Listed B2Gold developer of the N$370 million Otjikoto Gold Project has reported strong results from a feasibility study for the project providing for 1.34-million ounces of gold to be mined over a period of 12 years in Namibia.
The Otjikoto gold project is located about 300 km north of Windhoek, and is 92% by Vancouver-based mid tier gold producer B2Gold and 8% owned by EVI Gold, a Namibian black empowerment group led by Dr Leake Hangala.
The property has excellent infrastructure. It is located adjacent to a major paved highway and drilling has outlined water on site well in excess of the life-of-mine (LoM) requirements.
The Otjikoto project will be developed as an open pit mine, where run-of-mine ore will be trucked to the plant, crushed, and then treated in a grinding circuit using conventional semiautogenous-grinding and ball mills, and a carbon-in-leach recovery process.
The mine plan is based on probable mineral reserves of 29.4-million tons at a grade of 1.42 g/t containing 1.34-million ounces of gold at a stripping ratio of 5.59:1 to be mined over an initial 12 year period. All necessary government permits and licences have been received.
Construction has started and is scheduled for completion in the fourth quarter of 2014, when mill production will start.
The current average yearly production for the first five years is about 141 000 per ounce per year of gold at an average operating cash cost of $525 per ounce and for the LoM about 112 000 ounce per year of gold at an average operating cash cost of $689 per ounce.
The total capital costs are estimated to be US$244 m.
The plant facility and support infrastructure would be built to support a plant expansion from 2.5-million tons a year to 3-million tons a year with reduced additional capital expenditure.
The financial modelling for the Otjikoto project indicates robust economics at a gold price of $1 550 per ounce. The project is expected to yield a positive after-tax net present value of $243m at a discount rate of 5%. The internal rate of return after-tax is 23.6%.
The project has a 32-month payback period after first gold production.
B2Gold said the project has “excellent” exploration potential. An aggressive exploration-drilling programme continues after the high-grade Wolfshag-zone was discovered late in 2012, which is next to the planned Otjikoto pit.
“These positive results indicate significant exploration upside and the potential to outline additional resources, which could lead to the expansion of through-put capacity and increase annual average gold production,” the company said in a statement.
The company also said it had accepted a committed letter of offer from Macquarie Bank for a fully underwritten $150-million secured facility for a four-year term with a final repayment date of March 31, 2017.
The company said it has sufficient financial resources to bring the Otjikoto project into production and fund all additional expenditures this year.
The company’s TSX-listed stock traded at Canadian $3.82 apiece on Friday morning, and the company had a market capitalisation of Canadian $1.5-billion.
B2Gold Namibia was last week granted a 20-year-Mining Licence by the Ministry of Mines and Energy.
In a statement to shareholders, parent company, B2Gold Corp said the granting of the licence was the last major requirement before the start of a full scale mine construction, slated for the first quarter of next year.
Construction of the mine is expected to last two years with the first gold production from the mine projected for the fourth quarter of 2014 and the first full year of production being 2015.
In order to maintain the construction schedule, early works have been completed that include de-bushing of the areas where surface structures will be located; securing construction camp facilities; sourcing construction power, and establishing recruiting offices in the towns near the mine site.