Bema tables new production estimate for Refugio

Improved mining methods and new processing equipment will boost gold production at the Refugio gold mine by 30,000 oz. per year, according to new estimates by equal partners Bema Gold (BGO-T) and Kinross Gold (K-T).

Gold production at the Chilean mine will increase to 240,000 oz. per year, with daily throughput of 35,500 tonnes. Improvements are expected to lower cash costs to about US$220 per oz. Previous production figures were set at 30,000 tonnes of ore per day, for about 210,000 oz. gold per year at a cash cost of US$240 per oz.

The new production estimates reflect improvements, including the introduction of self-mining and the installation of four powerful third-stage crushers. The decision to terminate the existing mining contract in favour of self-mining will lower cash costs and improve operating flexibility, says Bema.

The improvements are scheduled to be fully implemented by the end of the third quarter.

The open-pit operation has proven and probable reserves of 38.2 million tonnes averaging 0.92 gram gold per tonne, for 1.1 million contained ounces.

Kinross became the operator of the mine in June, though the partners make decisions jointly.

Back in Canada, Bema has secured a US$5-million loan from Resource Capital Fund. The money will be used at other projects and for working capital. The loan will mature on Dec. 31, 2002, and carry an 6% yearly interest rate payable in cash or shares.

Bema can prepay the loan any time, subject to Resource Capital’s conversion rights. The loan can be divided into two tranches of US$2.5 million each. The first tranche can be drawn when the deal closes and the second, until Dec. 31,1999. The loan is convertible at Resource Capital’s option at a price of $1.07 per share for the first tranche and $1.16 per share for the second.

For the first quarter of 1999, Bema reported a net profit of US$718,000 (or 1 cents per share) on revenue of US$9.7 million. This compares with a net loss of US$1.2 million (1 cents per share) on revenues of US$9.8 million for the same period last year. Cash from operating activities during the quarter was US$3.3 million (3 cents per share), compared with US$394,000 (nil per share) during the first quarter of 1998.

Under the company’s hedging program, Bema was paid an average of US$386 for an ounce of its gold. The spot price for the quarter averaged US$287 per oz., and the hedging program provided US$2.6 million in additional revenue. The company’s cash position at the end of the quarter was US$14.2 million.

The Refugio mine produced 52,850 oz. gold, of which Bema’s share was 26,425 oz., at an operating cash cost of US$239 per oz. This compares with production of 48,544 oz. gold at an operating cash cost of US$287 per oz. during the same period in 1998.

Bema attributes the lower costs to changes in the mining plan, which resulted in a lower stripping ratio and increased crusher throughput.

At the Aldebaran project, also in Chile, the company has spent US$4.8 million on a feasibility and US$1 million on exploration.

Placer Dome (PDG-T) is earning a 51% interest in the project, and intends to spend US$18 million on exploration and feasibility work this year. In addition to drilling the Cerro Casale deposit, Placer completed more drilling on the Eva, Estrella, Anfileatro and Romancito Sur zones. Additional work included drilling and testing for a water well (and water rights applications), and metallurgical testing. The final feasibility study for the Cerro Casale deposit is expected to be complete by February 2000.

At the Lo Increible property in Venezuela, El Callao Mining (ECM-V), 38.4%-owned by Bema, plans to begin a US$6-million final feasibility study soon.

Bema is also reviewing capital and operating cost projections at its 79%-owned Julietta deposit in Magadan, Russia. An updated development plan is expected to be tabled in May.