TIDMHGM
RNS Number : 0917G
Highland Gold Mining Limited
19 July 2019
HIGHLAND GOLD MINING LIMITED
19 July 2019
Q2 2019 Operating Results
Highland Gold Mining Limited ("Highland Gold" or the "Company",
AIM: HGM) today reports its operating results for the three months
ended 30 June 2019 ("Q2 2019") and for the first half of 2019 ("H1
2019").
HIGHLIGHTS
-- Highland Gold produced a total of 70,293 oz of gold and gold
equivalent in Q2 2019, a slight increase from 69,610 oz in Q2
2018.
-- Total production in H1 2019 was 142,254 oz of gold and gold
equivalent, an increase of 10% from 128,921 in H1 2018.
-- Production at Mnogovershinnoye (MNV) in Q2 2019 was stable
year-on-year, while H1 2019 output was up 23% over the previous
year.
-- Belaya Gora and Novoshirokinskoye (Novo) saw year-on-year
declines in output during both the second quarter and the first
half of the year, although grades at Novo improved substantially in
Q2 2019 compared to the previous quarter.
-- Construction work at Kekura and an exploration drilling
programme at Klen continued during Q2 2019, as both projects were
officially granted residency in the Chukotka special economic
zone.
-- The average realised gold price was US$ 1,309 per ounce in
the second quarter and US$ 1,308 in the first half of the year.
-- The Company affirms its forecast for total 2019 production of
290,000-300,000 oz of gold and gold equivalent.
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)
-- Gold production was level year-on-year in Q2 2019 as slightly
higher mill throughput was offset by a slightly lower head
grade.
-- Q2 2019 ore mining increased by 2% and included more ore from MNV's historic waste dumps.
-- Waste stripping rose by 9% during the quarter and 26% for H1
2019, in line with MNV's mining plan, which foresees an increase in
average grades in the second half of this year.
MNV Units Q2 2018 Q2 2019 H1 2018 H1 2019
-------
Waste stripping t 1,316,531 1,441,361 2,097,446 2,635,346
------- ---------- ---------- ---------- ----------
Underground development m 2,993 3,087 5,923 5,570
------- ---------- ---------- ---------- ----------
Open-pit ore mined t 103,903 87,497 140,982 176,189
------- ---------- ---------- ---------- ----------
Open-pit ore grade g/t 2.25 2.41 2.23 2.38
------- ---------- ---------- ---------- ----------
Underground ore mined t 209,438 188,990 407,903 380,334
------- ---------- ---------- ---------- ----------
Underground ore grade g/t 3.29 3.83 3.10 4.01
------- ---------- ---------- ---------- ----------
Waste dumps ore mined t 47,296 90,447 47,296 146,249
------- ---------- ---------- ---------- ----------
Waste dumps ore grade g/t 1.04 1.10 1.04 1.10
------- ---------- ---------- ---------- ----------
Total ore mined t 360,637 366,934 596,181 702,772
------- ---------- ---------- ---------- ----------
Average grade g/t 2. 70 2.82 2.73 2.99
------- ---------- ---------- ---------- ----------
Ore processed t 359,582 364,380 609,226 704,252
------- ---------- ---------- ---------- ----------
Average grade g/t 2.76 2.68 2.75 2.92
------- ---------- ---------- ---------- ----------
Recovery rate % 91.9 91.6 92.0 91.74
------- ---------- ---------- ---------- ----------
Gold produced oz 28,731 28,728 48,090 59,317
------- ---------- ---------- ---------- ----------
Following the extension of MNV's life of mine from 2022 to 2029,
as announced by the Company earlier this year, a scoping study and
design documentation were commissioned in Q2 2019 regarding
renovations and upgrades to the mine, its production facilities and
infrastructure. Tenders for the projects have been completed,
contracts were awarded, and work on the scoping study is already in
progress.
A trade-off study on options for increasing tailings storage
capacity was also initiated during the quarter. Solutions under
consideration include semi-dry and conventional stockpiling at
various possible sites, and utilization of mined-out or abandoned
open pits. The study is expected to be completed in the third
quarter of this year.
Near-mine exploration at MNV in Q2 2019 focused on the flanks of
the Deer and Intermediate ore bodies, outlining over 425k tonnes of
potential new ore resources at grades ranging from 2.5 g/t to 5.5
g/t. The Company is in the process of preparing a report on the
exploration work conducted at MNV during the first half of this
year.
Belaya Gora
-- Q2 2019 stripping increased by 131% year-on-year, while ore
mining volume fell by 45%, both due to the cutback of the pit walls
on upper levels.
-- Mill throughput declined by 15% YoY due to SAG mill repairs
and a localised fire incident in a pipeline in the main processing
plant.
-- The processing plant's recovery rate in Q2 2019 was 73.1%,
compared to 76% in Q2 2018, as a direct result of the lower average
head grade.
