17th Sep 2007 07:00
Hambledon Mining PLC17 September 2007 PRESS INFORMATION 17th September 2007 HAMBLEDON MINING PLC (AIM: HMB) Interim Results Two producing assets before year end Hambledon Mining plc ("Hambledon" or the "Group" or the "Company"), anAIM-listed mining and exploration company on the cusp of gold, silver and copperproduction from two operations in Kazakhstan, announces its results for the halfyear ended 30 June 2007. Highlights • Grade control data shows 79 per cent increase in contained gold compared with the geological model at 480 metre level • Sekisovskoye processing facility completion expected in 4th Quarter 2007 • Ecological and operating permits received • Start-up of Ognevka processing plant expected in October • US$16 million raised • Exploration activities continue: over 5,000 metres drilled Nicholas Bridgen, Chief Executive of Hambledon Mining plc, commented: "The increase in contained gold shown by our grade control sampling is even moredramatic than previously announced. This reinforces our geologists' convictionthat the out-turn at this complex deposit will be far better than we have so farbeen able to demonstrate and, if so, it will extend the life of the open pit,reduce the stripping ratio and cut the cash costs per ounce. Despite the late delivery of some of our equipment and the slow working of somecontractors, we still expect our first gold production before the end of theyear. The Ognevka processing plant refurbishment is on schedule with productionexpected to commence in late October and the first revenues expected before theend of the year." Enquiries Hambledon Mining plcNicholas Bridgen, Chief Executive Telephone + 7 701 733 8915 +44 7791 327 180Bankside ConsultantsMichael Spriggs / Michael Padley Telephone +44 207 367 8888 Seymour PierceNicola Marrin Telephone +44 20 7107 8018 Note to editors Hambledon Mining plc is an AIM-listed gold mining and exploration company whichis developing the Sekisovskoye gold deposit and owns the Ognevka processingplant, both of which are close to Ust Kamenogorsk in East Kazakhstan. At Sekisovskoye, the Company is mining from an open pit and constructing an850,000 tonnes per year treatment plant. Production from the open pit willaverage over 40,000 ounces per annum. After the start of open pit processing,the Company plans to develop the much larger underground resource that isexpected to lead to a combined production rate of around 100,000 ounces peryear. The Ognevka processing plant is being refurbished and will produce concentratescontaining gold, silver, copper, iron and coke from the re-treatment of zincsmelter residues. All references to "£" are to the British pound and "ounces" are to troy ounces. CHAIRMAN'S STATEMENT Review The first half of the year has been as eventful as previous periods, with goodprogress towards the completion of the refurbishment of the Ognevka processingplant and construction of the processing facility at Sekisovskoye. At the Sekisovskoye deposit a 79 per cent increase in contained gold, as shownby some extensive grade control drilling, compared with our previous geologicalmodel reinforces our geologists' conviction that the out-turn at this complexdeposit will be far better than we have so far been able to demonstrate. Mining operations have been carried on for more than a year and, although theinitial target was pre-stripping waste for use in construction of the tailingsdam, a significant quantity of ore has now been stockpiled. Construction of the processing facility is well advanced. All major componentsare now in place, but a shortage of workers and qualified supervisors is slowingthe final electrical and piping stages. Nevertheless, the crushing plant hasbeen commissioned and is currently producing crushed material for roads. Theremainder of the plant is expected to start operating in the final quarter ofthis year. All important permits have now been received, except for the final reagent usepermits which are expected shortly following the completion of the associatedreagent handling facilities. In January we announced that the Company had raised US$16m to fund twoacquisitions and, although one of them was subsequently abandoned, the other isproving to be every bit as good as we had hoped. Completion of the legal registration of our ownership of Ognevka was onlycompleted in May but very good progress in the plant refurbishment means thatthe planned start-up date is the second half of October and we are reasonablyconfident