Name: Mnogovershinnoe (MNV) mine.

Location: The MNV mine is located in the Nikolaevsk area of the Khabarovsk territory, in the far-east of the Russian Federation.

Controlling Company: Highland Gold owns 100% of the MNV joint-stock company, which has a licence valid until December 2018, for the extraction of gold ore .

Brief History: The MNV deposit was discovered in 1959. Detailed exploration started in 1963 and preliminary construction started in 1979. The minerals processing facilities were built between 1990 and 1993, with preliminary production starting in 1991. The mine operated until 1997, when the mine was closed owing to poor technical and financial performance and a lack of funds for reconstruction and development. Following a change of ownership and the introduction of a new management team, gold mining and gold extraction restarted in 1999. Subsequent capital investment in mining and metallurgical equipment has resulted in the technical performance of the mine significantly improving over recent years.

Brief Description: MNV is an openpit and underground operation. The company produced 145 259 oz of gold in 2013.

Geology/Mineralisation: The MNV gold deposit is located at the junction of the Amgun synclinorium and the east Sikhote-Alin volcanic belt. The area is characterised by several subvertical faults, which control the location and orientation of the volcanics, intrusives, gold and silver mineralisation. The mineralisation spans about 120 km2.

Mineralisation is controlled by major north-easterly-trending faults. Post-mineral block faulting of north-west orientation caused the segmentation of the mineralisation zones along strike.

The orebodies at MNV are located within the Main and Intermediate zones. The Main zone is confined to a steeply dipping fault and marks a central quartz vein system surrounded by a zone of veinlet-impregnated silicification. The Intermediate zone is similarly confined to a steeply dipping fault and consists of a thick quartz vein surrounded by a halo of quartz veinlets.

The bulk (92% to 96%) of the gold and silver (80% to 90%) occurs in a free form, amenable to standard cyanidation leaching.

Reserves: Total proven and probable mineral reserves as at December 31, 2013, were estimated at 2.49-million tonnes, grading 4.69 g/t.

Resources: Total measured, indicated and inferred mineral resources as at December 31, 2013, were estimated at 16.33-million tonnes, grading 3.4 g/t.

Products: Gold.

Mining Method: Openpit and underground.

Major Infrastructure and Equipment: Trucks deliver preblended ore to the plant feed hopper, and they either directly tip or stockpile for subsequent feeding by the front-end loader. An apron feeder withdraws the ore from the base of the bin. The ore is then fed through a jaw crusher and the crushed ore is conveyed to a series of 14 feed hoppers.

The milling circuit comprises two 7 m × 2.3 m semiautogenous (SAG) mills, each fitted with a 1 600 kW motor and three 3.6 m × 4.0 m ball mills, each fitted with a 1 000 kW motor.

SAG discharge pulp passes into a spiral classifier. The spiral overflow is pumped through a series of hydrocyclones generating a final product of 85% minus 74µ. Some of the flow is divided into several centrifugal gravity concentrator units that pull a percentage of gravity gold, which is then processed by an in-line leach reactor. The cyclone overflow is pumped to the cyanide leach circuit. Following pH adjustment, sodium cyanide is added at a rate of 0.8 kg/t to 1 kg/t of ore and the pulp is then leached for about ten hours. The pulp then passes through the resin absorption circuit, where the leaching of gold from the ore and absorption onto the resin particles continues for a further 10 to 12 hours.

Loaded resin is periodically removed from the leaching circuit and treated using a desorption and electrowinning system to generate plated cathode gold. This gold is then smelted to produce bullion bars, which are shipped off the site for final refining.

Prospects: An independent Joint Ore Reserves Committee resource audit was carried out at the MNV mine in 2013, confirming a 79% increase in its resources, compared with those stated as at December 31, 2012. This will support the current life-of-mine plan and extend the mining operation to 2017. Management will also work on the conversion of MNV’s resource base into mineable reserves.

Contact Person: Investor relations.

Contact Details:
Highland Gold,
tel +44 1534 814202,
fax: +44 1534 814 815,
email info@highlandgold.com, and
website http://www.highlandgold.com.