The company said it had appointed Cutfield Freeman & Co to explore options to maximise the value of its 20% stake in the project, which could include a potential sale.
Highlands said it had not made a formal decision to sell the stake and the process was at an early stage.
However, it said progress had been "positive".
Frieda River 80% owner PanAust, a subsidiary of China's Guangdong Rising Asset Management (GRAM), has been notified.
PanAust has a pre-emptive right over the stake.
It comes amid a stoush between the Frieda River partners, in which PanAust is trying to get control of Highlands.
About two weeks ago, Highlands received a requisition notice from PanAust, seeking to remove four of its five non-executive directors, including chairman Ken MacDonald and newly appointed director Ron Douglas.
PanAust is seeking to replace the directors with three representatives from its Chinese state-owned parent, Guangdong Rising Assets Management Co.
PanAust has a 13.9% stake in Highlands.
The two have disagreed on the project in the past, with Highlands describing PanAust's approach to the project as "suboptimal".
Highlands has called a vote for May 18 in Port Moresby, the same day as its annual general meeting. Highlands said the changes would not be in the best interests of the company and has urged shareholders to vote against the resolutions.
Frieda River is one of the world's largest undeveloped copper resources and has capital costs of $US3.6 billion for a 40 million tonne per annum open pit operation to produce an average 175,000 tonnes of copper and 250,000 ounces of gold per annum over an initial 17-year life.
The companies are currently progressing the project through the permitting process, with first production not expected before 2024.
Highlands had $A14.5 million cash at the end of December.
Highlands has appointed Grant Samuel as financial adviser and Jones Day as legal adviser.