Production under way at Julietta

Vancouver — With the price of gold showing signs of life, the timing could not be better for Bema Gold (BGO-T) to launch production at its 79%-owned Julietta mine in Russia’s far east.

The project lies 250 km north of the port city of Magadan and 600 km south of Kinross Gold’s (K-T) 54.7%-owned Kubaka gold mine.

Production at the high-grade, gold-silver, underground operation began Sept. 7, some two months ahead of schedule. The mill is expected to reach an increased capacity of 400 tonnes per day by the end of the month.

The increase in the production rate is based on a revised mine development plan. This would see gold production climb by 31% to 140,000 oz. gold and 2.4 million oz. silver during the first year of operation.

Cash operating costs per ounce of gold, net of silver credits, are expected to come in at an impressive US$25 per oz. during the first year of production and climb to US$56 per oz. over the initial four years of operation. Total cash costs are slated to average US$70 per oz. gold in the first year and US$100 per oz. over the first four years.

These estimates are based on proven and probable reserves of 538,446 tonnes grading 24.7 grams gold and 407 grams silver, equivalent to 426,700 contained oz. gold and 7.1 million contained oz. silver.

Additional inferred resources of 492,000 tonnes grading 19.5 grams gold and 342 grams silver, equal to 309,000 oz. gold and 5.4 million oz. silver, could add another four years of mine life to the project.

The original development plan was completed in June 1999 and called for a daily operating rate of 350 tonnes.

Bema has opted to use conventional flotation concentration, cyanide leach and standard Merrill-Crowe precipitation to produce dor bars. The metallurgy of the deposit is said to be straightforward, with projected recoveries of 94% for gold and 85% for silver.

Capital costs were estimated at US$45 million.

Bema arranged a US$25-million project loan from Hypo-Vereinsbank and Standard Bank, as well as a US$10-million loan from International Finance Corp., a division of the World Bank.

Bema also secured a US$5-million cost overrun facility with Hypo-Vereinsbank and Standard Bank. Bema is contributing US$10 million toward construction.

Julietta is described as a low-sulphidation epithermal vein deposit. The steeply dipping veins vary in width from 10 cm to 7 metres for an average of 1-1.5 metres. The current resource comprises 14 quartz veins in an area measuring 1 km by 2 km.

Bema acquired a 79% ownership of the project in June 1998 through a merger with Arian Resources. A Russian group, headed by the geologist who first discovered the deposit in 1989, owns the remainder.