Q3 2008 Production Report

5th Nov 2008 07:00



05 November 2008

Q3 2008 Production Report

Mineral Expert's Report 

Postponement of Move to Main Market

 

Peter Hambro Mining Plc (the "Company" or "PHM" and together with its subsidiaries the "Group") is pleased to announce its production results for the quarter and for the nine months ended 30 September 2008.

 

	Attributable Production
	3 months ended 30 September 2008	3 months ended 30 September 2007	Variance
	Au, oz	Au, oz
Amur Region
Pokrovskiy, including Pioneer bulk sampling	72,950	60,821	20%
Pioneer	17,169	-	n/a
Alluvials	13,847	9,857	40%
Joint Ventures
Rudnoye	1,720	1,152	49%
Omchak	17,948	21,852	(18%)
TOTAL	123,634	93,682	32%

 

	Attributable Production
	9 months ended 30 September 2008	9 months ended 30 September 2007	Variance
	Au, oz	Au, oz
Amur Region
Pokrovskiy, including Pioneer bulk sampling	200,750	177,633	13%
Pioneer	20,769	-	n/a
Alluvials	18,638	13,760	35%
Joint Ventures
Rudnoye	2,175	1,284	69%
Omchak	26,382	33,207	(21%)
TOTAL	268,714	225,884	19%

Total attributable gold production, in the above tables and elsewhere in this document, is comprised of 100% of production from the Group's subsidiaries and the relevant share of production in joint ventures and other investments. PHM's direct and indirect interest in Pokrovskiy Rudnik, and any interest held by Pokrovskiy Rudnik, is 98.61%.

Highlights

Production

In the three months ended 30 September 2008, attributable gold production increased by 32% as compared to the same period in 2007 mainly due to the consistent improvements in production at the Pokrovskiy mine, as well as the commissioning of the new plant at Pioneer which came online in June/July 2008;

The Group's total attributable gold production for the nine months ended 30 September 2008 increased by 19% compared to the same period of the previous year; and

Preliminary production statistics for October 2008 indicate an overall Pokrovskiy and Pioneer production of 36,400 oz with production from Pioneer almost doubling to 12,100 oz compared to September 2008 production of 6,600 oz.

Development

The Group is carefully reviewing exploration, construction and maintenance expenditure for 2009 with a view to maximising capital availability for the Group's priority expansion and development projects - Pokrovskiy, Pioneer and Malomir. Malomir and Pioneer expansion plans remain on track with production at Malomir due to commence in the first half of 2010 and Pioneer's second crushing and grinding line due to come online in the first half of 2009.

Main Board Move

 JORC Reserves and Resources 

In connection with the proposed move to the Main Market, a mineral expert's report has been prepared by Wardell Armstrong International Ltd ("WAI"). A summary of this report, which states the Group's reserves and resources at the Pokrovskiy, Pioneer and Malomir deposits to JORC classification standards together with reserves and resources to  the  Russian  Standard  Classification System on other deposits, is set out below and the full report will be placed later today on the Company's website at www.peterhambro.com.

A summary of these mineral resources and ore reserves is given in Table 1 below. 

Table 1: Summary of Mineral Resources and Ore Reserves Estimates  for Pokrovskiy, Pioneer, and Malomir Estimated in accordance with the guidelines of the JORC Code (2004)1,2,3
	Category	Tonnage (kt)	Grade (g/t Au)	Metal (kg Au)	Metal (koz Au)
Resources	Measured	28,239	1.42	40,005	1,285
	Indicated	78,618	1.22	95,999	3,087
	Measured+Indicated	106,856	1.27	136,004	4,372
	Inferred	143,170	0.98	140,256	4,510
Reserves*	Proven+Probable	83,900	1.33	111,400	3,582
* Reserves included within the Measured and Indicated resources only

1 All statements of reserves and resources set out in this Summary are calculated on the basis of 100% ownership. Pokrovskiy, Pioneer and Malomir are 98.61% attributable to PHM

2 Numbers may not add up exactly due to rounding 

3 The Inferred category includes the figures from the Pokrovka-3 pit which were omitted from the equivalent table in the Interim Results for the period ended 30 June 2008

Peter Hambro, Executive Chairman of PHM said:

"We have taken the decision to postpone the move of our listing and I am sure that, in the present difficult market conditions, it is the right one. We have waited to see if things would improve in the short term but, although there are now some signs of optimism returning, we are a long way from the conditions that previously prevailed. We have decided, however, to publish the full Mineral Expert's Report that was commissioned as part of that process.  I believe that this will enable shareholders to reach a clearer understanding of how the Company's JORC based reserves and resources compare to those of western mining companies.  For our principal three assets, the aggregate of the resources compares favourably, with 8.2Moz projected from the Russian  Standard  Classification  System compared to 8.9Moz projected from JORC. Within this we have an audited JORC reserve base of 3.6Moz. In addition we have published the details of the Group's attributable gold production for the first nine months of the year. It is our intention to report production on a quarterly basis from now on. I am pleased to say that we remain on track to meet our 2008 forecast production of between 350,000 to 400,000 ounces and would draw your attention to the preliminary production results for October and the doubling of production from the Pioneer deposit.

