20th Jul 2005 07:01
Peter Hambro Mining PLC20 July 2005 20 July 2005 Pioneer Reserves & Resources Update and Feasibility Study Progress Report Peter Hambro Mining Plc ("PHM" or the "Group") issues this update on explorationand development for the Group's Pioneer project in the Amur Region, Far EastRussia. Work to date has resulted in: • a reclassification of the Russian resources to JORC; and• a materially different understanding of the deposit due to newly discovered high grade ore columns. JORC reclassification PHM is pleased to announce that the recent trial mining exercise and theavailability of the Group's three new laboratories for assay work has allowed anupdate of reserves and resources at Pioneer. As reported previously, the Group'sestimations for the reserves and resources at Pioneer were formed on the basisof preliminary exploration results. The results of more conclusive data, in theform of an extensive drilling programme, were delayed by the Group's lack oflaboratory capacity and hence ability to assay the drill samples. With theGroup's three new laboratories, this backlog of assays has now been almostentirely cleared and consequently the reserves and resources at Pioneer areupdated. Pioneer's overall resources have been updated and also partly recalculated usingthe Australian JORC code. According to the Russian classification system therelevant zones of the Pioneer deposit contain a total of C2 1.9 million ouncesand P1/P2 1.9 million ounces. As was undertaken at Pokrovskiy during 2004, wehave implemented the MicroMine mine planning software at Pioneer. By-products ofusing MicroMine are the independent audit of the deposit by the MicroMine teamand a JORC resource estimate. It has been found that the total JORC estimate forPioneer is 2.2 million ounces which closely correlates with that under theRussian classification system, and in fact the JORC estimate of resources is 14%higher. The table shows that the work undertaken by the Group to reclassify reserves andresources into JORC has been successful. Under the JORC system there is a totalof 2.2m ounces in the resource category versus 1.9 million under the Russian C2classification. Ahead of the completion of a feasibility study on the depositJORC does not qualify any of these resources as reserves but no furthergeological work would be required to do so and, using the economical conditionsat Pokrovskiy, c.70% of the JORC resources appear as reserves. Summary Comparison of Reserve & Resource estimates of the zones of the Pioneerdeposit With cutoff grade 0.6g/t --------------------------------------------- at 1-1-2004 Ore Contained Metal tonnes '000 kg oz '000 ----------- -------------------------Total (C2+P1+P2) 82,703 119,911 3,849Total C2 31,763 59,835 1,921 ----------- ---------- ----------- With cutoff grade 0.6g/t With cutoff grade 0.8g/t ---------------------------- --------------------------at 25-4-2005 Ore Contained Metal Ore Contained Metal tonnes kg oz tonnes kg oz '000 '000 '000 '000 ------- ------- ------ ------- ------ ------Total (JORC+P1+P2) 72,366 107,456 3,450 36,276 88,029 2,826Total (JORC) 63,915 68,156 2,188 28,737 49,353 1,584 ------- ------- ------- Resource Growth & High Grade Ore Columns The results of the Pioneer exploration and development programme all support theestimations made by the Group in the past. PHM's understanding of the deposit isnow more definitive but materially differs from that announced previously. Theunderstanding is now that the deposit consists of a series of orezones lyingalong two fault zones with high grade ore columns at intersections and branches.The average grade of each zone ranges from 1.0g/t to 2.0g/t but benefits frompockets of very high grade ore in the columns. Two of the very high grade orecolumns have so far been comprehensively explored; five more are predictedwithin the four ore zones; and based on current results the Group believes thatthere is the potential for many more. The high grade columns have materially changed the estimations and the Group'sunderstanding of the deposit. In drilling an orebody it would be normal todiscount particularly high grade assay results in the belief they are 'blips'which would distort resource estimations. The trial mining exercise at Pioneeron two such