<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 26, 1999
BATTLE MOUNTAIN GOLD COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
Nevada 1-9666 76-0151431
(STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (IRS EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
333 Clay Street, 42nd Floor
Houston, Texas 77002
(ADDRESS, OF PRINCIPAL EXECUTIVE (ZIP CODE)
OFFICES)
-------------------------------------
Registrant's telephone number, including area code: (713) 650-6400
Not applicable
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
<PAGE>
ITEM 5. OTHER EVENTS.
5.1 Attached hereto as Exhibit 99.1 and incorporated by reference
herein is certain information regarding the Company's third quarter financial
results as presented in a press release dated October 26, 1999.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
c) Exhibits.
99.1 Press Release issued by Battle Mountain Gold Company dated
October 26, 1999.
SIGNATURES
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 hereunto duly authorized.
Date: October 29, 1999. BATTLE MOUNTAIN GOLD COMPANY
(Registrant)
By: /s/ Greg V. Etter
----------------------------------
Name: Greg V. Etter
Title: Vice President, General Counsel
and Corporate Secretary
<PAGE>
[LOGO] NEWS
IMMEDIATE RELEASE
CONTACT: LES VAN DYKE
(713) 653-7248 OR
[email protected]
WEB PAGE: www.bmgold.com
BATTLE MOUNTAIN GOLD POSTS THIRD QUARTER LOSS, CONTINUES
STRONG OPERATING PERFORMANCE
Houston, October 26, 1999 -- Battle Mountain Gold Company (BMG-NYSE;
BMC-TSE) today reported a third quarter consolidated net loss of $14 million, or
6 cents per share, compared with a net loss of $9.6 million, or 4 cents per
share, in the same period last year. For the first nine months of 1999, the
Company reported consolidated net losses of $45 million, or 20 cents per share,
compared with $24.2 million, or 11 cents per share, in the same period last
year.
BMG President and Chief Operating Officer, John A. Keyes, said that the
quarter was characterized by the following factors:
- - operating cash flow $11 million higher than the first half of 1999,
- - an $18 per ounce reduction in cash costs over the second quarter,
- - a 6% increase in production over the second quarter,
- - a 1.5 million ounce reserve increase at the Phoenix project, as previously
reported,
- - a strengthening of the Company's financial position,
- - and a $9.5 million non-cash environmental remediation charge for the San Luis
property, offset by a $6.6 million partial restoration of previous non-cash
write-downs of Niugini Mining Ltd. (NML).
Keyes noted that the Company produced 198,000 ounces of gold at an average
cash production cost of $152 per ounce during the third quarter. Gold production
for the first nine months was 561,000 ounces at an average cash cost of $164 per
ounce. The Company expects to exceed its production target for the year of
725,000 ounces and improve on its cash cost forecast of $172 per ounce.
Keyes said that cash flow from operations improved significantly during the
nine-month period to $13.6 million, compared with $2.6 million for the first six
months of 1999. He emphasized that the Company has made significant strides
during the year to lower costs, as reflected by sharply diminishing operating
losses, even at lower gold prices. These improvements are expected to be clearly
reflected in the Company's fourth quarter performance, assuming recent gains in
gold prices to above $300 per ounce are sustained over the period.
Keyes added that the Company's financial position was strengthened by the
completion of the restructuring of its $104 million loan facility; the prospect
of greatly improved liquidity in
more....
<PAGE>
BMG REPORTS STRONG OPERATING PERFORMANCE, ADD 1.....
the Company's interest in Lihir through the pending merger of NML with Lihir
Gold Limited (LGL); and the implementation of a limited hedging program. The
Company's cash position was $79.2 million at the end of the first nine months,
including $40 million in restricted cash related to the Company's recently
restructured loan agreement which greatly improves the Company's repayment
schedule over the next 4 years.
BMG's cash flow position going forward is expected to be enhanced by
improving gold prices, and will also be supported by the Company's limited
hedging program. The hedge program is designed with three objectives in mind: To
help protect the next five years' cash flow from any potential price
deterioration; to help ensure that the Company is able to execute its operating
and development plans while meeting its financial obligations; and to maintain
exposure to upside moves in the gold price.
