JAN 4, 2006 - 16:40 ET
High River Gold Announces Strategic Alliance Agreement with Goldrush Resources Ltd for Burkina Faso
TORONTO, ONTARIO--(CCNMatthews - Jan. 4, 2006) - High River Gold Mines Ltd. ("High River" or the "Company") (TSX:HRG) today announced that it has entered into a Strategic Alliance Agreement (the "Agreement") with Goldrush Resources Ltd. ("Goldrush") whereby Goldrush will obtain 21 early-stage exploration permits from High River totaling approximately 4,690 square km in Burkina Faso, West Africa in exchange for an equity interest in Goldrush and back-in rights, including operatorship rights, on mineral deposit discoveries.|
The strategic alliance with Goldrush provides High River with:
1) Funding to meet the required exploration expenditures to maintain and advance these prospective early-stage exploration permits;
2) The ability to benefit from all Goldrush discoveries in Burkina Faso;
3) The opportunity to focus its energies and finances on its significant Bissa gold discovery and the construction of the Taparko-Bouroum gold mine and processing plant; and
4) Ownership, direct and indirect, of one of the largest land positions in Burkina Faso, exceeding 8,000 square km.
High River is concentrating its exploration work on the promising Bissa Project in Burkina Faso where the results of the current drilling campaign are expected to define an initial gold resource of 1 million ounces. With five other priority targets identified within 10 to 15 km of the Bissa Project, High River's objective is to build a large resource base on this 1,000 square km contiguous land package.
The 21 exploration permits to be transferred to Goldrush are divided into three groups and exclude High River's main areas of focus: the Taparko-Bouroum exploitation license, together with the Bissa and Labola exploration projects. The first group, referred to as the Taparko area permits, consists of nine permits totaling 2,186 square km with four of the permits adjacent to the north, west and south boundaries of High River's Taparko exploitation permit. The second group, referred to as the Hounde group, is located approximately 280 km southwest of Ouagadougou and consists of seven exploration permits covering an area of approximately 1,400 square km. The third group, known as the Kindo/Kaya group permits, is located approximately 40 km north of Ouagadougou, and consists of five exploration permits covering an area of approximately 1,105 square km. Two of the Kindo/Kaya permits lie approximately 6 km to the northwest of High River's Bissa Project with the other three permits situated approximately 30 to 40 km southeast of the Bissa Project.
In exchange for receiving a 90% interest in the 21 exploration permits (with the remaining 10% interest being retained by the Government of Burkina Faso), Goldrush will issue to High River: (1) 4,800,000 common shares at a deemed value of Cdn $0.20 per share (for a value of Cdn $960,000), which will represent an equity interest of approximately 19.9% in Goldrush, and (2) a non-interest bearing convertible debenture with a term of five (5) years in the amount of Cdn $2,342,277. Goldrush will have the right to redeem the debenture for cash or by the issuance of common shares at a deemed value of Cdn $1.00 per common share anytime during the term of the debenture. The Agreement is conditional upon regulatory approval and board approval of both companies.
High River will contract part of its exploration team to Goldrush at cost to operate the exploration programmes on the permits, subject to Goldrush's approval of the exploration programmes. The Agreement provides Goldrush with access to the future processing plant at Taparko-Bouroum for up to 500,000 tonnes per annum once the planned mill has been expanded beyond its current 1 million tonne per year design capacity. High River will have a right, in the event a deposit is discovered on the properties transferred to Goldrush, to purchase a 50% interest in each property at a cost of 1.5 times Goldrush's actual out-of-pocket costs on that property. If High River exercises its right, a joint venture will be formed and High River will be the operator during the mine development and production stage.
The Agreement also provides for High River to be given a right to purchase a 50% interest with operatorship rights in any new property acquired by Goldrush in Burkina Faso at a cost of 2 times Goldrush's actual out-of-pocket costs on that property.
High River will have 60 days from the date of a positive feasibility study on each property to exercise its back-in right, after which time the right shall expire.
Exploration programmes for the 21 permits are currently being planned with a proposed 2006 exploration budget of approximately US $2.2 million scheduled to commence in early 2006. High River may subscribe for a minimum of 10% and a maximum of 19.9% of any future financings of Goldrush.
About High River
High River is currently constructing two open pit gold mines which are scheduled to commence production in late 2006, the Taparko-Bouroum Project in Burkina Faso and the Berezitovy Project in Russia. Annual gold production from Taparko-Bouroum is planned at 100,000 ounces in year one increasing to over 140,000 ounces in the third year of operation, with annual production from Berezitovy of 100,000 ounces. Combined with gold production from High River's 85%-owned Russian subsidiary, OJSC Buryatzoloto, High River's attributable annual gold production is planned to exceed 300,000 ounces in 2007, establishing the Company as a mid-tier gold producer.
FORWARD LOOKING STATEMENTS
This press release 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 in the Annual Information Form.
FOR FURTHER INFORMATION PLEASE CONTACT:
High River Gold Mines Ltd.
(416) 360-0010 (FAX)
High River Gold Mines Ltd.
VP Investor Relations
(416) 360-0010 (FAX)
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