<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
------------ ------------
COMMISSION FILE NUMBER 1-9666
BATTLE MOUNTAIN GOLD COMPANY
(EXACT NAME OF THE REGISTRANT AS SPECIFIED IN ITS CHARTER)
Nevada 76-0151431
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
333 Clay Street, 42nd Floor, Houston, Texas 77002
(Address of principal executive offices, including Zip Code)
(713) 650-6400
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year if
changed since last report)
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
----- -----
Number of shares of Common Stock outstanding as of the latest
practicable date, August 5, 1998: 126,037,855. In addition, as of such date,
there were outstanding 103,747,166 Exchangeable Shares of Battle Mountain Canada
Ltd. which are exchangeable at any time into Common Stock on a one-for-one
basis, entitle their holders to dividend and other rights economically
equivalent to those of the Common Stock, and through a voting trust, vote at
meetings of stockholders of the Registrant.
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<PAGE> 2
BATTLE MOUNTAIN GOLD COMPANY
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I. Financial Information (Unaudited)
Condensed Consolidated Statement of Operations
for the three and six months ended June 30, 1998 and 1997 1
Condensed Consolidated Balance Sheet
at June 30, 1998 and December 31, 1997 2
Condensed Consolidated Statement of Cash Flows
for the six months ended June 30, 1998 and 1997 3
Notes to Condensed Consolidated Financial Statements 4
Supplemental Information 7
Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
Part II. Other Information 15
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BATTLE MOUNTAIN GOLD COMPANY
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30 June 30
------- -------
Millions, except per share amounts 1998 1997 1998 1997
---------------------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Sales $ 68.3 $ 91.2 $ 147.2 $ 167.7
---------- ---------- ---------- ----------
Costs and expenses
Production costs 39.7 56.1 83.4 107.2
Depreciation, depletion and amortization 19.6 18.8 42.5 36.3
Exploration, evaluation & other lease costs, net 7.5 5.6 12.8 11.5
Merger expense (Note 2) -- 0.1 -- 2.3
General and administrative expenses 3.7 4.2 7.4 8.1
---------- ---------- ---------- ----------
Total costs and expenses 70.5 84.8 146.1 165.4
---------- ---------- ---------- ----------
Operating income (loss) (2.2) 6.4 1.1 2.3
Interest expense (4.6) (2.6) (9.4) (6.0)
Other income (expense), net (Note 3) (3.5) 3.4 (1.7) 6.3
---------- ---------- ---------- ----------
Income (loss) before income taxes and
minority interest (10.3) 7.2 (10.0) 2.6
Income tax expense (benefit) (3.4) 5.2 (3.6) 7.3
Mining taxes 1.4 2.4 3.2 4.0
Minority interest in net income (1.0) (1.8) (1.3) (1.6)
---------- ---------- ---------- ----------
Loss before cumulative effect of accounting change (9.3) (2.2) (10.9) (10.3)
Cumulative effect of accounting change (Note 4) -- -- -- (3.7)
---------- ---------- ---------- ----------
Net loss (9.3) (2.2) (10.9) (14.0)
Preferred dividends 1.8 1.8 3.7 3.7
---------- ---------- ---------- ----------
Net loss to common shares $ (11.1) $ (4.0) $ (14.6) $ (17.7)
========== ========== ========== ==========
Loss per common share (Note 5)
Before cumulative effect of accounting change $ (.05) $ (.02) $ (.06) $ (.06)
Accounting change -- -- -- (.02)
---------- ---------- ---------- ----------
Basic and diluted $ (.05) $ (.02) $ (.06) $ (.08)
========== ========== ========== ==========
Dividends per common share $ -- $ -- $ .025 $ .025
========== ========== ========== ==========
Average common shares outstanding for
loss per share purposes - basic and diluted 229.8 229.7 229.8 229.7
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
<PAGE> 4
BATTLE MOUNTAIN GOLD COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
---------- ----------
Millions (Unaudited)
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 146.2 $ 185.0
Restricted cash 22.1 17.7
Accounts and notes receivable 23.7 33.0
Inventories 7.9 8.3
Materials and supplies, at average cost 24.3 25.4
Assets held for sale 42.5 42.5
Other current assets 9.9 12.1
---------- ----------
Total current assets 276.6 324.0
Investments 263.7 255.2
Property, plant and equipment, net 461.4 489.3
Other assets 21.9 24.7
---------- ----------
Total assets $ 1,023.6 $ 1,093.2
========== ==========
Liabilities and Shareholders' Equity
Current liabilities
Short-term borrowings $ -- $ 4.9
Current maturities of long-term debt 37.6 44.0
Accounts payable 16.0 24.0
Income and mining taxes payable 16.9 10.1
Other current liabilities 15.1 23.1
---------- ----------
Total current liabilities 85.6 106.1
Long-term debt 222.9 241.0
Deferred income and mining taxes 71.7 84.1
Other liabilities 48.6 48.3
---------- ----------
Total liabilities 428.8 479.5
Minority interest 108.7 107.7
Commitments and contingencies (Note 6) -- --
Shareholders' equity 486.1 506.0
---------- ----------
Total liabilities and shareholders' equity $ 1,023.6 $ 1,093.2
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 5
BATTLE MOUNTAIN GOLD COMPANY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six months ended
June 30
-------
Millions 1998 1997
-------- ---------- ----------
<S> <C> <C>
Cash flows from operating activities
Net loss $ (10.9) $ (14.0)
Adjustments to reconcile net loss to cash flows
from operating activities:
Depreciation, depletion and amortization 42.5 36.3
Deferred income taxes (10.5) (3.2)
Cumulative effect of accounting change (Note 4) -- 3.7
Equity in losses of equity investee 2.7 --
Foreign currency exchange loss 5.4 0.1
Change in working capital accounts, net 6.4 5.1
Other, net 5.3 2.1
---------- ----------
Net cash flows provided by operating activities 40.9 30.1
---------- ----------
Cash flows from investing activities
Capital expenditures (28.3) (37.7)
Investment in Lihir (11.5) --
Other, net 1.9 (0.3)
---------- ----------
Net cash flows used in investing activities (37.9) (38.0)
---------- ----------
Cash flows from financing activities
Debt repayments (24.2) (7.9)
Decrease in short-term borrowings (4.4) (21.8)
Cash dividend payments (9.5) (9.4)
Decrease (increase) in restricted cash (4.3) 0.4
Other, net 0.2 1.6
---------- ----------
Net cash flows used in financing activities (42.2) (37.1)
---------- ----------
Effect of exchange rate changes on cash and cash equivalents 0.4 (4.1)
---------- ----------
Net decrease in cash and cash equivalents (38.8) (49.1)
Cash and cash equivalents at beginning of period 185.0 94.0
---------- ----------
Cash and cash equivalents at end of period $ 146.2 $ 44.9
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 6
BATTLE MOUNTAIN GOLD COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. General Information
The unaudited condensed consolidated financial statements included herein have
been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission and include all normal recurring adjustments which are, in
the opinion of the management of Battle Mountain Gold Company ("BMG"), necessary
for a fair presentation. Certain information and footnote disclosures required
by generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. These financial statements include the
accounts of BMG and its wholly-owned and majority-owned subsidiaries ("the
Company") and should be read in conjunction with the consolidated financial
statements which are included in the Company's Annual Report on Form 10-K (File
No. 1-9666) for the year ended December 31, 1997. Certain amounts for prior
periods may have been reclassified in order to conform to the current reporting
presentation and requirements.
