NEWS RELEASE TRANSMITTED BY CCNMatthews
FOR: HIGH RIVER GOLD MINES LTD.
TSX SYMBOL: HRG
MAY 18, 2004 - 08:35 ET
High River Gold Announces First Quarter Results
TORONTO, ONTARIO--(CCNMatthews - May 18, 2004) - High River Gold
Mines Ltd. (TSX:HRG) today reported production and consolidated
financial results for the three month period ending March 31,
2004. All figures are in Canadian dollars unless otherwise
- Attributable gold production for the quarter was 25,604 ounces
at a total cash cost of US $286 per ounce
- Consolidated net income for the quarter was $1.4 million
- Consolidated operating cash flow, before changes in non-cash
working capital, for the quarter was $5.2 million
- Appointment of Daniel Vanin as Executive Vice President and
Chief Operating Officer for the Company
- Bankable feasibility studies nearing completion on two
- Discussions with banks for project financing on Taparko are
High River's consolidated financial and production results
continue to benefit from the excellent operating performance of
the Russian company, OJSC Buryatzoloto ("Buryatzoloto").
Continued operating difficulties at the New Britannia Mine ("New
Britannia") and higher operating costs at Buryatzoloto negatively
impacted earnings for the quarter.
High River is well funded with available cash of approximately
$8.7 million and continues to pursue new, advanced projects and
growth opportunities in both Russia and West Africa.
As at March 31, 2004, the Company's gold production interests
consisted of a 54.1% equity interest in Buryatzoloto and a 50%
joint venture interest in the New Britannia Mine. High River's
attributable gold production for the first three months of 2004
was 25,604 ounces at a total cash cost of US $286 per ounce,
compared to the 30,992 ounces at a total cash cost of US $213 per
ounce for the same period in 2003.
For the three months ended Buryatzoloto Mines New Britannia Mine
March 31 2004 2003 2004 2003
Gold Production (oz, 100%) 34,930 37,265 13,414 21,669
High River Share (oz) 18,897 20,157 6,707 10,835
Tonnes Milled 121,366 119,386 134,977 166,159
Head Grade (Au g/t) 9.50 10.22 3.36 4.29
Recovery (%) 94.3 94.0 92.1 94.6
Total Cash Cost (US $/oz) $237 $175 $425 $285
Realized Gold Price (US $/oz) $405 $349 $418 $336
Buryatzoloto Operating Results
Total cash cost for the first quarter of 2004 at Buryatzoloto
increased to US $237 per ounce (cash operating cost of US $211
per ounce) from US $175 per ounce (cash operating cost of US $153
per ounce) in the first quarter of 2003. The increased cost
reflects substantial advanced mine development and preparatory
work charged to operating expense in the first quarter at the
Zun-Holba mine, the transition to shaft mining at Zun-Holba using
a cut-and-fill method, as well as a stronger Russian rouble.
Buryatzoloto is projecting total cash costs for the year to
average in the range of US $210 to US $220 per ounce, which is in
line with the budget forecast.
New Britannia Operating Results
The mine continued to experience production shortfalls (both
tonnage and grade) in the first quarter due to a thinning and
flattening of the orebody. Cash operating costs exceeded the
selling price in the quarter. Subsequent to the quarter end, the
Company and Kinross Gold Corporation (the mine operator)
announced they had suspended underground development at the mine
(press release dated May 10, 2004). The mine will continue to
produce until approximately the end of the third quarter using
the developed ore. The mine is expected to close at the end of
the third quarter of 2004.
CONSOLIDATED FINANCIAL RESULTS
For the quarter ended March 31, 2004, the Company earned $1.4
million, or $0.01 per share, on gross revenue of $24.1 million.
This compares to consolidated net income of $702,000, or $0.01
per share, on gross revenue of $25.2 million for the same period
in 2003. Cash flow from operating activities, before changes in
non-cash working capital, for the quarter increased to $5.2
million from $5.0 million for 2003.
High River's unaudited first quarter consolidated financial
statements and management's discussion are available on SEDAR and
Three Months Ending
(Thousands of $ Cdn except per --------------------------------
share amounts and # of shares) March 31, 2004 March 31, 2003
Revenue $24,132 $25,163
Net Income 1,443 702
Net Income per Share (basic) 0.01 0.01
Cash Flow from Operations(a) 5,195 5,006
Weighted Average Shares Outstanding 105,973,788 97,435,371
(a) Before change in non-cash working capital
High River's consolidated working capital position at March 31,
2004 was $24.3 million compared to $27.0 million as at December
31, 2003. The consolidated cash position at March 31, 2004 was
$11.8 million, of which High River Canada's portion was $8.7
High River has two development projects, the Berezitovy Gold
Project located in the Amur Oblast in southern Siberia, Russia,
and the Taparko Gold Project in Burkina Faso, West Africa. Both
of these projects are being developed as open-pit mines with
conventional mills and are scheduled to start production during
the fourth quarter of 2005. The successful development of the
Taparko and Berezitovy projects would result in approximately
200,000 ounces of annual gold production.
