Nicaragua: $100 Million Invested in Gold Mines

Canada's Calibre Mining bought from B2Gold Nicaragua, the El Limón and La Libertad gold mines, as well as the Pavon project and other concessions, in a transaction that totaled $100 million.

Wednesday, July 3, 2019

The El Limón and La Libertad mines have produced more than 1.4 million ounces of gold since 2010, and their combined production of gold in 2019 is projected to be between 150,000 and 160,000 ounces, the company said in a statement.

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From the Calibre Mining Corp. statement:

Vancouver, British Columbia: B2Gold Corp. (TSX.BTO. NYSE AMERICAN: BTG. NSX: B2G) (“B2Gold”) and Calibre Mining Corp. (TSX-V: CXB) (the “Company” or “Calibre”) (jointly the “Partners”)  are pleased to announce that on July 2, 2019, the Partners entered into a binding agreement (the “Agreement”)  for B2Gold to restructure its interests in, and for Calibre to acquire, the producing El Limon and La Libertad Gold Mines (the “Nicaragua Mines”), the Pavon Gold Project and additional mineral concessions in Nicaragua (collectively, the “Nicaragua Assets”) held by B2Gold for aggregate consideration of US$100 million (the “Purchase Price”), which Purchase Price will be paid with a combination of cash, common shares and a convertible debenture  (the “Transaction”).

Following the completion of the Transaction, B2Gold will own an approximate 31% direct equity interest in Calibre. B2Gold’s ongoing commitment to continuing involvement with the Nicaraguan operations will be secured by its significant equity interest in Calibre, its right to appoint one director to the Board of Calibre and its participation in an Advisory Board to the main Board of Calibre

The El Limon and La Libertad Mines have produced in excess of 1.4 million ounces of gold since 2010. Their combined 2019 gold production is projected to be between 150,000 and 160,000 ounces (see: B2Gold MD&A for period ended March 31, 2019 filed on B2Gold’s profile on SEDAR).

In connection with the Transaction, Calibre has entered into an agreement with Canaccord Genuity Corp. and Sprott Capital Partners LP (together, the “Lead Agents”) in respect of a private placement of up to 167,000,000 subscription receipts (the “Subscription Receipts”) for gross proceeds of up to CDN$100 million (the “Concurrent Private Placement”).

The closing of the Transaction will be subject to certain conditions including majority of minority shareholder approval, the successful negotiation and execution of a definitive agreement (the “Definitive Agreement”) by B2Gold and Calibre, the closing of the Concurrent Private Placement by Calibre and satisfactory due diligence by Calibre. In connection with the closing of the Transaction, Calibre intends to apply to graduate to the Toronto Stock Exchange (subject to Toronto Stock Exchange approval and meeting the initial listing requirements of the Toronto Stock Exchange).

Clive Johnson, President and Chief Executive Officer of B2Gold stated: “We are pleased to join forces with Calibre in Nicaragua to continue our legacy of 10 years of responsible exploration, development and gold production. We are pleased to become a large shareholder of Calibre and through our roles on their Advisory Board and Board of Directors, we look forward to assisting Calibre’s experienced executive team and the combined B2Gold/Calibre management team in Nicaragua.

With Calibre and the combined Nicaraguan management team focussing on the El Limon and La Libertad Mines and other opportunities, B2Gold will focus on continuing to optimize responsible production at our other existing mines in Mali, Namibia and the Philippines as well as advancing our impressive pipeline of development and exploration projects. In addition, B2Gold will continue to pursue additional greenfield and advanced exploration opportunities.”

B2Gold’s History and Continuing Legacy of Success in Nicaragua
B2Gold was created in 2007 by the previous management of Bema Gold Corp. In 2009, B2Gold acquired the El Limon and La Libertad Mines in Nicaragua. B2Gold significantly improved the operations and economics of the El Limon Mine and, in addition, constructed a mill facility and commenced profitable gold production at the La Libertad Mine and realized significant exploration success around both mines. Over the last 10 years the Nicaragua Mines have produced in excess of 1.4 million ounces of gold, with B2Gold investing more than $560 million in capital and exploration in Nicaragua over that period.

Since 2010, the La Libertad and El Limon Mines have been an important contributor to the local and national economies, responsible for a large percentage of the country’s gold exports. Gold now ranks third in the country’s main exports.

In addition to being Nicaragua’s largest exporters of gold, the La Libertad and El Limon Mines are collectively also the largest individual exporting operations in the country.
B2Gold Nicaragua is a major employer in Nicaragua with La Libertad and El Limon mines generating over 2,800 direct and contract jobs. Approximately 90% of B2Gold Nicaragua’s direct employees are from the local communities around La Libertad and El Limon mines and fewer than 1% of direct employees are expatriates.