The Company implemented Statement of Financial Accounting Standards ("SFAS") No.
130, "Reporting Comprehensive Income," effective January 1, 1998. This standard
requires that all items required to be recognized under this standard as
components of comprehensive income, such as the Company's foreign currency
translation adjustments, be reported in a financial statement. The Company's
comprehensive loss follows:
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30 June 30
------- -------
Millions 1998 1997 1998 1997
-------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net loss $ (9.3) $ (2.2) $ (10.9) $ (14.0)
Foreign currency translation adjustments 0.4 (2.0) 0.2 (5.3)
---------- ---------- ---------- ----------
Comprehensive loss $ (8.9) $ (4.2) $ (10.7) $ (19.3)
========== ========== ========== ==========
</TABLE>
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which is
required to be adopted for fiscal years beginning after June 15, 1999. This
standard requires companies to record financial derivatives on the balance sheet
as assets or liabilities, as appropriate, at fair value. Gains or losses
resulting from changes in the fair values of those derivatives are accounted for
depending on the use of the derivative and whether it qualifies for hedge
accounting. Based on the current level of its hedging activities, the Company
believes that the implementation of this standard will not have a material
adverse effect on the Company's consolidated financial position or results of
operations.
Note 2. Merger Expenses
In connection with the 1996 combination of BMG and Battle Mountain Canada Ltd.
("BMCL"), formerly Hemlo Gold Mines Inc., an additional $2.2 million and $0.1
million of merger expenses were incurred in the first and second quarters of
1997, respectively, consisting primarily of merger-related severance payments
made to BMG employees.
4
<PAGE> 7
Note 3. Other Income (Expense), net
Other income (expense), net consisted of the following:
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30 June 30
------- -------
Millions 1998 1997 1998 1997
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Interest income $ 3.4 $ 1.9 $ 6.0 $ 3.2
Capitalized interest -- 1.5 -- 3.0
Foreign currency exchange losses, net (5.9) (0.3) (5.4) (0.1)
Equity in losses of equity investee (1.3) -- (2.7) --
Other, net 0.3 0.3 0.4 0.2
-------- -------- -------- --------
Total $ (3.5) $ 3.4 $ (1.7) $ 6.3
======== ======== ======== ========
</TABLE>
Note 4. Change in Accounting Method
Effective January 1, 1997, Empresa Minera Inti Raymi S.A. ("Inti Raymi"), the
Company's 88%-owned Bolivian gold mining subsidiary, changed its method of
calculating depreciation, depletion and amortization ("DD&A") of mining
properties and certain related assets at its Kori Kollo mine. Under the newly
adopted method, Inti Raymi calculates units-of-production DD&A on an
ounces-produced basis and applies such DD&A rate to the total estimated
development costs to be incurred throughout the mine life of Kori Kollo. The
Company correspondingly changed its method of amortizing the premium associated
with its investment in Inti Raymi to an ounces-sold basis. Previously, both such
DD&A calculations were based on a tonnes-milled rate applied to the capital
costs incurred to date.
The cumulative effect of this accounting change for periods ending prior to
January 1, 1997 was a decrease in net income of $3.7 million, or $.02 per common
share, net of minority interests of $0.5 million and income tax of $0.5 million.
Note 5. Loss per Common Share
The computations of the Company's basic and diluted loss per share amounts were
the same for the respective periods presented on the condensed consolidated
statement of operations. Other securities that could potentially dilute basic
loss per share amounts in each of those periods that were not included in the
calculations because they were anti-dilutive were the Company's outstanding
common stock options, convertible debentures and convertible preferred stock.
Note 6. Contingencies
See "Part II - Other Information - Legal Proceedings" for information concerning
significant legal proceedings of the Company. In addition to the legal
proceedings described therein, the Company is party to a number of actions
arising in the ordinary course of business. While the final outcome of these
actions cannot be predicted with certainty, the Company believes that the
outcome of these actions will not have a material adverse effect on the
Company's financial condition, results of operations or cash flows.
