High River Gold acquires Russian nickel deposit

High River Gold Mines’ 85%-owned Russian subsidiary, OJSC Buryatzoloto has acquired a 100% ownership interest in the Chaya nickel deposit, as the successful bidder in an auction conducted on February 22, 2008 in Ulan Ude by the Russian Ministry of Natural Resources. The cost to acquire this mining license was 260 million rubles (approximately $10.6 million). Chaya has been subject to nearly 50 years of exploration activity including geophysics, trenching and drilling and hosts historical Russian Classified C2 and P1 resources totaling 121.7 Mt containing 1,380 Mlb of nickel and 314 Mlb of copper.High River and Buryatzoloto intend to remain focused on precious metals mining and, as such, plan to identify and involve a base metals focused third party in the project by way of joint venture or spin-out. The acquisition of Chaya, located in the Republic of Buryatia, was seen by High River as an excellent opportunity to capitalise on its local knowledge and expertise in mining and logistics through Buryatzoloto. Buryatzoloto has been operating two underground mines in Buryatia for more than 15 years and has the local expertise to strongly support a third party partner to move the project forward quickly. Chaya has excellent logistics, being close to railroad facilities and a power line.

Chaya is located in the Russian Far East, 70 km north-northeast of the northern tip of Lake Baikal, some 300 km west of High River’s Irokinda mine, and 100 km by road north of the regional centre of Nizhne-Angarsk. It is 80 km north of the Baikal-Amur railroad line and a 220 kWh power line.

Chaya is a magmatic nickel sulphide deposit. Mineralisation is largely confined to a tectonically broken zone parallel to the long axis of the Chayskiy pyroxenite-dunite massif hosted by early Proterozoic gneisses and amphibolites. The deposit strikes approximately 1,500 m in an east-west direction, dips sub-vertically, and is on average 20 m thick. Mineralisation largely consists of pyrrhotite, as well as pentlandite and chalcopyrite. The deposit dimensions appear to be amenable to open-pit mining.

The following estimate was done using cutoff grades of 0.5% Ni and 0.3% Cu, and was approved by the Science-Technical Council of the State Industrial-Geological Association “Buryatgeologia”:

Resource     Tonnes   Ni grade(%)   Contained Ni    Cu grade    Contained
Category  (millions)                (million lbs)         (%) Cu (million
C2             51.1         0.6%             670      0.19            212
P1             70.6        0.46%             714      0.17            102
Total         121.7                        1,384                      314

Metallurgical testing conducted on five 400-500 kg samples by leading Russian metallurgical laboratories Gibronickel and Mechanobr indicated recoveries of 80-87.5% for nickel and 81% for copper into a bulk concentrate using a gravity-flotation flowsheet. Nickel recovery increased to 92-94% using a pressure leach process.

The deposit is open at depth. Also, Chaya is located in a highly prospective nickel belt. The Yoko-Dovyrenskiy nickel sulphide deposit is located 40 km west of Chaya. Several known exploration targets exist in the vicinity of Chaya area, including the anomalous Ogiyendo and Yubileynoye properties.

High River is a gold company with producing mines, mines under development, and advanced exploration projects in Burkina Faso and Russia. High River is bringing two new open-pit gold mines into production. The Taparko-Bouroum gold mine in Burkina Faso achieved commercial production in October 2007, and the Berezitovy gold mine in Russia is expected to achieve commercial production shortly. Gold production from Taparko-Bouroum for 2008 is planned at approximately 100,000 oz increasing to a rate of 140,000 oz/y by mid-year 2009, and 2008 production from Berezitovy is expected to be approximately 80,000 oz. Combined with gold production from producing underground mines in Russia, Zun-Holba and Irokinda, High River’s attributable unhedged gold production is expected to total approximately 300,000 oz in 2008. In addition, the company has two advanced exploration projects, the Bissa gold project in Burkina Faso and the world-class Prognoz silver project in Russia.