High River Gold Mines Ltd.
TSX : HRG

High River Gold Mines Ltd.

November 15, 2011 17:00 ET

High River Gold Reports Third Quarter 2011 Results

TORONTO, ONTARIO--(Marketwire - Nov. 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 September 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 THIRD QUARTER 2011

Financial Results

  • Net gold revenue of $111.5 million, a decrease of 18% from $136.2 million in Q2 2011, an increase of 11% from $100.8 million in Q3 2010.
  • Net income of $41.3 million ($0.05 per share) compared to a net income of $41.4 million ($0.05 per share) in Q2 2011 and a net income of $24.0 million ($0.03 per share) in Q3 2010.
  • Cash flow from operations of $23.1 million, down from $42.9 million in Q2 2011, and from $26.3 million in Q3 2010.
  • Cash and cash equivalents decreased to $150.0 million from $207.3 million at the end of Q2 2011, and increased from $125.6 million at the end of Q3 2010.
  • Working capital decreased to $296.0 million from $307.2 million at the end of Q2 2011 and increased from $205.3 million at the end of Q3 2010.
  • Current and long term debt decreased to $22.7 million from $24.0 million at the end of Q2 2011 and increased from $22.1 million at the end of Q3 2010.

Operations

  • Total gold production decreased 5.0% to 91,057 (Q2 2011 – 96,093) ounces (100%). Total cash cost per ounce increased 2% to US$ 720 (Q2 2011 – US$704 per ounce).
  • The Zun-Holba and Irokinda Gold Mines produced 34,100 ounces (Q2 2011 – 33,594) (100%) at a total cash cost of US$ 705 per ounce.
  • The Taparko-Bouroum Gold Mine produced 31,391 ounces (Q2 2011 – 33,753) (100%) at a total cash cost of US$ 681 per ounce.
  • Gold production at Berezitovy was 25,565 ounces (Q2 2011 – 28,746 ounces) (100%) at a total cash cost of US$ 787 per ounce.

Corporate

  • The Arbitration Court of the City of Moscow terminated the official bankruptcy proceedings for Prognoz Silver LLC ("Prognoz Silver") in connection with the application of Prognoz Silver claiming that the criteria of bankruptcy are no longer in place.

Subsequent Events

  • In October 2011, the share capital of Berezitovy was increased which resulted in the increase of the Group's interest in Berezitovy up to 99.91%.

DISCUSSION OF FINANCIAL RESULTS

Selected Financial Results

The Company reported a net income of $41.3 million ($0.05 per share) in Q3 2011 compared to a net income of $41.4 million ($0.05 per share) during Q2 2011 and net income of $24.0 million ($0.03 per share) in Q3 2010.

In thousands of Canadian dollars Three months ended Nine months ended
(except per share amounts) September
30, 2011
June 30,
2011
September
30, 2010
September
30, 2011
September
30, 2010
Gold revenue 111,544 $ 136,204 $ 100,767 370,112 $ 312,231
Net income (loss) 41,318 41,375 24,046 119,993 91,923
Net income (loss) per share (basic) 0.05 0.05 0.03 0.14 0.11
Cash provided by (used in) operating activities 23,131 42,893 26,296 119,542 106,595
Weighted average number of shares outstanding (basic) 840,218,962 840,218,962 826,660,782 840,218,962 808,510,986