5
<PAGE> 8
Note 7. Summarized Financial Information
The following summarized information of Battle Mountain Canada Ltd. is presented
in accordance with the Securities and Exchange Commission's reporting
requirements as they pertain to the BMCL Exchangeable Shares:
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30 June 30
------- -------
Millions 1998 1997 1998 1997
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
Sales $ 35.5 $ 40.2 $ 77.5 $ 74.3
Costs and expenses 31.7 31.1 66.0 58.7
------- ------- ------- -------
Operating income $ 3.8 $ 9.1 $ 11.5 $ 15.6
======= ======= ======= =======
Net income (loss) $ (4.6) $ 5.8 $ (2.6) $ 9.6
======= ======= ======= =======
</TABLE>
Summarized financial information of Lihir Gold Limited, which commenced
commercial operations on October 1, 1997, follows:
<TABLE>
<CAPTION>
Three months ended Six months ended
Millions June 30, 1998 June 30, 1998
-------- ------------- -------------
<S> <C> <C>
Sales $ 47.9 $ 90.9
Costs and expenses 35.5 69.2
---------- ----------
Operating income $ 12.4 $ 21.7
========== ==========
Net income $ 2.6 $ 4.1
========== ==========
</TABLE>
6
<PAGE> 9
BATTLE MOUNTAIN GOLD COMPANY
SUPPLEMENTAL INFORMATION
OPERATING DATA (Unaudited) (1)
(All production data reflects BMG attributable interests)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30 June 30
------- -------
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
GOLDEN GIANT
Gold recovered (000s oz) 87 97 190 177
Silver recovered (000s oz) 9 3 17 7
- -------------------------------------------------------------------------------------------------------------
Cost per Gold Ounce Sold
Cash production costs $ 129 $ 132 $ 121 $ 145
Depreciation, depletion and amortization 68 61 68 65
Reclamation and mine closure costs 4 4 4 4
------- ------- ------- -------
Total production costs $ 201 $ 197 $ 193 $ 214
- -------------------------------------------------------------------------------------------------------------
KORI KOLLO (88% Interest)
Gold recovered (000s oz) 71 71 148 134
Silver recovered (000s oz) 209 205 445 380
- -------------------------------------------------------------------------------------------------------------
Cost per Gold Ounce Sold (2)
Cash production costs $ 186 $ 188 $ 176 $ 195
Depreciation, depletion and amortization 128 124 132 124
Reclamation and mine closure costs 11 8 10 8
------- ------- ------- -------
Total production costs $ 325 $ 320 $ 318 $ 327
- -------------------------------------------------------------------------------------------------------------
HOLLOWAY (84.65% Interest)
Gold recovered (000s oz) 21 15 39 29
- -------------------------------------------------------------------------------------------------------------
Cost per Gold Ounce Sold
Cash production costs $ 238 $ 336 $ 244 $ 333
Depreciation, depletion and amortization 117 114 117 118
Reclamation and mine closure costs 2 2 2 2
------- ------- ------- -------
Total production costs $ 357 $ 452 $ 363 $ 453
- -------------------------------------------------------------------------------------------------------------
BATTLE MOUNTAIN COMPLEX
Gold recovered (000s oz) 9 20 24 38
Silver recovered (000s oz) 22 38 45 72
- -------------------------------------------------------------------------------------------------------------
Cost per Gold Ounce Sold
Cash production costs $ 273 $ 255 $ 243 $ 277
Depreciation, depletion and amortization 26 40 40 34
Reclamation and mine closure costs -- 43 -- 44
------- ------- ------- -------
Total production costs $ 299 $ 338 $ 283 $ 355
- -------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE> 10
BATTLE MOUNTAIN GOLD COMPANY
SUPPLEMENTAL INFORMATION
OPERATING DATA (Unaudited) (1)
(All production data reflects BMG attributable interests)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30 June 30
------- -------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
LIHIR (8.65%) Interest (3)
Gold recovered (000s oz) 11 23
- ------------------------------------------------------------------------------------------------------------------------------
Cost per Gold Ounce Sold
Cash production costs $ 205 $ 191
Depreciation, depletion and amortization 189 191
---------- ----------
Total production costs $ 394 $ 382
- ------------------------------------------------------------------------------------------------------------------------------
VERA/NANCY (50% Interest) (3)
Gold recovered (000s oz) 13 25
Silver recovered (000s oz) 10 20
- ------------------------------------------------------------------------------------------------------------------------------
Cost per Gold Ounce Sold
Cash production costs $ 126 $ 131
Depreciation, depletion and amortization 29 29
Reclamation and mine closure costs 1 1
---------- ----------
Total production costs $ 156 $ 161
- ------------------------------------------------------------------------------------------------------------------------------
SAN CRISTOBAL (50.5% Interest)
Gold recovered (000s oz) 4 9 12 17
Silver recovered (000s oz) 10 19 23 38
- ------------------------------------------------------------------------------------------------------------------------------
Cost per Gold Ounce Sold
Cash production costs (4) $ 87 $ 382 $ 166 $ 399
Depreciation, depletion and amortization 64 47 86 47
---------- ---------- ---------- ----------
Total production costs $ 151 $ 429 $ 252 $ 446
- ------------------------------------------------------------------------------------------------------------------------------
RED DOME (50.5% Interest) (5)
Gold recovered (000s oz) 10 21
Silver recovered (000s oz) 27 80
Copper recovered (000s lb) 433 1,217
- ------------------------------------------------------------------------------------------------------------------------------
Cost per Gold Ounce Sold
Cash production costs $ 266 $ 254
Depreciation, depletion and amortization 5 9
Reclamation and mine closure costs 9 10
---------- ----------
Total production costs $ 280 $ 273
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE> 11
BATTLE MOUNTAIN GOLD COMPANY
SUPPLEMENTAL INFORMATION
OPERATING DATA (Unaudited) (1)
(All production data reflects BMG attributable interests)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30 June 30
------- -------
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
SILIDOR (55% Interest) (5)
Gold recovered (000s oz) 3 9
- ---------------------------------------------------------------------------------------------------------------
Cost Per Gold Ounce Sold
Cash production costs $ 327 $ 328
Depreciation, depletion and amortization -- 45
Reclamation and mine closure costs -- 5
---------- ----------
Total production costs $ 327 $ 378
- ---------------------------------------------------------------------------------------------------------------
AGGREGATE DATA
Gold recovered BMG share (000s oz) 216 225 461 425
Gold sold BMG share (000s oz) 215 226 459 416
Gold recovered (000s oz) 240 253 516 480
Gold sold (000s oz) 240 252 514 462
Average price per oz realized $ 314 $ 352 $ 309 $ 354
- ---------------------------------------------------------------------------------------------------------------
Silver recovered BMG share (000s oz) 260 293 550 577
Silver sold BMG share (000s oz) 259 269 547 505
Silver recovered (000s oz) 298 367 634 744
Silver sold (000s oz) 298 322 630 603
Average price per oz realized $ 5.62 $ 4.95 $ 5.98 $ 4.97
- ---------------------------------------------------------------------------------------------------------------
Weighted Average Cost per Gold Ounce Sold
Cash production costs $ 166 $ 194 $ 160 $ 204
Depreciation, depletion and amortization 94 80 96 82
Reclamation and mine closure costs 6 8 5 9
---------- ---------- ---------- ----------
Total production costs $ 266 $ 282 $ 261 $ 295
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Cash production costs are presented in accordance with guidelines
established by The Gold Institute. In addition to mining, milling and plant
level general and administrative expenses, cash production costs include
royalties, freight, smelting costs and allowances, and production taxes.
Credits for by-product silver and copper are offset against these cash
production costs. This standard also provides for reporting on a cost per
gold ounce basis, rather than cost per equivalent gold ounce.
(2) Royalties paid to the Bolivian government for the Kori Kollo mine are
treated as income tax for per ounce cost purposes and therefore are not
included in these cost calculations.
(3) Production started at Vera/Nancy and at Lihir during the third and fourth
quarters of 1997, respectively.
(4) Includes deferred stripping credits of $52 per ounce for the three months
ended June 30, 1997, and deferred stripping costs of $47 per ounce and
deferred stripping credits of $64 per ounce for the six months ended June
30, 1998 and 1997, respectively.
