Black Hawk Mining Inc
BHK
Shares issued 122,738,417
1999-04-23 close $0.16
Monday Apr 26 1999
Mr. Blois Hennigar reports
All dollar amounts are stated in U.S. dollars, unless indicated otherwise.
Black Hawk's operating income for the year was $0.6-million (nil cents per share) before a $6.5-million
(six cents per share) reduction in the carrying value of mineral properties, resulting in a net loss for the
year of $5.9-million (six cents per share). For the purposes of valuing mineral properties, Black Hawk
used a forecast gold price of $325 per ounce. The 1997 income was $4.6-million (five cents per share)
before a property writedown of $7.6-million (nine cents per share) resulting in a net loss of $3.0-million
(four cents per share). Operating cash flow for 1998 was a loss of $0.3-million (nil cents per share),
compared with $10.9-million (13 cents per share) in 1997. The 1997 period included one-time gains of
$3.3-million when the company's hedge position was liquidated.
Total gold production for 1998 was a record 88,855 ounces, with 59,647 ounces from the Keystone gold
mine and 29,208 ounces from the El Limon mine following its acquisition as of May 31, 1998. The
consolidated 1998 cash operating cost of production was $230 per ounce and the average price realized
for the year was $323 per ounce. In 1997, total production was 67,067 ounces of gold at a cash operating
cost of $183 per ounce and the price realized was $343 per ounce.
Fourth quarter results reported an operating loss of $0.4-million (nil cents per share) before the
$6.5-million (six cents per share) property writedown resulting in a net loss of $6.9-million (six cents
per share) in the quarter. The comparable results in 1997 were income of $1.3-million (two cents per
share) from operations and a net loss of $6.2-million (seven cents per share) after a property writedown
of $7.6-million (nine cents per share). Gold production in the quarter was 24,177 ounces, with 14,693
ounces from Keystone and 9,484 ounces from El Limon, whose production facilities were shut down for
the month of November due to the effects of Hurricane Mitch. Black Hawk's consolidated cash operating
cost per ounce in the quarter was $229 and the price realized was $321 per ounce. In the fourth quarter
1997, Black Hawk produced 17,321 ounces at a cash operating cost of $183 per ounce. The price
realized in the same period was $343 per ounce.
OPERATING STATISTICS Three months ended Dec. 31 1998 1997 Keystone Gold Mine Ore milled
(tonnes) 121,545 116,737 Average ore grade (grams/tonne) 3.88 5.33 Recovery (%) 97 87 Gold sales
(ounces) 14,693 17,321 Cash operating cost per ounce (U.S. $) 229 183 Price realized per ounce (U.S.
$) 321 343 OPERATING STATISTICS Year ended Dec. 31 1998 1997 Keystone Gold Mine Ore
milled (tonnes) 473,652 449,028 Average ore grade (grams/tonne) 4.14 5.19 Recovery (%) 95 90 Gold
sales (ounces) 59,647 67,067 Cash operating cost per ounce (U.S. $) 225 183 Price realized per ounce
(U.S. $) 323 343 EL LIMON MINE(1) Three Seven months months ended ended Dec. 31 Dec. 31
1998 1998 Ore Milled (tonnes) 56,875 179,706 Average ore grade (grams/tonne) 6.76 6.01 Recovery
(%) 77 81 Gold sales (ounces) 9,484(2) 29,208 Cash operating cost per ounce (U.S. $) 229 240 Price
realized per ounce (U.S. $) 321 323
(1) The El Limon mine was acquired by Black Hawk as of May 31, 1998.
(2) The low production for El Limon in the fourth quarter 1998, reflects the impact of Hurricane Mitch.
RESERVES AND RESOURCES
Black Hawk's reserves and resources at year-end 1998 adhere to the categories, definitions and
guidelines for public reporting recommended by the Canadian Institute of Mining, Metallurgy and
Petroleum and published in September of 1996.
Reserves Ounces
Proven, probable
and possible
El Limon mine 394,300
Keystone gold mine 58,600
Bald Mountain
(gold equivalent) 154,500
---------
Subtotal 607,400
Resources
El Limon mine 325,900
Lynn Lake 208,200
Manantial Espejo
(gold equivalent) (1) 1,246,400
Limon-La India 541,300
Hoyle Township 459,700
Sulphurets
(gold equivalent) (2) 297,800
---------
Subtotal 3,079,300
Total 3,686,700
(1) Represents Black Hawk's
80 per cent interest
(2) Represents Black Hawk's
40 per cent interest
CONSOLIDATED STATEMENT OF OPERATIONS
Year ended Dec. 31
(U.S. dollars)
1998 1997
Revenue
Gold Bullion $ 28,718,281 $ 23,020,694
Direct Costs
Mining and
milling 20,461,362 12,262,745
Royalties 1,243,723 808,643
Reclamation 339,304 379,803
Amortization 2,937,492 2,931,786
------------ ------------
24,981,881 16,382,977
------------ ------------
Income from
mining
operations 3,736,400 6,637,717
------------ ------------
Other
operating
expenses
Administration 2,048,416 1,587,242
Exploration 411,453 -
------------ ------------
2,459,869 1,587,242
------------ ------------
Income before
the undernoted 1,276,531 5,050,475
------------ ------------
Other (income)
and expenses:
Interest and
other income (184,866) (92,982)
Gain on con-
version of gold
loan (104,874) (99,630)
Gain on sale
of marketable
securities
acquired and
sold during
the year (92,372) -
Loss on
disposal of
assets 37,061 228,748
Foreign
exchange loss
(gain) 241,989 (12,936)
Interest on
long-term debt 268,637 355,555
Interest on
other obli-
gations 28,267 51,423
Writedown of
mineral
properties 6,495,267 7,556,478
------------ ------------
6,689,109 7,986,656
------------ ------------
Net loss
before income
and mining
taxes 5,412,578 2,936,181
------------ ------------
Income and
mining taxes 467,493 75,688
------------ ------------
Net loss $ 5,880,071 $ 3,011,869
============ ============
Net loss
per share 6 cents 4 cents
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