Russia’s second largest gold miner has seen first half profits fall by a third as higher costs offset the strong price of the precious metal.

UK-listed Peter Hambro posted sales of $146.4m (£79.3m) in the six months to the end of June, up 57% on a year ago.

But operating expenses rose 82% as labour costs at its flagship Pokrovskiy mine jumped 32%, diesel costs added 41% and electricity bills rose by 14%.

Peter Hambro said it was on track to meet its 2008 production targets.

The firm said it had sold its gold for an average of $901 per ounce over the period – up 38% from the year before.

The metal spiked at about $980 in July but then fell in line with other commodities.

However last week gold rallied, as investors sought safer investments amid market turbulence.

News reported by The BBC