22 Sep 2009 13:37

Highland Gold boosts net profit 70% in H1

MOSCOW. Sept 22 (Interfax) - UK-based Highland Gold, which produces gold in Russia, increased net profit 70% to $38.1 million in the first half of 2009 compared to the same period of 2008, the company said in a statement.

Sales revenue grew 3% to $78.8 million in the half due to an increase in production at the Mnogovershinnoye field in the Khabarovsk territory as well as a slight rise in metals prices. Highland sold 83,860 ounces of gold at an average price of $910 per ounce compared to 81,036 ounces at a price of $909 per ounce.

Production at the Mnogovershinnoye field, which is now the company's sole existing field, grew 14% to 78,421 ounces of gold in the half.

EBITDA (earnings before interest, taxes, depreciation and amortization) rose 33% to $27.3 million from $20.6 million in the first half of 2008 due to an increase in gold sales combined with a decline in expenditures. The company managed to cut expenses 3% to $50.1 million. In particular, operating costs fell 9% to $35.3 million. The average cost of producing one ounce of gold totaled $514 compared to $574 in the same period of last year.

Capital expenditures totaled $15.7 million in the half versus $43.7 million a year earlier. The considerable decline in investment can above all be attributed to the sale of the Mayskoye field to Polymetal. The company also said it is still developing the Novoshirokinskoye field and will start test production at the field on October 1 in accordance with the license terms.

Highland Gold also said that it signed a loan agreement with UniCredit for $15 million in July and an agreement with Gazprombank for $25 million in September. The company will use the funds to finance its investment program.

Highland Gold is owned by Millhouse, representing billionaire Roman Abramovich and his partners, Barrick Gold and Tremadon Ventures, whose beneficiaries are Evraz Group shareholders Alexander Abramov and Alexander Frolov.