HGM.L Regulatory News (HGM)

8 Aug 2007 12:46

Highland Gold Mining Limited08 August 2007 HIGHLAND GOLD MINING LIMITED SALE OF THE WHOLE OF THE SHARE CAPITAL OF OOO "DARASUNSKY RUDNIK" 8 August 2007 - Highland Gold Mining Limited ("Highland Gold", or the "Company")announces that its wholly owned subsidiary, Stanmix Holding Limited, has enteredinto a conditional agreement for the sale of the Darasun, Teremky and TalatuiMines ("the Mines") in the Chita region of Russia. On 7 August 2007 an agreementwas entered into between Stanmix Holding Limited and Open Joint Stock Company"Uzhuralzoloto Group of Companies" a company incorporated under the laws ofRussia ("the Purchaser") whereby the Purchaser will acquire the whole of theshare capital of OOO "Darasunsky Rudnik", the owner of the Mines, for a totalconsideration of US$25 million. The consideration will be satisfied by thepayment of US$3 million in cash, which shall be paid on completion of thetransaction, and the repayment by OOO "Darasunsky Rudnik" of US$22 million ofits indebtedness due to Stanmix Investments Limited of which US$12 million shallbe repaid by the end of 2007 and US$10 million shall be repaid on 1st March2008. The agreement is subject to satisfaction of certain conditions precedent, theprincipal one being the obtaining of Russian anti-monopoly approval by thePurchaser. The various conditions precedent will be satisfied as soon aspracticable following which the transaction will then be completed. It isanticipated that this transaction will be completed by the end of 2007 at thelatest. Following a non-cash impairment charge of US$79.3 million the net book value ofthe Mines being sold as at 31 December 2006 was US$2.5 million. This net bookvalue excludes US$5.2 million of provisions for royalties and fire related costsas these liabilities will remain with Highland Gold once the disposal of Darasunhas been completed. The after-tax loss attributable to the Mines during the 2006financial year was US$108.5 million, which includes the non-cash impairmentcharge of US$79.3 million and a US$2.4 million exceptional charge for one-offcosts directly associated with the fire at the Mines. A further announcement will be made following completion of the transaction. Commenting on today's announcement, Henry Horne, Managing Director said: "As weadvised earlier we have proceeded with divesting the Darasun asset in order toprioritise and focus on our other important development projects, includingthose which the Company is currently developing in the same Chita region.Notwithstanding this transaction we remain committed to helping those familymembers who suffered from the terrible fire in September 2006 and we willcomplete our various programmes of support for the Darasun community." - ENDS - For further informationplease contact: Henry Horne, Managing Director Dmitry Yakushkin, Director of Communications Moscow: + 7 (495) 777 31 55 Dominic Palmer-Tomkinson, Head of Investor Relations London: +44 (0) 207851 64 00 Or, WMC Communications, Alex Glover on +44 20 7930 9030 This information is provided by RNS The company news service from the London Stock Exchange