Battle Mountain Gold posts first-quarter loss, expects to meet production targets for year 1997.

HOUSTON--(BUSINESS WIRE)--April 30, 1997--Battle Mountain Gold Co. (NYSE:BMG) (TSE:BMC) Wednesday reported a first-quarter consolidated net loss of $9.1 million, or 4 cents per share attributable to common shareholders.

The first-quarter loss compares with net income of $3.1 million, or 1 cent per share, in the same period last year. Consolidated gross revenue for the first quarter of 1997 was $76.5 million, compared with $105 million a year earlier.

BMG President and Chief Executive Officer Ian D. Bayer said first-quarter 1997 net income was impacted primarily by lower average realized gold prices of $358 per gold ounce sold, compared with $398 in the first period of 1996; and lower gold production, which is expected to be made up during the year.

Also impacting the quarter was a final merger-related expense of $2.2 million. These factors were somewhat offset by lower operating costs and lower depreciation, depletion and amortization charges.

Cash flow from operating activities in the first quarter of 1997 was $14.4 million, compared with $20.7 million in the first quarter of 1996.

Attributable gold production for the first quarter was approximately 200,000 ounces, compared with about 246,000 ounces in the same period of last year.

Cash production costs in the quarter averaged $222 per gold ounce sold, compared with $203 per ounce in the first quarter of 1996.

Strategy and Outlook

Speaking at the company's 1997 annual meeting, Bayer noted that the merger integration activities are complete, and that while first-quarter results are below plan, the company expects to meet its production targets for the year.

BMG's strategy is clear and focused, Bayer explained. Battle Mountain Gold is in business to create shareholder wealth by producing more than 900,000 ounces of gold in 1997 at the lowest possible cost, while growing the company.

Overall, BMG believes it is in a highly competitive position to accomplish its goals:

-- Its foundation is built on quality, diversified reserves, with

more than half of scheduled future production expected to come

from North America.

-- BMG has two flagship, low-cost ore bodies in the Golden Giant

and Kori Kollo mines.

-- With the transition from older higher-cost mines to new lower-

cost properties, Battle Mountain also has some of the lowest

cash production costs in the industry. This allows it to

better weather cyclical fluctuations in gold prices and to be

positioned to respond to opportunities that may present

themselves.

-- The company's low-cost position also translates into strong

cash flow from operations. Coupled with a sound cash position,

BMG expects to be able to fully fund its capital-development

needs over the next few years.

-- BMG also has anticipated production growth in the pipeline

of about 30 percent before the end of the decade.

-- The company is backstopping this growth with an aggressive

corporate development program and a broad international

exploration effort that is expected to provide growth in the

next century.

-- Importantly, BMG has on board the people with the technical

expertise and the entrepreneurial drive to accomplish its

goals.

Often, progress is measured in big bold strides such as a major discovery or acquisition, Bayer continued. These can be company makers. But progress also comes in smaller steps and in doing things well every day.

Since the merger, BMG has been doing many smaller things well, he said. For example, at Niugini Mining, activities have been restructured to largely focus their efforts on Lihir, as the Red Dome and San Cristobal mines near the end of their productive lives. In so doing, NML has moved from a loss position of approximately $1 million per month to near break-even and is still improving.

Restructuring efforts at the Kori Kollo mine could save as much as $10 million annually and improve operating efficiencies.

Elsewhere, the company's exploration efforts have been restructured, consolidating offices, focusing on priority countries and providing increased and sustained funding.

All of these activities are a necessary part of going forward, Bayer told the meeting.

To achieve these goals, BMG has put in place a strong, experienced, decentralized management team, substantially from the depth of personnel on board at the time of the merger. Operations, exploration and other offices have direct input into and control of the business area for which they are responsible and accountable in association with a small head-office group enabling the company to move quickly and decisively, he said.

These goals and objectives are the ones that are within the company's control, Bayer noted. Meeting these annual operating, exploration and growth targets are the factors by which BMG should be measured as it goes forward, he said.

Less under BMG's sphere of influence is the gold price, which has come under heavy pressure. Recent factors impacting the market include: continued fears of European central-bank sales, coupled with low worldwide inflationary expectations and relatively high non- North American gold prices due to the strength of the U.S. dollar.

Concern about possible producer selling, and an increase in short selling activity by funds, is also impacting the market.

