Bema raises cash for Monument Bay drilling

Junior Bema Gold (BGO-T) has closed a brokered private placement of flow-through shares with Canaccord Capital and Haywood Securities with an eye toward resuming drilling at the high-grade Monument Bay gold property in northeastern Manitoba.

The private placement comprised about 1.9 million flow-through shares at 65 apiece plus another 416,666 flow-through shares at 66 each for gross proceeds of about $1.5 million.

The funds will go toward drilling at Monument Bay, which is slated to begin in early March.

Earlier this year, fellow junior Wolfden Resources (YWO-V) granted Bema an option to earn up to a 70% stake in Monument Bay. To earn an initial 51% interest in the property, Bema must spend $3 million by the end of 2005 and make annual payments of $50,000. Bema can boost its stake by 19% for another $3 million in expenditures plus $150,000 in cash.

Bema can recoup 35% of money spent on exploration, to a maximum of $400,000 annually, in northeastern Manitoba via the provincial government’s Mineral Exploration Assistance Program.

The deal with Bema came on the heels of news that the Canadian exploration arm of Newmont Mining (NEM-N) cancelled a back-in right (inherited via Newmont’s takeover of Battle Mountain Gold) at Monument Bay.

In return for the cancellation, Newmont Canada will be paid $500,000 if a feasibility study is tabled, and another $500,000 if commercial production follows. It retains a small smelter royalty. Wolfden can earn a 100% interest in the project by spending $3 million on exploration over six years.

High-grade gold mineralization at the 67-sq.-km property is hosted by the Stull Lake greenstone belt. Gold is associated with narrow quartz veins and silicified zones in the 30-km-long Twin lakes – Monument Bay deformation zone. The property is underlain by a sequence of overturned volcanic and sedimentary rocks.

Noranda (NRD-T), a past owner and the only other company besides Wolfden to sink holes on the property, outlined four zones of mineralization. Results from both companies varied but ran as high as 107 grams per tonne over a few metres.

Most of the widely spaced holes tested three zones along a 3.5-km-long section of the deformation zone; the remainder remains untested. The higher-grade intersections appear to form continuous ore shoots within the three individual zones. The shoots remain open in several directions. There has been very little drilling between the zones.

Bema plans to drill 3,500 metres on the Twin Lakes zone, the most continuous of the zones. The holes will aim to extend the high-grade ore shoots.