The pilot of the hot air balloon reported that while conducting a sight-seeing flight with multiple passengers, the balloon approached a mountain where it encountered downdrafts, causing the balloon to sink and its ground speed to increase. The pilot attempted but was unable to arrest the sink rate using the balloon’s propane flame burners. The pilot directed the passengers to sit down in the basket, as they had been briefed prior to the flight. The passenger basket impacted a rock on the mountain terrain, incurring substantial damage to a structural wooden skid and a structural metal tube. The basket then became airborne again and the pilot continued the flight to a safe landing zone. According to the pilot, a passenger who remained standing during the accident sequence received a minor injury. The pilot reported there were no mechanical malfunctions or failures with the balloon that precluded normal operation.