Half Yearly Report

HIGHLAND GOLD MINING LIMITED

INTERIM RESULTS FOR THE FIRST HALF OF 2012

19 September 2012

Highland Gold Mining Limited ("Highland Gold" or the "Company") announces its production figures and financial results for the half year ended 30 June 2012. 

FINANCIAL SUMMARY

HIGHLIGHTS

Financial:

·; Group revenue rose 2.1% to US$161.5 million in H1 2012 (H1 2011: US$158.1 million). As the result of a "no hedge" policy the Group fully participated in stronger spot gold prices and also benefited from the higher attributable metal production from Novo in line with its increased equity interest. The average price received for gold and gold equivalents, including Novo, during H1 2012 recorded a near 5% advance to US$1,537 per oz compared with US$1,464 per oz in H1 2011

·; The Group's cost of sales totalled US$103.5 million (H1 2011: US$72.7 million) reflecting respective increases in open pit waste stripping and ore tonnes processed at MNV and ore tonnes mined and processed at Novo

·; EBITDA declined 25.4% to US$65.7 million (H1 2011: US$88.1 million) due to the higher cost of sales

·; Total cash costs amounted to US$804 per oz compared with US$531 per oz in H1 2011. This increase largely reflected the higher waste stripping volumes at MNV and a decrease in the average gold grade delivered for processing at MNV and Novo

·; Cash, short term deposits and bonds totalled US$150.8 million as at 30 June 2012 compared with US$272.2 million as at 30 June 2011. This reflected the acquisition of the additional interest in Novo and higher capital expenditure of US$47.1 million in H1 2012 compared with US$31.4 million in H1 2011

·; Interim special dividend of £0.048 per share

Producing Mines:

·; Combined production of gold and gold equivalents from Mnogovershinnoye ("MNV"), Novoshirokinskoye ("Novo") (97.5% interest) and Belaya Gora totalled 101,900 oz - a 9.5% increase compared with H1 2011

·; On track to produce 200,000 - 215,000 oz of gold and gold equivalents in 2012

·; Production ramp up at Novo resulted in a 6% increase in processed tonnes compared with H1 2011

·; A 16% increase in total JORC compliant resources to 12.9 Moz, through exploration and acquisition, compared with stated figures as at 31 December 2011

Development and Exploration Sites:

·; Construction of the Belaya Gora stand-alone processing facility remains on track for commissioning in Q4 2012

·; Exploration programme at MNV continued to target potential resources adjacent to existing operations (Watershed, Pebble/Quiet zones)

·; Continuation of exploratory drill works and underground development at Unkurtash designed to expand the resource base. Approval of mining licence by the Kyrgyzstan Government authorities paves the way for project development

·; Submission of Lyubov documentation to GKZ regulatory authorities and the commencement of an independent JORC resource audit

·; Exploratory drilling and trenching at Blagodatnoye continued to deliver positive results with an increased mineralised zone developing along strike and at depth

POST HALF YEAR EVENTS

·; Medium term production profile expanded through purchase of the Klen and Verkhne-Krichalskaya licence areas with initial gold production scheduled for 2015

CONFERENCE CALL DETAILS

The Company will hold a conference call on Wednesday, 19 September 2012 hosted by Valery Oyf, CEO to discuss the interim results. The conference call will take place at 9 am UK time (12.00 Moscow). To participate in the conference call, please dial one of the following toll-free numbers:

UK Free Call 0800 694 0257

UK Local Call 0844 493 3800

UK Standard International +44 (0) 1452 55 55 66

Russia Free Call 8108 002 097 2044

USA Free Call 1866 966 9439

Conference ID 3261 83 95

A replay of the presentation will be accessible shortly afterwards by dialing one of the following numbers:

International Dial In +44 (0) 1452 55 00 00

UK Local Dial In 0845 245 52 05

USA Free Call Dial In 1866 247 4222

INTERIM OPERATIONAL REVIEW

Production

Mnogovershinnoye (MNV) - Khabarovsk region, Russia

Overall production at MNV was in line with Company targets. Process plant throughput during the six months to 30 June 2012 totalled 611,036 tonnes of ore and yielded 68,751 oz of gold. Recovery rates, benefiting from major hydrocyclone and pump upgrades at the plant, improved during the latter part of the period and are expected to remain at a level of 90% during the second half of 2012.

