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HOUSTON--(BUSINESS WIRE)--July 28, 2000
Battle Mountain Gold Company (NYSE:BMG)(TSE:BMC) today reported a second quarter consolidated net loss of $9.2 million, or 4 cents per share, including foreign currency losses of $4.4 million. The second quarter loss compares
For the first half of 2000, the consolidated net loss was $12.7 million, or 6 cents per share, including foreign currency losses of $3.9 million. This compares with a consolidated loss of $31.7 million, or 14 cents per share in the same period last year, which included a $26.4 million loss related to LGL.
BMG President and Chief Operating Officer, John A. Keyes, said that the average realized gold price increased to $289 per ounce in the first half, compared with $278 in the same period of last year. Cash flow from operations increased to $21.2 million for the period as a result of improving gold prices and production. The Company's cash position was $65.9 million at the end of the first half, including $42.4 million in restricted cash, which is primarily related to the Company's loan facility. First half gold production of 395,000 ounces and cash costs of $167 per ounce were slightly better than planned and are expected to remain on target for the balance of the year.
In addition, Keyes said that the Company's previously announced merger with Newmont Mining Corporation is expected to be completed this Fall following customary regulatory approvals and approval by Battle Mountain Gold shareholders. On July 27, 2000 early termination of the waiting period applicable to the proposed merger under the Hart-Scott-Rodino Improvements Act of 1976 was granted. Noranda Inc., which owns 28 percent of Battle Mountain Gold, has agreed to vote its shares in favor of the merger.
Development
Keyes also reported that work on BMG's Final Phoenix Feasibility Study has been completed and that the results are largely in line with or improve on the targets projected in the March 2000 interim study. The Feasibility Study does not take into account additional operating synergies which are expected to result from the merger, further lowering costs and increasing the rate of return.
Final Phoenix Feasibility Study
Final Feasibility July 2000 Feasibility Targets March 2000
Avg. Mill Feed Grade Avg. Mill Feed Grade
Gold (oz/ton) 0.037 0.038
Silver (oz/ton) 0.286 0.285
Copper (%) 0.15 0.15
----------------------------------------------------------------------
Avg. Mill Recovery Avg. Mill Recovery
Gravity Gold (%) 40.6 43.0
Flotation/SART Au (%) 44.0 41.5
---- ----
Total Au Recovery 84.6 84.5
---------------------------------------------------------------------
Silver (%) 58.1 52.0
Copper (%) 85.1 83.5
----------------------------------------------------------------------
Avg. Heap Leach Grade Avg. Heap Leach Grade
Gold (oz/ton) 0.028 0.026
Silver (oz/ton) 0.229 0.236
----------------------------------------------------------------------
Leach Recovery Leach Recovery
Gold (%) 67.1 64.5
Silver (%) 31.4 16.0
----------------------------------------------------------------------
Mill Ore Total Tons (000s) 148.4 140.2
Milling Rate (tons per day) 32,500 30,000
Strip Ratio 2.11:1 2.1:1
Contained Au Reserves
/Resources 6.3 M oz 6.2 M oz
Capital Cost (millions) $206.5 $189.0
----------------------------------------------------------------------
Gold, Silver, Copper Production
Au, Ag, Cu, Au, Ag, Cu,
oz/yr oz/yr Mlbs/yr oz/yr oz/yr Mlbs/yr
Gravity 180,000 310,000 183,500 290,000
Float/SART 194,000 1,692,000 162,500 1,300,000
Heap Leach 41,000 153,000 39,000 100,000
------ ------- ------ -------
TOTAL 415,000 2,155,000 28.8 385,000 1,690,000 27.5
----------------------------------------------------------------------
Cash Operating Cost (per oz) $170 $172
DD&A (per oz) 41 38
Sustaining Capital (per oz) 18 15
Reclamation (per oz) 3 11
---- ----
Total Costs (per oz) $232 $236
----------------------------------------------------------------------
Pre tax IRR @ $300 Au (%) 17 18
----------------------------------------------------------------------
Keyes noted that, based on the same $300 per ounce gold price used in the March study, proven and probable contained gold reserves increased from 5.7 million ounces to 6.1 million ounces. The increased reserves do not take into account ongoing development drilling, and BMG expects to add another 800,000 ounces to the reserve base this year, with significant additional upside potential remaining.
