Milestone Achievement - Reserve Approval at the Unkurtash Deposit

01.06.2011 

Highland Gold Mining Limited ("Highland Gold", or the "Company" AIM: HGM) is pleased to announce the approval of 42.9 tonnes (1.38 million oz) gold reserves (C1+C2 category) by the State Committee on Reserves of the Kyrgyz Republic (GKZ) at its Unkurtash project in Kyrgyzstan. As a result the GKZ reserves of the Company as stated at 31 December 2010 will increase by 19%. The approval will facilitate the granting of a mining license and represents a major step towards mine development of the Company's Unkurtash project.

The Company has committed to audit its GKZ reserves in compliance with JORC standards and this work related to the Unkurtash project has already been initiated with anticipated completion during H2 2011.

The Unkurtash project includes three distinct prospects: the Unkurtash, Sarytube and Karatube located within the Company's two licenses Unkurtash-Andagul (12 km2) and Kassan (51 km2). The combined mineralised zone measures approximately 4,000 metres on strike, ranges from 250-500 metres in width and has a potential vertical extent of at least 350 metres.

Based primarily on the 2009 drilling and exploration programme, a pre-feasibility study including a reserve calculation was submitted for approval in late 2010 to the Kyrgyz GKZ who passed a decision to register the initial (C1+C2) reserves with the state natural resource inventory. Accordingly, at a cut-off grade of 0.7 g/t in-pit (C1+C2) reserves amount to 42.9 tonnes of gold contained in 17.0 million tonnes of ore at an average grade of 2.52 g/t. The pre-feasibility study envisages conventional large scale open-pit mining and utilising a combination of gravitation and cyanidation process technology for gold recovery.

The Company is making excellent progress with its ongoing exploration programme and recent drilling results corroborate the potential of hosting a world class stockwork-type gold resource at Unkurtash and Sarytube. Highland Gold aims to substantially increase this initial mineral resource estimate and has earmarked over 50,000 metres of reverse circulation and diamond core drilling as well as advancing 3,000 metres of underground exploration development during 2011 in order to test the continuity of mineralisation across the three prospects. US$20 million of the Company's US$30 million planned 2011 exploration budget has been assigned for this project.

Mr. Werner Klemens, Head of Exploration at Highland Gold has reviewed and verified the information contained in this release with respect to drilling and resource / reserves matters. Mr. Klemens holds a Ph.D. in Geology from the University of Toronto. He has 13 years experience in mineral exploration and is a fellow of the Geological Association of Canada. A rigorous quality assurance programme complying with international standards is in effect at all exploration projects and includes duplicate sampling, insertion of standards and check assaying at external laboratories.

For further information please contact:

Highland Gold Dmitry Yakushkin, Head of Communications + 7 495 424 95 21
  Duncan Baxter, Chairman + 44 (0) 1534 814 202
   
Matrix Robin Henshall, +44 (0) 20 3206 7172
(Nominated Adviser and broker) Tim Graham, +44 (0)20 3206 7206
   
Fin Public Relations Alex Glover + 44 (0) 20 7608 2280