PR out Friday night:
Friday May 18, 8:53 pm Eastern Time
Press Release
SOURCE: Bema Gold Corporation
Bema Gold Corporation - 2000 Review and Corporate
Update, 2000 Fourth Quarter Results, 2000 Year End
Results
VANCOUVER, May 18 /PRNewswire/ - Bema Gold Corporation (``Bema'' or the
``Company'') today presented a review of the year 2000 and corporate update, and
announced results for the fourth quarter and year ended December 31, 2000.
2000 Review and Corporate Update
For the year 2000, the highlights for the Company were the financing of,
and commencement of construction at the Julietta Mine in Russia, and the
completion of the Final Feasibility Study at the Cerro Casale Deposit in
Chile.
Julietta Project, Magadan, Russia
The 79% owned Julietta Project in far east Russia reached two major
milestones in 2000 with the arrangement of $45 million of project financing to
build the Mine and commencement of full construction. The project financing
consists of a $10 million equity contribution from Bema, a $25 million Project
Loan from Hypo-Vereinsbank A.G. and Standard Bank Limited, and a $10 million
Project Loan from the International Finance Corporation (a division of the
World Bank). In addition, Bema was also successful in arranging a $5 million
cost overrun facility with Hypo-Vereinsbank and Standard Bank to be used in
the event that additional capital is needed to complete the Project.
The mine construction contractor mobilized in May 2000 to continue concrete work for the
mill and to procure equipment and supplies which were shipped to the port city of Magadan
in July. With the draw-down of the Project Loans in late September, full construction
commenced at the site in October. Despite record low temperatures in the Magadan Region
over the winter, construction remained on schedule. To April 30, 2001, over 1,500 metres of underground development
drifting had been completed, camp construction was completed, and the mill facilities were entering the final stage of
construction. Gold and silver production is projected to commence on schedule in the fourth quarter of 2001.
The Julietta Project has a high mineable reserve grade of 24.7 grams per tonne gold and 407.5 grams per tonne silver. These
high grades combined with the simple mining and processing methods to be used are forecast to generate operating cash costs
of $75 per gold equivalent ounce during the first five years of mining based on average annual production of 87,000 ounces of
gold and 1,307,000 ounces of silver. The total cash cost per ounce of gold equivalent produced is projected at less than $100,
including revenue taxes and royalties.
The Julietta Project encompasses 225 square kilometres of mineral licenses with good exploration potential. The potential to
expand reserves is excellent as several of the defined veins remain open along strike and at depth, and there are several
unexplored high-grade surface showings.
Aldebaran Property, Chile
51% Placer Dome Inc. / 24% Bema / 25% Arizona Star Resource Corp.
The Aldebaran Property, located in northern Chile, hosts the world class Cerro Casale gold copper porphyry deposit, which
also reached a major milestone in 2000. In February, Placer Dome Inc. (``Placer''), as part of the Joint Venture Agreement to
earn a 51% interest in the Property, completed a Final Feasibility Study (the ``Study'') on the Cerro Casale Deposit. The Study
confirms that Cerro Casale is technically feasible as one of the world's largest gold copper mines once metal prices recover.
The Study contemplates a large scale open pit mine with mineable proven and probable reserves containing 23 million ounces
of gold and 6 billion pounds of copper from 1.035 billion tonnes grading .69 grams per tonne gold and 0.26% copper, based
on a gold price of $350 per ounce and a copper price of $0.95 per pound. The Study concludes the optimal processing rate
would range from 150,000 to 170,000 tonnes per day to produce an average of 975,000 ounces of gold and 287 million
pounds of copper annually over an 18 year mine life. Operating cash costs, net of copper credits at $0.95 per pound, are
projected at $98 per ounce of gold while total costs per ounce, including operating costs and initial and ongoing capital, are
$203 per ounce of gold. Initial capital costs are estimated at $1.43 billion, with Placer required to arrange financing for the first
$1.3 billion, once the project is financeable, to retain their interest.
Placer expended approximately $2.5 million on the Cerro Casale Project in 2000, primarily on permitting, and in the first
quarter of 2001 made payments of approximately $2.5 million to secure the water rights. The Project now has sufficient water
to build and operate a plant as envisioned in the Study. Another significant milestone was reached in the first quarter of 2001
with the submission of an Environmental Impact Study to the Chilean government.
