22nd Jan 2007 07:02
Peter Hambro Mining PLC22 January 2007 22nd January 2007 2006 Trading Statement Peter Hambro Mining plc ("PHM" or "the Group") issues this statement as anunaudited update on 2006 trading and in advance of its full year resultsannouncement. Trading Up-date Highlights for 2006 •Total attributable gold production increased by 5% to c.261,000 ounces •Pokrovskiy Rudnik gold production increased by c.11% •Gold recovery rates remained stable, even when treating primary ores, thanks to technological improvements •Average realised gold sales price of US$586/oz during 2006 was 33% higher than in 2005 •Acquisition of Open Joint Sock Company "Irgiredmet" in Irkutsk - the laboratory research and scientific consulting company - strengthens the Group's technical expertise Attributable gold production,oz'000* 2006 2005 Var % 2004 Amur Region Pokrovskiy 206.3 185.7 +11.1% 153.8 Amur NE Assets 10.5 4.2 +150.0% - Rudnoye JV 8.1 7.8 +3.8% -Omchak JV Magadan assets 33.4 49.6 -32.7% 55.4 Amur Assets 2.5 2.0 +25.0% - TOTAL 260.8 249.3 +5% 209.3 * Total attributable gold production is comprised of the Group's subsidiaries,share of production in joint ventures and other investments Chairman's comments Commenting on the above, Peter Hambro, Executive Chairman, said: "A 5% increase in the Group's attributable gold production has, I am pleased tosay, once again exceeded our expectations. Our Amur Region mines, which are directly operated by the Group and make upc.86% of the attributable production, increased their gold output by 14%.However production results from the joint-venture operations (which account foronly 14% of the Group's production) were less successful. In particular theunderground operations at Nelkoba in the Omchak JV were less productive thanlast year as the production moved to deeper levels. I am pleased to note that the questions on our mining licences which arose inDecember 2006 are now resolved. The outlook for 2007 is once again encouraging, as the gold price continues tomove in our favour and our production grows. As usual we will be reporting indetail to shareholders on the technical progress on our growth targets inFebruary and our 2007 production forecast at the time of Annual Report releasein May." Production Pokrovskiy & Pioneer PHM Mining Schedule Units 2006 2005Pokrovskiy deposit Total material moved '000 m3 5,385 5,248 Including advanced stripping '000 m3 1,657 1,180 Ore mined '000 tonnes 1,904 1,393 Grade g/t 3.0 3.6 Gold '000 oz 184.5 159.8 Including rich ore '000 tonnes 1,379 899 Grade g/t 3.8 4.7 Gold '000 oz 168.0 135.7Pioneer deposit Total material moved '000 m3 912 836 Ore mined '000 tonnes 168 133 Grade g/t 3.4 3.5 Gold '000 oz 18.3 15.0 PHM Processing Schedule Units 2006 2005Resin In Pulp plant Ore from Pokrovskiy pit '000 tonnes 1,404 899 Grade g/t 3.8 4.7 Gold '000 oz 172 136 Ore from stockpiles '000 tonnes 248 444 Grade g/t 3.4 2.8 Gold '000 oz 27.4 39.4 Pioneer (bulk sample) '000 tonnes 46 53 Grade g/t 6.7 5.7 Gold '000 oz 9.8 9.7 Total milled '000 tonnes 1,698 1,397 Grade g/t 3.8 4.1 Gold '000 oz 209.0 184.9 Recovery % 90.7% 91.5% Gold recovered '000 oz 190 169Heap leach Ore stacked '000 tonnes 750 714 Grade g/t 0.9 1.5 Gold '000 oz 23 38 Recovery % 73.1% 48.9% Gold recovered '000 oz 17.0 16.5Total gold recovered ** 206.3 185.7** Certain comparative numbers have been rounded up. Pokrovskiy Rudnik Pokrovskiy enjoyed another successful year, producing 206,300 ounces of gold; an11% increase over the 185,700 oz produced in 2005. Mining Planning and management of mining works, using the MicroMine geological computermodel of the deposit, allowed for a higher quality of reserves definition andoptimisation of direct mining expenses. Renewal of the mining and transportation fleet was carried out in 2006 when, inaddition to the equipment acquired in 2004-2005, five new 45 tonne capacityBelaz dump trucks and three Caterpillar Cat-330 excavators were purchased whichensured consistency of the mining works and conformity to the mining plan. The increase in gold prices and consequent reduction in the chosen cut-off gradealso enabled an increase of the projected depth of the current Pokrovskiy pit.This will allow for an increase in high grade reserves at the Pokrovskiy depositby c.200,000oz of gold in 2007. RIP processing Expansion work on