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Unlocking the Value of a
World Class Resource Base
Denis Alexandrov, CEO
Mines & Money London
November 2017
AIM: HGM
Disclaimer
Certain statements within this presentation constitute forward looking statements. Such forward looking statements involve risks and
other factors which may cause the actual results, achievements or performance of the Group to be materially different from any future
results, achievements or performance expressed or implied by such forward looking statements. Such risks and other factors include,
but are not limited to, general economic and business conditions, changes in government regulations, currency fluctuations (including
the US$/RUR rate), the gold price, the Group’s ability to recover its reserves or develop new reserves, competition, changes in
development plans and other risks.
There can be no assurance that the results and events contemplated by the forward looking statements contained in this presentation
will, in fact, occur. These forward-looking statements are correct or represent honestly held views only as at the date of delivery of this
presentation.
The Company will not undertake any obligation to release publicly any revisions to these forward looking statements to reflect events,
circumstances and unanticipated events occurring after the date of this presentation except as required by law or by regulatory
authority.
***
Total cash costs include mine site operating costs such as mining, processing, administration, royalties and production taxes, but are
exclusive of depreciation, depletion and amortisation, capital and exploration costs. Total cash costs are then divided by ounces sold
to arrive at the total cash costs of sales. This data provides additional information and is a non-GAAP measure.
In line with guidance issued by the World Gold Council, the formula used to define all-in sustaining cash costs measure commences
with total cash costs per ounce sold and then adds sustaining capital expenditures, corporate general and administrative costs, mine
site exploration and evaluation costs and environmental rehabilitation costs. This data seeks to represent the total costs of producing
gold from current operations, and therefore it does not include capital expenditures attributable to projects or mine expansions,
exploration and evaluation costs attributable to growth projects, income tax payments, interest costs or dividend payments.
2
3
Highland Gold Highlights
Kekura
Klen
Belaya Gora
Mnogovershinnoye
(MNV)
Baley Hub
(Taseevskoye, ZIF-1,
Sredny Golgotay)
Novoshirokinskoye
(Novo)
Blagodatnoye
Khabarovsk
Cluster
Chukotka
Cluster
Baikal
Cluster
Operating Mine
DFS Stage
PFS Stage
Scoping Study
46%54%
2017E Production
265
koz
Unkurtash Kyrgyzstan
US$
509
US$
674
Total
Cash Costs*
All-In
Sustaining Costs*Russia
Baikal
ClusterKhabarovsk
Cluster
2016: 261koz
H1 2016: US$ 444 H1 2016: US$ 609
51%
8%
19%
22%
Mineral Resources
16.8
Moz
3.3 g/t
Khabarovsk
Baikal
Kyrgyzstan
Chukotka
- JORC-compliant measured, indicated & inferred resources of gold and gold equivalent as of 01
January 2017, adjusted for updated MNV (May 2017) and Novo (Nov. 2017) resource audits.
* TCC and AISC based on H1 2017 interim accounts
4
Our Strategy: Unlocking Value
- JORC-compliant measured, indicated & inferred resources of gold and gold equivalent as of 01
January 2017, adjusted for updated MNV (May 2017) and Novo (Nov. 2017) resource audits.
MNV
0.6 Moz
7.3 g/t
Novo
3.1 Moz
4.0 g/t
Belaya Gora
0.7 Moz
2.3 g/t
Kekura
2.6 Moz
7.5 g/t
Klen
0.6 Moz
5.0 g/t
Maximise
the upside potential
of operating assets
Develop
assets at the PFS
stage into production
De-risk and
convert additional
resources
into reserves
Taseevskoye
5.1 Moz
5.1 g/t
Unkurtash
3.7 Moz
1.7 g/t
Focus development on
regions of presence
Maintain commitment to
operating safety and
protecting the environment
Reserves Throughput Recovery
DFS PFS De-water Partnership
Corporate Overview
5
Listed on London AIM
Incorporated in Jersey in 2002
15-year track record as a public company
Shareholders include a broad range of high-quality
UK, European and N. American institutional investors
Committed to Best Practice in Corporate
Governance
Led by an experienced Board of Directors and
management team
Seven directors – executive chairman, one executive
director, and five non-executive (three independent)
HGM
Shares 325,222,098
Market Cap* US$ 657M
Enterprise Value* US$ 861M
Net Debt** US$ 204M
