<PAGE>
===============================================================================
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, 1998
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 $455 million as of February 16, 1999,
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 $584 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 16, 1999 is 127,932,119, not including 101,147,884 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 1999 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,
1998 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 Sheets...................................... 4
Statements of Cash Flows............................ 5
Notes to Financial Statements....................... 6
</TABLE>
1
<PAGE>
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 1998 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 28 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 28 reconciles these differences.
<PAGE>
LIHIR GOLD LIMITED
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 1998 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 1997;
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.
PRICEWATERHOUSECOOPERS
/s/ Robert Hubbard
- ----------------------
By R Hubbard
Registered under the Accountants Registration Act (Chapter 89)
PORT MORESBY, PAPUA NEW GUINEA
On 28th day of April 1999
2
<PAGE>
LIHIR GOLD LIMITED
PROFIT AND LOSS ACCOUNTS
FOR THE YEARS ENDED 31 DECEMBER 1998, 1997, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
US$ 000
NOTE 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
SALES REVENUE 184,718 56,966 - - -
OPERATING EXPENSES
Mining expenses (62,261) (15,562) - - -
Processing costs (30,339) (5,609) - - -
Power generation costs (11,097) (3,264) - - -
General and administrative costs (19,726) (8,427) - - -
Refining, royalty and management fees (7,548) (2,042) - - -
Costs deferred and transferred to 15,258 11,588 - - -
inventories
Total operating expenses (115,713) (23,316) - - -
-------------------------
OPERATING PROFIT BEFORE DEPRECIATION, 69,005 33,650 - - -
ABNORMAL ITEMS, INTEREST AND TAX
Depreciation and amortisation (46,123) (8,918) - - -
-------------------------
OPERATING PROFIT BEFORE ABNORMAL ITEMS, 22,882 24,732 - - -
INTEREST AND TAX
Net interest expense 5 (28,970) (6,593) - - -
-------------------------
OPERATING PROFIT BEFORE ABNORMAL ITEMS AND 5 (6,088)
INCOME TAX
Abnormal item 5 (9,370)
-------------------------
OPERATING PROFIT BEFORE INCOME TAX (15,458) 18,139 - - -
Income tax attributable to operating profit 14 5,186 (6,338) - - -
-------------------------
OPERATING PROFIT AFTER INCOME TAX (10,272) 11,801 - - -
Retained profits at the beginning of the 11,801 - - - -
period
Total available for appropriation 1,529 11,801 - - -
Dividends provided for or paid - - - -
-------------------------
RETAINED PROFITS AT THE END OF THE FINANCIAL
PERIOD 1,529 11,801 - - -
-------------------------
</TABLE>
The accompanying notes form part of these financial accounts
3
<PAGE>
BALANCE SHEETS AS AT 31 DECEMBER 1998, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
US$ 000
NOTE 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS
Cash 6 82,459 30,640 44,002 363,099
Inventories 8 22,054 21,953 - -
Receivables and prepayments 9 7,149 6,282 42 420
Other current assets 10 12,845 6,320 - -
-------------- -------------- -------------- --------------
TOTAL CURRENT ASSETS 124,507 65,195 44,044 363,519
NON-CURRENT ASSETS
Inventories 8 6,804 4,262 - -
Receivables and prepayments 9 5 418 - -
Development and mining properties 11 882,983 889,049 670,412 268,235
Other non current assets 10 34,428 26,732 20,496 -
-------------- -------------- -------------- --------------
TOTAL NON-CURRENT ASSETS 924,220 920,461 690,908 268,235
-------------- -------------- -------------- --------------
TOTAL ASSETS 1,048,727 985,656 734,952 631,754
-------------- -------------- -------------- --------------
CURRENT LIABILITIES
Accounts payable 12 27,442 19,459 51,055 10,054
Provisions 13 1,508 579 516 218
Borrowings 22 44,430 26,623 540 -
Deferred hedging income 23 684 - - -
Retentions 0 421 1,527 168
-------------- -------------- -------------- --------------
TOTAL CURRENT LIABILITIES 74,064 47,082 53,638 10,440
NON CURRENT LIABILITIES
Provisions 13 10,268 6,131 - -
Borrowings 22 273,869 299,328 60,000 -
Deferred hedging income 23 684 - - -
-------------- -------------- -------------- --------------
TOTAL NON CURRENT LIABILITIES 284,821 305,459 60,000 -
-------------- -------------- -------------- --------------
TOTAL LIABILITIES 358,885 352,541 113,638 10,440
-------------- -------------- -------------- --------------
NET ASSETS 689,842 633,115 621,314 621,314
-------------- -------------- -------------- --------------
SHAREHOLDERS' EQUITY
Paid up capital 18 688,313 621,314 621,314 621,314
Reserves 19 - - -
Retained Earnings 1,529 11,801 - -
-------------- -------------- -------------- --------------
TOTAL SHAREHOLDERS' EQUITY 689,842 633,115 621,314 621,314
-------------- -------------- -------------- --------------
</TABLE>
4
<PAGE>
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDING 31 DECEMBER 1998, 1997, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
US$ 000
