Potential investment by EBRD - Replacement

 
TIDMHMB 
 
 

The issuer advises that the following replaces the 'Potential investment by EBRD' announcement released today at 11.51 am GMT.

Announcement is being resent to include correct ISIN for linking purposes.

All other details remain unchanged.

Hambledon Mining plc ("Hambledon" or the "Company")

Potential investment by EBRD

12 January 2012

Hambledon is pleased to announce that today the European Bank for Reconstruction and Development ("EBRD") has posted on its website a Project SummaryDocument ("PSD") relating to a potential US$15 million debt facility along with an equity investment of US$3 million for Hambledon to develop the Sekisovskoye underground mining operation and other group projects. It is also proposed that EBRD will be issued with warrants to a value of US$2 million.

The EBRD PSD is set out on its website and can be accessed through the following link: http://www.ebrd.com/pages/project/psd/2012/42831.shtml

The full text of the PSD is set out below.

Final approval is expected to be received in the middle of quarter 1, 2012, and further updates will be announced to shareholders as soon as possible. The total amount mentioned here of US$20 million is subject to exchange rate variation.

Tim Daffern, CEO of Hambledon commented:

"We are very pleased by the prospect of this partnership with EBRD. The Board is excited about the future of the Company which can only be enhanced by having the backing of a lender and investor of the stature of EBRD".

Enquiries;

HAMBLEDON MINING:

Telephone [phone]Charles Zorab

FAIRFAX I.S. PLC (NOMAD AND BROKER):

Telephone [phone]Ewan Leggat/Katy Birkin

TAVISTOCK COMMUNICATIONS:

Telephone [phone]Ed Portman/Jos Simson

EBRD PSD extraction:

 
Project description and objectives:                                The EBRD is continuing to support the safe exploration of natural  resources in Kazakhstan with a planned investment into the  development of the Sekisovskoye gold and silver deposit in the  province (oblast) of East Kazakhstan. 
                                                                   The Bank is considering a  joint loan and equity investment of up to US$21 million to  contribute to the expansion of the underground mine and processing  operations at Sekisovskoye. As outlined in the current 
                                                                   EBRD Strategy  for Kazakhstan, the Bank supports the development of responsible  mining and pursues projects that increase private sector  participation and are committed to improving environmental standards  and energy 
                                                                   efficiency. The investment in Sekisovskoye which the EBRD  is considering will contribute to further improvements of the  application of best environmental, health and safety (EH&S)  standards at the deposit. 
Transition impact:                                                 The Transition Impact potential of the project is derived from: 
                                                                   (i) support of private sector development and increased  competition in the project sector and 
                                                                   (ii) setting higher standards of EH&S practices and the adoption  of the International Cyanide Management Code. 
 
                                                                   Through the proposed financing, the Bank will support the  successful development of a medium-sized independent gold  producer in Kazakhstan's gold market dominated by a handful of  large operators. Hambledon 
                                                                   Mining plc's development will  contribute to the economic development of the East Kazakhstan  region by stimulating economic activity.  The Company will adhere to the 'Publish What You Pay' 
                                                                   principles  and implement an Environmental and Social Action Plan to bring  EH&S in line with best international standards, including the  adoption of the International Cyanide Management Code.  The 
                                                                   Bank will also be instrumental in ensuring that Hambledon  Mining Plc implement high environmental standards across all its  operations in accordance with the Bank's Performance  Requirements (PRs). 
The client:                                                        Hambledon Mining plc is a public limited company, registered in  England and listed on AIM, with mining operating assets in  Kazakhstan. 
EBRD finance:                                                      Joint equity and debt financing of up to US$21 million. 
Total project cost:                                                US$66 million investment program. 
Environmental and social categorisation, impact, and mitigation:   Screening and rationale for classification: 
 
                                                                   The further development of the Project site from above ground  mining and processing operations to include below ground mining  activities and associated infrastructure has been categorised B in  accordance with the EBRD's Environmental & Social Policy 2008  (ESP). Independent due diligence has confirmed 
                                                                   that potential  adverse environmental and social impacts associated with the  Project are site specific, readily identified, and the residual  impacts are to be addressed through mitigation measures in a  timely manner, as agreed with the client in an Environmental and  Social Action Plan (ESAP). 
 
                                                                   As the investment includes participation in the company's equity  capital, the client is required to adopt the ESAP at a corporate  level and apply the Performance Requirements (PRs) at a site level  for all existing and any future operations. 
 
                                                                   Information reviewed: 
                                                                   An international environmental and social (E&S) consultancy firm  was mandated by the client to undertake pre-financing E&S due  diligence against the ESP and associated PRs. Due diligence  comprised site visit (accompanied by EBRD E&S specialists),  management interviews, project stakeholder focus discussions and  document review. 
 
