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High River Financial Results for the Third Quarter Ended September 30, 2012

Date : 11/15/2012 @ 3:45AM
Source : Marketwired
Stock : High River Gold J (HRG)
Quote : 1.39  0.0 (0.00%) @ 11:35AM
High River Gold Mines share price Chart

High River Financial Results for the Third Quarter Ended September 30, 2012

High River Gold Mines (TSX:HRG)
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(All currency figures are in Canadian Dollars unless otherwise noted)

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 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 River Gold Mines Ltd.                                                  
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 River Gold Mines Ltd.                                                  
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. 6821info@hrg.ca www.hrg.ca



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