- Highland Gold Mining's first half revenue rose 13% to US$147.1 million in the six months to the end of June reflecting improved metals prices and increased sales volumes during the period.

EBITDA increased to US$ 79.7 million - up 45% over H1 2015, while EBITDA margin rose to 54% from 42% and operating profits jumped to $50.4m from $18.8m.

All-in sustaining costs per ounce fell by 14% to US$609/oz, assisted by ongoing weakness in the rouble and strict cost controls.

Free cash flow (defined as net cash flows from operating activities less cash flows used in investing activities) was US$60.7 million.

Net debt to EBITDA ratio reduced to 1.3 as of 30 June 2016 versus 1.7 as of 31 December 2016 as the Company directed free cash flow to debt repayment.

Production totalled 128,671 oz of gold and gold equivalent at Mnogovershinnoye (MNV), Novoshirokinskoye (Novo), Belaya Gora, and Sredny Golgotay (Kaftan site), an increase of 6% from 121,242 oz in H1 2015.

MNV and Novo exceeded internal production targets for the quarter, while at Belaya Gora efforts to optimise operations were ongoing.

Exploration work continued on the Northern ore body at MNV, with reserves expected to receive approval from regulators by year-end and work commenced on the planned expansion of processing capacity at the Novo mill.

Other highlights:

- Pre-feasibility study completed for Kekura, and a subsequent fatal flaw review supported open pit and underground mine design plans.

- Scoping studies initiated for the Baley Cluster Projects (Taseevskoye, Sredny Golgotay and ZIF-1 tailings) and Unkurtash, and a revised pre-feasibility study initiated for Klen.

Chief executive Denis Alexandrov said: "Sadly, I have to begin by stating that, after the reporting period, on 10 September, the Company witnessed a fatality at our MNV underground mine.

"In light of this accident and an increase in minor incidents this year, we have undertaken urgent measures to strengthen and expand our HSE team and to update our safety standards across all of our operations. We have also initiated safety inspections of all underground shafts at MNV and Novo.

"Overall, the Company witnessed a positive first half of 2016, with increased production, stronger gold prices, cost controls, and the weak rouble together contributing to improved earnings, lower costs and higher margins.

"At the core of this progress were MNV and Novo, which both exceeded their six-month production targets. Work on reassessing MNV's reserves, as well as exploration of near-mine targets, continued apace with a target of extending life of mine. Novo increased mining and processing throughput while also advancing plans to expand the mill's capacity to 1.3 million tons over the next two years.

"Belaya Gora continued to face challenges with both geology and metallurgy during the half, despite higher ore production and a reduction in tailings grade. The Company has initiated work, together with consultants SRK, to reassess the mine's reserves, to study the combined processing of Belaya Gora ores with those of the nearby Blagodatnoye deposit, and to upgrade the mill with CIL technology. This work will continue throughout the second half and be finalised early next year.

"The Company also saw progress in its exploration and development projects, with over US$ 10 million spent on drilling programs at MNV, Kekura, Sredne Golgotay, and Blagodatnoye, as well as on a pre-feasibility study (PFS) for Klen, open pit dewatering at Taseevskoye, and a scoping study for Unkurtash. A PFS for Kekura was delivered in the second quarter and preparations for construction at the site are already underway. These efforts are laying the foundations for production growth in the years to come."

At 8:21am: [LON:HGM] Highland Gold Mining Ltd share price was -0.37p at 135.63p

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