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exploitation of the deposit, which began in 2016, has been extended to 2029. According to the results of exploration work, Highland Gold announced that as of January 1, 2018, the probable and proved reserves of gold in the ore increased by 70.4% to 771,569 ounces. The content in the reserves decreased from 5.5 g / t to 2.7 g / t. The company explains this by increasing the ore from 2.7mn to 9.1mn tons. The increase in the life of the deposit is good news for the company, and the growth of the resource base for the gold mining company traditionally leads to an increase in its value, says Maxim Khudalov, director of the ACRA corporate rating group. “It is embarrassing that the content of the precious metal in the new reserves has been significantly reduced. This implies an increase in the cost of [production] in the future,” he notes, as cited by Vedomosti. The company recounted stocks based on the price of gold at $1,250 per ounce. Highland Gold continues exploration work both at the main license areas and at the neighbouring undeveloped areas that have been acquired over the past two years, according to a company report. After the publication of news about the increase in reserves of the Highland Gold deposit went up on the London Stock Exchange by 1.46%. The company's capitalization was $706.3mn.
Highland Gold released a reserves valuation increase by 70%. The updated resources and reserves study (initially planned for 2Q18) suggests a 2.5x increase in resources and a 1.7x rise in reserves, to 1.5mnoz and 0.8mnoz, respectively, incorporating exploration results from 2017, and a new gold price and USDRUB assumptions. Although this comes with more than a 50% decline in the average reserve grade, it is now broadly in line with the grade mined recently. Life-of-mine extended six years. MNV has been the mine with shortest life-of-mine in company’s portfolio – until 2023. Reportedly, the update increases it to 2029, which is based, as we understand, on underground reserves and current ore mining rate per annum. Despite data on open pit reserves suggesting it is to be depleted by 2020-2021, we do not rule- out that substantial JORC resources-to-reserves potential, as well as continued spend on exploration, might extend open pit by a few years.
Russian gold miner Polyus reports better cash generation and lower Sukhoi Log costs in 4Q18 trading update Russian gold minder Polyus Gold has reported a marginally positive trading update for 4Q18, VTB Capital (VTBC) said in a note on January 25. “Although output matched our estimates (exceeding the upper bound of the company’s FY18 guidance of 2.425mnoz), we were positively surprised by stronger cash generation and the decreased outlook on Sukhoi Log costs after the resources update. Our unchanged Target Price of $52 suggests an ETR of 33%: Buy reiterated,” the bank said. The company’s output matches the management guidance. Output of 637koz, up 8% y/y on new Natalka ounces and better performance at Kuranakh and alluvials, matched VTBC’s estimates. “Looking at mine-by-mine performance, we note that the output of larger assets (Olimpiada, Blagodatnoye, and Natalka) was slightly weaker than we had expected, compensated by the remaining mines. Meanwhile, total sales were slightly below our estimates, but reflect a decrease of concentrate inventory from Olimpiada (sales exceed production),” Dmitry Glushakov of VTBC said in a note. “Polyus reiterated its FY19 guidance of 2.8mnoz.” The new Natalka mine is on track for higher grades and throughput in 2019. Although bankers were expecting lower processing volumes at Natalka on ball mill motor replacement and scheduled maintenance, grade and recoveries printed a sharp decline q/q (greater than we had estimated), as the company processed lower-quality ore during the maintenance. Nevertheless, Polyus reiterated its guidance for higher grade ore processing in FY19, which, based on VTBC’s model, might pick up to just
127 RUSSIA Country Report February 2019 www.intellinews.com