Updated Resource and Reserve Estimates for MNV

HIGHLAND GOLD MINING LIMITED

05 May 2017

Updated Resource and Reserve Estimates for MNV

Highland Gold Mining Limited ("Highland Gold" or the "Company", AIM: HGM) is pleased to announce the results of updated JORC-compliant Mineral Resource and Ore Reserve estimates for its Mnogovershinnoye (MNV) mine, conducted by Micon International Co Limited.

The Mineral Resource and Ore Reserve estimates take into account data from the extensive near-mine exploration programme conducted at MNV in 2016, which included over 14,000 metres of diamond drilling. The data supports the extension of MNV's life of mine to 2022, as announced earlier this year.

Total Ore Reserves increased to 500,400 oz, compared to 245,618 oz previously estimated to remain from the last reserve audit conducted in 2012 and reported in the Company's 2016 Annual Report.

Mineral Resources of the Mnogovershinnoye Gold Deposit

in accordance with the JORC Code (2012) as of 01 January 2017

Ore Reserves of the Mnogovershinnoye Gold Deposit

in accordance with the guidelines of the JORC Code (2012) as of 01 January 2017

Mineral Resources and Ore Reserves are diluted and based upon a gold price of US$1,200 per ounce. The cut-off grade for open pit mining is 1 g/t Au and for underground mining is 2 g/t.

Mineral Resources were reduced to 631,720 oz, compared to the 1.6 million oz reported in the 2016 Annual Report, as a result of employing a different approach to modelling and a higher cut-off grade. This was done with the goal of optimising resources under both Russian and international standards, and therefore omits resources with grades of lower than 2 g/t for underground mining.

Due to the geological complexity of mineralisation, Micon has exercised further caution by assigning Mineral Resources to the Indicated and Inferred categories, and Ore Reserves to the Probable category.

The Company is carrying out additional surface and underground exploration at several of the ore bodies at MNV in 2017 with a view toward further increase reserves and extending the life of mine beyond 2022. In addition, 4,300 m of drilling is planned at the satellite Bear ore zone to the north this year. This exploration programme has the potential to upgrade the current MNV Mineral Resources and Reserves.

The resource estimate does not include MNV's historic rock waste dumps, which the Company has been evaluating separately on an ongoing basis. Since the beginning of 2016, the Company has taken about 400k tonnes of ore from the rock dumps, with an average grade of ~1.1 g/t, for processing at the MNV mill.

Information contained in this release has been taken from the "Independent Expert's Report on the Resources and Reserves of the Mnogovershinnoye Gold Deposit, Khabarovsk Region, Russian Federation", prepared in compliance to the JORC Code 2012 by a panel of qualified industry experts of Micon International Co Limited. The report has been signed off by Mr Stanley Bartlett, who has sufficient experience relevant to the style of mineralisation and type of deposit under consideration to qualify as Competent Persons as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves".

FOR FURTHER INFORMATION PLEASE CONTACT:

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Glossary

JORC - Widely accepted standard for reporting mineral resources and ore reserves established by the Australasian Joint Ore Reserves Committee.

Mineral Resource - concentration or occurrence of solid material of economic interest in or on the Earth's crust in such form, grade or quality and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade or quality, continuity and other geological characteristics of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling.

Inferred Mineral Resource- that part of a Mineral Resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.

Indicated Mineral Resource - that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed.

Measured Mineral Resource- that part of a Mineral Resource for which quantity, grade or quality, densities, shape, and physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity.

Ore Reserve - the economically mineable part of a Measured or Indicated Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A Mineral Reserve includes diluting materials and allowances for losses that may occur when the material is mined.

Probable Ore Reserve - the economically mineable part of an Indicated and, in some circumstances, a Measured Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.

Proven Ore Reserve - is the economically mineable part of a Measured Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction is justified.