TIDMHGM
RNS Number : 2533T
Highland Gold Mining Limited
11 October 2017
HIGHLAND GOLD MINING LIMITED
Q3 2017 Operating Results
11 October 2017
Highland Gold Mining Limited ("Highland Gold" or the "Company")
today reports its operating results for the three months ended
September 30, 2017 ("Q3 2017").
HIGHLIGHTS
-- Q3 2017 production at Mnogovershinnoye (MNV),
Novoshirokinskoye (Novo), and Belaya Gora was 71,767 oz of gold and
gold equivalent versus 62,601 oz in Q3 2016, an increase of
14.6%.
-- Total production for the first nine months of 2017 ("9M
2017") was 203,552 oz of gold and gold equivalent, up 6.6% from
190,873 in the first nine months of 2016.
-- MNV and Novo improved on nine-month gold and gold equivalent
production by 11.9% and 8.2%, respectively. Output fell
year-on-year at Belaya Gora due to the planned continued processing
of low-grade ore stockpiles.
-- Progress continued on near-mine exploration at MNV, the
drafting of development studies for Belaya Gora/Blagodatnoye,
Kekura, and Klen, and preparations for the plant expansion at Novo
and construction at Kekura.
-- Average realised gold price of 1280 USD/oz.
-- The Company expects total production of gold and gold
equivalent for the year to be near the upper end of its guidance
range of 255,000-265,000 oz.
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)
-- Higher grades resulted in increased gold output compared to Q3 2016.
-- Total ore mined was down 9% compared to Q3 2016, mainly due
to a lower volume of open pit mining, but fully in-line with MNV's
mining plan for the year.
MNV Units Q3 2016 Q3 2017 9M 2016 9M 2017
------------------------- ------- ---------- ---------- ---------- ----------
Waste stripping t 2,396,177 1,908,915 3,203,753 5,615,716
------------------------- ------- ---------- ---------- ---------- ----------
Underground development m 2,876 2,993 8,739 8,416
------------------------- ------- ---------- ---------- ---------- ----------
Open-pit ore mined t 201,853 82,902 223,920 243,802
------------------------- ------- ---------- ---------- ---------- ----------
Open-pit ore grade g/t 1.85 2.21 1.96 2.07
------------------------- ------- ---------- ---------- ---------- ----------
Waste dumps ore mined t 2,801 71,112 279,113 252,177
------------------------- ------- ---------- ---------- ---------- ----------
Waste dumps ore grade g/t 1.21 1.18 1.06 1.12
------------------------- ------- ---------- ---------- ---------- ----------
Underground ore mined t 195,367 209,463 546,703 598,120
------------------------- ------- ---------- ---------- ---------- ----------
Underground ore grade g/t 3.05 3.08 3.15 3.10
------------------------- ------- ---------- ---------- ---------- ----------
Total ore mined t 400,021 363,477 1,049,736 1,094,099
------------------------- ------- ---------- ---------- ---------- ----------
Average grade g/t 2.42 2.51 2.34 2.41
------------------------- ------- ---------- ---------- ---------- ----------
Ore processed t 348,201 364,073 1,020,801 1,084,536
------------------------- ------- ---------- ---------- ---------- ----------
Average grade g/t 2.43 2.58 2.34 2.48
------------------------- ------- ---------- ---------- ---------- ----------
Recovery rate % 92.1 92.3 91.4 91.4
------------------------- ------- ---------- ---------- ---------- ----------
Gold produced oz 24,852 27,376 69,819 78,125
------------------------- ------- ---------- ---------- ---------- ----------
The Company's extensive near-mine exploration programme at MNV
continued during the quarter, with 1,757 m of diamond drilling on
the lower horizons of the underground Flank ore body and 2,701m of
surface diamond drilling on the Bear zone.
Operational exploration drilling commenced on the flanks of
several MNV ore bodies (Central, Intermediate, Upper, Northern,
Southern) for a total of 6,759 metres. Another 900 metres was
drilled at the mine's historic rock waste dumps in order to
identify additional gold-bearing areas.
The flanks for the Intermediate ore body have shown particular
promise. Early estimates show that the site could add
Russian-standard reserves of up to 448.3k tonnes of ore at 4.45 g/t
and 2 tonnes of gold (65k oz) to MNV's operations. Evaluation of
the remaining ore bodies will be completed after all of the
exploration results are collated.
