TIDMHGM
RNS Number : 0598X
Highland Gold Mining Limited
25 April 2019
HIGHLAND GOLD MINING LIMITED
25 April 2019
Q1 2019 Operating Results
Highland Gold Mining Limited ("Highland Gold" or the "Company",
AIM: HGM) today reports its operating results for the three months
ended 31 March 2019 ("Q1 2019").
HIGHLIGHTS
-- Highland Gold produced a total of 71,961 oz of gold and gold
equivalent in Q1 2019, an increase of 21% from 59,311 oz in Q1
2018.
-- Mnogovershinnoye (MNV) saw a 58% increase in production
compared to Q1 2018, when its processing plant was operating at
reduced capacity.
-- Production at Belaya Gora rose 31% year-on-year due to higher volumes and better recoveries.
-- Lower grades and recoveries at Novoshirokinskoye (Novo)
resulted in a 28% decline in production versus Q1 2018, but was 3%
higher than in the preceding quarter (Q4 2018).
-- The production total includes the Valunisty mine, acquired by
the Company last December. Excluding Valunisty, Q1 2019 production
rose 9% year-on-year.
-- The average realised gold price during the quarter was US$ 1,307 per ounce.
-- The Company affirms its forecast for total production of gold and gold equivalent in 2019 of 290,000-300,000 oz.
-- Highland Gold regrets to report that, during the quarter, two
employees at Novo and one at Belaya Gora died while on assignment.
The Company offers sincerest condolences to the families of the
deceased and has conducted thorough investigations of these
incidents.
FOR FURTHER INFORMATION PLEASE CONTACT:
Highland Gold Mining Ltd. John Mann, Head of Communications
+ 7 495 424 95 21
Duncan Baxter, Non-Executive Director
+ 44 (0) 1534 814 202
Numis Securities Limited John Prior, James Black, Paul Gillam
(Nominated Adviser and Joint +44 (0) 207 260 1000
Broker)
BMO Capital Markets Limited Jeffrey Couch, Tom Rider, Pascal Lussier
(Joint Broker) Duquette
+44 (0) 207 236 1010
Peat & Co Charlie Peat
(Joint Broker) +44 (0) 207 104 2334
KHABAROVSK REGION, RUSSIA
Mnogovershinnoye (MNV)
-- Q1 2019 processing throughput rose 36% year-on-year as the mill operated at full capacity.
-- The head grade at the mill rose 14% to 3.18 g/t thanks to higher-grade ore from underground.
-- The temporary closure of one of the underground mine's
entrances following avalanches in the area late last December had a
negligible effect on underground mining volume.
MNV Units Q1 2018 Q1 2019
-------
Waste stripping t 780,915 1,193,985
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Underground development m 2,930 2,483
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Open-pit ore mined t 37,079 88,692
------- -------- ----------
Open-pit ore grade g/t 2.18 2.34
------- -------- ----------
Underground ore mined t 198,465 191,344
------- -------- ----------
Underground ore grade g/t 2.90 4.18
------- -------- ----------
Waste dumps ore mined t - 55,802
------- -------- ----------
Waste dumps ore grade g/t - 1.11
------- -------- ----------
Total ore mined t 235,544 335,838
------- -------- ----------
Average grade g/t 2.78 3.18
------- -------- ----------
Ore processed t 249,544 339,872
------- -------- ----------
Average grade g/t 2.74 3.18
------- -------- ----------
Recovery rate % 92.2 91.9
------- -------- ----------
Gold produced oz 19,359 30,589
------- -------- ----------
In January 2019, regulatory agency Rosnedra approved updated
mining plans for MNV based on new ore reserve estimates completed
over the course of the previous year. Also in Q1 2019, the Company
received a positive ruling from the state geological expert panel
Rosgeolexpertiza on its geological exploration programme for the
flanks of MNV's ore bodies and for the deeper horizons of the
deposit.
Near-mine exploration efforts at MNV in Q1 2019 focused on
preparing an exploration programme for the Vilkinskaya zone, a new
adjacent greenfield licence acquired in 2018. The Company expects
to submit the plan for expert review in Q2 2019.