of first revenues before the end of the year. Very interestingopportunities for further development of this operation are being examined. Outlook The outlook for the Company is extremely healthy. Although full operations atSekisovskoye have not yet started, we are already working on the next stage ofexpansion. We have passed our plans for the development of the underground mineat Sekisovskoye to Australian Mining Consultants of Perth for them to appraiseour ideas and bring them to feasibility study standard. Our plan is to moveahead with the underground development as soon as possible. The profitability ofthis operation will be far greater than the open pit due to the higher grade andconsequent higher production from the current treatment facility. The initialproduction from open pit will be some 40,000 ounces per year but is expected torise to over 100,000 ounces when underground ore is partially substituted. Anexpansion of the processing facility will be considered at that stage whichcould potentially take production even higher. At Ognevka, the tailings dam from the previous operations is currently beingsampled so that testwork can be carried out to assess the potentialprofitability of re-treating those tailings. Information from previousoperations shows that they contain valuable feldspar and various metals. George EcclesChairman17th September 2007 REVIEW OF OPERATIONS Sekisovskoye Permitting All necessary approvals for mining and milling operations, including the OverallEnvironmental Approval, have now been received, with the exception of thelicences for dangerous goods (sodium cyanide and acids). These approvalprocesses are well-advanced with final granting of licences expected in Octoberfollowing the completion of the handling facilities. We have pre-purchased firstfill quantities of these reagents and are storing them in nearby licensedfacilities until the licences are received. Status of plant construction and commissioning The 850,000 tonnes per annum ore processing facilities are now in the earlystages of commissioning. The crushing plant has begun crushing ore for initialmilling operations, waste rock for road construction and stemming material forblasting. The carbon-in-pulp process plant and related facilities are nearingcompletion after delays caused mainly by late delivery of the 1.2 MW main ballmills from Russia. Poor local contractor performance and a shortage ofconstruction workers and supervisors have been off-set by Group employees takingover most of the construction activities. The initial tailings storage facility has been constructed and geomembranelining of the Stage 1 section is underway. The Company took advantage of thedelay in mill construction to increase the capacity of the "starter dam" toallow for longer operation while the Stage 2 section is completed. The facilities constructed on site include a 16 MW substation and relatedinfrastructure, a 220 tonne per hour 3-stage crushing plant, a crushed orestockpile reclaim system, the main milling facilities including a gold-room,warehouse and reagent storage buildings, change-rooms, mine offices andmaintenance facilities, security buildings, access roads, and fencing. Water forprocessing and drinking will be supplied from the existing underground mineshaft and from recycling of tailings return water. The recovery process is a relatively standard carbon-in-leach (CIL) plant butincludes regrinding and intensive leaching of a pyrite concentrate. A gold /silver dore will be produced for sale to Metalor Technologies Group inSwitzerland for refining. Cyanide tailings are neutralised before pumping to thestorage dam. Process equipment in the crushing and milling circuits has beensourced from a mix of western and local suppliers. Approximately 148,000 tonnes of open pit ore has been mined and stockpiled onthe ROM pad. Ore is segregated into oxide and primary ore types that will beblended for initial milling operations. Ore grade to date has averaged 1.6 g/tAu with some higher grade zones (+2.0 g/t Au) to be targeted after commissioningis completed. Mining operations The mining group continues to lead the way at Sekisovskoye. The open pit rampsystem is now fully developed to the point of ensuring on-going ore supply fromthe North Pit and from the top of Sedukha Hill - the main orebody. Importantly,all major earthworks and construction activities were either all or in partprovided by the mining team. Up to the end of August 2007, 0.92 million