Positive feasibility for Kupol

Vancouver – The much-anticipated feasibility study for Bema Gold‘s (BGO-T) Kupol gold and silver project in northeast Russia paints a rosy picture for the high grade deposit with robust economics and low cash costs.

Bema is earning a 75% interest in Kupol from the government of Chukotka.

While the capital cost of the Kupol project has risen by 7% over last year’s preliminary assessment owing to higher steel and fuel costs, total cash costs came in at US$88 per oz.

The estimated US$364 million pre-production capital cost includes US$288.2 million for mine site facilities and development, US$36 million for mining equipment and US$39.8 million in working capital.

The feasibility study, prepared by in-house personnel and an assorted team of engineering firms including Orocon, AMEC Americas, and Thyssen Mining, envisages mining from open pit and underground to commence simultaneously.

Bema could churn out 552,000 oz. gold and 5.86 million oz. of silver per year over 6.5 years from the 3,000-tonne-per-day operation.

The study is based solely on the estimated indicated resource of 6.4 million tonnes containing 4.2 million ounces gold at an average grade of 20.3 grams gold and 53 million ounces of silver at an average grade of 257 grams.

Assuming US$400 gold and US$6 silver prices, the feasibility study calculates a probable reserve of 7.1 million tonnes containing 3.85 million oz. gold at an average grade of 16.9 grams gold and 48.76 million oz. silver at an average grade of 214 grams.

Bema says that if inferred resources could have been included, the mine life could be doubled to 12 years. Inferred resources now stand at 4 million tonnes averaging 12.4 grams gold and 171.4 grams silver per tonne for 1.6 million oz. gold and 23 million oz. of silver contained.

The company is confident that the inferred resources can be bumped up to reserve status through more infill drilling which is now under way.

On the exploration front, Bema continues to meet with success while exploring along the strike of the North Extension Zone. Step-out hole 5-456, 100 metres north of the last mineralized hole, intersected 28.33 grams gold and 245.7 grams silver over a drill length of 13.6 metres (true width of 8 metres).

The project’s net present value at zero discount is estimated at US$730 million over its life, US$430 million using a 5% discount with payback estimated at 18 months.

Currently utilizing a $100 million bridge loan facility for the project, the company is in talks with its bankers regarding the project loan facility, part of which will go toward paying back the bridge loan.

So far, Bema has spent some US$70 million at Kupol.Camp expansion, road construction and site earth works towards development of the project ahead of the main construction years of 2006 and 2007 are now under way.

Plans call for some 45,000 metres of exploration, condemnation and infill drilling, with six rigs currently turning.

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