TIDMHGM
RNS Number : 5095D
Highland Gold Mining Limited
27 April 2017
HIGHLAND GOLD MINING LIMITED
Q1 2017 Operating Results
27 April 2017
Highland Gold Mining Limited ("Highland Gold" or the "Company")
today reports its operating results for the three months ended
March 31, 2017 ('Q1').
HIGHLIGHTS
-- Total production at Mnogovershinnoye (MNV), Novoshirokinskoye
(Novo) and Belaya Gora in Q1 2017 of 65,243 oz of gold and gold
equivalent, up 14.7% from 56,889 oz in Q1 2016.
-- Average realized gold price of 1,222 USD/oz.
-- MNV and Novo improved on 2016 gold and gold equivalent
production by 27.5% and 15.7%, respectively.
-- At Belaya Gora, continued focus on processing low-grade ore
stockpiles pending the completion of an ongoing project review.
-- Exploration programme at MNV continued with a view towards
further extension of life of mine.
-- Scoping study for Unkurtash completed and published, and
consultants retained to identify potential partners for developing
the project.
-- The Company affirms its forecast for total production of gold
and gold equivalents 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
KHABAROVSK REGION, RUSSIA
Mnogovershinnoye (MNV)
-- Q1 2017 production up 27.5% year-on-year due to higher grades
and a 20.6% increase in ore processed.
-- Total ore mining rose 11.5% YoY to 352,548 tonnes.
MNV Units Q1 2016 Q1 2017
------------------------- ------- -------- ----------
Waste stripping t - 1,869,075
------------------------- ------- -------- ----------
Underground development m 2,939 2,596
------------------------- ------- -------- ----------
Open-pit ore mined t - 49,858
------------------------- ------- -------- ----------
Open-pit ore grade g/t - 2.10
------------------------- ------- -------- ----------
Waste dumps ore mined t 150,976 114,328
------------------------- ------- -------- ----------
Waste dumps ore grade g/t 1.10 1.11
------------------------- ------- -------- ----------
Underground ore mined t 165,320 188,362
------------------------- ------- -------- ----------
Underground ore grade g/t 3.13 3.01
------------------------- ------- -------- ----------
Total ore mined t 316,296 352,548
------------------------- ------- -------- ----------
Average grade g/t 2.16 2.26
------------------------- ------- -------- ----------
Ore processed t 298,725 360,137
------------------------- ------- -------- ----------
Average grade g/t 2.22 2.36
------------------------- ------- -------- ----------
Recovery rate % 90.7 90.6
------------------------- ------- -------- ----------
Gold produced oz 18,970 24,185
------------------------- ------- -------- ----------
In Q1, the Company continued its programme, begun last year, of
re-evaluating resources for each of MNV's ore bodies. Work was
completed for the Deer, Intermediate I & II, Silent and Deep
ore bodies during the quarter, based on a revised cut-off grade and
increased mineable resources. The resulting findings have been
submitted to authorities in Khabarovsk for state expert review.
Additionally, the Company produced a report for regulators based
on the results of 2016 grade control drilling at the Central,
Quiet, and Southern ore bodies and the mine's historic rock waste
dumps. The report added a total of over 1.6 million tonnes of ore
containing 3.83 tonnes (123k oz) at a grade of 2.4 g/t to MNV's
Russian-standard (GKZ) reserves.
An updated JORC-compliant reserve estimation for MNV, prepared
by Micon, is due to be published shortly.
The Company continues to implement a broad exploration programme
at MNV with the aim of adding more reserves and further prolonging
the life of mine beyond the extended 2022 end-date announced
earlier this year. The main targets in Q1 were the lower horizons
of existing ore bodies and the mine's historic rock dumps.
Exploration drilling totalling 4,865 metres was conducted at the
Deep, Intermediate and Central ore bodies. Samples are currently
being processed and analysed.
Belaya Gora
-- Ore mining in Q1 2017 amounted to 453,372 tonnes, 24% higher YoY.
-- Lower grades at the mill resulted in a 13% drop in gold production.
Belaya Gora Units Q1 2016 Q1 2017
----------------- ------- ---------- --------
Waste stripping t 3,654,199 661,031
----------------- ------- ---------- --------
Ore mined t 364,462 453,372
----------------- ------- ---------- --------
Average grade g/t 1.18 0.84
----------------- ------- ---------- --------
Ore processed t 383,231 380,714
----------------- ------- ---------- --------
Average grade g/t 1.26 1.11
----------------- ------- ---------- --------
Recovery rate % 69.7 70.4
----------------- ------- ---------- --------
Gold produced oz 10,698 9,527
----------------- ------- ---------- --------
The lower average grade at the Belaya Gora processing plant was
the result of the continued use of ore from low-grade stockpiles,
in line with a management policy initiated last year as the Company
prepares plans for improving recovery rates at the mill by adding
cyanidation. Of the ore processed at Belaya Gora in Q1, about 218k
tonnes at a grade of 0.92 g/t were taken from stockpiles, while
163k tonnes at 1.31 g/t came from the open pit.
