(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, 2011. 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 2011
Financial Results
-- Net gold revenue of $ 122.4 million, a decrease of 0.8% from $123.4
million in Q4 2010, an increase of 25.3% from $ 97.7 million in Q1 2010.
-- Net income of $ 37.3 million ($0.04 per share) compared to a net income
of $22.3 million ($0.03 per share) in Q4 2010 and a net income of $30.4
million ($0.03 per share) in Q1 2010.
-- Cash flow from operations of $53.5 million, up from $40.0 million in Q4
2010, and up from $31.5 million in Q1 2010.
-- Cash and cash equivalents increased to $204.1 million from $154.0
million at the end of 2010, and up from $82.5 million at the end of Q1
2010.
-- Working capital increased to $287.0 million from $205.2 million at the
end of 2010, up from $117.9 million at the end of Q1 2010.
-- Current and long term debt decreased to $ 23.5 million from $25.0
million at the end of 2010 and from $62.6million at the end of Q1 2010.
-- In January 2011, Royal Gold, Inc. ("RGI") agreed that the Completion
Test, as such term is defined in the Amended and Restated Funding
Agreement dated February 22, 2006 between RGI and Somita S.A. ("Somita")
(the "Taparko Funding Agreement") had been satisfied and agreed to
release its security interests in certain collateral (including certain
equity investments in public companies) that it held pursuant to the
"Taparko Funding Agreement".
Operations
-- Total gold production increased 18% to 91,756 (Q1 2010 - 77,762) ounces
(100%). Total cash cost per ounce decreased 10% to US$ 560 (Q1 2010 -
US$624 per ounce).
-- The Zun-Holba and Irokinda Gold Mines (including placer operations)
produced 31,855 ounces (Q1 2010 - 33,732) (100%) at a total cash cost of
US$ 579 per ounce.
-- The Taparko-Bouroum Gold Mine produced 36,456 ounces (Q1 2010 - 30,426)
(100%) at a total cash cost of US$ 485 per ounce.
-- Gold production at Berezitovy was 23,445 ounces (Q1 2010 - 13,604
ounces) (100%) at a total cash cost of US$ 649 per ounce.
-- At the Bissa Gold Project, the tender procedures to engage EPCM
(Engineering, Procurement, Construction Management) contractor were
continued in Q1 2011 and the tenders to engage the suppliers of mining
equipment were commenced.
Subsequent Events
-- In June 2011, High River has agreed to settlement terms with its former
contractor in respect of a previously disclosed action brought against
Somita. As previously disclosed, a claim regarding services which were
delivered to Somita was filed against Somita before the arbitrator in
South Africa in 2009. The aggregate amount of the claim was US$ 3.7
million and High River filed a statement of defense and counterclaim for
damages. The settlement agreement provides for full and final settlement
of the contractor's claim against Somita for a settlement amount of
US$1,350,000.
DISCUSSION OF FINANCIAL RESULTS
Selected Financial Results
The Company reported a net income of $ 37.3 million ($0.04 per share) in Q1 2011
compared to a net income of $ 30.4 million ($0.03 per share) during Q1 2010.
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In thousands of Canadian 2011 2010 2009
dollars (except per share
amounts)
Three months ended on March 31
----------------------------------------------------------------------------
Gold revenue $ 122,363 $ 97,656 $ 88,779
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Net income (loss) 37,299 30,421 931
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Net income (loss) per share
(basic) 0.04 0.03 0.00
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Cash provided by (used in)
operating activities 53,519 31,499 29,672
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Total Assets 889,601 688,102 706,962
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Loans and interest payable 23,528 62,626 84,031
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Weighted average number of
shares outstanding (basic) 840,218,962 799,327,755 590,193,673
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About High River
High River is an 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, 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 2010 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 STATEMENTS OF FINANCIAL POSITION
As at March 31, 2011
(Unaudited, expressed in thousands of Canadian Dollars)
March 31, December 31, January 1,
2011 2010 2010
-----------------------------------------
ASSETS
Current Assets
Cash & cash equivalents 204,084 153,964 82,061
Restricted cash 2,177 1,285 562
Inventories 121,735 97,663 81,090
Trade and other receivables 17,279 13,639 18,115
Other assets 15,417 15,589 12,382
-----------------------------------------
360,692 282,140 194,210
Non-Current Assets
Exploration and evaluation assets 112,753 119,847 105,061
Mine properties 28,147 67,436 72,241
Property, plant & equipment 238,121 190,256 224,331
Available for sale financial
assets 111,940 109,633 64,810
Other assets 8,251 7,986 697
Deferred tax asset 7,369 1,596 1,578
-----------------------------------------
506,581 496,753 468,718
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TOTAL ASSETS 867,273 778,893 662,928
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LIABILITIES
Current Liabilities
Accounts payable and accrued
liabilities 60,210 53,692 39,726
Loans and other borrowings 13,438 23,293 58,666
Income tax payable - - -
