Accepted Accounting Practices ("UK GAAP")and under IFRS is not material. International financial markets have not enjoyed a peaceful summer and yourBoard decided that, to ensure continued availability of financing forinvestment, it would be wise to secure a working capital facility. I am pleasedto report that VTB Bank Europe plc, the London arm of one of Russia's mostprominent banks and the Group are in the final stage of negotiation of a US$50million facility. Finally, as announced previously, we have commissioned a Competent Person'sReport on all our mining assets. The reasons for doing so are twofold: first,this will provide full details on all mining assets and how capital expendituredecisions will be made; secondly, the Company wishes to have an independentreport showing reserves and resources under both Russian and Western reportingsystems. The consultants who have been commissioned to undertake this task,Wardell Armstrong International Limited, are presently on site and we currentlyexpect to be in a position to publish the results of their review during thefourth quarter of 2007. Accordingly we have not included the usual report ongeological and development advances during the last six months, since these willbe fully covered when the Competent Person's Report is published. As I saidearlier, and in the Trading Update issued on 16 July 2007, prospects for theremainder of the year remain good. Peter HambroExecutive Chairman GROUP OPERATIONS REPORT Pokrovskiy mine During the first six months of 2007 Pokrovskiy mine demonstrated stable andsuccessful progress, producing 116,800oz of gold compared to 93,600oz in thesame period of 2006. This 25% increase was achieved due to the stable work ofthe plant, improved recovery rates and higher head grades through the mill. Theincrease in recovery rates was the result of the range of measures introduced byPokrovskiy mine's specialists in 2006. Amongst these measures were adjustmentsto the crushing-grinding circuit, creation of an intermediate stockpile forblending purposes and an increase in the leaching time. Cash operating costs of production per unit were reduced by 14% which was aremarkable achievement of Pokrovskiy mine's team. This was achieved despite thebackground of 8% inflation in Russia. Mining operations Planned advance stripping works were carried out according to the mining planusing geological computer models of the deposit (Micromine). The capacity of theintermediate blending ore stockpile was increased further to 200,000 tonneswhich allowed for an optimal ore mixture to be sent to the Resin in Pulp Plant.The commissioning of a new drilling rig (Atlas Copco DML) model with highproductivity and a drilling diameter, in spite of increased explosive works,allowed for a reduction of total costs of mining works. Pokrovskiy mine Mining Operations-------------------------------------------- ------------------ 6 months to 30 June --------- ------------------ Units 2007 2006 Var,% --------- --------- ------- -------Mining--------------------- --------- --------- ------- -------Total Material Moved m3'000 2,458 2,624 (6%)--------------------- --------- --------- ------- -------Ore mined t'000 1,197 889 35%--------------------- --------- --------- ------- -------Average grade g/t 3.6 3.2 13%--------------------- --------- --------- ------- -------Gold content oz'000 136.8 90.9 50%--------------------- --------- --------- ------- ------- Processing operations - Resin in Pulp plant 863,000 tonnes of ore were treated through the mill in the first half of theyear - 6% more than during the same period in 2006. A 5% increase in recoveryrates from 86.6% in the first half of 2006 up to 91.0% for the same period thisyear was a positive achievement especially as harder and less oxidised materialwas treated through the mill. This was achieved by the introduction of a numberof technical improvements to create optimal operating conditions includinggrinding coarseness, leaching time, speed and quantity of sorbents' circulationand cyanide concentration. An increase in leaching time became possible due tothe addition of a new line of leaching tanks installed during the plant'sexpansion in 2006. The increase in recovery rates together with the processing of higher gradematerial through the mill allowed for an increase in the plant's gold output.This was achieved by the introduction of a number of technological improvementslast year including the creation of the intermediate stockpile where fivedifferent types of ore from the Pokrovskiy pit are blended. This stockpileallows for an optimal mix of different types of ore to go through the Resin inPulp Plant. Heap Leach The increase in the capacity of the gold processing plant and the rise in thegold price allowed for lower grade ore to be processed through the heap leachwithout an increase in the volume of mining works and without decreasing theoverall gold production of Pokrovskiy mine. The recovery rates, although 22% lower than in 2006 due to a shorter period ofleaching as a result of the later start of the leaching season caused by weatherconditions, were still impressive for this type of operation in the conditionsof the Russian Far East. Pokrovskiy mine Processing Operations-------------------------------------------- ------------------ 6 months to 30 June ------------------ Units 2007 2006 Var,%--------------- --------- --------- ------- -------Resin in Pulp Plant--------------- --------- --------- ------- -------Ore from pit t'000 352 609 (42%)--------------- --------- --------- ------- -------Average grade g/t 4.43 3.85 15%--------------- --------- --------- ------- -------Ore from stockpile t'000 511 109 369%--------------- --------- --------- ------- -------Average grade g/t 4.43 4.14 7%--------------- --------- --------- ------- -------Total milled t'000 863 818 6%--------------- --------- --------- ------- -------Average grade g/t 4.4 3.8 16%--------------- --------- --------- ------- -------Gold content oz'000 122.7 99.6 23%--------------- --------- --------- ------- -------Recovery rate % 91.0% 86.6% 5%--------------- --------- --------- ------- -------Gold recovered oz'000 112 86 30%--------------- --------- --------- ------- -------Heap Leach--------------- --------- --------- ------- -------Ore stacked t'000 354 345 3%--------------- --------- --------- ------- -------Average grade g/t 0.8 1.0 (20%)--------------- --------- --------- ------- -------Gold content oz'000 10 11 (9%)--------------- --------- --------- ------- -------Recovery rate % 53.6% 68.3% (22%)--------------- --------- --------- ------- -------Gold recovered oz'000 5 7 (29%)--------------- --------- --------- ------- -------Total--------------- --------- --------- ------- -------Gold recovered oz'000 116.8 93.6 25%--------------- --------- --------- ------- ------- Gold Institute Standard Operating Cost Analysis The Group reports and breaks down Pokrovskiy mine's operating costs according tothe internationally recognised GIS following the industry best practices. The GIS cost analysis for the period is as follows: 6m to 6m to 12m to 30/6/07 30/6/06* Variance 31/12/06* -------------------- -------- -------- --------- ---------Pokrovskiy mine-----------------------------------------------All figures reported in US$ per oz of gold produced----------------------------------------------- -------- -------- --------- ---------Direct mining expenses 71.3 92.0 (23%) 103.0-------------------- -------- -------- --------- ---------Third-party smelting,refining and transportation costs 6.3 6.4 (2%) 7.0-------------------- -------- -------- --------- ---------By-product credits - (0.5) (4.0)-------------------- -------- -------- --------- ---------Other 38.19 36.4 (5%) 27.8-------------------- -------- -------- --------- --------- Cash Operating Costs 115.8 134.4 (14%) 133.8-------------------- -------- -------- --------- ---------Royalties 42.8 36.8 16% 35.3-------------------- -------- -------- --------- ---------Production taxes 9.3 7.7 21% 5.7-------------------- -------- -------- --------- --------- Total Cash Costs 167.8 178.8 (6%) 174.8-------------------- -------- -------- --------- ---------Non-cash movement in stock 30.0 22.9 31% 15.8-------------------- -------- -------- --------- ---------Depreciation/ Amortisation 52.0 49.51 5% 46.14-------------------- -------- -------- --------- --------- Total Production Costs 249.9 251.2 (1%) 236.8-------------------- -------- -------- --------- --------- * Numbers have been restated due to the transition to IFRS, mainly depreciation/amortisation due to implementation of a unit of production method ofdepreciation vs. straight line depreciation method for certain mining assets A significant decrease in cash operating costs has been achieved due to thoroughcash costs control and implementation of a plan aimed to reduce operating costsat every stage of the gold producing circuit on the mine from mining works inthe pit to expenses for infrastructure upkeep. Higher grades and improved recovery rates also positively affected productioncosts. During the first half of 2007, the Pokrovskiy mine team achieved a remarkable 6%reduction of expenses on petroleum, oil and lubricants for the mining fleet, a20% reduction of expenses on petroleum, oil and lubricants for heating supply ofthe mine and 4% decrease of expenses on chemicals and consumables at the plant. A new system of bonuses introduced at the beginning of 2007 resulted in anincrease in labour productivity. Non-cash movement in stock reflects the cost of mining incurred in the previousperiods but accounted for in the first half of 2007 when the actual gold wasproduced. Pioneer mine At Pioneer, in the first half of 2007, efforts were concentrated on preparingthe deposit for first production in September, on schedule. Mining works werecarried out in order to complete geological exploration works and to prepare thedeposit for operations. Mining works were carried out according to a mining plan to produce material fora commissioned Resin in Pulp plant and for the next year. This includedadvanced stripping and preparation mining works. Mining works are carried outby two electrical excavators EKG5 and 3 diesel excavators Cat 330, 8 Belaztrucks with a capacity of 30 tonnes and six Cat and Volvo in-pit trucks with acapacity of 38 tonnes. The commissioning of the complex comprising a primary crushing unit, a SAG mill,2 spiral classifiers, a cyanide leaching circuit, a heap leach, a tailings damand all necessary auxiliary divisions was carried out in September according tothe mining plan. Further infrastructure construction is being carried out atthe moment. Mining operations Units 6 months to 30 June-------------- 2007 2006 Var,% --------- --------- --------- ---------Pioneer Deposit-------------- --------- ---------- --------- ---------Total Material Moved '000 m(3) 666 392 70%-------------- --------- ---------- --------- ---------Ore Mined '000 t 38 13 192%-------------- --------- ---------- --------- ---------Grade g/t 1.8 1.3 38%-------------- --------- ---------- --------- ---------Gold '000 oz 2.2 0.5 340%-------------- --------- ---------- --------- --------- Malomir deposit In accordance with the plans, detailed exploration work was carried out in thenorth-eastern part of the deposit. During the Period, 32,160m of drilling and58,900m(3) of trenching was completed. A grid of drill holes and trenches (40m x40m), intended for the computation of economic reserves of gold of category C1,was established on an area 320-350m in width and approximately 600m in length. A number of metallurgical tests on the different types of ore at the Malomirdeposit were carried out at the Group's laboratories and at specialistscientific institutions, including Irgiredmet. A process of gravity separationand flotation of non-oxidised types of ore similar to that at Pioneer wassuggested and proved to yield impressive results. Gold recovery in concentratefrom flotation is 83-86% and flotation produces a concentrate that isapproximately 4-6% by weight of the ore. Cyanide leaching of oxide ore producesup to 84% recovery. At the junction of ore body No.10 with the Diagonal zone, two ore columns havebeen delineated. In the plan, the width of the columns is 50-140m, and they areseparated by a narrow (up to 30-40m) strip of lower grade ore. Down dip, bothore columns have been traced for 320m. Reserves of metal in the columnsconstitute, from initial estimates, c.418,000 oz at a gold grade of 2-2.5g/t (ata 0.8g/t cut off). Adjacent to the Severniy Fault at depths of 130-240m, a major body ofcataclastic quartz metasomatites 150-200m wide has been discovered. This zoneconstitutes an extension, to depth, of the main Diagonal zone. Within this newore zone, several ore bodies of a thickness from 20 - 46m, and gold gradestypically of 1.0-2.2g/t (and up to a maximum of 40g/t), have been defined. Inthe same area of the deposit, at shallower depths, 45-130m, drilling hasintersected separate ore bodies from 3 - 27m thick with gold grades typically of1.0-2.5g/t. On the southern continuation of the mineralised zone of the Diagonal fault itscontinuation has been identified by drill holes as having a thickness of 3.0 -6.9m and gold grade of 0.94-1.48g/t. Two metallurgical bulk samples have been taken from ore bodies in the Quartzitearea. Newly Developing Production Operations A number of alluvial mining enterprises, now included in the Group, carried outworks at the sites of the Group's operational and exploration activities,allowing for additional profits for the Group without major investment ininfrastructure or