B2gold Corp 6-K, filed Feb 23, 2022
B2gold Corp (BTG)
6-K
2022-02-23
For: 2021-12-31
View Original
Added on
April 11, 2026
About this 6-K
B2gold Corp filed this 6-K on February 23, 2022.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of February, 2022
Commission File Number: 001-35936
B2Gold Corp.
(Translation of registrant’s name into English)
Park Place
Suite 3400 - 666 Burrard Street
Vancouver, British Columbia V6C 2X8
Canada
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
[ ] Form 20-F [X] Form 40-F
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ]
DOCUMENTS INCLUDED AS PART OF THIS FORM 6-K
See the Exhibit Index hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| B2Gold Corp. | ||||||||
| Date: February 22, 2022 | By: | /s/ Roger Richer | ||||||
| Name: | Roger Richer | |||||||
| Title: | Executive Vice President, General Counsel & Secretary | |||||||
EXHIBIT INDEX
EXHIBITS 99.1 AND 99.2 INCLUDED WITH THIS REPORT ARE HEREBY INCORPORATED BY REFERENCE INTO THE REGISTRANT'S REGISTRATION STATEMENTS ON FORM S-8 (FILE NOS. 333-239197, 333-232158, 333-206811, 333-200228, 333-218710, 333-226063 AND 333-192555) (COLLECTIVELY, THE "REGISTRATION STATEMENTS"), AND TO BE A PART THEREOF FROM THE DATE ON WHICH THIS REPORT IS SUBMITTED, TO THE EXTENT NOT SUPERSEDED BY DOCUMENTS OR REPORTS SUBSEQUENTLY FILED OR FURNISHED, AND EXHIBITS 99.3, 99.4 AND 99.5 ARE HEREBY INCORPORATED BY REFERENCE AS EXHIBITS TO THE REGISTRATION STATEMENTS.
| Exhibit | Description | ||||
| No. | |||||
B2GOLD CORP.
Consolidated Financial Statements
December 31, 2021 and 2020
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of B2Gold Corp.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of B2Gold Corp. and its subsidiaries (together, the Company) as of December 31, 2021 and 2020, and the related consolidated statements of operations, comprehensive income, cash flows and changes in equity for the years then ended, including the related notes (collectively referred to as the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and its financial performance and its cash flows for the years then ended in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting on page 27 of the 2021 Management’s Discussion & Analysis. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial
| PricewaterhouseCoopers LLP | ||
| PricewaterhouseCoopers Place, 250 Howe Street, Suite 1400, Vancouver, British Columbia, Canada V6C 3S7 | ||
| T: +1 604 806 7000, F: +1 604 806 7806 | ||
| “PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership. | ||
reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Menankoto Property impairment analysis
As described in Notes 3, 4 and 8 to the consolidated financial statements, long-lived assets are tested for impairment, or reversal of a previous impairment, if there is an indicator of impairment or of subsequent impairment reversal. The Company was involved in a dispute with the Malian Government related to the renewal of the exploration permit for the Menankoto Property (the “Menankoto Permit”) for which it had applied in early February 2021. As of June 30, 2021, management considered the non-renewal of the Menankoto Permit to be an indicator of impairment for its Menankoto Property, which had a carrying value of $32 million on that date. As a result, management performed an impairment analysis for the Menankoto Property by estimating its recoverable amount to determine if an impairment charge was required. In estimating the recoverable amount, management estimated the fair value less costs of disposal using assumptions such as: the weighted-average probabilities of renewal of the Menankoto Permit through available legal remedies, the value of the property based on the value per ounce of gold determined by
using comparable market transactions, and estimated mineral resources of the Menankoto Property prepared by appropriately qualified persons (management specialists). Management concluded that the Menankoto Property was not impaired at June 30, 2021.
The principal considerations for our determination that performing procedures relating to the Menankoto Property impairment analysis is a critical audit matter are: (i) the significant judgment by management, including the use of management’s specialists, when estimating the recoverable amount of the Menankoto Property; (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures to evaluate the assumptions; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s impairment analysis, including controls over the determination of the recoverable amount of the Menankoto Property. These procedures also included, among others, (i) testing management’s process for determining the recoverable amount of the Menankoto Property, (ii) evaluating the reasonableness of the weighted-average probabilities of renewal of the Menankoto Permit through available legal remedies by evaluating correspondence with the Company’s relevant legal counsel regarding the matter, and (iii) testing the completeness and accuracy of underlying data used by management in determining the recoverable amount of the Menankoto Property. The work of management’s specialists was used in performing the procedures to evaluate the reasonableness of the estimated mineral resources of the Menankoto Property. As a basis for using this work, management’s specialists’ qualifications were understood and the Company’s relationship with management’s specialists was assessed. The procedures performed also included evaluation of the methods and assumptions used by management’s specialists, tests of the data used by the specialists, and an evaluation of the specialists’ findings. Professionals with specialized skill and knowledge were used to assist in assessing the reasonableness of the value per ounce of gold based on comparable market transactions.
/s/PricewaterhouseCoopers LLP
Chartered Professional Accountants
Vancouver, Canada
February 22, 2022
We have served as the Company’s auditor since 2007.
| B2GOLD CORP. | ||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||
| FOR THE YEARS ENDED DECEMBER 31 | ||
| (Expressed in thousands of United States dollars, except shares and per share amounts) | ||
| 2021 | 2020 | |||||||||||||
| Gold revenue | $ | 1,762,264 | $ | 1,788,928 | ||||||||||
| Cost of sales | ||||||||||||||
Production costs (Note 19) | (493,389) | (407,865) | ||||||||||||
| Depreciation and depletion | (378,892) | (301,491) | ||||||||||||
| Royalties and production taxes | (121,431) | (121,285) | ||||||||||||
| Total cost of sales | (993,712) | (830,641) | ||||||||||||
| Gross profit | 768,552 | 958,287 | ||||||||||||
| General and administrative | (50,185) | (45,605) | ||||||||||||
Share-based payments (Note 12) | (22,571) | (17,129) | ||||||||||||
Net gain on disposal of Burkina Faso assets (Note 8) | 22,463 | — | ||||||||||||
(Impairment) reversal of impairment of long-lived assets (Note 8) | (5,905) | 174,309 | ||||||||||||
Write-down of mineral property interests (Note 8) | (15) | (11,353) | ||||||||||||
| Community relations | (3,072) | (6,484) | ||||||||||||
| Foreign exchange losses | (5,895) | (15,301) | ||||||||||||
Share of net income of associates (Note 8) | 17,543 | 22,167 | ||||||||||||
| Other | (6,282) | (5,957) | ||||||||||||
| Operating income | 714,633 | 1,052,934 | ||||||||||||
| Interest and financing expense | (11,798) | (15,803) | ||||||||||||
Gains (losses) on derivative instruments (Note 14) | 24,373 | (5,706) | ||||||||||||
| Other | (981) | 3,003 | ||||||||||||
| Income from operations before taxes | 726,227 | 1,034,428 | ||||||||||||
Current income tax, withholding and other taxes (Note 16) | (270,669) | (309,913) | ||||||||||||
Deferred income tax recovery (expense) (Note 16) | 5,267 | (52,102) | ||||||||||||
| Net income | $ | 460,825 | $ | 672,413 | ||||||||||
| Attributable to: | ||||||||||||||
| Shareholders of the Company | $ | 420,065 | $ | 628,063 | ||||||||||
Non-controlling interests (Note 13) | 40,760 | 44,350 | ||||||||||||
| Net income | $ | 460,825 | $ | 672,413 | ||||||||||
Earnings per share (attributable to shareholders of the Company)(Note 12) | ||||||||||||||
| Basic | $ | 0.40 | $ | 0.60 | ||||||||||
| Diluted | $ | 0.40 | $ | 0.59 | ||||||||||
Weighted average number of common shares outstanding (in thousands)(Note 12) | ||||||||||||||
| Basic | 1,053,809 | 1,043,385 | ||||||||||||
| Diluted | 1,061,542 | 1,056,302 | ||||||||||||
See accompanying notes to consolidated financial statements.
| B2GOLD CORP. | ||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
| FOR THE YEARS ENDED DECEMBER 31 | ||
| (Expressed in thousands of United States dollars) | ||
| 2021 | 2020 | |||||||||||||
| Net income | $ | 460,825 | $ | 672,413 | ||||||||||
| Other comprehensive income | ||||||||||||||
| Items that will not be subsequently reclassified to net income: | ||||||||||||||
| Unrealized gain on investments | 2,234 | 6,538 | ||||||||||||
| Other comprehensive income | 2,234 | 6,538 | ||||||||||||
| Total comprehensive income | $ | 463,059 | $ | 678,951 | ||||||||||
| Other comprehensive income attributable to: | ||||||||||||||
| Shareholders of the Company | $ | 2,234 | $ | 6,538 | ||||||||||
| Non-controlling interests | — | — | ||||||||||||
| $ | 2,234 | $ | 6,538 | |||||||||||
| Total comprehensive income attributable to: | ||||||||||||||
| Shareholders of the Company | $ | 422,299 | $ | 634,601 | ||||||||||
| Non-controlling interests | 40,760 | 44,350 | ||||||||||||
| $ | 463,059 | $ | 678,951 | |||||||||||
See accompanying notes to consolidated financial statements.
| B2GOLD CORP. | ||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| FOR THE YEARS ENDED DECEMBER 31 | ||
| (Expressed in thousands of United States dollars) | ||
| 2021 | 2020 | |||||||||||||
| Operating activities | ||||||||||||||
| Net income | $ | 460,825 | $ | 672,413 | ||||||||||
Mine restoration provisions settled (Note 11) | (343) | (425) | ||||||||||||
Non-cash charges, net (Note 17) | 369,556 | 198,058 | ||||||||||||
Changes in non-cash working capital (Note 17) | (104,615) | 86,777 | ||||||||||||
| Changes in long-term value added tax receivables | (1,310) | (6,178) | ||||||||||||
| Cash provided by operating activities | 724,113 | 950,645 | ||||||||||||
| Financing activities | ||||||||||||||
Revolving credit facility, drawdowns net of transaction costs (Note 10) | (3,368) | 250,000 | ||||||||||||
Repayment of revolving credit facility (Note 10) | — | (450,000) | ||||||||||||
Equipment loan facilities, drawdowns net of transaction costs (Note 10) | — | 41,416 | ||||||||||||
Repayment of equipment loan facilities (Note 10) | (28,797) | (28,445) | ||||||||||||
| Interest and commitment fees paid | (6,232) | (12,451) | ||||||||||||
Cash proceeds from stock option exercises (Note 12) | 6,435 | 46,152 | ||||||||||||
Dividends paid (Note 12) | (168,372) | (115,266) | ||||||||||||
Distributions to non-controlling interests (Note 13) | (36,187) | (9,206) | ||||||||||||
Loan repayments from non-controlling interests (Note 13) | 5,312 | — | ||||||||||||
Principal payments on lease arrangements (Note 10) | (3,889) | (3,637) | ||||||||||||
| Changes in restricted cash accounts | 870 | 2,572 | ||||||||||||
| Cash used by financing activities | (234,228) | (278,865) | ||||||||||||
| Investing activities | ||||||||||||||
| Expenditures on mining interests: | ||||||||||||||
| Fekola Mine | (110,637) | (184,037) | ||||||||||||
| Masbate Mine | (30,743) | (34,041) | ||||||||||||
| Otjikoto Mine | (80,936) | (66,815) | ||||||||||||
| Gramalote Property | (23,887) | (19,498) | ||||||||||||
Other exploration and development (Note 17) | (56,116) | (48,182) | ||||||||||||
Cash proceeds from sale of mineral properties, net of transaction costs (Note 8) | 31,684 | 24,525 | ||||||||||||
Purchase of common shares of associate (Note 8) | (5,945) | — | ||||||||||||
| Funding of reclamation accounts | (8,009) | (11,575) | ||||||||||||
| Other | (1,688) | 1,667 | ||||||||||||
| Cash used by investing activities | (286,277) | (337,956) | ||||||||||||
| Increase in cash and cash equivalents | 203,608 | 333,824 | ||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | (10,294) | 5,265 | ||||||||||||
| Cash and cash equivalents, beginning of year | 479,685 | 140,596 | ||||||||||||
| Cash and cash equivalents, end of year | $ | 672,999 | $ | 479,685 | ||||||||||
Supplementary cash flow information (Note 17) | ||||||||||||||
See accompanying notes to consolidated financial statements.
| B2GOLD CORP. | ||
| CONSOLIDATED BALANCE SHEETS | ||
| (Expressed in thousands of United States dollars) | ||
| As at | As at | |||||||||||||
| December 31, | December 31, | |||||||||||||
| 2021 | 2020 | |||||||||||||
| Assets | ||||||||||||||
| Current | ||||||||||||||
| Cash and cash equivalents | $ | 672,999 | $ | 479,685 | ||||||||||
Accounts receivable, prepaids and other (Note 5) | 32,112 | 21,306 | ||||||||||||
Deferred consideration receivable (Note 8) | 41,559 | — | ||||||||||||
| Value-added and other tax receivables | 14,393 | 11,797 | ||||||||||||
Inventories (Note 6) | 272,354 | 238,055 | ||||||||||||
Assets classified as held for sale (Note 8) | 12,700 | 11,855 | ||||||||||||
| 1,046,117 | 762,698 | |||||||||||||
Long-term investments (Note 7) | 32,118 | 9,354 | ||||||||||||
| Value-added tax receivables | 63,165 | 35,383 | ||||||||||||
Mining interests (Note 8 and Note 22 – Schedules) | ||||||||||||||
| - Owned by subsidiaries and joint operations | 2,231,831 | 2,387,020 | ||||||||||||
| - Investments in joint ventures and associates | 104,236 | 76,235 | ||||||||||||
Other assets (Note 9) | 82,371 | 67,142 | ||||||||||||
Deferred income taxes (Note 16) | 1,455 | 24,547 | ||||||||||||
| $ | 3,561,293 | $ | 3,362,379 | |||||||||||
| Liabilities | ||||||||||||||
| Current | ||||||||||||||
| Accounts payable and accrued liabilities | $ | 111,716 | $ | 89,062 | ||||||||||
| Current income and other taxes payable | 92,275 | 154,709 | ||||||||||||
Current portion of long-term debt (Note 10) | 25,408 | 34,111 | ||||||||||||
Current portion of mine restoration provisions (Note 11) | 734 | — | ||||||||||||
| Other current liabilities | 1,056 | 8,211 | ||||||||||||
| 231,189 | 286,093 | |||||||||||||
Long-term debt (Note 10) | 49,726 | 75,911 | ||||||||||||
Mine restoration provisions (Note 11) | 116,547 | 104,282 | ||||||||||||
Deferred income taxes (Note 16) | 187,887 | 220,903 | ||||||||||||
| Employee benefits obligation | 7,115 | 5,874 | ||||||||||||
| Other long-term liabilities | 7,822 | 8,726 | ||||||||||||
| 600,286 | 701,789 | |||||||||||||
| Equity | ||||||||||||||
| Shareholders’ equity | ||||||||||||||
Share capital (Note 12) | 2,422,184 | 2,407,734 | ||||||||||||
| Contributed surplus | 67,028 | 48,472 | ||||||||||||
| Accumulated other comprehensive loss | (136,299) | (138,533) | ||||||||||||
| Retained earnings | 507,381 | 254,343 | ||||||||||||
| 2,860,294 | 2,572,016 | |||||||||||||
Non-controlling interests (Note 13) | 100,713 | 88,574 | ||||||||||||
| 2,961,007 | 2,660,590 | |||||||||||||
| $ | 3,561,293 | $ | 3,362,379 | |||||||||||
Commitments (Note 21) | ||||||||||||||
| Approved by the Board | "Clive T. Johnson" | Director | "Robert J. Gayton" | Director | ||||||||||
See accompanying notes to consolidated financial statements.
| B2GOLD CORP. | ||
| CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | ||
| FOR THE YEARS ENDED DECEMBER 31 | ||
| (Expressed in thousands of United States dollars) | ||
| 2021 | ||||||||||||||||||||||||||
| Shares (‘000’s) | Share capital | Contributed surplus | Accumulated other comprehensive loss | Retained earnings | Non- controlling interests | Total equity | ||||||||||||||||||||
| Balance at December 31, 2020 | 1,051,138 | $ | 2,407,734 | $ | 48,472 | $ | (138,533) | $ | 254,343 | $ | 88,574 | $ | 2,660,590 | |||||||||||||
| Net income | — | — | — | — | 420,065 | 40,760 | 460,825 | |||||||||||||||||||
Dividends (Note 12) | — | — | 1,072 | — | (169,669) | — | (168,597) | |||||||||||||||||||
| Unrealized gain on investments | — | — | — | 2,234 | — | — | 2,234 | |||||||||||||||||||
Shares issued on exercise of stock options (Note 12) | 3,053 | 6,435 | — | — | — | — | 6,435 | |||||||||||||||||||
Shares issued on vesting of RSUs (Note 12) | 2,143 | 6,068 | (6,068) | — | — | — | — | |||||||||||||||||||
Transactions with non-controlling interests (Note 13) | — | — | — | — | 2,642 | (28,621) | (25,979) | |||||||||||||||||||
Share-based payments (Note 12) | — | — | 25,499 | — | — | — | 25,499 | |||||||||||||||||||
| Transfer to share capital on exercise of stock options | — | 1,947 | (1,947) | — | — | — | — | |||||||||||||||||||
| Balance at December 31, 2021 | 1,056,334 | $ | 2,422,184 | $ | 67,028 | $ | (136,299) | $ | 507,381 | $ | 100,713 | $ | 2,961,007 | |||||||||||||
| 2020 | ||||||||||||||||||||||||||
| Shares (‘000’s) | Share capital | Contributed surplus | Accumulated other comprehensive loss | Retained earnings (deficit) | Non- controlling interests | Total equity | ||||||||||||||||||||
| Balance at December 31, 2019 | 1,030,400 | $ | 2,339,874 | $ | 56,685 | $ | (145,071) | $ | (261,245) | $ | 61,409 | $ | 2,051,652 | |||||||||||||
| Net income | — | — | — | — | 628,063 | 44,350 | 672,413 | |||||||||||||||||||
Dividends (Note 12) | — | — | 696 | — | (116,101) | — | (115,405) | |||||||||||||||||||
| Unrealized gain on investments | — | — | — | 6,538 | — | — | 6,538 | |||||||||||||||||||
Shares issued on exercise of stock options (Note 12) | 19,265 | 44,651 | — | — | — | — | 44,651 | |||||||||||||||||||
Shares issued on vesting of RSUs (Note 12) | 1,473 | 3,960 | (3,960) | — | — | — | — | |||||||||||||||||||
Transactions with non-controlling interests (Note 13) | — | — | — | — | 3,626 | (17,185) | (13,559) | |||||||||||||||||||
Share-based payments (Note 12) | — | — | 14,300 | — | — | — | 14,300 | |||||||||||||||||||
| Transfer to share capital on exercise of stock options | — | 19,249 | (19,249) | — | — | — | — | |||||||||||||||||||
| Balance at December 31, 2020 | 1,051,138 | $ | 2,407,734 | $ | 48,472 | $ | (138,533) | $ | 254,343 | $ | 88,574 | $ | 2,660,590 | |||||||||||||
See accompanying notes to consolidated financial statements.
