Results of Auction for the Taseevskoye Deposit (Chita Region)

23.09.2004

Highland Gold Mining Limited, the AIM quoted Russian gold producer, announces today that it has won, in open auction, the licence for exploration and production rights for the Taseevskoye deposit in the Chita region of Siberia. Upon registration of the licence with the Federal authorities the total consideration of US$25.5m will become payable within 30 days. The licence is for a 20-year period, which can be extended on the successful completion of exploration work on the deposit and the implementation of a viable mining plan.

Highland Gold’s current plans are based on open pit mining and using direct leaching technologies. The rights relate to an area, which contains the site of a previously working gold mine and is located 2km from the town of Baley in one of Russia’s richest gold producing regions. The site is well served by road and rail links and is in close geographical proximity to Highland Gold’s existing assets at Darasun, Novoshirokinskoye and the supporting processing and warehousing infrastructure. This proximity offers significant logistical and managerial synergies with the Group’s existing operations in the region.

Current stated resources for the deposit are as follows:

Metal  
Resources
   
C1
C2
Ore 000' tonnes
11,499
7,066
Gold oz
1,044,031
626,939
Silver oz
559,423
3,343,677
       
Source: State Committee for Resources, 1.1. 2003

Highland Gold plans to review the results of the previously conducted feasibility study and expects that the resource statement is conservatively stated. The terms of the licence specify that Highland Gold must start construction no later then 50 months after registration of the licence and production with mill throughput of no less then 2m tonnes of ore per annum must start no later then 66 months after registration of the licence. The exact capital expenditure required to bring the mine into production will be known once the full potential of the deposit has been gauged.

Taseevskoye was an established gold deposit for many years. The historic production profile shows 6m oz of high grade (13.6 g/t) gold was produced from underground mining between 1948 and 1994. Open-pit mining began in 1983 and before mining ceased in 1994, a further 1.88m tonnes of ore was extracted at an average grade of 1.8g/t.

Commenting on today’s announcement Ivan Koulakov, Managing Director, said:

“The award of the licences at Taseevskoye is another exciting development for Highland Gold. The price which works out at $US15 per resource oz is an attractive price for an asset with enormous potential in an area where we already have extensive infrastructure.”

Enquiries: +44 (0) 20 7404 5959
   
Highland Gold Peter Daresbury, Executive Chairman
  Ivan Koulakov, Managing Director
  Denis Alexandrov, Finance Director
  Dimitry Yakushkin, Director of Communications
   
Brunswick Andrew Garfield
  Mark Antelme
  Pavla Kazbundová