detailed exploration works. Two of them - OAO ZDP Koboldo andZAO Amur-Dore - which extract gold from alluvial deposits in the north-east ofthe Amur Region in close proximity to the Tokur and Malomir deposits, producedc.3,900 oz of gold in the first half of 2007. The enterprises exploit alluvialdeposits using dredging methods and with the use of washing apparatus. Plans for 2007 envisage an increase in the production of alluvial gold by 1.5times (up to 16,000 oz) in comparison with 2006. Joint Ventures in the Amur Region Priisk Solovyevskiy, Nagima and Odolgo, all of which are in different types ofjoint-venture arrangements with PHM, produced c.2,265 oz of attributable goldduring the first half of 2007. On 30 May 2007, a modular plant with gravitational technology for the extractionand processing of concentrate using the intensive cyanidation method was putinto operation at the Odolgo site. During June, commissioning works andsimultaneous exploitation works were carried out. The first batch of concentratewas processed at the Pokrovskiy resin-in-pulp plant in June at a newly builtintensive cyanidation facility. Omchak Joint Venture Through its subsidiaries, Omchak produced c.23,000 oz of gold in the first halfof 2007. This represents c.32.3% of the scheduled production for 2007 and is inline with the previous year's production and in accordance with the internalbudget for the first half of 2007. As more than 67% of the gold produced byOmchak comes from the exploitation of placer deposits, the majority ofproduction occurs during the second half of the year. PHM's attributable shareof production was c.11,400 oz as it owns a 50% interest in Omchak. During the first half of the year, Omchak's subsidiaries, OOO Zeyazoloto and OOONoviye Tekhnologii carried out and completed the necessary preparation works forthe 2007 production season including the delivery of fuels and lubricants,technical repair works, stripping works and the assembly of washing apparatus.Gold production commenced in June. Omchak also carried out geological exploration work at three projects in theChita region in accordance with approved plans and licence conditions. At the Verkhne-Aliinskiy gold deposit, exploration drilling was completed aswell as trenching works and the collection of samples for geotechnical andtechnological analysis. Since the start of 2007, 12,623m of drilling and20,000m(3) of trenching has been carried out, and 1,347 core samples and 112trench samples analysed yielding samples with gold grades up to 166.6g/t. At the flanks of the Bukhtinskiy prospective area, aerial geophysicalexploration is being carried out as well as a geochemical survey. Ore samplesand mineralogical samples are being analysed. At the Kuliinskiy ore field, geological exploration commenced in July 2007 andmining is expected to be commissioned by the end of the year. It is planned tocarry out 15,000m(3) of trenching and to collect more than 200 drill samples. EXPLORATION AND DEVELOPMENT REPORT During the first half of 2007, the Group's exploration team concentrated theirefforts on the most advanced projects of the Group in order to prepare them forexploitation according to the Group's schedule. Works on other projects wereprogressed according to the frameworks of the exploration plans and licenceterms. During this period, the Group carried out 348,600m(3) of trenching and105,642m of drilling. Yamal In the first half of 2007, OAO Yamalzoloto carried out appraisal work on twooperating projects: the Novogodnee Monto deposit and at theToupugol-Khanmeishorskiy area. At Novogodnee Monto, finalisation andconfirmation of the feasibility study on current exploration conditions wasaccomplished. At the Toupugol-Khanmeishorskiy area the following work wascarried out: drilling - 12,747m (127 boreholes), including structure drilling -2,324m (72 boreholes); trenching - 52,596m(3); assaying: core sampling - 7,085samples (7,041m core), slurry - 249 samples (256m core), lithogeochemical -1,110 samples (4,084m core). As the Petropavlovsk deposit, located 400m from Novogodnee Monto, is a vitalpart of the plan regarding the future development of the area, intensiveexploration works were continued here in 2007. Detailed drilling was carriedout in a grid of 40m x 20m in the northern section of the deposit. At the Petropavlovsk deposit a feasibility study was prepared using the datafrom the operational calculation of reserves. The feasibility study has set outthat the exploitation of the deposit is economically feasible provided that therealisation of output is achieved and that there is demand for stripped rock. Yamalskaya Gornaya Company During the period, OOO Yamalskaya Gornaya Company (YGK) carried out geologicalexploration works including office study and laboratory-analytical works and theinitial stages of field works on 8 projects contained in 6 licence areas. During the period, a complete summary was made for the Ozerno-Pyatirechensk areaof all geological, geophysical and geochemical information gathered from threeyears of field works based on the results of ore sampling from core drill holesand excavation (6,200 samples), aerial litho chemical (more than 8,000 samples)and geophysical exploration and geological observations following prospectingtraversing (more than 3,500 tonnes). Following this correlation of results, the previously forecast presence of threepotential ore bearing zones on the Ozernoye site was confirmed. A number ofmore prospective sites were singled out according to complex characteristics;the evaluation of these areas is expected to be carried out in 2007. Other Assets The Group has acquired seven new exploration licences in the Amur region, on avariety of prospective areas, some of which have already been extensivelyexplored and on which ore deposits are defined and reserves and resources havebeen established. These require some additional drilling to confirm. Meanwhile, exploration work continues, with promising results, on the Adamikhaand Gar-II licence areas in the middle of the Amur region. It is intended that detailed information will be made available together withthe Wardell Armstrong results during the fourth quarter of 2007. Chemical laboratories PHM's chemical laboratories have been working at their full capacity. In order to support exploration works at Malomir, in April 2007 the capacity ofthe Tokur laboratory was increased by 50% from 6,000 samples a month to 9,000samples a month (fire assay analyses) due to commissioning a separate samplepreparation department of the laboratory at the Malomir site. In June 2007, anew laboratory in Solovievsk was commissioned to support exploration works atthe Solovievskaya field. The capacity of this laboratory is 6,000 samples amonth (fire assay analyses). IFRS PHM plc has previously prepared its consolidated financial results under UnitedKingdom Generally Accepted Accounting Practices. With effect from 1 January2007, the Group is required to prepare its consolidated financial statements inaccordance with IFRS as adopted by the European Union (EU). The first full set of audited annual financial statements prepared under IFRSwill be for the year ending 31 December 2007, and the first interim reportprepared under IFRS is for the half year ended 30 June 2007. Gold price/Treasury The Group's average realised gold price for the period was US$652/oz, up 14%against US$573/oz during the first six months of 2006. The Russian roublestrengthened against the US Dollar by 2% during the period and was RuR25.82/US$at 30 June 2007 (RuR27.08/US$ - 30 June 2006, RuR26.33/US$ - 31 December 2006).The Group has a policy of no long term gold forward sales or hedging. Enquiries: Alya Samokhvalova +44 (0)20 7201 8900Director of External Communication, Peter Hambro Mining plc Patrick Magee +44 (0)20 7155 4525JP Morgan Cazenove David Simonson / Tom Randell +44 (0)20 7653 6620 Merlin This release has been reviewed by Dr. Stephen Henley, who is an independentgeological advisor to the Board of Directors of Peter Hambro Mining Plc. Dr.Henley is qualified to act in the capacity of a Competent Person for thepurposes of this statement. Dr. Stephen Henley holds a PhD in Geology(University of Nottingham, 1970). He is a Fellow of the Geological Society, aFellow of the Institution of Materials, Minerals and Mining, and a CharteredEngineer. He is also a Charter Member of the International Association forMathematical Geology. He has been employed in exploration, mining, academic andgeological consultancy posts since 1970 and has participated in Competent Personstudies on a variety of different minerals and types of deposit, including gold,polymetallic and chromite projects. In this interim report we present financial items such as "cash operatingcosts", "total cash costs" and "total production costs" that have beendetermined using industry standards as per the Gold Institute and are notmeasures under International Financial Reporting Standards. An investor shouldnot consider these items in isolation or as alternatives to any measure offinancial performance presented in accordance with IFRS either in this documentor in any document incorporated by reference herein. While the Gold Institute has provided definitions for the calculation of "cashoperating costs", "total cash costs" and "total production costs", thedefinitions of certain non-financial measures included herein may varysignificantly from those of other gold mining companies, and by themselves donot necessarily provide a basis for comparison with other gold mining companies.However, we believe that total cash costs and total production costs in total bymine and per ounce by mine are useful indicators to investors and management ofa mine's performance because they provide a very useful indication of a mine'sprofitability, efficiency and cash flows. They also show the trend in costs asthe mine matures over time and on a consistent basis. These costs can also beused as a benchmark of performance to allow for comparison against other minesof other gold mining companies. Independent Review Report to PETER HAMBRO MINING plc We have been instructed by the Company to review the financial information ofPeter Hambro Mining plc for the period ended 30 June 2007 which comprises theCondensed Consolidated Interim Income Statement, Condensed Consolidated InterimBalance Sheet, Condensed Consolidated Interim Statement of Cash Flows, and therelated notes 1 to 14. We have read the other information contained in theinterim report and considered whether it contains any apparent misstatements ormaterial inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the Directors. The Directorsare responsible for preparing the interim report in accordance with the AIMRules of the London Stock Exchange which require that the accounting policiesand presentation applied to the interim figures should be consistent with thoseapplied in preparing the preceding annual accounts except where any changes, andthe reasons for them, are disclosed. This interim report has been prepared inaccordance with International Accounting Standard 34, "Interim financialreporting". Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom. A reviewconsists principally of making enquiries of Group management and applyinganalytical procedures to the financial information and underlying financial dataand based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with International Standards on Auditing (UK andIreland) and therefore provides a lower level of assurance than an audit.Accordingly we do not express an audit opinion on the financial information. To the fullest extent permitted by law, we do not accept or assumeresponsibility to anyone other than the Company and the Company's members as abody, for our audit work, for this report, or for the opinions we have formed. