20th Jul 2005 07:01
Peter Hambro Mining PLC20 July 2005 20 July 2005 Trading Update Peter Hambro Mining Plc ("PHM" or the "Group") issues this trading statement asan update and in advance of its results for six months to 30 June 2005 ("thePeriod"). A full results announcement will be issued in September 2005. Highlights for the Period include: • Pokrovskiy Mine production of 84,600oz of gold for the Period. Plant production is up 48% and total production up 41% on the same period for 2004;• Omchak Joint Venture total production up 4% with attributable production of 17,015oz of gold for the Period. 36% up on the same period for 2004;• PHM attributable production of 102,178oz 41 % up on the same period for 2004;• The Group is on track to meet its 271,000oz per annum production target for 2005;• Operating costs, in US$/oz, at Pokrovskiy were in line with the previous year;• Average realised sales price of US$422/oz which is 7% higher compared to the same period last year;• Further expansion at Pokrovskiy announced and work commenced; and• Fundraising to raise US$140m has been launched meeting the greater part of PHM's expected external finance requirements to reach the 2009 million ounce production target. Commenting on the announcement, Peter Hambro, Executive Chairman, said: "Again I congratulate all concerned at the Group's operations as we report another period of delivery on all our targets on time and on budget. Pokrovskiy's 2004 50% expansion to 1.5mtpa has been successfully implemented and the recently announced interim expansion to 2.2mtpa should result in a tripling of capacity since 2002. Gold production at Pokrovskiy continues to be highly profitable and I am glad that we have begun the implementation of this interim expansion contributing towards the million ounce target. I am also pleased to report that we have ticked another box in the developmentchecklist for delivery of our million ounce production target in 2009. Our fundraising should meet the greater part of our project finance requirements forthis development." Operations Report Pokrovskiy Mine Pokrovskiy Rudnik continued to build on the success achieved during 2004;84,600oz of gold was produced versus 60,000oz in the same period for 2004. TheCompany is pleased to report that it has maintained low unit operating coststhrough economies of scale and mining optimisation, despite increases in rawmaterial costs and an appreciating Rouble. Mining operations The use of MicroMine to manage operational grade control, together with over onemillion tonnes of advanced stripping carried out in 2004, allowed for the miningof high quality ore. During the period, the Group commenced preparations for theexpansion of the mining works to fulfil the one million ounce production targetwhich includes the renewal, maintenance and expansion of its mining fleet.Overall, the material delivered from the pit had a gold content showing anincreased of 61%. Pokrovskiy Rudnik Mining Operations 6 months to June 30th -------- --------- ------- -------- Units 2005 2004 Var %Mining Total material moved m3 '000 2,755 2,104 +31%Ore mined t '000 652 438 +49%Average grade g/t 3.7 3.5 +6%Gold content oz '000 77.0 49.6 +55%Including high grade ore t '000 424 304 +39%Average grade g/t 4.9 4.2 +17%Gold content oz '000 66.6 41.4 +61%--------------- --------- --------- ------- ------- Processing operations - Resin in Pulp plant The plant capacity was increased by 50% in late 2004. During the Period 691,000tonnes were processed through the plant, compared with 506,000 in the first halfof 2004, representing a 37% increase year-on-year. The increased capacity from1mpta to 1.5mtpa at the mill has allowed the Group to carry out essentialmaintenance on the circuits which optimises operations, will increase the lifeexpectancy of the mill liners and allows full production at full capacityongoing. Further expansion work to 2.2mtpa has been announced and is already ongoing. TheGroup announced that it will be further increasing the capacity of the millswith expected completion of works in the third quarter of 2006. The expansionwork will encompass the construction of a further SAG mill and the increase incapacity of the resin circuits. It is expected that the existing mill buildingwill have sufficient space to house the extra machinery and hence costs areexpected to be only c.US$5m in total. This is an interim expansion toward thelarger growth of operations to fulfil Pokrovskiy and the Pokrovskiy flanks'contribution towards the one million ounce target. Analysis on the largerexpansion possibilities is ongoing and will be announced on completion. Heap Leach Double stacking introduced to the heap leach process over the last year resultedin significant increases in recovery rates which allows the treatment of orepreviously considered to be non-economical. A by-product of this is that theremay be possible increases in the reserve base of the deposit to incorporate thelower grade that it is now possible to treat economically. During the Period,the Pokrovskiy heap-leach processed 1.4g/t