<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM 10-K/A
(AMENDMENT NO. 1)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______ TO _______
COMMISSION FILE NO. 1-9666
BATTLE MOUNTAIN GOLD COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 76-0151431
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
333 CLAY STREET, 42ND FLOOR, HOUSTON, TEXAS 77002
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 650-6400
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- -------------------
Common Stock New York Stock Exchange
$3.25 Convertible Preferred Stock New York Stock Exchange
Rights to Purchase Preferred Stock New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the common stock held by non-affiliates
of the registrant was approximately $719 million as of February 9, 1998, based
on the closing sales price of the registrant's common stock as reported on the
New York Stock Exchange Composite Tape on such date. As of such date, the
aggregate market value of the common stock and the Exchangeable Shares of the
registrant's wholly-owned subsidiary, Battle Mountain Canada Ltd., together,
held by non-affiliates was approximately $955 million. For purposes of the
foregoing sentence only, all directors and officers of the registrant are
assumed to be affiliates.
The number of shares outstanding of the registrant's common stock as of
February 9, 1998 is 124,067,103, not including 105,720,691 shares of
Exchangeable Shares of the registrant's wholly-owned subsidiary, Battle Mountain
Canada Ltd., that entitle holders to the same rights as the registrant's common
stock and are exchangeable at any time into such common stock on a one-for-one
basis.
DOCUMENTS INCORPORATED BY REFERENCE:
LIST HEREUNDER THE FOLLOWING DOCUMENTS IF INCORPORATED BY REFERENCE AND
THE PART OF THE FORM 10-K INTO WHICH THE DOCUMENT IS INCORPORATED: PROXY
STATEMENT RELATING TO THE 1998 ANNUAL MEETING OF STOCKHOLDERS OF BATTLE MOUNTAIN
GOLD COMPANY TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
REGULATION 14A UNDER THE SECURITIES EXCHANGE ACT OF 1934 (TO THE EXTENT SET
FORTH IN ITEMS 10, 11, 12 AND 13 OF PART III OF THIS ANNUAL REPORT).
================================================================================
<PAGE> 2
The information appearing in Part II, Item 8 of Battle Mountain Gold Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1997 is hereby
amended as indicated in the Index to Consolidated Financial Statements as "II.
Lihir Gold Limited" to include the following financial statements of Lihir Gold
Limited.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Consolidated Financial Statements
<TABLE>
<CAPTION>
Page
----
<S> <C>
II. LIHIR GOLD LIMITED
Report of Independent Accountants.......................... 2
Profit and Loss Accounts................................... 3
Balance Sheet.............................................. 4
Statement of Cash Flows.................................... 5
Notes to Financial Statements.............................. 6
</TABLE>
1
<PAGE> 3
LIHIR GOLD LIMITED
REPORT OF INDEPENDENT ACCOUNTANTS
THE BOARD OF DIRECTORS
LIHIR GOLD LIMITED
PORT MORESBY
PAPUA NEW GUINEA
We have audited the financial statements of Lihir Gold Limited for the year
ended 31 December 1997 as set out on pages 3 to 29. The Company's Directors are
responsible for the preparation and presentation of the financial statements and
the information they contain. We have conducted an independent audit of these
financial statements in order to express an opinion on them to the members of
the Company.
Our audit has been conducted in accordance with International Standards on
Auditing which are substantially similar to U.S. standards, to provide
reasonable assurance as to whether the financial statements are free of material
misstatement. Our procedures included examination, on a test basis, of evidence
supporting the amounts and other disclosures in the financial statements, and
the evaluation of accounting policies and significant accounting estimates.
These procedures have been undertaken to form an opinion as to whether, in all
material respects, the financial statements are presented fairly in accordance
with Accounting Standards adopted for use in Papua New Guinea and Papua New
Guinea statutory requirements so as to present a view which is consistent with
our understanding of the Company's financial position and the results of its
operations.
The audit opinion expressed in the Report has been formed on the above basis.
As described in Note 27 to the financial statements, the Company's accounting
policies vary in certain important respects from the accounting principles
generally accepted in the United States. Note 27 reconciles these differences.
<PAGE> 4
AUDIT OPINION
In our opinion:
(a) the financial statements of Lihir Gold Limited are properly drawn up:
(i) so as to give a true and fair view of the state of affairs of
the Company at 31 December 1997 and of the results and cash
flows of the Company for the year ended on that date; and
(ii) in accordance with the provisions of the Companies Act
(Chapter 146); and
(iii) in accordance with applicable Accounting Standards;
(b) the accounting and other records (including registers) examined by us
have been properly kept in accordance with the Companies Act.
COOPERS & LYBRAND
By R Hubbard
Registered under the Accountants Registration Act (Chapter 89)
PORT MORESBY, PAPUA NEW GUINEA
On 17th day of March 1998
2
<PAGE> 5
LIHIR GOLD LIMITED
PROFIT AND LOSS ACCOUNTS
FOR THE YEARS ENDED 31 DECEMBER 1997, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
US$ 000
NOTE 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
SALES REVENUE 56,966 -- -- --
OPERATING EXPENSES
Mining expenses (15,562) -- -- --
Processing costs (5,609) -- -- --
Power generation costs (3,264) -- -- --
General and administrative costs (8,427) -- -- --
Refining, royalty and management fees (2,042) -- -- --
Costs deferred and transferred to 11,588 -- -- --
inventories
Total operating expenses (23,316) -- -- --
OPERATING PROFIT BEFORE DEPRECIATION, 33,650 -- -- --
INTEREST AND TAX
Depreciation and amortisation (8,918) -- -- --
OPERATING PROFIT BEFORE INTEREST AND TAX 24,732 -- -- --
Net interest expense (6,593) -- -- --
OPERATING PROFIT BEFORE INCOME TAX 5 18,139 -- -- --
Income tax attributable to operating profit 14 (6,338) -- -- --
OPERATING PROFIT AFTER INCOME TAX 11,801 -- -- --
Retained profits at the beginning of the -- -- -- --
period
Total available for appropriation 11,801 -- -- --
Dividends provided for or paid -- -- -- --
RETAINED PROFITS AT THE END OF THE
FINANCIAL PERIOD 11,801 -- -- --
</TABLE>
The accompanying notes form part of these financial accounts
3
<PAGE> 6
LIHIR GOLD LIMITED
BALANCE SHEETS AS AT 31 DECEMBER, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
US$ 000
NOTE 1997 1996 1995
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash 6 30,640 44,002 363,099
Inventories 8 21,953 -- --
Receivables and prepayments 9 6,282 42 420
Other current assets 10 6,320 -- --
------- ------- -------
TOTAL CURRENT ASSETS 65,195 44,044 363,519
NON-CURRENT ASSETS
Inventories 8 4,262 -- --
Receivables and prepayments 9 418 -- --
Development and mining properties 11 889,049 670,412 268,235
Other non current assets 10 26,732 20,496 --
------- ------- -------
TOTAL NON-CURRENT ASSETS 920,461 690,908 268,235
------- ------- -------
TOTAL ASSETS 985,656 734,952 631,754
------- ------- -------
CURRENT LIABILITIES
Accounts payable 12 19,459 51,055 10,054
Provisions 13 579 516 218
Borrowings 22 26,623 540 --
Retentions 421 1,527 168
------- ------- -------
TOTAL CURRENT LIABILITIES 47,082 53,638 10,440
NON CURRENT LIABILITIES
Provisions 13 6,131 -- --
Borrowings 22 299,328 60,000 --
------- ------- -------
TOTAL NON CURRENT LIABILITIES 305,459 60,000 --
------- ------- -------
TOTAL LIABILITIES 352,541 113,638 10,440
------- ------- -------
NET ASSETS 633,115 621,314 621,314
------- ------- -------
SHAREHOLDERS' EQUITY
Share capital 18 68,085 68,085 68,085
Ordinary shares K0.10 par value
Authorised 2,000,000,000; issued
and outstanding 1996 and 1995
900,000,000 shares)
Reserves 19 553,229 553,229 553,229
Retained Earnings 11,801 -- --
------- ------- -------
TOTAL SHAREHOLDERS' EQUITY 633,115 621,314 621,314
------- ------- -------
</TABLE>
4
<PAGE> 7
LIHIR GOLD LIMITED
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDING 31 DECEMBER 1997, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
US$ 000
1997 1996 1995 1994
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from operating activities 56,966 -- -- --
Payments arising from operating activities (50,466) -- -- --
-------- -------- -------- --------
6,500
Interest income 633 -- -- --
Interest paid to third parties (6,135) -- -- --
Income taxes paid -- -- -- --
-------- -------- -------- --------
NET CASH FLOWS FROM OPERATING ACTIVITIES 998 -- -- --
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares -- -- 431,754 --
Joint Venture contributions -- -- 37,936 12,812
Borrowings 261,527 60,540 -- --
-------- -------- -------- --------
261,527 60,540 469,690 12,812
CASH FLOWS FROM INVESTING ACTIVITIES
Property plant and equipment (216,813) (420,417) (123,877) (12,812)
Decrease (Increase) in debtors (1,994) 378 (420) --
Decrease (Increase) in inventories (14,773) -- -- --
Decrease (Increase) in other assets (2,848) -- -- --
Increase (Decrease) in creditors (29,366) 42,658 10,440 --
Increase (Decrease) in other provisions 632 -- -- --
Interest received 1,550 18,240 7,266 --
Interest paid to third parties (12,275) -- -- --
Increase in deferred hedging costs -- (20,496) -- --
-------- -------- -------- --------
(275,887) (379,637) (106,591) (12,812)
-------- -------- -------- --------
NET INCREASE/(DECREASE) IN CASH AND CASH (13,362) (319,097) 363,099 --
EQUIVALENTS
-------- -------- -------- --------
Cash balance at beginning of period 44,002 363,099 -- --
Cash balance at end of period 30,640 44,002 363,099 --
-------- -------- -------- --------
(13,362) (319,097) 363,099 --
-------- -------- -------- --------
</TABLE>
The accompanying notes form part of these financial statements.
