Highland Gold Mining : Interim Results Announcement for H1 2015

Released: 23 Sep 2015

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Highland Gold Mining Limited ("Highland Gold", the "Company" or "Group") announces its unaudited financial results and production figures for the half year ended 30 June 2015.

FINANCIAL SUMMARY

* Net profit as previously reported for H1 2014 has been re-presented to exclude a one-off gain on settlement of contingent consideration amounting to US$5.6 million.

The interim condensed consolidated financial statements of Highland Gold for the six months ended 30 June 2015 are set out below.

H1 2015 HIGHLIGHTS

Financial & Operations

• Total H1 2015 production of 121,242 oz of gold and gold equivalents at Mnogovershinnoye ("MNV"), Novoshirokinskoye ("Novo"), and Belaya Gora, a 0.9% increase from 120,121 oz in H1 2014.
• H1 2015 EBITDA was US$54.9 million, an increase of 13.5% compared to H1 2014, driven mainly by RUR devaluation and strong cost performance and negatively adjusted by lower gold prices. EBITDA margin of 42.0% (34.0% in H1 2014).
• Total first half revenue fell by 8.1%, reflecting lower metals spot market prices during the period (average realised price for gold and gold equivalents of US$1,088 per oz in H1 2015 compared to US$1,210 in H1 2014).
• All-in sustaining costs (AISC) per ounce were 21.1% lower, helped by weakness in the Russian Rouble and increased throughput at Belaya Gora and Novo. Total cash costs (TCC) down by 21.8%. Both indicators demonstrate that the Group is one of the lowest-cost gold producers.
• Net debt to EBITDA ratio reduced to 1.8 as of 30 June 2015 from 2.0 a year earlier.
• Effective tenor of debt portfolio extended from 11 months to 22 months.
• Free cash flow (defined as net cash flows from operating activities less cash flows used in investing activities) was US$37.7 million compared to US$21.9 million h-o-h as the Company remained focused on free cash flow generation.
• Continued optimisation of operations at the Belaya Gora processing plant in H1, with gold recovery rates reaching 75.9% on average (20.9% higher than in H1 2014) and 80.9% in June.
• Steady operations at Novo, with ore processing volumes set to rise to an annual rate of 630,000 - 650,000 tonnes by year-end.

Development & Exploration

• Work on Kekura progressed as planned, including state approval of Russian-compliant reserves, finalisation of processing studies; and initiation of work on technical design documentation.

POST HALF YEAR EVENTS

• Exploration program, designed in H1, underway at MNV Lower Horizons licence.
• JORC audit of Kekura reserves in progress with results expected in H2.
• Interim dividend of £0.020 per share (H1 2014: Interim dividend of £0.025 per share)

CONFERENCE CALL DETAILS

The Company will hold a conference call on Wednesday, 23 September 2015, hosted by Valery Oyf, CEO, to discuss the interim results. The conference call will take place at 11 a.m. UK time (13:00 Moscow). To participate in the conference call, please dial one of the following toll-free numbers:

UK Free Call 0800 694 0257

UK Local Call 0844 493 3800

UK Standard International +44 (0) 1452 5555 66

Russian Federation 8 499 677 1040 \ 8 800 775 68 18

USA Free Call 1866 966 9439

Conference ID 47083314

A replay of the presentation will be accessible shortly afterwards on Company's website.

For further information please contact:

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