Location Geological Setting & Mineralization Project Development Update on Construction Activities Processing Manpower

HRG ownership: 99% Feasibility study: June 2004 Start up: 2Q 2007 Reserves: 1.0 million oz Gold   5.2 million oz Silver Projected gold production: >100,000 oz/yr Total cash cost: US $160/oz (+ 6% Roylaty) Capital cost: US $76 million (+refundable VAT)

Project Location Map click to view enlarged

Location

The Berezitovy property is located in the Amurskaya Oblast region of the Russian Federation approximately 340 kilometres southwest of Tynda and 150 kilometres northwest of Skovorodino. The city of Tynda is located on the Baikal-Amur Railway while Skovorodino is located at the junction of the Trans Siberia and Baikal-Amur railways. The nearest population centre is Urusha (4,700 people) located 50 kilometres to the south of the property, on the Trans Siberian railway and a major road.

Geological Map click to view enlarged

Geology and Mineralization

The Berezitovy property is located in the Prishulkino Structural-Metallogenic Zone which forms part of the eastern flank of the Eastern Transbaikal Upper Amur Region. Structurally the deposit is situated within the Magochina thrusted block of Archean age rocks and is near the intersection of Sergachinski and Khaiktinski regional faults.

The area of the Berezitovy property is underlain predominantly by Early Proterozoic-age biotite-feldspar gneissose granites and granodiorites with some feldspar-pyroxene gabbro in the southern part. To the east and west of the property, Jurassic-age granodiorite and diorites are present. To the south of the property, the Yuzhna-Sergachinski Fault separates the above rocks from the Archean-age Shurigiskaya and Amazarskaya Suites containing interlayered biotite gneiss and biotite-feldspar gneiss.

Gold mineralization is present within a north-northwest trending, steeply southwest dipping zone of brecciated and hydrothermally altered granodiorite. This zone, along with several other zones of similar orientation in the general area, may represent regional scale tension gashes developed between the east-northeast trending Severa and Yuzhna-Sergachinski faults. The overall outline of the mineralized zone is due to the juxtaposition of two inverted cone shaped structures (breccia pipes), which have provided channel ways to the hydrothermal alteration and the associated gold-polymetallic mineralization. Presence of shard fragments in the breccia may also indicate volcanic activity predating the mineralization. Gold mineralization is present in various facies of brecciated zones with disseminated sulphides and in silicified rocks. Sulphide mineralization consists predominantly of pyrite, sphalerite and galena. Gold is commonly present in solid solution with silver as electrum.

A post-mineral, east-northeast diorite dike separates the Berezitovy deposit into two parts; a northern area containing the North Zone and a southern one containing the Central and South Zones. Based on field observations and resource assay data, the Central and South Zones has significantly higher average gold and lead grades and similar silver and zinc grades compared to the North Zone.

Project Development

In December 2002, High River acquired a 100% interest in the Berezitovy project for 6.8 million treasury shares of the Company together with a total cash payment of US $2.75 million. In late 2002, High River engaged Roscoe Postle Associates Inc. (RPA) to conduct an initial resource audit of the 1982 resource estimate by the Amurskaya Geological Expedition (AGE). This estimate was based on 18,700 metres of surface and underground diamond drilling, 7,194 metres of underground development in 61 cross-cuts, 40 metres apart, and three raises from three adits 80 metres apart, and 40 trenches. RPA recommended additional infill drilling and underground sampling in order to estimate a mineral resource compliant with NI-43-101. By early 2003, High River had completed 4,644 metres of drilling in 25 holes and additional underground sampling along cross-cuts. Data from this campaign was incorporated into the AGE database to prepare a resource estimate in accordance with NI 43-101. In September 2003, RPA reported an indicated resource of 1.14 million ounces of gold and 5.73 million ounces of silver (14.0 million tonnes at an average grade of 2.52 g/t gold and 12.7 g/t silver at a cut-off grade of 0.9 g/t gold).

Proposed pit outline

The results of this work were incorporated into a bankable feasibility study that was completed in June 2004 (click on Technical Report June 2004 - PDF). In August 2004, the Company acquired from Newmont Mining Corporation (Newmont) the Mill 4 Gold Ore Processing Facility ("Mill 4") and an overland conveyor system located in Nevada, USA.

In late 2004, the Company transferred a 1% interest in the Berezitovy project to the State Property Fund in the Amurskaya Oblast.

Feasibility Study Summary with Updated Costs
Reserves Proven & probable:	13.9 Mt @ 2.32 g/t Au, 11.7 g/t Ag (1.0 M oz Au, 5.2 M oz Ag)
Mill throughput:	1.5 Mtpa
Strip ratio:	6.2:1
Mine life:	9 years
Average gold production:	100,000 oz/yr
Capital cost:	US $76 (plus US $9 million in recoverable VAT)
Unit operating cost:	US $14.93/tonne ore (1)
Total Cash Cost:	US $160/oz +6% royalty
(1) using a gold price of $400/oz

Construction activities started in the fourth quarter of 2004 and are expected to be completed by the end of the second quarter 2007.

Construction of Explosives Storage Facility	Construction of reclaim tunnel
Process Plant Construction	Construction of tailings pad

Processing

The processing facilities will consist of a crushing and grinding circuit followed by a cyanidation circuit and a carbon-in-pulp (CIP) plant. The average recoveries are expected to exceed 87% for gold and 30% for silver. Tailings will be transported by gravity through a pipeline to the tailings filtration plant where the slurry will be dewatered to produce a semi-dry tailings solid. Using four pressure filters, the semi-dry tailings will be placed in a lined engineered impoundment with a water collection pond at the down slope end of the facility. The facilities are designed with a zero-discharge water recovery system. In instances where waters may need to be discharged, these will be neutralized using an alkaline chlorination process.

Manpower

High River will employ its own mining fleet and mine workforce for waste movement and ore mining. The project will employ 600 people at maximum production with most drawn from the region. All employees will be housed on site in a camp and work a one month in/one month off rotation. Mining activity will be carried out on two 10-hour shifts. Supplies will arrive in Skovorodino via rail or truck at a transfer centre operated by High River, which will also facilitate employee rotation changes.