High River Gold Reports Second Quarter 2010 Results
TORONTO, ONTARIO -- (Marketwire) -- 08/13/10 -- (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 and six month periods ended June 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 SECOND QUARTER 2010
Financial Results
-- Net gold revenue of $113.8 million, an increase of 16% from $97.7
million in Q1 2010, an increase of 34% from $84.6 million in Q2 2009.
-- Net income of $39.3 million ($0.05 per share) compared to a net income
of $27.5 million ($0.03 per share) in Q1 2010 and a net loss of $37.8
million (-$0.06 per share) in Q2 2009.
-- Cash flow from operations of $48.8 million, compared to $31.5 million in
Q1 2010, and $22.8 million in Q2 2009.
-- Cash and cash equivalents increased to $92.7 million from $82.5 million
at the end of Q1 2010, and up from $23.1 million at the end of Q2 2009.
-- Current and long term debt decreased to $31.5 million from $62.6 million
at the end of Q1 2010 and from $135.6 million at the end of Q2 2009.
Operations
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Production (100%) Cash Operating Costs Total Cash Costs
Oz US$/Oz US$/Oz
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Buryatzoloto 36,467 520 592
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Berezitovy 20,332 684 756
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Somita 30,004 325 370
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Total 86,803 491 554
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Q2 2010 total operating and non-operating cash costs reached US $585 per ounce. Non-operating cash costs per ounce mainly represent corporate administration, exploration, and other expenses such as realized foreign exchange losses.
-- Zun-Holba and Irokinda Underground Gold Mines:
-- Stable production with no material shortcomings.
-- Lower grades processed resulted in higher production cash costs
-- Berezitovy Open-pit Gold Mine:
-- The crusher and mill availability significantly increased compared
to the previous quarter, but remained below planned level.
-- Lower production during the quarter resulted in higher production
cash costs
-- Taparko-Bouroum Open-pit Gold Mine:
-- Production in line with the plan resulted in low production cash
costs
DISCUSSION OF FINANCIAL RESULTS
Selected Financial Results
The Company reported a net income of $39.3 million ($0.05 per share) in Q2 2010 compared to a net income of $27.5 million ($0.03 per share) in Q1 2010 and a net loss of $37.8 million (-$0.06 per share) in Q2 2009.
Three months ended Six months ended
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(except per
share June 30, March 31, June 30, June 30, June 30,
amounts) 2010 2010 2009 2010 2009
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Gold revenue $ 113,808 $ 97,656 $ 84,561 $ 211,464 $ 173,340
Net income
(loss) 39,267 27,530 (37,777) 66,797 (10,219)
Net income
(loss) per
share (basic) 0.05 0.03 (0.06) 0.08 (0.02)
Cash provided
by (used in)
operating
activities 48,800 31,499 22,821 80,299 52,493
Weighted
average
number of
shares
outstanding
(basic) 799,327,755 799,327,755 597,407,151 799,327,755 593,800,412
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OVERVIEW OF OPERATIONS
Underground Mines
The Company's attributable gold production from Buryatzoloto was 30,974 ounces compared to 28,652 ounces in Q1 2010 and 30,439 ounces in Q2 2009. Buryatzoloto continues to be profitable and achieved its production objectives for Q2 2010 with 36,466 ounces (100%) of gold produced at an estimated total cash cost of US$592 per ounce as compared to 35,835 ounces of gold produced at a total cash cost of US$459 per ounce in Q2 2009.
Open Pit Mines
Berezitovy Mine (Russia)
The main crusher and mill availability significantly increased in Q2 2010 compared to the previous quarter. As a result, production increased by 49% while cash operating costs decreased by 28%. The Company's attributable gold production from Berezitovy was 20,129 ounces compared to 13,468 ounces in Q1 2010 and 23,783 ounces in Q2 2009.
Taparko-Bouroum Mine (Burkina Faso)
The mine ran well and met management's expectations. The Company's attributable gold production from Taparko-Bouroum mine was 27,003 ounces in Q2 2010 compared to 27,384 ounces in Q1 2010 and 18,125 ounces in Q2 2009. The total cash costs in Q2 2010 amounted to US$370 per ounce.