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Receipts from operating activities 184,718 56,966 - - -
Payments arising from operating activities (132,049) (50,466) - - -
-------------- -------------- -------------- -------------- --------------
52,699 6,500 - - -
Interest income 3,654 633 - - -
Interest paid to third parties (32,624) (6,135) - - -
Income taxes paid - - - - -
-------------- -------------- -------------- -------------- --------------
NET CASH FLOWS FROM OPERATING ACTIVITIES 23,699 998 - - -
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from issue of shares 67,000 - - 431,754 -
Joint Venture contributions - - - 37,936 12,812
Borrowings 4,900 261,527 60,540 - -
Repayment of term debt (11,262) - - - -
-------------- -------------- -------------- -------------- ---------------
60,638 261,527 60,540 469,690 12,812
CASH FLOWS FROM INVESTING
ACTIVITIES
Property plant and equipment (32,518) (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) - -
-------------- -------------- -------------- -------------- ---------------
(32,518) (275,887) (379,637) (106,591) (12,812)
-------------- -------------- -------------- -------------- ---------------
NET INCREASE/(DECREASE) IN CASH AND CASH 51,819 (13,362) (319,097) 363,099 -
EQUIVALENTS
-------------- -------------- -------------- -------------- ---------------
Cash balance at beginning of period 30,640 44,002 363,099 - -
Cash balance at end of period 82,459 30,640 44,002 363,099 -
-------------- -------------- -------------- -------------- ---------------
51,819 (13,362) (319,097) 363,099 -
-------------- -------------- -------------- -------------- ---------------
The accompanying notes form part of these financial statements.
</TABLE>
5
<PAGE>
LIHIR GOLD LIMITED
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
These financial statements are presented in accordance with the Papua New
Guinea Companies Act 1997, and comply with applicable financial reporting
standards and other mandatory professional reporting requirements approved
for use in Papua New Guinea by the Accounting Standards Board (ASB). The ASB
has adopted International Accounting Standards and Interpretations issued by
the Standing Interpretations Committee as the applicable financial reporting
framework.
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.
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 or 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 or 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.
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.
6
<PAGE>
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.
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.
Where a change in estimated recoverable gold ounces containing proved
and probable ore reserves is made, depreciation and amortisation of
mine properties is accounted for in the current accounting period.
(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.
(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 gold 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.
7
<PAGE>
(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 amount of remaining recoverable gold ounces,
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) IMPAIRMENT OF ASSETS
Impairments of assets are recognised whenever the carrying amount of
an asset exceeds its recoverable amount. The company has adopted early
IAS 36 "Impairment of Assets", which requires recoverable amount to be
measured as the higher of net selling price and value in use. Value in
use for individual assets is calculated by discounting future cash
flows using a risk adjusted pre-tax discount rate.
(h) RESTORATION, REHABILITATION AND ENVIRONMENTAL EXPENDITURE
The company has adopted early IAS 37 "Provisions, Contingent
Liabilities and Contingent Assets", whereby the amount of the
provision recognised is the full amount required to settle present
obligations, discounted using a pre-tax risk-free interest rate. A
corresponding asset, which represents future economic benefits, is
raised and subsequently amortised using the units of production
method.
The company has a rehabilitation policy which identifies the
environmental, social and engineering issues to be considered and the
procedures to be followed when providing for costs associated with the
site closure. Site rehabilitation and closure involves the dismantling
and demolition of other than community based infrastructure, the
removal of residual materials and the remediation of disturbed areas.
Community requirements and long term land use objectives are also
considered.
The adoption of IAS 37 has not resulted in a material adjustment and
therefore the comparatives and opening retained earnings have not been
restated.
(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, direct 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.
8
<PAGE>
(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:
- the product is in a form suitable for delivery and no further
processing is required by, or on behalf of, the Company;
- the quantity and quality (grade) of the product can be
determined with reasonable accuracy;
- 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
- 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.
