B2Gold Corp. (TSE:BTO) released a new feasibility study for the Fekola project in Mali on Friday before market opened. Fekola feasibility results confirm robust project economics. B2Gold released the long-anticipated results of the optimized feasibility study for the Fekola project in Mali. This feasibility study represents the first economic evaluation update since the Preliminary Economic Assessment (PEA) released in June 2014.
Highlights of the optimized Feasibility Study include:
An open pit gold mine with an initial production life of mine (“LOM”) of 12.5 years based on the probable mineral reserves;
Average annual gold production for years one through seven of 350,000 ounces per year at a $418 operating cash cost per ounce;
Average annual LOM gold production of 276,000 ounces per year at an operating cash cost of $552 per ounce;
New open pit probable mineral reserves of 49.2 million tonnes at a grade of 2.35 g/t gold containing 3.72 million ounces of gold at a stripping ratio of 4.5:1;
Average LOM gold recovery of 92.8% resulting in a total of 3.45 million ounces produced over the 12.5 year LOM;
Estimated pre-production capital cost of $395 million plus $67 million of equipment financing. This does not include approximately $30 million of early works, which were materially completed (on schedule) at the end of June 2015;
At an indicated gold price of $1,300 and $1,200 per ounce, cumulative LOM pre-tax net cash-flow of $1.66 billion and $1.34 billion, respectively; and
At an indicated gold price of $1,300 and $1,200 per ounce, a net present value pre-tax of $1.01 billion and $0.8 billion, respectively, at a 5% discount rate generating a pre-tax internal rate of return of 35% and 30%, respectively.
nitial construction activities at Fekola began in February 2015 led by core team members of the Otjikoto construction team. Early works included the assessment of construction equipment needs, purchasing and mobilization of required equipment and materials, hiring of local contractors and mobilization of key personnel. Early works construction includes:
improving the existing access road between Kenieba and the site (complete);
construction of a new site access road (materially complete);
construction of an on-site airstrip designed to allow personnel to fly directly in and out of the site (30% complete); and
commencement of construction of the camp pad and commencement of excavations within the mill footprint.
Initial construction activities at Fekola began in February 2015 led by core team members of the Otjikoto construction team. Early works construction activities that were completed included:
Construction of a new site access road (40 km from the tar road to site) complete with a bridge across a major waterway to allow for year round access;
Construction of an on-site airstrip designed to allow personnel to fly directly in and out of the site (materially complete but waiting for final regulatory approvals);
Construction of the camp pad and commencement of clearing within the mill footprint;
Crushing of aggregate to produce sand and gravel to be used in the concrete batch plant;
Construction of the concrete batch plant; and
Development of the on-site geotechnical laboratory to be used for compaction and concrete testing.
All of these activities allowed the project to move forward and prepare for work after the rainy season which runs from late June through September. The site has been receiving a steady stream of materials for mine construction which commenced in the fourth quarter of 2015. Activities that are currently scheduled include:
Commencing construction of the permanent camp;
Commencing excavation of the mill area; and,
Commencing clearing of the tailings basin.
Concurrently, with the activities on site, the B2Gold engineering team continues to work with Lycopodium Engineering in Australia to complete detailed design and procure long-lead items. To date, many of the major mill packages have been identified and purchase orders have been issued. This includes SAG and ball mills, thickeners, cyclones, crusher, and tanks.
On June 11, 2015, the Company announced robust results from the optimized Feasibility Study at the Fekola Gold Project in Mali. According to the Feasibility Study, the current average annual production for the first seven years is approximately 350,000 ounces per year at an average operating cash cost of $418 per ounce and for the life of mine plan approximately 276,000 ounces per year at an average operating cash cost of $552 per ounce. The total pre-production capital costs are estimated to be $395 million plus $67 million of anticipated mine fleet and power generator costs which are expected to be lease financed. Sunk costs related to early works (including access roads, construction aggregate stockpiling, airstrip construction, and land clearing) of approximately $38 million are not included in the total pre-production capital estimate. Based on current assumptions the Fekola mine is scheduled to commence production in late 2017.
In addition to the Fekola development project, B2Gold has four mines (two in Nicaragua, one in the Philippines and one in Namibia) and a strong portfolio of development and exploration assets in Mali, Nicaragua, Namibia, Philippines, Colombia and Burkina Faso. The Company is projecting to produce between 500,000 and 540,000 ounces of gold in 2015.