Earnings improve for Battle Mountain

Despite a downturn in the price of gold, Battle Mountain Gold (BMG-N) cut its losses considerably in the first quarter on the strength of lower operating costs.

The company reported a net loss of US$3.5 million (or 2cents per share), compared with a net loss of US$13.7 million (6cents per share) for the corresponding period of 1997.

Cash production costs for the quarter fell 27% to US$156 per oz., compared with US$215 per oz. in the same period last year.

Attributable gold production was up 23% in the first quarter to 246,000 oz.

Despite lower gold prices, revenues for the quarter were US$78.9 million, just ahead of the US$76.5 million tallied in the first quarter of 1997. The company realized an average price of US$307 per oz. of gold sold, compared with US$358 a year earlier.

“Battle Mountain is a much different company than it was a year ago,” says President Ian Bayer. “It has been hard at work to meet the challenge of lower gold prices and position itself to grow in the future.” In the last 18 months, Battle Mountain has closed four higher-cost mines and replaced them with two lower-cost mines. The company also restructured 50.5%-owned subsidiary Niugini Mining in 1997, turning what was a cash drain in 1996 into a source of profit.

In Bolivia, Battle Mountain made operating changes and workforce reductions at the Kori Kollo gold mine in a program to lower operating costs. Cash costs for the first quarter were trimmed to US$167 per oz. gold from US$203 during the first quarter of 1997. Production was up 20% to 77,000 oz. during the first quarter.

At the Golden Giant mine in Ontario, the company has benefited from higher-than-expected gold grades in several active stopes, which boosted quarterly production to 103,000 oz. gold from 80,000 oz. in the first quarter of 1997, and lowered cash costs to US$114 per oz. gold from US$161.

The company also saw grades rise and costs drop at the Vera-Nancy mine in Australia.

On the exploration front, Battle Mountain reduced its budget by 30%, cutting grassroots projects. The company has budgeted US$25 million for exploration in 1998. Over half of that amount is earmarked for eight priority projects.

In Mexico, Battle Mountain is focusing on four properties along the eastern flank of the Sierra Madre Occidental. The most advanced of these is El Cairo, 75 miles north of Durango. So far, drilling on the 1,600-sq.-mile property has encountered long intervals of low-grade mineralization in what is believed to be a gold-bearing porphyry system. Some of the better intercepts include 246 ft. of 0.032 oz. gold per ton, 265 ft. of 0.049 oz., 262 ft. of 0.064 oz. and 195 ft. of 0.08 oz. Battle Mountain has four drilling rigs working on the property.

The company has two drills turning on the Holloway property in northeastern Ontario, testing downdip extensions of the known deposit.

In Nevada, three drills are finishing up a 70,000-ft. program in the vicinity of two pits at the Battle Mountain complex. The company also plans several deeper holes to test for higher-grade skarn mineralization.

Limited, yet successful drilling is leading to a new geologic interpretation for the southern extension of the Vera-Nancy structure in Queensland, Australia, where Battle Mountain holds a 50% interest.

Intersections on the main structure include a 33-ft. interval grading 0.99 oz. gold, an 18-ft. interval of 0.68 oz. gold and a 10-ft. interval grading 0.34 oz. gold. In a hangingwall structure, drilling encountered 31 ft. of 1.27 oz. gold and 41 ft. of 1.97 oz. However, additional drilling will be required to resolve the structurally complex area.

In Ghana, Battle Mountain is continuing to focus exploration efforts on the Mampon prospect on the Dunkwa joint venture with Birim Goldfields (BGI-T). A drilling program has started testing the down-plunge and strike extent of known mineralization, with the first completed hole intersecting 53.5 ft.

grading 0.27 oz. gold.