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TORONTO, ONTARIO--(Marketwire - Nov. 15, 2010) -
(All currency figures are in Canadian dollars unless otherwise noted)
High River Gold Mines Ltd. ("High River" or the
"Company") (TSX:HRG) today reported its financial results and
operational highlights for the three and nine month periods ended
September 30, 2010. The Unaudited Interim Consolidated Financial
Statements and related Notes along with the Management's Discussion and
Analysis have been filed with SEDAR (www.sedar.com)
and can be viewed on the Company's website at www.hrg.ca.
HIGHLIGHTS FOR THE THIRD QUARTER 2010
Financial Results
-- Net gold revenue of $100.8 million, a decrease of 11% from $113.8 million in Q2 2010, an increase of 13% from $89.6 million in Q3 2009. -- Net income of $ 25.8 million ($ 0.03 per share) compared to a net income of $39.3 million ($0.05 per share) in Q2 2010 and a net loss of $4.6 million (-$0.01 per share) in Q3 2009. -- Cash flow from operations of $26.3 million, compared to $48.8 million in Q2 2010, and $33.00 million in Q3 2009. -- Cash and cash equivalents increased to $125.6 million from $92.7 million at the end of Q2 2010, and up from $38.7 million at the end of Q3 2009. -- Working capital increased to $205.3 million from $150.9 million at the end of Q2 2010, up from $18.5 million at the end of Q3 2009. -- Current and long term debt decreased to $22.1 million from $31.5 million at the end of Q2 2010 and from $121.1 million at the end of Q3 2009.
Operations
-- Total gold production (dore) decreased 10% to 77,427 ounces (Q2 2010 - 86,803 ounces (100%) and 84,990 ounces in Q3 2009). Total cash cost per ounce increased 9% to US$603 (Q2 2010 - US$554 per ounce and US$518 per ounce in Q3 2009) (see the Non-GAAP Financial Measures table). -- The Zun-Holba and Irokinda Gold Mines produced 30,186 ounces (Q3 2009 - 37,430) (100%) at a total cash cost of US$583 per ounce. -- The Taparko-Bouroum Gold Mine produced 29,582 ounces (Q3 2009 - 25,073) (100%) at a total cash cost of US$421 per ounce. -- Gold production at Berezitovy was 17,659 ounces (Q3 2009 - 22,487 ounces) (100%), at a total cash cost of US$939 per ounce. -- At the Bissa Gold Project, the technical report describing the results of the feasibility study was published in Q3 2010.
Subsequent Events
-- Igor Klimanov resigned as Chief Executive Officer on October 4, 2010. -- A subsidiary of Severstal acquired 19,000,000 common shares of the Company in October 2010. Following the transaction, Severstal has beneficial ownership and control over 610,362,172 Common Shares, representing approximately 72.64% of the issued and outstanding Common Shares of the Company. -- Konstantin Sobolevskiy was appointed as Chief Executive Officer effective October 28, 2010. -- The Company paid off the principal amount of the Royal Gold loan. The Company has started to pay the tail royalty to Royal Gold, which amounts to 2% of the revenue generated by Somita.
DISCUSSION OF FINANCIAL
RESULTS
Selected Financial Results
The Company reported a net income of $25.78 million ($0.03 per share)
in Q3 2010 compared to net income of $39.3 million ($0.05 per share) in
Q2 2010 and a net loss of $4.6 million (-$0.01 per share) in Q3 2009.
---------------------------------------------------------------------------- Three months ended Nine months ended ---------------------------------------------------------------------------- (except per share September June 30, September September 30, September amounts) 30, 2010 2010 30, 2009 2010 30, 2009 ---------------------------------------------------------------------------- Gold revenue $100,767 $113,808 $89,557 $312,231 $262,917 ---------------------------------------------------------------------------- Net income (loss) 25,775 39,267 (4,567) 92,572 (41,413) ---------------------------------------------------------------------------- Net income (loss) per share (basic) 0.03 0.05 (0.01) 0.11 (0.07) ---------------------------------------------------------------------------- Cash provided by (used in) operating activities 26,296 48,800 33,011 106,595 85,504 ---------------------------------------------------------------------------- Weighted average number of shares outstanding (basic) 826,660,782 799,327,755 649,217,295 808,510,986 612,272,706 ----------------------------------------------------------------------------
About High River
High River is an unhedged gold company with
interests in producing mines and advanced exploration projects in
Russia and Burkina Faso. Two underground mines, Zun-Holba
and Irokinda, are situated in the Lake Baikal
region of Russia. Two open pit gold mines, Berezitovy
in Russia and Taparko-Bouroum in Burkina
Faso, are also in production. Finally, High River has two advanced
exploration projects with NI 43-101 compliant resource estimates, the Bissa gold project in Burkina Faso and 50% interest
in the Prognoz silver project in Russia.
