Commercial production underway at Julietta

After cranking up gold and silver production two months ahead of schedule in September, Vancouver-based Bema Gold (BGO-T) reports that commercial production rates have been achieved at its 79%-owned high-grade Julietta gold-silver underground mine in the Magadan region of far-eastern Russia.

Julietta’s first dor bar was poured on Sept. 26; ore processing commenced on Sept. 7.

Bema also reports that commissioning of Julietta’s mill is complete, and underground mining and drifting continue ahead of schedule.

Underground drift sampling in a high-grade portion of the V-1 vein returned gold and silver grades more than 50% higher than those projected in the feasibility study’s probable reserve estimate. Bema says that drifting has cut several higher-grade (plus 75 grams per tonne gold) vertically continuous ore shoots that were mostly missed by earlier drilling. The veins are also running 15% wider than expected.

Ore stockpiled from underground development at Julietta currently contains about 25,000 tonnes averaging 30 grams gold and 410 grams silver per tonne, including a higher-grade stockpile of about 10,000 tonnes running 53 grams gold and 650 grams silver.

Underground development also led to the discovery of a new high-grade offshoot of the V-2 vein at the 785-metre level. Dubbed V-2c, the vein has been mined for a length 60 metres and is up to 4 metres wide. The offshoot has averaged 51 grams tonne gold and 83.5 grams silver along that length. Underground drilling aimed at defining the vein, which remains open along strike and to depth, has begun. The vein was not included in the earlier development plan reserves or resources.

Under a revised development plan, mining will target some of the more profitable ore early in the mine life. Julietta is expected to mine and mill 400 tonnes of ore per day (up from the original plan of 350 tonnes) to produce about 140,000 oz. of gold and 2.4 million oz. of silver during the first year. Cash operating costs, net of silver credits, are expected to ring in at an impressive US$25 per oz. gold during the first year, climbing to US$56 per oz. over the initial four years of operation. During the first four years of operation, the mine is expected to average 100,000 oz. of gold and 1.7 million oz. of silver annually. This production is covered by a hedging program, required as part of the project financing, averaging a minimum price of US$303 per oz. gold, based on a spot price of US$270 per oz.

Julietta’s reserves and resources are situated on a 1-by-2-km portion of the 225-sq.-km property, which hosts several unexplored high-grade showings.

Looking ahead, the mine currently contains an inferred resource of 492,000 tonnes grading 19.5 grams gold and 342 grams silver. Upgrading this inferred resource would add an additional four years to the mine life. Also, many of the mine’s existing veins remain open along strike and at depth. Underground drilling will continue to upgrade the resource and further explore the veins while surface exploration drilling is slated for the summer of 2002.