Black Hawk flies high in third quarter

Black Hawk Mining (BHK-T) posted a US$901,000 profit in the third quarter of 2000 and earned US$2.2 million during the first nine months of the year. The figures are a considerable improvement over the company’s 1999 performance.

The gold producer’s US$901,000 profit for the three months ended Sept. 30 came on revenue of US$6.9 million and represents US1 per share. In the third quarter of 1999, Black Hawk lost US$1.1 million on revenue of US$7.9 million.

In the first three quarters of 2000, Black Hawk’s US$2.2-million profit came out of US$21.7 million in revenue. During the corresponding nine months in 1999, Black Hawk had lost US$2.2 million on revenue of US$24.2 million.

Radically lower production costs made the difference in the company’s operating results in 2000. Third-quarter costs for mining and milling fell to US$3.8 million from US$6.6 million in the corresponding quarter of 1999. Over the nine months ended Sept. 30, production costs fell to US$13.6 million, compared with US$19.8 million a year ago.

Cash costs at the El Limon mine in Nicaragua averaged US$164 per oz. over the first nine months of the year, down from US$227 a year before. Recoveries at the mill improved, averaging 87% over the same period, up from 84%.

Grades at El Limon also improved, as higher-grade underground stopes were mined. The average grade over the 9-month period rose to 9.3 grams per tonne, compared with 6.5 grams a year ago. El Limon converted entirely to underground operations in 1999.

Exploration continues on the company’s land package surrounding El Limon, part of which is under option to Newmont Mining (NEM-N). Newmont finished a 3-month program of reconnaissance work on the El Limon-La India exploration concession during the quarter.

Underground drilling at El Limon itself is establishing potential to block out resources between the 240- and 300-metre levels of the mine. In 12 drill holes on the Talavera Sur vein system, Black Hawk has encountered grades mainly in the 4-to-9-gram range, over true widths of 3-5 metres. The deepest intersections were at a vertical depth of 300 metres, where holes cut intervals of 3 metres grading 3.7 grams gold per tonne and 3.9 metres grading 4.2 grams.

At the Keystone gold mine in northwestern Manitoba, which shut down its mill in April, costs averaged US$232 per oz. — slightly higher than a year ago. All the ore milled during 2000 came from existing ore stockpiles, and Black Hawk is doing rehabilitation work on the Farley and Burnt Timber open pits. The cost of the rehabilitation — US$2.3 million last year — has already been charged against Black Hawk’s income.

Financially, the year has been good to the company, with cash reserves growing to US$2.3 million from about US$1 million at the beginning of the year. Long-term debt of about US$2.7 million becomes payable in the current year, but net debt has fallen to US$1.8 billion.

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