Highland Gold Mining : Belaya Gora/Blagodatnoye PFS and Resource Update

Highland Gold Mining Limited ('Highland Gold' or the 'Company', AIM: HGM) is pleased to announce the results of a Pre-Feasibility Study ('PFS') by consultants SRK for its Belaya Gora operation, including upgrades to the existing processing plant and the mining and processing of ore from the nearby Blagodatnoye deposit. The PFS also contains updated JORC-compliant Mineral Resource and Ore Reserve estimates ('Resource Update') for both Belaya Gora and Blagodatnoye. An executive summary of the report is available here.

PFS HIGHLIGHTS

• Resource Update for the combined Belaya Gora and Blagodatnoye operation with total gold reserves of 932k oz at a grade of 1. 44 g/t versus the previously reported 291k oz @ 3.3 g/t for Belaya Gora alone (1 January 2017).
• New mining plans for Belaya Gora and Blagodatnoye, both of which are open-pit operations, envisioning the processing of Blagodatnoye ore at the Belaya Gora mill and a combined life of mine extending until the year 2032.
• Estimated capital expenditures of US$ 15 million for upgrades to the Belaya Gora processing plant, which encompasses the addition of a carbon-in-pulp (CIP) circuit, to improve recoveries from the current 72% to a range of 86-91% for Belaya Gora ore and 90% for Blagodatnoye ore.
• Estimated capex of US$ 21 million in 2023 to move mining activity from Belaya Gora to Blagodatnoye, including the purchase of a crushing circuit, road construction and upgrades, and equipment replacement.
• Average annual production of 55 koz over the life of mine.
• Total life of mine production of 820 koz at an average total cash cost of US$ 802/oz and all-in sustaining costs of US$ 848/oz.
• Post-tax NPV@10% of US$ 97 million and IRR of 142% for the combined project, excluding historical costs and based on a gold price of US$ 1250/oz.

The revised Mineral Resource estimate for Belaya Gora more accurately reflects the actual mining experience and takes into account the results of a two-year drilling programme, which identified additional mineral resources. The Ore Reserve estimate also accounts for improved project economics, which increased the limits of the open pit.

Estimates for Blagodatnoye likewise follow an extensive drilling programme in 2016-2017 to confirm the deposit's resources.

Mineral Resources of the Belaya Gora Mine*

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

Mineral Resources of the Blagodatnoye Deposit*

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

* Notes
- Mineral Resources are reported inclusive of ore reserves.
- Cut-off grade of 0.4 g/t for Belaya Gora and 0.5 g/t for Blagodatnoye.

Ore Reserves of the Belaya Gora and Blagodatnoye Project**

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

** Ore Reserves are reported at a variable cut-off grade for Belaya Gora (between 0.4 and 2.05 g/t Au) and 0.77g/t Au for Blagodatnoye within an engineered pit design.

Belaya Gora is Highland Gold's youngest operating mine, with commercial production initiated in 2014. It is located in the Khabarovsk region of Russia's Far East, 55 kilometres north of the town of Nikolaevsk-na-Amur and 66 kilometres south of the Company's MNV operation.

The Blagodatnoye deposit is a greenfield project located 39 kilometres to the southeast of Belaya Gora. Initial exploration was carried out at the site in 2010-2012, and restarted in 2016. It is connected to Belaya Gora by municipal road.

Information contained in this release has been taken from the 'Pre-Feasibility Study for Belaya Gora and Blagodatnoye Gold Project', prepared in compliance to the JORC Code 2012 by a panel of qualified industry experts of SRK Consulting.

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 Competent Persons as defined in the JORC Code 2012 Edition.

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Glossary

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

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.

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.

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.

Measured Mineral Resource - that part of a Mineral Resource for which quantity, grade or quality, densities, shape, and physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit. The estimate 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 that are spaced closely enough to confirm both geological and grade continuity.

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.

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.

Proven Ore Reserve - is the economically mineable part of 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 is justified.