Hambro Mining shares rocked by Russian attack

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Shares in the AIM-listed Peter Hambro Mining plunged 14 per cent yesterday after a senior Russian government official questioned the legality and efficiency of the company's activities in its sole area of operations.

Oleg Mitvol, the deputy head of Russia's state environmental watchdog, said he had asked the government to strip Peter Hambro of two important exploration licences in north-eastern Russia.

He accused it of a litany of corporate and environmental failings, alleging that it was failing to exploit the opportunities it had been given. Shares of Peter Hambro fell 165p to 1,025p on his comments, prompting the company to rush out a statement dismissing what it called "media speculation". Mr Mitvol's criticism appeared to have taken the company and investors by surprise and comes at a time when British companies are facing more and more regulatory problems in Russia.

Some analysts suspect the problems are more imagined than real and motivated by the Kremlin's desire to control more of the country's natural resources.

But Mr Mitvol, who has also found serious fault with Shell's Sakhalin-2 oil and gas development and with BP's Russian joint venture, insisted yesterday that his concerns were legitimate. He accused Peter Hambro and its subsidiaries of refusing to provide information to his inspectors and of seeking to cover up breaches of environmental legislation.

Talking about the Peter Hambro subsidiary concerned, a firm called Yamalzoloto, he said it was guilty of unacceptable inactivity. "This is one of those companies which simply takes licences for its balance sheet and increases its capitalisation without developing deposits," he said.

"Judging by the fact that the firm is paying no natural resources tax, gold mining is not taking place here though the forecast reserves for this deposit [the Novogodnee-Monto deposit] are 29 tonnes." He accused regional environmental inspectors of being far too soft on Peter Hambro in the past, saying he was "amazed" by how lenient they had been. Nor, he stressed, were the alleged licensing infractions minor. "In the case of the Novogodnee-Monto deposit, 21 of the 30 points in the licensing agreement have not been fulfilled."

Peter Hambro categorically refuted that it was in breach of any environmental or health and safety laws. Nor, it added in a statement, had it received any official notification of Mr Mitvol's complaints.

"The company did not receive any prior notification whatsoever on this matter," the company's founder and executive chairman Peter Hambro said. "Its representatives are in discussion with the Ministry and the relevant authorities seeking clarification on these comments."

The company is planning to invest £36m in the two fields next year with a view to extracting gold, copper and various ores. Peter Hambro holds about 50 mining and extraction licences in Russia and employs about 1,700 people.

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