Research Alert

Contacts
Wednesday 16 May 2007
Vice Chairman
Stocks covered in this note
Richard Ratner 020 7107 8037
richardratner@seymourpierce.com
Stock/sector Analyst Mkt cap (£m) Recommendation Page
Research Team
Hambledon
Charles Kernot 60.5 BUY 2
Mining 1,3,4,5,F Head of Research
Jim McCafferty 020 7107 8070
jimmccafferty@seymourpierce.com

FTSE All Share – recent performance Deputy Head of Research

Alan Matthews 020 7107 8021
3450
Key Indices Close Daily % chge alanmatthews@seymourpierce.com
3400 UK
3350 FTSE 100 6568.65 0.2 Research Analysts
3300
Asa Bridle 020 7107 8034
FTSE All Share 3413.75 0.23
3250
asabridle@seymourpierce.com
3200
FTSE Mid 250 12092.22 0.45 Derek J. Brown 020 7107 8068
3150 derekbrown@seymourpierce.com
3100
FTSE AIM 1202.1 0.11
19 26
FEB
5 12
MAR
19 26 2 9 16
APR
23 30 7
M AY
14
Jon Dunningham 020 7107 8042
FT SE ALL SHAR E - PR IC E IND EX

Sourc e: D AT ASTREAM
jondunningham@seymourpierce.com

Source: Datastream Gerald Farr 020 7107 8332

geraldfarr@seymourpierce.com
Earnings Monitor Charles Kernot 020 7107 8069
charleskernot@seymourpierce.com
Company EPS (p) OLD EPS (p) NEW
Date 2007E 2008E 2007E 2008E Kevin Lapwood 020 7107 8337
kevinlapwood@seymourpierce.com
Hardide
3,5
15.05.07 (06) 0.4 (07) 1.5 (06) -0.79 (07) -0.2
European Goldfields 15.05.07 15.1 19.0 11.4 16.0 Charles Peacock 020 7107 8001
charlespeacock@seymourpierce.com
Sage 15.05.07 13.9 15.9 13.8 15.3
Oakdene Homes
3,5
11.05.07 (06) 22.0 (07) 37.1 (06) 16.9 (07) 26.0 Amit Thakar 020 7107 8022
Debenhams 10.05.07 11.8 14.4 10.4 13.5 amitthakar@seymourpierce.com

N Brown 10.05.07 15.5 17.1 16.7 19.0 Andrew Wade 020 7107 8049
Antofagasta (US¢) 08.05.07 (06) 143.8 (07) 124.2 (06) 138.2 (07) 144.2 andrewwade@seymourpierce.com
Blacks Leisure 03.05.07 na 11.9 9.2 = 14.5
Aquarius Platinum 03.05.07 169.0 219.7 189.86 208.30
Rentokil 03.05.07 (06E) 9.4 (07) 11.5 (06E) 10.4 (07E) 9.7

Forthcoming Events

2007 Company Event

3,4,5
May 16 Networkers International Final results
3,5
16 Geong Final results
3,5
31 Titan Europe Field trip
3,5
June 12 Focus Solutions Final results

If you wish to arrange a meeting, please ring your Sales contact.

F
Forecast change
Please see regulatory disclosure notes at the end of this document
Research Alert Wednesday 16 May 2007

Hambledon Mining 1,3,4,5, F

Metals & Mining

BUY
Severely mispriced 14.25p
AIM HMB.L

• Hambledon Mining has updated the market on the progress that it has
been making at the Sekisovskoye gold mine in East Kazakhstan. It
No of shares (m) 425
suggests that the mine is within two to three months of production. Work
on the rehabilitation of the Ognyovka process plant has also commenced. Market cap (£m) 60.5

• The key area of concern at Sekisovskoye has been the ball mills, which Net cash (£m) 4.4
were subject to about nine months of delays. The first mill is now on site
and being fitted into the process plant. The second mill has been built and Enterprise value (£m) 56.1

