David Erfle – Gold Market Commentary – Tue 2 Jul, 2019

Two Significant News Events In the Gold Space – A Bidding War and A $100Millon Mining Deal

David Erfle, Founder of The Junior Miner Junky joins me to outline two news events that are a good sign for the overall gold market. We start with the bidding war that is underway for Alexandria Minerals. While Alexandria was a poorly run Company the asset is attractive, which is why we are seeing O3 Mining and Agnico in a bidding war. Next is the news out of B2Gold and Calibre Mining regarding a deal for the El Limon and La Libertad Gold Mines. Click here to read the full news release… We weigh in on our thoughts on the deal.

Click here to visit David’s site and find out more about his newsletter. It is very much worth your time if you invest in junior mining stocks.

B2Gold says not trying to buy Zimbabwe gold project

Mid-tier Canadian miner B2Gold (TSX:BTO)(NYSE: BTG) on Friday dismissed reports indicating it was mulling the acquisition of an idled gold mine in Zimbabwe, emphasizing it was not currently interested in any mergers or acquisitions.

Chief executive, Clive Johnson, reiterated B2Gold’s long-term growth strategy by saying that in addition to developing its existing pipeline of projects, the company continued to seek global exploration opportunities.

“Spread the word – no M&A from us,” Johnson told analysts on the miner’s earnings call on May 8, when reported total gold of 230,859 ounces, about 6% above plan. “We’re not going to pay for ounces,” he added.

“Spread the word: no M&A from us.” — Chief executive, Clive Johnson.

Bloomberg News reported on May 23 that the Vancouver-based wanted to add Metallon Corp.’s  Shamva gold mine to its portfolio. The article added that B2Gold would bid if it were exempted from a law in Zimbabwe that requires producers to sell all the metal to the country’s central bank.

The country’s two main miners – Metallon and RioZim – are suing the central bank over its payment arrangements. Gold miners are required by law to sell their output to Fidelity Printers, an arm of the Reserve Bank, which then pays them back partly in dollars and partly in local quasi-currency that cannot be traded outside of Zimbabwe.

Mining is the biggest source of foreign exchange for Zimbabwe, which has the world’s largest platinum reserves after South Africa. It also known for its diamonds, though alluvial deposits are almost depleted, and it's said to have eight out of nine “rare earth” minerals and a processing capacity for gold, diamond and chrome.

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B2Gold to produce 5m ounces of gold at Mali mine after $50m expansion

Mid-tier Canadian miner B2Gold (TSX:BTO)(NYSE: BTG) will invest $50 million into expanding its 80%-owned Fekola mine in southwestern Mali, which would allow the operation churn out 5 million ounces of gold over the new mine life of 12 years.

Average annual gold output would increase to more than 550,000 ounces in the five-year period 2020 – 2024, and over 400,000 ounces during the remaining seven years.

The project could also take the operation’s processing throughput to 7.5-million tonnes a year, up from the current 6-million tonne throughput.

Average annual gold output would increase to more than 550,000 ounces in the five-year period 2020 – 2024.

The decision comes as the results of a preliminary expansion assessment (PEA), published on May 10, recommended extending the mine’s fleet and upgrading the existing plant to process an additional 1.5-million tonnes a year.

Vancouver-based B2Gold, which poured first gold at Fekola in late 2017, said half of the total capital needed will be spent in this year with the remaining half in 2020. It also said it expected to recover the full investment in less than a year.

In 2018, its first full year of commercial production, Fekola exceeded expectations, producing 439,068 ounces of gold, while B2Gold expected a maximum of 430,000 ounces.

B2Gold said it continued to further optimize the PEA and expected to incorporate those results into an updated study, which will be available in the final quarter of the year.

Fekola is located near Mali’s border with Senegal, and about 520 km from the country’s capital, Bamako. The country’s government owns the reminding 20%.

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RANKED: Top 10 lowest cost gold mines on the globe

In 2018, global gold mining companies' average all-in sustaining costs (AISC) fell 6% across the board as miners reacted to a gold price in steady decline for most of the year.

