High River Gold Mines Ltd HRIVF

RE: RE: RE: HRG's News Release re debt

[ccharlwood]

The Severstal debt is US$27M. The press release only refers to retiring this debt and not Royal Gold. In fact Royal Gold would likely not want to get paid out as it is collecting a nice gold Royalty from HRG. For this reason, it will likely not be calling its loan. Also, I have been told that it is very messy business to go bankrupt in Russia and would be very risky for Severstal to call its loan. It is not an easy system like in North America to bankrupt and reorg. I do not think Severstal will want to take the risk of competing against Nomos and Royal Gold for the assets in a bankruptcy situation. Also, they would lose their $60M invested to date in the equity of  this business only to collect on US$27M. 

With the company no longer in risk of getting de-listed and it being unliley that any loans will be called, the outlook has drastically improved on HRG for us today.

If Severstal converts its US$27M or C$30M at $.28, they will give themselves another 107M shares or up to 64% of share total. In addition to this they will have bought whatever small percentage that tendered to their bid. The institutions made it clear in a letter to Severstal that they want to participate in any future financings so as to not get diluted. This may lead to cooperative financing in future.