Refugio Mine, Chile
50% Bema / 50% Kinross Gold Corporation
The Company was extremely disappointed with the performance of the Refugio Mine in the year 2000, as it again failed to
meet projections resulting in unexpected cash calls to fund budget shortfalls. For the year 2000, Refugio was projected to crush
an average of 35,500 tonnes per day yielding 230,000 ounces of gold for the year, with operating cash costs of $230 per
ounce.
Despite having two consecutive quarters of record crusher throughput to the end of June, the Mine fell well short of
expectations for the year 2000, producing 169,832 ounces of gold (26% below budget) at an operating cash cost of $286 per
ounce (24% over budget). The operating shortfall resulted in unexpected cash calls to Bema of over $6.8 million. The shortfall
in production was primarily due to poor crushing plant throughput in the second half of the year, resulting from low plant
utilization, combined with extensive freezing of a significant portion of the leach solution distribution system and heap leach
pads. Freezing occurred when the primary power supply was interrupted during a storm in June and the backup power supply
system to the solution, installed in 1999, proved to be inadequate for its intended purpose. In the Company's opinion, these
operating problems were caused by the operator's failure to cause CMM to implement approved programs and budgets. In
November 2000, in response to a dispute with Bema over budget over-run funding, Kinross Gold Corporation (``Kinross'')
took the unilateral action of suspending mining and crushing operations without the approval of Bema or the CMM Board of
Directors. The partners ultimately agreed to restart mining in mid-December to take advantage of the favourable conditions
existing during the Chilean spring and summer. Leaching of gold from the heap leach pads and gold production continued during
the suspension period.
With an improved management team at the Mine in the latter part of 2000, production at Refugio has exceeded budget for the
first quarter of 2001, producing 51,521 ounces of gold at operating cash costs of $230 per ounce. Unfortunately, due to the
Mine's costly poor performance in 2000, the low gold price, and the requirement for significant capital to build more leach pads
in the second half of 2001, we agreed with Kinross to cease mining on May 31, 2001 and place the Mine on care and
maintenance. We do, however, believe that the recent improved production at Refugio demonstrates that it can be a profitable
gold producer as the gold price recovers.
During 2000 the Company and Kinross continued with formal arbitration proceedings in Chile against the original construction
contractor of the Refugio Mine in an attempt to recover losses suffered as a result of numerous design and construction failures.
A final arbitration decision is expected by the fourth quarter of 2001.
Financial
Despite the weak gold price and gold equity markets during 2000, the
Company was successful in raising the necessary funds to finance the Julietta
Mine capital requirements, the unexpected cash shortfalls at the Refugio Mine,
and corporate working capital. In total, the Company raised approximately $47
million during 2000 from the debt and equity markets. In addition, the Company
improved its working capital with the sale of non-core assets for
approximately $15 million, which included the interest in Venezuela.
In addition to significantly reducing corporate overhead costs during the year, the Company also reduced project funding
requirements. The combination of these reduced cash requirements going forward and strong projected cash flow from the
Julietta Mine, should see Bema less dependent on the equity markets to fund its activities in the future.
Outlook
Looking forward, while the Company's management strongly believes that
the gold price is cyclical and will therefore ultimately return to higher
levels, obviously the timing of cycles is difficult to predict. Therefore, the
Company will continue to pursue its goal of building Bema into a successful
low cost gold producer with the development of the Julietta Mine, while
maintaining its large gold reserve and resource base that offers extraordinary
leverage to higher gold prices. In addition, the objective is to grow the
Company's low cost gold production by focusing acquisition efforts on high-
grade projects such as Julietta, which can be financed and developed even at
current gold prices.
Fourth Quarter Results
The Company's 50% owned Refugio Mine had fourth quarter production of
41,941 ounces of gold (Bema's share - 20,971 ounces) at an operating cash cost
of $321 per ounce of gold versus production of 42,665 ounces of gold (Bema's
share - 21,322 ounces) at an operating cash cost of $284 per ounce in the same
period in 1999. Production in the fourth quarter of 2000 at Refugio was
adversely affected by continued operational problems.
