Petrex sinks Bema

Higher-than-expected costs at the Petrex mines in South Africa and an unrealized US$13.4-million derivative loss pushed Bema Gold () US$21.5 million into the red during the fourth quarter of 2003.

The loss, which translates as US6 per share, occurred despite a three-fold increase in revenue to US$26.7 million, compared with the fourth quarter of 2002.

For all of 2003, Bema incurred a loss of US$30.6 million (or 9 per share), compared with a year-earlier loss of US$3.3 million (2 per share). Revenue between the two years rose 139% to US$86.8 million, whereas cash flow from operations slipped by US$2.2 million, to US$8.1 million.

In all, Bema churned out 250,315 oz. gold in 2003, or 113% more than in 2002. Operating cash costs were US$262 per oz.; total cash costs, US$279 per oz. The unrealized mark-to-market loss on the company’s hedge book for all of 2003 was US$7.5 million.

The Petrex operations, which Bema acquired in February 2003, produced 132,170 oz. gold for the year. Total cash costs at Petrex were US$100 per oz. higher than expected at US$397 per oz., reflecting the stronger rand. Contributing to the higher costs were lower grades and a delay in the ramp-up of ore production.

On a brighter note, Bema’s 79%-owned Julietta mine in Russia exceeded its budget by 1,800 oz. gold, producing 118,145 oz. at a total cash cost of US$148 per oz.

At year-end, Bema had working capital of US$19.9 million, including US$30.8 million. The company paid US$11.2 million against the Julietta project loan to reduce the balance to US$18.3 million and plans to pay off the loan in 2004. A further US$8 million was paid to reduce the Petrex project loan to US$27 million.