9
<PAGE>
(ii) ANNUAL AND LONG SERVICE LEAVE & OTHER ACCRUED BENEFITS
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 employees 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.
Foreign currency transactions (other than US dollars) are initially
translated into US currency at the rate of exchange at the date of the
transaction. At balance date, amounts payable and receivable in
foreign currencies are translated to US dollars at rates of exchange
current at that date. Resulting exchange differences are brought to
account in determining the profit or loss for the year.
(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). Income tax on
temporary differences is set aside to the deferred income tax and
future tax benefit accounts at current rates. The future tax benefit
relating to deductible temporary differences and tax losses is only
carried forward as an asset to the extent that it is probable that
taxable profit will be available against which the deductible
temporary differences and tax losses can be utilised.
(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.
10
<PAGE>
(r) YEAR 2000 COMPLIANCE
All costs relating to the modification of computer software for Year
2000 compatibility are charged to expenses as incurred.
(s) COMPARATIVE FIGURES
Where necessary, comparative figures have been adjusted to conform
with changes in presentation in the current year.
Refer to note 1(h) on the impact on comparatives arising from the
early adoption of IAS37.
(t) 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 permits the payment of dividends only on the quarterly
payment dates 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.
11
<PAGE>
NOTE 5: OPERATING PROFIT
<TABLE>
<CAPTION>
US$ 000
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Operating profit before taxation has been
determined after crediting /(charging):
Interest income 3,654 633 - - -
Interest expense and finance expenses (32,624) (7,226) - - -
Royalties on sales (3,792) (1,151) - - -
Foreign exchange gains and (losses) 2,096 30 - - -
Provisions for employee benefits (2,614) (207) - - -
Amortisation of hedging costs (3,246) 0 - - -
Donations (60) (3) - - -
Abnormal charge - impairment of low grade (9,370) - - - -
stockpile
(Applicable income tax expense $3.3 m)
<CAPTION>
NOTE 6: CASH
US$ 000
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Cash at bank and on hand 39,245 5,364 8,600 1,372 -
At call deposits with financial institutions 43,214 25,276 35,402 149,012 -
Treasury bills and commercial paper - - - 212,715 -
------------ ------------ ------------ ------------- ------------
82,459 30,640 44,002 363,099 -
------------ ------------ ------------ ------------- ------------
</TABLE>
12
<PAGE>
NOTE 7: STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
US$ 000
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Reconciliation of cash flow from operating activities to
operating profit after tax
Operating profit/(loss) after tax (10,272) 11,801 - - -
-
Depreciation and amortisation 46,123 8,918 - - -
Accumulated depreciation - disposed assets 170 (17) - - -
Increase/(Decrease) in debtors (454) (4,665) - - -
Increase/(Decrease) in inventories (2,643) (11,442) - - -
Increase/(Decrease) in future income tax benefit (1,089) (64) - - -
Increase/(Decrease) in other assets (16,378) (9,642) - - -
Decrease/(Increase) in creditors 7,983 548 - - -
Decrease/(Increase) in deferred tax (4,320) 5,869 - - -
(Decrease)/Increase in rehabilitation 600 -
Decrease/(Increase) in other provisions 3,979 (308) - - -
-
-------------------------------------------------------------
Net cash flow from operating activities 23,699 998 - - -
-------------------------------------------------------------
</TABLE>
Movements in assets and liabilities relate to the period since the commencement
of commercial production.
NOTE 8: INVENTORIES
<TABLE>
<CAPTION>
US$ 000
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
CURRENT
Stores 18,117 14,354 - - -
Production work in progress 1,556 4,811 - - -
Finished goods 1,053 - - - -
Ore stockpiles 1,328 2,788 - - -
------------------------------------------------------------
Total current inventories 22,054 21,953 - - -
NON-CURRENT
Ore stockpiles 6,804 4,262 - - -
------------------------------------------------------------
Total inventories 28,858 26,215 - - -
------------------------------------------------------------
</TABLE>
13
<PAGE>
In accordance with the Company's accounting policy as set out in note 1(g), the
value of ore stocks were written down. The write down was determined using the
net selling price of US$350 per ounce of gold, being the Company's assumed
average long-term gold price.
