Final Results

RNS Number:7490X
Hambledon Mining PLC
05 June 2007


PRESS INFORMATION                                                  5th June 2007
                              HAMBLEDON MINING PLC

                                 Final Results

(All references to "#" are to the British Pound and "ounces" are to troy ounces)

Hambledon Mining plc ("Hambledon" or the "Group" or the "Company"), an
AIM-listed mining and exploration company developing precious metal deposits in
Kazakhstan, announces its results for the year ended 31 December 2006.

Highlights

   *Processing facility nearing completion
   *Initial annual planned production 40,000oz
   *Gold content 18% higher than predicted from geological model
   *Total Inferred & Indicated Resource as at Sept. 2006: Au 2.5m ozs; Ag
    3.6m ozs
   *Exploration activity continues
   *Ognevka processing plant acquired January 2007, expected on line late
    2007
   *#9m fundraising completed January 2007 - project now fully funded


Nicholas Bridgen, Chief Executive of Hambledon Mining plc, commented:

"We have made excellent progress towards completion of the processing facilities
at Sekisovskoye and we are now on the brink of joining the ranks of gold
producing companies. It is gratifying that, in spite of the well publicised
levels of inflation affecting the world's mining industry, the capital costs are
expected to be within the budget set in June 2006.

"Evidence from grade control sampling shows that the contained gold being
encountered is some 18% higher than that predicted from the geological model and
this obviously impacts on our projected profitability.

"The acquisition of the Ognevka processing plant gives the Company diversity of
operations and a more robust financial future. Several options for the further
development of Ognevka are being studied and we believe that it has the
potential to become a highly significant contributor to Group profits."


Enquiries

Hambledon Mining plc
Nicholas Bridgen, Chief Executive                     Telephone + 7 701 733 8915
                                                                 [phone]
Bankside Consultants
Michael Spriggs / Michael Padley                      Telephone [phone]

Seymour Pierce
Nicola Marrin                                         Telephone [phone]


Note to editors

Hambledon Mining plc is an AIM-listed gold mining and exploration company which
is developing the Sekisovskoye gold deposit and owns the Ognevka processing
plant, both of which are close to Ust Kamenogorsk in East Kazakhstan.

At Sekisovskoye, the Company is mining from an open pit and constructing an
850,000 tonnes per year treatment plant. Production from the open pit will
average over 40,000 ounces per annum. After the start of open pit processing,
the Company plans to develop the much larger underground resource which is
expected to lead to a combined production rate of around 100,000 ounces per
year.

The Ognevka processing plant is being refurbished and will produce concentrates
containing gold, silver, copper, iron and coke from the retreatment of zinc
smelter residues.



CHAIRMAN'S STATEMENT


Review


Since my last report on 20 June 2006, we have made excellent progress towards
completion of the processing facilities at Sekisovskoye, and we are now on the
brink of joining the ranks of gold producing companies.


Mining started in June 2006, focused initially on the mining of waste for use in
the construction of the tailings dam but now including the creation of a
pre-start up stockpile of ore. This part of the operation is performing well and
generally exceeds the planned mining rates. At the time of writing, over 1.1
million cubic metres of material had been moved.


We are now commissioning the crushing plant and the remainder of the process
plant is nearing completion. The construction team has overcome considerable
delays in the delivery of some of the major equipment, including the two main
ball mills, the first of which arrived on site nine months late and the second
of which is now expected in mid June. However, it is gratifying that in spite of
the well publicised levels of inflation affecting the world's mining industry,
the capital costs are expected to be within the budget set in June 2006. This
has been achieved partly by bringing a substantial portion of the work in house
rather than using subcontractors.


Of major significance to the Company was the further evidence that the contained
gold is some 18% higher than that predicted from the geological model. Equally
important has been the verification of the style of mineralisation contained in
the model by the much closer spaced sampling of the grade control drilling
compared with the previous exploration. The verification of the model allows us
to be more confident in our mine planning and, of course, the higher gold
content impacts considerably on our projected profitability.