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2021 and 2020 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
1Nature of operations
B2Gold Corp. (“B2Gold” or the “Company”) is a Vancouver-based gold producer with three operating mines. The Company operates the Fekola Mine in Mali, the Masbate Mine in the Philippines and the Otjikoto Mine in Namibia. The Company also has a 50% joint operation interest in the Gramalote Property in Colombia. The Company had an approximately 33% interest in Calibre Mining Corp. ("Calibre"). Subsequent to December 31, 2021, the Company's interest in Calibre was diluted to approximately 25%. The Company also has an approximately 19% interest in BeMetals Corp. ("BeMetals"). In addition, the Company has a portfolio of evaluation and exploration assets in other countries including Mali, Uzbekistan and Finland. On November 30, 2021, the Company completed the sale of its 81% interest in the Kiaka Project in Burkina Faso (see Note 8).
B2Gold is a public company listed on the Toronto Stock Exchange under the symbol “BTO”, the NYSE American LLC under the symbol “BTG” and the Namibian Stock Exchange under the symbol “B2G”. B2Gold’s head office is located at Suite 3400, Park Place, 666 Burrard Street, Vancouver, British Columbia, V6C2X8.
2Basis of preparation
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”). These consolidated financial statements were authorized for issue by the Board of Directors on February 22, 2022.
3Summary of significant accounting policies
The significant accounting policies used in the preparation of these financial statements are as follows:
Principles of consolidation
The financial statements of the Company consolidate the accounts of B2Gold and its subsidiaries. All intercompany transactions, balances, and unrealized gains and losses from intercompany transactions are eliminated on consolidation.
The Company’s most significant wholly-owned and partially owned subsidiaries are presented below:
| % interest | ||||||||
| - | Fekola SA (“Fekola”) | 80 | ||||||
| - | B2Gold Namibia (Pty) Ltd. (“Otjikoto”) | 90 | ||||||
| - | Philippines Gold Processing & Refining Corporation (“Masbate”) | 100 | ||||||
| - | Filminera Resources Corporation ("Masbate") | 40 | ||||||
Subsidiaries are entities controlled by the Company. Control exists when the Company has power over an investee, when the Company is exposed, or has rights, to variable returns from the investee and when the Company has the ability to affect those returns through its power over the investee. Subsidiaries are fully consolidated from the date on which control is obtained by B2Gold and are de-consolidated from the date that control ceases.
The Company holds its interest in the Masbate Gold Project (which operates the Masbate Mine) through two indirectly-owned subsidiaries. B2Gold has a 100% interest in Philippines Gold Processing & Refining Corporation (“PGPRC”) and a 40% interest in Filminera Resources Corporation (“FRC”). The remaining 60% interest in FRC is held by a Philippines-registered company that is owned by a Philippine shareholder. The Company consolidates the Masbate Gold Project as a result of its ownership interests and the contractual relationship between the entities. FRC owns the majority of the Masbate Gold Project tenements. PGPRC owns the process plant and is responsible for the sale of all gold. PGPRC and FRC have a contractual relationship, which includes PGPRC purchasing all of the ore production from FRC at a price equal to the cost for the ore plus a predetermined margin. For accounting purposes, this contractual relationship gives the Company control to consolidate FRC.
The Company’s 50% interest in the Gramalote Property located in Colombia operates as an incorporated joint arrangement with AngloGold Ashanti Limited (“AngloGold”). This joint arrangement is accounted for as a joint operation. The Company and AngloGold jointly control the operations of the Gramalote Property. The Company recognizes its share of the assets and liabilities of this joint operation.
1
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2021 and 2020 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
The Company's interest in Calibre is accounted for as an investment in associate. The Company does not control this entity, but does exert significant influence over its operations. The Company accounts for its interest in this associate using the equity method.
The Company's interest in BeMetals is also accounted for as an investment in associate (Note 8). The Company does not control this entity, but does exert significant influence over its operations. The Company accounts for its interest in this associate using the equity method.
The Company established a trust arrangement under its Incentive Plan (Note 12) for the benefit of its directors, officers, employees and service providers. The Company consolidates this trust as it has the power to control its financial and operating policies and obtain the benefits from its activities.
Investments in joint arrangements and associates
A joint arrangement is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.
The Company considers whether a joint arrangement is a joint operation or joint venture. The parties to a joint operation have the rights to the underlying assets and are exposed to the underlying liabilities of the joint arrangement. The Company accounts for investment in joint operations by recognizing its share of the operations underlying assets, liabilities, revenues and expenses. The parties to a joint venture have an interest in the underlying net assets of the joint arrangement. Investments in joint ventures are accounted for using the equity method. The equity method involves recording the initial investment at cost. Additional funding into an investee is recorded as an increase in the carrying value of the investment. The carrying amount is adjusted by the Company’s share of post-acquisition net income or loss, dilution gains or losses (resulting from changes in ownership interest), depreciation or amortization.
An associate is an entity over which the Company has significant influence, but not control. Investments in associates are also accounted for using the equity method.
Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of the group's entities are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in United States dollars, which is the Company’s presentation currency. The Company’s mining operations operate within an economic environment where the functional currency is the United States dollar. References to "$" or "US$" are to United States dollars, while references to "Cdn. $" are to Canadian dollars and "Aus. $" are to Australian dollars.
Transactions and balances
Transactions denominated in foreign currencies are translated into the United States dollar as follows:
•Monetary assets and liabilities are translated at the rates of exchange at the Consolidated Balance Sheet date;
•Non-monetary assets and liabilities are translated at historical exchange rates prevailing at each transaction date;
•Revenue and expenses are translated at the exchange rate at the date of the transaction, except depreciation, depletion and amortization, which are translated at historical exchange rates, and share-based compensation expense, which is translated at the rates of exchange applicable at the date of grant of the share-based compensation; and
•Exchange gains and losses on translation are included in earnings. When the gain or loss on certain non-monetary items, such as long-term investments classified as fair value through other comprehensive income (“OCI”) is recognized in OCI, the translation differences are also recognized in OCI.
2
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2021 and 2020 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
Group companies
For any subsidiaries or joint ventures whose functional currency differs from the United States dollar, balances and transactions are translated into the United States dollar as follows:
•Assets and liabilities are translated at the rates of exchange at the Consolidated Balance Sheet date;
•Revenue and expenses are translated at average exchange rates throughout the reporting period or at rates that approximate the actual exchange rates; items such as depreciation are translated at the monthly average exchange rate; and
•Exchange gains and losses on translation are included in OCI.
The exchange gains and losses are recognized in earnings upon the substantial disposition, liquidation or closure of the entity that gave rise to such amounts.
Financial instruments
The Company recognizes financial assets and liabilities on the Consolidated Balance Sheet when the Company becomes party to the contractual provisions of the instrument.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held with banks, and other short-term highly liquid investments with original maturities of three months or less. Cash and cash equivalents are classified as financial assets and subsequently measured at amortized cost.
Accounts receivable, accounts payable and accrued liabilities
Accounts receivable, accounts payable and accrued liabilities are non-interest bearing and are initially measured at fair value, subsequently recorded at amortized cost which approximates fair value due to the short term to maturity. Where necessary, accounts receivable are net of expected credit losses. Accounts receivable are classified as financial assets subsequently measured at amortized cost and accounts payable and accrued liabilities are classified as financial liabilities and subsequently measured at amortized cost.
Long-term investments
Equity investments in entities that are not subsidiaries, joint ventures or investments in associates are designated as fair value through profit and loss ("FVTPL") unless they are irrevocably designated, on an individual basis, as fair value through other comprehensive income ("FVOCI"). These investments are measured at fair value on acquisition and at each reporting date. Any unrealized holding gains and losses related to long-term investments designated as FVOCI are excluded from net earnings and are included in OCI. Upon disposal, any accumulated gains and losses remain in equity.
Lease liabilities
Lease liabilities are interest bearing and are initially measured at the present value and subsequently recorded at amortized cost.
Debt
The Company initially recognizes all financial liabilities at fair value and classifies them as subsequently measured at either FVTPL or amortized cost, as appropriate. For debt subsequently measured at amortized cost, the effective interest rate method is used. Debt classified as FVTPL is measured at fair value on each financial period-end date with gains and losses flowing through the Consolidated Statement of Operations. For debt that is optionally classified as FVTPL, the part of the fair value change related to the Company’s own credit risk is recorded in OCI rather than the Consolidated Statement of Operations.
Derivative instruments
Derivative instruments, including embedded derivatives, are recorded at FVTPL and accordingly recorded at fair value on the Consolidated Balance Sheet with changes in the fair value being recognized as gains or losses in the Consolidated Statement of Operations. Fair values for derivative instruments are determined using valuation techniques, using assumptions based on market conditions existing at the balance sheet date.
3
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2021 and 2020 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
Impairment of financial assets held at amortized cost
At each reporting date, the Company measures the loss allowance for financial assets held at amortized cost at an amount equal to the lifetime expected credit losses if the credit risk on the financial assets has increased significantly since initial recognition. If at the reporting date, the credit risk on the financial assets has not increased significantly since initial recognition, the Company measures the loss allowances for the financial assets at an amount equal to twelve month expected credit losses.
Derecognition of financial assets
Financial assets are derecognized when the investments mature or are sold, and substantially all the risks and rewards of ownership have been transferred. Gains and losses on derecognition of financial assets classified as FVTPL or amortized cost are recognized within other non-operating income. Accumulated gains or losses on financial assets classified as FVOCI remain within accumulated other comprehensive income.
Inventories
Gold and silver bullion, in-process and stockpile inventories are recorded at the lower of average cost and net realizable value. The cost of finished goods and work-in-progress comprises raw materials, direct labour, and other direct costs, as well as stripping in the production stage and related production overheads (based on normal operating capacity) including applicable depreciation on property, plant and equipment. Net realizable value is the estimated selling price less applicable selling expenses and cost to complete.
When inventories have been written down to net realizable value, a new assessment of net realizable value is made in each subsequent period. If the circumstances that caused the write down no longer exist, the amount of the write down on inventory not yet sold is reversed.
Materials and supplies inventories are valued at the lower of average cost and net realizable value. Cost includes acquisition, freight and other directly attributable costs.
Mining interests
Mining interests include property, plant and equipment, mineral properties and mine development costs, deferred stripping, exploration and evaluation expenditures, capitalized borrowing costs and impairment.
Property, plant and equipment
Property, plant and equipment are recorded at cost. Repairs and maintenance expenditures are charged to operations; major improvements and replacements which extend the useful life of an asset are capitalized. Property, plant and equipment are amortized over the life of the mine using the units-of-production (“UOP”) method based on the recoverable ounces from the estimated proven and probable reserves and a portion of the measured and indicated resources that are reasonably expected to be converted to proven and probable reserves. Mobile equipment, tailings dams and other equipment are depreciated on a straight-line basis over three to six years as appropriate, net of residual value. The Company allocates the amount initially recognized in respect of an item of property, plant and equipment to its significant components and depreciates separately each component part. Residual values, method of amortization and useful lives of the assets are reviewed annually and adjusted if appropriate.
Mineral property and mine development costs
Mineral property and mine development costs are stated at cost less accumulated depreciation and impairment losses. When production commences, these costs are amortized using the UOP method, based on recoverable ounces from the estimated proven and probable reserves plus a portion of measured and indicated resources that are reasonably expected to be converted to proven and probable reserves.
Capitalization of development costs incurred ceases when the mine is capable of operating in the manner intended by management. The Company applies judgement in its assessment of when a mine is capable of operating in the manner intended by management which takes account of the design of the mine and the nature of the initial commissioning phase of the mine. During the commissioning phase of a new mine, pre-production expenditures, net of incidental revenue, are capitalized to plant and equipment.
4
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2021 and 2020 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
In accordance with the amendments to IAS 16, Property, plant and equipment, for new mines commissioned on or after January 1, 2022, revenues and the associated cost of production for any items produced during the commissioning phase are recognized in the Consolidated Statement of Operations. Early adoption of the standard is also permitted, but the Company has chosen not to early adopt. The Company has determined there is no retrospective impact from the adoption of the standard.
Non-recoverable costs for projects determined not to be commercially feasible are expensed in the period in which the determination is made or when the carrying value of the project is determined to be impaired.
Deferred stripping
Stripping costs incurred during the production phase of a mine are considered production costs and are included in the cost of inventory produced during the period in which stripping costs are incurred, unless the stripping activity can be shown to be a betterment of the mineral property. Betterment occurs when stripping activity increases future output of the mine by providing access to additional reserves. Stripping costs incurred to provide access to the ore body for extraction are capitalized as mine development costs and are amortized on a UOP basis over the reserves and resources to which they relate.
Exploration and Evaluation Expenditures
The Company defers the cost of acquiring, maintaining its interest, exploring and evaluating a mineral property as exploration and evaluation until a decision to develop, abandon or sell the property is made. Once the technical feasibility and commercial viability of the extraction of mineral reserves or resources from a particular mineral property has been determined, exploration and evaluation expenditures are reclassified to “mineral properties and mine development costs”. If no mineable ore body is discovered, such costs are expensed in the period in which it is determined the property has no future economic value. Exploration costs that do not relate to any specific property are expensed as incurred.
The establishment of technical feasibility and commercial viability of a mineral property is assessed based on a combination of factors, such as but not limited to:
•The extent to which mineral reserves or mineral resources have been identified through a feasibility study or similar level document;
•The results of optimization studies and further technical evaluation carried out to mitigate project risks identified in the feasibility study;
•The status of environmental permits; and
•The status of mining leases or permits.
In addition, commercial viability is deemed to be achieved when the Company determines that the project will provide a satisfactory return relative to its perceived risks. Ore reserves and resources may be declared for an undeveloped mining project before its commercial viability has been fully determined. Evaluation costs may continue to be capitalized during the period between declaration of reserves and approval to mine as further work is undertaken in order to refine the development case to maximize the project’s returns.
Borrowing costs
Borrowing costs attributable to the acquisition or construction of qualifying assets, which take a substantial period of time to make ready for their intended use are added to the cost of the assets, until such time as the assets are substantially complete and ready for their intended use. The amount of borrowing costs capitalized cannot exceed the actual amount of borrowing costs incurred in a period. All other borrowing costs are expensed in the period in which they are incurred.
Impairment and reversals of impairment
The carrying amounts of long-lived assets are tested for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. If there are indicators of impairment, the recoverable amount of the asset is estimated in order to determine the extent of the impairment. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount and is recorded as an expense in the Consolidated Statement of Operations.
The recoverable amount is the higher of an asset’s “fair value less costs of disposal” ("FVLCD") and “value-in-use”. Where the asset does not generate cash flows that are independent from other assets, the recoverable amount of the cash-generating unit to which the asset belongs is determined. FVLCD is determined as the amount that would be obtained from
5
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2021 and 2020 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
the sale of the asset less costs of disposal in an arm’s length transaction between knowledgeable and willing parties. For mining assets this would generally be determined based on the present value of the estimated future cash flows arising from the continued development, use or eventual disposal of the asset. In assessing these cash flows and discounting them to the present value, assumptions used are those that an independent market participant would consider appropriate. In assessing “value-in-use”, the estimated future cash flows expected to arise from the continuing use of the assets in their present form and from their disposal are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset.
Impairment losses are evaluated for potential reversals when events or circumstances warrant such consideration. Where an impairment loss is subsequently reversed, the amount of such reversal is limited such that the revised carrying amount of the asset or cash-generating unit does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in the prior years. A reversal of an impairment loss is recognized into earnings immediately.
Leases
At the inception of a contract, to determine if it contains a lease, the Company assesses whether it conveys the right to control and obtain substantially all of the economic benefits of an identified asset, for a period of time, in exchange for consideration. Where a contract contains a lease, the Company recognizes a right-of-use asset and a lease liability at the commencement date of the lease.
The right-of-use asset is measured at cost less any accumulated depreciation and impairment losses and may be adjusted for any remeasurement of the lease liability. Cost is the amount of the initial lease liability plus any initial direct costs incurred and any lease payments made at or before the commencement date less any incentives received.
The right-of-use assets are included in the cost of property, plant and equipment for the associated mining interest on the Consolidated Balance Sheet. They are depreciated, in accordance with the Company's existing accounting policy, over the shorter of the lease term or the life of the asset.
