Drilling Report

HIGHLAND GOLD REPORTS JORC COMPLIANT RESOURCES AT THE LYUBOV PROJECT

1 October 2012 - Highland Gold Mining Limited ("Highland Gold", or the "Company") announces results from a JORC compliant mineral resource audit carried out by the independent consultancy IMC Montan at the Company's Lyubov project located in the Zabaikalsky region in Eastern Siberia. The audit results define a total mineral resource of 0.48 Moz (98% measured and indicated). This increases the Company's total JORC compliant mineral resource base as recorded at 31 December 2011 by 4% to 13.3 Moz of gold.

The Lyubov project is targeting a near surface bulk-mineable gold resource for a potential open-pit mining operation. The property license includes the Evgraf prospect which has been the focus of the Company's previous exploration activities including more than 20,000 metres of core drilling.

The Evgraf prospect is characterised by stockwork-type mineralisation where gold is associated with disseminated quartz-sulphide veinlets localised within a granitic stock and surrounding shales. Previous test work has indicated favourable metallurgy and gold recovery levels via conventional processing methods including heap leaching. The mineral resource estimate included results from block modelling up to approximately 250 metres from surface.

 (Resource calculation based on minimum grade of 0.5 g/t per cell in block model)

In respect of the Evgraf prospect the Company has also submitted a pre-feasibility study including a reserve calculation to the regulatory authorities. A C1+C2 category reserve of approximately 0.5 Moz is to be considered for reserve registration by the State Committee on Reserves of the Russian Federation (GKZ). Approval is anticipated in Q4 2012.

The Lyubov project is entering the development stage and engineering studies in relation to conventional processing options, including heap leaching, have been initiated.

IMC Montan (International Economic and Energy Consulting) consultants Mr. Neil Scott (Member of the Institution of Materials, Minerals and Mining; Bachelor of Science; Certified Engineer) and Mr. John Bacharach (Fellow of the Institution of Materials, Minerals and Mining; Associate of the Royal School of Mines; Bachelor of Science; Certified Engineer) have provided and verified information contained in this release with respect to drilling and resource / reserves. They are qualified as Competent Persons as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.

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