TIDMHGM
RNS Number : 8206L
Highland Gold Mining Limited
24 July 2017
HIGHLAND GOLD MINING LIMITED
Q2 2017 Operating Results
24 July 2017
Highland Gold Mining Limited ("Highland Gold" or the "Company")
today reports its operating results for the three months ended June
30, 2017 ("Q2").
HIGHLIGHTS
-- Total production at Mnogovershinnoye (MNV), Novoshirokinskoye
(Novo) and Belaya Gora for the first half of 2017 ("H1") was
131,784 oz of gold and gold equivalent, up 2.4% from 128,671 in H1
2016.
-- Total Q2 2017 production was 66,536 oz of gold and gold
equivalent versus 71,782 oz in Q2 2016.
-- MNV and Novo improved on H1 2016 gold and gold equivalent
production by 13% and 4.5%, respectively.
-- At Belaya Gora, increased focus on processing low-grade ore
stockpiles pending the completion of an ongoing project review
resulted in lower Q2 production.
-- Average realised gold price of 1,253 USD/oz.
-- New exploration licences received for two areas adjacent to
MNV, and an extensive near-mine exploration programme continued on
existing MNV licence areas.
-- 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
KHABAROVSK REGION, RUSSIA
Mnogovershinnoye (MNV)
-- A higher average grade resulted in higher production for Q2
year-on-year, as increased open pit mining reduced the usage of
lower-grade ore from rock waste dumps.
-- Total ore mined increased 13% year-on-year during the quarter.
MNV Units Q2 2016 Q2 2017 H1 2016 H1 2017
------------------------- ------- -------- ---------- -------- ----------
Waste stripping t - 1,837,725 - 3,706,800
------------------------- ------- -------- ---------- -------- ----------
Underground development m 2,924 2,827 5,863 5,423
------------------------- ------- -------- ---------- -------- ----------
Open-pit ore mined t 22,067 111,042 22,067 160,900
------------------------- ------- -------- ---------- -------- ----------
Open-pit ore grade g/t 3.02 1.95 3.02 2.00
------------------------- ------- -------- ---------- -------- ----------
Waste dumps ore mined t 125,336 66,737 276,312 181,065
------------------------- ------- -------- ---------- -------- ----------
Waste dumps ore grade g/t 1.01 1.08 1.06 1.10
------------------------- ------- -------- ---------- -------- ----------
Underground ore mined t 186,016 200,295 351,336 388,657
------------------------- ------- -------- ---------- -------- ----------
Underground ore grade g/t 3.27 3.20 3.20 3.10
------------------------- ------- -------- ---------- -------- ----------
Total ore mined t 333,419 378,074 649,715 730,622
------------------------- ------- -------- ---------- -------- ----------
Average grade g/t 2.40 2.46 2.28 2.36
------------------------- ------- -------- ---------- -------- ----------
Ore processed t 373,875 360,326 672,600 720,463
------------------------- ------- -------- ---------- -------- ----------
Average grade g/t 2.32 2.51 2.28 2.43
------------------------- ------- -------- ---------- -------- ----------
Recovery rate % 91.1 91.2 90.9 90.9
------------------------- ------- -------- ---------- -------- ----------
Gold produced oz 25,970 26,564 44,929 50,749
------------------------- ------- -------- ---------- -------- ----------
During the quarter, as part of its ongoing programme of
re-evaluating resources for each of MNV's ore bodies, the Company
received regulatory approval for revised Russian-standard (GKZ)
reserves for five ore bodies (Deer, Intermediate I & II, Silent
and Deep), based on a report submitted earlier in the year. The
five sites hold a combined 8 tonnes (257k oz) of GKZ gold
reserves.
Additionally, the Company received regulatory approval of a
mining plan for the south-western flank of the Central ore body,
with 440.8 kg (14k oz) in GKZ gold reserves, and MNV's historic
rock piles, with 237.3 kg (7.6k oz) in GKZ gold reserves.
Near-mine exploration continued during the quarter, with 2,148 m
of diamond drilling on the lower horizons of the underground Flank
and Southern ore bodies. Surface diamond drilling on the Bear zone,
to the northwest of MNV, totalled 612 m. Furthermore, operational
exploration drilling commenced on the flanks of several MNV ore
bodies (Central, Intermediate, Burlivoye, Northern, Southern) in
order to identify additional gold-bearing areas.
In May, the Company received exploration licences for two
greenfield sites adjacent to the existing licence areas for MNV.
