B2Gold settles into Colombia (February 25, 2008)

VANCOUVER — In its first major move since debuting on the market in December, B2Gold (BTO-V, BGLPF-O) has worked a deal with AngloGold Ashanti (AU-N, AGD-L) to get its hands on a significantly increased land package in Colombia while the senior takes a bigger chunk of the young company’s shares.

B2Gold has agreed to issue AngloGold 25 million common shares plus 21.4 million warrants. Of the warrants, 11 million are exercisable at $3.34 and the rest at $4.25; all expire in three years. The transaction will leave AngloGold holding 15.9% of B2Gold’s outstanding shares or 26% of the company on a fully diluted basis.

In exchange, B2Gold will receive an additional 1,500 sq. km of land hosting several prospective targets surrounding its flagship project, Gramalote. B2Gold’s ownership in the project will also increase: the junior picks up an additional 2% interest as well as AngloGold’s right to acquire a further 24%. If exercised, the right would give B2Gold a 51% interest in the site, making the junior the operator. The junior also takes on responsibility to cover spending necessary for a feasibility study at Gramalote by 2010.

In addition, the deal gives B2Gold a 100% interest in the Miraflores property, a medium-tonnage, low-grade gold occurrence centred around a breccia pipe that has seen limited exploration, as well as a 100% stake, less a 1% net smelter return royalty, in the Mocoa copper-molybdenum deposit. Both Miraflores and Mocoa are in Colombia.

In the agreement, AngloGold loses its right to receive 20% of the voting shares of B2Gold subsidiary Andean Avasca Resources, leaving B2Gold with 100% ownership.

Finally, B2Gold must complete more drilling to earn its interest in other Colombian properties under its deal with AngloGold. The agreement is structured such that B2Gold can pick up and continue exploration on any properties where AngloGold, which holds the largest mineral rights package in Colombia, doesn’t find potential for a large-scale deposit.

The original deal required B2Gold to complete 3,000 metres of drilling; the junior now has to complete 5,000 metres of drilling on any target AngloGold sends its way. At that point, AngloGold has the right to back in for a 50% interest. If AngloGold does not exercise that right, B2Gold holds the property outright.

In other B2Gold news, the company recently began a 5,500-metre diamond-drill program on the Quebradona gold property in central Colombia. The 24-sq.-km property hosts five gold-rich porphyry systems as indicated in surface rock chip samples.

And a 25,000-metre drill program is expected to begin by the end of the month at Gramalote. Previous drilling — more than 11,000 metres in 38 holes — outlined widespread structurally controlled, intrusive-hosted gold mineralization over a 1-sq.-km area. The program will consist of infill drilling in the main Gramalote zone, satellite drilling of prospective outlying targets, metallurgical and geotechnical studies and resource modelling.

B2Gold is the new exploration vehicle for the former management team from Bema Gold, a junior that grew into an international gold producer before being bought out by Kinross Gold (K-T, KGC-N) for $3.5 billion in February 2007. The company completed its initial public offering of 40 million shares at $2.50 apiece and, with $100 million on hand, entered the market in early December.

On the news, B2Gold moved up 35 to close at $2.25, rising in the following days to $2.32. The company’s shares have traded in a 52-week window of $1.80-2.55.