We acquired TOO Ognevka, owner of the Ognevka processing facility, in January
2007. This facility has two main production lines. The first is a 350,000
tonnes per year crushing, grinding and flotation circuit which has been adapted
for the treatment of residues from zinc smelters which contain high values of
copper, gold, silver, iron and carbon. The rehabilitation of this operation,
which is currently shut-down, is ongoing. The second line is a 200,000 tonnes
per year gravity concentrator formerly used to treat tantalum ore from a
now-closed mine which used to operate at the site. Several options for the
further development of Ognevka are being studied including the expansion of the
zinc residues treatment facility and the re-treatment of existing tailings which
still contain commercial quantities of feldspar, lithium and beryllium as well
as other by-products. This acquisition now gives the Group diversity of
operations and a more robust financial future than could be guaranteed from any
single operation


In April this year, we welcomed Baurzhan Yerkeyev to the board as an Executive
Director in charge of operations. Baurzhan has been playing an increasingly
important role in the management of the Group, having originally been our Chief
Geologist and more recently the Director of all the Sekisovskoye operations. He
is a Kazakh national, with long experience of working with western companies.
Meanwhile, Alzhan Shomaev has decided to step down in order to pursue other
business opportunities. Alzhan was a founding partner in the original company in
1998 and has provided invaluable help in a non-executive capacity since the
Company's flotation in June 2004. We wish him every success for the future.


Outlook

Commissioning of the Sekisovskoye process plant has started with the crushing
facility this June and will progress through the milling and gold recovery
sections throughout July. Legislation in Kazakhstan requires certain reagent
handling storage and mixing equipment to have been built and inspected before
applications can be made for the appropriate licences. Whilst no delay is
expected, it is impossible to be exact about the date of first production.


Once production starts, it is expected that the design capacity of 850,000
tonnes per annum will be reached fairly quickly. The grade of gold to be treated
in the first year is slightly lower than the predicted average for the whole
open pit, but this is likely to be compensated by the higher gold grades which
are now being encountered in the grade control sampling. Production is therefore
likely to be around the predicted average annualised rate of 40,000 ounces per
year. As the open pit deepens, the grade will rise so that by the second and
third year, production from the open pit is likely to be around 50,000 ounces
per annum on the same basis.


Development of plans for the underground mine have also been progressed.
Underground production is likely to start later next year and increase
progressively to substitute for the lower grade open pit feed, thereby extending
the open pit life. Detailed design and scheduling has not yet been completed but
conceptual plans indicate that production is expected to rise to around 100,000
ounces from the existing plant, although some addition to milling and leach
capacity is likely to be required. Output may rise to 150,000 ounces per year
after suitable plant upgrading and mine development. Further increases may be
possible given successful exploration in the surrounding areas.


We expect Ognevka to start production before the end of the year. Whilst we hope
for a very fast recovery of our investment, the operating performance is not yet
proven and it would be safer to wait for actual results before making any
predictions. Nonetheless, the many opportunities for future development that we
are currently studying lead us to believe that Ognevka has the potential to
become a highly significant contributor to Group profits.


It was unfortunate that the negotiations for the proposed acquisition of a
second gold mining company that were in progress in the early part of this year
could not be completed. However, the Company's current commitments are now fully
funded and we will be able to utilise our strong financial position together
with our broad experience of Kazakhstan to acquire new expansion opportunities
and further enhance shareholder value.


I would like to thank all of our employees for their hard work and commitment in
progressing the development of Hambledon's first mine. We look forward to the
next twelve months with great optimism.



George Eccles
Chairman








REVIEW OF OPERATIONS


Sekisovskoye


Group structure

In mid-2006 the Group formed a new local company, TOO Altai Ken-Bayitu ("AKB"),
to conduct the ore processing activities at the Sekisovskoye minesite. This
further allows the facilities at Sekisovskoye to be used for custom processing
of ores sourced externally while providing some longer term tax benefits for the
Group. AKB owns the mill processing facilities and related infrastructure, while
Sekisovskoye Mining Company ("SMC") holds the mining rights and owns the mining
fleet, the main powerline and substation, the tailings facility and the
laboratory. Exploration activities are also carried out by SMC.


