Projects

Masbate mine - the Philippines

Open Pit(1)

Q3 2016 Update:

The Masbate mine continued its very strong operational performance into the third quarter of 2016, producing 47,676 ounces of gold, 4% (or 1,806 ounces) above budget and 18% (or 7,308 ounces) higher than the third quarter of 2015. Masbate’s strong quarter was driven by better-than-expected grades from the Main Vein Stage 1 pit and higher recoveries arising from higher-than-budgeted oxide ore 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 third quarter 2016 cash operating costs(2) were $466 per ounce of gold, $179 per ounce (or 28%) below budget and $218 per ounce (or 32%) below the prior-year quarter. This significant reduction was mainly the result of both higher gold production and lower fuel/energy costs.

Masbate’s third quarter 2016 all-in sustaining costs(2) were $650 per ounce of gold, significantly below both budget of $955 per ounce and $1,030 per ounce in the prior-year quarter, reflecting the favourable cash operating costs as well as lower capital expenditures and pre-stripping costs.

B2Gold is pleased to announce that as at September 30, 2016, Masbate operations had completed approximately 6 million man-hours (or 353 days) without a “Lost-Time-Injury” (LTI). This achievement was attained by staff, workers, and contractors who are truly committed to working safely.

As previously reported on September 27, 2016, 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. At that time, DENR spokespersons advised B2Gold that the Masbate mine would receive a show-cause letter related to its operations. The DENR subsequently issued the Masbate mine audit report which contained the detailed findings from the audit and directed the Company to provide explanations and comments in response; however, no show-cause order was issued to the Company in respect of any findings. The audit findings are related to administrative and regulatory issues. The Company has provided a comprehensive response to the findings and recommendations in the audit, which the Company believes addresses the issues raised, and which is presently being evaluated by the DENR. Meanwhile, Masbate’s operations continue uninterrupted and the personnel at the DENR have been highly cooperative and supportive in helping to address these matters.

YTD(3)2016 Update:

Masbate’s year-to-date(3) 2016 production was 157,591 ounces of gold, significantly above budget by 16% (or 21,209 ounces) and 23% (or 29,746 ounces) higher than the first nine months of 2015.

Masbate’s year-to-date 2016 cash operating costs were a year-to-date record low of $437 per ounce of gold, $172 per ounce (or 28%) below budget and $275 per ounce (or 39%) below the same period last year.

Masbate’s year-to-date 2016 all-in sustaining costs were $612 per ounce of gold, significantly below both budget of $888 per ounce and $1,029 per ounce in the first nine months of 2015.

FY 2016 & Beyond:

Based on Masbate’s strong performance, full-year 2016 gold production and cost guidance have both been favorably revised. Masbate is now forecast to produce between 200,000 to 210,000 ounces of gold (significantly up from its original guidance range of 175,000 to 185,000 ounces) at cash operating costs of between $465 to $505 per ounce (significantly lower than its original guidance range of $620 to $660 per ounce) and revised all-in sustaining costs are expected to be in the range of $680 to $720 per ounce.

Masbate’s process plant upgrades have now been substantially completed with most process improvements integrated into operation slightly ahead of the original schedule. The plant upgrades are expected to improve gold recoveries by between 2% and 3% and sustain throughput on harder ore types.

In August 2016, Masbate’s mine plan was adjusted to optimize the mine’s development sequence/gold production through to 2017 and beyond. The modified mine plan provides for continued strong gold production in the fourth quarter of 2016 while optimizing production.

News Releases:

Please click here for the full news release “B2Gold Corp. Reports Q3 2016 Results; Operating Cash Flows Significantly Higher on Record Gold Production, Record Low Costs and Higher Gold Prices; 2016 Guidance Favourably Revised”, dated November 3, 2016.

