Battle Mountain reports mixed quarter

Although Battle Mountain Gold (BMG-N) achieved all of its production goals in the second quarter, weak gold prices prevented the Houston, Tex.-based miner from realizing a profit.

The loss amounted to US$17.2 million (or 7 cents per share) during the quarter, compared with a loss of US$11.1 million (5 cents per share) in the corresponding period last year.

Production during the 3-month period was on target, at 187,000 oz. gold. The cash operating cost was US$170 per oz.

Battle Mountain sold its gold at an average price of US$271 per oz. during the quarter, compared with US$314 a year ago.

The dismal price of gold forced the company to close offices in Accra, Ghana, and Hermosillo, Mexico. In the process, 45 jobs were slashed and exploration spending was reduced to US$17 million. The cuts are designed to save about US$10 million a year.

Despite the cuts, Battle Mountain is determined to explore the Phoenix gold project in northern Nevada. In the first half of the year, crews completed 120,000 ft. of a planned 150,000-ft. drill campaign, and results to date are described as encouraging, though no details were available. Operating costs are targeted at US$185 per oz., production at 300,000 oz. annually, and capital costs at US$165 million.

Meanwhile, Battle Mountain is considering deepening the pit at the Kori Kollo gold mine in Bolivia. Twenty-one core holes were drilled in the second quarter, and the company says there may be as much as 200,000 oz. beneath the final bottom of the pit. No grade or tonnage was provided.

At the Crown Jewel project in Washington state, Battle Mountain and its 46% partner, Crown Resources (CRRS-Q), received a clean water permit in June, bringing the controversial project one step closer to production. Earlier in the quarter, congressional action reinstated the record-of-decision and approved the plan of operations. At this stage, the partners have received 95% of the permits required for construction.

Among the company’s earlier-stage projects is the Casposo gold-silver project in Argentina’s San Juan province, where a 12-hole program is in progress.

Over a strike length of 3,280 ft., five of the first holes assayed returned significant values, including 17 ft. averaging 1.4 oz. gold and 4.7 oz. silver per ton. Also, a 68-ft. interval hit 0.14 oz. gold and 1.4 oz. silver per ton; a 34-ft. zone returned 0.16 oz. gold and 6.5 oz. silver; and a 65-ft. interval assayed 0.12 oz. gold and 0.87 oz. silver.

Farther north, at the Tres Cruces project in Peru, Battle Mountain is concentrating on a newly discovered southern extension. Mineralization has been traced over a strike length of 1,960 ft. in 18 drill holes. Some of the better intervals include 78 ft. of 0.099 oz. gold per ton, 54 ft. of 0.1 oz. gold, and 211 ft. of 0.076 oz. gold.

While mineralization remains open to the south, the company is preparing an updated resource for the deposit. Currently, resources stand at 2 million oz. gold within 34 million tons grading 0.058 oz. per ton.

In Mexico, Battle Mountain has decided to discontinue exploration of the Castillo deposit, which contains a resource of 880,000 oz. gold within 37 million tons of oxide mineralization averaging 0.023 oz. per ton. The company cites low gold prices as the reason for its pull-out.

In the board room, Ian Bayer has resigned as president and chief executive officer, though he will remain a director. Chairman Karl Elers will become CEO, while John Keyes assumes the title of president.