FOR: BEMA GOLD CORPORATION
TSX, AMEX SYMBOL: BGO
AIM SYMBOL: BAU
March 22, 2005
Bema Gold Corporation: 2004 Fourth Quarter and Year End Results/Updated Kupol Mineral Resource
Estimate
VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - March 22, 2005) - Bema Gold Corporation
(TSX:BGO)(AMEX:BGO)(AIM:BAU) reports the results from its operations for the fourth quarter and year
ended December 31, 2004. Bema remains leveraged to growth through the development of three key
projects; the Kupol deposit in Russia and in Chile the Refugio Mine and the Cerro Casale project. In
2004, the South African rand continued to appreciate versus the US dollar, negatively affecting the
operations at Petrex, while at Julietta a fire in the warehouse early in the year contributed to lower
than budgeted gold production. Despite these challenges, Bema was able to significantly advance each
of its development projects during the year. Refugio commenced a major construction program and is
scheduled to recommence production in May 2005. At Kupol, Bema completed an extensive exploration and
development program while at Cerro Casale, Placer Dome Inc. continues to use reasonable efforts to
arrange financing for the project and are required to make a financing decision in 2005. All dollar
figures are in United States dollars unless otherwise indicated.
Financial Results
Bema's loss for the year ended December 31, 2004 was $79.6 million or $0.22 per share compared to a
loss of $30.6 million or $0.09 per share in 2003. The largest contributor to the loss during the year
was a write down of the carrying value of the goodwill at Petrex in the amount of $27.3 million. The
valuation of Petrex is highly sensitive to assumptions regarding the South African rand / U.S. dollar
exchange rates and to the price of gold. Management has determined that the carrying value of the
Petrex Mines was not impaired based on the projected undiscounted cash flows of the mines. However, in
determining the fair value of the Petrex reporting unit, management determined that the overall
goodwill was impaired. The loss in 2004 was also a result of a number of other non cash charges during
the year, including an $8.5 million write-down of the carrying value of the Yarnell property (refer to
Q-1 press release dated 05-14-04) a write-down of $4 million relating to the cessation of the open pit
operations at the Petrex Mines in the fourth quarter and a $6.1 million decrease in the value of the
mark-to-market, non-hedge derivatives. Further contributing to the loss was $6.4 million of Refugio
Mine start-up costs, which were expensed during the year ($3.2 million in the fourth quarter), lower
than forecasted production at Julietta (see: "Julietta Mine" section) and high operating costs at the
Petrex Mines. (see: "Petrex Mines" section). Removing the non cash items from the $79.6 million loss
for the year would result in a loss of $33.7 million or $0.09 per share.
The Company reported a loss of $44.6 million ($0.12 per share) during the fourth quarter of 2004
compared to a net loss of $20.2 million ($0.06 per share) in the same period of 2003. The loss for the
quarter was due mainly to the write downs at Petrex and the Refugio Mine start up costs.
Gold Revenue
Gold revenue improved by 6% in 2004 to $92.1 million on sales of 232,925 ounces at an average realized
price of $396 per ounce. The Julietta Mine accounted for $32.7 million from the sale of 86,000 ounces
of gold at an average price of $380 per ounce, while $59.5 million was contributed by the Petrex Mines
from 146,925 ounces of gold sold at an average price of $405 per ounce.
Gold revenue in 2003 totaled $86.8 million on sales of 245,523 ounces at an average realized price of
$354 per ounce. The Julietta Mine contributed $39.5 million from 116,066 ounces of gold sold at an
average price of $340 per ounce, while the Petrex Mines accounted for $47.4 million from sale of
129,457 ounces of gold sold at an average price of $366 per ounce.
In 2004, gold revenue for the fourth quarter was $26.4 million on sales of 65,674 ounces at an average
realized price of $403 per ounce. Julietta contributed $7.4 million from the sale of 19,033 ounces at
an average price of $387 per ounce and Petrex accounted for $19.1 million from the sale of 46,641
ounces at an average price of $410 per ounce.
Operations
Bema's consolidated gold production for the year was 229,545 ounces with an operating cash cost of
$315(1)(2) and total cash cost of $332 per ounce(1)(2). In 2003, Bema produced 250,315 ounces of gold
with an operating cash cost of $242(3) and total cash cost of $259 per ounce(3). Lower than forecasted
production at Julietta, due mainly to a fire in the warehouse in February, and higher operating cost
at Petrex, due to the strong South African Rand, were the primary reasons for the shortfall in
production ounces and the higher operating costs. For more detail please refer to the "Julietta Mine"
and "Petrex Mines" sections, respectively.
Consolidated gold production for the fourth quarter was 61,501 ounces with an operating cash cost of
$353 per ounce(1)(2) and a total cash cost of $371 per ounce(1)(2).