is now being shipped to site. When completed, the plant will need to apply (%) 1m 3m 12m
for local operating approvals to ensure compliance with health and safety FTA relative -4.9 -13.0 -17.1
legislation. The length of time that this process will take is uncertain but it
12 month high/low (p) 17.75/12.25
should not delay the start of the process plant for long.
Next news
• Recent grade control drilling on the first bench that is scheduled to be Finals - 5 June
mined has confirmed that overall tonnes and estimated grade has
increased above that of the original resource. The 18% uplift to contained Business
Developing gold mines and other
gold is in line with the earlier work which suggested that the Soviet results production facilities in Kazakhstan
underestimated the grade by approximately 17%.
www.hambledon-mining.com
• Exploration elsewhere in the licence area has so far not yielded much
success, albeit that some drilling has intersected low-grade mineralization. Price and price relative (-2y)
Additional work is scheduled here in order to determine if more consistent 20
HAMBLE DON MINING 15/5/07

mineralization can be intersected at depth and further results should be 18

available later in the year. 16

• While Sekisovskoye will be coming to production behind schedule, this

14

should be offset by the start of output at the Ognyovka plant. Indeed, we

12

10

estimate that the additional earnings that should be generated from that 8

operation will more than offset the lower earnings from the mine. This 6

means that the stock is trading on a prospective 2008 PER of only 3.5.
M J J A S O N D J F M A M J J A S O N D J F M A
PRICE
PRICE REL. T O FT SE ALL SHA RE - PRICE INDEX
Source: DATASTREAM

• Against the US$138/oz of resource and US$5,778/oz of annual production Source : Datastream

paid by Kazakhmys for Eurasia Gold we estimate that Hambledon is

currently on values US$34/oz and US$1,677/oz, respectively. While Contact

Eurasia’s rating reflected its restricted free float we believe that Charles Kernot
Hambledon should be trading at least at 3 times its current level. BUY. Research Analyst
020 7107 8069
charleskernot@seymourpierce.com

Year end Sales Pre-tax Normalised EPS PER DPS Yield EV/Sales EV/EBITDA
31 Dec (£m) (£m) Net (£m) (p) (x) (p) (%) (x) (x)

2005A 0.0 -0.6 -0.6 -0.2 nm 0.0 0.0 nm nm

2006E 0.0 -0.7 -0.7 -0.2 nm 0.0 0.0 nm nm
2007E 10.7 3.5 3.5 0.8 17.8 0.0 0.0 5.2 10.4
2008E 35.7 17.5 17.5 4.1 3.5 0.0 0.0 1.6 2.8

Source: Seymour Pierce Limited full year forecasts

1,3,4,5
Please see regulatory disclosure notes at the end of this document

Seymour Pierce Research 2

 Research Alert Wednesday 16 May 2007

Hambledon Mining – production and earnings summary estimates

Year end 31 December 2003 2004 2005 2006E 2007E 2008E 2009E 2010E 2011E
Gold production (000oz) 0.0 0.0 0.0 0.0 14.7 71.5 118.4 137.4 149.2
Gold price (US$/oz) 364 410 445 604 620 485 412 420 429

Profit & loss (£m) 2003 2004 2005 2006E 2007E 2008E 2009E 2010E 2011E
Turnover 0.0 0.0 0.0 0.0 10.7 35.7 40.2 43.1 44.5

Operating costs 0.0 0.0 0.0 0.0 4.3 14.3 18.0 21.3 23.9
Depreciation 0.0 0.0 0.0 0.0 1.8 2.9 2.7 2.7 2.8
Admin and other 0.2 0.4 0.8 0.9 0.9 0.9 1.6 2.0 2.2
PBIT -0.2 -0.4 -0.8 -0.9 3.6 17.5 17.8 17.1 15.7

Net interest 0.0 0.0 0.2 0.2 -0.2 0.0 0.9 1.5 2.1

Pre-tax -0.2 -0.4 -0.6 -0.7 3.5 17.5 18.7 18.6 17.7
Tax 0.0 0.0 0.0 0.0 0.0 0.0 4.2 4.6 4.3
Attributable profit -0.2 -0.4 -0.6 -0.7 3.5 17.5 14.5 14.0 13.5
Normalised earnings -0.2 -0.4 -0.6 -0.7 3.5 17.5 14.5 14.0 13.5

Normalised EPS -0.1 -0.2 -0.2 -0.2 0.8 4.1 3.4 3.3 3.2
DPS 0.0 0.0 0.0 0.0 0.0 0.0 0.4 0.4 0.4

Balance sheet (£m) 2003 2004 2005 2006E 2007E 2008E 2009E 2010E 2011E
Fixed assets 0.2 0.7 3.1 13.6 22.0 20.6 20.4 20.8 21.6

