Boosted by the over-weekend gold price performance, the announcement of positive operating results for 2008 today saw Peter Hambro Mining (PHM)'s stock price move up sharply. The company is Russia's second largest gold miner, after Polyus Gold.
The results announced today are unaudited preliminaries for the 2008 calendar year and show a 36 percent rise in attributable output to 393,600 oz, which is close to the top end of the company's production target for the year. For the current year PHM's target output is again substantially higher at between 460,000 oz and 510,000 oz as the second line of the Pioneer plant is due to come on line in the second half of the year
In 2008, PHM reports output growth up 13 percent at its flagship Pokrovskiy mine and the commencement of output at Pioneer which added 72,900 ounces to the total. The less significant alluvial operations yielded 22,700 ounces, up 38 percent, but output from jv operations was down 15 percent at 30,800 ounces.
Mining costs were affected by both rouble devaluation against the UIS dollar making costs of some equipment and consumables more expensive, but overall, with the fall in oil price and some elements of local costs stabilisation, the rouble's continuing devaluation against the dollar means that in dollar terms costs may well fall in 2009 despite a continuing high level of inflation in Russia.
The Group's average realised gold sales price of US$845/oz during 2008 was 26% higher than the average price of US$668/oz achieved in 2007. And if gold continues to perform well, as many expect, in 2009 the profit margins of 2008 may well be able to be maintained.
Looking a year or more ahead, development at the Malomir deposit remains on-track with production due to commence in the second half of 2010. Construction has commenced, all technological decisions have been made and the construction plans and the commissioning of the deposit have been finalised.