TIDMHGM
RNS Number : 5929D
Highland Gold Mining Limited
29 October 2020
HIGHLAND GOLD MINING LIMITED
29 October 2020
Q3 2020 Operating Results
Highland Gold Mining Limited ("Highland Gold" or the "Company",
AIM: HGM) today reports its operating results for the three months
ended 30 September 2020 ("Q3 2020").
HIGHLIGHTS
-- Highland Gold produced a total of 75,610 oz of gold and gold
equivalent in Q3 2020, a slight increase from 75,038 oz in Q3
2019.
-- For the first nine months of the year ("9M 2020"), total
production was 200,383 oz of gold and gold equivalent, down from
217,298 oz in 9M 2019, as 2020 production plans are heavily
weighted to the latter part of the year.
-- The production figures include, for the first time, gold
output from pilot mining and processing activities at Kekura, the
Company's main development project.
-- The Company reaffirms its guidance for total production of
290,000-300,000 oz of gold and gold equivalent for the full year
2020.
-- Mnogovershinnoye (MNV), Belaya Gora and Valunisty all met or
exceeded their production targets for 9M 2020, balancing out a
small shortfall at Novoshirokinskoye (Novo) due to lower
grades.
-- Construction progressed on the expansion projects at Novo and
Belaya Gora, with Belaya Gora on track for completion this year and
Novo now planned for completion in Q1 2021.
-- Construction likewise continued at Kekura and the Baley ZIF-1
Tailings heap leach project, with the latter now expected to
produce first gold in 2021, earlier than previous guidance.
-- The Company published its inaugural annual Sustainability
Report on 17 August 2020. The report, which is available on the
corporate website at www.highlandgold.com/home/sustainability,
contains data on a range of ESG (environment, social, governance)
metrics from 2019, as well as information on policies and
programmes in progress this year.
-- Production, sales and supply chain were not materially
affected by the COVID-19 pandemic in Q3 2020, but the Company
continues to implement its broad programme for protecting its
employees and the communities where it operates.
-- The average realised gold price was US$1903 per ounce in Q3 2020.
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 Stuart Skinner, Louis McKeeve
(Nominated Adviser and +44 (0) 207 260 1000
Joint Broker)
BMO Capital Markets Limited Tom Rider, Pascal Lussier Duquette, Neil
(Joint Broker) Elliot
+44 (0) 207 236 1010
Peat & Co Charlie Peat
(Joint Broker) +44 (0) 207 104 2334
***
KHABAROVSK REGION, RUSSIA
Mnogovershinnoye (MNV)
-- MNV gold production rose by 26% year-on-year in Q3 2020
thanks to higher grades and recoveries
-- Open pit grades doubled during the quarter as mining
activities moved to the Intermediate and Deer ore bodies, feeding a
40% year-on-year increase in the average head grade at the mill
-- Better grades and recoveries more than offset a 12% decline
in ore processing volume during the quarter due to the re-lining of
one of the mills and other scheduled maintenance
-- Mining at MNV's historic waste dumps was curtailed in Q3 2020
after already meeting annual targets
MNV Units Q3 2019 Q3 2020 9M 2019 9M 2020
-------
Waste stripping t 2,370,609 2,577,173 5,085,292 7,864,045
------- ---------- ---------- ---------- ----------
Underground development m 3,235 2,895 8,805 8,730
------- ---------- ---------- ---------- ----------
Open-pit ore mined t 13,124 94,894 189,313 156,127
------- ---------- ---------- ---------- ----------
Open-pit ore grade g/t 1.61 3.18 2.32 3.16
------- ---------- ---------- ---------- ----------
Underground ore mined t 220,000 202,280 600,334 602,881
------- ---------- ---------- ---------- ----------
Underground ore grade g/t 3.61 3.93 3.86 3.82
------- ---------- ---------- ---------- ----------
Waste dumps ore mined t 113,169 63,219 259,418 226,282
------- ---------- ---------- ---------- ----------
Waste dumps ore grade g/t 1.07 1.18 1.09 1.12
------- ---------- ---------- ---------- ----------
Total ore mined t 346,293 360,393 1,049,065 985,290
------- ---------- ---------- ---------- ----------
Average grade g/t 2.70 3.25 2.90 3.10
------- ---------- ---------- ---------- ----------
Ore processed t 341,563 300,916 1,045,815 995,265
------- ---------- ---------- ---------- ----------
Average grade g/t 2.84 4.04 2.90 3.02
------- ---------- ---------- ---------- ----------
Recovery rate % 91.7 93.4 91.7 92.5
------- ---------- ---------- ---------- ----------
Gold produced oz 28,951 36,502 88,269 89,224
------- ---------- ---------- ---------- ----------
Following the success of the Company's ongoing near-mine
exploration programme and last year's extension of MNV's life of
mine to 2029, planning work commenced for increasing the mine's
tailings capacity. In Q3 2020, the State Expert Panel gave its
approval of an engineering survey for construction of the new Tier
3 tailings storage facility. A review of facility's design
documentation by the panel is in progress.
