Highland Gold plans to invest $1.17 billion in development of Russian Lugokan gold mine
By Eugene Gerden
Highland Gold, one of Russia’s largest gold miners, which is owned by a well-known local businessman Vladislav Sviblov, plans to invest more than 106 billion rubles (US$1.17 billion) in the development of Lugokan field, which is located in the Russian Transbaikalia Region.
Under the terms of the project that will be implemented by Highland Gold’s subsidiary Industrial Investments, the development of Lugokan copper-gold field will be conducted during the period of 2024-2027. In addition to mining works, the project involves the construction of facilities for processing 15 million tons of ore per year.
According to the Russian Ministry of Natural Resources, the reserves of Lugokan field, which is located in the Transbaikalia, a mountainous region to the east of Lake Baikal in Far Eastern Russia, are estimated at 124 tonnes of gold, 604,000 tonnes of copper and 1.500 tonnes of silver. So far, the Russian federal government together with the authorities of Transbaikalia Region, has already promised Mr. Sviblov to provide all the needed support during the implementation of the project that will be probably in the form of tax and customs exemptions. The revenues from the project to the state budget are an estimated 70 billion rubles.
The Lugokan field is expected to be not the only gold field in the Transbaikalia region that will be developed by Highland Gold in years to come. As part of the company’s plans is the development of at least two other gold mines in the region.
One of them is known as Serebryanoye, which development will require investments of more than 16.2 billion rubles. The project also involves the construction of processing facilities for 3 million tonnes of ore per year on the basis of the field. Finally, the third field, which is scheduled for development is Talatuyskoye LLC. The volume of investments is estimated at 11 billion rubles.
According to earlier calculations of the Union of Gold Miners of the Russian Federation, as of the beginning of 2022 Highland Gold occupied the third place in terms of gold production in Russia with a total figure of about 16 tonnes. As stated on the Highland Gold website, the group’s activities are concentrated around four production centers in the Khabarovsk, Kamchatka and Trans-Baikal Territories, as well as in the Chukotka Autonomous Okrug. In addition, the company owns assets in Kyrgyzstan.
Russian analysts expect local investors will continue to increase investments in gold mining due to maintaining high global gold prices.
According to their calculations, of the total investments in the global mining and metallurgical sector, about 28% accounts for projects in the gold mining sector. Moreover, many gold mining projects in Russia can be more profitable compared to foreign ones at present, due to lower costs.
Highland Gold Mining Limited was established in 2002 on the resource base of the Mnogovershinnoe gold mining enterprise in the Khabarovsk Territory. In 2003 Barrick Gold Corp., became an investor in the company and later increased its stake up to 34%. However, the company later sold its stake, explaining that “participation in a Russian company is no longer a core business”.
In 2007, more than 40% of Highland Gold shares were acquired by the investment company Millhouse, acting in the interests of Roman Abramovich. In mid-2020, structures controlled by Vladislav Sviblov announced the purchase of a 40.06% stake in Highland Gold from Abramovich and partners. By the end of 2020, Sviblov became a sole owner of Highland Gold.
In 2021 Highland Gold acquired the largest gold producer in Kamchatka — Gold of Kamchatka, along with Trans-Siberian Gold.
In April 2022, Highland Gold announced the purchase of Russian assets of Canadian Kinross Gold at a price of US$340 million instead of the initially proposed US$680 million, which was already below the estimated market value of the assets.