FORWARD LOOKING INFORMATION
This release and subsequent oral statements made by and on behalf of
the Company may contain forward-looking statements. Wherever possible,
words such as "intends", "expects",
"scheduled", "estimates", "anticipates",
"believes", and similar expressions or statements that
certain actions, events or results "may", "could",
"would", "might" or "will" be taken,
occur or be achieved, have been used to identify these forward-looking
statements. Although the forward-looking statements contained in this
release reflect management's current beliefs based upon information
currently available to management and based upon what management
believes to be reasonable assumptions, High River cannot be certain
that actual results will be consistent with these forward-looking
statements. A number of factors could cause events and achievements to
differ materially from the results expressed or implied in the
forward-looking statements. These factors should be considered carefully
and prospective investors should not place undue reliance on the
forward-looking statements. Forward-looking statements necessarily
involve significant known and unknown risks, assumptions and
uncertainties that may cause High River's actual results, events,
prospects and opportunities to differ materially from those expressed
or implied by such forward-looking statements. Although High River has
attempted to identify important risks and factors that could cause
actual actions, events or results to differ materially from those
described in forward-looking statements, there may be other factors and
risks that cause actions, events or results not to be anticipated,
estimated or intended, including those risk factors discussed in the
Company's 2009 Annual Information Form. There can be no assurance that
the forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Accordingly, prospective investors
should not place undue reliance on forward-looking statements. Any
forward-looking statements are made as of the date of this release, and
High River assumes no obligation to update or revise them to reflect
new events or circumstances, unless otherwise required by law.
High River Gold Mines Ltd. CONSOLIDATED BALANCE SHEETS (Expressed in thousands of Canadian dollars) September 30, December 31, (unaudited) 2010 2009 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Assets Current Assets Cash and cash equivalents 125,587 $ 82,061 Restricted cash 1,348 562 Accounts receivable 16,332 18,115 Inventory 99,097 81,090 Other assets 17,384 12,382 ---------------------------------------------------------------------------- 259,748 194,210 Investments 103,871 64,810 Property, plant and equipment 311,087 340,606 Exploration properties and deferred exploration 114,919 105,061 Other assets 759 697 Future income taxes 1,122 1,578 ---------------------------------------------------------------------------- Total Assets 791,506 $ 706,962 ---------------------------------------------------------------------------- Liabilities Current Liabilities Accounts payable 43,164 $ 39,726 Loans and interest payable 8,466 58,666 Non-hedge derivatives 2,863 - ---------------------------------------------------------------------------- 54,493 98,392 Loans and interest payable 13,628 25,365 Reclamation and closure costs 17,755 14,208 Non-hedge derivatives - 13,684 Future income taxes 33,884 20,567 ---------------------------------------------------------------------------- 119,760 172,216 Non-controlling interest 31,408 21,922 ---------------------------------------------------------------------------- Total Liabilities 151,168 194,138 ---------------------------------------------------------------------------- Shareholders' Equity Share capital 640,157 610,770 Warrants 10,126 13,265 Contributed surplus 16,002 15,907 Debenture conversion option 538 538 Deficit (29,228) (121,801) Accumulated other comprehensive income 2,743 (5,855) ---------------------------------------------------------------------------- Total Shareholders' Equity 640,338 512,824 ---------------------------------------------------------------------------- Total Liabilities and Shareholders' Equity 791,506 $ 706,962 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- High River Gold Mines Ltd. CONSOLIDATED STATEMENTS OF OPERATIONS (Expressed in thousands of Canadian dollars except per share figures) Three months ended Nine months ended September 30, September 30, (unaudited) 2010 2009 2010 2009 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Revenue Gold 100,767 $ 89,577 312,231 $ 