Exploration Projects
Burkina Faso
In Q2 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 and other properties in Burkina Faso. 8,500 meters of RC drilling, 9,300 meters of RAB drilling and 390 meters of Diamond drilling were completed in Q2 2010.
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)
June 30, December 31,
(unaudited) 2010 2009
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Assets
Current Assets
Cash and cash equivalents $ 92,730 $ 82,061
Restricted cash 477 562
Accounts receivable 13,479 18,115
Inventory 91,085 81,090
Other assets 16,359 12,382
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214,130 194,210
Investments 78,040 64,810
Property, plant and equipment 306,041 340,606
Exploration properties and deferred
exploration 108,062 105,061
Other assets 765 697
Future income taxes 6,624 1,578
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Total Assets $ 713,662 $ 706,962
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Liabilities
Current Liabilities
Accounts payable $ 39,063 $ 39,726
Loans and interest payable 17,793 58,666
Non-hedge derivatives 6,373 -
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63,229 98,392
Loans and interest payable 13,738 25,365
Reclamation and closure costs 14,942 14,208
Non-hedge derivatives - 13,684
Future income taxes 30,312 20,567
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122,221 172,216
Non-controlling interest 26,972 21,922
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Total Liabilities 149,193 194,138
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Shareholders' Equity
Share capital 610,987 610,770
Warrants 13,265 13,265
Contributed surplus 15,996 15,907
Debenture conversion option 538 538
Deficit (55,004) (121,801)
Accumulated other comprehensive income (21,313) (5,855)
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Total Shareholders' Equity 564,469 512,824
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Total Liabilities and Shareholders' Equity $ 713,662 $ 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 June 30,
(unaudited) 2010 2009
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Revenue
Gold $ 113,808 $ 84,561
Silver 1,388 3,622
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115,196 88,183
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Expenses
Mining costs 42,909 43,332
Mine administrative costs 3,679 3,032
Mine amortization and depletion 15,425 14,782
Asset retirement obligation accretion 333 223
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62,346 61,369
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Income before the undernoted 52,850 26,814
Administrative costs (552) (2,135)
Amortization (107) (11)
Exploration expense (1,892) (1,195)
Financing costs and investment income, net 504 (3,469)
Other income/ expenses (3,215) (48,105)
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Income before tax and non-controlling interest 47,588 (28,101)
Income tax expense (5,899) (5,366)
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Income before non-controlling interest 41,689 (33,467)
Non-controlling interest in earnings of
subsidiary (2,422) (4,310)
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Net income for the period $ 39,267 $ (37,777)
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Net income per share - basic and diluted $ 0.05 $ (0.06)
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High River Gold Mines Ltd.
Consolidated Statements of Cash Flows
(Expressed in thousands of Canadian dollars)
Three months ended June 30,
(unaudited) 2010 2009
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Operating Activities
Net income/loss for the period $ 39,267 $ (37,777)
Non-cash items:
Non-controlling interest in earnings of
subsidiary 2,422 4,310
Mining costs (4,231) (976)
Amortization and depletion 15,532 14,792
Asset retirement obligation accretion 333 223
Financial instrument accretion 270 661
Fair value adjustments to financial
instruments (3,482) (1,229)
Stock based compensation 21 130
Loss on disposal of assets 628 58,784
Future income taxes 122 434
Interest on capital lease (650) 1,164
Unrealized foreign exchange loss 3,842 (8,453)
Other 980 46
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Subtotal 55,054 32,109
Change in non-cash working capital (6,254) (9,288)
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Net cash provided by operating activities 48,800 22,821
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Investing Activities
Property, plant and equipment (9,176) (5,164)
Proceeds on disposal 538 -
Exploration properties and deferred
exploration (2,411) (604)
(Increase)decrease in other assets (165) 3,320
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Net cash used by investing activities (11,214) (2,448)
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Financing Activities
Loans received - 5,947
Loans repaid (30,511) (37,812)
Common shares issued - 10,623
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Net cash used by financing activities (30,511) (21,242)
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Effect of exchange rate changes on cash held
in foreign currencies 3,115 (1,021)
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Increase in cash and cash equivalents during
the period 10,190 (1,890)
Cash and cash equivalents - Beginning of
period 82,540 25,020
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Cash and cash equivalents - End of period $ 92,730 $ 23,130
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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