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International gold company, B2Gold has started with the construction of its Otjikoto gold project in Namibia, which is due to be completed in the fourth quarter of 2014 when mill production will commence.

The company has further accepted a committed letter of offer from Macquarie Bank for a fully underwritten US$150 million (R1.36 billion) secured facility, which will provide sufficient financial resources to bring the mine into production and fund all additional expenditures projected for 2013.

The mine plan is based on probable mineral reserves of 29.4 Mt at a grade of 1.42 g/t containing 1.34 Moz of gold at a stripping ratio of 5.59:1. It will be mined over a 12-year period. All necessary government permits and licences have been received. The total pre-production capital costs are estimated to be US$244.2 million.

The Otjikoto project will be developed as an opencast mine, where run-of-mine (ROM) ore will be trucked in 100 t trucks to the plant, crushed, and then treated in a grinding circuit utilising conventional SAG and ball mills, and a carbon-in-leach (CIL) recovery process.

Engineering and procurement will be managed from the B2Gold corporate offices in Vancouver, British Columbia, Canada, with construction management occurring from the Otjikoto project site. The majority of equipment and supplies will be sourced from South Africa, North America or European suppliers and will be ocean shipped to the seaport at Walvis Bay, Namibia.

The mills and primary crusher were ordered in December 2012. The grinding mills, crushing equipment and the construction man camp have been secured and partial payment has been made and they are undergoing fabrication and shipping. The generators will be procured in February 2013.

The Otjikoto gold project is located approximately 300 km north of Windhoek and is owned 92% by B2Gold and 8% by EVI Gold, a Namibian black empowerment group. 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 requirements.

The current average annual production for the first five years is approximately 141 000 ozpa of gold at an average operating cash cost of US$525/oz.

The plant facility, which will utilise a CIL recover circuit and support infrastructure, will be built to support a plant expansion from the initial processing capability of 2.5 Mtpa to 3 Mtpa with minimal additional capital expenditure.

The Otjikoto gold project has excellent exploration potential. An aggressive exploration drilling programme continues on the success of the high grade Wolfshag zone discovered in late 2012, that is adjacent 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 throughput capacity and increase annual average gold production.

The mineral reserves established for the Otjikoto project are based only on the indicated mineral resource and are therefore eligible for conversion to the probable mineral reserve category. The mineral reserve estimate was calculated based on a gold price of US$1 350 and resulted in a cut-off grade of approximately 0.4 g/t.

The pre-production capital cost estimate for the Otjikoto project’s processing plant and infrastructure was compiled by the project management team supported by the primary feasibility consultant, DRA Mineral Projects and other engineering contractors that contributed significantly to the capital cost estimate form and basis. DRA provided the plant process and infrastructure capital costs and VBKOM Consulting Engineers Namibia provided the form and basis for the surface mining capital costs inclusive of the mining equipment and mine development costs. Epoch Resources provided the designs and quantities for the tailing pond cost estimates.

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