AIM: HGM

H1 2019 Results and Project Update

September 2019

Disclaimer

Certain statements within this presentation 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 regulations, 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

presentation will, in fact, occur. These forward-looking statements are correct or represent honestly held views only as at the date of

delivery of this presentation.

The Company will not undertake any obligation to release publicly any revisions to these forward looking statements to reflect

events, circumstances and unanticipated events occurring after the date of this presentation except as required by law or by

regulatory authority.

***

Total cash costs include mine site operating costs such as mining, processing, administration, royalties and production taxes, but are

exclusive of depreciation, depletion and amortisation, capital and exploration costs. Total cash costs are then divided by ounces sold

to arrive at the total cash costs of sales. This data provides additional information and is a non-GAAP measure.

In line with guidance issued by the World Gold Council, the formula used to define all-in sustaining cash costs measure commences

with total cash costs per ounce sold and then adds sustaining capital expenditures, corporate general and administrative costs, mine

site exploration and evaluation costs and environmental rehabilitation costs. This data seeks to represent the total costs of producing

gold from current operations, and therefore it does not include capital expenditures attributable to projects or mine expansions,

exploration and evaluation costs attributable to growth projects, income tax payments, interest costs or dividend payments.

2

Highland Gold Today

3

Russia

Kazakhstan

Four Operating Mines

with 290-300 koz

Annual Production1

2018: 270 koz

Pipeline of High-Grade

Development

Projects

Low-Cost Producer

with AISC of

US$ 778 per oz2

Strong track record of

paying dividends

1. Guidance for 2019 production of gold and gold equivalent

2. Figure for H1 2019

Chukotka

Cluster

Khabarovsk

Cluster

Baikal

Cluster

Kyrgyzstan

Unkurtash

Mongolia

China

Novo

Baley HubTaseevskoye, ZIF-1,

Sredny Golgotay

MNVBelaya Gora

Blagodatnoye

Klen

Kekura

Valunisty

Kayen

Operating Mines

Development Projects

H1 2019 Results Highlights

► Production at Mnogovershinnoye (MNV) in H1 2019 rose

by 23.3% over the first half of last year

► Newly-acquired Valunisty accounted for 10% of production

► Novoshirokinskoye (Novo) output was 18% lower due to

lower grades year-on-year, although grades improved in

the second quarter

►Belaya Gora production was 7.5% lower year-on-year due

to several operational challenges, including mill repairs

and a localised fire incident in Q2

► Construction work at Kekura and an exploration drilling

programme at Klen continued throughout H1 2019, as

both projects were officially granted residency in the

Chukotka special economic zone

4

H1 2019 H1 2018

Production (Oz gold and gold eq.)

142,254 128,921

All-in sustaining costs (US$/oz)

778 697

Total cash costs (US$/oz)

540 536

Revenue(US$ k)

174,676 146,897

EBITDA (US$ k)

EBITDA margin

86,54150%

71,42449%

Net profit(US$ k)

45,692 28,639

Net cash flow from

operations(US$ k)

72,566 65,700

Capital expenditure (US$ k)

31,327 26,534

Net debt*(US$ k)

216,917 189,071

* On June 30

Operating Highlights

48.159.3 61.0

49.7

19.8 18.3 14.9

H1

2018

H1

2019

H1

2018

H1

2019

H1

2018

H1

2019

H1

2018

H1

2019

MNV Novo Belaya Gora Valunisty

Production by Asset (koz)

Commitment to Dividends

5

2.9%

6.2%6.3%

7.7%

9.6%

9.8%

6.5%

9.1%

5.9%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

US$ M

* Based on the average share price for the period.

H1 2019 yield annualised

25.7

40.3

26.723.2 21.8

42.545.5

58.0

22.6

2011 2012 2013 2014 2015 2016 2017 2018 H12019

H1 2019 interim dividend:

GBP 0.05 per share

Total payout: US$ 22.6 m

Highland Gold paid an

average of US$ 134 per oz

produced in 2011-2018

Future dividends secured by

dividend policy, which sets

target minimum payout of

20% of net operating cash

flow before capex.

