Forward sale, CAT deal catapult B2Gold shares
Shares in B2Gold (TSE:BTO) raced higher on Tuesday after the company announced two deals worth more than $200 million to finance its Fekola gold project in Mali through to production.
In afternoon trade B2Gold was trading up 9.1% amid a generally down day on gold markets with more than 11m shares in the Vancouver-based company changing hands.
B2Gold, worth $1.7 billion on the Toronto big board announced a forward sales deal of up to US$120 million from its existing bank backers led by HSBC.
According to the company the initial prepaid sales contract was entered into for the physical delivery of an estimated 86,200 ounces during 2017 and 2018 for total cash proceeds of $100 million. The ounces to be delivered represent approximately 7% and 5% of forecast consolidated gold production in 2017 and 2018 respectively.
B2Gold has made over $1.9 billion in acquisitions since 2009
The number of ounces to be delivered was based on an average forward price of $1,248 per ounce of gold said B2Gold (gold was last trading at $1,230 in New York, losing nearly $15 an ounce on Tuesday). The company said it expects to enter into a second forward sale agreement for the remainder of the $120 million deal. Fekola is expected to enter production late next year.
B2Gold also announced that is has signed a commitment letter to enter into a euro equivalent of US$81 million term equipment facility with Caterpillar to finance the fleet and other equipment at 90%-owned Fekola. The CAT facility will be available for 5 years repayable in 20 equal quarterly instalments. In addition, the company increased its equipment facility at the Otjikoto gold mine in Namibia with Caterpillar by US$4.5 million, to US$45.4 million.
B2Gold acquired Fekola located on the border with Senegal in the southwest of the African nation, the continent's number three gold producing country after Ghana, as part of its $570 million 2014 takeover of Papillion Resources. The deposit contains 3.72 million ounces of gold grading at 2.35g/t.
B2Gold has made over $1.9 billion in acquisitions since 2009 and is projecting gold production in 2016 of between 510,000 to 550,000 ounces, increasing to between 800,000 to 850,000 ounces in 2018 from its mines in Namibia and the Philippines and operations in Nicaragua.