5
<PAGE> 8
LIHIR GOLD LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 1997
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been prepared in accordance with The Papua New
Guinea Companies Act (Chapter 146), applicable International Accounting
Standards (IAS) and other mandatory professional reporting requirements
(Standing Interpretations Committee). The financial statements have also been
prepared on the basis of historical costs and do not take into account changing
money values. Cost is based on the fair values of the consideration given in
exchange for assets. The accounting policies have been consistently applied,
unless otherwise stated.
Construction and commissioning of the mine and processing facilities were
completed during the year. For the purpose of these financial statements the
effective date for the commencement of commercial production was 1 October 1997.
The following is a summary of the significant accounting policies adopted by the
Company in the preparation of the financial statements.
(a) EXPLORATION AND EVALUATION EXPENDITURE
Exploration and evaluation expenditure is accumulated separately for
each area of interest. Exploration expenditure is fully written off in
the financial year in which it is incurred, unless recoupment from
revenue to be derived from the relevant area of interest/mineral
resource, or from the sale of that area of interest, is reasonably
assured.
Evaluation expenditure is capitalised, to the extent to which its
recoupment out of revenue to be derived from the relevant area of
interest/mineral resource, or from sale of that area of interest, is
reasonably assured.
Exploration or evaluation expenditure written off, or provided against,
is reinstated when recoupment out of revenue to be derived from the
relevant area of interest/mineral resource or from sale of that area of
interest, is reasonably assured.
(b) DEVELOPMENT PROPERTIES
Development expenditure is accumulated separately for each area of
interest in which economically recoverable mineral reserves have been
identified and are reasonably assured.
6
<PAGE> 9
LIHIR GOLD LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 1997
Once a development decision has been taken, all past and future
exploration and evaluation expenditure in respect of the area of
interest is aggregated with the costs of development and classified
under non-current assets as "Development Properties".
All expenditure incurred prior to the commencement of commercial levels
of production from each development property is carried forward to the
extent to which recoupment out of revenue to be derived from the sale
of production from the relevant development property, or from sale of
that property, is reasonably assured.
No amortisation is provided in respect of development properties until
they are reclassified as "Mine Properties", following the commencement
of commercial production.
(c) MINE PROPERTIES
Mine properties represent the accumulation of all exploration,
evaluation, and development expenditure incurred by or on behalf of the
Company in relation to areas of interest in which mining of a mineral
resource has commenced.
When future economic benefits are established by further development
expenditure in respect of a mine property after the commencement of
production, such expenditure is carried forward as part of the cost of
that mine property. Otherwise such expenditure is classified as part of
the cost of production.
Revenue from the sale of gold prior to the commencement of commercial
production has been offset against the carrying value of Mine
Properties.
Amortisation of costs is provided on the unit-of-production method,
separate calculations being made for each mineral resource. The
unit-of-production basis results in an amortisation charge proportional
to the depletion of estimated recoverable gold ounces contained in
Proved and Probable Ore Reserves.
(d) CAPITALISATION OF FINANCING COSTS
Interest, other financing costs and foreign exchange differences are
classified as part of development and mine properties where they relate
to funds raised for developing those properties. Interest earned on the
temporary investment of borrowed funds and funds received in connection
with the sale of equity securities prior to the expenditure being made
is deducted from interest paid on the borrowed funds in arriving at the
amounts so capitalised. These are amortised using the
unit-of-production method based on recoverable gold ounces.
7
<PAGE> 10
LIHIR GOLD LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 1997
(e) MINE BUILDINGS, MACHINERY AND EQUIPMENT
The cost of each item of buildings, machinery and equipment is
depreciated over its expected useful life. For the majority of assets
this is accomplished using the unit-of-production method based on
recoverable ounces, although some assets are depreciated using a
percentage based on time. Each item's economic life has due regard to
both physical life limitations and to present assessments of
economically recoverable reserves of the mine property (where
appropriate) and to possible future variations in those assessments.
Estimates of remaining useful lives are made on a regular basis for all
assets, with annual reassessments for major items.
The total net carrying values of mine building, machinery and equipment
at each mine property are reviewed regularly and, to the extent to
which these values exceed their recoverable amounts, that excess is
fully provided against in the financial year in which this is
determined.
Major spares purchased specifically for particular plant are included
in the cost of plant and are depreciated over the expected useful life
of the item of plant.
(f) REMAINING MINE LIVES
In estimating the remaining life of the mine at each mine property for
the purpose of amortisation and depreciation calculations, due regard
is given, not only to the volume of remaining recoverable mineral
reserves, but also to limitations which could arise from the potential
for changes in technology, demand, product substitution and other
issues which are inherently difficult to estimate over a lengthy time
frame.
(g) RECOVERABLE AMOUNTS
Annually, or more frequently if circumstances require, an assessment is
made of the carrying value of assets, in order to determine whether, in
the opinion of the directors, it is reasonable to believe that the
carrying value of the assets will be recovered over the expected
remaining life of the mine. This is calculated by comparing
undiscounted future cash flows, based on estimated future sales prices
and operating and capital costs, with current net carrying values. If
the difference is material then a write down to the estimated
recoverable amount is made with a charge to profit as an abnormal item.
(h) RESTORATION, REHABILITATION AND ENVIRONMENTAL EXPENDITURE
Restoration, rehabilitation and environmental expenditure to be
incurred during the production phase of operations is accrued when the
need for such expenditure is established, and then written off as part
of the cost of production. Significant restoration, rehabilitation and
environmental
8
<PAGE> 11
LIHIR GOLD LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 1997
expenditure to be incurred subsequent to the cessation of production at
each mine property is accrued, in proportion to production, provided
the amount of expenditure can be reasonably estimated.
(i) INVENTORIES
Inventories of ore and metal are physically measured or estimated and
valued at the lower of cost and net realisable value.
Cost comprises direct material, labour and transportation expenditure
in getting such inventories to their existing location and condition,
together with an appropriate portion of fixed and variable overhead
expenditure and depreciation and amortisation, based on weighted
average costs incurred during the period in which such inventories are
produced. Net realisable value is the amount estimated to be obtained
from sale of the item of inventory in the normal course of business,
less any anticipated costs to be incurred prior to its sale.
Inventories of consumable supplies and spare parts expected to be used
in production are valued at the lower of weighted average cost, which
includes the cost of purchase as well as transportation and statutory
charges, and net realisable value.
(j) DEFERRED MINING COSTS
Direct expenditure on mining is brought to account for each phase of
the mine's development based on the estimated ratio of waste to ore for
that phase. During the mining period the actual ratio of waste to ore
removed for each phase varies from year to year. In periods where more
than the average amount of waste is removed the surplus is transferred
to the deferred mining cost account. It is subsequently expensed during
periods where the waste to ore ratio is less than the average. The
average amount of waste to be removed is assessed according to each
mining phase, and not over the entire life of the mine.
(k) REVENUE RECOGNITION
Sales are recognised as revenue only when there has been a passing of
risk to the customer, and:
o the product is in a form suitable for delivery and no further
processing is required by, or on behalf of, the Company;
o the quantity and quality (grade) of the product can be determined
with reasonable accuracy;
9
<PAGE> 12
LIHIR GOLD LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 1997
o the product has been despatched to the customer and is no longer
under the physical control of the Company (or property in the
product has earlier passed to the customer); and
o the selling price can be measured reliably.
Sales revenue represents the gross proceeds receivable from the
customer.
Revenue received from sale/disposal of product, materials or services
during the exploration, expenditure or development phases of operations
is offset against expenditure in respect of the area of
interest/mineral resource concerned.
(l) GOLD HEDGING
Hedging is undertaken to ensure a minimum level of income, and not for
speculative purposes. Any costs incurred in purchasing options, forward
contracts and other derivative instruments are capitalised, and charged
to profit when the position expires, either through delivery of the
underlying gold or through the passage of time. All unrealised gains
and losses are also brought to account upon expiry, and not
progressively through time. The Company does not trade derivative
financial instruments.
(m) EMPLOYEE ENTITLEMENTS
(i) Wages and Salaries
A liability for wages and salaries is recognised, and measured
as the amount unpaid at balance date at current pay rates in
respect of employees' services up to that date.
(ii) Annual and Long Service Leave
A liability for annual and long service leave is recognised and
measured with reference to existing entitlements and salary and
measured as the amount unpaid at balance date at current pay
rates in respect of employee's services up to that date.
(n) FOREIGN CURRENCY TRANSLATION
As the Company's turnover is denominated in US dollars and the majority
of its fixed asset purchases and costs are in US dollars or currencies
related to US dollars, the Company's Directors have adopted the US
dollar as the Company's functional and management reporting currency.
10
<PAGE> 13
LIHIR GOLD LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 1997
(o) INCOME TAX
Tax effect accounting procedures are followed whereby the income tax
expense in the profit and loss account is matched with the accounting
profit (after allowing for permanent differences). The future tax
benefit relating to tax losses is not carried forward as an asset
unless the benefit is assured beyond any reasonable doubt. Income tax
on net cumulative timing differences is set aside to the deferred
income tax and future income tax benefit accounts at the rates which
are expected to apply when those timing differences reverse.
(p) LEASES
Leases of fixed assets where substantially all the risks and benefits
incidental to the ownership of the asset, but not the legal ownership
transferred to the Company, are classified as finance leases. Finance
leases are capitalised, recording an asset and liability equal to the
present value of the minimum lease payments, including any guaranteed
residual values. Leased assets are amortised over their estimated
useful lives. Lease payments are allocated between the reduction of the
lease liability and the lease interest expense for the period.