Net Debt/EBITDA (LTM)** 1.3x
2016 Earnings/Share US$ 0.145
* On 21 Nov 2017 ** On 1 Jul 2017
26%
10%
47%
17%
Prosperity Capital
Management
Board &
Management
Institutions
& Retail
Primerod Int’l &
Affiliated Parties
Shareholder Structure
57%
Free
Float
HGM Gold Price FTSE All Share Mining
Share Price Performance
Jan Apr Jul Oct Jan Apr Jul Oct
70
120
170
220
270
320
Commitment to Dividends
6
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
0
2
4
6
8
10
12
2011 2012 2013 2014 2015 2016 H1 2017
GB
X
Dividend per share (pence) Yield (%) Total Payout (US$)
$25.7M $40.3M $26.7M $23.2M $21.9M $41.8M
• Yield based on average share price for the period
• Yield calculated for H1 2017 on annualised basis
$21M
Low Cost, High Margin Producer
7
H1 2017 All-In Sustaining Costs (US$/oz)
- All H1 2017 figures as per company reporting- Median calculated for companies presented
EBITDA Margin (%)
36%
37%
49%
38%
44%
50%
62%
0% 20% 40% 60% 80%
NewmontMining
NewcrestMining
BarrickGold
Polymetal
Nordgold
HGML
PolyusGold
Median, 43%
931 892 805 800 758906 865
674 610
KinrossGold
NewmontMining
NewcrestMining
Goldcorp BarrickGold
Polymetal Nordgold HGML PolyusGold
Median, 632 $/oz
International Majors Russian peers
682 675 632527 510
662 656509
379
KinrossGold
NewmontMining
NewcrestMining
BarrickGold
Goldcorp Nordgold Polymetal HGML PolyusGold
H1 2017 Total Cash Costs (US$/oz)
Median, 800 $/oz
H1 2017 EBITDA
US$
73M
H1 2016: US$ 80M
$327
$208
$158 $141 $130
$96 $94 $74 $69 $57 $44 $41 $33
8
Attractively Valued with Upside Potential
EV / 2017E EBITDA
EV / Resources
13.2x
9.5x8.6x 8.6x
7.8x6.9x 6.3x
5.5x 5.2x 4.8x4.1x
3.3x2.3x
Figures based on company filings, street consensus estimates and share price as of 20 Nov 2017.
171143 160
29122
140
200
2010 2017 Medium-TermTarget
Delivering Growth
2017 Production Guidance: 255-265 koz
Medium-Term Production Target: 500 koz
– Includes only operating mines and Kekura
– Additional upside potential with Klen, Baley Hub
(Taseevskoye, ZIF-1, Sredny Golgotay), and Unkurtash
Production growth to be financed by free cash flow
and low-cost debt
9
BaikalNovo
ChukotkaKekura
KhabarovskMNV
Belaya Gora
Blagodatnoye
~500
200
2654.6%
CAGR
~
~
~
Location Khabarovsk Cluster
Opened 1991 (HGM 1999)
LoM 2022
Mine Type Open pit & underground
Processing Gravity + cyanide leaching
Processing Capacity 1.4 mtpa
Au Production (2017E) 105k oz
Avg Head Grade 2.48 g/t
Total Cash Costs* US$ 595/oz
Gold production expected to increase by 4% in 2017
Updated MNV JORC reserve statement completed and
published in May, with Ore Reserves doubled to 500k oz
Au and Life of Mine extended to 2022
Ongoing near-mine exploration programme on existing
MNV licences with a view towards further extension of
life of mine
Two new licences received in 2017 for greenfield sites
directly adjacent to MNV – Zamanchivaya (4.2 sq km)
and Kulibinskaya (38 sq km)
10
Mnogovershinnoye (MNV)
MNV Snapshot
94.6 90.496.2
91.5100
91.4
Production (koz) Recovery (%) Grade (g/t) TCC (US$)
2015 2016 2017E*
Khabarovsk Cluster
2.29 2.36
691
607595
2.48
* TCC as of H1 2017
61.3
75.4
45.9
71.4
40.0
72.2
Production (koz) Recovery (%) Grade (g/t) TCC (US$)
2014 2015 2016
Location Khabarovsk Cluster
Opened 2014
LoM 2023
Mine Type Open pit
Processing Gravity
Processing Capacity 1.8 mtpa
Au Production (2017E) 38k oz
Avg Head Grade 1.11 g/t
Total Cash Costs* US$ 880/oz
2017 operations focussed on processing low-grade orestockpiles
Lower mined ore grade this year due to the re-classification of some waste stripping following adecision by regulators to reduce the mine's cut-off gradefrom 0.7 g/t to 0.3 g/t.
A pre-feasibility study is currently being finalized,including upgrades to the Belaya Gora mill and a jointmining schedule for Belaya Gora and the nearbyBlagodatnoye mine, as well as a new JORC reserveestimate.
11
Belaya Gora
Belaya Gora Snapshot Khabarovsk Cluster
1.211.64
1.11
465 465
678
2015 2016 2017E*
880
* TCC as of H1 2017
105.9
86.0
117.6
85.9
125.0
85.3
Production (koz) Recovery (%) Grade (g/t) TCC (US$)
2014 2015 2016
Location Baikal Cluster
Opened 2009
LoM 2029
Mine Type Polymetallic, Underground
Processing Gravity-flotation circuit
Processing Capacity 0.8 mtpa
Au Eq Production (2017E) 122k oz
Avg Head Grade 5.49 g/t
Total Cash Costs* US$ 305/oz**
Novo continues to be our lowest cost, highest margin
production asset
Gold equivalent production expected to rise by 4% in
2017
Updated JORC reserve audit completed in November
with lower cut-off grade and 430% increase in total ore.
