CUL 0.00% 2.2¢ cullen resources limited

cullen resources

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    Peter Hambro Mining Anticipates Benefits Of New Gold Recovery Plant In Second Half Year.

    The interim results from Peter Hambro Mining provide little in the way of useful comparisons with first half of 2001 as the company was not formed until December 2001 prior to listing on AIM and the group as previously constituted did not produce six month figures to 30th June 2001. Suffice to say that the post-tax profit of US$1.13 million achieved on turnover of US$7.02 million confirms that the company just about held its own during the severe winter in the Far East of Russia when production rates from heap leach operations are hit hard.. It should be noted also that the heap leach problems were exacerbated by the fact that the gold in the lower horizon ore was more tightly bound to the quartz than expected. This meant more crushing and longer residence times, with consequent temporary cash-flow implications. Capital costs on the mill were also somewhat higher than expected so it was just as well that the company obtained all it wanted, and more, by way of funding when it listed.

    PHM will have to make a profit of US$3.27 million in the second half year merely to stand still, but a number of events are working in its favour. First, the consolidated profit to the end of June 2002 reflected only a 55.1per cent interest in the earnings of JSC Pokrovskiy Rudnik, the Russian operating company. This interest was increased to 75 per cent at the end of July and Peter Hambro Mining hopes to increase it further to 97 per cent as soon as possible. Second, the new resin-in-pulp plant was commissioned in July and first gold from this plant was produced as scheduled in the first week of September.

    This new plant will boost recovery from the 53 per cent achieved by heap leach to 92 per cent and, just as important, will smooth out production throughout the year. The company gives an example of 3,858 ounces being produced in the first two weeks of its operation, but it is too early to draw too many conclusions as to 2003 production from this. The heap leach was still operating as the new plant started up, but the contribution from heap leach will fall away as Russia moves on into winter. As a guide, however, the resin-in-pulp plant is expected to average 1,900 ounces per week in the start-up period so the company should be looking at a minimal annual production rate of 100,000 ounces/year with a degree of confidence.

    The feasibility study for the new plant indicated cash costs per ounce of US$130 and this is the figure analysts will have at the forefront of their minds when running a slide rule over the full year’s results. The mining rate was doubled in the first half year so the plant should be running to full capacity and the good news is that the mine life has been increased significantly . At the time of the listing in March the satellite gold silver deposit at Pioneer was estimated by the Amur Geological Commite to have contained gold equivalent of just under 1.5 million ounces which was pretty much in line with the resource at Pokrovskoye of 10.8 million tonnes grading 4.1 g/t gold to contain 1.43 million ozs gold. Since then Federal State Unitary Geophysical Enterprise "Dalgeofizika" has prepared an updated ore resource statement.

    This new resource was based on three portions of the Pioneer strike which covered almost 3.2kms of the trend, to depths of between 60metres and 380aetresm from surface. The deposit is open at both ends, both sides and at depth. Russian category C2 resources, which correspond roughly to the “indicated” category on the JORC code used in the west over, totalled 1.68 million ounces over these three main zones at an average grade of 1.83g/t and at a cut-off of 0.6g/t. The Russian P1 class of resource, which is equivalent to the “indicated” category, rose sharply to 2.53 million ounces at the same grade. And there should be more to come as old and new drilling data was used and it looks as if previous estimates of thickness and grade were understated..

    Peter Hambro Mining has therefore emerged from its first few months as a public listed company in good shape. The share price performance may be a bit disappointing , but when equity markets are in this degree of disarray babies get washed out with the bath water. What the company now has to do is continue to live up to its promises and use its established relationships in Russia to come up with new gold projects.
    ..........................well this is something i had picked up while surfing...............thought you long term holders might get a read out from this.......gosh
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