Black Hawk narrows losses

With fewer tonnes milled, Black Hawk Mining (BHK-T) lost US$358,000 during the 3-month stretch ended June 30.

The loss translates into nil per share, and compares with a year-earlier net loss of US$409,000 (again, nil per share). Despite selling 1,771 fewer ounces (12,955 oz.) of gold during the recent quarter, Black Hawk saw its revenue climb by US$372,000, to US$4.4 million. The increase reflects the company’s average realized gold price, which climbed by US$29 per oz. to US$289 per oz. Still, the lower sales sent cash flow from operations plummeting to US$61,000 from US$379,000.

Production at the Limon mine in Nicaragua slid by 16% to 12,786 oz., as a result of lower grades (5.6 grams per tonne versus 6.4 grams per tonne in 2002). Mill throughput slipped to 73,680 tonnes from 85,395 tonnes. The lower production caused cash operating costs to rise US$9 to US$220 per oz. Cash costs per tonne milled were unchanged at US$38.

Looking ahead, Black Hawk expects Limon to mill 174,000 tonnes grading 5.9 grams gold per tonne during the last half of 2003. With a projected mill recovery rate of 87%, production is pegged at 28,000 oz. at a cash operating cost of less than US$225 per oz.

The company also looks forward to selling its gold at spot prices for the remainder of the year. It delivered the last ounces to forward gold sale contracts on June 16.

Black Hawk expects to wrap up its previously announced combination with Glencairn Gold (GLJ.V) in the third quarter. Under the deal, Glencairn will take over the larger Black Hawk for shares at a rate of one of its own shares for every three of Black Hawk. In the end, Black Hawk shareholders would hold 69% of Glencairn, but Glencairn’s officers would retain their seats.

The deal is subject to due diligence, a definitive agreement, and regulatory approval. It also needs the go-ahead from Black Hawk shareholders.