The AISC metric serve as a benchmark of a mine’s operating efficiency. They provide a more comprehensive look at mine economics than the traditional "cash costs" approach that many companies may interpret arbitrarily – and it includes important expenses such as overhead outlays and capital used in ongoing exploration, mine development and production.

Mining Intelligence, a MINING.com sister company, looked at costs at primary gold mines and ranked them based on AISC. Primary gold operations are defined by Mining Intelligence as “mines where gold contributed to 80% or more of revenues from operating activities generated last year.”

The data used by Mining Intelligence represents companies reporting quarterly production and listed on the following stock exchanges: TSX (+TSX-V), ASX, LSE (+LSE-AIM), NYSE, and JSE. The ranking excludes privately-owned mines, tailings, re-processing operations, mines where the precious metal is produced as a by-product, and operations where companies report gold-equivalent output.


Falling out of the top ten list compiled by Mining Intelligence in 2018 are two Barrick mines that were on the Mining Intelligence list compiled in 2018: Lagunas Norte in Peru, where costs have gone up from $483 to $636/oz, and Pueblo Viejo, in the Dominican Republic, where costs rose from $525 to $623/oz. The Barrick mines made way for two recently commissioned mines: B2Gold's Fekola mine in Mali, and Atlantic Gold's Moose River mine in Nova Scotia.

1 Svetloye – $425/oz

Svetloye mine. Image from Polymetals.

Polymetal’s Svetloye mine is an open-pit gold operation that located in the far east region of Russia. Despite the remote location and lack of infrastructure, high-grade ores and heap-leaching technology help this mine to produce gold at the lowest costs possible.

2 Fosterville – $442/oz

Fosterville mine. Image from Kirkland Gold.

Fosterville is the largest gold producer in the state of Victoria, Australia. The underground mine is owned by Toronto-based Kirkland Lake Gold. Production in 2018 totalled 356,230 ounces. Recently the company raised the production guidance to 550,000-610,000 ounces for 2019-2020, up from the previous guidance of 390,000–430,000 ounces.

3 Olimpiada – $468/oz

Olimpiada mine. Image from Polyus.

Located in one of Russia’s most prolific gold mining provinces, Olimpiada is Polyus’ largest operation.To treat Olimpiada’s sulphide ores, Polyus employs BIONORD, the company’s proprietary bio-oxidation technology. Successful exploration activities in the area indicate the potential for substantial extension of the life of this mine.

4 Voro – $477/oz

Voro mine. Image from Polymetal.

Voro is one of Polymetal's very first key gold assets, acquired in 1998. The mine and processing facility is located in the Sverdlovsk region of Russia. The open-pit and heap leach operation started in 2000 and has another nine years of life.

5 South Arturo – $478/oz

South Arturo mine. Image from Premier Gold Mines.

The South Arturo open-pit gold mine in Nevada is a high-grade oxide deposit amenable for highly efficient heap leaching mineral processing and extraction technology. This deposit is of the prominent Carlin-type widely known as being one of the most productive and cost efficient geological formations worldwide. Premier Gold Mines holds a 40% interest in the South Arturo property with Barrick owning the remaining 60%. Barrick processes South Arturo ore at its Goldstrike plant 5 km south of the mine.

6 Long Canyon – $505/oz

Long Canyon mine. Image from Newmont.

Newmont’s Long Canyon open-pit mine is of the same mineralization style as the South Arturo deposit, and the only significant discovery made in Nevada in the last decade. The nature of the deposit, application of a heap leach technology and tapping into existing infrastructure keep costs at Long Canyon at some of the lowest levels in the industry.

7 Fekola – $533/oz

Fekola mine. Image from B2Gold.

B2Gold first acquired the world-class Fekola gold project in Mali through a merger with Papillon Resources back in 2014. First gold pour at the Fekola mine took place three years later. The company recently decided, based on a positive PEA study, to invest $50 million into expanding the mine's capacity.

8 Cerro Negro – $535/oz

Goldcorp’s Cerro Negro mine.

Sitting 600 metres above sea level on the Patagonian plains in southern Argentina, Goldcorp’s Cerro Negro underground mine has 4.86 million ounces in proven and probable gold reserves. Commercial production began on January 1, 2015.

