RNS Number:4680R
Bema Gold Corporation
30 October 2003
News Release
2003 Third Quarter Results
October 30, 2003
VANCOUVER - Bema Gold Corporation ("Bema or the "Company") is pleased to report
the results from its operations for the third quarter ended September 30, 2003.
All dollar figures are in United States dollars unless otherwise indicated.
Highlights
* Produced 70,217 ounces of gold
* Revenue of $24.8 million
* Cash flow from operations of $8.2 million
* Completed successful phase one drill program at Kupol gold and silver
property, Russia
* Completed Petrex Mine plant expansion
* Raised $55.4 million through equity issues
Financial Results
Bema reported revenue of $24.8 million for the third quarter 2003 compared to
$11.2 million for the same period last year. Cash flow from operations during
the period was $8.2 million compared to $8 million for the third quarter 2002.
The Company reported a net loss of $3.5 million ($0.011 per share) for the
period primarily due to foreign exchange translation adjustments relating to the
rand of $2.2 million. In the third quarter 2002 Bema reported a restated net
loss of $823,000 ($0.004 per share).
For the first nine months of 2003, the Company reported a net loss of $8.8
million ($0.028 per share) on revenue of $62.9 million compared to a restated
net loss of $1.1 million ($0.007 per share) on revenue of $27.8 million in the
comparable period of 2002. Cash flow from operations improved to $10.1 million
year to date compared to $8.9 million for the first nine months of 2002. Cash
flow from operations in the first nine months of 2002 included $4.2 million
relating to an arbitration settlement awarded to Bema during that period. Cash
flow from operations for the first nine months of 2003 is mainly a result of
lower production costs at Julietta and partly from the acquisition of the Petrex
Mines.
Gold Production
Bema produced 70,217 ounces of gold during the quarter at an operating cash cost
of $234 per ounce and a total cash cost of $252 per ounce compared to 32,665
ounces of gold at an operating cash cost of $95 per ounce and a total cash cost
of $126 per ounce during the third quarter last year. Operating costs in the
first nine months reflect the acquisition of the Petrex Mines from February 14,
2003 onwards. For the first nine months Bema produced 181,360 ounces of gold at
an operating cash cost of $246 per ounce and a total cash cost of $264 per
ounce. The higher production costs are primarily due to the strength of the
South African Rand versus the US dollar during the period and the expected
higher operating costs at Petrex during the mill expansion and through put ramp
up. For details please refer to the "Petrex Mines" section of this news release.
Operations
The Julietta Mine, Russia (Bema 79%)
The Julietta Mine produced 32,928 ounces of gold in the third quarter at an
operating cash cost of $58 per ounce and a total cash cost of $97 per ounce,
resulting in the most profitable quarter to date with the lowest operating costs
since the commencement of production. In the third quarter of 2002, Julietta
produced 32,665 ounces of gold at an operating cash cost of $95 per ounce and a
total cash cost of $126 per ounce. Revenue from Julietta was $10.6 million from
the sale of 32,651 ounces of gold sold at an averaged price of $325 per ounce.
This is compared to 35,715 ounces of gold sold at an average spot price of $313
in the third quarter 2002 for revenue of $11.2 million. The Julietta Mine
continues to perform well and gold production and costs are expected to meet or
exceed fourth quarter and annual budget expectations. Management remains
confident that the 2003 projected total annual production of 116,000 ounces at
an operating cash cost of $110 per ounce will be achieved.
The Petrex Mines, South Africa (Bema 100%)
Expansions to the mill processing plant at the Petrex Mines were completed
during the third quarter and through put is continuing to improve. During the
period, mill through put averaged approximately 175,000 tonnes per month,
exceeding forecast by 7%. In the fourth quarter, through put is projected to
reach 185,000 per month resulting in lower operating costs.
Due to the lower tonnage through put during the mill expansion, cash costs for
the first nine months of 2003 were budgeted to be significantly higher than
those budgeted for the remainder of the year and beyond. In the third quarter
the Petrex Mines produced 37,289 ounces of gold at total cash cost of $389 per
ounce. The main reasons for the high cash costs were the strength of the South
African rand versus the U.S. dollar and the mill ramp up. The South African rand
continued to strengthen against the U.S. dollar during the third quarter and
gained an additional 4% over the previous quarter. The rand, however was 35%
higher during the quarter versus the budgeted rate of exchange (10 Rand to 1
USD). This equates to an additional $102 per ounce to the total cash cost for
the quarter. For the remainder of 2003, should the rand retain its strength,
approximately 80% of the resulting higher U.S. dollar denominated cash costs
will be mitigated by increased revenue realized from the rand denominated gold
put options purchased. Over the next six years approximately 70% of expected
production is protected by Rand denominated put options. (see "Gold Forward and
Option Contracts" section).
