High River Financial Results for the Third Quarter Ended September 30, 2012
14.11.2012 | Marketwire
(All currency figures are in Canadian Dollars unless otherwise noted)TORONTO, ONTARIO -- (Marketwire) -- 11/14/12 -- High River Gold Mines Ltd. (TSX: HRG) ("High River" or the "Company") today reported its financial position and operational results for the three month period ended September 30, 2012. The Unaudited Interim Condensed Consolidated Financial Statements and related Notes along with the Management's Discussion and Analysis have been filed on SEDAR (www.sedar.com) and can be viewed on the Company's website at www.hrg.ca.
HIGHLIGHTS FOR THE THIRD QUARTER 2012
Financial Results
- Net gold revenue of $142.6 million, an increase of 5% from $135.5 million in Q2 2012, an increase of 28% from $111.5 million in Q3 2011.
- Net income attributable to equity holders of $35.5 million ($0.04 per share) compared to a net income of $31.5 million ($0.04 per share) in Q2 2012 and a net income of $41.3 million (0.05 per share) in Q3 2011.
- Cash flow from operations of $57.9 million, up from $49.8 million in Q2 2012, and up from $23.1 million in Q3 2011.
- Cash and cash equivalents increased to $55.0 million from $18.0 million at the end of Q2 2012, and down from $150.0 million at the end of Q3 2011.
- Working capital decreased to $212.4 million from $214.8 million at the end of Q2 2012, down from $296.0 million at the end of Q3 2011.
- Current and long term debt increased to $10.3 million from $10.1 million at the end of Q2 2012 and decreased from $22.7 million at the end of Q3 2011.
Operations
- Total gold production decreased 5% to 86,906 ounces (Q3 2011 - 91,057 ounces) (100%). Total cash cost per ounce increased 11% to US$804 per ounce (Q3 2011 - US$720 per ounce).
- The Zun-Holba and Irokinda gold mines produced 23,891 ounces (Q3 2011 - 34,100 ounces) (100%) at a total cash cost of US$997 per ounce.
- The Taparko-Bouroum gold mine produced 29,774 ounces (Q3 2011 - 31,391 ounces) (100%) at a total cash cost of US$817 per ounce.
- Gold production at the Berezitovy mine was 33,241 ounces (Q3 2011 - 25,565 ounces) (100%) at a total cash cost of US$654 per ounce.
- The Bissa project is on track to deliver first gold in H1 2013 and we now believe that production of gold at Bissa can be started in the earlier part of the announced period. Mining fleet is available on site and started pre-stripping of the pits, while part of the fleet is assisting the tailings storage facility construction. Ball and SAG mills are installed and mechanical alignment is complete. CIL tanks are installed, while piping and other auxiliary mechanical equipment installation and most of electrical work is still to be finished.
Corporate
- On July 18, 2012, Nord Gold N.V. ("Nordgold") announced its intention to make a formal offer to acquire the common shares ("Common Shares") of the Company that Nordgold and its affiliates do not already own, including Common Shares issuable upon exercise of convertible High River securities, for a price per Common Share, at the option of the tendering shareholder, of either: (a) 0.285 global depositary receipts of Nordgold; or (b) $1.40 in cash (the "Offer").
- On July 18, 2012, the board of directors of the Company (the "Board") established a special committee of independent directors (the "Special Committee") to consider the Offer, alternatives to the Offer and engage a financial advisor to prepare the formal valuation of High River in accordance with Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Special Committee engaged Paradigm Capital Inc. ("Paradigm Capital") to prepare the formal valuation. The Special Committee also engaged Fraser Milner Casgrain LLP as its legal counsel.
- The Company filed on SEDAR an amended and restated annual information form ("AIF") for the year ended December 31, 2011. The original AIF was filed on March 30, 2012. The amended and restated AIF now provides updated mineral reserve and mineral resource estimates for the Zun- Holba, Irokinda, and Berezitovy mines in Russia, as well as High River's properties in Burkina Faso. In addition, the Company filed updated certificates of the Chief Executive Officer and the Chief Financial Officer for the year ended December 31, 2011, as required under National Instrument 52-109 - Certification of Disclosure in Issuers' Annual and Interim Filings.
- The Company also filed on SEDAR revised technical reports with respect to its Berezitovy and Burkina Faso properties that address minor deficiencies in the original technical reports filed on June 8, 2012. The technical report on the Berezitovy mine entitled "The Berezitovy Project, Russia, NI 43-101 Technical Report" dated July 20, 2012, was prepared by Mark Owen, BSc, MSc, MCSM, CGeol, EurGeol, FGS of Wardell Armstrong International ("WAI"). The technical report on the Taparko- Bouroum gold mine entitled "The Taparko-Bouroum Assets, Burkina Faso, NI 43-101 Technical Report" dated July 20, 2012, was prepared by Dr. Phil Newall, BSc (ARSM), PhD (MCSM), CEng, FIMMM, Director of Mining and Minerals of WAI. The technical report on the Bissa gold project entitled "The Bissa Asset, Burkina Faso, NI 43-101 Technical Report" dated July 20, 2012, was also prepared by Dr. Newall. Each of Mr. Owen and Dr. Newall is a "qualified person" as that term is defined in National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101") and independent of the Company.
