9 Nov 2010 12:34

Highland Gold starts third mine in Russia

MOSCOW. Nov 9 (Interfax) - Highland Gold Mining has started mining operations at its Belaya Gora open pit in Russia's Khabarovsk territory - the company's third mine in Russia, Highland said in a statement.

Select oxide ores will be hauled to and processed as planned at the Mnogovershinnoye (MNV) plant. This marks the initial production at Highland Gold's third producing mine just 12 months after commissioning its second producing asset (Novoshirokinskoye) with its joint venture partner in October 2009.

To maximise efficiencies the MNV processing plant gravity circuit is undergoing upgrades that include the incorporation of additional concentrators and in-line leach reactor technology. These upgrades will improve gold recovery levels benefiting both operations.

The Belaya Gora mine is situated 66 kilometres south of MNV and is accessible via an all weather road. In July 2009 the Russian Regulatory Authority (GKZ) approved 820,000 ounces of C1 + C2 reserves and today's announcement is a major milestone for advancing from greenfield exploration into production just five years after the property was purchased at an auction in October 2005.

Design for a stand-alone processing facility at the Belaya Gora mine site is underway with completion of construction scheduled for mid 2012. The plant will process the Belaya Gora ore stockwork in addition to potential ore from nearby satellite deposits at Blagodatnoye and Belaya Gora Flanks, both of which were acquired by the Company earlier this year.

Highland Gold raised gold production 2.7% to 163,108 oz in 2009. Production of gold equivalent rose 9.4% year-on-year in H1 2010 to 85,789 oz, and guidance for 2010 as a whole is 200,000-210,000 oz.

The company's main projects are located in Russia's Khabarovsk territory (MNV, Belaya Gora and Blagodatnoye) and Trans-Baikal territory (Novoshirokinskoye, Lyubvavinskoye and Taseyevskoye); and in Kyrgyzstan (Unkurtash).

Valery Oif, Highland Gold's chief executive, said in September that the company might produce 210,000-220,000 oz gold equivalent in 2011 and 280,000-300,000 oz in 2012, when the Belaya Gora recovery plant is commissioned.

HGM's shareholders are Millhouse, acting on behalf of billionaire Roman Abramovich and his business partners; Barrick Gold; and Tremadon Ventures, whose beneficiaries are Evraz Group shareholders Alexander Abramov and Alexander Frolov.