Russell Ball, Executive Chairman of Calibre stated: “We are delighted to be able to partner with B2Gold on the acquisition of the El Limon and La Libertad Mines and welcome B2Gold as a significant shareholder of Calibre. We see continuing the ongoing commitment to the current management team and many long-term employees as fundamental to the future success of our company and are grateful to have B2Gold’s unwavering guidance and involvement in carrying out this responsibility.

Calibre has been actively exploring in Nicaragua for the past ten years and has enjoyed excellent support from our employees, suppliers and the Nicaraguan government.  Calibre is fully committed to maintaining B2Gold’s high standards of responsible mining, government relations, health, safety and environment and corporate social responsibility that B2Gold established at its Nicaraguan operations in partnership with its management team, employees and contractors.  Maintaining these high standards is an essential benefit for all stakeholders.”

Transaction Highlights
B2Gold has disclosed 2019 consolidated production guidance for the Nicaragua Mines of 150,000 to 160,000 ounces of gold (see: B2Gold MD&A for period ended March 31, 2019 filed on B2Gold’s profile on SEDAR).  The Nicaragua Mines also contain exploration potential, particularly at El Limon, where B2Gold recently discovered the high-grade El Limon Central Gold Zone, which hosts a high-grade open-pit  inferred mineral resource of 5.1 Mt grading 4.92 g/t gold containing approximately 812,000 oz of gold (see: B2Gold News Release dated February 23, 2018 filed on B2Gold’s profile on SEDAR).
Other potential benefits of the Transaction for Calibre include:

  • Immediate gold production and cash flow: The acquisition establishes Calibre as a gold producer with exceptional exploration potential in a jurisdiction that Calibre and B2Gold have been successfully operating in for over 10 years. 
  • Near-term growth potential:  There is potential for near-term low capital expansion at El Limon in order to reduce costs, increase production to 75,000 ounces of gold per year for an initial 10 years and extend the mine life by an additional 11 years with the inclusion of historical tailings re-treatment.  Once expanded, El Limon is estimated to generate over US$235M of after-tax free cash flow (using US$1,300/oz gold price) (see B2Gold News Release dated October 22, 2018 filed on B2Gold’s profile on SEDAR).
  • Substantial increase in Calibre’s resource base:  The acquisition will add measured and indicated resources of 1,135,000 ounces of gold (for details of resource category, tonnages and grade see Tables 1 and 2 below) and inferred resources of 1,473,000 ounces of gold (for details of tonnages and grade see Tables 1 and 2 below) to Calibre’s current inferred resources of 2,400,000 gold-equivalent ounces (see: Iamgold Corporation and Calibre Mining Corp. Technical Report on the Eastern Borosi Project, Nicaragua dated May 11, 2018, Primavera Project Resource Estimate dated January 31, 2017,  Calibre Mining NI 43-101 Technical Report and Resource Estimation on the Cerro Aeropuerto and La Luna Deposits, Borosi Concessions, Nicaragua dated April 11, 2011 filed on Calibre’s profile on SEDAR) (see: Table 1 below).  
  • Proven management team and board: The new management team and board of directors have extensive experience in the mining industry with a long history of substantial stakeholder value creation and proven capabilities in financing, acquiring, discovering, developing and operating open-pit and underground mines.
  • Compelling value proposition: Calibre will be well-positioned with leading leverage among junior gold producer equities with significant exploration potential and an attractive valuation on net asset value, cash flow, resource, and production multiples.
  • Establishes a Strategic Partnership with B2Gold:  Following the restructuring of B2Gold’s investment in its Nicaraguan operations, B2Gold will own a direct approximate 31% equity interest in Calibre.  B2Gold’s ongoing commitment to continuing involvement with the Nicaraguan operations will be secured by its significant equity interest in Calibre, its right to appoint one director to the Board of Calibre and its participation in an Advisory Board to the main Board of Calibre.  B2Gold’s exceptional track record and expertise in finding, acquiring, building and operating mines will be of significant benefit to Calibre as Calibre seeks to expand its gold production and resource base.
  • Execution of a gold consolidation strategy: The acquisition establishes a producing platform to continue to acquire quality gold production assets and development opportunities. Shareholders will be well-positioned to participate in future value creation and growth opportunities.

Cautionary Statement 
The reader is advised that the El Limon Central results summarized in this news release are intended to provide only an initial, high-level review of the project potential and expansion options. The initial mine plans and economic models include numerous assumptions and the use of Inferred Mineral Resources. The El Limon Central expansion study is preliminary in nature, and it includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves. There is no guarantee that Inferred Mineral Resources can be converted to Indicated or Measured Mineral Resources and, consequently, there is no guarantee the production estimates or project economics described herein will be achieved.