Subsequent Events
- On October 22, 2012, High River acknowledged that Nordgold filed its take-over bid circular and formally commenced the previously announced Offer. The valuation prepared by Paradigm Capital was included in the take-over bid circular prepared by Nordgold. In the valuation, Paradigm Capital was of the opinion that, based upon and subject to the analyses, assumptions, qualifications and limitations discussed in the valuation, and such other factors as Paradigm Capital considered relevant, as of October 16, 2012, the fair market value of High River was in the range of $1.33 to $1.80 per share. Furthermore, Paradigm Capital was of the opinion that, as of October 16, 2012, the value of Nordgold was in the range of $4.02 to $6.60 per share.
- On October 31, 2012, High River announced that it mailed to its shareholders a Directors' Circular as required by applicable securities laws in response to the Offer. A copy of the Directors' Circular is available online at www.sedar.com. The Board of High River (with those directors who are nominees of Nordgold abstaining), upon the unanimous recommendation of its Special Committee, unanimously recommended that High River shareholders accept the Offer and tender their Common Shares to the Offer.
DISCUSSION OF FINANCIAL RESULTS
Selected Financial Results
The Company reported a net income of $35.5 million ($0.04 per share) in Q3 2012 compared to a net income of $31.5 million ($0.04 per share) during Q2 2012 and net income of $41.3 million ($0.05 per share) in Q3 2011.
In thousands of
Canadian
dollars Three months ended Nine months ended
------------------------------------ -----------------------
(except per September June 30, September September September
share amounts) 30, 2012 2012 30, 2011 30, 2012 30, 2011
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Gold revenue $ 142,660 $ 135,526 $ 111,544 $ 417,083 $ 370,112
Net income
(loss) 35,544 31,576 41,318 124,757 119,993
Net income
(loss) per
share (basic) 0.04 0.04 0.05 0.15 0.14
Cash provided by
(used in)
operating
activities 57,915 49,812 23,131 179,159 119,542
Weighted average
number of
shares
outstanding
(basic) 840,218,962 840,218,962 840,218,962 840,218,962 840,218,962
----------------------------------------------------------------------------
About High River
High River Gold is an unhedged gold company with interests in producing mines, development 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 a 90% interest in a development project, the Bissa gold project in Burkina Faso, and a 50% interest in an advanced exploration project with NI 43-101 compliant resource estimates, the Prognoz silver project in Russia.
FORWARD LOOKING INFORMATION
This release contains 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 most recent 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.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
For the three and nine months ended 30 September
(In thousands of Canadian Dollars)
Three months ended Nine months ended
30 September, 30 September, 30 September, 30 September,
2012 2011 2012 2011
-------------------------------------------------------
-------------------------------------------------------
Revenue
Gold 142,660 111,544 417,083 370,112
Silver 2,011 2,292 5,375 7,194
---------------------------------------------------------------------------
144,671 113,836 422,458 377,305
Cost of sales (92,515) (52,621) (249,568) (189,103)
---------------------------------------------------------------------------
Gross Profit 52,155 61,216 172,889 188,202
---------------------------------------------------------------------------
---------------------------------------------------------------------------
General and
administrative
expenses (2,788) (933) (3,915) (2,310)
Other expenses,
gains and losses 1,349 (8,833) 571 (17,877)
Interest income 2,043 4,112 8,156 7,134
Finance costs (1,269) (2,037) (3,926) (5,166)
---------------------------------------------------------------------------
Profit before income
taxes 51,490 53,526 173,776 169,984
Income tax expense (12,741) (6,512) (36,807) (33,040)
---------------------------------------------------------------------------
Profit for the year 38,749 47,014 136,969 136,943
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Attributable to:
Non-controlling
interest 3,205 5,696 12,212 16,951
Equity holders of
the Company 35,544 41,318 124,757 119,993
---------------------------------------------------------------------------
Profit for the year 38,749 47,014 136,969 136,943
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Other Comprehensive
(loss) Income
Net (loss) gains on
available for sale
financial assets 17,765 (11,592) 2,866 (13,515)
Exchange differences
on translation of
foreign operations (3,123) (2,597) (14,759) 9,287
---------------------------------------------------------------------------
Other comprehensive
(loss) income, net
of tax 14,642 (14,189) (11,893) (4,228)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Attributable to:
Non-controlling
interest 3,205 5,696 12,212 16,951
Equity shareholders
of the Company 50,186 27,129 112,865 115,765
---------------------------------------------------------------------------
Comprehensive
Income, net of tax 53,392 32,824 125,076 132,715
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Profit attributable
to equity holders
of the Company 35,544 41,318 124,757 119,993
Weighted average
number of ordinary
shares outstanding 840,218,962 840,218,962 840,218,962 840,218,962
