2nd Feb 2005 13:09
Highland Gold Mining Limited02 February 2005 2 February 2005 New Board Appointments Trading Update Highland Gold, the AIM quoted Russian gold producer, today announces new Boardappointments and production figures for the year ending 31 December 2004 for itstwo gold producing deposits, MNV and Darasun. In addition the company is alsoproviding an update on recent progress at all five of its deposits. Highlights Board Appointments •Ivan Koulakov, former Managing Director, appointed Deputy Chairman with executive responsibility for corporate development •Dmitry Korobov, former Commercial Director, appointed Managing Director •David Fish appointed Non Executive Director and Head of the Audit Committee •Christopher Palmer-Tomkinson appointed Senior Independent Director Trading Update Mnogovershinnoye (MNV) • 195,026 oz of gold produced; throughput increased by 4.06% to 927,000 tonnes • Sixth consecutive year of increased production Darasun • 4,870 oz of gold produced • Full production expected in H2 2005. Planned production for 2005 of over 70,000 oz Novoshirokinskoye • Increased reserves and resources estimates, with consequent new mining plan • Comprehensive program underway to bring deposit into production of concentrate in H2 2005 • A long-term licence has been obtained Mayskoye •Feasibility study underway, completion of technical feasibility study expected in Q1 2005 •New upscaled mining plan based on 1 million tones of ore adopted Taseevskoye €20 year mining licence awarded November 2004 •Barrick has confirmed its intention to exercise its 50% right to the Taseevskoye deposit and discussions are now in progress with a view to completing the Joint Venture documentation •New feasibility study underway Commenting on today's announcement, James Cross, Chairman, Highland Gold, said: "I'm delighted to announce the appointment of Ivan Koulakov as Deputy Chairmanand Dmitry Korobov as Managing Director. As the former Commercial Director,Dmitry Korobov has the experience to oversee the development of our five worldclass assets. "This appointment allows Ivan Koulakov to focus on corporate development andidentify new opportunities in Russia and the FSU." "I am also delighted to welcome David Fish to the Board. David has spent hiscareer in finance and mining and we look forward to his contribution." Commenting on today's trading update, Dmitry Korobov, Managing Director, said: "Highland Gold made further positive progress in 2004, and, with two producingmines and a further three deposits at different stages of development, remainsfocused on realising the significant gold producing potential. "In 2005 we expect to continue and complete working on a number of importantfuture-oriented projects such as the Mayskoye and Taseevskoye reservesrecalculation to JORC standards and the Mayskoye deposit full feasibility study.We also look forward to the start of mining and production of concentrate at ourpolymetallic deposit Novoshirokinskoye in H2 2005". A conference call for analyst and investors will take place at 3.00pm (UK) onTuesday 2 February. Please dial telephone number: +44 (0) 1452 561 263 to accessthis facility. Enquiries: +44 (0) 20 7404 5959 Highland Gold James Cross, Chairman Dmitry Korobov, Managing Director Dmitry Yakushkin, Director of Communications Brunswick Mark Antelme Pavla Kazbundova www.highlandgold.com Board Appointments Highland Gold today announces the appointment of Dmitry Korobov as ManagingDirector. Mr Korobov was previously Commercial Director of Highland Gold,responsible for the running of RDM, the company which manages the Group'sRussian operations in Moscow. Ivan Koulakov, former Managing Director ofHighland Gold is today appointed Deputy Chairman and his responsibilities willcentre on corporate development, which remains the primary focus of ourbusiness. Highland Gold also announces the appointment of David Fish, 58, as a NonExecutive Director. Mr Fish, a Chartered accountant, was a Partner at PeatMarwick Mitchell & Co before joining Anglo American Corporation of South AfricaLtd. He will also take on the role of Chairman of the Audit Committee. There are no details that are required to be disclosed under schedule 2paragraph F (sections III-VIII) of the AIM rules. The Board has appointed Christopher Palmer-Tomkinson as Senior IndependentDirector. Trading update Mnogovershinnoye (MNV) Gold production during 2004 at MNV, the core component of Highland Gold, hasincreased to 195,026 oz (6,066 tonnes), which is 0.53% up on the previous year.Ore production was 803,049 tonnes and, taking into account ore stockpiled atMNV's mill, the volume of ore processed by MNV totaled 927,369 tonnes, whichrepresents a 4.06% increase over the previous year. Average recovery at the millwas 92.18%, an increase of 0.18% compared to 2003. 2004 2003 Ore mined, tonnes 803,049 800,800 From underground 389,506 474,767 From open pit 413,543 326,033 Stockpiled ore, tonnes 124,320 90,402 Ore processed, tonnes 927,369 891,202 Average Au grade, g/t 7.09 7.36 For ore mined from underground 8.51 8.82 For ore mined from the pit 6.43 6.05 Gold production, Troy oz./tonne 195,026/6.066 194,000/6.034Recovery, % 92.18 92.02 Development works at Severnoye ore body were started in 2003 and carried outduring 2004. Ore production started in January 2005. Severnoye ore body contains4 million tonnes of reserves, being one of the sources for further miningactivities at Mnogovershinnoye. Darasun (including Talatui and Teremki) Ore produced from underground, tonnes 96,344Average grade, g/t 8,6Ore processed, tonnes 31,909Average grade of Au, g/t 5.92Gold produced, Troy oz/kg 4,870/151.5Recovery, % 80.20 In autumn 2004 representatives from Highland Gold, Siemens and yazhmash, aRussian mill equipment supplier, analysed technical start-up problems at theDarasun mill. This group pinned down the factors underlying the start-up delayand the fault is now being rectified. Highland Gold now expects the Darasun millto achieve full capacity in H2 2005. 