Battle Mountain inks processing deal for Holloway

Battle Mountain Gold (BMG-N) has revised its custom milling agreement for its Holloway mine, near Matheson, Ont.

Under an arrangement with Barrick Gold (ABX-T), Battle Mountain will put up half the funds required to increase capacity at Barrick’s Holt-McDermott mill, situated less than 2 km from Holloway. The new capacity will allow the mill to handle all ore from Holloway.

When Battle Mountain opened Holloway in 1997, as much as 85% of the ore was being trucked the short distance to Barrick’s mill. The carbon-in-leach mill has a capacity of 2,500 tonnes per day, of which Barrick uses only 1,300 tonnes per day. Battle Mountain shipped the remainder of the material to Kinross Gold’s Macassa mine. However, Macassa shut its doors in late 1999, forcing the company to look elsewhere for the excess capacity.

The agreement with Barrick calls for the two companies to split the $1.7-million cost of boosting daily throughput at Holt-McDermott to 2,740 tonnes. At this higher throughput, Holloway expects to realize savings up to US$15 per oz. Barrick has not determined how this expanded effort will affect costs at its mine.

In addition, the agreement gives Battle Mountain the opportunity to boost its throughput by another 10%.

Barrick granted Battle Mountain the option to buy the mill at an undisclosed, predetermined price. Battle Mountain also has the right of first refusal for any excess mill capacity, should it become available.

Battle Mountain has an 84.6% interest in Holloway, and, in 1999, the mine contributed 91,000 oz. gold to the company. Cash operating costs for the year were under US$200 per oz.

Battle Mountain has several promising targets at the Holloway property that have the potential to add to reserves. The company has already intersected significant mineralization at the Blacktop deposit, and, this year, it expects to focus on the 500 XP, Lightning and Contact zones.