(5) Production ceased at Silidor and at Red Dome during the third and fourth
quarters of 1997, respectively.
9
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion should be read in conjunction with Management's Discussion and
Analysis of Financial Condition and Results of Operations included in the
Company's Annual Report on Form 10-K (File No. 1-9666) for the year ended
December 31, 1997 and the historical condensed consolidated financial statements
and notes thereto preceding this discussion.
OVERVIEW - Increased gold production and decreased cash production costs by the
Company's mines improved cash flows from operations during the first six months
of 1998, as compared with the same period in 1997. However, $5.9 million of net
foreign currency exchange losses recorded in the second quarter of 1998
resulting from U.S. dollar denominated BMCL debt, and continued low realized
gold prices resulted in a net loss to common shares of $11.1 million and $14.6
million, respectively, for the three and six month periods ended June 30, 1998.
MARKET CONDITIONS AND RISKS
Gold Price - The Company's profitability is significantly affected by changes
in the market price of gold. Gold prices can fluctuate widely and are affected
by numerous factors, such as demand, forward selling by producers, central bank
sales and purchases, investor sentiment and production levels. Continued
uncertainty about the level of central banks' holding and lending of gold
reserves, the perception of sustainable low-inflationary environments and other
factors could continue to adversely impact the market price of gold. While the
Company is one of the lowest cost gold producers, a sustained period of low
gold prices could have a material adverse affect on its financial position and
results of operations. Consistent with the Company's impairment policy, if
current low gold prices persist, the Company may be required to reduce the
carrying values of some of its long-lived assets in the future, as appropriate.
Foreign Currency - The Company has operations in Canada and Australia in
addition to operations in the United States and other countries. Gold produced
at these operations is sold in the international markets for U.S. dollars. The
cost structures at these operations are primarily Canadian and Australian
dollar denominated, respectively. As such, the Company is exposed to financial
risk to the extent that there are fluctuations in local currency exchange rates
against the U.S. dollar.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1998, the Company had cash and cash equivalents of $146.2 million,
of which $111.0 million was held by BMG and its wholly-owned subsidiaries,
$33.9 million was held by Niugini Mining Limited ("NML"), a Papua New Guinea
company, and $1.3 million was held by Inti Raymi. An additional $14.0 million
of restricted cash was held by NML related to a guarantee of Lihir Gold Limited
("Lihir") debt and $8.1 million of restricted cash was held by Inti Raymi for
future debt service.
See Part II - Other Information - Legal Proceedings and Note 6 of Notes to
Condensed Consolidated Financial Statements for a discussion of material
contingencies.
The Company expects that cash currently held, along with future cash flows from
operations, will be sufficient to meet future cash needs at least through the
end of 1998.
Operating Activities - The Company generated cash flows of $40.9 million from
operating activities during the six months ended June 30, 1998 compared with
$30.1 million for the six months ended June 30, 1997. The increase in cash flows
from operations was primarily the result of higher production and lower
operating costs, despite lower gold prices.
Investing Activities - Capital expenditures totaled $28.3 million during the six
months ended June 30, 1998 as compared with $37.7 million during the same period
in 1997. Capital expenditures for the six months ended June 30, 1998 and 1997,
included $4.5 million and $6.0 million, respectively, of capitalized interest
related to the Company's investment in Lihir. In conjunction with contributions
made by certain other equity investors, in May 1998, NML increased its
investment in Lihir by $11.5 million, maintaining the Company's 8.65% equity
interest in Lihir. The Company has reduced its total 1998 projected capital
expenditures to $50 million due to a revised construction schedule for the Crown
Jewel Project. However, capital expenditures could be substantially higher as
the Company is continuing to evaluate strategic opportunities that may exist in
the marketplace as a result of depressed gold prices.
Financing Activities - The Company made $24.2 million of scheduled debt payments
during the six months ended June 30, 1998. In addition, restricted cash balances
increased $4.3 million, primarily restricted cash of NML as required by the
Lihir financing agreement.
10
<PAGE> 13
RESULTS OF OPERATIONS
Net loss - The Company recorded net losses of $11.1 million ($.05 per share) and
$14.6 million ($.06 per share) for the three and six month periods ended June
30, 1998, respectively. This compares with net losses of $4.0 million ($.02 per
share) and $17.7 million ($.08 per share), respectively, for the same periods in
1997. Results in 1998 were impacted by lower gold prices, higher DD&A and
increased foreign currency exchange losses, partially offset by higher
production in the first six months of 1998. Results in 1997 included $2.3
million of merger expenses and a $3.7 million charge related to a change in
accounting method.
<TABLE>
<CAPTION>
Three months ended Six Months ended
June 30 June 30
------- -------
1998 1997 1998 1997
----- ---- ---- ----
<S> <C> <C> <C> <C>
Gold sales - 100%, thousand ounces 240 252 514 462
Gold revenue realized per ounce $ 314 $ 352 $ 309 $ 354
Average London PM gold fix per ounce $ 300 $ 343 $ 297 $ 347
</TABLE>
Sales - Sales decreased for the three month period ended June 30, 1998 as
compared with the same period in 1997 primarily as a result of lower realized
gold sales prices and decreased sales volumes. Contributing to this decrease
were the effects of the ceasing of production at the Red Dome and Silidor mines
in the second half of 1997 following depletion of the ore bodies. Partially
offsetting the decreases was production at the Vera/Nancy and Lihir mines, which
commenced operations during the second half of 1997.
Sales also decreased for the six month period ended June 30, 1998 as compared
with the same period in 1997 resulting from lower realized gold sales prices,
partially offset by increased sales volumes. Production increased at the Golden
Giant and Kori Kollo mines because of higher average head grades, while
production from the Vera/Nancy and Lihir mines offset the effects of the ceasing
of production at the Red Dome and Silidor mines.
The average realized price of gold decreased for the six months ended June 30,
1998, compared with the same period in 1997, as a result of decreased spot gold
prices. Average realized prices for the three and six month periods ended June
30, 1998 were higher than the average London PM fix price for the same periods
due to gains recognized from the Company's forward sales.