(1) In 2004, consolidated production costs are adjusted to reflect a cash gain of $41 per ounce gold
(Q4-$30 per ounce) from the exercise of South African rand denominated gold put options. At Petrex the
cash gain from the puts was $64 per ounce gold (Q4-$43 per ounce).
(2) Julietta costs are net of silver by-product credit.
(3) Adjusted for rand denominated put option gains from 2003- please refer to the year end news
release dated 03/25/04 for more detail.
Operating cash costs are calculated in accordance with the Gold Institute Production Cost Standard and
include direct mining, smelting, refining and transportation costs, less silver by-product credits.
Total cash costs, calculated in accordance with this standard, include operating cash costs, royalties
and production taxes.
Liquidity and Capital Resources
The Company ended the year with $87.1 million in cash and working capital of $85.6 million compared to
cash of $30.8 million and a working capital deficiency of $9.3 at the end of 2003.
During the year, Bema made scheduled payments towards the Julietta project loans and also prepaid an
additional $5.6 million of the project loans six months ahead of schedule. The Company has now repaid
in its entirety the Julietta project loans with the exception of the $1.5 million IFC C loan. This
loan can be extended beyond the September 15, 2005 maturity date at the option of the IFC.
At Petrex, the lenders have agreed to provide all of the necessary waivers for covenant compliance to
the end of 2005 and to defer the loan principal payments until 2006. During the third quarter of 2004,
Petrex closed out rand denominated gold put option contracts maturing between October 2005 and
December 2008 for a total cash consideration of $15.3 million. Of this amount, $3.4 million was
applied against a deferred premium owed relating to the original purchase of the put options. The
remaining $11.87 million was applied to the project loan balance of $24 million outstanding at the
time to reduce the amount outstanding to approximately $12.1 million at the end 2004. By prepaying a
portion of the project loan, annual interest expense is expected to be reduced by over $500,000.
Furthermore, the outstanding debt has been reclassified from current to a long-term liability as at
December 31, 2004. Petrex also made the two scheduled principal payments of $1.5 million each in March
2004 and in June 2004. As a result, the Petrex project loan currently totals $12.1 million, while the
rand denominated working capital loan is $9 million. It is anticipated that a formal agreement will be
signed with the lenders over the next several months. The Petrex project loans are non-recourse to
Bema.
Bema made a $10 million payment during the fourth quarter to earn an additional 10% interest in the
Kupol project from the Government of Chukotka. As a result of this payment, Bema now owns 40% of the
Kupol property. To earn the remaining 35%, Bema is required to make a payment within 90 days of the
completion of the feasibility study of $5 per ounce on 75% of the proven and probable gold reserves as
determined by the study.
Julietta Mine, Russia (Bema 79%)
In 2004, Julietta produced 83,317 ounces of gold at an operating cash cost of $189 per ounce and a
total cash cost of $234 per ounce from 159,816 tonnes of ore milled at an average grade of 18.2 grams
per tonne. In 2003, Julietta produced a total of 118,145 ounces of gold at an operating cash cost of
$111 per ounce and a total cash cost of $148 per ounce. The lower than forecast production at Julietta
is mainly a result of a fire in the warehouse during the first quarter and delays in accessing higher
grade working faces that were scheduled to be mined during the year. The fire destroyed the majority
of spare parts inventory, which resulted in mining and milling rates at Julietta being temporarily
reduced while the spare parts were replaced. The loss from the warehouse fire of $2.3 million and a
hedging loss of $2.5 million resulted in an operating loss at Julietta of $532,000 in 2004.
In the fourth quarter, 38,535 tonnes of ore were milled at Julietta at an average grade of 16.5 grams
per tonne producing 17,743 ounces of gold, at an operating cash cost of $266 per ounce and a total
cash cost of $327 per ounce. In the fourth quarter of 2003, Julietta produced a total of 30,519 ounces
of gold at an operating cash cost of $123 per ounce and a total cash cost of $156 per ounce. The
decline in production and the increase in operating costs during the fourth quarter was a result of
not accessing high grade working faces as well as increased fuel, shipping and maintenance charges.
Furthermore, while the mill performed well through most of the year, during November the leach and
recovery circuit was upset, which took several days to recover from and resulted in gold recovery of
79% compared to normal recovery of 89% for that month. In addition, late in December, the mantle shaft
of the cone crusher broke, resulting in downtime which was the main reason for the shortfall in tonnes
milled of 21% during the month. The crusher was fully operational again by the end of the first week
in January 2005.