Open pit waste stripping volumes were increased during the first half in order to ensure continued mining access to the Flank pit where pit wall conditions were affected by the spring thaw. This increase impacted cash costs due to the higher volumes moved per oz of gold mined and processed during the half year. Ore tonnes mined, in respect of both open pit and underground operations, were on target. Underground development at 3,479 metres recorded a 19% improvement over H1 2011 performance. New underground mining capital equipment, introduced in 2011 and early 2012, helped to maintain production targets and will facilitate the retirement of older less efficient production units. The 'near mine' exploration programme, involving drilling and trenching operations close to existing mine workings, continued. These activities are designed to further the conversion of resources into reserves and to discover new resources to help offset depletion. Independent expertise has also been deployed in order to maximise this potential.

Novoshirokinskoye (Novo) - Zabaikalsky region, Russia

During the six month period, underground ore production, waste development metres and processed ore throughput all met or exceeded their respective targets. Output improvements in both ore mining and processing are anticipated with production of approximately 450,000 tonnes of ore expected by the year end. Components for a SAG mill upgrade have been ordered with the retrofit expected during the second half of the year. With regard to underground development, access to additional stoping blocks will continue to provide flexibility in respect of ongoing ore supply to the process plant.

*approximate Au equivalent

DEVELOPMENT PROJECTS

Belaya Gora - Khabarovsk region, Russia

At Belaya Gora the construction of the stand-alone processing plant proceeded on target with vertical planning, major foundations, steel work, and ancillary works all making good progress. All integral items such as mills, drives and steel frames are currently on site or in transit. Open pit ore and waste mining operations continued in accordance with plans to use waste stripping material for the construction of the tailings storage facility dam and roadways, with ore being stockpiled for future plant feed. During the six month period, 21,680 tonnes of ore were processed at the MNV plant producing 1,919 ounces of gold. The focus will remain on the construction project with ore processing limited to the stockpile already delivered to the MNV plant. Full grade ore currently being mined will be stockpiled for the purpose of feeding the new plant post commissioning which is expected during Q4 2012.

Taseevskoye - Zabaikalsky region, Russia

The drilling programme initiated during H1 2011 for confirmation of resources and ore characterisation was finalised during the first half of 2012. This programme was delivered to verify the existing resource and to ensure that the planned semi-industrial pilot test work will be completed using fully representative samples from each of the varying ore zones located within the potential open pit. Tests are currently underway and are expected to be completed during H2 2012. The potential to advance the project to the definitive feasibility stage will be considered following the conclusion of the current review process.

POST HALF YEAR EVENTS

Klen - Chukotka region, Russia

The purchase of Klen and the adjacent Verkhne-Krichalskaya (VK) properties in July 2012 provided Highland with an opportunity to expand its production profile through additional resource ounces (0.63 Moz) with initial production targeted for 2015. Preliminary studies indicate a 300,000 to 400,000 tonnes per annum open pit operation allied to a conventional gravity and cyanidation process plant to produce 50,000 to 60,000 ounces of gold per annum.

Geochemical work has been expedited on the adjacent 996 km² VK licence during 2012 in order to delineate additional drilling and trenching targets for the 2013 field season and beyond. Preliminary estimates indicate the potential for significant organic resource growth.

EXPLORATION

Unkurtash - Kyrgyzstan

The Unkurtash project hosts four distinct prospects, three of which, Unkurtash, Sarytube and Karatube have been the focus of the Company's extensive exploration activities.

In H1 2012 the independent consultancy IMC Montan completed a JORC compliant resource audit at the Sarytube prospect which increased the previously reported resources of the Unkurtash project by 1.1 Moz to a total of 3.0 Moz (94% Measured and Indicated).

In July 2012 mining permits were received for the Unkurtash and Karatube prospects which provide the rights for the exploitation of subsoil gold reserves and the timelines for project research, engineering design and the commencement of construction in respect of a planned large scale open pit operation.

The Company's 2012 exploration programme is focused on the deeper level of the Unkurtash prospect up to a depth of 450 metres with the objective of substantially enlarging the currently defined mineral resource. In H1 2012 a total of 850 metres of underground development at the 1,640 metre horizon (above sea level) was completed as planned. More than 11,000 metres of deep drilling are budgeted for completion by the year end.

An independent JORC compliant resource update is planned during H2 2012 in addition to preparatory work towards the registration of additional reserves with the Kyrgyzstan GKZ scheduled for H1 2013.

