LATIN AMERICA — Kori Kollo crucial to `new’ Battle Mountain — Latin American exploration key to company’s strategy

Last year’s merger with Hemlo Gold Mines has provided the “new” Battle Mountain Gold (BMG-N) with two core operations that together represent two-Thirds of its current production and about half of its attributable reserve base.

One of these is the Golden Giant mine, near Matheson, Ont., which is expected to turn out 361,000 oz. gold this year at a cash cost of US$141 per oz. In 1996, the mine produced 371,000 oz. at a cash production cost of US$137 per oz.

Golden Giant has been in operation since 1985 and is well-known in mining circles as one of Canada’s largest and lowest-cost gold producers. Lesser known, however, is Battle Mountain’s other core asset — the Kori Kollo gold mine.

Situated on the altiplano of western Bolivia, Kori Kollo is one of South America’s premier open-pit operations and one of Bolivia’s most important enterprises. In 1996, for the third consecutive year, it produced more than 300,000 oz. gold. The operation is wholly owned by Empresa Minera Inti Raymi, which, in turn, is 88%-owned by Battle Mountain.

Production at Kori Kollo last year was affected by lower grades and higher mining costs. The operation turned out 270,000 attributable ounces at a cash cost of US$255 per oz. This year, with a cost-cutting program in place, Battle Mountain expects Kori Kollo to produce 284,000 attributable ounces at a cash operating cost of US$186 per oz.

Battle Mountain also holds a 50.5% interest in the San Cristobal mine in Chile, which last year produced 39,000 attributable ounces gold at a cash production cost of US$362 per oz. Efforts are under way to lower operating costs by improving mining methods. Last year, San Cristobal took an asset writedown of about US$18 million, half of which was attributable to Battle Mountain.

On the exploration front, Latin America will be an important focus of the company’s search for new reserves and resources. This year, Battle Mountain expects to spend US$35 million on worldwide exploration programs, 23% of which will be directed towards South and Central America. Prospects in Mexico will be explored again this year, with work focused on the discovery of large gold deposits on the western side of the Mesa Central in central Mexico, and on the western side of the Sierra Madre Occidental along the Pacific Coast.

The projects acquired are described as having “characteristics of the large, sediment-hosted gold deposits of the Great Basin in Nevada.” The company says it has acquired an “excellent land position” in these regions, where several high-priority targets have been defined. Among these is El Cairo, where eight reverse-circulation drill holes have identified a target with potential for a large tonnage, bulk-minable gold deposit amenable to heap-leach processing. Seven of the holes encountered significant widths of anomalous gold mineralization. The best result was 0.031 oz. gold per ton over 330 ft., with the hole bottoming in mineralization.

Elsewhere in Latin America, Battle Mountain will carry out programs in seven countries: Argentina, Chile, Bolivia, Brazil, Honduras, Panama and Peru. In Argentina, the company hopes to extend the Maricunga and El Indio mineral belts. More than 1 million acres have been staked in these areas to date.

In Brazil, the company, together with equal partner TVX Gold (TVX-T), is exploring the Volta Grande project, a 58-sq.-mile concession underlain by Archean greenstone and granite-gneiss terrane and covering extensive artisanal workings. Battle Mountain says results from drilling continue to be encouraging, with multiple zones of mineralization ranging from 13 to 118 ft.

in thickness at grades ranging from 0.018 to 0.175 oz. gold per ton. More drilling is planned for this year.

The company also is active in Honduras, where a second phase of drilling has been completed on the Cacmuya joint venture. While the first drill program generated impressive results (such as 57 ft. grading 3.4 oz. gold), results from subsequent drilling were mixed, suggesting the high-grade mineralization is discontinuous. The best intercept from the second program was 29 ft. of 0.21 oz. gold. More work is planned.

In 1996, Battle Mountain’s operations yielded a total of 916,000 attributable ounces, making the company the fifth-largest producer of gold in the world.

With new projects under development and exploration programs at an advanced stage, the company hopes to increase its attributable production to beyond 1 million oz. by 1999.