Construction of a diverting dam at the existing Tier 2 tailings
strorag was completed by contractor Avik LLC during the quarter.
Construction of the bedding and the bund wall for the Tier 3
tailings dam is in progress, with contractor Zoloto Plus LLC having
completed approximately 85% of work on section one of the project
and Spetspromstroy LLC having completed about 60% of section two.
The scope of work for both sections has been expanded to include
the construction of additional drainage systems and bund wall
excavation and filling.
Belaya Gora
-- Q3 2020 production was 5% ahead of targets and 23% higher
year-on-year due to a 12% increase in head grade at the mill, as
well as higher recoveries
-- Higher grades and recoveries offset a 3% reduction in
processing volume caused by unscheduled downtime for maintenance
and repairs
Belaya Gora Units Q3 2019 Q3 2020 9M 2019 9M 2020
-------
Waste stripping t 2,468,316 2,664,586 6,975,113 6,969,801
------- ---------- ---------- ---------- ----------
Ore mined t 782,927 384,969 1,799,679 1,689,625
------- ---------- ---------- ---------- ----------
Average grade g/t 0.83 0.91 0.86 0.90
------- ---------- ---------- ---------- ----------
including:
---------- ---------- ---------- ----------
* Ore Au >0.6 g/t* t 484,337 299,743 1,129,840 1,165,040
------- ---------- ---------- ---------- ----------
* Average grade g/t 1.06 1.04 1.09 1.09
------- ---------- ---------- ---------- ----------
* Ore Au 0.3-0.6 g/t* t 298,590 85,226 669,838 524,585
------- ---------- ---------- ---------- ----------
* Average grade g/t 0.46 0.47 0.47 0.48
------- ---------- ---------- ---------- ----------
Ore from stockpiles t 13,643 0 225,112 4,090
------- ---------- ---------- ---------- ----------
Average grade g/t 1.04 0 0.85 1.43
------- ---------- ---------- ---------- ----------
Ore processed t 413,561 399,696 1,192,345 1,130,261
------- ---------- ---------- ---------- ----------
Average grade g/t 0.98 1.10 1.01 1.03
------- ---------- ---------- ---------- ----------
Recovery rate % 77.7 78.0 75.9 76.8
------- ---------- ---------- ---------- ----------
Gold produced oz 9,108 11,212 27,430 29,038
------- ---------- ---------- ---------- ----------
* The low-grade cut-off in 2019 was 0.7 g/t
The Company is in the final stages of renovations to the Belaya
Gora processing plant, which are on track for completion by the end
of this year. The addition of a CIP circuit to the plant will
improve gold recovery to around 90% from the current average of
just over 75%. It will also enable the plant to process ore from
the nearby Blagodatnoye deposit.
Highland Gold's project bureau, ZabaikalZolotoProekt, drafted an
environmental impact study for the processing plant expansion in Q3
2020. The study underwent and passed a review at a public
hearing.
The installation of equipment for the sorption/elution and
pre-leaching circuits progressed during the quarter, with the
sorption section now completed and pre-leaching over 50% complete.