m3 of waste rock have been mined andanother 0.52 million m3 of in situ materials were moved as part of theconstruction activities (topsoil, subsoils and clay). Ore mined to the end ofAugust 2007 totals some 148,000 tonnes. As with the milling equipment, the mining fleet is from a mix of western andformer Soviet Union or Chinese suppliers, with key equipment supplied from highquality manufacturers including Atlas Copco and Hitachi. In addition to the openpit mining fleet (haul trucks, excavators, dozers, loaders and servicevehicles), a small earthmoving fleet has been purchased to conduct on-goingtailings dam construction. This will provide significant savings over contractorcosts during the life of the project. The open pit mining reserve amounts to some 4.2 million tonnes of ore. However,the bulk of the Sekisovskoye mining reserve will be accessed by undergroundmining. Australian Mining Consultants of Perth has been commissioned to preparea feasibility study for the development of the initial phases of the plannedunderground mine. The study is due to be completed in October and will form thebasis for detailed underground mine design which will be conducted in house.Development activities will begin in early 2008 at Orebody 11, a high-gradenear-surface ore zone which will be accessed via a decline roadway. We previously reported that during the course of mining over the past 15 months,blast hole sample assays have confirmed an increase in contained gold in theareas mined as compared to the approved geological model. This is consistentwith 2004 - 2006 exploration and extension drilling programmes which indicatedincreases in contained gold of 17 per cent to 21 per cent compared with resultsbased on Soviet drilling. Our independent geological consultant has verified theresult and believes it is likely that overall gold gains will be encountered forthe whole deposit. More recent grade control sampling shows even higherincreases. An extensive contiguous blasthole grade control sampling pattern atSedukha Hill, representing 572 blastholes on a 3m x 3m grid, shows that at this480m horizon, the resource model substantially underestimates the contained goldand these results are tabulated below: Table showing increase in contained gold compared with resource model Model Mean Percentage Tonnes Oz Percentage increase oz Au g/t increase g/t Resource * 1.33 - 42,625 1,823 - Bench 480m 1.56 17.3 65,015 3,261 79 Troy oz = 31.10348 grams * extracted blocks from resource model of September2006. In the North Pit, blasthole sampling on the 430m bench only encroaches themarginal areas of Orebody 2, and at this stage there is insufficient coverage tomake a meaningful statistical assessment. However, interactive reviews of thelimited blasthole results with the resource model indicate a good correlationtrend. Financial At 30 June 2007 the Group had cash balances of £6 million. These were consideredto be sufficient to put both the Sekisovskoye processing facility and theOgnevka treatment plant into production, but as reported in our last pressrelease, a facility with a local Kazakhstan bank is being finalised in order tofund any cost over-run, delay, or other working capital requirements. In view ofthe currently projected start-up date, a small drawdown under this facility islikely. EXPLORATION The analytical laboratory at Sekisovskoye has recently received accreditationfrom the Kazakhstan Standards Authority, so in-house analyses are now approvedfor use in ore reserve calculations. Exploration activities have continued throughout the year. In total some 5,088metres of diamond core were drilled from 1 May 2006 to 31 August 2007. Thisrepresents 65 drill holes, 56 of which were drilled in the area of the Tserkovkadeposit. The remaining holes were drilled around the base of Sedukha Hill aspart of an investigation into extensions of the known ore zones - in particulararound Orebody 11 which is the initial target for underground mining. All 815 core sample results from the 9 Diamec drillholes that targeted updip oreextensions west of Sedukha Hill have been received. Results confirm the overallintegrity of the geological resource model. Overall, the Tserkovka drilling has been less encouraging. Only minor zones ofmineralization have been encountered so far. Our exploration team have severalmore deep holes planned in the near future but, nevertheless, we have decided towrite off the expenditure to date. Other areas of interest within theexploration