Mishaps at Refugio mine spoil Bema’s second quarter

A production shortfall at the Refugio mine in northern Chile caused 50%-owner Bema Gold (BGO-T) to bleed more red ink in the second quarter.

The Vancouver-based company tabled a loss of US$2.5 million (or 2 cents per share) on revenue of US$7.9 million during the 3-month period, compared with a loss of US$950,000 (1 cents per share) on US$8.1 million in the corresponding quarter last year.

During the first six months of 1998, Bema’s loss amounted to US$3.7 million (4 cents per share) on revenue of $17.7 million, compared with a loss of US$752,000 (2 cents per share) on $17.3 million in the first half of 1997.

The company pulled in US$2 million in hedging gains during the second quarter, resulting in an average price of US$402 per oz. on its gold sales. This represents a premium of US$102 per oz. over the average spot price of US$300 per oz. Hedging generated an additional US$4.4 million in revenue during the first half of 1998.

The Refugio mine produced 37,964 oz. during the second quarter at an operating cash cost of US$320 per oz. Bema’s portion amounted to 18,982 oz. By comparision, the mine cranked out 36,800 oz. in the year-ago period, with Bema’s share amounting to 18,400 oz. (The remaining half of the mine is owned by Amax Gold [AXG-T]).

Refugio’s first-half output was 86,508 oz. in 1998, compared with 88,600 oz. last year.

The production shortfall was caused chiefly by mechanical problems with the overland conveyor. However, the motor and belt splice failures have since been corrected and production levels are said to be back to normal. Also, the crusher plant has been modified, and a new access road has been constructed to improve transportation during winter months.

Bema completed a 16-hole diamond drill program below the Verde deposit at Refugio. Results indicate that mineralized material with gold grades similar to those of Verde continue below the planned pit floor. The results are said to confirm the potential for increased reserves.

The company recently raised US$28.5 million by issuing 8 million shares to an underwriting syndicate. The proceeds will be applied to exploration and development projects.

At the end of the second quarter, Bema’s cash balance stood at US$28.4 million.