While B2Gold's evaluations team has been busy with their purchase of Papillon Resources for $570 million worth of stock, the team at the company's newest gold mine, Otjikoto, continues to bring the project closer to first gold by year-end. This morning, B2Gold provided investors with the latest drilling results from the high-grade Wolfshag zone which continues to deliver above average gold intercepts and also provided an update on the construction activities at the project.
The Otjikoto pit has a reserve grade of 1.42g/t gold for its milling operation. However, the Wolfshag zone (which already hosts 6.8Mt at 3.21g/t containing 703,000 ounces of inferred gold) continues to deliver grades over significant widths well above that providing the opportunity to dramatically improve life-of-mine head-grades and operating costs at Otjikoto.
Highlights from the latest group of infill drill holes include:
- WH14-162, with 29.65 metres at 9.53 g/t gold, including 15.30 metres at 17.34 g/t gold;
- WH14-171, with 19.95 metres at 11.78 g/t gold, including 10.80 metres at 20.58 g/t gold;
- WH14-135, with 15.00 metres at 7.43 g/t gold, including 7.62 metres at 12.91 g/t gold;
According to B2Gold. drill hole WH14-162 represents the best hole to date in the northernmost portion of the Wolfshag zone and is remarkable in the continuity of high-grade sample values within the zone.
Mr. Johnson and company have budgeted $8 million as part of their campaign to convert inferred ounces into more conservative measured and indicated ounces with plans to update the resource estimate there this year. To date, the company has drilled 63 holes totaling 13,230m on 25m spacings over 50m section lines.
The Wolfshag zone continues to intrigue the company, investors and analysts alike. It offers materially higher-grade ore within kilometers of the processing facilities which could easily be fed through an expanded mill to increase the overall head-grade of the project as well as reduce per ounce costs over the life-of-mine.
Currently, ounces from Wolfshag are not included in the public Otjikoto mine plan (although I'm sure the team at B2Gold has the Wolfshag zone incorporated).
The company also provided an update on the construction of Otjikoto which is to be B2Gold's newest gold mine with production starting by the end of this year. According to the company, the Namibian project is nearly complete. Concrete work is 90% complete and millwrights are installing the crushing and milling circuits.
The company is also mining and stockpiling ore while the tailings pond continues to collect water ahead of the end of year start up.
Otjikoto is expected to add 140,000 ounces of annual gold production in 2015 and 170,000 in 2016-2017. With the potential fold in of Papillon's Fekola project, B2Gold could be producing just shy of 1 million ounces of gold (925,000 ounces) by 2017 which would more than double its current production. B2Gold is guiding 395-420,000 ounces of gold production this year at all-in sustaining cash costs per ounce of $1,025-$1,125.
Since 2012, B2Gold and the GDX (Gold Miners Index) have decoupled with shares of B2Gold outperforming the index by a substantial margin:
The company has a number of upcoming catalysts, including:
- Updated Masbate resource estimate (H2/2014)
- Closing of Papillon acquisition (Q3/2014)
- Expansion study results for Masbate (Q4/2014)
- Updated resource estimate at Wolfshag (Q4/2014)
- First gold pour at Otjikoto (Year-end 2014)