Lease payments for operating leases, where substantially all the risks
and benefits remain with the lessor, are charged as expenses in the
periods in which they are incurred.
(q) CASH
For the purpose of the statement of cash flows, cash includes:
(i) cash on hand and in at call deposits with banks or financial
institutions, net of bank overdrafts; and
(ii) investments in money market instruments with less than 90 days
to maturity.
(r) COMPARATIVE FIGURES
Where necessary, comparative figures have been adjusted to conform with
changes in presentation in the current year.
11
<PAGE> 14
LIHIR GOLD LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 1997
(s) ROUNDING OF AMOUNTS
The financial statements and directors' report have been rounded to the
nearest thousand dollars.
NOTE 2: SPECIAL MINING LEASE
The Special Mining Lease was issued on 17 March, 1995 and has a term of 40
years. Under the Mining Act it may be renewed for subsequent 20 year periods at
the discretion of the PNG Government.
NOTE 3: REQUIREMENTS REGARDING CASH RESERVES
The Papua New Guinea Central Banking (Foreign Exchange and Gold) Regulations
generally require PNG companies to hold all cash reserves in Kina. Prior
approval of the Bank of Papua New Guinea is required to convert funds from Kina
into other currencies.
Under the Mining Development Contract, however, the Company has permission to
retain funds in foreign currencies to meet its obligations.
NOTE 4: DIVIDEND RESTRICTIONS
The Loan Agreement prohibits the payment of dividends by the Company prior to
Completion (as defined in the Loan Agreement) and permits the payment of
dividends thereafter only on the quarterly payment dates under the Loan
Agreement and only if certain conditions are met, including a condition that
after payment of such dividends and all other payments required under the Loan
Agreement the company has a specified minimum cash balance in an offshore
account and a Debt Cover ratio (as defined in the Loan Agreement) of not less
than 1.25:1.
NOTE 5: OPERATING PROFIT
<TABLE>
<CAPTION>
US$ 000
1997 1996 1995 1994
<S> <C> <C> <C> <C>
Operating profit before taxation has been determined
after crediting / (charging):
Interest income 633 -- -- --
Interest expense and finance expenses (7,226) -- -- --
Royalties on sales (1,151) -- -- --
Foreign exchange gains and (losses) 30 -- -- --
Provisions for employee benefits (207) -- -- --
</TABLE>
12
<PAGE> 15
LIHIR GOLD LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 1997
NOTE 6: CASH
<TABLE>
<CAPTION>
US$ 000
1997 1996 1995 1994
<S> <C> <C> <C> <C>
Cash at bank and on hand 5,364 8,600 1,372 --
At call deposits with financial institutions 25,276 35,402 149,012 --
Treasury bills and commercial paper -- -- 212,715 --
------- ------- ------- -------
30,640 44,002 363,099 --
------- ------- ------- -------
</TABLE>
NOTE 7: STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
US$ 000
1997 1996 1995 1994
<S> <C> <C> <C> <C>
Reconciliation of cash flow from operating
activities to operating profit after tax
Net cash flow from operating activities 998 -- -- --
Depreciation and amortisation (8,918) -- -- --
Accumulated depreciation - disposed assets 17 -- -- --
Increase/(Decrease) in debtors 4,665 -- -- --
Increase/(Decrease) in inventories 11,442 -- -- --
Increase/(Decrease) in future income tax benefit 64 -- -- --
Increase/(Decrease) in other assets 9,642 -- -- --
Decrease/(Increase) in creditors (548) -- -- --
Decrease/(Increase) in deferred tax (5,869) -- -- --
Decrease/(Increase) in other provisions 308 -- -- --
------- ------- ------- -------
Operating profit after tax 11,801 -- -- --
------- ------- ------- -------
</TABLE>
Movements in assets and liabilities relate to the period since the commencement
of commercial production.
13
<PAGE> 16
LIHIR GOLD LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 1997
NOTE 8: INVENTORIES
<TABLE>
<CAPTION>
US$ 000
1997 1996 1995 1994
<S> <C> <C> <C> <C>
CURRENT
Stores 14,354 -- -- --
Production work in progress 4,811 -- -- --
Ore stockpiles 2,788 -- -- --
-------- -------- -------- --------
Total current inventories 21,953 -- -- --
NON-CURRENT
Ore stockpiles 4,262 -- -- --
-------- -------- -------- --------
Total inventories 26,215 -- -- --
-------- -------- -------- --------
</TABLE>
NOTE 9: RECEIVABLES AND PREPAYMENTS
<TABLE>
<CAPTION>
US$ 000
1997 1996 1995 1994
<S> <C> <C> <C> <C>
CURRENT
Prepayments 2,969 33 41 --
Insurance claims receivable 805 -- -- --
Other amounts receivable from:
- - third parties 2,508 -- -- --
- - other related bodies corporate -- 9 379 --
------- ------- ------- -------
6,282 42 420 --
NON-CURRENT
Prepayments 413 -- -- --
Other amounts receivable 5 -- -- --
------- ------- ------- -------
418 -- -- --
------- ------- ------- -------
Total amounts receivable and prepayments 6,700 42 420 --
------- ------- ------- -------
</TABLE>
14
<PAGE> 17
LIHIR GOLD LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 1997
NOTE 10: OTHER ASSETS
<TABLE>
<CAPTION>
US$ 000
1997 1996 1995 1994
<S> <C> <C> <C> <C>
CURRENT
Future income tax benefit 25 -- -- --
Hedging costs 3,246 -- -- --
Deferred mining costs: 3,049 -- -- --
---------- ---------- ---------- ----------
6,320 -- -- --
NON-CURRENT
Future income tax benefit 39 -- -- --
Hedging costs 17,250 20,496 -- --
Deferred mining costs: 9,443 -- -- --
---------- ---------- ---------- ----------
26,732 20,496 -- --
---------- ---------- ---------- ----------
Total Other Assets 33,052 20,496 -- --
---------- ---------- ---------- ----------
</TABLE>
NOTE 11: DEVELOPMENT AND MINING PROPERTIES
<TABLE>
<CAPTION>
US$ 000
1997 1996 1995 1994
<S> <C> <C> <C> <C>
DEVELOPMENT PROPERTIES
Cost brought forward 670,412 268,235 151,624 146,005
Additions 240,014 407,246 113,823 5,619
Interest received (12,275) (18,240) (7,266) --
Borrowing costs -- 13,171 10,054 --
Transfers to mining properties (894,579) -- -- --
---------- ---------- ---------- ----------
Costs carried forward 3,572 670,412 268,235 151,624
PLANT AND EQUIPMENT
Cost brought forward -- -- -- --
Transfers from development properties 412,225 -- -- --
Disposals (201) -- -- --
---------- ---------- ---------- ----------
Cost carried forward 412,024 -- -- --
Depreciation brought forward -- -- -- --
Charge for the year (4,566) -- -- --
</TABLE>
15
<PAGE> 18
LIHIR GOLD LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 1997
<TABLE>
<S> <C> <C> <C> <C>
Disposals 17 -- -- --
---------- ---------- ---------- ----------
Depreciation carried forward (4,549) -- -- --
---------- ---------- ---------- ----------
Net book value 407,475 -- -- --
---------- ---------- ---------- ----------
LAND AND BUILDINGS
Cost brought forward -- -- --
Transfers from development properties 71,496 -- -- --
Disposals -- -- --
---------- ---------- ---------- ----------
Cost carried forward 71,496 -- -- --
Depreciation brought forward -- -- -- --
Charge for the year (643) -- -- --
Disposals -- -- -- --
---------- ---------- ---------- ----------
Depreciation carried forward (643) -- -- --
---------- ---------- ---------- ----------
Net book value 70,853 -- -- --
---------- ---------- ---------- ----------
CAPITALISED EXPLORATION
Cost brought forward -- -- -- --
Transfers from development properties 146,374 -- -- --
Disposals -- -- -- --
---------- ---------- ---------- ----------
Cost carried forward 146,374 -- -- --
Depreciation brought forward -- -- -- --
Charge for the year (1,317) -- -- --
Disposals -- -- -- --
---------- ---------- ---------- ----------
Depreciation carried forward (1,317) -- -- --
---------- ---------- ---------- ----------
Net book value 145,057 -- -- --
---------- ---------- ---------- ----------
DEFERRED EXPENDITURE
Cost brought forward -- -- -- --
Transfers from development properties 264,484 -- -- --
Disposals -- -- -- --
---------- ---------- ---------- ----------
Cost carried forward 264,484 -- -- --
Depreciation brought forward -- -- -- --
Charge for the year (2,392) -- -- --
</TABLE>
16
<PAGE> 19
LIHIR GOLD LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 1997
<TABLE>
<S> <C> <C> <C> <C>
Disposals -- -- -- --
---------- ---------- ---------- ----------
Depreciation carried forward (2,392) -- -- --
---------- ---------- ---------- ----------
Net book value 262,092 -- -- --
---------- ---------- ---------- ----------
TOTAL MINING PROPERTIES
Cost brought forward -- -- -- --
Transfers from development properties 894,579 -- -- --
Disposals (201) -- -- --
---------- ---------- ---------- ----------
Cost carried forward 894,378 -- -- --
Depreciation brought forward -- -- -- --
Charge for the year (8,918) -- -- --
Disposals 17 -- -- --
---------- ---------- ---------- ----------
Depreciation carried forward (8,901) -- -- --
Net book value 885,477 -- -- --
---------- ---------- ---------- ----------
TOTAL DEVELOPMENT AND MINING PROPERTIES 889,049 -- -- --
---------- ---------- ---------- ----------
</TABLE>
NOTE 12: ACCOUNTS PAYABLE
<TABLE>
<CAPTION>
US$ 000
1997 1996 1995 1994
<S> <C> <C> <C> <C>
CURRENT
Trade creditors and accruals 17,510 50,100 9,492 --
Amounts payable to related bodies 1,949 955 562 --
---------- ---------- ---------- ----------
19,459 51,055 10,054 --
---------- ---------- ---------- ----------
</TABLE>
NOTE 13: PROVISIONS
<TABLE>
<CAPTION>
US$ 000
1997 1996 1995 1994
<S> <C> <C> <C> <C>
CURRENT
Employee provisions - current 579 516 218 --
NON CURRENT
Employee provisions - non current 262 -- -- --
Deferred income tax 5,869 -- -- --
---------- ---------- ---------- ----------
6,131 -- -- --
---------- ---------- ---------- ----------
Total provisions 6,710 516 218 --
---------- ---------- ---------- ----------
</TABLE>
17
<PAGE> 20
LIHIR GOLD LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 1997
NOTE 14: INCOME TAX
INCOME TAX EXPENSE HAS BEEN CALCULATED AS FOLLOWS:
<TABLE>
<CAPTION>
US$ 000
1997 1996 1995 1994
<S> <C> <C> <C> <C>
PROFIT FOR THE YEAR 18,139 -- -- --
Prima facie income tax charge on operating profit at 35% 6,348 -- -- --
Tax effect of permanent differences
Exempt interest income (10) -- -- --
---------- ---------- ---------- ----------
6,338 --
DEFERRED TAX PROVISION
Balance carried forward (5,869) -- -- --
This balance comprises the tax effect of:
Depreciation (5,033) -- -- --
Other (836) -- -- --
---------- ---------- ---------- ----------
(5,869) -- -- --
---------- ---------- ---------- ----------
FUTURE INCOME TAX BENEFIT
Balance carried forward 64 -- -- --
This balance comprises the tax effect of:
Provisions 39 -- -- --
Other 25 -- -- --
---------- ---------- ---------- ----------
64 -- -- --
---------- ---------- ---------- ----------
</TABLE>
18
<PAGE> 21
LIHIR GOLD LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 1997
NOTE 15: REMUNERATION AND RETIREMENT BENEFITS
(a) Directors' and Executive Officers' Remuneration
<TABLE>
<CAPTION>
DIRECTORS SALARY AND
FEES OTHER BENEFITS
US$ US$
<S> <C> <C>
Baylis, Joseph -- --
Collier, John -- --
Garnaut, Ross 68,511 30,000
Ives, Glenn (alternate for Ian Telfer) -- --
Kulala, John (alternate for Charles Lepani) -- --
Lepani, Charles -- --
Louden, Geoff -- --
O'Reilly, John -- 354,200
Siaguru, Anthony 23,733 --
Soipang, Mark 4,153 --
Taylor, Meg 23,733 --
Tauvasa, Joe (Retired) -- --
Thomas, Gavin (Retired) -- --
Telfer, Ian -- --
Vickerman, Andrew -- 252,800
</TABLE>
In addition, during the year the Company paid a premium of US$45,000 for
insurance to cover liability whilst acting as a director or executive officer.
