In our view it is imperative that mining companies operate in a responsible manner.  This requires effective environmental and social governance to minimise the impact of mining operations and to maximise the benefits, be they environmental or social.  We understand the need to implement our environment and social governance policies throughout all of the Group's operations to ensure that effective and robust systems and controls are in place at an operational level.  As a result, we have staff at all levels within the Group who are responsible for environment, health and safety and social and community issues. 

The Natural Resources Management and Ecological Department which is based in Moscow, supports the Peter Hambro Mining Plc Board, provides guidance and support to OAO Pokrovskiy Rudnik, the operating company at the Pokrovskiy mine, carries out internal environmental audits, oversees all environmental activities of the operating companies in the Group throughout Russia and liaises with the regulatory agencies based in Moscow.  The Sustainability Committee oversees all aspects of environmental and social management, setting priorities for the Group and reviewing progress in implementation.  In Blagoveschensk, the Director of the Ecological Department is responsible for environmental monitoring and control at Pokrovskiy Rudnik.  Internal and external environmental monitoring is regularly carried out at the mine under the supervision of the Director who is also responsible for reporting on performance and compliance matters both internally and to the Russian regulatory authorities. 

Extensive reviews of our environmental monitoring and performance records by the Russian authorities in December 2006 confirmed that the mine is operating in full compliance with the Russian regulatory requirements.  As part of the ongoing process of implementing international good practice, we will develop a robust and systematic set of environmental, health and safety and social key performance indicators (KPIs) for use going forward. 

Current key environmental performance indicators include:

- Maximum permissable concentrations were not exceeded for any pollutants (in air or water) on the border of the sanitary-protection zone at Pokrovskiy Rudnik in 2006
- The mine is designed as a "zero discharge" facility with water recycled from the tailings pond back through the processing plant - water discharges from the mine are negligible
- Cyanide levels within the tailings pond are within the Russian regulatory levels and are within IFC guideline levels
- Ore geochemistry means that acid drainage is not an issue at the mine
- Waste is disposed of according to the Russian regulatory requirements and waste disposed off-site is handled and disposed of by authorised contractors
- The Company is seeking to implement the ISO 14001 environmental management system and will continue the process of implementing IFC guidelines and performance standards, as well as broader international good practice.