In this mornings mail bag we received these updates on High River Gold Mines (HRG) from Chris Charlwood for which we express our sincere thanks. As we can see this fight is not over yet so if you are a shareholder please add your support to the 'Reject the Offer' campaign by contacting Chris on firstname.lastname@example.org Chris will send you a form and all you have to do is sign it and fax it back to him.
The Severstal debt is US$27M. The press release below only refers to retiring this debt and not Royal Gold. In fact Royal Gold would likely not want to get paid out as it is collecting a nice gold Royalty from HRG. For this reason, it will likely not be calling its loan. Also, I have been told that it is very messy business to go bankrupt in Russia and would be very risky for Severstal to call its loan. It is not an easy system like in North America to bankrupt and reorg. I do not think Severstal will want to take the risk of competing against Nomos and Royal Gold for the assets in a bankruptcy situation. Also, they would lose their $60M invested to date in the equity of this business only to collect on US$27M.
With the company no longer in risk of getting de-listed and it being unliey that any loans will be called, the outlook has drastically improved on HRG for us today.
If Severstal converts its US$27M or C$30M at $.28, they will give themselves another 107M shares or up to 64% of share total. In addition to this they will have bought whatever small percentage that tendered to their bid. The institutions made it clear in a letter to Severstal that they want to participate in any future financings so as to not get diluted. This may lead to cooperative financing in future.
Aug 06, 2009 12:13 ET
High River Gold Announces TSX Ends Delisting Review
TORONTO, ONTARIO--(Marketwire - Aug. 6, 2009) - High River Gold Mines Ltd. ("High River" or the "Company") (TSX:HRG) is pleased to announce that the Toronto Stock Exchange (the "TSX") has determined that High River satisfies the TSX's continued listing requirements and is lifting the delisting review.
As previously disclosed, the Company continues to be in breach of certain covenants under the loan agreement ("RGI Agreement") between Royal Gold Inc. ("RGI") and High River's subsidiary, Somita SA, and the loan agreements (the "Severstal Agreements") between OAO Severstal ("Severstal") and High River and Somita SA (which were previously held by Standard Bank plc and assigned to Severstal on April 20, 2009). The default under the RGI Agreement relates to operational issues in connection with the inability of Somita to satisfy the "Completion Test" (as such term is defined in the RGI Agreement) and these issues are being addressed by the Company. The defaults under the Severstal Agreements included breaches of certain financial covenants which have not been waived but are in compliance now and a cross-default under the RGI Agreement. The Company is current on all scheduled payments on the current portion of long-term debt facilities, and in particular, has made all payments of principal and interest under the RGI Agreement and the Severstal Agreements as they come due. Although RGI and Severstal have not yet made any demands for payment or taken any action, they continue to reserve their rights to do so. Severstal has advised High River that, following completion of its subsidiary's take-over bid for the common shares of High River, it will seek to restructure the Severstal Agreements with a view to retirement of the loans.
About High River
High River is a gold company with interests in producing mines and advanced exploration projects in Burkina Faso and Russia.
For those of you who have not seen the press release (below) this morning, this should give relief to one of the major concerns investors have had with this story. It looks like the TSX may have finally listened to one of our written complaints.
Also, Dan, Investor Relations of HRG, has confirmed that the Q2 results should be coming out on August 15th. We are hoping for a much improved profit in Q2 as the $1M profit of Q1 was arrived at after a $22M expense for foreign exchange losses. We expect that the foreign exchange losses will be far less, if any. The cashflow from operations of $29.7M should also improve due to the slight increase in gold production for Q2 already announced.
TSX Delisting Review - High River Gold Mines Ltd. (HRG, HRG.WT)
TORONTO, Aug. 6 /CNW/ - DELISTING REVIEW - High River Gold Mines Ltd. (the "Company") - Further to TSX Bulletin 2009-0788 dated June 19, 2009, TSX has completed its review of the common shares (Symbol: HRG) and warrants (Symbol: HRG.WT) of the Company and has determined that it meets TSX's continued listing requirements.
About TMX Group
TMX Group's key subsidiaries operate cash and derivative markets for multiple asset classes including equities, fixed income and energy. Toronto Stock Exchange, TSX Venture Exchange, Montreal Exchange, Natural Gas Exchange, Boston Options Exchange (BOX), Shorcan, Equicom and other TMX Group companies provide trading markets, clearing facilities, data products and other services to the global financial community. TMX Group is headquartered in Toronto with offices in Montreal, Calgary and Vancouver. For more information about TMX Group, visit our website at www.tmx.com.
For further information
Corporate Communications, TMX Group Inc., Toll Free 1-888-873-8392, email@example.com
High River Gold Mines Limited trades on the Toronto Stock Exchange under the symbol of HRG
Have a sparkling day.
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