Name: Novoshirokinskoye (Novo) mine.

Location: The Novo deposit is located in the Chita region of Eastern Siberia, in the Russian Federation.

Controlling Company: Highland Gold Mining.

Brief History: Before Highland Gold acquired the Novo mine in 2002, the mine had been researched and extensively developed to produce primarily zinc and lead, with gold and silver as by-products. In early 2003, the company commissioned a feasibility study to review the orebody and the existing plant to prioritise gold production.

At the end of 2005, Highland Gold submitted a report on recalculated Novo resources to the State Committee for Reserves for evaluation. The evaluation of the mine pointed out several defects and the report was returned for improvements.

A review of the strategic options available at Novo showed that the project would be viable, if the gold-rich lead flotation concentrates, which would be produced by the mine on the international metals market, could be sold. Having studied these options, Highland Gold decided to find a partner to jointly develop this polymetallic asset. This resulted in a joint venture agreement between Highland Gold and Kazzinc, involving the sale of a 48.3% interest in the development project at Novo. The deal was completed in December 2006. The interest sold represented 50% of Highland Gold’s current holding of 96.6%.

Kazzinc’s 48.3% share in the open joint stock company, Novo-Shirokinskiy Rudnik, the owner of Novo mine, was acquired by Highland Gold in December 2011. Highland Gold now owns 97.12% of the company.

Brief Description: Novo has been developed as a long-hole open stoping operation, down to the first three levels. There is reportedly an estimated nine years of ore available at 450 000 t/y from these three levels.

Geology/Mineralisation: The Novo deposit occurs in a 20-m- to 300-m-thick fault zone hosted by a sequence of Upper Jurassic volcanic and sedimentary rocks. The mineralisation is confined to the central portion of the zone, with a strike length of up to 2.2 km and to a maximum depth of 700 m. Seventeen en-échelon orebodies have been delineated, of which the Main, V and VII orebodies are the largest, constituting 91% of the resource.

The orebodies are veinlike in nature, with pinch and swell structures and numerous splays. Towards the centre of the structure, these often merge, forming thicker zones of mineralisation. The orebodies strike to the north-west and dip at between 30° and 82° to the south-west.

The average depth of oxidation is 18 m from the surface, with only weakly oxidised ore above this level. Novo is also located in a zone of permafrost, which varies in depth between 38 m and 123 m.

The ore is mainly lead/zinc sulphide mineralisation, with associated gold and silver in host rocks predominantly containing quartz, carbonates and sericites. Additional accessory minerals are pyrite, chalcopyrite and various iron and copper oxides. The mineralisation is fairly homogenous throughout the deposit, with little variation being displayed.

Lead, in the form of galena, is the major mineral in the range 4% to 5%, with sphaleritic zinc comprising 1.5% to 2%. Average gold and silver grades are estimated at 4 g/t and 90 g/t respectively.

Reserves: Total proven and probable mineral reserves as at December 31, 2013, were estimated at 5.44-million tonnes grading 8.3 g/t gold.

Resources: Total measured, indicated and inferred mineral resources as at December 31, 2013, were estimated at 7.39-million tonnes grading 7.6 g/t gold.

Products: Gold.

Mining Method: Underground long-hole open stoping.

Major Infrastructure and Equipment: The underground mine is fully developed to the extent that some of the stopes have been drilled and blasted, and broken ore is present in the draw points. The haulages are fully equipped with compressed air mains, water pipes and pumping mains.

The man-and-materials shaft is concrete-lined and extends to 250 m below the collar. The shaft stations are well equipped with double-track entries and overhead lifting facilities. The rock-hoisting shaft is 200 m deep and is comprehensively equipped with skips and a flask-loading system. The mine has a fully developed ore- and waste-handling system, with separate passes for ore and waste on each level.

The winders for both shafts are modern units and are in good operating condition.

Prospects: Plant adjustment, to facilitate increased throughput and the development of deeper elevation from the Novo mine, will be conducted in 2014.

Contact Person: Investor relations.

Contact Details:
Highland Gold,
tel +44 1534 814 202,
fax +44 1534 814 815,
email info@highlandgold.com, and
http://www.highlandgold.com.