material as opposed to 1.8g/t in thesame period of 2004. The 30.7% (down from 35%) recovery for the Period reflectsthe late start to the heap leach season due to weather conditions. Double stacking allowed the Company to carry out the heap leach maintenanceschedule in a more optimal way without disrupting the production process. Oncompletion of the maintenance work (during 2006), the capacity of the heap leachshould be increased to 1mtpa. Pokrovskiy Rudnik Processing Operations 6 months to 30 June --------- --------- ------- ------- Units 2005 2004 Var %Resin in Pulp Plant Ore from pit t '000 409.5 304 +35%Average grade g/t 4.9 4.2 +17%Ore from stockpile t '000 281 202 +39%Average grade g/t 2.4 2.8 -14%Total milled t '000 691 506 +37%Average grade g/t 3.9 3.7 +5%Gold content oz '000 86.5 59.6 +45%Recovery rate % 92.2 90.3 +2%Gold recovered oz '000 79.8 53.9 +48% Heap Leach Ore stacked t '000 341.0 309.0 +10%Average grade g/t 1.4 1.8 -22%Gold content oz '000 16.0 17.7 -10%Recovery rate % 30.7% 35% -12%Gold recovered oz '000 4.8 6.2 -23% TotalGold recovered oz '000 84.6 60.0 +41%--------------- --------- --------- ------- ------- Table showing the breakdown of gold production at Pokrovskiy Rudnik by month forthe six months to 30 June 2005 vs 2004 (ounces) Month 2005 2004January 13,695 7,398February 11,226 6,855March 12,811 9,661April 11,321 9,005May 16,657 11,243June 18,890 15,838 Total 84,600 60,000 Omchak Joint Venture Production from the currently 65%-owned Omchak Joint Venture (the "Omchak JV")is ahead of target for the year. In the Period the Omchak JV produced 26,177oz(25,081oz in the first half year 2004). The production attributable to PHM of17,015oz increased 36% compared to the period 2004 due to the increase of theCompany's stake in the Omchak JV and an increase in the joint venture assets'production. The seasonal character of the majority of Omchak JV's operationsshifts the main production towards the second part of the year. As disclosed inthe 2004 annual report, dependent on the dividend payment by the asset holdingentities, the production attributable to PHM may reduce by 20-30,000 ounces ifOmchak's assets deliver an enhanced dividend cashflow to the Group. The management team of the Omchak JV aimed to increase the reserve base throughnew acquisitions and expansions to new regions. In May 2005, the Omchak JVannounced its success in the auction of the combined exploration and mininglicence over the Verkhne-Alliinskiy gold property in the Chita Region of Russia.The licence is estimated to contain gold reserves and resources of 76,000oz and593,000oz in Russian categories C1 and C2 respectively and silver reserves andresources of 138,000oz and 752,000oz in Russian categories C1 and C2respectively. In the Amur Region the Omchak JV's subsidiary OOO "Noviye Tekhnologii" startedpreparatory works for the commencement of production on five licence areasacquired during 2004. Works during the Period were concentrated mainly onpreparation of machinery for the production season and approval of mining plans.Mining works commenced in May 2005 and included stripping and the preparation ofmachinery for the washing of gold bearing sands. Exploration and Development Report Pokrovskiy Flanks Further exploration works were undertaken on the Pokrovskiy deposit and itsflanks in order to confirm the geochemical gold anomalies identified by ageochemical modelling study undertaken by the Vladivostok consultancy firmEcotsentr. Work at the Pokrovskiy flanks, contiguous to the existing Pokrovskiypit shell, focussed on extending strike from the existing mine along faultextensions, and confirming mineralisation at previously identified goldanomalies. The Verkhnesegeevsky anomaly has been tested with 31 drill holes up to 150m deepcovering 10.24 hectares. Incomplete results show individual 1m samples ofbetween 1.0g/t and 3.4g/t, while at Nadvigoviy 44 holes to a depth of up to 120mand covering an area of 9.12 hectares have returned isolated grades of 0.8 to5.5g/t over approximately one metre. Both areas continue to be assessed. Further work on extensions of known orebodies - Novoye and Zeiskoye - has shownincreases to known structures with intersections including 4g/t over 4m and 0.7g/t over 14m. At Molodyezhnoye high silver grades of up to 582.2g/t have beenencountered. Further work is being planned. Pioneer deposit PHM is producing a separate release on the Pioneer deposit today. Please seewww.peterhambro.com for a copy of this report. Amur North East Belt Malomir In February 2005 the Group announced that it was successful in the auction ofthe combined exploration and mining licence over the Malomir gold property inthe North East of the Amur Region, Far East Russia. This acquisition was anotherstep in the Group's long-term strategy of combining several gold properties inthe North East area of Amur region to help to benefit from operationalsynergies. Previously the Group held licences for two areas adjacent to thedeposit which it had explored for two years. The Diagonal Zone, at the centre ofthe Malomir licence