B2gold Corp Q4 FY2024 Earnings Call

Thank you for your patience. This is the conference operator. Welcome to B2Gold Corporation's Fourth Quarter and Full Year 2024 Financial Results Conference Call. All participants are in listen-only mode and the conference is being recorded. After the presentation, analysts will have the opportunity to ask questions. I will now hand over the conference to Clive Johnson, President and CEO of B2Gold. Please proceed.

Hello everyone. Thank you for joining us. As mentioned by the operator, we will be discussing the fourth quarter and full year 2024 results, which we have just released. I will share a few highlights before passing it to Mike and Bill for more details. We successfully met our new guidance for the year, finishing at the upper end of all-in sustaining costs and the lower end of production. Looking ahead, we anticipate a significantly more positive 2025, with increased production at Fekola and the initiation of trucking ore, as well as the Fekola underground operations. Bill will provide more details on this. Additionally, we are excited about our operations leading into the first quarter of June 2025. As many of you may know, we reached an agreement with the Mali government in September last year regarding the future of Fekola and the trucking of ore from regional projects. This was a critical agreement for both us and the government. We are now closely aligned and eager to capitalize on the revenue and profits from mining in the region. We are actively implementing the agreement, and it seems to be progressing positively. We expect to receive permits to proceed in the near term. Recent media reports indicate that Barrick and the Mali government have also reached an agreement to move forward, which is crucial for us and creates a clearer path ahead in our relationship with the Mali government, benefiting all parties involved. It’s important to highlight that the challenges we faced at Fekola were not primarily due to government issues. Bill will explain the reasons behind the production decrease in 2024. Despite ongoing discussions with the Mali government, we have maintained a positive trajectory in our gold production and our dealings with the government. Our relationship will continue to evolve through negotiation. Now, looking ahead to growth, we expect a significant increase in production from Fekola, alongside many upcoming milestones this year. Receiving the necessary permits for Fekola will enable us to achieve up to 180,000 ounces annually from the mining operations in the region. Goose is also poised to drive substantial growth as we plan to begin production in June. Goose is projected to contribute over 300,000 ounces of gold annually. Additionally, following a positive feasibility study and construction decision, the Gramalote Project in Colombia could yield 300,000 ounces of annual production. We find this project quite appealing and expect it to demonstrate strong returns at a gold price of $2,000. Should we see a rise in the gold price during construction, that could provide further upside. Overall, we anticipate 180,000 ounces from Fekola's regional operations, over 300,000 ounces from Goose, and around 240,000 ounces from Gramalote, all subject to various conditions. Moreover, we’ve made a new discovery in the Otjikoto area, which may add approximately 65,000 ounces of gold. In total, this positions us for over 650,000 ounces of gold production, all from existing assets, avoiding the need for acquisitions to find these ounces. While there's room for further discoveries, this is our current standing, illustrating a very strong growth profile with minimal speculation involved. 2024 was indeed a challenging year, but we regard it as an anomaly. In 2025, we aim to return to our core competency of growing our production profile, which we have successfully achieved since B2Gold’s inception in 2007. Now, I'll hand it over to Mike for financial highlights, followed by Bill, who will summarize the current gold market situation as we move into this year.

Thank you, Clive. I want to highlight a few key points from the quarter. Basic earnings per share were slightly negative this quarter, primarily due to lower-than-expected production at Fekola, the impact of currency fluctuations from the weakening of the West African currency amounting to about $1, and the increase in the Fekola priority dividend to 20%, which was previously set at 10 plus 20 and is now recorded as a tax. Adjusted net earnings for the quarter stood at $0.01 per share. The operating cash flow before working capital adjustments for the quarter was $145 million, benefiting from the higher average gold price. Regarding the Goose project, construction and mine development activities totaled CAD209 million for the quarter, along with CAD55 million for working capital. We have maintained the total construction and development cash expenditures for Goose at CAD1.54 billion, projected to finish in the second quarter of 2025. Financially, we are in a strong position, ending the year with cash and cash equivalents of $337 million and having drawn $400 million from our revolving credit facility. However, in early 2025, we completed a convertible note offering that raised gross proceeds of $460 million, which we used to fully pay down the revolving credit facility balance. Currently, we have no amount drawn from the revolver, which has an $800 million capacity with the existing syndicate, plus an additional $200 million available for future use if needed. This gives us considerable financial flexibility, and we believe we will be able to complete the Goose construction by the second quarter of 2025, along with other growth initiatives mentioned by Clive, and continue to support robust exploration programs across all our sites to extend mine lives. Those are the highlights I wanted to mention. I'll now hand it over to Bill.

