Directorate Change & Trading Update


Highland Gold, the AIM quoted Russian gold producer, today announces new Board appointments and production figures for the year ending 31 December 2004 for its two gold producing deposits, MNV and Darasun. In addition the company is also providing an update on recent progress at all five of its deposits.Highlights Board Appointments

  • Ivan Koulakov, former Managing Director, appointed Deputy Chairman with executive responsibility for corporate development
  • Dmitry Korobov, former Commercial Director, appointed Managing Director
  • David Fish appointed Non Executive Director and Head of the Audit Committee
  • Christopher Palmer-Tomkinson appointed Senior Independent Director

Trading Update

Mnogovershinnoye (MNV)

  • 195,026 oz of gold produced; throughput increased by 4.06% to 927,000 tonnes
  • Sixth consecutive year of increased production


  • 4,870 oz of gold produced
  • Full production expected in H2 2005. Planned production for 2005 of over 70,000 oz


  • Increased reserves and resources estimates, with consequent new mining plan
  • Comprehensive program underway to bring deposit into production of concentrate in H2 2005
  • A long-term licence has been obtained


  • Feasibility study underway, completion of technical feasibility study expected in Q1 2005
  • New upscaled mining plan based on 1 million tones of ore adopted


  • 20 year mining licence awarded November 2004
  • Barrick has confirmed its intention to exercise its 50% right to the Taseevskoye deposit and discussions are now in progress with a view to completing the Joint Venture documentation
  • New feasibility study underway

Commenting on today's announcement, James Cross, Chairman, Highland Gold, said:“I’m delighted to announce the appointment of Ivan Koulakov as Deputy Chairman and Dmitry Korobov as Managing Director. As the former Commercial Director, Dmitry Korobov has the experience to oversee the development of our five world class assets.

“This appointment allows Ivan Koulakov to focus on corporate development and identify new opportunities in Russia and the FSU. “I am also delighted to welcome David Fish to the Board. David has spent his career in finance and mining and we look forward to his contribution.”

Commenting on today's trading update, Dmitry Korobov, Managing Director, said:“Highland Gold made further positive progress in 2004, and, with two producing mines and a further three deposits at different stages of development, remains focused on realising the significant gold producing potential. “In 2005 we expect to continue and complete working on a number of important future-oriented projects such as the Mayskoye and Taseevskoye reserves recalculation to JORC standards and the Mayskoye deposit full feasibility study. We also look forward to the start of mining and production of concentrate at our polymetallic deposit Novoshirokinskoye in H2 2005”.

A conference call for analyst and investors will take place at 3.00pm (UK) on Tuesday 2 February. Please dial telephone number: +44 (0) 1452 561 263 to access this facility.

Enquiries: +44 (0) 20 7404 5959
Highland Gold

James Cross, Chairman


Dmitry Korobov, Managing Director


Dmitry Yakushkin, Director of Communications


Mark Antelme
Pavla Kazbundová

Board Appointments Highland Gold today announces the appointment of Dmitry Korobov as Managing Director. Mr Korobov was previously Commercial Director of Highland Gold, responsible for the running of RDM, the company which manages the Group's Russian operations in Moscow. Ivan Koulakov, former Managing Director of Highland Gold is today appointed Deputy Chairman and his responsibilities will centre on corporate development, which remains the primary focus of our business. Highland Gold also announces the appointment of David Fish, 58, as a Non Executive Director. Mr Fish, a Chartered accountant, was a Partner at Peat Marwick Mitchell & Co before joining Anglo American Corporation of South Africa Ltd. He will also take on the role of Chairman of the Audit Committee. There are no details that are required to be disclosed under schedule 2 paragraph F (sections III-VIII) of the AIM rules. The Board has appointed Christopher Palmer-Tomkinson as Senior Independent Director.Trading update Mnogovershinnoye (MNV) Gold production during 2004 at MNV, the core component of Highland Gold, has increased to 195,026 oz (6,066 tonnes), which is 0.53% up on the previous year. Ore production was 803,049 tonnes and, taking into account ore stockpiled at MNV's mill, the volume of ore processed by MNV totalled 927,369 tonnes, which represents a 4.06% increase over the previous year. Average recovery at the mill was 92.18%, an increase of 0.18% compared to 2003.

Ore mined, tonnes
From underground
From open pit
Stockpiled ore, tonnes
Ore processed, tonnes
Average Au grade, g/t
For ore mined from underground
For ore mined from the pit
Gold production, Troy oz./tonne
Recovery, %

Development works at Severnoye ore body were started in 2003 and carried out during 2004. Ore production started in January 2005. Severnoye ore body contains 4 million tonnes of reserves, being one of the sources for further mining activities at Mnogovershinnoye.Darasun (including Talatui and Teremki)

