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Message: Update on Operations
| January 2, 2009 |
| High River Gold Provides Update on Operations, Financial Status, and Personnel Changes |
| TORONTO, ONTARIO--(Marketwire - Jan. 2, 2009) - High River Gold Mines Ltd. ("High River" or the "Company") (TSX:HRG) would like to provide an update on the operating status of its four gold mines, on its financial situation, and on recent personnel changes: Operations Update Taparko After a prolonged mill shutdown, the Taparko mill was restarted in November 2008. Early indications were that the mill vibration issue was resolved with the replacement of the gearbox. However, after several weeks of operation, the vibrations previously encountered in the mill drive-train have recently re-occurred. As a result, throughput for December has varied from zero to just over 2,000 tonnes per day, substantially below the planned average throughput rate of 2,450 tonnes per day. December gold production will consequently total approximately 4,100 ounces. A 7 to 10 day mill shutdown is scheduled for mid-January during which operating personnel will undertake action designed to correct the problem. Remedial action will include the reinstallation of the electric motor base plate, and a rotation of the ball mill bull gear 180 degrees about the vertical axis. Berezitovy After the achievement of commercial production on October 1, 2008, Berezitovy mill throughput regularly exceeded 85% of the design capacity with satisfactory recoveries. Recently, throughput and recoveries at the mill have suffered due to mining in the pit encompassing the old underground workings, which resulted in fragments of the old timbers entering the process plant. Also the mill has been producing too coarse a grind, which has also adversely affected recoveries. As a result, gold production during the month of December is only expected to total approximately 1,400 ounces, with a further 3,200 ounces in material available for future processing in the furnace. Operating personnel at the mine are currently planning remedial action to resolve the issue. Buryatzoloto (Zun-Holba and Irokinda) The Zun-Holba and Irokinda underground gold mines continue to operate according to plan, and are currently on track to meet the budgeted 2008 whole year production target of 145,000 gold ounces (100% basis). Financial Status Cash Position As of December 31, 2008, High River's head office cash position totalled approximately $11 million, a lower than anticipated amount due to the negative impact on Company cashflow from the unexpected operational difficulties at Taparko and Berezitovy. Lenders High River and its operating subsidiaries have three lenders which comprise the majority of current and long term debt outstanding. Approximately one half of the consolidated current and long term debt outstanding of $193 million, as of September 30, 2008, is comprised of various loans due to Nomos Bank by Buryatzoloto and Berezitovy. All scheduled loan repayments have been made to Nomos Bank, including a US $15 million loan repayment on November 21, 2008 on behalf of Berezitovy, and a further US $10 million loan repayment on December 21, 2008 on behalf of Buryatzoloto. High River's Somita SA subsidiary, which operates the Taparko mine, continues to be in breach of loan covenants pursuant to the US $35 million loan agreement with Royal Gold Inc. The present balance of the facility with Royal Gold Inc. is US $30.3 million. Discussions are ongoing regarding obtaining a waiver of the covenant breaches. Standard Bank Plc, with loans to Somita SA and High River of approximately $27 million, was recently granted a corporate guarantee from Severstal after completion of the Severstal private placement in High River. The repayment date on these facilities has been extended into 2010. Total High River consolidated debt at the end of December 2008 is anticipated to be approximately US $142 million. Trade Creditors Recently, High River advised Somita SA trade creditors that it will slow down payments for accounts payable for a brief period in light of lower than expected cashflows from the group's operations. Management plans to pay suppliers for current purchases of goods and services. Actions being taken to meet financial obligations High River is currently in discussions relating to additional debt or equity financing arrangements to meet its financial obligations. It hopes to finalize these arrangements by January 31, 2009. Personnel Changes Two officers of High River, Don Whalen, Executive Vice President, and Mike Kelly, Executive Vice President and Chief Operating Officer, have left the Company. In the interim, until a permanent replacement can be found, Chief Operating Officer duties will be shared by High River CEO, Nikolay Zelenskiy, and the mine managers of the Company's 4 operating mines. As well, Valery Dmitriev, General Director of Buryatzoloto, has left High River. Replacing him is Vladimir Baltsat, who previously worked for Peter Hambro Mining Plc as the mine manager of the Pokrovsky mine in Russia. About High River High River is a gold company with interests in producing mines, mines under development, and advanced exploration projects in Burkina Faso and Russia. |
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