New Acquisitions in the Khabarovsk, Chukotka and Chita Regions
Moscow. – Highland Gold Mining Limited (“Highland Gold”, or the “Company”) is very pleased to announce a series of new acquisitions in the Khabarovsk, Chukotka and Chita regions of Russia. These acquisitions are an important part of the Company’s strategic development as they provide a mix of quality exploration targets, resource enhancements to existing projects, and additional leverage off our existing management and infrastructure in these three important regions.
BELAYA GORA DEPOSIT (Khabarovsk Region)
Highland Gold has acquired a 25 year licence to develop and mine the Belaya Gora gold deposit. The acquisition was made pursuant to a public auction at a price of Rb16.5 million (US$580,000). This acquisition falls under our participation agreement with Barrick, and accordingly Highland Gold will offer Barrick participation of up to 50% in the project. The Belaya Gora licence area covers approximately 1 square kilometre and is located in the Khabarovsk region, 55 kilometres north of the town of Nikolaevsk-na-Amur and 66 kilometres to the south of Highland Gold’s MNV operation. The deposit also lies within 5 kilometres of an existing high voltage power line and is accessible all year around by a well maintained road that connects MNV to the town of Nikolaevsk-na-Amur and its port and airport facilities. Exploration of the Belaya Gora deposit began in the early 1900s and led to a small scale milling operation through the 1930s and early 1940s. Total gold production for this period has been reported at approximately 30,000 ounces from ore grading 5.8 g/t Au. The deposit received additional exploration during the late 1970s and early 1980s, as Belaya Gora was considered a prime candidate for the introduction of heap leaching technology into the Soviet Union. During this period the deposit was explored to a depth of 120 meters, though limited drilling also showed the mineralisation continued to a depth of 312 meters. This exploration work included geophysical studies, trenching, a large amount of drilling and underground development on three horizons. Metallurgical testing was also conducted on several bulk samples and confirmed that the deposit was amenable to heap leaching since gold is not associated with sulphides and there are low levels of copper and other preg robbing components in the mineralisation. Recovery rates in the range of 70 – 75% were achieved. The C2 resources of the deposit, estimated in accordance with Russian methodologies at a cutoff grade of 2.73 g/t Au, amount to 466,000 ounces of gold grading 3.0 g/t. Highland Gold considers this resource to be highly sensitive to the choice of cutoff grade. In the coming months, the Company will compile all historic exploration data on the deposit and develop an exploration program for 2006.
SOVINOYE DEPOSIT (Chukotka Region)
Highland Gold has acquired a 20 year licence to develop and mine the Sovinoye deposit. The acquisition was made pursuant to a public auction at a price of Rb5.0 million (US$177,000). This acquisition falls under our participation agreement with Barrick, and accordingly Highland Gold will offer Barrick participation of up to 50% in the project. The Sovinoye deposit covers an area of 9 square kilometres and is located in the Chukotka region, 100 kilometres west of the village of Shmidt Cape (Population: 570) and 350 kilometres to the east of Pevek. Regional geology in the area began in the early 1950s and this work led to the early identification of the Sovinoye deposit during the 1970s, though more detailed exploration of the deposit did not occur until the mid 1980s. This work, primarily focused on identifying high grade veins, consisted of approximately 8,000 metres of trenching, 25,000 metres (96 holes) of drilling, and 2,700 metres of underground development. As a result, five main ore bodies were identified with gold grades ranging from 3.4 to16.5 g/t over widths of 0.9 to 9.3 metres. Metallurgical test work completed on ore samples showed recoveries of more than 95%, including roughly 88% recovered from a gravity circuit. Highland Gold has reviewed a limited amount of the historic geological data on the Sovinoye deposit. This review has resulted in a re-interpretation of the primary target into a bulk tonnage, open pittable model. In the coming months, the Company will continue its evaluation of prior exploration results and develop an exploration program to test its new re-interpretation of the Sovinoye mineralisation.