the RIP plant carried out from 2004-6 allowed for systematicgrowth in processing volumes of lower grade ore which led to an overall increasein gold production at the RIP plant. At the end of 2006 the plant achievedannual capacity of 2.2 mln tonnes of ore. This productivity increase was accomplished through the expansion of theresin-in-pulp circuit and the optimisation of the grinding circuits andclassifiers. In particular, an adjustment in technology was introduced wherebythe volume of resin was increased and cyanidation of the gold bearing orestarted at the SAG mill. This allowed for an increase in the total resin surfacearea and leaching time, and, despite the processing of primary ore, the recoveryrates remained at approximately the same level as the previous year (90.7%compare to 91.5% in 2005). Modernisation of desorbtion columns allowed for higher quality cleaning of theresin and restoration of its original properties. Separation of the flows of pregnant solutions and the installation of additionalelectrowinning cells optimised gold recoveries and increased the recoverypercentage of silver. Heap leach processing Increase in capacity at the plant and increase in gold prices allowed Pokrovskiyto treat lower grade material in the heap leaching process which previouslywould not have been considered economically profitable for processing. Successful results of the innovations introduced in 2005 (heap leach pads werestacked and treated by cyanide solution in the autumn for leaching the followingyear) accounted for an increase of leaching time and hence improved goldrecoveries. Pioneer Deposit Mining works were carried out at Pioneer in 2006 in order to conclude geologicalexploration work and process improvement and to prepare the deposit forproduction, which is due to be launched in the second half of 2007. Mining workscarried out at the Bakhmut and Promezhutochnaya areas of the deposit in 2006allowed for large bulk samples of primary ore to be collected for technologicaltesting. Total volume of mining works carried out at the deposit in 2006amounted to 912,000 m3. Also a 46,000 tonne bulk sample of oxidised Pioneer ore was processed at thePokrovskiy plant in 2006 with an average grade of 6.7 g/t and a recovery rate ofc.86%. These results confirmed the viability of the technological schemedeveloped for the oxidised ore of the Pioneer deposit. In 2006 works on an engineering survey at Pioneer were continued in preparationfor a final decision regarding the construction sites for the heap leach, thecrushing and grinding complex, the technological point for gold extraction,infrastructure etc. The power transmission line (between Pokrovka and Pioneer) came into operationand the first stage of the Pioneer substation was completed (4 MW capacity).Construction and assembly work is being carried out at the sorption-cyanidationcomplex. Omchak Joint Venture During 2006, CJSC Omchak ("Omchak") produced gold through its subsidiarycompanies in two Russian regions - the Magadan and the Amur regions. It alsocarried out geological exploration works at the recently acquired depositslocated in Chita region of Russia: Verhkne-Allinsky and Bukhtinskaiy &Kulinskaiy deposits. The total attributable production of gold was 35,900oz and was achieved by theexploitation of the Shkolnoye deposit (CJSC Nelkobazoloto, Magadan region) andmore than 25 smaller deposits. The overall production of 'Omchak' in 2006 fromthe operations of 'Berelekh' at alluvial deposits in the Magadan Region and'Nelkobazoloto' at the Shkolnoe mine decreased by 23%. The main reason for 13%'Berelekh''s decrease in production in 2006 was a decline in the average gradeof gold in sands (from 0.45 g/m3 in 2005 to 0.37 g/m3 in 2006). Nelkobazoloto is entering the final stage of production at the Shkolnoe minewhere development and exploration are simultaneously establishing the reservesof the lower horizons of the deposit. Due to the narrowness of the ore bodies inthis underground operation the economic viability is decreasing. In order tocompensate for the fall in production, in 2006 'Omchak' received a subsoil uselicence and commenced pilot production of alluvial gold in adjacent regions tothe Magadan Region, in the Republic of Sakha (Yakutia). Test works showed thatthe gold content in gold bearing sands here is 0.77-0.78 g/m(3). It has beenestablished that it is feasible to continue the production and exploration ofalluvial gold on the territory of the Sakha Republic(Yakutia), bringing thevolume of production to 3,000 - 4,000oz in 2007. Work is being commenced inorder to prepare applications to receive new projects in this region. Verhkne-Allinsky Deposit, Chita Oblast The deposit was acquired by JV in June 2005. Exploration works carried out in2006 resulted in 51 core holes with an overall volume of 4,745.5m drilled at thedeposit. 