High River Gold Mines Ltd.

High River Gold Mines Ltd.

March 31, 2005 09:00 ET

High River Gold Reports 2004 Year-End Results


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: HIGH RIVER GOLD MINES LTD.

TSX SYMBOL: HRG

MARCH 31, 2005 - 09:00 ET

High River Gold Reports 2004 Year-End Results

TORONTO, ONTARIO--(CCNMatthews - March 31, 2005) - High River Gold Mines
Ltd. ("High River", "Company") (TSX:HRG) is pleased to report its
financial results and operations for the year ended December 31, 2004
(all currency figures are in Canadian dollars unless otherwise noted).
The Consolidated Financial Statements and related Notes along with the
Management's Discussion and Analysis have been filed with SEDAR
(www.sedar.com) and can be viewed on the Company's website at
www.hrg.ca, and will also be included in the Company's annual report,
which will be mailed to our shareholders.

Highlights for 2004

- Attributable gold production of 107,644 ounces at a total cash cost of
US $257 per ounce

- Consolidated net loss of $112,000 ($0.00 per share)

- Consolidated operating cash flow of $19.4 million

- Completion of equity issues for gross proceeds of $64.8 million

- Bankable feasibility studies completed for Taparko-Bouroum and
Berezitovy gold projects

- Project financing arranged for the two development projects

- Start of construction at the Taparko-Bouroum and Berezitovy projects

Subsequent Events

- Interest in Buryatzoloto increasing to 85%

- Acquisition of the Novophirsovskoye exploration and mining license in
Russia

High River's primary growth strategy continues to focus on Russia and
West Africa. During 2004, High River pursued its objective of increasing
its equity interest in its Russian subsidiary OJSC Buryatzoloto
("Buryatzoloto"). By the end of 2004, the Company had finalized share
exchange agreements with several Buryatzoloto shareholders with the
result of increasing High River's interest to 84.9%. The share exchange
transaction was approved by the Russian Federal Anti-Monopoly Service in
late January 2005. The actual exchange of High River shares for
Buryatzoloto shares with the parties involved will occur after
completion of formal documentation. Accordingly, information in this
press release is presented on the basis that the share exchange
transactions have not been completed.

2004 Financial Results

The Company incurred a net loss of $112,000 ($0.00 per share) in 2004
compared to a net loss of $17,109,000 ($0.16 per share) in 2003. The
loss for the year was mainly due to the closing of the New Britannia
Mine in Canada, higher operating costs at the Company's underground
operations in Russia and a non-cash stock option expense of $1,756,000.
In 2003, the loss was largely the result of the Company having to write
down $14,155,000 for plant and equipment of the New Britannia Mine.

The Company's consolidated gold revenues for 2004 were $96,353,000
compared to $96,415,000 in 2003. Although there was a significant
improvement in the realized gold price on gold sales, the Company's
attributable gold production declined by 9% to 107,644 ounces compared
to 118,182 ounces in 2003 as a result of lower production at the New
Britannia Mine. Attributable gold sales were 110,252 ounces in 2004
compared to 119,999 in 2003. The average realized gold price was US $405
per ounce in 2004, up from US $358 per ounce in 2003. The Company
remains unhedged and continues to sell its gold production at spot
prices.

Exploration expenses declined from $4,642,000 to $2,647,000 in 2004.
General and administrative expenses in 2004 increased to $5,724,000
compared to $5,232,000 in 2003.

Cash flow from operating activities increased in 2004 to $19.4 million
compared to $12.4 million in 2003. The increase is mainly due to changes
in non-cash working capital accounts.

Investing activities consumed $49.1 million of cash in 2004 compared to
$31.2 million in 2003. The significant increase is due to the planned
capital expenditures on the construction of the Taparko-Bouroum and
Berezitovy projects.

The Company strengthened its balance sheet in 2004 by completing two
financings for gross proceeds of $64.8 million. The proceeds from these
transactions were added to cash resources to fund the development of the
Berezitovy and Taparko-Bouroum projects. In 2003, the Company raised net
proceeds of $23.2 million in a brokered private placement and $6.6
million from the exercise of stock options and warrants. The proceeds
were added to working capital.

Working capital at December 31, 2004 amounted to $42.7 million, of which
$40.7 million was in cash compared to $27.0 million at the end of 2003,
of which $18.3 million was in cash.

