Management at Highland Gold Mining will no doubt be pleased with the Q4 and full year production numbers for its operations, despite a year-on-year drop in production, as planned upgrade work and construction on its new projects progress. 

The company was able to increase its gold production in the fourth quarter to 83,429oz, up from 75,038oz the previous quarter.

That was enough (300,704oz) to slightly exceed the company's 2019 guidance of 290,000-300,000oz - but lower grades and processing difficulties earlier in the year reduced production by 9% compared with 2018.

Production at Novo in particular was hit by lower conversion rates for base metals, given a strong increase in gold prices. Novo produces gold, silver, lead and zinc.

Guidance remains unchanged in 2020 at 290,000-300,000oz.

SP Angel analyst John Meyer highlighted good production at Highland Gold's Mnogovershinnoye (MNV) mine in Russia. 

"Stronger production at MNV compensated for weaker performance at other operations of the Group in FY19," said Meyer.

Highland Gold's four operating mines are in the Khabarovsk, Zabaikalsky and Chukotka regions of Russia, and in Kyrgyzstan. The company also has three development projects and three exploration properties.

The company's 2019 capital expenditure was $94 million, set to rise to $205-210 million in 2020 as construction at Kekura, Belaya Gora and Novo continues.

Kekura is the company's main development project, slated to open in 2023 with production of 172,000oz annually.

Belaya Gora opened in 2014 but is currently being upgraded to improve recovery rates from 77.6% currently to 90%. The mine produced 40,067oz in 2019, down about 10% on the previous year due to the upgrade work. Nevertheless, Belaya Gora had a good fourth quarter, producing 12,637oz in Q4 2019 (up from 11,000oz in Q4 2018). 

"The team continued to progress with optimisation projects across its portfolio of assets including 1.3Mtpa project at Novo and the installation of the CIP circuit at Belaya Gora, among other things, while advancing preparatory works at Kekura ahead of the commissioning of the pilot processing plant," said Meyer.

Novo is an underground mine that opened in 2009. It produced 106,784oz in 2019, down about 6,000oz from the previous year. 

Highland Gold's average realised gold price in Q4 was US$1,482/oz, compared with $1,395/oz for the full year.

Highland Gold Mining (LSE: HGM) shares were trading at 184.4p on Tuesday, down from 193p when its Q3 results were released in October. Its market capitalisation is £662.66 million.