The Kulibinskaya licence area, located to the south west of MNV,
covers a territory of 38 sq. km, while the Zamanchivaya area
includes 4.2 sq. km to the north east of MNV. Early-stage
exploration programmes were developed and filed with regulators,
with exploration work and geochemical surveys scheduled for
July-September 2017.
The Company has also developed a gold mineralisation forecast
map for the surrounding Nizhny-Amur ore district with the goal of
identifying potential new licences in the vicinity of MNV.
Belaya Gora
-- Substantial year-on-year decline in waste stripping, ore
mining, and average grade due to a 140% increase in ore supply from
the BG-1 stockpile.
-- Lower mined ore grade is due to the re-classification of some
waste stripping following a decision by regulators to reduce the
mine's cut-off grade from 0.7 g/t to 0.3 g/t.
-- Processing plant throughput totalled 429,835 tonnes, which is
4.54% lower YoY but in line with the Company's 2017 production
plan.
-- The average recovery rate for Q2 was 72.8%, which is 3.8%
higher than internal targets but 2.4% lower than Q2 2016, mainly
due to the processing of lower-grade ore.
Belaya Gora Units Q2 2016 Q2 2017 H1 2016 H1 2017
-------------------------------- ------- ---------- -------- ---------- ----------
Waste stripping t 1,663,362 728,931 3,294,701 1,389,963
-------------------------------- ------- ---------- -------- ---------- ----------
Ore mined t 590,923 241,696 955,385 695,068
-------------------------------- ------- ---------- -------- ---------- ----------
Average grade g/t 1.24 0.75 1.22 0.81
-------------------------------- ------- ---------- -------- ---------- ----------
Including:
-------------------------------- ------- ---------- -------- ---------- ----------
* Ore Au >0.7 g/t T 590,923 97,292 955,385 311,592
-------------------------------- ------- ---------- -------- ---------- ----------
* Average grade g/t 1.24 1.11 1.22 1.14
-------------------------------- ------- ---------- -------- ---------- ----------
* Ore Au 0.3-0.7 g/t t - 144,404 - 383,476
-------------------------------- ------- ---------- -------- ---------- ----------
* Average grade g/t - 0.50 - 0.53
-------------------------------- ------- ---------- -------- ---------- ----------
Ore from stockpiles* t 49,473 118,515 101,091 633,871
-------------------------------- ------- ---------- -------- ---------- ----------
Average grade g/t 0.90 1.03 0.68 1.01
-------------------------------- ------- ---------- -------- ---------- ----------
Ore processed t 450,278 429,835 833,509 810,549
-------------------------------- ------- ---------- -------- ---------- ----------
Average grade g/t 1.31 1.13 1.29 1.12
-------------------------------- ------- ---------- -------- ---------- ----------
Recovery rate % 75.2 72.8 72.7 71.7
-------------------------------- ------- ---------- -------- ---------- ----------
Gold produced oz 14,665 10,501 25,349 20,033
-------------------------------- ------- ---------- -------- ---------- ----------
The Company continues to treat ore from low-grade stockpiles at
Belaya Gora while it examines options for processing plant
improvements to boost recovery rates. Work continues on a
pre-feasibility study including 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.
The PFS report will include a new JORC-compliant reserve
estimation following a re-assessment of Belaya Gora's reserves
carried out earlier this year under Russian GKZ standards and
additional drilling this year. The re-assessment takes into account
the mine's uneven grade distribution and other geological factors,
which led to a decision to lower the cut-off grade to 0.3 g/t. The
new cut-off grade was registered by regulators, thus necessitating
the re-classification of some waste material as ore.
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.
An additional exploration drilling programme carried out in Q2
is now nearing completion, with the results to be used for
registering with regulators and, if possible, increasing the mine's
measured and indicated reserves.
ZABAIKALSKY REGION, RUSSIA
Novoshirokinskoye (Novo)
-- Novo continued to achieve incremental increases in ore mining
and processing during Q2 via the optimisation of technological
processes.
-- Lower average grade in Q2 offset the benefits of higher
grades in Q1 (5.76 g/t) and were down 9% from Q2 2016.