500 core samples were taken and analysed. As a result of these worksthe "Zhila 2" ore body was identified and followed to a depth of 150m. Theestablished intersections of the ore body have the following parameters:horizontal thickness - 0.4m with 12.6 g/t of gold, horizontal thickness - 0.4mcontaining 8.6 g/t of gold, horizontal thickness - 0.7m containing 9.5 g/t. Bukhtinskaya & Kulinskaya Deposits The deposits were acquired at the beginning of 2006 and during the year workswere focused on geological exploration plans creation in order to conductexploration and evaluation surveys. A geochemical survey of the deposit wascommissioned. Amur alluvial production The Group operates a number of alluvial enterprises which exploit placer minesusing dredging machinery and washing technology. These operations are usuallycarried out at the sites of the Group's operational and exploration activitieswhich allows for additional profits for the company without major investment ininfrastructure or detailed exploration works. In 2006 assets contributing to theGroup's production in Amur region were: •OAO "ZDP Koboldo" and ZAO "Amur-Dore" which together produced aggregated 10,500oz of gold. These two subsidiaries extract gold from alluvial deposits in the North East of the Amur Region in close proximity to the Tokur and Malomir deposits. •OAO "Solovievskiy Mine", OOO "Nagima" and Rudnoye Joint Venture, operating not far from Pokrovskiy Rudnik, produced c.8,000oz of gold. Rudnoye Joint Venture In May 2006 exploration was mainly finished at the Odolgo deposit, where theGroup plans the construction of a small scale processing operation. A modularplant with gravitational beneficiation technology and methods of concentrateprocessing using intensive cyanidation is being constructed. First production ofgold at the deposit is scheduled from the second half of 2007 at an approximateyearly rate of 10,000 - 15,000oz of gold. Exploration & Development Reserves & Resources As 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. PHM Summary Schedule of Exploration Work Site Exploration Trenches Drilling Samples mapping generated km2 m3 total length in mPokrovskiy Rudnik* - - 44,128 27,227Flanks of Pokrovskiydeposit - 30,634 23,113 18,475Pioneer 16 166,404 36,470 46,357Malomir 20 403,613 44,157 73,515Other** 27 479,555 40,544 40,274Yamalzoloto 15 73,449 50,494 5,082Buryatia 13 1,564 - 162Total: 91 1,155,219 238,906 211,092 * At Pokrovskiy Rudnik (Pokrovskiy and Pioneer deposits) operational explorationis being carried out by early production. ** Raslomniy, Voroshilovskiy, Izvestkovaya Sopka, Zheltunakskiy, Odolginskiy,Bryantinskiy, Adamikha, Gar II, Albinskiy, Uspenskiy, Sagurskiy, Osipkanskiy,Kera, Chelogor, B.Karaurak Assay Laboratories •Blagoveshchensk laboratory - mineralogical (petrographic and mineralogical assaying of minerals) and semi-quantative spectrum ore analysis departments are being developed at this laboratory. Blagoveshensk laboratory is also a methodological centre providing recommendations and maintaining control of the entire Group's laboratory facilities. •Pokrovoka laboratory - with the launch in April 2006 of the automated sample preparation complex - Hamersley (New Zealand), the laboratory capacity increased from 10,000 to 12,000 samples a month. The laboratory services the Pokrovka, Pokrovskiy flanks, Pioneer and Odolgo operations. •Tokur laboratory - in 2006 the productivity of this laboratory has increase from 3,000 samples a month to 6,000 samples a month to serve the intensive work carried out on the Malomir deposit. The laboratory also performs analytical work for Tokur, Malomir and Voroshilovskoye geological exploration programmes. •Labitnangi chemical laboratory - with 3,000 samples/month productivity for assay sampling and 5,000 samples/month for semi-quantative spectrum analysis ore analysis provides support for geological exploration works at Yamalzoloto operations. 