Highland Gold Mining Reduces Production Forecast After Siberian Mine Fire Kills 25 Workers

Highland Gold Mining PLC has reduced its 2006 production forecast after a fire at one of its Siberian mines killed 25 workers at the start of the month, the company said Thursday.

In a conference call, managing director Henry Horne said the company had lowered its forecast to 178,000 to 180,000 ounces from its previous range of 180,000 to 185,000 ounces and blamed the decline on the Sept. 7 fire in its Darasun deep mine in the Chita region.

“The recent tragedy at our Darasun mine has marred an otherwise positive period,” Highland Gold said in a statement.

Despite the lower forecast, the company said in its statement that it had narrowed its first-half net loss to $200,000 from $7.2 million in the first half of 2005, which it attributed to a strong performance at its Mnogovershinnoye mine in the far-eastern Khabarovsk region as well as a higher price for the gold it sold.

The company said gold revenue for the first half of 2006 rose 90 percent from the same period of 2005 to $53.8 million on sales of 85,567 ounces.

The 105-year-old Darasun mine has been plagued with operational problems for more than a year, badly delaying the schedule for raising output and contributing to Highland’s net loss last year.

After the accident, which is believed to have been triggered by welding works, the Ministry of Natural Resources said it would carry out a special inspection of safety practices at the country’s mines, including a thorough check of Highland’s Russian operations.

Shares in Highland Gold gained 7.7 percent to 167.75 pence ($3.16) on the London Stock Exchange.