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. Last Updated: 07/27/2016

Highland Gold Begins Talks On Selling Its Darasun Mine

Highland Gold, the country's No. 4 gold miner, is in talks about the possible sale of its loss-making Darasun mine, where a fire killed 25 people last year, its managing director said Thursday.

"We have been approached by a potential buyer but it is premature to disclose any details as the talks have only just started and are at a very early stage," Henry Horne said in an e-mailed statement.

Vedomosti identified mining company Yuzhuralzoloto as the potential buyer, citing two unidentified gold company managers familiar with the talks.

Yuzhuralzoloto said on its web site that it had licenses to mine the Kochkarskoye and Svetlinskoye deposits.

Horne did not give any more details. On April 16, he said in an interview the company was considering "all sorts of options" for the mine, from recapitalizing to selling the asset.

He said equipment from the mine in the Chita region was being moved to Highland's main gold mine, Mnogovershinnoye, near the Pacific coast.

Highland reported increased annual losses of $96.4 million in 2006, including write-offs of $79.3 million after the fire at Darasun in September. Darasun's total, after-tax operating loss last year was $101.45 million.

Highland produced 167,544 ounces of gold in 2006, about 3 percent of the country's total. Mnogovershinnoye produced 151,146 ounces and Darasun 16,398 ounces.

Highland's shares were up 2.9 percent Thursday.

Alfa Bank said in a note that the possible sale of Darasun would be positive for Highland Gold, as the mine requires significant investment to lower operating costs and increase production.

"In our view, the main value of Highland Gold is in its Maiskoye and Taseyevskoye deposits, which are currently undergoing a feasibility study," Alfa Bank said.

Highland Gold is owned 34 percent by Barrick Gold, the world's largest gold miner.