High River Gold Mines (TSX:T.HRG, Stock Forum) announced Thursday that it is entering into a non-brokered private placement of more than 282 million common shares and over 40 million warrants.

The company says its board of directors, and independent directors “have determined that the Corporation faces serious financial difficulty and that the proposed transaction has been designed to improve the financial position of the Corporation.” It added that as a result of relying upon the financial hardship exemptions, the TSX will start a delisting review.

High River, a gold company with exploration projects in Burkina Faso and Russia, says that Lybica Holding B.V., an affiliate of ZAO Severstal Resources, the mining division of OAO Severstal has agreed to purchase the shares for approximately 20 cents per share resulting in gross proceeds of over $56 million for High River.

Severstal, through its affiliates, currently holds over 30 million shares of High River totaling 9.9% of outstanding common shares. After the offering is completed, the company will hold more than 312 million shares, or 53% of the outstanding common shares.

Proceeds of the offering will be used for repayment of $15 million to Nomos Bank, provision of $9 million to Société Des Mines De Taparko for working capital needs, repayment of $10 million to Nomos Bank and for general corporate purposes.

On the High River Gold Bullboard on Thursday, Power1 said: “Couple of items to skate through, but I like the financial backing and being it is a controlling investment, this group will generate shareholder value IMO. They will definately want price appreciation which may ultimately result is share rollback IMO[sic].”

goldlust added: “The real unknown at present is the price of gold. If it skyrockets as many predict, the share price will move up very quickly with four operating mines![sic]”

Shares of High River climbed 15% to 11.5 cents in early trading Thursday, after closing up 11% to 10 cents Wednesday, with over 11 million shares traded.

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