TIDMHGM
RNS Number : 1638O
Highland Gold Mining Limited
03 November 2016
HIGHLAND GOLD MINING LIMITED
Q3 2016 Operating Results
03 November 2016
Highland Gold Mining Limited ("Highland Gold" or the "Company")
today reports its operating results for the three months ended
September 30, 2016 ('Q3').
HIGHLIGHTS
-- Total production of 191,752 oz of gold and gold equivalent
over the first nine months of the year, in line with 191,408 oz
during the same period of 2015.
-- Total Q3 2016 production of 63,096 oz, a decrease of 11% from 70,864 oz in Q3 2015.
o Production at Mnogovershinnoye (MNV) and Novoshirokinskoye
(Novo) in line with Q3 of last year.
o Lower output at Belaya Gora due to management decision to
process lower grade stockpiles while contractor SRK develops
updated mining and processing plans.
-- Average Q3 realized gold price of 1,335 USD/oz.
-- Exploration drilling programmes totalling over 60k metres
completed at MNV, Kekura, Blagodatnoye and Sredny Golgotay.
-- At Kekura, Fluor awarded a contract for key sections of a
detailed feasibility study (DFS), while construction of key
infrastructure is underway.
-- The Company affirms its forecast for total production of gold
and gold equivalent of 255,000-265,000 oz for the full year.
FOR FURTHER INFORMATION PLEASE CONTACT:
Highland Gold 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
(Nominated Adviser and Broker) Paul Gillam
+44 (0) 207 260 1000
Peat & Co Charlie Peat
(Joint Broker) +44 (0) 207 104 2334
OPERATIONAL REVIEW
KHABAROVSK REGION, RUSSIA
Mnogovershinnoye (MNV)
-- Higher grades from underground mining resulted in an overall
1.7% increase in grades at the mill versus Q3 2015, and an increase
of 4.7% versus Q2 2016.
-- Recovery rates at the mill rose to over 92% in Q3.
MNV Units Q3 2015 Q3 2016 9 Months 2015 9 Months 2016
------------------------- ------- ---------- -------- -------------- --------------
Waste stripping m(3) 1,250,689 907,643 3,028,611 1,213,543
------------------------- ------- ---------- -------- -------------- --------------
Underground development m 2,924 2,876 7,211 8,739
------------------------- ------- ---------- -------- -------------- --------------
Open-pit ore mined t 334,333 201,853 623,753 223,920
------------------------- ------- ---------- -------- -------------- --------------
Open-pit ore grade g/t 2.08 1.85 2.08 1.96
------------------------- ------- ---------- -------- -------------- --------------
Waste dumps ore mined* t - 2,801 - 279,113
------------------------- ------- ---------- -------- -------------- --------------
Waste dumps ore grade g/t - 1.21 - 1.06
------------------------- ------- ---------- -------- -------------- --------------
Underground ore mined t 166,885 195,367 497,214 546,703
------------------------- ------- ---------- -------- -------------- --------------
Underground ore grade g/t 2.49 3.05 2.30 3.15
------------------------- ------- ---------- -------- -------------- --------------
Total ore mined t 501,218 400,021 1,120,967 1,049,736
------------------------- ------- ---------- -------- -------------- --------------
Average grade g/t 2.22 2.42 2.18 2.34
------------------------- ------- ---------- -------- -------------- --------------
Ore processed t 347,486 348,201 1,052,979 1,020,801
------------------------- ------- ---------- -------- -------------- --------------
Average grade g/t 2.39 2.43 2.18 2.33
------------------------- ------- ---------- -------- -------------- --------------
Recovery rate % 91.9 92.1 90.1 91.4
------------------------- ------- ---------- -------- -------------- --------------
Gold produced oz 24,766 24,837 67,218 69,755
------------------------- ------- ---------- -------- -------------- --------------
Work continues on evaluating MNV's historic waste dumps, some of
which were reclassified and successfully processed during the first
half of this year. An estimated 212.7k tonnes of material
containing 8,200 oz of gold were identified as ore and registered
with regulators in Q3, bringing the total to 512k tonnes of ore
reclassified over the course of the year. Following further
sampling, two additional reserve reports are currently being
prepared for regulators.
Exploration programmes for the Central and Eastern flanks of the
Northern ore body (MNV Lower Horizons licence) were completed
during the quarter. Reserve estimates for these areas are expected
to receive approval from regulators by year-end.
In addition, exploration programmes were developed for the lower
horizons of the Southern and Flank ore bodies. Work will commence
in early Q4 2016 and be completed by the end of 2017.
At the Chainoye ore zone (MNV Western Flank licence), eight
trenches were dug with a total volume of 20k m3 in order to
investigate geochemical anomalies. As a result of trench sampling,
several potential ore zones were delineated and core drilling of
1,070 metres is planned for early Q4 to test this potential.
