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TORONTO, ONTARIO--(Marketwire - Nov. 13, 2007) -
(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 and nine month periods ended September 30, 2007. The 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 OF 2007
Financial Results
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- Net loss of $4.7 million ($0.02 per share).
- Attributable gold production of 34,302 ounces at a total cash cost of US
$444 per ounce.
- Cash flow from operations before working capital changes of $2.9 million.
Operations
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- Taparko-Bouroum Gold Mine:
- First gold pour in July.
- Commercial Production declared in September.
- Berezitovy Gold Mine:
- First gold pour in August.
- Commercial Production on track for Q4 2007.
- Bissa Advanced Exploration Project:
- Gougre Gold Discovery geophysical anomaly extended from 300 metres to
1,200 metres.
- Prognoz Advanced Exploration Project:
- In-fill drilling on-going with 447 core holes completed ytd.
- Step-out drilling on the Boloto vein significantly extended high grade
mineralization outside the established resource
- NI 43-101 compliant interim resource estimate expected during Q4 2007.
- Zun-Holba and Irokinda Operating Mines:
- NI 43-101 compliant gold reserve and resource estimates for both mines
were completed during the quarter and were in line with previously
calculated Russian estimates of C1 and C2 resources. Please refer to
press release dated November 9, 2007 for further details.
Corporate
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- Financing:
- US $15 million senior revolving credit facility completed with Standard
Bank to fund working capital requirements at the Berezitovy Mine and
for general corporate purposes.
- Two equity financings were closed for total gross proceeds of
$23.8 million.
Events Subsequent to the Quarter
--------------------------------
- The Company completed a $100 million "Bought Deal" equity financing.
Proceeds are to be used to pay down debt, fund exploration, and for
general corporate purposes including working capital.
- Strategic Review recommended a possible spin out of Prognoz.
- Goldrush Resources Ltd. ("Goldrush"), High River's strategic partner in
Burkina Faso, announced a gold discovery at Ronguen, just six kilometres
from Bissa.
- The Taparko-Bouroum Gold Mine official Opening Ceremony was held on
October 8, 2007.
DISCUSSION OF FINANCIAL RESULTS
Selected Financial Results
--------------------------
(in thousands of Canadian
dollars except per Three Months Ending Nine Months Ending
share amounts) September 30, September 30,
2007 2006 2007 2006
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Gold revenue $ 26,572 $ 30,551 $ 84,819 $ 71,372
Net operating income 4,349 8,052 19,149 16,592
Net income (loss) (4,657) 33,666 (3,495) 33,266
Net income (loss) per
share (basic) (0.02) 0.14 (0.01) 0.14
Cash flow from
operations (1) 2,886 4,933 17,780 13,993
Weighted average
number of shares
outstanding (basic) 260,709,088 233,889,139 253,941,944 230,082,986
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(1) Before changes in non-cash working capital.
Gold revenue for Q3/07 was down 13% from $30.6 million last year as higher realized gold prices were offset by fewer ounces sold and a stronger Cdn dollar. The average gold price realized on sales was US $664 per ounce during Q3/07, up 6% from US $626 per ounce last year. A total of 38,199 ounces of gold was sold during the quarter, down 12% from Q3 2006 due to lower production this year and inventory drawdown last year. The Cdn dollar strengthened by 7% from last year, resulting in lower Cdn dollar revenue.
The Company reported a consolidated net loss for the quarter of $4.7 million resulting from higher operating costs at Buryatzoloto combined with the stronger Cdn dollar and non-cash financial instrument adjustments totaling $4.1 million ($0 in 2006). Buryatzoloto continues to be profitable and achieved its production objectives for the third quarter of 2007 with 40,403 ounces of gold produced at an estimated total cash cost of US $444 per ounce as compared to 42,886 ounces of gold produced at a total cash cost of US $386 per ounce in the third quarter of 2006. The increased total cash cost reflects labour wage increases (due to indexation and implementation of employee performance bonus initiatives designed to retain skilled employees), domestic inflation in materials and energy costs, and a stronger Russian Rouble ("RUB"). A one-time, non-cash gain of $32.9 million was recorded in Q3 2006 on the transfer of High River's interest in the New Britannia Mine to a third party.
OVERVIEW OF OPERATIONS
Operating Mines
Zun Holba Gold Mine (Russia)
Zun Holba's third quarter production of 17,440 ounces and year-to-date production of 52,506 ounces were comparable to last year's levels. Higher tonnes mined and milled offset a 9% lower head grade. Direct mining costs for the quarter of US $ 421 per ounce were 16 % higher than US $362 per ounce last year due to inflationary cost pressures mentioned above together with higher costs associated with sourcing ore from deeper levels within the mine.