While we fully understand that we are in an industry that is suffering from significant escalation in operating costs, we remain confident that PHM will continue to operate in the lowest quartile of the global gold production cost curve.

In the meantime, development of Pokrovskiy, Pioneer and Malomir continues as planned."

exECUTIVE SUMMARY OF THE Mineral Expert's Report

WAI has been commissioned by PHM to prepare a Mineral Expert's Report for PHM's portfolio of principal assets in the Amur, Yamal and Buryatia regions of Russia.

For this report, the resources and reserves of PHM have been estimated using both the guidelines of the JORC Code (2004) and the Russian Standard Classification System. The resources and reserves for the principal assets of Pokrovskiy, Pioneer and Malomir have been estimated in accordance with the guidelines of the JORC Code (2004), whilst the remainder are classified under the Russian Standard Classification System.

RESOURCE SUMMARY

Concurrently with resource estimates prepared under Russian requirements, PHM has also estimated Mineral Resources and Reserves in accordance with the guidelines of the JORC Code (2004) for the principal ore zones within the Pokrovskiy and Pioneer deposits. These have been reviewed by WAI, and in addition, WAI has prepared a resource estimate for the Malomir deposit using Datamine® geological modelling software in accordance with the guidelines of the JORC Code (2004).

WAI has taken the mineral resources prepared in accordance with the Russian Standard Classification System for those assets where no Micromine® models are available. WAI has reviewed Russian Standard Classification System estimates for Albyn, Quartzite and Ozhidaemoe (Malomir deposit), together with estimates for the Pokrovskiy flanks, in order to give an expert opinion on which part of these resources can be classified as mineral resources as defined by the JORC Code (2004). 

Summaries of the mineral resources and reserves attributed to PHM in the Amur Region are presented in the tables below. These tables are not alternatives to each other, but comprise those resources that have been prepared in accordance with the JORC Code (2004) and those that have been prepared in accordance with the Russian Standard  Classification  System.

PHM Proven and Probable Mineral Reserves1  Classified in accordance with the guidelines of the JORC Code (2004) (WAI July 2008)
	Ore (Mt)	Grade (g/t)	Contained Gold		Stripping Ratio (t Waste:t Ore)
			(kg)	(oz)
Pokrovskiy Total	5.6	2.05	11,500	369,733	4.2:1
Andreevskaya	2.8	3.66	10,400	334,368	11.7:1
Bakhmut, Yuzhnaya and Promezhutochnaya	24.7	1.03	25,500	819,843	4.8:1
Pioneer Total	27.5	1.30	35,900	1,154,211	5.5:1
Malomir Total	50.8	1.26	64,000	2,057,646	3.6:1
Total PHM Reserve	83.9	1.33	111,400	3,581,590	4.3:1

1 Above reserves are inclusive of resources and based on a US$650/oz gold price.

PHM Mineral Resources Classified in accordance with the guidelines of the JORC Code (2004) (WAI July 2008)
Type	Category	Pokrovska-12 (Pokrovskiy)				Pokrovska-32 (Pokrovskiy)				Andreevskaya 2 (Pioneer)
		Tonnage (kt)	Grade (g/t Au)	Metal		Tonnage (kt)	Grade (g/t Au)	Metal		Tonnage (kt)	Grade (g/t Au)	Metal
				(kg Au)	(koz Au)			(kg Au)	(koz Au)			(kg Au)	(koz Au)
Oxide (0.4g/t Au COG)	Measured	51	2.11	108	3					327	7.44	2,429	78
	Indicated	478	1.74	832	27					73	4.54	330	11
	Measured + Indicated	529	1.78	940	30					399	6.91	2,759	89
	Inferred	5,707	1.11	6,335	204					21	5.13	109	3.5
Sulphide (0.4g/t Au COG)	Measured	1,905	2.14	4,077	131	1,463	1.36	1,987	64	2,294	2.33	5,344	101
	Indicated	3,469	2.01	6,969	224	1,012	0.73	738	23	1,576	2.00	3,153	172
	Measured + Indicated	5,374	2.06	11,046	355	2,474	1.10	2,725	87	3,869	2.20	8,498	273
	Inferred	7,267	1.3	10,050	323	991	0.58	570	18	3,271	1.70	5,575	179
TOTAL 1	Measured	1,956	2.13	4,185	134	1,463	1.36	1,987	64	2,621	2.97	7,773	250
	Indicated	3,947	1.98	7,801	251	1,012	0.73	738	23	1,649	2.11	3,483	112
	Measured + Indicated	5,903	2.03	11,986	385	2,474	1.10	2,725	87	4,270	2.64	11,256	362
	Inferred	12,974	1.26	16,385	527	991	0.58	570	18	3,292	1.73	5,684	183

Note:

