AUSTRALIAN-listed firm, West African Resources, has agreed to buy the Toega gold deposit from B2Gold and its partner, GAMS-Mining F&I for $45m, the company said on Wednesday.
Payment for the project, which is located in Burkina Faso, would be in stages beginning with an initial $10m upfront cash payment to be made from company resources. A further $10m would be paid on completion of the feasibility study with the balance paid as a 3% net smelter returns royalty on production.
Toega is located within 14 kilometres of West African Resources’ Sanbrado, a gold project scoped to produce 300,000 ounces a year for 10 years. First gold at Sanbrado was poured on March 19.
West African executive chairman, Richard Hyde, said in a statement that Toega would increase Sanbrado’s production and mine life. “We intend to kick off drilling and feasibility studies in the near future, with the aim of bringing Toega ore into the Sanbrado mine plan within three years,” he said.
Infill drilling at Toega is expected to commence in the third quarter of this year assuming Burkina Faso’s wet season and COVID-19 restrictions allow. “A range of other technical activities being conducted in parallel or commencing over the next 20 months,” the company said
B2Gold said earlier this month that it was on track to meet production guidance of one million to 1.05 million oz of gold for its 2020 financial year, but it had taken “a precautionary step” of drawing down on a portion of its revolving credit facility (RCF), nonetheless.
The Toronto-listed firm said that “… given the current uncertainty resulting from the COVID-19 pandemic” it had drawn on a further $250m of its $600m RCF. This was to “… provide additional liquidity flexibility and assurance until the ultimate timing and outcome of the COVID-19 pandemic can be reasonably determined”.
It had no pressing debt repayment deadlines but it would monitor its options including the possibility of discretionary capital expenditure. The company started the financial year with $140m in cash and cash equivalents to which it added in the year to date.