262,917 Silver 1,068 950 3,279 4,914 ---------------------------------------------------------------------------- 101,835 90,527 315,510 267,831 ---------------------------------------------------------------------------- Expenses Mining costs 42,134 47,736 127,030 134,315 Mine administrative costs 3,543 1,676 9,015 8,153 Mine amortization and depletion 13,868 13,145 45,116 41,913 Asset retirement obligation accretion 327 216 947 639 ---------------------------------------------------------------------------- 59,872 62,773 182,108 185,020 ---------------------------------------------------------------------------- Income before the undernoted 41,963 27,754 133,402 82,811 Administrative costs (1,470) (5,205) (2,809) (11,525) Amortization - (15) (6) (46) Exploration expense (6,764) (999) (9,916) (3,000) Financing costs and investment income, net 3,084 (8,490) 3,922 (15,356) Other income/(expenses) (572) (13,513) (4,570) (80,447) ---------------------------------------------------------------------------- Income (loss) before tax and non-controlling interest 36,241 (468) 120,023 (27,563) Income tax expense (6,029) (4,085) (17,965) (9,438) ---------------------------------------------------------------------------- Income (loss) before non- controlling interest 30,212 (4,553) 102,058 (37,001) Non-controlling interest in earnings of subsidiary (4,437) (14) (9,486) (4,412) ---------------------------------------------------------------------------- Net income (loss) for the period $ 25,775 $ (4,567)$ 92,572 $ (41,413) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Net income (loss) per share - basic and diluted $ 0.03 $ (0.01)$ 0.11 $ (0.07) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- High River Gold Mines Ltd. CONSOLIDATED STATEMENTS OF CASH FLOWS (Expressed in thousands of Canadian dollars) Three months ended Nine months ended September 30, September 30, (unaudited) 2010 2009 2010 2009 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Operating Activities Net income (loss) for the period $ 25,775 $ (4,567) $ 92,572 $ (41,413) Non-cash items: Non-controlling interest in earnings of subsidiary 4,437 14 9,486 4,412 Mining cost -change in inventory (6,200) 1,593 (17,976) 470 Amortization and depletion 13,868 13,161 45,122 41,959 Asset retirement obligation accretion 327 216 947 639 Financial instrument accretion 40 114 351 568 Fair value adjustments to financial instruments (3,510) 4,007 (10,821) 1,000 Stock based compensation 6 70 95 250 Write down of exploration - 11,383 628 70,167 Loss on disposal of assets (286) 6,429 (133) 6,991 Future income taxes 2,061 1,898 3,072 768 Unrealized foreign exchange loss (1,156) (6,204) 2,067 (2,690) Other 201 - (313) ---------------------------------------------------------------------------- Subtotal 35,563 28,114 125,097 83,121 Change in non-cash working capital (9,267) 4,897 (18,502) 2,383 ---------------------------------------------------------------------------- Net cash provided by operating activities 26,296 33,011 106,595 85,504 ---------------------------------------------------------------------------- Investing Activities Property, plant and equipment (10,165) (6,081) (23,387) (13,721) Proceeds on disposal 1,092 1,636 1,634 1,636 Exploration properties and deferred exploration (7,137) (1,560) (11,772) (4,114) (Increase) decrease in other assets (573) (4,927) (811) (1,553) ---------------------------------------------------------------------------- Net cash used by investing activities (16,783) (10,932) (34,336) (17,752) ---------------------------------------------------------------------------- Financing Activities Loans received - 13 - 5,991 Loans repaid - (5,722) (50,040) (63,290) Common shares issued 26,032 - 26,249 10,623 ---------------------------------------------------------------------------- Net cash used by financing activities 26,032 (5,709) (23,791) (46,676) ---------------------------------------------------------------------------- Effect of exchange rate changes on cash held in foreign currencies (2,688) (837) (4,942) (1,536) ---------------------------------------------------------------------------- Increase in cash and cash equivalents during the period 32,857 15,533 43,526 19,540 Cash and cash equivalents - Beginning of period 92,730 23,130 82,061 19,123 ---------------------------------------------------------------------------- Cash and cash equivalents - End of period $ 125,587 $ 38,663 $ 125,587 $ 38,663 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------
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