LYUBOV DEPOSIT (Chita Region)
Highland Gold has acquired a 25 year licence for the exploration and mining of the Malo Fedorovskoye deposit. Barrick has also acquired a similar license for the Lubavinskoye deposit. These deposits, together are referred to as the Lyubov Project, are contiguous and the related license acquisitions fall under our participation agreements with Barrick. Accordingly, Highland Gold has offered Barrick up to 50% in the Malo Fedorovskoye project. Similarly, Highland Gold has received an offer from Barrick for up to 50% in the Lubavinskoye project. Highland Gold intends to accept this offer in the coming weeks. These acquisitions were made pursuant to public auctions at a total cost of Rb66.4 million (US$2.33 million), and assuming each party exercises their participation rights Highland Gold’s 50% share will amount to Rb33.2 million (US$1.16 million). The Lyubov project covers an area of approximately 130 square kilometres and is located in the Chita region, 400 kilometres to the southwest of the city of Chita and 25 kilometres north of the Mongolian border. The project is accessible by road and links to the state electrical power grid. Intermittent gold exploration and mining has taken place in the area since the late 1800s, though until recently the focus of this work had always been oriented on high-grade veins. Historic gold production from the Lubavinskoye mill has been reported at roughly 22,000 ounces at a grade of 21 g/t and an 82% recovery rate (80.7% recovered from gravity). In the late 1990s, the exploration focus on the property was shifted towards developing a near surface, bulk tonnage resource that would be amenable to heap leaching. This work began on the Malo Fedorovskoye deposit and resulted in Russian C2+P1 resources over a 350 metre strike length and to a depth of 120 metres of 230,000 ounces of gold at a grade of 2.1 g/t Au. Metallurgical testing was also conducted on two 5-tonne bulk samples and confirmed that these resources are amenable to heap leaching since gold is not associated with sulphides and there are low levels of preg robbing components in the mineralisation. Heap leach recovery rates of 68% were achieved. As the Malo Federovskoye zone represents a small portion of a 10 kilometre strike length, Highland Gold considers the Lyubov project is a highly prospective exploration target with good potential to develop into a bulk tonnage, open pittable resource that is amenable to heap leaching. This conclusion is further supported by prior exploration data that has identified at least 7 prospects on the licence area that warrant further investigation. An exploration program for 2006 is being planned.
BALEY ZIF-1 TAILINGS (Chita Region)
Highland Gold has acquired a 25 year licence for the development and re-processing of tailings initially accumulated from the Baley ZIF-1 processing plant. The acquisition was made pursuant to a public auction at a price of Rb15.75 million (US$550,000). This acquisition falls under our participation agreement with Barrick, and accordingly Highland Gold will offer Barrick participation of up to 50% in the project. These tailings are situated approximately 2 kilometres from the Taseevskoye open pit and have been acquired to provide additional mill feed for the Taseevskoye project. The Baley ZIF-1 plant operated from 1934 to 1972 and processed ore mined from the Baley and Taseevskoye mines. Over this period, these mines provided large volumes of very high grade mill feed (12.6 g/t Au), which when combined with the inefficient processing technologies (89% recovery) of the time resulted in the build-up of substantial mill tailings that carried gold values in excess of 1 g/t. The gold resource contained within the tailings is estimated at 485,000 ounces at a gold grade of 1.02 g/t. For a map showing the locations of the new acquisitions, please click here.
Commenting on today’s announcement Ivan Koulakov, Deputy Chairman with responsibilities for Corporate Development, said:
“The acquisitions that we have announced today represent the first important steps in the execution of an exploration strategy that was defined at the start of the year. We have put a lot of effort into prioritising many potential acquisitions across the country, and we are very pleased to have acquired these quality projects that have already been subjected to significant amounts of exploration that we could analyze and re-interpret. We are now planning our next steps on each of these projects and look forward to a busy year of exploration in 2006.”
About Highland Gold
Highland Gold is a Russian focused, intermediate gold producer with two operating mines and 3 advanced projects at the feasibility study stage. Highland Gold shares are quoted under the symbol “HGM” on the Alternative Investment Market (AIM) of the London Stock Exchange. Barrick Gold is the Company’s largest shareholder, holding a 20% equity stake.
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Dmitry Korobov, Managing Director
Dmitry Yakushkin, Director of Communications
Grant Sinitsin, Director of Investor Relations