In a now familiar refrain from precious-metals miners, Highland Gold (HGM) recorded a fall in full-year revenues despite rising production volumes. To its credit, the Russia-focused miner (co-owned by Roman Abramovich) also managed to reduce cash costs by 9 per cent to $611 (£364) an ounce. But this largely encouraging performance was offset by a fall in gold prices.
Highland’s average realised gold price in 2013 dropped by around a fifth on the previous year to $1,291 an ounce. That reduced cash profits from $179m to $133m - though at least the company wasn’t forced to write down any of its mining assets due to the price slippage. Full-year earnings also suffered due to a $16.1m reduction in finance income, following fair-value reassessments of coupon bonds and lower interest payments on the company’s cash deposits. The first-quarter acquisition of ZAO Bazovye Metally effectively transformed the previous year-end’s $52.6m cash surplus into a net-debt position of $251m, but the ratio of net debt to cash profits remains in line with management plans.
The good news for shareholders is that production hit a record 233,696 ounces in 2013, with the first gold poured from the Belaya Gora complex. The ramp-up at Belaya Gora is expected to drive production beyond 300,000 ounces this year.
| HIGHLAND GOLD MINING (HGM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 68p | MARKET VALUE: | £222m | |
| TOUCH: | 68-68p | 12-MONTH HIGH: | 90p | LOW: 50p |
| DIVIDEND YIELD: | 7.3% | PE RATIO: | 7 | |
| NET ASSET VALUE: | 252¢ | NET DEBT: | 31% | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 165 | 87 | 24.2 | nil |
| 2010 | 244 | 144 | 37.6 | nil |
| 2011 | 300 | 132 | 31.9 | 5.0 |
| 2012 - restated | 352 | 158 | 38.8 | 7.8* |
| 2013 | 304 | 82 | 16.7 | 5.0 |
| % change | -14 | -48 | -57 | -36 |
Ex-div: 30 Apr Payment: 30 May £1 = $1.68. *Includes special dividend of 4.8p, paid in October 2012 | ||||
