B2Gold Buys Papillon Resources for $570 Million
Papillon is an Australian junior company headquartered in Perth, Western Australia. The Fekola pre-feasibility study assumed an ore processing rate of 4 million mt/y at a plant feed grade of 2.73 g/mt gold and a mining cut-off grade of 1.1 g/mt gold from measured and indicated resources totaling 44 million mt. A total of 2.8 million oz of gold would be recovered over a nine-year mine life at an average recovery of 92.7%.
Up-front capital costs for Fekola were estimated at $292 million. Life-of-mine all-in sustaining cash costs, including corporate overheads, sustaining capital, exploration expenditure, and royalties, were estimated at about $725/oz.
B2Gold is based in Vancouver, British Columbia, and has three producing gold mines: La Libertad and Limon in Nicaragua and Masbate in the Philippines. Collectively, the B2Gold mines produced 366,000 oz of gold in 2013 at an all-in sustaining cost of $1,064/oz. B2Gold expects its production to increase to about 550,000 oz/y by 2015, when its low-cost Otjikoto mine in Namibia is up and running.
The B2Gold-Papillon agreement will be implemented by way of a Scheme of Arrangement under the Australian Corporations Act 2001. Upon completion of the Scheme, existing B2Gold shareholders and former Papillon shareholders will own approximately 74% and 26%, respectively, of the combined company.
Based on current assumptions, including successful completion of its acquisition of Papillon, B2Gold expects to be producing more than 900,000 oz/y of gold from five operating mines by 2017.
In other news from B2Gold, the company reported that construction of its 90% owned Otjikoto open-pit gold mine in Namibia remains on schedule for a production start in late 2014. The mine is expected to produce an average of about 141,000 oz/y of gold during its first five years of operation. Total construction and development costs remain in line with feasibility study projections, including pre-development costs of $244 million and deferred stripping estimates of $33 million.
Based on the recent discovery of the high-grade Wolfshag zone near the planned open pit, B2Gold is building the Otjikoto processing plant and infrastructure to support a plant expansion from an initial processing capacity of 2.5 million mt/y to 3 million mt/y. When the expansion is complete at the end of 2015, B2Gold expects gold production from the main Otjikoto pit to increase to about 170,000 oz/y. Meanwhile, the company will rerun its mine plans to include higher-grade ore from the Wolfshag zone.