Stocks 0.0 0.0 0.0 1.0 1.0 2.0 2.2 2.4 2.5
Trade Debtors 0.0 0.0 0.2 1.2 1.5 3.0 3.4 3.6 3.7
Cash 0.0 1.3 4.0 6.8 10.6 29.6 41.5 53.8 65.3
Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Current assets 0.0 1.3 4.2 9.0 13.1 34.6 47.2 59.8 71.5

Short-term debt 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3
Trade creditors 0.0 0.0 0.0 0.0 0.5 3.0 2.6 3.3 3.8
Tax and other 0.1 0.1 0.2 0.2 0.2 0.2 0.2 0.2 0.2
Current liabilities 0.4 0.4 0.4 0.4 1.0 3.4 3.0 3.8 4.3

Long term liabilities 0.0 0.0 1.1 7.1 7.1 7.1 7.1 7.1 7.1
Net Assets -0.1 1.5 5.8 15.1 27.0 44.6 57.4 69.8 81.7

Shareholders' funds -0.1 1.5 5.8 15.1 27.0 44.6 57.4 69.8 81.7
Minorities 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Equity Interests -0.1 1.5 5.8 15.1 27.0 44.6 57.4 69.8 81.7

Cash Flow (£m) 2003 2004 2005 2006E 2007E 2008E 2009E 2010E 2011E
Operating profit -0.2 -0.4 -0.8 -0.9 3.6 17.5 17.8 17.1 15.7
Dep'n and Amortisation 0.0 0.0 0.0 0.0 1.8 2.9 2.7 2.7 2.8
Other non-cash 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0
Change in working cap 0.3 0.0 -0.2 -2.0 0.2 0.0 -1.0 0.3 0.3
Operating cash flow 0.1 -0.4 -0.9 -2.9 5.7 20.4 19.5 20.1 18.8

Net interest and dividends 0.0 0.0 0.1 0.2 -0.2 0.0 -0.8 -0.2 0.5
Taxation 0.0 0.0 0.0 0.0 0.0 0.0 -4.2 -4.6 -4.3
Net capital expenditure -0.1 -0.5 -1.3 -10.5 -7.2 -1.5 -2.6 -3.1 -3.5
Acquisitions/disposals 0.0 0.0 0.0 0.0 -3.0 0.0 0.0 0.0 0.0
0.0 -0.9 -2.0 -13.2 -4.7 18.9 11.9 12.2 11.5

Debt raised 0.0 0.0 0.0 6.0 0.0 0.0 0.0 0.0 0.0
Shares issued 0.0 2.1 4.8 10.0 8.5 0.0 0.0 0.0 0.0

Cash flow 0.0 1.2 2.8 2.8 3.8 18.9 12.0 12.2 11.5
Cash at end of year 0.0 1.3 4.0 6.8 10.6 29.6 41.5 53.8 65.3

Source: Company data and Seymour Pierce Limited estimates

3 Seymour Pierce Research

Key to material interests
1. The analyst has a personal holding of the securities issued by the company, or of derivatives
related to such securities.
2. Seymour Pierce Limited or an affiliate owns more than 5% of the issued share capital of the
company.
3. Seymour Pierce Limited or an affiliate is party to an agreement with the company relating to
the provision of investment banking services, or has been party to such an agreement within
the past 12 months. Our corporate broking agreements include a provision that we will
prepare and publish research at such times as we consider appropriate.
4. Seymour Pierce or an affiliate has been lead manager or co-lead manager of a publicly
disclosed offer of securities for the company within the past 12 months.
5. Seymour Pierce is a market maker or liquidity provider in the securities issued by the
company.
6. Seymour Pierce is party to an agreement with the company relating to the production of
research recommendations.
Distribution of ratings
Our research ratings are defined with reference to the amount by which we expect the absolute
return to change over the next 12 months:

Rating Definition
Buy Absolute return expected to increase by more than 10%
Outperform Absolute return expected to increase by between 5% and 10%
Hold Absolute return expected to change by between -5% and +5%
Underperform Absolute return expected to decrease by between 5% and 10%
Sell Absolute return expected to decrease by more than 10%

As at 31 March 2007 the distribution of all our published recommendations is as follows:

Proportion of Proportion of these provided with

Rating recommendations investment banking services
Buy 36% 58%
Outperform 24% 19%
Hold 27% 28%
Underperform 7% 6%
Sell 1% 0%

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