Bema arranges US$45-m financing for Refugio

Bema Gold (BGO-T) has arranged a non-recourse project loan for up to US$45 million based on its 50% share of production at the Refugio gold mine in central Chile. The new loan replaces a previously announced US$34-million gold loan.

The refinancing, which offers significantly better terms, was arranged with BZW Mining & Metals, the investment banking division of London-based Barclays Bank. The deal increases funds available to Bema by US$11 million, which the company says will enable it to pay for its share of a potential expansion of production.

Bema owns a half interest in Refugio, one of the world’s largest open-pit, heap-leach mines. The remainder is held by Amax Gold (AU-N).

The mine poured its first gold in April 1996 and began producing at commercial rates five months later. Hampered by startup problems (primarily mechanical glitches in the crushing plant), the mine nonetheless produced 61,222 oz. at an operating cash cost of US$233 per oz. in its first three months of commercial production. Output for the year totalled 101,276 oz.

In the first quarter of 1997, Refugio produced 51,860 oz. at an operating cash cost of US$248 per oz. The decrease in production and increase in costs were attributed to operating inefficiencies.

In the second quarter, severe winter weather prevented output from rising above 36,752 oz., while cash operating costs rose to US$305 per oz. And expectations are that third-quarter results will show little improvement.

In the first half of 1997, production totalled 88,612 oz. at an operating cash cost of US$272 per oz. The total cash cost is estimated at US$289 per oz.

On a hopeful note, fine-tuning by the company at its crushing plant should boost daily output to its capacity of 30,000 tonnes. In the first half of September, the mine averaged, on a daily basis, nearly 25,000 tonnes of fine crushed ore. Bema expects output during the fourth quarter to improve significantly as crushing throughput continues to increase.

Average annual production at Refugio over the next nine years is projected at 233,000 oz. at cash operating costs of less than US$250 per oz.

The current mining plan is 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. The stripping ratio there is 1-to-1.

Another mining plan increases minable reserves at Verde to 186 million tonnes grading 0.89 gram, equivalent to 5.3 million contained ounces. The stripping ratio under this plan is 0.9-to-1.

Another deposit, the Pancho, situated 2 km northwest of Verde, is estimated to contain 68 million tonnes grading 0.96 gram gold. Metallurgical tests indicate the gold is amenable to heap leaching.

As a result of inclement weather, the company managed to sink only 15 holes of a planned 60-hole program at Pancho. Drilling is expected to resume in the new year.