LONDON (Alliance News) - Highland Gold Mining Ltd shares rose on Wednesday after the miner said its profit dropped by almost 70% in 2015 due to a large rise in the amount of impairments booked during the period, but it demonstrated the effectiveness of its response to lower gold prices.
Highland Gold shares were trading up 8.5% to 92.75 pence per share on Wednesday morning.
The miner, which produces from three mines in Russia, said its pretax profit plummeted in 2015 to USD13.9 million from the USD45.5 million booked in 2014, after it reported USD36.0 million worth of impairments during the year compared to only USD11.4 million a year earlier.
Although revenue dropped more than 9.2% to USD276.2 million from USD304.2 million, Highland managed to lower its operating costs significantly to allow its gross profit to still increase to USD76.8 million from USD75.7 million, representing a small 1.5% rise.
Although its gross profit increased, those impairments and other costs led its operating profit to plunge to USD22.4 million from USD55.9 million in 2014, a 60% year-on-year fall.
Despite the fall in pretax profit, Highland retained its total dividend for 2015 at 4.5 pence per share.
Revenue fell as a result of lower gold prices, averaging USD1,062 per ounce in 2015 compared to USD1,175 per ounce a year earlier. In response, Highland managed to increase production and lower its all-in sustaining cash cost to only USD640 per ounce from USD809.
Production in the year totalled 262,485 gold equivalent ounces in 2015, a 1.4% rise from the 258,937 ounces produced the year before.
Looking forward, Highland aims to produce 255,000 to 265,000 ounces of gold in 2016, which would represent between a 2.9% year-on-year fall to a potential 1.0% year-on-year lift compared to 2015 levels.
Highland reined in its capital expenditure in 2015 to USD42.2 million from the USD65.5 million spent in 2014. The miner's net debt fell to USD229.2 million at the end of 2015 from the USD247.2 million at the end of 2014.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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