Interim Results for the First Half of 2005


Moscow. – Highland Gold Mining Limited (“Highland Gold”, or the “Company”) announces its interim results for the first half ended 30 June 2005. The results reflect operating challenges but good progress has been made since 30 June, and the Company expects to post improved results for the second half of 2005.Summary

    H1 2005   H1 2004;   2004
Financial (US$ millions; UK GAAP)            
Turnover   $28.3   $38.2   $82.1
Cash flow from trading (before w/c)   $0.9   $13.9   $25.6
Net profit/(loss)   ($6.9)   $6.5   $5.0
Earnings/(loss) per share (cents)   (4.6)   5.5   4.2
Capital expenditure and investments   $25.3   $30.5   $107. 8
Gold sold (ounces)   63,333   94,055   195,313
MNV - Cash operating cost ($/ounce)   $318   $184   $187
MNV - Total cash cost ($/ounce)   $349   $212   $215


  • Implemented new procedures and controls at MNV, resulting in improved recoveries of gold production in July and August
  • Resolved start-up issues at Darasun and reached designed milling rates for an extended period in August
  • Completed resource updates on Mayskoye and Taseevskoye to JORC standards
  • Initiated an in-fill drilling program at Mayskoye
  • equity stake
  • Formalised the Taseevskoye Joint Venture, receiving $13.3 million from Barrick Gold for their 50%
  • Placed $49.3 million in new ordinary shares with Barrick Gold at a price of £2.30 per share, increasing their stake to 20%
  • Improved the balance sheet with longer term debts and $78.9 million in cash

Commenting on today’s announcement Dmitry Korobov, Managing Director, said: “Despite a difficult first half of 2005, our strategy remains firmly focused on improving existing operations and advancing our development projects to ensure growth and that we meet high level international standards. Our operating team has made good progress in recovering from a disappointing first half at MNV with August production already achieving a more normalised rate of 16,500 ounces of gold. At Darasun, reaching the designed milling capacity for the first time is also a noteworthy achievement. I am optimistic that with these operating improvements we will be able to deliver a stronger second half of 2005.”

Highland Gold will hold a conference call hosted by Dmitry Korobov, Managing Director and Scott Yelland, Chief Operating Officer to discuss these latest operating and financial results and progress at the Company’s development projects. The call will take place at 1:00 pm UK time (8:00 am EST; 4:00 pm Moscow) on Thursday, 22 September 2005. Participants may access the call toll free from the UK on 0800 694-1562 or from the USA on 1 (866) 245-0744. International callers may use +44 1452 583-043. A replay of the conference will be available for one week at +44 1452 550 000 by using the access code 9382082#. For further information please contact:

Enquiries:   London: +44 (0) 207 851 6400
Moscow: +7 (095) 777 5529
Dmitry Korobov, Managing Director
Dmitry Yakushkin, Director of Communications
Grant Sinitsin, Director of Investor Relations