ore columns has shown that the high grade results are not mere blipsbut material high grade pockets which significantly increase the grade ofmineable gold. The two columns that have been opened to date have been found tobe c.35-50m wide with 62% of samples having a grade greater than 10g/t. The table below shows the substantial increase in high grade resources andgrade. The size of the overall resource has increased only marginally from 309tonnes of contained gold to 317 tonnes whilst the grade has remained constant at1.6g/t. The high grade content has increased from 29 tonnes at 3g/t to 134tonnes at 5.1g/t - an increase in high grade gold of 365% whilst grade increasesby 73%. -----------------------------------------------Pioneer Ore Zones estimated at----------- -------------- -------------- -------------- At 1/01/2004 At 1/7/2005 At 1/7/2005 -------------- -------------- -------------- cut off grade 0.6 cut off grade 0.6 cut off grade 0.8 Contained Grade Contained Grade Contained Grade gold (g/t) gold (g/t) gold (g/t) (Mill Oz) (Mill Oz) (Mill Oz)---------- -------------- -------------- --------------Bakhmut,Yuzhnaya,PromezhutochnayaandApophysis 1 3.85 1.45 3.45 1.48 2.83 2.43High Gradetherein 0.92 2.94 1.25 4.60 1.22 5.10---------- --------------- --------------- ---------------Other oreszones 6.08 1.42 6.75 1.68 - -High Gradetherein - - 3.04 5.40 - ----------- --------------- --------------- --------------- Total 9.93 1.61 10.20 1.61 - - --------------- --------------- ---------------Total high grade 0.92 2.94 4.29 5.10 - - --------------- --------------- --------------- The results of the work have confirmed PHM's confidence in the amenability ofthe deposit to a large scale gold mining and processing operation and hence workhas commenced on the basic infrastructure requirements of such operation. Attached to this release is a summary of the report on this subject made to theBoard of PHM by N.G. Vlasov, the Group's Chief Geologist. Commenting on the announcement, Peter Hambro, Executive Chairman, said: "Today's report is a technical confirmation of our original beliefs in thelikelihood of Pioneer to become a world class asset. Pioneer is due to play akey part in the Group's development strategy and particularly in fulfilling our2009 one million ounce production target. I am very pleased that all the work todate at Pioneer has confirmed the Group's original estimations of reserves andresources and that we are making such good progress in exploring the deposit. Asat Pokrovskiy last year, the independently prepared JORC resource estimates haveconfirmed the Group's previous estimates which used the Russian classificationsystem. Further to our increased understanding of the deposit, it is gratifying to havebeen able to identify the existence of key high grade pockets of ore which areopen at depth and seem to reoccur at regular intervals in the deposit." Enquiries: Alya Samokhvalova Investor Relations, Peter Hambro Mining +44 (0) 20 7201 8900 David Simonson / Tom Randell Merlin +44 (0) 20 7653 6620 The following is an executive summary of the report to the Board of Directors ofPHM, by the Group Chief Geologist, N.G. Vlasov. Exploration Work Undertaken For the period 2001-2005 the following work has been carried out on the Pioneerdeposit: - core drilling 28,500m- geotechnical drilling 3,300m- shallow mapping holes 7,400m o Total drilling 39,200m- Trenching 1,994,000 m3- Samples taken 36,458 The total expenditure on this work as of 1 June 2005 is RuR148m roubles(c.US$5.1m). Results of Exploration - Reserves & Resources Update Assays Almost all of the outstanding assays from 2004 have now been completed. A smallnumber of assays were not completed by the modelling cutoff date of 25 April2005 and have not been used in the reserves figures. The ore shoot on thePromezhutochnaya zone is the principal reserve figure affected by this. Theeffect of adding this is expected to be an increase in average grade for thePromezhutochnaya zone. Computer Models Two computer models have been generated: (1) a conventional ore deposit model, in MicroMine, which has been used togenerate JORC resource figures. MicroMine has independently audited this modeland approved the resultant JORC resource figures; and (2) a 3D geochemical