Fourth Quarter 2004 Review

Gold revenue decreased to $20.3 million in the fourth quarter of 2004
from $20.8 million in the same period of 2003. Despite a decrease in
gold sales from 24,854 ounces to 19,006 ounces, a higher realized gold
price offset the production shortfall. For the period, the Company
incurred a net loss of $4.3 million compared to $17.2 million in 2003.
The loss is the result of costs associated with the closure of the New
Britannia Mine, lower income from Buryatzoloto due to higher costs at
their operations, and a higher non-cash expense for stock options. In
2003, the Company took a write down of $14.2 million for property, plant
and equipment at the New Britannia Mine.

The Company's investing activities during the fourth quarter totalled
$22.9 million mainly associated with the construction and development of
its two major projects. Expenditures at the Taparko project included
procurement of equipment and supplies, initial purchase of the camp
facility and the hiring of key senior personnel. At the Berezitovy
project, expenditures were associated with dismantling of the purchased
mill plant, continued construction of the powerline, procurement of
equipment and supplies, and road construction.

During the fourth quarter, the Company raised gross proceeds of $60
million to finance the development of its two projects. In preparation
for its project loan requirement with Absa Bank Limited of South Africa,
acting through its division Absa Corporate and Merchant Bank ("ABSA"),
for the construction of the Taparko-Bouroum project, the Company
purchased put options for 60,000 ounces of gold with a strike price of
US $390 per ounce at a cost of US $784,000.

Review of Operations and Development Projects

Buryatzoloto Operations

Buryatzoloto's mines are located in the Republic of Buryatia in southern
Siberia, Russia. For 2004, Buryatzoloto achieved its mine plan target
and produced 155,253 ounces of gold from its two underground mines and a
small placer operation, at a total cash cost of US $251 per ounce. Gold
production from the small, seasonal placer operation was 4,752 ounces
compared to 4,545 ounces in 2003. The 2004 results exceeded last year's
record gold production of 153,754 ounces at a total cash cost of US $197
per ounce. Buryatzoloto is unhedged and realized an average price of US
$405 per ounce for gold sales during the year.

Buryatzoloto's capital expenditures for the year totalled $12.2 million.



Buryatzoloto Operating and Financial Data

2004 2003
---------------------------------------------------------------------
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Tonnes milled 533,335 485,245
Head grade (g/t) 9.3 10.1
Recovery (%) 94.4 94.1
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Gold production (oz) (100%) 155,253 153,754
High River share of production (oz) 83,992 83,181
High River share of gold sales (oz) 83,628 82,968
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Direct mining cost (US $/oz) 227 177
By-product credits (US $/oz) (4) (3)
---------------------------------------------------------------------
Mine operating cost (US $/oz) 223 174
Royalties (US $/oz) 28 23
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Total cash cost (US $/oz) 251 197
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Zun-Holba Mine

In 2004, the mine produced 65,017 ounces of gold, in line with the mine
plan. The mill processed 225,208 tonnes of ore at an average grade of
9.5 g/t gold. Since 1995, the mine has produced a total of 544,505
ounces of gold.

In 2004, direct mining costs increased to US $267 per ounce (total cash
cost of US $297 per ounce) compared to direct mining costs of US $199
per ounce (total cash cost of US $223 per ounce) in 2003. The increased
costs were largely due to the implementation of a more costly mining
method and higher inflation and labour costs. Costs were also impacted
by the strengthening of the rouble during the year resulting in higher
US dollar costs at Zun-Holba.



Operational Data

2004 2003
---------------------------------------------------------------------
---------------------------------------------------------------------
Tonnes mined 235,540 229,200
Tonnes milled 225,208 229,332
Head grade (g/t) 9.5 9.5
Recovery (%) 93.7 93.2
Gold production (oz) 65,017 65,267
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Irokinda Mine

In 2004, Irokinda produced 85,484 ounces of gold, exceeding budget by
12%. The mill achieved well above budgeted throughput levels and
processed 308,127 tonnes of ore at an average grade of 9.1 g/t gold.
Since 1995, the mine has produced a total of 510,997 ounces of gold.

In 2004, direct mining costs increased to US $188 per ounce (total cash
cost of US $214 per ounce) compared to direct mining costs of US $142
per ounce (total cash cost of US $164 per ounce) in 2003. The rise in
operating costs was mainly the result of a lower than planned head
grade, and higher inflation and labour costs. The strengthening of the
rouble against the US dollar also negatively impacted operating costs at
Irokinda as most of these costs are rouble based.



