Last checked at 12 May 2010 07:00
HAMBLEDON MINING PLC(AIM:HMB)
Final results(All references to "£" are to the British pound and "ounces" are to troy ounces)
Hambledon Mining plc ("Hambledon" or the "Group" or the "Company"), the AIM-listed gold mining company based in Kazakhstan, announces its results for the year ended 31 December 2009.
Highlights
First operating profit achieved of £42,000 (2008: loss of £7.0 million). Positive cash flow from operations of £779,000 (2008: outflow of £3.9 million). 20,050 ounces of gold and 46,050 ounces of silver produced during 2009 (2008: 12,488 ounces of gold and 22,364 ounces of silver). Underground mine development started. Third tailings dam completed. Capital expenditure in 2009 of £2.4 million (2008: £2.1 million). Alfa bank loan facility of US$2.0 million renewed for 3 years until December 2012. Processing of third party purchased ore successfully initiated.Nick Bridgen, Chief Executive of Hambledon Mining commented:
"Whilst it is pleasing to announce improved results, we are still not at our desired level of production. Although we only produced 2,579 ounces of gold in the first quarter of 2010, largely as a result of the exceptionally cold winter weather, throughput has improved since the last days of March and we milled 68,300 tonnes of ore to produce 2,048 ounces in April. This is a better indicator of our progress which we intend to build on for the rest of the year. The improved operation of the mine and the plant, together with the starting of the treatment of third party ore and the underground development, give us cause for confidence in the development of our Company."
The annual general meeting of the Company will be held at the offices of Fairfax I.S. PLC at 46 Berkeley Square, Mayfair, London W1J 5AT on Wednesday 23 June at 10.30 a.m. The annual report of the Company for the year ended 31 December 2009 will be posted to shareholders on or before 31 May 2010.
| Enquiries | |||||
| Hambledon Mining plc | |||||
| Charles Zorab | Telephone: + 44 (0) 207 233 1462 | ||||
| Fairfax I.S. PLC | |||||
| Ewan Leggat | Telephone: +44 (0) 207 598 5368 |
Chairman's statement
I am pleased to announce our financial results for the twelve months to 31 December 2009.
Review of 2009 and 2010 to date
The Group recorded its first operating profit in 2009 and had a positive cash inflow from operations despite experiencing certain production difficulties in the year. The average price we received for our gold in 2009 was US$974 per ounce (2008: US$844 per ounce). However, neither the financial nor the production results bear witness to the real progress made in 2009. Despite the setback in the first quarter of 2010 due to the weather, results in April were much better and we expect this improvement to continue for the remainder of the year, as the mine and plant continue to operate with fewer interruptions.
We were very pleased by the reception accorded to our share placing of £2.8m in September 2009, which enabled us to continue our underground development, despite the setback of the severe winter.
Sekisovskoye
We resolved a number of production problems over the year. Set against that, we have increased the capacity of the plant, commissioned the third tailings dam, conducted our own blasting operations, and completed many other new developments that will serve the Company well in the long term. We commissioned external consultants to improve our operating practices and help train local staff in western best practices in both mining and processing. This proved to be extremely cost-effective and we plan to use consultants in a similar way whenever appropriate.
We recently concluded a contract to acquire gold-bearing ore from another mine in Kazakhstan which provides another profitable means to capitalise on our versatile processing plant. This is an exciting development which may be increased in volume and could presage other similar deals. We believe the development of the underground operations - always the main story at Sekisovskoye - will further enhance the perception and the outlook of your Company.
Ognevka
Ognevka remained on care and maintenance throughout 2009. Due to closure of the plant, the government controlled rehabilitation process was deemed to have failed. Ognekva will be placed into bankruptcy and subsequently liquidated during 2010. As a secured creditor, the Group will receive the majority of the liquidation proceeds. Consideration will be given to the acquisition by the Group of the assets of Ognevka. In this case, the majority of the acquisition cost will be returned to the Group as liquidation proceeds.
Outlook
2010 started with the worst winter on record at our operation in Kazakhstan. Whilst we do not wish to become a slave to winter weather in Kazakhstan, its extreme severity resulted in a very poor start to the year and we have much ground to make up. Nevertheless, the improvements to the plant made over the last year, the build up of spare parts and better operating practices have all put Hambledon in a position to exceed design performance of the plant over the remainder of this year. The performance of the mine and plant over the first month since the end of winter has shown that this is achievable.
