Projects

Masbate Gold Mine - The Philippines

Open Pit

Property Location and Access:

The Masbate Gold Project (MGP) is located in Masbate Island in the Republic of the Philippines. The mine is situated about 360 kilometres (“km”) southeast of Manila, the capital of the Philippines, within the municipality of Aroroy, Masbate Province, Region V. The mine site can be accessed by a commercial airline service, which flies daily to Masbate City; from there it is a 70 km drive on a partially-sealed road to the mine site. Alternate access to the site from Masbate City is via a one hour boat ride. A registered light air strip and helipad are located close to the mine. The mine is equipped with a barge loading jetty where heavy equipment and consumables are delivered and offloaded. Click here for B2Gold’s Annual Information Form ("AIF") 2017 for more details on the mine’s “Property Description, Location and Access”.

2016:

The Masbate Mine had a very strong year in 2016, producing an annual record 206,224 ounces of gold, above the mid-point of its revised production guidance range (of 200,000 to 210,000 ounces) and significantly exceeding its initial guidance range (of 175,000 to 185,000 ounces). Gold production for the year also increased by 17% (or 30,421 ounces) over 2015. Masbate’s strong operational performance was driven by better-than-expected grades from the Main Vein Stage 1 pit and higher recoveries arising from higher than budgeted oxide ore tonnage from the Colorado pit. In addition, recoveries were positively impacted by the newly completed process plant upgrades (adding residence time and additional oxygen to the CIL circuit to achieve optimum leach performance).

Masbate’s full year 2016 cash operating costs(1) were an annual record-low at $463 per ounce of gold, and were even below the reduced cost guidance range (of between $465 and $505 per ounce) and significantly below initial guidance (of between $620 and $660 per ounce). Cash operating costs also decreased by $194 per ounce (or 30%) compared to the prior-year. This significant improvement reflects higher gold production and lower fuel/energy costs. Masbate’s full year 2016 all-in sustaining costs (“AISC”)(1) were $653 per ounce of gold, significantly below both budget of $899 per ounce and $965 per ounce in the prior-year, reflecting the favourable cash operating costs as well as lower capital expenditures. The lower capital expenditures resulted from lower than budgeted pre-stripping costs driven by lower mining costs and a lower strip ratio for the Colorado pit. Timing delays in land acquisition costs also contributed to the lower than budgeted capital costs.

Q1 2017:

Masbate continued its very strong operational performance into the first quarter of 2017 producing 52,562 ounces of gold, 5% (or 2,569 ounces) above budget and comparable with the prior-year quarter. Gold production improved against budget mainly due to higher-than-expected throughput and recoveries mainly driven by higher-than-budgeted oxide ore from the Colorado pit. As mining advances in the Colorado pit, the trend of more oxide ore than modelled has continued. As a result, oxide feed material accounted for 42% of the total milled tonnes in the quarter compared to budget of 20% (with the remaining amount consisting of transitional to sulfide material). The higher mill recoveries in the quarter also reflected the ongoing benefits from the recent CIL circuit upgrade, tracking slightly ahead of expectations. Masbate also continued its strong safety performance, extending the number of days without a “Lost-Time-Injury” to 535 days at the end of the first quarter of 2017.

Mill throughput in the quarter was 1,704,001 tonnes compared to budget of 1,645,473 tonnes and 1,785,891 tonnes in the first quarter of 2016. Mill throughput exceeded budget as a result of the softer ore conditions (due to the higher-than-budgeted oxide blend) and a reduction in planned downtime. In February, a planned plant maintenance shutdown was completed more quickly than anticipated (in eight days instead of the estimated ten days). Mill throughput was lower compared with the prior-year quarter as a result of the February maintenance shutdown. Mill recoveries averaged 74.8% which was better than budget of 73.3% and 72.9% in the first quarter of 2016. The improved recoveries in the quarter reflect both the higher-than-budgeted oxide blend and the benefit of the process improvements as part of the Masbate plant upgrade which came on line on June 29, 2016. The average grade processed was 1.28 g/t, comparable to budget and slightly higher compared to 1.26 g/t in the first quarter of 2016. 