Ore produced from underground, tonnes 96,344
Average grade, g/t


Ore processed, tonnes


Average grade of Au, g/t


Gold produced, Troy oz/kg 4,870/151.5
Recovery, % 80.20

In autumn 2004 representatives from Highland Gold, Siemens and Tyazhmash, a Russian mill equipment supplier, analysed technical start-up problems at the Darasun mill. This group pinned down the factors underlying the start-up delay and the fault is now being rectified. Highland Gold now expects the Darasun mill to achieve full capacity in H2 2005. 96,344 tonnes of ore were mined at Darasun in 2004. Although working at a reduced capacity in H2 2004, the Darasun mill processed 31,909 tonnes of ore. By the year end 4,870 oz of gold (151.5 kg) was recovered. Works at the Darasun plant are stable and 17,000 tonnes of ore were processed in January 2005. We expect to continue production at approximately 20,000 tonnes a month before achieving full capacity later in 2005. A long-term licence for the Talatui deposit has been obtained and an internal feasibility study has been prepared. Ore production at Talatui, will start in February 2005, with plans to produce approximately 150,000 tonnes during 2005. The ore from Talatui will be processed at the Darasun plant. Novoshirokinskoye The Company is introducing a modern technology based on the Kivcet Flash Smelter. This technology is highly efficient and should provide much better recovery rates for gold, lead and silver. In 2004 the Company completed the re-contouring of the deposit based on gold equivalent cutoff grades between 0.5 - 5.0 g/t and the findings of this work have been sent to GKZ for their review and approval. Using a 3 g/t gold equivalent cutoff grade, the geological resource has increased to 3.156 million gold equivalent oz, (98,2 tonnes), an increase of 68% from the comparable 2002 figure. As a result of optimizing the mine plan, Highland Gold increased scheduled annual production to 115,000 oz of gold equivalent. In September 2004 Highland Gold obtained a 20 year licence for developing the Novoshirokinskoye deposit, which comprises different metals. The company has increased its share in the share capital of Novoshirokinsky Rudnik open joint stock company from 87.35% to 96.51%. The finalisation of the feasibility study has been ongoing and good progress has been made with the construction of primary metallurgical facilities. The mining plan anticipates production of concentrate starting in H2 2005, the launching of the flash smelter in 2006 and a projected milling rate of 450,000 tonnes annually in 2007. Mayskoye Highland Gold has adopted a new mining plan for Mayskoye based on 1m tonnes of ore throughput and production of more than 260,000 oz of gold per annum. This compares to the previous base model of throughput of 550,000 tonnes of ore and 180,000 oz of production. Full production capacity of 1 million tonnes of ore is expected in 2009. Bioleaching tests at the Mayskoye deposit produced positive results. According to estimates by TSNIGRI, the rate of recovery amounts to 95.7%. Estimates from SGS Lakefield Research suggest the rate of recovery is 92.9%. Work on the re-estimation of reserves to JORC standards continues; the Mayskoye technical feasibility study is expected to be completed in Q1 2005. Camp construction continues and communication and power supply systems for the construction field are in the final stage of installation. Taseevskoye In September 2004, following an open auction, the Company was awarded the right to develop the Taseevskoye deposit. In November 2004, the Company obtained a twenty year licence for gold and silver mining from the Ministry of Natural Resources. The cost of the licence was 742.35 million Rbl. (US$26.5 million), which was paid in full in December 2004. In January 2004, Highland Gold and Barrick Gold exchanged reciprocal participation rights on certain new acquisitions, which includes Highland Gold's acquisition of the Taseevskoye licence. Barrick has confirmed its intention to exercise its 50% right to the Taseevskoye deposit and discussions are now in progress with a view to completing the Joint Venture documentation. Highland Gold's immediate plans for Taseevskoye include re-estimating the resources and financial parameters in accordance with current economic conditions. Highland Gold has engaged Snowden Mining Industry Consulting (Vancouver), a company specialising in ore reserve definition, to complete the resource re-estimation to JORC standards and to design a 3D block model. On completion of this work, which is expected during the first half of 2005, Highland Gold plans to prepare a new, detailed feasibility study. Financial news In 2004, Highland Gold sold 197 306 oz of gold, the gold sales revenues of the Group totalled US$80.1m. In December 2004, the Company placed 27.4 million ordinary shares at 190 pence per share to raise US$100 million to pay for the Taseevskoye licence, to finance capital expenditure at Darasun, Novoshirokinskoye and Mayskoye and to refinance some of the Group's existing banking facilities. Highland Gold arranged a syndicated 3.5 year US$80 million loan facility with assistance of mandated Lead Arranger Commerzbank Aktiengesellschaft in order to extend the maturity profile of its banking debt. The facility agreement was signed on the 13 December 2004, the first drawdown took place on 30 December 2004. The next drawdown is planned for Q1 2005. Furthermore this facility has significantly strengthened Highland Gold's banking relationship with the international banking community. Note to editors: Dmitry Korobov Dmitry Korobov, 33, graduated as a Mechanical Engineer from the Moscow State Technical University (Bauman). He became deputy general director of ZAO Oil Finance in 1997 and then a director of ZAO MNV in 1998. Since that time he has been instrumental in the development of ZAO MNV and, prior to his appointment as Managing Director was General Director of RDM, the company which manages the group's Russian operations in Moscow. David Fish David GK Fish, 58, graduated from the University of Witwatersrand. He started his professional career as a chartered accountant in 1969 at Peat Marwick Mitchell & Co, which became KPMG. He was appointed a partner in 1980 and was Chairman of the Banking and Finance practice. In 1988 Mr. Fish joined Anglo American Corporation of South Africa Ltd as the Finance Manager in the Chairman's office. Whilst at Anglo American Mr. Fish was involved on the finance, legal and commercial side of various South African projects from early exploration, through feasibility, construction and final commissioning. Since 2002 he has been a significant investor and Financial Officer in Mwana Africa Holdings.