HGM.L Regulatory News (HGM)

HIGHLAND GOLD MINING LIMITED

14 January 2019

New Resource & Reserve Audit Extends MNV Life of Mine to 2029

Highland Gold Mining Limited ("Highland Gold" or the "Company", AIM: HGM) is pleased to announce the results of an updated audit of Mineral Resources and Ore Reserves at the Mnogovershinnoye (MNV) mine, conducted by Micon International Co Limited in compliance with the JORC code (2012). The audit takes into account data from near-mine exploration conducted at MNV in 2017, as well as updated mining parameters.

The new Ore Reserve estimate supports the extension of MNV's life of mine to the year 2029 versus the previous forecast of 2022. Furthermore, a significant increase in Mineral Resources creates the potential to add substantially more reserves in the future.

Gold contained in Ore Reserves (Proven and Probable) as of January 1, 2018 increased to 771,569 oz from the estimate of 452,866 oz published last year. The reserve grade was lowered from 5.5 g/t to 2.7 g/t, reflecting lower cut-off grades and an increase in ore volume from 2.7 million tonnes to 9.1 million tonnes. The new reserve grade is in line with the average grade mined at MNV in recent years.

Ore Reserves of the Mnogovershinnoye Gold Deposit

in accordance with the guidelines of the JORC Code (2012) as of 01 January 2018

Ore Reserves are diluted and based on a gold price of US$1,250 per ounce, with a cut-off grade of 0.7 g/t Au for open pit mining and 1.0 g/t for underground mining (1.2 g/t for the Northern ore body). Reserves were previously calculated at a price of $1,200 and with cut-off grades of 1.0 g/t and 2.0 g/t, respectively. There are no reserves classified in the Proven category.

The open pit Ore Reserves figure represents only a portion of the reserves registered under Russian standards (C1+C2) and included in MNV's mine plan, which total 643k tonnes of ore at a grade of 7.55 g/t (155,918 oz contained Au). The Company plans additional drilling to convert these resources to JORC-qualified reserves within the next two years.

Mineral Resources (Indicated and Inferred) increased to 14.14 million tonnes of ore with an average grade of 3.2 g/t and contained gold of 1.47m oz, compared to the previously-reported 2.4 million tonnes at 7.7 g/t and 578k oz Au. The difference is the result of exploration drilling as well as a reduction in the cut-off grade, as with Ore Reserves, to 0.7 g/t open pit and 1.0 g/t underground.

Mineral Resources of the Mnogovershinnoye Gold Deposit

in accordance with the JORC Code (2012) as of 01 January 2018

The Mineral Resources figures are reported inclusive of Ore Reserves. There are no resources classified in the Measured category.

The resource audit did not cover MNV's historic rock waste dumps, which the Company has been evaluating separately on an ongoing basis. During 2016-2018, the Company took over 675k tonnes of ore from the rock waste dumps, with an average grade of 1.09 g/t, for processing at the MNV mill.

Highland Gold continues to conduct near-mine exploration at MNV, both on the main licence areas and on three adjacent greenfield licences acquired over the past two years - Zamanchivaya, Kulibinskaya, and Vilkinskaya. Work on the new licences carried out in 2018 included over 70,000 m3 of trenching, as well as core drilling at Zamanchivaya and Kulibinskaya. Logging and sampling are in progress.

Information contained in this release has been taken from the "Independent Expert's Report on the Resources and Reserves of the Mnogovershinnoye Gold Deposit, Khabarovsk Region, Russian Federation", prepared in compliance with the JORC Code 2012 by a panel of qualified industry experts of Micon International Co Limited. The report has been signed off by Stanley C. Bartlett, M.Sc., PGeo., who has sufficient experience relevant to the style of mineralisation and type of deposit under consideration to qualify as Competent Persons as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves".

Mr. Andrey Sevryugin, Senior Specialist in the Geology and Subsoil Use Department at Highland Gold, has reviewed and verified the information contained in this release with respect to mineral resources. Mr Sevryugin is an Expert of the Russian Society of Subsoil Use Experts (OERN) and has sufficient experience relevant to the style of mineralisation and type of deposit under consideration to qualify as a Competent Person as defined in the JORC Code 2012 Edition.

FOR FURTHER INFORMATION PLEASE CONTACT:

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Glossary

Cut Off Grade - the lowest grade value that is included in a resource statement. It must comply with JORC requirement 19: "reasonable prospects for eventual economic extraction" the lowest grade, or quality, of mineralised material that qualifies as economically mineable and available in a given deposit. It may be defined on the basis of economic evaluation, or on physical or chemical attributes that define an acceptable product specification.

g/t - grams per tonne, equivalent to parts per million.

JORC - Widely accepted standard for reporting mineral resources and ore reserves established by the Australasian Joint Ore Reserves Committee.

Koz - thousand troy ounces.

Mineral Resource - concentration or occurrence of solid material of economic interest in or on the Earth's crust in such form, grade or quality and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade or quality, continuity and other geological characteristics of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling.

Measured Resource - that part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a high level of confidence. It is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The locations are spaced closely enough to confirm geological and grade continuity.

Indicated Mineral Resource - that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed.

Inferred Mineral Resource- that part of a Mineral Resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.

Ore Reserve - the economically mineable part of a Measured or Indicated Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A Mineral Reserve includes diluting materials and allowances for losses that may occur when the material is mined.

Proved Reserve - the part of Measured resources that can be mined in an economically viable fashion.

Probable Ore Reserve - the economically mineable part of an Indicated and, in some circumstances, a Measured Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.

Oz - troy ounce (= 31.103477 grams)

Russian Standard - Gosstandart of Russia (GOST), the national Russian standard on mining and minerals as published by the National Certification Body of the Russian Federation.

Category C1 - Russian reserve category generally consistent with the Indicated resource category of the JORC code.

Category C2 - Russian reserve category partly consistent with the Indicated and partly with the Inferred resource category of the JORC code.

t - tonne (= 1 million grams)