– Average Au Eq. grade lowered by 67% but Ore Reserves
increased by 76%.
Preparations continue for the expansion of Novo’s ore
mining and processing capacity to 1.3 mtpa by 2019
12
Novoshirokinskoye (Novo)
Novo Snapshot Baikal Cluster
5.58 5.62
305302
254
2015 2016 2017E*
5.49
* TCC as of H1 2017** Excludes concentrate processing costs
Location Chukotka Cluster
Start Date 2020
LoM 2029
Mine Type Open pit & underground
Processing Gravity + Cyanide Leaching
Processing Capacity 0.8 mtpa
Au Production (est. annual) 209,000 oz
Reserve Grade 10.73 g/t
Kekura definitive feasibility study (DFS) in final preparationstages
2017 exploration programme of 11,000 metres of RC-drillingand 4,750 m of core drilling for reserve confirmation, as well4,350 m of drilling to confirm sterile ground
The Russian government has granted approval for thedevelopment of a deposit of “federal significance”, arequirement for deposits of this size
Design completed and turnkey construction tender held forpower substation
Upside potential in additional targets within licence area
13
Kekura
Kekura Snapshot
Kekura Mineral Resources*
ClassificationTonnage
(Mt)
Au Grade
(g/t)
Metal Au
(Moz)
Indicated 7.412 8.64 2.06
Inferred 3.266 4.80 0.51
Total 10.678 7.47 2.57
Kekura Ore Reserves*
ClassificationTonnage
[Mt]
Au Grade
[g/t]
Metal Au
[Moz]
Proven - - -
Probable Open Pit 4.296 10.94 1.51
Underground 0.541 9.04 0.16
Total 4.837 10.73 1.67
* Reserves & resources compliant to JORC Code 2012. Resources cut-off grade of 1.0
g/t Au. Reserves cut-off grade of 2.2 g/t Au at the open pit and 4.2 g/t Au for the
underground mine. A gold price of US$1,150 per ounce has been applied.
Mayskoye
Kupol Klen
DvoinoyeKekura
Chukotka
Polymetal Kinross
Valunisty
Pevek
Anadyr
Chukotka Cluster
A scoping study for Unkurtash was completed andpublished in March
The report envisages mining two open pits and an 18-year life of mine, with annual production of 133k oz ofgold at an average operating cost of US$ 616/oz. Totalcapital expenditure to start production is estimated atUS$ 322 million.
Highland Gold is considering partnership opportunitiesto develop this promising resource and has hadpreliminary discussions with potential partners, mainlyfrom China
Location Kyrgyzstan
LoM 18 years
Mine Type Open pit
Processing Gravity + Cyanide Leaching
Processing Capacity 4 mtpa
Au Production (est. annual) 133,000 oz
Resource Grade 1.7 g/t
Avg. Operating Costs (est.) US$ 616/oz
Capex Required US$ 322 M
NPV (10%) US$ 200 M14
Unkurtash
Unkurtash
Sarytube
Karatube
Baikonur0 1000 m
Unkurtash
Kazakhstan
Kyrgyzstan
Kumtor
Bishkek
Bozymchak
Ishtamberdy
Centerra Kazakhmys
Full Gold Mining
China
Unkurtash Licence Area
Unkurtash Snapshot
Figures based on March 2017 scoping study
Kyrgyzstan
The Company continues to focus on de-risking
the project and preparing for further exploration
4.3 million cubic meters of water were pumped
from the Taseevskoye open pit into the nearby
ZIF-2 tailings pond in H2 2016 and H1 2017,
resulting in a 10.05 m decrease in the pit's
water level
Water inflow from the neighboring Baley pit has
not been observed
The ZIF-2 tailings pond is full and the Company
is currently reviewing options for additional
storage or disposal
15
Baley Hub Projects
Baley Open Pit Taseevskoye Open Pit
Taseevskoye Baikal Cluster
ZIF-1
Baikal Cluster
The ZIF-1 tailings project, containing ~300k oz Au, is being targeted for a heap leach operation
Contractor Irgiredmet has drafted a technological flowsheet
The Company's in-house research center at Novo is also reviewing the flowsheet with the aim of
increasing potential recovery rates.
A tender to select a contractor for a DFS is currently underway
Baikal Cluster
The Highland Gold Investment Case
Upside Potential in Existing
Operating Assets
Growth Potential in High
Grade Resources
Development Strategy
Focused on Regional Hubs
Disciplined Capital
AllocationUnlocking the
Value of
Highland Gold’s
Resource BaseCommitment to Dividend
15-Year Track Record
as a Public Company
16