VANCOUVER (CP) - Costs at Bema Gold Corp.'s Cerro Casale gold project in Chile are expected to be higher than originally forecast in its 2000 plan, but chief executive Clive Johnson is confident the project is still a viable mine.

Johnson said technical improvements and other changes since the plan was first released will hopefully make up for the higher costs of building a mine in today's market.

"We know the costs from 2000 are going to be significantly higher for fuel, power, employees, steel, you name it, so we're looking for ways to mitigate some of the higher costs by making it basically a better mine," Johnson said in an interview after the company's annual meeting.

"For example, there are larger mills in the world today than there were then. So instead of needing three mills, we think we can use two mills, so there are those kinds of cost savings and other things we've been looking at."

A technical update of the company's 2000 feasibility study is expected to be published in the next week or two.

Bema is in the final stages of completing the deal that will see Barrick Gold (TSX:ABX) return its stake in the project to Bema and its partner Arizona Star Resources (TSXV:AZS) in the coming days. Once that agreement is final, Bema will hold 49 per cent of the Cerro Casale project once the deal with Barrick is complete, while Arizona Star will hold the other 51 per cent.

Johnson suggested Wednesday that a major gold producer may want to take all of Arizona Star's stake and a portion of Bema's stake in taking on the project.

"It is obviously a major company project. We're not going to sit here and tell you that we're going to build Casale. The amount of financing that is going to be required is going to be somewhere around $1.8 billion plus," he said.

"We don't mind taking a minority role. Thirty-five or 40 per cent would be ideal for us."

Placer Dome had passed on the Cerro Casale project and said it was "not financially viable at this time" last year, prior to its acquisition by Barrick.

Johnson said Barrick has agreed to live up to the terms of the deal Placer Dome signed with the company to return its stake in the project to its partners, but he believes Barrick might still be interested.

"Barrick has expressed an interest in it. We'll see what happens there. Maybe they will be the partner at the end of the day, but I'm sure other majors are going to be interested in it too," he said.

Last month, Bema increased the reserve estimates for its 75 per cent owned Kupol mine in northeastern Russia and added two years to the estimated producing lifespan of the project.

The Vancouver-based company has pegged the probable mineral reserves at the mine at 4.45 million ounces, up from a prior 3.86 million ounce estimate.

It also dropped its estimate for silver reserves at the Kupol project to 54.23 million ounces from a prior 48.76 million ounces.

The company also said it is raising Kupol's projected mine life to 8.5 years from its previous 6.5-year estimate, extending production into 2016.

Bema, which reports in U.S. dollars, said it lost $35.5 million US or eight cents per share for the three months ended March 31. That compared with a loss of $14.8 million or four cents per share in the same period a year ago.

The loss included a $30.4 million unrealized non-hedge derivative loss resulting from the mark-to-market adjustment of the company's non-hedge derivative financial instruments to reflect soaring spot gold prices.

Quarterly revenue more than doubled to $47.1 million from $21.5 million a year ago.