New Britannia drags down High River Gold

High River Gold (HRG-T) incurred a $17 million loss for 2003, most ($14 million) of which is attributed to a writedown on the company’s share of the New Britannia mine in Manitoba. The mine is slated for closure later this year.

By contrast, High River posted a profit of $1.7 million for 2002.

Situated in Snow Lake, the New Britannia mine is owned equally by High River and Kinross Gold (K-T), which decided that the grade and tonnage are no longer economic. Between 2002 and 2003, cash costs per ounce rose from US$206 to US$329 per oz., and in the first quarter of 2004, the cash cost was US$425 — unprofitable at the average realized gold price of US$418 per oz. The plan is to continue mining developed ore over the next few months and then close the mine.

In contrast, High River’s 54.1%-owned Russian subsidiary, Buryatzoloto, reported a 2003 profit of $9.7 million. Buryatzoloto owns the Zun-Holba and Irokinda underground gold mines, as well as a small placer operation, which together produced 154,000 oz. gold in 2003 at a cash cost of US$194 per oz. Total production in 2003 was 485,245 tonnes grading 10.1 grams gold per tonne. The realized gold price was US$358 per oz.

Buryatzoloto’s costs rose by US$30 per oz. last year, reflecting a transition to cut-and-fill mining at Zun-Holba, as well as the negative impact of a stronger Russian ruble.

The overall attributable gold production for the first quarter of 2004 was 25,604 oz. at a total cash cost of US$286 per oz. Net income was $1.4 million, and cash flow, $5.2 million.

High River has two gold projects ready for open-pit development: Taparko in Burkina Faso and Berezitovoye in southern Siberia.