model, created by the independent consulting groupEcotsentr (from Vladivostok) using all available assay data. A similarindependent model was carried out by Ecotsentr in the surrounding area toPokrovskiy approximately two years ago. Subsequent exploration work at Pokrovskyhas so far confirmed the usefulness of the geochemical model with explorationwork corroborating many of the forecasts made. Ore shoots From a combination of the 3D geochemical model and structural reasoning, it hasbeen predicted that at intervals of approximately half a kilometre there arerich high grade ore-shoots along the Bakhmut, Promezhutochnaya, Tsentralnaya andYuzhnaya zones. These rich ore shoots have been found to have grades rangingbetween 5g/t and upwards of 20g/t - with 62% of all samples assayed to datebeing over 10g/t. The ore shoots occur at the junctions of the 'main' ore zones with apophyses (orsubsidiary, branching ore-zones), places where gold mineralising solutions havebeen trapped by the geological structures. •The first ore shoot to be intensively studied is at the junction of Bakhmut zone and Apophysis 1. This is now being test-mined with an open pit that was commenced in the winter of 2004. The ore shoot is about 40m across, oval in plan (surface area c.1500m2), and more than 200m deep. Drilling to date, at 200m depth, has not reached the bottom of the high grade zone. Average grades are in the region of 20g/t. •A second ore shoot currently being explored is near the north-east end of Promezhutochnaya zone. •There are believed to be a further five such ore shoots on the Bakhmut, Promezhutochnaya, and Yuzhnaya zones. There is physical exploration evidence for a number of these, whilst others are predicted as a result of the geochemical modelling programme. None have been explored in any detail to date and hence are not recorded in the reserve category. The geochemical model and other exploration evidence, as well as interpretation of the structural geology, all suggest that many similar ore shoots will be found on other ore zones in the Pioneer property. Zonational structure of the deposit The Promezhutochnaya zone is down-faulted by comparison with Bakhmut - thismeans that the same ore horizons are found at deeper levels. High silver gradeshave been found here - the Group's interpretation is that these correspond to aposition near the top of the zone of mineralisation (which has been eroded awayin the Bakhmut zone). The Tsentralnaya zone is downfaulted even more, whichmeans that the highest gold grades there are likely to be found at depth. Atsurface this zone has the most intensive arsenic/antimony/silver anomaly whichcan be intepreted as a dispersion halo above the main ore levels. Then furtherto the south, the Yuzhnaya zone is at a similar erosional level toPromezhutochnaya zone. Ore shoots - ore types The ore within the Bakhmut/Apophysis 1 ore shoot is different in character fromore in the main ore zones - it includes a significant proportion of coarse,visible gold. The presence of coarse gold means that the grades aresignificantly under-estimated by conventional sampling and assay methods. Bulksampling and complex assay processes including gravity separation are needed -as discovered in the testing PHM undertook during 2004. The bulk sample testingundertaken to date has shown a recovered grade 30% higher than from thecorresponding conventional samples. This means that it is probable that thereported reserve estimates within the ore shoots are highly conservative -possibly to the quantum of a greater than 30% uplift. Pioneer flanks Preliminary exploration results on ore zones on the Pioneer 'flanks' (mostly tothe west of the main line of ore zones) show gold grades and anomalies thatjustify a further detailed exploration programme in the area. There are samplesidentifying particularly high grades of both gold and silver. Oxide zone This is developed and intersected by drilling to varying depths across thePioneer deposit; 20-25m at Promezhutochnaya, 40-70m at Bakhmut and 70-100m atYuzhnaya, and deepest of all (to 220m) at the bend in the Yuzhnaya zone. Thereare localised enrichments of gold in the oxide zone, and coarse visible gold hasbeen seen throughout the oxidised zone. Processing Studies have shown that for both