                                                                   The consultant and the client have developed an ESAP in discussion  with EBRD which has been agreed and will be part of the legal  commitments of the client. A summary of the key issues are  provided in the relevant section below. 
 
                                                                   Environmental and Social issues: 
                                                                   Independent due diligence has identified that site operations have  historically been managed to meet the requirements of Kazakh law.  Senior company management has acknowledged that additional works  are required to meet international standards and agreed to address  outstanding E&S issues in a timely manner through the  implementation of the ESAP. 
 
                                                                   While it is not an EBRD requirement for Category B projects, the  company has, under its own initiative, commissioned a full life of  mine (above and below ground activities) E&S Impact Assessment  (ESIA) 
                                                                   by an independent consultant, including the development of  an action plan for additional studies and assessments. This is  currently work in progress and is part of the company's stated aim  to 
                                                                   meet best practice. Many of the action items arising from the  ESIA are anticipated to be similar to those agreed in the ESAP  developed during due diligence. Where additional recommendations  are provided 
                                                                   in the ESIA action plan these are also to be adopted  by the client. In accordance with best practice, the ESIA shall  include disclosure and consultation, including a non-technical  summary. 
 
                                                                   Management Systems: 
                                                                   As a result of the reactive approach to E&S management stipulated  by the Kazakh regulations a proactive management system is  required to achieve continuous improvement in E&S performance.  Similarly, due diligence has identified that a Health 
                                                                   & Safety  management systems is required to be developed and formally  implemented to meet best practice. The company has committed to  designing and implementing management systems that are aligned  with international best practice. 
 
                                                                   Workforce 
                                                                   The conversion of operations from above ground to below ground  will require a different skill set of mine workers and is likely  to result in some redundancies (circa. 300) on the one hand and  worker influx (circa. 200) on the other. The company is therefore 
                                                                   in the process of developing a retraining and retrenchment plan  that will meet EBRD and other International Financial Institutions  requirements. In addition, worker accommodation to be constructed  shall be done so in accordance with EBRD requirements. 
 
                                                                   Pollution Prevention 
                                                                   The mine is regulated under the Kazakh permitting system and an  environmental engineer is responsible for maintaining regulatory  compliance. Cyanide is used on site and the company has agreed, at  the request 
                                                                   of the EBRD, to commission an International Cyanide  Management Code (ICMC) auditor to review site operations provide  recommendations that will be adopted by the client to meet the  code where necessary. 
                                                                   With the exception of the tailings dam leak  (detailed below) the site is generally in compliance with Kazakh  emission and discharge limits. The company is in the process of  converting wet tailings 
                                                                   management to paste technology which shall  further reduce the risk (volume and structural) associated with  tailings management while also reducing the amount of water  required for processing. 
 
                                                                   Community Safety 
                                                                   The lack of a formal social impact assessment undertaken to date  means impacts to community health, safety and security are not  fully understood. The completion of the SIA (as part of the ESIA  process) to satisfactory standard will address each of these  residual risk issues and mitigation measures proposed are required 
                                                                   to be adopted by the company in full. This work will be carried  out as a priority and the ESAP updated with any additional actions  needed. Emergency response plans is place at the site are  currently being revised and communication of risks and procedures  to local communities is a requirement of the ESAP. 
 
                                                                   Resettlement 
                                                                   Resettlement of local householders situated within the Sanitary  Protection Zone (SPZ) of the mine has occurred historically and is  to be completed in 2012 with the acquisition and resettlement of  the final two households. There has been no consistent 
                                                                   policy  applied to land acquisition for resettlement to date and it is  therefore a requirement of the EBRD that past land acquisition  impacts be assessed and mitigated and future land be undertaken in  accordance with EBRD and other IFI standards. 
 
                                                                   Tailings Dam 3 (TD3) Leak 
                                                                   During the due diligence period, TD3 was in commissioning phase  when the liner failed resulting in a release of low level cyanide  containing effluent to a stream which flows across the mine site.  The client informed the competent authorities and was requested to  add a cyanide neutralising agent 
                                                                   to the watercourse. A fish kill  resulted from the leak and/or treatment, and temporary ban on the  use of the watercourse was imposed. The company provided an  alternative water supply for local residents until the authorities  declared that the stream no longer presented a risk to water users. 
 
                                                                   The local authorities have completed their investigations and the  company has received a fine for the leak following court  proceedings. In addition, the company has entered into a formal  agreement with the local communities to provide investment in  local social infrastructure, 
                                                                   including provision of municipal  water supply, recreational facilities for communities, road  surfacing, etc. to which the company has agreed. This is in  addition to the existing social infrastructure investments that  the company is currently implementing. 
 
