Highland Gold Acquires the Sredny Golgotay Deposit (Chita Region)

28.02.2005

Highland Gold Mining Limited, the AIM quoted Russian gold producer, announces today that it has won, in an open auction, the licence for exploration and production rights for the Sredny Golgotay deposit with a bid of US$377,300. The licence area is 4.5 square kilometres and is located in the Chita region of Russia, 13 kilometres southwest of Highland Gold’s Taseevskoye deposit, near the town of Baley.

Subject to further exploration and feasibility studies, the company believes this deposit could provide ore for trucking to a new processing plant at Taseevskoye. The licence is for a 10-year period, which can be extended on the completion of a feasibility study. The licence payment will be made within 30 days, once the registration procedure is completed. Under Highland Gold’s partnership agreement with Barrick Gold, Barrick Gold has an option to participate in up to 50% of this acquisition.

The site is well served by road and rail links and is also in close geographical proximity to Highland Gold’s existing assets at Darasun, Novoshirokinskoye and the supporting warehousing infrastructure. This proximity offers logistical and managerial synergies with the Group’s existing operations in the region. The deposit consists of quartz and sulphide-quartz veins which have been explored to a depth of 250 metres from the surface. They have a near vertical dip and range between 200 and 1000 metres long, and vary in thickness, up to four metres. The veins are open to depth and Highland Gold believes that considerable potential remains for enlarging the resource. Prior exploration on the deposit has been extensive, including both diamond drilling and underground exploration by shaft drives and cross cuts. There are also adits at three levels accessing the vein system. There are two styles of mineralisation found in the deposit: gold-quartz and gold-quartz-tourmaline-sulphide. The majority of the gold occurs in the former, which are essentially quartz veins with sulphide being predominantly arsenopyrite. The resources as calculated using Russian standards, based on extensive surface and underground exploration, are as follows:

Sredny Golgotay Resources

Resource Category Ore
(Tonnes)
Gold
Grade(g/t)
Contained Gold
(Ounces)
B+C1 (Indicated) 471,000 16.7 250,500
C2 (Inferred) 175,000 12.0 67,500
Total 646,000 15.5 318,000

Source: State Committee for Resources, 01 January 2004

Commenting on today's announcement Dmitry Korobov, Managing Director, said:

"We are very pleased to have won the auction for the Sredny Golgotay Deposit. It represents a further step in our disciplined acquisition strategy, in that it provides the company with a quality, high-grade project that has excellent potential to expand on the currently defined resource base. Furthermore, should development prove feasible, the opportunity to share a processing plant and infrastructure with our neighbouring Taseevskoye project would provide enhanced economics for both projects. “We are looking forward to providing updates on results from future exploration drilling that will be designed to better assess the global resource potential of Sredny Golgotay."

Enquiries:
Dmitry Korobov, Managing Director
Dmitry Yakushkin, Director of Communications
+7 095 777-3155
+44 207 851-6400
www.highlandgold.com