Zeev's Turnips Patch-No Politics (ZEEV)

[basserdan]

*** Gold related post (BGO) ***


Bema Announces Preliminary Economic Assessment for the Kupol Project/Commences Phase II Drill Program

Wednesday May 26, 4:05 pm ET

VANCOUVER, British Columbia--(BUSINESS WIRE)--May 26, 2004--Bema Gold Corporation (AMEX:BGO - News; TSX:BGO - News; AIM:BAU) is pleased to announce the results of a Preliminary Economic Assessment (PEA) for the Kupol gold and silver project located in Chukotka, North Eastern Russia. The PEA demonstrates that Kupol can be developed as a high grade, low cost gold and silver mine with robust project economics. Bema is earning a 75% interest in the project, from the Government of Chukotka, through cash payments and work requirements. All dollar figures are in United States dollars unless otherwise indicated.

The PEA has been completed following one summer season of exploration at the Kupol Property, where Bema has identified a Preliminary Mineral Resource (see table 1) containing 1.8 million ounces of gold and 19 million ounces of silver in the indicated category and a further 4.2 million ounces of gold and 56 million ounces of silver in the inferred category. This PEA is the beginning of the planning process for conducting mining and milling operations at Kupol. While some parts of the study including Metallurgical Design, Logistics, Plant and Infrastructure are advanced well beyond what is required for a PEA, the study has been based on the Indicated plus Inferred resources which therefore reverts it to a PEA by definition.

The PEA contemplates an initial 12 year mine life based on the drilling to date. The total pre-production capital cost is estimated at $280.1 million, which includes $221.3 million for construction of the plant facilities, tailings pond, owners costs and pre-stripping, and $58.8 million in working capital as it is expected that all consumables and supplies required for a 12 month period will be purchased and shipped to site prior to start up. Open pit mine equipment, as well as an initial underground mining fleet is assumed to be arranged by way of a capital equipment lease at a total cost of $58.7 million.

The following tables outline the various production scenarios on a 100% basis, using a gold price of $375 per ounce and a silver price of $5.50 per ounce. Recoveries have been calculated at 93.5% for gold and 83% for silver.

Using $375 gold and $5.50 silver Bema has calculated a preliminary, after tax, Net Present Value (NPV) at a 0% discount, of approximately $734 million for the life of mine. At a 5% discount the NPV has been calculated at approximately $472 million. Repayment of all pre-production capital is estimated at approximately 22 months.

Using $400 gold and $6.00 silver, with a 0% discount, Kupol has a preliminary, after tax NPV of approximately $841 million for the life of mine. Using the same metal prices at a 5% discount the project NPV is $551 million.

The Preliminary Economic Assessment includes Inferred resources that have not yet been sufficiently drilled to have economic considerations applied to them to enable them to be categorized as reserves. Until there is additional drilling to upgrade the Inferred resources to reserves, there can be no certainty that the preliminary assessment will be realized. Tom Garagan, VP Exploration for Bema is the Qualified Person overseeing this PEA.

The study recommends a 4,300 tonne per day open pit operation for the first two years, processing 3,200 tonnes per day and stockpiling lower grade ore. From years 3 to 7 the mine will continue to process 3,200 tonnes per day from a combination of open pit, underground mining and stockpile with daily throughput projected to decrease during 8 to 12 to 2,200 tonnes per day from underground mining. The decrease in throughput in later years is due to the limitation within the current underground plan, which only includes Big Bend and the North Zone, plus the extension. With further drilling, management feels that other areas will be sufficiently defined to be included in the underground production plan. Bema is currently conducting trade off studies, examining different combinations of open pit and underground mining which could maintain the daily throughput rate of 3,000 tonnes per day for the ultimate life of the mine. The result of the trade off studies could also substantially reduce the capital expenditures for the project development.

A second phase exploration drilling program is now underway to determine the ultimate potential of the Kupol property. The program will utilize 7 rigs to drill 57,000 metres to infill the area defined in the Preliminary Mineral Resource and further test the Kupol vein structure to the north and at depth. The potential for this program is both to enhance the project economics and increase the ultimate mine life. Management's target at Kupol remains up to, or in excess of, 16 million tonnes with similar gold and silver grades to those stated in the Preliminary Mineral Resource.(ii)

* (ii) The potential quantity and grade is conceptual in nature and there has been insufficient exploration to define this target at this time and it is uncertain that further exploration will result in further discoveries on the property. The target referred to is based on follow up to currently untested, known strike length and down dip potential.

The Preliminary Economic Assessment was prepared by an integrated engineering team which included Bema personnel, Orocon Incorporated and SRK Consulting.

Table 1

The flowing tables outline the Kupol Indicated Mineral Resource and the Inferred Resource at a 6 g/t gold cutoff. Due to wide drill spacing, a 10% metal loss was applied to the resource

To view tables:
http://biz.yahoo.com/bw/040526/265703_1.html