B2Gold (TSX:BTO) acquires full ownership of Gramalote gold project in Colombia from AngloGold Ashanti (NYSE:AU) for $60 million

Canadian gold producer B2Gold (TSX:BTO) has reached an agreement to acquire full ownership of the Gramalote gold project in Colombia. The acquisition includes the purchase of Anglo Gold Ashanti’s (NYSE:AU) 50% interest in the project previously held. The transaction price is US$60 million.

The Gramalote gold project, located 124 kilometers northeast of Medellin, experienced a development pause last August. The decision comes as preliminary results from an optimized feasibility study indicate the project does not meet the joint venture’s mine development criteria. The partner companies then debated the future of the project. They ultimately agreed to sell Gramalote because it was the best option for both parties. However, they were unable to find a third-party buyer.

B2Gold made clear its intentions post-acquisition, highlighting the benefits of bringing Gramalote under a single owner. The move is expected to pave the way for exploring more affordable and profitable development options. The company emphasized that it had previously viewed Gramalote as a major project with the potential to significantly increase production from both partner companies. Through this integration, Vancouver-based B2Gold will actively explore various smaller-scale development options to achieve cost efficiencies. Additionally, a new study is planned to begin in the last quarter of this year, with the goal of conducting an initial assessment by mid-2024.

In terms of resource expansion, B2Gold’s ownership of Gramalote will include an additional 2.11 million ounces of gold from Indicated Mineral Resources and 740,000 ounces of gold from Inferred Mineral Resources.

AngloGold Ashanti, on the other hand, sees the sale as an opportunity to focus more on operating assets and potentially developable projects. The company shared these sentiments in a separate announcement. CEO Alberto Calderon expressed the company’s continued commitment to Colombia, and in particular to the future Quebradona copper-gold project. He said: “AngloGold Ashanti remains a committed long-term investor in Colombia with the exciting Quebradona copper-gold project and we look forward to playing a key role in the development of a modern, responsible mining industry in the country.”

The payment structure of the deal has been broken down. Upon completion of the transaction, B2Gold expects to transfer $20 million. The remaining amount will be paid in installments based on the achievement of certain milestones. An interesting clause stipulates that B2Gold will not be liable if commercial production does not start within five years of the transaction.

As the first project in the exploration phase, Gramalote holds a special position for B2Gold. In 2015, the company made headlines when it received Colombia’s first environmental permit after a gap of 35 years. The approval provides three years to address social and environmental issues, particularly the relocation of artisanal miners and certain local people. Gramalote has also been trying to resolve an ongoing mining rights dispute with Canadian company Zonte Metals.