High River Gold Mines Ltd.
TSX : HRG

High River Gold Mines Ltd.

November 20, 2008 08:28 ET

High River Gold Announces Equity Financing

TORONTO, ONTARIO--(Marketwire - Nov. 20, 2008) - High River Gold Mines Ltd. ("High River" or the "Corporation") (TSX:HRG) announces that it is entering into a non-brokered private placement (the "Offering") of 282,288,515 common shares (the "Common Shares") and 40,674,540 warrants (the "Warrants") of the Corporation, each Warrant entitling the holder thereof to acquire one Common Share at an exercise price of CDN$0.64 until September 29, 2013. Lybica Holding B.V., an affiliate of ZAO Severstal Resources, the mining division of OAO Severstal ("Severstal"), has agreed to purchase the Common Shares for a price of approximately US$0.1594 (CDN$0.20) per Common Share for total aggregate gross proceeds to High River of US$45,000,000 (CDN$56,367,000). The Warrants are being issued as partial consideration for the purchase price of the Common Shares. The Offering is expected to be closed later today (the "Closing").

Severstal, through its affiliates, currently holds 30,482,615 Common Shares of High River totaling 9.9% of the currently outstanding Common Shares. Upon completion of the Offering, Severstal will hold 312,771,131 Common Shares representing approximately 53.0% of the currently outstanding Common Shares. Upon closing of the still outstanding Prognoz transaction, which will result in the Corporation acquiring the remaining 50% of Prognoz that it does not own, there will be 624,293,673 Common Shares issued and outstanding, and Severstal will indirectly hold approximately 50.1% of such Common Shares. No insider of the Corporation will participate in the Offering.

High River has agreed that the Closing will be conditional upon, among other things, Roman Deniskin, Nikolay Zelenskiy, Evgeny Tulubensky and Oleg Pelevin being appointed to the board of directors of the Corporation on behalf of Severstal Resources in place of resigning directors David Mosher and Valery Dmitriev. Management changes are also contemplated including the resignation of David Mosher as President and Chief Executive Officer and the appointment of Nikolay Zelenskiy as Chief Executive Officer. In addition, effective November 19, 2008, Richard A. Morawetz, a Managing Director of Alvarez & Marsal Canada ULC was appointed Chief Restructuring Officer of the Corporation.

The Corporation is relying upon exemptions from the security holder approval requirements of the Toronto Stock Exchange (the "TSX") in Subsection 604(e) of the TSX Company Manual, available in cases of financial hardship. The Corporation's board of directors, and its independent directors, acting in good faith, have determined that the Corporation faces serious financial difficulty and that the proposed transaction has been designed to improve the financial position of the Corporation. As a consequence of relying upon the financial hardship exemptions, the TSX has informed the Corporation that it will, in the ordinary course, commence a delisting review. The Corporation believes that, upon completion of the Offering and the filing of its third quarter financial statements, it will be in compliance with TSX listing requirements.

The completion of the Offering is subject to the approval of the TSX and all other necessary regulatory approvals. The securities issuable pursuant to the Offering will be subject to applicable regulatory hold periods. Proceeds of the Offering will be used for repayment of the US$15 million to Nomos Bank due November 21, 2008, provision of US$9 million to Societe Des Mines De Taparko for working capital needs, repayment of US$10 million to Nomos Bank due December 21, 2008 and for general corporate purposes.

For this transaction, the Special Committee of High River was advised by CIBC World Markets and Cormark Securities. Alvarez & Marsal Canada ULC acted as restructuring advisors to the Special Committee. Cassels Brock & Blackwell LLP provided the Corporation with legal advice relating to the transaction and Fraser Milner Casgrain LLP provided the Special Committee with legal advice. Severstal was advised by Morgan Stanley & Co. Limited and Torys LLP provided legal advice in connection with the transaction.

About High River

High River is a gold company with an interest in producing mines, mines under development, 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 Corporation 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.

Contact Information

  • High River Gold Mines Ltd.
    Dan Hrushewsky
    Vice President Investor Relations
    (416) 947-1440
    (416) 360-0010
    Email: info@hrg.ca
    Website: www.hrg.ca