TIDMHGM
RNS Number : 4731M
Highland Gold Mining Limited
30 April 2018
HIGHLAND GOLD MINING LIMITED
Q1 2018 Operating Results
30 April 2018
Highland Gold Mining Limited ("Highland Gold" or the "Company",
AIM: HGM) today reports its operating results for the three months
ended 31 March 2018.
HIGHLIGHTS
-- Total production at Mnogovershinnoye (MNV), Novoshirokinskoye
(Novo) and Belaya Gora in Q1 2018 of 59,311 oz of gold and gold
equivalent, down 9% from 65,243 oz in Q1 2017.
-- MNV's quarterly output slowed as technical issues uncovered
in Q4 2017 resulted in reduced processing plant capacity. The mill
returned to full volume in early March.
-- The Belaya Gora processing plant experienced seasonal
technical issues during the quarter but is likewise now operating
at full capacity.
-- Novo saw slight increases in ore mining and processing but
gold equivalent production remained flat year-on-year due to lower
recoveries.
-- Average realised gold price during the quarter of US$ 1,329 per ounce
-- The Company affirms its forecast for total production of gold
and gold equivalent of 265,000-275,000 oz for the full year.
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 Broker) +44 (0) 207 260 1000
BMO Capital Markets Jeffrey Couch, Neil Haycock, Pascal Lussier Duquette
(Joint Broker) +44 (0) 207 236 1010
Peat & Co Charlie Peat
(Joint Broker) +44 (0) 207 104 2334
KHABAROVSK REGION, RUSSIA
Mnogovershinnoye (MNV)
-- Ore mining declined by 33% year-on-year in Q1 2018 due to the
reduced availability of processing capacity and the use of ore from
stockpiles.
-- Processing volumes fell by 31% year-on-year due to one of two
SAG mill lines being halted in Q4 2017 following the discovery of a
damaged feed trunnion. The trunnion was replaced in March 2018 and
the line is now operational.
MNV Units Q1 2017 Q1 2018
------------------------- ------- ---------- --------
Waste stripping t 1,869,075 780,915
------------------------- ------- ---------- --------
Underground development m 2,596 2,930
------------------------- ------- ---------- --------
Open-pit ore mined t 49,858 37,079
------------------------- ------- ---------- --------
Open-pit ore grade g/t 2.10 2.18
------------------------- ------- ---------- --------
Waste dumps ore mined t 114,328 -
------------------------- ------- ---------- --------
Waste dumps ore grade g/t 1.11 -
------------------------- ------- ---------- --------
Underground ore mined t 188,362 198,465
------------------------- ------- ---------- --------
Underground ore grade g/t 3.01 2.90
------------------------- ------- ---------- --------
Total ore mined t 352,548 235,544
------------------------- ------- ---------- --------
Average grade g/t 2.26 2.78
------------------------- ------- ---------- --------
Ore processed t 360,137 249,544
------------------------- ------- ---------- --------
Average grade g/t 2.36 2.74
------------------------- ------- ---------- --------
Recovery rate % 90.6 92.2
------------------------- ------- ---------- --------
Gold produced oz 24,185 19,359
------------------------- ------- ---------- --------
Near-mine exploration at MNV in Q1 2018 focused on drilling from
underground at the Intermediate and Deer ore bodies. New ore zones
have been identified and outlined based on the results of this work
and updated reserve estimates are in the process of being filed
with regulators.
Geochemical prospecting has been completed on the Kulibinskaya
and Zamanchivaya licences, located to the southwest and northeast
of MNV. Assay test results showed gold anomalies and are being used
to develop an exploration programme for the remainder of this
year.
An updated JORC compliant reserves estimate for MNV, including
the results of 2017 exploration, is expected at the end of Q3
2018.
Belaya Gora
-- Waste stripping increased by 85% year-on-year in Q1 2018 as
mining operations moved from stockpiles to the open pit.
-- Total ore mining increased by 9% year-on-year.
-- Ore processing declined by 16% year-on-year due to seasonal
problems with water supply to the mill.
-- The recovery rate was 74.68%, an increase of 6.1% over the same period last year.
