Update on MNV Fixed Assets

11.08.2003

The Board of Highland Gold Mining Limited notes the announcement made yesterday by the Government of the Khabarovsk region relating to the privatisation of the freehold of certain immovable fixed assets and other plant and equipment at MNV, the Group's operating mine.

The Board of Highland Gold has reserved its legal rights in respect of the existing lease agreement with the regional government under which all of the assets subject to the privatisation notice are currently leased under a 15 year agreement which expires in 2015. Whilst the Board of Highland Gold can see benefits from ownership of the freehold of the assets in question, in the event that the assets are not acquired by Highland Gold, Highland Gold will continue to lease these assets under the terms of its lease agreement for the duration of the lease in accordance with Russian law. Furthermore, Highland Gold continues to operate the MNV mine under the terms of its long term mining license which is valid until 2018.

The Board intends to participate in the auction of these assets in full compliance with the stipulated privatisation requirements. In evaluating the terms of its participation the Board will act at all times in the best interests of shareholders.
Enquiries:

W.H. Ireland Laurie Beevers / David Youngman +44 (0) 161 832 2174
Brunswick Patrick Handley / Mark Antelme +44 (0) 20 7404 5959