TORONTO (miningweekly.com) – TSX-listed High River Gold is in discussions regarding potential debt or equity financing arrangements, to ensure that it meets its financial obligations, the firm said on Friday.

High River shares fell 20,7%, to C$0,115 apiece by 14:32 in Toronto.

The company, which announced in November that it would raise $45-million by selling shares to Russia's Severstal, said in a statement that it hopes to have the financing plans finalised by the end of this month.

The firm has struggled with operational difficulties at the Taparko mine and mill in Burkina Faso, where the firm expects to shut the mill again, after vibration problems which forced a shutdown last year have re-occurred since the mill was restarted in November.

Production at Taparko has fallen well short of expectations and the company has scheduled a seven- to ten-day shutdown in mid-January, during which it plans to reinstall the electric motor base plate and to rotate the ball mill gear by 180 degrees above the vertical axis.

Secondly, production at the Russian Berezitovy mine and mill, which began commercial production in October last year, has declined, after mining operations encountered old workings, and some timber fragments entered the process plant, High River reported.

The mill also has been producing too coarse a grind, which also has affected recoveries.

Operating staff at the mine are currently planning remedial action to resolve the issues, the firm said.

As a result of the difficulties at Tarpako and Berezitovy, High River's head office cash position was lower than expected, at only $11-million, on December 31.

The firm's consolidated debt at the end of the year is estimated at $142-million, and High River's Somita subsidiary, which owns the Taparko operations, remains in breach of loan covenants regarding a $35-million loan agreement with Royal Gold Inc.

The current balance of the facility with Royal Gold is $30,3-million and discussions are ongoing regarding obtaining a waiver of the covenant breaches, the company said.

Because of the lower-than-expected cash flow from operations, the firm has warned creditors of Somita that it will slow down payments for accounts payable “for a brief period”, but said that it planned to pay suppliers for current purchases of goods and services.

PERSONNEL CHANGES

High River also announced on Friday that executive vice-president (VP) Don Whalen, executive VP and COO Mike Kelly and the general director of the company's Russian subsidiary, Valery Dmitriev, have left the company.

Until a permanent replacement can be found, the COO duties will be shared by High River CEO Nikolay Zelenskiy, and the mine managers of the company's four operating mines.

Dmitriev has been replaced by Vladimir Baltsat, who previously worked for Peter Hambro Mining.

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