NOTE 9: RECEIVABLES AND PREPAYMENTS
<TABLE>
<CAPTION>
US$ 000
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
CURRENT
Prepayments 3,410 2,969 33 41 -
Insurance claims receivable - 805 - - -
Other amounts receivable from:
- - third parties 3,739 2,508 - - -
- - other related bodies corporate - - 9 379 -
-----------------------------------------------------------
7,149 6,282 42 420 -
NON-CURRENT
Prepayments - 413 - - -
Other amounts receivable 5 5 - - -
-----------------------------------------------------------
5 418 - - -
-----------------------------------------------------------
Total amounts receivable and prepayments 7,154 6,700 42 420 -
-----------------------------------------------------------
</TABLE>
NOTE 10: OTHER ASSETS
<TABLE>
<CAPTION>
US$ 000
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
CURRENT
Future income tax benefit 25 - - -
Hedging costs 4,469 3,246 - - -
Deferred mining costs: 8,376 3,049 - - -
--------------------------------------------------------
12,845 6,320 - - -
NON-CURRENT
Future income tax benefit 1,153 39 - - -
Hedging costs 12,781 17,250 20,496 - -
Deferred mining costs: 20,494 9,443 - - -
--------------------------------------------------------
34,428 26,732 20,496 - -
--------------------------------------------------------
Total Other Assets 47,273 33,052 20,496 - -
--------------------------------------------------------
</TABLE>
14
<PAGE>
LIHIR GOLD LIMITED
NOTE 11: DEVELOPMENT AND MINING PROPERTIES
<TABLE>
<CAPTION>
US$ 000
1998 1997 1996 1995 1994
DEVELOPMENT PROPERTIES
<S> <C> <C> <C> <C> <C>
Cost brought forward 3,572 670,412 268,235 151,624 146,005
Additions 32,446 240,014 407,246 113,823 5,619
Interest received - (12,275) (18,240) (7,266) -
Borrowing costs - - 13,171 10,054 -
Transfers to mining properties (5,079) (894,579) - - -
----------------------------------------------------------------
Costs carried forward 30,939 3,572 670,412 268,235 151,624
PLANT AND EQUIPMENT
Cost brought forward 412,024 - - - -
Transfers from development properties 4,562 412,225 - - -
Transfer to deferred expenditure (26)
Disposals (102) (201) - - -
----------------------------------------------------------------
Cost carried forward 416,458 412,024 - - -
Depreciation brought forward (4,549) - - - -
Charge for the year (21,107) (4,566) - - -
Disposals 9 17 - - -
-----------------------------------------------------------------
Depreciation carried forward (25,647) (4,549) - - -
Net book value 390,811 407,475 - - -
-----------------------------------------------------------------
LAND AND BUILDINGS
Cost brought forward 71,496 - - -
Transfers from development properties 74 71,496 - - -
Transfers from mining properties 26 - - -
-----------------------------------------------------------------
Cost carried forward 71,596 71,496 - - -
Depreciation brought forward (643) - - - -
Charge for the year (3,262) (643) - - -
Transfers from mining properties (1) - - - -
-----------------------------------------------------------------
Depreciation carried forward (3,906) (643) - - -
-----------------------------------------------------------------
Net book value 67,690 70,853 - - -
-----------------------------------------------------------------
15
<PAGE>>
LIHIR GOLD LIMITED
<CAPTION>
CAPITALISED EXPLORATION
Cost brought forward 146,374 - - - -
Transfers from development properties - 146,374 - - -
Disposals - - - - -
-----------------------------------------------------------------
Cost carried forward 146,374 146,374 - - -
Depreciation brought forward (1,317) - - - -
Charge for the year (6,681) (1,317) - - -
Disposals - - - - -
Depreciation carried forward (7,998) (1,317) - - -
-----------------------------------------------------------------
Net book value 138,376 145,057 - - -
------------ ------------ ------------ ------------- ------------
DEFERRED EXPENDITURE
Cost brought forward 264,484 - - - -
Transfers from development properties 443 264,484 - - -
Disposals (1,642) - - - -
-----------------------------------------------------------------
Cost carried forward 263,285 264,484 - - -
Depreciation brought forward (2,392) - - - -
Charge for the year (12,001) (2,392) - - -
Disposals - - - - -
-----------------------------------------------------------------
Depreciation carried forward (14,393) (2,392) - - -
-----------------------------------------------------------------
Net book value 248,892 262,092 - - -
-----------------------------------------------------------------
TOTAL MINING PROPERTIES
Cost brought forward 894,378 - - - -
Transfers from development properties 5,079 894,579 - - -
Disposals (1,744) (201) - - -
-----------------------------------------------------------------
Cost carried forward 897,713 894,378 - - -
Depreciation brought forward (8,901) - - - -
Charge for the year (43,051) (8,918) - - -
Disposals 8 17 - - -
-----------------------------------------------------------------
Depreciation carried forward (51,944) (8,901) - - -