Belaya Gora Units Q1 2017 Q1 2018
--------------------------------- ------- -------- ----------
Waste stripping t 661,031 1,221,192
--------------------------------- ------- -------- ----------
Ore mined t 453,372 493,799
--------------------------------- ------- -------- ----------
Average grade g/t 0.84 0.80
--------------------------------- ------- -------- ----------
Including:
--------------------------------- ------- -------- ----------
* Ore Au >0.75 g/t t 214 300 233 818
--------------------------------- ------- -------- ----------
* Average grade g/t 1.16 1.16
--------------------------------- ------- -------- ----------
* Ore Au 0.3-0.75 g/t t 239 072 259 981
--------------------------------- ------- -------- ----------
* Average grade g/t 0.55 0.48
--------------------------------- ------- -------- ----------
Ore processed t 380,714 320,566
--------------------------------- ------- -------- ----------
Average grade g/t 1.11 1.12
--------------------------------- ------- -------- ----------
Recovery rate % 70.4 74.7
--------------------------------- ------- -------- ----------
Gold produced oz 9,527 8,977
--------------------------------- ------- -------- ----------
In early Q1 2018, the Company published details of a
pre-feasibility study (PFS) covering planned upgrades to the Belaya
Gora processing plant and the eventual processing of ore from the
nearby Blagodatnoye deposit at the mill. The study included updated
reserve figures for Belaya Gora.
The process of estimating potential new reserves and registering
them with regulators continued through the quarter, based on the
results of diamond drilling on Belaya Gora's deep horizons and
northeastern flank completed in 2017.
Exploration drilling totalling 4,000 metres was carried out on
the Kolchansky and Zayachy prospects on the adjacent Belaya Gora
Flanks licence in Q1 2018, with the programme set to continue in
the second quarter. Another 1,500 metres will be drilled on
Kolchansky's western flank and for infill drilling at Zayachy. The
work is expected to be completed by the end of April.
The Company selected Kazgipertsvetmet and SGS Bateman to prepare
technical design documentation for the Belaya Gora processing plant
upgrade, which will include the addition of a carbon-in-pulp (CIP)
circuit in order to improve recoveries.
Blagodatnoye
The Company's first JORC-compliant reserve report for
Blagodatnoye was published in Q1 2018 as part of the Belaya Gora
PFS. Work continued on interpreting data from additional
exploration drilling carried out last year and on registering
reserves with state regulators.
It is envisaged that Blagodatnoye ore will be pre-crushed on
site and trucked to the Belaya Gora processing plant once the
Belaya Gora open pit is mined out.
ZABAIKALSKY REGION, RUSSIA
Novoshirokinskoye (Novo)
-- Q1 2018 ore mining totalled 223,057 tonnes, up 7.5% from Q1 of last year.
-- Ore processing also gained pace during the quarter, rising 3%
due to the optimisation of technological processes, but recovery
rates dipped slightly.
Novo Units Q1 2017 Q1 2018
------------------------- ------- -------- --------
Underground development m 3,110 3,034
------------------------- ------- -------- --------
Ore mined t 207,463 223,057
------------------------- ------- -------- --------
Average grade* g/t 5.69 5,51
------------------------- ------- -------- --------
Ore processed** t 199,006 204,732
------------------------- ------- -------- --------
Average grade* g/t 5.76 5.80
------------------------- ------- -------- --------
Recovery rate* % 85.5 81.2
------------------------- ------- -------- --------
Gold produced* Oz 31,531 30,975
------------------------- ------- -------- --------
* Calculated in Au equivalent at actual prices
Metal grade of mined ore = Au 3.11 g/t, Ag 55.90 g/t, Pb 1.52 %,
Zn 0.45 %
Work on the expansion of Novo's ore mining and processing
capacity to 1.3 Mtpa continued in Q1 2018. The Company completed
additional engineering and geological surveys on the site for a new
run-off treatment plant.
Design documentation and construction schedules for Stage 1 of
the expansion project, focused on increasing underground ore
production to 1.3 Mtpa, were formulated and submitted to the state
regulators for approval. This stage is forecast to be completed by
year-end 2018 and includes comprehensive upgrades to the main rock
hoisting shaft, including winding engine, headframe, loading boxes,
primary crusher, and modification to associated surface buildings.
Additional work will include the installation of a new main
ventilation fan, a new boiler, and the water treatment plant.
For Stage 2 of the project (processing plant upgrades), the
design process is underway on a new line at the processing plant
and for the tailings dam. Contractor Mekhanobr-Engineering is
managing the design process. Construction is scheduled to commence
in 2019 with full capacity reached in 2020.
The Company is also reviewing the potential for using dense
media separation (DMS) or X-ray separation to reduce capital costs
for the Stage 2 mill expansion.
Baley Ore Cluster (Taseevskoye, Sredny Golgotay and ZIF-1)
The Company selected Geotechproekt LLC (Ekaterinburg) as
contractor to carry out design work on a proposed heap leach
operation at the ZIF-1 Tailings licence, with expected annual
throughput of up to 840 k tonnes of ore. Field studies were carried
out over the course of Q1 2018 to inform an engineering study, and
a report is currently in preparation.
