20 Jul 2009 07:00
20 July 2009
Trading Update
Peter Hambro Mining Plc ("PHM" or the "Group") issues this trading statement as an update and in advance of its interim results for the six months to 30 June 2009 which are expected to be issued on 27 August 2009.
Highlights
Production Update:
Total first half attributable gold production¹ of c.222,600oz, up 54% on the same period last year. Historically, production during the first half of the year is lower than the second half due to more significant contribution from alluvial and heap-leach operations in the second half. Production in H2 2009 will be additionally boosted by the commissioning of the second processing line at Pioneer;
Pioneer deposit's first half gold production of 118,100oz² (compared with 38,800oz² in H1 2008) reinforces the Group's confidence in delivering its full year production target of approximately 500,000oz;
Pioneer deposit's expansion works remain on track with the second mill expected to ramp up to full capacity in September 2009;
Pokrovskiy deposit's first half gold production was 91,700oz² (compared with 92,100oz in H1 2008), in line with the Group's forecasts;
PHM's joint ventures and alluvial operations contributed a further c.12,800oz (compared with c.13,700oz in H1 2008) to total production for the first half;
The Group sold 210,000oz of gold in H1 2009 (versus 118,800oz in H1 2008). Joint ventures do not form part of the Group's gold revenues and are therefore excluded from the gold revenue numbers.
Gold Price and Costs
Unit costs at the Pokrovskiy and Pioneer deposits for the first half of the year were in line with the Group's internal forecasts for the first six months of the year;
Average realised gold sales price of US$917/oz, up c.2% on the same period last year;
Exploration and Development
Malomir project on track for commissioning in the second half of 2010;
Kuranakh's Olekma iron ore processing plant on track for commissioning at the end of 2009;
Group exploration activities have produced promising results in the first half which are expected to be published in detail with the Group's interim results on the 27 August 2009.
¹Total attributable gold production, as stated throughout this document, is comprised of 100% of production from the Group's subsidiaries and the relevant share of production from joint ventures. The Company's direct and indirect interest in Pokrovskiy Rudnik (and any interest held by Pokrovskiy Rudnik) is 98.61%.
²In H1 2009, some of the gold from Pioneer deposit was processed through Pokrovskiy mill. Pioneer gold processed through Pokrovskiy mill is included in the Pioneer deposit figures. Figures for H1 2008 are restated accordingly.
Commenting on the announcement, Peter Hambro, Executive Chairman, said:
"The increase in gold production during the first half of 54% compared to the same period a year ago is in itself very pleasing and gives us considerable confidence about our production growth plans at Pioneer and Malomir.
"We have remained resolute in our efforts to manage costs and guard our position as a low cost producer and I am pleased to report a solid performance in this respect. In our iron ore business, the Olekma processing plant is on track for commissioning at the end of 2009 and we are pleased to see some signs of recovery in the iron ore market."
Table 1: Total Attributable Gold Production
| Summary Production | 6 months to 30 June | ||
| 2009 | 2008 | Var. % | |
| Mine | '000oz | '000oz | |
| Pokrovskiy deposit³ | 91,700 | 92,100 | (0.4%) |
| Pioneer deposit³ | 118,100 | 38,800 | 204.4% |
| JV and Alluvials | 12,800 | 13,700 | (6.6%) |
| Total | 222,600 | 144,600 | 53.9% |
³In H1 2009, some of the gold from Pioneer deposit was processed through Pokrovskiy mill. Pioneer gold processed through Pokrovskiy mill is included in the Pioneer deposit figures. Figures for H1 2008 are restated accordingly.
Pokrovskiy deposit
All of the Pokrovskiy deposit's operations performed in line with expectations in the first half, yielding 91,700oz of gold (excluding Pioneer ore processed via the Pokrovskiy mill). This figure is in line with the corresponding period in 2008 and the Company's plan. In the first half of 2009, part of the mining fleet from the Pokrovskiy mine was relocated to Pioneer to meet increasing volumes there.
Recovery rates at the RIP plant in the first half were slightly lower due to the significant proportion of primary material in the blend for the mill. Some of the decrease in ore (-24% versus H1 2008) stacked at heap leach pads was due to unfavourable weather conditions in May and June.
