Peter Hambro shares higher as gold output beats forecastsadmin
Peter Hambro Mining, one of the biggest gold miners in Russia, said on Monday that gold production had risen 5 per cent to 261,000 ounces in 2006 while realised gold prices increased by 33 per cent to $586 an ounce.
The UK-listed miner said the rise in output had exceeded its expectations and the outlook for 2007 was encouraging, with both prices and production growth looking strong.
Peter Hambro, executive chairman, said questions over the company’s mining licences in Russia ”are now resolved”.
In December 2006, shares in the company lost a third of their value on speculation that the industry regulator in Russia, Rosprirodnadzor, was being used by political interests in a move to push foreign investors out of the country.
That allegation formed part of a wider suspicion that the Putin government wanted to extend state control over the resources sector.
Shares in the company were 4.2 per cent higher at £10.12 in morning trade, but still below the £12 level reached before the regulatory scare hit.
On December 14, the company issued a statement following a meeting with the head of Rosprirodnadzor, saying it had received assurances that the regulator had no intention of pressuring foreign miners to leave but that they must comply with environmental regulations.
While overall production rose 5 per cent, but was 11 per cent higher at the Pokrovskiy Rudnik complex, which accounts for more than three-quarters of output.
This was due in part to better computer modelling of deposits.
The rise in gold prices has made it economic to work lower grades of ore and increase working depths.
That will allow the company to book an increase in high grade reserves of some 200,000 ounces in 2007.
Production at the Pioneer deposit is expected to commence in the second half of 2007.