Although winters as severe as the last one are rare, the Company plans further steps to winterise its operations. Mining operations will inevitably be affected by extreme cold and blizzards, but the Company aims to produce a stockpile of ore ready for the start of next winter and to enclose parts of the crushing plant. Future underground operations are less likely to be affected by severe cold.
I hope shareholders will join me in thanking management and staff at the mine who have worked tirelessly in very difficult conditions to keep Hambledon Mining moving forward.
George Eccles
11 May 2010
Review of operations
Sekisovskoye
Safety
The safety performance for 2009 was excellent with no significant injuries recorded. Regular safety inspections of both the process plant and mining operations were carried out by the Company's health and safety department. Reports on these inspections along with recommended changes to work practices were forwarded to site management and Hambledon safety management representatives. These were then acted on appropriately.
Safety training courses were conducted for employees during the year utilising both internal and external resources.
Mining
Open pit
The volume mined from the Sekisovskoye open pit increased substantially in 2009. Total material movement was increased as the pit development deepened towards the point of maximum stripping ratio that was expected during early 2010.
During 2009, a total of 3.74 million tonnes of material was mined from the open pit (2008: 2.07 million tonnes) including 590,233 tonnes of high grade ore at a gold grade of 1.28 grammes per tonne. In addition, 334,000 tonnes of low grade material was mined and stockpiled for later processing. The stripping ratio during 2009 was 5.52 (tonnes of waste mined for each tonne of ore mined) compared to 2008 when the stripping ratio was 2.53. The original design was for a pit with a stripping ratio over the life of the mine of 4.66.
To accommodate the higher stripping ratios expected, the mining fleet was augmented with the addition of a Kraneks EK450, 45 tonne face shovel, in August 2009. Four Belaz 7540, 30 tonne capacity, haul trucks were hired on a short term basis to provide additional trucking capacity.
Higher mining volumes were achieved in August and September. However, in late September, one of our Hitachi excavators suffered an engine failure well before the end of its planned service life. Due to long spare part delivery times, the machine was out of commission for eleven weeks. A spare engine has now been purchased.
The winter of 2009/10 proved to be long and cold with snowfalls experienced as late as April. Exceptionally long spells of temperature below -40 ?C were experienced. At these low temperatures there is an elevated probability of the mining equipment suffering damage. This is particularly true with our drill rigs which have not performed well in very cold temperatures. As a result of this, mining production was restricted in January and February of 2010.
Stage 3 of the tailings storage facility was completed in September 2009. This facility will only be required for tailings storage in 2010 but had to be completed early as the wet conditions that are likely in spring and early summer do not allow civil works to be carried out. Construction of the rock walls of stage 4 of the dam complex was commenced in late 2009. This facility will be completed in 2010 for use in 2011/12.
Following a review of operational costs, the decision was made to terminate the use of the contractors carrying out the site blasting operations. A vehicle for the transportation of explosives was purchased and a supply contract signed with Orica, a local supplier of explosives. This has enabled substantial savings to be realised as well as greater control over the technical aspects of blast design.
With the completion of the detailed design of the underground mine in the area just below the bottom of the pit, it was recognised that some of the existing underground infrastructure on the 320 metre level (measured above Baltic Sea datum or "RL") (approximately 120 metres below surface) could be removed with little impact on the development of the underground mine. As a result of this, a redesign of the open pit was undertaken that deepened the pit from a projected bottom at 340 metre level to 305 metre RL. This has effectively increased the pit life and will result in higher tonnages of ore being mined from this area due to the different cut-off grades used in the pit and underground designs.
Underground development
During 2009, an experienced project manager was recruited to oversee the submission of the documentation to the state authorities for approval to commence the development of underground operations. This was duly received for the development of the decline in December 2009 and approval for refurbishment of the shaft was granted in February 2010.
Underground development will require an additional diamond drilling programme to be carried out from the old 320 metre level. A 12,000 metre drilling programme has been designed, targeting the ore from the 320 metre level down to 120 metre elevation. The information obtained from this programme will provide additional detail on the location of the ore zones below the 320 level and will allow the location of the major mine infrastructure in this region to be designed. To carry out this drilling programme the existing surface shaft is being refurbished to enable safe access to the 320 level. In late 2009, tenders for the refurbishment work on the shaft were called for. The contract for this work was placed with Kazinteretnos, an experienced shaft contractor. They commenced this work in early March 2010 with completion expected in July 2010. The drilling programme will commence in August following the setting up of drilling sites on the level.