Petrex Mines, South Africa (Bema 100%)
In 2004, Petrex produced 146,228 ounces of gold at a total cash cost of $388 per ounce(1) from
1,862,635 tonnes of ore milled at an average grade of 2.65 grams per tonne. During the first two
quarters of 2004 Bema successfully completed a program designed to improve mining efficiencies and cut
costs at Petrex. As a result, tonnes milled, recoveries, operating costs, capital expenditures and
ounces produced were all improved during the second half of the year. However, operating costs will
remain high if the South African rand retains its strength versus the US dollar. Petrex incurred an
operating loss for the year of $8.9 million(2), most of which occurred in the first half of the year.
Petrex produced 43,758 ounces of gold during the fourth quarter ending December 31, 2004, at a total
cash cost $388 per ounce(1) from 478,314 tonnes of ore milled at an average grade of 3 grams per
tonne. Petrex produced 38,436 ounces of gold during the fourth quarter of 2003 at total cash cost of
$395 per ounce(3).
(1) Consolidated production costs are adjusted to reflect a cash gain of $41 per ounce gold from the
exercise of South African rand denominated gold put options in 2004. At Petrex the cash gain from the
puts is $64 per ounce gold (Q4-$43 per ounce).
(2) Adjusting for a rand denominated put gain of $9.4 million during the year.
(3) Adjusted for rand denominated put option gains from 2003 please refer to the year end news release
dated 03/25/04 for more details.
Refugio Mine, Chile (Bema 50%)
Start up of the crushing facilities at Refugio is scheduled to commence on May 1, 2005. A two-month
ramp-up period is projected prior to reaching full plant capacity of 40,000 tonnes per day. As a
result, Bema's share of estimated production at Refugio for the remainder of the year should be
approximately 50,000 ounces of gold. Total operating costs are projected at $298 per ounce in 2005,
slightly higher than the life of mine projections of $250 per ounce, due to the ramp up period.(i) The
mine plan at Refugio is being updated and is expected to be completed by mid year.
(i) These projections have been estimated by Bema and are not necessarily the view of the Refugio
joint venture.
Kupol Deposit, Russia (Bema 75%)
The following is the updated mineral resource estimate for the Kupol gold and silver property in
Chukotka, north-eastern Russia. The infill drilling in 2004 has resulted in a 230% increase in
contained gold ounces and a 273% increase in contained silver ounces in the Indicated category over
the 2003 resource estimate (published in February 2004). The resource estimate also confirms the
large, high grade nature of the Kupol project. The deposit remains open to the north, at depth in the
north and to the south. In addition several parallel structures remain untested. The new indicated and
inferred resource estimates are tabulated below.
/T/
Indicated Resource: Undiluted Risk-Adjusted, Vein,
Above 6 g/t Gold Cutoff
--------------------------------------------------------------------
Tonnes Gold Silver Contained Contained
(000's) Grade Grade Metal Metal
(g/t) (g/t) Gold Troy Silver Troy
Ounces (000's) Ounces (000's)
(ii)
--------------------------------------------------------------------
Big Bend Zone 2,208 29.1 358.6 2,064 25,454
--------------------------------------------------------------------
All Kupol
Vein(i) 6,403 20.3 257.0 4,184 52,911
--------------------------------------------------------------------
Inferred Resource : Undiluted Risk-Adjusted, Vein,
Above 6 g/t Gold Cutoff
--------------------------------------------------------------------
Tonnes Gold Silver Contained Contained
(000's) Grade Grade Metal Metal
(g/t) (g/t) Gold Troy Silver Troy
Ounces (000's) Ounces (000's)
(ii)
--------------------------------------------------------------------
Big Bend Zone 532 12.4 188.6 212 3,226
--------------------------------------------------------------------
All Kupol
Vein(i) 4,090 12.4 171.4 1,637 22,539
--------------------------------------------------------------------
(i) Including Big Bend
(ii) Subject to mine planning, metallurgical recovery studies and
infill drilling to be converted to reserves. Subject to mining
dilution and recovery losses.
/T/
The details of the resource estimation techniques and cutting can be found at the end of the news
release. The major difference between the 2004 and the 2003 resource calculation is the large increase
in the Indicated category with a corresponding decrease in the Inferred category as a result of the
infill drilling. The specific gravity with more sampling has decreased to 2.48 from 2.55. In addition,
further drilling has removed 50 metres from the bottom of the Big Bend zone which was included in last
years Inferred resource. The resources lost in these two situations were gained back due to several
previously unknown parallel veins in the North Zone, the increase in grade of the Big Bend Inferred
resource when converted to an Indicated resource by infill drilling and a lower metal at risk factor.
In addition, the mineralization has been extended a further 350 metres north and 150 metres deep in
the north based on 2004 drilling. The metal at risk adjusted factors were used as a result of guidance
from Bema's consultant Dr. Harry Parker of AMEC E&C Services and the final review of this resource
will be completed by Dr. Parker for the feasibility study. The following table shows the uncut 2004
resource that can be compared with the uncut resource calculation derived from the 2003 drill program
(published in February 2004).