The remaining 290k tonnes of ore mined at the open pit were sent
to stockpiles. The lower grade of this ore was due to a change in
cut-off grade to 0.3 g/t from 0.6 g/t, as per the mining plan
registered with regulators (GKZ), thereby resulting in the higher
volume.
An exploration programme covering 8,515 metres of drilling has
commenced on the north-eastern flank of the Belaya Gora deposit.
The aim of the programme is to confirm reserves due to be included
in an updated JORC-compliant reserve estimate for Belaya Gora, as
well as to better delineate the mine's ore bodies and obtain the
material for process mapping. About a third of the programme was
completed in Q1, totalling 2,885 metres over 22 drill holes.
Work continues on a pre-feasibility study including an updated
JORC reserve estimation, upgrades to the Belaya Gora mill, and a
joint mining schedule for Belaya Gora and the nearby Blagodatnoye
mine. The report is expected in Q3 of this year.
Blagodatnoye
The Blagodatnoye deposit is being targeted to augment the
mineral resource base for the Company's Belaya Gora operation.
During Q1, results were collated from an extensive exploration
programme carried out at the site in 2016, which included 18,000
metres of exploration drilling.
A full reserve report and mining plan will be included in the
pre-feasibility study currently being drafted on the joint
development of Belaya Gora and Blagodatnoye.
ZABAIKALSKY REGION, RUSSIA
Novoshirokinskoye (Novo)
-- Gold equivalent production rose 15.7% for the quarter, aided
by higher grades and a 10.0% increase in ore processed.
-- Ore mining totalled 207,463 tonnes in Q1, an increase of 5.5% YoY.
Novo Unit Q1 2016 Q1 2017
------------------------- ------ -------- --------
Underground development m 2,809 3,110
------------------------- ------ -------- --------
Ore mined t 196,696 207,463
------------------------- ------ -------- --------
Average grade * g/t 5.29 5.69
------------------------- ------ -------- --------
Ore processed t 180,853 199,006
------------------------- ------ -------- --------
Average grade * g/t 5.43 5.76
------------------------- ------ -------- --------
Recovery rate * % 86.35 85.50
------------------------- ------ -------- --------
Au production (100%)* Oz. 27,246 31,531
------------------------- ------ -------- --------
* calculated in Au equivalent in actual prices
(metals contained in mined out ore = Au 3.05 g/t, Ag 62.62 g/t,
Pb 1.99%, Zn 0.79%)
Preparations continue for the expansion of Novo's ore processing
capacity to 1.3 mtpa. Mills for the expanded processing plant have
been manufactured and are currently undergoing quality checks
before being shipped to site later this year. The mine is expected
to achieve its new target production capacity in late 2018.
CHUKOTKA AUTONOMOUS DISTRICT, RUSSIA
Kekura
In Q1 2017, work continued on drafting a definitive feasibility
study for the Kekura project. Contractor Fluor Canada has completed
the majority of work on the report, including sections on
processing and mill design. Fluor has received quotations on 9
packages equipment for the processing plant (crushers, mills,
gravity separators, pressure filters, thickeners, refinery package,
conveyors, agitators, diesel generators). The data obtained will be
incorporated into the final financial model for the project.
SRK is drafting the mining section of the report, including an
updated JORC-compliant reserve estimation taking into account
drilling conducted at the site in 2016 as well as additional
drilling planned for this year. Concurrently, data is being
processed for geotechnical studies to be used in design for the
underground portion of the mine.
The exploration programme at Kekura for 2017 is designed to
confirm top-cut sample parameters and the boundaries of ore bodies
targeted for underground mining. This includes 11,000 metres of
RC-drilling and 4,750 m of core drilling for reserve
confirmation.
Additionally, 1,600 m of core and 2,750 m of RC drilling has
been scheduled in order to confirm sterile ground at the planned
locations of the stripping waste dumps and infrastructure
facilities.
Fluor is expected to deliver the consolidated DFS report,
including the work by SRK, by the end of Q3 of this year.
In line with an agreement signed by the Company and Chukotka
regional administration last year, the government is moving ahead
with a project to build the Bilibino-Kekura-Peschanka-Omsukchan
main power line, which has the potential to improve Kekura's
economics versus previous plans for local power generation.
Preparation of design documentation for the Kekura 110/6kV
substation was ongoing during Q1, and a second revision of the
design is now in progress. The work is expected to be completed and
design documentation submitted to for state expert review by the
end of May 2017.
Based on principal technical solutions incorporated in the
substation design, the Company carried out a tender to select a
contractor for turnkey substation construction. The facility is
currently scheduled to be completed by the end of 2018.
