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« 210% Gain in Two Weeks for SK OptionTrader Subscribers | Main | China Gets Picky »

High River Gold (HRG) Update 16 July 2011

HRG Logo 31 July 2009.JPG

Always appreciated we now have an update from Chris Charlwood who has very kindly sent us this missive updating us on the current state of play over at High River Gold Mines Limited (HRG) which we hope that you find interesting and informative.

July 15, 2011
To High River Gold Shareholders (HRG.TO),
HRG's Q1 results show over $214M in annualized cash flow and $292.5M in net liquid assets. At the recent trading price of $1.25, HRG's $1.05B market cap less the net liquid assets has it trading at a very low 3.5 times cash flow. With the $178M capex program for HRG properties in 2011 (including Bissa mine construction), we can expect HRG's resource base to increase from the current 5.8M oz of gold resources (8.4M oz if you include gold equivalent in silver). We have already heard of potential additional resources of 2M oz at Bissa, 4.5M oz gold equivalent in silver at Prognoz (represents HRG's 50%) and up to 2M oz at Bouly. Also, we are expecting positive drill results before year's end from the depleting Zun-Holba and Irokinda mines.
Nord Gold, a Severstal subsidiary and HRG's largest shareholder, attempted an IPO on the LSE early this year, but postponed it due to falling short of valuation targets. We minority shareholders warned Nord/Severstal that they needed to promote the HRG story to have it trading at its pro rata contribution value of Nord. The bankers in London likely saw the disconnect between HRG's $1B market cap and Nord's $4 - 5B valuation attempt. HRG contributes more than 50% of Nord's important metrics.
HRG vs. Nord Q1, 2011:
HRG produced 91,756 oz vs. Nord's 174,193 oz - 52.67%.
HRG's revenue was $124.4M vs. Nord's $244M - 50.97%.
HRG's cash flow was $53.5M vs. Nord's $78.7M - 68%.
HRG's total cash costs/oz was $560 vs. Nord's $603.
HRG's EBITDA was $64.3M vs. Nord's "normalized' $135.1M - 47.59%.('normalized' definition not given)
HRG's Net Income was $44.9M vs. Nord's $95.6M - 46.97% (including non-controlling interests).
HRG had $287M of working capital and $292.5M net liquid assets (cash, third party stock less debt). At end of Q3 2010, HRG made up 83% of Nord's total net liquid assets.
Recently an article suggested that Nord may attempt another buyout offer of HRG minority shares at a price of $1.50/share. I have collected share counts from all of the larger shareholders including institutions and larger retail shareholders. This core group holds 114M shares (including 66M institutional shares). Although we have not yet canvassed the smaller retail minority shareholders, we expect that their numbers would add significantly to this position. The 114M shares puts us well ahead of the minimum 85M shares (10%) required to prevent any squeeze out under Canadian securities laws. When the smaller retail share counts are collected, we should easily eclipse the 115M shares (50%, majority of minority) needed to keep HRG from going private by way of a related party bid.
Eric Sprott (with 4% of HRG via certain managed funds) has informed Nord management that he and other minority shareholders believe HRG to be worth at minimum 50% of Nord’s value. 
HRG's Q2 results should be out on August 15th. 

HRG's Q1 results. 
Nord Gold's Q1 results.
Nord Gold video and PDF Presentation     
HRG's Bissa gets mining license in Burkina Faso.       
Chris Charlwood
Investor - to be added or removed from e-mail list.
            604-718-2668 – for ongoing HRG shareholder communication.

We are still holding on to our position in High River Gold Mines Limited and have no intention of selling any of this stock in the foreseeable future.

Regarding We currently have a number of trades on the drawing board, two of which have been placed and are now showing a profit.

Our model portfolio is up 338.11% since inception, 2 years ago.

An annualized return of 117.00%

Average return per trade of 40.41%

81 closed trades, 78 closed at a profit

Average trade open for 46.27days

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Reader Comments (4)

"believe HRG to be worth at minimum 50% of Nord’s value"

What would the share price of HRG be worth then? I cannot remember what price Nord was looking per share at their first IPO attempt.

July 16, 2011 | Unregistered CommenterGreek Fire

July 16, 2011 | Unregistered CommenterVincent

High River Gold Mines revenues up 11% Editor | August 16, 2011 Print Article

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Financial Results

Net gold revenue of $136.2 million, an increase of 11% from $122.4 million in Q1 2011, an increase of 20% from $113.8 million in Q2 2010.
Net income of $41.4 million ($0.05 per share) compared to a net income of $37.3 million ($0.04 per share) in Q1 2011 and a net income of $37.5 million ($0.05 per share) in Q2 2010.
Cash flow from operations of $42.9 million, down from $53.5 million in Q1 2011, and down from $48.8 million in Q2 2010.
Cash and cash equivalents increased to $207.2 million from $204.1 million at the end of Q1 2011, and up from $92.7 million at the end of Q2 2010.
Working capital increased to $307.2 million from $287.0 million at the end of Q1 2011 and from $150.9 million at the end of Q2 2010.
Current and long term debt increased to $24.0 million from $23.5 million at the end of Q1 2011 and decreased from $31.5 million at the end of Q2 2010.
In June 2011, High River agreed to settlement terms with its former contractor in respect of a previously disclosed action brought against Somita. As previously disclosed, a claim regarding services which were delivered to Somita was filed against Somita before an arbitrator in South Africa in 2009. The aggregate amount of the claim was US$3.7 million and High River filed a statement of defense and counterclaim for damages. The settlement agreement provides for full and final settlement of the contractor’s claim against Somita for a settlement amount of US$1.35 million.


Total gold production increased 5% to 96,093 (Q1 2011 – 91,756) ounces (100%). Total cash cost per ounce increased 25% to US$704 (Q1 2011 – US$560 per ounce).
The Zun-Holba and Irokinda Gold Mines produced 33,594 ounces (Q1 2011 – 31,855) (100%) at a total cash cost of US$778 per ounce.
The Taparko-Bouroum Gold Mine produced 33,753 ounces (Q1 2011 – 36,456) (100%) at a total cash cost of US$556 per ounce.
Gold production at Berezitovy was 28,746 ounces (Q1 2011 – 23,445 ounces) (100%) at a total cash cost of US$792 per ounce.
High River’s subsidiary in Burkina Faso, Bissa Gold S.A. (“Bissa Gold”), was granted the mining license for the Bissa Gold Project by the governmental authorities of Burkina Faso for a term of 20 years with a possibility of renewal. Bissa Gold has engaged the EPCM (Engineering, Procurement, and Construction Management) contractor and the ball mills supplier for the Project.

Subsequent Events

In July 2011, Bissa Gold engaged the mining fleet supplier and power plant constructor for the Bissa Gold Project.

August 16, 2011 | Unregistered Commentervincent brenneman

Thanks for this Vincent, we missed it!

August 16, 2011 | Unregistered CommenterGold Prices

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