Following the water clues

Nevada's earliest prospectors dipped gold pans into streams, looking for traces of the precious metals.

Combine the thought that motivated those early prospectors with technology that can identify metals in quantities as small as parts per trillion and you begin to understand Battle Mountain Gold Exploration Corp.

The Reno-based company, which began trading publicly barely more than a month ago, is built around eight years of research by Wade Hodges, its chief geologist.

Hodges, senior staff geologist with Santa Fe Pacific Gold Corp.

for more than 10 years before he struck out on his own in 1996, follows in the footsteps of those early prospectors with their gold pans.

They followed the traces of gold they found in their pans upstream toward gold deposits in the rock.Hodges figures groundwater should carry the same evidence even though the deposits are far underground.

Although gold leaves only the tiniest of traces in groundwater, increasingly sophisticated technology allows geologists such as Hodges to follow the evidence.

Hodges and other founders of Battle Mountain Gold Exploration have spent the past three years sorting through water samples collected by federal, state and local groups.

Today, the company has a database covering more than 46,000 water samples around the state samples that are oriented against the sites of 150 gold mines in the state.

Here's how James McKay, the president and chief executive officer of Battle Mountain Gold Exploration, expects to turn that database and Hodges' research into a profitable company: The first step was taking the company public, which was accomplished via a reverse merger with tiny Hudson Ventures Inc.

With a publicly traded stock that provides investors a clear-cut exit strategy,McKay completed a private placement that raised $450,000.

(The placement was completed in late November at $1 a share; the company's stock was trading last week at a bid price of $1.14.) Battle Mountain Gold Exploration will use its capital in coming months to intensively analyze about 1,100 water samples collected in northern Nevada looking at 74 elements in each sample.

That's a proprietary technology.

And McKay says the company will begin assembling land positions as its analysis spotlights attractive properties.

As a starter, Battle Mountain Gold Exploration established a joint venture with Placer Dome U.S.

Inc.

for exploration of a 920- acre parcel six miles north of the Marigold Mine in Humboldt County.

A subsidiary of Battle Mountain Gold is required to spend $1 million evaluating the property.

If it's promising, Placer could pick up the tab to develop mining and Battle Mountain could hold a 30 percent stake.

The company's subsidiary also has leased the exploration and mining rights on about 2,200 acres of private ranch land five miles east of the Lone Tree Mine in Humboldt County.

The company doesn't have any plans to become a gold producer itself,Hodges says, because the investment in time and capital required to launch a mine is simply too great.

Besides, he says, the largest payoff in mining comes to those who discover resources and sell them to mine operating companies.

But the potential of a big payoff comes with big risks as well as hundreds of junior mining companies take advantage of the current runup in gold prices to raise capital and begin exploration programs.

A challenge for Battle Mountain Gold Exploration,McKay says, is differentiating itself from other, sometimes slimy, junior gold companies so it can get a fair hearing from investors.

A key to cutting through the slime factor, he says, is the experience of the company's top management.

Chairman Mark Kucher has worked in mining-related financial positions since 1990, while McKay has worked in mine exploration and management

positions since the early 1970s.