Over the course of Q3 2017, geochemical surveys were conducted
at Kulibinskaya and Zamanchivaya, the Company's two new greenfield
licences adjacent to MNV, and results are expected by year-end. In
addition, state regulators have approved the Company's exploration
programmes for these licences.
Belaya Gora
-- Planned substantial year-on-year declines in waste stripping,
ore mining, and average grade for Q3 2017 due to a 45% 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 463,134 tonnes in Q3 2017, which is 14% higher YoY.
-- The average recovery rate for Q3 2017 was 73%, which is a 6%
increase compared to Q3 2016.
Belaya Gora Units Q3 2016 Q3 2017 9M 2016 9M 2017
-------------------------------- ------- ---------- -------- ---------- ----------
Waste stripping t 2,503,592 888,030 9,866,803 2,277,993
-------------------------------- ------- ---------- -------- ---------- ----------
Ore mined t 293,076 108,476 1,248,461 803,544
-------------------------------- ------- ---------- -------- ---------- ----------
Average grade g/t 1.20 0.70 1.21 0.79
-------------------------------- ------- ---------- -------- ---------- ----------
Including:
----------------------------------------- ---------- -------- ---------- ----------
* Ore Au >0.7 g/t T 193,076 58,823 1,248,461 370,415
-------------------------------- ------- ---------- -------- ---------- ----------
* Average grade g/t 1.20 0.93 1.21 1.11
-------------------------------- ------- ---------- -------- ---------- ----------
* Ore Au 0.3-0.7 g/t t - 49,653 - 433,129
-------------------------------- ------- ---------- -------- ---------- ----------
* Average grade g/t - 0.42 - 0.52
-------------------------------- ------- ---------- -------- ---------- ----------
Ore from stockpiles t 190,577 344,577 291,668 978,358
-------------------------------- ------- ---------- -------- ---------- ----------
Average grade g/t 1.01 1.10 1.01 1.05
-------------------------------- ------- ---------- -------- ---------- ----------
Ore processed t 400,312 463,134 1,233,821 1,273,683
-------------------------------- ------- ---------- -------- ---------- ----------
Average grade g/t 1.11 1.08 1.23 1.11
-------------------------------- ------- ---------- -------- ---------- ----------
Recovery rate % 68.5 73.0 71.5 72.2
-------------------------------- ------- ---------- -------- ---------- ----------
Gold produced oz 9,637 12,280 34,982 32,314
-------------------------------- ------- ---------- -------- ---------- ----------
The Company has been treating 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 (PFS) covering upgrades to the Belaya Gora
mill, updated reserve estimates, and a joint mining schedule for
Belaya Gora and the nearby Blagodatnoye site. The report is
expected in Q4 2017.
An exploration programme on the lower levels and north-eastern
flank of the Belaya Gora deposit was completed in Q3 2017. The
programme included diamond drilling of 27 drill holes (3,318
metres) during the quarter, for a total of 111 drill holes (12,686
metres) over the course of the year.
The aim of the programme was to confirm reserves as well as to
better delineate the mine's ore bodies and obtain material for
process mapping. Results are now being collated for use in the
Belaya Gora PFS.
Also in Q3 2017, preparations were made for exploration drilling
on the Kolchanskoye ore body, located on the adjacent Belaya Gora
Flanks licence. The Company plans about 1,500 metres of drilling at
the site in the fourth quarter.
Blagodatnoye
The Blagodatnoye deposit is being targeted to augment the
mineral resource base for the Belaya Gora operation. Earlier this
year, 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 of 2,400 metres,
initiated in Q2 2017 and continuing into Q3 2017, is now completed.
The results will be used for registering with regulators and, if
possible, increasing the mine's measured and indicated reserves.
They will be reported together with the Belaya Gora PFS.
ZABAIKALSKY REGION, RUSSIA
Novoshirokinskoye (Novo)
-- Ore mining in Q3 2017 amounted to 220,755 tonnes, a 35% increase YoY.
-- Novo's mill saw a 10% increase in ore throughput in Q3 2017
via the optimisation of technological processes.
Novo Unit Q3 2016 Q3 2017 9M 2016 9M 2017
------------------------- ------ -------- -------- -------- --------
Underground development m 2,649 2,821 8,456 8,541
------------------------- ------ -------- -------- -------- --------
Ore mined t 163,321 220,755 564,304 635,618
------------------------- ------ -------- -------- -------- --------
Average grade * g/t 5.46 5.37 5.48 5.42
------------------------- ------ -------- -------- -------- --------
Ore processed t 194,309 213,572 566,254 618,167
------------------------- ------ -------- -------- -------- --------
Average grade * g/t 5.27 ,5.47 5.49 5.49
------------------------- ------ -------- -------- -------- --------
Recovery rate * % 85.68 85.43 86.23 85.30
------------------------- ------ -------- -------- -------- --------
Au production (100%)* oz 28,112 32,111 86,072 93,113
------------------------- ------ -------- -------- -------- --------
* calculated in 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 %).