An updated JORC reserve report for MNV is expected in Q1 2017,
which will include the results of all prior exploration.
Belaya Gora
-- In Q3, management switched focus to the treatment of
low-grade ore stockpiles at Belaya Gora while SRK continues work on
plans for optimising future mining and processing operations.
-- Work progressed on a cut-back of the northeast wall of the
Stockwork pit to uncover underlying ore horizons.
Belaya Gora Units Q3 2015 Q3 2016 9 Months 2015 9 Months 2016
----------------- ------- ---------- ---------- -------------- --------------
Waste stripping m(3) 1,043,857 1,117,675 2,601,114 4,412,376
----------------- ------- ---------- ---------- -------------- --------------
Ore mined t 831,870 293,076 1,717,184 1,248,461
----------------- ------- ---------- ---------- -------------- --------------
Average grade g/t 1.39 1.20 1.51 1.21
----------------- ------- ---------- ---------- -------------- --------------
Ore processed t 474,551 400,312 1,149,536 1,233,821
----------------- ------- ---------- ---------- -------------- --------------
Average grade g/t 1.56 1.11 1.74 1.23
----------------- ------- ---------- ---------- -------------- --------------
Recovery rate % 76.5 68.5 76.1 71.5
----------------- ------- ---------- ---------- -------------- --------------
Gold produced oz 18,557 9,637 48,714 34,982
----------------- ------- ---------- ---------- -------------- --------------
Alongside efforts to boost recoveries by improving the existing
processing flowsheet, the Company is working with SRK on designs
for additional cyanide leach (CIL) capacity at the Belaya Gora
mill. The results of a comprehensive review of the processing plant
flowsheet are expected in Q4 2016.
Blagodatnoye
In order to augment the mineral resource base for Belaya Gora,
the Company has targeted further exploration of resources at the
nearby Blagodatnoye gold deposit. The licence has preliminarily
measured 2 category reserves for open pit mining of about 10
million tonnes of ore. Initial metallurgical test work has
supported gold recovery around 90% via cyanidation.
In Q3, the Company completed an extensive drilling programme at
the site, including 15,000 metres for resource identification and
upgrade, 1,000 metres for geotechnical investigation, and 1,500
metres for hydrological evaluation. The Company expects to submit a
reserve report to the State Expert Review Panel in the first half
of 2017.
An updated JORC reserve statement for both Belaya Gora and
Blagodatnoye will be finalised in Q1 2017, along with a study on
the option of treating ore from both deposits at the Belaya Gora
mill using CIL processing technology.
ZABAIKALSKY REGION, RUSSIA
Novoshirokinskoye (Novo)
-- Ore mining in Q3 fell 9% year-on-year to 162,321 tonnes due
to capital repairs on the mine shaft loading boxes. Over the first
nine months of 2016, ore production was 12% higher than during the
same period of 2015.
-- Ore processing in Q3 continued to gain pace with a 10% increase over Q3 2015.
Novo Units Q3 2015 Q3 2016 9 Months 2015 9 Months 2016
------------------------- ------- -------- -------- -------------- --------------
Underground development m 2,767 2,649 8,079 8,456
------------------------- ------- -------- -------- -------------- --------------
Ore mined t 177,736 163,321 503,365 564,304
------------------------- ------- -------- -------- -------------- --------------
Average grade * g/t 5.62 5.46 5.44 5.48
------------------------- ------- -------- -------- -------------- --------------
Ore processed t 176,536 194,309 508,087 566,254
------------------------- ------- -------- -------- -------------- --------------
Average grade * g/t 5.61 5.27 5.44 5.49
------------------------- ------- -------- -------- -------------- --------------
Recovery rate * % 86.55 85.68 85.74 86.23
------------------------- ------- -------- -------- -------------- --------------
Gold produced * oz 27,541 28,112 75,476 86,072
------------------------- ------- -------- -------- -------------- --------------
* In gold equivalents at actual prices.
(Metal grade of mined ore = Au 3.12 g/t, Ag 69.88 g/t, Pb 2.42
%, Zn 0.63 %)
Preparatory construction work for the planned expansion of
Novo's processing capacity to 1.3 million tonnes per annum
continued in Q3. Geotechnical construction studies are being
finalised and design documentation is being developed. The mine and
mill are expected to reach the new, increased capacity in late
2018.
Sredny Golgotay - Kaftan Site
A pilot project for mining ore from the Kaftan site of the
Sredny Golgotay licence continued during the period. Some 6,262
tonnes of ore at 3.04 g/t were transported and processed at the
Novo mill.
