High River Gold Reports Third Quarter 2010 Results
TORONTO, ONTARIO -- (Marketwire) -- 11/15/10 -- (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, 2010. The Unaudited Interim 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 2010
Financial Results
-- Net gold revenue of $100.8 million, a decrease of 11% from $113.8
million in Q2 2010, an increase of 13% from $89.6 million in Q3 2009.
-- Net income of $ 25.8 million ($ 0.03 per share) compared to a net income
of $39.3 million ($0.05 per share) in Q2 2010 and a net loss of $4.6
million (-$0.01 per share) in Q3 2009.
-- Cash flow from operations of $26.3 million, compared to $48.8 million in
Q2 2010, and $33.00 million in Q3 2009.
-- Cash and cash equivalents increased to $125.6 million from $92.7 million
at the end of Q2 2010, and up from $38.7 million at the end of Q3 2009.
-- Working capital increased to $205.3 million from $150.9 million at the
end of Q2 2010, up from $18.5 million at the end of Q3 2009.
-- Current and long term debt decreased to $22.1 million from $31.5 million
at the end of Q2 2010 and from $121.1 million at the end of Q3 2009.
Operations
-- Total gold production (dore) decreased 10% to 77,427 ounces (Q2 2010 -
86,803 ounces (100%) and 84,990 ounces in Q3 2009). Total cash cost per
ounce increased 9% to US$603 (Q2 2010 - US$554 per ounce and US$518 per
ounce in Q3 2009) (see the Non-GAAP Financial Measures table).
-- The Zun-Holba and Irokinda Gold Mines produced 30,186 ounces (Q3 2009 -
37,430) (100%) at a total cash cost of US$583 per ounce.
-- The Taparko-Bouroum Gold Mine produced 29,582 ounces (Q3 2009 - 25,073)
(100%) at a total cash cost of US$421 per ounce.
-- Gold production at Berezitovy was 17,659 ounces (Q3 2009 - 22,487
ounces) (100%), at a total cash cost of US$939 per ounce.
-- At the Bissa Gold Project, the technical report describing the results
of the feasibility study was published in Q3 2010.
Subsequent Events
-- Igor Klimanov resigned as Chief Executive Officer on October 4, 2010.
-- A subsidiary of Severstal acquired 19,000,000 common shares of the
Company in October 2010. Following the transaction, Severstal has
beneficial ownership and control over 610,362,172 Common Shares,
representing approximately 72.64% of the issued and outstanding Common
Shares of the Company.
-- Konstantin Sobolevskiy was appointed as Chief Executive Officer
effective October 28, 2010.
-- The Company paid off the principal amount of the Royal Gold loan. The
Company has started to pay the tail royalty to Royal Gold, which amounts
to 2% of the revenue generated by Somita.
DISCUSSION OF FINANCIAL RESULTS
Selected Financial Results
The Company reported a net income of $25.78 million ($0.03 per share) in Q3 2010 compared to net income of $39.3 million ($0.05 per share) in Q2 2010 and a net loss of $4.6 million (-$0.01 per share) in Q3 2009.
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Three months ended Nine months ended
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(except per
share September June 30, September September 30, September
amounts) 30, 2010 2010 30, 2009 2010 30, 2009
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Gold revenue $100,767 $113,808 $89,557 $312,231 $262,917
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Net income
(loss) 25,775 39,267 (4,567) 92,572 (41,413)
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Net income
(loss) per
share
(basic) 0.03 0.05 (0.01) 0.11 (0.07)
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Cash provided
by (used in)
operating
activities 26,296 48,800 33,011 106,595 85,504
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Weighted
average
number of
shares
outstanding
(basic) 826,660,782 799,327,755 649,217,295 808,510,986 612,272,706
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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.
FORWARD LOOKING INFORMATION
This release and subsequent oral statements made by and on behalf of the Company may contain forward-looking statements. Wherever possible, words such as 'intends', 'expects', 'scheduled', 'estimates', 'anticipates', 'believes', and similar expressions or statements that certain actions, events or results 'may', 'could', 'would', 'might' or 'will' be taken, occur or be achieved, have been used to identify these forward-looking statements. Although the forward-looking statements contained in this release reflect management's current beliefs based upon information currently available to management and based upon what management believes to be reasonable assumptions, High River cannot be certain that actual results will be consistent with these forward-looking statements. A number of factors could cause events and achievements to differ materially from the results expressed or implied in the forward-looking statements. These factors should be considered carefully and prospective investors should not place undue reliance on the forward-looking statements. Forward-looking statements necessarily involve significant known and unknown risks, assumptions and uncertainties that may cause High River's actual results, events, prospects and opportunities to differ materially from those expressed or implied by such forward-looking statements. Although High River has attempted to identify important risks and factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors and risks that cause actions, events or results not to be anticipated, estimated or intended, including those risk factors discussed in the Company's 2009 Annual Information Form. There can be no assurance that the forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, prospective investors should not place undue reliance on forward-looking statements. Any forward-looking statements are made as of the date of this release, and High River assumes no obligation to update or revise them to reflect new events or circumstances, unless otherwise required by law.
High River Gold Mines Ltd.