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2007. St. Paul's House, MOORE STEPHENS LLPWarwick Lane, London Registered AuditorEC4M 7BP Chartered Accountants21 September 2007 PETER HAMBRO MINING plc Condensed Consolidated Interim Income Statement Note ------ Six months to Six months to Year to 30 June 2007 30 June 2006 31 December 2006 $'000 $'000 $'000 Gross revenue: group and share ofjoint ventures 99,244 63,108 177,034 ----------- ----------- -----------Group revenue 93,128 59,024 157,807 Net operating (57,793) (38,782) (108,184)expenses Operating profit 35,335 20,242 49,623 Share of results of joint ventures (767) (466) (173) Profit before finance items and tax 34,568 19,776 49,450 Financial income 3,227 4,272 7,429Financial expenses (5,970) (5,825) (11,764) Profit before taxation 31,825 18,223 45,115 Taxation 4 (9,953) (6,544) (12,742) ----------- ----------- ----------- Profit for the period 21,872 11,679 32,373 Attributable to:- equity holders of the company 21,444 11,572 31,986- minority interest 428 107 387 Earnings per ordinary share 11 $0.265 $0.146 $0.398 Diluted earnings per ordinary share 11 $0.265 $0.144 $0.398 The accompanying notes are an integral part of this Condensed ConsolidatedInterim Income Statement. PETER HAMBRO MINING plc Condensed Consolidated Interim Balance Sheet Note ------ 30 June 31 December 30 June 2007 2006 2006 $'000 $'000 $'000 AssetsNon-current assets 403,890 360,349 259,778Goodwill 16,291 13,396 156Intangible assets 145,604 155,266 120,838Property, plant and equipment 217,936 165,930 114,487Investments in joint ventures 9,659 10,534 10,249Other investments 5 965 1,022 764Inventories 13,435 14,201 13,284 -------- -------- ------- Current Assets 131,592 145,585 202,873Inventories 38,317 21,859 22,293Trade and other receivables 6 56,996 47,323 38,296Securities held for trading 6 10,207 13,937 -Cash and cash equivalents 6 26,072 62,466 142,284 -------- -------- ------- Total assets 535,482 505,934 462,651 LiabilitiesCurrent liabilities (50,317) (38,829) (31,873)Trade and other payables 6 (48,263) (37,856) (30,579)Current income tax liabilities 6 (2,054) (973) (1,294) -------- -------- ------- Net Current Assets 81,275 106,756 171,000 -------- -------- ------- Total Assets less Current 485,165 467,105 430,778Liabilities Non-current liabilities (159,519) (157,051) (162,511)Borrowings 6 (135,245) (134,740) (134,407)Deferred income tax liabilities (22,707) (21,744) (12,550)Provisions 7 (1,567) (567) (15,554) -------- -------- -------Net Assets 325,646 310,054 268,267 ======== ======== ======= Capital and reservesShare capital 8 1,311 1,311 1,298Share premium 35,082 35,082 17,797Other reserves 176,722 176,722 176,722Contingent reserve on acquisition - - 3,152Equity reserve on bonds 1,583 1,583 1,583Retained earnings 104,985 83,541 63,127 -------- -------- -------Equity attributable to PHM 319,683 298,239 263,679shareholdersMinority interests 5,963 11,815 4,588 -------- -------- -------Total equity 325,646 310,054 268,267 ======== ======== ======= The accompanying notes are an integral part of this Condensed ConsolidatedInterim Balance Sheet. These Condensed Consolidated Interim financial statements were approved by theDirectors on 21 September 2007 P.C.P. Hambro PETER HAMBRO MINING plc Condensed Consolidated Interim Cash Flow Statement Note ------ Six months to Six months to Year to 31 30 June 2007 30 June 2006 December 2006 $000 $000 $000Cash flows from operatingactivitiesCash generated from 9 19,932 10,091 47,607operationsInterest received 1,643 1,060 7,209Interest paid (5,045) (5,417) (10,935)Income tax paid (5,965) (3,894) (9,416) Net cash from operating 10,565 1,840 34,465activities Cash flows from investingactivitiesAcquisitions of (9,156) (991) (38,613)subsidiaries and jointventures net of cashacquiredPurchase of property, (28,228) (14,924) (30,394)plant and equipment andintangiblesExploration and evaluation (20,241) (17,398) (36,747)expenditureSecurities held for 3,792 - (13,845)tradingPayments to Reserve Bonus - - (15,000)Scheme holdersProceeds from sale of - 4,000 4,000investmentsavailable-for-saleAcquisition of other (21) (295) (537)investments Net cash used in investing (53,854) (29,608) (131,136)activities Cash flows from financingactivitiesNet proceeds from issue of - 17,822 17,822ordinary share capitalProceeds/repayment from/of 6,261 6,436 (5,622)borrowingsCapital element of finance - (193) (243)leases Net cash from financing 6,261 24,065 11,957activities Net decrease in cash and 10 (37,028) (3,703) (84,714)cash equivalents in theperiodEffect of exchange rates 10 634 1,453 2,646on cash and cashequivalentsCash and cash equivalents 10 62,466 144,534 144,534at beginning of periodCash and cash equivalents 10 26,072 142,284 62,466at end of period The accompanying notes are an integral part of this Condensed ConsolidatedInterim Cash Flow Statement. PETER HAMBRO MINING plc Condensed Consolidated Interim Statement of Changes in Equity Attributable to equity holders of the parent Note Capital Share Other Contingent Equity Retained Total Minority Total Total premium reserves reserve on reserve earnings interest equity Total $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Balance at 1 1,273 - 176,722 3,152 1,583 51,555 234,285 4,481 238,766January 2006------------ ------- ------- -------- ------- ------- ------- ------- ------- ------- Recognised - - - - - 11,572 11,572 107 11,679 income andexpensesNew shares 8 25 17,797 - - - - 17,822 - 17,822issued Balance at 1,298 17,797 176,722 3,152 1,583 63,127 263,679 4,588 268,267 30 June 2006 ------------ ------- ------- -------- ------- ------- ------- ------- ------- ------- Recognised - - - - - 20,414 20,414 280 20,694income andexpensesShares issued in relation toacquisition ofPeter HambroMining (Cyprus) Ltd 8 13 17,285 - (3,152) - - 14,146 - 14,146 Acquisition of subsidiaryundertakings - - - - - - - 6,748 6,748 Additional - - - - - - - 199 199acquisition of subsidiaryundertakings------------ ------- ------- -------- ------- ------- ------- ------- ------- -------Balance at 31 1,311 35,082 176,722 - 1,583 83,541 298,239 11,815 310,054December 2006------------- ------- ------- -------- ------- ------- ------- ------- ------- -------Recognised - - - - - 21,444 21,444 428 21,872income andexpenses Additional acquisition of subsidiaryundertakings 13 - - - - - - - (6,280) (6,280)------------- ------- ------- -------- ------- ------- ------- ------- ------- -------Balance at 1,311 35,082 176,722 - 1,583 104,985 319,683 5,963 325,64630 June 2007 ------------- ------- ------- -------- ------- ------- ------- ------- ------- ------- The accompanying notes are an integral part of this Condensed ConsolidatedInterim Statement of Changes in Equity. PETER HAMBRO MINING plc Condensed Consolidated Interim Financial Information for the period ended 30 June 2007 Notes Peter Hambro Mining plc restatement of 2006 Financial Information under IFRS INTRODUCTION Peter Hambro Mining plc and its subsidiaries ("PHM" or "the Group") havehistorically prepared their consolidated financial statements under UK GenerallyAccepted Accounting Practices ("UK GAAP"). PHM's shares are traded on theAlternative Investment Market ("AIM") of the London Stock Exchange. Under theAIM Rules companies are required to report under International FinancialReporting Standards ("IFRS") for the first time for accounting periods beginningon or after 1 January 2007. AIM Rule 18 requires AIM companies to produce ahalf-yearly report, but does not mandate the use of IAS 34. BASIS OF PREPARATION These interim financial statements do not constitute statutory accounts withinthe meaning of section 240 of the Companies Act 1985. The comparative figuresfor the financial year ended 31 December 2006 are not the Company's fullstatutory accounts for that year. A copy of the statutory accounts for that yearhas been delivered to the Registrar of Companies. The auditors' report on thoseaccounts was unqualified and did not contain any statements under section 237(2)or (3) of the Companies Act 1985. The comparative figures for the financial yearended 31 December 2006 have been abridged from the Group's statutory accountsfor that financial year, translated from UK GAAP to IFRS. The UK GAAP version ofthose accounts have been reported on by the Group's auditors and delivered tothe Registrar of Companies. These interim financial statements have been prepared in accordance with IAS 34"Interim Financial Reporting" and are covered by IFRS 1 "First-time Adoption ofIFRS", because they are part of the period covered by the Group's first IFRSfinancial statements for the year ended 31 December 2007. Except as describedbelow these condensed consolidated interim financial statements have beenprepared in accordance with all IFRS standards and IFRIC interpretations asadopted by the European Union issued and effective or issued and early adoptedas at the time of preparing these statements. The IFRS standards and IFRICinterpretations that will be applicable at 31 December 2007, including thosethat will be applicable on an optional basis, are not known with certainty atthe time of preparing these condensed consolidated interim financial statements.The policies set out below have been consistently applied to all the periodspresented. The following new standards, amendments to standards and interpretations havebeen issued, but are not effective for the financial year ending 31 December2007 and have not been early adopted: - IFRIC 11, "IFRS 2 - Group and treasury share transactions", effective for annual periods beginning on or after 1 March 2007. Management do not expect this interpretation to be relevant for the Group. - IFRIC 12, "Services concession arrangements", effective for annual periods beginning on or after 1 January 2008. Management do not expect this interpretation to be relevant for the Group. - IFRS 8, "Operating segments", effective for annual periods beginning on or after 1 January 2009, subject to EU endorsement. Management do not currently foresee any changes to the Group's business segments. The Group's consolidated financial statements were prepared in accordance withthe UK GAAP until 31 December 2006. UK GAAP differs in some areas from IFRS. Inpreparing these condensed consolidated interim financial statements, managementhas amended certain accounting, valuation and consolidation methods applied inthe UK GAAP financial statements to comply with IFRS. The comparative figures inrespect of 2006 were restated to reflect these adjustments, except as describedin the accounting policies. Reconciliations and descriptions of the effect of the transition from the UKGAAP to IFRS on the Group's equity and its net income and cash flows areprovided in Note 2. These financial statements are presented in United States dollars because thatis the currency of the primary economic environment in which the Group operates.Foreign operations are included in accordance with the policies set out in note1. The preparation of financial information in accordance with IAS 34 requires theuse of certain critical accounting estimates. It also requires management toexercise judgement in the process of applying the Company's accounting policies.The areas involving a higher degree of judgement or complexity, or areas whereassumptions and estimates are significant to the condensed consolidated interimfinancial statements are disclosed below. The Group's transition date to IFRS is 1 January 2006. The rules for first-timeadoption of IFRS are set out in IFRS 1 "First-time adoption of InternationalFinancial Reporting Standards". In preparing the 2006 IFRS financialinformation, these transition rules have been applied to the amounts reportedpreviously under UK GAAP. PETER HAMBRO MINING plc Condensed Consolidated Interim Financial Information for the period ended 30 June 2007 Notes (continued) Peter Hambro Mining plc restatement of 2006 Financial Information under IFRS(continued) BASIS OF PREPARATION (continued) IFRS 1 generally requires full retrospective application of the Standards andInterpretations in force at the first reporting date. However, IFRS 1 allowscertain exemptions in the application of particular Standards to prior periodsin order to assist companies with the transition process. PHM has applied thefollowing exemptions: - Designation of financial assets and financial liabilities exemption: the Group reclassified various securities as available-for-sale investments and as financial assets at fair value through profit and loss at the opening balance sheet date of 1 January 2006, the IFRS transition date. - Share-based payment transaction exemption: the Group has elected to apply the share-based payment exemption in respect of the C shares issued by Eponymousco Limited in April 2002. - Decommissioning liabilities included in the cost of property, plant and equipment exemption: the exemption provided in IFRS 1 from the full retrospective application of IFRIC 1 has been applied to determine the adjustment required to property, plant and equipment in respect of the obligation to decommission existing production facilities. The Group has not restated business combinations that occurred before the dateof transition to comply with IFRS 3 "Business Combinations". This means that: - The 2002 merger of the economic interests of Peter Hambro Mining plc and Eponymousco Limited structure continues to be accounted for as a merger. - Additional deferred tax provisions recognised in respect of fair value adjustment on a business combination have been recognised as a reduction of shareholders' funds on the date of transition. In addition, IFRS 1 requires that estimates made under IFRS must be consistentwith estimates made for the same date under UK GAAP except where adjustments arerequired to reflect any differences in accounting policies. UK GAAP financial information The UK GAAP financial information for the year ended 31 December 2006, presentedon pages 33 and 36, is based on the Group's full financial statements for thatyear, which were prepared in accordance with UK GAAP and on the historical costbasis. These financial statements have been filed with the Registrar ofCompanies. The UK GAAP financial information for the period ended 30 June 2006, presentedon pages 32 and 35, is based on the Group's half year report for that period,which was prepared using accounting policies consistent with those applied inthe Group's full financial statements for the year ended 31 December 2006. Thisinterim financial information is unaudited but reviewed. Certain changes have been made to the presentation of the UK GAAP financialinformation reported in the Group's full financial statements for the year ended31 December 2006 and half year report for the period ended 30 June 2006, asfollows: - The formats of the balance sheet, profit and loss account and cash flow statement have been modified to align them with the IFRS formats, to simplify presentation of the adjustments required to arrive at the IFRS figures; PETER HAMBRO MINING plc Condensed Consolidated Interim Financial Information for the period ended 30 June 2007 Notes (continued) Peter Hambro Mining plc restatement of 2006 Financial Information under IFRS(continued) 1. Accounting policies adopted under IFRS These condensed consolidated interim financial statements have been preparedunder the historical cost convention, as modified by the revaluation ofavailable-for-sale