HGM.L Regulatory News (HGM)

14 Jul 2006 10:00

Highland Gold Mining Limited14 July 2006 HIGHLAND GOLD MINING LIMITED 14 July, 2006 Barrick Joint Venture Sovinoye, Malo-Fedorovskoye & Belaya Gora Deposits Barrick Joint Venture Arrangements In April, 2006, we announced with our final results and in our Annual Report of31 December, 2005, that Barrick had confirmed its intention to exercise itsearly participation rights in respect of three deposits, Sovinoye,Malo-Fedorovskoye & Belaya Gora (the "Deposits"), under the Highland / BarrickParticipation Agreement entered into in early 2004. Under the Participation Agreement, Barrick is only required to pay for its shareof Highland's acquisition costs associated with acquiring the Deposits once ajoint venture corporation, or corporations, has been established to own andoperate the Deposits. In an effort to advance the exploration and other aspectsof the deposits, Highland and Barrick have entered into agreements wherebyBarrick has made an advance payment of US$1,781,607 representing half of theoriginal purchase price paid by Highland for each of the deposits (beingUS$245,074, US$82,816 and US$623,220 respectively) for its 50% interest in theDeposits and expenditures to date of US$2,612,104 and will also contribute toits share of future Deposit related development expenditures. As the payments byBarrick have been made in advance of the final ownership structure as requiredunder the Participation Agreement, Highland granted Barrick warrants to acquireunissued shares at an exercise price of US$4.18 per share covering the fullvalue of the payments. The warrants are exercisable at the option of Barrick ifthe ownership structures are not established by December 31, 2006 in respect ofthe Sovinoye deposit and April 30, 2007 in respect of the Malo-Fedorovskoye &Belaya Gora deposits (or such later date as Barrick may determine) and Highlandhas not repaid the full value of the payments in cash. The warrants expire in2012. Further warrants maybe issued to cover further interim expenditurespending completion of the ownership structure. As Barrick's shareholding in Highland is in excess of 10%, Barrick is treated asa related party under the AIM Rules. The Directors of Highland consider that,having consulted with JPMorgan Cazenove, its Nominated Adviser, the arrangementsabove with Barrick are fair and reasonable in so far as shareholders in Highlandare concerned. Enquiries: Henry Horne, CEO +00 7 495 777 5529 (Moscow) Duncan Baxter, Corporate Affairs Director +44 (0) 1534 814202 (Jersey) This information is provided by RNS The company news service from the London Stock Exchange