<TABLE>
<CAPTION>
HEDGE POSITION (AS OF 10/26/99)
TYPE OUNCES PERIOD COVERED PRICING
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
COLLAR 100,000 1Qtr. '00 - 4Qtr. '03 Put @ $290 -Call @ $335
COLLAR 100,000 1Qtr. '00 - 4Qtr. '03 Put @ $280 -Call @ $340
COLLAR 100,000 1Qtr. '00 - 4Qtr. '03 Put @ $320 -Call @ $370
- -------------------------------------------------------------------------------------
</TABLE>
To date, BMG has taken advantage of the rising market to hedge a total of
300,000 ounces of production for delivery over the next four years, or about
19,000 ounces per quarter. In addition, as part of its 90-day gold sales
program, the Company could be required to deliver 15,000 ounces of gold in the
fourth quarter of 1999 at $320 per ounce. BMG currently produces about 190,000
ounces per quarter. There is no lease rate or margin call risk on the Company's
current hedge book. So far, the Company has employed a cash-neutral strategy,
utilizing matched puts and calls. The puts create floors ranging from $280 to
$320 per ounce, and the calls range from $335 to $370 per ounce on the upside.
BMG expects to continue to build that position in a gradual manner over the next
few years, as appropriate. The Board will continue to regularly monitor the
implementation of the Company's hedging program, and these activities will be
updated as part of BMG's normal quarterly reporting.
The loss for the quarter included a non-cash environmental remediation
charge for the San Luis property of $9.5 million, which was offset by a $6.6
million partial restoration of the previous non-cash write-down of the Company's
investment in NML. The San Luis remediation charge is based upon the Company's
best estimate of the cost to address long-term water-quality issues at the shut
down San Luis property. These issues are technical in nature, and the water
quality does not pose a risk to human health or the environment. The Niugini
Mining gain, which is in keeping with current accounting standards and
practices, reflects an increase of 10% in the market value of NML's interest in
LGL. As previously reported, NML has agreed to be acquired by Lihir Gold
Limited. The transaction is subject to necessary regulatory and shareholder
approvals.
The loss for the nine month period ending September 30 includes the
environmental remediation charge of $9.5 million, offset by foreign currency
gains of $6.9 million. The losses
more....
<PAGE>
BMG REPORTS STRONG OPERATING PERFORMANCE, ADD 2.....
were significantly impacted by the $34 per ounce decline in average realized
gold prices to $272 per ounce, compared with the same period last year.
OPERATIONS/DEVELOPMENT
For 1999, BMG continues to enjoy a position as one of the industry's lower
cost producers. Cash operating costs for 1999 are targeted to average less than
$170 per ounce, with total production now expected to be approximately 750,000
attributable ounces of gold.
Keyes emphasized the significant progress that is being made at the Phoenix
project, noting that it is a sound project with rapidly rising rates of return
at gold prices of $280 per ounce and above. Assuming a $300 gold price, the
Company currently hopes to add approximately 400,000 ounces at year end.
Additional upside potential still remains both within the current interim pit
design, which could help to further lower the overall strip ratio and improve
project economics, and elsewhere on the Complex property. Permitting for Phoenix
is moving ahead, and the Company currently hopes to have a draft environmental
impact statement early next year.
In Canada, the GOLDEN GIANT mine performed well during the quarter with
both higher than plan throughput and grades contributing to higher than
anticipated production and lower costs. Development work on Block 5 continued to
advance.
The 88% owned KORI KOLLO mine in Bolivia continued to have good performance
and is essentially on target for the year. Ore grades for the quarter were on
plan, partially offset by slightly lower recoveries and mill throughput.
Work is moving ahead on schedule on the year-long 200,000-ton pilot-plant
test of the near-by LLALLAGUA bio-oxidation heap leach project, which continues
to indicate recovery rates in the 70% range are feasible. BMG expects to make a
decision to proceed with detailed drilling of the deposit this quarter and to
reach a production decision late in 2000. The Company's current model shows that
it has a minimum of 850,000 ounces of resources at Llallagua at $280 gold, with
good upside potential. The project is expected to have low capital development
costs, because the Company expects to be able to utilize the existing Kori Kollo
infrastructure.
The 84.65% owned HOLLOWAY mine reported significant gains in production
performance as both tonnage and grade improved. Cash operating costs during the
third quarter were $162 per ounce, compared with $190 in the same period last
year.
BMG's 50% joint venture interest in the PAJINGO COMPLEX in Queensland,
Australia, performed ahead of plan due to slightly higher grades and higher mill
throughput. During the quarter, cash production costs were $112 per ounce at
this long-term low-cost asset. Total production at the Vera/Nancy mine there is
targeted to double by the year 2000 to at least 200,000 ounces per year.
EXPLORATION
Keyes noted that the Company has been making good progress in its reserve
replacement work, even at lower gold prices. As a result, three of BMG's four
mines -- Holloway, Kori Kollo
more....
<PAGE>
BMG REPORTS STRONG OPERATING PERFORMANCE, ADD 3.....
and the Vera/Nancy JV, are in a position to add reserves with very little
capital required. Both Phoenix and Crown Jewel also have tremendous potential.
