Papillon/B2Gold merger brings forward new Mali gold mine start
Papillon’s Fekola project, de-risked by the pending merger with B2Gold, is on track to start construction this year and build up to production in 2016.
Posted: Thursday , 04 Sep 2014
Australian listed gold developer, Papillon Resources, say it expects to complete its Definitive Feasibility Study and start mine construction in the next quarter for the Fekola gold project in Mali - at the same time as the company beds down a $650 million merger with TSX-listed and Vancouver-based B2Gold.
Addressing the second day in Perth of the three day Paydirt 2014 Africa Down Under Conference, Papillon Managing Director, Mr Mark Connelly, said the merger would derisk Fekola and “brings forward the development schedule – a point supported by the Government of Mali.”
“Fekola is a $350 million mining investment and we are ready to go,” Connelly said. “Our team is well advanced on engineering studies and we will be in production within a very short period of time – less than 18 months.”
“The merged entity is on track for an overall production rate of 900,000 to one million ounces by 2017 and will be one of the few companies in the gold industry with a development profile and producing on a profitable basis.”
Papillon shareholders will vote on the merger on 15th September with the current merger timetable anticipating finalisation of the transaction by October 3.
Connelly said timing had been fortuitous for the merger, based on where the company had progressed with Fekola’s engineering works.
“We have not lost any momentum with the schedule despite the merger and will start construction towards end of this year with a full contingent on ground early in 2015 to move Fekola along at rapid speed,” he said.
The merger proposes 0.661 B2Gold ordinary shares per Papillon share. It will be implemented by way of a Scheme of Arrangement. Existing B2Gold shareholders and former Papillon shareholders will own approximately 74% and 26%, respectively, of the combined company.
Connelly said the combination of B2Gold and Papillon will result in a company with a significant growth profile beyond its 3 operating mines which collectively produced 366,000 ounces of gold in 2013 at a cash cost of C$681 and ounce and an all in sustaining cost of C$1,064 per ounce.
B2Gold’s production is projected to increase significantly as the low cost Otjikoto mine in Namibia begins gold production late in 2014.
The combined company would be focused on furthering the development of Fekola and continuing to operate B2Gold’s existing Masbate gold mine in the Philippines and the Limon and La Libertad gold mines in Nicaragua as well as Otjikoto.