A leading Russian investment bank and asset management firm is coming to the aid of indebted High River Gold Mines (HRG-T, HRIVF-O) with a US$57-million financing.
Troika Dialogue Group, through its affiliate Polencia Investments, is acquiring 150 million shares of High River Gold at 38¢ a share. If the transaction wins final approval, the Russian company will own 23.1% of the gold producer’s shares. (The Toronto Stock Exchange has conditionally approved the private placement, pending further documentation.)
High River will use the proceeds to repay roughly US$27 million it owes under two credit agreements assigned by Standard Bank to Russia’s steel giant Severstal in April.
High River’s board of directors unanimously approved the financing, while Severstal’s nominees abstained. A Troika nominee will likely be appointed to High River’s board and audit committee, once the transaction is completed.
Since it was set up in 1991, Troika has invested in companies with prospects across a wide spectrum of sectors in Russia. In March, Standard Bank acquired a 33% interest in Troika Dialogue, which has offices in 25 cities across Russia, in addition to offices in London, New York, Almaty and Nicosia.
High River has interests in producing mines and advanced exploration projects in Russia and Burkina Faso. Two of its producing mines, Zun-Holba and Irokinda, are in Russia’s Lake Baikal region. It also has two producing open-pit mines: the Berezitovy mine, also in Russia, and the Taparko-Bouroum mine in Burkina Faso. In addition, it has two advanced exploration projects with National Instrument 43-101-compliant resource estimates, the Bissa gold project in Burkina Faso and the Prognoz silver project in Russia, in which it holds a 50% stake.
In Toronto at presstime, High River Gold traded at 39¢ a share. Over the last year, it traded as low as 4¢ last November and as high as 48¢ this September.
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