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. Last Updated: 07/27/2016

Highland '04 Profit Falls 72%

London-listed Highland Gold Mining blamed a hefty tax charge and costs at its key Russian mine for a fall in net profit on Tuesday, adding it had no plans to raise cash for acquisitions this year.

The Russia-based gold company, with a string of gold mines in Siberia, said profit after tax fell 72 percent to $5 million, on turnover of $82 million.

Highland shares, however, had risen 5.2 percent to 193.5 pence by late morning as the results broadly satisfied market expectations, traders said. The stock has fallen 37 percent in the past year.

Chairman James Cross said lower profits were due to higher costs, particularly chemicals and fuel, at its main mine; expansion of its Moscow office; a stock write down; and a one-off tax charge of around $5 million.

Cash operating costs at the mine were $187 per ounce last year, up over 17 percent from 2003.

"Across the industry, costs have escalated alarmingly in the last year. Our cash costs are very much in line," Cross said.

Pretax profit was also down, falling 42 percent to $14.2 million. The results are a contrast to those of many gold companies operating in Russia, which have reported strong 2004 figures on the back of the booming gold price.

Cross admitted Highland's acquisitive strategy -- which has doubled reserves and resources in two years -- had stretched the company, but said Highland had to act when a good deposit came up for auction in order to build the company for the long term.