B2gold Corp Q1 FY2025 Earnings Call

Thank you for waiting. Welcome to B2Gold Corporation's First Quarter 2025 Financial Results Conference call. I will now hand the call over to Clive Johnson, President and CEO of B2Gold. Please proceed.

Welcome everyone. Today, we will focus on discussing our first quarter results. We will also provide updates on the Goose construction, the Monte project, and other developments and catalysts for the future. It's great to report a positive first quarter. As you know, we faced challenges in 2024 mainly due to operational issues with equipment at Fekola, which affected production. Consequently, we shifted some of our better grade production to this year. This marks the first time in eight years that we have had to provide a revised guidance, and we are certainly disappointed by that. However, we anticipate a strong recovery and a solid 2025. We started the quarter off well with all our mines performing effectively. It's important to note that Fekola experienced operational issues while the other two mines performed well and surpassed their guidance. The challenges at Fekola, which you will hear more about later, have been addressed. We also received positive news from the government in Valley regarding the terms of the MOU signed last September. I'm going to let Randall elaborate on that. We are making significant progress with the Goose construction, and Joe will discuss our transition toward operational activities. We're now in the final stages of preparing for production. I want to highlight some upcoming catalysts this year, with the most significant being the completion of construction and the start of production at the Goose project. Additionally, we are prioritizing Fekola as we work with the government to obtain necessary permits for trucking and other activities in the region, which could potentially add 180,000 ounces annually. Combined with Goose's projected 300,000 ounces, this represents strong growth potential. Moreover, there are critical studies on the horizon. The feasibility study for Gramalote in Colombia will be completed by the end of June. If the results are as positive as we expect, we could decide to move forward with construction preparations soon after. We already have a permit in place from previous days in Gramalote, with strong backing from local and federal governments, putting us ahead in terms of permitting. We will also keep exploring opportunities, mainly focusing on exploration. We have allocated a $64 million budget for this year, with $32 million dedicated to Back River. This significant allocation signals our commitment to exploring new targets as well as conducting infill drilling. We plan to continue investing in junior exploration companies that are well-managed and possess valuable assets, similar to how we have approached past investments like Snowline. We are open to exploring potential assistance in construction or operational partnerships as well. One additional note: we have received many inquiries about M&A activities. We want to clarify that we are not looking to surprise anyone with a large acquisition. We can assert that we are not interested in acquiring another development company or project, especially with the growth we have expected from Goose and Fekola and the Gramalote feasibility study. Altogether, this could lead to approximately 720,000 ounces of new annual production, reflecting a robust growth profile. However, we feel our share price does not adequately represent our current production and growth potential, as noted by around 15 mining analysts. We must ensure we create shareholder value by advancing our development opportunities. After hearing from Mike, we’ll open the floor for questions. Randall and Bill are also available for discussions, and everyone else is here with Bill because he’s overseeing the construction at Goose. We’re pleased with the quarter, happy to be back on track operationally, and committed to responsible production. We’re focused on growth from our existing assets. That concludes my summary. Now, I’ll hand it over to Mike for some financial details, after which we’ll proceed with updates from Bill regarding operations and developments with the government. Mike, over to you.

Thanks, Clive. Financially, it was a strong quarter. After adjusting for one-time items, the company generated $0.09 per share of adjusted earnings. We benefited, obviously, from the strong average gold sales price. Basic earnings per share were $0.04 per share, which included non-cash mark-to-market adjustments for the Goose that we inherited when we bought Sabina and also from the zero-cost collars that we put in place at the end of last year in conjunction with renewing our revolver. Operating cash flow before working capital adjustments for the quarter was $244 million, another strong result, and I think this highlights the cash generation potential of our operating assets and the strong gold price environment. On the CapEx side, spending on the Goose project remains in line with their latest budget during the quarter; construction mine development activities spent CAD 136 million during the first quarter of '25. I would comment that in late '24 and early '25, we accelerated approximately $60 million in plant and equipment purchases, including deposits on some longer lead items that were pulled forward from the second half of '25 or subsequent years. So, factoring these into account, excluding them from the total, Goose cash expenditures to date remain in line with budget. Balance sheet-wise, we continue to remain in a strong financial position with cash and cash equivalents of $330 million at the end of the first quarter, and during the quarter, I think as we discussed on our last call, we repaid the outstanding balance in our revolving credit facility. Proceeds from the convertible note that we issued in January '25, and at the end of the quarter, we had $800 million in full capacity undrawn on our revolving credit facility. So, we have a good amount of financial flexibility to be able to complete Goose construction very shortly, to fully repay the obligation under the gold prepays as we deliver into them over the course of a year from July '25 to June '26. And to complete other sustaining growth initiatives across the portfolio and continue to fund our very healthy exploration programs, which will hopefully expand mine lives. That's the financial update, I guess the key points. And with that, I'll turn the call over to Bill for an operational and project update.