<TABLE>
<CAPTION>
CONSOLIDATED PRODUCTION COSTS Three months ended Six months ended
PER OUNCE OF GOLD SOLD June 30 June 30
------- -------
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Direct mining costs $ 162 $ 206 $ 159 $ 215
Deferred stripping adjustments 6 (4) 5
(4)
Third party smelting, refining and transportation costs 2 3 2
3
By-product credits included in sales (7) (7) (7) (7)
------- ------- ------- -------
Cash operating costs 163 198 159 207
Royalties* 4 4 3 4
Production taxes -- 1 -- 1
------- ------- ------- -------
Total cash costs 167 203 162 212
Depreciation, depletion and amortization 94 76 95 79
Reclamation and mine closure costs 5 8 5 8
------- ------- ------- -------
Total production costs $ 266 $ 287 $ 262 $ 299
======= ======= ======= =======
</TABLE>
11
<PAGE> 14
<TABLE>
<CAPTION>
RECONCILIATION OF TOTAL CASH COSTS PER OUNCE
TO CONSOLIDATED FINANCIAL STATEMENTS* Three months ended Six months ended
June 30 June 30
------- -------
Millions, except ounces sold and per ounce amounts 1998 1997 1998 1997
-------------------------------------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Production costs per financial statements $ 39.7 $ 56.1 $ 83.4 $ 107.2
By-product credits included in sales (1.7) (1.7) (3.8)
(3.1)
Reclamation and mine closure costs (1.3) (2.0) (2.6) (3.8)
Other 3.5 (1.3) 6.4 (2.5)
---------- ---------- ---------- ----------
Production costs for per ounce calculation purposes $ 40.2 $ 51.1 $ 83.4 $ 97.8
========== ========== ========== ==========
Gold ounces sold, thousands 240 252 514 462
========== ========== ========== ==========
Total cash costs per gold ounce sold $ 167 $ 203 $ 162 $ 212
========== ========== ========== ==========
</TABLE>
* Royalties paid to the Bolivian government for the Kori Kollo mine are treated
as income tax for per ounce cost calculations and therefore are not included
in these cost calculations.
Production costs - Total production costs decreased for the three and six month
periods ended June 30, 1998 compared with 1997. Contributing to the decreases
were the closures of the Red Dome and Silidor mines in the second half of 1997
and decreased production costs at Golden Giant resulting from higher head grades
experienced primarily during the first three months of 1998. The overall
decreases were partially offset by the addition of production costs from the
Vera/Nancy mine.
Consolidated per ounce cash costs decreased for the three and six month periods
ended June 30, 1998 compared with the same periods in 1997. All of the Company's
mines showed per ounce cash cost reductions in 1998 as compared with 1997.
Golden Giant's cash costs per ounce decreased from $145 per ounce to $121 per
ounce for the six month period as a result of higher ore grades mined. Kori
Kollo cash costs per ounce decreased primarily as a result of lower costs.
Depreciation, depletion and amortization - DD&A increased in total and on a cost
per gold ounce sold basis for the three and six month periods ended June 30,
1998 compared with the same periods in 1997. DD&A increased in total primarily
as a result of increases at Kori Kollo, largely due to increased production and
1997 capital expenditures, and at Golden Giant because of increased production.
Also contributing to the increase was DD&A at the Vera/Nancy mine, which
commenced commercial production in the second half of 1997. Depreciation,
depletion and amortization from the Lihir mine also contributed to the increase
on a cost per ounce sold basis.
Exploration, evaluation and other lease costs, net - Exploration, evaluation and
other lease costs increased for the three and six month periods ended June 30,
1998, compared with the same periods in 1997, primarily as a result of decreased
proceeds from the sales of properties in 1998 as compared with 1997.
Merger expenses - Additional merger expenses of $2.3 million were recorded in
the first six months of 1997, consisting primarily of merger-related severance
payments made to certain former BMG employees related to the 1996 combination of
BMG and BMCL.
Interest expense - Interest expense increased in the three and six month periods
ended June 30, 1998, as compared with the same periods in 1997, as a result of
the $145 million bank borrowing by BMCL in September 1997.
12
<PAGE> 15
Other income (expense), net - Other income, net decreased for the three and six
month periods ended June 30, 1998, as compared with the same periods in 1997,
primarily as a result of $5.9 million of net foreign currency exchange losses
incurred in the second quarter of 1998, mostly on BMCL's U.S. dollar denominated
debt. Also contributing to the decrease in other income was decreased
capitalized interest, as interest related to Lihir is no longer capitalized
effective October 1, 1997 upon commencement of commercial operations, and the
recording of the Company's share of Lihir losses in 1998. Partially offsetting
the decrease in other income was increased interest income resulting from higher
levels of invested cash.
Income and mining taxes - The Company's provision for income taxes for the three
and six month periods ended June 30, 1998 reflected benefits of $3.4 million and
$3.6 million, respectively, on losses before taxes of $11.3 million for both
periods. The Company's effective income tax rate for the three and six month
periods ended June 30, 1998 was 30% and 32%, respectively.
The Company's provision for income taxes for the three and six month periods
ended June 30, 1997 was $5.2 million and $7.3 million, respectively, on losses
before taxes of $5.4 million and $1.0 million, respectively. These provisions
were primarily the result of provisions for Canadian income taxes on Canadian
income and an increase in income tax benefits generated by U.S. net operating
losses which were fully offset by an increase in the Company's deferred tax
asset valuation allowance.
Mining taxes decreased for the three and six month periods ended June 30, 1998
as compared with the same periods in 1997 due to decreased mining income from
the Company's Canadian mines.
Cumulative effect of accounting change - Effective January 1, 1997, Inti Raymi
changed its method of calculating DD&A of mining properties and certain related
assets at its Kori Kollo mine. See Note 4 of Notes to Condensed Consolidated
Financial Statements for further discussion.
OTHER
Hedging - The Company has only limited involvement with derivative financial
instruments and does not use them for trading purposes. Derivative instruments
are generally used to manage well-defined interest rate, foreign currency
exchange rate and commodity price risks.
The Company utilizes forward sales contracts and may use options to hedge
anticipated sales of gold and silver. At June 30, 1998, the Company had open
forward sales contracts for 9,070 ounces of gold, at an average price of $429 an
ounce, expiring in July and August 1998. The aggregate amount by which the net
market value of these forward sales contracts was greater than the spot price of
$297 per ounce of gold as of June 30, 1998 was $1.2 million.
Accounting Standards - In June 1998, the Financial Accounting Standards Board
issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," which is required to be adopted for fiscal years beginning after
June 15, 1999. This standard requires companies to record financial derivatives
on the balance sheet as assets or liabilities, as appropriate, at fair value.
Gains or losses resulting from changes in the fair values of those derivatives
are accounted for depending on the use of the derivative and whether it
qualifies for hedge accounting. Based on the current level of its hedging
activities, the Company believes that the implementation of this standard will
not have a material adverse effect on the Company's consolidated financial
position, results of operations or liquidity.