The lease liability is initially measured at the present value of future lease payments discounted at the interest rate implicit in the contract. If the implicit rate cannot be determined, the incremental borrowing rate over a similar term and with similar security for the funds necessary to obtain an asset of similar value in a similar economic environment is used. The lease payments include fixed payments less any incentives receivable, variable lease payments that depend on an index or rate and amounts expected to be paid under residual value guarantees. Where the lease contains an extension or purchase option, the costs associated with the option are included if it is reasonably expected to be exercised by the Company.
Thereafter, the amount of the lease liability is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of the lease liability is remeasured to reflect any modifications to the contract terms. Lease liabilities are presented as a component of debt on the Consolidated Balance Sheet.
The Company has elected not to recognize right-of-use assets and lease liabilities for contracts that have a lease term of 12 months or less or are for the use of low value assets. These contracts are recognized as an expense in the Consolidated Statement of Operations in the period the cost is incurred. In addition, for certain asset classes, the Company has elected to treat both lease and non-lease components as a single lease component for the purposes of applying IFRS 16, Leases.
Mine restoration provisions
Future obligations to retire an asset including site closure, dismantling, remediation and on-going treatment and monitoring are initially recognized and recorded as a liability based on estimated future cash flows discounted at a risk free rate. The measurement determination is based on estimated future cash flows, the current risk-free discount rate, and an estimated inflation factor. The value of restoration provisions is adjusted at each reporting period for changes to factors including the expected amount of cash flows required to discharge the liability, the timing of such cash flows and the risk-free interest rate. The liability is added to the carrying amount of the associated asset, and this additional carrying amount is depreciated over the life of the asset. The liability is accreted to full value over time through periodic charges to earnings. This unwinding of the discount is expensed in the Consolidated Statement of Operations. As reclamation work is performed or liabilities are otherwise settled, the recorded amount of the liability is reduced.
Share-based payments
The cost of stock options and other equity-settled share-based payment arrangements is recorded based on the estimated fair-value at the grant date and charged to earnings over the vesting period.
6
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2021 and 2020 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
The Company grants stock options to certain employees and directors. Each tranche is considered a separate award with its own vesting period and grant date fair value. The fair value of each tranche is measured at the date of grant using the Black-Scholes option pricing model. Compensation expense is recognized over the tranche’s vesting period by a charge to earnings, with a corresponding increase to contributed surplus based on the number of awards expected to vest. The number of awards expected to vest is reviewed at least annually, with any impact being recognized immediately.
Current and deferred income taxes
Income tax comprises current and deferred tax. Income tax is recognized in the Consolidated Statement of Operations except to the extent that it relates to items recognized directly in equity, in which case the income tax is also recognized directly in equity. Taxes on income in interim periods are recorded using the tax rate that would be applicable to expected annual profit.
Current tax is the expected tax payable on taxable income for the year, using tax rates enacted or substantively enacted, at the end of the reporting period.
Deferred tax is recognized in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined on a non-discounted basis using tax rates and laws that have been enacted or substantively enacted at the balance sheet date and are expected to apply when the deferred tax asset or liability is reversed. Deferred tax assets are recognized to the extent that it is probable that the assets can be recovered.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except, in the case of subsidiaries, where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future. As an exception, deferred tax assets and liabilities are not recognized if the temporary differences arise from the initial recognition of goodwill, or an asset or liability in a transaction (other than in a business combination) that affects neither accounting profit nor taxable profit.
Deferred income tax assets and liabilities are presented as non-current.
Revenue
Gold revenue is recognized when it is probable that the economic benefits will flow to the Company, delivery has occurred, the sales price is reasonably determinable and collectability is reasonably assured. These criteria are generally met at the time the product is delivered to the customer and, depending on the delivery conditions, title and the risks and rewards of ownership have passed to the customer and acceptance of the product, when contractually required, has been obtained. Gold revenue is measured based on the price specified in the sales contract at the time of sale.
Silver revenue is accounted for as a by-product and is recorded as a credit to operating costs.
Earnings per share
Basic earnings per share is calculated by dividing the net income for the year attributable to shareholders of the Company by the weighted average number of common shares outstanding during the year.
Diluted earnings per share is calculated using the treasury share method whereby all “in-the-money” options, warrants and equivalents are assumed to have been exercised at the beginning of the year and the proceeds from the exercise are assumed to have been used to purchase common shares at the average market price during the period. Diluted earnings per share excludes all dilutive potential common shares if their effect is anti-dilutive.
4Significant accounting judgements and estimates
The preparation of these financial statements in conformity with IFRS requires judgements and estimates that affect the amounts reported. Those judgements and estimates concerning the future may differ from actual results. The following are the areas of accounting policy judgement and accounting estimates applied by management that most significantly affect the Company’s financial statements, including those areas of estimation uncertainty that could result in a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
7
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2021 and 2020 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
Areas of judgement
Uncertain tax positions
The Company’s operations involve the application of complex tax regulations in multiple international jurisdictions. Determining the tax treatment of a transaction requires the Company to apply judgement in its interpretation of the applicable tax law. These positions are not final until accepted by the relevant tax authority. The tax treatment may change based on the result of assessments or audits by the tax authorities often years after the initial filing.
The Company recognizes and records potential liabilities for uncertain tax positions based on its assessment of the amount, or range of amounts, of tax that will be due. The Company adjusts these accruals as new information becomes available. Due to the complexity and uncertainty associated with certain tax treatments, the ultimate resolution could result in a payment that is materially different from the Company’s current estimate of the tax liabilities.
Capitalization of exploration and evaluation expenditures
The application of the Company’s accounting policy for capitalization of exploration and evaluation expenditures requires judgement in determining whether the future economic benefit is likely, either through future exploitation or sale, where properties have not reached a stage which permits a reasonable assessment of the existence of reserves. The deferral policy requires management to make certain judgements about future events or circumstances, in particular whether an economically viable mine can be established. Judgements made may change if new information becomes available. If, after an expenditure is capitalized, information becomes available suggesting that the recovery of expenditure is unlikely, the amount capitalized is written off in the Consolidated Statement of Operations in the period when the new information becomes available.
Determination of control or significant influence over investees
The assessment of whether the Company has a significant influence or control over an investee requires the application of judgement when assessing factors that could give rise to a significant influence or control. Factors evaluated when making a judgement of control or significant influence over an investee include, but are not limited to, ownership percentage, representation on the board of directors, participation in the policy-making process, material transactions and contractual arrangements between the Company and the investee, interchange of managerial personnel, provision of essential technical
information and potential voting rights. In evaluating these factors, the Company determines the level of power over the investee the Company has. Changes in the Company's assessment of the factors used in determining if control or significant
influence exists over an investee would impact the accounting treatment of the investment in the investee.
Joint arrangements
The Company is party to a number of arrangements over which it has determined it does not have control. Judgement is required in determining whether joint control over these arrangements exists, which parties have joint control and whether each arrangement is a joint venture or joint operation. In assessing whether the Company has joint control, the activities of each arrangement are analysed to determine which activities most significantly affect the returns of the arrangement over its life. These activities are determined to be the relevant activities of the arrangement. If unanimous consent is required over the decisions about the relevant activities, the parties whose consent is required would have joint control over the arrangement. The judgements around which activities are considered the relevant activities of the arrangement are subject to analysis by each of the parties to the arrangement and may be interpreted differently. When performing this assessment, the Company generally considers decisions about activities such as managing the asset while it is being designed, developed and constructed, during its operating life and during the closure period. The Company may also consider other activities including, but not limited to, the approval of budgets, expansion and disposition of assets, financing, significant operating and capital expenditures, appointment of key management personnel and representation on the Board of Directors. When circumstances or contractual terms change, the Company reassesses the control group and the relevant activities of the arrangement.
If the Company has joint control over an arrangement, an assessment of whether the arrangement is a joint venture or joint operation is required. This assessment is based on whether the Company has rights to the assets, and obligations for the liabilities, relating to the arrangement or whether the Company has rights to the net assets of the arrangement. In making this determination, the Company reviews the legal form of the arrangement, the terms of the contractual arrangement and other relevant facts and circumstances. In a situation where the legal form and the terms of the contractual arrangement does not give the Company rights to the assets and obligations for the liabilities, an assessment of the other relevant facts and circumstances is required. This includes whether the activities of the arrangement are primarily designed for the provision of output to the parties and whether the parties are substantially the only source of cash flows contributing to the
8
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2021 and 2020 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
arrangement. The consideration of the other relevant facts and circumstances may result in the conclusion that a joint arrangement is a joint operation. This conclusion requires judgement and is specific to each arrangement.
Sources of estimation uncertainty
COVID-19 estimation uncertainty
A global pandemic related to COVID-19 was declared by the World Health Organization in March 2020. The current and expected impacts on global commerce have been and are anticipated to continue to be far-reaching. To date, globally, there has been significant volatility in commodity prices and foreign exchange rates, restrictions on the conduct of business in many jurisdictions, including travel restrictions, and supply chain disruptions. There is significant ongoing global uncertainty surrounding COVID-19 and the extent and duration of the impact that it may have.
The areas of estimation uncertainty for the Company which may be impacted include estimates used to determine recoverable reserves and resources, estimates used to determine the recoverable amounts of long-lived assets, estimates used to determine the recoverable amounts of value-added tax receivables and estimates regarding deferred income taxes and valuation allowances. The impact of COVID-19 on the global economic environment, and the local jurisdictions in which the Company operates, could result in changes to the way the Company runs its mines. These changes could result in revenues or costs being different from the Company's expectations. This impact could be material.
Mineral reserve and resource estimates
Mineral reserves are estimates of the amount of ore that can be economically and legally extracted from the Company’s mining properties. The Company estimates its mineral reserves and mineral resources based on information compiled by appropriately qualified persons relating to the geological data on the size, depth and shape of the ore body, and requires complex geological assessments to interpret the data. The estimation of recoverable mineral reserves is based upon factors such as estimates of foreign exchange rates, commodity prices, future capital requirements, metallurgical recoveries, permitting and production costs along with geological assumptions made in estimating the size, and grade of the ore body. Changes in the mineral reserve or mineral resource estimates may impact the carrying value of mining interests, mine restoration provisions, recognition of deferred tax assets, depreciation and amortization charges and royalties receivable.
Impairment of long-lived assets
Long-lived assets are tested for impairment, or reversal of a previous impairment, if there is an indicator of impairment or a subsequent reversal. Calculating the estimated recoverable amount of cash generating units for long-lived asset requires management to make estimates and assumptions that include such factors as reserves and resources, future production levels, metallurgical recovery estimates, operating and capital costs, future metal prices and discount rates. Changes in any of these assumptions or estimates used in determining the recoverable amount could impact the analysis. Such changes could be material.
Value-added tax receivables
The Company incurs indirect taxes, including value-added tax, on purchases of goods and services at its operating mines and development projects. Indirect tax balances are recorded at their estimated recoverable amounts within current or long-term assets, net of provisions, and reflect the Company’s best estimate of their recoverability under existing tax rules in the respective jurisdictions in which they arise. Management’s assessment of recoverability considers the probable outcomes of claimed deductions and/or disputes. The provisions and balance sheet classifications made to date may be subject to change and such change may be material.
Current and deferred income taxes
The Company is periodically required to estimate the tax basis of assets and liabilities. Where applicable tax laws and regulations are either unclear or subject to varying interpretations, it is possible that changes in these estimates could occur that materially affect the amounts of deferred income tax assets and liabilities recorded in the financial statements. Changes in deferred tax assets and liabilities generally have a direct impact on earnings in the period that the changes occur.
Each period, the Company evaluates the likelihood of whether some portion or all of each deferred tax asset will not be realized. This evaluation is based on historic and future expected levels of taxable income and the associated repatriation of retained earnings, the pattern and timing of reversals of taxable temporary timing differences that give rise to deferred tax liabilities, and tax planning initiatives. Levels of future taxable income are affected by, among other things, metal prices, production costs, quantities of proven and probable gold reserves, interest rates and foreign currency exchange rates. The
9
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2021 and 2020 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
availability of retained earnings for distribution depends on future levels of taxable income as well as future reclamation expenditures, capital expenditures, dividends and other uses of available cash flow.
5Accounts receivable, prepaids and other
| 2021 | 2020 | |||||||||||||
| $ | $ | |||||||||||||
Current portion of derivative instruments (Note 14) | 12,823 | 3,252 | ||||||||||||
| Supplier advances | 7,291 | 5,208 | ||||||||||||
| Prepaid expenses | 4,151 | 4,903 | ||||||||||||
| Other receivables | 7,847 | 7,943 | ||||||||||||
| 32,112 | 21,306 | |||||||||||||
6Inventories
| 2021 | 2020 | |||||||||||||
| $ | $ | |||||||||||||
| Gold and silver bullion | 52,867 | 39,157 | ||||||||||||
| In-process inventory | 13,260 | 7,984 | ||||||||||||
| Ore stock-pile inventory | 72,242 | 71,115 | ||||||||||||
| Materials and supplies | 133,985 | 119,799 | ||||||||||||
| 272,354 | 238,055 | |||||||||||||
Ore stock-pile inventory includes amounts for the Fekola Mine of $52 million (2020 - $44 million), for the Otjikoto Mine of $16 million (2020 – $25 million), and for the Masbate Mine of $4 million (2020 - $2 million).
7Long-term investments
| 2021 | 2020 | ||||||||||||||||||||||
| Cost | AOCI | Fair value | Cost | AOCI | Fair value | ||||||||||||||||||
| $ | $ | $ | $ | $ | $ | ||||||||||||||||||
West African Resources Ltd. (Note 8) | 20,530 | 759 | 21,289 | — | — | — | |||||||||||||||||
| St. Augustine Gold & Copper Ltd. | 20,193 | (11,578) | 8,615 | 20,193 | (13,780) | 6,413 | |||||||||||||||||
| RTG Mining Inc. | 13,400 | (12,114) | 1,286 | 13,400 | (11,167) | 2,233 | |||||||||||||||||
| Libero Copper & Gold Corporation | 632 | 272 | 904 | 632 | 61 | 693 | |||||||||||||||||
| Goldstone Resources Ltd. | 20 | 4 | 24 | 20 | (5) | 15 | |||||||||||||||||
| 54,775 | (22,657) | 32,118 | 34,245 | (24,891) | 9,354 | ||||||||||||||||||
10
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2021 and 2020 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
8Mining interests
| 2021 | 2020 | |||||||||||||
| $ | $ | |||||||||||||
| Property, plant and equipment (depletable) | ||||||||||||||
| Fekola Mine, Mali | ||||||||||||||
| Cost | 1,645,337 | 1,516,134 | ||||||||||||
| Accumulated depreciation and depletion | (609,899) | (416,559) | ||||||||||||
| 1,035,438 | 1,099,575 | |||||||||||||
| Masbate Mine, Philippines | ||||||||||||||
| Cost | 1,085,687 | 1,046,577 | ||||||||||||
| Accumulated depreciation and depletion | (449,675) | (361,438) | ||||||||||||
| 636,012 | 685,139 | |||||||||||||
| Otjikoto Mine, Namibia | ||||||||||||||
| Cost | 782,208 | 696,956 | ||||||||||||
| Accumulated depreciation and depletion | (475,303) | (371,138) | ||||||||||||
| 306,905 | 325,818 | |||||||||||||
| Exploration and evaluation properties (pre-depletable) | ||||||||||||||
| Gramalote Property, Colombia, net of impairment | 119,866 | 95,435 | ||||||||||||
| Menankoto Property, Mali | 33,739 | 28,991 | ||||||||||||
| Bantako North Property, Mali | 15,351 | 6,191 | ||||||||||||
| Kiaka Royalty, Burkina Faso | 18,488 | — | ||||||||||||
| Mocoa Royalty, Colombia | 10,230 | 10,230 | ||||||||||||
| Finland Properties, Finland | 12,561 | 9,034 | ||||||||||||
| Uzbekistan Properties, Uzbekistan | 8,802 | 4,131 | ||||||||||||
| Kiaka Project, Burkina Faso | — | 80,927 | ||||||||||||
| Ondundu Property, Namibia | — | 10,701 | ||||||||||||
| Other | 11,019 | 6,688 | ||||||||||||
| 230,056 | 252,328 | |||||||||||||
| Corporate & other | ||||||||||||||
| Office, furniture and equipment, net | 23,420 | 24,160 | ||||||||||||
| 2,231,831 | 2,387,020 | |||||||||||||
| Investments in associates (accounted for using the equity method) | ||||||||||||||
| Calibre, Nicaragua | 93,728 | 76,235 | ||||||||||||
| BeMetals, Various | 10,508 | — | ||||||||||||
| 104,236 | 76,235 | |||||||||||||
| 2,336,067 | 2,463,255 | |||||||||||||
Disposal of Kiaka Project
On November 30, 2021, the Company completed the sale of 100% of the issued and outstanding shares of Volta Resources (Cayman) Inc., the holder of an 81% interest in the Kiaka gold project located in Burkina Faso (the “Kiaka Project”) to West African Resources Limited (“WAF”). The measurement of the consideration is as follows:
•Cash payment of $0.45 million received on execution of the Kiaka Agreement;
•$43 million received on closing of the transaction, comprised of $22.5 million in cash and 22,190,508 WAF ordinary shares (valued at Aus. $1.31 per share using a foreign exchange rate of Aus. $1.41 to $1);
•$45 million deferred consideration payable on the earlier of (i) commencement of construction at the Kiaka Project (provided such date will be a minimum of 6 months from the date of the Kiaka Agreement), (ii) completion of a positive feasibility study at the Kiaka Project, and (iii) October 25, 2022, in cash or WAF ordinary shares, at B2Gold’s option but subject to any required WAF shareholder approval to issue WAF ordinary shares; and
•the Company retained a 2.7% net smelter return royalty ("NSR") interest (the "Kiaka Royalty") on the first 2,500,000 ounces of gold produced at the Kiaka Project, and a 0.45% NSR royalty interest on the next 1,500,000 ounces of gold produced at the Kiaka Project valued at $18 million.
