Transcript Document

Russian Regional and CIS Mining
Opportunities – The Highland Gold
Perspective
Werner P. Klemens,
Head of Exploration
CERBA Russia & CIS Mining Conference
Toronto, March 9, 2011
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.
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Company Profile
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Company incorporated in May 2002 and quoted on AIM (London Stock Exchange)
since December 2002
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Currently operating 3 producing mines, 1 development project and 4 exploration
properties
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Major changes in operational management in 2008-2009
Resources estimated at 6.8 million oz of gold
(as at 31 December 2009 in accordance with JORC)
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Powerful combination of two strategic investors (Millhouse LLC and Barrick Gold)
provides technological, financial and corporate input
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Focus on growth opportunities in Russia and Central Asia
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Share Structure
Millhouse LLC (through Primerod International Ltd)
Moscow based Russian asset management company
that oversees investments in metallurgy, mining, real
Main Shareholders’ Interests
Other
39%
Primerod
32.6%
estate, consumer goods and transport engineering
Barrick Gold
World’s largest gold mining company based in
Toronto, Canada, with mines in North and South
America, Australia and Africa
8%
Board & Mgt
20.4%
Barrick Gold
Description
Number or % of shares
Issued shares
325,197,098
Shares not in public hands
61%
Market Cap at AIM LSE – March 8 2011 (in millions)
US$ 890
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Mine Location
Moscow
MNV
Belaya Gora & Flanks BG
Iska
Khabarovsk
Blagodatnoуe
Novoshirokinskoye
Chita
Astana
Taseevskoye
Lyubov
Vladivostok
Ulan Bator
Bishkek
Unkurtash
Operating mine
Development projects
Exploration projects
Regional office
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Highland Gold Three Years Ago
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Operations
MNV
Projects
Novoshirokinskoye
Mayskoye
3
Taseevskoye
Exploration
Belaya Gora
Lyubov – Sovinoye- Unkurtash
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Iska - Maya Inikan
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Highland Gold Today
Operations
MNV
3
Novoshirokinskoye
Belaya Gora
Projects
Taseevskoe
1
Unkurtash
Exploration
Lyubov
Blagodatnoe
4
Belaya Gora Flanks
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2010 Highlights
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The Company met its 2010 production guidance by producing 200,028 oz of gold and gold
equivalents from Mnogovershinnoye (“MNV”), Novoshirokinskoye (“Novo”) (48.3%) and its newly
commissioned third mine, Belaya Gora, a 23% increase year-on-year
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Unkurtash initial C1+C2 reserves estimate (1.70 Moz ) submitted to Kyrgyzstan GKZ for approval,
JORC compliant audit underway with results expected during H1 2011
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JORC compliant audit confirms original Belaya Gora GKZ reserve (0.82 Moz)
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Novo continues to ramp up mining and processing levels
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12,000 metres of resource conversion drilling completed at Lyubov
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Group currently debt free after fast tracking loan repayments
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Mnogovershinnoye (MNV) – Khabarovsk Region
A solid performance in 2010
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170,356 oz of gold produced at MNV, a
4.4% increase over the previous year
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Process milling and gravity upgrades
are underway and expected to improve
recoveries
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New capital equipment deliveries in
2010 improving productivity levels and
helping to keep costs in check
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Diamond drilling programme adds near
surface resources for future exploitation
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MNV Exploration
Extensive near-mine exploration
programme ongoing to replace
and grow reserves
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Targeting additional reserves in
underexplored areas in-between and along
strike of known ore zones
Focus on surface exploration – 6,200 m of
drilling completed at 4 targets in 2010
Pebble deposit returns positive results
confirming strong potential for open pit
reserve
Positive drilling results obtained from other
targets warrant follow-up work
Near-mine exploration continues – 2011
budget allocates 8,000 metres of surface
drilling and 16,000 metres of underground
drilling
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Belaya Gora – Khabarovsk Region
Belaya Gora initial production launch increases the
Highland stable to three operating mines
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First ore hauled to and processed at
MNV in November 2010
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1,000 oz produced from 10,971
tonnes of ore
