B2Gold’s Fekola Mine in Mali has continued its strong operational performance through the second quarter of 2021, producing 113,611 oz of gold, 3% (3,611 oz) above budget, as the Fekola processing facilities continued to outperform following the successful completion of the Fekola mill expansion in September 2020.
In the second quarter of 2021, Fekola’s mill throughput was a quarterly record of 2.29 Mt, 16% above budget and 47% higher than the second quarter of 2020. The higher than budgeted mill throughput was due to favourable ore fragmentation and hardness, as well as optimization of the grinding circuit, partially offset by mill feed grade which was 10% below budget in the second quarter of 2021, as Fekola’s low-grade stockpiles were used to provide additional unbudgeted mill feed required as a result of the higher than budgeted processed tonnes.
As expected, compared to the second quarter of 2020, gold production was lower by 23% (33,813 oz) as a result of the higher waste stripping and lower mined ore grades in the second quarter of 2021, as Phases 5 and 6 of the Fekola Pit were developed during the first half of 2021.
For the second quarter of 2021, mill feed grade was 1.65 grams per tonne (“g/t”) compared to budget of 1.84 g/t and 3.11 g/t in the second quarter of 2020; mill throughput was 2.29 million tonnes compared to budget of 1.98 million tonnes and 1.56 Mt in the second quarter of 2020; and gold recovery averaged 93.2% compared to budget of 94.0% and 94.8% in the second quarter of 2020. Mined ore tonnage and grade continue to reconcile well with the Fekola resource model, and ore production is expected to significantly increase in the second half of 2021 when mining reaches the higher-grade zones of the Fekola Pit.
The Fekola mill has the potential to sustain an annualized throughput rate which is higher than the original assumed mill expansion throughput rate of 7.5 million tonnes per annum (“Mtpa”). Mill processing trials conducted in the fourth quarter of 2020 demonstrated the potential to optimize the grind-throughput capacity of the expanded facility and increase hard-rock throughput and support the addition of saprolite ore tonnage in excess of the hard-rock capacity.
Based on the positive results noted to date through to the second quarter of 2021, Fekola’s annualized throughput rate is now expected to average 8.3 Mtpa for 2021 and average approximately 8.5 Mtpa (over the long-term), based on an ore blend including fresh rock and saprolite. For 2021 budgeting purposes, the Company assumed a throughput rate of 7.75 Mtpa.
Production planning for the nearby Cardinal inferred resource area, located within 500 metres of the current Fekola resource pit, is currently underway (the initial Inferred Mineral Resource estimate for Cardinal is 640,000 ounces of gold in 13.0 million tonnes of ore at 1.54 g/t gold). Grade control drilling at Cardinal was completed in the second quarter of 2021, and a 10,000-tonne bulk sample was mined and processed. Results indicate that the Cardinal material can be processed at Fekola. An Environmental and Social Impact Assessment has been completed and submitted to the Malian authorities. The Company is in the process of updating the Fekola Mine Plan to include production from Cardinal which is expected to commence in the third quarter of 2021.
For the second quarter of 2021, Fekola’s cash operating costs were $617 per ounce produced ($606 per ounce sold), above budget by $73 per ounce produced (13%), due to higher than budgeted processing costs (related to the unbudgeted mill throughput of low-grade stockpile material) and fuel prices, and increased operational waste (due to lower than budgeted strip ratios). In addition, camp and medical costs were also higher than budget as the Company continues to manage COVID-19 related risks and maintain safe operations.
As expected, Fekola’s cash operating costs were higher in the second quarter of 2021 compared to $300 per ounce produced ($271 per ounce sold) in the second quarter of 2020, mainly due to the planned lower gold production and higher period stripping activities (as discussed above). Fekola’s AISC for the second quarter of 2021 were $854 per ounce sold (Q2 2020 – $562 per ounce sold), in-line with budget, as higher than budgeted realized gains on fuel derivatives, lower than budgeted sustaining capital expenditures (mainly due to lower than budgeted pre-stripping costs) and higher than budgeted gold ounces sold offset higher than budgeted cash operating costs as discussed above.
For the first half of 2021, the Fekola Mine produced 238,699 ounces of gold, well above budget by 5% (11,699 ounces), and 23% (72,736 ounces) lower than the first half of 2020 (for the reasons outlined above).
For the first half of 2021, Fekola’s cash operating costs were $557 per ounce produced ($541 per gold ounce sold), in-line with budget and higher than $274 per ounce produced ($278 per ounce sold) in the first half of 2020 (for the reasons outlined above). Fekola’s AISC for the first half of 2021 were $811 per ounce sold (first half of 2020 – $542 per ounce sold), well below budget by $61 per ounce sold (7%), as a result of higher than budgeted gold ounces sold, higher than budgeted realized gains on fuel derivatives, lower than budgeted sustaining capital expenditures (mainly due to lower than budgeted pre-stripping costs and mobile equipment rebuilds) and lower than budgeted community relations costs, partially offset by higher than budgeted royalties. The lower than budgeted sustaining capital expenditures are mainly a result of timing of expenditures and are expected to be incurred later in 2021.
Capital expenditures in the second quarter of 2021 totaled $9 million, primarily consisting of $2 million for the solar plant, $2 million for pre-stripping, $1 million for mine infrastructure and $1 million for the development of Cardinal. Capital expenditures in the first half of 2021 totaled $26 million, primarily consisting of $8 million for the solar plant, $7 million for pre-stripping, $4 million for mine infrastructure and $2 million for the development of Cardinal.
For full-year 2021, the Fekola Mine remains on track to meet or exceed the upper end of its forecast production range of between 530,000 – 560,000 ounces of gold at cash operating costs of between $405 – $445 per ounce and AISC of between $745 – $785 per ounce. Additional mining from the Cardinal inferred resource area and the higher than budgeted processing capacity experienced to date at the Fekola mill (as discussed above) have the potential to increase Fekola’s budgeted 2021 and longer-term gold production. No adjustment to Fekola’s 2021 guidance range has currently been made while the Company continues to evaluate the potential upside impact of these factors for the balance of 2021.
As a result of the planned higher waste stripping completed and lower mined ore grades realized in the first half of 2021 (as Phase 5 and 6 of the Fekola Pit were being developed), production is expected to be significantly weighted to the second half of 2021 (when mining reaches the higher grade portion of Phase 5 of the Fekola Pit). For the second half of 2021, Fekola’s gold production is expected to increase significantly to between 310,000 – 330,000 ounces and cash operating costs are expected to significantly improve to between $315 – $355 per ounce and AISC to between $670 – $710 per ounce (based mainly on the weighting of the planned production and timing of higher waste stripping).
Fekola Solar Plant
Following the temporary suspension of the solar plant construction activities in April 2020 due to COVID-19 restrictions, and a fire in the solar storage yard in January 2021, construction of the Fekola solar plant is now complete. A small crew will remain on site until mid-August 2021 to ensure that all final commissioning tasks and warranty issues are properly executed. With the solar plant now 100% online, it is expected to reduce Fekola’s HFO consumption by over 13 million litres per year and lower carbon dioxide emissions by an estimated 39,000 tonnes per year. Solar production to date indicates that the plant will exceed initial power production estimates.