(1) Please refer to “Project Description” section below for the ownership summary of the Masbate Gold Project (MGP)
(2) Refer to Non-IFRS measures
(3) Nine months ending September 30, 2016

Certain portions of the following information are derived from and based on the assumptions, qualifications and procedures set out in the technical report entitled “NI 43-101 Technical Report Masbate Gold Project Republic of the Philippines” filed June 20, 2012 and prepared by, among others, Mark Turner, B.Eng., MAusIMM, and Andrew Vigar, B.App. Sc Geo., FAusIMM, MSEG (the “Masbate Technical Report”) and from our most recently filed Annual Information Form (“AIF”). For a more detailed overview of the MGP, please refer to the technical report noted above and our most recent AIF, which is available under the profile of CGA Mining Limited (“CGA”) on SEDAR at www.sedar.com.

Project Location

The Masbate Gold Project (MGP) lies within the municipality of Aroroy, Masbate Province, and is located near the northern tip of the island of Masbate, 360 km south-east of Manila, the capital city of the Philippines. The project can be accessed by a commercial airline service which flies daily to Masbate City (population of approximately 85,000) and a 70 km drive on a partially sealed road to the project site. Alternate access to the site from Masbate City is via a one hour boat ride. The site is equipped with a barge loading jetty where heavy equipment and consumables are delivered and offloaded. The site also has a private airstrip for charter aircraft.

MGP_0116

Project Description

B2Gold acquired its interest in the MGP through the acquisition of CGA in January 2013. Through 100% controlled subsidiaries, B2Gold owns 40% of Filminera Resources Corporation (“FRC”) and 100% of Philippine Gold Processing & Refining Corporation (“PGPRC”), the owner of the mineral processing facility. The remaining 60% of FRC is owned by a Philippine registered company, Zoom Mineral Holdings Inc. (“Zoom”). PGPRC and FRC work together contractually and cooperatively to operate the MGP.

FRC holds the mineral tenements that include the MGP. The mining claims and applications cover an area of approximately 15,209 hectares. Of that, FRC holds 1,366 acres which consist of a combination of patented mineral claims and four mining licenses known as Mineral Production Sharing Agreements (“MPSA”) where the Mineral Resources and Mineral Reserves occur. The majority of the Mineral Resources and Mineral Reserves occur on the patented mineral claims that have perpetual rights with no expiry date. The four other mining rights claims have the following expiry dates: MPSA 095-97-V currently expires on November 19, 2022, MPSA 255-2007-V and MPSA 256-2007-V both expire on July 29, 2032 and MPSA 329-2010-V expires on March 22, 2035. B2Gold also holds an interest, through Vicar Mining Corporation (“Vicar”), in the prospective Pajo property, immediately to the north of the Colorado Pit, an approved MPSA which covers an area of 786 hectares and expires October 19, 2030 (MPSA 219-2005-V). Pursuant to an Operating Agreement between Vicar and FRC that has been applied for, the latter at its cost and expense, will explore and, if warranted, develop and operate any mine in the MPSA area of Vicar. Vicar will receive a royalty share equivalent to 2% of the gross receipts (less certain expenses) of the mineral products realized from the Vicar MPSA.

PGPRC, which is indirectly wholly-owned by B2Gold, has developed and owns the process plant on the island of Masbate and is responsible for the sale of all gold. PGPRC and FRC have a contractual relationship, which includes PGPRC purchasing all of the Masbate Gold Project ore from FRC at a price equal to the cost for the ore plus a predetermined percentage, while maintaining joint financial and legal liability for the social and environmental obligations under Philippine law.

There is no royalty payable on the MGP, however a 2% excise tax on gross gold and silver sales is payable annually to the Philippine government under the MPSA regulatory framework, and a 1.5% tax on operating cost as a required expenditure for social development of host communities.

The Philippines is a highly regulated environment and there are a significant number of permits required. These permits are issued for varying periods and need to be regularly renewed. Although B2Gold has a dedicated permitting team that constantly monitors progress, the Company is also reliant on the various regulatory bodies issuing the required permits.