oxide and primary ore, gravity/flotation orcyanidation both give recoveries that would be suitable for a large mining/processing operation as originally perceived by the Group - with the addition ofa gravity separation system at the front of the mill, recovery of the coarsehigh grade material is manageable and cost-effective. To date tests showrecoveries as follows: 98% on high grade material; 92% on oxide material; and85% on non-oxide material. Reserves/resources The zones which have been evaluated to the level of C1 and C2 reserves areYuzhnaya and Bakhmut and associated apophyses; Promezhutochnaya has beenevaluated almost to C1 standard (simply awaiting the return of final assay datafor completion). 9 further ore zones have been partially evaluated, throughdrill holes and trenches; 9 others are not yet explored. On the newly discoveredore shoots, there is to date insufficient work to give separate reserveestimates. Reserves and resources for Yuzhnaya, Bakhmut, and Promezhutochnaya aresummarised in the table below. This shows the figures for 1 Jan 2004, asreported by the Group then, computed per Russian classifications, and updatedfigures for 25 April 2005, reported on the JORC standard and independentlyaudited by MicroMine Consultants Pty Ltd. It should be noted that the figuresare analogous but with an overall increase in resources in terms of bothcontained gold and ore tonnage. This is similar to the results of the same studywhen carried out on the Pokrovskiy pitshell. Reported average grades remainsimilar, though at the same 0.6g/t cutoff the JORC resource grades are lower dueto block modelling indicating a higher total ore tonnage (though apparent hightonnage/low grade is a common artefact of the kriging method which tends tosmoothe the data). It is important to note that the high grades of the ore shoots are masked bydilution from the 'common' lower grade ore of the three main ore zones in whichthey feature. An apparent reduction in resources of Bakhmut plus Apophysis 1 (to thosepreviously reported by PHM in the 2003 and 2004 Annual Reports) results fromreinterpretation of the geology, resulting from detailed exploration (the testpit and additional drilling): Apophysis 1 was found to split into three separatezones (with Apophyses 8 and 9). Total estimated contained gold for the three zones has increased from 59,835 kgin 2004 (Russian C2 category) to 68,156 kg in 2005 (JORC measured plus indicatedresource). Comparison of Reserve & Resource estimates of the zones of the Pioneer deposit --------------------------------------------- With cutoff grade 0.6g/tat 1-1-2004 --------------------------------------------- Ore Contained Metal classification tonnes '000 kg oz '000 --------------- ----------- -------------------Yuzhnaya C2 13,600 19,150 615 P1+P2 36,300 39,950 1,282--------------------------- ----------- ------- -------- Promezhutochnaya C2 8,400 11,949 384 P1+P2 4,100 5,835 187--------------------------- ----------- ------- -------- Bakhmut+Apophysis 1 C2 9,763 28,736 922 P1 10,540 14,291 459--------------------------- ----------- ------- --------Total (C2+P1+P2) 82,703 119,911 3,849Total C2 31,763 59,835 1,921 With cutoff grade 0.6g/t With cutoff grade 0.8g/t --------------------------- -------------------------- Ore Contained Metal Ore Contained Metalat 25-4-2005 tonnes kg oz tonnes kg oz '000 '000 '000 '000------------------- ------- ------ ------ ------- ------ ------JORC resources 35,274 31,985 1,027 12,790 20,208 649P1+P2 6,131 26,700 857 5,523 26,284 844 ------------------- ------- ------ ------ ------- ------ ------JORC resources 12,032 13,939 447 7,984 11,146 358P1 1,160 6,300 202 1,008 6,196 199 ------------------- ------- ------ ------ ------- ------ ------JORC resources 16,609 22,232 714 7,963 17,999 578P1+P2 1,160 6,300 202 1,008 6,196 199 ------------------- ------- ------ ------ ------- ------ ------ Total (JORC+P1+P2) 72,366 107,456 3,450 36,276 88,029 2,826Total (JORC) 63,915 68,156 2,188 28,737 49,353 1,584------------------- ------- ------ ------ ------- ------ ------ Pioneer Resources per JORC at 0.6g/t - By Category & By Ore Type-------------------------------------------------------------------------------- Ore Average Percent of Percent tonnage grade Gold Gold JORC by tonnes