Belaya Gora
-- Q1 2019 waste stripping rose by 34% and ore mining increased
by 43% versus the same period last year as Belaya Gora reduced the
volume of ore from stockpiles taken for processing.
-- Ore processing rose 31% year-on-year as Belaya Gora resolved
seasonal problems with water supply that reduced capacity in Q1
2018.
-- Recoveries rose nearly 2% year-on-year to just over 76%
Belaya Gora Units Q1 2018 Q1 2019
-------
Waste stripping t 1,221,192 1,634,656
------- ---------- ----------
Ore mined t 493,799 705,429
------- ---------- ----------
Average grade g/t 0.80 0.91
------- ---------- ----------
including:
------- ---------- ----------
* Ore Au >0.7 g/t t 233 818 463,901
------- ---------- ----------
* Average grade g/t 1.16 1.13
------- ---------- ----------
* Ore Au 0.3-0.7 g/t t 259 981 241,527
------- ---------- ----------
* Average grade g/t 0.48 0.49
------- ---------- ----------
Ore processed t 320,566 432,801
------- ---------- ----------
Average grade g/t 1.12 1.15
------- ---------- ----------
Recovery rate % 74.7 76.0
------- ---------- ----------
Gold produced oz 8,977 11,775
------- ---------- ----------
Following on from last year's exploration drilling at the
Kolchansky and Zayachy prospects on the Belaya Gora Flanks licence,
the Company worked on a report of estimated reserves for the
deposits over the course of Q1 2019. The work continues and is
expected to be completed in the third quarter of this year.
Last year, the Company published details of a pre-feasibility
study (PFS) covering planned upgrades to the Belaya Gora processing
plant designed to improve recoveries to around 90% through the
addition of cyanidation capacity. Several steps toward implementing
the project were taken in Q1 2019, including:
-- Kazgiprotsvetmet and SGA Bateman worked on the technical designs for the plant upgrade;
-- The TOMS Institute produced updated technical regulations for
processing Belaya Gora ore; and
-- A tender was organised for equipment suppliers.
Blagodatnoye
As per the pre-feasibility study published by Highland Gold last
year, the Blagodatnoye deposit is being targeted to supply
additional ore to the Belaya Gora processing plant later in the
life of the project.
The Company received confirmation early this year that
Blagodatnoye's reserves had been registered with regulators as of
the end of December. In Q1 2019, the Company began organising a
tender to choose a contractor for mine design.
ZABAIKALSKY REGION, RUSSIA
Novoshirokinskoye (Novo)
-- Ore mining at Novo was largely unchanged year-on-year while
processing volume increased incrementally, by 3.7%.
-- Average head grade at the mill fell by 28% compared to Q1
2018, although up slightly from 4.07 g/t in Q4 2018.
Novo Units Q1 2018 Q1 2019
-------
Underground development m 3,034 2,677
------- -------- --------
Ore mined t 223,057 220,098
------- -------- --------
Average grade* g/t 5.51 3.98
------- -------- --------
Ore processed t 204,732 212,358
------- -------- --------
Average grade* g/t 5.80 4.18
------- -------- --------
Recovery rate* % 81.2 78.1
------- -------- --------
Gold produced (100%)* oz 30,975 22,289
------------------------- ------- -------- --------
* In gold equivalent at actual prices
(Metal grade of mined ore = Au 2.33 g/t, Ag 44.39 g/t, Pb 0.91%,
Zn 0.45%, 0.27% Cu).
The Novo 1.3 Mtpa expansion project, which is designed to
address the expected fall in grades at the mine, continued in Q1
2019.
Construction during the period focused on the water pumping
station at the +637 m level. Contractors are being selected to
complete other portions of Stage 1 of the project, which covers
expansion of the mine. Work on project documentation for Stage 2
(mill capacity expansion) is ongoing.
Baley Ore Cluster (Taseevskoye, Sredny Golgotay and ZIF-1)
In Q1 2019, the Company continued project design work on a heap
leach facility for its Baley ZIF-1 tailings licence, with a
projected annual processing capacity of 840k tonnes. A range of
geological, environmental, archaeological, and other studies was
conducted over the course of 2018, and design documentation was
approved by regional mining and environmental regulators in the
latter part of the year. The project has now been submitted for
review by the State Expert Panel.
