H1 2018 Interim Results and Project Update September 2018 - PowerPoint PPT Presentation

AIM: HGM H1 2018 Interim Results and Project Update September 2018

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

H1 2018 Highlights H1 2018 H1 2017 Chukotka Production 128,921 131,784 Cluster Valunisty (Oz Au + Au eq.) Kekura Revenue 147,176 146,897 Klen (US$ k) EBITDA 71,424 73,248 (US$ k) Net Cash Flow from Operations Khabarovsk 65,700 63,211 (US$ k) Cluster Russia Net Profit Mnogovershinnoye (MNV) 28,639 25,932 Belaya Gora (US$ k) Baikal Blagodatnoye Cluster Total Cash Costs 536 509 (US$/oz) Novoshirokinskoye (Novo) Baley Hub All-In Sustaining Costs 697 674 Taseevskoye (US$/oz) Kazakhstan Sredny Golgotay ZIF-1 Tailings Kyrgyzstan Unkurtash  Operating mines  Development projects  Pre-development  Acquisition target 2018 Production Forecast: 265,000-275,000 oz Au + Au eq. 3

Our Strategy: Unlocking Value MNV New reserves Maximise the upside potential Plant upgrade + Blagodatnoye Belaya Gora of operating assets Novo Increase throughput Develop DFS complete. Begin construction Kekura assets at the DFS/PFS stage Klen New PFS + additional exploration into production De-risk and De-water pit + confirm reserves Taseevskoye convert additional resources Unkurtash Find partner + move to PFS stage into reserves Focus development on Maintain commitment to operating safety regions of presence and protecting the environment 4

Low Cost, High Margin Producer All-In Sustaining Costs US$/oz (H1 2018) 1400 1315 1231 1200 1037 1020 1012 965 955 954 1000 945 930 918 906 893 887 857 854 847 835 830 828 793 800 697 639 600 400 200 0  International Majors  Russian Companies Highland Gold’s EBITDA Margin: 49% Source: Company Data 5

Commitment to Dividends Highland Gold is among Interim Dividend of Dividend policy sets target the most consistent dividend GBP 0.06 per share minimum payout of 20% of payers in the gold industry declared for H1 2018 net operating cash flow 12 12.0% 10 10.0% 8 8.0% GBX Yield 6 6.0% 4 4.0% 2 2.0% $25.7M $40.3M $26.7M $23.2M $21.8M $41.8M $48.3M $25.1M 0 0.0% 2011 2012 2013 2014 2015 2016 2017 H1 2018 Yield based on average share price for  Dividend per share (pence)  Yield (%)  Total Payout (US$) the period and annualised for H1 2018 6

Operational 0 Overview

Mnogovershinnoye (MNV) H1 2018 Highlights MNV Snapshot Khabarovsk Cluster  H1 2018 production of 48k oz Au (H1 2017: 51k) Opened 1991 (HGM 1999)  Processing volume in H1 2018 was 15% lower year-on-year due Life of Mine 2022 to a SAG mill line being out of operation following the discovery of Mine Type Open pit & underground a damaged feed trunnion. The trunnion was replaced in March and the plant is operating at full capacity Processing Gravity + cyanide leaching  Increases in grade and recovery rates helped reduce the impact Processing Capacity 1.4 Mtpa of lower processing volume, with H1 2018 gold production only Au Resources (M,I&I)** 578 koz @ 7.7 g/t 5% lower year-on-year Au Reserves (P&P)** 453 koz @ 5.5 g/t  TCC affected by lower volumes and front-loaded production Au Production (2017) 103 koz exploration in H1. Expected to be lower for the full year Avg Head Grade* 2.75 g/t  New exploration licence received for the Vilkinskaya zone, a 33 Total Cash Costs* US$ 707/oz sq km greenfield site adjacent to MNV Outlook 707  Ongoing near-mine exploration programme on existing MNV 607 617 103 96 91.5 91.4 92.0 licences, focusing on areas around previously-mined ore bodies  Exploration budget of US$ 3-5 M per year  Historic waste dumps being re-evaluated, adding over 1M tonnes 2.75 48 2.36 2.55 of ore with grades of ~1.1 g/t Au since 2016  Prospecting has begun on two adjacent greenfield licences – received in 2017 Zamanchivaya (4.2 sq km) and Kulibinskaya (38 sq km) Production Recovery Grade TCC  Updated JORC reserve estimate based on recent exploration is (koz) (%) (g/t) (US$) expected in Q3 2018 and will further extend the life of mine.  2016  2017  H1 2018  8 Production level expected to remain stable in mid-term * H1 2018 figures **JORC-compliant Resources and Reserves as of 31 Dec. 2017

Belaya Gora H1 2018 Highlights Belaya Gora Snapshot Khabarovsk Cluster  H1 2018 production of 20k oz Au (H1 2017: 20k) Opened 2014  Improved recoveries (75.4% vs 71.7% in H1 2017) offset an 11% Life of Mine* 2032 drop in processing volume due to water supply issues in early Q1 Mine Type Open pit and SAG mill re-lining in Q2  Processing Gravity Ore mining rose 52% year-on-year as mining operations moved from stockpiles back to the open pit Processing Capacity 1.6 Mtpa  Au Resources (M,I&I)** 1.38 Moz@ 1.4 g/t Design work initiated on Belaya Gora mill upgrade Au Reserves (P&P)** 932 koz @ 1.4 g/t Outlook Au Production (2017) 43 koz  Avg Head Grade* 1.11 g/t A pre-feasibility study was published in early 2018, including: Total Cash Costs* US$ 795/oz – Upgrades to the processing plant, adding a carbon-in-pulp ** with Blagodatnoye (CIP) circuit to improve recoveries from 72% to a range of 86- 861 91% for Belaya Gora ore and 90% for Blagodatnoye ore 795 – 678 New mining plans for Belaya Gora and Blagodatnoye – Estimated capex of US$ 15M for the plant upgrade and 75.4 US$ 21M to move mining activity from Belaya Gora to 72.5 71.4 Blagodatnoye in 2023 45.9 43.2 – Updated resource estimates incorporating results from 2016- 1.21 19.8 1.11 1.11 2017 drilling on the Belaya Gora northeast flank and at Blagodatnoye, tripling gold reserves for the operation – Average annual production of 55 koz Production Recovery Grade TCC  (koz) (%) (g/t) (US$) Exploration of the Belaya Gora flanks (Kolchansky & Zayachy  2016  2017  H1 2018 prospects) is in progress, potentially adding further resources 9 * H1 2018 figures **JORC-compliant Resources and Reserves as of 31 Dec. 2017