Lyubov - Zabaikalsky Region, Russia

In Q2 2012 the Company submitted a pre-feasibility study in respect of the Evgraf target, including a reserve calculation, to the Russian Federation's (GKZ) State Committee on Reserves.

Accordingly, at the Evgraf target alone, a C1+C2 category reserve of approximately 0.5 Moz of gold contained in 8.35 million tonnes of ore at an average grade of 1.88 g/t is to be considered for reserve registration, approval of which is anticipated in Q4 2012.

A JORC compliant independent resource audit which commenced in Q1 2012 is expected to be completed in H2 2012. The Company has initiated engineering studies in relation to conventional processing options, including heap leaching.

Blagodatnoye - Khabarovsk region, Russia

Results from the Company's 2011 drilling campaign at Blagodatnoye, located close to the Belaya Gora mine, indicated that this property has the potential to host a significant near surface resource grading 1.5 - 2.0 g/t.

The Company allocated 7,300 metres of drilling and 2,500 metres of trenching and additional geochemical and geophysical surveys throughout the Blagodatnoye licence area in respect of 2012 with a view to identifying further resource potential. By the end of H1 2012 more than 2,100 metres of drilling and 1,100 metres of trenching, as well as geochemical sampling over an area of 17.8 km2, had been completed. Final analytical results are expected in Q4 2012.

Mnogovershinnoye - Khabarovsk region, Russia

Throughout H2 2012 the Company will continue its systematic 'near-mine' exploration programme at MNV with the objective of delineating additional resources for future open pit exploitation.

H1 2012 saw the completion of 2,500 metres of drilling at the Quiet target which is part of the two kilometre long Quiet (Tikhoye) - Pebble (Valunistoye) zone hosting an internally estimated 190,000 oz of gold, grading more than 3.0 g/t.

At the Watershed (Vodorazdelnoye) target a trenching programme completed in 2011 returned initial high-grade gold intersects which warrant further drilling to delineate resource potential at depth and along strike. In H1 2012, preparatory earth works were completed at Watershed which will be followed by a staged exploration drilling programme allocating up to 6,000 metres depending on results.

Diamond core drilling activity in respect of underground resource conversion totalled 6,873 metres.

INTERIM FINANCIAL REVIEW

Group revenue recorded a 2.1% increase to US$161.5 million in H1 2012 compared with US$158.1 million in H1 2011. The Group sold 102,036 ounces of gold and gold equivalents compared to 104,911 ounces in H1 2011. MNV's share of sales at 67,692 oz decreased by 18.9% versus the same period last year whereas Novo's gold and gold equivalent sales at 31,942 eq. oz improved by 65% reflecting the increased share (97.5%) in Novo's production. Belaya Gora provided 2,402 oz in gold sales equating to an 18% improvement over the same period last year. The "no hedge" policy allowed the Group to fully participate in stronger gold prices.

The average realised price (net of commission) per ounce of gold sold from MNV and Belaya Gora increased to US$1,641 per oz in H1 2012 (H1 2011: US$1,453 per oz). The average realised price of gold equivalents sold by Novo was US$1,309 per oz in H1 2012 which is 13.4% lower than in H1 2011 (US$1,511 per oz) due to lower spot market prices for silver (12% lower), lead (20% lower) and zinc (16% lower) as against H1 2011. The Group's average realised price of gold and gold equivalents in H1 2012 was US$1,537 per oz compared with US$1,464 per oz in H1 2011.

The Group's cost of sales rose by 42.2% to US$103.5 million in H1 2012 (H1 2011: US$72.7 million). This primarily reflected a 30% increase in operating expenses at MNV due to the increased volume of open pit waste stripping (the actual stripping ratio more than trebled from 5.6 : 1 in H1 2011 to 17.7 : 1 in H1 2012) together with an increase in ore tonnes processed, the indexation of salaries and wages, an increase in third party services in respect of equipment repairs, an 8% rise in operating expenses at Novo, due to the increase in ore tonnes mined and processed, and an increase in sales volume at Belaya Gora.

