Highland Gold Mining : Updated Resource and Reserve Estimates for Novo

Highland Gold Mining Limited ('Highland Gold' or the 'Company', AIM: HGM) is pleased to announce the results of updated JORC-compliant Mineral Resource and Ore Reserve estimates for its Novoshirokinskoye ('Novo') mine, conducted by Wardell Armstrong International ('WAI').

The new JORC resource audit follows a comprehensive resource re-evaluation under Russian GKZ standards, completed in 2014. As part of that exercise, Novo's cut-off grades were substantially lowered, resulting in lower average grades but higher tonnages and contained metal.

For the purposes of modelling, WAI calculated a lead metal equivalent grade for Novo's polymetallic ore in its report. Prices were based on a trailing three-year average as of January 2017, and actual recovery data was supplied by Highland Gold.

Using the same parameters to calculate gold equivalent, total proven and probable Ore Reserves as of 01 January 2017 were 1.9 M oz Au Eq., compared to 1.1 M oz estimated to remain from the prior reserve audit conducted in 2011 and reported in the Company's 2016 Annual Report. Total Ore Reserve tonnage was 18.0 M tonnes versus 3.4 M tonnes previously reported. The average gold equivalent grade was 3.3 g/t, compared to 9.8 g/t reported earlier and an average grade of 5.5 g/t processed at the Novo mill this year to date.

Novo's measured, indicated and inferred Mineral Resources as of 01 January 2017 were 3.1 M oz of gold equivalent versus 1.4 M oz Au Eq. reported earlier. The resource grade was 4.0 g/t Au Eq. (previously 7.6 g/t) and the total ore resource was 24.1 M tonnes (previously 5.7 M tonnes).

The new reserve data reinforces the rationale behind the Company's on-going project to expand Novo's mine and processing plant annual capacity to 1.3 M tonnes of ore from its current run rate of 800k tonnes. Increased capacity will support Novo's overall production level as grades decline, while also helping to mitigate the expected upward pressure on total cash costs.

Below are Novo's Mineral Resources and Ore Reserves as presented in the report by Wardell Armstrong International, assessed on a lead-equivalent basis:

Mineral Resources of the Novoshirokinskoye Mine
in accordance with the JORC Code (2012) as of 01 January 2017

WAI Pb Equivalent Calculation Parameters

(Pb Eq) 2017

Information contained in this release has been taken from the 'Mineral Resources & Ore Reserve Estimation for the Novoshirokinskoye Deposit, Zabaikalskiy Krai, Russia', prepared in compliance to the JORC Code 2012 by a panel of qualified industry experts of Wardell Armstrong International. The report has been signed off by Mr Phil Newall, 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 Competent Persons as defined in the JORC Code 2012 Edition.

Mr. Colin Belshaw, Independent Director at Highland Gold, has reviewed and verified the information contained in this release with respect to reserve and resource matters. Mr Belshaw is a Fellow of the Institute of Materials, Minerals and Mining (FIMMM) 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.

FOR FURTHER INFORMATION PLEASE CONTACT:

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(1) Highland Gold internal gold-equivalent resource and reserve estimates, based on 2017 WAI JORC-compliant Mineral Resource and Ore Reserves estimates and calculated using WAI 2017 lead equivalent price and recovery parameters.

(2) Resources and reserves were estimated as of January 01, 2011 (in accordance with JORC Code 2004) and adjusted for 2011-2016 mining. Gold equivalent was calculated as follows:

Pb*0.510496+Zn*0.430005+Ag*0.01723 (WAI 2011 coefficients).

(3) Estimate ratios Pb eq.=Pb(%)+0.45Zn(%)+1.83Au(g/t)+0.03Ag(g/t)

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.