Altyngold Regulatory News (ALTN)

9 Mar 2005 07:00

Hambledon Mining PLC09 March 2005 HAMBLEDON MINING PLC Open pit project to go ahead Hambledon Mining Plc, an AIM-listed mining and exploration company developingprecious metal deposits in Kazakhstan, announces that, on the basis of theexcellent results of the fast-tracked feasibility study of the open pit area, ithas been decided to progress this part of the project. The open pit areaaccounts for approximately 7% of the estimated 2.8 million ounces of resourcesof the Sekisovskoye/Tserkovka complex. The feasibility study into thedevelopment of the much larger underground mine and exploration of the adjacentTserkovka licence area is continuing and a further announcement regardingdevelopments is expected to be made in June 2005. Highlights * Total open pit resources 183,000 ounces, 83% up on flotation figure, June 2004 * Grade 1.6 grammes per tonne, 13% higher than June 2004 * 3.6 million tonnes, 63% higher than June 2004 * Waste to ore ratio very low at 1.2:1 * Indications that grade may be up to 20% higher * Mining rate of 600,000 tonnes per year (20% increase on initial plans) * 95% metallurgical recovery * Annual output 30-35,000 ounces from open pit, rising to up to 110,000 ounces when underground ore is substituted * Open pit mine life - six years * Commencing spring 2006 Nicholas Bridgen, Chief Executive of Hambledon Mining plc commented: "We are delighted with the progress the Company has made since flotation lastJune. The initial open pit phase of the project has proved much more encouragingthan we originally anticipated. With a breakeven of $245 per an ounce, it is anextremely attractive project in its own right, but literally only scratches thesurface of the potential reserves within the whole complex." "Fast-tracking this profitable, low-risk project will provide near-termcash-flow to assist in the development of the more significant undergroundproject at Sekisovskoye, itself a precursor to the development of a much largerarea." 9th March 2005 ENQUIRIES: Hambledon Mining Plc Tel: +44 870 111 8778Nicholas Bridgen, Chief Executive or: +7 300 733 8915 Bankside Consultants Tel: 0207 444 4140Michael Spriggs/Michael Padley The full geological report will be available on the Company web site on Thursday10th March 2005. Project Development Open pit projectTwo significant factors we have identified have resulted in a change in theapproach to the development of the deposit. Previously, it was believed that theopen pit and underground ores from Sekisovskoye would be developedsimultaneously, with the open pit material being only a short-term stopgapwhilst the underground ore was developed. Since then, the Company has announced,in November 2004, the acquisition of the 39 square kilometre area surroundingSekisovskoye known as Tserkovka which contained several significant extensionsof the Sekisovskoye mineralisation. In January, the Company announced its 2004drilling results which were excellent and led to a plan to fast-track thedevelopment of the open pit project on a stand-alone basis. This is not only a profitable, low risk, way of starting the project, but alsoallows the Company to take the time to develop a coordinated plan for the wholeSekisovskoye/Tserkovka complex whilst benefiting from the cash flow andexperience that open pit production will bring. Whilst the feasibility study is not yet fully complete, sufficient informationis now to hand for the Company to reach the conclusion that the open pit projectshould go ahead. The remaining work will further refine the design parameters ofthe project but is unlikely to result in any significant change in the designconcept, nor diminish its extremely robust economic viability. In order tomaintain the "fast tracked" approach to this part of the Project, the Companywill now start the process of obtaining government approvals, land purchase and,in the summer we will commence the initial building construction so that workcan then progress during winter. A new geological model is being created which incorporates the 2004 drillresults and which also has greater sensitivity to low grade ore that was ignoredin previous Soviet models. This low grade ore lowers the average ore grade, butis a good contributor to profits and minimises the waste to ore ratio. The western boundary of the site is marked by the river Sekisovka. Though it mayprove possible to re-route this river, the conservative view has been taken thatthis will be a permanent restraint, limiting the westward extensions of thedeposit to underground mining only. Nevertheless, the 2004 drilling programme,together with the results of the remodelling of the open pit area discussedabove, have resulted in the identification of three main open pits, thewestern-most of which was not included in previous plans. Various scenarios have been examined with a view to both optimising net presentvalue and producing a mine plan that is robust against fluctuating gold prices.Though net present value is optimised at a much larger size, the chosen scenariosacrifices only nominal value for a greater profit per tonne, so that in theevent of falling gold prices, profits are still maintained at a reasonablelevel. The chosen scenario has a break-even gold price of only $245 per ounce. The selected scenario envisages the mining of 3.6 million tonnes of ore over sixyears. As modelled, this will result in production of over 30,000 ounces (goldequivalent) per year. Considerable evidence exists to suggest that the samplegrades resulting from Soviet era surface drilling were underestimated by around20%. The current model is only partially derived from such underestimatedsamples but, nevertheless, the Directors believe that production is likely to besignificantly higher. The average ore grade within the pit is 1.6 grammes per tonne. Because of theway in which the new geological model is compiled, this grade is already dilutedwith internal waste, so no further dilution factor is needed to derive theanticipated mined grade. Similarly, no additional mining losses are anticipated.The waste to ore ratio will be very low at 1.2:1. Overall contract mining costsfor ore and waste have been quoted by an independent contractor at less than$2.00 per tonne, giving a mined cost per tonne of ore of approximately $4 pertonne. Further negotiation, or competitive quotes, may reduce this figurefurther. GeotechnicalAs previously announced, geotechnical drilling has indicated very good rockstability. This has lead to the use of steep open pit walls and will minimiseunderground stability problems. HydrogeologyAn assessment of available hydrogeological data has indicated that sufficientdata is already available for design and permitting purposes for undergroundmining. Additional investigations required for environmental permitting of theproposed plant site and tailings dam are scheduled for early spring 2005. Mining EngineeringInitial open pit designs have been carried out by in-house mining engineers andgeologists. GeoMine Solutions of Johannesburg will complete the full feasibilitystudy. SRK Consulting of Johannesburg has been appointed for the underground mine studyas well as the transition between open pit and underground. Treatment plantA considerable amount of metallurgical test-work was carried out in Soviettimes, and further bulk samples have now been tested at the Vniitsvietmietinstitute in Ust Kamenogorsk. Results from low, medium and high grade sampleshave confirmed that the proposed treatment methods are appropriate and therecovery from all grades is consistent with previous predictions of 95%recovery. A complete physical and metallurgical testing programme has recentlybegun at Ammtec in Australia on core samples from the recent drilling programme.This programme will define all the design parameters for the milling, gravity,leaching and neutralisation circuits. The results to hand show that the initial gravity stage separation will extractup to 40% of the gold, with the remainder coming from a conventional leachplant. This plant uses established technology and is considered low intechnological risk. The treatment plant will be capable of treating not only orefrom the open pit, but also underground ore as it becomes available. Whilst theopen pit life is currently estimated at six years, it is possible thatunderground ore or other ore from the newly acquired territories will besubstituted sooner, leading to an increase in production to up to 110,000 ouncesper year from the same plant. EnvironmentalThe ecological baseline study has been accepted by the authorities and theenvironmental firm AsiaEcoLink has begun the next phase of the environmentalassessment. About Hambledon Mining PlcHambledon Mining plc is an AIM listed mining and exploration company developingprecious metal deposits in Kazakhstan. It holds the rights to the Sekisovskoyegold and silver deposit, on which the feasibility study is at an advanced stage,and to the adjacent Tserkovka deposit and exploration areas. ENDS This information is provided by RNS The company news service from the London Stock Exchange