-----------------------------------------------------------------
Net book value 845,769 885,477 - - -
-----------------------------------------------------------------
16
<PAGE>
LIHIR GOLD LIMITED
<CAPTION>
REHABILITATION
Cost brought forward - -
Acquisitions and disposals 6,775 -
-----------------------------------------------------------------
Cost carried forward 6,775 -
Amortisation brought forward - -
Charge for the year (500) -
Disposals - -
-----------------------------------------------------------------
Amortisation carried forward (500) -
-----------------------------------------------------------------
Net book value 6,275 -
-----------------------------------------------------------------
-----------------------------------------------------------------
TOTAL DEVELOPMENT AND MINING PROPERTIES 882,983 889,049 - - -
-----------------------------------------------------------------
NOTE 12: ACCOUNTS PAYABLE
US$ 000
1998 1997 1996 1995 1994
CURRENT
Trade creditors and accruals 24,056 17,510 50,100 9,492 -
Amounts payable to related bodies 3,386 1,949 955 562 -
-----------------------------------------------------------------
27,442 19,459 51,055 10,054 -
-----------------------------------------------------------------
NOTE 13: PROVISIONS
US$ 000
1998 1997 1996 1995 1994
CURRENT
Employee provisions - current 1,508 579 516 218 -
NON CURRENT
Employee provisions - non current 1,944 262 - - -
Deferred income tax 1,549 5,869 - - -
Rehabilitation provision 6,775 - - - -
-----------------------------------------------------------------
10,268 6,131 - - -
-----------------------------------------------------------------
Total provisions 11,776 6,710 516 218 -
-----------------------------------------------------------------
</TABLE>
17
<PAGE>
NOTE 14: INCOME TAX
INCOME TAX EXPENSE HAS BEEN CALCULATED AS FOLLOWS:
<TABLE>
<CAPTION>
US$ 000
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
PROFIT/(LOSS) FOR THE YEAR (15,458) 18,139 - - -
Prima facie income tax charge on operating profit at 35% (5,410) 6,348 - - -
Tax effect of permanent differences
- - non-deductible entertainment 5 - - - -
- - non-deductible superannuation 180 - - - -
- - non-deductible rehabilitation 13 - - - -
- - exempt interest income (59) (10) - - -
-----------------------------------------------------------------
INCOME TAX ADJUSTED FOR PERMANENT DIFFERENCES - - -
(5,271) 6,338
Under provision in previous years 85 - - - -
INCOME TAX EXPENSE ATTRIBUTABLE TO OPERATING PROFIT (5,186) 6,338
- - -
DEFERRED TAX PROVISION - - -
Balance carried forward (1,549) (5,869) - - -
This balance comprises the tax effect of: - - -
Depreciation (666) (5,033) - - -
Prepayments (883) (836) - - -
-----------------------------------------------------------------
(1,549) (5,869) - - -
-----------------------------------------------------------------
FUTURE INCOME TAX BENEFIT
Balance carried forward 1,153 64 - - -
This balance comprises the tax effect of:
Provisions 890 39 - - -
Other 263 25 - - -
-----------------------------------------------------------------
1,153 64 - - -
-----------------------------------------------------------------
</TABLE>
18
<PAGE>
NOTE 15: REMUNERATION AND RETIREMENT BENEFITS
(a) Directors' remuneration, including the value of benefits
received during the year:
<TABLE>
<CAPTION>
US$ 000
1998 1997
<S> <C> <C>
Baker, Phillips - -
Baylis, Joseph - -
Collier, John (Retired) - -
Garnaut, Ross 71 69
Ives, Glenn - -
Lepani, Charles (Retired) - -
Louden, Geoff - -
Merton, Michael 445 -
O'Reilly, John (Part year) 383 354
Siaguru, Anthony 28 23
Soipang, Mark 2 4
Taylor, Meg 25 24
Telfer, Ian - -
Vickerman, Andrew (Retired) 52 253
</TABLE>
In addition, during the year the Company paid a premium of US$104,000 for
insurance to cover liability whilst acting as a director or executive officer
( b) The number of employees, not including directors, whose remuneration and
benefits exceeded K100,000 fall into the following bands:
<TABLE>
<CAPTION>
REMUNERATION AND BENEFIT BAND NUMBER OF NUMBER OF
EMPLOYEES EMPLOYEES
1998 1997
<S> <C> <C> <C>
US$ PGK
$47,500 - $52,250 K100,000 - K110,000 2 7
$52,251 - $57,000 K110,001 - K120,000 2 4
$57,001 - $61,750 K120,001 - K130,000 3 18
$61,751 - $66,500 K130,001 - K140,000 5 6
$66,501 - $71,250 K140,001 - K150,000 18 9
$71,251 - $76,000 K150,001 - K160,000 7 4
$76,001 - $80,750 K160,001 - K170,000 7 6
$80,751 - $85,500 K170,001 - K180,000 5 -
$85,501 - $90,250 K180,001 - K190,000 6 -
$90,251 - $95,000 K190,001 - K200,000 2 4
$95,001 - $99,750 K200,001 - K210,000 2 -
$99,751 - $104,500 K210,001 - K220,000 - 1
$104,501 - $109,251 K220,001 - K230,000 2 -
$109,250 - $114,000 K230,001 - K240,000 1 1
19
<PAGE>
$123,501 - $128,250 K260,001 - K270,000 2 -
$137,751 - $142,500 K290,001 - K300,000 - 1
$142,501 - $147,250 K300,001 - K310,000 1 -
</TABLE>
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 $515,000
(1997 $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 $216,000 (1997 $233,000).