Permitting

Following negotiations with the Kazakhstan Ministry of Energy and Mineral
Resources in October and November 2006 and payment of the Commercial Discovery
Bonus in December 2006, SMC received a supplement to our subsoil use agreement
which allows exploitation of the Sekisovskoye deposit through open pit and
underground mining and processing activities. The licence fixed our royalty
payment at 1% of revenue.

SMC has received numerous additional licences and permits for surface land
access and use, ecological clearances, water supply, mine planning and design,
blasting, as well as a licence to conduct design and construction activities
using SMC in-house personnel and resources. The latter has become very important
for both time and cost savings.

AKB has received licences and permits from the East Kazakhstan Water Authority,
Land Control Department, Emergency Situations Department, Fire Authority, and
Sanitation & Disease Control Department and has submitted an overall Safety
Declaration which was recently approved by all departments.

Outstanding licences and permits include: 1) Overall Environmental Approval
after submission of final, life of mine, tailings storage facility (TSF) design,
2) the mineral processing licence for AKB and 3) approvals for use of hazardous
and poisonous materials.


Status of plant construction

The AKB 850,000 tonnes per annum carbon-in-pulp process plant and related
facilities are nearing completion after 3 years of planning, design and
construction. Site works began in earnest in June 2006. Delays have been
encountered mainly in mill building construction due to the poor performance of
local contractors and in the receipt of the two 1.2 MW ball mills which were
fabricated in Russia. These delays added 2 to 3 months to the start-up schedule.

Over the period, site access roads were constructed and area roads were
upgraded. A 5.5km 110 kV high voltage powerline and a 16 MW substation have been
built and connected. A long-term electricity supply contract has been negotiated
with Kazakhmys Corporation. The site office building purchased in 2005 was
upgraded and fitted out for our mining, survey, geology, process, engineering,
maintenance, exploration and administration personnel. We also set up an
analytical laboratory which is now in operation on exploration and grade control
samples.

At the initial phase of construction, the site area was cleared and over 320,000
m3 of topsoil was stockpiled. This was no mean feat as the area at the minesite
has topsoil over 2 metres thick in places. Several contracts were let for the
various construction activities. The crushing plant is a 220 tonne per hour,
3-stage plant that will be commissioned very shortly. It was built mainly by a
local group from nearby Semipalatinsk using crushing and screening equipment
sourced from China.

The main mill building construction contract was awarded to a local building
contractor. At this time, all equipment foundations have been completed and the
mill building itself is nearing completion. The main leach tanks have been
installed and structural steel work platforms, pipe racks, etc. are being
fabricated. All process equipment items have been ordered, with all major and
the majority of minor equipment items received or currently in transit. The main
stores building has been completed and is now being filled with new equipment,
spare parts and other consumables. All other buildings are in an advanced
construction phase. Overall, the mill facility is expected to be ready for an
August start-up.

At the TSF, the first cell earthworks are complete and ready for geomembrane
lining in early July. Preparations for the second cell, including clearing of
topsoil, excavation of underdrain trenches, and initial wall construction are
also well advanced.

Process equipment has been sourced from a mix of Western and local suppliers.
Key items include a Falcon concentrator (Canada), Kemix agitators and inter-tank
screens (South Africa), Warman slurry pumps (South Africa), Grundfos solution
pumps (Germany), Symons crushers (Chinese manufacture), Ramsey belt weigh scales
(supplied from Holland), Weir cyclones (UK), Schenck vibrating screens
(Australia), TyazhMash ball mills (Russia), PromSnabComplekt blowers (Russia),
Danfoss vari-speed controllers (Denmark), and ABB and Schneider electrical
switchgear (Italy and France). All fabrication for tanks and structural steel
has been conducted by local groups. In addition, supply contracts for reagents,
grinding balls and other consumables have all been finalised.


