Altyngold Regulatory News (ALTN)

29 Aug 2012 11:14

Hambledon Mining Plc

("Hambledon" or "Company")

Update on the Tailings Dam 3 Fine

29 August 2012

Hambledon Mining plc ("Hambledon Mining" or "Company") (AIM: HMB), the Kazakhstan gold mining and development company, announces an update relating to the fine imposed by the Specialised Inter-district Economics Court of East Kazakhstan (the "Court") on one of the Company's subsidiaries, Sekisovskoye Mining Company LLP ('SMC LLP') in response to a minor breach at tailings dam 3 at the Company's Sekisovskoye gold project on 30 October 2011.

Following the incident, The National Environmental Department of East Kazakhstan (a Kazakhstan government department, not judiciary) made a claim against SMC LLP for compensation for damage caused to the environment, totalling $9.5M.

This Claim was referred to the Court who on 18 January 2012 reviewed and partially agreed the Claim as imposed by The National Environmental Department of East Kazakhstan.

The Court imposed an obligation on SMC LLP to make good the local environment, enact various community and social programs and prevent similar incidents occurring by implementing measures in an agreed programme of work valued at $4.7M (included in the total value of the Claim of $9.5M). This court resolution left the estimation of the total claim of $9.5M as set out by the National Environment Department of East Kazakhstan for damage to the environment unchanged. The resolution also included an administrative penalty and environmental emission fines, which totalled $3.9M (also included in the total value of the Claim of $9.5M).

The Company has paid the $3.9M fines and penalties and completed all the measures on environment rehabilitation to make good the local environment. The Company has also completed the majority of the community and social works as agreed with the Court. The Company committed to the development of improved waste handling facilities to prevent reoccurrence of the tailings dam incident the costs of which were already included in its infrastructure development plan.

Recent Developments

On 30 May 2012, the Supreme Court of the Republic of Kazakhstan cancelled the decision of the Court and sent the case to be reviewed in the same Court by a different member of the judiciary. It was proposed that this new court hearing would enable the Company to continue its appeal against the Claim and for the Company to obtain partial repayment of the penalties paid.

On 16 August 2012, the Court restated the Claim of an estimated $9.5M, as correct. This new resolution ignored the statements of the third-party legal and scientific reviewers who demonstrated that the environment had been remediated with the approval and to the satisfaction of the Environmental Department of East Kazakhstan and that the evidence used by the courts was technically incorrect.

The methods used by the courts and the Government to determine the fines and penalties of the Claim have differed and have become complex and contradictory. The methods used rely on the concepts of damage to the environment which can be repaired and damage which cannot be repaired.

Hambledon and its Kazakh legal advisers consider the resolution of the Court on 16 August 2012 illegal, unjustified and believe that they violate the legal and procedural norms of the Republic of Kazakhstan. The Company has prepared an appeal against this resolution to a higher level court, the Regional Court of East Kazakhstan. In the event that the hearing of this appeal is not satisfactory, SMC LLP retains the right to appeal to various higher intermediary Kazakhstan courts including the Supreme Court of Kazakhstan.

Hambledon continues to have confidence that the amount of the fines and penalties which the Company has already paid are unjustifiable and the Company continues its appeal process with the aim of obtaining at least partial repayment of the fines paid to the Kazakh Government.

The Company will make a further announcement when there are any material developments in connection with the above court actions.

Enquiries:

HAMBLEDON MINING:

Telephone +44 (0)207 233 1462

Charles Zorab

FAIRFAX I.S. PLC (NOMAD AND BROKER):

Telephone +44 (0)207 598 5368

Ewan Leggat/Katy Birkin

TAVISTOCK COMMUNICATIONS:

Telephone +44 (0)207 920 3150

Ed Portman/Jos Simson

Copyright Business Wire 2012