Fairfax has reiterated its ‘buy recommendation for Hambledon Mining (LON:HMB) following a visit to the Sekisovskoye gold mine in Kazakhstan. Analyst John Meyer said the company is moving ahead with the underground operations while open pit operations are performing well. The processing plant is currently undergoing a capital refurbishment programme in order to cut processing costs and improve gold recoveries. Meyer has a 7 pence price target on the stock, providing significant upside to the current level of 1.68 pence. Underground mining should contribute nearly 50 percent of the 40,000 ounces gold forecast to be produced in 2013. The analyst said results of bulk stoping trials, with a view to ramping up the mining rate, that are due to start in September should be watched closely for an indication of future developments. Regarding the open pit operations, Meyer said the amount of ore mined with better grades than initially forecast should be enough to avoid tapping low grade stockpiles before the Central and Northern pits deplete in the first quarter of 2015. He expects the elevated operating costs to come off from the US$1,209 per ounce level expected for the 2012 full-year to US$887 per ounce in 2013 as the underground mine gains pace and management initiatives to cut processing costs start to pay off. The remedial works on Tailings Dam #3 are progressing on schedule and should be completed in September, for the processing plant to return to a normal 750,000 tonnes/year operating capacity in October. Hambledon plans to release an updated JORC resource for the underground mine before the end of the year, with management looking to increase the confidence level of the resource, Meyer added. http://www.proactiveinvestors.com/companies/news/33783/hambledon-mining-making-progress-at-kazakhstan-gold-mine-target-price-7p-broker-33783.html
"...back to 1.53p. At that price Hambledon is valued at £14.9 million.
But doing without equity finance is possible for Hambledon, which previously tapped the market through several placings well above today’s levels, because of the support of the EBRD. The EBRD put £1.9 million into one of the company’s placings and, more importantly, recently provided US$20 million of finance, mostly debt with US$2 million in warrants.
Not surprising then, that the EBRD, has appointed a representative, mining entrepreneur Sabine Anderson, to the board. From it, and from any other sources, will clearly continue to play a significant role in Hambledon’s development, until cash flow from gold mining plays a bigger part.
Daffern envisages capital expenditure of US$25 million this year, US$22 million next year and again for four to six years to enable the company to reach its goals.
Relations with the Kazakh authorities are also crucial to Hambledon. Now that Tailings Dam 3 is ‘stabilised’, Daffern now wants to tap the oxide layers at Akmol in joint venture with the government. The prize is about half a million tonnes of ore with gold at 4.5 grammes a tonne.
Calling this ‘Project Sugar’, he says “the government wants a joint venture” and talks of giving the Kazakh administration a 9.5 to 14.5 per cent free carried interest’ in a deal he hopes to conclude next year.
“The Kazakh government is pragmatic”, he reflects. “They want their hand in the cookie jar and the question is ‘how many cookies do they want?’ All governments are the same.”
Investors want cookies, too. If Daffern can deliver them, Hambledon’s shares, which are clearly not without risk, might stand a fair chance of reviving.
Hambledon Mining Sets A Production Target Of 100,000 Ounces Of Gold Per Year By 2018
By Robert Tyerman, 10th August 2012
"September promises to be a pivotal month for Hambledon Mining, the unfavoured Kazakhstan-focused gold miner whose progress was rudely interrupted last autumn by leaks beneath the foundations of the then newly-commissioned waste Tailings Dam No. 3 at the its Sekisovskoye mine. Chief executive Tim Daffern says next month should bring production at Sekisovskoye back to an annual rate of about 25,000 ounces, with further increases in store by the end of the year.
At the same time he’s also hoping to put out an update on the company’s present resource estimate which amounts to 800,000 ounces of measured and indicated gold and 1.2 million inferred ounces.
The leak halted production for 10 days and forced the company to book some US$10 million in rebuilding and remediation costs and fines, although as far as the fines are concerned an appeal has been passed by the Supreme Court of Kazakhstan to the local court of East Kazakhstan, where the leak occurred.
Daffern notes the tailings dam was designed and built before he took charge at Hambledon, and insists that the replacement dam, being built with help from the European Bank of Reconstruction and Development (EBRD), will be “an engineering classic”.
He’s also adamant that Hambledon remains on track to achieve its ambition of annual gold production of 100,000 ounces.
Hambledon’s gold output fell eight per cent to 20,851 ounces in 2011 after the tailings dam interruption, while losses came in at around £6.6 million.
In the last quarter the company produced 5,917 ounces of gold at a low average grade of 1.28 grammes a tonne, although the underground portion graded a somewhat higher 3.08 grammes a tonne.
But over time those numbers should improve markedly. Hambledon now expects to produce 60,000 ounces of gold annually “in two years”, according to Daffern. He expects 40,000 ounces of this will come from Sekisovskoye. The other 20,000 ounces from Akmola Gold, a company which Hambledon bought last year for its Tellur and Stepok prospects in central Kazakhstan in a £3.1 million shares-and-cash takeover.
This is part of Daffern’s drive to take production to 100,000 ounce of gold annually before 2018 and, perhaps, to 200,000 ounces a year by 2020, particularly if Tellur and Stepok live up to expectations.
He hopes to bring in the Kazakhstan government as a participant, but as far as raising new money’s concerned he declares: “we are doing it all ourselves and have no intention of going back to shareholders”.
This is partly making a virtue out of necessity, since the stock market might give a dusty answer just now to any call from Hambledon, whose shares, floated at 5p in 2004, reached nearly 22p in 2007 and have now slid
Hamdledon I feel is very undervalued. Their operation is robust and I believe they have the right management in place. The handling of the tailings dam issue has been good, hopefully we get that cash back.
welcome to the board mike ,thought we had nt had an update for a while . the company should hopefully be on the turn around now , but i have made that call too many times before. having said that there is a lot of potential upside to this company if the board are getting things right. atb
Can't see a production update since mid April, If I remember right these are normally quarterly so unless I've missed one we are overdue. Only recently got back into this share so would not be surprised if I have missed something.
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