13
<PAGE> 16
Foreign Operations - Identifiable assets attributable to operations of the
Company outside the U.S. and Canada as of June 30, 1998 were approximately
$443.5 million. Mining operations outside the U.S. and Canada represented
approximately 47% of the total gross revenues of the Company for the six months
ended June 30, 1998. As a result, the Company is exposed to risks normally
associated with operations located outside the U.S. and Canada, including
political, economic, social and labor instabilities, as well as foreign exchange
controls, currency fluctuations and taxation changes.
Year 2000 ("Y2K") Issue - The Company is in the final stage of its Y2K readiness
program, with its computer systems inventory, systems validation, and
certification and testing stages completed. Systems that have been determined to
be Y2K non-compliant are being replaced or upgraded, as appropriate, and
critical vendor/supplier readiness confirmations are currently being obtained.
An outside contractor is assisting the Company with its Y2K readiness program
and it is expected that the program will be completed by mid-1999. The Company
does not anticipate any material adverse effect on operations regarding Y2K
compliance.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
The U.S. securities laws provide a "safe harbor" for certain forward-looking
statements. This report contains forward-looking statements that involve risks
and uncertainties that could cause actual results to differ materially from
those projected in such forward-looking statements. Statements regarding the
expected commencement dates of mining operations, projected quantities of future
production, capital costs, production rates, costs and expenditures and other
operating and financial data are based on expectations that the Company believes
are reasonable, but it can give no assurance that such expectations will prove
to have been correct. Factors that could cause actual results to differ
materially include, among others: risks and uncertainties relating to general
domestic and international economic and political conditions, the cyclical and
volatile prices of gold, silver and copper, political and economic risks
associated with foreign operations, unanticipated ground and water conditions,
unanticipated grade and geological problems, metallurgical and other processing
problems, availability of materials and equipment, the delays in the receipt of
or failure to receive necessary governmental permits, changes in laws or
regulations or the interpretation and enforcement thereof, the occurrence of
unusual weather or operating conditions, force majeure events, lower than
expected ore grades, the failure of equipment or processes to operate in
accordance with specifications or expectations, labor relations, accidents,
delays in anticipated start-up dates, environmental risks, the results of
financing efforts and financial market conditions. These and other risk factors
are discussed in more detail in the Company's Annual Report on Form 10-K (File
No. 1-9666) for the year ended December 31, 1997. Many of such factors are
beyond the Company's ability to control or predict. Readers are cautioned not to
put undue reliance on forward-looking statements. The Company disclaims any
intent or obligations to update these forward-looking statements, whether as a
result of new information, future events or otherwise.
14
<PAGE> 17
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
New World Project
The New World project is owned by a subsidiary of Crown Butte Resources Ltd.
("CBR"), a Canadian corporation in which the Company owns a 60% interest. In
1993, several special interest groups filed a complaint in U.S. District Court
for the District of Montana against CBR and others, alleging that certain
discharges from the CBR-controlled New World site were in violation of the
federal Clean Water Act. The action was designated CV 93-154-BLG-JDS and is
referred to herein as the "Clean Water Action." On October 13, 1995, the
District Court found CBR and other defendants liable for violations of the Clean
Water Act. On August 12, 1996, CBR, the U.S. government and certain special
interest groups entered into an agreement which provided a framework whereunder
CBR would exchange property interests within the New World Mining District for
U.S. interests or assets having a value of $65 million, and then set aside $22.5
million for the completion of reclamation and restoration programs in the
District (the "August 1996 Agreement"). On June 25, 1998, pursuant to the August
1996 Agreement, CBR, the United States and the other parties to the Clean Water
Action lodged a Consent Decree with the U.S. District Court. On August 7, 1998,
the Court approved the Consent Decree. The approval of the Consent Decree has
resulted in: 1) the consummation of the exchange contemplated by the August 1996
Agreement; 2) CBR and certain other entities obtaining releases from potential
environmental liabilities related to the New World site; and 3) the settlement
of the Clean Water Action and an action brought against CBR by the Untied States
and the state of Montana contemporaneously with the lodging of the Consent
Decree. The second action, designated CV 98-91-BLG-JDS, was brought solely to
provide a legal basis for the Consent Decree and to facilitate consummation of
the August 1996 Agreement. Certain special interest groups' claims for
attorneys' fees and costs in the Clean Water Action remain outstanding.
Crown Jewel
The following legal proceedings relate to the Crown Jewel project in Washington
State in which the Company is earning an interest of up to 54%. During the first
quarter of 1997, the final Environmental Impact Statement ("EIS") for the Crown
Jewel project was issued. Certain positive permit decisions and approvals have
been received for the project, but additional state and federal permit decisions
and approvals are pending. The existing legal proceedings evidence opposition to
the project by certain persons and special interest groups, including the
Okanogan Highlands Alliance ("OHA"), the Washington Environmental Council
("WEC"), the Center for Environmental Law and Policy ("CELP") and the
Confederated Tribes of the Colville Reservation ("CCT"). The Company expects
that additional appeals may be filed and that injunctions will be sought. The
impact and exact timing of final resolution of the existing appeals, or any
future appeals related to the project, cannot be determined with any accuracy at
this time.
OKANOGAN HIGHLANDS ALLIANCE V. WILLIAMS, ET AL., UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON, CIVIL NO. 97-806JE
During the first quarter of 1997, the United States Forest Service ("USFS")
issued a Record of Decision ("ROD") which approved the Crown Jewel project
subject to the requirement that the Company obtain USFS approval of a detailed
Plan of Operations. The USFS received four administrative appeals to its EIS and
ROD, which were denied in the second quarter of 1997. On May 29, 1997, OHA, WEC,
the
15
<PAGE> 18
Colville Indian Environmental Protection Alliance and the Kettle Range
Conservation Group instituted the above-referenced action against the USFS and
certain USFS decision makers in United States District Court for the District of
Oregon. The action appeals the EIS, the ROD and the denial of the administrative
appeals. The action seeks the following rulings: 1) that the EIS and ROD are
inadequate and violate the National Environmental Policy Act and the
Administrative Procedures Act; 2) that the USFS's decision not to prepare and
issue a supplemental EIS was not in accordance with law; and 3) that the ROD
violates certain specified laws. The action also seeks an award of fees and
costs associated with the litigation and indicates that the plaintiffs will seek
injunctive relief restraining the USFS from approving or authorizing the Plan of
Operations or any other action related to the Crown Jewel project. The Company
has intervened in the action. On November 5, 1997, CCT moved to intervene as a
matter of right and filed a complaint alleging that the ROD was issued in
violation of certain tribal rights. On March 19, 1998, the court ruled in favor
of the USFS and the Company by denying the plaintiffs' challenge to the contents
and scope of the administrative record. On March 27, 1998, the court granted the
CCT's Motion to Intervene. It is now anticipated that briefing of the case on
the merits will be completed in the third quarter of 1998.
