LONDON (Alliance News) - Highland Gold Mining Ltd Wednesday reported a substantial fall in pretax profit for 2014 as the company booked impairments, made a bigger foreign exchange loss and paid higher finance costs.
The Russia-based gold miner reported a pretax profit of USD45.5 million for the eyar, down from USD82.1 million in 2013, after it booked USD11.4 million in impairments, a wider USD9.6 million foreign exchange loss and higher finance costs totalling USD4.2 million.
The impairments were made against the company's Klen gold deposit and other long-term assets due to the postponement of project development. The company made no impairments in the previous year. The foreign exchange loss was caused by the devaluation of the Russian rouble against the dollar and pound and was wider than the USD2.8 million forex loss booked in 2013, whilst finance costs rose from USD1.6 million in 2013.
Revenue remained fairly flat at USD304.2 million as an increase in production was offset by lower commodity prices. Production rose to 258,937 gold ounces from 233,696 ounces but average prices fell to USD1,175 an ounce compared with USD1,291 an ounce a year earlier.
The company was also hit with higher total cash costs, which rose by 5.7% to USD645 per ounce, although all-in sustaining cash costs fell 3.8% to USD809 an ounce.
"Despite the uptick in total cash costs, the company remains near the median of our Russian and international peers in this indicator, and leads the pack in all-in sustaining costs," it said.
The company's total dividend for 2014 was cut to GBP0.045 per share from GBP0.050 per share in 2013.
In 2015, Highland is aiming to expand production to around 270,000 to 285,000 ounces of gold and gold equivalent whilst maintaining its cost control. The Belaya Gora mine is expected to double output in the year to contribute around 38,000 ounces, it said.
"I am pleased to report that the quality of our company's asset base together with the rigorous cost disciplines that are integral to our business culture, underwrote a generally solid performance in 2014, a year characterised by a distinctly challenging trading climate," said Chairman Eugene Shvidler.
"Our principal objectives in 2015, taking into account the current weakness of the marketplace, are to expand production in line with our forecast, significantly progress our Kekura development towards the targeted startup date of 2018 and continue to prioritise our near-mine exploratory activities at Mnogovershinnoye," he added.
Highland Gold shares were untraded on Wednesday morning, last trading at 41.50 pence per share.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.
