RUSSIA - BEMA GOLD CORP. of Vancouver has received commitment letters for a fully-underwritten commercial tranche of US$280 million for the construction and development of the Kupol high-grade gold-silver mine, located in Chukotka, Russia. (Kupol is a joint venture between Bema and the Government of Chukotka.) In addition, the company has entered into an agreement for a "bought deal" financing with a syndicate of Canadian underwriters: Bema will issue 41.72 million common shares at Cdn$2.85 per common share for gross proceeds of Cdn$118.9 million, to further advance the Kupol property and for general corporate purposes.
Estimated pre-production capital costs to develop the Kupol mine remain at US$364 million and the total cost including start-up working capital, pre-production capital costs, financing fees and interest during construction, is estimated at US$460 million. In addition Bema has invested US$51 million in exploration and feasibility work and US$45 million in property payments to date. As of the end of July 2005, Bema had spent over US$108 million of the pre-production capital costs.
The Kupol development program is on schedule and on budget. The foundations for the SAG and ball mills are nearing completion and six 3000-cu.-metre fuel tanks have been erected. All of the mill site earthworks are complete, as is the pad for the permanent camp and the roads to the airport and to the south. Water well testing is complete, indicating enough fresh water to meet the mill and camp requirements.
The equipment procurement program is also on schedule. Two ships have arrived in the Northern Russian port city of Pevek, and four more are expected to arrive by early October. The ships contain all of the supplies necessary for the 2006 development program including the camp, mill and administrative buildings and most of the mill equipment. This equipment will be trucked to site between January and April over 400 kilometres of ice roads. The main construction years at Kupol will be 2006 and 2007, and the project is on schedule to commence production in mid-2008.
Kupol is expected to produce an average of approximately 550,000 ounces of gold per year at an operating cash cost of $47 per ounce and a total cash cost of $88 per ounce for a minimum of 6.5 years. It is 940 kilometres northeast of the Julietta gold-silver mine in Russia's Magadan region, in which Bema has 79% interest.
Visit www.bema.com for more details including the June 2005 feasibility study and results from the ongoing exploration program.
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