Bema’s bosses return with B2Gold

Vancouver — The former management team from Bema Gold is back with a new company that has one of the biggest exploration budgets in the junior mining industry.

B2Gold (BTO-V) completed an initial purchase offering of 40 million shares at $2.50 a share and, with $100 million in the coffers, debuted on the TSX Venture Exchange on Dec. 6.

“We’re back, we’re public, and we’re ready to hit the ground running,” says company president and CEO Clive Johnson.

Johnson was the CEO of Bema Gold, a junior explorer that grew into an international gold producer before being bought by Kinross Gold (K-T, KGC-N) for $3.5 billion in February. The management team from Bema decided to stay together as a group and try to replicate their success with a new company.

At B2Gold, Johnson is joined by Roger Richer as vice-president, Mark Corra as vice-president of finance and chief financial officer, Tom Garagan as vice-president of exploration, and Dennis Stansbury and Ian MacLean as vice- presidents.

For a nascent company, B2Gold has an impressive project portfolio, stemming from partnerships with Kinross and AngloGold Ashanti (AU-N, AGD-L), and a significant exploration budget totalling $60 million.

AngloGold holds the largest mineral rights land package in Colombia. The major’s goal in prospecting the underexplored country is to conduct a first-pass exploration program at each of the 500 anomalies on its properties to find potential large-scale deposits. But AngloGold did not want to simply desert the anomalies that showed smaller-scale potential, so it looked for an exploration partner.

“The way our arrangement with Anglo works, if they see something that’s interesting, but that’s not their size, they send it to us,” Johnson says.

Under the deal between the companies, B2Gold is required to complete 5,000 metres of drilling on any target the major sends its way, at which point AngloGold has the right to back in for a 50% interest. If AngloGold chooses not to exercise its right, B2Gold holds the property outright.

“It’s a creative joint-venture agreement that means we can move ahead quickly and productively with Anglo’s enormous land package,” Johnson says. “And from our perspective, this isn’t roll-the-dice grassroots exploration — a lot of these projects have seen drill holes already, so essentially we get a lot of the upside of exploration without so much of the downside.”

B2Gold has three projects under way in Colombia. The Gramalote gold property is 230 km northwest of Bogota. Exploration work has identified three target types at the property, including a ridge area that has seen 43 drill holes. Johnson thinks Gramalote has the potential to become a significant gold porphyry system, amenable to open-pit mining, and the company is carrying the project to feasibility as project operator. B2Gold currently holds a 25% interest in the site, with an option to increase the interest to 51%.

The MiraFlores gold property has seen exploration by various groups over the past 20 years. Limited diamond drilling combined with metallurgical test work indicates a medium-tonnage, low-grade gold occurrence amenable to bulk-tonnage mining. B2Gold has the right to earn 51% in MiraFlores, but has signed an option with AngloGold to increase its interest to 100%.

The Quebradona property, 220 km northwest of Bogata, hosts five early phase gold or gold-copper porphyry-type exploration targets. Again, B2Gold has an option to earn a 51% interest by completing 5,000 metres of drilling.

“Not only are we walking into some fantastic geologic opportunities, but we’re also working with people who have a huge amount of experience in dealing with the political and permitting side of things,” Johnson says, in response to a question on the difficulties of working in Colombia. AngloGold has been working in the South American country for six years.

B2Gold plans to spend $50 million on exploration in Colombia over the next 12 months. The company plans to spend another $10 million on exploring its other projects, in eastern Russia.

As part of the Bema takeover, Kinross acquired 54% of the Kupol East and West projects in Chukotka state, Russia. The licences cover land adjacent to the high-grade gold and silver Kupol mine that Bema had been developing since 2003. The mine is scheduled to begin production in the second half of 2008.

Previous work by Bema, and more recently by B2Gold on Kupol East and West, outlined several prospective targets. Kupol West, which surrounds the original Kupol project area and represents an expansion of the existing property to 230 sq. km from 18 sq. km, covers the potential northern and southern extensions of the main Kupol vein. Kupol East lies 3.5 km east of Kupol West and covers an additional 194 sq. km of ground, hosting five gold-silver prospects.

On its first day of trading, B2Gold traded 6.5 million shares. The debut share price of $2.50 fell 10.