/T/
Indicated Resource: Undiluted Not Cut, Vein,
Above 6 g/t Gold Cutoff
--------------------------------------------------------------------
Tonnes Gold Silver Contained Contained
(000's) Grade Grade Metal Metal
(g/t) (g/t) Gold Troy Silver Troy
Ounces (000's) Ounces (000's)
(ii)
--------------------------------------------------------------------
Big Bend Zone 2,209 31.0 382.6 2,201 27,165
--------------------------------------------------------------------
All Kupol
Vein(i) 6,417 21.7 275.7 4,486 56,874
--------------------------------------------------------------------
Inferred Resource: Undiluted Not Cut, Vein,
Above 6 g/t Gold Cutoff
--------------------------------------------------------------------
Tonnes Gold Silver Contained Contained
(000's) Grade Grade Metal Metal
(g/t) (g/t) Gold Troy Silver Troy
Ounces (000's) Ounces (000's)
(ii)
--------------------------------------------------------------------
Big Bend Zone 532 13.1 198.8 223 3,400
--------------------------------------------------------------------
All Kupol
Vein(i) 4,102 13.1 179.4 1,723 23,659
--------------------------------------------------------------------
(i) Including Big Bend
(ii) Subject to mine planning, metallurgical recovery studies and
infill drilling to be converted to reserves. Subject to mining
dilution and recovery losses.
/T/
The feasibility study work is underway and is scheduled to be completed in May 2005. Drilling at Kupol
is expected to recommence this May and will consist of approximately 45,000 metres to test the deposit
to the north and to depth in the north, to test the offset of the structure southwards and to test
parallel veins. Approximately 1/3 to 1/2 of the drilling will also be used for further infill,
condemnation and mine planning.
Cerro Casale, Chile (Bema 24%)
In September 2004, Placer Dome issued a certificate (Certificate B) under the shareholders' agreement
indicating that it has commenced or is continuing to use reasonable commercial efforts to arrange
financing for the Cerro Casale project on commercially reasonable and customary terms in accordance
with the financing requirements of the shareholders' agreement. Subject to the terms of the
shareholders' agreement, Placer Dome has until the end of 2005 to arrange such financing. Placer Dome
is also advancing discussions on key commercial contracts and long-term marketing off-take
arrangements. If Placer Dome elects not to proceed with the project and it is still deemed financeable
under the terms of the shareholders agreement, they will relinquish their interest in Cerro Casale.
The Cerro Casale project is located in Chile and is a joint venture between Placer Dome (51%), Bema
(24%) and Arizona Star Resource Corp. (25%).
Bid for Arizona Star
On December 20, 2004, Bema announced that it intends to make an offer to all Arizona Star Resource
Corp. ("Arizona Star") shareholders to exchange each Arizona Star share for 1.85 shares of Bema. The
offer valued Arizona Star at CDN$7.01 per common share based on that day's closing price and
represented a premium of 33% based on the 20 day moving average trading share prices for both
companies at the time of the offer. Bema currently owns approximately 5% of the common shares of
Arizona Star.
Gold forward and Option Contracts
The Company reduced the number of outstanding gold forward and contingent forward contracts by 92,325
ounces in 2004. The Company intends to deliver into all of the outstanding Julietta forward contracts
on the designated maturity dates out to 2006.
/T/
2005 2006 2007 2008-2012
-----------------------------------------
-----------------------------------------
Gold
Forward contracts (ounces) 38,550 43,350 - -
Average price per ounce $ 341 $ 319 $ - $ -
Dollar denominated -
Put options purchased
$290 strike price (ounces) 26,364 23,790 21,342 38,646
$390 to $422 strike price
(ounces) 49,000 68,000 68,000 38,500
Rand ("ZAR") denominated -
Put options purchased
(ounces) 103,914 - - -
Average price per ounce
(ZAR) 3,100 - - -
Average price per ounce
(U.S.)(1) $ 552 $ - $ - $ -
Call options sold (ounces) 57,000 59,000 59,000 33,000
Average price per ounce $ 467 $ 464 $ 464 $ 466
Contingent forwards (maximum)
$320 strike price
(ounces) 10,000 - - -
$350 strike price
(ounces) 34,500 36,000 36,000 132,000
Silver
Forward contracts (ounces) 200,000 - - -
Average price per ounce $ 6.23 $ - $ - $ -
Put options purchased
(ounces) 600,000 600,000 - -
Average price per ounce $ 6.34 $ 6.34 $ - $ -
Call options sold (ounces) 600,000 600,000 - -
Average price per ounce $ 7.65 $ 7.65 $ - $ -
(1) Based on 5.6153 rand to one U.S. dollar, being the closing rate
at December 31, 2004.