financial assets, and financial assets and financialliabilities (including derivative instruments) at fair value through profit orloss. The principal accounting policies adopted are set out below. Judgements in applying accounting policies and key sources of estimationuncertainty Many of the amounts included in the financial statements involve the use ofjudgement and/or estimation. These judgements and estimates are based onmanagement's best knowledge of the relevant facts and circumstances, havingregard to previous experience, but actual results may differ from the amountsincluded in the financial statements. Information about such judgements andestimation is contained in the accounting policies and/or the notes to thefinancial statements, and the key areas are summarised below. Areas of judgement that have the most significant effect on the amountsrecognised in the financial statements are: - Determination of mineral reserve estimates - note 1(f) - Asset impairments (including impairment of goodwill) - note 1(g) - Capitalisation of exploration and evaluation costs - note 1(e) - Deferral of stripping costs - note 1(h) - Reclamation and closure obligations - note 1(i) - Stockpiles, gold in process, ore on leach pads and product inventories - note 1(l) - Current income tax recognition - note 1(p) - Recoverable VAT. The Group is due refunds of input tax which remain outstanding for periods longer that those provided under statute in Russia. - Identification of functional currencies - note 1(b) a) Basis of consolidation The financial statements consist of the consolidation of the accounts of PeterHambro Mining plc and its subsidiaries. Subsidiaries Subsidiaries are all entities over which the Group has the power to govern thefinancial and operating policies, generally accompanying a shareholding of morethan one half of the voting rights. The existence and effect of potential votingrights that are currently exercisable or convertible are considered whenassessing whether the Group controls another entity. Subsidiaries are fullyconsolidated from the date on which control is transferred to the Group. Theyare de-consolidated from the date on which control ceases. The purchase method of accounting is used to account for the acquisition ofsubsidiaries by the Group. The cost of an acquisition is measured as the fairvalue of the assets given, equity instruments issued and liabilities incurred orassumed at the date of exchange, plus costs directly attributable to theacquisition. Identifiable assets acquired and liabilities and contingentliabilities assumed in a business combination are measured initially at theirfair values at the acquisition date, irrespective of the extent of any minorityinterest. The excess of the cost of acquisition over the fair value of theGroup's share of the identifiable net assets acquired is recorded as goodwill.If the cost of acquisition is less than the fair value of the Group's share ofthe net assets of the subsidiary acquired, the difference is recognised directlyin the income statement. Inter-company transactions, balances and unrealised gains on transactionsbetween Group companies are eliminated. Unrealised losses are also eliminatedunless the transaction provides evidence of an impairment of the assettransferred. Subsidiaries' accounting policies have been changed where necessaryto ensure consistency with the policies adopted by the Group. PETER HAMBRO MINING plc Condensed Consolidated Interim Financial Information for the period ended 30 June 2007 Notes (continued) Peter Hambro Mining plc restatement of 2006 Financial Information under IFRS(continued) 1. Accounting policies adopted under IFRS (continued) a) Basis of consolidation (continued) Joint ventures The Group's interests in jointly controlled entities are accounted for using theequity method of accounting. The Group's investment in joint ventures includesgoodwill (net of any accumulated impairment loss) identified on acquisition. The Group's share of its joint ventures' post-acquisition profits or losses isrecognised in the income statement, and its share of post-acquisition movementsin reserves is recognised in reserves. The cumulative post-acquisition movementsare adjusted against the carrying amount of the investment. Unrealised gains on transactions between the Group and its joint ventures areeliminated to the extent of the Group's interest in the joint ventures.Unrealised losses are also eliminated unless the transaction provides evidenceof an impairment of the asset transferred. Joint ventures' accounting policieshave been changed where necessary to ensure consistency with the policiesadopted by the Group. Acquisitions and disposals The results of businesses acquired during the year are brought into theconsolidated financial statements from the date of acquisition; the results ofbusinesses sold during the year are included in the consolidated financialstatements for the period up to the date of disposal. Gains or losses ondisposal are calculated as the difference between the sale proceeds (net ofexpenses) and the net assets attributable to the interest which has been sold. b) Foreign currency translation Functional and presentation currency Items included in the financial statements of each of the Group's entities aremeasured using the currency of the primary economic environment in which theentity operates (the functional currency). For the purpose of the consolidatedfinancial statements, the results and financial position of each Group companyare expressed in US Dollars, which is the functional currency of the Company andits subsidiaries. The consolidated financial statements are presented in USDollars, which is the Group's presentation currency. The rates of exchange used to translate balances from other currencies into USdollars were as follows (currency per US dollar): 30 June 31 December 30 June 2007 2006 2006Sterling 0.50 0.51 0.55Russian rouble 25.82 26.33 27.08 Transactions and balances Foreign currency transactions are translated into the functional currency usingthe exchange rates prevailing at the dates of the transactions. Foreign exchangegains and losses resulting from the settlement of such transactions and from thetranslation at the year-end exchange rates of monetary assets and liabilitiesdenominated in foreign currencies are recognised in the income statement.Foreign exchange gains and losses resulting from the settlement of foreigncurrency transactions and from the translation at year-end exchange rate ofmonetary assets and liabilities denominated in foreign currencies are recognisedin the income statement. Non-monetary items carried at fair value that aredenominated in foreign currencies are translated at the rates prevailing at thedate when the fair value was determined. Non-monetary items that are measured interms of historical cost in a foreign currency are not retranslated. PETER HAMBRO MINING plc Condensed Consolidated Interim Financial Information for the period ended 30 June 2007 Notes (continued) Peter Hambro Mining plc restatement of 2006 Financial Information under IFRS(continued) 1. Accounting policies adopted under IFRS (continued) c) Goodwill Goodwill represents the excess of the cost of an acquisition over the fair valueof the Group's share of the net identifiable assets of the acquired subsidiaryor joint venture at the date of acquisition. Goodwill on acquisitions ofsubsidiaries is included in non-current assets as a separate line item. Goodwillon acquisitions of joint ventures is included in "Investments in joint ventures"and is tested for impairment as part of the overall balance. Separatelyrecognised goodwill is tested annually for impairment and carried at cost lessaccumulated impairment losses. Impairment losses on goodwill are not reversed.Gains and losses on the disposal of an entity include the carrying amount ofgoodwill relating to the entity sold. Goodwill is allocated to cash-generating units for the purpose of impairmenttesting. The allocation is made to those cash-generating units or groups ofcash-generating units that are expected to benefit from the synergies of thebusiness combination in which the goodwill arose. The excess of the acquirer's interest in the net fair value of the identifiableassets, liabilities and contingent liabilities acquired over cost is recognisedimmediately in the income statement. d) Intangible assets Purchased intangible assets excluding mineral rights are recorded at cost lessaccumulated amortisation and impairment. Intangible assets acquired as part of an acquisition of a business arecapitalised separately from goodwill if the asset is separable or arises fromcontractual or legal rights, and the fair value can be measured reliably oninitial recognition. Intangible assets excluding mineral rights are amortised using a straight-linemethod based on estimated useful lives. e) Exploration and evaluation As part of the Group's transition to IFRS there have been no changes to theGroup's policy for the recognition and measurement of exploration and evaluationexpenditure. Exploration and evaluation expenditure related to an area of interest where theGroup has tenure are capitalised as intangible assets. Exploration and evaluation expenditure in the relevant area of interestcomprises costs which are directly attributable to: - researching and analysing existing exploration data; - conducting geological studies, exploratory drilling and sampling; - examining and testing extraction and treatment methods; and - compiling pre-feasibility and feasibility studies. Exploration and evaluation expenditure also includes the costs incurred inacquiring mineral rights, the entry premiums paid to gain access to areas ofinterest and amounts payable to third parties to acquire interests in existingprojects. Capitalised costs include general and administrative costs that areonly allocated to the extent that those costs can be related directly tooperation activities in the relevant area of interest. All capitalised exploration and evaluation expenditure is assessed forimpairment if facts and circumstances indicate that impairment may exist. Incircumstances where a property is abandoned, the cumulative capitalised costsrelating to the property are written off in the period. When development of a mine begins, exploration and evaluation assets aretransferred to mine development assets (see 1(f)). PETER HAMBRO MINING plc Condensed Consolidated Interim Financial Information for the period ended 30 June 2007 Notes (continued) Peter Hambro Mining plc restatement of 2006 Financial Information under IFRS(continued) 1. Accounting policies adopted under IFRS (continued) f) Property, plant and equipment Land and buildings, plant and equipment On initial recognition, land, property, plant and equipment are valued at cost,being the purchase price and the directly attributable cost of acquisition orconstruction required to bring the asset to the location and condition necessaryfor the asset to be capable of operating in the manner intended by the Group. Assets in the course of construction are capitalised in the capital constructionin progress account. On completion, the cost of construction is transferred tothe appropriate category of property, plant and equipment. Development expenditure Development expenditure incurred by or on behalf of the Group is accumulatedseparately for each area of interest in which economically recoverable resourceshave been identified. Such expenditure includes costs directly attributable tothe construction of a mine and the related infrastructure. Once a developmentdecision has been taken, the carrying amount of the exploration and evaluationexpenditure in respect of the area of interest is aggregated with thedevelopment expenditure and classified under non current assets as "minedevelopment assets". Mine development assets are reclassified as "miningproperties" at the end of the commissioning phase, when the mine is capable ofoperating in the manner intended by management. No depreciation is recognised inrespect of mine development assets until they are reclassified as "miningproperties". Mine development assets are tested for impairment in accordancewith the policy in note 1(g). Subsequent costs are included in the asset's carrying amount or recognised as aseparate asset, as appropriate, only when it is probable that future economicbenefits associated with the item will flow to the Group and the cost of theitem can be measured reliably. All other repairs and maintenance are charged tothe income statement during the financial period in which they are incurred. Depreciation Depreciation is provided so as to write off the cost, less estimated residualvalues of property, plant and equipment as follows: Mine production assets and certain mining equipment, where economic benefitsfrom the asset are consumed in a pattern which is linked to the productionlevel, are depreciated using a unit of production method based on estimatedeconomically recoverable reserves, which results in a depreciation chargeproportional to the depletion of reserves. Subsequently these assets aremeasured at cost less accumulated depreciation and impairment. Capitalised mine development expenditure is, upon commencement of production andreclassified to "mining properties", depreciated using a unit of productionmethod based on the estimated economically recoverable reserves to which theyrelate or are written-off if the property is abandoned. Certain capitalised minedevelopment costs related to alluvial gold operations are, upon commencement ofproduction, depreciated using the straight-line