High River Gold Reports First Quarter 2010 Results
TORONTO, ONTARIO -- (Marketwire) -- 05/13/10 -- (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 month period ended March 31, 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 FIRST QUARTER 2010
Financial Results
-- Net gold revenue of $97.7 million, a decrease of 4% from $101.5 million
in Q4 2009, an increase of 10% from $88.8 million in Q1 2009.
-- Net income of $27.5 million ($0.03 per share) compared to a net income
of $31.6 million ($0.05 per share) in Q4 2009 and a net income of $0.9
million ($0.00 per share) in Q1 2009.
-- Cash flow from operations of $31.5 million, down from $40.0 million in
Q4 2009, and up from $29.7 million in Q1 last year.
-- Cash and cash equivalents increased to $82.5 million from $82.1 million
at the end of 2009, and up from $25.0 million at the end of Q1 2009.
-- Current and long term debt levels decreased to $62.6 million from $84.0
million at the end of 2009, compared to $175.8 million at the end of Q1
2009.
Operations
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Production (100%) Cash Operating Costs Total Cash Costs
Oz US$/Oz US$/Oz
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Buryatzoloto 33,732 575 643
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Berezitovy 13,604 879 949
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Somita 30,426 423 457
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Total 77,762 569 624
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Q1 2010 total operating and non-operating cash costs reached US $682 per ounce. Non-operating cash costs per ounce mainly represent corporate administration, exploration, and other expense such as realized foreign exchange losses.
-- Zun-Holba and Irokinda Underground Gold Mines:
-- Stable production with no material shortcomings.
-- Ruble appreciation against US dollar along with lower grades
processed resulted in higher production cash costs
-- Berezitovy Open-pit Gold Mine:
-- Production was limited due to the main crusher breakdown in February
and lower mill availability in March.
-- Low production during the quarter resulted in high production cash
costs
-- Taparko-Bouroum Open-pit Gold Mine:
-- Production above planned level due to processing of higher than
life-of-mine grade ore
-- Higher throughput resulted in slightly lower cash costs despite
lower grades processed compared to 2009
-- Events Subsequent to the Quarter-End
-- In April, 2010 the debt owed to Nomos Bank by Buryatzoloto and
Berezitovy was fully repaid without penalty. The amount of the debt
and accrued interest was $ 25,207,000 at March 31, 2010.
DISCUSSION OF FINANCIAL RESULTS
Selected Financial Results
The Company reported a net income of $27.5 million ($0.03 per share) in Q1 2010 compared to a net income of $931,000 ($0.00 per share) during Q1 2009.
(in thousands of Canadian dollars except per share amounts and number of
shares)
Three months ended on March, 31 2010 2009 2008
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Gold revenue $ 97,656 $ 88,779 $ 45,009
Net income/(loss) 27,530 931 (2,308)
Net income/(loss) per share (basic) 0.03 0.00 (0.01)
Cash provided by (used in) operating
activities 31,499 29,672 (252)
Total assets 688,102 706,962 753,109
Loans and interest payable 62,626 84,031 188,445
Weighted average number of shares
outstanding (basic) 799,327,755 590,193,673 307,787,242
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OVERVIEW OF OPERATIONS
Underground Mines
The Company's attributable gold production from Buryatzoloto was 28,652 ounces in Q1 2010, essentially similar to the 29,551 ounces in Q1 2009. Buryatzoloto continues to be profitable and achieved its production objectives for Q1 2010 with 33,732 ounces (100%) of gold produced at an estimated total cash cost of US$643 per ounce as compared to 34,790 ounces of gold produced at a total cash cost of US$479 per ounce in Q1 2009. The cash costs were negatively impacted by the Ruble appreciation and lower grade ore processed.
Open Pit Mines
Berezitovy Mine (Russia)
In Q1 2010 in addition to the planned shutdown Berezitovy experienced a few technical problems. Several breakdowns were magnified by long spare parts delivery time. As a result, the main crusher was idle most of the February, while the March production was limited by the mill availability. This resulted in low gold production in Q1. The low mill and crusher availability accounted for most of the increase in the direct mining costs. They were also negatively impacted by the Ruble appreciation and lower grade ore processed.
Taparko-Bouroum Mine (Burkina Faso)
Production in the first quarter of 2010 was above projected levels due to above life-of-mine ore grades and improved mill availability, while the cash costs decreased compared to 2009.
