Kazakh gold miner Hambledon plans to bring down cash costs
June 15. Platts
By Ben Kilbey
Hambledon Mining’s key objective in the near term is to get its underground gold operations in Kazakhstan up-and-running in order to bring down inflated cash costs, CEO Tim Daffern told Platts Wednesday.
Cash costs per ounce are above $1,000/oz at present due to low ore grades and a 6% tax imposed by the Kazakhstan government. Ore grades at the company’s open face pit are around 1.2 g/mt while once the underground operations come on stream, scheduled for the start of 2012, this will bring on stream grades of around 4.2g/mt, according to the CEO.
Hambledon operates the Sekisovskoye mine in Kazakhstan, near the Russia and China borders. Last year, the miner produced around 24,000 oz of gold and aims for 25,000 oz this year.
Daffern said that bringing the underground resource into fruition will “start to change the business plan. Tonnage will be up and gold production will be up.”
Regarding cash costs, with the underground mine penciled to be fully operational in 2016-with a forecast output of 100,000 oz-Daffern hopes for costs as near to $700/oz as possible. In 2012, costs are aimed at $800/oz.
The target extraction rate at the Sekisovskoye mine is 850,000 mt/year by 2016. The open pit has a life span to Q3 2014. Since start up in December 2010 the mine has produced 55,006 oz of gold.
Regarding operating in Kazakhstan the CEO said that tax and mine laws are “well understood” and that working in the country is straightforward. He noted that mining laws are looking “healthy for the way forward.”
Corporate tax has already been reduced to 20% from 30% and is predicted to be cut by a further 5% going forward. Charles Zorab, head of corporate development at Hambledon, told Platts that the country is “genuinely keen to attract more foreign money.”
RESEARCHING POSSIBLE ACQUISITIONS
Regarding the possibility of purchases, or indeed being purchased, Daffern said he did not rule this out. He said that the company is constantly looking to gain knowledge and that in the next 18 months an acquisition could be possible.
“We are not buying a mine right now,” he said.
Platts asked whether Hambledon had given thought to the possibility of being bought up by a Chinese miner-due to the proximity and the hunger China has for gold, currently the world’s biggest producer and second-largest consumer after India. Daffern said it crosses his mind but would be a long way out, more in line with when the underground operations are fully in place.
Hambledon is debt free with solid credit lines and is currently in various talks to strengthen these lines to be used when needed, the CEO said.
Regarding the business he said that “we are looking to build a pipeline slowly and steadily, developed with minimum debt. The underground operations are key at present.”
Gold fixed Wednesday morning at $1,517.75/oz.