Mill throughput in the Final Feasibility study increased to 32,500 tons per day from the 30,000 ton-per-day target. Total production estimates increased to 415,000 ounces of gold per year, together with 2.2 million ounces of silver and 28.8 million pounds of copper. This compares with 385,000 ounces of gold, 1.7 million ounces of silver and 27.5 million pounds of copper in the March target case.
Cash operating costs declined slightly to $170 per ounce, with total production costs declining to $232, including sustaining capital. Total capital costs increased to $206 million, including an $18.3 million contingency allowance. The pre-tax internal rate of return is estimated at 17%.
At the Llallagua bio-oxidation demonstration plant adjacent to the 88%-owned Kori Kollo mine in Bolivia, processing of Llallagua and Nueva Esperanza ores continued. A recently completed scoping study has generally supported earlier expectations and confirmed contained gold mineralization of 1.3 million ounces. In addition, a 34 hole drilling program has been completed to evaluate areas that could have significant impacts on the Llallagua sulfide project by testing new areas and extending known mineralization. Assays overall were generally encouraging and have identified three promising mineralized targets. These new targets occur outside the current pit designs and will expand the resource. Of special note is the higher grade of recent intercepts, many of which are over twice the average Llallagua resource grade. Recent results include .172 opt gold (Au) over 35.1 ft., .117 opt Au/29.5 ft. and .108 opt Au/59.0 ft. Based on these positive results, a second phase of drilling totaling 35-40 holes will be implemented shortly. This program will further test these new areas to expand the Llallagua deposit and provide detailed information on resource grade, stripping ratio, ore controls and model parameters.
Operations
In Canada, the Golden Giant mine performed well during the first half and is expected to be on target for the year. Shaft deepening and additional development for Block 5 is on schedule. At Kori Kollo, production was slightly below plan, and cash operating costs for the period were about 12% over target, primarily due to higher equipment-maintenance and fuel costs. Production from the 84.65%-owned Holloway mine was slightly above plan for the first six months. BMG's 50% joint venture interest in the Vera/Nancy mine at the Pajingo complex in Queensland, Australia, completed the first half above plan in terms of production, with cash costs averaging $99 per ounce for the period.
Exploration
Positive exploration developments for the first half include significant drill results from the Holloway area in Canada, Copper Basin in Nevada, Casposo in Argentina, and Llallagua in Bolivia.
Exploration in Canada during the quarter focused on the Holloway area. East of the Holloway mine, surface drilling continued to expand the Blacktop deposit. Mineralization is open to the west and is currently being drilled. The first drill hole to test this westerly extension assayed .185 opt Au/10.2 ft. This drilling is expected to be completed early in the third quarter and will provide resource information required for an internal study on the viability of developing the Blacktop deposits.
On the western side of the Holloway mine, the first phase of the 505 West exploration drift to evaluate Lightning and Middle zone mineralization west of the current mine limits is nearly complete. In this area, very positive developments have been made in defining Middle zone mineralization. Significant values returned include .616 opt Au/19.4 ft., .228 opt Au/15.1 ft. and .229 opt Au/18 ft. In addition, the 505 West level has encountered a northeast trending quartz tourmaline vein with high-grade gold values. The vein trend is normal to all other mineralization at Holloway and had not been recognized previously. The vein has been cut by 14 underground holes to-date, and drilling is continuing. The average drill intercept is 5.8 ft. wide, grading .415 opt gold. Based on these positive developments, further work will commence immediately. The expectation is that the 505 West exploration program will outline additional reserves equivalent to one year's production (approximately 100,000 ounces).
Aside from the Phoenix development work, exploration drilling at the Battle Mountain Complex during the second quarter of 2000 focused on the Copper Basin area 7 miles to the north of Phoenix. A 16-hole program totaling 7,000 ft. is under way at the Surprise area at Copper Basin with the objective of drilling off an indicated resource which has the potential to contain significant amounts of gold and copper.
In Argentina, work focused on the Casposo project. Based on results to date, a preliminary study was completed to determine the general economics of the mineralized zone and to identify areas for significant improvement. Metallurgical test work indicates a total recovery of 98.5% for gold using gravity concentration and 96.7% for silver. At $300 gold, preliminary resource calculations indicate 1.9 million tons of ore grading 0.186 opt gold and 3.358 opt silver, or approximately 350,000 ounces of gold and 6.4 million ounces of silver. Further drilling is planned with excellent potential to expand this resource.
PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR STATEMENT
This press release includes forward-looking information and statements about Battle Mountain Gold, Newmont Mining Corporation and the combined company after completion of the proposed merger that are intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. These statements include financial projections and estimates and their underlying assumptions; statements regarding plans, objectives and expectations with respect to future operations, products and services; and statements regarding future performance. Forward-looking statements are generally identified by the words "expect," "anticipates," "believes," "intends," "estimates" and similar expressions. The forward-looking information and statements in this press release are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of Battle Mountain Gold and Newmont, that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include those discussed or identified in the public filings with the U.S. Securities and Exchange Commission (SEC) made by Battle Mountain Gold and Newmont; risks and uncertainties with respect to the parties' expectations regarding the timing, completion and accounting and tax treatment of the merger, the value of the merger consideration, production and development opportunities, conducting worldwide operations, earnings accretion, cost savings, revenue enhancements, synergies and other benefits anticipated from the transaction; and the effect of gold price and foreign exchange rate fluctuations, and general economic conditions such as changes in interest rates and the performance of the financial markets, changes in domestic and foreign laws, regulations and taxes, changes in competition and pricing environments, the occurrence of significant natural disasters, civil unrest and general market and industry conditions.
ADDITIONAL INFORMATION
Information regarding the identity of the persons who may, under SEC rules, be deemed to be participants in the solicitation of stockholders of Battle Mountain Gold in connection with the proposed merger, and their interests in the solicitation, are set forth in a Schedule 14A filed by Battle Mountain Gold on June 21, 2000 with the SEC. Battle Mountain Gold filed a preliminary proxy statement/prospectus with the SEC on July 21, 2000. In addition, Battle Mountain Gold and Newmont will be filing a definitive proxy statement/prospectus and other relevant documents concerning the proposed transaction with the SEC. Investors are urged to read the definitive proxy statement/prospectus when it becomes available and any other relevant documents filed with the SEC because they will contain important information on the proposed transaction. Investors will be able to obtain the documents free of charge at the SEC's website (www.sec.gov). In addition, documents filed with the SEC by Battle Mountain Gold are available free of charge by contacting Battle Mountain Gold Company, 333 Clay Street, 42nd Floor, Houston, Texas 77002, (713) 650-6400. Documents filed with the SEC by Newmont may be obtained free of charge by contacting Newmont Mining Corporation, 1700 Lincoln Street, Denver, CO 80203, (303) 863-7414. Investors should read the definitive proxy statement/prospectus carefully when it becomes available before making any voting or investment decision.
BATTLE MOUNTAIN GOLD COMPANY
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
Three months ended Six months ended
June 30 June 30
2000 1999 2000 1999
(as restated) (as restated)
US$ millions, except
per share amounts
Sales $ 59.2 $ 53.4 $121.7 $107.2
Costs and expenses
Production costs 36.2 35.7 75.6 71.6
Depreciation,
depletion and
amortization 15.2 15.8 32.7 30.2
Exploration, evaluation
& other lease costs, net 3.8 5.3 7.4 9.2
Merger expense 0.7 -- 0.7 --
General and
administrative expenses 2.6 4.0 5.9 7.4
Total costs and
expenses 58.5 60.8 122.3 118.4
Operating Income (Loss) 0.7 (7.4) (0.6) (11.2)
Interest expense (3.7) (3.8) (7.5) (7.5)
Interest income 0.9 2.0 2.0 3.6
Equity in losses and