Operational Data

2004 2003
---------------------------------------------------------------------
---------------------------------------------------------------------
Tonnes mined 327,014 287,929
Tonnes milled 308,127 255,913
Head grade (g/t) 9.1 10.7
Recovery (%) 95.0 94.8
Gold production (oz) 85,484 83,943
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New Britannia Mine (50%)

High River has a 50% direct, joint venture interest in the underground
New Britannia Mine, under the operatorship of Kinross Gold Corporation
("Kinross"). Gold production for 2004 was 47,304 ounces at a direct
mining cost of US $294 per ounce (total cash cost of US $299 per ounce).
High River's share for 2004 was 23,652 ounces. In 2003, gold production
was 70,002 ounces at a direct mining cost of US $335 per ounce (total
cash cost of US $339 per ounce). High River's share for 2003 was 35,001
ounces. In 2004, the mill processed 391,081 tonnes of ore at an average
grade of 4.04 g/t gold. The New Britannia Mine realized an average price
of US $406 per ounce for gold sales during the year compared to US $359
per ounce in 2003.



New Britannia Operating and Financial Data

2004 2003
---------------------------------------------------------------------
---------------------------------------------------------------------
Tonnes milled 391,081 606,630
Head grade (g/t) 4.04 3.80
Recovery (%) 93.2 94.5
---------------------------------------------------------------------
Gold production (oz) (100%) 47,304 70,002
High River share of production (oz) 23,652 35,001
High River share of gold sales (oz) 26,624 37,031
---------------------------------------------------------------------
Direct mining cost (US $/oz) 294 335
By-product credits (US $/oz) (1) (1)
---------------------------------------------------------------------
Mine operating cost (US $/oz) 293 334
Royalties (US $/oz) 6 5
---------------------------------------------------------------------
Total cash costs (US $/oz) 299 339
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---------------------------------------------------------------------


Throughout the year, the mine continued to experience production
shortfalls, both in tonnage and grade. Kinross and High River suspended
production in September 2004 and in January 2005 the mine was placed on
care and maintenance. High River could relinquish its interest following
closure, subject to discussion with the operator.

Berezitovy Project (99%)

The Berezitovy project is located in the Amur Oblast region of Russia.
Following a bankable feasibility study completed in June 2004, High
River initiated the construction and development of the open pit mine
and its on-site processing facilities in 2004. In August 2004, the
Company acquired from Newmont Mining Corporation ("Newmont") the Mill 4
Gold Ore Processing Facility ("Mill 4") and an overland conveyor system,
located approximately twenty miles north of Carlin, Nevada. In addition
to the Mill 4 facility, High River also purchased a jaw crusher located
at the McCoy Mine. In October 2004, Newmont/High River received approval
from the State of Nevada to dismantle the plant. Demolition and
equipment removal are almost complete and certain parts are being
refurbished in the area prior to shipping. The current plan is to have
all components relocated to Russia and available for reassembly by
mid-2005.

Based on the current project development schedule, the mine will
commence commissioning in the first half of 2006. Approximately US $14
million of the US $59 million construction and development budget was
spent in 2004, relating to the purchase of Mill 4, construction of the
powerline, initial engineering work and procurement of equipment and
supplies. The project will be financed by project debt (approximately US
$32 million) and available cash resources of the Company.

In November 2004, High River signed a mandate with the European Bank for
Reconstruction and Development (EBRD) to provide a US $32 million
financing debt package for the construction of the Berezitovy project.
The financing is subject to the bank's due diligence process and credit
committee approval. The terms and conditions are to be finalized
following the due diligence process, which is underway.

In March 2005, the Company received approval for an extension to the
production commitments on its Berezitovy mining license. The new terms
extend the period for the start of industrial exploitation (mining) to
July 30, 2006. Additionally, the Company has until June 30, 2007 to
achieve an annual production rate of no less than 48,232 oz of gold. The
Company is highly confident in meeting these requirements.

Taparko-Bouroum Project (90%)

The Taparko-Bouroum project is located in the Namantenga Province,
Burkina Faso in West Africa, approximately 200 km northeasterly, by
road, from the capital city of Ouagadougou. In June 2004, High River
completed a bankable feasibility study for the construction of the mine
and mill facilities to process ore from both the Taparko gold deposits
and the nearby Bouroum gold deposits, located 49 kilometres northwest of
the planned Taparko mill. In June 2004, the Company purchased the
Bouroum property for US $3.3 million. Final payment of US $2.7 million
will be made within four months of receiving the exploitation permit for
the Bouroum property, which is expected shortly.