Arguing for higher prices in the future, these factors were somewhat offset by another record year for demand in developing markets and jewelry offtake as a whole, despite gold-price increase in many countries. Demand in India and the United States led the way in 1996, though it slipped in other important markets such as China and Japan.

In total, annual new mine production in 1996 met only about 71 percent of total fabrication demand. Going forward, if speculation about the Busang deposit in Indonesia proves correct, significant previously expected new mine-production growth will not be coming to market.

To the degree these growth expectations have been factored into the gold price and are proved to be incorrect, this too can be bullish for gold's outlook, Bayer said.

A period of low gold prices is not necessarily all negative for a financially healthy, low-cost producer such as Battle Mountain, because it opens up opportunities, he added.

Of course, not all assets are equal. Battle Mountain has quality assets, and it is working to acquire and discover quality assets.

BMG assesses country risk on a case-by-case basis before entering an area for exploration or development, Bayer explained. North America will continue to play a large role in the company's future, but it has excellent exploration opportunities elsewhere in the world. New production will soon be coming from the company's interest in the Lihir gold deposit in Papua New Guinea and from Vera/Nancy in Australia.

Operations

Bayer noted that operations at the Golden Giant mine, in Canada, were affected by technical problems in the mill, which resulted in approximately 11,000 ounces of gold production remaining in solution. These ounces are expected to be recovered during the next three months.

In Bolivia, the Kori Kollo mine, in which BMG has an 88 percent interest, experienced the worst rains in 50 years, which limited pit flexibility and resulted in production being below target for the quarter. However, this production will be made up as the year progresses, Bayer said.

More important, a number of changes have been made at Kori Kollo, and BMG is continuing to focus on a series of productivity improvements that will make a significant difference to ongoing operations.

Recent administrative and operating changes already accomplished have helped lower costs at Kori Kollo in the first quarter to $203 per gold ounce sold, compared with $209 per ounce for 1996, despite lower gold production. Programs to enhance the metallurgical recovery are also well under way, as are trials to increase throughput tonnages.

Collectively, these factors are expected to help this important property achieve its full potential.

At the nearby Llallagua deposit, which contains more than 1 million ounces of gold mineralization, a pilot heap-leach program is being put in place to test the feasibility of bio-oxidation on this refractory sulfide material.

The Holloway mine, in Canada, where BMG has an 84.7 percent interest, after a slower-than-anticipated start-up, turned the corner in March. All infrastructure is in place, and that property is expected to be on plan the balance of the year.

At the Battle Mountain Complex, in Nevada, Bayer said cash production costs at Reona are down to $304 per gold ounce sold in the first quarter, compared with $318 per ounce in 1996. Additional ore identified there will extend the mining operation through 1997, and production will continue from stockpiles at diminishing rates through 2001.

Turning to development, at Crown Jewel in Washington state, where BMG is earning a 54 percent interest, the Final Environmental Impact Statement (EIS) and Record of Decision (ROD) was received earlier in the year.

The U.S. Forest Service has received four appeals to its EIS and ROD, which are under review, and BMG awaits the decision of the regional forester, which is expected in the first half of May. The impact and exact timing for final resolution of these appeals is difficult to predict.

At Vera/Nancy in Queensland, Australia, where BMG and Normandy Mining Ltd. each hold a 50 percent interest, work is continuing on the Vera and Cindy declines, and a July start-up of production from development ore is expected.

In Papua New Guinea, the Lihir development project, in which BMG has an 8.7 percent attributable interest, total construction was 82 percent complete on March 31, with the oxide-process facilities 91 percent finished and the sulfide-process facilities 81 percent completed.

At the Battle Mountain Complex, the Phoenix development project is continuing, with work focused on securing the draft environmental impact statement. The company is continuing to look at alternatives to enhance the economics of the project.

In summary, Bayer said that while the quarter did not fully match expectations, there were important advancements at all of the company's key properties, as well as declining overall cash production costs. BMG expects that it will meet its production targets for the second quarter and the year.

Exploration

The discovery of new mineralization and reserves will continue to play a significant role in the growth of the company, Bayer added, and BMG is committed to a long-term, dynamic exploration program.

With exploration activities ranging from early reconnaissance to advanced drilling, Bayer noted, BMG will deploy more than 150 exploration personnel and spend about $35 million on exploration worldwide in 1997.

The company has established local offices in the areas where it is actively exploring in order to support its decentralized exploration organization. Most recently, Battle Mountain Gold opened an office in Rio de Janeiro, Brazil, and increased the staffing of its office in Accra, Ghana, to expand efforts in those parts of the world.