Au g/t kg oz '000 material ore type '000 ------- ------- ------- ------- -------- ---------Total for deposit 63,907 1.07 68,217 2,193 100% 100%including by ore type: oxide 14,074 1.09 15,279 491 22% primary 49,832 1.06 52,937 1,702 78% ------- ------- ------- ------ -------- --------including by JORC category ------- ------- ------- ------ -------- -------- Measured resource 18,899 1.24 23,375 752 34% ------- ------- ------- ------ -------- --------including by ore type oxide 6,796 1.26 8,541 275 36% primary 12,103 1.23 14,834 477 64% ------- ------- ------- ------ -------- -------- Indicated resource 22,475 1.03 23,243 747 34% ------- ------- ------- ------ -------- --------including by ore type oxide 4,181 0.91 3,825 123 19% primary 18,295 1.06 19,418 624 81% ------- ------- ------- ------ -------- -------- Inferred 22,533 0.96 21,599 694 32% ------- ------- ------- ------ -------- --------including by ore type oxide 3,098 0.94 2,913 94 14% primary 19,435 0.96 18,685 601 86% ------- ------- ------- ------ -------- -------- Measured +Indicated 41,374 1.13 46,618 1,499 68% ------- ------- ------- ------ -------- --------including by ore type: oxide 10,977 1.13 12,366 398 27% primary 30,397 1.13 34,252 1,101 73% ------- ------- ------- ------ -------- -------- Source: MicroMine Flanks of the Pioneer Deposit In 2004, a large number of samples were collected from drill holes and trenches,and a laboratory backlog prevented any statement on the other ore zones. Most ofthese assays have now been completed. Although there is not enough density ofdata for a full evaluation of the other ore zones, there is supportinginformation from the Ecotsentr geochemical model leading to updated 'prognosticresource' figures. Total P1+P2 resource for these ore zones is now 125 milliontonnes of ore with 206 tonnes (6.6m oz) contained gold (an overall average gradeof 1.66 g/t). This is increased from 180 tonnes (5.8m oz) of contained goldestimated from much less data in 2004. There is also a small high-grade C2resource in the Zapadnaya ore zone of 319,000 tonnes of ore at 5.6 g/t, and inApophysis 3 of 295,000 tonnes at 7.1 g/t. The main zones for which new data havebeen received are Apophysis 3, Zvezdochka, Zapadnaya, Geofizicheskaya,Andreevskaya, Listvennichnaya, Vostochnaya, and Berezovaya. Estimation of Pioneer deposit and its flanks at 25-4-2005 -------- -------- ------------------- ----------- ------------------ ---------- Forecast Name of Classifi- Reserve&Resource no. of high Reserve&Resource Basis of OreZone cation Estimate grade ore Estimate for high geologocal columns grade ore column estimate-------- -------- ------------------- ----------- ------------------ ---------- Ore Metal Ore Metal tonnes contained tonnes contained '000 kg'000 oz'000 '000 kg'000 oz'000----------- --- -------------------- ----------- ------------------ ---------- C2 295 2.1 67.5 From small amount of trenches and drill Apophysis 3 P1 144 1.0 32.1 P2 4,995 5.0 160.7 Forecast P2 2,320 12.6 405.1 2 2,320 12.6 405.1 from geochem model ----------- --- -------------------- ----------- ------------------ ---------- Apophysis 2 P2 3,800 3.8 122.2 Not explored Forecast P2 2,320 12.6 405.1 2 2,320 12.6 405.1 from geochem model----------- --- -------------------- ----------- ------------------ ----------Listven- P2 7,620 7.6 244.3 Intersected in one nichnaya trench----------- --- -------------------- ----------- ------------------ ---------- P1 1,349 2.8 90.0 Intersected in 3 trenchesBerezovaya P2 4,827 4.8 154.3 Forecast P2 1,160 6.3 202.5 1 1,160 6.3 202.5 from geochem model ----------- --- -------------------- ----------- ------------------ ----------Sosnovaya P2 23,040 23.0 739.4 Not explored----------- --- -------------------- ----------- ------------------ ---------- P1 4,600 4.6 147.9 Intersected in 3 drill holesAndreev- P2 5,380 5.4 173.6 Intersected in 3 drill holesskaya Forecast P2 2,320 12.6 405.1 2 2,320 12.6 405.1 from geochem model----------- --- -------------------- ----------- ------------------ ----------Apophysis 4 P2 5,180 5.2 167.2 Not explored----------- --- -------------------- ----------- ------------------ ----------Geofizi- P1 815 1.2 38.6 From a few cheskaya trenches and drill P2 12,500 12.5 401.9 ----------- --- -------------------- ----------- ------------------ ----------Bakhmut P2 7,190 7.2 231.5 Not explored zone continuation ----------- --- -------------------- ----------- ------------------ ----------Zvezdochka P2 12,160 12.2 392.2 From a few previous trenches P2 4,640 25.2 810.2 4 4,640 25.2 810.2 ----------- --- -------------------- ----------- ------------------ ---------- C2 319 1.8 57.9 From a few trenches and drill Zapadnaya P1 319 1.8 57.9 P2 766 0.8 25.7 Forecast P2 2,320 12.6 405.1 2 2,320 12.6 405.1 from geochem model ----------- --- -------------------- ----------- ------------------ ---------- Vostochnaya P2 13,300 13.3 427.6 Not explored(Kulisnaya 1, Kulis- Forecast naya 2, P2 2,320 12.6 405.1 2 2,320 12.6 405.1 from Apophyses 5,7) geochem model----------- --- -------------------- ----------- ------------------ ----------TOTAL 125,999 210.6 6,770.6 17,400 94.5 3,038.1----------- --- -------------------- ----------- ------------------ ---------- Infrastructure Update In advance of a full investment decision on the ultimate size of the plant it ispossible to provide the basic infrastructure requirements of a project. To datethe mining engineering team have been working on a number of key areas: Roads Road requirements include both connecting roads to and from the deposit as wellas those within the mining area. Pioneer, as with Pokrovskiy, benefits from itsproximity to the national transport network in the form of the main Zeya-Tigdahighway. We have constructed a 4km length of road, with a width of 8m, from theZeya-Tigda highway to the Pioneer deposit, the total volume of material moved inconstruction was 30,800m3. The mine roads and other roads were essentiallycompleted in 2005 with the total volume of material moved 132,100m3. As a costsaving and as good environmental practice, waste rock from the Pioneer trialmining operation area constituted 16,500m3 of the material requirements for roadbuilding. Workers' accommodation at Pioneer Within the area of the deposit we have constructed two workers villages - onefor 60 men for personnel involved in geological exploration, the other for 100men for personnel involved in the mining works. Both villages have livingaccommodation, food preparation and eating facilities, and administrativeoffices. Power Zavodskaya-Pioneer high-voltage 35kV power line It is expected that Pioneer will utilise national grid power in the same way asoperations at Pokrovskiy. A major cost saving for the construction at Pioneerwill be access to the substation at Pokrovskiy. A power line has beenconstructed connecting the new unit ORU 35kV substation "Zavodskaya" atPokrovsky mine, and the end point is the portal of the substation 35/10/6 kV atPioneer. The total length of the line is 34km, with five changes of direction.The ground under the foundations is clays, silts, and sands. Distance betweenpylons is 160 and 260m. The line is single-circuit, and the construction ofpylons metallic (5 angle-anchors) and reinforced concrete (166, free-standing),make of cable - AS 70/11. PS 35/6 kV Pioneer-Pokrovsky mine, two-transformer, 35/6 kV, 2*2500 kVA Sub-station 35/6 kV is at the end point of VL 35kV "SubstationZavodskaya-Pioneer" and is for power supply to the Pioneer property. Power forthe property will be supplied through VL 6kV PS 35/6 "Pioneer mine", stationarytype, 2km long, and beyond that through temporary lines. As of 1 June 2005 it ispartially built - the foundations, portals, and earthing are complete. A 35/6kV(2500kVA) transformer, an initial 35kV unit using a S-35 oil switch, is readyfor installation, as well as an 8-way distributor unit. Pioneer mine high-voltage 6kV power line PS 35/6 The starting point of the VL is substation 35/6 kV "Pioneer - Pokrovskiy mine",the end point is the last pylon at the southern flank of the deposit. Totallength of line - 2km. The ground under the foundations is clays, silts, andsands. Distance between pylons is 60m. The line is two-circuit, construction ofpylons is reinforced concrete, make of cable AS-50. Water The hydrogeological study at Pioneer has been initiated and the water supplydrillhole No.4-L (Pioneer) - to a depth 100 m - completed for pumping tests. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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