Irokinda Gold Mine (Russia)
Irokinda's gold production declined 9% to 20,806 ounces during the quarter, from 22,731 last year, largely due to lower mill throughput as a result of planned maintenance and a slightly lower grade. Direct mining costs were flat quarter over quarter, but increased to US $293 per ounce in Q3/07 from US $243 per ounce last year due to increased transportation costs related to production from a new but more distant ore body, development costs related to a second adit, as well as the inflationary cost pressures cited earlier.
New Mines
Taparko-Bouroum Gold Mine (Burkina Faso)
The Taparko-Bouroum Gold Mine had its first gold pour from the gravity circuit on July 17, 2007. Gold was produced out of the leach circuit on August 1, 2007. Commercial Production at the mine was achieved on September 26, 2007. The criteria established for Commercial Production stipulated that all components of the processing plant were to operate for 30 consecutive days at 60% capacity or better. Mill throughput during the 30 day period ending September 24th, 2007 totaled 60,825 tonnes, representing an average capacity utilization of 74%. The effective date of Commercial Production for accounting purposes is expected to be October 1, 2007, at which time gold sales and operating costs will begin to be reported on High River's income statement. Prior to October 1, 2007, a total of 5,904 ounces of gold were produced. Approximately 200,000 tonnes of ore (equivalent to three months of production) remain stockpiled, ready for processing.
Gold production for 2008 is planned to be approximately 100,000 ounces, increasing to over 140,000 ounces in 2009 following the planned increase in mill capacity from 1 million to 1.5 million tonnes per year.
Berezitovy Gold Mine (Amur Oblast, Russia)
On August 8, 2007, High River announced that gold was produced as scheduled out of the gravity circuit of the Berezitovy Mine. The leach circuit became operational in October 2007. Minor work remains on the carbon stripping circuit and the tailings filter plant. Pre-stripping is largely completed, and mining continues with approximately 230,000 tonnes of ore (approximately 2 months of production) stockpiled. Commercial production is scheduled to be achieved during Q4 2007.
Gold production in 2008 is planned to be approximately 100,000 ounces.
Advanced Exploration Projects
Bissa Gold Project
During the quarter, High River focused exploration efforts on Gougre, one of the 12 Drill Target Areas identified by the Company on the Sabce Deformation Corridor and adjacent structures. Earlier in the year, 9 diamond drill holes intersected a 300 metre strike length of pervasive alteration and gold mineralization, which coincided with strong chargeability and resistivity anomalies. During the quarter, additional geophysical work indicated that Gougre's mineralized zone may extend for a total strike length of 1,200 metres. In September, High River began a 3,800 metre (33 hole) diamond drill programme to test the extension of the geophysical anomaly for gold mineralization. Assay results on completed holes are pending.
High River plans to accelerate exploration on Gougre and the other Drill Target Areas. A total of $12 million of the recent bought deal financing has been allocated for this purpose.
During the quarter, Goldrush, the Company's Strategic Alliance Partner in Burkina Faso, reported on the results of 32 reverse circulation holes drilled on its Ronguen gold discovery. Drill results have extended the strike length of the Ronguen Main Gold Zone to 1.5 kilometres. The deposit remains open at depth and along strike in both directions. Ronguen is strategically located only six kilometres from High River's Bissa project. High River holds rights to operatorship and a 50% back-in to Ronguen, subject to a payment of 150% of Goldrush's cumulative exploration expenditures on the property.
Prognoz Silver Project
Significant exploration activity continued on the property with 447 core holes completed to the end of September. MICON, which visited the property in June 2007, are expected to complete an interim NI 43-101 compliant resource estimate for Prognoz in Q4 2007. This resource estimate will be based on a portion of the drilling data generated to date.
During the quarter, fire assay results were received from step out diamond drill holes on the Boloto vein. These new results indicated a 740 metre extension of high grade mineralization east of the existing resource area, with several intersections of bonanza grade mineralization.
Subsequent to the end of the quarter, High River reported on the results of a Strategic Review, undertaken by the Company's board of directors. The study recommended that the Company consider spinning out the Prognoz Silver Project to fully realize the value of the project for High River shareholders.