In determining the value of the Kiaka Royalty of $18 million, the Company applied a market value approach using a comparable transaction method, whereby the value to the Kiaka Royalty was determined based on the dollar value per NSR royalty ounce based on a comparable pool of gold related NSR royalty transactions. Management’s estimate of the fair value
11
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2021 and 2020 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
of the Kiaka Royalty is classified as level 3 in the fair value hierarchy. For accounting purposes, the Kiaka Royalty has been classified as a Mining Interest on the Consolidated Balance Sheet at December 31, 2021.
The gain on the disposal of the Kiaka Project was, $23 million as outlined below:
| $ | ||||||||
| Proceeds from sale: | ||||||||
| Initial payment received upon agreement execution | 450 | |||||||
| Cash consideration received upon closing | 22,500 | |||||||
| Common shares of WAF, issued upon closing | 20,530 | |||||||
Cash consideration, one year from closing discounted at 10.22% | 41,239 | |||||||
| NSR royalty | 18,488 | |||||||
| Transaction costs | (248) | |||||||
| Total proceeds from sale, net of transaction costs | 102,959 | |||||||
| Total assets sold | 85,656 | |||||||
| Total liabilities sold | (5,356) | |||||||
| Net assets sold | 80,300 | |||||||
| Gain on disposal of Kiaka Project | 22,659 | |||||||
Disposal of Toega Property
On November 30, 2021, the Company completed the sale of the Toega Property located in Burkina Faso to WAF. The measurement of consideration is as follows:
•$9 million as an initial non-refundable cash payment, received during the year ended December 31, 2020;
•$9 million received upon closing;
•production payments of in the form of an NSR royalty (the "Toega Royalty") on the first 1.5 million ounces of production from the Toega Property area valued at $3 million. The Toega Royalty is paid at a rate of 2.7% until payments total $22.5 million and then 0.45% thereafter.
•$2 million to be received from WAF upon the favourable settlement of a disputed tax assessment.
The $9 million non-refundable cash payment was credited to the carrying value of the mineral property during the year ended December 31, 2020. The remaining value of the Toega Property of $12 million was classified as an asset held for sale on the Consolidated Balance Sheet at December 31, 2020.
In determining the value of the Toega Royalty of $3 million, the Company applied a market value approach using the comparable transaction method, whereby the value to the Toega Royalty was determined based on the dollar value per NSR royalty ounce based on a comparable pool of gold related NSR royalty transactions. Management’s estimate of the fair value of the Toega Royalty is classified as level 3 in the fair value hierarchy. For accounting purposes, the Toega Royalty has been classified as a Mining Interest on the Consolidated Balance Sheet at December 31, 2021.
The loss on the disposal of the Toega Property is outlined below:
| $ | ||||||||
| Proceeds from sale: | ||||||||
| Cash consideration, received upon agreement execution | 9,000 | |||||||
| Cash consideration, received upon closing | 9,000 | |||||||
| NSR royalty | 2,599 | |||||||
| Tax guarantee receivable | 1,858 | |||||||
| Transaction costs | (18) | |||||||
| Total proceeds from sale, net of transaction costs | 22,439 | |||||||
| Total assets sold | 23,237 | |||||||
| Total liabilities sold | (602) | |||||||
| Net assets sold | 22,635 | |||||||
| Loss on disposal of Toega Property | (196) | |||||||
12
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2021 and 2020 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
Kronk and BeMetals
On April 26, 2021, the Company completed the sale of the outstanding common shares of its subsidiary Kronk Resources Inc. ("Kronk") to BeMetals Corp. ("BeMetals"). In exchange for its interest in Kronk, the Company received 16 million shares of BeMetals valued at $5 million. The gain on the sale of $1 million has been recorded in Other Operating Income in the Consolidated Statement of Operations for the year. In connection with the transaction, the Company also purchased 17 million shares of BeMetals valued at Cdn. $0.44 per share for a total cost of $6 million by way of a non-brokered private placement.
Upon closing of the transactions, the Company held approximately 19% of the outstanding shares of BeMetals. The Company determined that, effective April 26, 2021, it has significant influence over the decision-making process of BeMetals as a result of its share ownership and having executives of the Company on BeMetals' Board of Directors. Therefore, the Company is using the equity basis of accounting to account for this investment and has included its investment in BeMetals in Mining Interests. The Company adjusts BeMetals financial results, where appropriate, to give effect to uniform accounting policies.
The trading price of BeMetals on December 31, 2021 was Cdn $0.24 per share which corresponds to a quoted market value of $6 million (at a closing exchange rate of Cdn $1.27 per US$) for the Company's investment.
The following table summarizes the change in the carrying amount of the Company's investment in BeMetals:
| $ | ||||||||
| Balance at December 31, 2020 | — | |||||||
| Share consideration on Kronk sale | 4,741 | |||||||
| Purchase of BeMetals shares | 5,945 | |||||||
| Share of net loss for the year | (164) | |||||||
| Loss on dilution | (14) | |||||||
| Balance at December 31, 2021 | 10,508 | |||||||
The equity accounting for BeMetals is based on its most recent published results to September 30, 2021. BeMetals files its financial results in Canadian dollars. The Condensed Interim Consolidated Statement of Financial Position has been converted to United States dollars at a rate of Cdn. $1.27 and the Condensed Statement of Loss and Comprehensive Loss has been converted at a rate of Cdn. $1.25. The following is a summary of the Condensed Interim Consolidated Statement of Financial Position of BeMetals at September 30, 2021 on a 100% basis: Current assets - $7 million, non-current assets - $22 million, total assets - $29 million, and net assets - $29 million. The following is a summary of the Condensed Interim Consolidated Statement of Operations of BeMetals for the nine months ending September 30, 2021 on a 100% basis: Other expenses - $1 million, stock-based compensation - $1 million, and net loss and comprehensive loss - $1 million.
Disposal of Ondundu
On December 31, 2021, the Company entered into an agreement with Osino Resources Corp. ("Osino") for the sale of the Ondundu Property in Namibia. The measurement of consideration is as follows:
•$4 million in cash to be received upon closing;
•$5 million of Osino common shares to be received upon closing;
•$4 million in cash to be received six months after closing;
•$2.5 million to be received upon the earlier of (i) completion of a feasibility study including the Ondundu Property or (ii) first gold production from the property, to which no value has been assigned.
As a result of entering into the agreement, the Ondundu Property has been written-down to its fair value less cost to sell resulting in an impairment loss of $6 million being recognized in the Consolidated Statement of Operations for the year ended December 31, 2021. The remaining value of the Ondundu Property of $13 million has been classified as an asset held for sale on the Consolidated Balance Sheet at December 31, 2021.
Investment in Calibre
At December 31, 2021, the Company owned approximately 33% of the outstanding common shares of Calibre. The trading price of Calibre on December 31, 2021 was Cdn $1.34 per share which corresponds to a quoted market value of $117 million (at a closing exchange rate of Cdn $1.27 per US$) for the Company's investment in Calibre.
13
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2021 and 2020 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
The following table summarizes the change in the carrying amount of the Company's investment in associate:
| $ | ||||||||
| Balance at December 31, 2019 | 53,471 | |||||||
| Share of net income for the year | 22,167 | |||||||
| Gain on dilution | 597 | |||||||
| Balance at December 31, 2020 | 76,235 | |||||||
| Share of net income for the year | 17,707 | |||||||
| Loss on dilution | (214) | |||||||
| Balance at December 31, 2021 | 93,728 | |||||||
The equity accounting for Calibre is based on its published results to September 30, 2021 and an estimate of results for the period of October 1, 2021 to December 31, 2021. The following is a summary of the Condensed Interim Consolidated Statement of Financial Position of Calibre at September 30, 2020 on a 100% basis: Current assets - $129 million, non-current assets - $288 million, total assets - $417 million, current liabilities - $45 million, non-current liabilities - $96 million and net assets - $276 million. The following is a summary of the Condensed Interim Consolidated Statement of Operations of Calibre for the nine months ending September 30, 2020 on a 100% basis: Revenues - $240 million, production costs - $125 million, royalties and production taxes - $9 million, depreciation and depletion - $24 million, general and administrative expense - $5 million, stock-based compensation - $2 million, current income tax expense - $20 million, deferred income tax expense - $8 million and net income - $44 million. The Company's equity share of Calibre's estimated net income for the year ended December 31, 2021 was $18 million (2020 - $22 million).
Menankoto
The Company, through its Malian subsidiary Menankoto SARL (“Menankoto”), applied for the renewal of the Menankoto exploration permit (the “Menankoto Permit”) in early February 2021, which was not granted. After ongoing discussions with the Malian Government were not ultimately successful in resolving the situation, on June 24, 2021 the Company announced that it had formally commenced arbitration proceedings against the Republic of Mali. The arbitration commenced pursuant to the arbitration clause set out in the Menankoto mining convention (the “Convention”) governed by the 2012 Malian Mining Code (“2012 Mining Code”), on the basis that the Republic of Mali breached its obligations under the Convention and under the 2012 Mining Code. On February 2, 2022 the Company announced that B2Gold’s Malian subsidiary had now received the new Menankoto Permit, issued by the Government of Mali in compliance with the procedures and requirements set out under the Malian 2019 Mining Code, which provides for an initial term of three years and two additional three year renewal periods. B2Gold’s Malian subsidiary has now withdrawn the international arbitration proceedings against the Republic of Mali.
The Company considered the non-renewal of the Menankoto Permit to be an indicator of impairment for its Menankoto Property, which has a carrying value of $34 million. The Company conducted an impairment analysis whereby the carrying value of the Menankoto Permit was compared to an estimate of its recoverable amount which was determined to be its fair value less costs of disposal (“FVLCD”). FVLCD was determined based on the weighted-average probabilities of renewal of the Menankoto Permit through available legal remedies, the value of the property based on the value per ounce of gold determined by using comparable market transactions, and estimated mineral resources of the Menankoto Property prepared by appropriately qualified persons (management specialists). The Company’s analysis concluded that the Menankoto Property was not impaired.
Masbate impairment reversal
During the year ended December 31, 2014, the Company recorded a pre-tax impairment charge of $436 million on the carrying value of Masbate Mine property, plant and equipment. The net impairment recorded in the Consolidated Statement Operations, after taking into account a deferred income tax recovery of $131 million, was $305 million. Subsequently, during the year ended December 31, 2019, after reflecting the amount of depreciation that would have been recorded had the assets not been impaired, the Company recorded a pre-tax impairment reversal of $100 million on the carrying value of Masbate Mine property, plant and equipment. The net impairment reversal recorded in the statement operations in 2019, after taking into account a deferred income tax expense of $30 million, was $70 million.
During the year-ended December 31, 2020, the long-term consensus gold price continued to be above the long-term gold price assumptions used in the Company’s reserve estimations and life-of-mine plans. Consequently, during the year-ended December 31, 2020, the Company revised its long-term gold price estimate to $1,500 per ounce of gold. The increase in the
14
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2021 and 2020 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
long-term gold price was an indicator of impairment reversal. The Company performed an impairment reversal test on the Masbate Mine cash-generating unit (“CGU”) as at September 30, 2020.
The carrying values of the Masbate Mine property, plant and equipment were compared to the mine’s recoverable amount which was determined to be its FVLCD at September 30, 2020. To estimate the recoverable amount of the Masbate Mine’s CGU for impairment reversal, the Company utilized a discounted cash flow model incorporating estimates and assumptions that included such factors as reserves and resources, future production levels, metallurgical recovery estimates, operating and capital costs, future metal prices and the discount rate. Management’s estimate of the FVLCD of its CGUs is classified as level 3 in the fair value hierarchy. The Company’s estimate of future cash flows is subject to risks and uncertainty and, therefore, could change in the future if the underlying assumptions change.
Key assumptions used for the impairment tests were:
| 2020 | 2019 | |||||||
| Long-term gold price | $1,500/ounce | $1,350/ounce | ||||||
| Silver price | $17/ounce | $17/ounce | ||||||
| Estimated final year of production | 2036 | 2036 | ||||||
| Discount rate | 5 | % | 5 | % | ||||
The Company concluded that the carrying values of the Masbate Mine property, plant and equipment at September 30, 2020 was lower than the FVLCD and, combined with the previous impairment reversal, resulted in a complete reversal of the remainder of the original impairment loss recorded in 2014. After reflecting the amount of depreciation that would have been recorded had the assets not been impaired, the Company recorded a pre-tax impairment reversal of $174 million in the Consolidated Statement of Operations for the year ended December 31, 2020. The net impairment reversal recorded in the Consolidated Statement of Operations for the year ended December 31, 2020, after taking into account a deferred income tax expense of $52 million, was $122 million.
Other
During the year-ended December 31, 2020, the Company wrote-off $11 million relating to non-core properties in Mali, Burkina Faso, Botswana and Ghana.
As at December 31, 2021 the Company had recorded leased assets of $25 million under IFRS 16. The leased assets primarily consisted for the corporate office of $21 million (cost of $25 million net of $4 million in accumulated depreciation) included in Corporate & Other and other leased assets of $4 million (cost of $8 million net of accumulated depreciation of $4 million) included with their respective mineral properties.
9Other assets
| 2021 | 2020 | |||||||||||||
| $ | $ | |||||||||||||
| Low-grade stockpile | 34,318 | 28,322 | ||||||||||||
| Reclamation deposits | 26,170 | 19,099 | ||||||||||||
Debt service reserve account (Note 10) | 8,701 | 9,805 | ||||||||||||
Deferred financing costs (Note 10) | 8,959 | 5,449 | ||||||||||||
| Derivative instruments at fair value | 2,602 | 1,348 | ||||||||||||
| Other | 1,621 | 3,119 | ||||||||||||
| 82,371 | 67,142 | |||||||||||||
15
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2021 and 2020 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
10Long-term debt
| 2021 | 2020 | |||||||||||||
| $ | $ | |||||||||||||
| Equipment loans/finance lease obligations: | ||||||||||||||
| Fekola equipment loan facilities (net of unamortized transaction costs) | 42,408 | 71,261 | ||||||||||||
| Masbate equipment loan facility (net of unamortized transaction costs) | 3,865 | 7,254 | ||||||||||||
| Lease liabilities | 28,861 | 31,507 | ||||||||||||
| 75,134 | 110,022 | |||||||||||||
| Less: current portion | (25,408) | (34,111) | ||||||||||||
| 49,726 | 75,911 | |||||||||||||
The following is a continuity schedule of the Company's debt balances:
| Revolving credit facility | Equipment loans | Lease Liabilities | Total | |||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||
| Balance at December 31, 2019 | 192,287 | 59,833 | 9,731 | 261,851 | ||||||||||||||||||||||
| Drawdowns | 250,000 | 42,065 | — | 292,065 | ||||||||||||||||||||||
| Lease liabilities incurred | — | — | 22,879 | 22,879 | ||||||||||||||||||||||
| Debt repayments | (450,000) | (28,445) | (3,637) | (482,082) | ||||||||||||||||||||||
| Foreign exchange losses | — | 5,054 | 1,270 | 6,324 | ||||||||||||||||||||||
Reclass of deferred financing costs to other assets (Note 9) | 6,018 | — | — | 6,018 | ||||||||||||||||||||||
| Deferred transaction costs incurred | — | (649) | — | (649) | ||||||||||||||||||||||
| Non-cash interest and financing expense | 1,695 | 657 | 1,264 | 3,616 | ||||||||||||||||||||||
| Balance at December 31, 2020 | — | 78,515 | 31,507 | 110,022 | ||||||||||||||||||||||
| Lease liabilities incurred | — | — | 398 | 398 | ||||||||||||||||||||||
| Debt repayments | — | (28,797) | (3,889) | (32,686) | ||||||||||||||||||||||
| Foreign exchange gains | — | (4,145) | (295) | (4,440) | ||||||||||||||||||||||
| Deferred transaction costs incurred | 5,768 | — | — | 5,768 | ||||||||||||||||||||||
Reclass of deferred financing costs to other assets (Note 9) | (5,768) | — | — | (5,768) | ||||||||||||||||||||||
| Non-cash interest and financing expense | — | 700 | 1,140 | 1,840 | ||||||||||||||||||||||
| Balance at December 31, 2021 | — | 46,273 | 28,861 | 75,134 | ||||||||||||||||||||||
| Less: current portion | — | (21,117) | (4,291) | (25,408) | ||||||||||||||||||||||
| — | 25,156 | 24,570 | 49,726 | |||||||||||||||||||||||
Revolving credit facility
On December 16, 2021, the Company entered into a revised revolving credit facility ("RCF") agreement with its existing syndicate of banks. The maximum available for drawdown under the facility remains at $600 million with an accordion feature, available on the receipt of additional binding commitments, for a further $200 million.
The RCF bears interest on a sliding scale of between LIBOR plus 2.00% to 2.50% based on the Company’s consolidated net leverage ratio. Commitment fees for the undrawn portion of the facility are also on a sliding scale basis of between 0.450% and 0.563%. The term of the RCF is four years, maturing on December 16, 2025. Transaction costs on the RCF of $9 million are being amortized over the remainder of the facility term.
The Company has provided security on the RCF in the form of a general security interest over the Company’s assets and pledges creating a charge over the shares of certain of the Company’s direct and indirect subsidiaries. In connection with the RCF, the Company must also maintain certain ratios for leverage and interest coverage. As at December 31, 2021, the Company was in compliance with these debt covenants.
16
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2021 and 2020 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
At December 31, 2021, the Company had drawn $nil on the RCF with the entire facility of $600 million remaining available for future drawdowns.
