Vancouver-headquartered B2Gold is mulling an expansion at the El Limon mine, announcing on Monday that it is considering a $35-million investment to increase production at the Nicaragua-based mine.

B2Gold has concluded an expansion study, which indicates that increasing plant capacity from 485 000 t/y to 600 000 t/y and adding a third stage of milling to achieve a fine grind will result in a much longer mine life, with higher gold production and lower costs.

The company embarked on the expansion study following the discovery of the El Limon Central zone, which will provide long-term openpit feed to blend with underground ore.

The El Limon Central zone has a mineral resource of 5.13-million tonnes at a grade of 4.92 g/t, containing 812 000 oz of gold. Combined with the inferred mineral resources from underground, the study focused on about six-million tonnes at a grade of 4.3 g/t, containing about 829 000 oz.

B2Gold expects about 60% of the plant feed to come from openpits which have an overall strip ratio in the range of 16 t of waste to 1 t of mill feed. At the end of the mine life, plant feed is expected to come from the old tailings at a rate of 600 000 t/y. 

The mineral resources from openpit and underground sources will provide a ten-year mine life and the processing of historic mine tailings – made possible by the third stage of milling – will result in an additional 11 years of mining.

The study estimates that yearly production will increase to about 75 000 oz/y in the ten years of underground and openpit mining and that an average of 18 000 oz/y of gold could be processed from tailings thereafter. Combined, El Limon will deliver about 985 000 oz of gold over 21 years.

The expanded mine will operate at direct cash operating costs below $600/oz and projected all-in sustaining costs (AISC) will reduce to about $900/oz.

In the second quarter of 2018, the El Limon mine produced 11 109 oz of gold at a cash operating cost of $893/oz and an AISC of $1 614/oz. The mine is forecast to produce between 50 000 oz and 55 000 oz in 2018.

The expansion study forecasts an after-tax net present value of more than $135-million at a 5% discount rate and a gold price of $1 300/oz, generates an after-tax internal rate of return of about 28%.