NOTE 17: AUDITORS' REMUNERATION
<TABLE>
<CAPTION>
Amounts received or due and receivable by US$ 000
Company auditors for: 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
- - auditing the accounts 85 110 36 30 7
- - other services 70 51 90 747 5
</TABLE>
NOTE 18: SHARE CAPITAL
<TABLE>
<CAPTION>
US$ 000
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
900,000,000 ordinary shares 621,314 621,314 621,314 621,314 -
38,324,196 ordinary shares 61,254 - - - -
3,594,530 ordinary shares 5,745 - - - -
-----------------------------------------------------------------
688,313 621,314 621,314 621,314 -
</TABLE>
In accordance with the Papua New Guinea Companies Act, the following applies:
- - par values are not attributable to shares
- - there is no requirement for authorised capital
(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$1.19 in
consideration for their agreement to underwrite the over-allotment
options under the Company's Global Offering. The option is valid for a
period of five years.
20
<PAGE>
LIHIR GOLD LIMITED
NOTE 19: RESERVES
<TABLE>
<CAPTION>
US$ 000
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
CAPITAL RESERVES - - - - -
</TABLE>
In accordance with the Papua New Guinea Companies Act, no Share Premium Reserve
exists. Figures prior to 1998 have been restated to reflect this.
NOTE 20: CAPITAL AND LEASING COMMITMENTS
(a) Operating Lease Commitments
<TABLE>
<CAPTION>
Non-cancellable Operating leases contracted for US$ 000
but not capitalised in the accounts 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Payable
- not later than one year 534 426 249 944 834
- later than one year but not later than 2 years 472 296 17 302 775
- later than two years but not later than 5 years 466 374 - - 159
------------ ----------- ----------- ----------- ------------
1,472 1,096 266 1,246 1,768
------------ ----------- ----------- ----------- ------------
</TABLE>
(b) Capital Expenditure Commitments
<TABLE>
<CAPTION>
US$ 000
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Capital expenditure commitments contracted for:
Capital expenditure projects 48,074 9,212 183,119 228,231 -
Payable
- not later than one year 48,074 9,212 183,119 195,755 -
- later than one year but not later than 2 years - - - 32,476 -
------------ ----------- ----------- ----------- ------------
48,074 9,212 183,119 228,231 -
------------ ----------- ----------- ----------- ------------
</TABLE>
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.
21
<PAGE>
LIHIR GOLD LIMITED
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$10 million.
CLAIMS
There are no outstanding claims against the company.
NOTE 22: FINANCE FACILITIES
<TABLE>
<CAPTION>
US$ 000
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Loan facilities 326,428 326,528 330,000 310,000 -
Amount utilised (326,428) (321,528) (60,000) - -
-------------- --------------- --------------- --------------- ---------------
Unused loan facilities 0 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 1998 the
total facility had been drawn (1997: $295,000,000).
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
date of entry; (l) the Manager is no longer wholly owned and controlled
by Rio Tinto at a time when the Management Agreement
22
<PAGE>
LIHIR GOLD LIMITED
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 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.
23
<PAGE>
LIHIR GOLD LIMITED
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")
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$26.5million 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 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
24
<PAGE>
LIHIR GOLD LIMITED
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.
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>
44,430 47,990 212,157 13,722
</TABLE>
Interest accrued at 31 December 1998 was $3,413,000 (1997: $4,403,000), and is
included in Accounts Payable.