At Sredny Golgotay, Wardell Armstrong (WAI-RU) continued work on
a trade-off study (Scoping Study level) to aid in considering
options for developing the deposit. A preliminary report has been
submitted and is currently undergoing review and revision with a
view towards completion in Q2 2019.
Meanwhile, Zabaikalzolotoproekt has been retained to work on
amendments to the technical project for Sredny Golgotay, with plans
for submission to regional mining regulators in Q3 2019.
CHUKOTKA AUTONOMOUS DISTRICT, RUSSIA
In December 2018, a commission of the Ministry for Development
of the Russian Far East approved a proposal to expand the
Beringovsky Advanced Special Economic Zone (ASEZ), which previously
covered only the south-eastern part of Chukotka, to include other
parts of the region where Highland Gold's Kekura and Klen licences
are located. The Chukotka ASEZ, as it is now known, was approved by
the Russian prime minister on January 10, 2019.
The Company learned in Q1 2019 that Kekura and Klen have been
included in the list of projects eligible to become 'residents' of
the ASEZ, which could provide certain tax breaks and other
incentives.
Valunisty
-- Ore mining and processing rose by 23% and 48% year-on-year, respectively.
-- Waste stripping fell 28% due to a shortage of machinery for
technical reasons as well as severe inclement weather
conditions.
-- As expected, head grade at the mill fell by more than half
versus Q1 2018, when the processing plant treated higher-grade ore
from the Gorny mine on the neighbouring KAS licence. Some mining at
Gorny is planned for later this year.
Valunisty Units Q1 2018 Q1 2019
-------
Waste stripping t 1,427,090 1,025,585
------- ---------- ----------
Ore mined t 35,025 43,095
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Average grade* g/t 4.49 3.07
------- ---------- ----------
Ore processed t 42,376 62,608
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Average grade* g/t 8.62 3.98
------- ---------- ----------
Recovery rate % 96.7 95.0
------- ---------- ----------
Gold produced* oz 11,177 7,308
------- ---------- ----------
* In gold equivalent at actual prices (incl. Ag)
Q1 2018 data offered solely for comparison
Exploration work at Valunisty and KAS in Q1 2019 focused on the
lower horizons and the flanks of the main deposit. Just over 1,300
metres were drilled over 7 holes on the southern part of Novaya
zone as follow-up exploration for ore bodies 13 and 17; 2,828
metres of core were logged; 1,153 core samples were extracted
(1,023.5 metres); 59 check samples were extracted (51.4 metres);
and 942 assay test results were received from the mine's
laboratory.
In parallel, the Company is preparing updated Russian-standard
reserve estimates for the Valunisty and Gorny deposits for
submission to regulators based on drilling results from 2014-2018.
Design documentation is also being drafted for an exploration
programme at the Zhilny ore cluster on the KAS licence. The Zhilny
programme is scheduled for submission to regulators for approval
later this month with a view towards commencing drilling in Q3
2019.
Also during the period, engineering studies and project design
work continued on the proposed expansion of Valunisty's processing
plant capacity from 250k tonnes to 350k tonnes of ore per annum,
and for the beginning of underground mining at the site. Laboratory
testing of X-Ray separation began during the quarter and is now
nearing the completion stage; technical inspections of the existing
processing plant's buildings, structures and foundations were
completed; and general mining plans were developed covering
stripping methods and estimates for mining complexes.
Kekura
Preparations for the next two phases of construction at Kekura
continued throughout Q1 2019, including engineering studies,
technical audits, site surveys, design work, tenders for
contractors, and the preparation and submission of various types of
documentation for regulatory approval.
Construction work continued on some first-phase facilities, such
as the assay laboratory, fuel storage facility, and communications
tower. Start-up and adjustment work was carried out on the power
substation, which is expected to be connected to the regional power
network later this year.
Technical assignments were prepared for a range of engineering
studies in preparation for the next phase of construction,
including geodesic, geological, hydrometeorological and
environmental. State geological experts approved a programme for
hydrogeological work aimed at exploring underground water reserves
in the area of the Khrebtovaya river as a source of water
supply.