1 - TOTAL includes Oxide at 0.4g/t Au COG and Sulphide at 0.4g/t Au COG

2 - WAI audit of PHM Micromine® resource models

PHM Mineral Resources  Classified in accordance with the guidelines of the JORC Code (2004) (WAI July 2008)
Type	Category	Pioneer 2				Malomir 3
		Tonnage (kt)	Grade (g/t Au)	Metal		Tonnage (kt)	Grade (g/t Au)	Metal
				(kg Au)	(koz Au)			(kg Au)	(koz Au)
Oxide (0.4g/t Au COG)	Measured	5,210	0.94	4,921	158
	Indicated	3,842	0.82	3,147	101
	Measured + Indicated	9,052	0.89	8,068	259
	Inferred	11,688	0.73	9,253	276
Sulphide (0.6g/t Au COG)	Measured	9,750	1.19	11,638	374	7,239	1.31	9,501	305
	Indicated	11,012	1.15	12,715	408	57,156	1.19	68,115	2,190
	Measured + Indicated	20,762	1.17	24,353	782	64,395	1.21	77,616	2,495
	Inferred	26,676	1.00	26,767	859	87,549	0.94	82,262	2,645
TOTAL 1 Oxide (0.4g/t Au COG) + Sulphide (0.6g/t Au COG)	Measured	14,960	1.11	16,559	532	7,239	1.31	9,501	305
	Indicated	14,854	1.07	15,862	510	57,156	1.19	68,115	2,190
	Measured + Indicated	29,814	1.09	32,421	1,042	64,395	1.21	77,616	2,495
	Inferred	38,364	0.92	35,355	1,137	87,549	0.94	82,262	2,645

Note:

1 - Includes Oxide at 0.4g/t Au COG and Sulphide at 0.6g/t Au COG

2 - WAI audit of PHM Micromine® resource models

3 - WAI Datamine® estimate based on PHM sample database

PHM also evaluates mineral resources in accordance with the Russian Standard Classification System, which classifies into A, B, C1 and C2 resource/reserve categories, as well as P1, P2 and P3 "prognostic" resource categories.

PHM Resources and Reserves Summary - Russian Standard Classification System (PHM Annual Report 2007 - As at 01/01/08)
		B + C1				C2				P1
Deposit	Category	Tonnage (kt)	Grade (g/t Au)	Metal		Tonnage (kt)	Grade (g/t Au)	Metal		Tonnage (kt)	Grade (g/t Au)	Metal
				(kg Au)	(koz Au)			(kg Au)	(koz Au)			(kg Au)	(koz Au)
Pokrovskiy Main	Balance	4,450	4.23	18,824	605	576	3.94	2,269	73	1,540	3.90	6,000	193
	Off Balance	8,162	1.0	8,162	262	23	0.91	21	0.7
Stockpiles	Balance	4,259	1.33	5,665	182
	Off Balance	3,924	0.73	2,865	92
RIP Tailings	Balance	7,067	0.42	2,968	95
Inner Flanks	Balance					92	3.91	360	12
	Off Balance					11,430	1.20	13,716	441	2,730	1.70	4,641	149
Fanglomerates	Off Balance					3,100	1.00	3,100	100	2,560	0.80	2,048	66
Upper Luzhki	Balance									3,550	2.00	7,100	228
Anatolievsky	Balance									400	2.50	1,000	32
Pokrovskiy Totals	Balance	15,777	1.74	27,457	882	338	3.90	2,605	96	5,490	2.57	17,755	442
	Off Balance	12,086	0.97	11,027	354	14,553	1.16	16,837	541	5,290	1.27	6,689	215
Pioneer						72,658	1.61	116,979	3,761	21,760	1.63	35,469	1,140
Malomir						51,770	1.55	80,326	2,580	38,708	1.40	54,258	1,742
Tokur		3,932	3.24	12,740	410	8,851	2.36	20,888	672	15,010	3.40	51,034	1,641
Albyn										12,968	3.90	50,575	1,626
Novogodnee Monto	Balance	4,878	1.14	5,560	179	817	2.00	1,634	53	1,960	4.70	9,212	296
	Off Balance					185	1.04	192	6.6
Toupugal		7,630	1.40	10,682	343	6,661	1.52	10,125	326	7,900	5.80	45,820	1,473
Ozernoye Au										2,300	1.00	2,300	74
PGM's										2,300	1.50	3,450	111
Amur Region						1,366	8.49	11,597	373	2,063	7.43	15,328	493
GROUP TOTAL (Excl. PGM's)		44,303	1.54	67,466	2,168	157,529	1.66	261,101	8,409	115,749	2.49	287,823	9,253

POKROVSKIY 

The mineable reserves at Pokrovskiy are based on geological resources and have been economically optimised using cut-off grades based on gold prices of US$650 to US$750/oz. WAI has re-run the optimisation process using the same parameters as PHM and the results were found to be within acceptable limits. The table below summarises the reserves under JORC (2004) guidelines at Pokrovskiy at three different gold prices.

