B2Gold (BTO-T) delivered a flurry of good news to the market and investors responded accordingly.
The company announced solid results from a feasibility study on its Otjikoto in Namibia and that construction has begun on a mine there, and also revealed that it has secured a US$150 million loan.
The study on Otjikoto outlined an open pit gold mine with a 12-year mine life based on the probable mineral reserves. Otjikoto sits roughly 300-km north of the Namibian capital of Windhoek, and B2Gold has a 92% stake while EVI Gold, a Namibian black empowerment group, holds the remaining 8%.
Average annual production over the first five years of the mine’s life is expected to be 141,000 oz. of gold per year at an average operating cost of US$524 per oz. Over the entire mine life, it expects production to average out to 112,000 oz. per year at an operating cash cost of $689 per oz.
B2 expects pre-production capex to come in at $244.2 million, which would build a mine that generates net cash flow of US$413 million over the life of the mine.
The after-tax net present value was calculated at US$243.4 million using a 5% discount rate, while the internal rate of return came in at 23.6%.
The company already has plans to bolster production from the initial design capacity of 2.5 million tonnes per year to 3 million tonnes per year, and says it can do so with minimal additional capital requirements.
B2 also updated its open pittable probable reserves, which now stand at 29.4 million tonnes grading of 1.42 grams per tonne gold for 1.34 million oz. with a strip ration of 5.59:1.
More good news was found in the metallurgical results from the study, as average gold recoveries for the mine increased to 95.6%.
Also boding well for the project are recent high grade discoveries on the property that B2 believes might expand reserves and mill through put capacity which could facilitate an increase in annual gold production.
As for construction, the company was free to get things moving since it has received all of the required government permits and licenses.
In Toronto on Jan. 10, the company’s shares were up 5% or 20¢ to $3.85 on 5.6 million shares traded.
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