Mr. Chris Charlwood, shareholder, reports

NORD'S HRG OFFER STILL TOO LOW

Nord Gold said last week it intends to make a formal offer to buy out the minority shareholders of High River Gold Mines Ltd. The board of directors of High River Gold has appointed a special committee of three independent directors to review the offer (when it arrives), to study alternatives and to commission a third party valuation of HRG to help respond to the offer. Shareholders are told that the formal offer will be mailed after the valuation has been completed. Minority shareholders will have 35 days to react. As shareholders all know, the directors have, on many occasions over the last 18 months, signed off on HRG loans to Nord Gold for almost $150-million notwithstanding numerous complaints from HRG minority to Nord, the HRG board as well as to the Ontario Securities Commission. Therefore, Chris Charlwood, shareholder, fully expects the committee to come out and endorse the offer from Nord and to recommend HRG shareholders accept the offer in one of its forms. Mr. Charlwood also expects the valuation to come in around the offer price of $1.18-billion value (840-million shares multiplied by $1.40).

The offer does not have a minimum tendering requirement. Therefore, whichever option is chosen, the shares tendered become Nord's shares. Nord has stated that, if, within 120 days of the original offer, 90 per cent of minority accept Nord's offer, Nord will then seek to acquire the last 10 per cent through a compulsory acquisition transaction. If there is not a 90-per-cent acceptance, Nord has said it may pursue a subsequent acquisition transaction (likely in the form of an amalgamation squeeze-out). The vote for the amalgamation squeeze-out will be determined by those shareholders that either attend a special meeting or give their proxy. Those that neither attend the shareholder meeting nor give a proxy will not have their shares counted for the vote. In other words, if Nord does not get 90 per cent of shareholders to tender in the first round of the offer (very likely it will not), then the outcome of the subsequent amalgamation squeeze-out will be determined by majority of minority. It intends to vote the shares acquired in the original offer. Logic says that, if on expiry of the offer, there are not sufficient acceptances to guarantee approval of a subsequent transaction, Nord will have to increase its offer.

To remind you of some financial comparisons of HRG versus Nord Gold, for the year 2011, HRG made up 49 per cent of production, 49 per cent of revenues, 54 per cent of EBITDA (earnings before interest, taxes, depreciation and amortization) and 68 per cent of profit. In the first quarter of 2012, HRG made up 54 per cent of Nord's production, 53 per cent of revenues, 79 per cent of EBITDA and 105 per cent of profit. At the end of the first quarter, if Nord repaid the recent $150-million in loans it took from HRG and HRG sold its third party stock (mostly Detour Gold), it would have $322-million in cash with $11-million debt. At the end of the first quarter, Nord had $433-million debt and, without HRG's loans, would only have $21-million in cash.

As you know by Mr. Charlwood's communications over the last few years, he has worked hard to get Nord Gold to accept that HRG is worth a minimum 50 per cent of Nord's total value. Several of the institutional minority shareholders also worked hard to get Nord to accept this. With this offer of 0.285 Nord share for each HRG share, Nord has acquiesced -- as the offer translates to them, offering 58 per cent of Nord's value to HRG minority shareholders. To give you some reference points, the inverse of 0.285 is 3.5 HRG shares for one Nord share. In a Bloomberg article dated March 11, 2012, Nord's chief executive officer suggested a swap with HRG minority shareholders could get Nord's float to increase to 20 per cent. This translates to a transaction where HRG minority would have received a 5:1 share swap, which would have worked out to less than 40 per cent of Nord's value for HRG minority. Mr. Charlwood asked for a 3:1 share swap, which translates to 0.333 Nord share for each HRG share. This works out to HRG being worth 66 per cent of Nord. Mr. Charlwood's logic for this was assuming HRG is worth a minimum of 50 per cent of Nord's value, then add on HRG minorities' 25 per cent of HRG's liquidity position of $322-million (at the end of the first quarter), plus estimated additional cash of $40-million in the second quarter, you get to a 3:1 exchange ratio.

The cash option of the offer at $1.40 is completely unacceptable to Mr. Charlwood and probably still values HRG at one-half to one-third of its real value. If you deduct the $322-million cash (the second quarter should result in even more cash) from the $1,176-million offer, you get to a net $854-million. Divide this by first quarter profit of $62-million (four times annualized) and you get a 3.4 multiple. As Nord has little of its own cash, keeps borrowing HRG's cash and has a low market capitalization, it would need to dilute itself significantly in order to finance the shareholders' desired $3 to $4 cash per share. Therefore, Mr. Charlwood does not expect Nord will increase its cash offer anywhere near acceptable levels.

Two of the funds that worked hard at getting shareholders the 3.5:1 shares swap (0.285) offer have decided to enter into the lock-up agreements referred to in the Nord press release. In addition, a larger shareholder group also locked up part of its holdings. These were shareholders that were part of the shareholders' 115-million-share core majority of minority group. Eric Sprott confirmed to Mr. Charlwood on Tuesday that he has not locked up his funds and currently holds 31 million shares. He has pledged his support to Mr. Charlwood's resisting minority group as he sees Nord's offer as too low. Based on this, the core HRG minority group has approximately 77 million shares. However, this core minority shareholder group does not include the remaining minority shareholders out there that have never contacted Mr. Charlwood and/or those that bought their shares after Mr. Charlwood's original share survey during the 2009 buyout attempt. As of July 27, 2012, Nord has 60 million shares locked up. The race is on to get to 105-million-share majority, so Mr. Charlwood's group needs to add 28 million shares and Nord needs to add 45 million shares. Mr. Charlwood has confidence HRG minority will succeed at obtaining majority again as it is an easy sell to convince shareholders that Nord's offer is too low. To start the campaign, Mr. Charlwood is requesting an updated HRG shareholder list in order to make contact with all shareholders.

