TORONTO, ONTARIO--(Marketwire
- June 9, 2009) - The Board of High River Gold Mines Ltd. ("High
River" or the "Company") (TSX:HRG)
would like to update the market on its previously announced discussions
with OAO Severstal ("Severstal")
concerning Severstal's proposal to make a
cash offer to minority shareholders in High River. Today, following
receipt of an improved proposal from Severstal,
the Special Committee of independent directors recommended to the Board
of High River that High River negotiate a support agreement with Severstal, pursuant to which Severstal
would offer to acquire all of the outstanding common shares
("Shares") of High River for cash at a price of $0.22 per
Share (the "Offer"). The Offer is a 13% premium to High
River's 20-day volume weighted average price and a 33% premium to the
20-day volume weighed average price ending May 21, 2009, the day before
the announcement of Severstal's previous
offer. The Offer will be subject to certain conditions, including
negotiation and execution of the support agreement and all ancillary
documentation. The recommendation of the Special Committee follows the
preparation of a formal valuation of High River conducted in accordance
with Multilateral Instrument 61-101 - Protection of Minority Security
Holders in Special Transactions ("MI 61-101").
In connection with the Offer, High River and Severstal
have also agreed to complete a private placement (the "Private
Placement"). Subject to the approval of the Toronto Stock
Exchange, Severstal will acquire 59,019,367
Shares (representing approximately 10% of the 590,193,673 currently
outstanding Shares) at a price of $0.18 per Share for proceeds of
approximately $10.6 million. The proceeds will be used by High River to
repay a US$10 million in debt by its 84.94%-owned subsidiary OJSC Buryatzoloto ("Buryatzoloto")
on June 12, 2009. The Private Placement is expected to close promptly
following the receipt of regulatory approval, and the Shares issued
pursuant to the Private Placement will be subject to a statutory four
month hold period. Following closing of the Private Placement, Severstal will control 57.3% of the Shares. In
order to facilitate such payment, Severstal
has also agreed to provide Buryatzoloto with
a short-term loan, repayable in ten days from the proceeds of the
Private Placement.
The Special Committee believes that the combination of the Offer and
the Private Placement allows High River to address its immediate
liquidity concerns while allowing shareholders an option to tender
their shares at a price per share that falls within the formal
valuation range prepared by an independent appraiser.
High River is not required to obtain a formal valuation or seek
minority approval under MI 61-101 in connection with the Private
Placement because the Shares to be issued pursuant to the Private
Placement represent less than 25% of High River's market capitalization
and therefore High River is exempt from such requirements in accordance
with Section 5.5(a) and Section 5.7(1)(a) of
MI 61-101. High River will file a material change report as soon as
practicable after issuing this press release. The material change
report will be filed fewer than 21 days before the closing of the
Private Placement. The timing of the material change report is, in High
River's view, both necessary and reasonable because the terms were
recommended by the Special Committee and approved by High River's Board
on June 9, 2009 and High River requires immediate funding to address
its critical solvency concerns, including the US$10 million payment by Buryatzoloto on June 12, 2009.
About High River
High River is a gold company with interests in producing mines and
advanced exploration projects in Burkina Faso and Russia.
FORWARD LOOKING STATEMENTS
This release and subsequent oral statements made by and on behalf of
the Company may contain forward-looking statements. Wherever possible,
words such as "intends", "expects",
"scheduled", "estimates", "anticipates",
"believes", and similar expressions or statements that
certain actions, events or results "may", "could",
"would", "might" or "will" be taken,
occur or be achieved, have been used to identify these forward-looking
statements. Although the forward-looking statements contained in this
release reflect management's current beliefs based upon information
currently available to management and based upon what management
believes to be reasonable assumptions, High River cannot be certain
that actual results will be consistent with these forward-looking
statements. A number of factors could cause events and achievements to
differ materially from the results expressed or implied in the
forward-looking statements. These factors should be considered
carefully and prospective investors should not place undue reliance on
the forward-looking statements. Forward-looking statements necessarily
involve significant known and unknown risks, assumptions and
uncertainties that may cause High River's actual results, event,
prospects and opportunities to differ materially from those expressed
or implied by such forward-looking statements. Although High River has
attempted to identify important risks and factors that could cause
actual actions, events or results to differ materially from those
described in forward-looking statements, there may be other factors and
risks that cause actions, events or results not to be anticipated,
estimated or intended. There can be no assurance that the
forward-looking statements will prove to be accurate, as actual results
and future events could differ materially from those anticipated in
such statements. Accordingly, prospective investors should not place
undue reliance on forward-looking statements. Any forward-looking
statements are made as of the date of this release, and High River
assumes no obligation to update or revise them to reflect new events or
circumstances, unless otherwise required by law.
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