The Company reported cash from operations of $247,000 or zero cents per share and a net loss of $31.7 million or $0.22 per
share on sales of $7.5 million for the fourth quarter of 2000. In the same period in 1999, cash provided from operations was
$780,000 or $0.01 per share and the net loss was $2.0 million or $0.01 per share on sales of $9.3 million. The loss in the
fourth quarter was mainly a result of a $22.6 million write-down of mineral properties, an additional $2.5 million write-down of
its investment in El Callao Mining Corp. (``El Callao''), and investment losses of $7.1 million mostly from the sale of shares in
Arizona Star Resource Corp. (``Arizona Star''). Included in the write-down of mineral properties was an impairment charge
against the Refugio Mine assets of $20 million based on a long-term gold price assumption of $300 per ounce. This compares
with only $1.8 million of mineral property write-downs in the same period in 1999.
Bema's gold hedging program in the fourth quarter realized an average price per ounce of gold of $369 compared to the
quarter average spot price of $269 per ounce. Following the suspension of in-pit mining at Refugio, Bema closed out all the
Refugio hedges and received gross proceeds of $1.7 million.
Twelve Month Results
For the year ended December 31, 2000 the Company reported cash from
operations of $0.7 million or zero cents per share and a net loss of $51.1
million or $0.36 per share on sales of $30.6 million. This compares to cash
from operations of $3.3 million or $0.03 per share and a net loss of $4.0
million or $0.03 per share in 1999 on sales of $35.3 million. The loss for
2000 consisted mainly of a $20 million write-down to the carrying value of the
Refugio Mine and investment losses of $9.3 million from the sale of Arizona
Star shares and $11.8 million from the sale of the Company's 45% interest in
El Callao.
Revenue in 2000 was $30.6 million or 13% lower than in 1999 mainly due to a lower realized gold price of $353 per ounce in
2000 versus $402 per ounce of gold in 1999. Gold sold in 2000 was 86,822 ounces versus 87,610 ounces in 1999. The
realized gold price of $353 per ounce in 2000 was $74 per ounce above the average spot price for the year.
As at December 31, 2000, the Company had cash of $3.2 million and working capital of $7.4 million ($1.8 million in 1999).
The increase in working capital in 2000 was mainly attributable to the disposal of the Company's investment in and notes
receivable from El Callao in September, resulting in the reclassification of $5.8 million of assets from long-term to current.
Note: All dollar amounts are expressed in United States dollars unless otherwise stated.
On behalf of BEMA GOLD CORPORATION
"Clive T. Johnson"
Chairman, C.E.O., & President
The Toronto Stock Exchanges neither approves nor disapproves the information contained in this News Release, Bema Gold
Corporation trades on The Toronto and American stock exchanges. Symbol: BGO.
Some of the statements contained in this release are forward-looking statements, such as estimates and statements that describe
the Company's future plans, objectives or goals, including words to the effect that the Company or management expects a
stated condition or result to occur. Since forward-looking statements address future events and conditions, by their very nature,
they involve inherent risks and uncertainties. Actual results in each case could differ materially from those currently anticipated in
such statements.
