In a posting on B2Gold’s website, the company said the decision to shelve the project followed a revisit of Gramalote’s original project design parameters and further optimized design, a review of drilling of indicated and inferred sections of the mineral resource area, and updated capital and operating costs.
“On a global scale, cost inflation has resulted in estimated capital cost increases of approximately 12%, coupled with uncertain long-term operating costs,” B2Gold said. “More detailed resource modelling indicates that the grade-tonnage characteristics of the orebody resulted in lower than expected processing head grade and annual ounce production, specifically within the first five years of production, including the payback period.”
The updated information pushed the project’s net present value (NPV) and internal rate of return (IRR) below the companies’ investment thresholds, although specific figures were not released.
The miner noted however, that Gramalote has positive attributes, including a low strip ratio, low processing costs and good relationships with local and regional stakeholders.
The announcement came just days before Colombia’s new leftist president Gustavo Petro was sworn into office on Aug. 7. Petro, a former mayor of Bogota who was also a guerilla with the left-wing M-19 rebel group in the late 1970s and ‘80s, beat conservative rivals in June elections.
His platform focused on reducing poverty, protecting the environment, leaving coal and oil reserves in the ground and building a decarbonized economy. He has pledged to ban large-scale open-pit mining.
A December 31, 2021 resource update pegged indicated resources at Gramalote at 173.4 million tonnes of gold at 0.73 gram gold per tonne for 4 million contained oz. of gold on a 100% basis.
Inferred resources come to 58.2 million tonnes at 0.59 gram gold per tonne for 1.1 million contained oz. of gold.
