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High River Gold Increases Equity Interest in Buryatzoloto.

TORONTO -- High River Gold Mines Ltd. (TSX:HRG) ("High River") today announced it has reached agreement with the European Bank for Reconstruction and Development ("EBRD") to acquire the EBRD's equity interest in the Russian company, OJSC Buryatzoloto, in exchange for shares in High River to be issued from treasury. The EBRD holds 800,000 common shares of Buryatzoloto and preferred shares convertible into an additional 200,000 shares. High River will issue 11,760,000 common shares to the EBRD in exchange for their 1.0 million Buryatzoloto shares.

At the annual meeting held on June 15, 2004, High River's shareholders authorized management to enter into private transactions to acquire additional Buryatzoloto shares on the basis of 11.76 common shares of High River for each Buryatzoloto share, subject to regulatory approval and compliance with securities laws, to a maximum issue of 30 million High River shares. If the Company were to enter into agreements for the maximum, High River's equity interest in Buryatzoloto would increase to approximately 84% on a fully diluted basis. Following closing of the transaction with the EBRD, High River's interest will be approximately 63.1% on a fully diluted basis (representing 66.8% of the issued shares).

The exchange ratio was determined based on a net asset valuation approach and has been agreed to by the Boards of both companies. The commonality of many of the assets simplified the process. The current corporate structure between Buryatzoloto and High River is felt to be an inhibitor to the realization of full value for the shareholders of both companies. It has been suggested that a pooling of assets, to the largest extent possible, under the High River entity, would be the most effective way of unlocking this additional shareholder value.

The share purchase exchange agreement is subject to satisfaction of all conditions to closing including receipt of all regulatory approvals in Russia and Canada.

At the June meeting, shareholders also elected Mark Rachovides to High River's Board of Directors. Mr. Rachovides is a Principal Banker in the Natural Resources Team at the EBRD. He is currently working on a variety of oil and gas and mining projects in the Former Soviet Union and Eastern Europe. He has written a number of articles and conference presentations on Russian gold mining for the London Bullion Market Association, the World Gold Council, the Prospectors and Developers Association of Canada, the Russia-Canada mining group and other bodies. Mr. Rachovides has nineteen years experience in commercial banking, including eight years with the EBRD. Mr. Rachovides has a masters degree from Oxford University and is an Associate of the Chartered Institute of Bankers.
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Publication:Business Wire
Date:Aug 24, 2004
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