High River Gold Reports Second Quarter 2011 Results

TORONTO, ONTARIO--(Marketwire - Aug. 15, 2011) -

(All currency figures are in Canadian dollars unless otherwise noted)

High River Gold Mines Ltd. ("High River" or the "Company") (TSX:HRG) today reported its financial results and operational highlights for the three month period ended June 30, 2011. The Unaudited Interim 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.

HIGHLIGHTS FOR THE SECOND QUARTER 2011

Financial Results

• Net gold revenue of $136.2 million, an increase of 11% from $122.4 million in Q1 2011, an increase of 20% from $113.8 million in Q2 2010.
• Net income of $41.4 million ($0.05 per share) compared to a net income of $37.3 million ($0.04 per share) in Q1 2011 and a net income of $37.5 million ($0.05 per share) in Q2 2010.
• Cash flow from operations of $42.9 million, down from $53.5 million in Q1 2011, and down from $48.8 million in Q2 2010.
• Cash and cash equivalents increased to $207.2 million from $204.1 million at the end of Q1 2011, and up from $92.7 million at the end of Q2 2010.
• Working capital increased to $307.2 million from $287.0 million at the end of Q1 2011 and from $150.9 million at the end of Q2 2010.
• Current and long term debt increased to $24.0 million from $23.5 million at the end of Q1 2011 and decreased from $31.5 million at the end of Q2 2010.
• In June 2011, High River agreed to settlement terms with its former contractor in respect of a previously disclosed action brought against Somita. As previously disclosed, a claim regarding services which were delivered to Somita was filed against Somita before an arbitrator in South Africa in 2009. The aggregate amount of the claim was US$3.7 million and High River filed a statement of defense and counterclaim for damages. The settlement agreement provides for full and final settlement of the contractor's claim against Somita for a settlement amount of US$1.35 million.

Operations

• Total gold production increased 5% to 96,093 (Q1 2011 – 91,756) ounces (100%). Total cash cost per ounce increased 25% to US$704 (Q1 2011 – US$560 per ounce).
• The Zun-Holba and Irokinda Gold Mines produced 33,594 ounces (Q1 2011 – 31,855) (100%) at a total cash cost of US$778 per ounce.
• The Taparko-Bouroum Gold Mine produced 33,753 ounces (Q1 2011 – 36,456) (100%) at a total cash cost of US$556 per ounce.
• Gold production at Berezitovy was 28,746 ounces (Q1 2011 – 23,445 ounces) (100%) at a total cash cost of US$792 per ounce.
• High River's subsidiary in Burkina Faso, Bissa Gold S.A. ("Bissa Gold"), was granted the mining license for the Bissa Gold Project by the governmental authorities of Burkina Faso for a term of 20 years with a possibility of renewal. Bissa Gold has engaged the EPCM (Engineering, Procurement, and Construction Management) contractor and the ball mills supplier for the Project.

Subsequent Events

• In July 2011, Bissa Gold engaged the mining fleet supplier and power plant constructor for the Bissa Gold Project.

DISCUSSION OF FINANCIAL RESULTS

Selected Financial Results

The Company reported a net income of $41.4 million ($0.05 per share) in Q2 2011 compared to a net income of $37.3 million ($0.04 per share) during Q1 2011 and net income of $37.5 million ($0.05 per share) in Q2 2010.

In thousands of Canadian dollars	Three months ended				Six months ended
(except per share amounts)	June 30, 2011		June 30, 2010		June 30, 2011		June 30, 2010
Gold revenue	$	136,204	$	113,808	$	258,566	$	211,464
Net income (loss)		41,375		37,456		78,674		67,877
Net income (loss) per share (basic)		0.05		0.05		0.09		0.08
Cash provided by (used in) operating activities		42,893		48,800		96,410		80,299
Weighted average number of shares outstanding (basic)		840,218,962		799,327,755		840,218,962		799,327,755

About High River

High River is an unhedged gold company with interests in producing mines, development and advanced exploration projects in Russia and Burkina Faso. Two underground mines, Zun-Holba and Irokinda, are situated in the Lake Baikal region of Russia. Two open pit gold mines, Berezitovy in Russia and Taparko-Bouroum in Burkina Faso, are also in production. Finally, High River has a 90% interest in a development project, the Bissa gold project in Burkina Faso, and a 50% interest in an advanced exploration project with NI 43-101 compliant resource estimates, the Prognoz silver project in Russia.

FORWARD LOOKING INFORMATION

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, events, 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, including those risk factors discussed in the Company's 2010 Annual Information Form. 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.

