Interim Results Announcement for H1 2008

25.09.2008

Highland Gold Mining Limited ("Highland Gold", or the "Company") announces its production and financial results for the half year ended 30 June 2008.

Financial Summary

Financial (US$ millions) H1 2008 H1 2007
Turnover 76.5 43.4
Cash inflow /(outflow) from operating activities 10.7 (26.0)
Group Operating profit 14.4 4.2
Net profit from Continuing operations 22.2 5.7
Profit/(loss) for the period 22.2 (2.8)
Diluted earnings per share from continuing operations (US$/share) 0.068 0.029
Capital expenditure 43.0 19.3
Operating    
MNV – Gold recovered (ounces) 68,813 58,196
MNV – Gold sold (ounces) 81,036 62,643
MNV – Cash operating cost (US$/ounce sold) 472 417
MNV – Total cashcost (US$/ounce sold) 529 458

The Group's financial statements for the period ended 30 June, 2008 have been prepared in accordance with IFRS.

First Half Highlights

  • Group profit after tax of US$22.2 million compared to a loss for the same period in 2007 of US$2.8 million
  • Gold revenue for the first half of 2008 increased by 77% over the same period in 2007 to US$73.7 million on sales of 81,036 ounces
  • Average realised gold sales price was US$909/oz, up by 39% (first six months of 2007 – US$655/oz). The Group remains unhedged
  • Cash and short term deposits of US$308.7 million at 30 June 2008
  • Novoshirokinskoye on schedule for commissioning at the end of 2008

Commenting on today's announcement Duncan Baxter, Non-Executive Chairman said: "We have benefited in the first half from the efficiency measures taken in 2007 to improve production at Mnogovershinnoye (MNV) and this is reflected in significantly improved results and we look forward to seeing further progress being made during the rest of the year. Novoshirokinskoye (Novo) is on track to become our second producing mine by the end of the year. In the light of recent Board and Executive appointments and the turmoil in the financial markets which is likely to result in liquidity constraints for the foreseeable future, the Board will examine all aspects of the business to focus on the best way to exploit the Company's strong net cash position. This may have an effect on timing for various projects and will also include looking at opportunities of acquiring additional producing assets."

Conference call

Highland Gold will hold a conference call hosted by Henry Horne, CEO and Tatyana Breeva, CFO. The conference call will take place at 10.00am London time on 25 September 2008. To participate in the conference call, please dial one of the following toll-free numbers:

UK Local Call 0844 493 3800
UK Standard International +44 (0) 1452 561 394
Russian Local Call 8108 002 097 2044
Conference ID 66053391

A recording of the presentation will be accessible on the company website www.highlandgold.com shortly after, as well as by dialing one of the following numbers:

International Dial in: +44 (0) 1452 55 00 00
UK Free Call Dial In: 0800 953 1533
UK Local Dial In: 0845 245 5205
USA Free Call Dial In: 1866 247 4222
Encore Replay Access Number: 66053391#

Encore Replay will be available until 1 October 2008.

The Interim Report to 30 June 2008 will be available on our website from 30 September.