B2Gold Update – May 8, 2017

B2Gold (BTG, $2.25, MCap $2.2b, 973.45m SO) ​announced Q1 2017 results, with adjusted net earnings of $19.4 million (Q1 2016: $18.9 million) and operating cash flow of $39.6 million (Q1 2016: $171.6 million). The company produced 132,736 Au ounces in Q1, 6% above budget and 4% higher than the same period in 2016, at an AISC of $889/oz.

B2Gold is also on track to meet its 2017 annual guidance of between 545,000 to 595,000 ounces of gold. For 2018 it projects production to increase significantly to between 900,000 and 950,000 oz of gold, including the Fekola mine’s first full year of commercial production. Consolidated cash operating costs are expected to come in between $610 and $650 per ounce while AISC is expected to fall between $940 and $970 per ounce. The Company’s forecast consolidated cash operating costs per ounce and AISC per ounce are expected to decrease in 2018 and be comparable to the Company’s 2016 revised cost guidance ranges of $500 to $535 per ounce for cash operating costs and $780 to $810 per ounce for AISC.

 

Also of note, the company provided commentary stating that the Masbate mine in the Philippines will not be affected by the Philippine Department of Environment and Natural Resources (DENR) audit. Philippines has become openly hostile to mining, with Environment Secretary Gina Lopez recently cancelling 75 mining contracts and the DENR shutting down 23 mining firms. The effects have already been felt in the nickel market, with Philippines being a key producer. While B2Gold believes its operations will not be affected, the Masbate mine accounts for over 30% of its production and hence the situation bears close watching.

 

Fekola Project Update

Based on Fekola’s current mine construction progress, the Fekola Project remains 3 months ahead of schedule and is planning for an October 1, 2017 production start. At the end of the first quarter, the project was approximately 75% complete with civil earthworks construction and process plant construction approximately 91% and 54% complete, respectively. Through the quarter, average daily mining rates have increased from 25,000 tonnes to 42,000 tonnes. Installation of the ball and SAG mills at the process plant commenced in February 2017, following arrival and preparation of the components in January 2017. Concrete progress and structural steel erection at the mill is approximately 99% and 94% complete, respectively. Concrete work and platework at the primary crusher and stockpile feed conveyor has been completed while approximately 80% of the structural steel at the primary crusher has been erected. Erection of the various buildings around site also commenced, with a completion rate of approximately 35% at the end of the quarter. Earthworks construction of the phase 1 tailings storage facility (“TSF”) embankment has been completed and HDPE lining of the facility is 100% complete. The network of under-drains in the basin of the TSF, which aids in consolidation of the tailings and extending the life of the facility, has also been completed. The first of the three decant structures, designed to return water back to the process plant, has been finished along with the decant access road above the HDPE liner. The TSF and the site water management structures are approximately 98% and 93% complete, respectively. Construction of the run of mine (ROM) pad continued through the quarter with over 1,700,000 m3​of material placed to date and 750,000 m3​ ​of material placed in the quarter. The manpower on site saw an increase through the first quarter with an average of 1,050 employees and contractors.

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Ed Bugos

Mr. Bugos is the Dollar Vigilante's Senior Analyst and founding partner. He is an Austrian economist and has been a dedicated investment professional since 1989, having started his career as a stock and futures broker on Howe Street at one of Vancouver's leading brokerage firms. Ed retired in 2000 warning clients about the tech bubble, and launched an online digest forecasting gold's revival and bull market when it was just $285. He saw the value in bitcoin as a potentially sounder alternative to the present fiat currency system as early as 2011 before many of his Austrian peers. Ed has built a career record of being early on major economic trends, bullish and bearish.