JOHANNESBURG (miningweekly.com) – London-listed company Highland Gold on Tuesday posted a 37% increase in its net profit for 2017, as above-guidance production boosted revenue, costs were controlled and no impairment losses were reported.
The company, which mines in the Khabarovsk, Chita and Chukotka regions of Russia, increased its net profit to $65.9-million in the year ended December 2017, compared with $47.9-million in 2016, when it recognised an impairment of $22.8-million in relation to the Belaya Gora mine.
Revenue increased by 3.5% to $326.7-million, driven by higher volumes, with 270 380 oz of gold and gold equivalent sold. Total production of gold and gold-equivalent increased from 261 159 oz in 2016 to a record 272 274 oz in 2017, exceeding the guidance range for the year of 255 000 oz to 265 000 oz.
Highland, which is pursuing a no-hedge policy, achieved an average realised price of $1 162/oz of gold equivalent in 2017, compared with $1 136/oz of gold equivalent.
The strength of the Russian rouble and a marginal increase in all-in sustaining costs to $664/oz, resulted in total cash costs increasing by 11.7% to $507/oz, which CFO Alla Baranovskaya said remained “comfortably below the industry average”.
Earnings before interest, taxes, depreciation and amortisation (Ebitda) decreased by 4.4% to $155.3-million in 2017, resulting in the Ebitda margin falling from 53.1% to 49%.
Highland’s capital expenditure amounted to $58.3-million in 217, compared with $59.3-million in 2016, primarily related to near-mine exploration at Mnogovershinnoye (MNV), the extension of Novoshirokinskoye’s processing capacity to 1.3-million tonnes a year and the progression of the company’s main development project, Kekura.
The exploration programme at MNV, which forms part of the Khabarovsk cluster, is aimed at extending MNV’s productive life beyond 2022, with a budget of $3-million to $5-million a year set for exploration spend. Two new greenfield sites – Zamanchivaya and Kulibinskaya – are located directly adjacent to MNV, where initial exploratory work is under way.
The planned expansion of Novo’s mining and milling capacity is designed to compensate for expected lower grades from the mine. Highland has increased the mine’s ore reserves by 430% to 1.9-million ounces of gold equivalent, but the grade has fallen from 9.8% to 3.3%.
The first stage of the mine’s capacity expansion, focused on upgrades to the mining system, would be completed by the end of 2018, CEO Denis Alexandrov reported, adding that the second stage, focused on the processing plant, was in the design phase.
Highland provided a production target of 265 000 oz to 275 000 oz for 2018.