area, was extensively explored by Soviet geologists. Sincethe Group's registration of the licence for the deposit in May 2005 constructionof a man camp and relevant infrastructure has commenced to aid exploration andthe development work. PHM has initiated an extensive programme of confirmationand other drilling to form the basis of a pre-feasibility study. Tokur Trenching and drilling has been carried out area in the Glavniy fault zone andon the flanks of the Tokur deposit with 980.5m of core drilling and 2,831.9m3 oftrenching accomplished. The results of this work are expected later this year. Voroshilovskiy As planned, detailed exploration continued in the area with 8,896m3 oftrenching. The results of the geochemical exploration, trenches and drill holeshave now been received by the Group and are being processed. The geophysical andgeochemical results identify two prospective ore structures. Within the twonewly identified structures, gold grades reaching 8.8 - 11.3g/t have beenindicated from grab sampling. Trenching has already intersected the indicatedorebody with visible gold noted at surface. Yamalzoloto The main focus of works on Novogodnee Monto and Petropavlovskoye deposits duringthe Period was on the preparation of information for the pre-feasibility study -to be finalised by early 2006. The study will be prepared by the leading Russianconsulting institution ZNIGRI. The metallurgical tests carried out by thisinstitution were almost completed during the period. The recommended processingflow sheet shows magnetic separation followed by gravity and flotation withsubsequent cyanidation of concentrate and tails. It is expected that recoveriesof c.92% of gold, c.50% of silver and c.77% of iron are achievable. There isalso 13% pyrite concentrate recovery containing 67% cobalt with an average gradeof 0.86%. In addition to the established gold reserves and resources, included in thepre-feasibility study calculations the deposit is estimated to contain 6.2million tonnes of iron ore at 40%, including 4.9 million tonnes located withinthe boundaries of gold mineralisation. Two drill holes located 600 and 750 meters to the north of the Petropavlovskoyedeposit intersected similar types of mineralisation. Similar types of ore werealso found in an old stone quarry nearby. Gold grades found as a result ofexploration works reach 75.0g/t. The surface area is mainly represented bylower grades (1.0 - 2.5g/t) with areas of high grade material (8.0 - 82.0 g/t). The density of the drill hole grid is not sufficient yet to outline orebodies. Metallurgical studies showed recovery rates of 74.5% of gold and 64% ofsilver using the method of direct cyanidation. These tests continue. Further to the detailed exploration of Novogodnee Monto and Petropavlovskoye forthe pre-feasibility study, exploration work was undertaken on the seven otherprospective areas that were identified by an independent hydro-geochemicalsurvey. The study covers all licensed area and the results of it were acquiredby Yamalzoloto as the basis for planning future exploration works. Portfolio Assets Further exploration works were carried out on the company's other explorationand development assets including Izvestkovaya Sopka, Zheltunak, Olga, Gar II,Adamikha, Odolgo, Bryantinskiy. Chagoyansk Field work is ongoing and trench sample assay results are already beingreceived. Two samples gave gold grades of 1.94g/t (on 1m width) and 0.45g/t (on0.3m interval). Further trenches were dug for confirmation of theaero-geophysical survey which identified potassium anomalies and the data fromthe works done by previous explorers which indicated a high gold-bearingpotential. A drilling programme commenced on the areas identified through aero-geophysicalsurvey, 6 of 10 planned drill holes have been drilled with results expectedlater in the year. Gold Price/Treasury The Group's average realised gold price for the period was US$422/oz, up 7%against US$393/oz in the first six months of 2004. The Rouble strengthenedagainst the Dollar by one percent during the Period and was RuR28.67/US$ at 30June 2005 (RuR29.03/US$ - 30/6/04). The Group has a policy of no long term goldforward sales or hedging. Fundraising to raise US$140m has been launched meeting the greater part of PHM'sexpected external finance requirements to reach the 2009 million ounceproduction target. Conference Call A conference call to discuss today's trading update will be hosted by PeterHambro, Executive Chairman of Peter Hambro Mining plc, today at 11:00 am UKtime. Details to access the conference call are as follows: The dial-in number in the UK will be: 0845 245 3471 and internationally it willbe +44 (0) 1452 542 300. Replay will be available after the call has finished for seven days on 0845 2455205 in the UK and on +44 (0) 1452 55 0000 internationally with the access codein both cases 7694438#. Enquiries: Alya Samokhvalova +44 (0) 20 7201 8900Investor Relations, Peter Hambro Mining David Simonson / Tom Randell +44 (0) 20 7653 6620Merlin This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
POG.L