This policy was organised through the Rio Tinto Group Global Insurance
Programme.
(b) The number of employees, including executive directors, whose remuneration
and benefits exceeded K100,000 fall into the following bands:
<TABLE>
<CAPTION>
REMUNERATION AND BENEFIT BAND NUMBER OF EMPLOYEES
US$ PGK
<S> <C> <C>
$59,330 - $65,263 K100,000 - K110,000 7
$65,264 - $71,196 K110,001 - K120,000 4
$71,197 - $77,129 K120,001 - K130,000 18
$77,130 - $83,062 K130,001 - K140,000 6
$83,063 - $88,995 K140,001 - K150,000 9
$88,996 - $94,928 K150,001 - K160,000 4
$94,929 - $100,861 K160,001 - K170,000 6
$112,727 - $118,660 K190,001 - K200,000 4
$124,593 - $130,526 K210,001 - K220,000 1
$136,459 - $142,392 K230,001 - K240,000 1
$172,057 - $177,990 K290,001 - K300,000 1
$249,186 - $255,119 K420,001 - K430,000 1
$350,047 - $355,980 K590,001 - K600,000 1
</TABLE>
19
<PAGE> 22
LIHIR GOLD LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 1997
NOTE 16: RETIREMENT BENEFITS
Senior employees of the Company participate in a retirement benefit plan, and
contributions are made to the plan by the Company based on a fixed percentage of
the employee's base salary. Employer contributions during the year were
$447,000.
The Company also participates in the National Provident Fund of Papua New Guinea
in respect of its Papua New Guinean employees. Employer contributions during the
year amounted to $233,000.
NOTE 17: AUDITORS' REMUNERATION
<TABLE>
<CAPTION>
Amounts received or due and receivable by US$ 000
Company auditors for: 1997 1996 1995 1994
<S> <C> <C> <C> <C>
- - auditing the accounts 110 36 30 7
- - other services 51 90 747 5
</TABLE>
NOTE 18: SHARE CAPITAL
<TABLE>
<CAPTION>
US$ 000
1997 1996 1995 1994
<S> <C> <C> <C> <C>
(a) Authorised Capital
2 billion Ordinary Shares of K0.10 each 148,000 148,000 148,000 --
---------- --------- --------- --------
(b) Issued and Outstanding Capital
900,000,000 Ordinary Shares of K0.10 each, fully
paid 68,085 68,085 68,085 --
---------- --------- --------- --------
</TABLE>
(c) Share Options
In 1995 the Company granted to the Sponsors 7,200,000 share options at
a price 15% above the final institutional price of US$1.19 in
consideration for their agreement to underwrite the over-allotment
options under the Company's Global Offering. The option is valid for a
period of five years.
NOTE 19: RESERVES
<TABLE>
<CAPTION>
US$ 000
1997 1996 1995 1994
<S> <C> <C> <C> <C>
CAPITAL RESERVES
Share premium reserve 553,229 553,229 553,229 --
</TABLE>
NOTE 20: CAPITAL AND LEASING COMMITMENTS
(a) Operating Lease Commitments
<TABLE>
<CAPTION>
Non-cancellable Operating leases contracted for but US$ 000
not capitalised in the accounts 1997 1996 1995 1994
<S> <C> <C> <C> <C>
Payable
- not later than one year 426 249 944 834
- later than one year but not later than 2 years 296 17 302 775
- later than two years but not later than 5 years 374 -- -- 159
---------- --------- --------- --------
1,096 266 1,246 1,768
---------- --------- --------- --------
</TABLE>
(b) Capital Expenditure Commitments
<TABLE>
<CAPTION>
US$ 000
1997 1996 1995 1994
<S> <C> <C> <C> <C>
Capital expenditure commitments contracted for:
Capital expenditure projects 9,212 183,119 228,231 --
Payable
- not later than one year 9,212 183,119 195,755 --
- later than one year but not later than 2 years -- -- 32,476 --
---------- ---------- ---------- ----------
9,212 183,119 228,231 --
---------- ---------- ---------- ----------
</TABLE>
20
<PAGE> 23
LIHIR GOLD LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 1997
NOTE 21: CONTINGENT LIABILITIES
Guarantees
As part of the Company's support of Lihirian owned businesses, the Company has
provided a number of guarantees to various financiers in favour of Lihirian
companies. These guarantees total approximately US$5 million.
The Company has also arranged the supply of various bank guarantees to companies
with which the Company conducts business. The Company would be obliged to meet
any amounts called under these guarantees. These guarantees total approximately
US$10 million.
Claims
The Company has received claims totalling approximately US$2.5 million from
various contractors relating to the construction phase of the mine. The Company
believes that there is no basis to these claims.
Environmental and Rehabilitation Liability
The Company will be required to restore and rehabilitate the site upon
completion of mining activities. The extent to which these obligations may
involve future costs is not possible to measure at this point in time.
21
<PAGE> 24
LIHIR GOLD LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 1997
NOTE 22: FINANCE FACILITIES
<TABLE>
<CAPTION>
US$ 000
1997 1996 1995 1994
<S> <C> <C> <C> <C>
Loan facilities 326,528 330,000 310,000 --
Amount utilised (321,528) (60,000) -- --
---------- ---------- ---------- ----------
Unused loan facilities 5,000 270,000 310,000 --
---------- ---------- ---------- ----------
</TABLE>
The major facilities are summarised as follows:
(a) $300,000,000 Limited Recourse Project Financing Facility with a
syndicate of 25 banks, which expires on 11 August, 2005. Interest
payments under the facility are based on LIBOR plus a margin which
varies over time. Mandatory prepayments are required under the Loan
Agreement in certain conditions. There are certain conditions precedent
to each draw down. The Sponsors have guaranteed the facility until
Completion. The Company has provided a range of covenants and
warranties in relation to the facility. As at 31 December 1997
$295,000,000 (1996: $60,000,000) had been drawn down against this
facility.
