unlocking the value of a world class resource base · gbx dividend per ... kekura definitive...

Unlocking the Value of a

World Class Resource Base

Denis Alexandrov, CEO

Mines & Money London

November 2017

AIM: HGM

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

3

Highland Gold Highlights

Kekura

Klen

Belaya Gora

Mnogovershinnoye

(MNV)

Baley Hub

(Taseevskoye, ZIF-1,

Sredny Golgotay)

Novoshirokinskoye

(Novo)

Blagodatnoye

Khabarovsk

Cluster

Chukotka

Cluster

Baikal

Cluster

Operating Mine

DFS Stage

PFS Stage

Scoping Study

46%54%

2017E Production

265

koz

Unkurtash Kyrgyzstan

US$

509

US$

674

Total

Cash Costs*

All-In

Sustaining Costs*Russia

Baikal

ClusterKhabarovsk

Cluster

2016: 261koz

H1 2016: US$ 444 H1 2016: US$ 609

51%

8%

19%

22%

Mineral Resources

16.8

Moz

3.3 g/t

Khabarovsk

Baikal

Kyrgyzstan

Chukotka

- JORC-compliant measured, indicated & inferred resources of gold and gold equivalent as of 01

January 2017, adjusted for updated MNV (May 2017) and Novo (Nov. 2017) resource audits.

* TCC and AISC based on H1 2017 interim accounts

4

Our Strategy: Unlocking Value

- JORC-compliant measured, indicated & inferred resources of gold and gold equivalent as of 01

January 2017, adjusted for updated MNV (May 2017) and Novo (Nov. 2017) resource audits.

MNV

0.6 Moz

7.3 g/t

Novo

3.1 Moz

4.0 g/t

Belaya Gora

0.7 Moz

2.3 g/t

Kekura

2.6 Moz

7.5 g/t

Klen

0.6 Moz

5.0 g/t

Maximise

the upside potential

of operating assets

Develop

assets at the PFS

stage into production

De-risk and

convert additional

resources

into reserves

Taseevskoye

5.1 Moz

5.1 g/t

Unkurtash

3.7 Moz

1.7 g/t

Focus development on

regions of presence

Maintain commitment to

operating safety and

protecting the environment

Reserves Throughput Recovery

DFS PFS De-water Partnership

Corporate Overview

5

Listed on London AIM

Incorporated in Jersey in 2002

15-year track record as a public company

Shareholders include a broad range of high-quality

UK, European and N. American institutional investors

Committed to Best Practice in Corporate

Governance

Led by an experienced Board of Directors and

management team

Seven directors – executive chairman, one executive

director, and five non-executive (three independent)

HGM

Shares 325,222,098

Market Cap* US$ 657M

Enterprise Value* US$ 861M

Net Debt** US$ 204M

Net Debt/EBITDA (LTM)** 1.3x

2016 Earnings/Share US$ 0.145

* On 21 Nov 2017 ** On 1 Jul 2017

26%

10%

47%

17%

Prosperity Capital

Management

Board &

Management

Institutions

& Retail

Primerod Int’l &

Affiliated Parties

Shareholder Structure

57%

Free

Float

HGM Gold Price FTSE All Share Mining

Share Price Performance

Jan Apr Jul Oct Jan Apr Jul Oct

70

120

170

220

270

320

Commitment to Dividends

6

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

0

2

4

6

8

10

12

2011 2012 2013 2014 2015 2016 H1 2017

GB

X

Dividend per share (pence) Yield (%) Total Payout (US$)

$25.7M $40.3M $26.7M $23.2M $21.9M $41.8M

• Yield based on average share price for the period

• Yield calculated for H1 2017 on annualised basis

$21M

Low Cost, High Margin Producer

7

H1 2017 All-In Sustaining Costs (US$/oz)

- All H1 2017 figures as per company reporting- Median calculated for companies presented

EBITDA Margin (%)

36%

37%

49%

38%

44%

50%

62%

0% 20% 40% 60% 80%

NewmontMining

NewcrestMining

BarrickGold

Polymetal

Nordgold

HGML

PolyusGold

Median, 43%

931 892 805 800 758906 865

674 610

KinrossGold

NewmontMining

NewcrestMining

Goldcorp BarrickGold

Polymetal Nordgold HGML PolyusGold

Median, 632 $/oz

International Majors Russian peers

682 675 632527 510

662 656509

379

KinrossGold

NewmontMining

NewcrestMining

BarrickGold

Goldcorp Nordgold Polymetal HGML PolyusGold

H1 2017 Total Cash Costs (US$/oz)

