B2Gold Corp. (TSX: BTO) has provided a detailed update on its Goose Project in Nunavut, Canada, highlighting that the development is progressing as scheduled, with a key milestone set for mid-2025: the first gold pour.
This project, located within the Back River Gold District, is a major undertaking for the company, with expectations of contributing significantly to its annual gold production once operational.
The Goose Project has made substantial headway throughout 2024, with construction on track for the first gold production by the second quarter of 2025. This will be followed by a ramp-up to full commercial production by the third quarter of the same year. Once operational, the Goose mine is expected to produce approximately 310,000 ounces of gold annually during its first five years, establishing it as a cornerstone of B2Gold’s long-term production strategy.
“All planned construction for 2024 has been completed, and project construction and development continue to progress on schedule,” the company said.
Among the major accomplishments is the installation of Phase 2 of the Goose Project’s accommodation complex, which expanded the site’s camp capacity to over 600 beds, as well as the construction of three additional fuel storage tanks that will ensure the mine’s operations are well-supported in this remote northern location.
A newly constructed barge ramp at the Marine Laydown Area (MLA) boosted the offloading performance, with seven supply vessels having arrived by early September. Three of those vessels have already completed their deliveries and departed ahead of schedule, marking a key achievement for the project’s critical supply chain.
Rising costs and project adjustments
While progress has been steady, the Goose Project has encountered cost overruns. B2Gold’s total estimated construction, development, and sustaining capital costs before first gold production are now projected at $1.54 billion, a $290 million (or 23%) increase from previous estimates. Much of this rise is attributed to delays and the acceleration of capital expenditures originally planned for post-production.
Approximately 52% (or $150 million) of this cost increase is due to a previously disclosed one-quarter delay in reaching first gold production. Additionally, B2Gold chose to fast-track certain critical capital items, such as mining equipment and infrastructure at the Goose site, to ensure the operation’s reliability once the mill starts. The company anticipates this upfront spending will “de-risk” the startup process and streamline future operations.
A significant portion of the additional costs—around 24% (or $70 million)—has been tied to the logistical challenges of transporting materials to the Goose Project site. This remote area, accessible only through seasonal transport routes, requires complex logistical planning, which has added further strain on the project’s budget.
B2Gold has been upfront about the challenges of working in the Arctic. A company representative noted, “The increased cost of logistics has been a major factor, but by accelerating key capital investments, we’re ensuring a more reliable and efficient operation down the line.”
Despite the rising costs, as of June 30, 2024, the company reported a working capital balance of $600 million and access to an undrawn $700 million revolving credit facility. Furthermore, B2Gold expects to generate significant operating cash flow from its ongoing operations, which include gold mines in Mali, Namibia, and the Philippines.
The company also plans to spend an additional $330 million to build up working capital and stockpiles at the Goose site. This expenditure is designed to mitigate future risks, particularly those posed by the area’s logistical and seasonal constraints. By pre-purchasing fuel, consumables, and critical spare parts, B2Gold aims to reduce operating cash expenditures over the life of the mine.
While the immediate focus is on completing construction and starting production at the Goose Project, B2Gold has also been keen to highlight the significant exploration potential within the broader Back River Gold District. The district covers approximately 58,734 hectares and includes multiple mineral claims, with the Goose Project being the most advanced.
Exploration in the Back River Gold District has yielded promising results. The company is conducting a 25,000-meter drilling campaign, targeting extensions of the Llama and Umwelt deposits, which hold some of the highest-grade resources in the area.
Additionally, B2Gold is employing advanced geophysical techniques to identify new underground resource targets. “The exploration upside in the district remains substantial,” the company stated, with several zones of interest yet to be fully tested.
With an exploration budget of $28 million for 2024, B2Gold is actively investing in both expanding its resource base at the Goose Project and exploring regional targets such as the George, Boot, Boulder, and Del projects.
As the Goose Project continues to advance toward production, B2Gold remains optimistic about the project’s contribution to its long-term growth. The company estimates gold production between 120,000 and 150,000 ounces in 2025, with output ramping up to 310,000 ounces annually from 2026 to 2030.
Importantly, the company said the updated mining schedule and cost adjustments have not altered the overall gold production forecast for the life of the mine.
B2Gold last traded at $4.20 on the TSX.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