Belaya Gora Units Q2 2018 Q2 2019 H1 2018 H1 2019
-------
Waste stripping t 1,241,719 2,872,141 2,462,911 4,506 796
------- ---------- ---------- ---------- ----------
Ore mined t 561,797 311,323 1,055,596 1,016,752
------- ---------- ---------- ---------- ----------
Average grade g/t 0.81 0.82 0.81 0.88
------- ---------- ---------- ---------- ----------
including:
------- ---------- ---------- ---------- ----------
* Ore Au >0.7 g/t t 273,442 169,163 507,260 633,064
------- ---------- ---------- ---------- ----------
* Average grade g/t 1.18 1.07 1.17 1.11
------- ---------- ---------- ---------- ----------
* Ore Au 0.3-0.7 g/t t 288,355 142,160 548,336 383,687
------- ---------- ---------- ---------- ----------
* Average grade g/t 0.46 0.53 0.47 0.50
------- ---------- ---------- ---------- ----------
Ore from stockpiles t 78,570 179,796 162,900 211,469
------- ---------- ---------- ---------- ----------
Average grade g/t 0.82 0.83 1.00 0.84
------- ---------- ---------- ---------- ----------
Ore processed t 398,302 345,983 718,868 778,784
------- ---------- ---------- ---------- ----------
Average grade g/t 1.09 0.87 1.11 1.03
------- ---------- ---------- ---------- ----------
Recovery rate % 76.0 73.1 75.4 74.9
------- ---------- ---------- ---------- ----------
Gold produced oz 10,827 6,546 19,804 18,322
------- ---------- ---------- ---------- ----------
Data is being assembled for a JORC-compliant audit of reserves
in the Kolchansky and Zayachy prospects on the Belaya Gora Flanks
licence, based on over 8,000 metres of exploration drilling in 2017
and 2018. In-house estimates compiled over the course of Q2 2019
point to potentially two million tonnes of ore at a grade of 1.16
g/t. The JORC reserve report is expected later this year.
ZABAIKALSKY REGION, RUSSIA
Novoshirokinskoye (Novo)
-- Mined ore in Q2 2019 totalled 191k tonnes, which is 11.7%
lower YoY, but ore processing volume inched up by 1% to 202k
tonnes.
-- Mined ore grades were lower year-on-year at 5.16 g/t gold
equivalent, but much improved versus 3.98 g/t in the first quarter
of this year.
Novo Units Q2 2018 Q2 2019 H1 2018 H1 2019
-------
Underground development m 3,150 2,570 6,184 5,295
------- -------- -------- -------- --------
Ore mined t 216,373 191,077 439,430 411,175
------- -------- -------- -------- --------
Average grade* g/t 5.70 5.16 5.60 4.53
------- -------- -------- -------- --------
Ore processed t 200,777 201,963 405,509 414,321
------- -------- -------- -------- --------
Average grade* g/t 5.86 5.30 5.83 4.73
------- -------- -------- -------- --------
Recovery rate* % 79.4 79.8 80.3 79.0
------- -------- -------- -------- --------
Gold produced (100%)* oz 30,052 27,453 61,027 49,742
------------------------- ------- -------- -------- -------- --------
* In gold equivalent at actual prices
(Metal grade of mined ore = Au 2.76 g/t, Ag 51.96 g/t, Pb 0.99%,
Zn 0.47%, Cu 0.25%).
Work on the Novo 1.3 Mtpa expansion project progressed in Q2
2019. Highlights included:
- Continued construction work on a water pumping station at the
+637m level in the underground mine, with completion expected in
November 2019 after the installation and adjustment of electrical
equipment;
- The selection of contractors for work on the key remaining
facilities for Stage 1 of the project (mine capacity expansion),
covering reconstruction of the skip hoist and main ventilation
system; and
- The initiation of work on design documentation for expanding
the tailings dam in preparation for Stage 2 of the project
(processing plant capacity expansion).
Also during the quarter, the Company continued to undertake
studies on future ore mining at Novo, with intensified production
drilling over the past few months. The deliverable of this exercise
will be an updated model of the mine's mineralogical and
metallurgical balance.
Baley ore cluster (Teseevskoye, Sredny Golgotay and ZIF-1)
The Company continued design work on a heap leach facility with
an annual processing capacity of 840k tonnes at the Baley ZIF-1
tailings licence during the quarter. Design documentation has
undergone a preliminary review process at the State Expert Panel in
Krasnoyarsk, and is being updated based on their feedback. The
submission of project documentation for final expert review is
underway, with approval expected in Q3 2019.
Work on finalising a scoping study for Sredny Golgotay,
including a trade-off analysis of various options for developing
the deposit, was ongoing in Q2 2019. The technical and financial
parameters in a preliminary report received earlier this year are
in the process of being reviewed and approved. The final report is
expected in the coming weeks.
CHUKOTKA AUTONOMOUS DISTRICT, RUSSIA
As per the Company's announcement earlier this month, a key
highlight of Q2 2019 was the completion of an agreement with
Russia's Far East Development Corporation officially confirming
residency in the Chukotka Advanced Special Economic Zone (ASEZ) for
the Kekura and Klen projects, which was then signed on 03 July
2019. The ASEZ programme offers certain tax breaks and other
incentives over the first five to ten years of operations.