The terms of the finance facility can be withdrawn on an event of
default occurring. The Loan Agreement includes the following "Events of
Default", among others: (a) failure to make any payment under any
Finance Agreement; (b) violations of any representations and
warranties, the effect of which is to have a material adverse effect on
the Project or the Company; (c) the Mining Development Contract,
Special Mining Lease, any Finance Agreement or any other material
Project Agreement has ceased to be a valid, binding and enforceable
agreement that is in full force and effect, or a party thereto has
defaulted in its obligations thereunder, and such cessation or default
has a material adverse effect on the Company's ability to meet Loan
Payments; (d) certain events of insolvency or bankruptcy; (e) the
acceleration of any other indebtedness of the Company in excess of $5
million; (f) the Lihir Project is abandoned; (g) a catastrophic
casualty has occurred and the Company is not undertaking repair and
reconstruction in accordance with the terms of the Loan Agreement; (h)
the Banks' security interest in certain material assets is not a valid,
perfected first priority security interest or any person other than the
Banks attaches assets of the Company having a net book value in the
aggregate of more than $1 million; (i) the Company fails to maintain
insurance required by the Loan Agreement; (j) the PNG government
expropriates the assets of the Company or takes any other action which
the Banks reasonably believe will have a material adverse effect on the
Lihir Project; (k) final judgments in excess of $5 million in aggregate
rendered against the Company remain unpaid, unstayed on appeal,
undischarged, unbonded or undismissed for a period of 90 days from the
22
<PAGE> 25
LIHIR GOLD LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 1997
date of entry; (l) the Manager is no longer wholly owned and controlled
by Rio Tinto at a time when the Management Agreement remains in effect;
(m) the Manager or Rio Tinto has committed a material default under the
Management Agreement or Technical Support Agreement, respectively,
which has a material adverse effect on the Lihir Project, or either of
these agreements is terminated, declared to be unenforceable or
expressly repudiated by any contracting party; (n) Rio Tinto fails to
maintain an indirect equity interest in the Company equal to the
greater of 15% or the amount held immediately following the Global
Offering (the "Rio Tinto Minimum Equity Percentage") or Southern Gold
ceases to be the direct beneficial holder of an equity interest in the
Company equal to the greater of 20% or the amount held immediately
following the Global Offering (the "Southern Gold Minimum Equity
Percentage"); (o) following Completion, the Banks determine, in the
exercise of reasonable good faith judgment, that by reason of a
material adverse change in or affecting the operation of the Lihir
Project the Company will be unable to make Loan Payments in full when
due; provided that neither the occurrence of (i) any event that is (or
with the passage of time would be) a political event covered under the
political risk insurance policies nor (ii) any change in the
international market price of gold, will be considered such a material
adverse change for purposes of this Event of Default; (p) Completion
has not occurred by December 31, 1999, subject to certain adjustments
due to force majeure events (provided that in no event shall the Final
Completion Date extend beyond June 30, 2000); (q) certain additional
convertibility or transfer restrictions are placed on the Company's
revenues which limit its ability to make Loan Payments; (r) the
occurrence of certain events of political violence which renders
impossible the continued construction or operation of the Lihir
Project; (s) an Unremedied Funding Shortfall has occurred and has
continued unremedied for a further period of 60 days; (t) any required
authorization, consent or approval is not obtained or is revoked; (u)
an event of default under the Completion Agreement has occurred, is
continuing and has not been cured; (v) certain hedging agreements
required under the Loan Agreement to ensure the availability to the
Company of funds to make Loan Payments cease to be in full force and
effect; (w) the political risk insurance policies cease to be in full
force and effect unless such event is caused by the Banks; and (x)
violation of any covenant in any Finance Agreement which violation has
a material adverse effect on the Project or the Company and continues
unremedied for 30 days after notice is given by the agent for the Banks
to the Company.
The Loan Agreement provides that immediately upon declaration of any
"Default" by the Banks, the agent for the Banks may take control of the
Kina and non-Kina accounts of the Company (subject to application of
the funds in such accounts in accordance with the terms of the Loan
Agreement) and has the right (a) to direct the activities of the
Manager under the Management Agreement, (b) to terminate the Management
Agreement for cause and (c) to appoint a successor to the Manager
(provided that the Banks may not take actions which would prevent the
Company from correcting such Default). Immediately following a Default
relating to the insolvency of the Company, an abandonment or any
expropriatory action or following a certain grace period with
23
<PAGE> 26
LIHIR GOLD LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 1997
respect to any other Default, the agent for the Banks (as instructed by
the Banks in accordance with the terms of the Loan Agreement) may
decide to take additional Enforcement Actions (which include applying
funds in the Kina and non-Kina accounts to the making of Loan Payments,
declaring the Loan principal immediately due and payable, exercising
any security interests in the collateral and taking other legal,
equitable or other remedial action or any other action available under
applicable law). Until December 31, 1999 or a later Final Completion
Date extended due to force majeure events (but in no event for more
than six months), so long as there is no continuing event of default
under the Completion Agreement and abandonment has not occurred, the
Banks may not exercise any remedies against the Company as long as the
Sponsors under the Completion Agreement are paying or causing to be
paid under the Completion Guarantee all obligations under the Loan
Agreement in accordance with their regularly scheduled maturities or
are awaiting the outcome of an arbitration as contemplated by the
Completion Agreement.
Covenants - The Company has agreed that during the term of the Loan
Agreement it will, among other things: (a) not engage in any business
other than the Lihir Project or any business related to other
exploration licenses granted by the PNG government (such other
businesses to be funded through shareholder equity, proceeds from
subordinated debt or funds from the Expansion Account); (b) with
certain exceptions, not sell, lease or otherwise dispose of any of the
Lihir Project assets except for the production of the Lihir Project;
(c) construct and operate the Lihir Project substantially in accordance
with the Approved Proposal for Development and good international
mining practice; (d) use its best efforts to procure Completion by
December 31, 1999; (e) not incur indebtedness for borrowed money in
addition to the Loan except certain subordinated loans and certain
permitted senior unsecured working capital facilities; (f) incur no
liens or encumbrances upon any Lihir Project assets, except permitted
encumbrances; (g) use the Loan proceeds solely for purposes of the
Lihir Project; (h) enter into hedging agreements as required by the
Loan Agreement to protect itself and the Banks against fluctuations in
the price of gold; (i) not terminate the Management Agreement or
appoint a successor Manager not wholly owned and controlled by Rio
Tinto, or amend the Management Agreement in any material respect
adverse to the Banks or the Company; and (j) indemnify the Banks
against certain liabilities they may incur arising out of use or
disposal by the Company of hazardous substances or failure by the
Company to comply with PNG environmental laws.
Security - the Company has provided to the syndicate of Banks a first
ranking security over all its assets.
(b) LOAN FACILITY EUROPEAN INVESTMENT BANK ("EIB")/ MINERAL RESOURCES
DEVELOPMENT COMPANY PTY LTD ("MRDC")
24
<PAGE> 27
LIHIR GOLD LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 1997
The Company entered into an Agreement with EIB and MRDC whereby the
European Investment Bank would lend funds to MRDC who would then
on-lend those funds to the Company. The amount of the loan is 25
million European Currency Units (ECU's) which was equivalent to
US$26.5 million when drawn down. The funds are provided to MRDC at a
concessional rate of interest. The interest rate payable by the Company
will be 8.42%. The Loan Principal is repayable in US Dollars by way of
16 semi-annual instalments commencing four years after loan signature.
The payment of interest under the Loan has been deferred during the
construction and early operating period, and will be repaid when
permitted under the Senior Debt Agreement. The Loan is unsecured.
EIB is with notice entitled to cancel the undisbursed portion of the
credit on exceptional circumstances arising which materially adversely
affects the relevant international capital markets or EIB's access
thereto or upon the occurrence of the various events which also entitle
EIB to demand repayment of the loan prior to the scheduled repayment
dates.
EIB is entitled to demand repayment of the loan from Mineral Resources
Development Company Pty Ltd ("MRDC") and which will trigger repayment
of the loan from MRDC to the Company immediately on among other things:
(a) where any documents or information provided by the Company is found
to be incorrect; (b) if the Company becomes insolvent or a receiver and
manager is appointed to any part of the assets or affairs of the
Company; (c) the Company's net worth reduces by a substantial amount;
and (d) the Company is following default on its main US$300 million
loan required to repay that loan. EIB is entitled to demand repayment
of the loan from MRDC within a reasonable period and which will trigger
repayment of the loan from MRDC to the Company on among other things:
(a) where the Company fails to comply with its obligations under the
Finance Contract with EIB and MRDC; and (b) if any event occurs in
relation to various project agreements or any other agreement or
permission in relation to the Lihir Project or the Company which has
the effect of stopping, indefinitely interrupting or materially
altering the terms of exploitation of the Lihir Project by the Company
or of materially and adversely affecting the financial or taxation
regime applicable to the revenues derived from the Lihir Project or
applicable to the Company.
MRDC is entitled, upon reasonable notice, to demand immediate repayment
of the loan in the event of the Company breaching the On-lending
Agreement and failing to remedy that breach.
The right of MRDC to receive repayment of the loan in the circumstances
mentioned above is subject to subordination terms under the Company's
US$300 million loan facility.
25
<PAGE> 28
LIHIR GOLD LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 1997
The following table details the profile of debt repayments:
<TABLE>
<CAPTION>
REPAYABLE IN LESS THAN ONE REPAYABLE IN ONE TO TWO REPAYABLE IN TWO TO FIVE REPAYABLE IN EXCESS OF
YEAR $000 YEARS $000 YEARS $000 FIVE YEARS $000
<S> <C> <C> <C>
22,220 44,440 240,438 19,430
</TABLE>
Interest accrued at 31 December 1997 was $4,403,000 (1996: $540,000).
NOTE 23: HEDGING INSTRUMENTS
The Company has entered into a series of agreements with financial institutions
in relation to future sales of gold. The purpose of these transactions is to
protect the level of income in future years, and it is not Company policy to
engage in speculative hedging activities.