Also in Q1, the Company transported to the Kekura site by winter
road some 1,567 tonnes of materials and commodities that had been
delivered to the port Pevek during the 2016 sea navigation window.
The cargo has been accepted for storage and stockpiled in
warehouses for use during the remainder of the year.
Klen
Preparation of an updated pre-feasibility study, assembled by
Hatch, continued in Q1 2017. SGS Vostok Chita was enlisted to
conduct additional test work in order to confirm certain parameters
in the report. This additional R&D is expected to be completed,
together with the corresponding report, by Q3 of this year.
KYRGYZSTAN
Unkurtash
A scoping study indicating positive economics for the Unkurtash
project was completed by SRK in Q1. The report envisions mining two
open pits and an 18-year life of mine, with annual production of
133k oz at an average operating cost of US$ 616/oz. Total capital
expenditure to start production is estimated at $322 million.
An executive summary of the report was published on the
Company's website.
The Company is considering various alternatives for proceeding
with the project, including partnering with another strategic
investor to co-develop Unkurtash.
HEALTH, SAFETY, AND ENVIRONMENT
Company management is saddened to report that, after the
reporting period, on April 13, an accident in the underground mine
at Novo resulted in a fatality. The Company has made arrangements
for the family of the deceased and initiated a broad and thorough
review of the circumstances behind the incident.
In Q1 2017, there were 9 workplace incidents registered across
the group, all of which were minor. They include 4 incidents at MNV
and 5 at Novo. Lost Time Incidents or "LTI" (defined as the number
of lost time incidents for every 1, 000,000 man hours) for Q1 2017
were 6.31, up from 2.02 in Q1 2016.
The fatality and Q1 2017 LTIs add new urgency to the programmes
being implemented by the new, expanded Health & Safety team
assembled in late 2016. Their remit is to implement best safety
practices across all of the Company's operations and to build an
occupational safety management system with a strong emphasis on
improving employees' attitudes towards safety.
New corporate standards on internal incident investigation,
behavioural safety audit methodology, and occupational safety
committees are being rolled out across the Company's operating
units. The new corporate Safety Committee carried out an inspection
at MNV on March 22, and local safety committees held their first
meetings at Novo and MNV during that month.
At the Company's Moscow office and at MNV and Novo, 268 managers
and specialists took part in training seminars on effective safety
management methods with elements of behavioural safety audits (PAB)
(12 hr seminar) and 92 employees were trained on internal incident
investigation (8 hr seminar). Some managers also participated in
"Order Standard 5C", "Leader Inspection" and "Suggestions on A3
Format Improvements" training sessions.
A total of 225 employees participated in safety induction
sessions (1 day), 24 took part in blasting operations management
training, and 92 others received specialised industrial
training.
In addition, a mentoring programme for line mangers envisions
systematic work with each of the Company's operating unit's
directors, their deputies and production division managers during
site visits by the HSE team. In Q1, this involved 25 managers at
MNV and 11 at NOVO.
Over the course of Q1, the Company conducted a response check of
its auxiliary mine rescue teams at each site to test preparations
for localising and mitigating accidents. It also worked to draft
and implement new fencing standards, and new rules designed to
improve the visibility of small-sized transport on the roads.
On the environmental front, the Company is working to maintain
and improve its focus on protecting the environment, minimising the
impact of its operations, and adhering to all relevant regulatory
requirements.
Internal audits of environmental management systems were carried
out in March at MNV and Belaya Gora to ensure the observance of
environment legislation. Based on the results of these audits,
measures were developed to mitigate environmental impact and remedy
any systematic violations.
Over the course of the quarter, 344 employees took part in
introductory environmental safety training classes, while 138
managers and specialists passed training courses and testing using
OlimpOKS software regarding hazardous waste handling.
As part of a broad environmental monitoring plan for 2017, a
leader check programme was implemented whereby managing directors
of the Company's operating units carry out regular checks of
production facilities. These inspections involve evaluations for
five major activities and visual presentations of their results in
order to get employees more involved in creating a safe work
environment.
***
Glossary:
Russian Standard
Gosstandart of Russia (GOST), the national Russian standard on
mining and minerals as published by the National Certification Body
of the Russian Federation.
JORC
Widely accepted standard for reporting mineral resources and ore
reserves established by the Australasian Joint Ore Reserves
Committee.
Cut-Off Grade
A grade level below which the material is considered to be
uneconomical to mine and process. The minimum grade of ore used to
establish reserves.
Note: Waste stripping reported in tonnes as per standard
industry practice. In previous years, the Company reported waste
stripping in volume (m3).
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCEDLBLDZFZBBV
(END) Dow Jones Newswires
April 27, 2017 02:02 ET (06:02 GMT)
Highland Gold Mining Ld (LSE:HGM)
Historical Stock Chart
From Apr 2024 to May 2024
Highland Gold Mining Ld (LSE:HGM)
Historical Stock Chart
From May 2023 to May 2024