Indications are that extensive drilling at the Battle Mountain complex in northern Nevada could result in a significant reserve increase for owner Battle Mountain Gold (BMG-N).
The Houston, Tex.-based company has already outlined an additional half a million ounces of gold mineralization from drilling at the Phoenix project during the first half of the year. In all, the company has drilled 106 reverse-circulation (RC) holes totalling 48,000 ft.
BMG expects the increase could reach a million ounces by year-end in anticipation of an aggregate 116,000 ft. of drilling from six RC and two core rigs.
Currently, the company is producing only a minor amount of gold from the Battle Mountain complex, primarily from the Reona heap-leach project. During the second quarter, production was down to 9,000 oz. gold, compared to 24,000 oz. in the corresponding period in 1997. This year’s results have been hampered by substantial rain in Nevada, which has diluted the heaps.
It is expected that much of this new mineralization will be added to the reserve base by year-end, significantly expanding the current estimate of 2.5 million contained ounces. Most of the new mineralization occurs within the outlines of the pit, which suggests the stripping ratio could be lowered. However, BMG states it is too early to estimate a grade and tonnage for the new material.
Several of the recently reported intercepts are high grade, including: hole 7196, drilled in the Fortitude area, which cut 42 ft. of 0.29 oz gold per ton at a depth of 529 ft.; hole 7312, drilled at the Mid-Midas target, which returned 105 ft. of 0.1 oz. gold at a depth of 480 ft.; and hole 7373, drilled at the West Midas target, which cut 60 ft. of 0.21 oz. gold at a depth of 645 ft.
Preliminary metallurgical tests suggest the material is more receptive to gravity separation than previously indicated. BMG believes the combination of gravity separation and flotation would result in improved gold recoveries.
The company completed a feasibility study on the project in 1994, and now that the full extent of the mineralization appears to be determined, permitting is expected to resume. At full capacity, the Phoenix mine is forecast to produce 200,000 oz. gold annually.
BMG has also received encouraging values from drilling performed outside the Phoenix project area. At Copper Basin, a hole drilled in the eastern side of the Surprise pit intersected 0.32 oz. gold, 1.75 oz. silver and 2.5% copper over a true width of 60 ft. A second hole, drilled at the southern end, encountered 15 ft. of 0.24 oz. gold.
Low gold prices have squeezed the company’s bottom line. BMG posted a loss of US$11.1 million (or 5 cents per share) for the second quarter, compared with a loss US$4 million (2 cents per share) in the corresponding period last year. Operating costs in the recent second quarter averaged US$354 per oz., compared with US$309 in the first half of 1998.
On a brighter note, cash production costs in the first half of the year averaged US$160 per oz., compared with US$204 in the year-ago period, while attributable gold production rose to 461,000 from 425,000 oz. For the current year, BMG expects to meet its target of 875,000 oz. at an average cost of US$175 per oz.
In addition to the resource boost at the Battle Mountain complex in Nevada, the company has received encouraging exploration results from several international projects.
Following a 108-hole, 80,000-ft. program at the El Castillo deposit in northwestern Mexico (part of the El Cairo property), gold resources there were calculated to be 700,000 oz. in oxide mineralization plus 485,000 oz.
in sulphides. Grade and tonnage estimates were not disclosed.
In Ghana, the company drilled 10 holes (7,100 ft.) on the Mampon prospect, part of the Dunkwa joint venture with Birim Goldfields (BGI-T). Nine of the holes tested the down-plunge and strike extension of the known structure.
Significant intercepts include 20 ft. grading 0.38 oz. per ton, 54 ft. of 0.27 oz., and 8 ft. of 0.23 oz. BMG is earning a 65% interest in the property.
In March, the company began a new drill phase at the Pajingo joint venture in Australia. Much of the work has been focused on the Vera South prospect, where intercepts include 22 ft. of 0.83 oz. gold and 18 ft. of 0.22 oz.
along the northwest-trending structure.
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