Several of the operational and financial levers that led Highland Gold (HGM) to a strong performance in 2015 were again evident in the six months to June. All-in sustaining costs - the most comprehensive measure for miners' outgoings - dropped from $640 (£494) an ounce (oz) in 2015 to $609 at the half-year, as the weak rouble offset the negative impact of inflation and energy price increases.
That coincided nicely with a 6 per cent year-on-year uptick in gold production, which was largely thanks to further development of the higher-grade underground mine at Novoshirokinskoye. This meant output from the site - where ore processing capacity is set to rocket to 1.3m tons over the next two years - increased by nearly a fifth from the comparable period in 2015 to 57,960 oz.
The picture was less rosy at the Belaya Gora mine in Russia's far eastern Khabarovsk region, where grades and recoveries fell despite higher ore production. In an effort to reassess the mine's gold reserves and improve recovery rates from the mill, Highland has called in industry consultancy SRK.
According to Bloomberg, analyst consensus is for pre-tax profits of $91m and adjusted EPS of 20¢ for the 2016 calendar year, up from $49.9m and 15.8¢ in 2015.
HIGHLAND GOLD MINING (HGM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 138p | MARKET VALUE: | £449m | |
| TOUCH: | 138-138.5p | 12-MONTH HIGH: | 150p | LOW: 48p |
| DIVIDEND YIELD: | 4.2% | PE RATIO: | 48 | |
| NET ASSET VALUE: | 235¢ | NET DEBT: | 26% | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2015 | 131 | 16.6 | 4.4 | 2.0 |
| 2016 | 147 | 48.8 | 11.3 | 5.0 |
| % change | +13 | +194 | +157 | +150 |
Ex-div: 6 Oct Payment: 21 Oct £1 = $1.29 | ||||
