Bema reconsiders Arizona Star bid

Vancouver — Four months after announcing its intention to do so, Bema Gold (BGO-T) has decided not to offer to swap its shares for those of Arizona Star Resource (AZS-V) that it does not already own.

The companies share a minority interest in the undeveloped Cerro Casale porphyry copper-gold project in northern Chile. Arizona Star owns 25% of the project; Bema, 23%; and Placer Dome (PDG-T), the operator, 51%.

Bema cites current market conditions plus a desire to focus on its Kupol gold project in Russia and its Refugio mine in Chile as reasons for its decision. Bema also withdrew its last representative from Arizona Star’s board and elected not to renew its management contract with the junior.

Cerro Casale is estimated to cost US$1.65 billion to develop, of which Placer Dome would be responsible for US$1.3 billion. The major has until year-end to decided whether or not to finance the project. If it decides not to, the project will revert back to Bema (51%) and Arizona Star (49%).

Bema, which already owns 5% of Arizona Star’s common shares, had offered to exchange 1.8 of its shares for each share of Arizona Star. Bema had seen this as an opportunity to increase its interest in the Cerro Casale deposit, which it believed was on the verge of moving into the development stage.

Paul Parisotto, president of Arizona Star, says Bema’s decision not to bid for Arizona Star’s shares shows that “Bema knew it had no chance of success given the poor performance of its shares in the past four months.”

Discovered by Bema in 1995, Cerro Casale is one of the world’s largest undeveloped porphyry copper projects. It occupies a portion of the Aldebaran property, 30 km south of the Refugio mine.