Strong operating results cut High River’s loss

Despite posting record production from its 50%-owned New Britannia mine in Manitoba, and at the mines of JCS Buryatzoloto, a Russian company in which it holds a 53.5% interest, High River Gold Mines (HRG-T) has posted a loss for the recent third quarter.

For the three months ended September 30, High River incurred a loss $710,000 (or 2 per share), compared with a year-ago loss of $1 million (3 per share). During the first nine month of the year, High River’s loss piled up to $4 million (11 per share), compared with a loss of $3.6 million the previous year. Cash flow per share was 3 for the quarter and 6 for the nine-month period, compared to negative cash flow of 2 per share and nil cash flow for the corresponding periods of 2000.

Gold production from the New Britannia mine in Manitoba during the first nine months of 2001 hit a record 84,660 oz. at a total cash cost of US$185 per oz., up from the 78,470 oz. produced a year earlier at US$210 per oz. This production is shared equally by High River and partner TVX Normandy Americas. TVX Normandy Americas is a joint venture between TVX Gold (TVX-T), with a 50.1% interest, and Normandy Mining (NDY-T), with 49.9%,

High River and TVX have agreed in principle to a split of management responsibilities at New Britannia. Continuing as operator, TVX will be responsible for the mine and underground exploration. In 2002, a drill program will test for extensions to the deposit to the 4,500 ft. level on both the Dick and the Ruttan ore zones. Recent drilling extended the deposit to the 3,900 ft. level, more than a 1,000 ft. below current mining activity.

High River’s responsibilities will include regional exploration aimed at locating and defining satellite deposits within trucking distance of the New Britannia mill. Management fees will be equally spilt.

In the south of Siberia, JSC Buryatzoloto owns and operates the Zun-Holba and Irokinda mines, which churned out 112,850 oz., an increase of 28% over the year-ago production of 87,820 oz. Cash costs are expected to ring in around the six month figure of US$167 per oz. The increased gold production is thanks to the conversion of the Irokinda mill to a year-round operation. In early October, High River boosted its stake in JCS Buryatzoloto by 10% to 53.5%.

Meanwhile, High River has completed a 3-hole deep drilling test program on Zone 3/5 at the Taparko project in Burkina Faso, West Africa. The gold-bearing zone covers a strike length of 1.1 km and contains about 65% of the defined open-pittable resource, which stands at 12.6 million tonnes grading 2.6 grams gold per tonne.

The holes tested a 680-metre strike length and returned up to 14.6 grams gold per tonne over 2.15 metres within a wider 9.45-metre interval running 4.84 grams gold in a centrally located hole. Lower grades were but in holes on either side of the first hole. The holes confirm the continuity of the gold-bearing Taparko shear zone to a vertical depth of 200 metres. At this depth, the shear zone varies in width from 23 to 52 metres, and includes well developed auriferous quartz veining zones and alteration similar to that intersected in shallower holes.

High River has a 61.5% interest in the advanced Taparko project and has an option for an additional 18.5%, with the remaining 20% held by the government of Burkina Faso. Resources at Taparko stand at 12.6 million tonnes grading 2.6 grams gold per tonne.

At the end of September, High River had a consolidated working capital deficiency of $4.6 million, including a US$5-million convertible debenture, maturing at the end of the year. A special shareholders meeting to approve a private placement of a $5 million convertible debenture to repay approximately two-thirds of the maturing debenture is slated for November 22, 2001.