OREANDA-NEWS. September 23, 2011. Highland Gold Mining Limited ("Highland Gold", or the "Company") announces its production and financial results for the half year ended 30 June 2011.

FINANCIAL SUMMARY

IFRS, USD 000 (unless stated)

H1 2011

H1 2010

Production (gold and gold eq. oz)

93,057

85,789

Total Group cash costs (USD /oz)

531

518

Revenue

158,085

100,473

Gross profit

85,355

43,226

EBITDA

88,068

46,687

Net profit after tax

70,296

23,334

Earnings per share (USD )

0.216

0.072

Net cash inflow from operations

77,778

37,449

Capital expenditure

31,388

13,685

Cash, short term deposits and bonds

272,233

216,484

HIGHLIGHTS

Financial:

Net profit after tax tripled year-on-year to USD 70.3 million (H1 2010: USD 23.3 million) and resulted in earnings per share of USD 0.216 (H1 2010: USD 0.072), demonstrating the Company's leverage to higher gold prices

EBITDA was USD 88.1 million (H1 2010: USD 46.7 million), an 88.6% increase due to increased production, gold sales volumes and higher realised prices

Total group cash costs were contained at USD 531/oz (H1 2010: USD 518/oz), despite inflationary cost pressures

Cash margins expanded significantly to USD 922/oz (H1 2010: USD 645/oz) as the Company is unhedged and fully participated in the increase in gold prices

Cash, short term deposits and bonds at June 30, 2011 were USD 272.2 million (H1 2010: USD 216.5 million) due to the generation of strong net cash inflow from operations

An interim dividend payable of 5.0 pence per share (H1 2010: Јnil per share), consisting of an ordinary dividend of 2.5 pence and a special dividend of 2.5 pence per share

Producing Mines:

Mnogovershinnoye ("MNV"), Novoshirokinskoye ("Novo") (48.3% shareholding) and Belaya Gora combined produced 93,057 oz of gold and gold equivalents - an 8.5% increase on H1 2010 production

New JORC compliant audit increased MNV reserves by 190%

Novo continued production ramp up resulting in a 33% increase in processed tonnes compared to H1 2010

The Company remains on track to produce 210,000 - 220,000 oz of gold and gold equivalents in 2011

Development and Exploration Sites:

Belaya Gora select oxide ore processing via MNV continued during the first half of 2011 and pre-construction preparations for a stand-alone processing facility remained on track with the submission of design documentation to Federal authorities

MNV exploration programme continued to target potential resources adjacent to existing operations

1.38 million oz of C1+C2 reserves at Unkurtash approved by the State Committee on Reserves in Kyrgyzstan

Exploration drilling and underground development results at Unkurtash support potential continuity of mineralisation along strike and at depth

Exploration work at Lyubov being compiled for GKZ regulatory submission and commencement of JORC audit by year end 2011

Blagodatnoye and Belaya Gora Flanks exploration properties continue to provide positive drilling intercepts.