OKANOGAN HIGHLANDS ALLIANCE, ET AL. V. STATE OF WASHINGTON DEPARTMENT OF
ECOLOGY, ET AL., WASHINGTON POLLUTION CONTROL HEARINGS BOARD, (PCHB NOS. 97-182;
97-183; 97-185; AND 97-186)
In November 1997, the Washington Department of Ecology ("WDOE") approved certain
applications for new water rights and certain applications for changes to
existing water rights that are necessary for the Crown Jewel project. Pursuant
to the Company's request, PCHB Nos. 97-182; 97-183; 97-185; and 97-186 were
consolidated for hearing with PCHB 97-146. PCHB No. 97-146 was subsequently
dismissed. At a March 5, 1998 Scheduling Conference, the Board decided that the
water quality issues raised by these pending appeals would not be heard during
the consolidated hearing, but instead would be heard at an unspecified future
date. The consolidated hearing concluded on May 20, 1998. Certain post-hearing
briefs and motions have been filed, with the remainder scheduled to be filed in
the third quarter of 1998.
PCHB No. 97-182. On December 1, 1997, Roger Lorenz instituted the action
designated PCHB No. 97-182 against WDOE, which action appeals WDOE's approval of
one new water right application and one water right change application.
PCHB No. 97-183. On December 1, 1997, OHA, WEC and CELP instituted the action
designated PCHB No. 97-183 against WDOE and the Company. The action challenges
WDOE's water rights decisions, claiming that such decisions violated the State
Water Code, Water Resources Act, Administrative Procedures Act and Environmental
Policy Act. The action seeks an order reversing WDOE decisions or, in the
alternative, vacating the Reports of Examination and remanding the applications
to WDOE for further study. The action has been joined by Triple Creek, a
nonprofit corporation.
PCHB No. 97-185. On December 3, 1997, Lori Bialic instituted the action
designated PCHB No. 97-185 against the WDOE, which action appeals the WDOE's
approval of two applications for changes of water rights. On May 29, 1998, the
PCHB dismissed this action for failure to present evidence. On June 11, 1998,
the PCHB denied Bialic's motion for reconsideration of the dismissal.
PCHB No. 97-186. On December 2, 1997, CCT instituted the action designated PCHB
No. 97-186 against the WDOE and the Company. The action makes the same challenge
and seeks the same relief as PCHB No. 97-183.
16
<PAGE> 19
OKANOGAN HIGHLANDS ALLIANCE V. STATE OF WASHINGTON DEPARTMENT OF ECOLOGY, ET
AL., WASHINGTON POLLUTION CONTROL HEARINGS BOARD, PCHB NO. 98-019
In January 1998, WDOE approved an air quality permit to construct and operate
the proposed Crown Jewel mine. On February 3, 1998, OHA instituted the action
designated PCHB No. 98-019 against the WDOE and the Company. The action
challenges the air quality permit to construct and operate the mine. On April
27, 1998, OHA voluntarily dismissed this action but reserved its right to appeal
future air permit decisions related to the mine.
CONFEDERATED TRIBES OF THE COLVILLE RESERVATION V. STATE OF WASHINGTON
DEPARTMENT OF ECOLOGY, ET AL., SUPERIOR COURT OF THE STATE OF WASHINGTON FOR
THURSTON COUNTY, CIVIL NO. 97-2-02849-7
In November 1997, the WDOE approved certain applications for new water rights
and certain applications for changes to existing water rights that are necessary
for the Crown Jewel project. WDOE granted the Company's applications in part
based upon a streamflow mitigation plan. On December 2, 1997, CCT instituted the
above-referenced action against the WDOE and the Company. The action seeks an
order holding that WDOE's approval of the streamflow mitigation plan constituted
a rulemaking in violation of the Administrative Procedures Act and an order that
such approval exceeds WDOE's statutory authority, conflicts with existing law
and is irrational. The action also seeks an order mandating a rulemaking to
develop guidelines and criteria for approving water resource mitigation measures
and an injunction on the approval of water rights applications until the
conclusion of such rulemaking. Reversal of WDOE's decisions with respect to the
Company's water rights applications is also sought, along with an injunction
precluding the Company from taking action in reliance on such decisions. The
Plaintiff also seeks costs and attorney fees.
OKANOGAN HIGHLANDS ALLIANCE, ET AL., V. WASHINGTON STATE DEPARTMENT OF ECOLOGY,
ET AL., SUPERIOR COURT OF THE STATE OF WASHINGTON FOR THURSTON COUNTY, CIVIL NO.
97-2-02831-8
On December 2, 1997, OHA, WEC and CELP instituted the above referenced action
against WDOE and the Company. The action makes the same challenges and seeks the
same relief as Confederated Tribes of the Colville Reservation v. State of
Washington Department of Ecology, et al., Superior Court of the State of
Washington for Thurston County, Civil No. 97-2-0289-7.
OKANOGAN HIGHLANDS ALLIANCE V. OKANOGAN COUNTY, ET AL., SUPERIOR COURT OF THE
STATE OF WASHINGTON FOR OKANOGAN COUNTY, CIVIL NO. 98-2-00180-3
On May 4, 1998, OHA instituted the above-referenced action against Okanogan
County, the Company and Crown Resources Corporation in the Superior Court of the
State of Washington in and for Okanogan County. On May 20, 1998, OHA amended the
action by naming the Okanogan County Health District as an additional
respondent. The action challenges the decision of the Okanogan County Health
District that Solid Waste Permits are not required for the Crown Jewel mine
tailings and waste rock piles. The action seeks an order declaring that such
decision violated the Washington Solid Waste Management Act and other state and
local laws and regulations and is therefore null and void. An initial hearing on
jurisdictional and preliminary matters is expected to occur during the third
quarter of 1998.