96,344 tonnes of ore were mined at Darasun in 2004. Although working at areduced capacity in H2 2004, the Darasun mill processed 31,909 tonnes of ore. Bythe year end 4,870 oz of gold (151.5 kg) was recovered. Works at the Darasun plant are stable and 17,000 tonnes of ore were processed inJanuary 2005. We expect to continue production at approximately 20,000 tonnes amonth before achieving full capacity later in 2005. A long-term licence for the latui deposit has been obtained and an internalfeasibility study has been prepared. Ore production at Talatui, will start inFebruary 2005, with plans to produce approximately 150,000 tonnes during 2005.The ore from Talatui will be processed at the Darasun plant. Novoshirokinskoye The Company is introducing a modern technology based on the Kivcet FlashSmelter. This technology is highly efficient and should provide much betterrecovery rates for gold, lead and silver. In 2004 the Company completed the re-contouring of the deposit based on goldequivalent cutoff grades between 0.5 - 5.0 g/t and the findings of this workhave been sent to GKZ for their review and approval. Using a 3 g/t goldequivalent cutoff grade, the geological resource has increased to 3.156 milliongold equivalent oz, (98,2 tonnes), an increase of 68% from the comparable 2002figure. As a result of optimizing the mine plan, Highland Gold increased scheduledannual production to 115,000 oz of gold equivalent. In September 2004 Highland Gold obtained a 20 year licence for developing theNovoshirokinskoye deposit, which comprises different metals. The company hasincreased its share in the share capital of Novoshirokinsky Rudnik open jointstock company from 87.35% to 96.51%. The finalisation of the feasibility studyhas been ongoing and good progress has been made with the construction ofprimary metallurgical facilities. The mining plan anticipates production ofconcentrate starting in H2 2005, the launching of the flash smelter in 2006 anda projected milling rate of 450,000 tonnes annually in 2007. Mayskoye Highland Gold has adopted a new mining plan for Mayskoye based on 1m tonnes ofore throughput and production of more than 260,000 oz of gold per annum. Thiscompares to the previous base model of throughput of 550,000 tonnes of ore and180,000 oz of production. Full production capacity of 1million tonnes of ore isexpected in 2009. Bioleaching tests at the Mayskoye deposit produced positive results. Accordingto estimates by TSNIGRI, the rate of recovery amounts to 95.7%. Estimates fromSGS Lakefield Research suggest the rate of recovery is 92.9%. Work on the re-estimation of reserves to JORC standards continues; the Mayskoyetechnical feasibility study is expected to be completed in Q1 2005. Camp construction continues and communication and power supply systems for theconstruction field are in the final stage of installation. Taseevskoye In September 2004, following an open auction, the Company was awarded the rightto develop the aseevskoye deposit. In November 2004, the Company obtained atwenty year licence for gold and silver mining from the Ministry of NaturalResources. The cost of the licence was 742.35 million Rbl. (US$26.5 million),which was paid in full in December 2004.In January 2004, Highland Gold and Barrick Gold exchanged reciprocalparticipation rights on certain new acquisitions, which includes Highland Gold'sacquisition of the Taseevskoye licence. Barrick has confirmed its intention toexercise its 50% right to the Taseevskoye deposit and discussions are now inprogress with a view to completing the Joint Venture documentation. Highland Gold's immediate plans for Taseevskoye include re-estimating theresources and financial parameters in accordance with current economicconditions. Highland Gold has engaged Snowden Mining Industry Consulting(Vancouver), a company specialising in ore reserve definition, to complete theresource re-estimation to JORC standards and to design a 3D block model. Oncompletion of this work, which is expected during the first half of 2005,Highland Gold plans to prepare a new, detailed feasibility study. Financial news In 2004, Highland Gold sold 197 306 oz of gold, the gold sales revenues of theGroup totaled US$80.1m. In December 2004, the Company placed 27.4 million ordinary shares at 190 penceper share to raise US$100 million to pay for the Taseevskoye licence, to financecapital expenditure at Darasun, Novoshirokinskoye and Mayskoye and to refinancesome of the Group's existing banking facilities. Highland Gold arranged a syndicated 3.5 year US$80 million loan facility withassistance of mandated Lead Arranger Commerzbank Aktiengesellschaft in order toextend the maturity profile of its banking debt. The facility agreement was signed on the 13 December 2004, the first drawdowntook placeon 30 December 2004. The next drawdown is planned for Q1 2005. Furthermore thisfacility has significantly strengthened Highland Gold's banking relationshipwith the international banking community. Note to editors: Dmitry KorobovDmitry Korobov, 33, graduated as a Mechanical Engineer from the Moscow StateTechnical University (Bauman). He became deputy general director of ZAO OilFinance in 1997 and then a director of ZAO MNV in 1998. Since that time he hasbeen instrumental in the development of ZAO MNV and, prior to his appointment asManaging Director was General Director of RDM, the company which manages thegroup's Russian operations in Moscow. David FishDavid GK Fish, 58, graduated from the University of Witwatersrand. He startedhis professional career as a chartered accountant in 1969 at Peat MarwickMitchell & Co, which became KPMG. He was appointed a partner in 1980 and wasChairman of the Banking and Finance practice. In 1988 Mr. Fish joined AngloAmerican Corporation of South Africa Ltd as the Finance Manager in theChairman's office. Whilst at Anglo American Mr. Fish was involved on the finance, legal andcommercial side of various South African projects from early exploration,through feasibility, construction and final commissioning. Since 2002 he has been a significant investor and Financial Officer in MwanaAfrica Holdings. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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