B2Gold said that its Gramalote gold project in Colombia will require a pre-production capital expenditure (capex) of $807m, based on the findings of a preliminary economic assessment (PEA) study.

The capex also includes around $93m for mining equipment and $63m for contingency.

According to the PEA, the Gramalote project has the potential to become a medium-scale and low-cost open pit gold mine. The project is expected to have an average annual gold production of about 185,000 ounces per year over the life of the project.

For the first five years of production, the Colombian project will produce approximately 234,000 ounces per year. As per the study, the Gramalote gold project will have an initial mine life of 10 years, with mill processing over 12.5 years.

Located in the Department of Antioquia, the Gramalote gold project is solely owned by B2Gold following the acquisition of AngloGold Ashanti’s 50% stake in the project in October 2023.

The PEA estimates a post-tax net present value (NPV) of $778m for the Colombian gold project.

It also projects a post-tax internal rate of return (IRR) of 20.6% with an after-tax payback period of 3.1 years.

The Gramalote gold project is estimated to generate a free cash flow of $1.38bn on an after-tax basis over the life of the project.

B2Gold intends to start feasibility work for the Colombian gold project, aiming to complete a feasibility study by mid-2025.

The company has also begun work on the modifications to the environment impact study of the Gramalote gold project. It is expected to be completed and submitted shortly following the completion of the feasibility study.

Earlier this month, B2Gold signed a purchase and sale agreement to sell a portfolio comprising 10 precious and base metals royalties to returns-focused metals royalty company Sandbox Royalties.