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TORONTO, ONTARIO--(Marketwire - July
16, 2009) - High River Gold Mines Ltd. (TSX:HRG) ("High
River" or the "Company") would like to provide an update
on the operating status of its four gold mines and its financial
situation for the second quarter.
Financial Status (Liquidity and Capital Resources)
As of June 30, 2009, High River's total consolidated debt outstanding
was estimated at approximately US$ 103.9 million. This includes: (a) US
$39.7 million under various loans between Nomos Bank and High River's
Russian subsidiaries, Buryatzoloto and Berezitovy; (b) US $26.2 million
under a loan agreement between Royal Gold Inc. and High River's
subsidiary, Somita SA; and (c) approximately US $27 million under loan
agreements between OAO Severstal ("Severstal") and High River
and Somita SA (this loan was previously held by Standard Bank plc and
assigned to Severstal on April 20, 2009). The Company continues to be
in breach of certain covenants under the loan agreements with Royal
Gold Inc. and Severstal, who have not taken any actions thus far but
have reserved their rights to do so. Total short term debt amounts to
approximately US $75 million. Additionally, as of June 30, 2009, the
Company's consolidated accounts payable total approximately US $20
million.
As of July 15, 2009, High River's head office cash position totalled
approximately US $3.4 million, and consolidated cash totalled
approximately US $13.9 million.
Operations Update (Q2/2009)
Total Q2/2009 gold poured, on a 100% basis, from High River's four operating
gold mines totalled 79,997 ounces of which 78,095 ounces were refined
in the same period. Following is a mine summary of operational
performance during the quarter.
Taparko (100%)
Gold poured during the quarter totalled 20,139 ounces of which 17,519
ounces were refined during the same period. Approximately 182,000
tonnes of ore were processed during the quarter for an average rate of
94 tonnes per operating hour (25% below the original design capacity). Milling
of a higher grade ore at 4.2 g/t has partially compensated for the
shortcomings of the milling circuit.
Replacement of a trommel screen and two cyclone pumps enabled the plant
to operate at slightly higher capacity than during the last quarter. However,
vibration levels at the pinion/girth gear interface remain above
acceptable levels which limits the productivity of the mill. The
Company continues to study the problem with the goal of implementing a
long term solution.
Berezitovy (100%)
Gold poured during the quarter totalled 24,023 ounces of which 22,091
ounces were refined during the same period. Approximately 281,000
tonnes of ore were processed during the quarter (28% below the design
capacity) with an average grade of 2.5 g/t.
Mill utilization rates were lower than planned due to a six day
shutdown in April and an eight day shutdown in May during which repairs
were made to SAG mill lifters, pumps, conveyors, and the ball mill
motor. While all three disk filter units are operational at the disk
filter plant, throughput is below design capacity requiring a by-pass
of a portion of the tailings slurry past the disk filter plant into a
wet tailings storage facility. As the wet tailings storage facility is
expected to be filled up in the fourth quarter, two new disk filter
units from a different supplier have been ordered to improve throughput
rates of the disk filter plant and eliminate the need for a wet
tailings by-pass.
Buryatzoloto (100%) (Zun-Holba and Irokinda)
The Zun-Holba and Irokinda underground gold mines reported no material challenges
or shortcomings in their operations during the second quarter and
continue to operate according to plan. Refined gold produced at
Buryatzoloto in the quarter totalled 38,485 ounces and gold poured in
the same period amounted to 35,835 ounces The higher amount of refined
gold produced relative to gold poured in the period reflects a drawdown
of gold dore inventory from the first quarter level.
Change to High River Management
Steven Poad has tendered his resignation from the position of Chief Financial
Officer effective July 31, 2009, to pursue other business interests. Mr.
Poad will be replaced by High River Treasurer Andrei Maslov. Subsequent
to the resignation date, Mr. Poad will assist Mr. Maslov in the
transition process as required.
Mr. Poad will continue to serve as a Director of High River. Management and the Board
of Directors of High River thank Mr. Poad for his service to the
company as the Chief Financial Officer.
Update on Severstal Offer
As previously announced on June 25, 2009, High River mailed to
shareholders its directors' circular recommending acceptance of the
offer (the "Offer") by Severstal for all of the issued and
outstanding common shares ("Shares") of High River (excluding
Shares currently held by Severstal and its affiliates) at a price of
$0.22 per Share in cash. The Offer expires at 5:00 p.m. (Toronto time)
on July 31, 2009, unless extended or withdrawn.
The Board of Directors is aware that certain shareholders have
circulated financial and other information regarding High River and the
Offer. The Board has not approved these materials and the financial
information in these materials was prepared by unidentified sources and
may be incomplete or inaccurate. The Board continues to recommend that
shareholders accept the Offer. The Board's detailed reasons for its
recommendation are set out in the directors' circular which is
available on SEDAR at www.sedar.com
and no other information which may be made available to shareholders
with respect to the Offer has been authorized or approved by the Board.
About High River
High River is a gold company with interests in producing mines and
advanced exploration projects in Burkina Faso and Russia.
FORWARD LOOKING STATEMENTS
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, event,
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. 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.
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