Update on Disposal of Warrants

Highlands Natural Resources plc ('Highlands' or 'the Company')

Update on Disposal of Warrants

Highlands, the London listed natural resources company, announces that it has been notified by Diversion Technologies LLC ('Diversion') that the arrangements entered into by Diversion earlier this week to sell its entire holding of 30 million warrants in Highlands to an institutional investor (the 'Institutional Investor') have been altered slightly as a reflection of the recent movements in the Highlands share price.  These alterations affect only Diversion.  The effect of the transaction on Highlands is unchanged, namely that, if the Institutional Investor takes up its options to acquire Diversion's entire holding and exercises the warrants, Highlands will receive new funds of £7.5 million.

The purchase price of the first 10 million of these warrants has been reduced to 1 pence per warrant, payable to Diversion.  Furthermore, Diversion has notified Highlands that these 10 million warrants have now been acquired at that price by the Institutional Investor.  On the assumption that the Institutional Investor exercises those warrants in due course, then Highlands will receive new funds of £2.5 million.

In return for accepting a lesser price for the first 10 million warrants, the options that the Institutional Investor has to acquire Diversion's remaining 20 million warrants have been re-priced in Diversion's favour.  These warrants can be acquired at a price equal to 10 pence per warrant plus 50 per cent. of any amount by which the Highlands share price on the day prior to exercise exceeds 51 pence.  All other terms of the arrangements remain as previously announced.

Robert Price, Chairman of Highlands, has a beneficial interest in the warrants which are the subject of these arrangements as a 37.5 per cent. shareholder in Diversion.

This has been a very active week for Highlands with the announcement of two significant transactions as well as the release of our annual results. The Board has received a number of investor inquiries requesting further information on Highlands' activities and has therefore produced a Q&A in response to these which will be available on the Company's website at http://www.highlandsnr.com at 9.30am this morning.

Highlands CEO Robert Price said, "This transaction by Diversion provides three significant advantages for Highlands.  Firstly, if all the warrants are exercised, the potential new funds for Highlands of £7.5 million are more than the Company has raised in aggregate to date.  Secondly, the sale rebalances our capital structure, making the Company easier to value.  Finally, and related to this, the exercise of the warrants would increase the Company's size and liquidity which in turn should enhance our appeal to a wider investor audience.

"Highlands is grateful to Diversion for entering into these arrangements.  As I outlined above, the effect should be to increase the funds available to Highlands so, the sale, and potential exercise of the warrants will reduce our reliance on future third party funding which itself is uncertain both in availability in price.  "With these arrangements in place, we now have the opportunity to accelerate Highlands' core projects, including the deployment of DT Ultravert."

Notes

The 30 million warrants were granted to Diversion by Highlands in May last year as part of the consideration to acquire a 75% interest in the pending patents for DT Ultravert, which has the potential to transform and significantly reduce the costs associated with unconventional exploration and production via re-fracking.  Pursuant to that transaction, Diversion was also issued with 1.9 million ordinary shares in Highlands which it continues to hold.  The warrants are exercisable into ordinary shares in Highlands at 25 pence per share at any time up to 29 May 2018.

**ENDS**

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