Refugio Mine Operating Statistics
For the period ended December 31
(Unaudited)
Fourth Quarter Twelve Months
2000 1999 2000 1999
---- ---- ---- ----
Refugio Mine (100%)
Fine crushed ore
to pad (tonnes) 1,485,900 2,002,800 8,730,800 8,936,400
Total ore to pad
(tonnes) 1,556,500 2,002,800 8,801,400 8,936,400
Stripping ratio 0.17 0.40 0.32 0.41
Gold grade (grams/tonne) 0.944 0.973 0.938 0.940
Gold Production (ounces) 41,941 42,665 169,832 179,465
Bema's 50% share
Gold Production (ounces) 20,971 21,332 84,916 89,733
Operating cash cost per
ounce $321 $284 $286 $263
Total cash cost per ounce $326 $286 $292 $268
Total cost per ounce $412 $366 $379 $342
Gold revenue per ounce $369 $402 $353 $402
Spot price of gold $269 $296 $279 $279
Cash from operations
(000's) $247 $780 $666 $3,266
Cash from operations
per share - $0.01 - $0.03
BEMA GOLD CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the periods ended December 31
(Unaudited)
(in thousands of United States dollars, except shares and per share amounts)
Fourth Quarter Twelve months
2000 1999 2000 1999
---- ---- ---- ----
GOLD REVENUE $ 7,547 $ 9,274 $ 30,630 S 35,252
OPERATING COSTS 6,763 6,148 25,849 24,309
--------- --------- --------- ---------
GROSS PROFIT FROM MINE
OPERATIONS 784 3,126 4,781 10,943
--------- --------- --------- ---------
EXPENSES (INCOME)
Depreciation and
depletion 1,819 1,656 7,331 6,482
General and
administrative 729 864 3,051 3,419
Interest on long-term
debt 413 485 1,799 2,068
Amortization of
deferred financing
costs 378 378 1,512 1,509
General exploration 49 110 442 557
Mining contract
termination - 1,546 - 1,546
Insurance proceeds (3,507) (894) (3,507) (2,670)
Other (402) (1,140) (404) (286)
--------- --------- --------- ---------
(521) 3,005 10,224 12,625
--------- --------- --------- ---------
EARNINGS (LOSS) BEFORE
THE UNDERNOTED ITEMS 1,305 121 (5,443) (1,682)
Investment losses (7,091) - (9,331) -
Write-down of investments (2,484) - (11,773) -
Write-down of mineral
properties (22,565) (1,765) (22,565) (1,765)
Write-down of notes
receivable (639) - (1,248) -
Equity in losses of
associated companies (220) (323) (779) (601)
--------- --------- --------- ---------
LOSS FOR THE PERIOD $ (31,694) $ (1,967) $ (51,139) $ (4,048)
--------- --------- --------- ---------
--------- --------- --------- ---------
LOSS FOR THE PERIOD,
PER COMMON SHARE $ (0.22) $ (0.01) $ (0.36) $ (0.03)
--------- --------- --------- ---------
--------- --------- --------- ---------
Weighted average number
of common shares
outstanding
(in thousands) 156,260 125,454 142,836 123,839
--------- --------- --------- ---------
--------- --------- --------- ---------
BEMA GOLD CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31
(Unaudited)
(in thousands of United States dollars)
2000 1999
---- ----
OPERATING ACTIVITIES
Loss for the period $ (51,139) $ (4,048)
Non-cash charges (credits)
Depreciation and depletion 7,331 6,482
Amortization of deferred financing costs 1,512 1,509
Deferred revenue (1,469) (4,146)
Equity in losses of associated companies 928 809
Investment losses 9,331 -
Write-down of investments 11,773 -
Write-down of mineral properties 22,565 1,765
Write-down of notes receivable 1,248 -
Other 676 569
Change in non-cash working capital (2,090) 326
--------- ---------
Cash from operating activities 666 3,266
--------- ---------
FINANCING ACTIVITIES
Common shares issued - 540
Special warrants issued 2,953 3,105
Convertible loan, net proceeds 7,593 4,842
Julietta loan proceeds 17,800 -
Refugio loan repayments (6,000) (6,000)
Deferred financing costs (4,758) (604)
Capital lease repayments (850) (362)
--------- ---------
Cash from financing activities 16,738 1,521
--------- ---------
INVESTING ACTIVITIES
Refugio Mine (4,544) (4,181)
Julietta mine construction and development (18,706) (3,189)
Acquisition, exploration and development (1,136) (3,002)
Promissory notes issued by associated
companies, net (2,120) (3,447)
Proceeds on sale of investments 5,892 -
Proceeds from the sale of notes receivable 3,000 -
Restricted cash 484 (484)
Other (453) (647)
--------- ---------
Cash used in investing activities (17,583) (14,950)
--------- ---------
Effect of exchange rate changes on cash 4 59
--------- ---------
INCREASE (DECREASE) IN CASH (175) (10,104)
CASH, BEGINNING OF PERIOD 3,400 13,504
--------- ---------
CASH, END OF PERIOD $ 3,225 $ 3,400
--------- ---------
--------- ---------
BEMA GOLD CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands of United States dollars)
As at As at
December 31 December 31
2000 1999
ASSETS
Current assets $ 23,167 $ 17,678
Notes receivable from associated companies - 11,467
Investments 2,694 30,274
Property, plant and equipment 132,540 136,876
Other assets 17,549 7,907
--------- ---------
$ 175,950 $ 204,202
--------- ---------
--------- ---------
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities $ 15,774 $ 15,885
Deferred revenue 1,799 3,268
Long-term liabilities 26,892 17,914
Shareholders' equity and convertible loans 131,485 167,135
--------- ---------
$ 175,950 $ 204,202
--------- ---------
--------- ---------
Approved by the Directors
"Clive T. Johnson"
-------------------
Clive T. Johnson
"Neil Woodyer"
-------------------
Neil Woodyer
BEMA GOLD CORPORATION
SEGMENTED LOSS INFORMATION
For the years ended December 31
(Unaudited)
(in thousands of United States dollars)
2000 1999
---- ----
GOLD $ (21,424) $ 1,536
EXPLORATION AND DEVELOPMENT (3,897) (2,322)
UNALLOCATED CORPORATE
General and administrative (3,051) (3,419)
Investment and equity losses (23,131) (601)
Other 364 758
--------- ---------
LOSS FOR THE PERIOD $ (51,139) $ (4,048)
--------- ---------
--------- ---------
The Company has a 50% interest in one producing mine, the Refugio Mine,
located in Chile to which all operating revenues are attributable.
