25 May 2012

Maiden payout from Highland Gold

20/09/2011 Robert Tyerman

Russia-focused Highland Gold Mining (HGM) is paying a first dividend after hoisting interim net profits threefold to $70.3 million (£44 million). The AIM-quoted company increased gold production 8 per cent to 93,057 oz in the six months to June and lifted turnover 58 per cent to $158 million, helped by a rising gold price, while managing to keep average cost increases to 2.5 per cent to $531 an ounce, less than a third of the metal's present market price.

Steered by chief executive officer Valery Oyf, Highland achieved its production from three mines, Mnogovershinnoye (MNV), its 48.3 per cent-owned Novoshirokinskoye (Novo) mine and Belaya Gora. During the first half, the company increased audited reserves 190 per cent at MNV, where estimated resources now stand at 1.35 million oz of gold, of which 887,361 oz are measured or indicated and with an average grade of 4.47 grammes od fold per tonne of ore, while Novo lifted output 33 per cent.

Jersey-based Highland, which ended June with cash and near-cash up 26.4 per cent at $272 million (£170 million), increased earnings threefold to 21.6 cents (13.5p) a share and is paying a 5p interim dividend, split half and half into an 'ordinary' dividend and a 'special' dividend. That will come as something of a relief to long-term shareholders who  bought at the company's 190p float as long ago as 2002. 

The shares rose to 332p by 2006, only to crumble below 40p later in after a succession of setbacks. Highlighted by Growth Company Investor at 44p three years ago and again at 166.5p last May, the shares now change hands at 199.25p, yielding 2.5 per cent, and valuing the company at £648 million.

They could rally further, country risk notwithstanding, as long as gold stays in vogue.    

   
     

Tags: AIM market, MNV mine, Russian gold, Valery Oyf

Sector: Mining

Companies: Highland Gold Mining

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