Third quarter revenue from Petrex was $14.2 million from the sale of 35,337
ounces of gold sold at an average realized price of $402 per ounce compared to
an average spot gold price for the period of $363 per ounce. The average
realized price benefited from the exercise of rand denominated gold put options
having a strike price of 3,000 rand per ounce.
Bema completed the acquisition of the Petrex Mines on February 14, 2003.
Production from the first seven and one half months from the date of the
acquisition was 93,734 ounces of gold at total cash costs of $375 per ounce
which was better than budget based on the budgeted conversion rate of 10 rand to
1 U.S. dollar
The Refugio Mine, Chile (Bema 50%)
During the third quarter of 2003 and nine months ended September 30, 2003, the
Refugio Mine recovered 2,431 and 10,239 ounces of gold, respectively, from
residual leaching operations which have substantially outperformed the budget
estimates. All revenue from gold recovered is credited to Refugio care and
maintenance costs. Gold and silver recoveries will begin to increase again in
October when different leaching areas are brought on line as the Chilean summer
begins.
When mining was suspended at the Refugio Mine in June 2001, due to low gold
prices, there were four years of reserves remaining at the Verde deposit. The
Company and its joint venture partner agreed to consider recommencing production
at Refugio when the gold price recovered to $325 per ounce. Bema's joint venture
partner completed an extensive drill program in May 2003 with the goal of
increasing reserves and thereby extending the projected mine life. The drilling
program has been successful, extending ore grade mineralization well below the
previously projected pit bottom. Based on the recent drill program, updated
independent reserves are being calculated. Management believes this will result
in an increase in reserves and significantly extend Refugio's mine life. A new
reserve calculation and production decision for Refugio is expected in the
fourth quarter of 2003.
With the inclusion of the Company's 50% share of the Refugio Mine production,
the Company's projected annual production (based on the original Refugio
development plan) would increase by an additional 115,000 ounces to
approximately 400,000 ounces of gold.
The Kupol Project, Russia (Bema 75%)
Bema has recently concluded a successful phase I drill program at Kupol. From
these results, the Company plans to publish an initial geological resource
estimate for Kupol by the end of the fourth quarter 2003. Furthermore, based on
the exploration results to date, Bema intends to fast track the development of
the Kupol Property. The Company is currently procuring equipment and supplies to
be shipped to site for accelerated feasibility and development work to be
conducted in 2004. The equipment includes three additional drill rigs, earth
moving equipment and additional camp facilities to increase the camp capacity.
The planned exploration and development program at Kupol in 2004 will include
approximately 55,000 metres of drilling to further explore the property and
conduct infill drilling. The program will also include construction of a runway
for fixed wing aircraft, earth works for mine and mill facilities, geotechnical
and condemnation drill programs, final metallurgical test work, and procurement
of equipment for 2005 construction.
The Cerro Casale Deposit, Chile (Bema 24%)
The Alderberan Property, which hosts the Cerro Casale deposit, is held by
Compania Minera Casale ("CMC") a Chilean contractual mining company owned
indirectly by Placer Dome Inc.(Placer) (51%), Arizona Star Resource Corp. (25%)
and Bema (24%). A feasibility study completed by Placer Dome Technical Services,
in January 2000, has outlined a reserve of 23 million ounces of gold and 6
billion pounds of copper. The feasibility study contemplates a large scale open
pit gold copper mine assuming a gold price of $350 per ounce and a copper price
of $0.95 per pound. According to the feasibility study, Cerro Casale is
projected to produce 975,000 ounces of gold and 130,000 tonnes of copper per
year over the 18 year mine life. Cash production costs are estimated to be less
than $100 per ounce of gold with total costs estimated at $203 per ounce of gold
(assuming credits for copper at $0.95 per pound). Based on the feasibility study
for Cerro Casale the Net Present Value of the project, at a 5% discount, is
$736.2 million.
During 2001, CMC secured sufficient water rights to build and operate a plant as
envisioned in the feasibility study. In March 2002, CMC received formal approval
of an Environmental Impact Study from the Chilean regulatory authorities
(COREMA). Given the recent improvement of both gold and copper prices during the
first nine months of 2003, the joint venture partners have scheduled meetings to
discuss upgrading the feasibility study and the financibility of the Cerro
Casale project.