Fekola equipment loan facilities
During 2016, the Company entered into a Euro 71 million term equipment facility (the "first equipment facility") with Caterpillar Financial SARL, as Mandated Lead Arranger, and Caterpillar Financial Services Corporation, as original lender. The aggregate principal amount of up to Euro 71 million was available to the Company’s subsidiary, Fekola SA (the “Borrower”) to finance or refinance the mining fleet and other mining equipment at the Company's Fekola Mine in Mali and was fully utilized.
The Company is required to maintain a deposit in a debt service reserve account (“DSRA”) equal at all times to the total of the principal, interest and other payments that become payable over the next six months. At December 31, 2021, the balance in the DSRA account was Euro 8 million ($9 million equivalent). At December 31, 2020, the balance in the DSRA account was Euro 8 million ($10 million equivalent).
Each equipment loan under the first equipment facility is repayable in 20 equal quarterly installments. The final repayment date shall be five years from the first disbursement under each equipment loan. The interest rate on each loan is a rate per annum equal to EURIBOR plus a margin of 5.10%. The Company and the Company’s subsidiary, Mali Mining Investments Limited, have guaranteed the first equipment facility and security is given over the equipment of the Borrower which has been financed by the first equipment facility, related warranty and insurance, and over the DSRA.
On September 29, 2020, the Company entered into a second term equipment facility (the "second equipment facility") with Caterpillar Financial Services Corporation for aggregate principal amount of up to the Euro equivalent of $40 million. The second equipment facility is available to the Company’s majority-owned subsidiary, Fekola SA (the “Borrower”) to finance or refinance up to 75% of the cost of the mining fleet and other mining equipment at the Company's Fekola Mine in Mali. The second equipment facility is available from the date of the agreement and ends on the earlier of the day when the new equipment facility is fully drawn and 12 months from date of the agreement. On October 26, 2020, the Borrower drew down the entire amount under the new equipment facility for proceeds of Euro 36 million.
Each equipment loan is repayable in 20 equal quarterly installments. The final repayment date shall be five years from the first disbursement under each equipment loan. The interest rate on each loan is a rate per annum equal to EURIBOR plus a margin of 4.25%. The Company and its wholly-owned subsidiary, Mali Mining Investments Limited, have guaranteed the second equipment facility and security is given over the equipment of the Borrower which has been financed by the second equipment facility, related warranty and insurance. There is no requirement to maintain a DSRA for the second equipment financing.
Otjikoto equipment loan facility
On March 30, 2020 the Company elected to voluntarily repay the outstanding balance on the Otjikoto equipment loan facility. The facility had an interest rate of LIBOR plus a margin of 3.85% on loans advanced under the facility and a commitment fee of 1.2% per annum on the undrawn balance of the facility, each payable quarterly.
Masbate equipment loan facility
On June 1, 2017, the Company entered into an $18 million term equipment facility with Caterpillar Financial Services Philippines Inc. The aggregate principal amount is available to the Company’s Philippines subsidiaries to finance or refinance the mining fleet and other mining equipment at the Company's Masbate Mine and is fully utilized.
Each equipment loan is repayable in 20 equal quarterly installments. The final repayment date shall be five years from the first disbursement under each equipment loan. The interest rate on each loan is a rate per annum equal to LIBOR plus a margin of 3.85%. The Company has guaranteed the equipment facilities and security is given over the equipment of the Borrower which has been financed by the equipment facility.
Lease liabilities
For the year ended December 31, 2021, the Company recognized depreciation expense of $4 million (2020 - $3 million) on right-of-use assets recognized under IFRS 16, Leases in the Consolidated Statement of Operations and made payments on these leases of $4 million (2020 - $4 million).
17
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2021 and 2020 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
The expected timing of undiscounted lease payments at December 31, 2021 for leases accounted for under IFRS 16 is as follows:
| $ | ||||||||
| Less than one year | 3,763 | |||||||
| One to five years | 12,501 | |||||||
| More than five years | 18,964 | |||||||
| 35,228 | ||||||||
For the year ended December 31, 2021, payments totalling $2 million (2020 - $4 million) relating to short-term leases (those with a term of 12 months or less) and $7 million (2020 - $10 million) relating to variable lease payments (including both lease and non-lease components) have been expensed in the Consolidated Statement of Operations. During the year ended December 31, 2020, the Company recognized new lease liabilities totalling $23 million primarily related to new corporate office space. The valuation of the new office lease was based on an initial term of 10 years plus one 5 year extension with average annual rental payments of approximately $2 million per year. There were no significant new leases for the year ended December 31, 2021.
The following table summarizes the Company’s scheduled debt repayments on its outstanding debt as at December 31, 2021:
| 2022 | 2023 | 2024 | 2025 | 2026 | Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Fekola equipment loan facilities: | ||||||||||||||||||||
| Principal | 18,028 | 10,320 | 8,334 | 6,183 | — | 42,865 | ||||||||||||||
| Interest (estimated) | 1,816 | 1,063 | 586 | 158 | — | 3,623 | ||||||||||||||
| Masbate equipment loan facility: | ||||||||||||||||||||
| Principal | 3,076 | 766 | 106 | — | — | 3,948 | ||||||||||||||
| Interest (estimated) | 167 | 26 | 2 | — | — | 195 | ||||||||||||||
| Lease liabilities | ||||||||||||||||||||
| Principal | 3,269 | 2,605 | 2,144 | 1,387 | 1,429 | 10,834 | ||||||||||||||
| Interest (estimated) | 11 | — | — | — | — | 11 | ||||||||||||||
| 26,367 | 14,780 | 11,172 | 7,728 | 1,429 | 61,476 | |||||||||||||||
11Mine restoration provisions
The Company’s mine restoration provisions consist primarily of costs associated with mine reclamation and closure activities. These activities, which are site specific, generally include costs for earthworks, including detoxification and recontouring, revegetation, water treatment and demolition. In calculating the present value of the Company’s mine restoration provisions as at December 31, 2021, management used a risk-free rate applicable to each location’s functional currency ranging from 1.52% to 1.69% and an inflation rate of 2.5%. The undiscounted cash flows, before inflation adjustments, and including the Company's proportionate share of the reclamation costs for Gramalote, to settle the mine restoration provisions was estimated at approximately $105 million at December 31, 2021 (2020 - $89 million). Due to the nature of mine closure plans, cash expenditures are expected to occur over a significant period of time with the majority of the expenditures expected to occur in the years from 2031 to 2047.
18
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2021 and 2020 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
The following table shows the movement in the provision for mine restoration provisions:
| 2021 | 2020 | |||||||||||||
| $ | $ | |||||||||||||
| Balance, beginning of year | 104,282 | 75,419 | ||||||||||||
| Reclamation spending at continuing operations | (343) | (425) | ||||||||||||
| Accretion expense | 1,438 | 917 | ||||||||||||
| Change in obligation | 12,484 | 28,371 | ||||||||||||
| Liabilities associated with assets sold | (580) | — | ||||||||||||
| Balance, end of year | 117,281 | 104,282 | ||||||||||||
| Less: current portion | (734) | — | ||||||||||||
| 116,547 | 104,282 | |||||||||||||
12Share capital
The Company’s authorized share capital consists of an unlimited number of common shares and an unlimited number of preferred shares. As at December 31, 2021, the Company had 1,056,333,691 common shares outstanding, including 1,705,000 common shares held in trust under the Company’s Incentive Plan (described below). No preferred shares were outstanding.
During the year-ended December 31, 2021, the Company paid a quarterly dividend of $0.04 per share totalling $170 million for the year. The amount has been recognized in retained earnings in the Consolidated Statement of Changes in Equity during the period.
During the year-ended December 31, 2020, quarterly dividends totalling $116 million were recognized in retained earnings in the Consolidated Statement of Changes in Equity.
Subsequent to December 31, 2021, on February 22, 2022, B2Gold’s Board of Directors declared a cash dividend for the first quarter of 2022 of $0.04 per common share, payable on March 17, 2022 to shareholders of record as of March 9, 2022.
During 2021, the Company received $6 million (2020 - $45 million) pursuant to the exercise of 3 million (2020 – 19 million) stock options. Cash proceeds for the year ended December 31, 2020 were $46 million and also included proceeds of $1 million from options exercised during 2019 but for which the shares were still pending issuance at December 31, 2019.
Stock options
During December 31, 2021, 19,461,000 stock options were granted to employees with exercise prices ranging from Cdn. $4.34 to Cdn. $6.30 per share. These stock options have a term of up to five years and vest over a period of up to five years. The estimated fair value when granted of these options totalling $23 million is being recognized over the vesting period. The fair value was calculated using the Black-Scholes option pricing model based on a risk-free annual interest rate of up to 0.7%, an expected life of approximately 3 years, an expected volatility of approximately 50% and a dividend yield rate of approximately 4%.
During 2020, approximately 395,000 stock options were granted to employees and directors with exercise prices ranging from Cdn. $5.02 to Cdn. $8.53 per share. These stock options have a term of up to five years and vest over a period of up to three years. The estimated fair value when granted of these options totalling $1 million is being recognized over the vesting period. The fair value was calculated using the Black-Scholes option pricing model based on a risk-free annual interest rate of up to 1.6%, an expected life of approximately 3 years, an expected volatility of approximately 45% and a dividend yield rate of approximately 1%.
Option pricing models require the input of highly subjective assumptions regarding the expected volatility. Changes in assumptions can materially affect the fair value estimate.
For the year ended December 31, 2021, share-based payments expense, relating to the vesting of stock options, was $13 million (2020 - $5 million), net of $2 million (2020 - $0 million) capitalized to mining interests.
19
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2021 and 2020 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
A summary of changes to stock options outstanding is as follows:
| Number of outstanding options | Weighted- average exercise price | |||||||||||||
| (‘000’s) | (in Cdn.$) | |||||||||||||
| Outstanding at December 31, 2019 | 36,066 | 3.29 | ||||||||||||
| Granted | 395 | 6.21 | ||||||||||||
| Exercised | (19,265) | 3.11 | ||||||||||||
| Forfeited or expired | (343) | 3.48 | ||||||||||||
| Outstanding at December 31, 2020 | 16,853 | 3.56 | ||||||||||||
| Granted | 19,461 | 5.45 | ||||||||||||
| Exercised | (3,052) | 2.64 | ||||||||||||
| Forfeited or expired | (773) | 4.58 | ||||||||||||
| Outstanding at December 31, 2021 | 32,489 | 4.75 | ||||||||||||
During 2021, 3 million (2020 – 19 million) stock options were exercised. The weighted average share price at the time of exercise was Cdn. $5.66 (2020 – Cdn. $7.12).
Stock options outstanding and exercisable as at December 31, 2021 are as follows:
| Range of exercise prices (in Cdn. $) | Number of outstanding options (‘000’s) | Weighted- average years to expiry | Weighted-average exercise price (in Cdn. $) | Number of exercisable options (‘000’s) | Weighted-average exercise price (in Cdn. $) | ||||||||||||
2.94 – 2.99 | 33 | 1.749 | 2.94 | 33 | 2.94 | ||||||||||||
3.00 – 3.99 | 9,733 | 1.353 | 3.42 | 9,518 | 3.42 | ||||||||||||
4.00 – 4.99 | 3,615 | 6.772 | 4.55 | 628 | 4.26 | ||||||||||||
5.00 – 5.99 | 16,719 | 4.465 | 5.35 | 4,683 | 5.35 | ||||||||||||
6.00 – 6.99 | 2,269 | 4.311 | 6.25 | 662 | 6.24 | ||||||||||||
7.00 – 8.53 | 120 | 3.565 | 8.01 | 40 | 8.01 | ||||||||||||
| 32,489 | 3.771 | 4.75 | 15,564 | 4.16 | |||||||||||||
Restricted share unit plan
The Company has a Restricted Share Unit Plan (the “RSU Plan”) whereby restricted share units (“RSUs”) may be granted to directors, executive officers and employees of the Company. The RSU Plan reflects the Company’s commitment to a long term incentive compensation structure that aligns the interests of its directors, executive officers and employees with the interests of its shareholders. Once vested, each RSU is redeemable for one common share entitling the holder to receive the common share for no additional consideration.
During the year ended December 31, 2021, the Company granted approximately 1 million (2020 – 2 million) RSUs to executive officers and employees of the Company. One-third of the RSUs vested one year from the grant date, another one-third will vest two years from the grant date with the remainder vesting three years from the grant date. The total estimated fair value of the RSU granted was approximately $7 million (2020 - $6 million) based on the market value of the Company’s shares at the grant date. The fair value of each RSU is recorded as a share-based payments expense over the vesting period.
For the year ended December 31, 2021, share-based payments expense relating to the vesting of RSUs was $6 million (2020 - $7 million).
20
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2021 and 2020 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
Summary of changes to RSUs outstanding:
| Number of outstanding RSUs | |||||
| (‘000’s) | |||||
| Outstanding at December 31, 2019 | 3,934 | ||||
| Granted | 1,777 | ||||
| Vested and converted to common shares | (1,473) | ||||
| Reinvested dividend equivalents | 96 | ||||
| Outstanding at December 31, 2020 | 4,334 | ||||
| Granted | 1,329 | ||||
| Vested and converted to common shares | (2,143) | ||||
| Reinvested dividend equivalents | 159 | ||||
| Outstanding at December 31, 2021 | 3,679 | ||||
Deferred share unit plan
The Company has a Deferred Share Unit plan (the "DSU plan") for the benefit of the directors of the Company. Pursuant to the plan, eligible directors can elect to receive all or part of their total cash compensation in the form of deferred share units ("DSUs"). The number of DSUs granted to an eligible director is determined by dividing the portion of the compensation to be paid in DSUs by the volume weighted average trading price of the common shares on the stock exchange on which the majority of the volume of trading of the shares occurred over the relevant period for the five trading days immediately preceding the date of grant. In addition, the Board may, at its discretion, grant additional DSUs to plan participants. Each eligible director is required to hold DSUs received until the eligible director ceases to be a director of the Company, following which the DSUs will be settled in cash. As the DSUs are cash settled, they are recorded as a liability at fair market value on the Consolidated Balance Sheet with changes in the fair value being recognized as a share-based payment expense or recovery in the Consolidated Statement of Operations.
For the year ended December 31, 2021, the Company issued 0.4 million DSUs (2020 - 0.4 million) with a fair market value of $1 million (2020 - $1 million) to directors of the Company. As at December 31, 2021, there were 2 million DSUs outstanding. For the year ended December 31, 2021, share-based payments recovery relating to DSUs was $1 million (2020 - expense of $3 million).
Performance share unit plan
The Company has a Performance Share Unit plan (the "PSU plan") for the benefit of officers, employees and eligible consultants. Under the plan, eligible participants will receive shares based on the achievement of certain defined performance measures over a defined period of time. The number of shares receivable shall be 0% to 200% of the performance share units ("PSUs") awarded, with the factor applied being dependent on the extent to which the defined performance measures have been achieved.
For the year ended December 31, 2021, the Company granted approximately 1 million (2020 - 2 million) PSUs to employees. The number of shares to be issued will be 0% to 200% of the number of PSUs depending on total shareholder return compared to a group of peer companies over the period January 1, 2021 to December 31, 2023 (2020 - January 1, 2020 to December 31, 2022). The estimated fair value when granted of $7 million (2020 - $8 million) is being recognized over the vesting period. The fair value was calculated using a risk-neutral Monte Carlo simulation based on a correlated Geometric Brownian Motion. The model used historical share price volatility ranging from 32% to 99% (2020 - 25% to 68%) for the group, a Canadian risk-free annual interest rate of 0.81% (2020 - 0.87%), and a United States risk-free annual interest rate of 0.35% (2020 - 0.61%).
As at December 31, 2021, 3 million PSUs had been issued under the plan. For the year ended December 31, 2021, share-based payments expense relating to PSUs was $4 million (2020 - $2 million).
Restricted phantom unit plan
During the year-ended December 31, 2021, the Company set up a Restricted Phantom Unit plan (the "RPU plan") for the benefit of the directors of the Company. Once vested, each restricted phantom unit is redeemable for the cash value of one common share. As the restricted phantom units ("RPUs") are cash settled, they are recorded as a liability at fair market
21
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2021 and 2020 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
value on the Consolidated Balance Sheet with changes in the fair value being recognized as a share-based payment expense or recovery in the Consolidated Statement of Operations. As at December 31, 2021, no RPUs have been granted under the plan.
Incentive plan
On June 29, 2007, the Company established the B2Gold Incentive Plan (the “Incentive Plan”) for the benefit of directors, officers, employees and service providers of the Company and issued to the trustees of the Incentive Plan options to acquire 4,955,000 common shares. On October 12, 2007, following the exercise of these options, an aggregate of 4,955,000 common shares were issued to and paid for by the trustees of the Incentive Plan. These shares were held in trust by the trustees pursuant to the terms of the Incentive Plan. The Company is required under IFRS to consolidate the trust. The Company recognizes a share-based compensation expense with respect to these incentive shares, when these shares are granted to the ultimate beneficiaries by the trust. As at December 31, 2021, there are 1,705,000 common shares remaining in the trust.