About High River
High River is bringing two new open-pit gold mines into production this year, the Taparko-Bouroum Gold Mine in Burkina Faso (September) and the Berezitovy Gold Mine in Russia (4th quarter). Gold production from Taparko-Bouroum for 2008 is planned at 100,000 ounces increasing to approximately 140,000 ounces in 2009, and 2008 production from Berezitovy is expected to exceed 100,000 ounces. Combined with gold production from High River's 85%-owned Russian subsidiary, OJSC Buryatzoloto, High River's attributable unhedged gold production is expected to exceed 300,000 ounces in 2008. In addition, the Company has two advanced exploration projects, the Bissa Gold Project in Burkina Faso and the world-class Prognoz Silver Project in Russia. These projects are expected to significantly add to the Company's production profile in the future.
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.
HIGH RIVER GOLD MINES LTD.
CONSOLIDATED BALANCE SHEETS
(Thousands of Canadian dollars)
September 30, December 31,
(unaudited) Note 2007 2006
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Assets
Current Assets
Cash and cash equivalents $ 9,891 $ 35,616
Restricted cash 319 73
Accounts receivable 25,554 11,055
Inventory 5 38,917 20,223
Other assets 6,862 1,231
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81,543 68,198
Available-for-sale securities 6 24,949 9,854
Property, plant and equipment 7 195,223 71,110
Exploration properties and
deferred exploration 8 111,989 107,825
Development properties 9 168,500 259,846
Other assets 2,232 599
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Total Assets $ 584,436 $ 517,432
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Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable $ 24,817 $ 24,207
Loans and interest payable 10 70,730 27,396
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95,547 51,603
Loans and interest payable 10 125,862 137,895
Future income taxes 26,495 17,776
Reclamation 1,371 1,506
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249,275 208,780
Non-controlling interest 18,072 16,341
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Total Liabilities 267,347 225,121
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Shareholders' Equity
Share capital 11 (b) 364,971 338,371
Warrants 11 (d) 9,845 6,294
Contributed surplus 11 (e) 11,384 11,363
Debenture conversion option 11 (f) 538 538
Deficit (47,716) (41,562)
Accumulated other comprehensive
income/(loss) 2 (b) (21,933) (22,693)
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Total Shareholders' Equity 317,089 292,311
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Total Liabilities and
Shareholders' Equity $ 584,436 $ 517,432
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HIGH RIVER GOLD MINES LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands of Canadian dollars, except for income per share)
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
September September September September
30, 30, 30, 30,
(unaudited) Note 2007 2006 2007 2006
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Operating revenue
Gold $ 26,572 $ 30,551 $ 84,819 $ 71,372
Other (7) (4) 241 756
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26,565 30,547 85,060 72,128
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Operating expenses
Mining costs 16,983 18,856 49,751 42,586
Mining administrative
costs 1,338 1,412 4,344 4,470
Amortization
and depletion 3,863 2,197 11,716 8,387
Asset retirement
obligation accretion 32 30 100 93
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22,216 22,495 65,911 55,536
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Net operating income 4,349 8,052 19,149 16,592
Administrative costs (1,842) (1,919) (6,260) (6,254)
Exploration expense (2,094) (2,389) (2,254) (2,656)
Amortization
and depletion (16) (24) (46) (54)
Financing costs 12 (5,657) (1,744) (10,674) (3,830)
Other income/(expense) 13 1,076 33,135 1,943 33,839
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Income (loss) before tax (4,184) 35,111 1,858 37,637
Income tax expense (330) (1,063) (3,621) (3,391)
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Income (loss) before
non-controlling interest (4,514) 34,048 (1,763) 34,246
Non-controlling interest
in earnings
of subsidiary (143) (382) (1,732) (980)
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Net income (loss) for
the period $ (4,657) $ 33,666 $ (3,495) $ 33,266
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Net income (loss)
per share
- basic 14 $ (0.02) $ 0.14 $ (0.01) $ 0.14
- diluted $ (0.02) $ 0.14 $ (0.01) $ 0.14
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HIGH RIVER GOLD MINES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Canadian dollars)
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
September September September September
30, 30, 30, 30,
(unaudited) Note 2007 2006 2007 2006
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Cash provided by
(used in):
Operating activities
Net income (loss) for
the period $ (4,657) $ 33,666 $ (3,495) $ 33,266
Non-cash items:
Non-controlling interest
in earnings
of subsidiary 143 382 1,732 980
Financing cost on
venture obligation - 544 - 1,518
Settlement of venture
obligation 13 - (32,940) - (32,940)
Amortization
and depletion 4,382 3,532 12,265 9,752
Asset retirement
obligation accretion 32 30 100 93
Debenture accretion
expense 87 - 257 -
Financial instrument
accretion expense 717 - 1,760 -
Fair value adjustments to
financial instruments 3,263 - 4,718 -
Stock option
benefit expense 558 481 1,823 1,873