Micromine is assessing 2016 exploration data for the Sredny
Golgotay licence with a view towards providing a new, updated
resource estimate for the deposit.
CHUKOTKA AUTONOMOUS DISTRICT, RUSSIA
Kekura
In early Q1 2018, the Company published details of a definitive
feasibility study (DFS) for Kekura, including an updated
JORC-compliant reserve report for the deposit. Construction on
several key infrastructure facilities for the project is scheduled
to get underway this year.
The government is currently building the
Bilibino-Kekura-Peschanka-Omsukchan power line, which will bring
the regional electricity grid to Kekura in 2019. The Company
received State Expert Board approval for a planned 110/6 kV power
substation in Q1 2018 and is now in the process of receiving
construction permits. Equipment for the substation was delivered to
the port of Pevek by Rostek JSC under a supply and installation
contract. Transportation of the equipment to the Kekura site is in
progress and is to be completed by the end of April.
Also during the quarter, a tender was held to select a
contractor to draft design documentation for mining of Kekura and
the processing plant. The contract was awarded to SPb
Giproshakht.
Exploration drilling continued on the Granat prospect within the
broader Kekura licence area during the quarter. Of a total
programme of 6,500 metres, 6,245 metres were completed over 64
holes. Granat is being targeted to potentially add more open pit
reserves to the Kekura operation.
Klen
The bulk of work on an updated PFS for Klen was completed by
Hatch in Q1 2018. Finalisation of the report is in progress.
State authorities approved changes to the Company's schedule for
developing the deposit. An application was filed to Chukotka branch
of Rosnedra to make changes to the license agreement and adjust the
start date. A decision is expected in Q2 2018.
The Company also held a tender for drafting design documentation
for the mine and processing plant during the quarter. Giprotsvetmet
was selected for the project.
KYRGYZSTAN
Unkurtash
The Company initiated several pre-project studies at Unkurtash
during the first quarter.
KenToo, a Bishkek-based research and design centre, was awarded
a contract to develop mine design documentation for Unkurtash in
accordance with mining license commitments. The work will be
conducted in stages, with the delivery of final results for
consideration and submission for State Expert Board approval by
June 1, 2019.
In addition, a test run was conducted to produce 10 kg of
sulphide gravitation-flotation concentrates for marketing studies
and evaluation. Gold recovery into sulphide pyrite concentrate
exceeded 90%, with Au grades up to 34 g/t, Ag grades of 30 g/t, and
about 2% of As impurities. The total concentrate yield was
4.58%.
Bishkek-based Premium Invest LLC won a contract to perform a
large-scale topographic survey of the tier III area of Unkurtash,
and the company has initiated fieldwork. Completion of the work and
delivery of final results according to the Technical Assignment are
expected by October 1, 2018.
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.
To those ends, senior staff from the Company's Moscow management
office (8 managers) and Novo (12 managers) attended courses titled
"Conscious Safety Management" during Q1 2018. At Novo, 10 employees
also attended an "Internal Accident Investigation" training course,
and eight staff from Moscow and 26 at Novo participated in a
"Defensive Driving" training course. Another 16 people at Novo
attended courses entitled "Safety Management System Audit".
Several new corporate standards were developed and introduced
during the reporting period ("PPE quality and use standard",
"Safety management system audit methodology", and 5 PPE technical
requirements). Tools are being introduced in each operating unit in
accordance with these standards.
A management-level HSE Committee meeting was held on February
09, 2018 and attendees approved a transportation safety programme
along with a set of goals for 2018. A set of principles for setting
safety targets were defined for each of the Company's operating
units.
The Lost Time Incidents Frequency Rate (LTIFR) in Q1 2018 was
6.57 versus 6.31 in Q1 2017. There were a total of 9 incidents
across the Group over the course of the quarter - five at Novo,
three at MNV and 1 at the Moscow office. By comparison, there were
also 9 minor incidents in Q1 2017: 4 at MNV and 5 at Novo.
As in past years, auxiliary mine rescue teams have been kept
ready at each mine site to handle emergency containment and
response.
The Company continues to observe environmental and regulatory
requirements and has an ongoing program to identify and analyse any
risks from operations that might impact the environment. Protecting
the environment by decreasing the impact of its operations is one
of the Highland's main goals for the year.
Internal environmental management audits were conducted at MNV,
Belaya Gora and Novo to check compliance with environmental
legislation. Action plans were developed based on audit results
with the aim to minimize reoccurring violations.
About 435 employees went through environmental training
programmes and 182 employees had class I-IV hazard waste treatment
training with subsequent testing using the OlimpOKS system.
Environmental monitoring programmes were developed and approved for
2018 during the reporting period.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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