CONSOLIDATED BALANCE SHEETS
(Expressed in thousands of Canadian dollars)
September 30, December 31,
(unaudited) 2010 2009
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Assets
Current Assets
Cash and cash equivalents 125,587 $ 82,061
Restricted cash 1,348 562
Accounts receivable 16,332 18,115
Inventory 99,097 81,090
Other assets 17,384 12,382
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259,748 194,210
Investments 103,871 64,810
Property, plant and equipment 311,087 340,606
Exploration properties and deferred
exploration 114,919 105,061
Other assets 759 697
Future income taxes 1,122 1,578
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Total Assets 791,506 $ 706,962
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Liabilities
Current Liabilities
Accounts payable 43,164 $ 39,726
Loans and interest payable 8,466 58,666
Non-hedge derivatives 2,863 -
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54,493 98,392
Loans and interest payable 13,628 25,365
Reclamation and closure costs 17,755 14,208
Non-hedge derivatives - 13,684
Future income taxes 33,884 20,567
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119,760 172,216
Non-controlling interest 31,408 21,922
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Total Liabilities 151,168 194,138
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Shareholders' Equity
Share capital 640,157 610,770
Warrants 10,126 13,265
Contributed surplus 16,002 15,907
Debenture conversion option 538 538
Deficit (29,228) (121,801)
Accumulated other comprehensive income 2,743 (5,855)
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Total Shareholders' Equity 640,338 512,824
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Total Liabilities and Shareholders' Equity 791,506 $ 706,962
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High River Gold Mines Ltd.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in thousands of Canadian dollars except per share figures)
Three months ended Nine months ended
September 30, September 30,
(unaudited) 2010 2009 2010 2009
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Revenue
Gold 100,767 $ 89,577 312,231 $ 262,917
Silver 1,068 950 3,279 4,914
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101,835 90,527 315,510 267,831
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Expenses
Mining costs 42,134 47,736 127,030 134,315
Mine administrative costs 3,543 1,676 9,015 8,153
Mine amortization and
depletion 13,868 13,145 45,116 41,913
Asset retirement obligation
accretion 327 216 947 639
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59,872 62,773 182,108 185,020
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Income before the undernoted 41,963 27,754 133,402 82,811
Administrative costs (1,470) (5,205) (2,809) (11,525)
Amortization - (15) (6) (46)
Exploration expense (6,764) (999) (9,916) (3,000)
Financing costs and
investment income, net 3,084 (8,490) 3,922 (15,356)
Other income/(expenses) (572) (13,513) (4,570) (80,447)
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Income (loss) before tax and
non-controlling interest 36,241 (468) 120,023 (27,563)
Income tax expense (6,029) (4,085) (17,965) (9,438)
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Income (loss) before non-
controlling interest 30,212 (4,553) 102,058 (37,001)
Non-controlling interest in
earnings of subsidiary (4,437) (14) (9,486) (4,412)
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Net income (loss) for the
period $ 25,775 $ (4,567)$ 92,572 $ (41,413)
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Net income (loss) per share
- basic and diluted $ 0.03 $ (0.01)$ 0.11 $ (0.07)
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High River Gold Mines Ltd.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in thousands of Canadian dollars)
Three months ended Nine months ended
September 30, September 30,
(unaudited) 2010 2009 2010 2009
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Operating Activities
Net income (loss) for
the period $ 25,775 $ (4,567) $ 92,572 $ (41,413)
Non-cash items:
Non-controlling
interest in earnings
of subsidiary 4,437 14 9,486 4,412
Mining cost -change in
inventory (6,200) 1,593 (17,976) 470
Amortization and
depletion 13,868 13,161 45,122 41,959
Asset retirement
obligation accretion 327 216 947 639
Financial instrument
accretion 40 114 351 568
Fair value adjustments
to financial
instruments (3,510) 4,007 (10,821) 1,000
Stock based
compensation 6 70 95 250
Write down of
exploration - 11,383 628 70,167
Loss on disposal of
assets (286) 6,429 (133) 6,991
Future income taxes 2,061 1,898 3,072 768
Unrealized foreign
exchange loss (1,156) (6,204) 2,067 (2,690)
Other 201 - (313)
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Subtotal 35,563 28,114 125,097 83,121
Change in non-cash
working capital (9,267) 4,897 (18,502) 2,383
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Net cash provided by
operating activities 26,296 33,011 106,595 85,504
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Investing Activities
Property, plant and
equipment (10,165) (6,081) (23,387) (13,721)
Proceeds on disposal 1,092 1,636 1,634 1,636
Exploration properties
and deferred
exploration (7,137) (1,560) (11,772) (4,114)
(Increase) decrease in
other assets (573) (4,927) (811) (1,553)
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Net cash used by
investing activities (16,783) (10,932) (34,336) (17,752)
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Financing Activities
Loans received - 13 - 5,991
Loans repaid - (5,722) (50,040) (63,290)
Common shares issued 26,032 - 26,249 10,623
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Net cash used by
financing activities 26,032 (5,709) (23,791) (46,676)
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Effect of exchange rate
changes on cash held in
foreign currencies (2,688) (837) (4,942) (1,536)
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Increase in cash and
cash equivalents during
the period 32,857 15,533 43,526 19,540
Cash and cash
equivalents - Beginning
of period 92,730 23,130 82,061 19,123
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Cash and cash
equivalents - End of
period $ 125,587 $ 38,663 $ 125,587 $ 38,663
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Contacts:
High River Gold Mines Ltd.
Konstantin Sobolevskiy
CEO
011 7 495 981 0910 ext. 6676
info@hrg.ca
www.hrg.ca