International gold producer B2Gold on Monday released a feasibility study for its Gramalote gold project in Colombia, projecting an after-tax net present value (NPV) of $1.72-billion and an internal rate of return (IRR) of 33.5% at current spot gold prices of $3 300/oz.

At a base case price of $2 500/oz, the project delivers an after-tax NPV of $941-million and IRR of 22.4%, the Vancouver-based miner said in a statement.

The openpit mine would produce an estimated 2.3-million ounces of gold over 13 years, with yearly output averaging 227 000 oz in the first five years.

B2Gold said the Gramalote project would require an initial construction capital investment of $740-million, including $73-million for mining equipment and an $81-million contingency. B2Gold estimates a payback period of 3.4 years at $2 500 gold, shrinking to 2.4 years at spot.

AngloGold Ashanti exited the project joint venture about two years ago after an optimised feasiblity study for a larger operation did not meet either company’s investment threshold for development. B2Gold then proceeded to a medium-scale, low operating cost project. 

Gramalote has projected all-in sustaining costs of $985/oz over the life of the project and an average recovery rate of 95.7% using conventional milling, flotation, and cyanide leaching.

The feasibility study, effective April 1, outlines a six-million-tonne-a-year processing rate and envisions a mine plan supported by 76.7-million tonnes of probable reserves grading 0.96 g/t, equivalent to 2.36-million ounces of contained gold.

B2Gold has received strong support from local communities and the Colombian government. While major environmental and mining permits are already in place from an earlier large-scale project plan, modifications will be needed to reflect the medium-scale design. The company expects the permit amendment process to take 12 to 18 months.

In preparation for potential construction, B2Gold is progressing with a resettlement programme, coexistence plans for artisanal miners, and local social and environmental initiatives. “The Gramalote project will continue to advance resettlement programmes, establish coexistence programmes for small miners, work on health, safety and environmental projects and continue to work with the government and local communities on social programmes,” the company said.

If greenlit, B2Gold intends to deploy its in-house mine construction team to build the mine and mill facilities.