21 June 2012

Negotiations Underway on Capital Raising Potential Cornerstone Investment with PNG Sustainable Development Program Limited

Highlands Pacific Limited (ASX: HIG) today announces that it is in the advanced stages of negotiations on a capital raising with PNG Sustainable Development Program Limited ("PNGSDP"), which is considering taking up a cornerstone investment in the Company.

While it is anticipated that a final agreement between Highlands and PNGSDP will be completed within the next two days, an agreement has not been executed at this time and there can be no guarantee that an agreement will be executed within two days or at all.

Managing Director of Highlands Pacific Mr John Gooding said today: "While there are still some points to be finalised a relationship with PNGSDP, a company with net assets of over US$1.43 billion, has the potential to deliver significant benefits to Highlands, giving it the financial and technical backing of a very large investment company that has strong ties in Papua New Guinea ("PNG") and is the majority shareholder of Ok Tedi Mining Limited ("OTML"), in Western Province, PNG. These connections could be crucial for Highlands as it proceeds with any development at the Star Mountains exploration project and also for the future development of the Frieda River project."

"In relation to our projects Ramu is progressing well with ore commissioning and ramp