HGM.L Regulatory News (HGM)

HIGHLAND GOLD MINING LIMITED

20 December 2018

Update on Valunisty Acquisition

Highland Gold Mining Limited ("Highland Gold" or the "Company", AIM: HGM) is pleased to announce that further to its announcements of 26 April 2018 and 24 May 2018, it has received permission from Russia's Federal Anti-Monopoly Service (FAS) to complete the acquisition of the Valunisty mine and related assets (the "Acquisition") from Aristus Holdings Limited ("Aristus").

All conditions required to be satisfied for the closing of the Acquisition have now been fulfilled and the parties today signed the Russian deed of sale for transfer of the assets. The Company will now file for legal registration of ownership of the assets, to be followed by the issuance of 38,621,343 ordinary shares of £0.001 each to Aristus, and thereafter their admission to trading on AIM. A further announcement will be made once these steps have been completed. Aristus' shares are subject to a six-month lock-up agreement.

The Acquisition covers three companies with assets in the Russian region of Chukotka, where Highland Gold already operates the Kekura and Klen development projects. The assets include the Valunisty gold mine and processing plant, with annual production of 31 koz (2017), as well as the Kanchalano-Amguemskaya Square ("KAS") licence, which covers territory surrounding Valunisty and hosts several satellite deposits, and the Kayenmivaam ("Kayen") exploration licence.

Valunisty and KAS hold total audited Proven and Probable Ore Reserves (JORC 2012) of 3.4 Mt at 5.1 g/t Au equivalent (4.6 g/t Au and 49.3 g/t Ag) (554 koz Au equivalent); and Indicated and Inferred Mineral Resources of 17.6 Mt at 3.0 g/t Au equivalent (2.4 g/t Au and 58.5 g/t Ag) (1.72 Moz Au equivalent), as at 1 January 2018.

The Consideration to be paid is US$91m, including approximately US$78.7m in shares based on the share price prior to announcement of the deal on 26 April 2018, and the balance by the assumption of approximately US$12.3m of net debt. The transaction was approved at an Extraordinary General Meeting of the Company in May 2018.

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