/T/
The mark-to-market value of the Company's off balance sheet gold hedge contracts as at December 31,
2004 was negative $2.2 million.
Outlook
Bema's projected gold production in 2005 is approximately 309,000 ounces at an estimated operating
cash cost of $295 per ounce (1)(2) and a total cash cost of $312 per ounce(1)(2). This would represent
a 35% increase over the number of ounces produced in 2004 and a 6% decrease in total operating cost
per ounce. The main reason for the increase in production is the recommencement of operations at the
50% owned Refugio Mine and an estimated 18% increase in production at the Petrex Mines. In 2006,
Bema's consolidated production is projected to increase further and operating costs to decline, as the
Refugio Mine records a full year of gold production.
At Kupol the majority of supplies for the 2005 exploration and development work have been shipped to
the seaports of Pevek and Magadan, and mobilization of that material to site along winter roads is
underway. The 2005 Kupol development program has commenced and Bema has received permits for
preliminary construction, which includes, roads and site earth works. In addition, a 45,000 metre
drill program is planned to further infill drill the resource and continue exploration drilling to
further test the ultimate potential of the Kupol deposit. Bema is earning a 75% interest in the Kupol
Project from the Government of Chukotka.
Through the development of the Kupol deposit and the continued advancement of the Cerro Casale project
by Placer Dome Inc. Bema is one of the world's fastest growing gold mining companies with a goal of
producing over 1 million ounces by 2008.
(1) Net of silver credits at Julietta assuming a $6.50 per ounce spot price
(2) Based on a 6.5 rand to 1 USD conversion rate, a $400 per ounce spot gold price and accounting for
any potential gains from the 2005 rand gold put option program.
A Quality Control Program ("QC") has been designed in concert with an independent consultant to meet
or exceed the requirements of N1 43-101. This QC program includes the use of certified standard
reference samples, coarse field blank material and duplicate sampling. Tom Garagan, Vice President of
Exploration, is the Qualified Person for Bema Gold Corporation. For more detailed information on the
Kupol Mineral Resource estimate please refer to the "Kupol Mineral Resource" section.
On Behalf of BEMA GOLD CORPORATION
Clive T. Johnson, Chairman, C.E.O., & President
Kupol Mineral Resource
QA/QC on Assay and Logged Database
The Kupol QA/QC program used to monitor the accuracy of the assay database was managed by Bema's
Qualified Person Tom Garagan and was audited by Smee and Associates, who found it to be compliant with
43-101 regulations. The lithology database was verified by redundant checks against original and quick
log information
Methodology Used to Estimate the Kupol Resource
The construction of the Resource Model was performed using Datamine software by Bema personnel and
several contractors. The process of building the resource model was overseen by Susan Meister
(Resource Modeling consultant) and Ken Brisebois (AMEC, Principle Geostatistician).
The resource was estimated from a three-dimensional block model, which was created by interpreting the
vein, stockwork zone, dyke and faults on east-west trending vertical cross sections and reconciling
the interpretations on levels. Three-dimensional solids (wireframe) models were built from the
interpretations and were the basis for coding the block model. Within the vein and stockwork
interpretation, 1.5-metre composites were created from the assay intervals. To best represent the high
and lower grade portions of the vein, an indicator variable was created using the intensity of
sulfosalts and Au grade. Variograms were run on composites for the indicator variable in addition to
Au and Ag within the high-grade portion and Au and Ag within the lower grade portion of the vein.
The indicator (high-sulfosalt) variable, high-grade Au, low-grade Au, high-grade Ag and low-grade Ag
were estimated with four passes of ordinary kriging, using 15 search orientations from south-to-north
that match the local strike and dip of the vein. Each of the passes was used to control the amount of
data mixing with consideration given to the drill hole spacing.
The whole block grade for vein was calculated using the kriged indicator to weight the high and low
grade kriged estimates. The formula used in this calculation was determined by visual inspection of
the block grades relative to the drill hole and trench data, comparison of the average grade at a zero
cutoff to the average of the declustered composites and comparison of profiles of kriged versus
nearest neighbor results by northing and elevation.
An in-situ dry density of 2.48 tonnes per cubic metre was used for tonnage calculations. This is based
on 543 vein samples collected from throughout the deposit. These were tested at site using the wax-
coated density technique as specified in ASTM standard C914-95 (reapproved 1999).
Checks made on the model include a comparison of the kriged estimate to the nearest neighbor (block
polygon) models and to the declustered composites. The effect of edge (contact) dilution and ore loss
will be assessed in a mining study that is in progress. Visual checks of the block grades relative to
the drill hole and trench data were completed in detail on cross sections and levels on the computer
screen.
