Bema, Arizona Star regain Cerro Casale

Partners Bema Gold (BGO-T, BGO-X) and Arizona Star Resource (AZS-V, AZS-X) have inked definitive deals to acquire Barrick Gold‘s (ABX-T, ABX-N) 51% stake in the large, low-grade Cerro Casale copper-gold project in Chile.

The pair have agreed to jointly pay Barrick US$10 million upon a positive construction decision. The pair can forego an additional US$70 million cash payment at the time of a construction decision by agreeing to annually fork over 10,000 oz. of gold production for five years followed by 20,000 oz. per year over a subsequent 7 years. The gold payments would begin a year after the start of production.

Annual production from the high-altitude project has previously been pegged at 975,000 oz. gold and 130,000 tonnes copper at cash costs of US$115 per oz. (net of copper credits) and total costs of US$225 per oz. for at least 18 years. The operation carries a price tag of US$1.65 billion, up from a previous estimate of US$1 billion. Accordingly, the duo will look for a senior partner to help advance the project.

At last count, Cerro Casale had measured and indicated resources totalling 1.1 billion tonnes grading 0.71 gram gold per tonne and 0.26% copper, plus an inferred resource of 171 million tonnes of 0.63 gram gold and 0.33% copper. The estimates (inclusive of reserves) employ a cutoff grade of 0.4 gram gold.

Bema and Arizona Star are updating the a feasibility study completed in early 2004. Revised operating and capital costs will be released shortly.

Cerro Casale is currently owned 51% by Barrick, 24% by Bema Gold, and 25% by Arizona Star. The recently inked deal will see the project will revert back to Bema (49%), and Arizona Star (51%).

The transfer of Barrick’s interest is expected to occur in the next week upon completion of closing requirements in Chile. Barrick inherited its stake in the project via its acquisition of rival Placer Dome earlier this year.

Shares in Bema were of 18, or 3.3%, at $5.26 in late-afternoon trading in Toronto following the news on June 27; Arizona Star was a dime cheaper at $11.90 on the TSX Venture Exchange. For its part, Barrick was off 58 at $31.20.