Group total cash costs rose to US$804 per oz in H1 2012 (H1 2011: US$531 per oz). Total cash costs at MNV increased to US$846 per oz (H1 2011: US$514 per oz) primarily due to a substantial increase in waste stripping volumes at the Flank open pit and an increase in ore tonnes processed at lower delivered grades. Total cash costs at Novo increased to US$667 per eq. oz (H1 2011: US$528 per eq. oz) largely reflecting a reduction in the volume of gold equivalents sold. The negative impact of lower silver and base metal prices versus the gold price ratio decreased the volume of gold equivalents by 12.8%. Total cash costs at Novo were also affected by lower ore grades delivered to the plant. Total cash costs at Belaya Gora increased from US$1,244 per oz in H1 2011 to US$1,459 per oz reflecting the allocation of increased fixed costs against gold sales. The Group also incurred higher royalty costs (up 24.6% compared with H1 2011) linked to the increase in the spot gold price.

We expect second half operating expenditures to remain stable or come in below the levels seen during the first half of the year due to a scheduled reduction in open pit stripping ratios and the forecast stable metal production at MNV during H2 2012.

The Group's EBITDA (defined as operating profit excluding depreciation, amortisation, impairment gain/(loss) and inventory provision) decreased by 25.4% in H1 2012 to US$65.7 million compared with US$88.1 million in H1 2011 due to the higher cost of sales. The EBITDA margin (defined as EBITDA divided by total revenue) decreased from 55.7% to 40.7%.

Net finance income increased to US$8.5 million in H1 2012 from US$6.0 million in H1 2011, primarily due to the reassessment of fair value on coupon bonds and shares and higher interest earned on deposits.

The Group recorded a foreign exchange income of US$1.3 million (H1 2011: US$5.4 million) following the settlement of foreign currency transactions and the translation of monetary assets and liabilities denominated in currencies such as Russian Roubles and Pounds Sterling into US Dollars.

Income tax amounted to US$12.3 million for the first half of 2012 compared with US$14.8 million in the corresponding period of 2011. The tax charge consists of US$11.5 million in respect of current tax expenses (MNV: US$11.4 million and Stanmix Investments: US$0.1 million) and US$0.8 million in respect of deferred tax. The effective tax rate increased from 17.4% in H1 2011 to 21.4% in H1 2012 which is similar to the Russian income tax rate of 20%.

Net profit after tax decreased to US$45.0 million (H1 2011: US$70.3 million) and resulted in earnings per share of US$0.139 (H1 2011: US$0.216)

The Group's cash inflow from operating activities of US$63.3 million in H1 2012 was US$14.5 million lower than the US$77.8 million generated in H1 2011. The decline in cash inflow reflected the higher cost of sales.

During the reporting period the Group's capital expenditure totalled US$47.1 million compared with US$31.4 million in the corresponding period of 2011. This comprised US$9.8 million at MNV, US$25.4 million at Belaya Gora, US$3.6 million at Novo, US$8.2 million in respect of development and exploration projects and US$0.1 million in relation to other entities within the Group. Capital expenditure was entirely funded through operating inflow and the Company's existing cash balances.

The net cash position of the Group as at 30 June 2012 was US$150.8 million versus US$126.7 million as at 31 December 2011. The net cash of the Group is defined as cash at bank, deposits and bonds decreased by any bank borrowings. The Group is currently free of debt.

DIVIDEND

The Board has approved an interim special dividend of £0.048 per share. This is expected to result in a dividend payment of £15.5 million. The interim dividend will be paid on Friday 19 October 2012 to shareholders on the register at the close of business on Friday 28 September 2012 (the record date). The ex-dividend date will be Wednesday 26 September 2012. The Board's policy is to pay special dividends as regularly as possible; the level of such dividends will depend on the gold price, cash flows and capital requirements.

POST HALF YEAR EVENTS

On 9 July 2012, the Group acquired a 100% share in Klen from Aristus Holdings Limited in order to enhance the proven and probable reserves base and increase gold and gold equivalents production. The total consideration amounted to US$69 million less any assigned loans.

HEALTH, SAFETY & ENVIRONMENT

Safety operations, designed to achieve improvement across all of the Company's sites, focused on safety awareness and training courses. As a result of this, the lost time incident (LTI) rate (based on the number of lost time incidents in respect of every 200,000 man hours worked) halved from 0.84 during H1 2011 to 0.42 for H1 2012. A total of 740 employees attended introductory (one day) safety training classes, 317 employees completed courses in safe working methods, labour protection and industrial safety training (3/5 days) while 267 employees participated in industrial safety certification through RosTechNadzor. In addition, 70 drivers received vehicle safety and driving training with particular emphasis on vehicular incident mitigation.