In addition to developing and executing exploration programs, all of these offices will play an important role in BMG's corporate activities in the areas in which they are located. They will be a key part of the company's network to identify acquisition opportunities, monitor competitor activity and carry out corporate representation and government liaison work.

At Vera/Nancy, Normandy Mining is putting in a decline and developing the deposit on a number of levels. This will allow completion of an infill drilling program, which is designed to validate the reserve and guide in the development of a detailed mining plan.

Battle Mountain Gold is also spending about $3 million on exploration work on targets on the Pajingo property, in which it has a 50 percent interest, to follow up potential north and south extensions to the Vera/Nancy deposit, where the company added about 400,000 ounces of gold mineralization in the fourth quarter of last year.

The company will also be working on a number of other targets on the Pajingo property that will be followed up over the next two years as part of an ongoing program.

At Dunkwa, in the Ashanti gold belt in Ghana, where BMG is earning a 65 percent interest from Birim Goldfields Inc., recent trenching and R.C. drilling on the Opon geochemical anomaly has returned assays of 0.042 ounces per ton (opt) gold (Au) over a length of nearly 500 feet from a trench across the anomaly.

A fence of R.C. drill holes across the anomaly returned assays of 0.060 opt Au over 59 ft; 0.036 opt Au over 118 ft; 0.040 opt Au over 125 ft; and 0.039 opt Au over 98 ft.

A diamond-drill program to further test the Opon project is scheduled for early May. Further work on the Mampon property in the Forest Preserve is pending finalization of rules and regulation by the government, which are now nearing completion, Bayer said.

In Argentina, Battle Mountain Gold has extensive landholdings covering nearly 1 million acres and some 55 cateos that have been acquired to cover extensions of the Maricunga and El Indio gold belts extending from Chile into Argentina. As infrastructure is developed, BMG will carry out target work and some diamond drilling of targets. Work there is expected to expand fairly rapidly.

Work on the Volta Grande Joint Venture in Brazil, in which BMG is earning a 50 percent interest, is continuing to give encouraging results. To date, 34 holes have been drilled to evaluate multiple subparallel zones of gold mineralization over a strike length of some 1.5 miles.

On a broad scale, the zone demonstrates good continuity along strike and has the potential to develop into a large open-pittable gold reserve.

At Kori Kollo, BMG has large landholdings around the mine site in a young, emerging gold district. Battle Mountain is now undertaking a fairly extensive exploration program to develop targets under extensive pampa cover on the altiplano. Work to date has already identified a number of targets where drill testing is under way.

The company expects to spend approximately $2 million per year on holdings in this area for the next three or four years.

In Mexico, Bayer noted, drilling is under way on the El Cairo property, which covers an extremely large-surface geochem anomaly some 1.2 miles in strike length and one mile wide. Early trenching and drilling has given assays of 0.029 opt Au over hole intervals of 328 ft and trench samples of 0.044 opt Au over 820 ft.

The current drill program of 18 holes is under way to test the extensive geochem anomaly and evaluate the possibility for a large- tonnage, bulk-minable, leachable gold deposit.

The Teddy Bear project, which covers the down-dip extension of the Holloway deposit in northeast Ontario, is located on the favorable Destor Porcupine fault. Ongoing exploration has enhanced potential at depth. Deep drilling intersected the mineralized Lightning Zone 2,000 feet below the previous deepest intersection.

The zone returned assays of 0.388 opt Au over 9.5 ft, clearly demonstrating the excellent potential to expand the reserve picture at depth at the Holloway mine, Bayer said. BMG has a 60 percent interest in this deep portion of the Lightning Zone.

In the Hemlo camp, Battle Mountain Gold has extensive landholdings to the west of the Golden Giant mine and up around the North Limb. Work on the Sceptre property has focused on both new surface prospects that have been developed, as well as testing down-plunge extensions of the Hemlo ore body itself on the Sceptre property.

This work continues to provide encouragement, and the current deep drill hole has encountered some 197 feet of well-altered mineralized material that is giving both high and low gold values ranging from 0.875 to 1.167 opt Au over 10 to 13 ft, to broad areas of low-grade 0.029 opt material -- all of which is significant and encouraging, he said.

In addition, surface work has identified a porphyry similar to the Moose Lake porphyry, which hosts the Golden Giant mine.

