Although first quarter gold production at B2Gold’s Masbate project was lower than expected overall production guidance for 2014 remains unchanged. There were 42,576 ounces of gold produced compared to budget of 51,892 ounces.

Gold production was lower than budget, due to a number of factors. At the end of 2013, mine development at the Colorado Pit had advanced more slowly than planned. As a result, mill feed in the first quarter of 2014, which was forecast to be 100% high grade oxide material from Colorado, contained transitional and primary ore from the HMBE and Main Vein pits not anticipated in the budget, which have a lower predicted recovery than oxide ore from Colorado.

As the Colorado Pit development is expected to catch up to budget in the coming months, the high grade oxide ore from Colorado which had been scheduled to be processed in the quarter will be mined and processed later in the year.

In the first quarter of 2013, gold production at Masbate was 43,554 ounces of which 36,467 ounces were included in the consolidated results of the company. The difference of 7087 ounces related to production from January 1 to January 15, 2013, prior to the acquisition of the mine by the company on January 16.

Operating cash costs for the first quarter of 2014 are expected to be $723 per ounce, about 4% lower than budget, as a result of less than budgeted waste being mined and high grade ore stockpiling which provided a positive stockpile adjustment against mining costs.

Mining of ore was ahead of schedule in the quarter. High grade ore production significantly exceeded both budget (2,105,576 tonnes compared to budget of 1,530,575 tonnes) and ore tonnes milled, resulting in a stockpile increase.

High grade ore production was below budget in terms of grade but significantly above budget in terms of tonnes and (contained) ounces. This predominately reflects differences in mining location versus budget schedule.

Masbate is projected to produce 190,000 to 200,000 ounces of gold in 2014, at an operating cash cost of $765 to $800 per ounce.

In the second quarter, the existing SAG mill is planned to be replaced. The SAG mill is on site and transfer and assembly of the crane is under way. Actual change-out of the SAG mill will occur in June. On restart, the operation will gain about 300,000 tonnes of annual operating capacity. SAG mill motors and gear boxes have been upgraded to handle the additional capacity.

Last year, B2Gold began a metallurgical sampling and analysis program in order to assess the potential for a mill expansion at Masbate. That preliminary work continues, with conclusions expected in the fourth quarter of 2014. A proposed mill expansion would allow the company to take advantage of opportunities to process additional ore, allow for the full utilization of the new SAG mill and optimize process plant gold recoveries.