B2Gold has strong start with eye on Fekola for Q3

New mine in Mali expected to add up to 400,000 ounces

Mid-tier gold producer B2Gold (TSX:BTO) has had an excellent start to the year, producing more gold at lower costs than expected from its four mines in the Philippines, Namibia and Nicaragua.

Sharing its first-quarter results yesterday, Vancouver-based B2Gold reported total gold production in Q1 of 132,736 ounces, which was 4% higher than the year-ago quarter and 6% above targeted production. The Otjikoto mine in Namibia was a standout, cranking out 42,774 ounces, beating expectations and Q1 2016 figures by 20%. The company's Masbate mine in the Philippines also did well, producing 52,562 ounces, 5% above budget.

All-in-sustaining costs (AISC) from all four operations were down by 23%, to $889  an ounce, and comparable with the year-ago quarter.

B2Gold managed a slight increase in gold revenues compared to the first quarter of 2016, at $146.3 million, with gold prices averaging $1,219/oz. This compared to Q1 2016, which pulled in $144.3 million at an average price of $1,193/oz. However B2Gold reported lower cash flow in Q1 due to the timing of shipments, noting that in the year-ago quarter, the company received a $7.5 million increase in inventory. This quarter, cash flow from operations was $39.6 million versus $171.6 million in Q1 2016.

The bottom line was a net loss of $4.6 million in the first quarter compared to $6.7 net income in the year-ago quarter. Shareholders likely reacted to that figure after digesting the results, with the stock down over 6% in mid-morning trading in Toronto.

Meanwhile the company continues to make progress on its plan to bring the Fekola project in Mali online by October 1st. The gold mine which B2Gold acquired through a merger with Papillon Resources in 2014 is expected to produce between 375,000 and 400,000 ounces annually for the first five years, and has a minelife of seven years. According to the company, Fekola is around three-quarters complete, including civil earthworks and process plant construction.

For full-year 2017, B2Gold is projecting production of between 545,000 and 595,000 ounces (including estimated pre-commercial production from Fekola of between 45,000 and 55,000 ounces). AISC are expected to be between $940 and $970 per ounce.

Q1 highlights:

  • Consolidated gold production of 132,736 ounces, 6% (or 7,955 ounces) above budget and 4% (or 4,892 ounces) higher than the same period in 2016
  • Consolidated gold revenue of $146.3 million on sales of 119,937 ounces at an average price of $1,219 per ounce
  • Consolidated cash operating costs (see "Non-IFRS Measures") of $564 per ounce, $80 per ounce (or 12%) below budget
  • Consolidated all-in sustaining costs ("AISC") (see "Non-IFRS Measures") of $889 per ounce, $262 per ounce (or 23%) below budget
  • Cash flow from operating activities (after non-cash working capital changes) of $39.6 million ($0.04 per share)
  • Strong cash position of $103.2 million at quarter-end
  • Company is on track to meet its 2017 annual guidance of between 545,000 to 595,000 ounces of gold production
  • Fekola Project mine construction remains 3 months ahead of schedule for an anticipated October 1, 2017 production start and remains on budget
  • On March 29, 2017, received the 2016 Award for "Friend of the Environment" and the 2016 Award for "Exporter of the Year" in Nicaragua