Bema aims for the big leagues

Vancouver — With one mine in the commissioning stage and two projects at feasibility, Bema Gold (BGO-T) is pushing hard to become a 1 million-oz. producer in the next few years.

The Vancouver-based company currently produces gold from two far-flung mines: the 79%-held Julietta mine in the Magadan region of Russia’s Far East, and the wholly owned Petrex mines in South Africa’s Witwatersrand Basin.

The company’s 50%-owned Refugio mine in Chile’s Maricunga district is expected to achieve commercial production later this year. The company’s share of production is estimated at about 50,000 oz., which should boost total production this year to an estimated 309,000 oz.

A bankable feasibility study is expected shortly for the Kupol gold-silver project in eastern Russia, and by year-end, Bema expects partner Placer Dome (PDG-T) to make a financing decision for the large Cerro Casale gold-copper project, 30 km south of the Refugio mine.

The wild card in Bema’s ambitious growth plan is the 24%-held Cerro Casale project held 25% by Arizona Star Resource (AZS-V) and 51% by Placer Dome. While viewed as one of the largest undeveloped gold-copper deposits in the world, Placer’s feasibility study in 2000 deemed the project uneconomic. Metal prices have improved considerably since then, but so have capital costs, which now projected at US$1.65 billion.

A final feasibility study and financing efforts are under way, based on a large, open-pit mine capable of producing an estimated 975,000 oz. gold and 130,000 tonnes copper annually for at least 18 years.

The final study will be completed by year-end. At that point, if Placer Dome elects not to proceed with the project, it will relinquish its interest to Bema and Arizona Star.

The feasibility study for the high-grade Kupol project is expected shortly. At last report, indicated resources stood at 6.4 million tonnes averaging 20.3 grams gold and 257 grams silver, plus an inferred resource of 4 million tonnes of 12.4 grams gold and 171.4 grams silver.

Bema’s two producing mines yielded 55,343 oz. in the latest quarter at an average cash cost of US$346 per oz., and a total cost of US$361 per oz. This compares with 52,497 oz. produced in the first quarter of 2004, when cash and total costs averaged US$307 and US$322 per oz., respectively.

The company says this year’s higher production costs reflect the strength of the South African rand against the U.S. dollar and the processing of lower-grade ore at Julietta.

The company posted a net loss of US$14.8 million on revenue of US$21.5 million for the first quarter of this year, up slightly from the US$14.1-million loss reported on revenue of US$19.6 million a year earlier.

Bema ended the quarter with US$40.3 million in cash and equivalents, down from US$87.1 million at the end of 2004.