Trading Statement

RNS Number:3141O
Highland Gold Mining Limited
05 August 2003


                            HIGHLAND GOLD MINING LTD


Embargoed till 0700 on 05/08/03
                                                                   5 August 2003

                                 Trading Update


The Board of Highland Gold Mining Limited today issues the following trading
update ahead of the Company's interim results for the six month period ended 30
June 2003 which the Board expects to announce in mid-September 2003.

Mnogovershinnoe

During the period ended 30 June 2003, the Company's main operating subsidiary
ZAO Mnogovershinnoe ("MNV") milled a total of 427,000 tonnes of ore, an increase
of 9.8% against the same period in 2002, at an average recovered grade of 6.6g/t
(7.3g/t in H1 2002). The lower grade reflects the Company's planned transition
of its open pit mining operation to the Upper Ore Body and the grade is expected
to increase in the second half of 2003. Of this, a total of 120,000 tonnes of
ore were mined from MNV's open pit operations and 264,000 tonnes from
underground operations. A further 43,000 tonnes were released from the
stockpile. The average recovery rate of 92.03% during the period represents a
marginal improvement on the recovery rate for the equivalent six month period in
2002 and for the full year to 31 December 2002. MNV produced a total of 90,100
ounces of gold in the period.

Open pit mining operations are now conducted at the Upper Ore Body. This
contains approximately 20% of MNV's total reserves and will be mined over the
next seven years. Underground development work to access the Northern Ore Body,
containing, approximately, a further 23% of MNV's reserves, has now started.
Mining will commence there in the latter part of 2004 and continue for the
following eight years. Construction has now commenced on the new diesel power
plant at MNV and this is expected to be in operation by the end of the year.
Thereafter, MNV will be self-sufficient in this respect, reducing reliance on
the local grid which is undergoing significant renovation in 2004.

The Company announced on 28 July 2003 that it was in discussions with
representatives of the Khabarovsk regional administration over the acquisition
of certain fixed assets at the Mnogovershinnoe mine. The Board remains confident
that it will be able to acquire these assets which, to date, have been leased
from the Khabarovsk administration. The sale process will be governed by the
legal framework for the privatisation of assets in the Russian Federation and
the Board expects that details of the sale process will be announced by the
Khabarovsk administration in due course and that these details will include the
proposed acquisition price of the assets concerned. In the meantime, the Company
continues to lease these assets under the terms of the original agreement.

Darasun

The Company continues to make good progress with the construction at the Darasun
project and expects that the mine will be commissioned in May 2004. The Company
expects to extract a total of 100,000 tonnes of ore and produce in the region of
40,000 ounces of gold from the Darasun deposit in 2004. It also expects that the
Talatui and Teremky deposits will be brought into production soon thereafter and
the Darasun project as a whole will reach full production at a mining rate of
450,000 tonnes of ore and production of 120,000 ounces of gold in 2005. The
Company estimates that, in full production, total cash costs per ounce at the
Darasun project will be approximately $190 per ounce.

A total of US$9.4 million was spent on capital expenditure at Darasun in the
period, completing the construction of a 35 kilovolt power line from Kholbon to
the Southwestern mine, a substation at the Central mine and the construction and
renovation of various office and administrative buildings. The foundations for
the mill have now been laid and approximately 50% of construction works for the
tailings dump have now been completed. The Company continues to reconstruct and
upgrade existing facilities and expects to spend a further US$13 million on this
in the second half of the year. The Company owns the freehold for all fixed
assets at Darasun.

Novoshirokinskoye

As reported in the final results statement issued on 29 April 2003, the Company
increased its ownership interest in OAO Novoshirokinskoye to 87.08%. The Company
continues to work closely with the Chita Scientific Research Institute on the
project feasibility study and expects to complete this work by the end of the
calendar year. The facilities at Novoshirokinskoye are presently being kept on a
care and maintenance basis and there are no significant capital expenditure
requirements planned at Novoshirokinskoye until the completion of the project
feasibility study.

Peter Daresbury, Executive Chairman, Highland Gold, said:

"The Board is very pleased with the continued progress at the Group's main
operation, MNV, which further increased it's  production volume to 427,000
tonnes of ore in the period, and where new open pit operations have made a
successful transition to the Upper ore body. Our development team has made
tremendous progress with our new projects, particularly at Darasun which is on
track for initial production in May 2004."


Enquiries:

W.H. Ireland       Laurie Beevers  / David Youngman         [phone]
Brunswick          Patrick Handley / Mark Antelme           [phone]


Forward looking statements

Certain statements within this announcement constitute forward looking
statements. Such forward looking statements involve risks and other factors
which may cause the actual results, achievements or performance of the Group to
be materially different from any future results, achievements or performance
expressed or implied by such forward looking statements. Such risks and other
factors include, but are not limited to, general economic and business
conditions, changes in government regulation, currency fluctuations (including
the US$/RUR rate), the gold price, the Group's ability to recover its reserves
or develop new reserves, competition, changes in development plans and other
risks. There can be no assurance that the results and events contemplated by the
forward looking statements contained in this announcement will, in fact, occur.
These forward looking statements are correct or represent honestly held views
only as at the date of this announcement. The Company will not undertake any
obligation to release publicly any revisions to these forward looking statements
to reflect events, circumstances or unanticipated events occurring after the
date of this announcement except as required by law or by any regulatory
authority.




                      This information is provided by RNS
            The company news service from the London Stock Exchange
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