It’s a real long shot, but here’s the pic.
The Field Mice were a 1980s/1990s English indie pop band, but I suspect the photo isn’t of England.
Looks like NorCal to me, but I’m biased. If you could get a shot of the back side, I bet it credits the location.
I don’t see anything in the picture that couldn’t be Britain - those look like English Oaks (and I think I see an Elm there). The sheep fence is of a style not unfamiliar to me.
Could be Sca Fell ridge or Helvellyn ridge in the background
I don’t know, other than to state the obvious observation: That’s a very distinctive looking skyline on the mountains in the background. Certainly, anyone who knows that area will be able to recognize it immediately.
Hm, I was was looking at the trees and thinking some looked like eucalypts- and those background hills don’t look like anywhere I’ve seen in Britain. Don’t know where it is though.
I agree that it could be Britain - my first thought was somewhere in Scotland, as we don’t have many jagged mountain ridges like that in England. But something about it looks more foreign.
I’ve found an email address for the record company (although their website doesn’t inspire too much confidence that they’re still very active), so I’ve asked them. In the meantime, further speculation welcome… 
Looks like just outside of Lorien, looking into Fangorn. Isengard should be around those distant mountains somewhere.
I did an image search and found one which was wider than the album cover and had no words on it. I uploaded and searched that image and found it on a lot of wallpaper sites. Here’s the results. It’s apparently widely used as a backdrop for multilingual bible versus, thus the “isaias 41 10” in the top results.
I don’t know what to make of that. Maybe they used a stock image for the album, or maybe the guy who took the photo for the album sold it as a stock image 20 years later or it got into the wild somehow. I’m contributing nothing really, but here is a fairly large version of the same photo.
Also, is that Nessie in the lower middle? It doesn’t look like Loch Ness…
Just to add an observation – those mountains must run east to west given the sun position. Seems to maybe eliminate California.
The terrain, especially the form of the hills, the vegetation, fence design, and apparent evidence of grazing, very much suggest to me the Grampian Ranges in Victoria, Australia.
I’ve never been to the UK, but judging from the shape of the mountains, their orientation, and the vegetation, this looks like this might be shot in the area of the Lake District National Park. Check out pictures of the Langdale Pikes.
That’s interesting. I reckon it must be a stock photo, which ought to make identifying it easier if I can track down which agency it came from. Unfortunately I’m pretty sure I no longer have my copy of the album, as it would probably have a credit for the stock agency.
Very good spot! Looking at this pic the shape looks very similar if you imagine the photographer was shooting from the opposite direction. http://image.shutterstock.com/display_pic_with_logo/486172/486172,1255691446,1/stock-photo-blea-tarn-and-the-langdale-pikes-38995180.jpg
So New Zealand then?
So not New Zealand then. (Although, hills that size wouldn’t necessarily run north south in New Zealand.)
I didn’t think England had hills like that, but on closer inspection, although they have a nice craggy look, they aren’t very high.
I don’t think it’s the Lake District due to the shape. The Lake District peaks tend to be more rounded/less steep as you reach the top whereas the peaks in the pictures tend to point more sharply up as you move towards the top. (formed by a different process?)
I grew up in the Lakes, and I really can’t think where in Cumbria it could possible be- the ridge doesn’t look like anywhere I know of, and that style of fence is not common at all up there except as short, mostly temporary stretches- that’s dry stone wall country.
Also, all the hills I can think of are either virtually bare or completely forested, with a stone wall marking the boundary of wood and field, rather than thicker trees gradually spacing out.
Something about the colour, and for some reason the shape of the ridge, says Australia to me. And I still think the shape and trunk colour of some of the trees looks like some species of eucalypt.
Last WAG for the UK: Snowdon Horseshoe in Wales. If you look for pictures, you’ll find that the general outline on the right side is similar. However, I’m not sure about the. vegetation and general feel.
Of course, since this is a stock photo, it could be anywhere. I’m not sure I would trust the colours too much, as they’ve probably been significantly adjusted to emphasise the light.
Matt Haynes, who used to run The Field Mice’s record label Sarah, and ran the label that issued the compilation in your OP, currently has this blog as his online home:
Might be worth dropping him a line?