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Message: Miners strting to dissapear, as expected - low cash forcing closures

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Miners strting to dissapear, as expected - low cash forcing closures

posted on Nov 03, 08 09:45AM

Canadian/Russian gold miner High River continued existence in jeopardy

Canada's High River Gold, with principal operations in Russia and Burkina Faso says it is in breach of certain financing agreements and as a result its whole future is in jeopardy.

Posted: Saturday , 01 Nov 2008

TORONTO (Reuters) -

Troubled miner High River Gold (HLGC.TO) said on Friday its existence could be in jeopardy as it is in breach of certain financing agreements, and may not be able to make loan payments.

The news sent its already hard-hit shares down 33 percent.

The Canadian-based Russian-focused miner said it has been told by lenders that covenants of two separate loans to its 90-percent-owned Somita subsidiary in Burkina Faso are in breach.

It said Somita is in breach of a requirement with Royal Gold to keep its indebtedness below $1 million until the company's Taparko-Bouroum project is finished. The unit's debt is currently $8.2 million.

Somita is also in breach of a revolving credit facility with Standard Bank Plc, High River said.

As well, High River's 99-percent owned Berezitovy Rudnik subsidiary owes a bank loan payment of $15.2 million. The subsidiary does not currently have the funds to make the payment, the company said.

"The ability of the company to continue as a going concern is therefore dependent on the on-going discussions with and/or forbearance from the lenders, accommodations from trade creditors, establishing steady production at (its) two new mines and obtaining additional financing," High River said in a statement.

"There is no assurance that the lenders will cooperate with the company."

The company formed a special committee last month to "examine strategic alternatives", including putting itself up for sale.

High River's stock, which is down 96 percent so far this year, fell 3 Canadian cents to 11 Canadian cents on the Toronto Stock Exchange on Friday.

The company also said it has delayed the closing of its acquisition of the remaining half of its 50-percent owned Prognoz silver project by a month, as the company is waiting for Russian regulatory approval

($1=$1.21 Canadian) (Reporting by Cameron French)

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