lease will be targeted beginning in early 2008. These includeextensions to the Sekisovskoye ore zones to the south-southwest and possibly ata polymetallic deposit which was discovered in Soviet times. MINERAL RESOURCES Resource statement This mineral resource estimate for the Sekisovskoye deposit has been preparedunder the JORC Code and is unchanged since the update reported in September2006. Location Resource Tonnes Au g/t Contained Ag g/t Contained Au g/t Cut-off Category (millions) Metal Metal Au oz * Ag oz * Open pit Indicated 9.55 1.8 552,671 3.0 921,119 0.5 area Inferred 6.06 1.8 350,700 2.0 389,667 (b)Underground Indicated 2.21 5.1 362,371 6.2 440,529 2.0 Inferred 7.16 5.2 1,197,036 7.1 1,634,415 (b) Marginal Indicated 3.40 0.7 76,519 1.4 153,037 0.5underground (a) Inferred 0.96 0.6 18,519 1.2 37,038 Totals Indicated 15.16 2.0 991,561 3.1 1,514,685 Inferred 14.18 3.4 1,566,255 4.5 2,061,120 Total Indicated 29.34 2.7 2,557,816 3.8 3,575,805 & Inferred \* Troy oz = 31.10348 grams(a) underground low grade material associated with high grade gold zones.(b) includes resources that have been defined beyond the current limits of thegrade model. Note: "Inferred" resources cannot be used for ore reserves untilthey have been upgraded. The updating of the resource estimate (announced in September 2006) was basedupon the analysis of the Diamec drilling results from the underground 441m leveland the remodelling at that time was confined to the open pit area at +250melevation. There was a slight increase in contained gold within the "indicated"category but lower in the "inferred" category. The Diamec drilling supported abetter understanding of the gold distribution trends and continuity, and themodel reflected this greater confidence. This model update contained 244separate gold zones indicating the complexity of the gold distributions abovethe 0.5g/t Au cut-off level. This complexity was also exhibited by theoccurrence of gold intersections that could not be modelled because of limitedcontinuity problems and these zones will add additional contained gold withinthe planned open pit. Blasthole grade control sampling continues to show overall increases incontained gold compared with the resource model and the expected global increasemay be higher than the 18 per cent previously reported. This increase in gold isbelieved to be associated with the relatively poor core recoveries from thehistorical Soviet drilling compared with the results from Hambledon's drillingusing modern hydraulic drill rigs. Although the resource model was last updatedin September 2006, the new grade control information is limited and thereforeinsufficient to justify an updating of the current model. Results so far from the exploration of the Tserkovka licence area have beendiscouraging, but it is quite possible that some of the declared Soviet-basedresources totalling 740,000 ounces of gold in the C2 and P1 categories could becategorised under the JORC Code after additional target results and assessment. Reserve estimate This ore reserve estimate for the Sekisovskoye open pit deposit has beenprepared under the JORC Code. Location Reserve Tonnes Au g/t Contained Ag g/t Contained Au g/t Category (million) Metal Metal Cut-off Au oz Ag oz Open pit Probable 4.19 1.6 213,352 2.6 346,665 0.5 areaUnderground Probable 0.083 5.1 13,384 7.4 19,615 2.0 Total 226,736 366,280 \* Troy oz = 31.10348 grams The Sekisovskoye Open Pit ore reserve model is based on the ordinary kriging ofthe mineral resource model using a 0.5 grams per tonne cut-off, taking intoconsideration the expected dilution and losses. In the absence of undergroundmining considerations, Whittle optimisations would have resulted in a pit shellcontaining 7.25 million tonnes of ore representing a conversion of 76 per centof the indicated resource to probable reserve in this area. However, developmentof this pit shell would have resulted in the loss of the existing undergroundinfrastructure and made the process of bringing the underground operation intoproduction much more difficult and on a much longer timeframe. It has thereforebeen decided to leave the existing 320 level intact and access this level from adecline developed from outside the pit limit. This will allow the western orebodies to be mined from underground concurrent with the open pit and other orezones below the pit bottom at the 340 level, which might otherwise have beenincluded in the open pit mine plan. The resultant reserve estimate is calculated