High River Financial Results for the Second Quarter Ended June 30, 2012

Marketwired

TORONTO, ONTARIO--(Marketwire - Aug. 14, 2012) -

(All currency figures are in Canadian Dollars unless otherwise noted)

High River Gold Mines Ltd. (HRG.TO) ("High River" or the "Company") today reported its financial position and operational results for the three month period ended June 30, 2012. The Unaudited Interim 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 SECOND QUARTER 2012

Financial Results

-- Net gold revenue of $135.5 million, a decrease of 3% from $138.9 million

in Q1 2012 and a decrease of 1% from $ 136.2 million in Q2 2011.

-- Net income attributable to equity holders of $31.5 million ($0.04 per

share) compared to a net income of $57.6 million ($0.07 per share) in Q1

2012 and a net income of $ 41.4 million (0.05 per share) in Q2 2011.

-- Cash flow from operations of $49.8 million, down from $71.5 million in

Q1 2012, and up from $42.9 in Q2 2011.

-- Cash and cash equivalents decreased to $18.0 million from $ 95.6 million

at the end of Q1 2012, and down from $ 207.2 million at the end of Q2

2011.

-- Working capital decreased to $214.8 million from $295.0 million at the

end of Q1 2012, down from $307.2 million at the end of Q2 2011.

-- Current and long term debt decreased to $10.1 million from $11.1 million

at the end of Q1 2012 and from $24.0 million at the end of Q2 2011.

Operations

-- Total gold production (hereinafter not including the gold equivalent of

silver) decreased 1% to 83,402 ounces (Q1 2012 - 84,457 ounces (100%)).

Total cash cost per ounce increased 5% to US$829 per ounce (Q1 2012 -

US$786 per ounce).

-- The Zun-Holba and Irokinda Gold Mines produced 28,970 ounces (Q1 2012 -

30,426 ounces) (100%) at a total cash cost of US$829 per ounce.

-- The Taparko-Bouroum Gold Mine produced 28,816 ounces (Q1 2012 - 33,747

ounces) (100%) at a total cash cost of US$790 per ounce.

-- Gold production at Berezitovy was 25,616 ounces (Q1 2012 - 20,284

ounces) (100%) at a total cash cost of US$873 per ounce.

Corporate

-- On April 16, 2012, High River announced updated reserve and resource

estimate and current technical reports for Irokinda and Zun-Holba.

-- On April 24, 2012, High River announced updated reserve and resource

estimate and current technical reports for its Berezitovy and Burkina

Faso properties.

-- On May 14, 2012, Yury Lopukhin replaced Konstantin Sobolevsky as Chief

Executive Officer and Georgy Smirnov was appointed as Chief Financial

Officer of High River.

-- On June 8, 2012, High River filed technical reports for its Berezitovy

and Burkina Faso properties.

Subsequent Events

-- 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. The Special Committee has

engaged Paradigm Capital Inc. to prepare the formal valuation and

expects to receive such valuation by mid-September 2012. The Special

Committee has also engaged Fraser Milner Casgrain LLP as its legal

counsel.

-- On July 20, 2012, 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 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. The Company also filed 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.

DISCUSSION OF FINANCIAL RESULTS

Selected Financial Results

The Company reported a net income of $31.5 million ($0.04 per share) in Q2 2012 compared to a net income of $57.6 million ($0.07 per share) during Q1 2012 and net income of $41.4 million ($0.05 per share) in Q2 2011.

