TORONTO, ONTARIO--(Marketwire - Jan. 28, 2011) - High River Gold Mines Ltd. ("High River") (TSX:HRG) is pleased to announce that Royal Gold, Inc. ("Royal Gold") released its security interests in certain collateral that it held pursuant to the amended and restated funding agreement dated February 22, 2006 (the "Funding Agreement") between Royal Gold, Inc. and Somita SA ("Somita"), a 90% owned subsidiary of High River and the operator of the Taparko mine.
Under the Funding Agreement, Royal Gold invested $35 million for the development of the Taparko mine and, as security for Royal Gold's investment, High River pledged certain equity investments in public companies held by it ("Pledge I"), and two of High River's subsidiaries pledged their equity interests in Somita and High River Gold Mines (West Africa) Ltd., the corporate parent of Somita ("Pledge II"). Pursuant to their terms, Pledge I would remain in effect until certain production and performance standards were attained at the Taparko mine sufficient to satisfy the Completion Test (as such term is defined in the Funding Agreement), and Pledge II would remain in effect until satisfaction of certain requirements as provided in the construction contract between Somita and its construction contractor. Following discussions between High River and Royal Gold concerning the results of the Completion Test, Royal Gold agreed that the Completion Test had been satisfied and agreed to release its security interests in the collateral held pursuant to Pledge I and Pledge II, and High River agreed, among other things, to guarantee, for the benefit of Royal Gold, payments by Somita of the tail royalty to Royal Gold. As previously disclosed, High River has started to pay the tail royalty to Royal Gold, which amounts to 2% of the revenue generated by Somita.
About High River
High River is an unhedged gold company with interests in producing mines 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 two advanced exploration projects with NI 43-101 compliant resource estimates, the Bissa gold project in Burkina Faso and 50% interest in the Prognoz silver project in Russia.