B2Gold Corp has completed a new mineral reserve estimate for the operating Masbate Gold Project on Masbate Island which is 7.5% greater than the previous estimate at a significantly improved grade of 0.97 grams/tonne gold, compared to 0.82 grams/tonne.
The new estimate is based on the existing mineral resource model as of December 31, 2012. Reserves were calculated using current site operating costs, revised metallurgical recoveries and a gold price of $1350 per ounce. The mineral reserve is now estimated to contain 3.2 million ounces.
The company has completed an additional 95 exploration and resource diamond drill holes for a total of approximately 15,000 metres and an additional 77 mine related diamond drill holes for a total of 9000 metres since its acquisition of the Masbate mine in January 2013.
Drill results are being collated and a new resource report incorporating those results is expected to be available by early 2014 and mineral reserves are expected to be updated by mid-2014, which could potentially increase the revised reserves.
An aggressive 2013 exploration program totalling $10.5 million is under way with eight drill rigs working. The Masbate project is a low sulphidation epithermal vein system with a tenement which covers 16km of very prospective ground with well-defined vein systems. The 2013 exploration program comprises reserve/resource drilling on numerous mine veins including Main Vein, Colorado, Panique and Montana as well as exploration drilling designed to outline new resources on near mine veins outside of the current reserve/resource such as Pajo and the high grade Montana North vein.
In addition to drilling, geochemical sampling and follow-up trenching will be carried out on a number of priority target areas outside of the current resource.
Gold production at Masbate for the second quarter was 38,323 ounces. The mine produced a total of 81,694 ounces in the first half of 2013 of which 74,790 ounces are included in the results of B2Gold. The company acquired the mine on January 16 with production totalling 6904 ounces recorded in the pre-acquisition period from January 1 to January 15.
Second quarter gold production was less than budgeted due to a temporary suspension of mining operations in June 2013 to replace a process pipeline. This production loss is expected to be offset by a modification of the mining sequence that had been in development prior to this event, centred on the Colorado Pit.
Overall, Masbate production for the 2013 financial year is expected to meet the upper end of the company's previously issued guidance range of 175,000 to 185,000 ounces. Masbate mine operating cash costs for the quarter and six months ended June 30, 2013 were $809 per ounce and $827 per ounce respectively, a significant improvement over budgeted costs of $850 per ounce for the quarter and $842 per ounce for the six months to June 30, 2013. The improvement is as a result of changes in the mining sequence as well as cost containment measures implemented at the Masbate site.
Forecast Masbate operating cash costs for the second half of 2013 have improved to $725-$760 per ounce from previous estimates of $820-$875. The decrease in cash operating costs is primarily due to better recoveries than originally forecast and an improvement in processed ore grade.
In 2014, the mine is forecast to produce between 190,000 and 200,000 ounces with a cash operating cost of $785 to $815 per ounce. The SAG mill change out will be deferred to 2014 which will allow the mill installation to be coordinated with the delivery of larger motors, while serving to maximize ounce production toward the high end of the production range for 2013.
Annual plant capacity will rise slightly after the SAG change out in the second quarter of 2014, to 6.85 million tonnes, compared to current capacity of 6.5 million tonnes. Slightly better grade and improved recoveries, as a result of a higher proportion of oxide sourcing, will also contribute to improved performance. A mill expansion study is under way but no decision on this will be made until at least the first quarter of 2014.
Read more about B2Gold’s Masbate project and other Philippines mining projects in the current issue of The ASIA Miner – visit www.asiaminer.com