                                                                   The company appointed an international mining engineering  consultant to undertake a root cause analysis of the failure and  to design remedial measures. EBRD requested that the company  provide a report relating to the incident 
                                                                   and EBRD was furnished  with all the information requested. An independent third party  consulting firm was then mandated jointly by the EBRD and the  client to review the incident analysis and proposed remedial works. 
 
                                                                   On the basis of the above, EBRD is satisfied that all information  has been provided and that the root cause of the recent failure is  understood, and a feasible engineering solution to TD3 remediation  and recommissioning has been proposed. Detailed design is  currently underway by the company engineers and independent  engineering consultants and shall be reviewed 
                                                                   by another  independent consulting firm at the appropriate time. EBRD has  stipulated a number of requirements within the ESAP to ensure that  the situation is closely monitored and appropriate measures are  adopted in the future. Implementation of these measures provides a  high level of confidence that repetition of such an incident will  not occur. 
 
                                                                   Environmental or social opportunities 
                                                                   The company has the stated aim of achieving E&S best practice and  through the EBRD's involvement the company has agreed to review  operations and achieve timely alignment with the below  international standards: 
 
 
                                                                   EU Mine Waste Directive  EU Best Available Techniques  ISO/OHSAS Standards  International Cyanide Management Code 
                                                                   In addition, the company has an existing social infrastructure  programme that is associated with the mine operations and shall be  of benefit to the local communities in the provision of clean  water, paved roads, waste management and recreational areas. 
 
                                                                   Summary of Environmental and Social Action Plan 
                                                                   Management of E&S issues by the company has, up to this point,  been focused on local Kazakh regulatory compliance. Requirements  set out in the ESAP therefore aim to promote best practice while  maintaining regulatory compliance, including: 
 
 
                                                                   Establish consistent baselines of current E&S performance;  Increase E&S management capacity and capability;  Establish formal policies and management systems to provide a  robust means of controlling 
                                                                   and measuring E&S performance;  Ensure that the substantial changes and challenges posed by the  development of the mine and the move from open-cast to  underground mining are managed 
                                                                   in accordance with the EBRD's PRs;  Finalise the mine closure and rehabilitation plan;  Complete rock blasting studies and propose mitigation measures  for prevention of fly-rock;  Conform 
                                                                   SPZ required for current and future operations and  develop a future / retroactive resettlement action plan in  accordance with EBRD requirements;  Implement Stakeholder Engagement Plan. 
                                                                   In addition, the ESAP states that the client is to implement EBRD  requirements for any future acquisitions and developments. 
 
                                                                   Project monitoring will assess the timely implementation of the  ESAP; due to the nature of the Project, monitoring in the first  year of signing shall include a visit by EBRD. 
 
                                                                   Stakeholder Engagement 
                                                                   A Stakeholder Engagement Plan (SEP) has been developed by the  client to meet EBRD requirements and was reviewed by both the E&S  consultant and EBRD. The SEP included a summary of the project  site, identifies stakeholders and defines a stakeholder engagement  programme, including a grievance mechanism and monitoring and  reporting. 
Technical cooperation:                                             None. 
                                                                   For consultant opportunities for projects financed by technical  cooperation funds, visit 
                                                                   procurement  of consultants. 
Company contact:                                                   Charles Zorab, 
                                                                   Head of Investor Relations 
                                                                   Hambledon Mining Plc 
                                                                   42, Queen Anne's Gate, 
                                                                   London SW1H 9AP 
                                                                   United Kingdom 
                                                                   Tel: [phone] 
                                                                   Email: [e-mail] 
                                                                   www.Hambledon-mining.com 
Business opportunities:                                            For business opportunities or procurement, contact the client  company. 
General enquiries:                                                 EBRD project enquiries not related to procurement:Tel: [phone]; Fax: [phone]Email:  [e-mail] 
Public Information Policy (PIP)                                    The PIP sets out how the EBRD discloses information and consults  with its stakeholders so as to promote better awareness and  understanding of its strategies, policies and operations. 
                                                                   The text of the PIP can be found under: http://www.ebrd.com/about/policies/pip/index.htm 
Project Complaint Mechanism (PCM)                                  The EBRD has established the Project Complaint Mechanism (PCM) to  provide an opportunity for an independent review of complaints from  one or more individuals or from organisations concerning projects  financed by the Bank which are alleged to have caused, 
                                                                   or likely to  cause, harm. The Rules of Procedure governing the PCM can be found  athttp://www.ebrd.com/about/integrity/irm/about/pcm.pdf, the Russian version can be accessed athttp://www.ebrd.com/about/integrity/irm/about/PCMRulesRussian.pdf 
                                                                   Any complaint under the PCM must be filed no later than 12 months  after the last distribution of EBRD funds. You may contact the PCM  officer (at [e-mail]) or the relevant EBRD Resident Office for  assistance if you are uncertain as to the period within which a  complaint must be filed.