Thanks, Mike. Looking back at Q3 last year, we successfully completed the sealift in August and September 2024, using 10 ships and one barge to unload approximately 123,000 cubic meters of dry cargo and over 84 million liters of Arctic-grade diesel fuel. We also added 58 trucks to help transport supplies for 2025. I’m pleased to report that we opened the 2025 winter ice road two days ago, ahead of schedule, and have started transporting materials to the Goose site. All planned construction activities for 2024 were completed on time, and the process plant is on track to produce its first gold by the end of Q2. On the mining front, we made significant progress mining the eco pit and remain ahead of our schedule. The underground development at unwell is achieving new highs in mining efficiency. In Mali, we are preparing for contributions in 2025 from both the Fekola Regional and Fekola underground, which will benefit operations for years ahead. As Clive noted, we experienced a couple of one-off events in 2024, including an operator error that resulted in the loss of an excavator for a quarter and some illegal union activities, which we have addressed through our disciplinary processes. At Masbate, operations continue to perform at a world-class level, outperforming last year and achieving all-in sustaining costs for 2024 that were significantly below our guidance range, resulting in strong free cash flow at current gold prices. Similarly, at Otjikoto, they also exceeded expectations in 2024. Clive mentioned the new Antelope deposit discovery, with a positive PEA released earlier this month, paving the way for potential new production later this decade, which remains open for exploration. For Gramalote, we are working on a feasibility study expected to be ready by mid-2025. With that, I’ll hand it back to you, Clive.

Thanks, Bill. Thanks, Mike. I want to share a final thought on the situation we've been facing regarding Mali, specifically the need for an agreement with the government in light of the 2022 mining code. We've made progress by reaching an agreement in September, and other companies have followed suit. It's also encouraging that media reports about Barrick addressing new issues and making progress are accurate. This has alleviated some of the pressure we've felt in this sector, especially considering our shares have been negatively affected by uncertainties regarding Mali’s future. Additionally, there has been concern about Goose in terms of timing and whether it will align with the budget we've outlined. The positive news is that Goose is on track, which has also contributed to the pressure on our market value. We hope to see a market turnaround as we eliminate these risk factors. The Gramalote feasibility study, which is expected to be completed by mid-2025, is another significant development. Overall, while 2024 posed challenges, we faced them successfully. As we approach 2025, we're optimistic about returning to solid production performance, maintaining a strong financial position, and growing from our existing assets. With that, we'll open it up to questions.

Thank you. We'll now begin the analysts' question-and-answer session. And today's first question comes from Ovais Habib with Scotiabank. Please go ahead.

Hi Clive and B2Gold team. A couple of questions from me. Sorry if you've already addressed on some of these questions, I've just been bouncing between a couple of conference calls, so I apologize for that. Just want to start off with Fekola in regards to the permit, and I'm glad to see things are moving ahead with Barrick as well. Is there any additional info for the regulators require on the Fekola Regional or Fekola underground? Or are we just waiting for the final sign-off?

We are currently working on consolidating three licenses that represent the majority of the property to the north, and that process is on track. We expect to achieve this soon. Following that, we anticipate receiving the government's permit to begin some pre-stripping work. If we accomplish these milestones, which we are optimistic will happen, we are aligned with the government in wanting to initiate mining this year. We have projected between 10,000 to 20,000 ounces from the regional area this year, with an expectation of about 180,000 ounces annually for the first five years from that region. Another significant point is that the government previously granted us permission to build the necessary infrastructure for regional mining and for transporting ore to the Fekola mill, including roads and maintenance facilities. This was a positive indication of the government's support for our operations even before we finalize the full agreement by the end of September.

Thanks for the insight on that, Clive. Moving on to Goose, it's great to hear that you were able to operate on the Ice Road. You mentioned in the press release that underground mining rates are slightly behind schedule. Is this primarily due to the experience level of the miners, or are there other factors such as rock hardness or ground conditions contributing to this?

If I'm being honest, Ovais, there are two main issues, both historical, that we have addressed. The first issue is the quality of the miners we inherited, which we have improved, and as a result, our daily rates are increasing. The second issue is the equipment purchased by our predecessor, which we are currently replacing during the Ice Road phase with new equipment to enhance speed. We began meeting our production targets in Q4, and we have adjusted our schedule accordingly. We do not anticipate any significant impact on our production for 2025 at our current rates.

Perfect. Thanks for that color on that Bill and that's it for me guys. Looking forward to the ramp-up at Goose. Thank you.

Thanks, Ovais.

Thank you. This concludes our question-and-answer session. I'd like to turn the conference back over to Clive Johnson for any closing remarks.

Okay. Well, I guess that means we have a very complete presentation. So thanks for your time, and you can see why we're pretty excited about the future here at B2Gold. Thank you, Operator.

Thank you, sir. This brings to close today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.