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The stand-alone process plant
design and construction works now
initiated with anticipated launch
expected by mid-2012
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Recent acquisitions of nearby
deposits provide additional resource
potential
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Expected contribution: approx. 1,000
oz per month during 2011
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Novoshirokinskoye - Chita Region
The ramp up of mined and processed
tonnes remains on track
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28,672 oz (48.3%) of gold and gold
equivalents from 397,075 tonnes of ore in
2010
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Approx. 450,000 t of ore are expected to be
processed in 2011 with 550,000 t as the
projected plant capacity
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Approx. 70% of 2010’s concentrate value was
attributed to precious metals
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Expected production over the life of mine –
1.5 million oz of gold and gold equivalents
(100%)
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Taseevskoye – Chita Region
Process test work continues
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Semi-industrial pilot test work (POX)
Development of a full feasibility study
expected by year end 2011
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Reviews will also include ZIF-1 and
BALEY TOWN
Sredne-Golgotayskoe deposits to
demonstrate the benefits of
introducing them into the current
TASEEVSKOYE
economic model
TAILINGS ZIF-1
SREDNEGOLGOTAYSKOYE
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Lyubov – Chita Region
Emerging development project in the Chita region
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130 km2 license in active placer mining
region with excellent infrastructure
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Targeting bulk-mineable gold ore for
low-cost open-pit operation at two sites
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Favorable metallurgy suitable for
low-cost gravitational processing
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EVGRAF
Scoping study for Evgraf target defines resource
potential of 1.6 M oz @ 1.7 g/t including C1+C2
reserves* of 0.6 M oz to depth of 200 – 250 m
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Adding reserves – 12,000 m resource conversion
drilling completed in 2010
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EVGRAF-West
Company plans to submit for approval to the State
Committee on Reserves of the Russian Federation
(GKZ) in H2 2011. A JORC compliant resource audit
is expected prior to the year end 2011.
* cut-off grade 0.5 g/t; unregistered reserves
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Unkurtash – Kyrgyzstan
Advanced exploration project with high potential for world class deposit
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63 km² license covering 4 km long gold mineralisation
zone – exploration continues at 3 distinct sites
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Targeting bulk-mineable gold ore for large low-cost
open-pit operation
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2010 and ongoing drilling programme returns positive
Karytube
intersects confirming resource model
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Initial 1.7 M oz (C1+C2) reserves* delineated (Unkurtash,
Sarytube
Karatube) – submitted in 2010 for registration to GKZ
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Large upside potential in underexplored areas – a four
fold increase in drilling is planned in 2011 (+50,000m) at 3
Unkurtash
targets plus 3,000 metres of u/g development
Baikonur
* planned to be registered in Q1 2011
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Unkurtash - Kyrgyzstan
2010 – 2011 Programme – Conversion of P1 into C1+C2
through drilling and u/g exploration
SW
NE
Central Unkurtash
2100 m
2000 m
1900 m
1800 m
Area to be explored by deep drilling in 2011
1700 m
80 m
E 720
W 80
3,000 m of new underground exploration development planned
E 720
Long section with drill hole projections, intersects, and distribution of grades >1 g/t (red)
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Goals for 2011
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Production in 2011 (MNV, Novo and Belaya Gora) is forecasted in the
range of 210,000 – 220,000 oz of gold and gold equivalents
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MNV – improve productivity, recovery rates and maintain production
Novo – continue to ramp up mining and processing levels
Belaya Gora – progress construction of a stand-alone processing facility
with an anticipated commissioning date of mid-2012
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Unkurtash – conclude JORC compliant audit on initial submitted
Kyrgyzstan GKZ reserve estimate and build on this success
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Lyubov – prepare reserve estimate for submittal to Russian GKZ
Group will continue to evaluate possibilities for new acquisitions
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Russian Regional and CIS Mining
Opportunities – The Highland Gold
Perspective
Werner P. Klemens,
Head of Exploration
CERBA Russia & CIS Mining Conference
Toronto, March 9, 2011