The following tables summarise the hedging programme as at 31 December 1997:
PROGRAMME REQUIRED UNDER THE MAIN LOAN FACILITY
<TABLE>
<CAPTION>
YEAR OUNCES AVERAGE REVENUE ASSURED TYPE OF INSTRUMENT
STRIKE PRICE (US$ MILLION)
(US$/OZ)
<S> <C> <C> <C> <C>
1998 157,700 427.77 67.5 Mainly Put Options
1999 217,100 439.56 95.4 Mainly Put Options
2000 214,950 452.71 97.3 Mainly Put Options
2001 205,500 466.23 95.8 Mainly Put Options
2002 200,550 480.33 96.3 Mainly Put Options
-------- -------- ---------
995,800 454.21 452.3
</TABLE>
FLOATING FORWARDS PROGRAMME
<TABLE>
<CAPTION>
YEAR OUNCES AVERAGE REVENUE ASSURED TYPE OF INSTRUMENT
STRIKE PRICE (US$ MILLION)
(US$/OZ)
<S> <C> <C> <C> <C>
1998 50,000 383.25 19.2 Floating Forwards
1999 50,000 383.25 19.2 Floating Forwards
2000 50,000 383.25 19.2 Floating Forwards
-------- -------- ---------
150,000 383.25 57.6
</TABLE>
After 31 December 2000 there is a further maximum of 375,000 ounces available at
the same nominal strike price spaced over the succeeding 7 years. However,
whatever ounces remain in this programme during this period are cancelled if the
spot price is US$328 or below on a quarter end date. The price received over the
life of the programme is adjusted by the gold lease rate actually prevailing at
the value date.
26
<PAGE> 29
LIHIR GOLD LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 1997
SPOT DEFERRED FORWARDS
<TABLE>
<CAPTION>
YEAR OUNCES AVERAGE REVENUE ASSURED TYPE OF INSTRUMENT
STRIKE PRICE (US$ MILLION)
(US$/OZ)
<S> <C> <C> <C> <C>
1998 96,085 331.57 31.9 Spot Deferred Forwards
1998 100,000 323.66 32.4 Spot Deferred Forwards
-------- -------- ---------
196,085 327.92 64.3
</TABLE>
The minimum total revenue generated from these programmes will be US$574.2
million. Revenue generated from the same number of ounces at the prevailing spot
price at 31 December 1997 of US$290.17 per ounce would be US$389.4 million.
Unrealised gains in the value of the hedge book have not been brought to account
in the profit for the year.
There are six counterparties to these transactions, all of which are recognised
financial institutions with a minimum credit rating of Aa3. As at the 31
December 1997 the Company had spent $20.496m on the purchase of options. The
Company's risk in the event of any of the counterparties defaulting on their
contractual obligations is limited to the defaulting party's share of this
amount, together with any revenue that may be foregone in the case where the
defaulted strike price exceeds the prevailing spot price at the value date. The
Company does not expect any counterparty to fail to meet its obligations under
any programme.
The accounting treatment of the option premium is to defer the full amount, and
then to subsequently charge to Profit and Loss at each value date the cost of
those options that expire on that date.
The Company does not use financial instruments to hedge future interest rates or
foreign exchange transactions.
NOTE 24: SEGMENT REPORTING
The Company operates in the gold industry in Papua New Guinea.
27
<PAGE> 30
LIHIR GOLD LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 1997
NOTE 25: RELATED PARTY TRANSACTIONS
Transactions between related parties are on normal commercial terms and
conditions which are no more favourable than those available to other parties.
MANAGEMENT AGREEMENT
Lihir Management Company Pty Ltd (LMC), a wholly owned subsidiary of Rio Tinto
Plc, manages the Company and the Lihir Project pursuant to the Management
Agreement dated 17 March 1995. LMC receives a management fee for managing the
project.
There are three directors who are on the Board of the Company and LMC.
<TABLE>
<CAPTION>
US$ 000
Related Companies 1997 1996 1995 1994
<S> <C> <C> <C> <C>
The Rio Tinto Group supplies labour on a secondment
basis and bears expenses on behalf of the project
which are subsequently recharged to the project 1,943 1,567 1,127 640
LMC Management fee 2,815 3,644 875 123
</TABLE>
NOTE 26: FINANCIAL INSTRUMENTS RISK
(a) Interest rate risk
Details of finance facilities are shown in note 22. All loans are at
variable rates, with the exception of the EIB facility which is fixed
at a rate of 8.42%
(b) Exchange rate risk
The Company has no significant exposure to exchange rate risk, as
turnover and all finance failities are denominated in US dollars
(c) Market risk and credit risk
Financial instruments which subject the Company to market risk and
concentrations of credit risk consist primarily of forward contracts
and option contracts for gold. Details of the Company's hedging
programme are shown in note 23.
NOTE 27: RECONCILIATION TO US GAAP
The Company's accounting policies vary in certain important respects from the
accounting principles generally accepted in the United States ("US GAAP"). Such
differences principally affect the measurement of mineral development costs and
certain reclassification issues.
Exploration costs
For the purposes of US GAAP, the Company's policy is to expense exploration and
evaluation costs when incurred. When a commercial mineral deposit has been
identified and the decision has been made to formulate a mining plan, the costs
of developing the mine are capitalised. The Company's management determined that
a commercial mineral deposit existed in 1992 and for the purpose of US GAAP all
expenditure incurred since this date has been capitalised. In accordance with
the Company's mineral development properties accounting policy under IAS,
exploration and development costs of $113.7 million incurred prior to the date
that commercial feasibility was determined to exist have been capitalised as
part of the mineral development property asset. Under US GAAP such costs would
have been expensed.
28
<PAGE> 31
LIHIR GOLD LIMITED
NOTES TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 1997
RECONCILIATION TO GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN THE UNITED STATES
<TABLE>
<CAPTION>
US$ 000
1997 1996 1995 1994
<S> <C> <C> <C> <C>
SHAREHOLDERS' EQUITY IN ACCORDANCE WITH IAS GAAP 633,115 621,314 621,314 151,624
Adjusted as follows:
- - General and administrative costs expensed (34,430) (21,871) (7,298) (1,400)
- - Project financing (11,470) (11,470) (8,994) (1,900)
- - Depreciation 1,495 -- -- --
- - Deferred tax provision 3,873 -- -- --
Reversal of exploration and evaluation costs
incurred prior to identification of commercial
feasibility (113,700) (113,700) (113,700) (113,700)
---------- ---------- ---------- ----------
ACCUMULATED DEFICIT UNDER US GAAP (154,233) (147,041) (129,992) (117,000)
---------- ---------- ---------- ----------
SHAREHOLDERS' EQUITY UNDER US GAAP 478,883 474,273 491,322 34,624
========== ========== ========== ==========
NET INCOME/LOSS IN ACCORDANCE WITH IAS GAAP 11,801 -- -- --
Adjusted as follows:
- - General and administrative costs expensed (12,559) (14,573) (5,898) (2,100)
- - Depreciation 1,494 -- -- --
- - Income tax expense 3,873 -- -- --
NET INCOME UNDER US GAAP 4,609 (14,573) (5,898) (2,100)
========== ========== ========== ==========
NET EARNINGS/(LOSS) PER SHARE UNDER US GAAP $ 0.01 $ (0.02) $ (0.03) $ --
Weighted average number of shares outstanding during
the year 907,200 907,200 196,001 --
</TABLE>
The deferred tax benefit of the losses incurred under US GAAP up to 31 December
1996 has not been recognised in the above reconciliation. If the deferred tax
benefit were to be recognised, the shareholders' equity under US GAAP would be
US$526,332.
29
<PAGE> 32
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment to be signed
on its behalf by the undersigned, thereunto duly authorized.
BATTLE MOUNTAIN GOLD COMPANY
By /s/ Jeffrey L. Powers
---------------------------------------
Jeffrey L. Powers
Vice President and Controller
May 28, 1998
30
<PAGE> 33
INDEX OF EXHIBITS
Exhibit No. Document
- ---------- --------
*2(a) -- Plan of Arrangement of Hemlo Gold Mines Inc. under Section 182
of the Business Corporations Act (Ontario) (Annex D to Exhibit
20(a), Joint Management Information Circular and Proxy Statement,
to the Company's Current Report on Form 8-K dated June 11, 1996 ).
*2(b) -- Combination Agreement effective as of March 11, 1996 by and
between the Company and Hemlo Gold Mines Inc. (Annex C to Exhibit
20(a), Joint Management Information Circular and Proxy Statement,
to the Company's Current Report on Form 8-K dated June 11, 1996 ).
*3(a) -- Restated Articles of Incorporation of the Company, as amended
and restated through July 19, 1996 (Exhibit 3(a) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1996 ).
*3(b) -- Certificate of Resolution Establishing Designation, Preferences
and Rights of $3.25 Convertible Preferred Stock (Exhibit 4(b) to
the Company's Current Report on Form 8-K dated July 19, 1996 ).
*3(c) -- Certificate of Amendment of Certificate of Resolution
Establishing Designation, Preferences and Rights of Series A Junior
Participating Preferred Stock (Exhibit 4(c) to the Company's
Current Report on Form 8-K dated July 19, 1996 ).
*3(d) -- Bylaws of the Company, as amended through March 21, 1997
(Exhibit 3(d) to the Company's Annual Report on Form 10-K/A for the
year ended December 31, 1996 ).
*4(a) -- Rights Agreement, dated November 10, 1988, as amended and
restated as of July 19, 1996, between the Company and The Bank of
New York, as Rights Agent (Exhibit 4(e) to the Company's Current
Report on Form 8-K dated July 19, 1996 ).
*4(b) -- Voting, Support and Exchange Trust Agreement dated as of July
19, 1996 between the Company, Hemlo Gold Mines Inc. and CIBC Mellon
Trust Company (as successor to The R-M Trust Company) (Annex E to
Exhibit 20(a), Joint Management Information Circular and Proxy
Statement, to the Company's Current Report on Form 8-K dated June
11, 1996 ).
*4(c) -- Specimen Stock Certificate for the Common Stock of the Company
(Exhibit 4(b) to the Company's Annual Report on Form 10-K for the
year ended December 31, 1988 ).
E-1
<PAGE> 34
*4(d) -- Fiscal and Paying Agency Agreement, dated as of January 4,
1990, between the Company and Citibank, N.A., Fiscal Agent
(Exhibit 4(c) to the Company's Annual Report on Form 10-K for
the year ended December 31, 1989 ).
+*10(a)(1) -- Battle Mountain Gold Company 1988 Deferred Income Stock
Option Plan (As Amended Through May 18, 1995) (Exhibit 10(a)
to the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995 ).