17
<PAGE> 20
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) Annual Meeting of Shareholders
April 27, 1998
<TABLE>
<CAPTION>
(c) Proposal For Against Withheld Abstain
-------- --- ------- -------- -------
<S> <C> <C> <C> <C>
Election of Directors
David W. Kerr 164,665,350 * 2,399,121 *
Mary Mogford 164,627,027 * 2,437,444 *
William A. Wise 164,627,165 * 2,437,306 *
Proposal to approve the
Company's 1997 Incentive Bonus
Program 161,540,273 4,392,839 * 1,131,359
Ratification of appointment
of Price Waterhouse LLP as
independent public accountants
166,186,473 583,203 * 294,795
</TABLE>
*Not Applicable
Each of the nominees for director were elected, the proposed
1997 Incentive Bonus Plan was adopted, and the appointment of
Price Waterhouse LLP was ratified.
ITEM 5. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11 Computations of Loss per Common Share
27 Financial Data Schedule
(b) Reports on Form 8-K
A Current Report on Form 8-K, dated April 23, 1998, was filed
containing a press release issued by Battle Mountain Gold
Company.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BATTLE MOUNTAIN GOLD COMPANY
Date: August 13, 1998 /s/ Jeffrey L. Powers
----------------------------------------
Jeffrey L. Powers
Vice President and Controller
18
<PAGE> 21
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
11 Computations of Loss per Common Share
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 11
BATTLE MOUNTAIN GOLD COMPANY
COMPUTATIONS OF LOSS PER COMMON SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
Millions, except per share amounts 1998 1997 1998 1997
---------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
BASIC LOSS PER SHARE
Net loss
Net loss $ (9.3) $ (2.2) $ (10.9) $ (14.0)
Deduct dividends on preferred shares (1.8) (1.8) (3.7) (3.7)
--------- --------- --------- ---------
Net loss applicable to common stock $ (11.1) $ (4.0) $ (14.6) $ (17.7)
========= ========= ========= =========
Shares
Weighted average number of common shares outstanding 229.8 229.7 229.8 229.7
========= ========= ========= =========
Basic loss per common share $ (0.048) $ (0.017) $ (0.064) $ (0.077)
========= ========= ========= =========
DILUTED LOSS PER SHARE
Net loss applicable to common stock $ (11.1) $ (4.0) $ (14.6) $ (17.7)
========= ========= ========= =========
Shares
Weighted average number of common shares outstanding 229.8 229.7 229.8 229.7
Assuming exercise of stock options reduced by the number of
shares which could have been purchased with the proceeds
from exercise of such options -- -- -- --
--------- --------- --------- ---------
Weighted average number of common shares outstanding, as adjusted 229.8 229.7 229.8 229.7
========= ========= ========= =========
Diluted loss per share, assuming conversion $ (0.048) $ (0.017) $ (0.064) $ (0.077)
========= ========= ========= =========
CALCULATIONS OF CONVERSIONS OF SECURITIES PRODUCING ANTI-DILUTIVE RESULTS
CONVERSION OF PREFERRED SHARES
Net loss
Net loss applicable to common stock $ (11.1) $ (4.0) $ (14.6) $ (17.7)
Effect on net loss if preferred shares were converted 1.8 1.8 3.7 3.7
--------- --------- --------- ---------
Net loss, as adjusted $ (9.3) $ (2.2) $ (10.9) $ (14.0)
========= ========= ========= =========
Shares
Weighted average number of common shares outstanding 229.8 229.7 229.8 229.7
Effect on average shares outstanding if preferred shares were converted 11.0 11.0 11.0 11.0
--------- --------- --------- ---------
Weighted average number of common shares outstanding, as adjusted 240.8 240.7 240.8 240.7
========= ========= ========= =========
Diluted loss per share, assuming conversion $ (0.039) $ (0.009) $ (0.045) $ (0.058)
========= ========= ========= =========
CONVERSION OF DEBENTURES
Net loss
Net loss applicable to common stock $ (11.1) $ (4.0) $ (14.6) $ (17.7)
Effect on net loss if debentures were converted 0.9 -- 1.9 --
--------- --------- --------- ---------
Net loss, as adjusted $ (10.2) $ (4.0) $ (12.7) $ (17.7)
========= ========= ========= =========
Shares
Weighted average number of common shares outstanding 229.8 229.7 229.8 229.7
Effect on average shares outstanding if debentures were converted 4.8 4.8 4.8 4.8
--------- --------- --------- ---------
Weighted average number of common shares outstanding, as adjusted 234.6 234.5 234.6 234.5
========= ========= ========= =========
Diluted loss per share, assuming conversion $ (0.043) $ (0.017) $ (0.054) $ (0.075)
========= ========= ========= =========
CONVERSION OF OPTIONS
Net loss
Net loss applicable to common stock $ (11.1) $ (4.0) $ (14.6) $ (17.7)
========= ========= ========= =========
Shares
Weighted average number of common shares outstanding 229.8 229.7 229.8 229.7
Effect on average shares outstanding if options were converted -- -- 0.1 0.1
--------- --------- --------- ---------
Weighted average number of common shares outstanding, as adjusted 229.8 229.7 229.9 229.8
========= ========= ========= =========
Diluted loss per share, assuming conversion $ (0.048) $ (0.017) $ (0.064) $ (0.077)
========= ========= ========= =========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BATTLE
MOUNTAIN GOLD COMPANY QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE
30, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-END> JUN-30-1998 JUN-30-1997<F1>
<CASH> 168,300 0
<SECURITIES> 0 0
<RECEIVABLES> 23,700 0
<ALLOWANCES> 0 0
<INVENTORY> 32,200 0
<CURRENT-ASSETS> 276,600 0
<PP&E> 1,067,100 0
<DEPRECIATION> 605,700 0
<TOTAL-ASSETS> 1,023,600 0
<CURRENT-LIABILITIES> 85,600 0
<BONDS> 222,900 0
0 0
110,600 0
<COMMON> 12,700 0
<OTHER-SE> 362,800 0
<TOTAL-LIABILITY-AND-EQUITY> 1,023,600 0
<SALES> 147,200 167,700
<TOTAL-REVENUES> 147,200 167,700
<CGS> 125,900 143,500
<TOTAL-COSTS> 125,900 143,500
<OTHER-EXPENSES> 12,800 11,500
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 9,400 6,000
<INCOME-PRETAX> (10,000) 2,600
<INCOME-TAX> (400) 11,300
<INCOME-CONTINUING> (10,900) (10,300)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 (3,700)
<NET-INCOME> (14,600) (17,700)
<EPS-PRIMARY> (.06) (.08)
<EPS-DILUTED> (.06) (.08)
<FN>
<F1>RESTATED TO REFLECT CUMULATIVE CHANGE IN ACCOUNTING METHOD, EFFECTIVE
JANUARY 1, 1997
</FN>
</TABLE>
