Two Major Transactions Completed

18.12.2006

Highland Gold Completes Increased Collaboration Transaction with Barrick Gold

Highland Gold Mining Limited (“Company” or “Highland”) (AIM: HGM) announces today that Barrick Gold Corporation (“Barrick”) has now increased its shareholding in the Company to approximately 34 per cent. In exchange Highland has received:

  • Barrick’s 50% interest in existing joint ventures with Highland
  • Four other gold exploration interests owned by Barrick
  • Two Barrick personnel to be appointed to the Highland Board and further appointments at executive level

The assets being acquired from Barrick as part of the agreement are:

  • Barrick’s 50% share in Taseevskoye Netherlands B.V., and Barrick’s rights and interests in the Taseevskoye licence;
  • Barrick’s 50 % share in HB Ventures Netherlands B.V., and Barrick’s rights and interests in Sovinoye, Belaya Gora and Malo Fedorov licences;
  • A 100% of the share in Barrick Resources LLC, the holder of the Lyubov, Maya-Inikan, and Sarasa licences;
  • A 100% of the shares in Barrick Gold Kyrgyzstan LLP, the holder of the Unkurtash and Kassan licences in Kyrgyzstan.

The consideration for the acquisition of these share interests is satisfied by the issue to Barrick entities of 34,492,305 ordinary shares in Highland.

The first tranche of 34,312,657 new ordinary shares has been admitted to AIM of the London Stock Exchange and started trading today, Monday 18 December, 2006, at 8.00am. A second tranche of 179,648 new ordinary shares will be issued in early 2007.

Completion of Strategic Joint Venture with KazZinc for development of Novoshirokinskoye

The joint venture deal between Highland and KazZinc, involving the sale of a 48.3% interest in the development project at Novoshirokinskoye (“Novo”) has been completed. As part of the deal Highland received US$36 million in cash. Both parties will now proceed with work on establishing a project to optimise the revenue from production and sale of product from the Novo gold-polymetallic deposit.

KazZinc is based in and develops deposits in Kazakhstan and is a large integrated zinc producer as well as a producer of copper, gold, silver and lead. KazZinc has successful experience in treating ores similar to those at Novo.

Commenting on both transactions, James Cross, Chairman of Highland, said:

“We are happy to be ending the year on such a positive note. Both transactions are important events for the Company.

Barrick brings to Highland great opportunities as a world leader in building and operating mines. Combined with the world-class assets and resources of Highland, the 4th largest producer of gold in Russia, the transaction puts us in an even stronger position to focus on maximising the value of our current operations and accelerating our development projects. We are delighted to welcome former Barrick executives Rene Marion as Chief Operating Officer and Scott Perry as Chief Financial Officer of Highland and look forward to benefiting frоm their wide-ranging experience in the months and years ahead.

The completion of our joint venture agreement with Kazzinc at our Novo mine also demonstrates our determination to achieve steady progress at all of our projects for the benefit of the Company’s shareholders.”

Enquiries:                                  

Dmitry Yakushkin, Director of Corporate Communications

Dominic Palmer-Tomkinson, Head of IR

Henry Horne, Managing Director

London: +44 (0) 207 851 64 00

Moscow: + 7 (495) 777 31 55

E-mail: info@highlandgold.com

Or, WMC Communications, Alex Glover on

+44 20 7930 9030