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MosNews: Peter Hambro’s Gold Mining Licenses in Russia Remain in Force

Created: 15.12.2006 12:22 MSK (GMT +3), Updated: 12:22 MSK

Shares in Peter Hambro Mining bounced back by more than 12 percent in late Thursday trading, after Russian government officials indicated that the gold producer’s main mining licenses were not under threat.

The stock has fallen sharply over the last two weeks after Oleg Mitvol, deputy head of Russia’s environmental watchdog Rosprirodnadzor, said five of the company’s gold mining licenses should be revoked because of environmental violations. Rosprirodnadzor is currently inspecting all of PHM’s Russian gold mining projects.

Mr Mitvol, an outspoken critic of resources companies’ activities in Russia, has also led a campaign against Shell’s Sakhalin-2 gas project. Shell revealed this week that it had offered to hand control of Sakhalin-2 to Gazprom, Russia’s state-controlled gas monopoly, following months of government pressure.

Many investors interpreted Mr Mitvol’s views as a sign that the Russian government wanted to take control of PHM’s assets, which comprise two gold mines and several gold exploration projects in the Far East of Russia.

Peter Hambro, founder and executive chairman, and Pavel Maslovsky, deputy chairman, met Mr Mitvol in Moscow on Thursday, Dec. 14, in an attempt to seek clarity and calm investors’ fears. Mr Mitvol denied that he was leading a political campaign against foreign companies in Russia. “Rosprirodnadzor’s inspections are in no way related to politics. Once again, I am urging foreign investors to comply with regulations of environmental protection and rational use of mineral resources, then there won’t be any problems with controlling bodies,” Mitvol was quoted by the Financial Times as saying.

He added that the inspections had not found any environmental violations at PHM’s projects in Russia’s Amur region, which are the company’s main assets. Mr Mitvol has been focusing his criticisms on five mining projects in the Yamal region, three of which have been sold by PHM.

Yesterday it was not clear whether the licenses for PHM’s two remaining Yamal projects would be revoked, but the company has said that they are not core assets. PHM said the meeting had been productive and reassuring. Mr Maslovsky said the company would try to rectify any environmental violations found at the Yamal projects.

PHM is expected to produce 250,000 ounces of gold this year, mostly from its Pokrovskiy mine. By 2009 the company aims to produce 1 million ounces of gold, through expanding Pokrovskiy and building new Russian mines.

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