All right. So, I'll start out with probably what people are most interested in. At Goose, it was a very successful winter ice road season. We started one month earlier than we have previously and completed one month earlier than expected. This was based on the additional capital we put in last year on our new ice road building plan. It was a great result. Everything came up the road. That's 4,000 container units and almost 80 million liters of fuel. On the construction side, progress was significant in the first quarter, and all activities are nearly complete and ready for first gold and subsequent ramp-up to commercial production in Q3. On the open pit mining side, mining of the Echo pit was recently completed and is now being set up to receive tailings. So when the mill turns on, the open pit mine of the Umwelt open pit will be mining and depositing tails in the Echo. On the underground mining side, mining rates at Umwelt underground are hitting new records, and we're confident that the high-grade stope ore production as in our current life of mine will begin in the third quarter of this year. Looking at Mali, Mali had a strong start to the year, exceeding gold production expectations and having lower all-in-sustaining costs than we anticipated. The mill feed grade over the course of the year, as we get through Phase 7, steadily increased, and we remain very confident in our 2025 production guidance. Of course, this will be highlighted by contributions from the Fekola underground and if we get all our permits for Fekola regional later in 2025. At Masbate, the operations continue to perform well, with a world-class safety record. I just want to call that out; they're now coming up on 2,300 days without an LTI. We anticipate another strong year of consistent production at Masbate with strong margins. At Otjikoto, the open pit and underground performed very well in the first quarter. Currently, we're focused on advancing the Antelope deposit to a development decision in the third quarter this year. And finally, Gramalote, we're getting close to the finalization of the feasibility study. We want to release it over the next couple of months. With that, I will turn it back to you, Clive.

Thanks, Bill. Randall, can you give us an update on the recent developments at Mali literally over the last couple of days?

Yes, absolutely. So, as most of you know, we've been working with the Government of Mali, following the 2023 mining code on the Fekola regional project. A part of the MOU was that they finally allowed a company to consolidate a large land package, which we are using to combine the Menankoto, Bantako, and Bakolobi permits for the first time. The 2023 mining code now allows for a larger overall land area under one consolidated land package. So, we’ve been working with them since September on what has been a novel process for them. Finally, it came through just yesterday where the council administered approved the decree to go ahead with that consolidated land package. What that does is really serve as a catalyst for us to be able to now submit our application for an exploitation permit, which will be just one license currently named Menankoto. That will find its way into a new operating company, and we expect that the application for the exploitation permit should go in within the week. The standard turnaround time has been around 30 to 60 days for us to be able to receive an exploitation license. So really, they lived up to another obligation in the MOU that one of the more important ones for us. Now it's a matter of continuing to work with that government to show them and demonstrate the value that the Fekola Regional will bring for all stakeholders, them being a 35% holder in Fekola Regional, and looking towards later on this year for getting into production.

Thanks, Randall. So that's 35% under the 2023 code for the regional area. Obviously, we own the other 65% of that. I think that's good, certainly where we sit today, as we've discussed. We've said some of the catalysts moving forward. Very happy with the first quarter, excited to continue that good performance for the rest of the year and significantly advance the catalysts that we've talked about today. So you've got the entire executive team here in Vancouver with the exception of Bill and Goose. With that, we'll open it up to any questions.

Our first question comes from Francesco Costanzo from Scotiabank. Please go ahead.

Hi, good morning, guys. Thanks a lot for taking my question. This is Francesco calling on behalf of Ovais Habib. I just want to start with Goose. So, maybe a question for Bill. Construction development is tracking to plan, and you've noted in the release that mining of the Echo pit and completion of the tailings slurry pipeline are some of the critical path items that are needed before the first gold pour. But can you speak to any of the other critical path items to highlight ahead of the first gold pour or before we achieve commercial production that we should look for?

Yes, well, obviously everything's going to be happening very rapidly now. We're currently in the process of commissioning the powerhouse. That's a key thing for the mill that is basically complete at this time. We have enough to run the mill. In the very near future, we're going to start commissioning through the mill, and then it's just working through the circuits, obviously trying to get ore in there and then producing gold by the end of Q2.

Okay, great. And then just on the capital budget. So, you've reiterated the CAD 1.54 billion budget with CAD 136 million spent during Q1. Although the initial guidance published earlier in the year outlined a little bit more non-sustaining capital in the first half of '25 than was implied by the total Goose budget. So, just wondering if you can clarify your expectation of sustaining and non-sustaining capital spending ahead of first gold, ahead of commercial production, and through the balance of the year.