 

Results of the Economic Optimisation of the Pokrovskiy Open Pit Classified in accordance with the JORC Code (2004) -  WAI (July 2008)
	Gold Price (US$/oz)
	650	700	750
Total
Total Rock Mass, kt	29,000	29,100	30,500
Ore, kt	5,600	5,600	5,700
Grade, g/t	2.05	2.05	2.02
Total Metal , kg	11,458	11,494	11,519
Total Metal, koz	368	370	370
Waste, kt	23,400	24,100	24,800
Stripping Ratio (tOre/tWaste)	4.2:1	4.3:1	4.4:1
RIP Processing
Ore to RIP Plant, kt	3,900	4,200	4,400
Grade, Au g/t	2.70	2.57	2.49
Total Metal, kg	10,518	10,718	10,861
Total Metal, koz	338	345	349
Economic Cut-Off-Grade, g/t	0.44	0.42	0.41
Heap Leach Processing
Ore to Heap Leach, kt	1,7	1,4	1,3
Grade, Au g/t	0.56	0.54	0.51
Total Metal, kg	94	776	658
Total Metal, koz	30	25	21
Economic Cut-Off-Grade, g/t	0.29	0.28	0.27

The Proven and Probable reserves derived by WAI under JORC (2004) guidelines at Pokrovskiy are based on a US$650/oz gold price are 5.6Mt of ore at an average grade of 2.05g/t Au (economic COG of 0.4g/t) and require that 23.4Mt of waste be removed to access the orebody at a stripping ratio of 4.2:1.  A significant further Inferred resource exists within the deposit.

PHM's current mining schedule is primarily based on reserves reported under the  Russian  Standard Classification System, which gives an inventory of mineable material of 15.9Mt at an average grade of 1.95g/t of gold and requires that 42.3Mt of waste be removed to access the orebody. This mining schedule also includes 274koz of gold of B+C1 reserves from stockpile material.  It is planned that the current rate of production will continue until 2012 when the existing open pit will be exhausted. After 2012, production will move to a series of smaller open pits termed the Pokrovskiy Flanks which are currently estimated at 553koz Au of C2 resources. The average grade of the flank deposits is lower than the current Pokrovskiy pit. It is planned that from 2013 to 2019 2.0Mt/pa at an average grade of 1.1g/t of gold will be processed in the resin-in-pulp plant and 0.6Mtpa, at the same average grade of 1.1g/t of gold, will be processed via the heap leach facility.

The mining schedule for Pokrovskiy is optimised to balance ore mining, waste mining and average grade each year. The mining rate and amount of blending required is not significantly different to the current operational practices and therefore WAI considers the schedule to be both practical and achievable. It should be noted however, that the Pokrovskiy Flanks deposits are not included in the block models reviewed by WAI. WAI believes that if these resources are modelled they are highly likely to be classed as Inferred at best under JORC Code (2004) guidelines.

Overall, the Pokrovskiy plant operations are run efficiently and in line with best international practice.

PIONEER

The reserves at Pioneer are based on the geological resources and have been economically optimised using a cut-off grade based on a gold price of US$650/oz. WAI has re-run the optimisation process using the same parameters as PHM and the results found to be within acceptable limits.

 

The Pioneer mine consists of four main open pits, Yuzhnaya, Promezhutochnaya, Bakhmut and Andreevskaya. The results of the economic optimisation are displayed in the tables below.

 

 

Results of the Economic Optimisation of Bakhmut, Yuzhnaya  and Promezhutochnaya Open Pits1 Classified in accordance with the JORC Code (2004) - WAI (July 2008)
Parameters	Gold Price (US$/oz)
	650	700	750
Total Rock Mass, kt	142,845	155,664	162,013
Waste, kt	118,174	128,639	133,689
Oxidized Ores
Ore, kt	9,765	9,783	9,804
Grade, g/t	0.84	0.85	0.85
Total Metal, kg	8,292	8,303	8,314
Total Metal, koz	267	267	267
Economic Cut-Off Grade, g/t	0.2	0.16	0.15
Primary Ores
Ore, kt	14,902	17,242	18,520
Grade, g/t	1.15	1.09	1.06
Total Metal, kg	17,175	18,809	19,549
Total Metal, koz	551	605	629
Economic Cut-Off Grade, g/t	0.5	0.45	0.42
Total
Ore, kt	24,671	27,025	28,324
Grade, g/t	1.03	1.00	0.8
Total Metal, kg	25,437	27,112	27,863
Total Metal, koz	818	872	896
Stripping Ratio (tOre/tWaste)	4.79:1	4.76:1	4.72:1

 

Results of the Economic Optimisation of the Andreevskaya Open Pit1 Classified in accordance with the JORC Code (2004) - WAI (July 2008)
Factors	Gold Price (US$/oz)
	650	700	750
Total Rock Mass, kt	35,922	37,123	37,038
Waste, kt	33,089	33,985	33,570
Ore, kt	2,833	3,138	3,468
Grade, g/t	3.66	3.36	3,08
Economic Cut-Off Grade, g/t	0.42	0.39	0.36
Total metal, kg	10,360	10,532	10,676
Total metal, koz	333	339	343
Stripping Ratio (tOre/tWaste)	11.7:1	10.8:1	9.7:1

1 Numbers may not add up exactly due to rounding 

The Pioneer reserves as derived by WAI are based on a US$650/oz gold price. This gives combined Proven and Probable reserves of 27.5Mt at an average grade of 1.30g/t Au and requires that 151.2Mt waste be removed to access the orebodies.

