TIDMHGM
RNS Number : 4446E
Highland Gold Mining Limited
18 October 2018
HIGHLAND GOLD MINING LIMITED
18 October 2018
Q3 2018 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 2018 ("Q3 2018").
HIGHLIGHTS
-- Production at Mnogovershinnoye (MNV), Novoshirokinskoye
(Novo) and Belaya Gora in Q3 2018 totalled 74,826 oz of gold and
gold equivalent, an increase of 4.4% from 71,767 oz in Q3 2017.
-- Total production for the first nine months of 2018 ("9M
2018") was stable year-on-year at 203,747 oz of gold and gold
equivalent compared to 203,552 in 9M 2017.
-- Aided by higher grades, MNV surpassed 2017 nine-month output,
more than making up for lost ground after operating at reduced
capacity in the first quarter of this year.
-- Belaya Gora production was steady year-on-year as higher
recoveries and grades offset slightly-lower processing plant
throughput.
-- Novo output was lower in Q3 2018 due to lower recoveries and
grades, while work continued on the planned mine expansion.
-- Average realised gold price during the quarter of US$ 1,206 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 Limited Jeffrey Couch, Tom Rider, 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)
-- Higher ore grades from both underground and open pit,
combined with less ore mined from lower-grade historic waste dumps,
boosted Q3 2018 production by 17% year-on-year.
-- Total ore mined increased by 2% YoY.
MNV Units Q3 2017 Q3 2018 9M 2017 9M 2018
------- ---------- ----------
Waste stripping t 1,908,915 1,160,684 5,615,716 3,258,130
------- ---------- ---------- ---------- ----------
Underground development m 2,993 2,943 8,416 8,866
------- ---------- ---------- ---------- ----------
Open-pit ore mined t 82,902 144,091 243,802 285,073
------- ---------- ---------- ---------- ----------
Open-pit ore grade g/t 2.21 2.47 2.07 2.36
------- ---------- ---------- ---------- ----------
Waste dumps ore mined t 71,112 20,966 252,177 68,262
------- ---------- ---------- ---------- ----------
Waste dumps ore grade g/t 1.18 1.04 1.12 1.04
------- ---------- ---------- ---------- ----------
Underground ore mined t 209,463 205,379 598,120 613,282
------- ---------- ---------- ---------- ----------
Underground ore grade g/t 3.08 3.45 3.10 3.21
------- ---------- ---------- ---------- ----------
Total ore mined t 363,477 370,436 1,094,099 966,617
------- ---------- ---------- ---------- ----------
Average grade g/t 2.51 2.93 2.41 2.81
------- ---------- ---------- ---------- ----------
Ore processed t 364,073 361,014 1,084,536 970,240
------- ---------- ---------- ---------- ----------
Average grade g/t 2.58 2.96 2.48 2.83
------- ---------- ---------- ---------- ----------
Recovery rate % 92.3 92.7 91.4 92.3
------- ---------- ---------- ---------- ----------
Gold produced oz 27,376 31,942 78,125 80,031
------- ---------- ---------- ---------- ----------
Near-mine exploration in Q3 2018 included drilling on the lower
horizons of the main MNV license area. Drilling results were
included in a cumulative reserve estimate for MNV that was
submitted to and successfully reviewed by experts at the State
Committee on Reserves. A new JORC-compliant reserve report for MNV
is being finalised and will be published in the coming months.
Grade control surface drilling progressed on the flanks of
several of MNV's ore bodies during the quarter. Drilling totalled
6,640 metres and focused on the Central, Intermediate, Upper, and
Northern ore bodies. Another 800 m were drilled on MNV's historic
waste dumps.
On the Kulibinskaya area, one of the Company's three greenfield
licenses adjacent to MNV, field geochemical surveys and assay tests
were performed as part of an initial exploration programme last
year, with several gold anomalies identified. Based on those
results, the Company conducted 54,485 m3 of trenching in Q3 2018.
Logging and sampling are in progress.
On the Zamanchivaya licence area, trenching began in June across
identified halos in order to verify them. Q3 2018 trenching
amounted to 8,247 m3, bringing the total for the year to 15,296 m3.
Core drilling was carried out in areas with heightened gold grades
that were identified with trench sampling. Q3 drilling at the site
amounted to 2,223 m.
Belaya Gora
-- Substantial year-on-year increase in Q3 2018 ore mining and stripping.
-- The average grade of mined ore increased by 24% for the quarter.
-- Recovery rates reached 76.2%, 4% higher year-on-year.
-- Ore processing declined slightly YoY, but the difference was
more than offset by higher average grade and recovery.