At the same time as the tenders for the shaft refurbishment were requested, development of the decline from surface to the 320 level was also put out to tender. A very competitive tender was submitted by a local company, Vostokshakhtostroy. It is anticipated that the contract for the development of the decline will be awarded to them in May 2010 with commencement of decline development starting in summer 2010. The development of the decline to the 320 level will take approximately 12 months to complete. This portion of the decline allows access to the upper portions of the number 11 ore body, from which the mine development schedule envisages the extraction of 85,000 tonnes of ore in late 2011.
Tenders for the supply of mining equipment have also been received. Equipment from many suppliers was considered with final selection determined based on suitability, reliability, value for money along with the ability to maintain the selected equipment. It is expected that ordering of equipment will be made in the second half of 2010 with delivery to site in first half 2011. A development scenario with the decline development being undertaken by contractors with the ore drives and ore extraction operations being undertaken by the Company is being considered.
Processing operations
Production in 2009 was 20,050 ounces of gold (2008: 12,488 ounces) and 46,050 ounces of silver (2008: 22,364 ounces). The operation of the process plant improved during 2009 with 679,714 tonnes (2008: 417,990 tonnes) crushed and 676,609 tonnes (2008: 392,485 tonnes) milled. The lower than anticipated production was principally associated with the operation of the crushing facility in the first quarter of the year. The performance of the crushing plant improved during the year as problems were identified and eliminated. In February 2009, an additional secondary crusher was installed into the circuit to increase production capacity. The feed arrangement to the jaw crusher was changed with an apron feeder being installed to replace the existing vibrating feeder. Air cannons were installed in the crusher feed bin to eliminate hang-ups. A new dust extraction system was installed in all areas of the crusher. An automatic sampler was installed to improve collection of ore samples. A second parallel conveyor belt was installed under the screen decks to eliminate a build-up of fine material in the screen discharge chutes.
A problem that was experienced in the 2008 and 2009 winters was the freezing of the crushed ore stockpile. This caused low mill feed rates when the crushed ore stockpile was required to be re-handled to the mill feed conveyor. To eliminate this problem a mobile crushing facility consisting of a jaw crusher and a screen deck was purchased to allow the re-handled frozen stockpile to be broken up for feeding to the mills. In addition, an expatriate metallurgist was contracted to review crushing operations and conduct operator training.
It is believed that all the major deficiencies associated with the design and installation of the crushing facilities have now been identified and rectified.
In 2009, 676,609 tonnes were milled at a gold grade of 1.15 grammes per tonne (2008: 392,485 tonnes at 1.37 grammes per tonne). The lower than expected grade was as a result of the requirement to mill 100,000 tonnes of low grade ore at a grade of 0.7 grammes per tonne due to a shortfall in tonnage mined from the pit.
The milling circuit performed well during the majority of 2009 but in late August 2009, the control system for the mill bearing lubrication failed. This failure resulted in the damage to all four bearings on both the primary and secondary mills. The white metal surface of the bearings had to be rebuilt resulting in the loss of 14 days of milling. The lubrication control system has subsequently been redesigned with additional safety features built into the control system to prevent it reoccurring.
During 2009, the plant thickener was commissioned to enable a greater recovery of cyanide from the tailings and the electro-winning circuit was expanded with the addition of another cell.
A risk assessment of factors that could affect the performance of the milling operations was undertaken and a programme for the purchase of major strategic spares was initiated, including the purchase of a spare 1.2 MW electric motor for the mills.
Purchase of ore
In March 2010, the Company contracted to buy gold ore from another mine in Kazakhstan for treatment at the Sekisovskoye plant. The ore is expected to have an average grade of 4.5 grammes per tonne and the Company will pay the vendors up to 51 per cent. of the gold value (depending on the final agreed grade). The vendors will pay for the ore to be transported to Ust Kamenogorsk by rail and the Company will then transport it by truck to the process plant. The first shipment of 10,000 tonnes has recently arrived at Sekisovskoye and processing of the ore has started.
Production statistics
Mining
| Ore Mined | 573,206 | t | |||
| Gold Grade | 1.28 | g/t | |||
| Silver Grade | 2.39 | g/t | |||
| Contained Gold | 23,598 | oz | |||
| Contained Silver | 43,995 | oz | |||
| Waste mined | 3,165,735 | T |
Processing
| Crushing | 679,714 | t | |||
| Milling | 676,609 | t | |||
| Gold Grade | 1.15 | g/t | |||
| Silver Grade | 2.41 | g/t | |||
| Gold Recovery | 80.1 | % | |||
| Silver Recovery | 87.7 | % | |||
| Gold Poured | 19,575 | oz | |||
| Silver Poured | 46,927 | oz |
Ognevka
The Ognevka processing facility remained on care and maintenance during 2009. The funds required for the maintenance of the plant were generated from the hire of the road trucks and front end loader to the Sekisovskoye operations.