Resource Classification
Mineral Resources have been categorized using the classification of the Canadian Institute of Mining,
Metallurgy and Petroleum (2000), relevant definitions being quoted below. This classification is the
basis for Technical Reports by Qualified Persons in Canada, and the classification is virtually the
same as that of the JORC code (Australia), SME guidelines (USA), SAMREC (South Africa) and that of the
European Union.
The CIM Mineral Resource Definitions state that an Indicated Mineral Resource is that part of a
Mineral Resource for which quantity, grade or quality, densities, shapes and physical characteristics
can be estimated with a level of confidence sufficient to allow appropriate application of technical
and economic parameters, to support mine planning and evaluation of the economic viability of the
deposit. The estimate is based on detailed and reliable exploration information gathered through
appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that
are spaced close-enough for geological and grade continuity to be assumed. Mineral resources under NI
43-101 must show a reasonable chance of economic viability however are not mineral reserves and do not
have demonstrated economic viability.
An Inferred Mineral Resource can be estimated on the basis of geological evidence and limited sampling
and reasonably assumed, but not verified geological and grade continuity. The estimate is based on
limited information from locations such as outcrops, trenches, pits, workings and drill holes.
Due to the uncertainty which may attach to Inferred Mineral Resources, it cannot be assumed that all
or part of an Inferred Mineral Resource will be upgraded to an Indicated or Measured Mineral Resource
as a result of continued exploration.
At Kupol, Indicated and Inferred Resources were defined by reviewing grade and mineralized vein width
on east/west trending cross sections and on a vertical longitudinal projection. Indicated Mineral
Resources are estimated where drill holes or trenches intersect the vein(s) at an approximate 50-metre
spacing. Eighty-three percent of the Indicated Resource is supported by approximately 25x50-metre
drill hole spacing. Projection of Indicated Resources is limited to 25 metres down-dip in the vein and
12.5 to 25 metres along strike. Within Indicated Resources, the vein structure is continuous, although
the vein thickness may be affected locally by faulting and dikes. The grade appears continuous from
hole to hole; this continuity has been confirmed by 141 trenches spaced at 4- to 5-metre intervals and
27 trenches at 10-metre intervals across the outcrop of the vein. Additionally, 63 close spaced drill
holes were completed in Big Bend and South Zones, which confirm the grade and vein continuity. The
average spacing of the detailed drilling is 10-metres along strike and 5 to 10-metres down dip.
Inferred Mineral Resources are estimated down dip and along strike from Indicated Resources in areas
that have been drilled on an approximate 100-metre spacing. Projection distances have been limited to
within 100 m of a drill hole.
Metal-at-Risk (Capping Levels)
The Mineral Resource is risk-adjusted with an average 5.8% metal reduction in the 25x50-metre spaced
drill area (within Indicated Resource), 11.3% metal reduction in the 50x50-metre spaced drill area
(within Indicated Resource) and 3.7% metal reduction in Inferred Resource. These approximately
correspond to reductions of 5.8, 12.2 and 5% targets developed by Dr. Parker and Mr. Brisebois. The
risk-adjustment accounts for a large portion of the gold being represented by a relatively small
proportion of samples having very high grades. Blocks in the three-dimensional block model with gold
grades greater than 8 g/t were adjusted downward by factoring the indicator to attain the metal
reduction suggested by the metal-at-risk analysis.
Risk Adjustment (Description of Methodology)
Precious metals deposits have skewed grade distributions. Skewed grade distributions have the property
that a small proportion of samples can represent a disproportionately large amount of metal. The
limited number of these samples can introduce significant uncertainty into a resource estimate. It is
a common practice to cut the grades of very high-grade samples, restrict their projection distance or
to adjust resource models to mitigate risk.
In many precious metals deposits, Kupol included, the highest grade samples are scattered and
discontinuous at the exploration drill-hole spacing. The number of high-grade samples intersected can
vary according to the positioning of the drill holes, and it is impossible to know in advance which
positions would give the most accurate estimate of the amount of high-grade metal actually present.
The uncertainty related to the amount of high-grade metal can be evaluated using a Monte Carlo
simulation technique developed by Mineral Resources Development/AMEC that has been applied over a 14-
year period. This method simulates re-drilling the deposit 1000 times and notes the variation in the
amount of high-grade metal present in annual or global production increments. The 20th percentile of
the simulated metal contents is added to the metal content represented by the remaining samples to
give a risk-adjusted metal content. The difference between total metal content and risk-adjusted metal
content is termed metal at risk. Theoretically, in four periods out of five, the mine should do better
than the estimate; however there is additional and largely unquantifiable uncertainty related to how
representative the assay distribution input is to the simulation.
