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Hambledon Mining – Solid First Quarter Results and New Infrastructure on the Way. Speculative Buy with an 8p Target

Releasing its quarterly report on the 12th of April, Hambledon Mining saw tremendous progress compared to the same period last year in what is undoubtedly its most challenging operating period. In addition to improving open pit production, the company is on track for extracting gold from its underground mine by the end of the year and thus further enhancing its production figures this time next year.

Hambledon again experienced some severe weather conditions in the 3 months to 31st of March 2011, but the combination of newly installed equipment (including the replacement of key crushing and screening equipment) and the implementation of phase 1 of its winterisation programme saw year on year quarterly output figures improve across the board at Sekisovskoye’s open pit. Compared to the 3 months to 31st March 2010, this quarter’s milled tonnes were up 36.2% to 141,317, gold grade up 20.8% to 1.16g/t, contained gold up 64.2% to 5,268 ounces, gold recovery up 4.5% to 84%, recovered gold up 72.5% to 4,449 ounces and recovered silver up 16.8% to 7,510 ounces. Production in 2011 continued to come predominantly from the main open pit with a modest contribution from the north pit.

Progress on the underground deposit’s access decline continued as planned, while underground equipment purchases began with a Load Haul Dump loading unit. Two short listed vendors are currently bidding for the five year plant, machinery and maintenance agreement. Existing contractors will be employed for construction work, but ore extraction will be performed by Hambledon’s own fleet and staff. Engineers from Golders Associates have commenced their detailed underground studies for expanding the project and will benchmark their analysis against other Kazakhstan mines.

The first 8 holes from Hambledon’s underground drill programme were also recently announced with average in situ grades of 5-6 g/t gold and 6-7 g/t silver. Not only do these results support the current JORC resource, but early indications suggest good resource expansion possibilities.

On the infrastructure front, Hambledon raised £8.6 million net through the issue of equity at 4p per share in March. £2.6 million will be used to install a plant waste management system at Sekisovskoye, £1.3 million for upgrading some of the plant process systems, £1.1 million to establish dual high voltage electrical infrastructure to the project site, and £0.6 million for the expansion of engineering workshops. The remaining money will be used for corporate development and accelerating underground exploration work. Already budgeted for is construction of the third tailings impoundment facility which is on track for completion in the third quarter of this year. In addition, the forth tailings facility has been designed and construction will follow on from completion of number 3.

Having produced impressive year-on-year quarterly gains at the beginning of 2011, Hambledon will do well to replicate these advances during the remainder of the year. However, with new infrastructure investment and the prospect of underground mining by the end of the year, there is every reason to believe the company can replicate these results. Speculative buy with 8p target price.

Financial Records & Forecast Table

^ Excludes cost of developing underground mine at Sekisovskoye