Here it grows again: Battle Mt profit up 75%

As every reporting period comes and goes, the balance sheet of U.S.-based Battle Mountain Gold grows stronger and stronger. And this latest round of reporting does not disappoint.

For the year ended Dec 30, the company netted $27 million or 63 cents per share, up a whopping 75% from the $15.4 million earned during 1985.

With its major asset being the 225,000-oz-per-year Fortitude gold mine in Nevada, Battle Mountain posted revenues of $91 million compared with $77.6 million in the same period a year earlier.

Looking specifically at the fourth quarter, net income was 20 cents per share or $8.8 million on revenues of $25 million, up a huge 120% from the $4 million earned on revenues of $18.9 million in the year earlier period.

Improving gold prices and continuing high levels of operating efficiency were largely responsible for the high profit level. However, these price and efficiency gains were somewhat offset by increased exploration, administrative and federal income tax expenses, says Chairman Douglas J. Bourne.

Total production costs at the Fortitude mine — defined as mining, milling, depreciation, depletion, local administration and general expenses and local and state taxes — amount to $172 per equivalent oz of gold compared to $206 per oz in 1985. Cash costs averaged $147 per equivalent oz in 1986, down from $184 in 1985.

Some 259,000 oz of gold and 969,000 oz silver were recovered during the latest fiscal year, up from 222,000 oz and 647,000 oz in the year-earlier period.

About six miles from the Fortitude, evaluation work is continuing on the Surprise satellite gold resource, says Mr Bourne. Work indicates a complex orebody with three types of mineralization. Metallurgical and engineering tests are under way to develop an operating plan, with pre-mining stripping expected to start mid-year.

Annual production at the Surprise is expected to be about 15,000 to 18,000 oz.

Regarding the company’s Pajingo project in Queensland, Australia, Mr Bourne says a mining lease is expected to be approved by mid-year.

Work is under way on development of the 60,000-oz-per-year mine with initial production expected by the end of this year.

Expected open pit mine life will be six to eight years, says Mr Bourne. However, before making an estimate of ultimate reserves, the company plans to gain actual operating experience at the project. Previously reported reserves at the Scott lode on the property stood at 1.6 million tons grading 0.32 oz gold and 1.17 oz silver. The company plans to spend about half of its $12 million exploration budget in Australia this year. Other targets in the U.S. are Nevada and Alaska where the company recently acquired exclusive prospecting rights over three islands in the Aleutian chain.