Battle Mountain Gold — Third Quarter Results

Business Wire, Nov 10, 2000

Business Editors & Environmental Writers

HOUSTON--(BUSINESS WIRE)--Nov. 10, 2000

Battle Mountain Gold Company (NYSE:BMG)(TSE:BMC) today reported a third quarter consolidated net loss of $16.2 million, or 7 cents per share, including non-cash environmental remediation charges and a reclamation accrual together totaling $6.7 million and non-cash foreign currency losses of $2.7 million. The third quarter loss compares with a net loss of $20 million, or 9 cents per share in the same period last year, which included a non-cash environmental remediation charge of $9.5 million.

For the first nine months of 2000, the consolidated net loss was $28.9 million, or 13 cents per share, including the previously mentioned non-cash environmental remediation charges and a reclamation accrual totaling $6.7 million and, non-cash foreign currency losses of $6.6 million. This compares with a consolidated loss of $51.7 million or 22 cents per share in the same period last year which included a $26.2 million loss related to Lihir Gold Limited (LGL), and non-cash foreign currency gains of $6.9 million.

BMG President and Chief Operating Officer, John A. Keyes, said that the average realized gold price increased to $287 per ounce in the first nine months, compared with $272 in the same period of last year. Cash flow from operations increased to $52.2 million for the period as a result of improved gold prices, and production and changes in working capital. The Company's cash position was $53.5 million at the end of the nine months, including $42.3 million in restricted cash, which is primarily related to the Company's loan facility. Keyes noted that in light of the current low gold price and the Company's current cash position Battle Mountain will defer capital projects and exploration expenditures as needed to conserve cash. Production of 586,000 ounces and cash costs of $166 per ounce for the first nine months were slightly better than planned and are expected to remain on target for the balance of the year.

The increased reclamation accrual and environmental remediation charges totaling $6.7 million reflect the current and projected expenditures required at the San Luis mine, which was closed in 1997. The increase is required to cover anticipated costs due to changes in the scope and timing of the remediation project caused by investigating and responding to evolving regulatory issues associated with the permitting of the discharge, the unanticipated redesign of the water treatment plant, and the permitting, in-field modification and construction of a stormwater diversion and conveyance system.

BMG reports third quarter results

In addition, Keyes said that the Company's previously announced merger with Newmont Mining Corporation is expected to be completed around year-end following customary regulatory approvals and approval by Battle Mountain Gold shareholders. Noranda Inc., which owns 28 percent of Battle Mountain Gold, has agreed to vote its shares in favor of the merger.

Development

In highlighting the third quarter, Keyes also noted that, as previously announced by the Company on Oct. 4, 2000, development drilling during the summer at the Phoenix development project in Nevada continued to yield good results. A table incorporating these results is attached. These results are not included in the current reserve calculation, which now stands at 6.1 million ounces. An updated reserve calculation will be reported at year-end.

Permitting activities are ongoing at Phoenix and Keyes noted that BMG expects to receive a Draft Environmental Impact Statement early in 2001.

Operations

At the Golden Giant mine in Canada, commissioning of the deepened shaft is expected to be completed in the first quarter of 2001. Cash costs at BMG's 50% joint venture interest in the Vera/Nancy mine at the Pajingo complex in Queensland, Australia, remained below plan at $101 per ounce for the nine months. At the Holloway mine in Canada, the expansion of the nearby Holt-McDermott Mill is on budget and on time. The additional capacity will come on stream early in 2001. Production and costs were on plan at Kori Kollo in Bolivia.

Exploration

During the quarter, activity focused on surface drilling in the Holloway area in Canada, Phoenix in Nevada, Llallagua in Bolivia and at the Pajingo Complex in Australia.

Near Holloway, drilling on the Golden Highway claims has discovered a new area of significant alteration and mineralization. The discovery hole returned 0.104 opt Au over 105 ft., including, 0.327 opt Au over 13 ft. Follow-up drilling is planned for the fourth quarter.

At Vera/Nancy, as previously announced on Oct. 4, 2000, recent drilling has focused on extending the limits of the Vera/Nancy ore horizon. Drilling along the northerly extension returned positive results from the Anne structure, 1,500 ft. north of the Cindy pit, including 0.34 opt Au/12.5 ft. and 0.43 opt Au/20 ft. Drilling along the southern extension has continued to expand Vera South and a significant new structure called Jandam has been identified 1,200 ft. south of Vera South. Battle Mountain believes that the results are very favorable. Recent drill holes include 1.12 opt Au/27 ft., 0.68 opt Au/48 ft. and 0.59 opt Au over 110 ft. Additionally, new drilling 2,200 ft. further south has intersected a second new zone, the Zed structure, returning 0.53 opt Au/113 ft.