=+10(a)(2) -- First Amendment to the Battle Mountain Gold Company 1988
Deferred Income Stock Option Plan (As Amended Through May 18,
1995), effective February 5, 1998.
+*10(b)(1) -- 1985 Stock Option Plan of the Company, as amended and
restated effective April 7, 1993 (Exhibit 10(a) to the
Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1993 ).
+*10(b)(2) -- First Amendment to 1985 Stock Option Plan of the Company,
effective May 12, 1995 (Exhibit 10(b)(1) to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30,
1995 ).
+o*10(c)(1) -- Form of the Company's Severance Agreement with Jeffrey L.
Powers, Controller of the Company, regarding certain benefits
payable in the event of change of control of the Company
(Exhibit 10(f) to the Company's Annual Report on Form 10-K for
the year ended December 31, 1986; File No. 0-13728).
=+10(c)(2) -- Battle Mountain Gold Company Change In Control Severance
Plan, effective December 2, 1997.
+*10(d) -- Battle Mountain Gold Company Contribution Equalization Plan,
as amended and restated effective as of November 10, 1988
(Exhibit 10(h) to the Company's Annual Report on Form 10-K for
the year ended December 31, 1992 ).
+*10(e)(1) -- Battle Mountain Gold Company Executive Productivity Bonus
Plan, as amended and restated effective January 1, 1994
(Exhibit 10(i) to the Company's Annual Report on Form 10-K for
the year ended December 31, 1993 ).
=+10(e)(2) -- Battle Mountain Gold Company 1997 Incentive Bonus Plan.
*10(f)(1) -- Battle Mountain Gold Company Non-Qualified Stock Option Plan
for Outside Directors (Exhibit 10(m) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1991 ).
*10(f)(2) -- Amendment to Battle Mountain Gold Company Non-Qualified
Stock Option Plan for Outside Directors effective January 1,
1995 (Exhibit 10(j)(2) to the Company's Annual Report on Form
10-K for the year ended December 31, 1994 ).
E-2
<PAGE> 35
*10(g) -- Heads of Agreement, dated March 23, 1989, among the Company,
Niugini Mining Limited and the individuals listed on the
signature page thereto (Exhibit 10(k) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1988).
+*10(h)(1) -- Amended and Restated 1994 Long-Term Incentive Plan of Battle
Mountain Gold Company, as of January 1, 1997 (Appendix B to the
Company's definitive Proxy Statement dated March 28, 1997 and
filed with the Commission on March 28, 1997).
+*10(h)(2) -- Specimen of the Company's 1994 Long-Term Incentive Plan
Non-Qualified Stock Option Agreement (Exhibit 10(c)(1) to the
Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995 ).
+*10(h)(3) -- Specimen of the Company's 1994 Long-Term Incentive Plan
Incentive Stock Option Agreement (Exhibit 10(c)(2) to the
Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995 ).
+*10(h)(4) -- Specimen of the Company's 1994 Long-Term Incentive Plan
Restricted Stock Agreement (Exhibit 10(a)(4) to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31,
1994 ).
+*10(h)(5) -- Specimen of the Company's 1994 Long-Term Incentive Plan
Performance Unit Agreement (Exhibit 10(n)(5) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1994).
+*10(i)(1) -- Specimen Split-Dollar Agreement (Individual) (Exhibit 10(o)(1)
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1994 ).
+*10(i)(2) -- Specimen Amendment to Split-Dollar Agreement (Individual)
(Exhibit 10(o)(2) to the Company's Annual Report on Form 10-K for
the year ended December 31, 1994 ).
+*10(i)(3) -- Specimen Split-Dollar Agreement (Trustee) (Exhibit 10(o)(3) to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1994 ).
+*10(i)(4) -- Specimen Amendment to Split-Dollar Agreement (Trustee)
(Exhibit 10(o)(4) to the Company's Annual Report on Form 10-K for
the year ended December 31, 1994 ).
=+10(j)(1) -- Battle Mountain Gold Company Supplemental Executive Retirement
Plan As Amended and Restated December 2, 1997 .
+o*10(j)(2) -- Specimen of the Company's Supplemental Executive Retirement
Plan Agreement (Exhibit 10(b) to the Company's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1995 ).
E-3
<PAGE> 36
*10(k) -- Registration Rights Agreement, dated as of July 19, 1996,
between Noranda Inc., Kerr Addison Mines Limited and the Company
(Exhibit 10(a) to the Company's Current Report on Form 8-K dated
July 19, 1996 ).
+o*10(l) -- Specimen of Employment Agreements dated March 11, 1996 between
the Company and certain executive officers (Exhibit 10(m) to the
Company's Annual Report on Form 10-K for the year ended December
31, 1996 ).
+*10(m) -- Consulting Agreement effective as of March 1, 1997 between the
Company and Karl E. Elers (Exhibit 10(n) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1996 ).
*10(n) -- Credit Agreement, dated as of March 31, 1997, among Battle
Mountain Gold Company and Battle Mountain Canada Ltd., the Banks
named therein and Citibank, N.A. as U.S. Administrative Agent and
Citibank Canada as Canadian Administrative Agent (Exhibit 10(a)
to the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997 ).
*10(o)(1) -- Investment Agreement, dated May 22, 1992, between Empresa
Minera Inti Raymi S.A. and International Finance Corporation
(Exhibit 4(e) to the Company's Annual Report on Form 10-K for the
year ended December 31, 1992).
*10(o)(2) -- Amendment to Investment Agreement and Waiver, effective as of
December 31, 1994, between Empresa Minera Inti Raymi S.A. and
International Finance Corporation (Exhibit 4(a) to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31,
1995).
*10(p)(1) -- Finance Agreement, dated as of September 14, 1992, between
Empresa Minera Inti Raymi S.A. and Overseas Private Investment
Corporation (Exhibit 4(f) to the Company's Annual Report on Form
10-K for the year ended December 31, 1992).
*10(p)(2) -- First Amendment to Finance Agreement and Limited Waiver,
effective as of December 31, 1994, between Empresa Minera Inti
Raymi S.A. and Overseas Private Investment Corporation (Exhibit
4(f)(2) to the Company's Annual Report on Form 10-K for the year
ended December 31, 1994).
*10(p)(3) -- Letter Agreement dated December 31, 1994, among Overseas
Private Investment Corporation, Battle Mountain Gold Company,
Kori Kollo Corporation and Zeland Mines, S.A. (Exhibit 4(c) to
the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995).
E-4
<PAGE> 37
*10(q)(1) -- Loan Agreement, dated June 29, 1992, between Empresa Minera
Inti Raymi S.A. and Corporacion Andina de Fomento (English
translation) (Exhibit 4(g) to the Company's Annual Report on Form
10-K for the year ended December 31, 1992).
*10(q)(2) -- Amendment to Loan Agreement, effective as of December 31,
1994, between Empresa Minera Inti Raymi S.A. and Corporacion
Andina de Fomento (English translation) (Exhibit 4(b) to the
Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995).
*10(r) -- Credit Agreement, dated September 30, 1997, between Canadian
Imperial Bank of Commerce and Battle Mountain Canada Ltd.
(Exhibit 10 to the Company's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1997 ).
=11 -- Computation of Earnings Per Common Share.
=18 -- Letter regarding change in accounting method.
=21 -- Subsidiaries of the Company.
=23(a) -- Consent of Price Waterhouse LLP.
=23(b) -- Consent of Ernst & Young.
23(c) -- Consent of Coopers & Lybrand.
=27 -- Financial Data Schedule.
- ------------------------
* Incorporated by reference as indicated.
+ Represent management contracts or compensatory plans or
arrangements required to be filed as exhibits to this Annual Report
by Item 601(10)(iii) of Regulation S-K.
= Previously filed.
o Pursuant to Instruction 2 accompanying paragraph (a) and the
Instruction accompanying paragraph (b)(10)(iii)(B)(6) of Item 601
of Regulation S-K, the registrant has not filed each executive
officer's individual agreement with the Company as an exhibit
hereto. The registrant has agreements substantially identical to
Exhibit 10(m) above with each of Messrs. Bayer, Atkinson, Baylis
and Keyes.
E-5
<PAGE> 38
INDEX OF EXHIBITS
Exhibit No. Document
- ---------- --------
*2(a) -- Plan of Arrangement of Hemlo Gold Mines Inc. under Section 182
of the Business Corporations Act (Ontario) (Annex D to Exhibit
20(a), Joint Management Information Circular and Proxy Statement,
to the Company's Current Report on Form 8-K dated June 11, 1996 ).
*2(b) -- Combination Agreement effective as of March 11, 1996 by and
between the Company and Hemlo Gold Mines Inc. (Annex C to Exhibit
20(a), Joint Management Information Circular and Proxy Statement,
to the Company's Current Report on Form 8-K dated June 11, 1996 ).
*3(a) -- Restated Articles of Incorporation of the Company, as amended
and restated through July 19, 1996 (Exhibit 3(a) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1996 ).
*3(b) -- Certificate of Resolution Establishing Designation, Preferences
and Rights of $3.25 Convertible Preferred Stock (Exhibit 4(b) to
the Company's Current Report on Form 8-K dated July 19, 1996 ).
*3(c) -- Certificate of Amendment of Certificate of Resolution
Establishing Designation, Preferences and Rights of Series A Junior
Participating Preferred Stock (Exhibit 4(c) to the Company's
Current Report on Form 8-K dated July 19, 1996 ).
*3(d) -- Bylaws of the Company, as amended through March 21, 1997
(Exhibit 3(d) to the Company's Annual Report on Form 10-K/A for the
year ended December 31, 1996 ).
*4(a) -- Rights Agreement, dated November 10, 1988, as amended and
restated as of July 19, 1996, between the Company and The Bank of
New York, as Rights Agent (Exhibit 4(e) to the Company's Current
Report on Form 8-K dated July 19, 1996 ).
