Kekura and Klen Admitted to Special Economic Zone

03 July 2019

Highland Gold Mining Limited ("Highland Gold" or the "Company", AIM: HGM) today signed an agreement with Russia's Far East Development Corporation officially confirming residency in the Chukotka Advanced Special Economic Zone (ASEZ) for the Company's Kekura and Klen projects.

The Russian government's ASEZ programme is designed to spur new investments in the country's Far East Federal District and covers 19 geographic areas. The Chukotka ASEZ, in which Kekura, Klen, and the Company's Valunisty mine are located, was created earlier this year via the expansion of an existing zone.

As residents in the ASEZ, Kekura and Klen will be subject to zero or reduced income tax, precious metals royalties, land rental, land tax, and property tax over the first five to ten years of operations. They will also pay a unified social tax on payroll of 7.6% versus the statutory rate of 30%, and be entitled to an expedited refund process for value added tax expenses.

Kekura is Highland Gold's premier development project, with construction currently in progress, stripping and preliminary ore mining set to start later this year, and commercial production expected to begin in 2023. The Kekura project has audited JORC-compliant gold reserves of 2.0 million ounces at a grade of 7.0 g/t, and is designed to produce an initial 172,000 ounces of gold a year with forecasted total cash costs (TCC) of US$511 per ounce. The Company estimates that residency in the Chukotka ASEZ adds approximately US$100 million to the project's net present value (NPV).

Chief Executive Office Denis Alexandrov said: "Highland Gold would like to put on record its thanks to the Russian federal government and the Chukotka regional administration for their support of Kekura and Klen, which will bring substantial jobs and tax revenue to Chukotka over the full life of the projects. In addition to the ASEZ, the government is building a power line to Kekura as well as a year-round road not far from this remote site. This level of support confirms Chukotka's beneficial investment climate and Kekura's importance to the development of the region."

Left-to-Right: Yury Trutnev, Deputy Prime Minister and Presidential Representative to the Far East Federal District. Aslan Kanukoev, CEO of the Far East Development Corporation. Sergey Shumilov, Highland Gold Deputy CEO and Managing Director for Chukotka. Roman Kopin, Governor of Chukotka.


Highland Gold Mining Ltd.

John Mann, Head of Communications

+ 7 495 424 95 21

Duncan Baxter, Non-Executive Director

+ 44 (0) 1534 814 202

Numis Securities Limited

(Nominated Adviser and Joint Broker)

John Prior, James Black, Paul Gillam

+44 (0) 207 260 1000

BMO Capital Markets Limited

(Joint Broker)

Jeffrey Couch, Tom Rider, Pascal Lussier Duquette

+44 (0) 207 236 1010

Peat & Co

(Joint Broker)

Charlie Peat

+44 (0) 207 104 2334