B2Gold Reports Upbeat Results for Gramalote JV, Eyes Growth

B2Gold Corp BTG reported positive results from the updated Preliminary Economic Assessment (PEA) for the Gramalote Ridge Project. This Colombia-based Gramalote project is a joint venture between B2Gold and AngloGold Ashanti Ltd. AU.

The PEA was conducted to evaluate Gramalote’s potential for recovery of gold from an open-pit mining operation that will move up to 143,000 tons per day (tpd), with a 30,137 tpd processing plant. The PEA is primarily based on production from the Gramalote Ridge deposit. Per the PEA, the Mineral Resource estimate for Gramalote Ridge includes Indicated Mineral Resources of 70,110,000 tons grading 0.92 g/t (gold grade) for a total of 2,070,000 ounces of gold and Inferred Mineral Resources of 79,030,000 tons grading 0.79 g/t gold for a total gold of 2,010,000 ounces.

Additional drilling at Gramalote Ridge is complete and a new Mineral Resource model has been developed. The updated Mineral Resource has facilitated efficient mine optimization, while significantly improving project economics by utilizing high-quality ore. The overall gold grade for the PEA stands at 0.85 g/t, which is significantly higher than previous studies on the project.

B2Gold expects Gramalote has the potential to become a large, low-cost open-pit gold mine, subject to completion of the ongoing infill drilling. Results of a final feasibility study expected to be completed by the end of this year. The project has some key infrastructure advantages, including reliable water supply as it is situated in a high rainfall region. It also adjacent to a national highway which connects to a major river with port facilities. The project is also close to the national electricity grid with low-cost power and skilled labor within Colombia.

Moreover, Gramalote is expected to benefit from few major operational advantages like metallurgical characteristics of the ore, resulting in high recovery rates at low processing costs, relatively low strip ratio in the mine and ability to process higher grade ore in the initial years of the mine life with improved project economics.

B2Gold and AngloGold have agreed to a budget of up to $37 million for the feasibility study on the Gramalote Project through the end of 2020. B2Gold is currently completing 42,500 metres of infill drilling at Gramalote Ridge, in order to convert the existing Inferred Mineral Resources to the Indicated category, as well as 7,645 metres of geotechnical drilling for site infrastructure. B2Gold currently expects to complete the entire drilling process by the end of this May.

B2Gold and AngloGold have agreed to amend the shareholding percentage and management structure of their Gramalote gold JV project. B2Gold will solely fund the project expenditures of $13.9 million to raise its ownership to 50% from its current rate of 48.3% and assume the position of manager of the Gramalote JV Project. Each company will now own half of the project.

Backed by solid gold production in 2019 and rising gold prices, the company has issued gold production guidance between 1,000,000 ounces and 1,055,000 ounces for 2020. The current-year consolidated cash costs are also expected to be lower than 2019. For 2020, B2Gold expects to generate cashflows from operating activities of roughly $700 million factoring a gold price of $1,500 per ounce.

The company will continue to focus on maximizing profitable production from its mines, expansion of the Fekola Mine throughput, and exploration and development of the existing projects while reducing debt levels.

Share Price Performance

In the past six months, shares of B2Gold have appreciated 30.4%, outperforming the industry’s gain of 10.9%.

Zacks Rank & Stocks to Consider

B2Gold currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Mining – Gold industry are Osisko Gold Royalties Ltd OR and Pretium Resources Inc. PVG, each sporting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Osisko Gold has a projected earnings growth rate of 15.96% for the current year. The company’s shares have gained 5.8% over the past year.

Pretium Resources has an estimated earnings growth rate of a whopping 107% for the ongoing year. Its shares have appreciated 58.7% in a year’s time.

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