impairment of Lihir -- (14.2) -- (26.4)
Foreign currency exchange
gain (loss), net (4.4) 3.7 (3.9) 6.8
Minority interest in
net loss 0.6 3.9 0.8 4.0
Other income, net -- 0.4 0.1 0.8
Loss Before Income Taxes (5.9) (15.4) (9.1) (29.9)
Income tax benefit
(expense) (1.9) 0.1 (1.0) 2.2
Mining tax benefit
(expense) 0.4 (0.1) 1.1 (0.3)
Net Loss (7.4) (15.4) (9.0) (28.0)
Preferred dividends 1.8 1.8 3.7 3.7
Net Loss to Common
Shares $ (9.2) $(17.2) $(12.7) $(31.7)
Loss per Common Share
- Basic and Diluted $ (.04) $ (.07) $ (.06) $ (.14)
Average Common Shares
Outstanding for Basic
and Diluted Loss per
Share Purposes 229.9 229.8 229.9 229.8
BATTLE MOUNTAIN GOLD COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
June 30, December 31,
US$ millions 2000 1999
(as restated)
ASSETS
Current assets
Cash and cash equivalents $ 23.5 $ 91.0
Restricted cash 1.7 0.2
Accounts and notes receivable, net 12.4 13.2
Product inventories 8.7 8.7
Materials and supplies, net, at
average cost 20.3 22.4
Marketable equity securities 43.9 --
Other current assets 7.3 7.7
Total current assets 117.8 143.2
Investments
Investment in Lihir -- 68.4
Other investments 12.5 10.6
Total investments 12.5 79.0
Restricted cash 40.7 40.0
Property, plant and equipment, net 282.9 299.6
Other assets 4.0 6.7
Total Assets $457.9 $568.5
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term borrowings $ 5.0 $ --
Current maturities of long-term debt 9.9 2.6
Debt due upon disposal of Lihir 30.0 30.0
Accounts payable 19.0 16.0
Income and mining taxes payable 11.1 16.7
Other current liabilities 18.6 23.6
Total current liabilities 93.6 88.9
Long-term debt 157.5 176.8
Deferred income and mining taxes 61.3 64.5
Other liabilities 52.7 54.5
Total Liabilities 365.1 384.7
Minority interest 5.0 65.1
Shareholders' equity 87.8 118.7
Total Liabilities and Shareholders'
Equity $457.9 $568.5
BATTLE MOUNTAIN GOLD COMPANY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
Six months ended
June 30,
US$ millions 2000 1999
(as restated)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (9.0) $ (28.0)
Adjustments to reconcile net loss to
net cash flows from operating
activities:
Depreciation, depletion and amortization 32.7 30.2
Deferred income and mining taxes (1.1) (5.4)
Equity in losses and impairment of Lihir -- 26.4
Foreign currency exchange loss (gain), net 3.9 (6.8)
Change in working capital accounts, net (1.5) (5.7)
Other, net (3.8) (6.0)
Net Cash Flows Provided by Operating
Activities 21.2 4.7
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (22.9) (22.9)
Crown Butte liquidating dividend to
minority shareholders -- (11.0)
Effects on cash of the Niugini Mining
and Lihir merger (54.7) --
Other, net (0.8) (0.2)
Net Cash Flows Used in Investing Activities (78.4) (34.1)
CASH FLOWS FROM FINANCING ACTIVITIES
Debt repayments (12.0) (24.4)
Increase (decrease) in short-term borrowings 5.0 (14.9)
Cash dividend payments (3.7) (3.7)
Decrease (increase) in restricted cash (2.2) 0.5
Other, net -- 0.3
Net Cash Flows Used in Financing Activities (12.9) (42.2)
Effect of Exchange Rate Changes on Cash 2.6 1.6
Net Decrease in Cash and Cash Equivalents (67.5) (70.0)
Cash and cash equivalents at beginning
of period 91.0 197.2
Cash and Cash Equivalents at End
of Period $ 23.5 $ 127.2
BATTLE MOUNTAIN GOLD COMPANY
SUPPLEMENTAL INFORMATION - (UNAUDITED) (1)
(Data reflects BMG attributable interests, except as noted)
(US$, ounces in thousands)
Three months ended Six months ended
June 30, June 30,
2000 1999 2000 1999
GOLDEN GIANT
Gold ounces recovered 84 86 173 164
Silver ounces recovered 5 4 12 7
Cost per Gold Ounce Produced
Cash production costs $ 149 $ 151 $ 149 $ 158
Depreciation, depletion and
amortization 66 68 67 66
Reclamation and mine closure
costs 6 4 6 4
Total production costs $ 221 $ 223 $ 222 $ 228
KORI KOLLO (88% Interest)
Gold ounces recovered 56 62 118 126
Silver ounces recovered 166 165 298 366
Cost per Gold Ounce Produced (2)
Cash production costs $ 219 $ 195 $ 209 $ 189
Depreciation, depletion and
amortization 92 89 91 87
Reclamation and mine closure
costs 5 11 5 11