Principal repayments due in less than one year and
accrued interest are shown as Current Liabilities in the Balance Sheet.
NOTE 23: HEDGING INSTRUMENTS
The Company has entered into a series of agreements with financial institutions
in relation to future sales of gold. The purpose of these transactions is to
protect the level of income in future years, and it is not Company policy to
engage in speculative hedging activities.
The following tables summarise the hedging program as at 31 December 1998:
PROGRAM REQUIRED UNDER THE MAIN LOAN FACILITY
<TABLE>
<CAPTION>
YEAR OUNCES AVERAGE REVENUE ASSURED TYPE OF INSTRUMENT
STRIKE PRICE (US$ MILLION)
(US$/OZ)
<S> <C> <C> <C> <C>
1999 217,100 439.56 95.4 Mainly Put Options
2000 214,950 452.71 97.3 Mainly Put Options
2001 205,500 466.23 95.8 Mainly Put Options
2002 200,550 480.33 96.3 Mainly Put Options
------------------ -------------------------- -------------------------
838,100 459.13 384.8
</TABLE>
25
<PAGE>
LIHIR GOLD LIMITED
FLOATING FORWARDS PROGRAM
<TABLE>
<CAPTION>
YEAR OUNCES AVERAGE REVENUE ASSURED TYPE OF INSTRUMENT
STRIKE PRICE (US$ MILLION)
(US$/OZ)
<S> <C> <C> <C> <C>
1999 80,000 352.20 28.2 Floating Forwards
2000 80,000 352.20 28.2 Floating Forwards
2001 40,000 330.00 13.2 Put Options
2002 40,000 330.00 13.2 Put Options
2003 40,000 330.00 13.2 Put Options
2004 120,000 330.00 39.6 Put Options
2005 120,000 330.00 39.6 Put Options
2006 120,000 330.00 39.6 Put Options
2007 120,000 330.00 39.6 Put Options
------------------------------------------------------------
760,000 334.74 254.4
</TABLE>
After 31 December 2000 the further 600,000 ounces are available at a nominal
strike price of US$352.20. However, if during this period the spot price on a
quarter end date is between US$310 and US$340 the forward ounces are
proportionately cancelled and replaced by put options with a strike price of
US$330. This substitution of put options for floating forwards is reflected
in the table above. The net revenue received over the life of the program is
adjusted by the gold lease rate actually prevailing at the value date.
SPOT DEFERRED FORWARDS
<TABLE>
<CAPTION>
YEAR OUNCES AVERAGE REVENUE ASSURED TYPE OF INSTRUMENT
STRIKE PRICE (US$ MILLION)
(US$/OZ)
<S> <C> <C> <C> <C>
1999 306,100 315.81 96.7 Spot Deferred Forwards
</TABLE>
The minimum total revenue generated from these programs will be
US$735.9 million. Revenue generated from the same number of ounces at the
prevailing spot price at 31 December 1998 of US$287.45 per ounce would be
US$547.4 million. Unrealised gains in the value of the hedge book have not
been brought to account in the profit for the year.
There are four counterparties to these transactions, all of which are
recognised financial institutions with a minimum credit rating of Aa3. As at
the 31 December 1998 the Company had a deferred hedging cost of $17.250m on
the purchase of options under the main loan facility (1997 $20.496m). 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 program.
As at 31 December 1998 the Company had a deferred hedging gain of $1.368m
arising from the restructuring of the floating forwards program with J Arons.
26
<PAGE>
The accounting treatment of any option premiums is to defer the full amount,
and then to subsequently charge to Profit and Loss at each value date the
cost of those options that expire on that date.
The Company does not use financial instruments to hedge future interest rates
or foreign exchange transactions.
NOTE 24: SEGMENT REPORTING
The Company operates in the gold industry in Papua New Guinea.
NOTE 25: RELATED PARTY TRANSACTIONS
Transactions between related parties are on normal commercial terms and
conditions which are no more favourable than those available to other parties.
MANAGEMENT AGREEMENT
Lihir Management Company Limited (LMC), a wholly owned subsidiary of Rio
Tinto Plc, manages the Company and the Lihir Project pursuant to the
Management Agreement dated 17 March 1995. LMC receives a management fee for
managing the project.
There are three directors who are on the Board of the Company and LMC.
<TABLE>
<CAPTION>
US$ 000
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Related Companies
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 2,196 1,943 1,567 1,127 640
LMC Management fee 3,231 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
27
<PAGE>
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: EARNINGS PER SHARE
The number of ordinary shares has been based on the weighted average number
of ordinary shares on issue during the year. The diluted earnings per share
takes account of the future exercise of the options.