Management Team and Board of DirectorsIn connection with the Transaction, Calibre intends to make amendments and supplements to its management team and board of directors. Calibre anticipates it will benefit from the proven and experienced board and executive management team, focused on stakeholder value creation.  The management team of Calibre is expected to include:
  • Russell Ball: Chief Executive Officer
  • Darren Hall: SVP and Chief Operating Officer
  • John Seaberg: SVP and Chief Financial Officer
  • Greg Smith: VP Exploration
  • Ryan King: VP Corporate Development & IR
The Calibre management team will be supported by an experienced Board of Directors including the former Newmarket Gold founders Blayne Johnson, Douglas Forster, Raymond Threlkeld, Doug Hurst and Edward Farrauto, and a B2Gold nominee. Blayne Johnson will act as Non-Executive Chairman upon closing of the Transaction and an Advisory Board will be established that includes two representatives each from B2Gold and Calibre.
The relevant experience of the proposed Calibre management team is included in Appendix A.

El Limon
B2Gold owns a 100% interest in El Limon, which is an open pit and underground gold mine located approximately 100 km northwest of Managua, the capital of Nicaragua. A major new high-grade gold discovery at El Limon was announced by B2Gold in February 2018 at Limon Central where open-pit mining has commenced with an initial Inferred Resource of 5.1Mt grading 4.92 g/t Au containing 812,000 ounces of gold.  With the deposit open along strike and at depth, significant exploration potential remains across the property.
In 2018, El Limon processed 447,961 tonnes grading 3.64 g/t gold with a recovery rate of 94.9% and produced 49,629 ounces.
In 2019, B2Gold’s production guidance for El Limon is 55,000 to 60,000 ounces with cash operating cost guidance of between US$720 and US$760 per ounce and All-In Sustaining Costs (AISC) guidance of US$1,005 to US$1,045 per ounce, with the second half anticipated to benefit from increased production and lower costs.

La Libertad
B2Gold owns a 100% interest in La Libertad, which is an open pit and underground gold mine located in the La Libertad-Santo Domingo Region of the Department of Chontales in Central Nicaragua, approximately 110 km east of Managua.  The annual mill throughput is approximately 2,250,000 tonnes and current gold recoveries are approximately 94% to 95%.

In 2018, La Libertad mine processed 2,250,687 tonnes grading 1.19 g/t gold with a recovery rate of 94.4% and produced 80,963 ounces of gold.  
Most recently, and significantly, the environmental permit for the Jabali Antena Open Pit was received in June 2019, and as of June 28, 2019, all resettlement, artisanal miner and land possession issues have been resolved and development of the Jabali Antena Open Pit has commenced.

B2Gold’s 2019 guidance for La Libertad is 95,000 to 100,000 ounces at cash operating costs of between US$840 and US$880 per ounce and AISC of US$1,150 to US$1,190 per ounce. The La Libertad project including the surrounding exploration concessions has numerous excellent exploration targets that can expand the current resource base on the 155.37 km2property. 

More on this topic

Gold Fever in Nicaragua

August 2011

The growth of the Nicaraguan economy is being led by the mining sector, with gold being the standard bearer.

The Canadian mining corporation B2Gold, owner of the concessions in Nicaragua for the Mines El Limón (Leon) and La Libertad (Chontales), has opened offices in the municipality of Santo Domingo, Chontales, an area for which they have an exploration concession "with good potential to become a new mine. "

Nicaraguan Gold Mine Production Increases

December 2010

"La Libertad" gold mine, owned by B2Gold Corp, could increase its production and operating life.

The company announced the results of exploratory drilling, which indicates the possibility of increasing current production, which stands at 80.000-90.000 ounces of gold annually.

B2Gold Announces Investments in Nicaragua

November 2010

The company announced an investment of nearly $ 34 million to increase domestic production of gold.

The company´s president, Clive T. Johnson, said projections for 2011 are to achieve a production of 140.000 ounces of gold.

About $ 11 million will be invested at La Libertad mine to improve production and about $ 4.5 million in exploration work.

La Libertad Gold Mine Reopens in Nicaragua

May 2010

Canadian corporation B2Gold invested $54 million to reopen the gold mine located in the province of Chontales.

B2Gold plans to extract 90.000 gold ounces a year, generating exports for approximately $85 million.

Emilio Rappaccioli, Energy Minister, commented that the new mine will double the country’s mining production, making gold the second or third most important export product.

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