High River Gold Mines Ltd.
TSX : HRG

High River Gold Mines Ltd.

October 18, 2005 14:30 ET

High River Arranges US$35 Million Project Financing for Taparko-Bouroum Project

TORONTO, ONTARIO--(CCNMatthews - Oct. 18, 2005) - High River Gold Mines Ltd. ("High River" or the "Company")(TSX:HRG) is very pleased to announce the signing of an innovative, US $35 million project finance facility with Royal Gold, Inc. of Denver, Colorado ("Royal Gold") to fund completion of the construction of the Taparko-Bouroum open pit mine and processing plant in Burkina Faso, West Africa (the "Project").

The facility has been given board approvals by both companies, and is subject to, among other things, definitive documentation, completion of pre-closing requirements, and any required regulatory approvals. The closing, and first tranche funding, is anticipated by November 15, 2005. Drawdowns on the facility will be linked to specific project milestones associated with the remaining development of the Project, which is now scheduled for completion in the third quarter of 2006.

The project finance facility has been structured to satisfy the objectives of both High River and Royal Gold. The consideration to Royal Gold for the US $35 million facility consists of two key components:

1. Quarterly cash production payments totaling US $35 million, or until 804,420 ounces of gold have been produced, whichever occurs first, calculated as 15% of the total gold production processed at the Taparko processing facility during each quarter multiplied by the average gold price, as quoted on the London LME, for the particular quarter; and

2. Quarterly cash production payments until payments in (1) above cease, calculated by dividing the average gold price for the quarter by 100, the number expressed as a percentage (i.e. a US $450 per ounce gold price results in a rate of 450/100 equals 4.5%) multiplied by the total gold production and average gold price for the quarter.

Once payments in (1) and (2) have ceased, Royal Gold will be entitled to a tail royalty cash payment, paid quarterly, equal to 2% of the total gold production revenues during the quarter from within a defined property area, together with, for production sourced outside the defined area, a milling fee of 0.75% based on gold production revenues until an annual maximum of one million tonnes of ore has been processed through the mill.

The defined property area is all of the land in the 11.7 sq. km. Bouroum Exploitation Permit, and a 34.7 sq. km. area of the 666.5 sq. km. Taparko Exploitation Permit.

High River has determined that this innovative arrangement is more advantageous in respect of the Project than traditional bank project financing taking into account all relevant factors, including costs associated with bank fees, gold price protection, cash reserve accounts and other normal bank requirements. In addition, while High River will provide a specific guarantee until project completion, the structure of this facility allows High River the flexibility to better manage the Taparko-Bouroum operation, and also provides additional flexibility for the financing of other activities, including the construction of the Berezitovy Project in Russia.

High River has previously announced its intention to expand the plant facility at the Taparko-Bouroum Project to 1.5 million tonnes per year during the second full year of production; the additional 500,000 tonnes capacity would not be subject to the Royal Gold milling fee.

As a result of this financing, High River has concluded its discussions with Absa Corporate & Merchant Bank regarding the previously announced initiative for financing the Taparko-Bouroum Project.

Royal Gold is a precious metals royalty company engaging in the acquisition and management of precious metal royalty interests. Royal Gold is publicly traded on the NASDAQ National Market System under the symbol "RGLG," and on the Toronto Stock Exchange under the symbol "RGL."

High River, through its Russian subsidiary OJSC Buryatzoloto, owns and operates two underground gold mines in southern Siberia, Russia, having combined gold production of approximately 150,000 ounces per year. In addition to the Taparko-Bouroum Project, the Company is also developing and constructing the open pit Berezitovy Project in Russia. Following successful start-up of both projects, High River's total attributable annual gold production is expected to exceed 300,000 ounces by 2007.

FORWARD LOOKING STATEMENTS

This press release contains forward-looking statements based on current expectations. These forward-looking statements entail various risks and uncertainties that could cause actual results to differ materially from those reflected. Risk and uncertainties about the Company's business are more fully discussed in the Management's Discussion and Analysis published in the Company's Annual Report and in the Annual Information Form.

Contact Information

  • High River Gold Mines Ltd.
    Don Whalen
    Executive Chairman
    (416) 947 1440
    (416) 360 0010 (FAX)
    or
    High River Gold Mines Ltd.
    Laurie Gaborit
    VP Investor Relations & Corporate Secretary
    (416) 947 1440
    (416) 360 0010 (FAX)
    info@hrg.ca
    www.hrg.ca