High River eyes Russian gold

High River Gold Mines (HRG-T) has inked a deal to acquire the Berezitovoye project in the Amur region of southern Siberia, from a Russian company, Khaikta Ltd.

Under the deal, High River will issue Khaikta at least 6.8 million treasury shares and pay a total of US$2.75 million in cash, based upon the proven and probable gold reserves defined within the optimized pit boundary of a final feasibility study to be produced by High River. High River will issue 4.65 million shares and pay US$1million on closing. The company will pony up another 2.15 million shares and US$1.75 million once the feasibility study is done.

The acquisition is subject to due diligence, board and regulatory approvals.

The project is centred on a deposit comprising reserves of 14.1 million tonnes grading 3.05 grams gold, 14.3 grams silver per tonne, 0.93% zinc and 0.57% lead, based on a cutoff grade of 1 gram gold per tonne gold, and under Russian classification guidelines.

Targeted as a starter pit is a higher-grade core estimated at 7.1 million tonnes of 3.7 grams gold, 14.6 grams silver.

The deposit is seen as amenable to open-pit mining with an initial strip ratio of about 1-to-1 that would eventually grow to 5-to-1. Historical metallurgical testing on bulk samples indicates that about 28% of the gold could be recovered by a simple gravity circuit; the remainder would be recovered by direct cyanidation with a recovery rate of about 90% to 92%.

As part of its due diligence, High River’ will bring the reserve figures in line with CIM standards.

The property is also home to several satellite targets identified by geochemical and electromagnetic methods, none of which have been drilling. High River’s deal with Khaikta calls for the Russian company to receive up to another US$1.8 million worth of High River shares should the Canadian company define another 13 million oz. of reserves in the targets for five years after closing.

The property is accessible by gravel roads from the city of Tynda near the intersection of the Trans Siberian and Baikal-Amur railways. The local electricity grid, powered by several coal-fired generating plants, passes with 60 km of the project.

High River is in talks with Buryatzoloto, in which it has a 54.5% stake, to jointly develop the project. The details of the management, development and ownership structure have yet to be fleshed out. High River also notes that the two are evaluating other Russian acquisition opportunities.

High River has been on a bit of a shopping spree lately. Late last month, the company agreed to boost its stake in the advanced Taparko project in Burkina Faso, West Africa, to 80% by exercising an option to pick up a 18.5% interest from Queenstake Resources (QRL-T).

High River renegotiated the price down by $200,000 to $1.2 million.

Resources at Taparko stand at 12.6 million tonnes grading 2.6 grams gold per tonne at a cutoff grade of 1 gram gold per tonne. High River is in the midst of a US$500,000 program of core, reverse-circulation (RC) and reverse-air-blast drilling aimed at exploring near-surface gold resources.

The company is looking developing the project with Axmin, which owns the nearby, 275-sq.-km Bouroum property. The two have agreed to study the feasibility of a joint operation.

In Late April, High River acquired 333,333 units of Intrepid Minerals (IAU-V) at 45 apiece. One unit comprises one share plus one share purchase warrant. Each warrant allows High River to buy one share for 55 for 18 months. The acquisition brings High River’s holding in Intrepid to just under 3.5 million shares for about a 16% stake.