method based on estimated usefullives or the life of the relevant license, whichever is shorter. Other tangible fixed assets are recorded at cost, net of accumulateddepreciation. Depreciation is provided on all such tangible assets using thestraight-line method based on estimated useful lives, or over the remaining lifeof the mine if shorter. Average lifeBuildings 15 - 50Plant and machinery 3 - 20Vehicles 5 - 7Office equipment 5 - 10Computer equipment 3 - 5 PETER HAMBRO MINING plc Condensed Consolidated Interim Financial Information for the period ended 30 June 2007 Notes (continued) Peter Hambro Mining plc restatement of 2006 Financial Information under IFRS(continued) 1. Accounting policies adopted under IFRS (continued) f) Property, plant and equipment (continued) Residual values and useful lives are reviewed, and adjusted if appropriate, ateach balance sheet date. Changes to the estimated residual values or usefullives are accounted for prospectively. In applying the units of production method, depreciation is normally calculatedusing the quantity of material processed at the mine in the period as apercentage of the total quantity of material to be extracted in current andfuture periods based on proven and probable reserves (and, for some mines,mineral resources). In assessing the life of a mine for accounting purposes,mineral resources are only taken into account where there is a high degree ofconfidence of economic extraction. g) Impairment of non-financial assets Property, plant and equipment and finite life intangible assets are reviewed forimpairment if there is any indication that the carrying amount may not berecoverable. This applies to the Group's share of the assets held by the jointventures as well as the assets held by the Group itself. When a review for impairment is conducted, the recoverable amount is assessed byreference to the higher of "value in use" (being the net present value ofexpected future cash flows of the relevant cash generating unit) or "fair valueless costs to sell". Where there is no binding sale agreement or active market,fair value less costs to sell is based on the best information available toreflect the amount the Group could receive for the cash generating unit in anarm's length transaction. Future cash flows are based on: - estimates of the quantities of the reserves and mineral resources for which there is a high degree of confidence of economic extraction; - future production levels; - future commodity prices (assuming the current market prices will revert to the Group's assessment of the long term average price, generally over a period of three to five years); and - future cash costs of production, capital expenditure, environment protection, rehabilitation and closure. IAS 36 "Impairment of assets" includes a number of restrictions on the futurecash flows that can be recognised in respect of future restructurings andimprovement related capital expenditure. When calculating "value in use", italso requires that calculations should be based on exchange rates current at thetime of the assessment. For operations with a functional currency other than the US dollar, theimpairment review is undertaken in the relevant functional currency. Theseestimates are based on detailed mine plans and operating budgets, modified asappropriate to meet the requirements of IAS 36 "Impairment of assets". The discount rate applied is based upon pre-tax discount rate that reflectscurrent market assessments of the time value of money and the risks associatedwith the relevant cash flows, to the extent that such risks are not reflected inthe forecast cash flows. If the carrying amount of the asset exceeds its recoverable amount, the asset isimpaired and an impairment loss is charged to the income statement so as toreduce the carrying amount in the balance sheet to its recoverable amount. Apreviously recognised impairment loss is reversed if the recoverable amountincreases as a result of a reversal of the conditions that originally resultedin the impairment. This reversal is recognised in the income statement and islimited to the carrying amount that would have been determined, net ofdepreciation, had no impairment loss been recognised in prior years. PETER HAMBRO MINING plc Condensed Consolidated Interim Financial Information for the period ended 30 June 2007 Notes (continued) Peter Hambro Mining plc restatement of 2006 Financial Information under IFRS(continued) 1. Accounting policies adopted under IFRS (continued) h) Deferred stripping costs Stripping (i.e. overburden and other waste removal) costs incurred in thedevelopment of a mine before production commences are capitalised as part of thecost of constructing the mine and subsequently amortised over the life of theoperation. The Group defers stripping costs incurred subsequently, during the productionstage of its operations, for those operations where this is the most appropriatebasis for matching the costs against the related economic benefits. This isgenerally the case where there are fluctuations in stripping costs over the lifeof the mine, and the effect is material. Deferred stripping costs are charged tooperating costs on the basis of allocating the actual volume of stripping to theblocs of ore mined. Where actual allocation of deferred stripping is notfeasible deferred stripping costs are charged to operating costs on the basis ofthe average life of the mine stripping ratio. The average stripping ratio iscalculated as the number of cubic metres of waste material removed per tonne ofore mined. The average life of the mine ratio is revised annually in the lightof additional knowledge and change in estimates. i) Provisions for close down and restoration costs Close down and restoration costs include the dismantling and demolition ofinfrastructure and the removal of residual materials and remediation ofdisturbed areas. Close down and restoration costs are provided for in theaccounting period when the legal or constructive obligation arising from therelated disturbance occurs, whether this occurs during the mine development orduring the production phase, based on the net present value of estimated futurecosts. Provisions for close down and restoration costs do not include anyadditional obligations which are expected to arise from future disturbance. Thecosts are estimated on the basis of a closure plan. The cost estimates arecalculated annually during the life of the operation to reflect knowndevelopments and are subject to formal review at regular intervals. The amortisation or "unwinding" of the discount applied in establishing the netpresent value of provisions is charged to the income statement in eachaccounting period. The amortisation of the discount is shown as a financingcost, rather than as an operating cost. Other movements in the provisions forclose down and restoration costs, including those resulting from newdisturbance, updated cost estimates, changes to the lives of operations andrevisions to discount rates are capitalised within property, plant andequipment. These costs are then depreciated over the lives of the assets towhich they relate. Where rehabilitation is conducted systematically over the life of the operation,rather than at the time of closure, provision is made for the outstandingcontinuous rehabilitation work at each balance sheet date. All other costs ofcontinuous rehabilitation are charged to the income statement as incurred. PETER HAMBRO MINING plc Condensed Consolidated Interim Financial Information for the period ended 30 June 2007 Notes (continued) Peter Hambro Mining plc restatement of 2006 Financial Information under IFRS(continued) 1. Accounting policies adopted under IFRS (continued) j) Financial instruments Financial instruments recognised in the balance sheet include other investments,convertible bonds, trade and other receivables, cash and cash equivalents,borrowings, derivatives, securities held for trading and trade and otherpayables. Financial instruments are initially measured at fair value when the Groupbecomes a party to their contractual arrangements. Transaction costs areincluded in the initial measurement of financial instruments, except financialinstruments classified as at fair value through profit and loss. The subsequentmeasurement of financial instruments is dealt with below. Trade and other receivables Trade receivables are recognised initially at fair value and subsequentlymeasured at amortised cost using the effective interest method, less accumulatedimpairment. Impairment of trade and other receivables is established when thereis objective evidence as a result of a loss event that the Group will not beable to collect all amounts due according to the original terms of thereceivables. The amount of the impairment is the difference between the asset'scarrying amount and the present value of estimated future cash flows, discountedat the original effective interest rate. The impairment is recognised in theincome statement. Other investments Listed investments and unlisted equity investments, other than investments insubsidiaries, joint ventures, and associates, are classified asavailable-for-sale financial assets and subsequently measured at fair value. Listed investments fair values are calculated by reference to the quoted sellingprice at the close of business on the balance sheet date. Fair values forunlisted equity investments are estimated using methods reflecting the economiccircumstances of the investee. Equity investments for which fair value cannot bemeasured reliably are recognised at cost less impairment. Changes in fair valueare recognised in equity in the period in which they arise. These amounts areremoved from equity and reported in income when the asset is derecognised orwhen there is evidence that the asset is impaired. Investments which management has the ability to hold to maturity are classifiedas held-to-maturity financial assets and are subsequently measured at amortisedcost using the effective interest rate method. If there is evidence that held-tomaturity financial assets are impaired, the carrying amount of the assets isreduced and the loss recognised in the income statement. Financial assets at fair value through profit or loss This category has two sub-categories: financial assets held for trading, andthose designated at fair value through profit or loss at inception. A financialasset is classified in this category if acquired principally for the purpose ofselling in the short term or if so designated by management. Derivatives arealso categorised as held for trading unless they are designated as hedges.Assets in this category are classified as current if they are either held fortrading or are expected to be realised within 12 months of the balance sheetdate. Cash and cash equivalents Cash and cash equivalents are defined as cash on hand, demand deposits andshort-term, highly liquid investments readily convertible to known amounts ofcash and subject to insignificant risk of changes in value and are measured atcost which is deemed to be fair value as they have a short-term maturity. Financial liabilities Financial liabilities, other than derivatives, are subsequently measured atamortised cost, using the effective interest rate method. PETER HAMBRO MINING plc Condensed Consolidated Interim Financial Information for the period ended 30 June 2007 Notes (continued) Peter Hambro Mining plc restatement of 2006 Financial Information under IFRS(continued) 1. Accounting policies adopted under IFRS (continued) j) Financial instruments (continued) Borrowings Borrowings are recognised initially at fair value, net of transaction costsincurred. Borrowings are subsequently stated at amortised cost; any differencebetween the proceeds (net of transaction costs) and the redemption value isrecognised in the income statement over the period of the borrowings using theeffective interest method. The fair value of the liability portion of a convertible bond is determinedusing a market interest rate for an equivalent non-convertible bond. This amountis recorded as a liability on an amortised cost basis until extinguished onconversion or maturity of the bonds. The remainder of the proceeds is allocatedto the conversion option. This is recognised and included in shareholders'equity, net of income tax effects. Borrowings are classified as current liabilities unless the group has anunconditional right to defer settlement of the liability for at least 12 monthsafter the balance sheet date. Trade payables Trade payables are recognised initially at fair value and subsequently measuredat amortised cost using the effective interest method. Equity instruments An equity instrument is any contract that evidences a residual interest in theassets of the Group after deducting all of its liabilities. Equity instrumentsissued are recorded at the proceeds received, net of direct issue cost. The Group assesses at each balance sheet date whether there is objectiveevidence that a financial asset or a group of financial assets is impaired. Inthe case of equity securities classified as available for sale, a significant orprolonged decline in the fair value of the security below its cost is consideredin determining whether the securities are impaired. If any such evidence existsfor available-for-sale financial assets, the cumulative loss - measured as thedifference between the acquisition cost and the current fair value, less anyimpairment loss on that financial asset previously recognised in profit or loss- is removed from equity and recognised in the income statement. Impairmentlosses recognised in the