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Financial Times: Highland Gold wins licence extension

By Rebecca Bream
Published: October 11 2007 04:19 | Last updated: October 11 2007 04:19

Shares in Aim-listed Highland Gold rose 12 per cent on Wednesday after the group was granted a licence extension for the Mayskoye gold project in Russia, the group’s main growth prospect.

On Monday, Oleg Mitvol, deputy head of Rosprirodnadzor, the Russian environmental watchdog, accused Highland Gold of breaching its licence requirements by not being ready to start production at Mayskoye by the end of this year.

The news hit Highland Gold’s shares as investors feared the licence could be revoked. But the company maintained that it was in the process of applying for a three-year extension to the production deadline at Mayskoye, which is located in Russia’s remote northern Chukotka region.

Highland Gold said on Wednesday that Rosnedra, the agency in charge of issuing mining licences, had extended its licence and given the group until 2010 to start production at Mayskoye.

Henry Horne, managing director of Highland Gold, said: “We are delighted with this decision. Since 2004 we have invested more than $100m in the Mayskoye project.”

He added: “We are satisfied that the licence extension process has come to a positive conclusion.”

Shares in the group rose 13½p to 122¾p on Wednesday.

Highland Gold currently mines most of its gold from the MNV mine, but Mayskoye is its biggest future growth prospect.

The company is selling its Darasun mine following a deadly fire there last year. Mr Mitvol has become the bane of western companies operating in Russia, leading a number of campaigns against groups including Imperial Energy, Peter Hambro Mining and Royal Dutch Shell.

He led a government campaign over alleged environmental violations at Shell’s $22bn (£10.8bn) Sakhalin-2 oil and gas venture, which ended after Shell sold control to state-run Gazprom in December.

Also in December, Mr Mitvol said PHM violated environmental rules at five projects and should have its licences revoked. The situation was resolved with no change in PHM’s licences, but the group’s shares have taken almost a year to recover.

Copyright The Financial Times Limited 2007

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