Earnings per share fell to $0.319, the company said on Tuesday, adding that the comparative 2010 results were strengthened by a decision to reverse a $52.8 million impairment loss attributed to its Novo project.
Highland Gold's production fell to 184,102 troy ounces of gold and gold equivalents from 200,028 ounces in 2010, while group total cash costs rose to $594 per ounces from $513.
Revenue increased by 23 percent, however, to $300 million in 2011, whileearnings before interest, taxation, depreciation and amortisation (EBITDA) rose 30 percent to $157 million.
Gold companies are benefiting from rising gold prices , which allows them to increase revenue despite falling output.
A 'no hedge' policy enabled us to take full advantage of favourable market conditions, Baxter said.
For 2012, the company earmarked $160 million for capital expenditures, the Chief Executive Officer Valery Oyf told a conference call.
Highland Gold's larger Russian rival - Nord Gold - reported an 8 percent increase in first quarter revenue to $264 million on Tuesday, while its gold output fell 11 percent to 155,700 troy ounces.
The company confirmed its previous plan to increase 2012 output to 200,000-215,000 ounces of gold and gold equivalents in its three key mines of Mnogovershinnoye, Novoshirokinskoye and Belaya Gora.
Highland Gold shares were up 0.75 percent at 133.75 pence at 0843 GMT in London
Canada's Barrick Gold, the world's largest gold producer, said in February it intended to sell its 20 percent stake in Highland Gold in February.
The stake in Highland was perceived as a non-core to ongoing business strategy of Barrick, Duncan Baxter, Chairman of Highland Gold, said in a statement.