HGM.L Regulatory News (HGM)

HIGHLAND GOLD MINING LIMITED

Agreements Signed for State Support of Kekura at Eastern Economic Forum

05 September 2016. Vladivostok.

Highland Gold Mining Limited ("Highland Gold" or the "Company") participated in the second annual Eastern Economic Forum on September 2-3 in Vladivostok, where the Company's planned Kekura gold mine and processing plant were selected by forum organizers as a featured investment project in Russia's Eastern Siberia and Far East regions. During the event, the Company signed two agreements with state agencies on financing and infrastructure to aid in the development of Kekura, which is located the Far Eastern province of Chukotka.

In the first agreement, the Far East Development Fund ("FEDV") committed to providing Highland Gold with a 2 billion rouble (US$ 30.7 million) preferential loan, with a term of six years and an annual interest rate of 5%. FEDV will also consider future additional financing for Kekura, which they estimate would add at least 55.6 billion roubles (US$ 855 million) to regional GDP and remit approximately 3 billion roubles (US$ 46 million) in taxes by 2027. The project will also create about 800 new jobs.

The second agreement, signed by the government of Chukotka, Highland Gold, and Regional Mining Company ("RGK"), is a memorandum of understanding on improving electricity infrastructure in the region. The local government confirmed its intention to build high-capacity power lines from the town of Bilibino, located 120 km north of Kekura, to substations that would be built by Highland Gold and RGK at their respective mine sites.

"The interest Kekura has received from both the Chukotka government and FEDV is testament to the project's importance, not just for Highland Gold but for Chukotka and the Russian Far East region. The Company believes that these two agreements, when implemented, will help to further improve the economics of the project. We welcome the involvement of FEDV in financing Kekura and count on continued cooperation with the Fund in the future," said Highland Gold CEO Denis Alexandrov.

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The Far East Development Fund was established in 2011 by the President and the Prime Minister of the Russian Federation. The Fund is a state-financed development institution with a flexible approach to project structuring and finance. The Fund invests in ventures and infrastructure that have significant social and financial impact on the economic development of the region. The Fund acts as part of a unified system, set up to accelerate the development of the Russian Far East, and cooperates with the Presidential Representative to the Far Eastern Federal District, the Ministry of Far East Development, and its stakeholder Vnesheconombank. Chartered capital - 15.8 billion rubles.

Highland Gold Mining is a well-established gold producer with a world class Russian asset base of producing, development and exploration projects. It has strong management and operational teams with local and international expertise, and an exciting portfolio of JORC audited resources. Highland Gold's operations are located around three main clusters in the Khabarovsk, Zabaikalsky and Chukotka regions of Russia, as well as in Kyrgyzstan in Central Asia. Since December 2002, the Company's shares have traded on AIM in London under the symbol "HGM".