LATIN AMERICA — Bema reports loss despite Refugio startup — New heap-leach operation generates profits of US$4.2 million

Despite having brought Chile’s Refugio gold mine into production, Bema Gold (BGO-T) found itself in the red at the end of 1996.

The company recorded a loss of US$2.7 million (or 5 cents per share), compared with a loss of US$3.1 million (8 cents per share) in the previous year.

Bema blames the loss on a US$2.7-million equity loss from its share of the loss incurred by Puma Minerals’ writedown of deferred acquisition and exploration costs on the Uspallata copper-gold property in western Argentina.

Bema owns a 40% interest in Puma.

The loss was ameliorated, however, by startup at the Regugio mine, in which Bema has a 50% interest. The remaining half is held by Amax Gold (AU-N).

Situated in the northern district of Maricunga, the mine entered production in October 1996 and, over the remainder of the year, produced 61,222 oz. gold at an operating cost of US$233 per oz.

Bema’s share of gold revenue for the quarter was US$10.8 million, based on sales of 28,266 oz. at US$383 per oz. Gross profits from mining operations amounted to US$4.2 million, including hedging gains of US$209,000 during the last four months of 1996.

In 1997, the mine is budgeted to produce 252,500 oz. gold at an operating cost of US$231 per oz.

To finance construction at Refugio, the joint venture obtained an US$85-million loan from an international banking consortium. The loan is to be paid back over five years, and represents 9% of mine production over that period.

The main source of ore at Refugio is the Verde deposit, where minable reserves stand at 186 million tonnes grading 0.89 gram gold per tonne. The stripping ratio is 1-to-1.