The Pioneer mining schedule derived by PHM using the Russian Standard Classification  System expects production to reach a maximum rate of 6.1Mtpa of ore by 2010, but the production rate is expected to reduce slightly towards the end of the mine life in 2017. The average grade over the life of the mine is expected to be 1.6g/t Au, but this varies between 2.6g/t at the beginning of the operation to 1.7g/t Au in 2017, mainly due to the influence of the Andreevskaya open pit, which has a much higher average grade than Bakhmut, Yuzhnaya and Promezhutochnaya.

The mining schedule proposed for Pioneer is optimised to balance ore mining, waste mining and average grade each year. Mining will take place from four separate open pits and will thereafter be blended in the combined processing facilities. WAI considers the proposed schedule to be both practical and achievable given PHM's experience and management expertise gained through the Pokrovskiy operations. It should be noted, however, that the combined mining schedule includes Inferred resources and as such, less reliance can be placed on proposed tonnage and grades in the latter parts of the schedule. WAI believes it is appropriate for these future resources to be included in the long term schedule as a guide only, pending further exploration work.

WAI has examined the testwork results and PHM development plans and is in general agreement with the results. However, WAI considers that more testwork should be undertaken, particularly with regard to the pressure oxidation of the sulphide concentrates to establish operating criteria and costs and also to investigate alternative methods if applicable.

MALOMIR

The Malomir project is an advanced stage development project and as such, much technical work still needs to be completed in order to accurately estimate essential parameters used in the reserve calculation. WAI has calculated a preliminary reserve for Malomir based on the current geological resources, but this calculation relies upon preliminary assumptions, particularly metallurgical. The results of the preliminary economic optimisation and reserve calculation are shown in the table below.

Results of the Economic Optimisation of the Malomir Open Pit Classified in accordance with the JORC Code (2004) - WAI (July 2008)
Parameters	Gold Price (US$/oz)
	650	700	750
Total Rock Mass, kt	231,982	256,969	248,078
Waste, kt	181,220	200,243	223,892
Ore, kt	50,762	56,726	60,186
Grade, g/t	1.26	1.22	1.21
Total Gold, kg	63,994	69,333	72,616
Total Gold, koz	2,057	2,229	2,335
Stripping Ratio, t ore/t waste	3.57:1	3.53:1	3.72:1
Economic COG, g/t	0.59	0.54	0.50

The proposed mining schedule for Malomir derived from PHM's Russian Standard  Classification  System reserves is based on a US$650/oz gold price. This gives indicative preliminary reserves of 50.8Mt at an average grade of 1.26g/t Au and requires that some 181Mt of waste be removed to access the ore body at a stripping ratio of 3.57:1. 

The reserves calculated at Malomir, and therefore the open pit design, must be considered as preliminary only, as there is still much work to be done in terms of metallurgical testing and cost estimation.

At this early stage, however, WAI is of the opinion that Malomir represents a significant open pit mineable resource which has a high potential of becoming a profitable operation in the near future, subject to the planned test work yielding the results expected.

PHM intends to start mining at Malomir in the first half of 2010. The preliminary schedule will be to mine 3.0Mt of ore in 2010, 4.0Mt in 2011 and ramping up to 6.0Mtpa from 2012 onwards. Given PHM's experience in developing and mining Pokrovskiy and in commissioning the Pioneer project, the development and mining schedule for Malomir is realistic and achievable. The size of the task is certainly within PHM's capabilities and there are no natural impediments such as terrain or location. The area has established lines of communication and is amenable to open pit mining.

The Malomir ore is known to be predominantly refractory and has been subjected to several detailed metallurgical test programmes. There are three different ore type categories within the deposits, namely Oxide, Transition and Primary. The testing of the orebody is continuing and pilot scale tests are on-going through 2008.

The Primary and Transition ore types are highly refractory due to the significant levels of gold associated with sulphide minerals (up to 40%). Various processing options were considered to treat the flotation concentrates and PHM selected Pressure Oxidation ("POX") as the most suitable method, following comminution and flotation.

The Company has been advised that the Malomir flotation concentrates could be effectively processed using autoclave oxidation and cyanidation. This view was based on the studies carried out by Irgiredmet on similar flotation concentrates from Pioneer which had a gold grade of 25-30g/t Au and sulphur content of 21%. It was predicted that autoclave treatment of the flotation concentrates at temperatures of 200-220°C at pressures of 2.5-3.0MPa for 1-2 hours, using 80% oxygen, would result in 97-98% oxidation of the sulphur and arsenic minerals present. Subsequent leaching of the oxidised concentrate would give a gold recovery of not less than 95%.  Overall gold recovery is expected to be approximately 80%, with a flotation recovery of 82-84%.

