Highland Gold profits boosted by increased sales volumes

Gold miner and trader Highland Gold Mining Ltd (LON: HGM) posted positive first half results led by sales of increased gold volumes.

The Company stated that its gold volume sold increased from 121,174oz for H1 2018, to 142,609oz for H1 2019. This led an increase in revenue on-year, from US$146.9 million to US$174.7 million.

Correspondingly, Highland Gold Mining operating profit rose from $50.67 million to $57.38 million, and their net profit spiked from $28.64 million to $45.69 million. The outlook was equally positive for shareholders, with their EPS rising from $0.088 to $0.125 in a comparison of the same periods.

Operationally, the Company noted that it owed its success to a 23.3% production increase at its Mnogovershinnoye mine, with a JORC-compliant reserve report extending its lifespan to 2029, up by seven years. Its Kekura and Klen ventures continued operations throughout H1 2019, with both being granted residency in the Chukotka special economic zone.

However, the Group did report that its Belaya Gora and Novoshirokinskoye prospects both suffered declines due to ‘operational issues’ and lower grades.

Highland Gold Mining comments

Denis Alexandrov, CEO, said,

“Highland Gold achieved solid half-year financial performance, buoyed by stable gold prices and a weaker rouble, despite higher maintenance capex for replacing older equipment due to the extension of life of mine at our key production assets, and higher costs at our newest mine, Valunisty, which we are now focusing on bringing in line with our other operating assets.”

“From an operational standpoint, the Company met its internal targets and increased production over the first half of last year with the aid of Valunisty and a particularly strong performance from MNV. Novo made progress in rectifying some of the issues with metals grades that constrained its output over the past twelve months. Belaya Gora had a difficult half-year, but still managed to minimize the impact of its operational challenges on total production.”

“We expect higher production levels and stronger operating cash flow in the second half, as well as continued progress on construction at our key development project, Kekura, and on our ongoing projects to improve operations at each of our existing mines.”

Investor notes

Following the update, the Company’s shares have rallied 0.34% or 0.80p to 233.40p a share 03/09/19 14:20 BST. The Group has a p/e ratio of 18.22 and an inviting dividend yield of 4.71%.

Elsewhere in the mining and minerals sector, recent updates have come from; Kavango Resources PLC (LON: KAV), URU Metals Ltd (LON: URU), Resolute Mining Limited (LON: RSG), Bisichi Mining PLC (LON: BISI), Polymetal International Plc (LON: POLY) Cora Gold Ltd (LON: CORA) and Glencore PLC (LON: GLEN).

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Senior Journalist at the UK Investor Magazine. Also a contributing writer at the Investment Observer, UK Property Journal and UK Startup Magazine. Postgraduate of King's College London with a specialisation in Business Ethics. Interested in Development Economics and David Hume.