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B2Gold publishes PEA for $901m mine with AngloGold in Colombia

Tue Jan 21 2020


Canadian miner B2Gold has published an updated preliminary economic assessment (PEA) for its Gramalote joint venture (JV) with South Africa’s AngloGold Ashanti in Colombia, outlining plans for an openpit mine that will yield 3.85-million ounces over its 13.6-year mine life.


The PEA is based on a yearly processing rate of 11-million tons, with an average life-of-mine (LoM) gold recovery of 94.3%.


The study calculates that Gramalote could produce an average of 416 000 oz/y for the first five years of production and average LoM production of 283 900 oz/y, at a cash cost of $544/oz. The average LoM all-in sustaining cost is estimated to be $648/oz.


To build the mine, the JV would require preproduction capital of $901-million, which includes about $160-million for mining equipment, B2Gold reported on Tuesday.


Assuming a discount rate of 5% and a gold price of $1 350/oz, the pretax net present value (NPV) is $1.03-billion and the aftertax NPV is $671-million, generating an aftertax internal rate of return (IRR) of 18.1% at the project construction decision date, which is estimated to be January 1, 2021.


The project payback period is estimated to be of 3.6 years.


The updated PEA compares with a 2014 study, which placed a price tag of $1.12-billion on the project, an aftertax NPV of $398-million and an aftertax IRR of 11.5%. The 2014 PEA projected gold production of 4.45-million ounces over a 14-year LoM.


The 2020 PEA is based only on production from the Gramalote Ridge deposit and does not include potential production from the nearby Trinidad deposit and the Monjas West zone. Gramalote Ridge has an indicated mineral resource of 70.11-million tonnes, grading 0.92 g/t gold for 2.07-million ounces of gold and inferred resources of 79.03-million tonnes, grading 0.79 g/t for a total of 2.01-million ounces of gold.


B2Gold on January 1 became the operator of the Gramalote JV following an amended agreement that will require the miner to fund $13.9-million of expenditure to increase its ownership to 50%.


The JV has set a 2020 budget of about $37-million to fund 42 500 m of infill drilling at Gramalote Ridge to convert existing inferred mineral resources to an indicated category, and 7 645 m of geotechnical drilling for site infrastructure.


All drilling will be wrapped up by May, B2Gold reported.


The miner noted that the remaining work to reach final feasibility study was not extensive and said it would deliver a final feasibility study by year-end.