Novo Unit Q2 2016 Q2 2017 H1 2016 H1 2017
------------------------- ------ -------- -------- -------- --------
Underground development m 2,999 2,610 5,807 5,720
------------------------- ------ -------- -------- -------- --------
Ore mined t 205,287 207,400 401,983 414,863
------------------------- ------ -------- -------- -------- --------
Average grade * g/t 5.68 5.21 5.49 5.45
------------------------- ------ -------- -------- -------- --------
Ore processed t 195,593 205,589 376,446 404,595
------------------------- ------ -------- -------- -------- --------
Average grade * g/t 5.72 5.25 5.58 5.50
------------------------- ------ -------- -------- -------- --------
Recovery rate * % 86.6 84.9 86.5 85.2
------------------------- ------ -------- -------- -------- --------
Au production (100%)* Oz. 31,147 29,471 58,393 61,002
------------------------- ------ -------- -------- -------- --------
* calculated in Au equivalent in actual prices
(metal grades in ore mined = Au 2.97 g/t, Ag 57.56 g/t, Pb 1.69
%, Zn 0.75 %).
Preparations continue for the expansion of Novo's ore processing
capacity to 1.3 mtpa, with work in Q2 focused on finalising design
documentation. The mine is expected to achieve its new target
production capacity in late 2018.
Baley Ore Cluster (Taseevskoye, Sredny Golgotay and ZIF-1)
The Company initiated a programme last year to de-water the
existing Taseevskoye open pit with a view towards drilling the
deposit to verify reserves. To date, 4.3 million cubic meters of
water have been pumped into the nearby ZIF-2 tailings pond,
resulting in a 10.05 m decrease in the pit's water level. Pumping
is currently on hold as the receiving pond is full, and the Company
is in the process of selecting a specialised contractor to identify
additional water storage options.
Contractor Irgiredmet is currently finalising a technological
flowsheet for a possible heap leach for the ZIF-1 Tailings licence.
The Company's in-house research centre at Novo is also reviewing
the flowsheet with the aim of increasing potential recovery rates.
A tender to select a contractor for developing design documentation
is planned for Q3.
CHUKOTKA AUTONOMOUS DISTRICT, RUSSIA
Kekura
Work continued on drafting a definitive feasibility study (DFS)
for Kekura in Q2. With most of the report completed by contractor
Fluor, the focus is currently on the mining section being developed
by SRK. Work will continue in Q3 with delivery expected by the end
of the quarter.
Together with the DFS mining section, SRK is carrying out an
updated JORC-compliant reserve estimate that includes data from the
2016-2017 drilling program. Data processing of geotechnical studies
to be used for the underground mine design was completed in Q2.
Also completed during the quarter was design documentation for a
110/6 kV power substation to be built by the Company in cooperation
with the regional government. As part of its development strategy
for the region, the Chukotka administration has included
construction of the Bilibino-Kekura-Omsukchan power line in its
infrastructure plans. The Company will submit the substation design
for state expert review in July 2017.
The Company has conducted a tender for turnkey construction of
the substation, to be based on the approved design. Preparation
work has already begun at the construction site, and key equipment
ordered for delivery during the summer sea navigation period.
Completion of the facility is expected by the end of 2018.
HEALTH, SAFETY, AND ENVIRONMENT
The Company adopted a new and improved HSE Policy during Q2,
with even greater emphasis on ensuring occupational safety,
managing operating risks, training employees and boosting safety
awareness.
As reported in the Company's Q1 operational report, there was
one fatality at Novo in early April. In addition, there were nine
minor incidents in April and May, comprising six at MNV and three
at Novo. The month of June passed without incident.
Over the course of the past three months, 129 managers and
specialists attended scheduled training courses on "Efficient
methods of safety management with elements of behavioural safety
audit" (one and a half day seminar); 55 managers and specialists
were trained on "Internal investigation of incidents" (one day
seminar); and 43 operational managers had additional training in
"Behavioural safety audits". Operations managers also had training
in "Standards", "Leader Inspection" and "Format A3". Managing
directors of each division, and their deputies, are instructed to
carry out inspections on a regular basis. Regular mentoring is
being carried out by HSE department employees during site
visits.
One of the most efficient tools being implemented for continuous
safety monitoring across the Company is a system of three-stage
safety controls and inspections, overseen by each division's
managing director. Managers, specialists and clerks are instructed
to utilise a set of behavioural safety audit principles in their
inspections, which are designed to have a positive impact on
employees' personal attitudes towards safety, encourage safe
behaviour and help to prevents hazards.
The Company also continues to be committed to protecting the
environment, with 655 employees undergoing some level of
environmental safety training during the quarter. Regulatory
agencies and auditors from the Company's head office carried out
both scheduled and unscheduled inspections at Novo and MNV during
Q2. A system is in place for following up on any recommendations
resulting from these inspections.
***
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
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