Mining operations

The mining department has accomplished much over the last 12 months, including
developing the open pit mine and related control systems, providing assistance
in obtaining key licences and approvals, preparing and submitting numerous open
pit mine design documents and short- mid-, and long-term mine plans while
providing key assistance in plant construction and earthworks. In addition, they
have prepared plans and designs for rapid development of the initial phases of
underground mining to access the near-surface, high grade Orebody 11 at the west
side of Sedukha Hill (the main deposit).

The initial mine plan was based on an orebody model, developed in Datamine in
2005, which was optimised using Whittle4D software to produce an optimum pit
shell. A 4,000 metre underground drilling programme was completed in early 2006
which resulted in the development of a new orebody model. In order to maintain
use of existing underground development, the pit depth was restricted to the 340
level. Optimisation on this basis produced a pit shell from which the current
mine design was developed. The design is for an open pit containing 4.2 million
tonnes of ore at an average grade of 1.59 g/t Au and 2.58 g/t Ag, for a total of
213,000 contained ounces of gold (equivalent). The mine strip ratio is 4.7 to 1.
At an ore processing rate of 850,000 tonnes per year, this gives a mine life of
5 years. However, development of the higher grade underground mine begins in
2008 and should allow substitution of this material on an increasing basis for
the following years.

A study was carried out in 2005 to determine the best way for mining to proceed.
Quotes were obtained from local mining contractors while a "first principles"
estimate of the unit mining cost was conducted. This study showed that there
were significant cost savings to be generated by purchasing the mining fleet and
carrying out the mining on an owner-operator basis. The decision to purchase our
own mine fleet was made in November 2005 and orders were placed immediately.

The majority of the mining fleet was delivered over the period of May to
September 2006, including an Atlas Copco ROC L7CR blasthole drill rig, two
Hitachi Zaxis 850H excavators, six 45-tonne Belaz haul trucks, a Dressta 534C
front-end loader, a XCGM TY 320B dozer (larger than a Cat D-8R), a Xuzhou GR215
grader plus various support vehicles including a water truck, service truck,
sheepsfoot compactor, and 25-tonne crane. Two additional Belaz trucks and
another dozer were received in early 2007.

Mining activities were initiated in June 2006 and have continued throughout the
winter months, with mining targets exceeded in all but one month to May 2007.
Blasting was initiated in November 2006 using a local contract blasting group
and is continuing as required.

In addition to providing support for the construction of the mill facilities,
mining-related activities over the period included construction of the main mine
haul roads, the ROM pad for ore storage (100,000 tonne ore storage capacity),
sedimentation control dams, and foundations for the main waste dump. Current
activities include construction of the main TSF walls.

The majority of the mining so far has been waste material for construction,
although mining of ore for stockpiling ahead of commissioning of the process
plant has now started. The North Pit cutback is nearing completion and the main
access road to the top of Sedukha Hill (the Main Pit) was completed in
preparation for ore mining in this area which began in June 2006. Both areas
will be mined simultaneously until early 2008, whereupon North Pit mining
activity will be suspended until mining at Sedukha reaches the same level and
the two pits will combine to the ultimate depth.

Up to the end of May 2007, 0.73 million m3 of waste rock have been mined plus
another 0.41 m3 of in situ materials were moved as part of construction
activities (mainly topsoil and subsoils). Ore mined to the end of May 2007
totals some 35,000 tonnes, with additional small stockpiles of various grades
left over from previous trial mining and underground exploration activities.

The formal mine workshop and related facilities are nearing completion adjacent
to the mill facilities. Fuel and other mining supplies and maintenance contracts
have been put in place. Additional fleet items were recently ordered, including
a second blasthole drill rig and a small civil earthworks fleet for on-going
tailings dam construction. This fleet is expected to save some $3 million in
contractor fees over the life of the open pit operation.

