North-Western Flank (NWF) Acquisition

North-Western Flank (NWF) Acquisition

23 July 2014 - Highland Gold Mining Limited ("Highland Gold" or the "Company") announces the acquisition of a licence in respect of the exploration and mining rights for the North-Western Flank (NWF) of the Mnogovershinnoye (MNV) ore body, a 12 km2 property immediately adjacent to the Company's mine operations. The acquisition resulted from an open auction held on 17 July 2014 in the regional capital of Khabarovsk at a bid price of 9,900 million roubles (ca. US$ 284,500). This new licence area includes a large section of the Bear zone which possesses good potential to deliver new resources at MNV. Together with the Western Flank-Chaynoye property acquired in December 2012, the Company now holds exploration and mining rights for the entire MNV ore body.

The Bear zone at NWF is approximately 2.5 km in length with a width of 0.25 km and runs parallel to the Main and Intermediate ore zones, the hosts of MNV's rich ore bodies and the focus of former and current mining activities. Bear is interpreted as a geological analogue to the MNV ore zones and constitutes a subvertically displaced structural block with potential to host gold mineralisation of similar geological style and grade to MNV.

The Bear zone has been partially explored in the past and has reported prognostic resources P1 of 19.8 tonnes of gold (~ 636,655 oz). Previous exploration included trenching and drilling up to 600 m depth which returned several single intersects up to 100 g/t of gold.

It is anticipated that the resource potential at Bear zone will be explored through a combination of surface drilling and underground exploration, utilising the existing underground infrastructure at MNV.

This acquisition sustains the Company's continued focus on its near-mine exploration efforts at MNV, designed to verify and further increase the known near mine mineralised prospects, thereby adding value to and extending the MNV ongoing operations.

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 / reserve matters. Mr. Klemens holds a Ph.D. in Geology from the University of Toronto, has more than 16 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.

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