B2Gold falls on Goose resource count cut

B2Gold (TSX: BTO, NYSE AMERICAN: BTG, NSX: B2G) stock fell after the miner provided a new life-of-mine plan for the Goose project in Nunavut that confirms the previous timeline and cost estimates but lowers its high-confidence resource count.

The new plan is based on a technical report containing an updated gold reserve estimate for the Goose project of 11.3 million tonnes grading 6.82 grams per tonne gold for a total of 2.48 million oz. This reserve base is expected to support continuous gold production over a nine-year mine life, with annual production of 270,000 oz., including 300,000 oz. during the first six full years from 2026 through 2031.

In addition to confirming the project’s previous timeline, B2Gold reiterated its construction and mine development cost estimate, which was pegged at C$1.54 billion last fall. Operating costs were higher than anticipated, however, with the all-in sustaining cost projected at US$1,547/oz. compared with US$1,363/oz. previously.

B2Gold’s technical report has a “slight negative impact” on the Goose project estimates since it used a stricter resource model that downgraded a portion of the indicated mineral resources to the inferred category, BMO Capital Markets said in an note Friday. There are now 3.56 million oz. indicated and 2.44 million oz. inferred, but with higher gold grades.

While BMO confirmed its “outperform” rating on the stock, it lowered its price target to $6.50 on the news.

Shares of B2Gold fell 8.8% in late afternoon trading to $4.14 apiece, for a market capitalization of $5.4 billion. The stock has traded in a 52-week range of $3.16 to $4.84. 

First project

Goose represents B2Gold’s first project in the Back River gold district, which consists of 11 mineral claims blocks along an 80-km belt. The proposed mine is scheduled to pour its first gold in the second quarter of this year, ramping up to commercial production the following quarter.

B2Gold remains “highly confident” that with additional in-fill drilling to be completed over time, a large portion of the inferred resources will convert to indicated, and therefore be eligible for classification as mineral reserves, according to Friday’s statement.

The mine plan currently includes Echo, Umwelt, Llama, and Goose open pits, plus the mining of Umwelt underground. B2Gold believes that multiple areas that were contemplated in the prior report (Echo underground, Llama underground and Goose underground) will have their resources upgraded with infill drilling.

Across its existing operations, B2Gold has historically converted in excess of 75% of inferred mineral resources to indicated mineral resources through this method, the company added.

Further upside

With first production at Goose expected within three months, B2Gold said it has also begun multiple optimization studies to improve the operation, including the potential additional of a SAG mill to increase its throughput to 6,000 tonnes per day from 4,000 tonnes.

The gold miner is also evaluating ways to exceed the planned production from the Umwelt underground, expected to begin high-grade stope ore production in the third quarter. This could involve the development of more active production levels and alternative mining methods to lower costs.

Additionally, the company is considering the viability of constructing and running the Goose project winter ice road on a less than annual basis.

B2Gold also said it sees the potential to increase the “significant mineral resource base” at the Goose project, with 12,000 metres of drilling planned targeting extensions of the largest and highest-grade resources at the Llama and Umwelt deposits. It will also follow up on the Nuvuyak, Mammoth and Hook targets from the 2023-24 drilling.