Amax purchasing Refugio interest

Following up previously announced plans, Amax Gold (NYSE) is proceeding with the acquisition of a 50% interest in the Refugio gold property in central Chile.

Amax originally announced its intention to acquire the 50% interest from Chilean company Cia Minera Refugio in March. On final closing of the deal, expected for mid-January, 1993, Amax will issue the vendor 3.15 million restricted common shares.

Bema Gold (TSE) originally had an option agreement with Cia Minera to earn a 50% interest in the property by completing a positive feasibility study and arranging project financing by the end of 1994.

With the previous agreement no longer in place, the Refugio property will now be held by a Chilean company owned 50% by Amax and 50% by Bema. Initial minable reserves on the project are estimated at 112 million tons grading 0.03 oz. gold per ton with a strip ratio of 1-to-1.

The proposed 33,000-ton-per-day heap-leach operation would produce an average of 233,000 oz. gold per year at an estimated cash operating cost of US$189 per oz. over a minimum mine life of 9.4 years.

The capital cost of the project is estimated at US$135

million with each partner responsible for its respective half-share. Bema has already arranged US$25 million of the financing through a lease-to-purchase agreement on the required mining equipment from Caterpillar. Sharps Pixley of New York is still committed to provide a minimum of 20% of a US$75-million gold loan for the project and is attempting to syndicate the balance of the loan. With Amax now on board, Sharps has lifted its financing condition that the price of gold be above a minimum floor price of US$350 per oz.

The remaining US$35 million of the estimated capital cost will be provided through equal equity investments by Bema and Amax.

Bema is now winding up operations at its 85% owned Champagne mine in Idaho and residual leaching operations are expected to be completed by March, 1993. As at June 30, Bema had a working capital deficit of about $2.9 million and long-term liabilities totalling $18.4 million.