(Alliance News) - Highland Gold Mining Ltd on Tuesday said its first half revenue and gold sales rose year-on-year reflecting the performance from the recently acquired Valunisty mine in Russia.
Revenue in the six months to June rose by 19% to USD174.7 million from USD146.9 million in the first half 2018. Gold and gold equivalent sold totalled 142,609 tonnes, up 18% year-on-year from 121,174 tonnes.
Pretax profit climbed at a slower rate however, by 12%, to USD56.1 million from USD50.2 million. The company attributed to this to USD5.7 million in losses from obsolete ore stockpiles in Valunisty and the Belaya Gora mine, also in Russia. There were no such costs in the first half of 2018.
The Russia-focused miner said capital expenditure rose by 18% to USD31.3 million from USD26.5 million, reflecting development costs at the Kekura project and the replacing of older equipment in Mnogovershinnoye.
Segmentally, sales in the Mnogovershinnoye mine rose by 28% to 60,492 tonnes of gold and gold equivalent from 47,144 tonnes, and there was a small sales rise of 1.7% at Belaya Gora to 19,554 tonnes from 19,224 tonnes.
Highland reported 14,680 tonnes of sales from Valunisty, which the company acquired for USD91 million last December.
Sales in the Novo mine fell by 13%, however, to 47,883 tonnes from 54,806 tonnes which the company attributed to average lower grades.
The company also said its first half earnings were supported by stable gold prices and a weaker local currency. The average rouble to dollar exchange rate increased by 9.5% year-on-year during the interim period, Highland explained.
Highland had a 10% rise in production during the period, increasing to 142,254 ounces of gold and gold equivalent from 128,921 ounces in 2018. Looking ahead, the company is forecasting 2019 gold and gold equivalent production between 290,000 tonnes and 300,000 tonnes.
Operationally, the company also said construction work at Kekura and exploration drilling at Klen continued during the period. In July, both developments were included in a Russian special economic zone which offers tax breaks and other incentives during the first five to ten years of operations.
Highland's interim dividend stayed flat at USD0.06 per share.
Chief Executive Denis Alexandrov said: "Highland Gold achieved solid half-year financial performance, buoyed by stable gold prices and a weaker rouble, despite higher maintenance capital expenditure. The company met internal targets and increased production with the aid of Valunisty and a particularly strong performance from Mnogovershinnoye.
"Novo made progress in rectifying some of the issues with metals grades that constrained its output over the past twelve months. Belaya Gora had a difficult half-year, but still managed to minimize the impact of its operational challenges on total production. We expect higher production levels and stronger operating cash flow in the second half, as well as continued progress on construction at our key development project, Kekura, and on our ongoing projects to improve operations at each of our existing mines."
Shares in Highland Gold were down 0.5% at 231.40 pence each in London on Tuesday.
