Hambledon Mining making progress at Kazakhstan gold mine, target price 7p – broker

Hambledon Mining making progress at Kazakhstan gold mine, target price 7p - brokerFairfax has reiterated its ‘buy recommendation for Hambledon Mining (LON:HMB) following a visit to the Sekisovskoye gold mine in Kazakhstan.

Analyst John Meyer said the company is moving ahead with the underground operations while open pit operations are performing well.

The processing plant is currently undergoing a capital refurbishment programme in order to cut processing costs and improve gold recoveries.

Meyer has a 7 pence price target on the stock, providing significant upside to the current level of 1.68 pence.

Underground mining should contribute nearly 50 percent of the 40,000 ounces gold forecast to be produced in 2013.

The analyst said results of bulk stoping trials, with a view to ramping up the mining rate, that are due to start in September should be watched closely for an indication of future developments.

Regarding the open pit operations, Meyer said the amount of ore mined with better grades than initially forecast should be enough to avoid tapping low grade stockpiles before the Central and Northern pits deplete in the first quarter of 2015.

He expects the elevated operating costs to come off from the US$1,209 per ounce level expected for the 2012 full-year to US$887 per ounce in 2013 as the underground mine gains pace and management initiatives to cut processing costs start to pay off.

The remedial works on Tailings Dam #3 are progressing on schedule and should be completed in September, for the processing plant to return to a normal 750,000 tonnes/year operating capacity in October.

Hambledon plans to release an updated JORC resource for the underground mine before the end of the year, with management looking to increase the confidence level of the resource, Meyer added.