Earnings per share
The following is the calculation basic and diluted earnings per share:
| 2021 | 2020 | |||||||||||||
| $ | $ | |||||||||||||
Net income and diluted net income (attributable to shareholders of the Company) | 420,065 | 628,063 | ||||||||||||
Basic weighted average number of common shares outstanding (in thousands) | 1,053,809 | 1,043,385 | ||||||||||||
| Effect of dilutive securities: | ||||||||||||||
| Stock options | 4,883 | 8,541 | ||||||||||||
| Restricted share units | 1,478 | 2,461 | ||||||||||||
| Performance share units | 1,372 | 1,915 | ||||||||||||
Diluted weighted average number of common shares outstanding (in thousands) | 1,061,542 | 1,056,302 | ||||||||||||
Earnings per share (attributable to shareholders of the Company) | ||||||||||||||
| Basic | $ | 0.40 | $ | 0.60 | ||||||||||
| Diluted | $ | 0.40 | $ | 0.59 | ||||||||||
22
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2021 and 2020 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
13Non-controlling interest
The following is a continuity schedule of the Company's non-controlling interests:
| Fekola | Masbate | Otjikoto | Other | Total | ||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Balance at December 31, 2019 | 30,429 | 16,189 | 13,877 | 914 | 61,409 | |||||||||||||||||||||||||||
| Share of net income (loss) | 35,742 | 113 | 9,856 | (1,361) | 44,350 | |||||||||||||||||||||||||||
| Interest on loan to non-controlling interest | (3,082) | — | — | — | (3,082) | |||||||||||||||||||||||||||
| Distributions to non-controlling interest | (11,097) | — | (3,143) | — | (14,240) | |||||||||||||||||||||||||||
| Other | — | — | 137 | — | 137 | |||||||||||||||||||||||||||
| Balance at December 31, 2020 | 51,992 | 16,302 | 20,727 | (447) | 88,574 | |||||||||||||||||||||||||||
| Share of net income | 32,292 | 351 | 7,641 | 476 | 40,760 | |||||||||||||||||||||||||||
| Interest on loan to non-controlling interest | (3,184) | — | — | — | (3,184) | |||||||||||||||||||||||||||
| Distributions to non-controlling interest | (22,011) | — | (9,142) | — | (31,153) | |||||||||||||||||||||||||||
| Repayment of loan by non-controlling interest | — | — | 5,312 | — | 5,312 | |||||||||||||||||||||||||||
| Purchase of non-controlling interest | — | — | — | 1,099 | 1,099 | |||||||||||||||||||||||||||
Non-controlling interest associated with mineral properties sold (Note 8) | — | — | — | (1,084) | (1,084) | |||||||||||||||||||||||||||
| Other | — | — | 389 | — | 389 | |||||||||||||||||||||||||||
| Balance at December 31, 2021 | 59,089 | 16,653 | 24,927 | 44 | 100,713 | |||||||||||||||||||||||||||
As at December 31, 2020, there was $5 million due to the State of Mali for their share of dividends declared by Fekola (Note 17). This amount was included in other current liabilities in the Consolidated Balance Sheets at December 31, 2020 and paid during the year ended December 31, 2021.
14Derivative financial instruments
Fuel derivatives
During the year ended December 31, 2021, the Company entered into additional series of forward contracts for the purchase of 27 million litres of gas oil and 41 million litres of fuel oil with scheduled settlement between February 2022 and October 2023. These derivative instruments were not designated as hedges by the Company and were recorded at FVTPL.
For the year ended December 31, 2021, the Company recorded an unrealized derivative gain on fuel derivatives of $11 million (2020 – gain of $6 million) and a realized fuel derivative gain of $14 million (2020 - loss of $6 million) in the Consolidated Statement of Operations.
The following is a summary, by maturity dates, of the Company’s fuel derivative contracts outstanding as at December 31, 2021:
| 2022 | 2023 | Total | ||||||||||||||||||
| Forward – fuel oil: | ||||||||||||||||||||
| Litres (thousands) | 51,884 | 21,292 | 73,176 | |||||||||||||||||
| Average strike price | $ | 0.32 | $ | 0.37 | $ | 0.33 | ||||||||||||||
| Forward – gas oil: | ||||||||||||||||||||
| Litres (thousands) | 40,171 | 17,066 | 57,237 | |||||||||||||||||
| Average strike price | $ | 0.37 | $ | 0.43 | $ | 0.39 | ||||||||||||||
The unrealized fair value of these contracts at December 31, 2021 was $15 million (see Notes 5 and 9).
23
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2021 and 2020 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
Subsequent to December 31, 2021, the Company entered into contracts for a further 1,969,000 litres of fuel oil for delivery between October and December 2023 at a price of $0.43 per litre.
Interest rate swaps
On January 24, 2019, the Company entered into a series of interest rate swaps with a notional amount of $125 million with settlements scheduled between April 2019 and July 2021. Under these contracts, the Company received a floating rate equal to the 3 month United States dollar LIBOR rate and pays a fixed rate of between 2.36% and 2.67%. During the year ended December 31, 2021, the Company delivered into the last of these contracts and no contracts remain outstanding.
15Financial instruments
The Company’s financial assets and liabilities consist of cash and cash equivalents, accounts receivable, loan receivable, long-term investments, accounts payable and accrued liabilities, fuel derivative contracts, interest rate swaps, and long-term debt.
Fair values
The Company’s financial assets and liabilities are classified based on the lowest level of input significant to the fair value measurement based on the fair value hierarchy:
Level 1 – quoted prices in active markets for identical assets or liabilities;
Level 2 – inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3 – inputs for the asset or liability that are not based on observable market data.
As at December 31, 2021, the Company’s financial assets and liabilities measured at fair value are categorized as follows:
| As at December 31, 2021 | As at December 31, 2020 | |||||||||||||||||||||||||
| Level 1 | Level 2 | Level 1 | Level 2 | |||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||
Long-term investments (Note 7) | 32,118 | — | 9,354 | — | ||||||||||||||||||||||
Fuel derivative contracts (Note 14) | — | 15,424 | — | 4,600 | ||||||||||||||||||||||
Interest rate swaps (Note 14) | — | — | — | (2,059) | ||||||||||||||||||||||
The fair value of the Company’s long-term investments were determined using market quotes from an active market for each investment.
The fair value of the Company's fuel derivative contracts and interest rate swaps were determined using prevailing market rates for instruments with similar characteristics.
The fair value of the Company's long-term debt also approximates its carrying value as it has a floating interest rate and the Company's credit spread has remained approximately consistent. The fair value of the Company's other financial instruments approximate their carrying value due to their short-term nature.
Capital risk management
The Company’s objectives when managing its capital is to ensure it will be able to continue as a going concern while maximizing the return to shareholders including the payment of dividends. The selling price of gold and minimizing production costs and capital expenditures are key factors in helping the Company reach its capital risk management objectives. The capital structure of the Company includes shareholders’ equity and debt.
24
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2021 and 2020 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
Credit risk
As at December 31, 2021, the Company’s maximum exposure to credit risk was the book value of cash and cash equivalents, accounts receivable, deferred consideration receivable, value added and other taxes receivable, loans receivable and the carrying value of its derivative portfolio. The Company limits its credit exposure on cash and cash equivalents by holding its deposits mainly with high credit quality financial institutions as determined by credit rating agencies.
Liquidity risk
The Company manages its liquidity risk through its budgeting and forecasting process. Budgets are prepared annually and forecasts are prepared and reviewed on a regular basis, to help determine the funding requirements to support the Company’s current operations and expansion and development plans and by managing its capital structure as described above.
As at December 31, 2021, the Company had cash and cash equivalents of $673 million. Cash provided by operating activities totalled $724 million for the year ended December 31, 2021. As at December 31, 2021, the Company had a $600 million revolving credit facility of which the entire balance of $600 million is undrawn.
As at December 31, 2021, the Company had drawn down the full amount under its equipment loan facilities at Fekola and Masbate.
As at December 31, 2021, the Company’s significant commitments are disclosed in the table below. In addition, significant commitments are disclosed in Note 10 for debt repayments and Note 21 for capital expenditure commitments.
| 2022 | 2023 | 2024 | 2025 | 2026 | Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Accounts payable and accrued liabilities | 111,716 | — | — | — | — | 111,716 | ||||||||||||||
| Fekola equipment loan facilities: | ||||||||||||||||||||
| Principal | 18,028 | 10,320 | 8,334 | 6,183 | — | 42,865 | ||||||||||||||
| Interest (estimated) | 1,816 | 1,063 | 586 | 158 | — | 3,623 | ||||||||||||||
| Masbate equipment loan facility: | ||||||||||||||||||||
| Principal | 3,076 | 766 | 106 | — | — | 3,948 | ||||||||||||||
| Interest (estimated) | 167 | 26 | 2 | — | — | 195 | ||||||||||||||
| Lease liabilities | ||||||||||||||||||||
| Principal | 3,269 | 2,605 | 2,144 | 1,387 | 1,429 | 10,834 | ||||||||||||||
| Interest (estimated) | 11 | — | — | — | — | 11 | ||||||||||||||
| 138,083 | 14,780 | 11,172 | 7,728 | 1,429 | 173,192 | |||||||||||||||
| Capital expenditure commitments | 59,712 | 2,401 | — | — | — | 62,113 | ||||||||||||||
| Commitment fees on revolving credit facility | 2,700 | 2,700 | 2,700 | 2,588 | — | 10,688 | ||||||||||||||
| Other liabilities | 1,040 | 1,565 | — | — | — | 2,605 | ||||||||||||||
| 201,535 | 21,446 | 13,872 | 10,316 | 1,429 | 248,598 | |||||||||||||||
Market risk
Market risk includes currency and price risk.
The Company’s operations in foreign countries are subject to currency fluctuations and such fluctuations may materially affect the Company’s financial position and results. The Company reports its financial results in United States dollars and incurs expenses in European euros, CFA francs, Namibian dollars, South African rand, Philippine pesos, United States dollars, Canadian dollars and Colombian pesos. As these exchange rates fluctuate against the United States dollar, the Company will experience foreign exchange gains and losses.
The Company also holds cash and cash equivalents that are denominated in non-United States dollar currencies which are subject to currency risk. As at December 31, 2021, $514 million of the Company’s $673 million in cash and cash equivalents
25
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2021 and 2020 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
was held in United States dollars. A 10% movement in foreign exchange rates versus the United States dollar would result in approximately a $16 million change in the Company’s cash position.
The Company maintains a portfolio of fuel derivatives that are measured at FVTPL. A 10% change in the forward price of fuel would result in a $6 million change in the value of the fuel derivative portfolio.
16Income and other taxes
Income tax expense differs from the amount that would result from applying the Canadian federal and provincial income tax rates to earnings from operations before taxes. These differences result from the following items:
| 2021 | 2020 | |||||||||||||
| $ | $ | |||||||||||||
| Income from operations before taxes | 726,227 | 1,034,428 | ||||||||||||
| Canadian federal and provincial income tax rates | 27.00 | % | 27.00 | % | ||||||||||
| Income tax expense at statutory rates | 196,081 | 279,296 | ||||||||||||
| Increase (decrease) attributable to: | ||||||||||||||
| Effects of different foreign statutory tax rates | 40,067 | 54,294 | ||||||||||||
| Change due to foreign exchange | 28,261 | (23,718) | ||||||||||||
| Withholding and other taxes | 28,249 | 13,682 | ||||||||||||
| Non-deductible expenditures | 24,356 | 29,499 | ||||||||||||
| Change in income tax rates | (20,143) | — | ||||||||||||
| Benefit of tax incentives | (16,544) | (19,185) | ||||||||||||
| Use of losses and temporary differences not previously recognized | (10,481) | — | ||||||||||||
| Future withholding tax | (3,300) | 24,300 | ||||||||||||
| Non-taxable portions of gains | (4,754) | (3,073) | ||||||||||||
| Losses for which no tax benefit has been recorded | 1,876 | 4,487 | ||||||||||||
| Change in accruals for tax audits | 1,200 | 2,757 | ||||||||||||
| Amounts under (over) provided for in prior years | 534 | (324) | ||||||||||||
| Income tax expense | 265,402 | 362,015 | ||||||||||||
| Current income tax, withholding and other taxes | 270,669 | 309,913 | ||||||||||||
| Deferred income tax (recovery) expense | (5,267) | 52,102 | ||||||||||||
| Income tax expense | 265,402 | 362,015 | ||||||||||||
Included in current income tax expense for the year-ended December 31, 2021, is $39 million (2020 - $49 million), related to the State of Mali's 10% priority dividend on its free carried interest in the Fekola Mine. This priority dividend is accounted for as an income tax in accordance with IAS 12, Income Taxes.
During the year ended December 31, 2021, the company recorded a deferred tax recovery of $3 million (2020 - expense of $24 million) related to future withholding tax expected to be incurred on retained earnings the Company is planning to repatriate from its foreign subsidiaries in the foreseeable future. The Company's foreign subsidiaries continue to accumulate earnings in excess of their expected needs for reinvestment. The deferred tax expense will eventually be a current tax expense as dividends from foreign subsidiaries and the associated withholding taxes are paid.
Deferred tax liabilities of approximately $112 million (2020 – $99 million) have not been recognized on the repatriation of earnings from foreign subsidiaries where the Company controls the timing of the reversal of the temporary differences but it is probable that such differences will not reverse in the foreseeable future.
26
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2021 and 2020 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
Total income tax expense attributable to geographical jurisdiction is as follows:
| 2021 | 2020 | |||||||||||||
| $ | $ | |||||||||||||
| Mali | 216,560 | 215,115 | ||||||||||||
| Philippines | (5,044) | 83,904 | ||||||||||||
| Namibia | 45,773 | 63,879 | ||||||||||||
| Other | 8,113 | (883) | ||||||||||||
| 265,402 | 362,015 | |||||||||||||
The composition of the Company’s net deferred income tax (liabilities) assets and deferred tax expense (recovery) is as follows:
| Deferred tax (liabilities)/assets | Deferred income tax expense/(recovery) | |||||||||||||||||||||||||
| As at December 31, 2021 | As at December 31, 2020 | 2021 | 2020 | |||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||
| Operating loss carry-forwards | 30,735 | 21,105 | (9,630) | (7,651) | ||||||||||||||||||||||
| Current assets and liabilities | (5,502) | 5,005 | 10,507 | 2,673 | ||||||||||||||||||||||
| Mining interests | (211,581) | (226,571) | (10,333) | 45,341 | ||||||||||||||||||||||
| Mine restoration provisions | 29,052 | 30,445 | 1,393 | (5,535) | ||||||||||||||||||||||
| Future withholding tax | (21,000) | (24,300) | (3,300) | 24,300 | ||||||||||||||||||||||
| Unrealized gains | (8,097) | (3,085) | 5,012 | (7,033) | ||||||||||||||||||||||
| Other | (39) | 1,045 | 1,084 | 7 | ||||||||||||||||||||||
| (186,432) | (196,356) | (5,267) | 52,102 | |||||||||||||||||||||||
Represented on the balance sheet as:
| 2021 | 2020 | |||||||||||||
| $ | $ | |||||||||||||
| Deferred tax asset | (1,455) | (24,547) | ||||||||||||
| Deferred tax liability | 187,887 | 220,903 | ||||||||||||
| Balance, end of year | 186,432 | 196,356 | ||||||||||||
The Company has the following unrecognized deferred tax assets:
| 2021 | 2020 | |||||||||||||
| $ | $ | |||||||||||||
| Capital and non-capital tax losses | 109,567 | 117,734 | ||||||||||||
| Long-term debt | 3,256 | 6,449 | ||||||||||||
| Mining interests and other | 600 | 2,524 | ||||||||||||
| Mine restoration provisions | 431 | — | ||||||||||||
| Current assets | — | 864 | ||||||||||||
| 113,854 | 127,571 | |||||||||||||
The Company has not recognized potential deferred tax assets of $114 million (2020 - $128 million) as it is not probable that future taxable profits will be available against which the Company can utilize the potential deferred tax assets.
27
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2021 and 2020 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
The change for the year in the Company’s net deferred tax liability was as follows:
| 2021 | 2020 | |||||||||||||
| $ | $ | |||||||||||||
| Balance, beginning of year | 196,356 | 144,254 | ||||||||||||
| Deferred income tax (recovery) expense | (5,267) | 52,102 | ||||||||||||
| Deferred income tax liability related to Kiaka disposal | (4,657) | — | ||||||||||||
| (9,924) | 52,102 | |||||||||||||
| Balance, end of year | 186,432 | 196,356 | ||||||||||||
At December 31, 2021, the Company had non-capital tax losses which are not recognized as deferred tax assets. The Company recognizes the tax benefit of the non-capital tax losses only to the extent of anticipated future taxable income that can be reduced by non-capital tax losses. The gross amount of the non-capital tax losses for which a tax benefit has not been recorded are $295 million (2020 - $282 million) in Canada which expire between 2027 and 2041, and $1 million (2020 - $17 million) in Colombia which expire between 2031 and 2033.
At December 31, 2021 the Company had capital losses in Canada of $310 million which have no expiry date and can be applied against future capital gains. No deferred income tax asset has been recorded with respect to these losses.
During the year ended December 31, 2021 the Company paid $324 million (2020 - $217 million) of current income tax, withholding and other taxes in cash.