The appropriate time-period for Indicated Resources is annual, as Indicated Resources will be used to
prepare annual production schedules as part of scoping and feasibility studies. For Inferred
Resources, there is inadequate information to support annual planning; therefore a global time-period
is used.
The method has advantages over other top-cutting methods in that it takes into account 1) the data
density, and 2) the volumes used for production scheduling. As the data density is increased, the
amount of metal at risk declines; longer production increments will have less risk than shorter ones.
Some of the statements contained in this release are "forward-looking statements" within the meaning
of Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements involve known
and unknown risks, uncertainties and other factors that may cause our actual results, performance or
achievements to differ materially from the anticipated results, performance or achievements expressed
or implied by such forward-looking statements. Forward-looking statements in this release include
statements regarding: the Company's projections regarding gold production, costs of production,
drilling and development programs, financings and the proposed bid for Arizona Star. Factors that
could cause actual results to differ materially from anticipated results include risks and
uncertainties such as: risks relating to estimates of reserves, mineral deposits and production costs;
mining and development risks; the risk of commodity price fluctuations; political and regulatory
risks; and other risks and uncertainties detailed in the Company's Form 40-F Annual Report for the
year ended December 31, 2003, which has been filed with the Securities and Exchange Commission, and
the Company's Renewal Annual Information Form for the year ended December 31, 2003, which is an
exhibit to the Company's Form 40-F and is available at the Canadian Depository for Securities Web
site. The Company disclaims any intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
/T/
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
2004 2003 2004 2003
-------- --------- -------- ---------
(Restated) (Restated)
GOLD REVENUE $ 26,445 $ 26,716 $ 92,133 $ 86,817
-------- --------- -------- ---------
EXPENSES
Operating costs 25,567 22,292 85,365 69,110
Depreciation and depletion 6,910 5,614 20,231 17,909
Refugio re-start of
operations 3,158 (57) 6,354 682
Julietta warehouse
fire loss 521 - 2,321 -
Other 1,441 736 4,528 2,041
-------- --------- -------- ---------
37,597 28,585 118,799 89,742
-------- --------- -------- ---------
MINE OPERATING LOSS 11,152 1,869 26,666 2,925
-------- --------- -------- ---------
OTHER EXPENSES (INCOME)
General and
administrative 2,003 1,437 8,901 7,125
Interest and
financing costs (255) 2,109 7,251 6,662
General exploration 915 137 1,593 340
Stock-based compensation 1,185 1,188 4,980 3,147
Foreign exchange
loss (gains) 2,090 (2,163) 3,311 (1,747)
Other (375) (181) (690) (133)
-------- --------- -------- ---------
5,563 2,527 25,346 15,394
-------- --------- -------- ---------
LOSS BEFORE THE
UNDERNOTED ITEMS 16,715 4,396 52,012 18,319
Write-down of
mineral properties 3,957 720 12,484 720
Write-off of goodwill 27,344 - 27,344 -
Realized derivative
(gains) (930) (172) (16,895) (2,362)
Unrealized derivative
losses (gains) (660) 13,494 6,087 7,481
Equity in losses of
associated companies 40 41 272 94
Investment losses (gains) (1,308) (54) (1,706) 45
-------- --------- -------- ---------
LOSS BEFORE INCOME TAXES 45,158 18,425 79,598 24,297
Current income
taxes (recovery) (1,170) 4,215 (678) 5,024
Future income
taxes (recovery) 661 (2,488) 695 1,255
-------- --------- -------- ---------
LOSS FOR THE PERIOD $ 44,649 $ 20,152 $ 79,615 $ 30,576
-------- --------- -------- ---------
-------- --------- -------- ---------
LOSS PER COMMON SHARE
- basic and diluted $ 0.12 $ 0.06 $ 0.22 $ 0.09
-------- --------- -------- ---------
-------- --------- -------- ---------
Weighted average number
of common shares
outstanding
(in thousands) 382,888 352,851 364,788 323,475
-------- --------- -------- ---------
-------- --------- -------- ---------
BEMA GOLD CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the periods ended December 31
(Unaudited)
(in thousands of United States dollars)
Fourth Quarter Twelve Months
2004 2003 2004 2003
-------- -------- -------- ---------
(Restated) (Restated)
OPERATING ACTIVITIES
Loss for the period $(44,649) $(20,152) $(79,615) $ (30,576)
Non-cash charges (credits)