Taparko Gold Project
On October 31, 2003 High River announced a decision to commence
development of the Taparko Gold Project in Burkina Faso. The
feasibility study evaluated the construction of a mill and
infrastructure on High River's Taparko property to process ore
from both the Taparko Gold deposit and Axmin's Bouroum Gold
deposit located 49 kilometres northwest of the Taparko property.
The combined operation would process one million tonnes per year
and produce approximately 680,000 ounces of gold over a 7 1/2
year mine life. Annual production would average 91,000 ounces but
would be approximately 100,000 ounces in the first few years. The
feasibility study considered mining from three pits on each
property. Reserves, totalling 605,000 ounces of gold, have been
established for the three pits on the Taparko property and High
River expects that ore containing a minimum of 110,000 ounces of
gold would be available from the Bouroum property, resulting in
total contained gold of approximately 715,000 ounces for the
project. A sensitivity study, using a gold price of US $400 per
ounce, more than doubles the gold resource to 1.3 million ounces
for the three Taparko pits.
At a gold price of US $350 per ounce, the project is expected to
generate an IRR in excess of 15%. A bankable feasibility study is
scheduled to be completed by the end of May. Talks are at an
advanced stage with financial institutions to secure funding for
High River has designed the Taparko facility with a longer term
operation in mind as there is excellent potential to define
additional satellite deposits. Previous exploration has defined a
total of 16 prospective gold targets within the Taparko property.
During the quarter, High River entered into a strategic alliance
with Jilbey Gold Exploration Ltd. ("Jilbey") that established
Jilbey as the Company's exploration arm in Burkina Faso. High
River has back-in and operatorship rights on gold discoveries
within trucking distance of High River's planned Taparko mill and
a right of first refusal on discoveries outside trucking
distance. High River and Jilbey currently control in excess of
3,500 square kilometres within a 100 kilometre radius of the
planned Taparko mine and mill facility. Jilbey also controls
another 1,900 square kilometres in other prospective locations in
Burkina Faso. Jilbey recently reported excellent drill results
from the first 16 holes of an 80 hole programme on its newly
acquired Bissa property.
Berezitovy Gold Project
In 2002, High River acquired a 100% interest in the Berezitovy
Gold Project, located in the Amur Oblast of southern Siberia,
Russia. The gold-polymetallic deposit is approximately 900 metres
in length and up to 150 metres in width at its thickest portions.
The project has excellent logistics and High River is planning to
develop the project jointly with Buryatzoloto. Buryatzoloto will
be the operator.
During 2003, High River reported results of an audit of the
resource of the Berezitovy Gold deposit, conducted according to
CIM standards by Roscoe Postle Associates Inc. The audit resulted
in a CIM classified "indicated in-pit resource" of 907,000 ounces
of gold using a cut-off grade of 1.22 g/t. Based on this resource
estimate, the Berezitovy operation would process approximately
1.5 million tonnes per year from a single pit with gold
production expected to approximate 100,000 ounces per year for a
ten-year period. The Berezitovy property also contains a number
of exploration targets that could enhance production or extend
the mine life.
During 2003, High River and Buryatzoloto initiated a feasibility
study utilizing a combination of International and Russian
engineering expertise to meet international standards as well as
Russian regulatory and permitting requirements. The Russian
feasibility study is complete and the bankable study will be
released shortly. At a gold price of US $350 per ounce, the
project is expected to generate an IRR of approximately 17%.
Talks have begun with financial institutions to secure funding
for the project.
STRATEGIC ALLIANCE UPDATE
In order to extend its influence in greenfields areas or other
areas of exceptional exploration merit and to create a pipeline
of potential projects for the future, High River has established
preferred status relationships and/or strategic alliances with
well-managed exploration companies.
During the quarter the Company increased its investment in
Pelangio Mines Inc. by $1.9 million, raising its interest to 19%.
Subsequent to quarter end, High River invested a further $338,000
in Jilbey and plans to exercise 437,313 warrants of Intrepid
Minerals Corporation in May at a cost of $328,000.
Each of these companies is well-funded and has recently announced
exciting results from their current drill programmes.
This report contains forward-looking statements based on current
expectations. These forward-looking statements entail various
risks and uncertainties that could cause actual results to differ
materially from those reflected. Risk and uncertainties about the
Company's business are more fully discussed in the Management's
Discussion and Analysis published in the Company's Annual Report
and Annual Information Form.
FOR FURTHER INFORMATION PLEASE CONTACT:
High River Gold Mines Ltd.
President and CEO
High River Gold Mines Ltd.
(416) 360-0010 (FAX)
Visit our website at www.hrg.ca