BEMA GOLD CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2000
(Unaudited)
1) Accounting for income taxes
Effective January 1, 2000, the Company adopted the Canadian Institute
of Chartered Accountants new accounting recommendation with respect to
income taxes. Under the new recommendation, future income tax assets
and liabilities are recognized for temporary differences between the
tax and accounting bases of assets and liabilities as well as for the
benefit of losses available to be carried forward to future years for
tax purposes, that are likely to be realized. The adoption of this
standard was applied retroactively and did not result in any
restatement of the Company's financial statements
2) Investments
During the fourth quarter of 2000, the Company sold 7 million shares
of Arizona Star Resource Corp. ("Arizona Star") for net proceeds of
$4.2 million, incurring a loss on disposal of $7.2 million. In
addition, due to the continued depressed gold market, the carrying
value of the Company's remaining investment in Arizona Star was
written down by $1.5 million at December 31, 2000.
Effective February 26, 2001, pursuant to a "lock-up" agreement dated
September 12, 2000, the Company tendered 20.7 million El Callao Mining
Corp. ("El Callao") shares to a Crystallex International Corporation
("Crystallex") takeover bid. In addition, pursuant to an asset
purchase agreement dated September 12, 2000, $14.8 million of debt
owed to the Company by El Callao and a royalty payable by El Callao to
the Company, equal to 2% of the cash flow from the Lo Increible gold
property in Venezuela was purchased by Crystallex for $7.6 million and
a 1% net smelter royalty. On September 13, 2000 Crystallex had taken
an interim position in the Company's loan to El Callao by purchasing
$3 million of the debt. The remaining $4.6 million of the purchase
price will be paid in two installments. The first payment of $2.3
million was received in March 2001 and a second payment of a maximum
of $2.3 million is due on September 12, 2001, payable at Crystallex's
option in cash or freely tradeable Crystallex common shares. During
2000, the Company wrote-down its investment in and receivable from El
Callao by $10.3 million and $1.2 million respectively, to their
estimated net recoverable amounts.
3) Julietta project loan financing
During the third quarter of 2000, the Company closed $35 million of
project loans for the construction of the Julietta mine, and received
the first draw down of $7.5 million. The project loans consist of a
$25 million loan from Hypo Vereinsbank A.G. and Standard Bank Limited,
and a $10 million loan from the International Finance Corporation. The
proceeds from these loans are to be used specifically for the
construction of the Julietta mine. As at December 31, 2000, the
Company had drawn down $17.8 million of the $35 million of project
loans.
4) Write-down of mineral properties
During the fourth quarter of 2000, the Company wrote-down the carrying
value of its Refugio Mine by $20 million to its estimated net
recoverable value, based on a long-term gold price assumption of $300
per ounce. In addition, the Friday property located in the United
States was written off in the amount of $2.6 million.
5) Subsequent event
Subsequent to December 31, 2000, the Company renegotiated certain
terms of the Refugio project loan with Barclays Bank PLC, including a
revised loan repayment schedule |