114 89 83 163 169 215140 186

Dividends Paid

Dividend Yield*

159

US$

per

oz

Highland Gold has articulated and

executed a clear operating strategy

Clear Operating Strategy

6

Develop assets at the

PFS/DFS stage into

production

Focus corporate

development on regions of

presence

De-risk and convert

additional resources into

reserves

Focus on operational

efficiency and continuous

improvement

Commitment to workplace

safety and protecting the

environment

Maximise the upside

potential of operating

assets

Control

CostsReturns to

Shareholders

Deliver

Growth

Unlocking Value

Expanding Throughput

Goal

► Increase throughput to offset an expected decline

in grades

Solution

► Expand mining and processing capacity from 800k

tonnes/year to 1.3 million tonnes/year

Status

► Stage 1 (mine capacity expansion)

– Construction work is in progress on the

ventilation system, skip hoist, pumping

station, water treatment facility, boiler unit,

and tailings dam upgrade

► Stage 2 (processing plant expansion)

– Technology and equipment selected for ore

sorting with X-ray transmission (XRT)

– Design work on ore sorting facility nearing

completion, with construction due next year

► Completion expected in 2020

Cost: US$42 million in 2019-2020

Extending Life of Mine

Goal

► Add reserves to extend the life of mine (was 2018)

Solutions

► Extensive near-mine exploration programme on

existing MNV licences

►Acquisition of three adjacent greenfield licences

► Re-examining historic rock waste dumps

Status

► Life of mine extended to 2029

► Nearly 600k oz Au added to reserves in 2017-2018

► Over 820k tonnes of ore at 1.09 g/t Au taken from

the rock waste dumps to the mill since 2016

► Exploration continues on MNV, MNV Flanks,

Kulibinskaya, Zamanchivaya and Vilkinskaya

– 7k metres drilled in H1 2019

– 1.2 km of trenching in H1 2019

– Annual budget of US$3-5 million

► Given the longer mine life, studies have been

commissioned on potential improvements to the

mine, the mill, and tailings storage.

Maximising the Upside Potential of Operating Assets

7

Mnogovershinnoye (MNV) Novoshirokinskoye (Novo)

Mill Upgrade and Additional Resources

Goals

► Increase recoveries at the processing plant

► Add resources to extend life of mine (was 2023)

Solutions

► Add reserves from nearby Blagodatnoye licence

► Add CIL circuit to the processing plant to improve

recoveries from the current 75% to a range of 86-

91% and enable processing of Blagodatnoye ore

► Exploration on the Belaya Gora Flanks licence

Status

► Processing plant upgrade in the late design phase

– Contractors and equipment selected

– Tailings dam upgrade in progress

– Completion expected in 2020

► 776k oz Au reserves booked for Blagodatnoye,

extending combined life of project to 2032

► Additional resources on the Belaya Gora Flanks

licence identified and being assessed

Cost: US $11.4 m for processing plant upgrade

Underground Mining and Mill Expansion

► The Valunisty mine and surrounding KAS licence

were acquired by Highland Gold in December 2018

Goals

► Increase production and lower costs

Solutions

► Move underground to reach higher ore grades

► Expand processing plant capacity from 250k

tonnes of ore per year to 350k tonnes/year

► Increase production from 40-45k oz to ~55k oz per

year

Status

► Engineering surveys, design work, and cost

estimates are in progress for both the underground

mine and the processing plant expansion

► Construction is expected to begin next year for

completion in 2021

Maximising the Upside Potential of Operating Assets

8

Belaya Gora Valunisty

Advancing Our Development Projects: Kekura

9

Kekura is Highland Gold’s premier development

project, with high grade ore and low projected costs

Project Status

► Definitive Feasibility Study (DFS) published in 2018

► Camp and pilot processing plant already on site

► Phase 1 facilities in active construction phase

– Completion expected in 2020

► Work on Phase 2 facilities, including main processing

plant (800 ktpa capacity), to begin in 2020

– Completion expected by 2023

► Stripping and preliminary ore mining in Q4 2019

► Granted residency in the Chukotka Advanced

Special Economic Zone (ASEZ), providing a series of

tax incentives that add more than US$ 100 million to

NPV

Cost: US$229 m (pre-commissioning as per DFS)