Masbate’s first quarter cash operating costs were $524 per ounce, significantly below budget by $110 per ounce (or 17%). This was mainly the result of both higher-than-budgeted gold production and lower-than-budgeted operating costs. Operating costs in the quarter benefited from higher silver by-product credits and lower maintenance costs and stockpile adjustments (as compared to budget). Masbate’s first quarter cash operating costs were $68 per ounce higher compared with the first quarter of 2016 (but substantially below budget), mainly as a result of higher fuel prices and maintenance costs (attributable to the February 2017 maintenance shutdown). AISC in the quarter were $808 per ounce compared to budget of $1,127 per ounce and $638 per ounce in the prior-year quarter. AISC were below budget as a result of lower cash operating costs and sustaining capital expenditures due to the timing of mobile equipment purchases which are now expected to occur later in 2017.

2017 Guidance:

For full-year 2017, Masbate is forecast to produce between 175,000 to 185,000 ounces of gold at cash operating costs of between $690 to $730 per ounce and AISC of between $1,020 and $1,050 per ounce. Masbate’s forecast 2017 AISC includes the planned mine fleet replacement and expansion costs. Since the new fleet will commence utilization in 2017, all of the related equipment purchase costs have been included in Masbate’s 2017 forecast AISC (even though the equipment will benefit Masbate operations in future years as well). Masbate’s mine equipment purchases are planned to significantly decrease in 2018.

Department of Environment and Natural Resources Update:

As previously reported by B2Gold on September 27, 2016, October 18, 2016 and in its Management Discussion & Analysis (“MD&A”) for the year ended December 31 ( click here for MD&A), the Philippine Department of Environment and Natural Resources (the “DENR”) announced the preliminary results of mining audits carried out by the DENR in respect of all metallic mines in the Philippines and issued the Masbate Mine audit report which contains the detailed findings from the audit and directed the Company to provide explanations and comments in response to the audit findings as described in the Company’s previous disclosures. The Company provided a comprehensive response to the findings and recommendations in the audit, which the Company believes addresses the issues raised.

As reported by B2Gold on February 2, 2017 the DENR has announced further results of its mining audit and Masbate was not among the mines announced to be suspended or closed. To date, the Company has not received any updated formal written response from the DENR confirming the results of the audit in respect of Masbate and as such, the final outcome of the audit has not been determined.

B2Gold believes that it continues to be in compliance with Philippine’s laws and regulations. The Company continues to work closely with the DENR to maintain compliance with regulations and continues to promote improved quality of life in the communities where it operates. The Company will continue to provide updates of its progress with the DENR. Operations remain uninterrupted at the mine and the projections and guidance for Masbate and the Company on a consolidated basis are provided on this basis.

The Secretary of the Department of Environment and Natural Resources was recently replaced by the Philippine government on May 3, 2017.

Recent News Releases:

Please click here for the full news release “B2Gold Corp. Reports Strong First Quarter 2017 Results Exceeding its Budget Guidance; Fekola Project Mine Construction Remains on Target for an October 1, 2017 Production Start”, dated May 3, 2017.

Please click here for the full news release "B2Gold Reports 2016 Fourth Quarter and Full-Year Results; Achieves 2016 Record Gold Production, Record-Low Cash Operating Costs and Record Operating Cash Flow; Outlook Provides for Very Strong Gold Production Growth Profile by 2018", dated March 16, 2017.

MGP_0116

Click here for details on the Masbate “Exploration” section.

Footnotes (Click to expand)

  1. Refer to “Non-IFRS measures” in the Company’s most recently filed Management’s Discussion and Analysis (“MD&A”). Click here for MD&A

Certain portions of the information provided herein are derived from and based on the technical report entitled “Masbate Gold Operation, Republic of the Philippines, NI 43-101 Technical Report on Operations” that has an effective date of December 31, 2016, and was prepared by Tom Garagan, P. Geo., Ken Jones, P.E., Kevin Pemberton, P.E. and John Rajala, P.E. and from our most recently filed Annual Information Form (“AIF”) - click here for AIF, and are based on the assumptions, qualifications and procedures set out therein. For a more detailed overview of the Masbate Gold Project, please refer to the documents noted above, which are available on SEDAR www.sedar.com and on the U.S. Securities and Exchange Commission’s website at www.sec.gov

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