Materials and equipment that were shipped to the port of Pevek
during the 2018 sea navigation season were delivered by winter
roads to the site over the course of the quarter.
On the exploration front, about 1,300 metres of drilling on the
Zapadny prospect on the broader Kekura licence is to be completed
this spring, while cores have been sent out for laboratory
analysis. Preliminary desktop studies of existing data show a
steeply dipping vein and veinlet impregnated zone with intervals
reaching 3-5 metres at 5-6 g/t, potentially providing additional
resources for the Kekura project.
A re-estimation and booking with regulators of Kekura's
Russian-standard reserves is in progress, taking into account
2016-2017 drilling results. Submission of materials for state
expert review is scheduled for this spring.
Klen
The development of design documentation for Klen was put on hold
pending further exploration and the finalisation of the project's
inclusion in the Chukotka ASEZ, which will have a significant
effect on the project's economics.
In the meantime, the Company conducted laboratory tests using
X-ray ore separation technology on ore from Klen. The XRT test
results demonstrated the potential to reject on the order of 30% of
plant feed material without significant metal losses. The tests
were performed on a Steinert separator, and duplicate bulk samples
have now been sent for verification testing on a Tomra
separator.
In March, exploration drilling commenced on the northern flank
of the Klen deposit. As of the end of Q1 2019, 1,784 metres were
drilled and 878 samples were extracted. All of the samples were
shipped to Kekura for sample preparation and X-ray spectroscopic
analysis, and intervals with gold bearing potential were identified
during the core logging. Core samples were extracted and assay
results are expected in due course. A total of 11,000 metres of
drilling is planned on Klen's flanks and on the surrounding
Verkhne-Krichalskaya license area this year.
HEALTH, SAFETY AND ENVIRONMENT
Highland Gold's key health and safety goals include ensuring
safe labour conditions, managing operational risks, offering
ongoing employee training programmes and encouraging personal
accountability for safety at the workplace.
In Q1 2019, the Lost Time Incident Frequency Rate (LTIFR),
calculated as the number of incidents for every 1,000,000
man-hours, was 3.6 compared to 5.5 in Q1 2018. Six lost-time
incidents were registered during the period - five at Novo and one
at Belaya Gora - versus nine during the same period last year
(three at MNV and Belaya Gora, five at Novo and one at the Moscow
office).
Among the incidents registered in Q1 2019 were three fatalities.
On 25 January 2019, two employees at Novo were found unresponsive
in the underground mine as a result of gas poisoning. On 21
February 2019, a repairman was found unresponsive in his workshop
at Belaya Gora, the apparent victim of an ischemic stroke.
Extensive investigations of both incidents were carried out and the
Company is taking concrete steps to prevent repeats of these
unfortunate incidents.
Training sessions conducted in Q1 2019 included a "Conscious
Safety Management" course for 6 people in the Moscow office and 32
at Valunisty. An "Internal Incident Investigation" course was
completed by 15 people from Valunisty. At MNV and Belaya Gora, 40
drivers attended a course on "Defensive Driving", while 16 people
from Valunisty received training on "Risk Assessment". A total of
222 employees at Novo and 280 from MNV and Belaya Gora attended
courses on "Conscious Safety Attitude".
Over the course of 2018, the Company's health & safety team
developed and introduced new corporate standards covering a range
of safe workplace issues. In Q1 2019, they added to that list new
standards for risk assessment and incident damage assessment. These
are currently being rolled out across the Company's operations.
The Board of Directors' HSE Committee and the management-level
HSE Committee both held meetings during the first quarter. At the
latter, targets for the year and plans for achieving them were
approved.
The Company's auxiliary mine rescue teams are being kept on
alert at each of its operations with a view to ensuring their
preparedness to participate in resolving emergency situations.
Highland Gold continues to adhere to its stated policy of
protecting the environment and operating in accordance with all
relevant regulatory requirements. An environmental monitoring
system is in place at each of the Company's operations, and
reducing the impact of its operations on the environment remains
one of the Company's key priorities.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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