WAI has inspected the testwork programmes and concurs that the chosen flowsheet is appropriate.  However, further work is required to verify the various assumptions made, particularly as more details of the orebodies emerge. 

YAMAL

A considerable amount of exploration has been undertaken by PHM on all of the licence areas; however, with the exception of Novogodnee-Monto (gold and iron), Zapadnoye (chromite) and the intensive exploration of Petropavloskoye in 2007 (a gold deposit which lies inside the Toupugol-Khanmeishorsky licence area), only those resources classified in the prognostic P category under the Russian Standard Classification System have been identified in the other licence areas.

Russian Standard Classification System resource and reserve estimates have been undertaken by PHM on the Novogodnee Monto, Petropavloskoye and Zapadnoye deposits. WAI has reviewed the exploration work undertaken by PHM (density of drilling and trenching over each project as a whole) and considers that both these deposits show considerable merit and potentially may well support the development of mining projects. A summary of the Mineral Resources and Reserves held by PHM in the Yamal Region are presented in the tables below.

Resource and Reserve Summary - Russian Standard Classification System Yamalzoloto  (PHM Annual Report as at 01/01/08)
		Gold			Magnetite			Gravel
Site	Category	Tonnage (kt)	Grade (g/t)	Metal (kg)	Tonnage (kt)	Grade (FeMgt%)	Metal (kt)	Tonnage (000's m3)
Novogodnee Monto
Metasomatic Zones	C1	64	3.80	244				11,279
	C2	472	2.59	1223				13,828
Magnetite Ores	C1	4814	1.11	5,324	4,814	41.16	1,981
	C2	345	1.22	419	529	41.61	220
Skarn	P1	1,960	4.67	9,144
Toupugol-Khanmeishorsky Area
Petropavlovskoye	C1	7,630	1.40	10,665
	C2	6,661	1.52	10,156
	P1	5,000	6.00	30,015
Karyerniy	P1	1,000	10.0	10,000
Karachentseva	P1	667	4.50	3,000
Anomalny	P1	833	6.00	5,000
Toupugolsky	P1	437	8.00	3,500
Khanmeishorsky	P1	2,657	3.50	9,300

Resource and Reserve Summary - Russian Standard Classification System Yamal Mining Company (PHM Annual Report as at 01/01/08)
Ozernoye-Pyatirechenskaya Area
		Gold			Platinoids			Other
Site	Category	Tonnage (kt)	Grade (g/t)	Metal (kg)	Tonnage (kt)	Grade (g/t)	Metal (kg)
Ozernoye	P1	2,300	1.0	2,300	2,333	1.50	3,500
	P2	-	-	-	6,667	1.50	10,000
Rudnogorskaya Area
Rudniy-Gorkiy-3	P1	1,667	1.50	2,500	-	-	-	-	-	-
Elkashor								Copper
								Tonnage (Mt)	Metal (%)	Metal (kg)
	P2	-	-	-	-	-	-	8.0	0.10	800
								Molybdenum
								Tonnage (Mt)	Metal (%)	Metal (kg)
	P2							8.0	0.06	200
Yarshor-Laptayeganskaya Area
Sandy Bay	P1	1,000	10	10,000	-	-	-	-	-	-

PHM proposes to extract gold and magnetite from the Novogodnee Monto deposit using traditional metallurgical processing routes. 405ktpa of ore is expected to be treated at a grade of 1.06g/t Au and 42.3% Fe.  Principally, gold will be processed by leaching flotation concentrates with cyanide. The gold content within the leached solutions will be further upgraded by electro-winning and smelted to produce a gold and silver alloy (doré), containing 70% Au and 30% Ag. It is intended that magnetite will be concentrated to produce a product containing 68.9% Fe using magnetic separation technology.

Based on results of metallurgical testing undertaken at the Petropavlovskoye deposit it was recommended that the Petropavlovskoye ore should be treated using flotation with subsequent cyanidation of the flotation concentrate.

FINANCIAL ANALYSIS

WAI has conducted a financial analysis of PHM's mining operations over the next 2.5 years. A cash flow model was constructed based on the mining of Proven and Probable reserves derived from Measured and Indicated resources. The results are summarised in the table below.

Summary of the PHM Group Financial Analysis
		2008	2009	2010
	Unit	Q3 and Q4	Q1 - Q4	Q1 - Q4
Gold Produced	kg	5,828	15,910	25,014
Gold Produced	Tr. oz	187,395	511,576	804,309
Total Revenue	US$m	159.3	434.8	627.4
Total Capital Expenditure	US$m	72.1	142.5	100.2

2010 Revenue figures include an estimated US$24.2M from aggregate sales.

The assets included in the above table are the reserves at Pokrovskiy, Pioneer, Malomir, Yamal and Placers Deposit. All have also been classified in accordance with the guidelines of the JORC Code (2004).

