Bema Gold Corporation announces fourth quarter results
VANCOUVER, April 19 /CNW/ - Bema Gold Corporation (''the Company'') today
announced results for the fourth quarter and year ended December 31, 1998.
During 1998, the Company:
- Further improved the Refugio Mine in Chile.
- Acquired the high grade gold-silver Julietta deposit in Magadan,
Russia.
- Advanced the large Cerro Casale gold deposit in Chile with its partner
Placer Dome Inc.
- Initiated a pre-feasibility study at Lo Increible in Venezuela.
- Completed a $20 million equity financing.
- Produced positive exploration results at the Quebrada property in
Chile.
The Company's 50% owned Refugio Mine had a strong fourth quarter
producing 48,680 ounces of gold (Bema's share - 24,340 ounces) at an operating
cash cost of $246 per ounce. The Mine continues to benefit from the various
repairs and improvements carried out over the last 18 months, with first
quarter 1999 gold production of 52,850 ounces (Bema's share - 26,425 ounces)
at an operating cash cost of $239 per ounce.
Fourth Quarter Results
The Company reported positive cash from operations of $2.0 million or
$0.02 per share and a net loss of $35.6 million or $0.31 per share (versus a
loss of $0.2 million or nil per share in the same period in 1997) on sales of
$9.6 million. The positive cash from operations reflects the higher gold
production and the sharply reduced operating cash costs. The fourth quarter
loss resulted mainly from a $30 million writedown of the Refugio Mine
reflecting the current gold environment.
Bema maintains a strong gold hedging program and in the fourth quarter
the average price received per ounce of gold was $386 per ounce as compared to
the quarter average spot price of $294 per ounce.
12 Month Results
For the year ended December 31, 1998 the Company reported cash to
operations of $4.3 million or $0.04 per share and a net loss of $46.1 million
or $0.40 per share on sales of $32.1 million. The loss in 1998 was primarily
due to the writedown of the Refugio mine, a $3.6 million writedown on the
carrying value of the gold-in-process inventory at Refugio and a $2.0 million
provision against amounts owed to the Company by one of its affiliates. The
writedown of the carrying value or the gold-in-process inventory was due to
lower than estimated recoveries of run of mine and primary crushed ore placed
on the leach pads in 1997 while the fine crushing plant was being repaired;
however, recoveries for the fine crushed ore remains as expected. For the
same period in 1997 the Company reported cash from operations of $2.0 million
or $0.02 per share and a loss of $5.9 million or $0.07 per share on sales of
$28.0 million.
Revenue in 1998 was higher versus 1997 due to a nine percent increase in
gold production to 80,525 ounces and a slightly higher realized gold price of
$393 per ounce. Operating cash flow was lower in 1998 than 1997 despite the
increased revenue and a slightly lower cash operating cost of $305 per ounce
due mainly to the settlement of short term liabilities assumed by Bema
following the acquisition of the Julietta deposit. Lower than anticipated
production at the Refugio Mine in 1998 was mainly caused by conveyor belt
splice failures and motor breakdowns. The problems with the conveyor were
resolved by the fourth quarter.
As at December 31, 1998, the Company had cash of $13.5 million and
working capital of $17.4 million.
The Company has employed a hedging program to provide a floor price for
its mine output. This successful program predominantly purchases put options
to limit the downside while providing upside potential when gold prices return
to historic average levels. Based on this program, the Company realized a
gold price of $393 per ounce in 1998 and should the gold price average $300
per ounce in 1999 the Company would realize a price of $385 per ounce for
substantially all of its share of production from the Refugio Mine.
Other Developments
The Company, and partners Arizona Star Resource Corp. and Placer Dome
Inc., further advanced the world class gold-copper porphyry Cerro Casale
deposit in Chile. The partners announced an updated measured and indicated
resource for Cerro Casale of 952 million tonnes grading 0.71 grams of gold per
tonne and 0.26% copper containing 21.7 million ounces of gold and 5.5 billion
pounds of copper. This is an increase of 2.0 million ounces over the
Company's pre-feasibility measured and indicated resource. Placer Dome which
is earning a 51% interest in the Cerro Casale deposit by advancing the project
to production spent $27.3 million in 1998 and is planning to spend a further
$18 million in 1999 with the goal of completing a feasibility study by
February 2000.
In June 1998, the Company acquired 79% of the very high grade gold-silver
Julietta deposit located in Magadan, Russia. The deposit currently contains
mineable reserves of 1.14 million tonnes grading 20.1 grams of gold per tonne
and 340 grams of silver per tonne containing 750,000 ounces of gold and 12.4
million ounces of silver. The feasibility study forecasts production to
average 110,000 gold equivalent ounces from proven and probable reserves at a
cash cost of $119 per ounce over five years. Including possible reserves the
mine life is nine years at an average annual production rate of 97,000 gold
equivalent ounces.
Bema is reviewing the project and believes there is the potential for
reductions in capital and operating costs. In 1999 Bema will continue to
pursue project financing based on the belief that the Julietta deposit is an
excellent asset that can be developed as a low cost mine and strong source of
cash flow even in today's poor metal markets.
