- H1 production of 96,986 oz compared to 90,133 oz in H1 2003, an increase of 8%, confirming on track to meet group full year target of 235,000 oz.
- First step taken in development of additional growth area through award of two exploration licences in Chita Region.
- Producing and development assets on track for 345,000 oz in 2005 (MNV, Darasun, Novoshirokinskoye).
- Further progress in talks with banks on financing options.
Commenting on today’s announcement, Ivan Koulakov, Managing Director, said:
“I am pleased to report that at the end of the first half we are well on track to meet our 235,000 oz production target for the full year and that significant progress has been made at all of our deposits.
“The exploration licences announced today are an important development for the company. Until now we have concentrated on developing existing assets or acquiring assets that could be brought into production. Moving into exploration will provide another way that we can grow the business and we are excited about the potential production opportunities exploration licences could now lead to, not only in the Chita region but across Russia and the former soviet union.
”Operating UpdateMnogovershinnoye (MNV) In the first half of year the volume of ore processed at the mill at MNV increased by 9% compared with the same period in 2003, with only a slight decrease in average grade. This was achieved while managing the transition to the new ore bodies. Gold production increased by 8% up to 96,986 oz. The average mill recovery was 91.9%, a slight decrease on the same period last year but within the bounds of natural fluctuation. The board confirms the previously announced plans to produce 195,000 oz of gold (6.3 tonnes) at MNV in 2004.
|H1 2004||H1 2003||Performance comparison|
|Ore mined (‘000 tonnes)|
|Ore from Stockpile (‘000 tonnes)||77.8||41.2||+88%|
|Ore Milled (‘000 tonnes)||466.0||425.9||+9%|
|Average Mill Recovered Grade (g/t)||7.04||7.11|
|Gold produced (oz)||96,986||90,133||+8%|
Darasun (Darasun, Talatui, Teremki)
Following the successful recommissioning of Darasun and the first gold pouring on 23 June, the mine is now on plan to achieve its target of 40,000 oz this year. Up to July 1 the amount of ore mined totalled 39,875 tonnes. As previously announced, when the mine reaches full capacity next year, Darasun is expected to produce 120,000 oz of gold (3.8 tonnes) annually. On 24 June, the company was awarded a 20 year mining licence for the adjacent deposit at Talatui. It is expected to start processing open pit ore from Talatui at the mill in Darasun in 2005.
As announced on 28 June, the company is currently recalculating reserves and resources based on gold as the main component that may lead to an increase in reserves from 1m oz to 1.5m oz and resources of 1.8m oz to 2.7m oz of gold equivalent (excluding P category resources). A further 20 year production licence was awarded on 24 June for Novoshirokinskoye. The company intends to step up investment in commissioning the mine in the second half of this year with a view to production starting in 2005. Assuming production at Novoshirokinskoye starts as scheduled in 2005, the company will be on plan to reach its group-wide target production for 2005 of 345,000 oz of gold equivalent.Mayskoye The full feasibility study is being prepared by The Magadan Mining Institute and is running within the scheduled timetable. In parallel a bankable feasibility study has been commissioned for the purpose of securing project financing and is expected to be completed by the year end. The company has completed renovation of key temporary facilities near the mine-site to accommodate 140 construction personnel. The pre-fabricated sections for the construction camp for 500 people have been manufactured and are ready for delivery to the mine-site. Assembly will commence at the end 2004. In the second half of the year the company will ship equipment and materials to the mine-site during the navigation season and start construction works.
Exploration licences for Bystrinkoye and Lubavinskoye ore fields
Highland Gold today announces that it has been successful in securing exploration licences at two ore fields, Bystrinskoye and Lubavinskoye, both in the Chita region. The exploration licences will shortly be issued to Highland Gold, without charge, as public contracts whereupon all of the existing geological information on these ore fields will be made available to the company. The award of these licences marks the first steps in entering exploration in order to further grow the company’s production base.
Previously Highland Gold has achieved scale by developing existing assets or, as with Mayskoye, acquiring assets that could be brought into production. Exploration has now been identified as the third important strand to achieve Highland Gold’s ambitious growth strategy. As it currently stands the ownership of exploration licences does not confer an automatic right to secure production licences. However, this position is currently under review.
The Bystrinskoye ore field is located in the Gazimuro-Zavodskoi region, south east of the city of Chita, 15 km from Highland Gold’s Novoshirokinskoye deposit. Bystrinskoye is a bulk-tonnage copper-gold porphyry target that was under exploration from 1986 to 1991. Overall copper resources of the Bystrinskoye ore field amount to approximately 4 million tonnes of Ð category at an average grade of 1.58%. Gold resources of Ð category amount to approximately 150 tonnes (4.8m oz) at a grade of 0.5 g/t. The exploration included 7,600 cubic meters of surface trenching and 6,800 meters of drilling.
Sample highlights from the drilling phase included:
|Hole #||From (m)||To (m)||Width (m)||Cu %||Au g/t||Ag g/t|
Information sourced from Chita Geological Survey
The Lubavinskoye ore field is located in the Kyrinski region, 400 km south east of the city of Chita and 330 km from the Darasun railway station near the Mongolian border. The Lubavinskoye field was discovered and has been mined intermittently since 1880. The target for this project is to delineate a bulk tonnage, low grade, heap leachable gold resource that was initially identified in the late 1990s during exploration on the flanks of the Lubavinskoye underground mine, which had been placed on care and maintenance in 1993. According to the previous surveys P category resources of the field are estimated at 150 tonnes (4.8m oz) of gold. These two licences are subject to 50% back-in rights by Barrick under the existing Participation Agreement.
Highland Gold is currently in the process of compiling prior exploration data on both the Bystrinskoye and Lubavinskoye projects to determine the scale of exploration activities. The P category resources for Bystinskoye and Lubavinskoye are given for indicative purposes and are not included in the group reserves’ statement, in line with Highland Gold’s current policy.Financing Credit facilities utilised by the company as of 30 June totaled US$56 million.
Highland Gold is in the final stage of negotiations with a number of Russian banks with a view to putting in place a further US$25million of short-term credit facilities. The board has also agreed to file registration with the Federal Commission for the Securities Market of the Russian Federation to issue bonds for up to 750m rubles US$25m. The registration is valid for 12 months. However, there is no obligation on the company to issue the bonds. Any decision to raise finance through the bond markets will be taken at the appropriate time in the light of market conditions.
For further information: Andrew Garfield, Mark Antelme, Brunswick, +44 207 404 5959