income statement on equity instruments are not reversedthrough the income statement. k) Provisions Provisions are recognised when the Group has a present obligation, whether legalor constructive, as a result of a past event for which it is probable that anoutflow of resources embodying economic benefits will be required to settle theobligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at the present value of management's best estimate ofthe expenditure required to settle the obligation at the balance sheet date. Thediscount rate used to determine the present value reflects current marketassessments of the time value of money and the risks specific to the liability. PETER HAMBRO MINING plc Condensed Consolidated Interim Financial Information for the period ended 30 June 2007 Notes (continued) Peter Hambro Mining plc restatement of 2006 Financial Information under IFRS(continued) 1. Accounting policies adopted under IFRS (continued) l) Inventories Inventories are valued at the lower of cost and net realisable value afterappropriate allowances for redundant and slow moving items. Net realisable valuerepresents estimated selling price in the ordinary course of business less anyfurther costs expected to be incurred to completion. Cost is determined on thefollowing bases: - gold in process is valued at the average total production cost at the relevant stage of production; - gold on hand is valued on an average total production cost method; - ore stockpiles are valued at the average moving cost of mining and stockpiling the ore. Stockpiles are allocated as a non-current asset where the stockpile exceeds current processing capacity; - consumable stores are valued at average cost; and - heap leach pad materials are measured on an average total production cost basis. The cost of materials on the leach pad from which gold is expected to be recovered in a period greater than 12 months is classified as a non-current asset. A portion of the related depreciation, depletion and amortisation chargerelating to production is included in the cost of inventory. m) Leases Leases of property, plant and equipment where the Group has substantially allthe risks and rewards of ownership are classified as finance leases. Financeleases are capitalised at the lease's inception at the lower of the fair valueof the leased property and the present value of the minimum lease payments. Eachlease payment is allocated between the liability and finance charges so as toachieve a constant rate on the finance balance outstanding. The correspondingrental obligations, net of finance charges, are included in other long-termpayables. The interest element of the finance cost is charged to the incomestatement over the lease period so as to produce a constant periodic rate ofinterest on the remaining balance of the liability for each period. Leases where the lessor retains substantially all the risks and rewards ofownership are classified as operating leases. Payments made under operatingleases (net of any incentives received from the lessor) are charged to theincome statement on a straight-line basis over the period of the lease. n) Revenue recognition Revenue is recognised at the fair value of the consideration received orreceivable to the extent that it is probable that the economic benefits willflow to the group and the revenue can be reliably measured. Revenue derived fromgoods and services comprises the fair value of the sale of goods and services tothird parties, net of value added tax, rebates and discounts. The followingcriteria must also be present: - the sale of mining products is recognised when the significant risks and rewards of ownership of the products are transferred to the buyer; - revenue derived from services is recognised in the accounting period in which the services are rendered; - revenue from bulk sample sales made during the exploration or development phases of operations is recognised as a sale in the income statement; - dividends are recognised when the right to receive payment is established; and - interest is recognised on a time proportion basis, taking account of the principal outstanding and the effective rate over the period to maturity, when it is determined that such income will accrue to the Group. PETER HAMBRO MINING plc Condensed Consolidated Interim Financial Information for the period ended 30 June 2007Notes (continued) Peter Hambro Mining plc restatement of 2006 Financial Information under IFRS(continued) 1. Accounting policies adopted under IFRS (continued) o) Borrowing costs Interest on borrowings relating to the financing of major capital projects underconstruction is capitalised during the construction phase as part of the cost ofthe project. Such borrowing costs are capitalised over the period during whichthe asset is being acquired or constructed and borrowings have been incurred.Capitalisation ceases when construction is interrupted for an extended period orwhen the asset is substantially complete. Other borrowing costs are expensed as incurred. p) Taxation Current tax is the tax expected to be payable on the taxable income for the yearcalculated using rates that have been enacted or substantively enacted by thebalance sheet date. It includes adjustments for tax expected to be payable orrecoverable in respect of previous periods. Full provision is made for deferred taxation on all temporary differencesexisting at the balance sheet date with certain limited exceptions. Temporarydifferences are the difference between the carrying value of an asset orliability and its tax base. The main exceptions to this principle are asfollows: - tax payable on the future remittance of the past earnings of subsidiaries, associates and jointly controlled entities is provided for except where the Company is able to control the remittance of profits and it is probable that there will be no remittance in the foreseeable future; - deferred tax is not provided on the initial recognition of goodwill or from the initial recognition of an asset or liability in a transaction that does not affect accounting profit or taxable profit and is not a business combination, such as on the recognition of a provision for close down and restoration costs and the related asset or on the inception of finance lease; and - deferred tax assets are recognised only to the extent that it is more likely than not that they will be recovered. Deferred tax is provided in respect of fair value adjustments on acquisitions.These adjustments may relate to assets such as mining rights that, in general,are not eligible for income tax allowances. In such cases, the provision fordeferred tax is based on the difference between the carrying value of the assetand its nil income tax base. Deferred tax is calculated at the tax rates that are expected to apply in theperiod when the liability is settled or the asset is realised. Deferred tax ischarged or credited in the income statement, except when it relates to itemscharged or credited directly to equity, in which case the deferred tax is alsodealt with in equity. Deferred tax assets and liabilities are offset when there is a legallyenforceable right to set-off current tax assets against current tax liabilitiesand when they relate to income taxes levied by the same taxation authority andthe Group intends to settle its current tax assets and liabilities on a netbasis. q) Employee benefits The Group operates a defined contribution pension scheme for the benefit of itsemployees. The funds of the scheme are administered by independent trustees andare separate from the Group. Contributions are recognised as they fall due. PETER HAMBRO MINING plc Condensed Consolidated Interim Financial Information for the period ended 30 June 2007 Notes (continued) 2. IFRS Reconciliation to UK GAAP Reconciliation of profit for the six months ended 30 June 2006 and the yearended 31 December 2006 Note ------ Six months Year ended ended 31 December 30 June 2006 2006 $'000 $'000 Total net income under UK GAAP 11,118 30,556attributable to equity holder of thecompany Write-back of negative goodwill a) - (176) Restatement of depreciation charge as a b) 272 490result of changes in the accountingpolicies Reversal of restoration and closing costs c) 21 117under UK GAAPCapitalised close down and restoration c) (18) (33)costsUnwinding of discount on provision c) (13) (24) Allocation of revised depreciation charge d) 77 (24)to inventories Deferred tax - on fair value adjustment e) 107 318Deferred tax - on other IFRS adjustments e) (274) 179 Share of JVs adjustments f) 283 551 Adjustment to minority interest (1) 32 ---------- ----------Total net income under IFRS attributable 11,572 31,986to equity holder of the company ---------- ---------- PETER HAMBRO MINING plc Condensed Consolidated Interim Financial Information for the period ended 30 June 2007 Notes (continued) Reconciliation of equity at 01 January 2006, 30 June 2006 and 31 December 2006 Note ------ 1 January 30 June 31 December 2006 2006 2006 $'000 $'000 $'000 Total equity under UK GAAP 244,449 273,493 316,289 Write-back of negative goodwill a) 176 176 - Restatement of depreciation charge b) - 272 490as a result of changes in theaccounting policies Reversal of restoration and closing c) 172 193 289costs under UK GAAPCapitalised close down and c) (129) (144) (162)restoration costsUnwinding of discount on c) (92) (105) (116)provision Allocation of revised depreciation d) 1,962 2,039 1,938charge to inventories Deferred tax - on fair value e) (4,104) (3,997) (3,786)adjustmentDeferred tax - on other IFRS e) (3,773) (4,047) (3,594)adjustmentsMinority interest - on fair value e) - - (1,950)adjustment Share of JVs adjustments f) 105 387 656 ---------- ---------- --------- Total equity under IFRS 238,766 268,267 310,054 ---------- ---------- --------- The above amounts include minority interests which under IFRS are classified asequity. The principal differences between UK GAAP and IFRS impacting on the Group'sincome statements, balance sheets and equity reconciliations are as follows: a) Write-back of negative goodwill Under IFRS any negative goodwill must be recognised immediately in the statementof income after reassessment, identification and measurement of the acquiree'sidentifiable net assets and the measurement of the combination's costs; b) Restatement of depreciation charge as a result of changes in theaccounting policies Depreciation policy in respect of certain non-current tangible assets waschanged from straight-line method to unit-of-production method of depreciationNote 1(f); c) A provisions for close down and restoration costs Provision and related non-current asset was recognised under IAS 37 "Provisions,Contingent Liabilities and Contingent Assets" in accordance with the IFRSaccounting policies Note 1(i). Previously recognised costs were reversedaccordingly; d) Allocation of revised depreciation charge to inventories A portion of the related depreciation and amortisation charge is included in thecost of inventories. PETER HAMBRO MINING plc Condensed Consolidated Interim Financial Information for the period ended 30 June 2007 Notes (continued) 2. IFRS Reconciliation to UK GAAP (continued) e) Deferred tax - Deferred tax on fair value adjustments arising on acquisitions. IFRS requires deferred tax to be recognised on all fair value adjustments, other than those recorded as goodwill. The profit under IFRS will benefit as the additional deferred tax provisions are released to the income statement in line with amortisation of the related fair value adjustments. For acquisitions prior to 1 January 2006, the increase in deferred tax provisions was reflected as a reduction in opening shareholders' equity. For acquisitions after 1 January 2006, these additional deferred tax provisions are offset by increases to the value of goodwill or other acquired assets. - Deferred tax related to other IFRS adjustments. f) Share of joint ventures' adjustments The Group has adopted equity accounting for all jointly controlled entities.Principal IFRS adjustments in joint ventures are as follows: - Reversal of goodwill amortisation. The systematic amortisation of goodwill under UK GAAP, by an annual charge to the profit and loss account, ceased under IFRS. - Restatement of depreciation charge as a result of changes in the accounting policies. Depreciation policy in respect of certain non-current tangible assets was changed from straight-line method to unit-of-production method of depreciation Note 1(f) - Deferred tax on fair value adjustments arising on acquisitions. PETER HAMBRO MINING plc Condensed Consolidated Interim Financial Information for the period ended 30 June 2007 Notes (continued) 2. IFRS Reconciliation to UK GAAP (continued) Income statement reconciliation A reconciliation between the UK GAAP and IFRS profit for the six months ended 30June 2006 is provided below. The UK GAAP profit and loss account has beenpresented in an IFRS income statement format. Note ------ GAAP Adjustment IFRS Six months to Six months to 30 June 2006 30 June 2006 $'000 $'000 $'000 Gross revenue: group and share ofjoint ventures 63,108 - 63,108 ----------- ----------- -----------Group revenue 59,024 - 59,024 Net operating (39,134) 352 (38,782)expenses Operating profit 19,890 352 20,242 Share of results (749) 283 (466)of joint ventures Profit before 19,141 635 19,776finance items and tax Financial income 4,272 - 4,272Financial c) (5,812) (13) (5,825)expenses Profit before 17,601 622 18,223taxation Taxation (6,377) (167) (6,544) ----------- ----------- -----------Profit for the period 11,224 455 11,679 Attributable to:- equity