by applying mining costs, miningdilution (4 per cent) and recoveries (97.5 per cent) to that portion of theIndicated Resource falling entirely within the optimised open pit design. Thearea of this open pit reserve is contained within the mineral resource asreported above. The Sekisovskoye underground ore reserve has been determined from the minedesign work carried out as a part of the approval of the General ResourceEstimate by the Kazakh authorities using a 2.0 gram per tonne cut-off. TheGeneral Resource Estimate covered both the open pit resource and undergroundresource. Mine designs were therefore required for both the open pit and theunderground areas. The underground design was carried out in detail on theresources from Elevation 250 up and in less detail in the lower areas. Thedesign of some of the orebodies, notably Orebody 11, included stope design downto detailed stope blast ring design. This level of design and financial analysishas allowed for the ore tonnages in these orebodies to be classified as aprobable reserve. It is anticipated that as further detailed design andfinancial evaluation is carried out on the indicated resources in these areasthen these too will be convertible to reserves. The underground reserve estimate is calculated by applying mining costs, miningdilution (8 per cent) and recoveries (96 per cent) to that portion of theIndicated Resource falling entirely within the stope design. The area of thisunderground reserve is contained within the underground mineral resource asreported above. Qualified personThese resource and reserve estimates have been prepared by Roger Rhodes BSc,MSc, MIMMM, independent geological consultant with Computer Resource Services.He has over 35 years of relevant experience and is a qualified person for thepurpose of reporting resources under the JORC Code and the AIM rules. Consolidated income statementSix months ended 30 June 2007 Note Six months to Six months to Year ended 30 June 2007 30 June 2006 31 December 2006 (unaudited) (unaudited) (audited) £000s £000s £000s Administrative expenses (846) (395) (774) Exploration costs writtenoff (174) - - Operating loss (1,020) (395) (774) Net finance revenue 3 26 354 94 Loss on ordinaryactivities before and after taxationretained for the financialperiod 6 (994) (41) (680) Loss per ordinary share Basic 5 (0.24)p (0.01)p (0.19)p Diluted 5 (0.24)p (0.01)p (0.19)p Consolidated statement of recognised income and expenseSix months ended 30 June 2007 Six months to Six months to Year ended 30 June 2007 30 June 2006 31 December 2006 (unaudited) (unaudited) (audited) £000s £000s £000s Currency translationdifferences on 263 (8) (1,107)foreign currency net investments Net income / (loss)recognised directly in equity 263 (8) (1,107) Loss for the financial period (994) (41) (680) Total recognised expense forthe financial period (731) (49) (1,787) Consolidated balance sheetAs at 30 June 2007 Six months to Six months to Year ended 30 June 2007 30 June 2006 31 December 2006 (unaudited) (unaudited) (audited) £000s £000s £000sNon-current assetsIntangible assets - 61 152Property, plant and equipment 16,229 5,571 10,416 16,229 5,632 10,568 Current assetsInventories 922 30 201Other current assets 1,304 2,059 165Cash and cash equivalents 5,977 9,753 4,352 8,203 11,842 4,718 Total assets 24,432 17,474 15,286 Current liabilitiesTrade and other payables (1,632) (643) (503) Net current assets 6,571 11,199 4,215 Non-current liabilitiesTrade and other payables (536) - -Long term provisions (834) (1,118) (789) (1,370) (1,118) (789) Total liabilities (3,002) (1,761) (1,292) Net assets 21,430 15,713 13,994 EquityCalled up share capital 424 366 366Share premium account 24,777 16,690 16,690Merger reserve (148) (148) (148)Accumulated losses (3,623) (1,195) (2,914) Total equity 21,430 15,713 13,994 Consolidated cash flow statementSix months ended 30 June 2007 Six months to Six months to Year ended 30 June 2007 30 June 2006 31 December 2006 (unaudited) (unaudited) (audited) £000s £000s £000s Net cash outflow from (1,048) (2,038) (1,312)continuing operating activities Investing activitiesInterest received 160 153 280Payments to acquireintangible fixed assets (22) (5) (100)Purchases of tangible fixedassets (4,987) (2,496) (8,790) Net cash (used in) investingactivities (4,849) (2,348) (8,610) Financing activitiesNet proceeds on issue ofshares 8,145 9,974 9,974Interest paid (6) (12) (24)Repayments of borrowings (290) - -Net cash inflow fromfinancing activities 