Barrick Joint Venture - Sovinoye, Malo-Fedorovskoye & Belaya Gora Deposits


In April, 2006, we announced with our final results and in our Annual Report of 31 December, 2005, that Barrick had confirmed its intention to exercise its early participation rights in respect of three deposits, Sovinoye, Malo-Fedorovskoye & Belaya Gora (the "Deposits"), under the Highland / Barrick Participation Agreement entered into in early 2004. Under the Participation Agreement, Barrick is only required to pay for its share of Highland's acquisition costs associated with acquiring the Deposits once a joint venture corporation, or corporations, has been established to own and operate the Deposits.

In an effort to advance the exploration and other aspects of the deposits, Highland and Barrick have entered into agreements whereby Barrick has made an advance payment of US$1,781,607 representing half of the original purchase price paid by Highland for each of the deposits (being US$245,074, US$82,816 and US$623,220 respectively) for its 50% interest in the Deposits and expenditures to date of US$2,612,104 and will also contribute to its share of future Deposit related development expenditures.

As the payments by Barrick have been made in advance of the final ownership structure as required under the Participation Agreement, Highland granted Barrick warrants to acquire unissued shares at an exercise price of US$4.18 per share covering the full value of the payments. The warrants are exercisable at the option of Barrick if the ownership structures are not established by December 31, 2006 in respect of the Sovinoye deposit and April 30, 2007 in respect of the Malo-Fedorovskoye & Belaya Gora deposits (or such later date as Barrick may determine) and Highland has not repaid the full value of the payments in cash. The warrants expire in 2012. Further warrants may be issued to cover further interim expenditures pending completion of the ownership structure. As Barrick's shareholding in Highland is in excess of 10%, Barrick is treated as a related party under the AIM Rules.

The Directors of Highland consider that, having consulted with JPMorgan Cazenove, its Nominated Adviser, the arrangements above with Barrick are fair and reasonable in so far as shareholders in Highland are concerned.

For further information please contact:

Henry Horne, CEO +00 7 495 777 5529 (Moscow)

Duncan Baxter, Corporate Affairs Director +44 (0) 1534 814202 (Jersey)