Belaya Gora Units Q3 2017 Q3 2018 9M 2017 9M 2018
Waste stripping t 888,030 1,543,717 2,277,993 4,006,628
------- ------- --------- --------- ---------
Ore mined t 108,476 583,239 803,544 1,638,835
------- ------- --------- --------- ---------
Average grade g/t 0.70 0.87 0.79 0.83
------- ------- --------- --------- ---------
Including:
------- --------- --------- ---------
* Ore Au >0.7 g/t t 58,823 372,213 370,415 879,473
------- ------- --------- --------- ---------
* Average grade g/t 0.93 1.12 1.11 1.15
------- ------- --------- --------- ---------
* Ore Au 0.3-0.7 g/t t 49,653 211,026 433,129 759,362
------- ------- --------- --------- ---------
* Average grade g/t 0.42 0.44 0.52 0.46
------- ------- --------- --------- ---------
Ore from stockpiles t 344,577 84,047 978,358 246,947
------- ------- --------- --------- ---------
Average grade g/t 1.10 1.02 1.05 1.01
------- ------- --------- --------- ---------
Ore processed t 463,134 456,970 1,273,683 1,175,838
------- ------- --------- --------- ---------
Average grade g/t 1.08 1.13 1.11 1.12
------- ------- --------- --------- ---------
Recovery rate % 73.0 76.2 72.2 75.7
------- ------- --------- --------- ---------
Gold produced oz 12,280 12,677 32,314 32,481
------- ------- --------- --------- ---------
The Company carried out core drilling within the boundaries of
the Belaya Gora pit shell during the quarter with the aim of
performing geomechanical and hydrogeological studies. Six holes
were drilled totalling 1,020 metres.
On the adjacent Belaya Gora flanks licence, exploration drilling
continued on the Kolchansky and Zayachy prospects, completing a
programme of 7,850 metres drilled this year. Two batches of
metallurgical samples totalling one tonne in weight were extracted
from the cores for metallurgical tests. Forty samples were
extracted from the cores' ore intervals for hardness testing.
Blagodatnoye
As per the pre-feasibility study published by the Company
earlier this year, the Blagodatnoye deposit is being targeted to
supply additional ore to the Belaya Gora mill later in the life of
the project.
In order to satisfy regulatory requirements, the Company
submitted a Russian-standard feasibility study covering exploration
parameters and a reserve estimate for Blagodatnoye to the State
Expert Panel for review on August 29, 2018. The review process is
expected to be completed in about three months.
ZABAIKALSKY REGION, RUSSIA
Novoshirokinskoye (Novo)
-- Q3 2018 ore mining totalled 213,533 tonnes, which was 9.67% lower YoY.
-- Ore processing rose slightly but was offset by lower grades and recoveries.
Novo Units Q3 2017 Q3 2018 9M 2017 9M 2018
-------
Underground development M 2,833 2,669.5 8,553 8,853
------- -------- -------- -------- --------
Ore mined T 220,755 213,533 635,618 652,963
------- -------- -------- -------- --------
Average grade * g/t 5.37 5.30 5.42 5.50
------- -------- -------- -------- --------
Ore processed T 213,572 216,271 618,167 621,780
------- -------- -------- -------- --------
Average grade * g/t 5.47 5.35 5.49 5.66
------- -------- -------- -------- --------
Recovery rate * % 85.43 81.2 85.30 80.6
------- -------- -------- -------- --------
Gold produced * oz 32,111 30,207 93,113 91,235
------------------------- ------- -------- -------- -------- --------
* calculated as Au equivalent in actual prices
(metal grades in ore mined = Au 3.08 g/t, Ag 60.10 g/t, Pb 1.80
%, Zn 0.71 %).
Work continued on Stage 1 of the Novo 1.3 Mtpa expansion project
in Q3 2018, which involves upgrades to the underground mine.
Highlights included:
- The adjustment of design documentation for reconstruction of the skip hoist (dosing station);
- The drafting of design documentation for the water drainage facility at the +637 m level;
- Excavation for the water drainage facility at the +637 m level;
- Underground active storage of explosive materials at the +750 m level; and
- Preparations for construction of the main fan unit.
For Stage 2 of the project, which covers processing plant
upgrades, engineering and geological studies for the plant, pipe
racks, and chemicals storage upgrade were carried out.
Earlier this year, Novo commenced a new exploration drilling
programme from both surface and underground with the aim of
developing a more detailed geological model of the deposit and
optimising mining activities. In Q3 2018, a contractor carried out
drilling on ore bodies below the 637.5 m level, completing nine
boreholes of a planned total of 26.
Baley Ore Cluster
(Taseevskoye, Sredny Golgotay and ZIF-1)
Geotechproekt LLC continues to develop designs for an 840 ktpa
heap leach facility for ore from the Baley ZIF-1 tailings licence.
The contractor completed and reported on engineering studies over
the course of Q3 2018. It also drafted and received approval for
the project's principal design solutions, and conducted public
hearings in line with environmental impact study (OVOS)
requirements.
The heap leach design was reviewed and approved by the regional
Committee on Reserves of regulatory agency Rosnedra in September of
this year. Design documentation was also submitted to environmental
agency Rosprirodnadzor for expert panel review. Approval by the
Main State Environmental Expert Commission is expected in November
of this year.
