High River Gold Mines Ltd.
TSX : HRG

High River Gold Mines Ltd.

June 09, 2009 12:16 ET

High River Gold Provides Update on Improved Severstal Offer and Announces Private Placement

TORONTO, ONTARIO--(Marketwire - June 9, 2009) - The Board of High River Gold Mines Ltd. ("High River" or the "Company") (TSX:HRG) would like to update the market on its previously announced discussions with OAO Severstal ("Severstal") concerning Severstal's proposal to make a cash offer to minority shareholders in High River. Today, following receipt of an improved proposal from Severstal, the Special Committee of independent directors recommended to the Board of High River that High River negotiate a support agreement with Severstal, pursuant to which Severstal would offer to acquire all of the outstanding common shares ("Shares") of High River for cash at a price of $0.22 per Share (the "Offer"). The Offer is a 13% premium to High River's 20-day volume weighted average price and a 33% premium to the 20-day volume weighed average price ending May 21, 2009, the day before the announcement of Severstal's previous offer. The Offer will be subject to certain conditions, including negotiation and execution of the support agreement and all ancillary documentation. The recommendation of the Special Committee follows the preparation of a formal valuation of High River conducted in accordance with Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101").

In connection with the Offer, High River and Severstal have also agreed to complete a private placement (the "Private Placement"). Subject to the approval of the Toronto Stock Exchange, Severstal will acquire 59,019,367 Shares (representing approximately 10% of the 590,193,673 currently outstanding Shares) at a price of $0.18 per Share for proceeds of approximately $10.6 million. The proceeds will be used by High River to repay a US$10 million in debt by its 84.94%-owned subsidiary OJSC Buryatzoloto ("Buryatzoloto") on June 12, 2009. The Private Placement is expected to close promptly following the receipt of regulatory approval, and the Shares issued pursuant to the Private Placement will be subject to a statutory four month hold period. Following closing of the Private Placement, Severstal will control 57.3% of the Shares. In order to facilitate such payment, Severstal has also agreed to provide Buryatzoloto with a short-term loan, repayable in ten days from the proceeds of the Private Placement.

The Special Committee believes that the combination of the Offer and the Private Placement allows High River to address its immediate liquidity concerns while allowing shareholders an option to tender their shares at a price per share that falls within the formal valuation range prepared by an independent appraiser.

High River is not required to obtain a formal valuation or seek minority approval under MI 61-101 in connection with the Private Placement because the Shares to be issued pursuant to the Private Placement represent less than 25% of High River's market capitalization and therefore High River is exempt from such requirements in accordance with Section 5.5(a) and Section 5.7(1)(a) of MI 61-101. High River will file a material change report as soon as practicable after issuing this press release. The material change report will be filed fewer than 21 days before the closing of the Private Placement. The timing of the material change report is, in High River's view, both necessary and reasonable because the terms were recommended by the Special Committee and approved by High River's Board on June 9, 2009 and High River requires immediate funding to address its critical solvency concerns, including the US$10 million payment by Buryatzoloto on June 12, 2009.

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
    Fax: (416) 360 0010
    info@hrg.ca
    www.hrg.ca