Due to the closure of the plant, the government controlled rehabilitation program was deemed to have failed. As a result, TOO Ognevka will be placed into bankruptcy and subsequently liquidated during 2010. The Company is a major secured creditor and can therefore expect to receive the majority of the liquidation proceeds, subject to the bankruptcy costs and taxation, as partial repayment of its debt. The Company will be free to bid for the assets of TOO Ognevka from the liquidator on an arms length basis.
Exploration
The issue of new exploration leases in Kazakhstan has still not been resolved and no applications for exploration were approved in 2009. Hambledon has applied for several licences for prospective exploration areas but these have been held up while a new system is implemented. The timing of the resolution of this issue is at present unknown.
Financial
Sekisovskoye produced 20,050 ounces of gold in 2009 which was sold at an average of £620 per ounce. There were no other material items of revenue. Cash costs were £348 per ounce. Sekisovskoye's administration costs were £1.4 million and capital expenditure was £2.4 million in 2009. The main items of capital expenditure were the tailings dam number 3, a mobile crusher, a Kraneks excavator and the vehicle for the transportation of explosives.
Ognevka was on care and maintenance throughout 2009 and its result was not material to the Group's result for the year.
Corporate administration costs in 2009 were £1.3 million. These were mainly director and other staff salaries, professional fees and the cost of maintaining the Group's listing on London's Alternative Investment Market including investor relations.
The Group prepares its financial statements in pounds sterling but the functional currency of the companies in Kazakhstan is the Kazakhstan tenge ("KZT"). The rates used to convert Kazakhstan tenge and United States dollars into pounds sterling in these financial statements are as follows:
| 2009 | 2008 | ||||||||||
| £1 = US$ | 1.59 | 1.45 | |||||||||
| £1 = KZT | 240.15 | 179.35 | |||||||||
| US$1 = KZT | 150.00 | 123.87 |
The pound sterling appreciated by approximately 34 per cent. against the Kazakhstan tenge in the year. This resulted in a currency translation loss on the Group's net investment in its companies in Kazakhstan of £4.8 million which has been taken to reserves.
Risks, uncertainties and performance indicators
The main risks and uncertainties facing the Sekisovskoye operation include the following:
1 The risk of production being affected by failures of vital equipment.2 The risk of the tonnes and grades of ore mined differing from those predicted from the geological model.3 The risk of failing to obtain the metallurgical recoveries predicted by test-work.4 The risk of operating costs being significantly higher than those predicted.5 The risk of operations being affected by events outside the control of the company such as major infrastructure failures or political upheaval.6 Gold and silver prices.
An analysis of equipment performance has been carried out, defects rectified and critical spares identified and procured. The implementation of a detailed costing system has allowed the monitoring and assessment of costs to be undertaken. The grade of ore mined is constantly compared to the geological model and differences investigated.
The key performance indicators used to monitor the performance of the operations are:
1 Tonnes and grade of ore and waste mined.2 Tonnes processed.3 Metallurgical recovery.4 Gold and silver produced.5 Cost per unit of production.6 Safety of the Group's employees.
The Group is monitoring the environmental impact of its operations in compliance with an agreed monitoring program.
Employee safety is of paramount concern to the Group and the Board receives regular updates on safety matters.
Going concern
The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman's statement and review of operations and exploration above. The major risks and uncertainties which could impact on the Group's ability to generate cash in the next 12 months are its level of production and gold prices.
Mining and processing operations at Sekisovskoye are the Group's only source of revenue. The directors believe that production at or above the levels achieved from the start of April 2010 to the date of this report are sustainable. This is following the major improvements made to the processing operations and the measures to guard against significant production interruptions introduced in 2009 as discussed in the review of operations above.
The Group's forecasts and projections based on the assumption that the current level of production at Sekisovskoye can be sustained and on the prevailing outlook for the gold price and taking into account reasonably possible changes in the level of production and gold prices show that the Group will now be cash generative for the foreseeable future. The Group's US$2.0 million working capital borrowing facility was also renewed in 2009 until December 2012. The directors believe that the Group's low level of gearing relative to the value of its assets would put it in a strong position, were any additional funding to be required.
Accordingly, at the time of approving the consolidated financial statements for the year ended 31 December 2009, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason the directors continue to adopt the going concern basis in preparing the financial statements.