The lower levels of the electrowinning and elution equipment were
mounted and steel structures assembled for the elution and carbon
regeneration equipment. Building construction is 90% complete with
only access point openings left to facilitate moving equipment in
and out. Installation of the thickener equipment is currently in
progress alongside the installation of utilities, cabling and
wiring.
In parallel, work continues on the expansion of Belaya Gora's
tailings capacity, including filling of the raised bund wall and
construction of a diversion ditch. The work is more than 50%
completed and is expected to be completed in the fourth
quarter.
ZABAIKALSKY REGION, RUSSIA
Novoshirokinskoye (Novo)
-- Ore mining in Q3 2020 decreased by 36% due to planned
shutdowns related to the reconstruction of the mine's skip hoist
system, but processing was slightly higher as the mine had
stockpiled ore in preparation for stoppages
-- The average grade in ore mined decreased by 47% vs. Q3 2019
due to the accessing of lower grade stopes
Novo Units Q3 2019 Q3 2020 9M 2019 9M 2020
-------
Underground development m 2,950 1,880 8,245 6,838
------- -------- -------- -------- --------
Ore mined t 227,893 150,123 639,068 640,632
------- -------- -------- -------- --------
Average grade* g/t 5.20 2.73 4.77 3.23
------- -------- -------- -------- --------
Ore processed t 217,654 219,242 631,975 647,352
------- -------- -------- -------- --------
Average grade* g/t 5.25 2.71 4.91 3.29
------- -------- -------- -------- --------
Recovery rate* % 81.7 74.2 79.9 76.7
------- -------- -------- -------- --------
Gold produced* oz 30,025 14,174 79,767 52,472
------------------------- ------- -------- -------- -------- --------
* Gold equivalent calculated at actual prices
(Metal grade of mined ore = Au 2.14 g/t, Ag 39.72 g/t, Pb 0.84%,
Zn 0.40%, Cu 0.21%).
The expansion of Novo's ore mining and processing capacity from
800 ktpa to 1.3 Mtpa continues to be a key focus for the Company as
it seeks to offset the effects of expected lower grades. Delays due
to various factors, including the Covid-19 pandemic, mean the
project is now likely to be completed Q1 2021.
In Q3 2020, the Company continued work on several objectives
designed to increase mining capacity, including the skip hoist,
skip measuring unit, measuring chamber, and hopper station. The new
ventilation system, heating system and boiler house are also at
advanced stages of construction.
Earlier in the year, the old chemical storage warehouse, boiler
and chimney structures were dismantled to make way for the
pre-concentrating unit that will increase Novo's processing
capacity. Construction of the pre-concentration circuit is in
progress.
Additionally, design work continued for a new water treatment
facility. Designs for the underground water pumping station have
been approved and work on that facility will commence in Q4
2020.
Baley Ore Cluster (Taseevskoye, Sredny Golgotay and ZIF-1)
Highland Gold accelerated the Baley ZIF-1 Tailings project in Q3
2020, with the Board of Directors approving a request for
additional funding to expedite the construction process and procure
equipment. The project entails building a heap leach to process
840k tonnes/year of slime from the tailings dam of the former Baley
processing plant, producing an estimated 15,000 oz of gold per
annum. Initial gold production is now expected to begin in H2
2021.
Contracts for plant construction have been signed and agreements
for the manufacture and procurement of equipment are currently
being negotiated. The contractors already on site have brought in
additional equipment and personnel and are finishing up initial
earthwork and casting foundations Overhead electricity lines are
completed and the associated documentation needed to put them into
use is in progress. A small hazardous materials storage facility is
nearing completion.
Also during the quarter, Zabaikalzolotoproekt continued to work
with in-house specialists on updated scoping studies for the
Taseevskoye and Sredny Golgotay deposits. The Company is close to
selecting a contractor for geo-metallurgical mapping of
Taseevskoye. That work will be followed by the drafting of a
pre-feasibility study, including geological, technical,
metallurgical, hydro-geological and other studies.