During the course of setting up the on-going mining activities, our geology team
have collected trench samples and analysed blast hole drill cuttings to develop
an effective grade control strategy. The results of the sampling were put into
the mining and orebody models with a perhaps not surprising result: the gold
content in the ore zones examined are showing an 18% increase as compared to the
previous geological model. This is consistent with previous drilling programmes
where recent drilling has revealed increases in contained gold of 17% to 21%
compared with results based on Soviet drilling. Our independent geological
consultant has verified the result and believes it is now likely that the
increase will apply to the entire deposit


EXPLORATION


Exploration activities continued throughout the year. After completion of a
contract drilling programme in September 2006, our Diamec underground drill rig
was converted to a surface rig and continued drilling throughout winter. In
total some 3,300 metres of diamond core were drilled from 1 May 2006 to 30 April
2007. This represents 35 drill holes, 26 of which were drilled in the area of
the Tserkovka deposit. The remaining holes were drilled around the base of
Sedukha Hill as part of an investigation into extensions of the known ore zones
- in particular around Orebody 11 which is the initial target for underground
mining.

At the time of writing, 189 sample results have been received from the surface
Diamec drilling programme that is targeting updip extensions of modelled ore
zones along the upper western fringes of the Sekisovskoye deposit. Initial
assessment of the gold grades with the modelled resource supports the integrity
of the model with a number of zones showing updip extensions, including Orebody
11. So far, a total of 872m of Diamec drilling has been completed and any
remodelling will be undertaken after the conclusion of the drilling and the
assessment of the results.

Overall, the Tserkovka drilling has been less encouraging. The last batch of
results, just received, represent five inclined drillholes with grades ranging
from 0.01g/t to 3.04g/t Au. The best intersection is seen in Z184 with drilled
thickness of 2.1m grading at 2.1g/t Au. The continuity of this zone remains open
and a full assessment is required. It is possible that this mineralisation is an
upper expression of deeper mineralised breccias and a follow-up drilling
programme may be warranted to target potential at depth. There are several
prospective targets for exploration within the lease planned for this current
season. Currently, there is one contract drill rig on site plus the Company's
Diamec unit. This coming season's drilling target is 2,000 metres.



MINERAL RESOURCES


Resource statement


This mineral resource estimate for the Sekisovskoye deposit has been prepared
under the JORC Code and is unchanged since the update reported in September
2006.

 Location   Resource    Tonnes   Au g/t  Contained   Ag g/t  Contained   Au g/t
                                                                         Cut-off
            Category  (millions)           Metal               Metal
                                          Au oz *             Ag oz *
 Open pit   Indicated     9.55    1.8      552,671    3.0      921,119     0.5
   area     Inferred      6.06    1.8      350,700    2.0      389,667
            (b)
Underground Indicated     2.21    5.1      362,371    6.2      440,529     2.0
            Inferred      7.16    5.2    1,197,036    7.1    1,634,415
            (b)
 Marginal   Indicated     3.40    0.7       76,519    1.4      153,037     0.5
underground
    (a)     Inferred      0.96    0.6       18,519    1.2       37,038
  Totals    Indicated    15.16    2.0      991,561    3.1    1,514,685
            Inferred     14.18    3.4    1,566,255    4.5    2,061,120
    Total   Indicated    
            &
            Inferred     29.34    2.7    2,557,816    3.8    3,575,805


*Troy oz = 31.10348grammes
(a) underground low grade material associated with high grade gold zones.
(b) includes resources that have been defined beyond the current limits of the
grade model. Note: "Inferred" resources cannot be used for ore reserves until
they have been upgraded.


The updating of the resource estimate (announced in September 2006) was based
upon the analysis of the Diamec drilling results from the underground 441m level
and the remodelling at that time was confined to the open pit area at +250m
elevation. There was a slight increase in contained gold within the "indicated"
category but lower in the "inferred" low confidence category. The Diamec
drilling supported a better understanding of the gold distribution trends and
continuity, and the model reflected this greater confidence. This model update
contained 244 separate gold zones indicating the complexity of the gold
distributions above the 0.5g/t Au cut-off level. This complexity was also
exhibited by the occurrence of additional gold intersections that could not be
modelled because of limited continuity problems and which could be expected to
add an additional 6% of contained gold within the planned open pit.