Advanced Exploration Projects
Bissa Gold Project
In Q1 2010 the company continued the Feasibility Study of the Bissa project, which is expected to be completed in 2010. At the same time the company continues exploration at the Bissa group permits. 5,700 meters of the RC drilling and 2,800 meters of Air Core drilling were completed in Q1 2010 as a part of $2 million budget for additional exploration of the Bissa area.
About High River
High River is 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, event, 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 2008 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)
March 31, December 31,
(unaudited) 2010 2009
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Assets
Current Assets
Cash and cash equivalents $ 82,540 $ 82,061
Restricted cash 513 562
Accounts receivable 14,836 18,115
Inventory 82,247 81,090
Other assets 16,179 12,382
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196,315 194,210
Investments 64,915 64,810
Property, plant and equipment 315,994 340,606
Exploration properties and deferred exploration 107,646 105,061
Other assets 738 697
Future income taxes 2,494 1,578
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Total Assets $ 688,102 $ 706,962
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Liabilities
Current Liabilities
Accounts payable $ 29,744 $ 39,726
Loans and interest payable 48,712 58,666
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78,456 98,392
Loans and interest payable 13,914 25,365
Reclamation and closure costs 14,541 14,208
Non-hedge derivatives 9,855 13,684
Future income taxes 22,901 20,567
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139,667 172,216
Non-controlling interest 24,550 21,922
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Total Liabilities 164,217 194,138
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Shareholders' Equity
Share capital 610,987 610,770
Warrants 13,265 13,265
Contributed surplus 15,976 15,907
Debenture conversion option 538 538
Deficit (94,271) (121,801)
Accumulated other comprehensive income (22,610) (5,855)
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Total Shareholders' Equity 523,885 512,824
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Total Liabilities and Shareholders' Equity $ 688,102 $ 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 March 31,
(unaudited) 2010 2009
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Revenue
Gold $ 97,656 $ 88,779
Silver 823 342
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98,479 89,121
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Expenses
Mining costs 41,987 43,247
Mine administrative costs 1,793 3,445
Mine amortization and depletion 15,823 13,986
Asset retirement obligation accretion 287 200
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59,890 60,878
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Income before the undernoted 38,589 28,243
Administrative costs (787) (4,185)
Amortization 101 (20)
Exploration expense (1,260) (806)
Financing costs and investment income,
net 334 (3,397)
Other income/ expenses (783) (18,829)
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Income before tax and non-controlling
interest 36,194 1,006
Income tax expense (6,037) 13
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Income before non-controlling interest 30,157 1,019
Non-controlling interest in earnings of
subsidiary (2,627) (88)
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Net income for the period $ 27,530 $ 931
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Net income per share - basic and
diluted $ 0.03 $ 0.00
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High River Gold Mines Ltd.
Consolidated Statements of Cash Flows
(Expressed in thousands of Canadian dollars)
Three months ended March 31
(unaudited) 2010 2009
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Operating Activities
Net income/loss for the period $27,530 $ 931
Non-cash items:
Non-controlling interest in earnings of
subsidiary 2,627 88
Mining costs (6,725) (147)
Amortization and depletion 14,902 14,006
Asset retirement obligation accretion 287 200
Financial instrument accretion 41 (207)
Fair value adjustments to financial
instruments (3,829) (1,778)
Stock based compensation 68 50
Loss on disposal of assets 31 29
Future income taxes 1,661 (2,294)
Interest on capital lease 16 53
Unrealized foreign exchange loss (619) 11,967
Other (1,510) -
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Subtotal 34,480 22,898
Change in non-cash working capital (2,981) 6,774
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Net cash provided by operating activities 31,499 29,672
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Investing Activities
Property, plant and equipment (4,046) (2,589)
Proceeds on disposal 4 113
Exploration properties and deferred
exploration (2,224) (1,950)
(Increase)decrease in other assets (73) 54
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Net cash used by investing activities (6,339) (4,372)
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Financing Activities
Loans received - 31
Loans repaid (22,163) (19,756)
Common shares issued 217 -
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Net cash used by financing activities (21,946) (19,725)
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Effect of exchange rate changes on cash held
in foreign currencies (2,735) 321
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Increase in cash and cash equivalents during
the period 479 5,896
Cash and cash equivalents - Beginning of
period 82,061 19,123
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Cash and cash equivalents - End of period $ 82,540 $ 25,019
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Contacts:
High River Gold Mines Ltd.
Igor Klimanov
CEO
011 7 495 981 0910 ext. 6678
info@hrg.ca
www.hrg.ca