High River Gold Mines Ltd.
TSX : HRG

High River Gold Mines Ltd.

July 16, 2009 12:59 ET

High River Gold Provides Q2/2009 Update on Operations and Financial Status

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.

Contact Information

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