Depreciation and depletion 6,910 5,614 20,231 17,909
Amortization of deferred
financing costs (242) 427 1,809 1,707
Accretion of Convertible
Notes (1,245) - 1,345 -
Accretion of asset
retirement obligations 370 376 1,477 1,340
Equity in losses of
associated companies 40 41 272 94
Derivative instruments (1,971) 14,169 5,195 10,565
Investment losses (gains) (1,308) (54) (1,706) 45
Future income tax expense
(recovery) 661 (2,488) 695 1,255
Stock-based compensation 1,185 1,188 4,980 3,147
Write-off of goodwill 27,344 - 27,344 -
Write-down of mineral
properties 3,957 720 12,484 720
Other 3,953 (696) 2,548 293
Change in non-cash
working capital (1,208) (1,145) (4,935) 1,629
-------- -------- -------- ---------
(6,203) (2,000) (7,876) 8,128
-------- -------- -------- ---------
FINANCING ACTIVITIES
Common shares issued,
net of issue costs 104,863 3,037 115,130 58,714
Subsidiary shares issued,
net of issue costs 3,046 - 3,046 -
Convertible loan,
net of issue costs (69) - 66,534 -
Kupol bridge financing 8,000 - 46,000 -
Julietta project
loan repayment - - (16,750) (11,167)
Petrex loan repayments (11,870) (1,500) (14,870) (8,000)
Capital lease repayments (540) - (770) -
Other (273) (218) (1,950) (450)
-------- -------- -------- ---------
103,157 1,319 196,370 39,097
-------- -------- -------- ---------
INVESTING ACTIVITIES
Julietta Mine (1,738) (615) (3,222) (1,441)
Julietta Mine exploration (1,397) (1,040) (6,456) (2,372)
Petrex Mines (1,385) (1,480) (7,454) (6,947)
Petrex exploration 61 (443) (1,415) (646)
Refugio exploration
and construction (6,291) (447) (20,019) (2,981)
Kupol exploration and
development (32,114) (27,996) (82,331) (35,920)
Acquisition, exploration
and development (1,444) (1,034) (7,010) (6,275)
Investment purchases - - (3,059) (869)
Acquisition of EAGC
Ventures Corp.,
net cash acquired - - - 6,742
Sale of EAGC special
warrants - - - 16,935
Other 477 (609) (699) (108)
-------- -------- -------- ---------
(43,831) (33,664) (131,665) (33,882)
-------- -------- -------- ---------
Effect of exchange
rate changes on cash
and cash equivalents (465) 78 (491) 772
-------- -------- -------- ---------
Increase (decrease) in
cash and cash equivalents 52,658 (34,267) 56,338 14,115
Cash and cash equivalents,
beginning of period 34,453 65,040 30,773 16,658
-------- -------- -------- ---------
Cash and cash equivalents,
end of period $ 87,111 $ 30,773 $ 87,111 $ 30,773
-------- -------- -------- ---------
-------- -------- -------- ---------
BEMA GOLD CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands of United States dollars)
As at As at
December 31 December 31
2004 2003
ASSETS
Current
Cash and cash equivalents $ 87,111 $ 30,773
Accounts receivable 8,019 5,754
Marketable securities
(Market value - $13.8 million;
December 31, 2003 - $12.1 million) 3,554 3,567
Inventories 16,113 14,932
Other 6,827 4,845
----------- -----------
121,624 59,871
Investments 5,593 2,706
Property, plant and equipment 418,883 304,044
Goodwill - 27,344
Unrealized fair value of derivatives 13,761 20,792
Deferred derivative losses 6,718 3,965
Future income tax assets 5,100 -
Other assets 21,374 14,206
----------- -----------
$ 593,053 $ 432,928
----------- -----------
----------- -----------
LIABILITIES
Current
Accounts payable $ 32,250 $ 23,292
Current portion of long-term debt 3,730 45,864
----------- -----------
35,980 69,156
Unrealized fair value of derivatives 49,299 48,382
Long-term debt 129,937 7,084
Future income tax liabilities 24,321 15,320
Asset retirement obligations 17,418 15,380
Other liabilities 664 3,465
Non-controlling interest 2,587 830
----------- -----------
260,206 159,617
----------- -----------
SHAREHOLDERS' EQUITY
Capital stock
Issued - 400,498,902 common shares
(December 31, 2003 - 355,688,190) 557,365 441,309
Value assigned to share purchase warrants
and stock options 19,060 14,814
Convertible debt 18,849 -
Deficit (262,427) (182,812)
----------- -----------
332,847 273,311
----------- -----------
$ 593,053 $ 432,928
----------- -----------
----------- -----------
Approved by the Directors
"Clive T. Johnson" "Robert J. Gayton"
Clive T. Johnson Robert J. Gayton
/T/
-30-
FOR FURTHER INFORMATION PLEASE CONTACT:
Bema Gold Corporation
Ian MacLean
Manager, Investor Relations
(604) 681-8371
OR
Bema Gold Corporation
Derek Iwanaka
Investor Relations
(604) 681-8371
investor@bemagold.com
www.bema.com
The Toronto Stock Exchange neither approves nor disapproves the information contained in this News
Release.
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