-------------------------------------------------------
Basic and diluted
earnings per share 0.04 0.05 0.15 0.14
-------------------------------------------------------
High [wp=92]River Gold Mines Ltd.[/wp]
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(In thousands of Canadian Dollars)
As at As at
30 September, 2012 31 December, 2011
------------------------------------------
------------------------------------------
ASSETS
Current Assets
Cash & cash equivalents 55,045 162,310
Inventories 142,755 121,690
Loans to related parties 63,922 24,360
Other assets 53,241 37,690
------------------------------------------
------------------------------------------
314,963 346,050
Non-Current Assets
Exploration and evaluation
assets 101,898 80,035
Mine properties 103,556 107,105
Property, plant & equipment 412,372 244,131
Available for sale financial
assets 89,361 86,023
Loans to related parties 49,363 57,219
Other assets 3,090 9,654
Deferred tax assets 77,606 77,610
------------------------------------------
------------------------------------------
837,245 661,777
---------------------------------------------------------------------------
TOTAL ASSETS 1,152,208 1,007,826
---------------------------------------------------------------------------
---------------------------------------------------------------------------
LIABILITIES
Current Liabilities
Accounts payable and accrued
liabilities 82,835 51,566
Loans and other borrowings 10,356 20,531
Derivative Financial Liabilities - -
Income tax payable 9,368 17,846
------------------------------------------
------------------------------------------
102,559 89,942
Non-Current Liabilities
Loans and other borrowings -
Provisions 19,956 19,147
Deferred tax liabilities 102,003 93,957
------------------------------------------
------------------------------------------
121,959 113,104
---------------------------------------------------------------------------
TOTAL LIABILITIES 224,517 203,047
---------------------------------------------------------------------------
---------------------------------------------------------------------------
EQUITY
Share Capital 640,157 640,157
Contributed surplus 25,079 25,079
Available for sale reserve 73,797 70,930
Foreign currency translation
reserve (59,830) (45,071)
Retained Earnings/(Deficit) 183,273 58,515
------------------------------------------
------------------------------------------
Equity attributable to equity
holders of the Company 862,476 749,610
Non-controlling interest 65,215 55,169
---------------------------------------------------------------------------
TOTAL EQUITY 927,691 804,779
---------------------------------------------------------------------------
---------------------------------------------------------------------------
TOTAL LIABILITIES AND EQUITY 1,152,208 1,007,826
---------------------------------------------------------------------------
---------------------------------------------------------------------------
High [wp=92]River Gold Mines Ltd.[/wp]
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Expressed in thousands of Canadian Dollars)
Year to Date
OPERATING ACTIVITIES 30 September, 2012 30 September, 2011
------------------------------------------
------------------------------------------
Profit after income taxes 136,969 136,943
Adjustments to profit for non-
cash items
Depreciation and amortization 47,134 42,293
Accretion expense 911 1,087
Write-down of exploration - 2,122
Loss/(gain) on disposal of
investments (167) (463)
Non-cash mining costs (563) 2,415
Gain/(loss) on disposal of
property, plant and equipment 15 (258)
Deferred tax expense 43,566 13,286
Other non-cash items (1,350) 5,881
Working Capital Adjustments
Change in trade receivable and
other assets (17,304) (12,075)
Change in inventories (21,065) (52,483)
Change in other assets 1,481 (17,874)
Change in accounts payable and
accrued liabilities 26,149 5,173
Income tax paid (36,617) (6,504)
---------------------------------------------------------------------------
NET OPERATING CASH FLOWS 179,159 119,542
---------------------------------------------------------------------------
---------------------------------------------------------------------------
INVESTING ACTIVITIES
Investment in exploration and
evaluation assets (25,888) (32,354)
Expenditure on property, plant
and equipment (223,077) (49,607)
Other Investing activities (797) (455)
Proceeds on sale of property,
plant and equipment 111 1,325
---------------------------------------------------------------------------
NET INVESTING CASH FLOWS (249,651) (81,091)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
FINANCING ACTIVITIES
Payments of loans and borrowings (10,597) (72,120)
Other Financing activities (23,978) (41,810)
Dividends paid to minority
interest (2,165) -
Proceeds from exercise of share
options - 67,336
---------------------------------------------------------------------------
NET FINANCING CASH FLOWS (36,741) (46,594)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Increase (decrease) in cash and
cash equivalents (107,232) (8,143)
Net foreign exchange difference (33) 4,208
Cash and cash equivalents,
beginning of the period 162,310 153,964
---------------------------------------------------------------------------
Cash and cash equivalents, end of
the period 55,045 150,029
---------------------------------------------------------------------------
Contacts:
High River Gold Mines Ltd.
Yury Lopukhin, CEO
011 7 495 981 0910 ext. 6821
info@hrg.ca
www.hrg.ca