Valunisty
-- Waste stripping was 6% lower year-on-year in Q2 2019 and 17%
lower for H1 2019 due to the redeployment of equipment for snow
ploughing and due to equipment downtime.
-- Ore mining increased by 12% YoY in the second quarter and 15%
in H1 2019, while ore processing rose by 15% and 28%,
respectively.
-- Grades were lower, as expected, in H1 2019 as the mill
processed ore from Valunisty's Glavnaya and Novaya zones, as
opposed to the main Valunisty ore body and the satellite Gorny mine
in H1 2018.
Valunisty Units Q2 2018 Q2 2019 H1 2018 H1 2019
-------
Waste stripping t 1,528,697 1,442,078 2,955,788 2,467 662
------- ---------- ---------- ---------- ----------
Ore mined t 81,399.5 91,319 116,425 134,415
------- ---------- ---------- ---------- ----------
Average grade* g/t 3.54 2.79 3.66 2.76
------- ---------- ---------- ---------- ----------
Ore processed t 59,946 68,986 102,322 131,593
------- ---------- ---------- ---------- ----------
Average grade* g/t 4.00 3.21 5.62 3.37
------- ---------- ---------- ---------- ----------
Recovery rate % 95.75 95.57 95.9 95.2
------- ---------- ---------- ---------- ----------
Gold produced* oz 7,940 7,566 19,117 14,873
------- ---------- ---------- ---------- ----------
* gold equivalent, including silver
Production exploration drilling at Valunisty in Q2 2019 focused
on the southern part of the Novaya zone, covering 25 holes and
totalling 4,720 metres. Cores were logged and 2,532 core samples
totalling 2,274 m were extracted. The mine's central assay
laboratory completed 4,272 assay tests during the period.
Engineering studies and project design work continued on the
planned 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. Tests were conducted using XRT
ore sorting technology, with the results now under review, and
inspections were carried out on the existing processing plant
buildings and foundations. Mining options were also reviewed along
with cost estimates for mining equipment.
Kekura
The current phase of construction and preparations for
subsequent stages continued throughout Q2 2019 at Kekura.
Progress was made in the ongoing construction of the assay
laboratory, where the foundation and structural frame are now in
place, and the communications tower, where the mast has been raised
and equipment block installed. The Company also reinforced the
steel structures of the main building of the pilot processing plant
on site.
During the quarter, ground regrading work began in preparation
for construction of an expanded camp. Work also began on an
internal power line network to connect buildings around the site to
Kekura's power substation. The substation is due to be connected to
the regional power grid later this year.
In June, Russian regulators approved Kekura's mine allotment for
the open pit, as well as the Company's methodology for production
exploration and grade control drilling. RC drilling commenced on
site towards the end of the month. The Company plans to begin
stripping and initial ore mining later this year.
Klen
The Company made preparations for conducting XRT bulk sorting
tests on Klen ore in Q2 2019 to see if this ore sorting technology
could be used for the project. A more representative sample in
terms of volume and extraction method will be taken for testing in
August.
While waiting for the tests to be conducted, a decision was made
to review new alternatives for development of the deposit with a
view towards reducing projected construction costs. The Company is
preparing a tender for contractors for the technical design
assignment.
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 Q2 2019, the Lost Time Incident Frequency Rate (LTIFR),
calculated as the number of incidents for every 1,000,000
man-hours, was 2.77 compared to 4.22 in Q2 2018. Four lost-time
incidents were registered during the period - one each at Novo,
MNV, Belaya Gora and Valunisty - versus seven during the same
period last year.
The Company is saddened to report that the incident at Novo
involved a fatality. A welder was making repairs to the surge bin
of an underground crusher housing and fell from height. An
extensive investigation of the incident has been carried out and
the Company has conducted additional safety briefings with mine
employees in an effort to prevent a repeat of this unfortunate
incident.
The Board of Directors' HSE Committee approved the Company's new
HSE Policy and its targets and goals for the year at its meeting in
March. Since then, a new corporate standard on "Analysis of Safe
Workplace Practices" was developed. The standard and a related set
of tools are currently being rolled out across the Company and its
subsidiaries.
Training sessions conducted in Q2 2019 included: a "Conscious
Safety Management" course for 24 employees at Novo and 274 at MNV;
a "Risk Assessment" course for 28 people at MNV and 23 at Novo; and
a "Defensive Driving" course for 41 employees at MNV.
A self-assessment of labour safety management systems was
undertaken at Novo, MNV, Kekura and Valunisty in May 2019. The
audit findings were used to develop an action plan aimed at further
introducing improved labour safety management processes. In
addition, a company-wide risk assessment project is in progress
with the aim of developing a risk registry in accordance with
corporate standards.
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.
Over the course of Q2 2019, in-house audits of environmental
management systems were performed at MNV and Belaya Gora to ensure
their compliance with environmental legislation. An action plan was
developed based on the audits' findings in order to minimize the
causes of systematic violations.
Across the Company, 1,117 employees underwent refresher training
on environmental safety during the quarter. Another 270 employees
sat for training and took exams on management of class I-IV
hazardous materials. Eight managers and specialists attended
external environmental safety courses.
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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