*4(b) -- Voting, Support and Exchange Trust Agreement dated as of July
19, 1996 between the Company, Hemlo Gold Mines Inc. and CIBC Mellon
Trust Company (as successor to The R-M Trust Company) (Annex E to
Exhibit 20(a), Joint Management Information Circular and Proxy
Statement, to the Company's Current Report on Form 8-K dated June
11, 1996 ).
*4(c) -- Specimen Stock Certificate for the Common Stock of the Company
(Exhibit 4(b) to the Company's Annual Report on Form 10-K for the
year ended December 31, 1988 ).
E-1
<PAGE> 39
*4(d) -- Fiscal and Paying Agency Agreement, dated as of January 4,
1990, between the Company and Citibank, N.A., Fiscal Agent
(Exhibit 4(c) to the Company's Annual Report on Form 10-K for
the year ended December 31, 1989 ).
+*10(a)(1) -- Battle Mountain Gold Company 1988 Deferred Income Stock
Option Plan (As Amended Through May 18, 1995) (Exhibit 10(a)
to the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995 ).
=+10(a)(2) -- First Amendment to the Battle Mountain Gold Company 1988
Deferred Income Stock Option Plan (As Amended Through May 18,
1995), effective February 5, 1998.
+*10(b)(1) -- 1985 Stock Option Plan of the Company, as amended and
restated effective April 7, 1993 (Exhibit 10(a) to the
Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1993 ).
+*10(b)(2) -- First Amendment to 1985 Stock Option Plan of the Company,
effective May 12, 1995 (Exhibit 10(b)(1) to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30,
1995 ).
+o*10(c)(1) -- Form of the Company's Severance Agreement with Jeffrey L.
Powers, Controller of the Company, regarding certain benefits
payable in the event of change of control of the Company
(Exhibit 10(f) to the Company's Annual Report on Form 10-K for
the year ended December 31, 1986; File No. 0-13728).
=+10(c)(2) -- Battle Mountain Gold Company Change In Control Severance
Plan, effective December 2, 1997.
+*10(d) -- Battle Mountain Gold Company Contribution Equalization Plan,
as amended and restated effective as of November 10, 1988
(Exhibit 10(h) to the Company's Annual Report on Form 10-K for
the year ended December 31, 1992 ).
+*10(e)(1) -- Battle Mountain Gold Company Executive Productivity Bonus
Plan, as amended and restated effective January 1, 1994
(Exhibit 10(i) to the Company's Annual Report on Form 10-K for
the year ended December 31, 1993 ).
=+10(e)(2) -- Battle Mountain Gold Company 1997 Incentive Bonus Plan.
*10(f)(1) -- Battle Mountain Gold Company Non-Qualified Stock Option Plan
for Outside Directors (Exhibit 10(m) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1991 ).
*10(f)(2) -- Amendment to Battle Mountain Gold Company Non-Qualified
Stock Option Plan for Outside Directors effective January 1,
1995 (Exhibit 10(j)(2) to the Company's Annual Report on Form
10-K for the year ended December 31, 1994 ).
E-2
<PAGE> 40
*10(g) -- Heads of Agreement, dated March 23, 1989, among the Company,
Niugini Mining Limited and the individuals listed on the
signature page thereto (Exhibit 10(k) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1988).
+*10(h)(1) -- Amended and Restated 1994 Long-Term Incentive Plan of Battle
Mountain Gold Company, as of January 1, 1997 (Appendix B to the
Company's definitive Proxy Statement dated March 28, 1997 and
filed with the Commission on March 28, 1997).
+*10(h)(2) -- Specimen of the Company's 1994 Long-Term Incentive Plan
Non-Qualified Stock Option Agreement (Exhibit 10(c)(1) to the
Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995 ).
+*10(h)(3) -- Specimen of the Company's 1994 Long-Term Incentive Plan
Incentive Stock Option Agreement (Exhibit 10(c)(2) to the
Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995 ).
+*10(h)(4) -- Specimen of the Company's 1994 Long-Term Incentive Plan
Restricted Stock Agreement (Exhibit 10(a)(4) to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31,
1994 ).
+*10(h)(5) -- Specimen of the Company's 1994 Long-Term Incentive Plan
Performance Unit Agreement (Exhibit 10(n)(5) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1994).
+*10(i)(1) -- Specimen Split-Dollar Agreement (Individual) (Exhibit 10(o)(1)
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1994 ).
+*10(i)(2) -- Specimen Amendment to Split-Dollar Agreement (Individual)
(Exhibit 10(o)(2) to the Company's Annual Report on Form 10-K for
the year ended December 31, 1994 ).
+*10(i)(3) -- Specimen Split-Dollar Agreement (Trustee) (Exhibit 10(o)(3) to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1994 ).
+*10(i)(4) -- Specimen Amendment to Split-Dollar Agreement (Trustee)
(Exhibit 10(o)(4) to the Company's Annual Report on Form 10-K for
the year ended December 31, 1994 ).
=+10(j)(1) -- Battle Mountain Gold Company Supplemental Executive Retirement
Plan As Amended and Restated December 2, 1997.
+o*10(j)(2) -- Specimen of the Company's Supplemental Executive Retirement
Plan Agreement (Exhibit 10(b) to the Company's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1995 ).
E-3
<PAGE> 41
*10(k) -- Registration Rights Agreement, dated as of July 19, 1996,
between Noranda Inc., Kerr Addison Mines Limited and the Company
(Exhibit 10(a) to the Company's Current Report on Form 8-K dated
July 19, 1996 ).
+o*10(l) -- Specimen of Employment Agreements dated March 11, 1996 between
the Company and certain executive officers (Exhibit 10(m) to the
Company's Annual Report on Form 10-K for the year ended December
31, 1996 ).
+*10(m) -- Consulting Agreement effective as of March 1, 1997 between the
Company and Karl E. Elers (Exhibit 10(n) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1996 ).
*10(n) -- Credit Agreement, dated as of March 31, 1997, among Battle
Mountain Gold Company and Battle Mountain Canada Ltd., the Banks
named therein and Citibank, N.A. as U.S. Administrative Agent and
Citibank Canada as Canadian Administrative Agent (Exhibit 10(a)
to the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997 ).
*10(o)(1) -- Investment Agreement, dated May 22, 1992, between Empresa
Minera Inti Raymi S.A. and International Finance Corporation
(Exhibit 4(e) to the Company's Annual Report on Form 10-K for the
year ended December 31, 1992).
*10(o)(2) -- Amendment to Investment Agreement and Waiver, effective as of
December 31, 1994, between Empresa Minera Inti Raymi S.A. and
International Finance Corporation (Exhibit 4(a) to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31,
1995).
*10(p)(1) -- Finance Agreement, dated as of September 14, 1992, between
Empresa Minera Inti Raymi S.A. and Overseas Private Investment
Corporation (Exhibit 4(f) to the Company's Annual Report on Form
10-K for the year ended December 31, 1992).
*10(p)(2) -- First Amendment to Finance Agreement and Limited Waiver,
effective as of December 31, 1994, between Empresa Minera Inti
Raymi S.A. and Overseas Private Investment Corporation (Exhibit
4(f)(2) to the Company's Annual Report on Form 10-K for the year
ended December 31, 1994).
*10(p)(3) -- Letter Agreement dated December 31, 1994, among Overseas
Private Investment Corporation, Battle Mountain Gold Company,
Kori Kollo Corporation and Zeland Mines, S.A. (Exhibit 4(c) to
the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995).
E-4
<PAGE> 42
*10(q)(1) -- Loan Agreement, dated June 29, 1992, between Empresa Minera
Inti Raymi S.A. and Corporacion Andina de Fomento (English
translation) (Exhibit 4(g) to the Company's Annual Report on Form
10-K for the year ended December 31, 1992).
*10(q)(2) -- Amendment to Loan Agreement, effective as of December 31,
1994, between Empresa Minera Inti Raymi S.A. and Corporacion
Andina de Fomento (English translation) (Exhibit 4(b) to the
Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995).
*10(r) -- Credit Agreement, dated September 30, 1997, between Canadian
Imperial Bank of Commerce and Battle Mountain Canada Ltd.
(Exhibit 10 to the Company's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1997 ).
=11 -- Computation of Earnings Per Common Share.
=18 -- Letter regarding change in accounting method.
=21 -- Subsidiaries of the Company.
=23(a) -- Consent of Price Waterhouse LLP.
=23(b) -- Consent of Ernst & Young.
=23(c) -- Consent of Coopers & Lybrand.
=27 -- Financial Data Schedule.
- ------------------------
* Incorporated by reference as indicated.
+ Represent management contracts or compensatory plans or
arrangements required to be filed as exhibits to this Annual Report
by Item 601(10)(iii) of Regulation S-K.
= Previously filed.
o Pursuant to Instruction 2 accompanying paragraph (a) and the
Instruction accompanying paragraph (b)(10)(iii)(B)(6) of Item 601
of Regulation S-K, the registrant has not filed each executive
officer's individual agreement with the Company as an exhibit
hereto. The registrant has agreements substantially identical to
Exhibit 10(m) above with each of Messrs. Bayer, Atkinson, Baylis
and Keyes.
E-5
<PAGE> 1
EXHIBIT 23 (c)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the previously filed
Registration Statements of Battle Mountain Gold Company on Form S-8 Nos.
33-14605, 33-22146, 33-47570, 33-53195, 333-14521, 333-14523 and 333-51673
of our report dated March 17, 1998, on our audit of the financial statements
of Lihir Gold Limited as of December 31, 1997, and for the year then ended,
which report is included in this Annual Report on Form 10-K/A.
COOPERS & LYBRAND
Port Moresby, Papua New Guinea
May 22, 1998