Provisions - - -
-----------------------------------------
73,648 76,985 98,392
Non-Current Liabilities
Other liabilities - - -
Derivative financial liabilities - - 13,684
Loans and other borrowings 10,090 1,732 25,365
Provisions 19,683 19,067 15,385
Deferred tax liabilities 37,008 24,291 20,567
-----------------------------------------
66,781 45,090 75,001
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TOTAL LIABILITIES 140,429 122,075 173,393
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EQUITY
Share Capital 640,157 640,157 610,770
Warrants - - 13,265
Contributed surplus 24,538 24,538 15,991
Debenture conversion option 538 538 538
Accumulated other comprehensive
income 28,148 3,023 (4,034)
Deficit (8,468) (45,768) (168,917)
Equity attributable to equity
holders of the Company 684,913 622,488 467,612
Non-controlling interest 41,932 34,330 21,922
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TOTAL EQUITY 726,845 656,818 489,534
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TOTAL LIABILITIES AND EQUITY 867,273 778,893 662,928
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High River Gold Mines Ltd.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the three months ended March 31, 2011
(Expressed in thousands of Canadian Dollars)
---------------------------
Three months ended
---------------------------
March 31, March 31,
2011 2010
---------------------------
Revenue
Gold 122,363 97,656
Silver 2,000 823
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124,363 98,479
Cost of sales (54,505) (55,022)
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Gross Profit 69,858 43,457
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Exploration expenses (4,036) (1,260)
General and administrative expenses (4,456) (3320)
Other expenses (3,808) 235
Interest income 1,771 230
Finance costs (2,006) (4,086)
Change in fair value of derivative - 3,829
Profit before income taxes 57,324 39,085
Income tax expense (12,423) (6,037)
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Profit for the period 44,901 33,048
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----------------------------------------------------------------------------
-
Attributable to: -
Non-controlling interest 7,602 2,627
Equity shareholders of the Company 37,299 30,421
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Profit for the period 44,901 33,048
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Other Comprehensive Income (loss)
Net gains on available for sale financial assets 7,923 (147)
Exchange differences on translation of foreign
operations 17,202 (12,862)
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Other comprehensive income, net of tax 25,125 (13,009)
----------------------------------------------------------------------------
Attributable to:
Non-controlling interest 7,602 2,627
Equity shareholders of the Company 62,425 17,412
----------------------------------------------------------------------------
Comprehensive Income, net of tax 70,026 20,039
----------------------------------------------------------------------------
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High River Gold Mines Ltd.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Expressed in thousands of Canadian Dollars)
(Unaudited)
For the three months ended
31 March 31 March
OPERATING ACTIVITIES 2011 2010
Profit before income taxes 57,324 39,085
Adjustments to profit for non-cash items
Depreciation of property, plant and equipment 6,750 13,587
Accretion expense 534 328
Write-down of exploration 18,551 -
Loss/(gain) on disposal of investments (16,614) -
Non-cash mining costs (1,676) (7,545)
Fair value adjustment to financial instruments - (3,829)
Share based payment expense - 68
Interest on capital lease - 16
Gain/loss on disposal of property, plant and
equipment (404) 31
Deferred tax expense 4,694 1,661
Other non-cash items (1,599) (4,548)
Working Capital Adjustments
Change in trade receivable and other assets (5,483) 2,909
Change in inventories (26,825) 1,450
Change in other assets 622 (3,488)
Change in accounts payable and accrued
liabilities 20,545 (3,853)
Income Tax Paid (2,901) (4,375)
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NET OPERATING CASH FLOWS 53,518 31,497
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INVESTING ACTIVITIES
Investment in exploration and evaluation assets (5,577) (2,224)
Expenditure on property, plant and equipment (9,845) (4,119)
Allocation of restricted cash (1,539)
Proceeds on sale of property, plant and
equipment 583 4
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NET INVESTING CASH FLOWS (16,378) (6,339)
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FINANCING ACIVITIES
Payments of loans and borrowings (10,283) (22,324)
Joint venture repayment of Prognoz contribution 16,609 -
Other Financing activities 209 160
Proceeds from exercise of share options - 217
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NET FINANCING CASH FLOWS 6,535 (21,947)
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Increase (decrease) in cash and cash equivalents 43,675 3,211
Net foreign exchange difference 6,444 (2,735)
Cash and cash equivalents, beginning of the
period 153,964 82,061
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Cash and cash equivalents, end of the period 204,083 82,537
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