<TABLE>
<CAPTION>
US$ 000
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net profit/(loss) attributable to ordinary shareholders (10,272) 11,801 - - -
Weighted average number of ordinary shares 924,642 900,000 900,000 900,000 -
Basic EPS (1.1) 1.3 - - -
Conversion of options into ordinary shares 7,200 7,200 7,200 7,200 -
Diluted number of ordinary shares 931,842 907,200 907,200 907,200 -
Diluted EPS (1.1) 1.3 - - -
</TABLE>
NOTE 28: 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
$113.7 million incurred prior to the date that commercial feasibility was
determined to exist have been capitalised as part of the mineral development
property asset. Under US GAAP such costs would have been expensed.
28
<PAGE>
RECONCILIATION TO GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN THE UNITED STATES
<TABLE>
<CAPTION>
1998 1997
US$ 000 US$ 000
<S> <C> <C>
SHAREHOLDERS' EQUITY IN ACCORDANCE WITH IAS GAAP 689,842 633,115
Adjusted as follows:
- - General and administrative costs expensed (34,430) (34,430)
- - Project financing (11,470) (11,470)
- - Depreciation 9,050 1,495
- - Deferred tax provision 1,228 3,873
Reversal of exploration and evaluation costs incurred prior to
identification of commercial feasibility (113,700) (113,700)
--------------------------------
ACCUMULATED ADJUSTMENTS UNDER US GAAP (149,322) (154,232)
--------------------------------
SHAREHOLDERS' EQUITY UNDER US GAAP 540,520 478,883
--------------------------------
--------------------------------
NET INCOME/(LOSS) IN ACCORDANCE WITH IAS GAAP (10,272) 11,801
Adjusted as follows:
- - General and administrative costs expensed - (12,559)
- - Depreciation 7,556 1,495
- - Income tax expense (2,645) 3,873
NET INCOME UNDER US GAAP (5,361) 4,610
--------------------------------
--------------------------------
</TABLE>
No deferred tax asset relating to accumulated losses incurred under US GAAP
up to 31 December 1998 has been recognised in the above reconciliation. If
the deferred tax asset were to be recognised, the shareholders' equity under
US GAAP would be $590,487 (1997 $526,332).
29
<PAGE>
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
(Chief Accounting Officer)
August 31, 1999
30
<PAGE>
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Document
- ----------- --------
<S> <C>
*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)(1) -- 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(a)(2) -- Third Amendment to Rights Agreement, dated and effective as of November 10,
1998, between the Company and The Bank of New York, as Rights Agent.
*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).
E-1
<PAGE>
*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).
*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 (Exhibit 10(a)(2) to the Company's Annual Report on Form 10-K for the
year ended December 31, 1997 File No. 1-9666).
+*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).
+-*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 in 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 (Exhibit 10(c)(2) to the Company's Annual Report on Form
10-K for the year ended December 31, 1997; File No. 1-9666).
+*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 (Exhibit 10(e)(2) to
the Company's Annual Report on Form 10-K for the year ended December 31,
1997; File No. 1-9666).
E-2
<PAGE>
*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).
*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 Quarterly Report on Form 10-Q
for the quarter 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).
E-3
<PAGE>
+*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.
+-*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).
*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).
+-*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)(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(m)(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(n)(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(n)(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).
E-4
<PAGE>
*10(n)(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).
*10(o)(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(o)(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(p) -- 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.
=21 -- Subsidiaries of the Company.
=23(a) -- Consent of PricewaterhouseCoopers LLP (Battle Mountain
Gold Company).
23(b) -- Consent of PricewaterhouseCoopers (Lihir Gold Limited).
=27 -- Financial Data Schedule.
</TABLE>
- ------------------------
* Incorporated by reference as indicated.
= Previously filed.
+ 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.
- - 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(l)
above with each of Messrs. Bayer, Atkinson, Baylis and Keyes.
E-5
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (Nos. 33-14605, 33-22146, 33-47570, 33-53195,
333-14521 and 333-14523) and Form S-3 (No. 333-51701) of Battle Mountain Gold
Company of our report dated April 28, 1999 which is included in this Annual
Report on Form 10-K/A.
/s/ PricewaterhouseCoopers
PricewaterhouseCoopers
/s/ J.C. Seeto
by: JC Seeto
Partner
Port Moresby, Papua New Guinea
September 1, 1999
