Battle Mountain/Centurion Team Up To Develop California Gold

A gold property located at the north end of California’s famed Mother Lode district has become the subject of a joint venture agreement between Battle Mountain Gold (TSE) and Centurion Gold (VSE), a Vancouver-based exploration and development company.

Battle Mountain Gold said development studies and permitting work are already under way on the San Juan property, with the project given a preliminary annual production estimate of approximately 35,000 oz gold.

The big United States gold mining company is also reported to be evaluating other opportunities in this historic mining district; part of an over-all effort to acquire new projects and expand reserves. Battle Mountain Gold is currently producing about 300,000 oz of gold annually from mines in the U.S. and Australia, and is active in exploration in seven countries. The company had agreed to acquire interests in some Canadian projects held by Noramco Mining (TSE) earlier this year, but talks broke down and the deal went instead to Breakwater Resources (TSE).

Battle Mountain Chairman Douglas J. Bourne said the company paid about $6.6 million(US) in shares and cash to acquire interests in the San Juan property from three companies; San Juan Gold, St. Joe Minerals and Coastal Mining.

At the same time the company entered into a joint venture agreement to develop the property with Centurion, which is contributing its interest holdings in the property.

Under the agreement, Battle Mountain Gold will hold a 63% interest and be the operator, while Centurion will hold a 37% interest. Centurion will have the right to earn up to a 50% interest by contributing, in addition to a 50% share of joint venture expenses, approximately $1.3 million(US) by mid- January next year.

Commenting on the agreement, Centurion President David Reesor said “A partner such as Battle Mountain assures us that the total potential of the San Juan will be brought to fruition.”

Centurion holds interests in a total of 14 mining properties in the Western U.S., including the Aurora property in Nevada, from which it is receiving royalty income.

Richard Ketchen, Centurion vice-president, told The Northern Miner the San Juan project will be developed as a placer open-pit operation.

According to Battle Mountain, evaluation of drilling data by the engineering consulting firm of Pincock, Allen & Holt gives the San Juan deposit approximately 187,000 ozs of proven and probable gold reserves, 139,000 oz of possible gold resources and 633,000 oz of potential gold resources.

Cash production costs are expected to be less than $200 per oz and total capital costs for the project are expected to be $28 million which includes all acquisition, exploration and development costs by the coventurers.

The mining property is located about 70 m from Sacramento and covers 2,200 acres located on San Juan Ridge, where previous drilling programs have totalled over 20,000 ft in 75 holes. Between 1850 ft and 1934 ft, open pit mining reportedly produced over 300,000 oz gold in the area.

Battle Mountain subsidiary Sierra Gold Development is conducting the environmental and engineering studies at San Juan.

California environmental regulations are known to be stringent, but Bourne said the start-up and operation of other historic California gold mines over the past five years has shown that mining can be responsibly carried out “with full consideration for environmental and socio-economic concerns.”