At the Sredny Golgotay deposit, Micromine Consulting Services
issued a report with a Russian statutory resource estimate to be
used as the basis of a Scoping Study for the project. Wardell
Armstrong was awarded a contract to draft the study and results are
expected in January 2019.
At Taseevskoye, geophysical survey tests were carried out in Q3
2018 with the aim of delineating the outlines of the old
underground workings present under the site. The work is intended
to contribute to better-quality geological exploration planning in
the future. Interpretation of the results is in progress.
CHUKOTKA AUTONOMOUS DISTRICT, RUSSIA
Kekura
Operations at Kekura in Q3 2018 covered a broad variety of
preparations for construction and mining at the deposit. The
Company prepared specifications for future orders of construction
materials and engineering and processing equipment, while
contractors carried out a range of vital studies and site
surveys.
Scientific research company Rosnedra LLC completed and submitted
for state geological expert review a report entitled "Programme of
Hydrogeological Works for Exploration of Underground Water Reserves
of the Khrebtovaya River". The report addresses options for
supplying processing and potable water for the project.
Contractor EngGeo LLC carried out several assignments during the
quarter:
- A geodesic survey, including aerial laser scanning and
geodesic control points, with desktop studies that are ongoing;
- An environmental survey, including samples taken along the
traverse with photos of the area and its fauna, as well as field
and desktop hydrometeorological studies; and
- Ground reconnaissance on the sites where geological work will
be performed for construction of Kekura's mining and processing
facilities.
SPb-Giproshakht LLC performed a comprehensive inspection of the
buildings and structures of the existing pilot plant for processing
bulk metallurgical samples. Detailed design documentation is under
development for the construction of Kekura's main processing plant
utilizing the existing pilot plant.
Kekura's explosives storage facility was re-equipped during the
quarter. Preparations are in progress to welcome a commission from
regulatory agency Rostechnadzor, which is responsible for approving
the commissioning of hazardous facilities.
In September, construction and installation work was completed
on the Kekura 110/6 kV substation, which is designed to receive
electricity from a new power line being built to the site by the
government. Start-up and adjustment of the substation is
underway.
Also in September, an open pit excavator was assembled and
tested. The foundation for a communications tower was likewise
completed in Q3 2018.
Materials and equipment for the construction of a second fuel
storage facility were delivered to the port of Arkhangelsk in
September. Delivery to the Kekura site by winter road is expected
to take place in March 2019.
Klen
The Company and regulators signed an amendment to the Klen
license agreement ( AND 01191 BE) in Q3 2018 that reflects the most
recent technical project for the deposit. The process of
registering the updated document is currently in progress.
Also during the quarter, ore samples from Klen were collected
and transported to Moscow to test their suitability for
pre-concentration using X-Ray separation technology. A tender to
select a contractor for this test work is in its final stages.
The further development of design documentation for Klen was
postponed until the end of the year, by which time the X-ray
separation tests results should be ready. By then it should also be
clear if Klen will be included in the government's proposed
Baimskaya priority development zone, which among other advantages
would offer special tax privileges for the project.
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 2018, the Lost Time Incident Frequency Rate (LTIFR) was
3.43 compared to 1.56 in the third quarter of last year. The
increase resulted from a total of five incidents - three at Novo
and two at MNV - compared to just two in the period last year.
Over the course of 9M 2018, the LTIFR was 4.49 compared to 5.28
in the first nine months of last year. The difference reflects a
decrease in the number of workplace incidents from 21 last year to
19 this year (11 at Novo, one at Belaya Gora, six at MNV and one in
the Moscow office).
Training sessions conducted in Q3 2018 included a "Conscious
Safety Management" course for 32 people in the Moscow office, 54 at
Novo, and 20 at MNV. An "Internal Incident Investigation" course
was completed by 18 people at Novo and 23 at MNV.
Other efforts included the development of a set of tools based
on several new corporate standards which are being introduced
across all operations. The new standards cover PPE quality and use;
contractors' safety management; audits and rating of labour safety;
and emergency medical response.
A new employee health management programme was introduced in
August and September of this year. Relevant audits were carried out
at Novo and MNV and are being used to further develop the
concept.
The Company's auxiliary mine rescue teams are being kept on
alert at each of its operations with a view to ensuring their
preparedness to participate in resolving emergency situations.
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.
In Q3 2018, the Company conducted 49 internal environmental
management audits at MNV, Belaya Gora and Novo to ensure compliance
with environmental legislation. Action plans were developed based
on audit findings in an effort to minimize the causes of any
systematic violations.
Over the course of the year, 1,910 employees underwent basic
environmental safety training and 420 employees had training and
tests on class I-IV hazardous waste disposal via the OlimpOKS
system. The Company sent 50 managers and specialists for skills
improvement training in dedicated centres where they attended
professional environmental training courses.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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