High River plagued with questions

The good news for High River Gold (HRG-T) is that the mill at its Taparko-Bouroum mine in Burkina Faso is up and running again.

The mill had been shut down for the entire third quarter while a new $200,000 gear box was installed for its ball mill.

But while the mill is up and running it is not certain that the company will continue to do so.

High River says its ability to continue as a going concern depends on its negotiations with its lenders and trade creditors as well as its ability to secure new financing and achieving  steady production at both Taparko-Bouroum and its recently commissioned Berezitovy gold mine in Russia.  

A special committee of its board of directors is in serious talks towards the sale or financing transaction for some or all of the assets of the Company.

High River says it has received some proposals for the company as a whole and for specific assets, but did not give any further details.

And as some members of the board work diligently towards coming to an acceptable arrangement, others are leaving the ship. On Nov. 10 High River announced that two board members, Mark Rachovides and Murray Sinclair, were resigning.

Additionally, while Taparko-Bouroum is currently running smoothly there is no guarantee it will continue to do so.

High River has installed vibration monitors to detect faults in the mill and if worrisome vibrations are detected the mill may need to be shutdown again.

The company plans to launch a study on the problem next year that will consider whether a further shutdown is needed to keep the mill in proper operating condition.

Gold production at Taparko in November is forecasted to be 5,000 oz, increasing to 7,000 oz in December – that production will come from a stockpile of 200,000 tonnes of ore. So far this year the mine has produced just 22,967 oz. of gold – and will not be able to reach the 91,000 oz. that was given as guidance back in early march.

As for its Berezitovy gold mine in Russia, the project reached commercial production on October 1 of this year – four months after its last guidance which said it would be in commercial production by May.

That May date was also a revised after a filter cloth problem meant the facility was only producing at 29% of its designed capacity at the end of 2007 and into the early part of 2008.

Gold production for the first three quarters at Berezitovy came in at 28,202 oz. Guidance from early March put total production for the year at 77,000 oz. of gold.

One of the lone bright spots for High River was that its two smaller projects, the Zun-Holba and Irokinda underground mines in Russia, had produced 109,592 oz. of gold as of the end of the third quarter and were on track to meet production targets.

And yet even that good news was mitigated by questions about financial reports from OJSC Buryatzoloto – the 85% controlled subsidiary that has a 100% stake in the two mines.

On Nov. 16 High River announced it was delaying the release of its financial statements because of concerns over financial reporting from Buryatzoloto.