Median, 800 $/oz

H1 2017 EBITDA

US$

73M

H1 2016: US$ 80M

$327

$208

$158 $141 $130

$96 $94 $74 $69 $57 $44 $41 $33

8

Attractively Valued with Upside Potential

EV / 2017E EBITDA

EV / Resources

13.2x

9.5x8.6x 8.6x

7.8x6.9x 6.3x

5.5x 5.2x 4.8x4.1x

3.3x2.3x

Figures based on company filings, street consensus estimates and share price as of 20 Nov 2017.

171143 160

29122

140

200

2010 2017 Medium-TermTarget

Delivering Growth

2017 Production Guidance: 255-265 koz

Medium-Term Production Target: 500 koz

– Includes only operating mines and Kekura

– Additional upside potential with Klen, Baley Hub

(Taseevskoye, ZIF-1, Sredny Golgotay), and Unkurtash

Production growth to be financed by free cash flow

and low-cost debt

9

BaikalNovo

ChukotkaKekura

KhabarovskMNV

Belaya Gora

Blagodatnoye

~500

200

2654.6%

CAGR

~

~

~

Location Khabarovsk Cluster

Opened 1991 (HGM 1999)

LoM 2022

Mine Type Open pit & underground

Processing Gravity + cyanide leaching

Processing Capacity 1.4 mtpa

Au Production (2017E) 105k oz

Avg Head Grade 2.48 g/t

Total Cash Costs* US$ 595/oz

Gold production expected to increase by 4% in 2017

Updated MNV JORC reserve statement completed and

published in May, with Ore Reserves doubled to 500k oz

Au and Life of Mine extended to 2022

Ongoing near-mine exploration programme on existing

MNV licences with a view towards further extension of

life of mine

Two new licences received in 2017 for greenfield sites

directly adjacent to MNV – Zamanchivaya (4.2 sq km)

and Kulibinskaya (38 sq km)

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Mnogovershinnoye (MNV)

MNV Snapshot

94.6 90.496.2

91.5100

91.4

Production (koz) Recovery (%) Grade (g/t) TCC (US$)

2015 2016 2017E*

Khabarovsk Cluster

2.29 2.36

691

607595

2.48

* TCC as of H1 2017

61.3

75.4

45.9

71.4

40.0

72.2


2014 2015 2016

Location Khabarovsk Cluster

Opened 2014

LoM 2023

Mine Type Open pit

Processing Gravity


Au Production (2017E) 38k oz


Total Cash Costs* US$ 880/oz

2017 operations focussed on processing low-grade orestockpiles

Lower mined ore grade this year due to the re-classification of some waste stripping following adecision by regulators to reduce the mine's cut-off gradefrom 0.7 g/t to 0.3 g/t.

A pre-feasibility study is currently being finalized,including upgrades to the Belaya Gora mill and a jointmining schedule for Belaya Gora and the nearbyBlagodatnoye mine, as well as a new JORC reserveestimate.

11

Belaya Gora

Belaya Gora Snapshot Khabarovsk Cluster

1.211.64

1.11

465 465

678

2015 2016 2017E*

880

* TCC as of H1 2017

105.9

86.0

117.6

85.9

125.0

85.3


2014 2015 2016

Location Baikal Cluster

Opened 2009

LoM 2029

Mine Type Polymetallic, Underground

Processing Gravity-flotation circuit


Au Eq Production (2017E) 122k oz


Total Cash Costs* US$ 305/oz**

Novo continues to be our lowest cost, highest margin

production asset

Gold equivalent production expected to rise by 4% in

2017

Updated JORC reserve audit completed in November

with lower cut-off grade and 430% increase in total ore.

– Average Au Eq. grade lowered by 67% but Ore Reserves

increased by 76%.