Plans currently call for spending $2 million per year on exploration in the Hemlo Camp over the next three or four years to evaluate all targets in hand.

Bayer also reported that the company is continuing to work on its large landholdings in Irian Jaya, where its Contract of Work was one of several signed on April 28, 1997, by the Indonesian government.

In summary, Bayer said BMG has the operations, the low costs, the financial muscle and flexibility, the development projects in the pipeline, the solid global land position and the corporate development opportunities needed to generate value for its shareholders. The company has been making and will continue to make progress toward that goal, he concluded. -0-

The U.S. 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 for the most recent year. -0-

BATTLE MOUNTAIN GOLD CO.

CONDENSED CONSOLIDATED STATEMENT OF INCOME

(Unaudited)

(In thousands, except per-share data)

Three months ended

March 31,

1997 1996

Sales $ 76,508 $104,996 Costs and expenses: Production costs 51,138 59,030 Depreciation, depletion and amortization 16,418 20,812 Exploration, evaluation & other lease costs 5,876 9,171 Merger expense 2,193 -- General and administrative expenses 3,870 3,875 Total costs and expenses 79,495 92,888 Operating income (loss) (2,987) 12,108 Interest and other income 1,367 887 Interest expense (1,886) (1,687) Income before income taxes and minority interest (3,506) 11,308 Income-tax expense 2,064 3,871 Mining taxes 1,579 3,832 Minority interest in net (income) loss (45) 1,362 Net income (loss) (7,194) 4,967 Preferred dividends 1,869 1,869 Net income (loss) to common shares $ (9,063) $ 3,098 Income (loss) per common share $ (.04) $ .01 Dividends per common share $ (.025) $ (.037) Average common shares outstanding for income-per-share purposes 229,652 234,688 -0-

BATTLE MOUNTAIN GOLD CO.

CONDENSED CONSOLIDATED BALANCE SHEET 

(Unaudited)

(In thousands)

March 31, Dec. 31,

1997 1996 Assets: Current assets:

Cash and cash equivalents $ 64,710 $ 103,004

Accounts and notes receivable 26,433 48,740

Inventories 13,918 10,440

Materials and supplies, at average cost 26,578 28,939

Other current assets  12,162 12,688

Total current assets 143,801 203,811 Investments 250,197 248,887 Property, plant and equipment, net 562,209 565,396 Other assets  19,916 18,812 Total assets $976,123 $1,036,906 Liabilities and shareholders' equity: Current liabilities:

Short-term borrowings $ 1,860 $ 21,800

Current maturities of long-term debt  13,618 13,595

Accounts payable and accrued liabilities  29,545 44,664

Income and mining taxes payable 12,979 18,103

Other current liabilities  4,069 6,119

Total current liabilities 62,071 104,281 Long-term debt 139,182 139,206 Deferred income and mining taxes 105,036 106,929 Other liabilities  42,107 40,996 Total liabilities 348,396 391,412 Minority interest 107,100 107,214 Shareholders' equity 520,627 538,280 Total liabilities and shareholders' equity $ 976,123 $1,036,906 -0-

BATTLE MOUNTAIN GOLD CO.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

(In thousands)

Three months ended

March 31,

1997 1996 Cash flows from operating activities: Net income (loss) $ (7,194) $ 4,967 Adjustments to reconcile net income (loss)

to cash flows from operating activities:

Depreciation, depletion and amortization 16,418 20,812

Deferred income-tax expense (benefit) (895) (3,285)

Change in current assets and liabilities 6,224 (3,294)

Other changes, net (141) 1,526

Total adjustments 21,606 15,759 Net cash flows from operating activities 14,412 20,726 Cash flows used in investing activities: Capital expenditures (23,629) (20,253) Other, net (490) (273) Net cash flows used in investing activities (24,119) (20,526) Cash flows used in financing activities: Cash proceeds from stock issuances 440 1,933 Cash proceeds from borrowings -- 13,052 Cash dividend payments (7,571) (3,899) Decrease in short-term borrowings (19,934) (12,228) Debt repayments -- (2,288) Other, net -- (18) Net cash flows used in financing activities (27,065) (3,448) Effect of exchange-rate changes on cash and cash equivalents (1,522) 680 Net decrease in cash and cash equivalents (38,294) (2,568) Cash and cash equivalents at beginning of period 103,004 142,202 Cash and cash equivalents at end of period $ 64,710 $139,634 -0-

BATTLE MOUNTAIN GOLD CO.