The gold price assumptions used in the cash flow model are as follows:

Short Term (2008/2009) - US$850/oz

Medium Term (2010/2011) - US$750/oz

Long Term (2012 and beyond) - US$650/oz. 

Enquiries:

Peter Hambro Mining Plc Alya Samokhvalova  JPMorgan Cazenove Ian Hannam / Patrick Magee	+44 (0) 20 7201 8900 +44 (0) 20 7155 2828
Merlin David Simonson / Tom Randell / Anastasia Ivanova	+44 (0) 20 7653 6620

The contents of this announcement have been reviewed and approved for release by Dr. P. Newall, BSc,PhD, CEng, FIMMM, of Wardell Armstrong International. Dr. P. Newall has consented to the inclusion of the material in the form and context in which it appears.

This release has been reviewed by Dr. Stephen Henley, who is an independent geological 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 the purposes of this statement. Dr. Stephen Henley holds a PhD in Geology (University of Nottingham, 1970). He is a Fellow of the Geological Society, a Fellow of the Institution of Materials, Minerals and Mining, and a Chartered Engineer.  He is also a Charter Member of the International Association for Mathematical Geology.  He has been employed in exploration, mining, academic and geological consultancy posts since 1970 and has participated in Competent Person studies on a variety of different minerals and types of deposit, including gold, polymetallic and chromite projects.

 

Forward-Looking Statements

This release contains forward looking statements relating to the Company's anticipated plans, resources, reserves and financial performance. The words "believe," "expect," "anticipate," "intend" and similar expressions identify forward-looking statements, but their absence does not mean the statement is not forward-looking. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that could cause actual results to differ materially from those anticipated in the forward-looking statements. You should not place undue reliance on these forward-looking statements. The forward-looking statements are made as of today's date and the Company assumes no obligation to update any such statements to reflect events or circumstances after the date hereof.