Mineral resources
Resource statement
This mineral resource estimate for the Sekisovskoye deposit has been prepared under the JORC Code. Mining operations commenced in mid 2006. Ore mining commenced in 2007.
The resource statement as reported in previous annual reports used the 250 metre R.L. as a separation between 'Open pit area' resources and 'Underground' resources. This elevation separation was based on the initial pit optimisation work that indicated that resources down to this elevation could be mined economically in an open pit. A 0.5 grammes per tonne cut off grade was used in the ore body modelling above the 250 metre R.L. to simulate the lower costs associated with open pit mining. A 2.0 grammes per tonne cut off was used for modelling of those resources below the 250 metre R.L.
With the detailed design of the underground workings and the redesign of the open pit down to 305 metre R.L. that was carried out in late 2009, the determination of the resource this year has been recalculated such that the 'Open pit' area resource is that part of the model above the 300 metre R.L. but excludes the number 11 ore body group. Consequently, all the open pit resources between 250 metre R.L. and 300 meter R.L. have been depleted and the underground resources increased to reflect the elevation change between the open pit and underground. Although extending above the 305 level the number 11 ore bodies are outside the current pit designs and will be mined as a part of the underground operation and as such are included in the underground resource.
Major updates to the resources have also been implemented to reflect results from additional evaluation drilling, from both diamond core drilling and rotary drilling within the area of the open pit. Additionally, depletion of the open pit resource due to mining activities, is also reflected in the resource table below.
Beyond the limits of the current modelled resource, numerous gold intersections from historical drilling results were included in the Soviet 'P1' category resource. These had a low level of confidence and as such were classified as an "Inferred" equivalent for potential open pit exploitation. However, it is now considered more feasible to extract major rich zones of gold continuity by underground mining, within these areas beyond the open pit. Therefore, an underground drilling exploration programme will be implemented to target gold zones above the 300 metre level. As a consequence, this "inferred" resource has been deleted from the open pit area, but it is likely that a portion of this resource can be re-assigned for underground extraction.
Due to the various changes in the resources as stated above, there has been an overall 14 per cent. depletion of contained gold within the "Indicated" resource, concomitant with a 25 per cent. increase in the underground "Indicated".
| Location | Resource category | Tonnes (million) | Au g/t | Contained metal Au oz * | Ag g/t | Contained metal Ag oz * | Au g/t Cut-off | ||||||||
| Open pit area | Indicated | 5.39 | 1.6 | 277,268 | 2.5 | 433,231 | 0.5 | ||||||||
| Inferred (a) | 0.21 | 1.3 | 8,777 | 1.8 | 12,153 | ||||||||||
| Underground | Indicated | 2.70 | 5.2 | 451,396 | 6.4 | 555,565 | 2.0 | ||||||||
| Inferred (a) | 7.22 | 5.2 | 1,207,068 | 7.1 | 1,648,111 | ||||||||||
| Marginal underground (b) | Indicated | 4.83 | 0.8 | 124,230 | 1.5 | 232,932 | 0.5 | ||||||||
| Inferred | 1.14 | 0.6 | 21,991 | 1.2 | 43,982 | ||||||||||
| Totals | Indicated | 12.92 | 2.1 | 852,895 | 2.9 | 1,221,728 | |||||||||
| Inferred | 8.57 | 4.5 | 1,237,836 | 6.2 | 1,704,247 | ||||||||||
| Total | Indicated & Inferred | 21.49 | 3.0 | 2,090,731 | 4.2 | 2,925,975 |
\* Troy oz = 31.10348 grams
(a) includes resources that have been defined beyond the current limits of the grade model. "Inferred" resources cannot be used for ore reserves until they have been upgraded.(b) underground low grade material associated with high grade gold zones.
Reserve estimate
This ore reserve estimate of the Sekisovskoye deposit has been prepared under the JORC Code.
| Location | Reserve category | Tonnes (million) | Au g/t | Contained metal Au oz * | Ag g/t | Contained metal Ag oz * | Au g/t Cut-off | ||||||||
| Open pit area | Probable | 3.06 | 1.60 | 157,614 | 2.45 | 241,331 | 0.5 | ||||||||
| Underground | Probable | 1.62 | 4.4 | 229,831 | 7.6 | 393,017 | 2.0 | ||||||||
| Total | 387,445 | 634,348 |
\* Troy oz = 31.10348 grams
With the redesign of the open pit from a pit bottom of 340 metre R.L. to 305 metre R.L. some of the reserve that would have been mined as a part of the underground mine will now be mined as a part of the open pit. This redesign resulted in a loss of 159,270 tonne at 3.53 grammes per tonne from the underground reserve but a corresponding increase in the open pit reserve of 829,683 tonne at 1.61 grammes per tonne. This increased the overall reserve by 24,792 ounces. This increase in overall reserve is due to the difference in cut-off grade used in the open pit and underground operation.