100% of sample analysis from all Group's deposits is carried out at the Group'sown laboratories. Results are received within one month from taking the sampleat the geological exploration site. A provision has been made for bringing the Amur Region laboratories to aproductivity of 300,000 samples a year in 2007 for assay samples. A constructionof a new spectrum analysis laboratory for 300,000 samples a year has beencommissioned at the end of 2006. OOO "NPGF Regis" In 2006 the Group continued development of its own geological explorationcompany OOO "NPGF Regis". With the use of modern drilling apparatus, excavationequipment and qualified specialists the Company was able to achieve thefollowing in 2006: •Deep drilling (core and percussion) - 64,170 m •Shallow (structure) drilling - 32,988 m •Trenching - 908,225 m3 •Geophysics - 96.3 km2 NPGF Regis has a fully qualified staff of geologists and mining surveyors,modern geological-surveying equipment using GPS systems and its own group ofgeologists who are specialists in computer modeling. All of the work to developgeological exploration is carried out with the intention of providing a highstandard of work, but at the same time minimising expenses. Engineering design During 2006 the Group put together a team of highly qualified specialists of 400people (ZAO "PHM Engineering" and OJSC "Irgiredmet"). Design and research and development work in 2006 was focused on: expansion andreconstruction of the RIP plant, design of spectral department of centralanalytical laboratory, design project for development of deep horizons of theMain ore body of Pokrovskiy deposit, development of technology and processprocedure for treatment of primary ores of Pokrovskiy deposit, feasibilityevaluation of the investments in a development of gold deposit Pioneer, andpilot tests of technology for oxidised ore of gold deposit Pioneer. The engineering design department also maintained a technical supervision ofconstruction works maintained by the construction department of the Group. Main Construction Almost all construction works at the Group's properties in 2006 were carried outby OOO "Kapstroi" - the Group's 100% owned construction company. The Companyemploys 700 workers and in 2006 it accomplished work for 584.5 mln roubles netof VAT at the following projects of the Group: Pokrovskiy Rudnik, Malomir,Pioneer, OAO "ZDP Koboldo", OOO "Odolgo". Corporate affairs Effective from 14th July 2006, Dr Pavel Maslovsky, Deputy Chairman of PHM, alsotook on the role of Chief Operating Officer, reflecting his increasing role inthe day to day management of the operations and the construction and developmentof future operations. The Deputy Finance Director, Mr. Andrey Maruta, becameFinance Director. Mr. Philip Leatham, who had been the non-executive FinanceDirector, remains on the board as a non-executive director. Mr. Alexei Maslovsky, Treasurer of PHM, also took on the role of Business Development Director fromMr. Jay Hambro. Jay Hambro gave up his executive duties with PHM in order tobecome Chief Executive of Aricom plc but remained a non-executive director. In October 2006 the Group acquired an 80% equity holding in OJSC "Irgiredmet"for a cash consideration of US$40m, one of Russia's best known laboratoryresearch and scientific consulting companies based in Irkutsk. The Companyprovides a range of services in the testing, development and optimisation ofgold, precious metal and diamond projects. This acquisition provides PHM withadditional laboratory capacity, intellectual capital and experience, the abilityto optimise existing mining operations and a project pipeline for the futurewhich will help a successful completion of the Group's ambitious targets. . The Group's average realised gold price at Pokrovskiy for 2006 was US$586/oz, up33% against that achieved in 2005. The Rouble strengthened against the Dollarby c.9% during the period and was RUR26.33/US$ at 31 December 2006 (RUR28.78/US$- 31/12/05). The Group has a policy of no long term gold forward sales orhedging. - Ends - Enquiries: Alya Samokhvalova / Marianna AdamsDirector 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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