In thousands of

Canadian dollars Three months ended Six months ended

--------------------------- ---------------------------

(except per share

amounts) June 30, 2012 June 30, 2011 June 30, 2012 June 30, 2011

----------------------------------------------------------------------------

----------------------------------------------------------------------------

Gold revenue $ 135,526 $ 136,204 $ 274,423 $ 258,566

Net income (loss) 31,576 41,375 89,213 78,674

Net income (loss) per

share (basic) 0.04 0.05 0.11 0.09

Cash provided by

(used in) operating

activities 49,812 42,893 121,244 96,410

Weighted average

number of shares

outstanding (basic) 840,218,962 840,218,962 840,218,962 840,218,962

----------------------------------------------------------------------------

----------------------------------------------------------------------------

About High River

High River 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 six months ended 30 June

(In thousands of Canadian Dollars)

Three months ended Six months ended

30 June, 30 June, 30 June, 30 June,

Notes 2012 2011 2012 2011

--------------------------------------------------------

--------------------------------------------------------

Revenue

Gold 135,526 136,204 274,423 258,567

Silver 1,578 2,902 3,364 4,902

----------------------------------------------------------------------------

137,104 139,106 277,787 263,469

Cost of sales (80,488) (79,658) (157,053) (136,482)

----------------------------------------------------------------------------

Gross Profit 56,616 59,448 120,734 126,987

----------------------------------------------------------------------------

----------------------------------------------------------------------------

Exploration expenses - 4,036 - -

General and

administrative

expenses (522) (384) (1,127) (1377)

Other expenses,

gains and losses (11,697) (3,993) (778) (9,044)

Interest income 2,337 1,251 6,114 3,022

Finance costs (2,343) (1,223) (2,657) (3,129)

----------------------------------------------------------------------------

Profit before income

taxes 44,390 59,134 122,286 116,458

Income tax expense (8,803) (14,106) (24,066) (26,529)

----------------------------------------------------------------------------

Profit for the year 35,587 45,029 98,220 89,930

----------------------------------------------------------------------------

----------------------------------------------------------------------------

Attributable to:

Non-controlling

interest 4,011 3,653 9,007 11,255

Equity holders of

the Company 31,577 41,375 89,213 78,674

----------------------------------------------------------------------------

Profit for the year 35,587 45,029 98,220 89,930

----------------------------------------------------------------------------

----------------------------------------------------------------------------

Other Comprehensive

(loss) Income

Net (loss) gains on

available for sale

financial assets (13,829) (9,846) (14,899) (1,923)

Exchange differences

on translation of

foreign operations (30,775) (74,582) (11,636) (57,380)

----------------------------------------------------------------------------

Other comprehensive

(loss) income, net

of tax (44,604) (84,428) (26,535) (59,303)

----------------------------------------------------------------------------

----------------------------------------------------------------------------

Attributable to:

Non-controlling

interest 16 4,011 3,653 9,006 11,255

Equity shareholders

of the Company (13,028) (43,052) 62,678 19,372

----------------------------------------------------------------------------

Comprehensive

Income, net of tax (9,017) (39,399) 71,685 30,627

----------------------------------------------------------------------------

----------------------------------------------------------------------------

Profit attributable

to equity holders

of the Company 31,577 41,375 89,213 78,674

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 0.11 0.09

---------------------------------------------------

High River Gold Mines Ltd.    

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(In thousands of Canadian Dollars)

