Otjikoto defers N$70m Wolfshag costs

By Hilary Mare

B2 GOLD’S Otjikoto gold mine has been forced by Covid-19 to defer mine development costs of up to N$70 million that were due to be spent in the development of the Wolfshag underground mine which its board approved last December.

The capital costs will now only be required in 2021 owing to implementation delays induced by Covid-19, Clive Johnson, president and Chief Executive Officer of B2 Gold said last week.

Confidente understands that the initial underground mineral reserve estimate for the down-plunge extension of the Wolfshag ore body includes 210 000 ounces of gold in 1.2 million tonnes of ore.

“During the first half of 2020, engineering of the underground mine continued and in the second quarter of 2020 an underground mining contractor was appointed for the development of the underground workings up to the production stopes. Development of the portal and primary ramp is expected to commence in the fourth quarter of 2020 and stope ore production is expected to commence in early 2022, in line with original estimates,” Johnson explained.

In its financial report released last week, the Otjikoto mine had a solid second quarter of 2020, producing 43 496 ounces of gold, three percent (1 342 ounces) above budget, as processed tonnes and recoveries were slightly better than budget.

Compared to the second quarter of 2019, gold production was significantly higher by 16 percent (6 075 ounces), due to higher grade ore from the Wolfshag pit (ore production from the pit resumed in the second half of 2019 following pre-stripping).

“Capital expenditures in the second quarter of 2020 totalled US$11 million, including US$8 million for pre-stripping (in the Otjikoto Phase 3 and Wolfshag phase 3 pits) and US$2 million for mobile equipment rebuilds and replacements. Capital expenditures in the first half of 2020 totalled US$23 million, including US$18 million for pre-stripping and US$3 million for mobile equipment rebuilds and replacements,” Johnson said.

During the second quarter of 2020, the Otjikoto mine processed 0.87 million tonnes (compared to budget of 0.85 million tonnes and 0.87 million tonnes in the second quarter of 2019) at an average grade of 1.58 grams per tonne (g/t) and average gold recoveries of 98.6 percent.

For the second quarter of 2020, Otjikoto’s cash operating costs were US$421 per ounce produced (US$418 per ounce sold); well-below budget by US$64 per ounce produced (13 percent) and significantly lower than the second quarter of 2019 by US$133 per ounce produced (24 percent).

“This resulted mainly from higher gold production, lower fuel prices and a weaker Namibian dollar in the second quarter (compared to both budget and the second quarter of 2019),” Johnson further stated.

For full-year 2020, the Otjikoto mine is forecast to produce between 165 000 and 175 000 ounces of gold, from the Otjikoto and Wolfshag pits, at cash operating costs of between US$480 and US$520 per ounce.