Tag Archives: mining equipment leasing

B2Gold weighs up in-pit crushing and conveying as Fekola mine expansion economics stack up

B2Gold’s plan to expand its Fekola gold mine, in Mali, by 1.5 Mt/y could see an up to $56 million investment in additional excavators, trucks, drills, support equipment and wheel loaders, according to the latest project economic study.

The expansion study preliminary economic analysis showed the company could increase throughput to 7.5 Mt/y, from the current 6 Mt/y base rate, by injecting just under $50 million over a period of some 18 months for processing expansion and upgrades.

As currently envisioned, the processing upgrade would focus on increased ball mill power, with upgrades to other components including a new cyclone classification system, pebble crushers, and additional leach capacity to support the higher throughput and increase operability.

“Critical path items include ball mill motors and the lime slaker, both of which will be commissioned in Q3 (September quarter) 2020,” B2Gold said.

“In parallel with the expansion, B2Gold is studying the addition of a solar power plant, which would reduce operating costs and greenhouse gas emissions. The current on-site power plant has sufficient capacity to support the expanded processing throughput, with or without the solar plant.”

On top of this, the company would need to invest in its mining fleet.

The current mining fleet consists of four Caterpillar 6020B excavators with haul trucks, drills, and support equipment to match, and mines an average of 36 Mt/y. The Whittle study results currently indicate mining production rates ranging from 54 Mt/y to 76 Mt/y are optimal to support the expanded processing rates over the life of mine and optimise head grade during the period 2020-2024.

B2Gold said: “Increased production will be achieved with the addition of two to four excavators with corresponding trucks, drills, and support equipment. Large front-end loaders would also be included to maintain fleet flexibility.

“Mine fleet expansion timing and scale will be optimised during Q2 (June quarter) 2019 and will generally be equipment loan/lease financed over a five-year period. The study has included $28 million for expansion to 54 Mt/y and an additional $28 million (for a total of $56 million) to go to 76 Mt/y.

“In parallel with the Whittle study, B2Gold is reviewing in-pit crushing and conveying as a means to reduce operating costs and potentially implement tailings and waste co-disposal at the Fekola mine.”

The expansion study estimated optimised that the life of mine could extend into 2030, including significant estimated increases in average annual gold production to over 550,000 oz/y during the five-year period 2020-2024 and over 400,000 oz/y over the life of mine (2019-2030).

This would see an increase in project net present value of approximately $500 million versus the comparable amounts in the company’s latest AIF mineral reserve life of mine model based on a $1,300/oz gold price and a discount rate of 5%.

The ‘value add’ in mining equipment finance and leasing

In the last decade or so, there has been a big change in the way mining companies source equipment for new and existing operations, with finance, leasing and rental now major parts of the system.

IM spoke with some of the major finance, leasing and rental companies around the globe as part of a feature (to be published in April) on the subject.

This is what Björn van den Berg, Director Customer Finance, Sandvik Mining & Rock Technology, had to say about demand for equipment finance and leasing solutions from the mining industry:

“If you have a look at the growth rate for customer finance, it has grown substantially,” he told IM.

“There are two underlying trends here. One is we see increased usage of contractors in mining, with contractors having a totally different cash position to producing mines. That’s one of the reasons why we see increased demand for different types of finance options – a trend we have seen occurring over a longer period of time,” he said.

“A more recent trend is what I would call the subscription-based economy, or ‘product as a service’. In the past, customers had an original equipment manufacturer (OEM) that would supply them with the machine and maybe some after-market services and they would own and use the machine until it fell apart. We are shifting more and more towards where the customer is not necessarily looking for an OEM that can provide a piece of equipment or machine. They are looking for a partner that can provide a solution, preferably, for the duration the customer requires.”

“In terms of the subscription-based economy trend, that normally includes a form of financing on the OEM side. That’s an emerging trend that has led to increased demand for different types of financial products.”

On these different types of financial products, van den Berg said: “We offer a finance-lease, loan – always asset-backed – and trade finance solutions, but what we also see is an increased demand for operational leases, or short-term rental type of solutions including or excluding services.”

The way customers are being charged is also changing, as their own internal cost structure evolves, he added.

“They might look for cost per hour, cost per tonne, cost per metre, etc,” he said. “Whatever defines a customer’s cost structure is the way they want to be charged.”

When it comes to providing not just a financial product, but a solution, van den Berg provided an example of how Sandvik’s equipment finance arm differentiates itself.

“We get requests from mines operating outdated machines where production levels and, therefore, cash flow isn’t where it can be. Sandvik comes in with a multi-disciplinary team, analyses the situation, assesses what the best alternative is for the mine, applies what impact that alternative will have on the cash flow and then structures a financial product around it that will let them achieve that cash flow.”

“A bank or generic financial institution might just look at the current balance sheet and profit and loss and decide not to finance the same initiative as the customer’s credit score does not support it.

“That is where we can add value over the customer’s house bank or other financial institution,” he said.

This interview is part of a wider feature on equipment finance, rental and leasing to be published in the upcoming April issue of International Mining