A US$25-million financing agreement is allowing
Two European banks have agreed to put up the funds, which comprise the bulk of the estimated US$38.5 million required to build a high-grade mine 250 km north of the port city of Magadan in far east Russia.
Bema hopes to raise the remaining funds by the end of January 2000. Construction would begin that summer, with full production expected in June 2001 at the rate of 350 tonnes per day.
The underground operation is designed to produce an average of 113,000 oz. gold-equivalent over the initial five years of a 9-year mine life. Total operating cash costs (including royalties and revenue taxes) are expected to be US$93 per oz., providing an after-tax internal rate-of-return of 43% (based on US$280 per oz. gold and US$5.50 per oz. silver).
Julietta is an epithermal gold-silver deposit comprising 14 quartz-sulphide veins. It hosts proven, probable and possible reserves totalling 1.1 million tonnes averaging 20.1 grams gold and 340 grams silver per tonne, or 750,000 contained ounces gold and 12.5 million contained ounces silver.
The mining method will be underground mechanized cut-and-fill, whereas the mill will consist of conventional flotation concentration with cyanide leach of the concentrate and Merrill-Crowe precipitation to produce dor bars.
Bema has already spent US$8.5 million at Julietta, including work this year to pour concrete footings for the mill and improving the year-round access road. In the years ahead, the company plans to explore 227 sq. km of mineral licences surrounding Julietta.
The high-grade Julietta project represents a departure of sorts for Bema, which had previously focused its efforts on developing low-grade, bulk-tonnage gold deposits in Chile.
The company holds a 50% interest in the Refugio gold mine in the Maricunga gold district. The open-pit operation is still struggling to produce profits for Bema and partner Kinross Gold (K-T).
Despite an improved performance at Refugio in the latest quarter, Bema reported a third-quarter loss of US$1.3 million on revenue of US$6.7 million. The loss was attributed to poor weather conditions and mechanical problems at the mine site.
By comparison, the company reported a loss of US$6.8 million (6 cents per share) on revenue of US$4.9 million in the third quarter of 1998.
Over the first nine months of the year, Bema lost US$2.1 million (2 cents per share) on revenues of $26 million, compared with a year-ago loss of US$10.5 million (9 cents per share) on revenues of US$22.5 million.
The company realized an average price of US$360 per oz. gold sold in the third quarter, whereas the average spot price was US$259 per oz. Hedging generated a gain of US$1.9 million during the 3-month period, and US$7.1 million over the first nine months.
The Refugio mine, of which Bema owns half, produced 35,334 oz. gold (Bema’s share: 17,667 oz.) at an operating cash cost of US$291 per oz. in the third quarter, compared with 25,858 oz. (12,929 oz.) at US$427 per oz. a year ago. Gold production during the recent third quarter was 37% higher than a year ago. Refugio is expected to produce less in the third than in other quarters, owing to the Chilean winter. However, this past winter was colder than usual, causing production to dip 10% below expectations.
On a brighter note, three of four new crushing circuits have been set up, and full production of 35,000 tonnes per day is expected to kick in by January 2000.
Total production in the first nine months was 136,800 oz. (Bema’s share: 64,800 oz.) at an operating cash cost of $256 per oz.
More recently, mechanical breakdowns in the power generators have resulted in a shortfall of crushed ore on the leach pads. Consequently, the mine is now expected to produce 180,000 oz. this year at a cash cost of US$267 per oz.
Kinross and Bema are projecting a significant improvement in production for 2000. The target is 230,000 oz. at a cash cost of US$220 per oz. At full production, the mine is forecast to produce 240,000 oz. annually.
Meanwhile, at the Aldebaran joint-venture project in Chile, operator
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