The result is anticipated to be a net increase in the Company's year end 1999
estimated reserve position, compared with last year.
At HOLLOWAY, the underground drill program this year hopes to replace mined
reserves. This material is being added in the Lightning Zone, with excellent
upside potential in the Middle Zone. Three drills are currently working under
ground, and an additional machine is drilling from the surface. Recently, BMG
has several good holes at its Blacktop property, in which it has an option to
earn a 100% interest. Blacktop is only about one mile from Holloway and could be
easily accessed from the Company's current underground workings. Assay results
returned from the first three holes in the Blacktop drill program reported
significant intercepts of 0.188 ounces per ton gold (opt)/87 ft, including two
higher grade intercepts of 0.37 opt/20 ft and 0.21 opt/29 ft. The other two
holes had intercepts of 0.298 opt/52 ft and 0.120 opt/17 ft. Drilling to confirm
and expand this satellite resource is continuing.
At KORI KOLLO, in Bolivia, in addition to the previously mentioned
Llallagua deposit, in-pit drilling in the Kori Kollo pit is confirming
additional reserves within the current pit limits. Results to date from the
in-pit drilling indicate that the pit life can be extended. Both grade and
ounces have improved, and the pit bottom is being redesigned to access the new
material.
At VERA/NANCY, in Australia, the joint venture is continuing to add
resources. The latest resource calculation for Vera South is approximately 2.2
million tons at 0.41 ounces per ton. That works out to roughly 450,000 ounces to
BMG's account. This brings the overall resource to approximately 4.6 million
tons at 0.426 ounces per ton, or about 1,965,000 ounces. Drill intercept
highlights for the quarter include 0.511 opt/31ft, 0.416 opt/7 ft, 0.364 opt/28
ft, and 0.108 opt/25 ft.
In terms of more grass-roots efforts, the Company has continued drill
testing Tres Cruces in Peru and Casposo in Argentina. At TRES CRUCES, all
planned drilling was completed in September. Data assessment and economic
modeling will be completed to bring the project to a decision point as soon as
possible.
CASPOSO is located in the lower elevations of the Andes, near San Juan,
Argentina, and is a very promising "grass roots" exploration project. Surface
showings there are very similar to the Vera/Nancy deposit in Australia. In the
first phase of diamond drilling, eight of the 12 holes yielded excellent results
and confirm the similarities with the Vera/Nancy property. Among the better
results are: 1.39 opt gold (Au) and 4.66 opt silver (Ag)/17 ft; 0.26 opt Au and
1.26 opt Ag/25 ft; and 0.157 opt Au and 6.47 opt Ag/43 ft. In the second round
of drilling, five of the 10 holes returned significant assays including: 0.665
opt Au/14 ft; 0.287 opt Au/65 ft; 0.266 opt Au/30 ft; 0.193 opt Au/22 ft; and
0.136 opt Au/75 ft. Additional work is under review.
The United States Private Securities Litigation Reform Act of 1995 provides
a "safe harbor" for certain forward-looking statements. Operating, exploration
and financial data, and other statements in this document, are based on
information that the Company believes reasonable, but involve significant
uncertainties as to future gold prices, costs, ore grades, mining and processing
conditions, and regulatory and permitting matters. Actual results and timetables
could vary significantly from the estimates presented. Also refer to the
cautionary statement contained in the Company's Form 10-K and 10-Q for the most
recent reporting periods. #####
BATTLE MOUNTAIN GOLD COMPANY
<PAGE>
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30 September 30
------------ ------------
US$ MILLIONS, EXCEPT PER SHARE AMOUNTS 1999 1998 1999 1998
- -------------------------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Sales $ 54.6 $ 70.0 $ 161.8 $ 217.2
------- ------- ------ ------
Costs and expenses
Production costs 36.1 39.2 109.0 122.6
Depreciation, depletion and amortization 16.6 19.9 46.8 62.4
Exploration, evaluation & other lease costs, net 3.9 3.5 13.1 16.3
General and administrative expenses 4.3 3.7 11.3 11.1
Environmental remediation charges 9.5 -- 9.5 --
Loss (gain) related to assets held for sale (6.6) -- 13.3 --
------- ------- ------ ------
Total costs and expenses 63.8 66.3 203.0 212.4
------- ------- ------ ------
Operating income (loss) (9.2) 3.7 (41.2) 4.8
Interest expense (3.7) (4.5) (11.2) (13.9)
Interest income 0.9 2.7 3.3 8.7
Foreign currency exchange gain (loss), net 0.1 (7.2) 6.9 (12.6)