Upside Potential

► Exploration drilling commenced on several of 12

additional targets in the broader Kekura licence area

to identify additional open pit reserves

Kekura

Est. Start Date 2023

Life of Mine 16 years

Mine Type Open pit & underground

Processing Gravity + cyanide leaching

Processing Capacity 0.8 Mtpa

Au Resources (M,I&I) 2.46 Moz @ 8.1 g/t

Au Reserves (P&P) 2.00 Moz @ 7.0 g/t

Au Production

(est. annual)

172k oz (years 1-8)

46k oz (years 9-16)

Total Cash Costs (est.) US$ 511/oz

Advancing Our Development Projects: Kekura

10

32

75 68

1 Open pit2 Processing plant site3 Power substation4 Mining support facilities5 Camp6 Warehouses7 Fuel storage8 Communications tower

Kekura Site Plan

4

2

1

5

7

1

23

4

5 78

6

1

2

3

4

5

6

7

8

Advancing Our Development Projects: Kekura

11Diesel Power Station CampCrushing Unit

►Pilot Processing Plant

– Renovations, including steel

frame reinforcement, are in

progress and scheduled for

completion by year-end.

– 120k tonnes per year processing

capacity with expected

recoveries of 35%

– Commissioning in 2020

Existing Site Infrastructure

Advancing Our Development Projects: Kekura

12Assay Laboratory Fuel StoragePower Substation

►Most Phase 1 facilities at an

advanced state of construction

►Power Substation

– Ready to be connected to the

regional power grid by the end of

2019

►Camp Expansion

– Brought forward from Phase 2 to

improve facilities for construction

– Ground prepared and modular

buildings ordered

Communications Tower

Camp Expansion Site

Phase 1 Construction

Advancing Our Development Projects: Baley ZIF-1

13

► Part of Highland’s Baley Hub group of licences,

together with Taseevskoye and Sredne Golgotay

► Tailings from the processing of ore from the Baley

and Taseevskoye mines in 1929-1973

► Near local infrastructure for the town of Baley

(electricity, roads, water, rail)