The Sekisovskoye open pit ore reserve model is based on the ordinary kriging of the mineral resource model using a 0.5 grammes per tonne cut-off.
The resultant reserve estimate is calculated by applying mining costs, mining dilution (8 per cent.) and recoveries (96 per cent.) to that portion of the Indicated Resource falling entirely within the optimised open pit design. The area of this open pit reserve is contained within the mineral resource as reported above.
The Sekisovskoye underground ore reserve has been determined from the mine design work carried out as a part of the evaluation on the development of the underground project using a 2.0 grammes per tonne cut-off.
The underground reserve estimate is calculated by applying mining costs, mining dilution (8 per cent.) and recoveries (96 per cent.) to that portion of the Indicated Resource falling entirely within the stope design. The area of this underground reserve is contained within the underground mineral resource as reported above.
Reconciliation
Mining of ore is carried out following the completion of grade control drilling. This is carried out using Atlas Copco L7 CR drill rigs. The resulting assays are modeled using Datamine software to produce a grade control model. This grade control model is reconciled back to the JORC model prior to mining to determine the accuracy of the original model. A reconciliation of the comparison of the grade control model to the JORC model reveals the following.
| Model Type | Tonnes | Au g/t | Au oz * | Ag g/t | Ag oz * | Au g/t Cut-off | |||||||
| Grade - actual ** | 794,513 | 1.34 | 34,229 | - | - | 0.5 | |||||||
| JORC - depleted | 761,672 | 1.54 | 37,712 | 3.35 | 82,039 | 0.5 |
* Troy oz = 31.10348 grams
** The grade control model results are based on vertical rotary drill hole sampling data, vis-à-vis diamond drill core sampling for the JORC resource, for the year ending 28th December 2009. A polygonal approach was used for grade interpolation, in assigning gold grades to the delineated ore zones prior to mining. For grade control, the Company does not assay silver.
The above grade control results are based on 28,716 samples, so statistically the results are significant. The JORC resource model shows a reasonably good spatial correlation with the grade control resource, but the JORC exploration model showed a 10 per cent. higher contained gold content. The reason for this 10 per cent. variation has been investigated to determine if this is likely to continue. The mining activities in 2009 involved the excavation of ore from the 465 level down the 435 level. The ore resource in this area was modelled using all the available data in the area. A large quantity of this data was from the channel sampling conducted in the 440 adit. The review of the grade reconciliation for 2009 examined all the source data that was used in the construction of the model. The channel data from the 440 level showed a much higher gold average than all the other gold values in this area resulting in an overestimation of the resource in the area from 460 down to 420. The reconciliation exercise carried out in the above table included this channel data. This data has however been removed from the model for the calculation of the remaining resource at the end of 2009.
The channel data used from the 320 level adit in the construction of the model in the lower area of the pit was also examined to determine if a similar discrepancy between this data and data from diamond and rotary drilling in the area existed. The channel data from the 320 level is statistically lower than the gold values from the diamond drill holes in this area so it is believed that there is no further overestimation in the model.
Glossary of technical terms used
| Grade | The tenor or concentration by weight of a metal in a mineral deposit or ore. | ||
| Indicated Resource | A category of Mineral Resource of higher confidence than an Inferred Resource, the estimation of which is prescribed by the JORC Code. This is the minimum level of resource classification required for Ore Reserve estimation under the JORC Code. | ||
| Inferred Resource | A category of Mineral Resource the estimation of which is prescribed by the JORC Code. Inferred Resources cannot be used as a basis for Ore Reserve estimation. | ||
| JORC Code | Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves (Joint Ore Reserves Committee). See www.jorc.org/main.php | ||
| Kriging | A class of methods of estimating mathematically the distribution of a metal in three dimensions within the earth, together with the confidence of the estimate | ||
| Mineral Resource | An estimated tonnage and grade of mineralisation in the ground determined as prescribed by the JORC Code | ||
| Ore Reserve | That part of a Mineral Resource which can be demonstrated to be worked profitably when all modifying factors are taken into account. | ||
| R.L. | Reduced Level. Measurement of elevation as measured relative to Baltic Sea standard datum. | ||
| Tonne | A metric tonne of 1000 kilograms |
Qualified person
The resource estimate has been prepared by Roger Rhodes BSc, MSc, MIMMM, independent geological consultant with Computer Resource Services. He has over 35 years of relevant experience and is a qualified person for the purpose of reporting resources under the JORC Code and the AIM Rules for Companies.