As at

As at 31 December,

Notes 30 June, 2012 2011

-----------------------------------

-----------------------------------

ASSETS

Current Assets

Cash & cash equivalents 3 18,003 162,310

Inventories 4 140,819 121,690

Loans to related parties 5 101,329 24,360

Other assets 6 60,022 37,690

-----------------------------------

-----------------------------------

320,173 346,050

Non-Current Assets

Exploration and evaluation assets 7 95,272 80,035

Mine properties 8 103,026 107,105

Property, plant & equipment 9 363,623 244,131

Available for sale financial assets 68,674 86,023

Loans to related parties 5 64,694 57,219

Other assets 6 3,023 9,654

Deferred tax assets 77,582 77,610

-----------------------------------

-----------------------------------

775,894 661,777

----------------------------------------------------------------------------

TOTAL ASSETS 1,096,067 1,007,826

----------------------------------------------------------------------------

----------------------------------------------------------------------------

LIABILITIES

Current Liabilities

Accounts payable and accrued

liabilities 11 86,160 51,566

Loans and other borrowings 12 10,140 20,531

Derivative Financial Liabilities - -

Income tax payable 9,058 17,846

-----------------------------------

-----------------------------------

105,358 89,942

Non-Current Liabilities

Provisions 13 19,328 19,147

Deferred tax liabilities 94,917 93,957

-----------------------------------

-----------------------------------

114,245 113,104

----------------------------------------------------------------------------

TOTAL LIABILITIES 219,603 203,047

----------------------------------------------------------------------------

----------------------------------------------------------------------------

EQUITY

Share Capital 640,157 640,157

Contributed surplus 25,079 25,079

Available for sale reserve 56,032 70,930

Foreign currency translation reserve (56,708) (45,071)

Retained Earnings/(Deficit) 147,729 58,515

-----------------------------------

-----------------------------------

Equity attributable to equity holders

of the Company 812,289 749,610

Non-controlling interest 16 64,175 55,169

----------------------------------------------------------------------------

TOTAL EQUITY 876,464 804,779

----------------------------------------------------------------------------

----------------------------------------------------------------------------

TOTAL LIABILITIES AND EQUITY 1,096,067 1,007,826

----------------------------------------------------------------------------

----------------------------------------------------------------------------

High River Gold Mines Ltd.    

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Expressed in thousands of Canadian Dollars)

Year to Date

OPERATING ACTIVITIES 30 June 2012 30 June 2011

--------------------------

--------------------------

Profit after income taxes 98,220 89,930

Adjustments to profit for non-cash items

Depreciation and amortization 31,227 28,397

Accretion expense 617 952

Write-down of exploration - (175)

Loss/(gain) on disposal of investments (108) (432)

Non-cash mining costs (559) (1,526)

Equity loss from associated company - -

Fair value adjustment to financial

instruments - -

Share based payment expense - -

Interest on capital lease - -

Gain/(loss) on disposal of property, plant

and equipment 8 (601)

Deferred tax expense 36,337 10,420

Other non-cash items (2,769) 12,678

Working Capital Adjustments

Change in trade receivable and other assets (12,323) (6,845)

Change in inventories (19,129) (26,441)

Change in other assets (3,129) (5,499)

Change in accounts payable and accrued

liabilities 24,054 2,994

Income tax paid (31,201) (7,436)

----------------------------------------------------------------------------

NET OPERATING CASH FLOWS 121,244 96,416

----------------------------------------------------------------------------

----------------------------------------------------------------------------

INVESTING ACTIVITIES

Investment in exploration and evaluation assets (19,261) (21,546)

Expenditure on property, plant and equipment (154,370) (15,937)

Allocation of restricted cash -

Proceeds on sale of property, plant and

equipment 23 1,273

Other investing activities (726) (895)

----------------------------------------------------------------------------

NET INVESTING CASH FLOWS (174,334) (37,104)

----------------------------------------------------------------------------

----------------------------------------------------------------------------

FINANCING ACIVITIES

Payments of loans and borrowings (10,597) (10,283)

Joint venture repayment of Prognoz contribution - 18,885

Other Financing activities (82,366) (16,726)

----------------------------------------------------------------------------

NET FINANCING CASH FLOWS (92,963) (8,124)

----------------------------------------------------------------------------

----------------------------------------------------------------------------

Increase (decrease) in cash and cash equivalents (146,053) 51,187

Net foreign exchange difference 1,746 2,113

Cash and cash equivalents, beginning of the period 162,310 153,964

----------------------------------------------------------------------------

Cash and cash equivalents, end of the period 18,003 207,264

----------------------------------------------------------------------------

----------------------------------------------------------------------------

Contact:
Yury Lopukhin
High River Gold Mines Ltd.
CEO
011 7 495 981 0910 ext. 6821
info@hrg.ca
www.hrg.ca

View Comments