Current ongoing assessment of the grade control sampling basically confirms the
overall spatial distribution style of the mineralised zones, as delineated in
the resource model. It also confirms that gold distributions can be quite
complex locally. An initial blast-hole grade sample model showed a contained
gold increase of 18% compared with the resource model and supports earlier
statistical indications. In light of this result, and from a recent graphical
interactive assessment of additional grade control sample results, we should
anticipate that this positive trend would continue for the resource as a whole.
This increase in gold is believed to be associated with the relatively poor core
recoveries from the historical Soviet drilling, compared with the results from
Hambledon's drilling using modern hydraulic drill rigs.


The resource model was last updated in September 2006. It would be premature at
this stage to further update the model in respect of the additional information
being assessed from the grade control sampling due to the relatively small
tonnage and, therefore, its negligible impact on the overall model.


Results so far from the exploration of the Tserkovka licence area have been
discouraging, but it is quite possible that some of the declared Soviet-based
resources totalling 740,000 ounces of gold in the C2 and P1 categories could be
categorised under the JORC Code after additional target results and assessment.


Reserve estimate


This ore reserve estimate for the Sekisovskoye open pit deposit has been
prepared under the JORC Code.

              Reserve   Tonnes         Contained         Contained      
             Category (million)          Metal             Metal       Au g/t
  Location                      Au g/t   Au oz    Ag g/t   Ag oz       Cut-off
  Open pit       
    area     Probable    4.19    1.6    213,352    2.6    346,665         0.5
Underground  Probable    0.83    5.1     13,384    7.4     19,615         0.2
     Total                              226,736           366,280


*Troy oz = 31.10348grammes


The Sekisovskoye Open Pit ore reserve model is based on the ordinary kriging of
the mineral resource model using a 0.5grammes per tonne cut-off, taking into
consideration the expected dilution and losses. In the absence of underground
mining considerations, Whittle optimisations would have resulted in a pit shell
containing 7.25 million tonnes of ore representing a conversion of 76 per cent
of the indicated resource to probable reserve in this area. However, development
of this pit shell would have resulted in the loss of the existing underground
infrastructure and made the process of bringing the underground operation into
production much more difficult and on a much longer timeframe. It has therefore
been decided to leave the existing 320 level intact and access this level from a
decline developed from outside the pit limit. This will allow the western ore
bodies to be mined from underground concurrent with the open pit and other ore
zones below the pit bottom at the 340 level, which might otherwise have been
included in the open pit mine plan.

The resultant reserve estimate is calculated by applying mining costs, mining
dilution (4 per cent) and recoveries (97.5 per cent) to that portion of the
Indicated Resource falling entirely within the optimised open pit design. The
area of this open pit reserve is contained within the mineral resource as
reported above.

The Sekisovskoye underground ore reserve has been determined from the mine
design work carried out as a part of the approval of the General Resource
Estimate by the Kazakh authorities using a 2.0grammes per tonne cut-off. The
General Resource Estimate covered both the open pit resource and underground
resource. Mine designs were therefore required for both the open pit and the
underground areas. The underground design was carried out in detail on the
resources from Elevation 250 up and in less detail in the lower areas. The
design on some of the orebodies, notably Orebody 11, included stope design down
to detailed stope blast ring design. This level of design and financial analysis
has allowed for the ore tonnages in these orebodies to be classified as a
probable reserve. It is anticipated that as further detailed design and
financial evaluation is carried out on the indicated resources in these areas
then these too will be convertible to reserves.


The underground reserve estimate is calculated by applying mining costs, mining
dilution (8 per cent) and recoveries (96 per cent) to that portion of the
Indicated Resource falling entirely within the stope design. The area of this
underground reserve is contained within the underground mineral resource as
reported above.


Qualified Person

These resource and reserve estimates have been prepared by Roger Rhodes BSc,
MSc, MIMMM, independent geological consultant with Computer Resource Services.
He has over 35 years of relevant experience and is a qualified person for the
purpose of reporting resources under the JORC Code and the AIM rules.