9 Blagodatnoye – $547/oz

Blagodatnoye mine. Image from Polyus.

Polyus commissioned Blagodatnoye in Krasnoyarsk, eastern Siberia in July 2010. Processing capacity at the open pit, located 25 km from the Moscow-based company's flagship Olimpiada mine, is 8.1 million tonnes of ore per year, which makes it one of the largest facilities of its kind in Russia.

10 Moose River – $564/oz

Atlantic Gold's Moose River mine.

Atlantic Gold’s Moose River open-pit mine is located in Nova Scotia that has a long history of gold mining. Commercial production was declared in March 2018, and in the first year production reached 90,500 ounces. Atlantic expects its phase two expansion plans will have gold production ramping up to more than 200,000 ounces per annum.

(Based on research compiled by Vladimir Basov of Mining Intelligence)

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B2Gold goes ahead with $50 million expansion of Fekola mine

Mid-tier Canadian miner B2Gold (TSX:BTO)(NYSE: BTG) will invest $50 million expanding its 80%-owned Fekola mine in southwestern Mali, which could take the operation’s gold output to 7.5-million tonnes a year from the current 6-million tonnes.

The decision comes as the results of a preliminary expansion assessment (PEA), published on Wednesday, recommended an expansion of the existing plant to process an additional 1.5-million tonnes a year, without requiring an extra ball mill or additional power generation capacity.

The Vancouver-based company, which poured first gold at Fekola in the last quarter of 2017, said that as result of the expansion the mine will produce more gold over a longer life. It will also have “more robust economics and higher average annual gold production, revenues and cash flows than the previous life of mine,” it said in a statement.

In 2018, its first full year of commercial production, Fekola exceeded expectations, churning out 439,068 ounces of gold, while B2Gold expected a maximum of 430,000 ounces.

Utilizing additional resources discovered in October, the mine could produce 550,000 ounces a year between 2020 and 2024 and 400,000 ounces between now and 2030, B2Gold said.

The PEA also predicts an increase in the net present value of Fekola of some $500 million and forecast life of mine pre-tax net cash flow of about $2.8 billion. The revised life of mine operating cash cost and all-in sustaining cost (AISC) would be between $500 and $700 per ounce respectively.

B2Gold  said it was also assessing various optimization alternatives, including processing gold-bearing ore from the company’s Anaconda project, which is situated north of Fekola, as well as installing solar power at the Fekola premises and “… various tailings and waste disposal strategies”.

This process would continue through the second quarter of this year and would be incorporated into a revised Fekola life of mine plan, which is expected to be available early next year.

Fekola is located near Mali’s border with Senegal, and about 520 km from the country’s capital, Bamako. The country’s government owns the reminding 20%.

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B2Gold hits record gold output in 2018 thanks to new Mali mine

Mid-tier Canadian miner B2Gold (TSX:BTO)(NYSE: BTG) reported Wednesday record gold production in 2018 of 953,504 ounces, a figure the company says was near the top end of the revised guidance of between 920,000 and 960,000 ounces.

This is the 10th consecutive year the Vancouver-based miner achieves record annual production, with output this time climbing 51% thanks to the contribution of its 80%-owned Fekola mine in southwestern Mali.

This is the 10th consecutive year the Vancouver-based miner achieves record annual production, with output this time climbing 51%.

Full-year consolidated gold revenue totalled $1.2 billion ore 92% more than in 2017, marking a new company record.

In its first full year of commercial production, Fekola exceeded expectations, as it produced 439,068 ounces, while B2Gold  expected a maximum of 430,000 ounces.

The company’s Masbate mine in the Philippines also topped guidance, achieving record yearly gold production of 216,498 ounces.

B2Gold’s other African asset, the Otjikoto in Namibia, produced 167,346 ounces, reaching the mid-point of its production guidance range.

For 2019, the miner forecasts gold production of between 935,000 and 975,000 ounces at all-in sustaining costs estimated at between $835 and $875 per ounce.

The company noted it planned a year of aggressive exploration,  with a budget of approximately $43 million, from which almost half will be spent in Mali, Burkina Faso and Ghana.

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