Minority interest in net loss (income) 0.5 -- 1.1 (1.3)
Equity in losses of Lihir -- (1.8) -- (4.5)
Other income (expense), net 0.4 (0.2) 0.9 0.2
------- ------- ------ ------
Loss before income taxes (11.0) (7.3) (40.2) (18.6)
Income tax benefit 1.0 1.8 3.2 5.4
Mining tax expense (2.1) (2.2) (2.4) (5.4)
------- ------- ------ ------
Net loss (12.1) (7.7) (39.4) (18.6)
Preferred dividends 1.9 1.9 5.6 5.6
------- ------- ------ ------
Net loss to common shares $ (14.0) $ (9.6) $ (45.0) $ (24.2)
------- ------- ------ ------
------- ------- ------ ------
Loss per common share - basic and diluted $ (.06) $ (.04) $ (.20) $ (.11)
------- ------- ------ ------
------- ------- ------ ------
Dividends per common share $ -- $ .025 $ -- $ .050
------- ------- ------ ------
------- ------- ------ ------
Average common shares outstanding for loss
per share purposes - basic and diluted 229.9 229.8 229.9 229.8
------- ------- ------ ------
------- ------- ------ ------
</TABLE>
<PAGE>
BATTLE MOUNTAIN GOLD COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
US$ MILLIONS (Unaudited)
- ------------
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 38.8 $ 147.6
Restricted cash 0.4 7.7
Accounts and notes receivable 12.0 13.8
Product inventories 7.8 8.9
Materials and supplies, at average cost 25.2 23.4
Assets held for sale 95.0 108.3
Other current assets 3.2 2.7
-------- --------
Total current assets 182.4 312.4
Investments 10.8 19.4
Property, plant and equipment, net 339.5 341.9
Restricted cash 40.0 --
Other assets 14.9 20.4
-------- --------
Total assets $ 587.6 $ 694.1
-------- --------
-------- --------
Liabilities and Shareholders' Equity
Current liabilities
Short-term borrowings $ -- $ 14.9
Current maturities of long-term debt 2.7 37.0
Debt due upon disposal of assets held for sale 30.0 --
Accounts payable 14.8 14.3
Income and mining taxes payable 13.6 23.9
Other current liabilities 14.3 12.9
-------- --------
Total current liabilities 75.4 103.0
Long-term debt 176.8 203.6
Deferred income and mining taxes 67.6 72.0
Other liabilities 61.5 50.1
-------- --------
Total liabilities 381.3 428.7
Minority interest 6.4 17.7
Shareholders' equity 199.9 247.7
-------- --------
Total liabilities and shareholders' equity $ 587.6 $ 694.1
-------- --------
-------- --------
</TABLE>
<PAGE>
BATTLE MOUNTAIN GOLD COMPANY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine months ended
September 30
------------
US$ MILLIONS 1999 1998
- ------------ ---- ----
<S> <C> <C>
Cash flows from operating activities
Net loss $ (39.4) $ (18.6)
Adjustments to reconcile net loss to cash flows
from operating activities:
Depreciation, depletion and amortization 46.8 62.4
Environmental remediation charges 9.5 --
Deferred income taxes (2.8) (16.8)
Foreign currency exchange loss (gain), net (6.9) 12.6
Loss related to assets held for sale 13.3 --
Equity in losses of Lihir -- 4.5
Change in working capital accounts, net (5.9) 13.3
Other, net (1.0) 4.7
-------- --------
Net cash flows provided by operating activities 13.6 62.1
-------- --------
Cash flows from investing activities
Capital expenditures (37.3) (37.9)
Crown Butte liquidating dividend to minority shareholders (11.0) --
Proceeds from sale of assets 11.3 1.9
New World settlement -- 34.9
Investment in Lihir Gold Limited -- (11.5)
Other, net (2.9) 1.4
-------- --------
Net cash flows used in investing activities (39.9) (11.2)
-------- --------
Cash flows from financing activities
Debt repayments (30.8) (30.0)
Decrease in short-term borrowings (14.9) (4.9)
Cash dividend payments (5.6) (17.1)
Decrease (increase) in restricted cash (32.7) 8.7
Other, net 0.1 0.3
-------- --------
Net cash flows used in financing activities (83.9) (43.0)
-------- --------
Effect of exchange rate changes on cash and cash equivalents 1.4 0.3
-------- --------
Net increase (decrease) in cash and cash equivalents (108.8) 8.2
Cash and cash equivalents at beginning of period 147.6 185.0
-------- --------
Cash and cash equivalents at end of period $ 38.8 $ 193.2
-------- --------
-------- --------
</TABLE>
BATTLE MOUNTAIN GOLD COMPANY
<PAGE>
SUPPLEMENTAL INFORMATION - OPERATING DATA (Unaudited) (1)
(Production data reflects BMG attributable interests)
(US$, ounces in thousands)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30 September 30
------------ ------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
GOLDEN GIANT
Gold ounces recovered 94 103 258 293
Silver ounces recovered 9 6 16 23
- -------------------------------------------------------------------------------------------------------------------
