Bema, Kinross win US$20 m at Refugio

An arbitrator has ruled in favour of equal partners Kinross Gold (K-T) and Bema Gold (BGO-T) in a case related the original construction of the Refugio open-pit heap-leach gold mine in northern Chile.

The arbitrator has ruled that Fluor Daniel Chile Ingenieria y Construccion, Fluor Daniel Corp., and Fluor Daniel Wright were “grossly negligent” in certain aspects of the construction. The ruling awards Bema and Kinross US$20 million plus accrued interest from July 1999.

In April of 1999, the partners initiated formal arbitration proceedings, against Fluor, to recover costs related to numerous design and construction failures.

The arbitration is binding.

Refugio churned out 13,128 oz. of gold at a total cash costs of US$123 per oz. The mine has been running in leach-only mode since open pit mining was suspended on June 1, 2001. All of the operation’s leased mining equipment has been disposed of.

Under the partner’s plan, the operation could resume should the gold reach a sustained price of US$325 per oz.

At full steam, the high-altitude operation is designed to crush and process 32,000 tonnes of ore daily to produce 230,000 oz. of gold per year at cash costs of about US$220 each.

At the end of 2000, Refugio’s proven and probable reserves stood at 62 million tonnes running 0.9 gram gold, or 1.9 million contained ounces, based on a gold price of US$300 per oz. Another 54.2 million tonnes averaging 0.9 gram gold are classified as measured and indicated resources.