holders 11,118 454 11,572of the company- minority 106 1 107interest The UK GAAP amounts are based on the UK GAAP profit and loss account adjusted tobe consistent with the 2006 IFRS income statement. The main reclassification wasto show share of results of joint ventures as one line on the face of the incomestatement. PETER HAMBRO MINING plc Condensed Consolidated Interim Financial Information for the period ended 30 June 2007 Notes (continued) 2. IFRS Reconciliation to UK GAAP (continued) Income statement reconciliation (continued) A reconciliation between the UK GAAP and IFRS profit for the year ended 31December 2006 is provided below. The UK GAAP profit and loss account has beenpresented in an IFRS income statement format. Note ------ GAAP Adjustment IFRS Year to Year to 31 December 31 December 2006 2006 $'000 $'000 $'000 Gross revenue: group and 177,034 - 177,034share of joint ventures ----------- ----------- -----------Group revenue 157,807 - 157,807 Net operating expenses (108,558) 374 (108,184) Operating profit 49,249 374 49,623 Share of results of joint (724) 551 (173)ventures Profit before finance 48,525 925 49,450items and tax Financial income 7,429 - 7,429Financial expenses c) (11,740) (24) (11,764) Profit before taxation 44,214 901 45,115 Taxation (13,239) 497 (12,742) ----------- ----------- ----------- Profit for the period 30,975 1,398 32,373 Attributable to:- equity holders of the 30,556 1,430 31,986company- minority interest 419 (32) 387 The UK GAAP amounts are based on the UK GAAP profit and loss account adjusted tobe consistent with the 2006 IFRS income statement. The main reclassification wasto show share of results of joint ventures as one line on the face of the incomestatement. PETER HAMBRO MINING plc Condensed Consolidated Balance Sheet At 31 December 2006 Notes (continued) 2. IFRS Reconciliation to UK GAAP (continued) Balance Sheet reconciliations A reconciliation between the UK GAAP and IFRS consolidated balance sheet at 1January 2006 (date of transition to IFRS) is provided below. The UK GAAP balancesheet has been amended to an IFRS presentation. Note ------ GAAP Adjustment IFRS 31 December 1 January 2005 2006 $'000 $'000 $'000 AssetsNon-current assets 226,161 1,504 227,665Goodwill a) (176) 176 -Intangible assets incl. 132,786 (29,911) 102,875exploration and development** Property, plant and equipment b), c) 74,959 30,232 105,191 Investments in joint ventures f) 10,609 105 10,714Other investments 448 - 448Inventories d) 7,535 902 8,437 -------- -------- --------Current Assets 191,793 1,060 192,853Inventories d) 15,986 1,060 17,046Trade and other 31,273 - 31,273receivablesCash and cash equivalents 144,534 - 144,534 -------- -------- -------- Total assets 417,954 2,564 420,518LiabilitiesCurrent liabilities (18,909) - (18,909)Trade and other payables (17,735) - (17,735)Current income tax (1,174) - (1,174)liabilities -------- -------- -------- Net Current Assets 172,884 1,060 173,944 -------- -------- -------- Total Assets less Current 399,045 2,564 401,609Liabilities Non-current liabilities (154,596) (8,247) (162,843)Creditors, amounts falling (2,250) - (2,250)due after one yearBorrowings (133,920) - (133,920)Deferred income tax e) (1,182) (7,877) (9,059)liabilitiesProvisions c) (17,244) (370) (17,614) -------- -------- --------Net Assets 244,449 (5,683) 238,766 ======== ======== ======== Capital and reservesShare capital 1,273 - 1,273Other reserves 176,722 - 176,722Merger reserve *** 8,755 (8,755) -Contingent reserve on acquisition 3,152 - 3,152Equity reserve on bonds 1,583 - 1,583Retained earnings 48,440 3,115 51,555 -------- -------- --------Equity attributable to PHM shareholders 239,925 (5,640) 234,285Minority interests * 4,524 (43) 4,481 -------- -------- --------Total equity 244,449 (5,683) 238,766 ======== ======== ======== PETER HAMBRO MINING plc Condensed Consolidated Balance Sheet At 31 December 2006 Notes (continued) 2. IFRS Reconciliation to UK GAAP (continued) Balance Sheet reconciliations (continued) A reconciliation between the UK GAAP and IFRS consolidated balance sheet at 30June 2006 is provided below. The UK GAAP balance sheet has been amended to anIFRS presentation. Note ------ GAAP Adjustment IFRS 30 June 2006 30 June 2006 $'000 $'000 $'000 AssetsNon-current assets 257,149 2,629 259,778Goodwill a) (176) 332 156Intangible assets incl. 149,770 (28,932) 120,838exploration anddevelopment **Property, plant and b), c) 84,977 29,510 114,487equipmentInvestments in joint f) 9,862 387 10,249venturesOther investments 764 - 764Inventories d) 11,952 1,332 13,284 -------- -------- --------- Current Assets 202,166 707 202,873Inventories d) 21,586 707 22,293Trade and other 38,296 - 38,296receivablesCash and cash 142,284 - 142,284equivalents -------- -------- --------- Total assets 459,315 3,336 462,651 LiabilitiesCurrent liabilities (31,873) - (31,873)Trade and other (30,579) - (30,579)payablesCurrent income tax (1,294) - (1,294)liabilities -------- -------- --------- Net Current Assets 170,293 707 171,000 -------- -------- --------- Total Assets less 427,442 3,336 430,778Current Liabilities Non-current (153,949) (8,562) (162,511)liabilitiesBorrowings (134,407) - (134,407)Deferred income tax e) (4,349) (8,201) (12,550)liabilitiesProvisions c) (15,193) (361) (15,554) -------- -------- ---------Net Assets 273,493 (5,226) 268,267 ======== ======== ========= Capital and reservesShare capital 1,298 - 1,298Share premium 17,797 - 17,797Other reserves 176,722 - 176,722 Merger reserve *** 8,755 (8,755) -Contingent reserve on acquisition 3,152 - 3,152Equity reserve on bonds 1,583 - 1,583Retained earnings 59,557 3,570 63,127 -------- -------- ---------Equity attributable to PHM shareholders 268,864 (5,185) 263,679Minority interests * 4,629 (41) 4,588 -------- -------- ---------Total equity 273,493 (5,226) 268,267 ======== ======== ========= PETER HAMBRO MINING plc Condensed Consolidated Balance Sheet At 31 December 2006 Notes (continued) 2. IFRS Reconciliation to UK GAAP (continued) Balance Sheet reconciliations (continued) A reconciliation between the UK GAAP and IFRS consolidated balance sheet at 31December 2006 is provided below. The UK GAAP balance sheet has been amended toan IFRS presentation. Note ------ GAAP Adjustment IFRS 31 December 31 December 2006 2006 $'000 $'000 $'000 AssetsNon-current assets 349,718 10,631 360,349Goodwill a), e) 5,439 7,957 13,396Intangible assets incl. 183,220 (27,954) 155,266exploration and development **Property, plant and equipment b), c) 137,197 28,733 165,930Investments in joint ventures f) 9,878 656 10,534Other investments 1,022 - 1,022Inventories d) 12,962 1,239 14,201 -------- -------- -------- Current Assets 144,886 699 145,585Inventories d) 21,160 699 21,859Trade and other receivables 47,323 - 47,323Securities held for trading 13,937 - 13,937Cash and cash equivalents 62,466 - 62,466 -------- -------- -------- Total assets 494,604 11,330 505,934 LiabilitiesCurrent liabilities (38,829) - (38,829)Trade and other payables (37,856) - (37,856)Current income tax liabilities (973) - (973) -------- -------- -------- Net Current Assets 106,057 699 106,756 -------- -------- -------- Total Assets less Current 455,775 11,330 467,105Liabilities Non-current liabilities (139,486) (17,565) (157,051)Borrowings (134,740) - (134,740)Deferred income tax e) (4,457) (17,287) (21,744)liabilitiesProvisions c) (289) (278) (567) -------- -------- --------Net Assets 316,289 (6,235) 310,054 ======== ======== ======== Capital and reservesShare capital 1,311 - 1,311Share premium 35,082 - 35,082Other reserves 176,722 - 176,722 Merger reserve *** 8,755 (8,755) -Equity reserve on bonds 1,583 - 1,583Retained earnings 78,996 4,545 83,541 -------- -------- --------Equity attributable to PHM shareholders 302,449 (4,210) 298,239Minority interests * 13,840 (2,025) 11,815 -------- -------- --------Total equity 316,289 (6,235) 310,054 ======== ======== ======== PETER HAMBRO MINING plc Condensed Consolidated Balance Sheet At 31 December 2006 Notes (continued) 2. IFRS Reconciliation to UK GAAP (continued) Balance Sheet reconciliations (continued) The UK GAAP amounts are based on the UK GAAP balance sheet adjusted to beconsistent with the 2006 IFRS statement. The main reclassifications were asfollows: * Minority interests have been reclassified to a separate component of equity. Under UK GAAP they were reported as a liability. ** Exploration and development assets have been reclassified to intangible assets and property, plant and equipment accordingly. *** Merger reserve has been reclassified to retained earnings. Various other categories have been renamed in accordance with IFRS. Cash flow statements The presentation of certain items in the cash flow statement prepared under IAS7 "Cash Flow Statements" differs to the previous presentation under UK GAAP. Under IFRS, cash flows are segregated into three categories: operating,investing and financing. This differs from UK GAAP which requires additional subcategories. Foreign currency exchange differences are also recorded on the faceof the cash flow statement under IFRS. The cash inflows and outflows under IFRSalso differ to those reported under UK GAAP. PETER HAMBRO MINING plc Condensed Consolidated Interim Financial Information for the period ended 30 June 2007 Notes (continued) 3. Business segment information Gold mining Construction and Exploration and Corporate Consolidated other services evaluation Six Six Six Six Six Six Six Six Six Six months months months months months months months months months months 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Revenue---------Gold sales 70,366 51,478 - - - - - - 70,366 51,478 Silver sales - 286 - - - - - - - 286 Other external - - 21,440 6,407 751 853 571 - 22,762 7,260 salesInter-segment - - 7,736 3,244 8,047 3,969 3,935 3,212 19,718 0,425 sales ------ ------ ------ ------ ------ ------ ------ ------ ------ ------Subtotal 70,366 51,764 29,176 9,651 8,798 4,822 4,506 3,212 112,846 69,449 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ (Less: - - (7,736) (3,244) (8,047) (3,969) 3,935) (3,212)(19,718)(10,425) inter-segment sales) ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Total group 70,366 51,764 21,440 6,407 751 853 571 - 93,128 59,024 revenue ====== ====== ====== ====== ====== ====== ====== ====== ======= ======= Expenses Net operating 18,936 16,193 17,136 6,190 1,890 1,270 8,876 9,224 46,838 32,877 expensesexcludingbelow expenses Inter-segment - - 6,001 2,784 7,748 3,810 - - 13,749 6,594 expenses Royalties 4,699 3,283 - - - - - - 4,699 3,283 Depreciation 6,163 4,926 921 122 459 147 127 114 7,670 5,309 and amortisation Subtotal 29,798 24,402 24,058 9,096 10,097 5,227 9,003 9,340 72,956 48,063 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------(Less: - - (6,001) (2,784) (7,748) (3,810) - - (13,749)(6,594) inter-segmentsales)Total group 29,798 24,402 18,057 6,312 2,349 1,417 9,003 9,340 59,207 41,469 expenses ====== ====== ====== ====== ====== ====== ====== ====== ======= =======Segment 40,568 27,362 3,383 95 (1,598) (564) (8,432) (9,340) 33,921 17,551 result ====== ====== ====== ====== ====== ====== ====== ====== ======= =======Exchange gain 1,887 3,855 Unallocated expenses (473) (1,164) Operating profit 35,335 20,242 Share of results of (767) (466)jointventures Operating profit after joint ventures 34,568 19,776 Financial income 3,227 4,272 (Financial expenses) (5,970) (5,825) (Taxation) (9,953) (6,544) Profit for the period 21,872 11,679 Gold revenue was solely derived from Pokrovskiy mine operations 105,872oz (sixmonths 2006 - 89,365oz) and two alluvial operations (Amur Dore and Koboldo)which combined sold c.2,000oz (six months 2006 - c.500oz). PETER HAMBRO MINING plc Condensed Consolidated Interim Financial Information for the period ended 30 June 2007 Notes (continued) Gold mining Construction and Exploration and Corporate Consolidated other services evaluation 30 31 30 31 30 31 30 31 30 31 June December June December June December June December June December 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Otherinformation-----------------Segment assets 218,396 164,024 76,780 73,208 173,299 176,840 30,850 53,995 499,325 468,067 Goodwill 16,291 13,396 Securities held for trading 10,207 13,937 Group share of net assets in joint ventures 9,659 10,534 Consolidatedtotal assets 535,482 505,934 Segment liabilities 19,816 8,056 21,601 19,782 3,103 2,073 5,310 8,512 49,830 38,423 Borrowings 135,245 134,740 Tax liability 2,054 973 Deferred Income tax Liability 22,707 21,744 Consolidated total liabilities 209,836 195,880 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Gold mining Construction and Exploration and Corporate Consolidated other services evaluation Six Six Six Six Six Six Six Six Six Six months months months months months months months months months months 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 ====== ====== ====== ====== ====== ====== ====== ====== ======= ======= Capital 29,783 19,819 2,350 212 13,459 9,009 2,877 3,282 48,469 32,322 expenditures ====== ====== ====== ====== ====== ====== ====== ====== ======= ======= 3. Business segment information (continued) 4. Taxation on profit on ordinary activities 30 June 2007 30 June 2006 31 December 2006 -------------- -------------- ------------------ $'000 $'000 $'000Current tax:UK corporation tax on 509 - 586profits for the year (30%)Foreign tax (24%) 8,480 5,283 12,518 --------- --------- -----------Total current tax 8,989 5,283 13,104 --------- --------- -----------Deferred tax:Origination and reversal of 964 1,261 704timing differences --------- --------- ----------- Total deferred