Highland Gold's H1 profit down 39% to $23 mln
MOSCOW. Sept 21 (Interfax) - Highland Gold Mining's (HGM) net profit to International Financial Reporting Standards (IFRS) fell 39% year-on-year in H1 2010 to $23.3 million, the company said.
The London-listed HGM, which develops the Mnogovershinnoye (MNV) and Novoshirokinskoye (Novo) gold fields in Russia's Far East, said earnings before taxes, depreciation and amortization (EBITDA) rose 71.3% year-on-year to $46.7 million and sales revenue was $100.5 million, up from $78.8 million a year previously.
Cash and cash equivalents were $216.5 million as of June 30. Capex fell to $13.7 million in H1 2010 from $15.9 million in H1 2009.
The production of gold and gold equivalents for the Group was 85,789 ounces during H1 2010 - this exceeded H1 2009 results by 9.4%. The performance increase was a result of the start of production at the Novo mine. The Group sold 86,093 ounces of gold and gold equivalents during the period, 2.7% higher than 83,860 ounces of gold in H1 2009. MNV and Novo (48.3% HGM share) combined produced 85,789 oz of gold and gold equivalents - a 9.4% increase on H1 2009 production
After first shipments of concentrate in February 2010, Novo continues to ramp up mining and processing levels. The company remains on track to produce 200,000 - 210,000 oz of gold and gold equivalents in 2010.
HGM increased gold production 2.7% in 2009 to 163,208 oz.
Highland Gold posted an operating profit of S$36.7 million in the first half of 2010 versus $19.4 million for the previous corresponding period. Turnover for the Group in the first half of 2010 was $100.5 million compared to $78.8 million in H1 2009. The increase was mainly due to the commencement of production at Novo ($10.1 million) and an increase in gold prices during the period ($11.3 million).
Gold sales at MNV were $87.6 million in H1 2010, 14.8% higher compared to $76.3 million in H1 2009. The volume of gold sold decreased by 10.1% (75,359 oz versus 83,860 oz in H1 2009). The average price of gold in H1 2010 was 27.8% higher compared to H1 2009 ($1,163 versus $910 per oz in H1 2009).
The Group EBITDA increased by 71.3% to $46.7 million compared to $27.3 million in the corresponding period in 2009. The increase was caused by higher revenue from gold sales at MNV and Novo coming online.
Cost of sales for the period was $57.2 million compared to $50.1 million in H1 2009 representing an increase of 14.3%. This is mainly the result of costs at Novo being recognised in the profit and loss as the mine has now moved from a development project into production, while in the prior periods they were capitalised. Cash operating costs at the MNV operation decreased by 8.1% to $36.8 million in H1 2010 while the total cash cost per ounce was US$489 compared to $478 per ounce in the prior period.
"This is another set of strong results delivering on target and on strategy. The first half of this year has seen progress on all fronts with positive progress being made at the Company's producing mines and exploration prospects. The acquisition of further property at Blagodatnoye and the Belaya Gora flanks underlines our strategy of maximising the potential of the regions we know to hold sound deposits and where the Company has existing operations," HGM said.
"Overall the Company's strategy of increasing production while keeping costs to a minimum is working well. After a period of restructuring of the Group's operations, the foundations are now in place to grow the business."
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.