Mike?

In terms of the total CapEx, the items that we'd identified, we did expand some of the sustaining CapEx. I mentioned it's somewhere in the region of $60 million, some of that was expended right at the end of '24 and with another component done in Q1 '25 and covers things like powerhouse enhancements that we're planning for next year. Actually, some of those deposits we’ve accelerated are for equipment purchases of Cat 777 loaders and some Volvo trucks. Those were originally planned for the second half of '25. We've also got some fuel on hand that we purchased for construction. So, it's purchased but hasn't been consumed yet. When you pull all these things together, you get something in the region of $60 million plus that we think are really things that were either accelerated and will be consumed in Q2 or that were pulled forward from subsequent periods or years.

Okay, thanks, Mike. And just my final question for Randall or whoever wants to take it. I mean great to see progress on the Fekola regional permit, I guess expected within the next 60 days or so. I just wanted to clarify, do you still expect to need around three months or so to prepare the site before we can actually see ore production start to come from Anaconda?

I'll leave that to Bill.

Yes, we do. There's three months of pre-stripping there.

Okay, great. Thanks for clarifying. That's all for my questions.

The next question comes from Anita Soni from CIBC World Markets. Please go ahead.

Good morning, Clive and team. I just had a question on the Gramalote study that's coming up soon. Could you just give us an idea of some of the parameters that you'd be looking at? Obviously, we know you're looking for a smaller footprint at that asset, but just wondering what kind of gold price you would be expecting to use in that study.

I'll turn it over to Bill to tell you. We can talk about what was in the PEA before in previous studies. I think it's quite along the lines of the PEA we're hoping to meet similar or even improved. But that was, as you said, a smaller footprint, which is good from the updated impairment point of view. Basically, looking at, because it's been older now, we're looking at the potential to produce 240,000 ounces a year for the first five years of a 12-year mine life. So, the culmination of the previous study at PEA was a bit misleading because it actually had. There's no return required to go to feasibility, and there's a lot of engineering work that went into that PEA. So much work has happened since then, and we're on track with the feasibility study for the middle of the year.

Yes, just I don't mean to walk on you there, but you're absolutely right. The PEA is the absolute best reference for what we're looking at for the feasibility study. Everything is tracking very nicely against that, and I'll leave it for Mike to comment on what gold price we're going to use.

I think gold price, I mean, you'll see us running some scenarios in there, but you'll see us look at consensus as a base just to see where we are. If you look at where CIBC's latest consensus came out, obviously it's higher in the short term, but those would be during build years anyway. Then in the long term, you're looking at somewhere around 2,300 to 2,400 bucks; that's current consensus.

I think that Gramalote can potentially, if we have a positive study and we make a development decision to go forward, it could slot in very nicely after Goose to our production profile. As everyone's aware, we don't try building two mines at the same time. When you look at funding Gramalote, there are a number of sources for funding, from the existing cash flow we're generating from existing facilities. We have access to good term debt facilities. This is not one that we would necessarily be afraid of hedging a bit of gold in terms of spending quite a lot of capital. The pre-feasibility was around $800 million, but there are numerous ways to finance that. Additionally, we would be looking at one option that could help protect the company and the project from the construction period. I expect that would be a small percentage of our gold production as a company. So, I hope that answers your questions.

It does. And then just the last question on the timing was. As you mentioned, not wanting to build Goose or build too many things at the same time, but you're coming to the tail end of Goose now. Would it be right to think about Gramalote potentially coming on stream just at the end of the decade?

Bill, you want to touch on a mix of that? Obviously, we don't know.

Yes. So, Anita, really it comes down to the feasibility study. We have to make some minor modifications because Anglo has a construction permit on it right now. That permit has to be modified for whatever changes we make in the PEA. We're estimating a 12-month to 15-month period on that. So your answer is absolutely correct. It could be earlier if the government wants to accommodate that. But you're right; it's probably the end of '28 or '29.

Okay, that's it for my questions. Thank you again.

Our next question comes from Carey Macrury from Canaccord Genuity. Please go ahead.

Good morning, guys. Just another question on Goose. What kind of stockpile do you expect to have and grade ahead of the mill startups?

Well, I can tell you that we've got significant stockpiles already prepared from the open pit. I was just looking at this morning. What I'll tell you is that for the mill, as we start up, once we get kind of the low-grade stuff through, we want to run at least 20,000 tons and maybe more, as much as 35,000 tons at plus 10 grams through right away. So, we're looking good for meeting our projections. This kind of 120 at this point, 120 to 130 is not really an issue. So, we can certainly see that in 2025.

We've got 120 to 150 right.