Glossary of Terms

"Ag"	chemical symbol for the element silver
"alluvial"	Detrital material which is transported by a river and deposited at points along the flood plain of a river
"arsenic"	metallic, steel-grey, brittle element. Chemical symbol, As
"Au"	chemical symbol for the element gold
"autoclave oxidation"	a high temperature and pressure process in which gold bearing sulphides are oxidised to render gold amenable to cyanide leaching
"Category A"	Soviet "ore reserves" where the reserves in place are known in detail. The boundaries of the deposit have been outlined by trenching, drilling, or underground workings. The quality and properties of the ore are known in sufficient detail to ensure the reliability of the projected exploitation.
"Category B"	Soviet "ore reserves" where blocks are delineated by mine workings on three or more sides
"Category C1"	Soviet "ore reserves" whose blocks are delineated by mine workings above and below
"Category C2"	Soviet "ore reserves extrapolated from Category C1 but with more complex geology or limited mine workings
"Category P1-3"	Soviet "Prognostic" ore reserves extrapolated beyond more definable reserves and resources. The category is subdivided into three sub-categories P1 to P3, with the level of confidence decreasing progressively from sub category 1 to 3
"Cu"	the chemical symbol for copper
"cut-off-grade" or "COG"	lowest grade of mineralised material considered economic, used in the calculation of ore resources
"cyanidation"	metallurgical technique for extracting gold by leaching from low-grade ore, converting the gold to water soluble aurocyanide metallic complex ions
"cyanide leach"	chemical extraction method using a dilute cyanide solution to leach gold from the mineralisation
"Datamine®"	complex mining software used primarily for orebody modelling, resource estimation and pit optimisation
"deposit"	coherent geological body such as a mineralised body
"doré"	unrefined gold. After being mined, the first stage in the purification process of the gold ore produces a cast bar (gold doré) that mostly comprises gold (up to >90%) with the remainder comprising silver, copper etc.
"Fe"	chemical symbol for iron
"FIMMM"	Fellow of the Institute of Material, Mining and Metallurgy
"flotation"	mineral processing technique used to separate mineral particles in a slurry, by causing them to selectively adhere to a froth and float to the surface
"g/t"	gram per metric tonne
"grade"	relative quantity or the percentage of ore mineral or metal content in an ore body
"heap leach"	process used for the recovery of metal ore from typically weathered low-grade ore. Crushed material is laid on a slightly sloping, impervious pad and uniformly leached by the percolation of the leach liquor trickling through the beds by gravity to ponds. The metals are recovered by conventional methods from the solution
"Indicated Resource"	as defined in the JORC Code, is that part of a Mineral Resource which has been sampled by drill holes, underground openings or other sampling procedures at locations that are too widely spaced to ensure continuity but close enough to give a reasonable indication of continuity and where geoscientific data are known with a reasonable degree of reliability. An Indicated Mineral resource will be based on more data and therefore will be more reliable than an Inferred resource estimate
"Inferred Resource"	as defined in the JORC Code, is that part of a Mineral Resource for which the tonnage and grade and mineral content can be estimated with a low level of confidence. It is inferred from the geological evidence and has assumed but not verified geological and/or grade continuity. It is based on information gathered through the appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes which may be limited or of uncertain quality and reliability
"JORC"	Joint Ore Reserves Committee of the Australian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals council of Australia
"kt"	kilo tonnes (1,000 tonnes)
"leached"	a rock that is in the process of being broken down by the action of substances dissolved in water
"leaching"	see cyanidation
"magnetics"	a geophysical technique used to measure the magnetic susceptibility of rocks
"magnetite"	an iron ore mineral, Fe3O4
"Measured Resource"	defined in the JORC Code, as that part of a Mineral Resource for which the resource has been intersected and tested by drill holes, underground openings or other sampling procedures at locations which are spaced closely enough to confirm continuity and where geoscientific data are reliably known. A measured resource estimate will be based on a substantial amount of reliable data, interpretation and evaluation which allows a clear determination to be made of the shapes, sizes, densities and grades
"metallurgical"	describing the science concerned with the production, purification and properties of metals and their applications
"metasomatism or metasomatic"	metamorphic change which involves the introduction of material from an external source
"Micromine®"	company that has developed innovative geological resource modelling software for the mineral resource industry since 1986
"mineral resource"	concentration or occurrence of material of intrinsic economic interest in or on the Earth's crust in such a form that there are reasonable prospects for the eventual economic extraction. The location, quantity, grade geological characteristics and continuity of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge. Mineral resources are sub-divided into Inferred, Indicated and Measured categories
"Mo"	chemical symbol for molybdenum
"Mt"	million tonnes
"off balance"	Russian Standard Classification System term defining uneconomic reserves
"on balance"	Russian Standard Classification System term defining commercially exploitable reserves but without mining dilution and recovery
"open pit"	large scale hard rock surface mine
"optimisation process"	process to define an open pit outline based on geotechnical and economic parameters
"ore"	mineral deposit that can be extracted and marketed profitably
"ore body"	mining term to define a solid mass of mineralised rock that can be mined profitably under current or immediately foreseeable economic conditions
"ore reserve"	the economically mineable part of a Measured or Indicated mineral resource. It includes diluting materials and allowances for losses which may occur when the material is mined. Appropriate assessments, which may include feasibility studies, have been carried out, and include consideration of and modification by realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the time of reporting that extraction could be reasonably justified. Ore reserves are sub-divided in order of increasing confidence into Probable and Proven
"ounce" or "oz"	troy ounce (= 31.1035 grams)
"oxide"	a mineral formed by the direct union of an element with oxygen; e.g. corundum, hematite, magnetite and cassiterite
"oxide ore"	often known as secondary or supergene ore, which consists of alteration products of primary ore as a result of weathering or other surficial processes resulting from descending surface waters
"PGM"	Platinum Group Minerals. Characterised by high specific density, unusual resistance to oxidising and acid attack and high melting point. Includes platinum, ruthenium, rhodium, palladium, osmium and iridium
"placer"	mineral deposit formed by the winnowing action of either water, or air to concentrate minerals of different mass by gravity separation
"plunge"	fold is said to plunge if the axis is not horizontal
"pluton"	igneous intrusion
"plutonic"	pertaining to igneous rocks formed at great depths
"polymetallic"	refers to a mineral deposit or occurrence with several metal sulphides, common metals include Cu, Pb, Zn, Fe, Mo, Au and Ag
"primary ore"	often known as hypogene ore, where ore minerals are deposited during the original period or periods of mineralisation. Ore that has remained practically unchanged from the time of original formation
"pressure oxidation" or "POX"	a high temperature and pressure process in which gold bearing sulphides are oxidised to render gold amenable to cyanide leaching
"recovery"	proportion of valuable material obtained in the processing of an ore, stated as a percentage of the material recovered compared with the total material present
"refractory ore"	ore material that is difficult to treat for recovery of the valuable element
"reserves"	Proven: measured mineral resources, where technical economic studies show that extraction is justifiable at the time of the determination and under specific economic conditions.  Probable: measured and/or indicated mineral resources which are not yet proven, but where technical economic studies show that extraction is justifiable at the time of the determination and under specific economic conditions
"RIP"	Resin in Pulp; processing technique by which a resin medium is used to adsorb the desired element out of solution or pulp
"Russian Standard Classification System"	Means by which Russian reserves are assigned to classes based on the degree of reliability of data and indicate their comparative importance for the national economy
"stockpile"	an accumulation of ore or mineral formed to create a reserve for loading or when demand slackens or when the process plant is unequal to handling mine output
"strip ratio"	the unit amount of spoil or waste that must be removed to gain access to a similar unit of ore or mineral material
"sulphide"	mineral containing sulphur in its non-oxidised form
"t"	metric tonne
"tailings"	material that remains after all metals/minerals considered economic have been removed from the ore
"tpa"	tonnes per annum
"transition ore"	zone of an orebody where both oxide and sulphide/primary ore material exists
"trench sampling"	sampling of a trench cut through the rock, generally in the form of a series of continuous channels (channel samples)

ENDMSCIIFSRLRLEIIT

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