Hambledon Mining well placed in Kazakhstan

Fairfax has reiterated its ‘buy' recommendation for Hambledon Mining a day after the group announced an agreement with authorities for Hambledon to continue to refine its gold and silver dore bars outside Kazakhstamining mills and plants in africa and chinan.

In a separate statement, the company also reported grades from underground drilling at its Sekisovskoye mine in the country.

In the broker’s ‘Daily Market Report’, analyst John Meyer also repeated his 7 pence price target for the stock, giving significant upside to the current level of 1.62 pence.

At the beginning of the year, the government implemented new laws that required producers in the country to process their dore domestically and sell to the Bank of Kazakhstan. The company was granted an initial stay until early 2013 while a refinery is being built in the country.

Meyer said that the sudden introduction of the new refining and export law in Kazakhstan now seems to have given way to a more pragmatic approach to enable gold producers to supply the new refinery when it is commissioned, currently expected to occur in the fourth quarter 2013.

Commenting on the drilling results from the underground workings of Sekisovskoye, the analyst believes Hambledon appears well placed to benefit from the better grades and production coming from its underground development.

The company had told investors that the latest results were consistent and in many areas exceeded the previous geological and mineral resource modelling.

Meyer also noted that the support from the European Bank for Reconstruction and Development is good news. The first tranche of a US$15 million loan agreed with the EBRD became available last week.

“Hambledon appears well set to benefit from rising gold prices and from its work with the new underground mine,” the analyst said.