Yes. Okay. And just in terms of the ore mix with the underground coming on more so in Q3, I'm assuming most of the ore mix for the first half of the year was really the stockpiles and the open pit. Is that correct? Or what is the mix, roughly?

What is the mix between open pit and underground? I don't have that at my fingertips right now, but certainly, in 2025, a lot of the material is coming from the open pit.

Yeah, I can comment on that. So Carey, about 40% of the feed will come from the Echo open pit throughout the year. 40% of material from the open pit, and then about 20% of material will come from underground is the mix for the balance of the year.

Okay, great. Thank you. Thanks, Mike.

The next question comes from Ovais Habib from Scotiabank. Please go ahead.

Hi, Clive and B2 team. Sorry, got a bit delayed coming on the call. I'm just bouncing between some conference calls. A lot of questions have been answered. But just one question on maybe on the Otjikoto side and in terms of any expansions on the Antelope side, you're looking to make a construction decision, I believe in Q3 of this year. What's pending in terms of making that decision? A PEA was released; do you need to do further studies or more drilling? Can you give us a little bit more color on that?

Yes, thanks for raising that. We didn't really talk much about it in detail. I guess I'll let Bill answer.

Yes. The only thing that's really kind of outstanding, Ovais, is the Geotech. Overall, we have the mining method locked down. We're currently looking at what is the surface infrastructure layout, basic kind of supporting questions. So, do we want to have extra facilities? We're right now going through a third-party review of what we've done.

Okay. So you guys should be in a good position then based on that for that construction decision in Q3.

100%.

Okay, sounds good. And just you may have already touched upon this during the call, so I apologize if I'm asking again, but just in terms of the permits on Mali, specifically on the Fekola underground. The Fekola underground, from what I understand is an amendment to your permit, is that expected sooner than the regional? I mean, is that separate? Is that together now? From what I understand, the Malian government or the regulators had combined the two. Any color on that piece?

I'll pass it over to Randall, but what you missed earlier in the call, you realize you've got a bunch of different calls to go back and forth on, was a significant development in terms of moving the permitting board from the government just in the last day. Randall, we've already covered it, but we'll give you, Ovais, a highlight view of that and also the other government as well.

Yes, I mean, let me answer your first question. They are not connected, Ovais. I'm not sure where that one came from, but they are two distinct processes; the underground and the regional. We talk about them together in our press releases just because that's the future and some of the catalysts at Fekola. Everything that needs to be submitted for the underground approvals has been submitted, and that process is underway. We expect that we'll be up and producing early in the second half and so don't see any issues there with the underground. That one is well in hand. As for the regional, we did receive the council's administrative decree yesterday for the combination of the three permits. The three permit area, so that's 200-plus square kilometers to the north covering contiguous areas of Medinandi and the Fekola permit. This really is the catalyst that allows us to submit the exploitation application. It's been completed, it's translated, it's ready to go. We need a little bit of time to include all of the details that come out of that consolidated permit and flow those through the application. But then we expect the turnaround time has been historically about 30 to 60 days in this instance.

Perfect. Thanks for the color on that, Randall. And then really good to hear on the progress on the permitting. That's it for me, guys, and thanks for taking my questions.

Absolutely.

And the next question is a follow-up from Carey Macrury from Canaccord Genuity. Please go ahead.

Yes, just a question for Mike. Obviously, the balance sheet is in great shape. Just asking about the prepay, given that you'll be ramping up in Q3, is there any thought of deferring that to later or are you comfortable just settling in that in the quarter?

Well, we can defer it. We could roll them if we want to. Our goal is not to. If you look at the rationale for pulling in the convertible for a bit of long-term money on the balance sheet, that's there to free up the line. We're going to use the line to help us maneuver through the prepays and to do some of these other capital early-stage initiatives like Antelope or whatever we might do with Gramalote, or finishing Fekola Regional; all those things but also use the line just to maneuver through. We set them up for a one-year delivery period, so they’re done pretty quickly. We've got them, we use them. Goose will be built, Goose will be running. We’ll deliver into the prepays, and we’re done. We'll put them behind us.

Talk about the general aim to build our facility available to us as Mike said; we'll use parts of that as we move forward and apply this to live other people.

Yes, there's lots of room. I mean, if gold stays where it is, we won't be touching the facility. But we don't plan on record gold prices all the time. We plan on managing things. So we're in good shape to do it, Carey. That's the bottom line.

All right. Great. Thanks, guys.

This concludes our question-and-answer session. I would now like to hand the conference back to Clive Johnson for any closing remarks.

Yes, thanks everyone for attending the conference. You can always follow up with us if there are any additional questions that occur to you after a good quarter, looking forward to great developments in 2025. Thanks for getting on the call.

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