High River Gold Mines Ltd.
TSX : HRG

High River Gold Mines Ltd.

May 19, 2009 08:00 ET

High River Gold Provides Update on Operations and Financial Status

TORONTO, ONTARIO--(Marketwire - May 19, 2009) - High River Gold Mines Ltd. ("High River" or the "Company") (TSX:HRG) would like to provide an update on the operating status of its four gold mines and its financial situation:

Financial Status (Liquidity and Capital Resources)

As of April 30, 2009, High River's total consolidated debt outstanding was estimated at approximately US$ 122 million. This includes: (a) US $54 million under various loans between Nomos Bank and High River's Russian subsidiaries, Buryatzoloto and Berezitovy; (b) US $27 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 financial 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 scheduled principal and interest debt repayments due in May and June 2009 amount to approximately US $15.5 million, with approximately US $22 million additional repayments due in the second half of 2009. Additionally, as of April 30, 2009, the Company's consolidated accounts payable totalled US $20 million.

As of May 11, 2009, High River's head office cash position totalled approximately US $0.6 million, and consolidated cash totalled approximately US $7.4 million.

The Company is continuing to consider alternatives regarding additional financing required to ensure that it will be able to meet its financial obligations. However, there can be no assurances that the Company will secure the required financing.

Operations Update (March and April, 2009)

Taparko

The scheduled mid-March shutdown began on March 18th and lasted until March 31st when the mill was restarted. During the shutdown, new ball mill liners were installed to eliminate recurring liner breakage and to lower mill vibration levels. However, since the restart, the mill has failed to achieve stable operation and has shown no improvement in throughput rates. Vibration levels at the pinion/girth gear interface remain high and problems with excessive cyclone pump wear resulted in a further decrease of the mill average throughput rate to 81 tonnes per operating hour in April from 87 tonnes per operating hour in March. The Company continues to undertake actions to correct these problems and to increase mill throughput and recovery.

Gold poured at Taparko during March and April, 2009 totalled 7,726 ounces and 4,088 ounces, respectively.

Berezitovy

During March, the Berezitovy mill was shut down for 9 days and average mill utilization was at 60% due to scheduled mill maintenance (replacement of SAG mill liners and unloading grates), and additional extra work which was done to take advantage of the downtime (replacement of SAG mill lifters, ball mill motor repair, etc.). Mill utilization during April was significantly higher at 80%. The Company continues to undertake actions to correct the problems described in our February 2, 2009 press release to increase mill throughput and recovery.

Gold poured at Berezitovy during March and April, 2009 totalled 6,529 ounces and 8,623 ounces, respectively.

Buryatzoloto (Zun-Holba and Irokinda)

The Zun-Holba and Irokinda underground gold mines reported no material challenges or shortcomings in their operations during March and April, 2009 and continue to operate according to plan.

Gold poured at Buryatzoloto during this period totalled 22,487 ounces.

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