Mines in the making — Crown Jewel closer to production

After five years of studies and consultations with local communities and native groups, Battle Mountain Gold (BMG-N) has announced the completion of an environmental impact statement (EIS) for its Crown Jewel gold mine project in Washington state.

The company holds a 54% interest in the project, with the remainder held by Crown Resources (CRO-T).

Battle Mountain describes the EIS as “a comprehensive analysis which shows conclusively that the project can be carried out in an environmentally sensitive manner.”

Brant Hinze, manager of the operation, believes the project will be a model for environmentally sound mining operations in the U.S. He notes, however, that mine construction will be delayed until the second half of this year in order to allow for an appeals period and permitting requirements.

The lead agencies for the EIS were the U.S. Forest Service and the Washington State Department of Ecology. The document is more than 2,000 pages long and is supported by roughly 100 technical studies.

Battle Mountain expects its share of production to average 130,000 oz.

annually, with cash operating costs projected at US$165 per oz. Capital costs are estimated at US$100 million.

Across the world in Papua New Guinea, mining of oxide ore is expected to start by mid-1997 at the Lihir gold mine. Battle Mountain holds a net 8.6% interest in the project though its 50.5% ownership of Niugini Mining.

Once up and running, Lihir is expected to generate 18,000 oz. annually to its account, rising to 50,000 attributable ounces in 1998, and 70,000 oz. in 1999 and 2000.

At the end of 1996, project engineering at Lihir was virtually complete and construction was 67% complete.

Battle Mountain, which merged with Hemlo Gold Mines last year, expects to record production of 920,000 attributable ounces from its various projects this year.

In 1996, gold production totalled 916,000 attributable ounces, compared with 843,000 oz. in 1995. Cash production costs averaged US$219 per oz. in 1996, compared with US$195 in 1995.

Production costs are expected to decrease this year as three new, lower-cost mines — Holloway in Ontario, Vera-Nancy and Lihir — come into full production. These mines will replace three of the company’s smaller, higher-cost operations — San Luis in Colorado, Silidor in Quebec, and Red Dome in Australia — all of which will be phased out by the second half of this year.

Battle Mountain reported a net loss of US$81.8 million for 1996, compared with income of US$22.2 million a year earlier. The company attributed the 1996 loss to costs related to the merger, as well as to property writeoffs, increased income tax charges, and higher production and exploration costs.