Bema loses US$80m

Vancouver — Escalating costs coupled with currency fluctuations pushed Bema Gold (BGO-T) deeper into the red in 2004.

The company ended up US$80 million (or US22 per share) in the hole, compared with a loss of US$31 million (US9 per share) in 2003. The loss incurred in the fourth quarter was US$45 million versus US$20 million a year earlier.

Strength in the rand affected the company’s Petrex operations in South Africa. Re-evaluation of Petrex caused Bema to write down US$27.3 million of the project’s carrying value assessed toward goodwill.

Petrex produced 146,000 oz. gold in 2004 at a cash cost of US$388 per oz. (adjusted to reflect a gain in rand-denominated gold put options). The company is sensitive to currency fluctuations, which can hamper operating costs. In addition to the writedown, Petrex incurred an operating loss of US$8.9 million for the year.

The company’s 79%-owned Julietta mine in far-eastern Russia produced 83,000 oz. gold at a cash cost of US$234 per oz. Bullion output was down almost 30% from the 118,000 oz. produced in 2003, the discrepancy being due to a warehouse fire in early 2004 plus delays in gaining access higher-grade veins. The fire destroyed most of the spare-parts inventory, resulting in reduced mining and milling rates while equipment was replaced.

Startup costs at Bema’s 50%-owned Refugio gold mine in northern Chile were affected by a charge of US$6.4 million incurred over the year. Restart of the mine has been delayed and is now scheduled for mid-2005. Production for 2005, during the ramp-up phase, is forecast at 100,000 oz. gold. Bema’s partner on the project is Kinross Gold (K-T), which is also the operator.

The company is developing its Kupol gold-silver project in the Chukotka region of northeastern Russia. Bema owns 40% of the deposit and can increase its stake to 75%. Infill drilling in 2004 provided data for an updated resource calculation. Within indicated resources, contained gold increased 230% to 4.2 million oz. while contained silver rose more than 270% to almost 53 million oz. The high-grade vein-hosted deposit holds an indicated resource of 6.4 million tonnes grading 20.3 grams gold and 257 grams silver per tonne. There is also an inferred resource of 4.1 million tonnes grading 12.4 grams gold and 171 grams silver. The main Kupol deposit remains open along strike to the north and south, and at depth in the north. Completion of a feasibility study is scheduled for May 2005. A 45,000-metre drill program will then test potential extensions.

Bema holds a 24% interest in the large Cerro Casale gold-copper deposit in northern Chile. Arizona Star Resource (AZS-V) owns 25% of the project, with operator Placer Dome (pdg-t) holding 51%. Placer is responsible for arranging development financing by the end of 2005; this is estimated to be US$1.3 billion. In late 2004, Bema launched a takeover bid for sister company Arizona Star, offering 1.85 shares for each Arizona Star share in its effort to consolidate the minority interest in the project.

In 2005, Bema expects to produce 309,000 oz. gold at a total cash cost of US$312 per oz.