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Gold/Mining/Energy : Bema(Bgo) and Arizona Star
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To: Richard Woo who wrote (591)10/27/1996 11:49:00 AM
From: Terry Swift   of 10482
 
Richard:
Bema has told me they estimate the strip ratio to be 2.5:1. Whether that is the average throughout the deposit or not I'm not sure. They have also told me they think they can get that lower; how, I'm not sure since the mineralization is the mineralization and unless the composition changes as they get into the deep porphyry I don't see how the strip ratios can change.
The net income from the 2 million ozs in the upper oxide portion will barely dent the $1 billion they will need for the mine to produce the 1.2 million ozs of gold per year they project. I would think they will only go that route if they have no prospects of selling Star and have to finance the project themselves. The other scenario, and the one I'm hoping to see, is the sale of Star to a major which will give BGO the cash for most of its share of the large open pit mine needed to produce 1.2 million ozs of gold each year.
The deep porphyry would be a copper mine? Ouch. That is not what the market wants to see and may be the reason this stock is at the price its at. The world is awash in copper and copper prices are down without much prospects for coming back soon. With 2 1/2 times gold to copper I would hope they will extract gold with a copper byproduct which will reduce the cost of mining the gold.
As I understand the strip ratios; if the 2.5:1 holds true then if they have 1/2 billion tonnes of mineralized ore, they have 1 1/4 billion tonnes of total ground to move to get all the mineralized ore. That ratio is very important in determining cost of production.
Clive Johnson and his board of directors have some very important decisions to make in the not-too-distant future.

Terry
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