Highland Gold posts first half growth, reports fatality

Highland Gold Mining reported its unaudited financial results and production figures for the half year to 30 June on Monday, with 127,697 ounces of gold and gold equivalent sold during the period, up from 119,277 ounces in the first half of 2015.

The AIM-traded form had total group cash costs of $444 per ounce, down from $538 per ounce, with group all-in sustaining costs of $609 per ounce down from $710 at the same time last year.

Revenue for the first half was $147.1m, from $130.74m, and operating profit surged to $50.42m from $18.78m.

Net profit was up to $37.05m from $14.47m, with EBITDA at $79.72m, from $54.89m.

Highland’s earnings per share for the period were 11.3 cents, up from 4.4 cents, with net cash inflow from operations of $78.39m from $56.52m.

Net debt was reduced to $197.9m, from $232.43m.

“Sadly, I have to begin by stating that, after the reporting period, on 10 September, the company witnessed a fatality at our MNV underground mine,” said CEO Denis Alexandrov.

“In light of this accident and an increase in minor incidents this year, we have undertaken urgent measures to strengthen and expand our HSE team and to update our safety standards across all of our operations.

“We have also initiated safety inspections of all underground shafts at MNV and Novo.”

Alexandrov said overall, the company witnessed a positive first half of 2016, with increased production, stronger gold prices, cost controls, and the weak rouble together contributing to improved earnings, lower costs and higher margins.

“At the core of this progress were MNV and Novo, which both exceeded their six-month production targets,” he explained.

“Work on reassessing MNV's reserves, as well as exploration of near-mine targets, continued apace with a target of extending life of mine.

“Novo increased mining and processing throughput while also advancing plans to expand the mill's capacity to 1.3 million tons over the next two years.”

He said Belaya Gora continued to face challenges with both geology and metallurgy during the half, despite higher ore production and a reduction in tailings grade.

“The company has initiated work, together with consultants SRK, to reassess the mine's reserves, to study the combined processing of Belaya Gora ores with those of the nearby Blagodatnoye deposit, and to upgrade the mill with CIL technology.

“This work will continue throughout the second half and be finalised early next year.”

Highland also saw progress in its exploration and development projects, with over $10m spent on drilling programs at MNV, Kekura, Sredne Golgotay, and Blagodatnoye, as well as on a pre-feasibility study for Klen, open pit dewatering at Taseevskoye, and a scoping study for Unkurtash.

“A PFS for Kekura was delivered in the second quarter and preparations for construction at the site are already underway,” Alexandrov said.

“These efforts are laying the foundations for production growth in the years to come.”