The reserve estimate has been prepared by Neil Stevenson, BE (Mining), FAusIMM. He is a full-time director of the Company and has sufficient experience which is relevant to the style of mining that is planned and is a qualified person for the purpose of reporting resources under the JORC Code and the AIM Rules for Companies.
| Group income statement | |||||||||
| year ended 31 December 2009 | |||||||||
| 2009 | 2008 | ||||||||
| Notes | £000 | £000 | |||||||
| Revenue | 12,810 | 5,553 | |||||||
| Cost of sales | (10,042) | (7,727) | |||||||
| Gross profit / (loss) | 2,768 | (2,174) | |||||||
| Administrative expenses | (2,726) | (3,154) | |||||||
| Other operating expenses: | |||||||||
| Impairment of TOO Ognevka | - | (1,679) | |||||||
| Operating profit / (loss) | 42 | (7,007) | |||||||
| Investment revenues | 3 | 42 | |||||||
| Other (losses) / gains | (41) | 3 | |||||||
| Finance costs | (249) | (101) | |||||||
| Loss before taxation | (245) | (7,063) | |||||||
| Taxation | 3 | 292 | (561) | ||||||
| Profit / (loss) attributable to equity shareholders | 47 | (7,624) | |||||||
| ===== | ===== | ||||||||
| Profit / (loss) per ordinary share | |||||||||
| Basic | 5 | 0.01 | p | (1.65) | p | ||||
| Diluted | 5 | 0.01 | p | (1.65) | p |
All results are derived from continuing activities.
| Group statement of comprehensive income | |||||
| year ended 31 December 2009 | |||||
| 2009 | 2008 | ||||
| £000 | £000 | ||||
| Profit / (loss) for the year | 47 | (7,624) | |||
| Currency translation differences on foreign | |||||
| currency net investments | (4,608) | 4,751 | |||
| Total comprehensive loss for the year attributable | |||||
| to equity shareholders | (4,561) | (2,873) | |||
| ===== | ===== |
| Group balance sheet | |||||
| 31 December 2009 | 2009 | 2008 | |||
| £000 | £000 | ||||
| Non-current assets | |||||
| Property, plant and equipment | 15,376 | 20,361 | |||
| Restricted cash | 41 | 23 | |||
| 15,417 | 20,384 | ||||
| Current assets | |||||
| Inventories | 4,980 | 3,393 | |||
| Trade and other receivables | 1,833 | 1,638 | |||
| Cash and cash equivalents | 1,462 | 513 | |||
| 8,275 | 5,544 | ||||
| Total assets | 23,692 | 25,928 | |||
| Current liabilities | |||||
| Trade and other payables | (1,425) | (1,626) | |||
| Provisions | (176) | (161) | |||
| Borrowings | - | (356) | |||
| (1,601) | (2,143) | ||||
| Net current assets | 6,674 | 3,401 | |||
| Non-current liabilities | |||||
| Trade and other payables | (470) | (629) | |||
| Deferred taxation | (137) | (561) | |||
| Provisions | (1,595) | (1,004) | |||
| (2,202) | (2,194) | ||||
| Total liabilities | (3,803) | (4,337) | |||
| Net assets | 19,889 | 21,591 | |||
| Equity | |||||
| Called - up share capital | 516 | 469 | |||
| Share premium | 33,996 | 31,317 | |||
| Merger reserve | (148) | (148) | |||
| Other reserves | 253 | 170 | |||
| Currency translation reserve | (1,041) | 3,629 | |||
| Accumulated losses | (13,687) | (13,846) | |||
| Total equity | 19,889 | 21,591 | |||
| ===== | ===== |
| Group cash flow statement | |||||
| year ended 31 December 2009 | |||||
| 2009 | 2008 | ||||
| £000 | £000 | ||||
| Net cash inflow / (outflow) from operating activities | 779 | (3,895) | |||
| Investing activities | |||||
| Interest received | 3 | 42 | |||
| Proceeds on disposal of property, plant and equipment | 104 | 61 | |||
| Purchase of property, plant and equipment | (2,354) | (2,123) | |||
| Restricted cash | (18) | (23) | |||
| Net cash used in investing activities | (2,265) | (2,043) | |||
| Financing activities | |||||
| Proceeds on issue of shares | 2,726 | 2,631 | |||
| (Repayment) / drawdown of bank loans | (356) | 356 | |||
| Net cash inflow from financing activities | 2,370 | 2,987 | |||
| Increase / (decrease) in cash and cash equivalents | 884 | (2,951) | |||
| Cash and cash equivalents at beginning of the year | 513 | 3,176 | |||
| Effect of foreign exchange rates changes | 65 | 288 | |||
| Cash and cash equivalents at end of the year | 1,462 | 513 | |||
| ===== | ===== |
Notes
1 General information
Hambledon Mining plc (the "Company") is a company incorporated in England and Wales. The address of the registered office is Daws House, 33-35 Daws Lane, London, NW7 4SD. The principal activities and place of business of the Company and its subsidiaries ("the Group") are set out in the chairman's statement and the review of operations above.
