27th Jan 2005 07:00
Peter Hambro Mining PLC27 January 2005 27th January 2005 2004 Trading Statement Peter Hambro Mining PLC ("PHM" or "the Group") issues this statement as anunaudited update on 2004 trading and in advance of its full year resultsannouncement expected in April 2005. Highlights for 2004 •Attributable gold production increased by 41% to c.209,000 ounces •Successful commissioning of 50% increase in milling capacity at Pokrovskiy Rudnik in October 2004 •Average realised sales price of US$402/oz during 2004 was 11% higher than 2003 •New relationship with the International Finance Corporation with proposed development funding •Generation of JORC standard reserves and resources of Pokrovskiy pit shell demonstrating reliability of Russian system of classification •Exploration results at the newly acquired Yamalzoloto indicate increased gold resources and potential for other metals such as iron and cobalt •Continuing exploration at the Pioneer deposit encountered promising grades in two new areas. Production Attributable total gold production for 2004 increased by 41% to c.209,000 ounces(2003 production: c.149,000 ounces). The increase represents a 3% improvement onthe Group's forecast for the year, released April 2004. As previously, the Groupexpects to provide 2005 annual production forecast at the time of the full yearpreliminary results. Ore processing at Pokrovskiy produced c.154,000 ounces, a 27% increase over 2003levels. This was facilitated by:- Pokrovskiy's new process circuit, which enlarges the through-put capacity by 50% to 1.5 million tonnes per annum, was commissioned as planned in October 2004.- New mining equipment (including ten Belaz 45 tonnes capacity dump trucks and two Komatsu-Demag hydraulic excavators with bucket capacities of 10 and 5.7 cubic metres respectively) allowed optimisation of mining operations.- Implementation of a double-stacking technology in heap leach operations increased the recovery rates in this process from 45% in 2003 to up to 60% in 2004.- Use of a Micromine computer geological model for operational planning of mining works, which increased efficiency of the deposit development. Omchak Joint Venture (Magadan Region) production was c.88,500 ounces (2003:56,295) of which PHM's attributable share was c.57,000 ounces. PHM's interest inOmchak increased from 50% to 65% with effect from April 2004, in accordance withthe original joint venture agreement. The Rudnoye Joint Venture, Amur Region, generated its first contribution toGroup attributable production. The first gold was produced and PokrovskiyRudnik's 50% share was 722 ounces. The deposit is one of two assets in the jointventure and initial production comes from small scale alluvial mining at site. PHM Schedule Units 2004 2003Pokrovskiy deposit Total material moved '000 m3 4,540 3,831 Including advanced '000 m3 1,028 - stripping Ore mined '000 tonnes 1,045 1,053 Grade g/t 3.4 3.5 Gold '000 oz 113.7 116.9 Including rich ore '000 tonnes 608 656 Grade g/t 4.5 4.5 Gold '000 oz 88.5 95.4Pioneer deposit Total material moved * '000 m3 228 - Ore mined '000 m3 43 - Grade g/t 7.6 - Gold '000 oz 10.4 - * Pioneer Bulk SampleThe processing of Pioneer ore was undertaken as part of a trial mining exercisewithin the pre-feasibility study of the Pioneer deposit. The study has shownthere was a significant content of visible, large gold particles in the ore and,during processing at the Pokrovskiy mill, these were found to congregate andremain in the grinding process rather than flow with the invisible particles tothe leach tanks. This anomaly has made the gold recovery slower than expectedbut, importantly, no additional gold has gone to the tailings dam. Accordinglythe gold in the process circuit, for which PHM does not take an accountingcredit, was unusually high at the year end. It is anticipated that thisgold-in-circuit will be recovered in 2005.In light of the above, initial results from the trial mining show that, when adecision is taken on the full process plant, it may be prudent to incorporate agravity separation circuit to gain the coarser fraction of the gold at the startof the process. Gravity separation is a well proven and low cost method ofextracting gold from ore which should allow an overall recovery process with asimilar rate to that at Pokrovskiy.The initial results from processing led the Group to reduce the size of the bulksample from 100,000 tonnes. PHM Processing Schedule Units 2004 2003Resin In Pulp plant Ore from Pokrovskiy pit '000 tonnes 673 661 Grade g/t 4.2 4.4 Gold 000 oz 90.6 93.1 Ore from stockpiles '000 tonnes 454 202 Grade g/t 3.1 3.6 Gold '000 oz 45.5 23.4 Pioneer (bulk sample *) '000 tonnes 38 - Grade g/t 8.4 - Gold '000 oz 10.1 - Total milled '000 tonnes 1,165 863 Grade g/t 3.9 4.2 Gold '000 oz 146.2 116.6 Recovery % 90.7 90.9 Gold recovered '000 oz 132.7 106.0 Heap leach Ore stacked '000 tonnes 620 503 Grade g/t 1.8 2.1 Gold '000 oz 35.3 34.1 Recovery % 60.0 44.8 Gold recovered '000 oz 21.3 15.3 TOTAL Total gold recovered '000 oz 153.9 121.2 Exploration & Development Prefeasibility Studies at Pokrovskiy & PioneerThroughout the year the Group has been working on the pre-feasibility scopingstudies for the development of Pioneer and the associated development plans forthe flanks of the Pokrovskiy deposit. These have included preliminary works ongeology, hydro-geology, engineering and the like. It is expected that theprocessing on Micromine of assay results to be received from the new laboratorywill allow a strategic decision to be made in mid-2005 on the way in which thePioneer deposit and the Pokrovskiy flanks will be mined and the resulting oreprocessed. The Group intends to publish the results of this analysis in thesecond half of 2005. Laboratory CapacityDue to limited laboratory capacity in the past and the priority given toprocessing samples from production geology, on average only 20% of the Group'sexploration samples have been assayed. To deal with this backlog new operationallaboratories have been built at Pokrovskiy and Tokur and the processing ofsamples has commenced at the new central exploration laboratory atBlagoveshensk. Together these give the Group one of the largest and most