Following the granting of the exploitation license for Taparko from the
Government of Burkina Faso in August 2004, the Company proceeded with
construction activities for the mine and mill facilities. The project is
expected to commence production by the end of the first quarter of 2006.
The capital cost for the Taparko-Bouroum project is expected to amount
to US $52 million. Approximately US $9.2 million was spent in 2004,
relating to initial engineering work and procurement of equipment and
supplies. The project will be financed by project debt (approximately US
$36 million) and available cash resources of the Company.

In August 2004, High River signed an indicative term sheet for a
financing debt package totalling approximately US $36 million with ABSA
for the construction of the Taparko-Bouroum project. The technical due
diligence has been completed and is subject to some minor follow up
issues. Final credit committee approval was received in March 2005.

The Company is currently optimizing the mine plan using a US $400 gold
price, which would allow for higher production levels in the early years
of the mining operation. High River also believes there is excellent
potential to define additional satellite deposits within trucking
distance of the processing facility. Exploration activities have defined
prospective gold targets which have the potential to add additional
resources amenable to open pit mining.

Outlook

During 2005, High River will focus its efforts on rapidly advancing the
development of the Taparko-Bouroum and Berezotovy gold projects to
ensure commencement of production in the first half of 2006. Management
believes the Company will be able to fund its capital projects with
finalization of the loan facilities and its current working capital. The
successful start-up of both projects will have a significant impact on
the Company as it will increase its gold production profile to over
300,000 ounces by 2007.

The Company intends to maintain its gold production level at its two
Russian operations with a production target of approximately 147,000
ounces (124,800 ounces attributable to High River). The 2005 production
forecast takes into account the Company's increased interest in
Buryatzoloto to 84.9%. High River and Buryatzoloto will be working
towards optimizing these operations with the objectives of increasing
reserves and reducing operating costs. The evaluation plan also includes
a review of the exploration potential in proximity of the mine
infrastructures.

High River plans to expand its exploration activities in both Burkina
Faso and Russia. The primary objective in Burkina Faso is to define
additional satellite deposits that are within trucking distance of the
Taparko-Bouroum mill facility to increase annual gold production and
extend the mine life of the project. In early 2005, the Company acquired
the Novophirsovskoye exploration and mining license in Russia through a
public auction. The license area has numerous gold prospects and will be
evaluated during the year. High River will continue to evaluate new
opportunities that will add value to the Company.

FORWARD-LOOKING STATEMENTS

This press release contains certain forward-looking statements relating
but not limited to the Company's expectations, intentions, plans and
beliefs. Forward-looking information can often be identified by
forward-looking words such as "anticipate", "believe", "expect", "goal",
"plan", "intend", "estimate", "may" and "will" or similar words
suggesting future outcomes, or other expectations, beliefs, plans,
objectives, assumptions, intentions or statements about future events or
performance. Forward-looking information may include reserve and
resource estimates, estimates of future production, unit costs, costs of
capital projects and timing of commencement of operations, and is based
on current expectations that involve a number of business risks and
uncertainties. Factors that could cause actual results to differ
materially from any forward-looking statement include, but are not
limited to, failure to establish estimated resources and reserves, the
grade and recovery of ore which is mined varying from estimates, capital
and operating costs varying significantly from estimates, delays in
obtaining or failures to obtain required governmental, environmental or
other project approvals, inflation, changes in exchange rates,
fluctuations in commodity prices, delays in the development of projects
and other factors. Forward-looking statements are subject to risks,
uncertainties and other factors that could cause actual results to
differ materially from expected results.

Potential shareholders and prospective investors should be aware that
these statements are subject to known and unknown risks, uncertainties
and other factors that could cause actual results to differ materially
from those suggested by the forward-looking statements. Shareholders are
cautioned not to place undue reliance on forward-looking information. By
its nature, forward-looking information involves numerous assumptions,
inherent risks and uncertainties, both general and specific, that
contribute to the possibility that the predictions, forecasts,
projections and various future events will not occur. High River
undertakes no obligation to update publicly or otherwise revise any
forward-looking information whether as a result of new information,
future events or other such factors which affect this information,
except as required by law.