2 Basis of preparation of financial information
The financial information set out above, which was approved by the Board on 11 May 2010, has been compiled in accordance with International Financial Reporting Standards ("IFRS"), but does not contain sufficient information to comply with IFRS. The Company expects to distribute its full financial statements that comply with IFRS in May 2010.
The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 December 2009 but is extracted from those accounts. The Company's statutory accounts for the year ended 31 December 2009 will be filed with the Registrar of Companies following the Company's annual general meeting. The independent auditors' report on those accounts was unqualified, did not draw attention to any matters by way of emphasis without qualifying those accounts and did not contain any statement under section 498(2) or (3) of the Companies Act 2006. The Company's statutory accounts for the year ended 31 December 2008 have been filed with the Registrar of Companies. The independent auditors' report on those accounts was unqualified, did not draw attention to any matters by way of emphasis without qualifying those accounts and did not contain any statement under Section 237(2) or (3) of the Companies Act 1985.
The financial statements have been prepared under the historical cost convention. The accounting policies are consistent with those adopted and disclosed in the Group's annual financial statements for the year ended 31 December 2008.
3 Taxation
| An analysis of the taxation charge is as follows: | |||||
| 2009 | 2008 | ||||
| £000 | £000 | ||||
| Current taxation | - | - | |||
| Deferred taxation | 292 | (561) | |||
| Total taxation benefit / (expense) | 292 | (561) | |||
4 Dividend
The directors do not recommend the payment of a dividend (2008 - nil).
5 Profit / ( loss) per ordinary share
The calculation of basic and diluted earnings per share is based upon the retained profit (2008: loss) for the financial year.
The weighted average number of ordinary shares for calculating the basic profit (2008: loss) per share and diluted profit (2008: loss) per share after adjusting for the effects of all dilutive potential ordinary shares relating to share options are as follows:
| 2009 | 2008 | ||||
| Basic and diluted | 481,267,589 | 461,031,025 |
6 Annual general meeting
The annual general meeting of the Company will be held at the offices of Fairfax I.S. PLC at 46 Berkeley Square, Mayfair, London W1J 5AT on Wednesday 23 June 2010 at 10.30 a.m.
| Company Information | |||
| Directors | George Eccles | ||
| Non-executive chairman | |||
| Nicholas John Bridgen | |||
| Chief executive | |||
| Neil Stevenson | |||
| Technical director | |||
| Christopher Thomas | |||
| Non-executive director | |||
| Baurzhan Yerkeyev | |||
| Executive director | |||
| Secretary | William Roy Morgan B. Sc. ACA | ||
| Registered Office | Daws House | ||
| 33-35 Daws Lane | |||
| London NW7 4SD | |||
| Telephone +44 (0) 870 111 8778 | |||
| Web | www.hambledon-mining.com | ||
| Kazakhstan Office | 10 Novostroyevskaya | ||
| Sekisovskoye Village | |||
| Kazakhstan | |||
| Telephone: +7 (0) 72331 27927 | |||
| Fax: +7 (0) 72331 27933 | |||
| Nominated Advisor and | Fairfax I.S. PLC | ||
| Broker | 46 Berkeley Square | ||
| Mayfair | |||
|
| London W1J 5AT | ||
| Telephone: +44 (0) 207 598 5368 | |||
| Investor relations | Charles Zorab | ||
| Telephone: +44 (0) 207 233 1462 | |||
| Registrars | Neville Registrars | ||
| 18 Laurel Lane | |||
| Halesowen | |||
| West Midlands B63 3DA | |||
| Telephone: +44 (0) 121 585 1131 |
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