In a week in which London's chief diplomat unsuccessfully lobbied for fresh sanctions against Russia, Highland Gold Mining (HGM) - one of the more stable Russian gold miners listed in London - released full-year results. Understandably, risks that the Syrian inferno will further engulf the world's superpowers has affected the gold price, which at $1,276 (£1,020) an ounce is 11 per cent up so far this year. Souring international relations have also held back the rouble, which since the beginning of 2016 has steadily strengthened against the dollar with higher oil and gas prices.
Fluctuations in the rouble, in which much of Highland's cost base is denominated, actually came out in the wash in full-year numbers. In fact, all-in sustaining cash costs were essentially flat at a very low $652 an ounce, although strict expenditure controls did not end up compromising production, which at 261,159 ounces of gold and gold equivalent was toward the upper end of guidance.
Investors should expect similar volumes this year, although unlike other precious metals peers, Highland provided no operating or development cost forecasts for 2017. So while it was encouraging to see the $59.3m of capital expenditure entirely funded from cash flows, the quantum of this year's outlay - split between exploration at MNV, expansion at Novo and development at several other mines - would have been useful.
On average, analysts expect full-year pre-tax profit of $142m and adjusted EPS of 16¢ this year, rising to $145m and 14.3¢ in 2018.
HIGHLAND GOLD MINING (HGM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 189p | MARKET VALUE: | £615m | |
| TOUCH: | 188.5-189p | 12-MONTH HIGH: | 196p | LOW: 70p |
| DIVIDEND YIELD: | 5.5% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 232¢ | NET DEBT: | 27% | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 352 | 158 | 38.8 | 7.8 |
| 2013 | 304 | 82.1 | 16.7 | 5.0 |
| 2014 | 304 | 45.5 | -7.7 | 4.5 |
| 2015 | 276 | 13.9 | -3.2 | 4.5 |
| 2016 | 306 | 66.2 | 14.5 | 10.4 |
| % change | +11 | +377 | - | +131 |
Ex-div: 20 Apr Payment: 19 May £1=$1.24 | ||||