As a backup plan, Mr. Charlwood has been told by a class-action lawyer that there is a case to be made that a court would hear an argument for a minority shareholder oppression suit. In researching the remedies of such cases, remedies include the judge having the power to remove all Nord directors from HRG's board, reversing some of the past financings and repayment of HRG loans.

Where does this all leave shareholders? Nord's proposed offer is, in Mr. Charlwood's view, much too low. Mr. Charlwood believes Nord would need to come up to $3 minimum as a cash offer and the share exchange offer needs to come up significantly. HRG's second quarter results are out on Aug. 15, 2012, and these will only re-enforce Mr. Charlwood's expectation of a higher offer as it will likely show HRG's cash position has increased. Also, the three-year drill program results for Buryatzoloto are expected in the third quarter. Mr. Charlwood reminds you that, in the CPR report on the assets of Nord Gold for Burkina Faso, Guinea, Kazakhstan, and the Russian Federation (pages 413 and 442) which was presented shortly after the Nord Gold prospectus, was distributed; it states that Buryatzoloto has a potential increase of 3.4 million ounces in the P1 (inferred equivalent) category. Lastly, the other 50-per-cent partner in Prognoz, Polar Silver, completed 117 drill holes in 2008 and has an National Instrument 43-101 report from July, 2009, that shows Prognoz Silver resources at 293 million ounces of sliver, not 205 million ounces that HRG disclosed in its 2008 NI 43-101 report (a 43-per-cent increase). Also, in Baker Steel's December, 2011, annual report (Baker is an investor in Polar Silver), it states: "An NI 43-101-compliant preliminary economic assessment was completed by Micon in February, 2012. This indicates potential for a mine producing an average of 13 million ounces of silver per year over a 16-year mine life." Lastly, HRG's Bissa mine is expected to come on stream early next year, and this is expected to add 100,000 ounces of production in 2013 and grow to 200,000 ounces per year. Bissa should bring HRG's total production up to the 450,000-ounce range in 2013. These expected changes to HRG's resource base and production will only add to HRG minorities' expectation of value as time goes on.

In considering the cash offer as opposed to the share exchange, unless Nord increases its cash offer to a minimum $3 per share, in Mr. Charlwood's view, the share exchange is the best option for upside potential. Mr. Charlwood feels that if Nord is successful in acquiring HRG, Nord will succeed at getting its price up double to triple over the next 12 to 18 months. Mordashov is motivated and Mr. Charlwood sees little risk that he will try and take Nord private again after all the effort he has made to get it public. Mr. Charlwood has spoken to an institution that is one of Nord's largest shareholders and it is of the view that increasing Nord's float from 10 per cent to 23 per cent should bring in significant institutional buying (currently not happening due to the small float). If Nord's float increases to 23 per cent, then Mordashov only needs to sell a few more percentage points to have Nord meet the 25-per-cent threshold of a main listing on the London Stock Exchange. This should bring in additional institutional buying. Another key milestone for gold mining companies is to achieve one million ounces of production a year, and those that do end up with higher valuations. Nord is expected to reach that milestone in 2013. If HRG shareholders become Nord shareholders, they benefit from HRG's over-60-per-cent contribution to the financial metrics and will partake in a proposed dividend policy of 25 per cent of net profits (supposedly projected at a 2- to 3-per-cent return).

In conclusion, if Nord agrees to up its offer to 0.333 Nord share for each HRG share (three HRG shares for one Nord share or 66 per cent of Nord's value), Mr. Charlwood will be tendering his shares to the share exchange offer. In Mr. Charlwood's opinion, if you remove the emotion of past poor minority shareholder treatment, it does makes business sense to him to ride Nord's shares up. A doubling of Nord's price from $5 to $10 is the equivalent of HRG at $2.80. A tripling is the equivalent of $4.20. Nord can easily justify more than double its current price when comparing itself with its peers. One point on LSE stock trading: it is expensive to do so from Canada as a retail investor. One quote Mr. Charlwood received was $400 per trade with a minimum $5,000 order. This will be a deterrent for those shareholders that might otherwise tender to the share exchange offer. Mr. Charlwood will strongly suggest to Nord to reconsider its position on a dual Toronto Stock Exchange listing. Mr. Charlwood thinks it will help them increase the share exchange take-up and provide Nord with increased exposure in Canada -- where a great number of the world's mining companies are listed.

If you believe the current Nord offer is too low and own over 100,000 shares, please e-mail Mr. Charlwood, and give him your name, share count and e-mail address. If you own less than 100,000 shares, please e-mail Jordan, who has offered to help collect for smaller shareholders in order to free up Mr. Charlwood's time to focus on other aspects of this campaign. Please be assured that both Jordan and Mr. Charlwood will keep your information strictly confidential. Mr. Charlwood has kept your identities and shares counts confidential for over three years now, including those of institutions.

The Nord/HRG share swap calculations are available on the Internet.

Disclosure: Mr. Charlwood owns 4.5 million shares. He sold 500,000 shares earlier in the year with the plans to buy them back.