High River Gold Mines Ltd.
Consolidated Balance Sheets
As at December 31
(Thousands of Canadian dollars)

2004 2003
(restated)
---------------------------------------------------------------------
---------------------------------------------------------------------
Assets
Current Assets
Cash and cash equivalents $ 40,709 $ 18,257
Restricted cash 2,021 615
Accounts receivable 5,301 7,513
Inventory 13,369 15,489
Other assets 116 1,066
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61,516 42,940
Investments 8,980 4,943
Property, plant and equipment 65,799 74,293
Exploration properties
and deferred exploration 4,111 27,667
Development properties 64,151 -
Other assets 1,289 599
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Total Assets $ 205,846 $ 150,442
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Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable $ 14,274 $ 8,906
Loans and interest payable 4,560 7,038
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18,834 15,944
Loans and interest payable 12,048 17,104
Reclamation 2,029 3,348
Venture obligation 29,881 30,352
Future income taxes 2,713 2,690
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65,505 69,438
Non-controlling interest 41,994 39,523
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Total Liabilities 107,499 108,961
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Shareholders' Equity
Share capital 177,084 124,669
Warrants and agent special options and
warrants 8,620 264
Contributed surplus 4,664 2,647
Cumulative translation
adjustment (20,458) (15,120)
Deficit (71,563) (70,979)
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98,347 41,481
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Total Liabilities and
Shareholders' Equity $ 205,846 $ 150,442
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High River Gold Mines Ltd.
Consolidated Statements of Operations
For the years ended December 31
(Thousands of Canadian dollars)

2004 2003
(restated)
---------------------------------------------------------------------
---------------------------------------------------------------------
Revenue
Gold $ 96,353 $ 96,415
Other 911 782
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97,264 97,197
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Expenditures
Mining costs 70,233 65,082
Amortization and depletion 9,083 10,820
Exploration 2,647 4,642
Administrative costs 5,724 5,232
Financing costs 3,510 3,919
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91,197 89,695
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Income before the under noted 6,067 7,502
Write-down of joint venture assets - (14,155)
Non-controlling interest
in earnings of subsidiary (3,166) (4,470)
---------------------------------------------------------------------
2,901 (11,123)
Income tax expense 3,013 5,986
---------------------------------------------------------------------
Net loss for the year $ (112) $ (17,109)
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Net loss per share - basic $ (0.00) $ (0.16)
- diluted $ (0.00) $ (0.16)
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Weighted average number of common
shares outstanding - basic 112,140,824 104,393,203
- diluted 112,140,824 104,393,203
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---------------------------------------------------------------------



Consolidated Statements of Deficit
For the years ended December 31
(Thousands of Canadian dollars)
2004 2003
(restated)
---------------------------------------------------------------------
Deficit - Beginning of year $ (70,979) $ (53,052)
Change in accounting policy (472) (818)
---------------------------------------------------------------------
As restated (71,451) (53,870)
Net loss for the year (112) (17,109)
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Deficit - End of year $ (71,563) $ (70,979)
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High River Gold Mines Ltd.
Consolidated Statements of Cash Flows
For the years ended December 31
(Thousands of Canadian dollars)

2004 2003
(restated)
---------------------------------------------------------------------
---------------------------------------------------------------------
Cash provided by (used in):
Operating Activities
Net loss income for the period $ (112) $ (17,109)
Non-cash items:
Non-controlling interest
in earnings of subsidiary 3,166 4,470
Reclamation (355) 522
Amortization and depletion 9,083 10,820
Write-down of joint venture assets - 14,155
Loss on disposal of assets 512 122
Stock option benefit expense 1,756 1,087
Future income taxes 240 1,941
Other (2,145) (278)
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Subtotal 12,145 15,730
Change in non-cash working capital 7,256 (3,339)
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Total operating 19,401 12,391
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Investing Activities
Property, plant and equipment (12,500) (23,448)
Exploration properties
and deferred exploration (653) (3,535)
Development properties (30,334) -
Increase in investments (4,079) (4,289)
Allocation of restricted cash (1,517) 67
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Total investing (49,083) (31,205)
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Financing Activities
Dividends paid by subsidiary to
non-controlling interest (350) -
Decrease in loans and interest
payable (6,417) (1,372)
Issuance of common shares 61,035 30,047
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Total financing 54,268 28,675
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Effect of exchange rate changes on
cash held in foreign currencies (2,134) (727)
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Increase in cash and cash equivalents
during the year 22,452 9,134
Cash and cash equivalents
- Beginning of year 18,257 9,123
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Cash and cash equivalents
- End of year $ 40,709 $ 18,257
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-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    High River Gold Mines Ltd.
    Don Whalen
    Chairman
    (416) 947 1440
    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