modernfire assay facilities in Russia and are enabling a steady reduction in thebacklog of work. Reserves & ResourcesAs usual, a full update on the Group's reserves and resources is intended to bepublished at the same time as its Annual Report and Accounts in May 2005. PHM Summary Schedule of Exploration Work-------------------------------------------------------------------------------- -------- -------- --------- --------- -------Site Trenching Drilling Samples Exploration Money --------- -------- -------- generated Mapping * Spent --------- --------- ------- m3 m3 km2 000 US$ ** -------- -------- --------- --------- ------- -------- -------- --------- --------- -------PokrovskiyFlanks n/a 9,873 7,000 1,391--------- -------- -------- --------- --------- -------Pioneer 39,847 10,742 15,760 2,760--------- -------- -------- --------- --------- -------Other deposits 55,968 10,799 20,683 210 3,699--------- -------- -------- --------- --------- ------- -------- -------- --------- --------- -------Total 95,815 31,414 43,443 210 7,850--------- -------- -------- --------- --------- ------- * At scales of 1:10000-1:25000 for Pokrovskiy & 1:10000-1:50000 for Rudnoye** Including money spent to date Pioneer DepositThe Group's exploration team continued to assess the reserve and resourcepotential at Pioneer. The full results of the work will be detailed in the 2004Annual Report. The two highlights are listed below:- It was found that the junction region of the Bakhmut and Apophysis 1 zones forms an isometric stock-work ore body in the form of an ore shoot which dips to the south-west. The maximum size of the ore body is 50m 40m. Assays of core and trench samples show the gold grade varying between 0.4g/t and 512.6g/t, with an average grade 9.85g/t over a thickness of 27m. Ore occurrences continue to a depth of 240m and the zone is open at that depth.- The presence of an ore shoot in Promezhutochnaya zone was confirmed. Drill hole no.404 intersected two ore intervals, the first with thickness 7m and grades up to 11.4 g/t, and the second with thickness 15m, and grades 5-8 g/t. YamalzolotoThis project, which was referred to previously as Novogodnee Manteau (acquiredApril 2004), is located in the Yamal district, inside the Arctic Circle, some 2hours flying time form Moscow. Yamal hosts a major portion of Russian naturalgas reserves and has more highly developed infrastructure more highly developedthan some of the other areas of Russia. Exploration expenditure on this projecthas been approximately US$4.5million, covering some 16,000m of drill holes,10,000 m3 of trenching and 13,000m of lithogeochemistry as well as associatedtest work.The results of this work, which include: the discovery of possible additionalresources and new ore bodies in the licence area; potential move to open pitmining; and commercial quantities of other metals such as cobalt and iron ore,are very encouraging.The Group has commissioned a report on Yamalzoloto from SRK, UK based miningconsultants, receipt of this is expected within a month. ChagoyanskThe Group expenditure for the year on this project, related to which it has amemorandum of understanding with Rio Tinto, was approximately US$100,000. Partof this expenditure financed an airborne geo-magnetic survey which identifiedanomalies that concur with those previously indicated in the publicly availablehistoric data (the historic data shows 2.7g/t for 35m and 6.0g/t for 45m).Potassium and thorium anomalies clearly indicate zones of mineralisation. 2005 Exploration BudgetThe Group has set an initial exploration budget for 2005 of US$20m. Corporate affairs International Finance CorporationAs previously announced, agreement was reached with International FinanceCorporation, the commercial arm of the World Bank, to conditionally subscribefor US$15 million of new equity and a similar value of warrants. AmetistovoyeThe Group announced its decision to relinquish its option to acquire theAmetistovoye deposit in Kamchatka because its due diligence evaluation of thedeposit's economic potential, when compared to other projects in the Group'sportfolio, did not show it to warrant expenditure of the purchase price andcapital expenditure required. Financial PositionIn line with the Group's intention to raise project finance to help fund thedevelopment of both Pokrovskiy and Pioneer, the Group has continued to reducelevels of debt. Where possible the Group has paid down debt, the remaining debtbeing residual minimal working capital facilities, resulting in a net positivecash position at the year end. Sales PricesPrices achieved on gold sales during the year have been higher than in recentyears. The unaudited average sales price realised during 2004 was US$402/oz(2003 - US$363/oz). The Rouble gold price started the year at R12,134 per ounce,traded as high as R17,783, as low as R10,943 and ended the year at R12,003. Chairman's comments Commenting on the above, Peter Hambro, Executive Chairman, said:"Unaudited production results show that the Group has done substantially betterthan last year and even a little better than forecast. Once again the PokrovskiyRudnik team is to be congratulated both on its successful mining and processingefforts and the accuracy of its predictions.The Group is well served by its exploration portfolio and, as usual, a fullreport on this will be made in the spring, at the time it publishes its AnnualReport. However the highlights of exploration at Pioneer, Chagoyansk andYamalzoloto are noteworthy and thus included in this statement and put incontext our decision to relinquish the option on Ametistevoye.2005 will be an enormously important one for the Group, as we take the strategicdecisions on the future of Pokrovskiy and Pioneer and commence the fullfeasibility studies. I look forward to working with the project lenders thathave expressed interest in financing the substantial capital expenditures thatthese decisions will call for." - Ends - Enquiries: Alya SamokhvalovaDirector of External Communications, Peter Hambro Mining +44 (0)20 7201 8900 David Simonson / Tom RandellMerlin +44 (0)20 7653 6620 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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