► Being targeted for a heap leach operation

Project Status

► Detailed design work completed and submitted for

regulatory approval, which is expected later this

year

► Application submitted for admission into the Trans-

Baikal Advanced Special Economic Zone (ASEZ),

which would provide a series of tax incentives

► Construction set to begin in 2020 with first gold in

H2 2021

Cost: US$ 23m in 2019-2022

Baley ZIF-1 Tailings

Est. Start Date 2021

Life of Mine 11 years

Mine Type Open pit

Processing Heap leach

Processing Capacity 840 ktpa

Estimated slime reserves*9.7 m tonnes @ 0.98 g/t Au

and 2.84 g/t Ag

Estimated contained Au* 344k oz

Au Production

(est. average annual)15k oz

Total Cash Costs (est.) US$ 736/oz

* Estimates to Russian reserve standards

1

2

3

4

5

6

1

2

3

4

5

6

65

5

Advancing Our Development Projects: Baley ZIF-1

14

Open pit mining site

• Sump

• Open pit water drainage

pumping station

• Water drainage pipeline

• Settling pond

HL production site

• Crusher house

• Pelletization circuit

• HL pile

• Pond facilities

Processing plant site

• Hydro-metallurgical circuit

• Tanks

Floating Pumping Station

10 kV power line

• Powerline

• Transformer substation

Inter-site roads

• Access road to HL site

• Access road to the

processing plant

Baley ZIF-1 Site Plan

H1 2019 Financial Review

15

H1 2019 Financial Highlights

16

H1 2018 H1 2019

Gold and GE Production, koz 128.9 142.3

Revenue, US$ m 146.9 174.7

Operating Profit (w/o impairment), US$ m 50.7 57.4

Impairment Losses, US$ m - -

EBITDA, US$ m 71.4 86.5

STRONG BALANCE SHEET

Total Assets, US$ m 1,142.4 1,280.7

Total Equity, US$ m 782.0 865.9

Gross Debt*, US$ m 197.3 221.0

Net Debt*, US$ m 189.1 216.9

KEY RATIOS

TCC, US$ / oz 536 540

AISC, US$ / oz 697 778

Net Debt* / EBITDA 1.2 1.3

EBITDA margin 48.6% 49.5%

DIVIDENDS

Dividends paid during the period, US$ m 24.2 31.9

Dividends declared. GBP per share 0.06 0.05

* Including the modification effect of IFRS 9

Metals Prices and Exchange Rates

17

H1 2018 H1 2019 ∆

Gold US$/oz 1,313 1,308 ▼ -0%

Silver US$/oz 16 15 ▼ -6%

Lead US$/t 2,482 1,956 ▼ -21%

Zinc US$/t 3,343 2,744 ▼ -18%

Copper US$/t 6,879 6,160 ▼ -10%

USD/RUB 59.5 65.1 ▲ +8%

EUR/USD 1.2 1.1 ▼ -7%

GBP/USD 1.4 1.3 ▼ -6%

HGML Revenue Breakdown

H1 2019 Gold Price vs Volume of Sales

10

22 17 13 17 13

1 292 1 320 1 302 1 288 1 283

1 358

Jan Feb Mar Apr May Jun

Au sold by MNV, BG, Valunisty, koz LMBA average price, USD/oz

H1 2019

Cu 1%Zn 1%

Pb 3%

Ag 6%

H1 2018

Au

84%

Other

Metals

Au

89%

■ Au sold by MNV, BG and Valunisty (koz) ▬ LMBA average price (US$/oz)

MNV

45%Valunisty

10%

Belaya Gora

15%Novo

18%

11%

MNV

42%

Belaya Gora

17% Novo

25%

16%

Cu 1%

Zn 2%

Pb 6%

Ag 7%

Low Cost, High Margin Producer

All-In Sustaining Costs

H1 2019 EBITDA Margin: 50%

18

International Majors

Russian Companies1207

1112 1109 10851026 1023 1002 987 977 977 973

940 936 925 904855

778720 705 679

584

0

200

400

600

800

1000

1200

1400

Source: Published company data for H1 2019 (where available)

* Q1 2019 data** FY 2018 data

H1 2019 - US$/oz

Total Cash Costs & All-In Sustaining Costs

19

707541

299 385

795 775 7306886

H1

2018

H1

2019

H1

2018

H1

2019

H1

2018

H1

2019

H1

2018

H1

2019

TCC by Operating Asset

MNV Novo Belaya Gora Valunisty

N.A.

► Total Cash Costs remained practically unchanged at US$540/oz as the influence of the

weak ruble was offset by rising Novo TCC (+28%) and the inclusion of Valunisty

► MNV TCC decreased by 23%, aided by 28% growth in the volume of sales and the

weak ruble

► Novo TCC increased by 28% due to the lower volume of sales (-13%), salary indexation,

and changes in contract terms & conditions due to the shipment of lead concentrate with

a lower grade (27% versus 30%)

► BG TCC decreased slightly to US$775/oz as gold sales were supported by an increase

in processing volume but with a lower average grade

► All-In Sustaining Costs increased by 12% to US$778/oz due to:

– An 85% increase in sustaining CAPEX to replace old equipment

– Higher AISC at newly-acquired Valunisty

– The write-down of stockpiles at BG (+US$1.8 m) and Valunisty (+US$3.9 m)

536 540

H1 2018 H1 2019

697778

H1 2018 H1 2019

Total Cash Costs

All-In Sustaining Costs

US$/oz

US$/oz

Processing costs (US$/oz)

+1% -23% +28%

-3%

470366

+12%

EBITDA (US$ M)

20

71 7179.8 84.6 84.6 87.4 86.7 86.1 87

8.87.0 2.2 5.7 2.9 0.7 0.6

H1

2018

Valunisty Exchange

Rate

Metals

Prices

Volume of

Sales

Costs G&A Other

ExpenseH1

2019

- US$2.2 m – decrease in Au prices for MNV and BG

(-US$0.3 m) and gold equivalent for Novo (-US$1.9 m)

+ US$5.7 m – increase in the volume of sales by 6%,

including:

• Novo - 6.9 koz of Au eq. (-13%)

• MNV + 13.3 koz of Au (+28%)

• BG + 0.3 koz of Au (+2%)