Notwithstanding these Group wide improvements in health and safety measures it was with deep regret that, earlier this year, we had to announce the occurrence of two employee fatalities in April and May 2012 respectively. The first incident, at MNV, was caused by a collapse of ground, while the second incident, at Novo, was the result of an underground tram accident.

Environmental compliance remained in good standing with all the relevant regulatory authorities. Environmental safety training was provided to 59 employees at MNV, Novo, Belaya Gora and Taseevskoye. Of these trainees, 10 employees at the Novo mine completed their environmental safety skills improvement courses at Trans Baikal State University. The Company has also progressed its programme of Environmental Management Systems (EMS) with the assistance of an independent specialist in ISO 14001 standards. As a result, preliminary audits were carried out at site during the first half of 2012. This programme will continue until the completion of certification at the year end.

In accordance with Russian Federation legal requirements, 35 hazard production items across all Company enterprises were insured, against the risks of causing harm to third parties in the event of an incident.

NEW APPOINTMENTS

In May 2012 Eugene Shvidler, a Director of Highland Gold Mining since January 2008, was appointed Non-Executive Chairman of the Company. Duncan Baxter, the former Non-Executive Chairman, remains on the Board as an independent Non-Executive Director.

In July 2012, Highland announced the appointment of four new Directors to the Board. Valery Oyf, Highland's Chief Executive Officer, Alla Baranovskaya, Highland's Chief Financial Officer, Sergey Mineev, Highland's Head of Exploration & Capital Projects Development and Andrey Solovyov, Highland's Head of Human Resources & Administration, were all appointed to the Board as Executive Directors.

Eugene Shvidler

Non-Executive Chairman

18 September 2012

Interim consolidated statement of comprehensive income

for the six months ended 30 June 2012

The Group does not have any items of other comprehensive income or any discontinued operations.

Interim consolidated statement of financial position

as at 30 June 2012

Interim consolidated statement of changes in equity

for the six months ended 30 June 2012

* The compulsory share purchase from non-controlling shareholders in accordance with the Russian legislation resulted in the Company's stake in Novo increasing from 96.6% at 31 December 2011 to 97.5% at 30 June 2012.

for the six months ended 30 June 2011

Interim consolidated cash flow statement

for the six months ended 30 June 2012

1. Corporate information

These interim condensed consolidated financial statements of Highland Gold Mining Limited for the six months ended 30 June 2012 were authorised for issue in accordance with a resolution of the Directors on 18 September 2012.

Highland Gold Mining Limited is a public company incorporated and domiciled in Jersey. Its ordinary shares are traded on the Alternative Investment Market ("AIM").

The principal activity is building a portfolio of gold mining operations within the Russian Federation and Kyrgyzstan.

2. Basis of preparation and accounting policies

Basis of preparation

The interim condensed consolidated financial statements for the six months ended 30 June 2012 have been prepared in accordance with IAS 34 'Interim Financial Reporting'. The annual financial statements of the Group for the year ended 31 December 2011 were prepared in accordance with International Financial Reporting Standards as issued by the European Union.

The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements as at 31 December 2011.

Having made relevant enquiries, the Directors believe that it is appropriate to adopt the going concern basis in the preparation of the interim condensed consolidated financial statements in view of the fact that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future.

The impact of seasonality or cyclicality on operations is not considered significant to the interim condensed consolidated financial statements.

Changes in accounting policies and presentation rules

The accounting policies adopted in the preparation of the consolidated interim financial statements are consistent with those applied in the preparation of the consolidated financial statements for the year ended 31 December 2011. 

The Group has not early adopted any standard, interpretation or amendment that was issued but is not yet effective.

Reclassifications

Some reclassifications were made in the statement of financial position items as at 30 June 2011 to keep the presentation form consistent with 2012 presentation. As a result of the reclassifications related to non-current VAT, other non-current assets were increased by US$5.7 million and trade and other receivables were decreased by US$5.7 million.

3. Business combinations

Business combination subsequent to the six months ended 30 June 2012

On 9 July 2012, the Group acquired a 100% share in LLC Klen from Aristus Holdings Limited in order to improve the proven and probable reserves base and to increase the gold and gold equivalents production.

