A strategic review of Hambledon Mining’s Sekisovskoye mine in eastern Kazakhstan has confirmed that drawing up a new mine development plan will significantly improve the company’s prospects. The new blueprint is designed to better exploit existing infrastructure and the large resource base.
The review revealed a significant increase in management’s estimate of underground resources from 1.8 million ounces to around 6 million ounces of gold with an average grade of 5.34 grams/tonne. This follows more than 53,000 metres of underground drilling, with a full independent Competent Person’s Report being prepared to be published in early 2014.
Hambledon says the existing processing plant, surface and underground infrastructure, along with an underground operating transport decline, combine to support a “robust economic case” for expansion of underground mining operations.
This includes a 22-year mine life to generate around US$1 billion in free cash flow, with expected production of 27,500 ounces for 2013, which is forecast to rise to more than 100,000 ounces a year by 2017 – a compound annual growth rate of 35%. Cash costs are estimated to be around US$500 per ounce, underpinning an economically viable operation even if the gold price was to fall further.
The total remaining capital needed to finish the mine’s development is estimated at US$130 million, with the bulk of that being spent over the next three years, and will be funded through internally generated cash flow, debt, and, if appropriate, equity.
Hambledon’s chief executive Aidar Assaubayev says, “Following a process that began a year ago, the board and senior management of Hambledon have developed a long-term plan with the goal of becoming Central Asia’s leading gold miner in terms of both production and reserves.”
The company has been mining from an open pit and operating an 850,000 tonnes/annum treatment plant since 2008. Underground mining initially began in late 2011 but was temporarily discontinued in October 2012. The underground mine was restarted in mid-June 2013 under the leadership of the new management team appointed by African Resources. In December 2012, African Resources, an investment group, completed the purchase of a 60% holding in the company through a partial tender offer.