17Supplementary cash flow information
Supplementary disclosure of cash flow information is provided in the table below:
Non-cash (credits) charges:
| 2021 | 2020 | |||||||||||||
| $ | $ | |||||||||||||
| Depreciation and depletion | 378,892 | 301,491 | ||||||||||||
Share-based payments (Note 12) | 22,571 | 17,129 | ||||||||||||
Impairment (reversal of impairment) of long-lived assets, net (Note 8) | 5,905 | (174,309) | ||||||||||||
Net gain on disposal of Burkina Faso assets (Note 8) | (22,463) | — | ||||||||||||
Share of net income of associates (Note 8) | (17,543) | (22,167) | ||||||||||||
Write-down of mineral property interests (Note 8) | 15 | 11,353 | ||||||||||||
| Non-cash interest and financing expense | 8,797 | 12,806 | ||||||||||||
Unrealized gains on derivative instruments (Note 14) | (12,884) | (5,336) | ||||||||||||
Deferred income tax (recovery) expense (Note 16) | (5,267) | 52,102 | ||||||||||||
| Other | 11,533 | 4,989 | ||||||||||||
| 369,556 | 198,058 | |||||||||||||
Changes in non-cash working capital:
| 2021 | 2020 | |||||||||||||
| $ | $ | |||||||||||||
| Accounts receivable and prepaids | 568 | 3,977 | ||||||||||||
| Value-added and other tax receivables | (48,820) | (727) | ||||||||||||
| Inventories | (24,042) | (24,823) | ||||||||||||
| Accounts payable and accrued liabilities | 12,078 | 7,038 | ||||||||||||
| Current income and other taxes payable | (44,399) | 101,312 | ||||||||||||
| (104,615) | 86,777 | |||||||||||||
28
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2021 and 2020 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
Other exploration and development:
| 2021 | 2020 | |||||||||||||
| $ | $ | |||||||||||||
| Fekola Mine, exploration | (13,014) | (14,718) | ||||||||||||
| Masbate Mine, exploration | (5,013) | (8,266) | ||||||||||||
| Otjikoto Mine, exploration | (4,424) | (3,183) | ||||||||||||
| Menankoto Property, exploration | (4,942) | (4,489) | ||||||||||||
| Bantako North Property, exploration | (9,057) | (3,199) | ||||||||||||
| Kiaka Project, exploration | (4,313) | (4,032) | ||||||||||||
| Ondundu Property, exploration | (188) | (922) | ||||||||||||
| Finland Properties, exploration | (3,527) | (2,336) | ||||||||||||
| Uzbekistan Properties, exploration | (4,456) | (1,967) | ||||||||||||
| Other | (7,182) | (5,070) | ||||||||||||
| (56,116) | (48,182) | |||||||||||||
Non-cash investing and financing activities:
| 2021 | 2020 | |||||||||||||
| $ | $ | |||||||||||||
| Change in current liabilities relating to mineral property expenditures | 8,762 | (2,931) | ||||||||||||
| Interest on loan to non-controlling interest | 3,746 | 3,626 | ||||||||||||
| Share-based payments, capitalized to mineral property interests | 2,124 | 400 | ||||||||||||
| Foreign exchange gains (losses) on Fekola equipment loan facility | 4,145 | (5,055) | ||||||||||||
Deferred consideration on disposal of Kiaka Project (Note 8) | 41,239 | — | ||||||||||||
Share consideration received on disposal of Kiaka Project (Note 8) | 20,530 | — | ||||||||||||
Royalty interest in Kiaka Project (Note 8) | 18,488 | — | ||||||||||||
Royalty interest in Toega Project (Note 8) | 2,599 | — | ||||||||||||
Tax guarantee receivable on disposal of Toega Project (Note 8) | 1,858 | — | ||||||||||||
Share consideration received on disposal of Kronk (Note 8) | 4,741 | — | ||||||||||||
| Change in accrued distributions to non-controlling interests | (5,033) | 5,033 | ||||||||||||
18Compensation of key management
Key management includes the Company’s directors, members of the Executive Committee and members of Senior Management. Compensation to key management consisted of:
| 2021 | 2020 | |||||||||||||
| $ | $ | |||||||||||||
| Salaries and short-term employee benefits | 8,891 | 8,952 | ||||||||||||
| Share-based payments | 11,946 | 9,268 | ||||||||||||
| 20,837 | 18,220 | |||||||||||||
29
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2021 and 2020 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
19Production costs by nature
| 2021 | 2020 | |||||||||||||
| $ | $ | |||||||||||||
| Raw materials and consumables | 408,219 | 310,067 | ||||||||||||
| Salaries and employee benefits | 120,690 | 112,124 | ||||||||||||
| Contractors | 32,926 | 37,183 | ||||||||||||
| Equipment rental | 3,752 | 10,266 | ||||||||||||
| Other | 37,207 | 26,929 | ||||||||||||
| Change in inventories | (15,986) | (5,707) | ||||||||||||
| Capitalized to mining interests | (93,419) | (82,997) | ||||||||||||
| 493,389 | 407,865 | |||||||||||||
Salaries and employee benefits expense included in general and administrative costs were $28 million for the year ended December 31, 2021 (2020 - $28 million).
20Segmented information
The Company’s reportable operating segments for 2021 include its mining operations, namely the Fekola, Masbate and Otjikoto mines. The “Other Mineral Properties” segment consists of the Company’s interests in mineral properties which are at various stages of exploration and development, including the Company's interests in the Gramalote Property and Calibre. The “Corporate and Other” segment includes corporate operations.
The Company’s segments are summarized in the following tables:
| 2021 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Other Mineral Properties | Corporate & Other | Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| External gold revenue | 1,024,425 | 398,879 | 338,960 | — | — | 1,762,264 | ||||||||||||||
| Production costs | 250,337 | 146,671 | 96,381 | — | — | 493,389 | ||||||||||||||
| Depreciation & depletion | 188,601 | 86,835 | 103,456 | 52 | 2,392 | 381,336 | ||||||||||||||
| Impairment of long-lived assets | — | — | — | 5,905 | — | 5,905 | ||||||||||||||
| Current income tax, withholding and other taxes | 190,908 | 25,750 | 49,063 | 37 | 4,911 | 270,669 | ||||||||||||||
| Net income (loss) | 263,218 | 132,615 | 71,576 | 9,781 | (16,365) | 460,825 | ||||||||||||||
| Capital expenditures | 123,651 | 35,756 | 85,360 | 57,552 | 1,652 | 303,971 | ||||||||||||||
| Total assets | 1,382,369 | 786,770 | 442,280 | 362,133 | 587,741 | 3,561,293 | ||||||||||||||
| 2020 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Other Mineral Properties | Corporate & Other | Total | |||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| External gold revenue | 1,113,288 | 368,473 | 307,167 | — | — | 1,788,928 | ||||||||||||||
| Production costs | 200,228 | 131,780 | 75,857 | — | — | 407,865 | ||||||||||||||
| Depreciation & depletion | 164,591 | 65,775 | 71,125 | — | 1,423 | 302,914 | ||||||||||||||
| Reversal of impairment of long-lived assets | — | 174,309 | — | — | — | 174,309 | ||||||||||||||
| Write-down mineral property interests | — | — | — | 11,353 | — | 11,353 | ||||||||||||||
| Current income tax, withholding and other taxes | 226,059 | 33,385 | 50,229 | 240 | — | 309,913 | ||||||||||||||
| Net income (loss) | 411,251 | 234,145 | 68,075 | 16,477 | (57,535) | 672,413 | ||||||||||||||
| Capital expenditures | 198,755 | 42,307 | 69,998 | 41,513 | 1,295 | 353,868 | ||||||||||||||
| Total assets | 1,404,135 | 864,043 | 450,843 | 354,577 | 288,781 | 3,362,379 | ||||||||||||||
30
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2021 and 2020 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
The Company’s mining interests are located in the following geographical locations:
| 2021 | 2020 | |||||||||||||
| $ | $ | |||||||||||||
| Mining interests | ||||||||||||||
| Mali | 1,084,580 | 1,134,868 | ||||||||||||
| Philippines | 636,525 | 685,139 | ||||||||||||
| Namibia | 307,434 | 336,897 | ||||||||||||
| Colombia | 130,096 | 105,665 | ||||||||||||
| Nicaragua | 93,728 | 76,235 | ||||||||||||
| Burkina Faso | 21,087 | 81,382 | ||||||||||||
| Canada | 23,420 | 24,160 | ||||||||||||
| Finland | 12,561 | 9,034 | ||||||||||||
| Other | 26,636 | 9,875 | ||||||||||||
| 2,336,067 | 2,463,255 | |||||||||||||
21Commitments
As at December 31, 2021, the Company had the following commitments (in addition to those disclosed elsewhere in these financial statements):
•For payments of $38 million for the Wolfshag underground project at the Otjikoto Mine, of which $36 million is expected to be incurred in 2022 and $2 million is expected to be incurred in 2023, and payments of $5 million related to the national power grid connection line, all of which is expected to be incurred in 2022.
•For payments of $8 million for mobile equipment, $2 million for the tailings storage facility expansion and $2 million for other capital projects at the Fekola Mine, all of which is expected to be incurred in 2022.
•For payments of $3 million for mobile equipment at the Masbate Mine, all of which is expected to be incurred in 2022.
•For payments of $4 million for the Gramalote Property, all of which is expected to be incurred in 2022.
.
31
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
Mining Interest Schedule (Note 22) | ||
For the year ended December 31, 2021 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
| Cost | Accumulated depreciation | Net carrying value | |||||||||||||||||||||||||||||||||||||||
| Balance at Dec. 31, 2020 | Additions | Disposals / write-offs | Reclass / Mine restoration provision movements | Balance at Dec. 31, 2021 | Balance at Dec. 31, 2020 | Depreciation | Disposals / write-offs | Balance at Dec. 31, 2021 | As at Dec. 31, 2021 | As at Dec. 31, 2020 | |||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| Property, plant and equipment (depletable) | |||||||||||||||||||||||||||||||||||||||||
| Fekola Mine | 1,516,134 | 126,824 | (2,508) | 4,887 | 1,645,337 | (416,559) | (193,401) | 61 | (609,899) | 1,035,438 | 1,099,575 | ||||||||||||||||||||||||||||||
| Masbate Mine | 1,046,577 | 35,081 | (284) | 4,313 | 1,085,687 | (361,438) | (88,450) | 213 | (449,675) | 636,012 | 685,139 | ||||||||||||||||||||||||||||||
| Otjikoto Mine | 696,956 | 85,571 | (3,277) | 2,958 | 782,208 | (371,138) | (107,383) | 3,218 | (475,303) | 306,905 | 325,818 | ||||||||||||||||||||||||||||||
| 3,259,667 | 247,476 | (6,069) | 12,158 | 3,513,232 | (1,149,135) | (389,234) | 3,492 | (1,534,877) | 1,978,355 | 2,110,532 | |||||||||||||||||||||||||||||||
| Exploration & evaluation properties (pre-depletable) | |||||||||||||||||||||||||||||||||||||||||
| Gramalote Property | 95,435 | 24,392 | — | 39 | 119,866 | — | — | — | — | 119,866 | 95,435 | ||||||||||||||||||||||||||||||
| Menankoto Property | 28,991 | 4,748 | — | — | 33,739 | — | — | — | — | 33,739 | 28,991 | ||||||||||||||||||||||||||||||
| Bantako North Property | 6,191 | 9,160 | — | — | 15,351 | — | — | — | — | 15,351 | 6,191 | ||||||||||||||||||||||||||||||
| Kiaka Royalty | — | 18,488 | — | — | 18,488 | — | — | — | — | 18,488 | — | ||||||||||||||||||||||||||||||
| Mocoa Royalty | 10,230 | — | — | — | 10,230 | — | — | — | — | 10,230 | 10,230 | ||||||||||||||||||||||||||||||
| Finland Properties | 9,034 | 3,527 | — | — | 12,561 | — | — | — | — | 12,561 | 9,034 | ||||||||||||||||||||||||||||||
| Uzbekistan Properties | 4,131 | 4,671 | — | — | 8,802 | — | — | — | — | 8,802 | 4,131 | ||||||||||||||||||||||||||||||
| Kiaka Project | 80,927 | 4,639 | (85,566) | — | — | — | — | — | — | — | 80,927 | ||||||||||||||||||||||||||||||
| Ondundu Property | 10,701 | 7,904 | (5,905) | (12,700) | — | — | — | — | — | — | 10,701 | ||||||||||||||||||||||||||||||
| Other | 6,688 | 9,514 | (5,183) | — | 11,019 | — | — | — | — | 11,019 | 6,688 | ||||||||||||||||||||||||||||||
| 252,328 | 87,043 | (96,654) | (12,661) | 230,056 | — | — | — | — | 230,056 | 252,328 | |||||||||||||||||||||||||||||||
| Corporate | |||||||||||||||||||||||||||||||||||||||||
| Office, furniture & equipment | 28,394 | 1,652 | (1,506) | — | 28,540 | (4,234) | (2,392) | 1,506 | (5,120) | 23,420 | 24,160 | ||||||||||||||||||||||||||||||
| 3,540,389 | 336,171 | (104,229) | (503) | 3,771,828 | (1,153,369) | (391,626) | 4,998 | (1,539,997) | 2,231,831 | 2,387,020 | |||||||||||||||||||||||||||||||
| Investments in associates (accounted for using the equity method) | |||||||||||||||||||||||||||||||||||||||||
| Calibre | 76,235 | 17,493 | — | — | 93,728 | — | — | — | — | 93,728 | 76,235 | ||||||||||||||||||||||||||||||
| BeMetals | — | 10,508 | — | — | 10,508 | — | — | — | — | 10,508 | — | ||||||||||||||||||||||||||||||
| 76,235 | 28,001 | — | — | 104,236 | — | — | — | — | 104,236 | 76,235 | |||||||||||||||||||||||||||||||
| 3,616,624 | 364,172 | (104,229) | (503) | 3,876,064 | (1,153,369) | (391,626) | 4,998 | (1,539,997) | 2,336,067 | 2,463,255 | |||||||||||||||||||||||||||||||
32
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
Mining Interests Schedule (Note 22) | ||
For the year ended December 31, 2020 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
| Cost | Accumulated depreciation | Net carrying value | |||||||||||||||||||||||||||||||||||||||
| Balance at Dec. 31, 2019 | Additions | Disposals / write-offs | Reclass / Impairment reversal / Mine restoration provision movements | Balance at Dec. 31, 2020 | Balance at Dec. 31, 2019 | Depreciation | Disposals / write-offs | Balance at Dec. 31, 2020 | As at Dec. 31, 2020 | As at Dec. 31, 2019 | |||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| Property, plant and equipment (depletable) | |||||||||||||||||||||||||||||||||||||||||
| Fekola Mine | 1,322,865 | 192,924 | (7,271) | 7,616 | 1,516,134 | (258,580) | (164,898) | 6,919 | (416,559) | 1,099,575 | 1,064,285 | ||||||||||||||||||||||||||||||
| Masbate Mine | 815,418 | 42,559 | (629) | 189,229 | 1,046,577 | (295,616) | (66,347) | 525 | (361,438) | 685,139 | 519,802 | ||||||||||||||||||||||||||||||
| Otjikoto Mine | 638,664 | 73,605 | (20,016) | 4,703 | 696,956 | (323,152) | (67,304) | 19,318 | (371,138) | 325,818 | 315,512 | ||||||||||||||||||||||||||||||
| 2,776,947 | 309,088 | (27,916) | 201,548 | 3,259,667 | (877,348) | (298,549) | 26,762 | (1,149,135) | 2,110,532 | 1,899,599 | |||||||||||||||||||||||||||||||
| Exploration & evaluation properties (pre-depletable) | |||||||||||||||||||||||||||||||||||||||||
| Gramalote Property | — | 7,903 | — | 87,532 | 95,435 | — | — | — | — | 95,435 | — | ||||||||||||||||||||||||||||||
| Kiaka Project | 76,807 | 4,120 | — | — | 80,927 | — | — | — | — | 80,927 | 76,807 | ||||||||||||||||||||||||||||||
| Menankoto Property | 25,450 | 3,541 | — | — | 28,991 | — | — | — | — | 28,991 | 25,450 | ||||||||||||||||||||||||||||||
| Ondundu Property | 9,778 | 923 | — | — | 10,701 | — | — | — | — | 10,701 | 9,778 | ||||||||||||||||||||||||||||||
| Mocoa Royalty | 10,230 | — | — | — | 10,230 | — | — | — | — | 10,230 | 10,230 | ||||||||||||||||||||||||||||||
| Finland Properties | 6,697 | 2,337 | — | — | 9,034 | — | — | — | — | 9,034 | 6,697 | ||||||||||||||||||||||||||||||
| Bantako North Property | 1,689 | 4,502 | — | — | 6,191 | — | — | — | — | 6,191 | 1,689 | ||||||||||||||||||||||||||||||
| Uzbekistan Properties | 2,164 | 1,967 | — | — | 4,131 | — | — | — | — | 4,131 | 2,164 | ||||||||||||||||||||||||||||||
| Other | 12,157 | 5,884 | (11,353) | — | 6,688 | — | — | — | — | 6,688 | 12,157 | ||||||||||||||||||||||||||||||
| 144,972 | 31,177 | (11,353) | 87,532 | 252,328 | — | — | — | — | 252,328 | 144,972 | |||||||||||||||||||||||||||||||
| Corporate | |||||||||||||||||||||||||||||||||||||||||
| Office, furniture & equipment | 4,971 | 23,423 | — | — | 28,394 | (2,811) | (1,423) | — | (4,234) | 24,160 | 2,160 | ||||||||||||||||||||||||||||||
| 2,926,890 | 363,688 | (39,269) | 289,080 | 3,540,389 | (880,159) | (299,972) | 26,762 | (1,153,369) | 2,387,020 | 2,046,731 | |||||||||||||||||||||||||||||||
| Investments in joint ventures and associates (accounted for using the equity method) | |||||||||||||||||||||||||||||||||||||||||
| Gramalote Property | 77,265 | 13,124 | — | (90,389) | — | — | — | — | — | — | 77,265 | ||||||||||||||||||||||||||||||
| Calibre | 53,471 | 22,764 | — | 76,235 | — | — | — | — | 76,235 | 53,471 | |||||||||||||||||||||||||||||||
| 130,736 | 35,888 | — | (90,389) | 76,235 | — | — | — | — | 76,235 | 130,736 | |||||||||||||||||||||||||||||||
| 3,057,626 | 399,576 | (39,269) | 198,691 | 3,616,624 | (880,159) | (299,972) | 26,762 | (1,153,369) | 2,463,255 | 2,177,467 | |||||||||||||||||||||||||||||||
33
B2GOLD CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
This Management’s Discussion and Analysis (“MD&A”) has been prepared as at February 22, 2022 and contains certain "forward-looking information" and “forward-looking statements” under Canadian and United States securities laws, respectively ("forward-looking statements"). All statements included herein, other than statements of historical fact, including without limitation statements regarding potential mineralization, exploration results and future plans, production and objectives of B2Gold Corp. (the “Company” or “B2Gold”), are forward-looking statements that involve various risks, uncertainties and assumptions. See the “Cautionary Statement on Forward-Looking Information” section. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements as a result of a number of factors, including those set out in “Risks and Uncertainties.”