Preparations continue for the expansion of Novo’s ore

mining and processing capacity to 1.3 mtpa by 2019

12

Novoshirokinskoye (Novo)

Novo Snapshot Baikal Cluster

5.58 5.62

305302

254

2015 2016 2017E*

5.49

* TCC as of H1 2017** Excludes concentrate processing costs

Location Chukotka Cluster

Start Date 2020

LoM 2029

Mine Type Open pit & underground

Processing Gravity + Cyanide Leaching


Au Production (est. annual) 209,000 oz

Reserve Grade 10.73 g/t

Kekura definitive feasibility study (DFS) in final preparationstages

2017 exploration programme of 11,000 metres of RC-drillingand 4,750 m of core drilling for reserve confirmation, as well4,350 m of drilling to confirm sterile ground

The Russian government has granted approval for thedevelopment of a deposit of “federal significance”, arequirement for deposits of this size

Design completed and turnkey construction tender held forpower substation

Upside potential in additional targets within licence area

13

Kekura

Kekura Snapshot

Kekura Mineral Resources*

ClassificationTonnage

(Mt)

Au Grade

(g/t)

Metal Au

(Moz)

Indicated 7.412 8.64 2.06

Inferred 3.266 4.80 0.51

Total 10.678 7.47 2.57

Kekura Ore Reserves*

ClassificationTonnage

[Mt]

Au Grade

[g/t]

Metal Au

[Moz]

Proven - - -

Probable Open Pit 4.296 10.94 1.51

Underground 0.541 9.04 0.16

Total 4.837 10.73 1.67

* Reserves & resources compliant to JORC Code 2012. Resources cut-off grade of 1.0

g/t Au. Reserves cut-off grade of 2.2 g/t Au at the open pit and 4.2 g/t Au for the

underground mine. A gold price of US$1,150 per ounce has been applied.

Mayskoye

Kupol Klen

DvoinoyeKekura

Chukotka

Polymetal Kinross

Valunisty

Pevek

Anadyr

Chukotka Cluster

A scoping study for Unkurtash was completed andpublished in March

The report envisages mining two open pits and an 18-year life of mine, with annual production of 133k oz ofgold at an average operating cost of US$ 616/oz. Totalcapital expenditure to start production is estimated atUS$ 322 million.

Highland Gold is considering partnership opportunitiesto develop this promising resource and has hadpreliminary discussions with potential partners, mainlyfrom China

Location Kyrgyzstan

LoM 18 years

Mine Type Open pit

Processing Gravity + Cyanide Leaching

Processing Capacity 4 mtpa

Au Production (est. annual) 133,000 oz

Resource Grade 1.7 g/t

Avg. Operating Costs (est.) US$ 616/oz

Capex Required US$ 322 M

NPV (10%) US$ 200 M14

Unkurtash

Unkurtash

Sarytube

Karatube

Baikonur0 1000 m

Unkurtash

Kazakhstan

Kyrgyzstan

Kumtor

Bishkek

Bozymchak

Ishtamberdy

Centerra Kazakhmys

Full Gold Mining

China

Unkurtash Licence Area

Unkurtash Snapshot

Figures based on March 2017 scoping study

Kyrgyzstan

The Company continues to focus on de-risking

the project and preparing for further exploration

4.3 million cubic meters of water were pumped

from the Taseevskoye open pit into the nearby

ZIF-2 tailings pond in H2 2016 and H1 2017,

resulting in a 10.05 m decrease in the pit's

water level

Water inflow from the neighboring Baley pit has

not been observed

The ZIF-2 tailings pond is full and the Company

is currently reviewing options for additional

storage or disposal

15

Baley Hub Projects

Baley Open Pit Taseevskoye Open Pit

Taseevskoye Baikal Cluster

ZIF-1

Baikal Cluster

The ZIF-1 tailings project, containing ~300k oz Au, is being targeted for a heap leach operation

Contractor Irgiredmet has drafted a technological flowsheet

The Company's in-house research center at Novo is also reviewing the flowsheet with the aim of

increasing potential recovery rates.

A tender to select a contractor for a DFS is currently underway

Baikal Cluster

The Highland Gold Investment Case

Upside Potential in Existing

Operating Assets

Growth Potential in High

Grade Resources

Development Strategy

Focused on Regional Hubs

Disciplined Capital

AllocationUnlocking the

Value of

Highland Gold’s

Resource BaseCommitment to Dividend

15-Year Track Record

as a Public Company

16

17

[email protected]+7 495 424-95-21

0Thank You

unlocking the value of a world class resource base · gbx dividend per ... kekura definitive...

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