Consolidated profit and loss account
For the year ended 31 December 2006



                                                            2006          2005
                                                                        restated
                                               Notes        #000          #000

Administrative expenses                                     (774)         (846)
                                                        ----------   -----------
Operating loss                                              (774)         (846)
Net interest and similar items                                94           249
                                                        ==========   ===========
Loss on ordinary activities before and                               
after taxation retained for the year                        (680)         (597)
                                                       ===========  ============

Loss per ordinary share (UK pence per share)
Basic                                             3        (0.19)p       (0.24)p
Diluted                                           3        (0.19)p       (0.24)p


All results are derived from continuing activities.



The Company has taken advantage of Section 230 of the Companies Act 1985 not to
publish its individual profit and loss account.











Consolidated balance sheet
31 December 2006

                                                        2006              2005
                                                                        restated
                                                        #000              #000

Fixed assets                                             152                52
Intangible assets                                     10,416             3,060
                                                    ----------       -----------
Tangible assets                                       10,568             3,112
                                                    ----------       -----------

Current assets
Stock                                                    201                 -
Debtors                                                  165               213
Cash at bank and in hand                               4,352             4,021
                                                    ----------       -----------
                                                       4,718             4,234
                                                    ----------       -----------
Creditors: amounts falling due within                               
one year                                               (503)              (444)
                                                    ----------       -----------
Net current assets                                     4,215             3,790
                                                    ----------       -----------
Provisions for liabilities                              (789)           (1,127)
                                                    ----------       -----------
Net assets                                            13,994             5,775
                                                    ==========       ===========
Capital and reserves
Called up equity share capital                           366               262
Share premium account                                 16,690             6,820
Merger reserve                                          (148)             (148)
Accumulated losses                                    (2,914)           (1,159)
                                                  ------------      ------------
Equity shareholders' funds                            13,994             5,775
                                                  ============      ============





These financial statements were approved by the board of directors on 4 June
2007 and signed on its behalf by





Nicholas Bridgen
Chief Executive








Consolidated cash flow statement
For the year ended 31 December 2006

                                                           2006           2005
                                                           #000           #000
                                                       ----------    -----------
Net cash outflow from continuing                                  
operating activities                                     (1,311)          (889)
                                                       ----------    -----------
Return on investments and servicing
of finance
Interest received                                           280            150
Interest paid                                               (24)           (21)
Miscellaneous non-operating income                            -             17
                                                       ----------    -----------
                                                            256            146
                                                       ----------    -----------
Capital expenditure and financial
investment
Payments to acquire intangible fixed assets                (100)          (988)
Payments to acquire tangible fixed assets                (8,487)          (277)
                                                       ----------    -----------
                                                         (8,587)        (1,265)
                                                       ----------    -----------
                                                       ----------    -----------
Net cash outflow before financing                        (9,642)        (2,008)
                                                       ----------    -----------
Financing
Issue of ordinary share capital in the year                       
(net of share issue expenses)                             9,974          4,813
Share issue expenses relating to previous years               -            (47)
                                                       ----------    -----------
                                                          9,974          4,766
                                                       ----------    -----------
                                                       ----------    -----------
Increase in net cash in the year                            332          2,758
                                                       ==========    ===========





Analysis and reconciliation of net funds

                                                        Net
                             1 January 2006        Cashflow     31 December 2006                                      
                                       #000            #000                 #000

Cash at bank and in hand            4,021             331                4,352
Debt due within one year             (303)              1                 (302)
                               ------------      ----------       --------------
Net funds                           3,718             332                4,050
                               ============      ==========       ==============








Consolidated statement of total recognised gains and losses
For the year ended 31 December 2006



                                                         2006             2005
                                                                        restated
                                                         #000             #000

Loss for the financial year                              (680)            (597)
Share based payment                                        32               10
                                                     ----------      -----------
Currency translation differences on foreign                         
currency net investments                                (1,107)               -
                                                     ==========      ===========
Total recognised losses relating to the                           
year                                                   (1,755)            (587)
                                                    ===========     ============



Reconciliation of movements in equity shareholders' funds
For the year ended 31 December 2006



                                                          2006            2005
                                                          #000            #000

Total recognised losses                                 (1,755)           (587)
New capital subscribed (net of costs)                    9,974           4,813
                                                      ----------     -----------
Net increase in equity shareholders' funds               8,219           4,226
Equity shareholders' funds - start of year               5,775           1,549
                                                      ----------     -----------
Equity shareholders' funds - end of year                13,994           5,775
                                                      ==========     ===========








NOTES

1   Basis of presentation and statutory accounts


The financial information presented does not constitute statutory accounts as
defined in Section 240 of the Companies Act 1985 as amended. The results have
been extracted from the consolidated financial statements of the Company for the
year ended 31 December 2006.