This transaction is classified as a related party transaction: LLC Klen was indirectly controlled by the substantial shareholder in the Company. The Directors of the Company, having received approval from the Company's nominated adviser, Numis Securities Limited, consider that the terms of the said transaction are fair and reasonable insofar as the shareholders of the Company are concerned.

The Group determined that this transaction represents a business combination.

From total consideration the amount allocated to loan was US$15,377 thousand based on the fair value of the loan. The payment was made on 16 July 2012.

Assets acquired and liabilities assumed

The preliminary estimated fair value of the identifiable assets and liabilities of Klen as at the date of acquisition were as follows:

The goodwill balance is the result of the requirement to recognise a deferred tax liability calculated as the difference between the tax effect of the fair value of the assets and liabilities acquired and their tax bases.

4. Segment information

For management purposes, the Group is organized into business units based on the nature of their activities, and has four reportable operating segments as follows:

·; Gold production;

·; Polymetallic concentrate production;

·; Development and exploration; and

·; Other.

Management monitors the gold production segment, namely Mnogovershinnoye (MNV) and Belaya Gora (BG), for the purpose of making decisions about resource allocation and evaluating the effectiveness of its activity.

The polymetallic concentrate production segment, namely Novoshirokinskoye (Novo), is analysed by management separately due to the fact that the nature of its activities differs from the gold production process. Novo profit and loss was accounted using the proportionate (48.3%) method during the first half of 2011 when it was classified as a joint venture. Following the stepped acquisition in December 2011, the results and balances of Novo have been fully consolidated.

The development and exploration segment contains the entities which hold the licenses being in the development and exploration stage.

The "other" segment includes head office, management company, trade house and other companies which have been aggregated to form the reportable segment.

Segment performance is evaluated based on EBITDA (defined as operating profit/(loss) excluding depreciation and amortisation, impairment gain/(loss) and movement in WIP provision). The development and exploration segment is evaluated based on the life of mine models in connection with the capital expenditure spent during the reporting period.

The following tables present revenue, EBITDA and asset information for the Group's operating segments. The segment information is reconciled to the Group's profit for the period.

The Highland Gold financing (including finance costs and finance income), income taxes and foreign exchange gains/ (losses) are managed on a group basis and are not allocated to operating segments.

Revenue from several customers for the first half of 2012 was greater than 10% of total revenues. The gold and silver revenue was received from sales to VTB Bank (US$66.2 million), Gazprombank (US$48.9 million) and MDM Bank (US$1.1 million). The concentrate revenue was received from sales to Kazzinc (US$41.8 million).

*Capital expenditure is the sum of exploration and evaluation assets, mine properties and property, plant and equipment.

**Current assets include corporate assets not directly attributable to operating segments. Such unallocated assets include corporate cash and cash equivalents of US$109.9 million (2011: US$90.6 million), investments of US$40.9 million (2011: US$36.1 million), inventories of US$49.1 million (2011: US$61.8 million), trade and other receivables of US$34.8 million (2011: US$28.6 million), and other assets of US$9.4 million (2011: US$8.9 million).

*** Cash capital expenditure include additions to property, plant and equipment of US$29.7 million (H1 2011: US$26.3 million) and prepayments given for property, plant and equipment of US$17.4 million (H1 2011: US$5.1 million).

*Capital expenditure is the sum of exploration and evaluation assets, mine properties and property, plant and equipment.

All revenue and assets for both 2012 and 2011 are located in the Commonwealth of Independent States.

5. Finance income and costs

5.1 Finance income

5.2 Finance costs

6. Income tax

The major components of income tax expense in the interim consolidated statement of comprehensive income are:

There are no tax amounts recognised directly in equity during the first half of 2012 (H1 2011: Nil).

7. Property, plant and equipment

Reconciliation of fixed assets on period-by-period basis for the period ending 30 June 2012

* In the first half of 2012 US$0.6 million (H1 2011: US$0.7 million) write-off relates to retirement of old inefficient equipment.

** During the first half of 2012 there was a change in the rehabilitation estimate. The net present value of the increase in the cost estimate is US$0.2 million (decrease of US$0.3 million at MNV, decrease of US$0.1 million at Novo and increase of US$0.6 million at BG) which was booked as an increase to mining assets and non-current provisions.

Reconciliation of fixed assets on period-by-period basis for the period ending 30 June 2011