tax 964 1,261 704 --------- --------- -----------Over provision in respect of - - (1,066)prior years --------- --------- -----------Tax on profit on ordinary 9,953 6,544 12,742activities --------- --------- ----------- PETER HAMBRO MINING plc Condensed Consolidated Interim Financial Informaiton for the period ended 30 June 2007 Notes (continued) 5. Other investments 30 June 2007 30 June 2006 31 December 2006 -------------- -------------- ------------------- $'000 $'000 $'000 Unlisted equity 965 764 1,022investments --------- --------- ------------ The above investments have been recorded at cost as fair values cannot bemeasured reliably. The Group has the following material subsidiaries and other significantinvestments, which were consolidated in these financial statements. Principal Country of Principal Principal Effectivesubsidiary and incorporation activity country of proportion ofjoint venture operation shares heldundertakings Held directly by the Company Holding UnitedEponymousco United Kingdom Company Kingdom 100%Ltd Holding UnitedVictoria United Kingdom Company Kingdom 100%Resources Ltd Peter Hambro Guernsey Finance United Mining Group Company Kingdom 100%Finance Ltd Holding Yamal Holdings Cyprus Company Cyprus 100%Ltd Peter Hambro Holding Mining (Cyprus) Cyprus Company Cyprus 100% Ltd Holding Sicinius Ltd Cyprus Company Cyprus 100% ZAO Management Holding Company PHM Russia Company Russia 100% Gold exploration andOOO Olga Russia production Russia 100% Gold exploration OAO Pokrovskiy andRudnik Russia production Russia 98.6% Gold exploration ZAO ZRK Omchak and(Joint Venture) Russia production Russia 50% PETER HAMBRO MINING plc Condensed Consolidated Interim Financial Information for the period ended 30 June 2007 Notes (continued) 5. Other investments (continued) Principal Country of Principal Principal Effectivesubsidiary and incorporation activity country of proportion ofjoint venture operation shares heldundertakings Held indirectly via 100% owned subsidiaries GoldOOO Tokurskiy exploration andRudnik Russia production Russia 100% GoldOOO GRK exploration and Victoria Russia production Russia 100% Security OOO Obereg Russia services Russia 100% Gold exploration and production OOO Spanch Russia Russia 100% Gold exploration and production OOO Osipkan Russia Russia 100% Gold exploration and production ZAO Amur Dore Russia Russia 100% Exploration workOOO NPGF Regis Russia Russia 100% Gold exploration and productionOOO Russia Russia 100%Rudoperspektiva Gold exploration and production OAO ZDP Koboldo Russia Russia 95.7% Project and engineering servicesZAO PHM Russia Russia 75%Engineering Construction and Gold exploration and productionOAO YamalskayaGornaya Kompania("YGK") Russia Russia 74.87% PETER HAMBRO MINING plc Condensed Consolidated Interim Financial Information for the period ended 30 June 2007 Notes (continued) 5. Other investments (continued) Principal Country of Principal Principal Effectivesubsidiary and incorporation activity country of proportion ofjoint venture operation shares heldundertakings Held indirectly via Pokrovskiy Rudnik Gold exploration and production OAO YamalZoloto Russia Russia 98.6% OOO Kapstroi Russia Construction Russia 98.6% Gold exploration and productionZAO MalomyrskiyRudnik Russia Russia 98.6% Gold exploration and production ZAO Region Russia Russia 98.6% Gold exploration and productionZAO Rudnoye (Joint Venture) Russia Russia 49% Held indirectly via YGK Chrome exploration and productionZAO SeverChrome Russia Russia 73.9% Held indirectly via Sicinius Researching servicesOAO Irgiredmet Russia Russia 98.36% In February 2007 PHM (Cyprus) Ltd acquired 100% of Rudoperspektiva for aconsideration of US$17,539. In April 2007 Tokurskiy Rudnik acquired a further 4.05% of Koboldo forconsideration of US$13,865. In April 2007 Sicinius Ltd acquired a further 18.36% of Irgiredmet forconsideration of US$9,176,651. PETER HAMBRO MINING plc Condensed Consolidated Interim Financial Information for the period ended 30 June 2007 Notes (continued) 6. Monetary assets and liabilities 30 June 2007 30 June 2006 31 December 2006 -------------- -------------- ------------------ $'000 $'000 $'000 Debtors - US dollar 11 4,242 303Debtors - Russian rouble 51,449 32,586 42,502Debtors - GBP 609 285 988Cash - US dollar 5,118 101,994 11,748Cash - Russian rouble 17,156 32,728 46,684Cash - GBP 3,798 7,562 4,034Loans (short term)- Russian 4,927 1,183 3,530RoubleSecurities held for trading - Russian Rouble 10,207 - 13,937 ---------- --------- ----------- 93,275 180,580 123,726 ---------- --------- ----------- Monetary assets - US 5,129 106,236 12,051dollarMonetary assets - Russian 83,739 66,497 106,653roubleMonetary assets - GBP 4,407 7,847 5,022 ---------- --------- ----------- 93,275 180,580 123,726 ---------- --------- ----------- Creditors - US dollar 8,926 559 12,065Creditors - Russian rouble 28,964 13,651 22,796Creditors - GBP 1,016 779 968Short - term Loans - US 11,411 4,195 3,000dollarShort - term Loans - - 12,689 -RoubleGuaranteed Convertible Bonds 135,245 134,407 134,740- US dollar ---------- --------- ----------- 185,562 166,280 173,569 ---------- --------- ----------- Creditors (short and 155,582 139,161 149,805long-term) - US dollarCreditors (short and 28,964 26,340 22,796long-term) - RussianroubleCreditors (short and 1,016 779 968long-term) - GBP ---------- --------- ----------- 185,562 166,280 173,569 ---------- --------- ----------- The Russian rouble strengthened against the US Dollar by 2% during the sixmonths of 2007 and was RuR25.82/US$ at 30 June 2007 (RuR26.33/US$ - 31/12/06). The Russian rouble strengthened against the US Dollar by 9% during the year 2006and was RuR26.33/US$ at 31 December 2006 (RuR28.78/US$ - 31/12/05). Included within the Group net operating expenses are foreign currencytranslation gains of US$1,887,000 (30 June 2006 - gain of US$3,855,000 and 31December 2006 - gain of US$5,623,000). PETER HAMBRO MINING plc Condensed Consolidated Interim Financial Information for the period ended 30 June 2007 Notes (continued) 7. Provisions 30 June 2007 30 June 2006 31 December 2006 -------------- -------------- ------------------ $'000 $'000 $'000 Provision for restoration 1,567 554 567and closing costsRBS holders - 15,000 - --------- ---------- ---------- 1,567 15,554 567 --------- ---------- ---------- Provision at 1 January 567 15,542 15,542 Additional provision 965 - -Unwinding of discount on 35 12 25environmental obligation* Settlement (RBS holders) - - (15,000) --------- ---------- ---------- Provision at period end 1,567 15,554 567 --------- ---------- ---------- * One of the Company's subsidiaries, Pokrovskiy Rudnik, set up a Reserve BonusScheme (the "Scheme") for certain senior Group executives of that company. Thescheme was never fully implemented. Under the scheme participants were to beawarded freely transferable 'Scheme units' at the end of each year from 2002 to2012 based on US$5 per ounce of gold added to the designated reserves for theScheme. Agreement was 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 takenprofessional advice and consulted with the Company's nominated adviser, agreedthat the sum of US$15,000,000 in aggregate (the "Scheme Payment") was faircompensation to the Eligible Persons for the Scheme not proceeding. The EligiblePersons excluded Directors. The Independent Directors also considered that thispayment was less than the cost to the Group (as determined by reference to theestimated net present value of the ongoing payment obligations for the Companyunder the Scheme) if the scheme were to proceed. The sum of US$15,000,000 wassubsequently paid in August 2006. PETER HAMBRO MINING plc Condensed Consolidated Interim Financial Information for the period ended 30 June 2007 Notes (continued) 8. Share Capital Ordinary Companyshares 30 June 2007 30 June 2006 31 December 2006 $'000 $'000 $'000 -------- --- -------- --- -------Allotted,called up andfully paid: At the 1,311 1,273 1,273beginning ofthe period Shares issued in relation toacquisition ofPeter HambroMining (Cyprus)Ltd - - 13 Other newissues - 25 25 --------- --------- ----------- --------- --------- -----------At the end ofthe period 1,311 1,298 1,311 --------- --------- ----------- --------- --------- ----------- Number ofshares (parvalue £0.01) Authorised 120,000 100,000 120,000 --------- --------- ----------- Issued at the 81,156 78,957 78,957beginning ofthe period Shares issued - - 750in relation toacquisition ofPeter HambroMining (Cyprus)Ltd Other newissues - 1,449 1,449 --------- --------- -----------At the end ofthe period 81,156 80,406 81,156 --------- --------- ----------- 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 InternationalFinance Corporation (the IFC). As a result of this transaction a share premiumof US$17.8m was created. PETER HAMBRO MINING plc Condensed Consolidated Interim Financial Information for the period ended 30 June 2007 Notes (continued) 9. Net Cash Inflow from Operating Activities 30 June 2007 30 June 2006 31 December 2006 -------------- -------------- ------------------ $'000 $'000 $'000Cash received from 89,435 61,214 162,130customersCash paid to suppliers and (57,137) (38,215) (84,352)employeesOther proceeds 1,665 409 1,296Other expenses (14,031) (13,317) (31,467) --------- ---------- ------------Net cash inflow from 19,932 10,091 47,607operating activities --------- ---------- ------------ 10. Analysis of Net Debt At 1 Jan. 07 Cash Flow Other non-cash Exchange At 30 changes movement June 07 $'000 $'000 $'000 $'000 $'000 -------- ------- ------- -------- --------- Cash in handand at thebank 62,466 (37,028) - 634 26,072 Debt duewithin oneyear (3,000) (8,506) - 95 (11,411) Debt dueafterone year (140,000) - - - (140,000) Less equitycomponent 1,583 - - - 1,583 Bonds issuecostcapitalised 3,677 - (505) - 3,172 -------- ------- ------- -------- ---------Financeleases /sales & leaseback (316) 56 - - (260) -------- ------- ------- -------- --------- -------- ------- ------- -------- ---------Net Cash inc.leasing (75,590) (45,478) (505) 729 120,844) -------- ------- ------- -------- --------- PETER HAMBRO MINING plc Condensed Consolidated Interim Financial Information for the period ended 30 June 2007 Notes (continued) 11. Earnings per ordinary share Six months to Six months to Year to 30 June 2007 30 June 2006 31 December 2006 $'000 $'000 $'000Profit for the period US$'000 21,872 11,679 32,373Weighted average number of 81,155,052 79,543,972 80,302,732ordinary shares Earnings per ordinary share 0.265 0.146 0.398 ---------- --------- -----------Weighted average number of 81,155,052 79,543,972 80,302,732ordinary shares ---------- --------- ----------- Contingent shares - 750,000 - ---------- --------- -----------Weighted average number of 81,155,052 80,293,972 80,302,732diluted shares ---------- --------- -----------Diluted earnings per share US$0.265 US$0.144 US$0.398 ---------- --------- ----------- PETER HAMBRO MINING plc Condensed Consolidated Interim Financial Information for the period ended 30 June 2007 Notes (continued) 12. Related Parties The Group had the following related party transactions during the year, (VAT isincluded where applicable): Related party Description Movement Amount due Movement for Amount due for the six from/(due to the year ended from/(due to) months 30 June) 31 December 31 December 2007 2007 2006 2006 $'000 '000 $'000 $'000 Aricom Plc andsubsidiaries Geological 127 173 2,062 329 workAricom Plc and Project andsubsidiaries engineering services 403 (1,066) 2,398 522 Aricom Plc and Management 571 571 - - subsidiaries services Aricom Plc andsubsidiaries Construction 10,340 (3,248) 15,307 (3,591) services Total Aricom 11,441 (3,570) 19,767 (2,740)Plc Expobank and Current 3,380 3,980 - 600subsidiaries account Expobank and Deposit (25,675) 765 - 26,440subsidiaries account Expobank and Promissory (2,517) 6,375 8,892 8,892subsidiaries Notes Expobank and Sales of gold and silver 43,488 - 74,425 -subsidiaries Expobank and Sales of goldsubsidiaries through metallic account 31,495 - 3,007 - Expobank and Purchase ofsubsidiaries gold to sale through metallic account (31,134) - (3,028) -Expobank and (3,798) -subsidiaries Purchases/ sales of 3,798 - 3,798 3,798 bonds Total 15,239 11,120 87,094 39,730Expobank PETER HAMBRO MINING plc Condensed Consolidated Interim Financial Information for the period ended 30 June 2007 Notes (continued) 13. Acquisition of subsidiary undertakings (a) Rudoperspektiva In February 2007 PHM (Cyprus) Ltd acquired 100% of OOO Rudoperspektiva forconsideration of US$17,539. This company is a gold alluvial mining enterprise. The fair values of the assets and liabilities on the date of acquisition were: Rudoperspektiva Fair Value adjustment Book value Total $'000 $'000 $'000 Intangible assets 757 48 805Cash and cash equivalents 52 - 52Trade and other payables (839) - (839) ------------- --------- ---------- Fair value of net assets acquired (30) 48 18 ------------- --------- ---------- 18 ------------- --------- ----------ConsiderationCash 18 ------------- --------- ---------- 18 ------------- --------- ---------- (b) Irgiredmet In April 2007 Sicinius Ltd acquired a further 18.36% Irgiredmet for consideration of US$9,176,651. 14. Capital commitments Capital commitments include property, plant and equipment purchases for thePioneer deposit development. Amounts contracted for but not provided for in thefinancial statements amounted to US$15,714,000 (31 December 2006 -US$13,320,000) for the Group. This information is provided by RNS The company news service from the London Stock Exchange

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