The financial information contained herein has been prepared in accordance with
all relevant financial reporting standards. The accounting bases and policies
are applied on a basis consistent with those set out in notes 1 and 2 in the
Annual Report and Accounts for the Group for the year ended 31 December 2005.
From 1 January, 2006 the Group has adopted Financial Reporting Standard 20,
"Share-based payment" as set out in note 2.


The Company's annual report and audited accounts for the year ended 31 December
2006 are being sent to shareholders and delivered to the Registrar of Companies
in due course. The annual report will contain complete notes to the consolidated
financial statements.


2   Change in accounting policy and comparatives for share based payment.



The Group has adopted Financial Reporting Standard 20 ("FRS 20"), "Share-based
Payment" which is effective for accounting periods commencing on or after 1
January 2006. Prior to the adoption of FRS 20, the Group did not recognise any
charge or credit in its profit and loss account in respect of any grant of
equity instrument. The Group had not granted any equity instruments prior to 7
November 2002, and therefore FRS 20 has been applied to all grants of equity
instruments that had not vested as of 1 January 2006.


The Group issues equity-settled share based payments in the form of share
options to certain employees. Equity-settled share-based payments are measured
at fair value at the date of grant. The fair value determined at the grant date
of the equity-settled share-based payments is expensed on a straight line basis
over the vesting period, based on the Group's estimate of shares that will
eventually vest.


Fair value is estimated by an independent third party using a proprietary
binomial probability valuation model. The expected life used in the model has
been adjusted, on the basis of management's best estimate for the effects of
non-transferability, exercise restrictions and behavioural considerations.


The new accounting policy for share based payment has been adopted
retrospectively and the comparative profit and loss account for the year ended
31 December 2005 has been restated. This change in accounting policy has
resulted in an increase in administrative expenses and accordingly the loss on
ordinary activities for the year ended 31 December 2005 of #10,000.


Any profit and loss charge in a year in respect of share-based payments is taken
to the Group's accumulated losses. The change in accounting policy has therefore
had no effect on the consolidated balance sheet of the Group at 31 December
2005.


3   Basic and diluted loss per share


The calculation of basic and diluted earnings per share is based on the retained
loss for the financial year of #680,000 (2005 as restated - #597,000).


The weighted average number of ordinary shares for calculating the basic loss
per share and diluted loss per share after adjusting for the effects of all
dilutive potential ordinary shares are as follows:


                                                2006                      2005
Basic and diluted                        348,931,995               246,854,369


4   Post Balance sheet events


Issue of shares
On 26 January 2007 a placing of 57,022,000 new ordinary shares at 15p per share
raised #8.6 million before expenses of #0.4 million. The funds will be used to
develop the Sekisovskoye and Ognevka projects.


Acquisition of TOO Ognevka
In January, 2007 the Group announced the acquisition of TOO Ognevka
("Ognevka"). Ognevka owns a processing facility in East Kazakhstan to treat up
to 350,000 tonnes per year of copper, gold and silver containing residues (slag)
from Zinc smelters. The facility had been closed for two years and Ognevka was
undergoing a process of rehabilitation under court protection from creditors
which had a total debt outstanding of #1.9 million. The Group acquired the debt
of the principal creditor with a nominal value of #1.4 million for a cash
payment of #0.9 million and then acquired 100 per cent. of the share capital of
Ognevka for a nominal amount.


5  Dividend


The directors do not recommend the payment of a dividend.











                      This information is provided by RNS
            The company news service from the London Stock Exchange

END
FR SSMFMLSWSELM