High River Gold Mines Ltd.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at June 30, 2011
(Unaudited, expressed in thousands of Canadian Dollars)
		June 30, 2011	December 31, 2010
ASSETS
Current Assets
	Cash & cash equivalents	207,264	153,964
	Restricted cash	2,179	1,285
	Inventories	124,104	97,663
	Trade and other receivables	22,003	13,639
	Other assets	18,862	15,589
		374,412	282,140
Non-Current Assets
	Exploration and evaluation assets	124,202	119,847
	Mine properties	71,428	67,436
	Property, plant & equipment	183,912	190,256
	Available for sale financial assets	98,116	109,633
	Other assets	28,599	7,986
	Deferred tax asset	5,080	1,596
		511,337	496,753
TOTAL ASSETS		885,749	778,893
LIABILITIES
Current Liabilities
	Accounts payable and accrued liabilities	37,268	33,905
	Loans and other borrowings	12,826	22,686
	Finance Leases	243	607
	Income tax payable	16,873	19,787
		67,210	76,985
Non-Current Liabilities
	Other liabilities	833	696
	Derivative financial liabilities		-
	Loans and other borrowings	10,397	1,732
	Provisions	21,147	19,067
	Deferred tax liabilities	37,619	23,595
		69,995	45,090
TOTAL LIABILITIES		137,205	122,075
EQUITY
	Share Capital	640,157	640,157
	Warrants		-
	Contributed surplus	24,538	24,538
	Debenture conversion option	538	538
	Other comprehensive income	4,819	3,023
	Retained Earnings/Deficit	32,906	(45,768	)
	Equity attributable to equity holders of the Company	702,959	622,488
	Non-controlling interest	45,585	34,330
TOTAL EQUITY		748,544	656,818
TOTAL LIABILITIES AND EQUITY		885,749	778,893

High River Gold Mines Ltd.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the three months ended June 30, 2011
(Expressed in thousands of Canadian Dollars)
	Three months ended				Six months ended
	June 30, 2011		June 30, 2010		June 30, 2011		June 30, 2010
Revenue
Gold	136,204		113,808		258,567		211,464
Silver	2,902		1,388		4,902		2,211
	139,106		115,196		263,469		213,675
Cost of sales	(75,851	)	(60,076	)	(130,356	)	(115,098	)
Gross Profit	63,255		55,121		133,113		98,578
Exploration expenses	4,036		(1,892	)	-		(3,152	)
General and administrative expenses	(3,686	)	(4,077	)	(8,142	)	(7397	)
Other expenses	(5,236	)	(4,239	)	(9,044	)	(4,004	)
Interest income	1,251		663		3,022		893
Finance costs	(485	)	(2,969	)	(2,491	)	(7,055	)
Change in fair value of derivative			3,171				7,000
Profit before income taxes	59,135		45,777		116,458		84,862
Income tax expense	(14,106	)	(5,899	)	(26,529	)	(11,936	)
Profit for the period	45,029		39,878		89,930		72,926
Attributable to:
Non-controlling interest	3,653		2,422		11,255		5,049
Equity shareholders of the Company	41,375		37,456		78,674		67,877
Profit for the period	45,029		39,878		89,930		72,926
Other Comprehensive Income (loss)
Net gains on available for sale financial assets	(9,846	)	9,353		(1,923	)	9,206
Exchange differences on translation of foreign operations	(74,582	)	(11,390	)	(57,380	)	(24,252	)
Other comprehensive income, net of tax	(84,428	)	(2,037	)	(59,303	)	(15,046	)
Attributable to:
Non-controlling interest	3,653		2,422		11,255		5,049
Equity shareholders of the Company	(43,052	)	35,419		19,372		52,831
Comprehensive Income, net of tax	(39,399	)	37,841		30,627		57,880

High River Gold Mines Ltd.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Expressed in thousands of Canadian Dollars)
(Unaudited)			Six months ended
OPERATING ACTIVITIES			June 30 2011		June 30 2010
	Profit after income taxes		89,930		72,926
	Adjustments to profit for non-cash items
		Depreciation of property, plant and equipment	28,397		31,254
		Accretion expense	952		931
		Write-down of exploration	(175	)	628
		Loss/(gain) on disposal of investments	(432	)	-
		Non-cash mining costs	(1,526	)	(11,776	)
		Fair value adjustment to financial instruments	-
		Share based payment expense	-		89
		Interest on capital lease	-		30
		Gain/loss on disposal of property, plant and equipment	(601	)	153
		Deferred tax expense	10,420		1,011
		Other non-cash items	12,679		(1,450	)
	Working Capital Adjustments
		Change in trade receivable and other assets	(6,845	)	4,359
		Change in inventories	(26,441	)	(10,001	)
		Change in other assets	(5,499	)	(3,473	)
		Change in accounts payable and accrued liabilities	2,994		(7	)
	Income Tax Paid		(7,436	)	(4,375	)
NET OPERATING CASH FLOWS			96,416		80,299
INVESTING ACTIVITIES
	Investment in exploration and evaluation assets		(21,546	)	(4,635	)
	Expenditure on property, plant and equipment		(15,937	)	(13,222	)
	Allocation of restricted cash		(895	)	(238	)
	Proceeds on sale of property, plant and equipment		1,273		542
NET INVESTING CASH FLOWS			(37,104	)	(17,553	)
FINANCING ACIVITIES
	Payments of loans and borrowings		(10,283	)	(52,674	)
	Joint venture repayment of Prognoz contribution		18,885		-
	Other Financing activities		(16,726	)	-
	Proceeds from exercise of share options		-		217
NET FINANCING CASH FLOWS			(8,124	)	(52,457	)
Increase (decrease) in cash and cash equivalents			51,188		10,289
Net foreign exchange difference			2,113		381
Cash and cash equivalents, beginning of the period			153,964		82,061
Cash and cash equivalents, end of the period			207,264		92,731