Development appraisal for Cerro Casale project

Bema Gold is has announced the results of a project development appraisal for the Cerro Casale project (49% Bema Gold, 51% Arizona Star). The appraisal conducted by Mine Quarry Engineering Services, analyzed and modified ore processing concepts and updated the operating and capital costs of the 2000 feasibility study completed by Placer Dome and updated by Placer in 2004.

AMEC Technical Services is completing a NI 43-101 technical report on the Cerro Casale project that will update the NI 43-101 report competed in 2005 and verifies the conclusions of the development appraisal prepared by Mine Quarry. The final report will be completed and filed on SEDAR at the beginning of September.

The base case parameters established for the detailed project evaluation includes open pit mining, heap leaching of oxide ores at 75,000 t/d and milling and flotation of mixed and sulphide ores at 150,000 t/d using two grinding lines, each consisting of one semi-autogenous mill and two ball mills. The open pit operations were redesigned and scheduled to optimize the effect of heap leaching the oxide ores.

Based on the updated capital, cash operating cost estimates and base case metal prices of $450/oz of gold and $1.50/lb of copper, this appraisal has confirmed the previously defined Cerro Casale proven and probable mineral reserves of 1.035 billion t of ore grading on average 0.69 g/t of gold and 0.25% copper containing 23 Moz of gold and 6 billion lb of copper.

The concept of heap leaching the oxide ore commencing over one year prior to the start-up of milling has significantly improved the project economics. This effectively eliminates pre-stripping, provides early revenue, creates a second cash flow stream once the mills are on line, and eliminates the need to blend the oxide ore with the sulphide mill feed resulting in increased copper head grades and improved concentrate grades. In summary, the early production years of the project are expected to be significantly improved. Heap leach processing the oxide ore had been briefly considered by Placer Dome during the original 2000 feasibility study but was not pursued because the better economic case for the project was to mill all of the ore types given the capital and operating costs at that time.