Table 2: Pokrovskiy Mining and Processing Operations
| Pokrovskiy Mining Operations | ||||
| 6 months to 30 June | ||||
| Units | 2009 | 2008 | Var. % | |
| Mining | ||||
| Total Material Moved | `000 m³ | 2, 641 | 2,899 | (8.9%) |
| Ore mined | t `000 | 972 | 1,059 | (8.2%) |
| Average grade | g/t | 2.8 | 3.2 | (12.5%) |
| Gold content | oz `000 | 87.5 | 107.5 | (18.6%) |
| Pokrovskiy Processing Operations | ||||
| 6 months to 30 June | ||||
| Units | 2009 | 2008 | Var.% | |
| Resin in Pulp Plant | ||||
| Ore from pit | t `000 | 572 | 632 | (9.5%) |
| Average grade | g/t | 3.9 | 4.3 | (9.3%) |
| Ore from stockpile | t `000 | 263 | 125 | 110.4% |
| Average grade | g/t | 3.9 | 3.6 | 8.3% |
| Pioneer Ore | t `000 | 35 | 81 | (56.8%) |
| Grade | g/t | 10.0 | 15.8 | (36.7%) |
| Total milled | t `000 | 870 | 837 | 3.9% |
| Average grade | g/t | 4.2 | 5.3 | (20.8%) |
| Gold content | oz `000 | 116.2 | 142.4 | (18.4%) |
| Recovery rate | % | 83.9% | 86.7% | (3.2%) |
| Gold recovered | oz `000 | 97.5 | 123.5 | (21.1%) |
| Heap Leach | ||||
| Ore stacked | t `000 | 311 | 410 | (24.1%) |
| Average grade | g/t | 0.8 | 0.8 | - |
| Gold content | oz `000 | 8 | 11 | (27.3%) |
| Recovery rate | % | 44.0% | 39.0% | 12.8% |
| Gold recovered | oz `000 | 3.6 | 4.3 | (16.3%) |
| Total | ||||
| Gold recovered | oz `000 | 101.1 | 127.8 | (20.9%) |
| including | ||||
| Pokrovskiy | oz `000 | 91.7 | 92.1 | (0.4%) |
| Pioneer | oz `000 | 9.4 | 35.7 | (73.7%) |
Pioneer deposit
During the first half, mining volumes were increased almost threefold compared with the same period in 2008 in order to provide uninterrupted feed for the current increased capacity rate of the Pioneer mill and to prepare for the mill's further expansion in the second half of 2009. Consequently, the mining fleet was also expanded with additional excavators, bulldozers and 90 tonne pit trucks.
The new plant performed consistently and in line with its internal design parameters.
The Andreevskaya deposit continued to produce high grade material throughout the first half of the year and thus the decision was taken to process all ore through the sorption plant without using the heap-leach operations in order to optimise gold recoveries.
Table 3: Pioneer Mining and Processing Operations
| Pioneer Mining Operations 6 months to 30 June | |||||
| Units | 2009 2008 Var. % | ||||
| Total Material Moved | `000 m3 | 3,503 | 1,258 | 178.5% | |
| Ore Mined | `000 t | 399 | 174 | 129.3% | |
| Grade | g/t | 10.1 | 9.5 | 6.3% | |
| Gold | `000 oz | 129.0 | 52.8 | 144.3% | |
| Pioneer Processing Operations4 | |||||
| 6 months to 30 June | |||||
| Units | 2009 | 2008 | Var.% | ||
| Ore from pit | t`000 | 60 | - | - | |
| Average grade | g/t | 3.7 | - | - | |
| Ore from stockpile | t `000 | 261 | 88 | 196.6% | |
| Average grade | g/t | 13.1 | 2.5 | 424.0% | |
| Total milled | t `000 | 321 | 88 | 264.8% | |
| Average grade | g/t | 11.3 | 2.5 | 352.0% | |
| Gold content | oz `000 | 116.6 | 7.1 | 1,542.3% | |
| Recovery rate | % | 93.2% | 43.7% | 113.3% | |
| Gold recovered | oz `000 | 108.7 | 3.1 | 3,406.5% | |
4Does not include material processed by the Pokrovskiy mill
Pioneer development
During the first half, the second mill and associated equipment were installed and testing of mills and pumps has commenced.
Construction of all facilities required by the increased capacity of the mine (accommodation, canteen, office buildings and workshops) has also been completed.
Alluvial Production
The Group`s alluvial mining operations, OAO ZDP Koboldo, ZAO Amur Dore and OOO Elga, produced c.5,400 oz of gold in the first half of the year, which was a c.13% increase on the same period in 2008. Extensive exploration was carried out at seven new sites with potential to add to current gold reserves.
Joint Ventures
Omchak Joint Venture
Omchak produced c.14,000oz of gold in the first half of 2008, in line with expectations. PHM`s attributable share of production was c.7,000oz .
Omchak also carried out exploration at three projects in the Chita Region in accordance with approved plans and licence conditions.
Amur Region Joint Ventures
In the first half of 2009, OOO Odolgo JV (formerly the Rudnoye JV) produced c.900oz with PHM having a 50% share.
Project update
Malomir
The rapid development of the Malomir project continued in the first half of 2009. The project's powerlines and all main internal roads were completed with construction of other support facilities also progressing according to plan. The sites for the plant and tailings dam have been prepared and construction of the main plant area has started
A new mining fleet has been delivered and in August 2009, advanced stripping will commence at the Quarzitovoye deposit. Further deliveries are due by October and with contracts already signed, it is expected that all remaining equipment will be delivered to the site between November 2009 and March 2010.
Kuranakh
Construction has continued at the Olekma process plant site. The concrete foundation plinths are complete and the majority of the larger equipment has been installed including the ball mills, thickeners and driers. All of the remaining equipment necessary for completion of the plant has been delivered to the site and the heating plant, currently under construction, will be operational by winter. The plant is on schedule for commissioning in the second half.
Conference Call
There will be a conference call today to discuss the announcement at 14:00 (London time).
Details to access the conference call are as follows:
The Dial-in number in the UK will be: 0800 953 0937
The Dial-in number is Russia will be: 8108 002 097 2044
Elsewhere, the Dial-in number will be: +44 (0)1452 569 103
The Conference ID in all cases will be: 20217449
Enquiries:
| Peter Hambro Mining Plc Alya Samokhvalova - Group Head of External Communications Charles Gordon - Investor Relations Officer Rachel Tuft - Investor Relations Officer | +44 (0) 20 7201 8900 |
| Merlin David Simonson Tom Randell | +44 (0) 20 7653 6620 |