The Monument Bay Project, Manitoba (Bema 70%)
During the third quarter Bema commenced a 7,500 metre, 30 hole, drill program at
Monument Bay to continue to test the Twin Lakes Zone and The Twin Lakes West
Zone. Monument Bay hosts a high grade inferred resource of 639,377 tonnes
averaging 20.4 grams per tonne containing 418,371 ounces of gold. Results from
the current drill program will be available during the fourth quarter
Liquidity and Capital Resources
The Company ended the quarter with $65 million in cash and cash equivalents
compared to $17.5 million at June 30, 2003. The increase in cash is due mainly
to an equity financing completed during the quarter and cash flow from
operations. During the quarter Bema made scheduled debt payments to Julietta and
Petrex of $5.6 million and $1.5 million respectively.
Gold forward and Option Contracts
The Company's hedging program as of September 2003 2004 2005 2006-2010
30, 2003 consists of the
following gold contracts:
Forward contracts (ounces) 24,900 71,100 38,550 -
Average price per ounce $ 344 $ 331 $ 338 $ -
Dollar denominated - 10,648 32,086 26,364 83,778
Put options purchased (ounces)
Average price per ounce $ 288 $ 289 $ 290 $ 290
Rand denominated - 37,647 146,244 136,086 351,204
Put options purchased (ounces)
Average price per ounce (ZAR) 3,000 3,050 3,100 3,200
Call options sold (ounces) 2,500 - - -
Average price per ounce $ 400 $ - $ - $ -
Contingent forwards (maximum)
$320 strike price (ounces) 5,000 20,000 10,000 -
$350 strike price (ounces) 8,250 33,000 34,500 204,000
The Company was required by the lenders of the Julietta and Petrex project loan
facilities to enter into gold hedge contracts over the loan life period in order
to cover the value of the mine's future operating and debt service costs.
The $320 contingent forward contracts ("CFC") are exercisable based on the
average quarterly spot price of gold. The number of ounces exercisable per
quarter under the CFC is prorated based on a gold price between $320 and $370
per ounce. The $350 CFC are exercisable each month-end evenly throughout the
year based on the spot price. The number of ounces deliverable for the month is
prorated based on a gold price between $350 and $400.
The rand denominated put options provide the Company with some protection
against a strengthening South African rand without limiting the Company's
leverage to a rising gold price or a declining rand. For example, at a
conversion rate of seven rand to one U.S. dollar, the Company will receive $429
per ounce of gold on its rand put options in 2003.
The mark-to-market value of the Company's hedges as at September 30, 2003 was
negative $15.6 million.
Outlook
Management is focused on continued production growth and exploration for the
remainder of 2003 and beyond. With the mill expansion at Petrex complete, Bema's
projected gold production rate is 300,000 ounces per year. With the expected
recommencement of production at Refugio in late 2004, Bema's annualized gold
production rate is projected to increase to over 400,000 ounces. The Company's
goal is to continue to increase annual gold production to over 1,000,000 ounces
from the further development of existing assets.
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 Toronto Stock Exchange neither approves nor disapproves the information
contained in this News Release. Bema Gold Corporation trades on The Toronto
Stock Exchange and the American Stock Exchange. Symbol: BGO.
Marc Simpson (P.Geo) is the project manager and qualified person for the
Monument Bay Project, and is a member of APEGBC and APEGM. Mr. Simpson has
supervised all aspects of drill hole planning, implementation and quality
control programs.
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 annual gold production in future periods.
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, 2001, which has been filed with the Securities
and Exchange Commission, and the Company's Renewal Annual Information Form for
the year ended December 31, 2001, 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.