CHUKOTKA, RUSSIA
Valunisty
-- Q3 2020 gold equivalent production rose by 65% year-on-year,
and substantially ahead of targets, on the back of higher
processing volume, grades and recovery rates
-- Ore grades were 172% higher during the quarter as mining
moved to lower levels of ore body 12 in the mine's Novaya zone
Valunisty Units Q3 2019 Q3 2020 9M 2019 9M 2020
-------
Waste stripping t 1,510,060 1,724,075 3,977,723 5,049,777
------- ---------- ---------- ---------- ----------
Ore mined t 98,836 62,907 233,251 229,092
------- ---------- ---------- ---------- ----------
Average grade* g/t 2.64 7.17 2.90 4.27
------- ---------- ---------- ---------- ----------
Ore processed t 69,230 72,422 200,824 208,849
------- ---------- ---------- ---------- ----------
Average grade* g/t 3.35 4.93 3.63 4.02
------- ---------- ---------- ---------- ----------
Recovery rate* % 94.6 97.2 94.1 96.4
------- ---------- ---------- ---------- ----------
Gold produced* oz 6,954 11,472 21,832 26,977
------- ---------- ---------- ---------- ----------
* Gold equivalent, calculated at actual prices, including
silver
Operating priorities at Valunisty include advancing projects to
increase the processing plant capacity from 250k tonnes to 350k
tonnes of ore per year, and preparations for the commencement of
underground mining. In addition, Q3 2020 saw progress on planning
and preparing for new open-pit mining at the satellite Gorny
deposit and the reconstruction of Valunisty's mining equipment
maintenance shop. All four projects together would result in
increased production capacity and lower per-unit operating costs at
the mine.
Following their approval at public hearings earlier in the year,
design documentation for the processing plant expansion and
underground mining projects has been prepared for submission to
state environmental authorities. Tendering for the processing plant
expansion is now underway and key equipment is being purchased with
a view towards construction commencing in 2021.
Kekura
-- Highland Gold initiates reporting of mining and processing data from Kekura
-- Initial stripping and mining at the site began in October
2019 while ramp-up work on the pilot processing plant began in Q1
2020 and continued throughout the year
-- The pilot processing plant has the capacity to treat 120,000 tonnes of ore per year
Kekura Units Q3 2019 Q3 2020 9M 2019 9M 2020
-------
Ore mined t - 121,508 - 210,488
------- --------- -------- -------- --------
Average grade* g/t - 3.25 - 2.59
------- --------- -------- -------- --------
Ore processed t - 19,153 - 36,982
------- --------- -------- -------- --------
Average grade* g/t - 7.39 - 4.86
------- --------- -------- -------- --------
Recovery rate* % - 49.5 - 46.2
------- --------- -------- -------- --------
Gold produced* oz - 2,250 - 2,672
---------------- ------- --------- -------- -------- --------
* Gold equivalent, calculated at actual prices, including
silver
Construction at Kekura continues at full pace in preparation for
the launch of commercial production by 2023. In Q3 2020, work was
completed on a broad array of facilities, including:
-- Foundations for the main processing plant;
-- Foundations for the bridge crane at the main processing plant site;
-- A pneumatic hangar at the main processing plant site;
-- Installation and start-up and adjustment of the mobile
concrete batching plant (Flagman-45);
-- Installation, start-up and adjustment of the boiler room;
-- External utilities such as water supply, sewage, heat and
power for the new camp expansion and canteen buildings;
-- Installation, start-up and adjustment of the water treatment station;
-- Construction and installation of an XRF (X-ray fluorescence)
sorter at the pilot processing plant;
-- Anti-corrosion protection for tanks in the fuel storage facility; and
-- A 450 m3 tank for the camp's firefighting station.
Throughout the quarter, work continued on several other projects
including the new camp housing and canteen facilities, which opened
for business in October. Other projects initiated in Q3 2020 that
are still in progress include:
-- The operator's room, technical pipelines, run-off water
drainage, and foundations for the cable racks at the fuel storage
facility;
-- External water pipelines;
-- Some internal utility work at the new camp housing and canteen;
-- Equipment installation at the assay laboratory; and
-- Installation of a BIOX water treatment station.
