Global Mining Symposium: B2Gold expects robust H2 performance on all metrics

Canada’s youngest senior gold producer, B2Gold (TSX: BTO; US-OTC: BTG), expects to report robust operating and financial metrics for the second half of 2021, the company’s VP for investor relations, Ian McLean, recently told The Northern Miner’s Global Mining Symposium.

B2Gold started the year on a solid footing, outperforming guidance. McLean recapped key consolidated figures for the first six months, including consolidated gold production of 432,256 ounces gold through the end of June, which was about 7% above guidance.

“We had cash operating costs of US$636 an ounce which was below budget by about 4%. And probably most significantly, all-in sustaining costs (AISCs) at US$974 per ounce came in below budget by about 8%,” McLean said.

Gold revenue was robust at US$725 million, while cash from operations on a consolidated basis for the same six months came in at US$138 million.

McLean said the first-half performance placed B2Gold on track to achieve full-year guidance of 970,000 to 1.03 million ounces gold, at a cash operating cost of US$540 to US$550 per ounce, and AISC about US$870 to US$910 per ounce. “Our cost metrics are among the lowest in the industry,” he said.

The performance sets the company up to outperform for the remainder of the year amid a relatively high gold price of around US$1,800 per ounce.

For the full year, B2Gold is projecting gold revenue of about US$1.7 billion and cash flow from operations of approximately US$630 million.

“We’ve been guiding since the beginning of the year that our production and cash from operations are more heavily weighted to the second half. So, we got off to a really good start, which has set the tone for us to be right up there at the higher end of our production and cost guidance,” McLean said.

The company is guiding for second-half output of 580,000 to 615,000 ounces gold. “At an average gold price of US$1,800, we’re expecting US$500 million in the second half of the year. So, it’s a pretty substantial increase over the first half, and given the third quarter has progressed well, we’re on track to be at the upper end of our production guidance by year-end,” said McLean.

Aside from being a strong growth company, B2Gold pays one of the highest dividend yields in the industry. On September 10, B2Gold’s board declared a cash dividend for the third quarter of US4c per common share or an expected US16c per common share on an annualized basis.

“Looking at our balance sheet where we finished the second quarter with US$382 million in the treasury, and US$600 million undrawn on a line of credit with a US$200 million accordion facility, we have great liquidity and a very strong balance sheet,” he said.

In June, B2Gold also provided long-term production guidance, with output expected to average about 950,000 ounces of gold over the next five years, not including any production from the Gramalote project in Colombia, for which it has partnered with AngloGold Ashanti (NYSE: AU) on a 50/50 basis.

Much of this future production is underpinned by the company’s cornerstone Fekola gold mine in Mali, where B2Gold has enjoyed substantial exploration success over the years since acquiring the asset in 2015.

B2Gold is working to sequence new satellite gold deposits into the mine plan to sustain production. The operation is expected to produce 530,000 to 560,000 ounces of gold in 2021 alone, at an AISC of US$745 to US$785 per ounce.

The Cardinal deposit is the latest addition to the mine plan, despite the company planning to mine inferred material via a recently permitted bulk sample at first until it can drill off the resource to a higher-confidence classification. McLean says B2Gold expects Cardinal to add about 640,000 ounces of gold, grading 1.5 grams gold per tonne to the overall resource base.

“And that’s 500 meters from the existing Fekola pit. So, it’s a remarkable discovery that could add immediate additional production to the Fekola mill,” said McLean.

“We’re projecting over the five-year guidance about 30,000 ounces of gold production from Cardinal annually. This is just another example of a strong exploration team adding value to the project, which was not even included in the budget even as early as the beginning of this year,” he said.

Meanwhile, in its June earnings release, the company announced it had filed for international arbitration against Mali after declaring a dispute regarding issuing an exploration licence on the Menankoto licence, south of another licence, Bantako, where it is currently drilling. These licences form part of the prospective Anaconda area, which is also expected to sustain the mine’s future production profile.

McLean said B2Gold has been working closely with the government since May to resolve the dispute. “We feel that the parties are in a position to resolve this amicably. We did go to arbitration, but our expectation is we won’t get there. We feel that we’re going to come to a resolution on this in the relatively near future,” said McLean.

Elsewhere in the portfolio, the Masbate mine in the Philippines and the Otjikoto mine in Namibia were said to also outperform guidance on all fronts, with the company confident both assets retain substantial future exploration upside.

McLean underlined that part of B2Gold’s strategy hinged on remaining a growth company. “Our first choice is to grow from pipeline projects,” he said.

This is where the Colombia-based Gramalote project’s value comes into play. “Gramalote is the first of those projects that we’re working on. We published a prefeasibility study back in January of 2020, and then we updated that in February 2021.”

“We think there’s strong potential to improve the economics from the prefeasibility to the feasibility. And so that’s what the focus is now. We’re looking at various optimization opportunities on the infrastructure, somewhat on the engineering, and we hope to be able to come up with a new feasibility study in the second quarter of 2022,” said McLean.

“We think it can contribute, at least in the first five years of operation, around 200,000 ounces of gold, on a 50% basis with Anglo.”

McLean also said the company was constantly reviewing mergers and acquisitions activity but remained highly selective about it. “Really, B2Gold was built through M&A. We’re always looking, but we have stringent parameters as to what we would engage in.

“Obviously, it must be accretive. We’re open to looking at different situations that perhaps the markets are not giving value to, and we feel that we could add something that would add value to justify the purchase price. And then beyond, we’ve been able to optimize and or discover more ounces at all the projects that we’ve acquired over the years,” said McLean.

As of December 31, 2020, B2Gold’s attributable global probable gold reserves stood at 6.26 million ounces grading on average 1.48 grams per tonne, held in 152 million tonnes.

B2Gold shares listed in Toronto last traded on September 30 at $4.33, capitalizing it at $4.57 billion (US$3.6 billion).

Watch the full interview with Ian MacLean from B2Gold Corp. here