Highland Gold Mining profits climb despite dip in production

Highland Gold Mining on Friday reported a rise in profit before tax as a reduction in costs offset lower revenues following a slight drop in production.

The AIM traded company recorded profit before tax of £108.2m for 2018, an increase of 8% compared to the year before, as cost of sales was reduced by 6% to £178.2m, offsetting a 2% reduction in revenue to £311.2m.

The drop in revenue came after gold production edged 1% lower to 269,500 equivalent ounces due to lower grades and recovery rates at the Novoshirokinskoye mine in Russia, particularly during the fourth quarter, though total production still fell within the guidance range of 265-275k oz.

Eugene Shvidler, executive chairman of Highland, said: "I am pleased to report that 2018 and the early months of the current financial year have witnessed significant developments on that front. The company's recent corporate highlights, namely the purchase of the Valunisty gold mine and the seven-year 'Life of Mine' extension of MNV, as well as the ramp-up of construction at Kekura, reflect key aspects of our overall strategy to capitalise on Highland's valuable and substantial asset base."

Kekura has an estimated start date for mining of 2023 after the ramp-up of construction resulted in the commencement of initial stripping and mining at the site.

Meanwhile, Valunisty is an operating gold mine and processing plant with an annual capacity of 250k tonnes of ore, which adds over 30 koz of gold and gold equivalent to Highland Gold's expected production for the current year.

Total production of gold and gold equivalent in 2019 is expected to be in the range of 290,000-300,000 oz

"Looking to the future, we are confident that the ongoing implementation of our strategy, together with the maintenance of rigorous cost disciplines and the roll-out of a new programme for operational efficiency and continuous improvement, will continue to serve shareholders well in the ensuing years," said Shvidler.

Highland Gold Mining's shares were down 1.61% at 183.60 at 1056 BST.