B2Gold Corp. (BTG:NYSE; BTO:TSX; B2G:NSX) announced in a news release the results of the preliminary economic assessment (PEA) on Gramalote in Colombia after becoming the manager, on Jan. 1, 2020, of the joint venture gold project with AngloGold Ashanti.
Using a $1,350 per ounce ($1,350/oz) gold price, the PEA outlines an open-pit gold mining operation for Gramalote, which would produce about 3.85 million ounces over its initial mine life of 13.6 years and would process roughly 11.0 million tons per year. Average annual gold production would be an estimated 416,600 ounces for the first five years.
Over the life of the mine, cash flow from Gramalote would be an estimated $1,827 million pretax and $1,283 million after tax. Assuming a 5% discount rate, the pretax net present value (NPV) is projected to be about $1,027 million. The PEA projects an after-tax NPV of $671 million, yielding an after-tax internal rate of return of 18.1% and resulting in payback in about 3.6 years.
As for costs, the pre-production capital costs for Gramalote are estimated at $901 million, which includes roughly $160 million for mining equipment. Average life-of-mine, all-in sustaining costs are projected to be $648/oz of gold. Average life-of-mine, all-in costs, including the pre-production ones, are forecast at $882/oz gold.
Currently, B2Gold is continuing to infill drill at Gramalote Ridge to convert existing Inferred mineral resources into Indicated resources. Geotechnical drilling for site infrastructure also is in progress. The project manager expects to finish by year-end 2020 all of the feasibility work needed to optimize the PEA and to release the feasibility study. A construction decision is to follow in early January 2021, the company stated.
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