In July, a grade control drilling programme of 7,330 metres
designed to investigate Kaftan's resources was completed by
contractors Sosnovgeo JSC. Drilling was performed both from
underground and from the surface. Some 8,281 assay results were
obtained and the Company is currently re-evaluating Kaftan's
resource.
Sredny Golgotay (Kaftan) Units Q3 2015 Q3 2016 9 Months 2015 9 Months 2016
-------------------------- ------- --------- -------- -------------- --------------
Underground development m - - - 766
-------------------------- ------- --------- -------- -------------- --------------
Ore mined t - 6,396 - 19,499
-------------------------- ------- --------- -------- -------------- --------------
Average Grade g/t - 3.07 - 2.69
-------------------------- ------- --------- -------- -------------- --------------
Ore processed t - 6,262 - 10,763
-------------------------- ------- --------- -------- -------------- --------------
Average Grade g/t - 3.04 - 3.27
-------------------------- ------- --------- -------- -------------- --------------
Gold produced oz - 510 - 943
-------------------------- ------- --------- -------- -------------- --------------
Baley Ore Cluster (Taseevskoye, Sredny Golgotay and ZIF-1)
The Company commenced the de-watering of the existing
Taseevskoye open pit in May of this year and, as of the end of Q3,
over 940k m3 of water had been pumped. The programme will continue
until December 2016.
At Sredny Golgotay, R&D testwork was carried out regarding
the potential for an X-ray fluorescence spectrometry (XRF) sorting
plant. If tests are successful, such a facility could enable the
pre-concentration of gold-bearing ore prior to transport and
treatment at Novo. A pilot XRF unit has been launched and a
preliminary report on the results of the XRF process is expected in
Q4.
Lyubov (ZIF tailings)
The Company retained an outside contractor for a resource
verification project at Lyubov in Q3. The project entailed the
trial processing of material from the Khaverginskoye, Lyubov and
Nikolaevskoye tailings dams and waste dumps inside the Lyubov
licence area, and involved 4,200 m3 of trenching and 96 metres of
exploratory drilling to evaluate available resources, with sampling
performed by SGS-Chita. The project is due to be completed in Q2 of
2017.
CHUKOTKA AUTONOMOUS DISTRICT, RUSSIA
Kekura
The Company completed its 25,000 metre 2016 exploration
programme for Kekura in the third quarter. The effort focused on
the eastern flank of the deposit, with the goal of confirming and
potentially increasing reserves intended for underground mining. An
updated JORC reserve calculation is expected in Q1 2017.
Work is ongoing on drafting a detailed feasibility study (DFS)
for Kekura. Following a tender process, Fluor Canada was awarded a
contract to develop the processing and tailings sections of the
DFS. Fluor will also consolidate DFS project report sections
written by other consultants into a single report after they are
reviewed and analysed. In parallel with this work, Fluor will
advise on the procurement of key processing plant equipment.
Preparations for 2017 construction and installation work are
ongoing, including the procurement of construction materials and
the selection of the contractors for construction of key
infrastructure facilities.
Klen
Worked continued on an updated pre-feasibility study (PFS) for
Klen in Q3. Contractor Hatch has provided data on mining
methodology, processing, and infrastructure, and a financial model.
A final PFS report is currently being prepared and will include
updated processing parameters following testwork planned for Q4.
The report is now expected in Q1 2017.
In order to meet requirement in the Klen licence, a technical
design for developing the deposit was submitted to and approved by
regulatory authorities.
HEALTH, SAFETY, AND ENVIRONMENT
Following a fatality at MNV in September, the Company
re-dedicated itself to ensuring occupational safety, managing
production risks, providing effective staff training, and strongly
encouraging personal responsibility at the workplace. A new
occupational safety team is being put in place to improve adherence
to international best practices at each of the Company's
locations.
The Lost Time Incident ("LTI") factor (defined as the number of
lost time incidents for every 200,000 man hours) over the first
nine months of 2016 was 0.37 (0.32 for Jan-Sep 2015). Nine
incidents were recorded across the Company including one fatality,
versus eight incidents for the same period last year (all of which
were minor). Of the total, three minor injuries and one fatality
occurred at MNV, two incidents were at Belaya Gora, two were at
Novo, and one at Kekura.
So far this year, a safety induction (1 day) course was given to
1,356 employees, while 173 managers and specialists passed
self-tuition courses and testing using OlimpOKS software and were
certified on industrial safety (7-30 day programmes). Auxiliary
mine rescue teams are kept ready at mine sites to address emergency
localisation and response.
The Company continues to observe environmental and regulatory
requirements and no environmental incidents were reported. In 2016,
environmental safety training was given to 805 employees as of
September 30, and 273 employees received training and passed tests
on I-IV hazard category waste handling.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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