Masbate Mine Reserves & Resources Estimates

Probable Mineral Reserves as of December 31, 2015 1,2,3,4,5,6,7,8,9

Region Tonnes Grade g/t Au Ounces
Au
Kg
Au
Masbate South 50,580,000 0.99 1,609,000 50,000
Masbate North 17,490,000 1.02 574,000 17,900
Run-of-Mine Stockpiles 410,000 1.03 13,000 400
Low Grade Stockpiles 25,510,000 0.57 463,000 14,400
Total Indicated Mineral Resources 93,990,000 0.88 2,660,000 82,700
Footnotes (Click to expand)

Notes:

  1. Gold Price = $1,200 per ounce.
  2. Mining dilution of 10% applied at a grade of 0.12 to 0.22 g/t gold.
  3. Mining recovery = 100% (no ore loss).
  4. Cut off grades are based on variable processing and mining costs.
  5. Metallurgical recovery based on modeled recovery in resource block model.
  6. Mineral Reserve numbers are rounded to reflect the accuracy of the estimate and numbers may not add due to rounding.
  7. Stockpile estimates were tabulated by personnel at the respective mine site. Ore stockpile balances are derived from mining truck movements to individual stockpiles or detailed surveys, with grade estimated from routine grade control methods.
  8. The Mineral Reserve estimates for the Masbate Gold Project were compiled and verified under the supervision of Kevin Pemberton, P.E. (Florida, USA), our Chief Mine Planning Engineer, and a Qualified Person.
  9. Pursuant to the ore sales and purchase agreement between FRC and PGPRC, our wholly-owned subsidiary, PGPRC has the right to purchase all ore from the Masbate Gold Project and as such, the Mineral Reserve estimates above reflect 100% of the estimated Mineral Reserves for the Masbate Gold Project. Probable Reserves include reserves located in the MPSA held by Vicar, for which an Operating Agreement has been applied and there is a reasonable expectation will be approved by the Philippine government.

Indicated Mineral Resources as of December 31, 20151,2,3,4,5,6,7, 8

Region Tonnes Grade g/t Au Ounces
Au
Kg
Au
Masbate South 80,090,000 0.98 2,520,000 78,400
Masbate North 27,170,000 0.96 836,000 26,000
Run-of-Mine Stockpiles 410,000 1.03 13,000 400
Low Grade Stockpiles 25,510,000 0.57 463,000 14,400
Total Indicated Mineral Resources 133,190,000 0.90 3,833,000 119,200

Inferred Mineral Resources as of December 31, 20151,2,3,4,5,6,7,8

Region Tonnes Grade g/t Au Ounces
Au
Kg
Au
Masbate South 6,940,000 0.86 192,000 6,000
Masbate North 3,900,000 0.80 100,000 3,100
Total Inferred Mineral Resources 10,830,000 0.84 292,000 9,100
Footnotes (Click to expand)

Notes:

  1. Mineral Resources are reported inclusive of Mineral Reserves.
  2. Mineral Resources are reported above a cut-off grade of 0.31 g/t gold and are constrained within a pit shell using a gold price of $1,400 per ounce and current costs and metallurgical recoveries.
  3. Stockpile estimates were tabulated by personnel at the mine site. Ore stockpile balances are derived from detailed survey pickups and volume is calculated for individual stockpiles, with grade estimated from routine grade control methods.
  4. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.
  5. Due to the uncertainty that may be attached to Inferred Mineral Resources, it cannot be assumed that all or any part of an Inferred Mineral Resource will be upgraded to an Indicated or Measured Mineral Resource category as a result of ongoing exploration.
  6. Mineral Resource numbers are rounded to reflect the accuracy of the estimate and numbers may not add due to rounding.
  7. Mineral Resource estimates for the Masbate Gold Project were prepared under the supervision of Tom Garagan, P.Geo., our Senior Vice President of Exploration, and a Qualified Person.
  8. Pursuant to the ore sales and purchase agreement between FRC and PGPRC, our wholly-owned subsidiary, PGPRC has the right to purchase all ore from the Masbate Gold Project, and as such, the Mineral Resources are reported at 100% interest.

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