Peter Hambro eyes Russian greenfield sites
LONDON (Reuters) - Russia-focused gold miner Peter Hambro Mining (POG.L) plans to stick to acquiring greenfield sites rather than buying gold producers, and is not considering expanding into China for now, its head said on Wednesday.
Executive Chairman Peter Hambro told the Reuters Global Mining Summit in London that the firm considered it cheaper to buy undeveloped assets from the Russian government rather than acquiring mines already in production, although more than 600 gold producers operate in the country.
"We will continue to buy greenfield sites. Buying from the state -- assets not used by anyone else -- is a relatively inexpensive way of doing it," he said.
Peter Hambro is Russia's second-biggest gold producer, with an aim to boost output to 1 million ounces a year by 2011 -- a target put back by a year in January.
Its shares were down 0.5 percent at 1360 pence by 11:45 a.m EDT, valuing the business at 1.1 billion pounds.
Hambro said China remains outside his ambitions for now, despite the group's close proximity to the border and the prospect of abundant mineral resources there.
"We are not seriously looking at it. Could we do it? I suppose so ... (but) there is a friction cost of going outside your back yard," he said.
However, he added that the group had several links to the world's most populous country, now also the biggest gold producer, including through iron ore firm Aricom OREA.L, which was spun out from Peter Hambro.
"We buy material from China, Aricom has China as its main buyer and we have a joint venture with (state-owned aluminum firm) Chinalco," he said.
Hambro said the company would be able to fund its expansion through 2011 after raising $180 million from a convertible bond last year and internal cash flow based on gold at $700 an ounce.
He reiterated that the group would consider paying a dividend from any excess cashflow after full-year results are declared on April 21. Spot gold was trading around $978 per ounce on Wednesday afternoon.
Hambro said he expected the price of gold to push through the $1000 an ounce barrier and might even press on to $1,200.
(For summit blog: summitnotebook.reuters.com/)
(Reporting by John Bowker; Editing by Erica Billingham)
