Lower-than-planned production at the Refugio gold mine in northern Chile contributed to a third-quarter loss for
The company posted a loss of US$6.8 million (or 6 cents per share) on revenue of US$4.9 million, compared with a loss of US$4.9 million (6 cents per share) on US$3.8 million in the third quarter of 1997.
During the first nine months of 1998, Bema lost US$10.5 million (9 cents per share) on revenue of US$22.5 million, versus a loss of US$5.6 million (7 cents per share) on US$21.1 million in the year-ago period.
Refugio produced 25,858 oz. gold during the quarter ended Sept. 30, 1998, of which Bema’s share was 12,929 oz. at a cash operating cost of US$427 per oz., compared with 19,575 oz. at US$529 per oz. a year ago.
For the 9-month period, Bema’s share of production from the mine was 56,183 oz. at an average cash cost of US$330 per oz., compared with 54,093 oz. at US$313 per oz. a year ago.
During the quarter, Bema realized an average price of US$398 per oz. on its gold sales, compared with the average spot price of US$288 per oz.
Production at Refugio has been hampered by mechanical breakdowns of the overland conveyor, which resulted in significantly lower gold production for the first three quarters of 1998. These lower production levels, along with conveyor repair costs, led to increased cash operating costs.
Last year, production at the mine was interrupted for nearly three months by severe winter storms aggravated by the El Nino weather pattern. Refugio produced a total of 147,086 oz. in 1997 at a cash cost of US$320 per oz.
Production at Refugio has been improving of late. Fine crushed ore placed on the leach pads from mid-August to the end of October averaged 24,150 tonnes per day at approximately 78% half-inch size. During October, production reached 13,343 oz., with cash costs improving to US$271 per oz.
The open-pit operation, which employs 3-stage crushing combined with cyanide heap-leach processing, is situated high in the Atacama Desert in the Chilean Andes at an elevation of 4,200 metres. Ownership is split equally between Bema and
Since the start of commercial production in October 1996, operators have struggled to resolve various mechanical and structural problems. Refugio has yet to achieve mine plan projections of 233,000 oz. annually at a cash operating cost of US$240 per oz. The mine was built at a cost of US$143 million.
Based on a minable reserve within the Verde deposit of 102 million tonnes grading 1.03 grams gold per tonne, equivalent to 3.3 million contained ounces, Refugio has a minimum mine life of nine years.
Bema wrote down US$3.6 million in the third quarter after adjusting its 50% share of in-heap inventory from 44,000 recoverable ounces to 24,000 oz. The writedown was based on a metallurgical study, which concluded that while recoveries for the fine crushed ore remain unchanged from feasibility study estimates of 73%, the recoveries of run-of-mine and primary crushed ore placed on the leach pads in 1997 were lower than estimated.
Refugio is currently processing oxide ore material and is not scheduled to begin mining the sulphide portion for another year or two.
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