Preparations continue for the expansion of Novo's ore processing
capacity to 1.3 mtpa, with work in Q3 2017 focused on finalising
design documentation. Grinding equipment that was purchased for the
expanded mill has now arrived on site.
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. In Q3 2017, the
Company selected a specialised contractor to identify or design
additional water storage options and that process is ongoing.
Highland Gold's Board of Directors has approved funding for
design work on a potential heap leach operation at the ZIF-1
Tailings licence. A technological flowsheet drafted by Irgiredmet
anticipates annual throughput of up to 840 kt of ore. A tender to
select a contractor for developing design documentation was
conducted and results are currently being finalised.
CHUKOTKA AUTONOMOUS DISTRICT, RUSSIA
Kekura
Contractor Fluor is now proceeding with work on a definitive
feasibility study (DFS) for Kekura after receiving data for the
study's mining section from SRK during Q3 2017. Delivery of the
full DFS is expected during the fourth quarter.
In addition to the DFS mining section, SRK is carrying out an
updated JORC-compliant reserve estimate that includes data from the
2016-2017 drilling program. The data obtained was used to prepare a
new geological model for the deposit. The updated JORC reserve
report is likewise expected in Q4 2017.
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.
During Q3 2017, the Company submitted design documentation for a
110/6 kV power substation, to be built at Kekura, for state expert
review. Project approval by regulators is expected by the end of
October 2017.
Rostek JSC was selected as contractor for the substation and,
based on current project design documentation, has already ordered
key equipment for the project. The equipment has been delivered to
the port of Arkhangelsk and is scheduled to set sail for the
Chukotka port of Pevek in mid-October so as to arrive before the
end of the current Arctic navigation season.
Design work on a temporary assay laboratory began in Q3 2017.
The planned lab is intended to support on-site mining operations
and exploration work. Lab equipment was purchased during the period
and will be shipped to Pevek during the current navigation
season.
The design process for a fuel and lubricants warehouse also
continued in Q3 2017, with construction expected to begin next
year. The Company plans to submit documentation for the facility
for state expert review in early Q4 2017.
Klen
Preparation of an updated pre-feasibility study, assembled by
Hatch, continued in Q3 2017. SGS Vostok Chita finished additional
test work in order to confirm certain parameters in the report. The
first phase of R&D was completed, with preliminary results
showing possible improved recoveries of over 90% and lower
forecasted operating costs. Based on these positive results, a
decision was made to continue with more R&D for the
project.
Furthermore, the Company has decided to move ahead with
additional exploration work to delineate any potential additional
resources in the licence area. A contractor has been selected and
the drilling programme is expected to begin in late Q1 2018.
HEALTH, SAFETY, AND ENVIRONMENT
Earlier this year, the Company adopted a new and improved HSE
Policy, with even greater emphasis on ensuring occupational safety,
managing operating risks, training employees and boosting safety
awareness. In Q3 2017, it recorded only two lost-time incidents,
both at Novo. MNV and Belaya Gora finished the quarter without
incident.
Over the course of the past three months, 124 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) and 98 managers and specialists
were trained on "Internal investigation of incidents" (one day
seminar). The managing directors of each division, and their
deputies, were instructed on carrying out inspections on a regular
basis.
Regular mentoring is being conducted by HSE department employees
during site visits. At the Moscow office, Novo, and MNV, safety
committees are now in place and work groups have been assembled to
ensure that new HSE policies are adopted across the board. Safety
contests were arranged at Novo (children's drawing contest; best
work space contest; contest for a safety slogan and logo) and MNV
(children's drawing contest; contest for a safety slogan and
logo).
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, to encourage safe
behaviour, and to help prevent hazardous situations.
Regulatory agencies carried out both scheduled and unscheduled
environmental inspections at Novo and Kekura during Q3 2017. The
Company has a system in place for following up on any
recommendations resulting from these inspections.
Over the course of Q3 2017, 83 employees attended environmental
safety training instruction. Some 67 specialists and managers
attended a two-day course on the new ISO 1401-2015 standard.
***
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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