Total production costs $ 316 $ 295 $ 305 $ 287
HOLLOWAY (84.65% Interest)
Gold ounces recovered 21 23 44 43
Cost per Gold Ounce Produced
Cash production costs $ 218 $ 204 $ 213 $ 205
Depreciation, depletion and
amortization 132 133 134 130
Reclamation and mine closure
costs 3 3 3 2
Total production costs $ 353 $ 340 $ 350 $ 337
VERA/NANCY (50% Interest)
Gold ounces recovered 35 16 60 30
Silver ounces recovered 26 12 45 24
Cost per Gold Ounce Produced
Cash production costs $ 82 $ 119 $ 99 $ 118
Depreciation, depletion and
amortization 36 36 42 34
Reclamation and mine closure
costs 2 1 2 1
Total production costs $ 120 $ 156 $ 143 $ 153
AGGREGATE DATA
Gold ounces recovered 196 187 395 363
Average price per gold ounce
realized $ 287 $ 271 $ 289 $ 278
Silver ounces recovered 197 181 355 397
Average price per silver ounce
realized $4.53 $5.08 $4.77 $5.19
Weighted Average Cost per Gold
Ounce Produced
Cash production costs $ 164 $ 170 $ 167 $ 171
Depreciation, depletion and
amortization 76 80 77 79
Reclamation and mine closure
costs 5 6 5 6
Total production costs $ 245 $ 256 $ 249 $ 256
BATTLE MOUNTAIN GOLD COMPANY
SUPPLEMENTAL INFORMATION - (UNAUDITED) (1)
(Data reflects BMG attributable interests, except as noted)
(US$, ounces in thousands)
Three months ended Six months ended
June 30, June 30,
2000 1999 2000 1999
AGGREGATE DATA (cont.)
Gold ounces recovered - 100% 204 195 411 380
Gold ounces sold - 100% 203 194 415 380
Gold ounces sold - BMG share 196 186 399 363
Silver ounces recovered - 100% 220 203 396 447
Silver ounces sold - 100% 224 202 395 447
Silver ounces sold - BMG share 201 180 355 397
(1) Cash production costs are presented in accordance with guidelines
established by The Gold Institute. In addition to mining, milling
and plant level general and administrative expenses, cash
production costs include royalties, freight, smelting costs and
allowances, and production taxes. Credits for by-product silver
and copper are offset against these cash production costs.
(2) Royalties paid to the Bolivian government for the Kori Kollo mine
are treated as income tax for per ounce cost calculations and are
therefore not included in these cost calculations.
DERIVATIVES OUTSTANDING
At July 26, 2000
Total or
2000 2001 2002 2003 2004 Average
Call options
Ounces 125 149 149 149 20 592
Average price per
ounce $ 334 $ 358 $ 358 $ 358 $ 372 $ 353
Put options
Ounces 75 149 149 149 20 542
Average price per
ounce $ 297 $ 297 $ 297 $ 297 $ 302 $ 297
Forwards
Ounces 25 38 38 38 2 141
Average price per
ounce $ 316 $ 317 $ 317 $ 317 $ 326 $ 317
The put options are the minimum price Battle Mountain will receive,
while the call options, having a higher price, allow participation in
a rising gold market. All ounces sold through the forwards will be at
the stated prices. The above derivatives have no margin requirements
nor do they subject Battle Mountain to lease rate exposure. The above
ounces represent between 3% and 46% of estimated production for each
period from July 27, 2000 through March 31, 2004, with a weighted
average of approximately 20% of total estimated production for those
periods combined.
In addition, make sure to read these articles:
- Cameco Announces Third Quarter Financial Results For2000.
- Falconbridge Reports 2005 Second Quarter Net Earnings Of US$202 Million.
- SEC Declares Newmont Registration Statement Effectivefor Battle Mountain Merger; Battle...
- Battle Mountain Gold Posts PreferredDividend.
- Battle Mountain Gold Posts PreferredDividend.
- Battle Mountain Gold Says Shelf RegistrationEffective; No Offering Currently Being Made.
- Battle Mountain Gold Posts PreferredDividend.
- Battle Mountain Gold Posts PreferredDividend.
- Battle Mountain Gold Posts PreferredDividend.
- Battle Mountain Gold PostsCorrection.
- Battle Mountain Gold Posts PreferredDividend.
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- Battle Mountain Gold posts preferreddividend.
- Battle Mountain Gold Co. announces preferred dividends.
- Battle Mountain Gold Co. announces dividends.
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