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 September 30, 2011
(Unaudited, expressed in thousands of Canadian Dollars)
Notes September 30,
2011
December 31,
2010
ASSETS
Current Assets
Cash & cash equivalents 150,029 153,964
Restricted cash 2,108 1,285
Inventories 150,146 97,663
Trade and other receivables 28,388 13,639
Other assets 32,291 15,589
362,962 282,140
Non-Current Assets
Exploration and evaluation assets 129,987 119,847
Mine properties 47,113 67,436
Property, plant & equipment 221,511 190,256
Available for sale financial assets 93,890 109,633
Other assets 66,681 7,986
Deferred tax asset 21,061 1,596
580,243 496,753
TOTAL ASSETS 943,205 778,893
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities 4 39,512 33,905
Loans and other borrowings 5 13,054 22,686
Finance Leases 5 66 607
Income tax payable 14,284 19,787
66,915 76,985
Non-Current Liabilities
Other liabilities 820 696
Derivative financial liabilities -
Loans and other borrowings 5 9,631 1,732
Provisions 6 21,179 19,067
Deferred tax liabilities 55,127 23,595
86,757 45,090
TOTAL LIABILITIES 153,672 122,075
EQUITY
Share Capital 9 640,157 640,157
Warrants 9 - -
Contributed surplus 24,538 24,538
Debenture conversion option 538 538
Other comprehensive income (1,205 ) 3,023
Retained Earnings/Deficit 74,224 (45,768 )
Equity attributable to equity holders of the Company 738,253 622,488
Non-controlling interest 9 51,280 34,330
TOTAL EQUITY 789,533 656,818
TOTAL LIABILITIES AND EQUITY 943,205 778,893
High River Gold Mines Ltd.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the three months ended September 30, 2011
(Expressed in thousands of Canadian Dollars)
Three months ended Nine months ended
September 30, 2011 September 30, 2010 September 30, 2011 September 30, 2010
Revenue
Gold 111,544 100,767 370,112 312,231
Silver 2,292 1,068 7,194 3,279
113,836 101,835 377,305 315,510
Cost of sales (52,621 ) (62,007 ) (189,103 ) (183,163 )
Gross Profit 61,215 39,828 188,202 132,347
Exploration expenses - (6,765 ) - (9,916 )
General and administrative expenses (294 ) (1,476 ) (2,310 ) (2,815 )
Other expenses (8,833 ) (389 ) (17,877 ) (4,393 )
Interest income 4,112 554 7,134 1,447
Finance costs (2,675 ) (1,062 ) (5,166 ) (8,117 )
Change in fair value of derivative - 3,822 - 10,821
Profit before income taxes 53,526 34,512 169,984 119,374
Income tax expense (6,512 ) (6,029 ) (33,040 ) (17,965 )
Profit for the period 47,014 28,483 136,944 101,409
Attributable to:
Non-controlling interest 5,695 4,436 16,951 9,486
Equity shareholders of the Company 41,318 24,046 119,993 91,923
Profit for the period 47,014 28,483 136,944 101,409
Other Comprehensive Income (loss)
Net gains on available for sale financial assets (11,592 ) 18,820 (13,515 ) 28,026
Exchange differences on translation of foreign operations (2,597 ) 403 9,287 (23,849 )
Other comprehensive income, net of tax (14,189 ) 19,223 (4,228 ) 4,177
Attributable to:
Non-controlling interest 5,695 4,436 16,951 9,486
Equity shareholders of the Company 27,129 43,269 115,764 96,100
Comprehensive Income, net of tax 32,824 47,705 132,715 105,586
High River Gold Mines Ltd.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Expressed in thousands of Canadian Dollars)
(Unaudited) Nine months ended
OPERATING ACTIVITIES September 30 2011 September 30 2010
Profit after income taxes 136,944 101,409
Adjustments to profit for non-cash items
Depreciation of property, plant and equipment 42,293 46,381
Accretion expense 1,087 866
Write-down of exploration 2,122 450
Loss/(gain) on disposal of investments (463 ) (10 )
Non-cash mining costs 2,415 (17,976 )
Fair value adjustment to financial instruments - (10,821 )
Share based payment expense - 95
Interest on capital lease - 22
Gain/loss on disposal of property, plant and equipment (258 ) (122 )
Deferred tax expense 13,286 3,072
Other non-cash items 5,881 1,733
Working Capital Adjustments
Change in trade receivable and other assets (12,075 ) 1,452
Change in inventories (52,483 ) (18,979 )
Change in other assets (17,874 ) (4,727 )
Change in accounts payable and accrued liabilities 5,173 13,463
Income Tax Paid (6,504 ) (9,710 )
NET OPERATING CASH FLOWS 119,542 106,595
INVESTING ACTIVITIES
Investment in exploration and evaluation assets (32,354 ) (11,773 )
Expenditure on property, plant and equipment (49,607 ) (23,386 )
Allocation of restricted cash
Proceeds on sale of property, plant and equipment 1,325 1,634
Other investing activities (455 ) (811 )
NET INVESTING CASH FLOWS (81,091 ) (34,336 )
FINANCING ACIVITIES
Payments of loans and borrowings (72,120 ) (57,453 )
Joint venture repayment of Prognoz contribution
Other Financing activities (41,810 ) 7,414
Proceeds from exercise of share options 67,336 26,248
NET FINANCING CASH FLOWS (46,594 ) (23,791 )
Increase (decrease) in cash and cash equivalents (8,143 ) 48,469
Net foreign exchange difference 4,208 (4,943 )
Cash and cash equivalents, beginning of the period 153,964 82,061
Cash and cash equivalents, end of the period 150,029 125,587

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