Highland Gold Increases Resource Base

OREANDA-NEWS. January 26, 2012. Highland Gold Mining Limited ("Highland Gold", or the "Company") is pleased to announce results from an initial JORC compliant resource audit carried out at the Company's Unkurtash project by the independent consultancy IMC Montan in November and December 2011. The audit results support the Company's previously GKZ-registered C1+C2 reserves and increase the Company's total JORC compliant mineral resource base as stated in the Company's Annual Report & Accounts 2010 by 23%.

The Unkurtash project includes three distinct prospects: the Unkurtash, Sarytube and Karatube located within the Company's two licenses Unkurtash-Andagul (12 km2) and Kassan (51 km2). The combined mineralised zone measures approximately 4,000 metres on strike, ranges from 250-500 metres in width and has a potential vertical extent of at least 350 metres. Intrusion-hosted stockwork type gold mineralisation characterises Unkurtash and Sarytube, while gold at Karatube is associated with skarn-type mineralisation. Previous test work has indicated favourable metallurgy and gold recovery levels via conventional processing methods.

(Resource calculation based on a minimum grade of 0.8 g/t per cell in block model)

For the Unkurtash prospect the current resource audit extends to a depth of approximately 250 metres from surface and does not include exploration results obtained in 2011 from deep drilling up to a depth of 450 metres from surface as well as results from ongoing systematic underground exploration at the 1640 metre horizon (above sea level). Results from these deeper levels have the potential to substantially enlarge the currently defined resource base and will be included in a JORC compliant resource update planned for H2 2012.

A JORC compliant resource audit for the Sarytube prospect (the third at the Unkurtash project) is underway and planned to be completed in Q1 2012. Based on the results of 29,000 metres of drilling completed in 2011 expected mineral resources for Sarytube are approximately 1 Moz at an average grade of approximately 1.8 g/t.

In 2011 the Company completed a substantial exploration programme at the project including a total of more than 53,000 metres of drilling and 1,800 metres of exploration underground development. While the Company has initiated engineering studies towards development of a large open-pit operation additional exploration drilling and underground development is planned to continue throughout 2012 with the objective of substantially enlarging the currently defined mineral resources at Unkurtash.

IMC Montan (International Economic and Energy Consulting) consultants Mr. Neil Scott (Member of the Institution of Materials, Minerals and Mining; Bachelor of Science; Certified Engineer) and Mr. John Bacharach (Fellow of the Institution of Materials, Minerals and Mining; Associate of the Royal School of Mines; Bachelor of Science; Certified Engineer) have provided and verified information contained in this release with respect to drilling and resource / reserves. They are qualified as Competent Persons as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.