7,849 9,962 9,950 Increase in cash 1,952 5,576 28 Cash at beginning of theperiod 4,352 4,021 4,021 Effect of foreign exchangerate changes (327) 156 303 Cash at end of the period 5,977 9,753 4,352 Notes to the interim consolidated financial statementsSix months ended 30 June 2007 1 General information These interim consolidated financial statements are for the six months ended 30June 2007 and are unaudited. The information for the year ended 31 December 2006does not constitute statutory accounts as defined in Section 240 of theCompanies Act 1985. The financial information for the year ended 31 December 2006 has been extractedfrom the statutory accounts of Hambledon Mining plc ("the Group") for that yearthat were prepared under United Kingdom Law and Accounting Standards ("UKGAAP"). A copy of the statutory accounts for that year has been delivered to theRegistrar of Companies. The auditors' report on those accounts was unqualifiedand did not contain any statement under Section 237(2) or (3) of the CompaniesAct 1985. 2 Accounting policies and adoption of International FinancialReporting Standards The Group adopted International Financial Reporting Standards ("IFRS") on 1January 2007. These interim consolidated financial statements have been preparedusing accounting policies consistent with all applicable IFRS Standards. Thereare no material differences between applicable IFRS and applicable UK GAAP underwhich the Group's financial statements were prepared up to 31 December 2006. The accounting policies under which these interim consolidated financialstatements have been prepared have been published on the company's web-site,www.Hambledon-mining.com on 17 September 2007. These will be the principalaccounting policies used for Hambledon Mining plc's future financial statements. The presentation of the interim consolidated financial statements has beenchanged to conform to IFRS. 3 Net finance revenue Six months to Six months to Year ended 30 June 2007 30 June 2006 31 December 2006 (unaudited) (unaudited) (audited) £000s £000s £000s Interest payable to relatedparty (6) (12) (23)Other interest expense (45) - -Bank interest receivable 165 153 282Foreign exchange (loss) / gain (88) 213 (165) 26 354 94 4 Dividend The directors do not recommend the payment of a dividend. 5 Basic and diluted loss per share The calculation of basic and diluted earnings per share is based on the retainedloss for the financial period. The weighted average number of ordinary shares for calculating the basic lossper share and diluted loss per share after adjusting for the effects of alldilutive potential ordinary shares are as follows: Six months to Six months to Year ended 30 June 2007 30 June 2006 31 December 2006 (unaudited) (unaudited) (audited) Basic and diluted 414,005,611 314,265,328 348,931,995 6 Acquisition of TOO Ognevka In January 2007, the Group acquired 100 per cent. of TOO Ognevka ("Ognevka").Ognevka owns a processing facility in East Kazakhstan to treat up to 350,000tonnes per year of copper, gold and silver containing residues (slag) from zincsmelters. The facility had been closed and the company had not traded for twoyears and Ognevka was undergoing a process of rehabilitation under courtprotection from its creditors which had a total debt outstanding of £1.9million. The Group acquired the debt of the principal creditor with a nominalvalue of £1.4 million for a cash payment of £0.9 million and then acquired 100per cent. of the share capital of Ognevka for a nominal amount. This transactionhas been accounted for by the acquisition of assets method of accounting and notas a business combination in accordance with "IFRS 3 - Business Combinations". 7 Approval of interim financial statements The interim report for the six months to 30 June 2007 was approved by theDirectors on 13 September 2007. Company Information Directors George William O'Neale Eccles Non-Executive Chairman Nicholas John Bridgen Chief Executive Randall Alan Pyper Technical Director Christopher James Thomas Non-Executive Director Baurzhan Yerkeyev Executive Director Company Secretary William Roy Morgan B. Sc. ACA Registered Office Daws House 33-35 Daws Lane London NW7 4SD Nominated Advisor and Seymour Pierce LimitedBroker 20 Old Bailey London EC4M 7EN Registrars Neville Registrars 18 Laurel Lane Halesowen West Midlands B63 3DA. Auditors Deloitte & Touche LLP Hill House 1 Little New Street London EC4A 3TR This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Altyngold