At the Lo Increible Property in Venezuela, the Company updated the
geological resource and completed a pre-feasibility study, the final results
of which were announced in February 1999. The indicated and inferred resource
based on a cut-off grade of 1.0 gram of gold per tonne was calculated at 24.1
million tonnes grading 3.3 grams of gold per tonne containing 2.6 million
ounces of gold. Using this resource the pre-feasibility produced a mineable,
open pittable reserve of 11.4 million tonnes grading 3.14 grams of gold per
tonne for a total of 1.1 million ounces of recoverable gold based on a
projected gold recovery of 92%. The pre-feasibility study contemplates a 3,000
tonne per day carbon in leach plant with annual production of 138,000 ounces
of gold over six years of mining at a cash cost of $167 per ounce. The mill
will process low grade stock-pile for an additional five years. These
resources have the potential to be expanded and also have the potential to be
exploited by underground mining methods during the later years of the open pit
mine and beyond. All six deposits are open at depth and along strike. The
project economics are robust with a pre-tax Internal Rate of Return for the
project of 19.8% at $300 gold. During 1999 the Company intends to commence a
Final Feasibility Study on the Lo Increible Project.
At the Q Seca deposit on the 100% owned Quebrada property, approximately
11 kilometres east of the Cerro Casale deposit, Bema completed additional
drilling. By the end of 1998 the Company had completed a total of 41 reverse
circulation and diamond drill holes totalling 11,600 metres. Based on this
drilling, Bema has commenced a resource study.
Outlook
The Company's goals in 1999 are to continue to advance its assets while
remaining in a strong cash position. The Company is projecting a continued
improvement in gold production at the Refugio Mine. In 1999 the Refugio Mine
is forecast to produce 210,000 ounces of gold at an operating cash cost of
$240 per ounce. Bema's 50% share of production will be 105,000 ounces.
At Aldebaran, Placer Dome will continue exploration and complete a Final
Feasibility Study.
The Company also intends to further advance the Lo Increible project in
Venezuela by commencing work on a Final Feasibility Study, and to pursue
financing for the construction of the Julietta mine in Russia. With these two
projects, and their high grade and low projected operating costs, the Company
has two assets that show strong economic returns, even with the gold price in
the $300 range. This strategy will ensure that Bema remains firmly on the
path of strong growth as a producer even in this low gold price environment.
Bema Gold Corporation produces gold in Chile, and explores for gold in
Canada, Chile, Russia, the United States and Venezuela. The common shares of
the Company are listed for trading in Canada on The Toronto Stock Exchange and
the Vancouver Stock Exchange and in the United States on the American Stock
Exchange under the symbol ''BGO''.
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
For more information on Bema Gold please contact Investor Relations at
(604) 681-8371 or toll-free 1-800-316-8855 or alternatively contact our
web-site at www.bema.com.
The Vancouver and Toronto Stock Exchanges neither approve nor disapprove
the information contained in this News Release, Bema Gold Corporation trades
on the Vancouver, Toronto and American stock exchanges. Symbol: BGO.
Some of the statements contained in this report 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.
BEMA GOLD CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Prepared from audited financial statements)
(in thousands of United States dollars)
As at As at
December 31 December 31
1998 1997
ASSETS
Current assets $ 30,166 $ 48,044
Investments 30,561 31,966
Property, plant and equipment 131,419 127,533
Other assets 8,341 8,451
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$ 200,487 $ 215,994
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LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities $ 12,737 $ 14,821
Deferred revenue 7,414 8,945
Long-term liabilities 21,575 27,087
Shareholders' equity 158,761 165,141
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$ 200,487 $ 215,994
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BEMA GOLD CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the periods ended December 31
(Prepared from audited financial statements)
(in thousands of United States dollars, except per share amounts)
Fourth Quarter Twelve months
1998 1997 1998 1997
---- ---- ---- ----
GOLD REVENUE $ 9,573 $ 6,919 $ 32,120 $ 27,991
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EXPENSES (INCOME)
Operating 6,464 5,242 25,381 23,018
Depreciation, depletion
and amortization 2,349 1,670 8,011 6,579
General and administrative 1,190 746 3,983 3,516
Interest on long-term debt 608 572 2,666 2,188
Write-downs 34,780 - 38,414 -
Other (229) (1,075) (208) (1,439)
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45,162 7,155 78,247 33,862
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LOSS FOR THE PERIOD $ (35,589) $ (236) $ (46,127) $ (5,871)
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LOSS FOR THE PERIOD,
PER COMMON SHARE $ (0.31) $ - $ (0.40) $ (0.07)
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Refugio Mine Operating Statistics
For the periods ended December 31
Fourth Quarter Twelve months
1998 1997 1998 1997
---- ---- ---- ----
Fine crushed ore to pad 2,163,800 2,339,400 8,077,100 6,899,700
Total ore to pad 2,177,400 2,682,400 8,207,300 8,149,800
Grade 0.906 0.943 0.928 1.025
Gold Production (ounces) 48,680 38,899 161,046 147,085
Operating cash cost per ounce $246 $305 $305 $311
Total cash cost per ounce $251 $314 $311 $320
Total cost per ounce $329 $379 $389 $391
Stripping ratio 0.88 0.79 1.19 1.17
Gold revenue per ounce $386 $391 $393 $391
Spot price of gold $294 $306 $294 $331
-0- 04/19/1999
For further information: Investor Relations (604) 681-8371 or toll-free 1-800-316-8855 or web-site www.bema.com.
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