Cost per Gold Ounce Produced
Cash production costs $ 126 $ 106 $ 147 $ 115
Depreciation, depletion and amortization 64 62 65 67
Reclamation and mine closure costs 3 4 3 4
---- ---- ---- ----
Total production costs $ 193 $ 172 $ 215 $ 186
- -------------------------------------------------------------------------------------------------------------------
KORI KOLLO (88% Interest)
Gold ounces recovered 61 72 187 221
Silver ounces recovered 150 205 516 650
- -------------------------------------------------------------------------------------------------------------------
Cost per Gold Ounce Produced (2)
Cash production costs $ 196 $ 182 $ 191 $ 177
Depreciation, depletion and amortization 92 129 89 131
Reclamation and mine closure costs 11 11 11 11
---- ---- ---- ----
Total production costs $ 299 $ 322 $ 291 $ 319
- -------------------------------------------------------------------------------------------------------------------
HOLLOWAY (84.65% Interest)
Gold ounces recovered 28 20 71 59
- -------------------------------------------------------------------------------------------------------------------
Cost per Gold Ounce Produced
Cash production costs $ 162 $ 190 $ 188 $ 220
Depreciation, depletion and amortization 130 107 131 113
Reclamation and mine closure costs 2 2 2 2
---- ---- ---- ----
Total production costs $ 294 $ 299 $ 321 $ 335
- -------------------------------------------------------------------------------------------------------------------
VERA/NANCY (50% Interest)
Gold ounces recovered 15 10 45 35
Silver ounces recovered 11 9 35 29
- -------------------------------------------------------------------------------------------------------------------
Cost per Gold Ounce Produced
Cash production costs $ 112 $ 150 $ 116 $ 138
Depreciation, depletion and amortization 39 35 36 30
Reclamation and mine closure costs 2 2 1 1
---- ---- ---- ----
Total production costs $ 153 $ 187 $ 153 $ 169
- -------------------------------------------------------------------------------------------------------------------
OTHER (3)
Gold ounces recovered 23 82
Silver ounces recovered 29 97
- -------------------------------------------------------------------------------------------------------------------
Cost per Gold Ounce Produced
Cash production costs $ 259 $ 232
Depreciation, depletion and amortization 96 95
---- ----
Total production costs $ 355 $ 327
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
BATTLE MOUNTAIN GOLD COMPANY
<PAGE>
SUPPLEMENTAL INFORMATION - OPERATING DATA (Unaudited) (1)
(Production data reflects BMG attributable interests)
(US$, ounces in thousands)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30 September 30
------------ ------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
AGGREGATE DATA
Gold ounces recovered - BMG share 198 229 561 690
Gold ounces sold - BMG share 195 230 558 689
Gold ounces recovered 207 253 587 769
Gold ounces sold 205 254 585 768
Average price per gold ounce realized $ 262 $ 299 $ 272 $ 306
- ------------------------------------------------------------------------------------------------------------------
Silver ounces recovered - BMG share 170 249 567 799
Silver ounces sold - BMG share 165 253 562 800
Silver ounces recovered 190 283 637 917
Silver ounces sold 184 290 631 920
Average price per silver ounce realized $ 5.26 $ 5.19 $ 5.20 $ 5.61
- ------------------------------------------------------------------------------------------------------------------
Weighted Average Cost per Gold Ounce Produced
Cash production costs $ 152 $ 155 $ 164 $ 159
Depreciation, depletion and amortization 80 90 79 93
Reclamation and mine closure costs 5 5 6 5
----- ----- ----- -----
Total production costs $ 237 $ 250 $ 249 $ 257
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Effective January 1, 1999, current and prior period production costs are
presented on an ounces-produced basis, versus an ounces-sold basis as
previously reported.
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. These guidelines also provide 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 calculations and are therefore not
included in these cost calculations.
(3) Battle Mountain Complex, Lihir and San Cristobal. Production data for the
Reona mine at the Battle Mountain Complex is not presented for 1999 because
it was placed on care and maintenance effective January 1, 1999. Data for
the Lihir and San Cristobal mines are not included in 1999 as the Company
has classified its investment in Niugini Mining Limited as an asset held for
sale as of December 31, 1998.