Write-down of
carrying value - - 8 -
Loss (gain) on disposal
of assets 154 (706) 174 (1,002)
Future income taxes (465) (166) (228) 356
Other (1,328) 110 (1,334) 97
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Subtotal 2,886 4,933 17,780 13,993
Change in non-cash
working capital 15 (a) (1,553) (1,272) (14,597) (16,404)
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Total operating 1,333 3,661 3,183 (2,411)
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Investing Activities
Property, plant
and equipment (3,482) (3,632) (11,121) (8,713)
Proceeds on disposal - 22 5 383
Exploration properties and
deferred exploration (2,756) (1,173) (12,799) (4,706)
Development properties (30,230) (35,729) (77,331) (80,464)
(Increase)/decrease in
investments (1,186) - (1,186) (259)
Purchase of subsidiary net of
cash acquired - (24,507) - (24,507)
Allocation to restricted cash (190) 24,612 (263) 1,929
Decrease in other
long-term assets 2,059 340 1,992 340
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Total investing (35,785) (40,067) (100,703) (115,997)
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Financing Activities
Loans received 25,590 32,315 61,402 114,724
Loans repaid (4,301) - (14,423) (24,263)
Dividends paid by
subsidiary to
non-controlling interest - (1) - (4)
Issuance of common shares 23,313 2,556 27,741 25,582
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Total financing 44,602 34,870 74,720 116,039
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Effect of exchange rate
changes on cash held
in foreign currencies (2,605) (402) (2,925) (555)
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(Decrease) in cash and
cash equivalents during
the period 7,545 (1,938) (25,725) (2,924)
Cash and cash equivalents -
Beginning of period 2,346 7,538 35,616 8,524
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Cash and cash equivalents
- End of period $ 9,891 $ 5,600 $ 9,891 $ 5,600
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HIGH RIVER GOLD MINES LTD.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(Thousands of Canadian dollars)
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
September September September September
30, 30, 30, 30,
(unaudited) Note 2007 2006 2007 2006
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Share capital
Balance at beginning
of period $ 343,170 $ 299,918 $ 338,371 $ 276,575
Issue of common shares 21,801 2,567 26,600 25,910
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Balance at end of period 364,971 302,485 364,971 302,485
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Warrants
Balance at beginning
of period 6,855 11,785 6,294 11,827
Issued 2,990 - 3,555 652
Exercised - - - (694)
Expired - - (4) -
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Balance at end of period 9,845 11,785 9,845 11,785
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Contributed surplus
Balance at beginning
of period 11,887 8,754 11,363 7,721
Expired warrants - - 4 -
Stock-based
compensation, net 558 481 1,823 1,873
Stock options exercised (1,061) (13) (1,806) (372)
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Balance at end of period 11,384 9,222 11,384 9,222
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Debenture conversion
option 538 - 538 -
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Deficit
Balance at beginning
of period (43,059) (73,007) (41,562) (72,607)
Transitional adjustment
on adoption of new
accounting policies 2 - - (2,659) -
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Balance at beginning of
period as restated (43,059) (73,007) (44,221) (72,607)
Net income (loss) for
the period (4,657) 33,666 (3,495) 33,266
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Balance at end of period (47,716) (39,341) (47,716) (39,341)
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Accumulated other comprehensive
income/(loss)
Balance at beginning
of period (18,579) (19,887) (22,693) (23,050)
Transitional adjustment
on adoption of new
accounting policies 2 - - 8,854 -
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Balance at beginning of
period as restated (18,579) (19,887) (13,839) (23,050)
Comprehensive income
(loss) for the period (3,354) 1,140 (8,094) 4,303
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Balance at end of period (21,933) (18,747) (21,933) (18,747)
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Shareholders' equity at
end of period $ 317,089 $ 265,404 $ 317,089 $ 265,404
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HIGH RIVER GOLD MINES LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Thousands of Canadian dollars)
Three Nine
Months Months
Ended Ended
September 30, September 30,
(unaudited) 2007 2007
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Net income (loss) for the period $ (4,657) $ (3,495)
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Other comprehensive income (loss),
net of taxes
Net change in unrealized gains in
available-for-sale securities (18,477) (14,332)
Unrealized loss on translation
of net foreign operations 15,123 6,238
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Comprehensive income (loss) for the period (3,354) (8,094)
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Net comprehensive income (loss)
for the period $ (8,011) $ (11,589)
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FOR FURTHER INFORMATION PLEASE CONTACT:
High River Gold Mines Ltd.
Dan Hrushewsky
(416) 947-1440
(416) 360-0010 (FAX)
Email: info@hrg.ca
Website: www.hrg.ca
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