Steel structures and equipment for the main processing plant, as
well as modular buildings for the second phase of the camp
expansion, have now been manufactured. They are all expected to be
delivered to site during the 2020-2021 navigation season.
Also in Q3 2020, public hearings were held to review late-stage
construction plans for Kekura, and local residents signed off on
the project. A review by environmental experts is currently in
progress.
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 Q3 2020, the Company's Lost Time Incident Frequency Rate
(LTIFR), calculated as the number of incidents for every 1,000,000
man-hours, was 3.41, a notable deterioration from the 2.14 LTIFR
recorded in Q3 2019. A total of six lost time incidents were
recorded (three at MNV and one each at Belaya Gora, Novo and
Kekura) compared to just three incidents in Q3 2019 (one each at
MNV, Belaya Gora and Valunisty). For each incident, the Company
commissions a detailed investigation and its findings are
communicated to managers at all production sites.
Training seminars carried out during the quarter included two
sessions on "Efficient Safety Management. Behavioural Safety
Audits" for 23 managers, supervisors and personnel at MNV and
Belaya Gora, and three courses on "Conscious Attitude towards
Safety" for 38 MNV and Belaya Gora staff. Furthermore, an extensive
training programme on corporate safety standards was developed for
employees staying at the Company's Observation Centres on their way
to a production site.
COVID-19 Response
A key focus of the HSE team for much of this year has been the
Company's response to the COVID-19 pandemic. In addition to the
corporate task force operating from the Moscow office, coronavirus
task forces are in action at each production site. The task forces
have implemented a complex programme of measures designed to
protect the health and well-being of the Company's employees and
the communities in which we operate. The Company's medical services
contractor, International SOS, is assisting in coordinating the
COVID-19 response.
Observation Centres have been established for each operating
location, either near the mine or in the nearest town or regional
capital, and shift changes are being conducted via 7 to 14 day
quarantine with coronavirus testing. The centres feature
comfortable accommodations for team members traveling to site and
for others requiring isolation, and are staffed by medical
professionals. Laboratories at each location are now fully
operational and can carry out in-house express coronavirus
testing.
While at the Observation Centres, employees receive additional
training on health and safety, corporate values and standards, and
vocational subjects.
At the Company's administrative offices, measures taken include
improved ventilation, wider spacing between work stations to ensure
social distancing, regular disinfection of surfaces, and free
distribution of PPE such as masks and gloves. A large proportion of
staff has been designated to work remotely and business travel has
been reduced to a bare minimum.
While there have been individual cases of COVID-19 infection
among Highland Gold employees in each operating region, the
Observation Centres and other precautions taken at administrative
offices and production sites have thus far prevented any
significant pandemic outbreaks or interruptions in the Company's
mining and processing plant operations, supply chain, and
sales.
Environment
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.
Among the highlights of this year has been Highland Gold's
ongoing company-wide effort to encourage waste sorting and
recycling among its employees and the small communities in which it
operates. From January through September, employees collected a
total of 14 tonnes of plastic for recycling. Our Taseevskoye unit,
which enlisted the help of the entire town of Baley, has led the
way with an average of 44.7 kg of plastic collected per employee .
MNV and Novo are competing for the runner-up position with averages
of 7.2 kg and 6.0 kg per person year-to-date as of September
30.
No environmental incidents were recorded in Q3 2020 or in the
first nine months of the year. During the quarter, 164 internal
audits of the Company's environmental management system were
carried at production sites to ensure adherence to environmental
legislation, bringing the total of audits for the year to 427. In
each case, action plans were developed based on audit findings to
minimize the root causes of systematic violations.
Over the course of 9M 2020, 2,586 employees received online
environmental training, 87 employees had training with subsequent
testing in hazard class I-IV waste management, and 160 managers and
specialists attended skills improvement seminars in professional
environmental training centres.
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