- US$2.9 m – increase in costs

- US$0.7 m – increase in G&A

- US$0.6 m – other operating profits and losses

24

41 40

29

10 10 0 8

-3 -2

H1

2018

H1

2019

H1

2018

H1

2019

H1

2018

H1

2019

H1

2018

H1

2019

H1

2018

H1

2019

MNV Novo Belaya Gora Valunisty G&A & Other

EBITDA by Asset

39%

52%

39% 40%

68%

57%

42%

% = EBITDA margin

Key Factors

Capital Expenditure

MNV

► US$ 4.3 m – supporting investments (equipment replacement)

► US$ 1.1 m – exploration work

► US$ 0.4 m – regulatory filings and design work

► US$ 2.7 m – capital development

Novo

► US$ 1.7 m – supporting investments (equipment replacement)

► US$ 1.7 m – capital development

► US$ 1.5 m – Novo 1.3 Mtpa project capex

Belaya Gora

► US$ 1.1 m – supporting investments

► US$ 0.2 m – exploration work

► US$ 0.8 m – design work (mining optimization & processing plant

upgrade)

Valunisty (w/ KAS)

► US$ 0.5 m – research work

► US$ 1.5 m – supporting investments

Kekura

► US$ 5.8 m – field camp & road maintenance

► US$ 0.5 m – exploration work

► US$ 3.2 m – purchases of fuel and consumables for pilot processing plant

and initial open pit mining

► US$ 1.4 m – research work & capital construction for pilot plant

Taseevskoye

► US$ 1.0 m – site maintenance

► US$ 0.2 m – research work for ZIF-1 heap leach

Klen (w/ Verkhne Krichalskaya)

► US$ 1.1 m – exploration work21 Capex budget for 2019: US$124m

US$ k, excl. VATH1

2018

H1

2019

KHABAROVSK CLUSTER 8,908 10,619

Mnogovershinnoye 7,388 8,514

Belaya Gora 1,520 2,105

BAIKAL CLUSTER 7,955 6,185

Novo 6,704 4,937

Taseevskoye 1,197 1,154

Lyubov 55 94

CHUKOTKA CLUSTER 8,681 13,951

Valunisty (w/ KAS) - 2,017

Kekura 7,907 10,851

Klen (w/ Verkhne Krichalskaya) 774 1,083

OTHER 990 572

Highland Exploration (Unkurtash) 448 405

Other 542 167

Total 26,534 31,327

Credit Portfolio

Debt Status as at 31.08.2019

► Net Debt/EBITDA ratio: 1.3

► Gross debt: US$ 218 m

► Net debt: US$ 205 m

► Effective interest rate: 4.09%

– All debt is fixed-rate

► Average tenor: 36.6 months

– Was 18.1 months on 30.06.2018

► Over US$ 500 m of undrawn revolving

credit facilities

22

By Lender By Term

208232 222 218199 194 217 205

3.44%

4.20% 4.20% 4.09%

1.56%

2.50% 2.36%2.09%

31.12.2017 31.12.2018* 30.06.2019 31.08.2019

Gross Debt (US$ M)

Net Debt (US$ M)

Interest Rate

Libor 1M US$

Debt Breakdown

* Excluding US$ 17.7 m of Valunisty

debt @ 5.12% assumed on

27.12.2018 and repaid in Q1 2019

Debt is free of the modification effect

of IFRS 9

27%ShortTerm

73%LongTerm

40%

Sberbank4%

Rosbank

27%

Raiffeisen

4%

Alfa Bank

25%

Unicredit

2019 Outlook

23

Key Targets for 2019

►2019 production forecast: 290,000-300,000 oz gold & gold equivalent

►Continue to advance projects designed to improve operations at existing mines:

√ Near-mine exploration at MNV and adjacent licences

√ Construction on Stage 1 (mine) and design work for Stage 2 (mill) of Novo expansion

√ Design work for mine and processing plant upgrades at Belaya Gora and Valunisty

►Ramp-up construction at Kekura

– Begin initial stripping and mining in Q4 2019

►Capital Expenditure Budget: US$ 124 million

– About 50% of capex for Kekura

►Roll-out new programmes for health & safety, operational efficiency and continuous

improvement across each of the Company's operating units

√ In progress

24

AIM: HGM

www.highlandgold.com

info@highlandgold.com

Thank You