SUPPLEMENTAL INFORMATION

OPERATING DATA

(Unaudited)(a)

(All production data reflects BMG attributable interests)

Three months ended

March 31,

1997 1996(b) GOLDEN GIANT Gold recovered (000s oz) 80 104 Silver recovered (000s oz) 5 3 Cost per gold ounce sold:

Cash production costs $161 $130

Depreciation, depletion and amortization 70 58

Reclamation and mine-closure costs 4 2

Total production costs $235 $190

KORI KOLLO (88% INTEREST) Gold recovered (000s oz) 63 69 Silver recovered (000s oz) 175 214 Cost per gold ounce sold(c):

Cash production costs $203 $208

Depreciation, depletion and amortization 103 105

Reclamation and mine-closure costs 8 3

Total production costs $314 $316

HOLLOWAY JOINT VENTURE (84.7% INTEREST)(e) Gold recovered (000s oz) 14 Silver recovered (000s oz) -- Cost per gold ounce sold:

Cash production costs $327

Depreciation, depletion and amortization 122

Reclamation and mine-closure costs 2

Total production costs $451

BATTLE MOUNTAIN COMPLEX Gold recovered (000s oz) 18 17 Silver recovered (000s oz) 34 64 Cost per gold ounce sold:

Cash production costs $304 $318

Depreciation, depletion and amortization 27 74

Reclamation and mine-closure costs 46 32

Total production costs $377 $424

SAN LUIS(d) Gold recovered (000s oz) 15 Silver recovered (000s oz) 7 Cost per gold ounce sold:

Cash production costs $308

Depreciation, depletion and amortization 85

Reclamation and mine-closure costs 24

Total production costs $417

PAJINGO(d) Gold recovered (000s oz) 11 Silver recovered (000s oz) 5 Cost per gold ounce sold:

Cash production costs $319

Depreciation, depletion and amortization 121

Reclamation and mine-closure costs 3

Total production costs $443

SAN CRISTOBAL (50.5% INTEREST) Gold recovered (000s oz) 8 10 Silver recovered (000s oz) 18 25 Cost per gold ounce sold:

Cash production costs $417 $353

Depreciation, depletion and amortization 46 96

Reclamation and mine-closure costs -- --

Total production costs $463 $449

RED DOME (50.5% INTEREST) Gold recovered (000s oz) 11 12 Silver recovered (000s oz) 52 105 Copper recovered (000s lb) 784 1,780 Cost per gold ounce sold:

Cash production costs $228 $277

Depreciation, depletion and amortization 20 101

Reclamation and mine-closure costs 13 10

Total production costs $261 $388

AGGREGATE DATA Gold recovered BMG share (000s oz) 200 246 Gold sold BMG share (000s oz) 190 236 Gold recovered (000s oz) 227 277 Gold sold (000s oz) 210 259 Average price per oz realized $358 $398

Silver recovered BMG share (000s oz) 284 424 Silver sold BMG share (000s oz) 235 326 Silver recovered (000s oz) 378 581 Silver sold (000s oz) 280 384 Average price per oz realized $4.99 $5.45

Weighted average cost per gold ounce sold:

Cash production costs $222 $203

Depreciation, depletion and amortization 78 80

Reclamation and mine-closure costs 9 6

Total production costs $309 $289

(a) Effective in the second quarter of 1996, BMG began reporting its

operating costs on the basis adopted earlier that year by The Gold

Institute. As a result, in addition to mining, milling and plant-

level G&A expenses, cash production costs include royalties,

freight, smelting costs and allowances and production taxes.

Credits for byproduct silver and copper are offset against these

cash production costs. This new North American standard also

provides for reporting on a cost-per-gold-ounce basis, rather

than cost per equivalent gold ounce. (b) Restated to conform with new operating-cost reporting standard. (c) In 1997, a new tax law was passed in Bolivia that imposes an

income tax on operating income. Any income tax due can be

credited against any royalty due to the government. As a result

of this, royalty expenses for the Kori Kollo mine are now treated

as income tax and no longer used in the calculation of cash costs

per ounce. The 1996 cash costs were restated. (d) Production ceased at these operations during the fourth quarter

of 1996. (e) Production started at this operation during the fourth quarter

of 1996.



CONTACT: Battle Mountain Gold Co., Houston

Les Van Dyke, 713/653-7248