News – 19-JUL-04

Highland Gold sews up Russian ground

A tender competition has awarded 20-year operating licences for the Talatui and Novoshirokinskoye gold properties in the Chita region of Siberian Russia to Highland Gold (HGM-L).

The successful tender to the Russian Federation’s Ministry of Natural Resources converts temporary licences Highland had previously held on the properties. Formal issuance is expected in a few weeks.

Talatui, near Highland’s newly opened Darasun gold mine, is expected to feed the Darasun mill when in production. The Talatui near-surface resource is 1.3 million tonnes grading 7.7 grams gold per tonne. A further 2.9 million tonnes at a grade of 7 grams is slated for underground development, and another 1.3 million tonnes at 5.8 grams is inferred.

Highland will hold an 87% interest in Novoshirokinskoye, roughly 100 km from the Chinese border in the area east of Chita. There, a fault-controlled polymetallic deposit holds a reserve of 5.5 million tonnes grading 3.4 grams gold and 84.6 grams silver per tonne, with 3.08% lead and 1.37% zinc.

Highland also announced it had poured its first gold from Darasun, which officially opened in mid-June. At full capacity Darasun is slated to produce 120,000 oz. gold annually; 2004 production will be around 40,000 oz.

Newmont restating cash flow

Gold mining giant Newmont Mining (NEM-N) will restate its cash flow for 2002, 2003, and the first quarter of 2004, owing to an accounting error.

The revised figures are not expected to affect Newmont’s balance sheets seriously for those periods. The company will amend the relevant filings with the Securities and Exchange Commission.

In the end, net cash provided by operating activities for 2002 will be reduced by US$14.5 million to US$655.8 million, by US$50.4 million to US$538.4 million for 2003, and by US$4.1 million to $324.1 million for the first three months of 2004.

Newmont earned US$475.7 million (or US$1.16 per basic share) in 2003, an increase of 208% from the US$154.3 million (US42 per share) it earned in 2002. During the first three months of 2004, net income totalled US$86.7 million (US20 per share), down from US$117.3 million (29 per share) in the year-earlier period.

Newmont will report its second-quarter earnings and mid-year exploration update in late July.

SpectrumGold OKs NovaGold offer

Vancouver — Shareholders of SpectrumGold (SGX-T) have approved the proposed business combination with NovaGold Resources (NG-T).

Novagold already owns 56% of SpectrumGold and will acquire the remaining shares it does not own through a share exchange of 1 share for each 1.35 SpectrumGold share.

The acquisition gives NovaGold full and complete title to the advanced-stage Galore Creek gold-silver-copper project in the Stikine gold belt of northwestern British Columbia.

Measured, indicated and inferred resources are pegged at 384.7 million tonnes grading 0.42 gram gold and 5.4 grams silver per tonne, plus 0.68% copper, based on a cutoff grade of 0.5% copper-equivalent. These figures translate as 5.2 million oz. gold, 67.3 million oz. silver and 5.8 billion lbs. copper.

NovaGold owns other multi-million-ounce gold projects, including Donlin Creek, Rock Creek and Nome Gold, and Ambler, all of which are in Alaska. After the transaction, NovaGold will have 62.8 million shares outstanding.

Phelps, BLM strike deal

The U.S. Bureau of Land Management has agreed to a land exchange with Phelps Dodge (PD-N) in southeastern Arizona that will facilitate development of the Dos Pobres and San Juan copper deposits.

Phelps Dodge will deliver land sought by the Bureau of Land Management, which in exchange will turn over federal land adjacent to Phelps Dodge’s Safford property, where two deposits have been outlined. There is a 45-day period for public comment before the exchange becomes final. Phelps Dodge plans to use the land for mine infrastructure and for a buffer zone between the proposed mines and public land.

The company is completing feasibility studies on Dos Pobres and San Juan, and is seeking regulatory permits for mining.

Diamonds North shares ground with Kennecott

Vancouver — An agreement between Diamonds North Resources (DDN-V) and Kennecott Canada, a subsidiary of Rio Tinto (RTP-N), will result in the combination of certain of their land holdings in Nunavut. Among the properties affected is Arnak, which comprises 3,870 sq. km and is situated immediately south of the Amaruk project, a joint venture of Diamonds North and BHP Billiton (BHP-N).

Two months ago, Diamonds North and BHP struck a similar deal, merging their common-area property holdings, which exceed 280 sq. km.

The Arnak project will be held 74% by Kennecott and 26% by Diamonds North. Kennecott is also responsible for funding the first $5.5 million in exploration work over the next four years. The subsidiary has committed to spending $1 million, in the first year, on airborne geophysics and heavy mineral sampling.

Diamonds North’s strategy of pooling its properties with those of majors such as BHP and Rio Tinto has enabled it to become one of the larger land-holders among Canadian diamond explorers.