BEMA GOLD CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the periods ended September 30
(Unaudited)
(in thousands of United States dollars, except shares and per share amounts)
Third Nine Months
Quarter
As restated As restated
(Note 3) (Note 3)
2003 2002 2003 2002
GOLD REVENUE $ 24,812 $ 11,194 $ 62,917 $ 27,796
EXPENSES
Operating costs 16,844 4,689 46,818 13,928
Depreciation and 4,800 3,642 12,201 8,983
depletion
Other 703 521 1,369 718
22,347 8,852 60,388 23,629
OPERATING EARNINGS - BEFORE ARBITRATION 2,465 2,342 2,529 4,167
SETTLEMENT
Arbitration - 262 - 4,169
settlement
OPERATING EARNINGS - AFTER ARBITRATION 2,465 2,604 2,529 8,336
SETTLEMENT
OTHER EXPENSES (INCOME)
General and 1,923 1,225 5,688 2,784
administrative
Interest on 1,140 1,000 3,273 3,258
long-term debt
Amortization of 427 424 1,280 2,409
deferred financing
costs
General 38 16 203 247
exploration
Foreign exchange 1,753 1,185 778 809
loss
Other 3 265 (809) 1,067
5,284 4,115 10,413 10,574
LOSS BEFORE THE UNDERNOTED ITEMS (2,819) (1,511) (7,884) (2,238)
Equity in losses of associated (46) (9) (53) (416)
companies
Investment gains (losses) (105) 1,110 (99) 1,945
LOSS BEFORE INCOME TAXES (2,970) (410) (8,036) (709)
Current income taxes (565) (413) (809) (413)
LOSS FOR THE PERIOD $ (3,535) $ (823) $ (8,845) $ (1,122)
LOSS PER COMMON SHARE
- basic and diluted $ (0.011) $ (0.004) $ (0.028) $ (0.007)
Weighted average number of common
shares
outstanding (in thousands) 331,399 237,777 313,308 211,746
BEMA GOLD CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the periods ended September 30
(Unaudited)
(in thousands of United States dollars)
Third Quarter Nine
Months
As As
restated restated
(Note 3) (Note 3)
2003 2002 2003 2002
OPERATING ACTIVITIES
Loss for the period $ (3,535) $ (823) $ (8,845) $ (1,122)
Non-cash charges (credits)
Depreciation 4,800 3,642 12,201 8,983
and depletion
Amortization 427 424 1,280 2,409
of deferred
financing
costs
Equity in 46 9 53 416
losses of
associated
companies
Derivative 1,583 110 926 183
instruments
Investment 105 (1,110) 99 (1,945)
(gains)
losses
Arbitration - 3,907 - -
settlement,
net
Other 1,798 1,568 1,640 1,901
Change in non-cash working 2,984 276 2,774 (1,933)
capital
8,208 8,003 10,128 8,892
FINANCING ACTIVITIES
Common shares issued, net of 55,403 2,170 55,677 23,963
issue costs
Julietta project loan (5,584) (5,583) (11,167) (5,583)
repayments
Petrex loan repayments (1,500) - (6,500) -
Refugio loan repayments - (3,500) - (4,000)
Other (102) (433) (232) (433)
48,217 (7,346) 37,778 13,947
INVESTING ACTIVITIES
Arbitration settlement - 5,512 - 5,512
Julietta Mine (669) (679) (2,158) (1,241)
Petrex Mine (2,359) - (5,670) -
Refugio exploration and (655) - (2,534) -
development
Acquisition, exploration and (4,828) (63) (13,165) (1,377)
development
Julietta development and - - - (2,435)
construction
Acquisition of EAGC Ventures - - 6,742 -
Corp., net cash acquired
Purchase of marketable - - - (1,039)
securities
Proceeds on sale of investments and - 1,039 17,015 1,048
marketable securities
Other (141) 1,304 (448) 524
(8,652) 7,113 (218) 992
Effect of exchange rate (244) (782) 694 (597)
changes on cash and cash
equivalents
Increase in cash and cash equivalents 47,529 6,988 48,382 23,234
Cash and cash equivalents, beginning of period 17,511 20,379 16,658 4,133
Cash and cash equivalents, end of period $ 65,040 $ 27,367 $ 65,040 $ 27,367
BEMA GOLD CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands of United States dollars)
As at As at
September 30 December 31
2003 2002
ASSETS
Current
Cash and cash $ 65,040 $ 16,658
equivalents
Accounts receivable 3,682 2,278
Marketable securities 3,557 3,272
Inventories 15,733 9,519
Other 3,507 892
91,519 32,619
Investments 2,123 12,664
Property, plant and equipment 263,177 146,711
Goodwill 27,549 -
Other assets 13,682 11,787
$ 398,050 $ 203,781
LIABILITIES
Current
Accounts payable $ 20,589 $ 3,979
Current portion of 17,166 11,167
long-term debt
37,755 15,146
Deferred revenue and derivative liability 15,587 1,045
Long-term debt 36,787 18,250
Future income tax liabilities 9,683 -
Other liabilities 8,873 3,511
Non-controlling interest 859 892
109,544 38,844
SHAREHOLDERS' EQUITY
Capital stock 438,072 317,494
Share purchase warrants and stock options 11,836 -
Deficit (161,402) (152,557)
288,506 164,937
$ 398,050 $ 203,781
Approved by the Directors
"Clive T. Johnson" "Robert J. Gayton"
Clive T. Johnson Robert J. Gayton
This information is provided by RNS
The company news service from the London Stock Exchange
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