17 June 2004 10:52
Peter Hambro Mining - Acquisition
RNS Number:8502Z Peter Hambro Mining PLC 17 June 2004 Proposed acquisition of Ametistovoye, a construction stage
asset, with Russian C1 & C2 Reserves of approximately 1.7 million ounces of gold and over 5 million ounces of silver
17th June 2004 Peter Hambro Mining PLC, the London based and mining company traded on AIM, announces that it has signed
a memorandum of understanding to acquire the company that holds the licence for the Ametistovoye Deposit in Kamchatka
located in the Russian Far East. Reserves and Resources The Ametistovoye deposit hosts a C category reserve base of
approximately 1.7 million ounces of gold and approximately 5.3 million ounces of silver. The official reserves and
resources of the Ametistovoye deposit, approved by Russian government Committee on Natural Resources protocol No.324
dated 24 May 1994, were as follows:- I---------------------------------I--------------I------------I I I C1 I C2 I
I---------------------------------I--------------I------------I I Ore '000 t I 1,724.4 I 2,126.1 I I Gold '000
oz I 848.4 I 838.5 I I Gold grade g/t I 15.3 I 12.3 I I Silver '000 oz I 2,241.6 I 3,029.2 I I Silver grade g/t I
40.4 I 44.3 I I---------------------------------I--------------I------------I The feasibility study of the deposit also
shows the possibility of a further P1 category resource of at least 1 million ounces of gold. Additional drilling and
evaluation of the flanks of the deposit will be required to confirm any additional resources. Purchase Price of US$25
million The memorandum of understanding with respect to the acquisition was signed on 31st May 2004 at which time a
deposit of US$200,000 was paid. Conditional upon the satisfactory completion of due diligence, the obtaining of all
necessary corporate and legal approvals and entry into definitive documentation, Peter Hambro Mining will pay a total of
US$25m in cash for the entire issued share capital of the licence holder and for the relevant geological information and
the feasibility study of, the Ametistovoye deposit. Part of the proceeds of Peter Hambro Mining's recent fund
raising will be used to fund this acquisition. Peter Hambro Mining is already in discussions with a number of banks
regarding project finance for the construction of a mine at Ametistovoye. Location The deposit is located in the
Penzhinsky area of the Koryak Autonomous Region (north of Kamchatka). The deposit is linked to the nearest population
centres Tilichiki and Korf by 180km of dirt road. Tilichiki and Korf both have a seaport and an airport, of which the
latter remains open year-round. The population of the area is mainly occupied in the mining of alluvial platinum and
gold deposits as well as in fishing and processing of marine products. Specialists from the Peter Hambro Mining Group
believe that the region is suitable for a mining operation of this type. Kamchatka is a traditional gold mining region
and the income generated by the industry is important to the local economy. The deposit is at considerable distance from
national parks and nature reserves, and in an area with a developing mining industry. An independent environmental
opinion suggests development of the deposit will not have a negative environmental impact in the region which conforms
to Peter Hambro Mining's stated aim of operating to World Bank approved standards. Exploration The deposit was
first discovered in 1968 and covers an area of 11km2. Exploration work on the deposit was conducted until 1994. During
this period the following work was carried out:- a€¢ trenches and pitting 899,625m3 a€¢ core drilling 167,365m a€¢
underground development 13,225m Feasibility Study Ametistovoye has a feasibility study establishing the viability of
exploiting the deposit. A mine with production of c.400,000 tonnes is estimated to require c.US$60-70million, and
forecasts annual gold production of c.150,000 ounces and silver production of more than 300,000 ounces for a period of
8-9 years from the current reserves. The geochemical properties and characteristics of the ore from the Ametistovoye
deposit were studied by laboratory samples, bulk samples and pilot scale testing in research centres in Russia &
Canada. The ore belongs to the same technological type and can be treated using sorption or a gravitation-sorption
process. Estimated recovery is at more than 93% of gold and c.80% of silver. Operations The feasibility study assumes
production using underground mining. Peter Hambro Mining's Omchak team has extensive of experience in underground
mining and it is planned that this team would be involved with the construction, development and operation of
Ametistovoye. The feasibility study suggests mining costs similar to that of the Pokrovskiy Mine, where Peter Hambro
Mining built its first operation in the Amur Region. Commenting on the acquisition, Peter Hambro, Executive Chairman of
the Group said:- "In the year of our tenth anniversary of doing business in Russia it is with great pleasure that
we announce the acquisition of another quality gold mining asset in the Russian Far East. Buying Ametistovoye, a deposit
with substantial reserves and more importantly a feasibility study that demonstrates its significant potential will
facilitate a major advance for Peter Hambro Mining since it will add more readily mineable reserves to our already
impressive gold-in-the-ground portfolio. It also shows, once again, Peter Hambro Mining's ability to find
world-class gold deposits at a cost per ounce well below that paid in the West. Once completed, the Ametistovoye
acquisition will give us mineable reserves at approximately c.US$14 per reserve ounce. Construction of the mine is
expected to commence shortly after the proposed acquisition and we would hope to have the mine in production during
2006. Mining specialists will note that the exploration work that has been done at Ametistovoye - almost 900,000 cubic
metres of trenching, 167 kilometres of drilling and 13 kilometres of underground development - would cost in the west as
much as our total acquisition cost of the deposit. This further exemplifies the number of high quality but low cost
mining opportunities in Russia." Enquiries: Alya Samokhvalova +44 (0) 20 7201 8900 Investor Relations, Peter Hambro
Mining Tom Randell / David Simonson +44 (0) 20 7653 6620 Merlin This information is provided by RNS The company news
service from the London Stock Exchange
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