The following discussion of the operating results and financial position of the Company should be read in conjunction with the audited consolidated financial statements and the notes thereto of the Company for the year ended December 31, 2021. These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”). All amounts are expressed in United States dollars, unless otherwise stated. All production results and the Company's guidance presented in this MD&A reflect total production at the mines the Company operates on a 100% basis. Production from the La Libertad and El Limon mines owned by Calibre Mining Corp. ("Calibre") is presented on an approximate 33% basis, representing the Company’s indirect ownership interest in the Nicaraguan operations through its equity investment in Calibre (subsequently diluted to 25% on January 12, 2022).
Additional information related to B2Gold, including our Annual Information Form, is available on the Company's website www.b2gold.com and on SEDAR at www.sedar.com.
INDEX
| Overview | |||||
| Review of Financial Results | |||||
| Review of Mining Operations and Development Projects | |||||
| Liquidity and Capital Resources | |||||
| Critical Accounting Estimates | |||||
| Risks and Uncertainties | |||||
| Disclosure Controls and Internal Controls Over Financial Reporting | |||||
| Non-IFRS Measures | |||||
| Summary of Quarterly Results | |||||
| Summary and Outlook | |||||
| Outstanding Share Data | |||||
| Cautionary Statement on Forward-Looking Information | |||||
1
OVERVIEW
B2Gold is a Vancouver-based gold producer with three operating mines: the Fekola Mine in Mali, the Masbate Mine in the Philippines and the Otjikoto Mine in Namibia. The Company also has a 50% interest in the Gramalote Project in Colombia. In addition, the Company has a portfolio of other evaluation and exploration projects in a number of countries including Mali, Uzbekistan and Finland.
COVID-19
The Company continues to address the COVID-19 pandemic and minimize its potential impact at its operations. The Company places the safety and well-being of its workforce and all stakeholders as its highest priority and continues to encourage input from all its stakeholders as the COVID-19 situation evolves. The Company continues to implement measures and precautionary steps to manage and respond to the risks associated with COVID-19 to ensure the safety of the Company's employees, contractors, suppliers and surrounding communities where the Company works while continuing to operate. The Company is continually updating these plans and response measures based on the safety and well-being of its workforce, the severity of the pandemic in areas where it operates, global response measures, government restrictions and extensive community consultation. The Company is working closely with national and local authorities, including labour unions, and continues to closely monitor each site's situation, including public and employee sentiment to ensure that stakeholders are in alignment with continued safe operation of its mines.
Summary
Consolidated gold revenue for the year ended December 31, 2021 was $1.76 billion on sales of 981,401 ounces at an average realized gold price of $1,796 per ounce, compared to $1.79 billion on sales of 1,006,455 ounces at an average realized gold price of $1,777 per ounce in 2020. The slight decrease in gold revenue of 1% ($0.03 billion) was due to a 2% decrease in gold ounces sold, partially offset by a 1% increase in the average realized gold price. For the fourth quarter of 2021, consolidated gold revenue was $526 million on sales of 292,350 ounces at an average realized gold price of $1,800 per ounce, compared to $480 million on sales of 256,655 ounces at an average realized gold price of $1,868 per ounce in the fourth quarter of 2020. The increase in gold revenue of 10% ($46 million) was due to a 14% increase in gold ounces sold (mainly due to the higher gold production), partially offset by a 4% decrease in the average realized gold price.
Despite the continuing challenges of the COVID-19 pandemic, B2Gold had another remarkable year of strong operational performance in 2021, with the achievement of B2Gold’s thirteenth consecutive year of record annual total gold production. The Company’s total gold production for 2021 was an annual record of 1,047,414 ounces (including 59,819 ounces of attributable production from Calibre) (2020 - 1,040,737 ounces), near the top end of its revised guidance range (of between 1,015,000 and 1,055,000 ounces) and exceeding the upper end of its original guidance range (of between 970,000 and 1,030,000 ounces). Consolidated gold production from the Company’s three operating mines was 987,595 ounces (2020 - 995,258 ounces), near the upper end of the revised guidance range (of between 965,000 - 995,000 ounces) and exceeding the upper end of the original guidance range (of between 920,000 and 970,000 ounces), with solid performances from each of the Company’s three mines (refer to "Review of Mining Operations and Development Projects" section below), including both the Masbate and Otjikoto mines achieving record annual gold production in 2021. In addition, the Fekola Mine achieved another strong year in 2021, producing 567,795 ounces of gold, near the upper end of its revised guidance range (of between 560,000 and 570,000 ounces) and exceeding the upper end of its original guidance range (of between 530,000 and 560,000 ounces). In the fourth quarter of 2021, B2Gold’s consolidated gold production was 288,849 ounces which was in-line with budget and 13% higher than the fourth quarter of 2020 resulting from higher gold production from the Fekola and Otjikoto mines, partially offset by lower gold production from the Masbate Mine. The Company’s total gold production for the fourth quarter of 2021 was 304,897 ounces (including 16,048 ounces of attributable production from Calibre).
For the year ended December 31, 2021, consolidated cash operating costs1 were $511 per gold ounce produced ($503 per gold ounce sold), in-line with the budget and $105 per gold ounce produced (26%) higher than 2020. Including estimated attributable results for Calibre, cash operating costs for the year ended December 31, 2021 were $535 per gold ounce produced ($528 per gold ounce sold) which were within the Company's guidance range of $500 to $540 per ounce and were $112 per gold ounce produced (26%) higher than 2020. Cash operating costs per ounce produced for the year ended December 31, 2021 were in-line with budget as a result of offsetting factors as the impact of the strong operating results from all of the Company's operations with above budget gold production was offset by inflation driven higher fuel costs, stronger local currencies and higher than budgeted processing of lower grade material at the Fekola Mine as low-grade stockpiles were used to provide additional unbudgeted mill feed required as a result of higher than budgeted processed tonnes. Cash operating costs for the year ended December 31, 2021 were higher than the year ended December 31, 2020 due to higher input costs resulting from higher prestripping activities, inflation driven higher fuel costs and higher import duties. In the fourth quarter of 2021, consolidated cash operating costs were $460 per gold ounce produced ($406 per gold ounce sold), $82 (22%) more per gold ounce produced than budget and in-line with the fourth quarter of 2020. Including estimated attributable results for Calibre, cash operating costs for the fourth quarter of 2021 were $484 per gold ounce produced ($433 per gold ounce sold), $79 (20%) more per gold ounce produced than budget and in-line with the fourth quarter of 2020. Consolidated cash operating costs for the fourth quarter of 2021 were higher than budget resulting from inflation pressures including higher fuel, reagents and consumables costs and stronger local currencies.
1 “Cash operating costs” a non-IFRS measure; for a description of how we calculate this measure and a reconciliation from this measure to the most directly comparable measure specified, defined or determined under IFRS and presented in our financial statements, refer to “Non-IFRS Measures”
2
The Company continues to experience cost inflation pressure across all sites which is impacting input prices including reagents, fuel and consumables. The Company is actively managing these cost increases through long-term contracts, hedging of fuel and reductions in consumption where possible.
Consolidated all-in sustaining costs2 for the year ended December 31, 2021 were $874 per gold ounce sold compared to $774 per gold ounce sold for 2020. Including estimated attributable results for Calibre, all-in sustaining costs for the year ended December 31, 2021 were $888 per gold ounce sold ($788 per gold ounce sold for 2020) and were within the Company's guidance range of $870 to $910 per ounce. The in-line with budget all-in sustaining costs for the year ended December 31, 2021 reflect the higher than budgeted gold ounces sold, higher than budgeted gains on settled fuel derivatives, partially offset by higher than budgeted sustaining capital expenditures ($10 million). Consolidated all-in sustaining costs for the fourth quarter of 2021 were $844 per gold ounce sold compared to a budget of $763 per gold ounce sold and $917 per gold ounce sold for the fourth quarter of 2020. Including estimated attributable results for Calibre, all-in sustaining costs for the fourth quarter of 2021 were $860 per gold ounce sold compared to a budget of $778 per gold ounce sold and $926 per gold ounce sold for the fourth quarter of 2020. The higher than budgeted all-in sustaining costs for the fourth quarter of 2021 reflect the higher than budgeted cash operating costs per gold ounce sold noted above and higher than budgeted sustaining capital expenditures, partially offset by higher than budgeted gold ounces sold and higher than budgeted gains on settled fuel derivatives. Higher than budgeted sustaining capital expenditures in the fourth quarter of 2021 reflected expenditures which were delayed from earlier quarters of 2021.
For the year ended December 31, 2021, mine sustaining capital expenditures were higher than budget by $10 million mainly as a result of higher prestripping costs at the Otjikoto Mine and the acceleration of mobile equipment rebuilds and purchases at the Fekola and Otjikoto mines. Non-sustaining mine capital expenditures for the year ended December 31, 2021 were $3 million higher than budget. In addition, for the year ended December 31, 2021, the Company's share of Gramalote capital expenditures was $11 million lower than budgeted mainly as a result of COVID-19 delays and the rescheduling of land purchase and resettlement programs while the Gramalote Project optimization work is completed (refer to “Review of Mining Operations and Development Projects" section for additional details of capital expenditures) and exploration costs were approximately $8 million less than budget.
For 2022, B2Gold remains well positioned for continued strong operational and financial performance with total gold production guidance of between 990,000 and 1,050,000 ounces (including 40,000 and 50,000 attributable ounces projected from Calibre) with total consolidated forecast cash operating costs of between $620 and $660 per ounce and total consolidated all-in sustaining costs of between $1,010 and $1,050 per ounce. Due to the timing of high-grade ore mining, consolidated gold production from the Company’s three operating mines is expected to be significantly weighted to the second half of 2022; for the first half of 2022, consolidated gold production is forecast to be between 390,000 and 410,000 ounces, which is expected to increase significantly to between 560,000 and 590,000 ounces during the second half of 2022. Based mainly on the weighting of production and timing of stripping, consolidated cash operating costs are expected to be between $760 and $800 per ounce in the first half of 2022, before significantly improving to between $490 and $530 per ounce during the second half of 2022. In addition, consolidated all-in sustaining costs are expected to be between $1,250 and $1,290 per ounce in the first half of 2022 before significantly improving to between $820 and $860 per ounce during the second half of 2022.
Operating and capital costs across all of the Company's operations are forecast to increase in 2022, with significant impacts from global cost inflation. Consolidated cash operating costs per ounce gold produced are forecast to increase by approximately $120 per ounce produced, or 24% compared to 2021. Of this increase, $71 per ounce (or 59%), is due to inflation including fuel cost, mechanical components and labour cost increases, coupled with a stronger foreign exchange rate for the Namibian dollar. The remaining $49 per ounce (or 41%) of the increase in consolidated cash operating costs is driven by operational related factors including the continued ramp up to full production of the higher strip ratio Cardinal Zone at the Fekola Mine, commencement of operations from the Wolfshag underground mine in the second half of 2022 and deeper open pits at the Fekola and Otjikoto mines. These impacts are partially offset by higher budgeted gold ounce production than 2021, led by the Fekola Mine. Consolidated all-in sustaining costs are budgeted to increase by approximately $150 per ounce, or 18%. Approximately 50% of this increase is due to the inflationary increases in cash operating costs noted above. The remaining increases are driven by the non-inflationary factors noted above as well as higher sustaining capital costs to support larger mining fleets and fleet maintenance as the open pits continue to grow and new sustaining capital projects including planned tailings storage facility raises at the Fekola and Masbate mines. The higher sustaining capital is offset partially by higher budgeted consolidated production, led by the Fekola Mine, and net lower capitalized prestripping costs.
2 “All-in sustaining costs” is a non-IFRS measure; for a description of how we calculate this measure and a reconciliation from this measure to the most directly comparable measure specified, defined or determined under IFRS and presented in our financial statements, refer to “Non-IFRS Measures”
3
For the year ended December 31, 2021, the Company generated net income of $461 million compared to $672 million in 2020 including net income attributable to the shareholders of the Company of $420 million ($0.40 per share) compared to $628 million ($0.60 per share) in 2020. Adjusted net income attributable to the shareholders of the Company3 for the year ended December 31, 2021 was $384 million ($0.36 per share) compared to $515 million ($0.49 per share) in 2020. Net income for the fourth quarter of 2021 was $153 million compared to $174 million for the fourth quarter of 2020. For the fourth quarter of 2021, the Company generated net income attributable to the shareholders of the Company of $137 million ($0.13 per share) compared to $168 million ($0.16 per share) in the fourth quarter of 2020. Adjusted net income attributable to shareholders of the Company for the fourth quarter of 2021 was $113 million ($0.11 per share) compared to $147 million ($0.14 per share) in the fourth quarter of 2020.
Cash flow provided by operating activities was $724 million for the year ended December 31, 2021 compared to $951 million during 2020, a decrease of $227 million. The decrease reflects lower revenues of $27 million, higher production costs of $86 million and higher non-cash working capital outflows for the year ended December 31, 2021, most significantly for current income and other taxes payables as well as value-added tax receivables. Current income tax payments for the year ended December 31, 2021 totalled approximately $340 million (including $18 million which was settled by value-added tax offsets) and included approximately $140 million related to 2020 outstanding tax liability obligations (comprised mainly of Fekola outstanding 2020 tax liabilities of $75 million and Fekola 2020 priority dividend obligations of $46 million). Current income tax payments for the year ended December 31, 2021 were approximately $40 million lower than the original budgeted guidance of $380 million mainly as the result of $10 million lower than budgeted tax obligations at Otjikoto and a rollover amount of $20 million for Fekola tax installments which were budgeted for the fourth quarter of 2021 but which will now be paid by the second quarter of 2022. Based on current assumptions, including an average gold price of $1,800 per ounce for 2022, the Company is forecasting to make total cash income tax payments in 2022 of approximately $290 million.
B2Gold continues to maintain a strong financial position and liquidity. At December 31, 2021, the Company had cash and cash equivalents of $673 million compared to cash and cash equivalents of $480 million at December 31, 2020. Working capital (defined as current assets less assets classified as held for sale and current liabilities) at December 31, 2021 was $802 million compared to $465 million at December 31, 2020.
On December 16, 2021, the Company entered into a revised revolving credit facility ("RCF") agreement with its existing syndicate of banks. The maximum available for drawdown under the facility remains at $600 million with an accordion feature, available on the receipt of additional binding commitments, for a further $200 million. At December 31, 2021, the full amount of the Company's $600 million RCF was undrawn and available.
For the year ended December 31, 2021, the Company declared and paid a quarterly cash dividend of $0.04 per common share ($0.16 per common share on an annualized basis). The declaration and payment of future quarterly dividends remains at the discretion of the Board and will depend on the Company's financial results, cash requirements, future prospects and other factors deemed relevant by the Board.
On October 25, 2021, the Company announced that it had entered into a binding agreement with West African Resources Limited (“WAF”) (the “Kiaka Agreement”), pursuant to which B2Gold has agreed to sell to WAF 100% of the issued and outstanding shares of Volta Resources (Cayman) Inc., the holder of an 81% interest in the Kiaka gold project located in Burkina Faso (the “Kiaka Project”). On November 30, 2021 the Company announced the completion of the sale. Under the terms of the Kiaka Agreement, B2Gold received the following consideration (the “Kiaka Transaction”)
•cash payment of $0.45 million paid on execution of the Kiaka Agreement;
•$45 million paid on closing of the Kiaka Transaction, comprised of 50% cash and 50% in WAF ordinary shares;
•$45 million payable on the earlier of (i) commencement of construction at the Kiaka Project (provided such date will be a minimum of 6 months from the date of the Kiaka Agreement), (ii) completion of a positive feasibility study at the Kiaka Project, and (iii) October 25, 2022, in cash or WAF ordinary shares, at B2Gold’s option but subject to any required WAF shareholder approval to issue WAF ordinary shares; and
•2.7% net smelter return (“NSR”) royalty interest on the first 2.5 million ounces of gold produced at the Kiaka Project, and a 0.45% NSR royalty interest on the next 1.5 million ounces of gold produced at the Kiaka Project.
In addition, B2Gold entered into an amended and restated purchase agreement with WAF and GAMS (the “Amended Toega Agreement”), pursuant to which B2Gold agreed to sell to WAF 100% of the shares of Kiaka Gold SARL, the holder of the Toega gold project located in Burkina Faso (the “Toega Project”)(the original transaction was structured as a sale of assets comprising the Toega Project) and GAMS-Mining F&I Ltd. (“GAMS”) would sell its 10% beneficial interest in the Toega Project. B2Gold held a 90% beneficial interest in the Toega Project with GAMS holding the remaining 10%. Under the terms of the Amended Toega Agreement, B2Gold received a cash payment of $18 million, and on the first 1.5 million ounces of gold produced at the Toega Project, a 2.7% NSR royalty until such time as the royalty payments total $22.5 million and thereafter a 0.45% NSR royalty interest (the “Toega Transaction”). This transaction was also completed on November 30, 2021.
3 “Adjusted net income attributable to shareholders of the Company” is a non-IFRS measure; for a description of how we calculate this measure and a reconciliation from this measure to the most directly comparable measure specified, defined or determined under IFRS and presented in our financial statements, refer to “Non-IFRS Measures”
4
In December 2021, B2Gold and the Government of Mali were pleased to reach an agreement in principle relating to the dispute on the Menankoto Permit in Mali, where the Government of Mali agreed that it would grant a new exploration permit covering the same perimeter as the Menankoto Permit to a new Malian subsidiary of B2Gold, and B2Gold would withdraw the international arbitration proceedings that its Malian subsidiary had previously commenced against the Republic of Mali. On February 2, 2022 the Company announced that B2Gold’s Malian subsidiary received the new Menankoto Permit, issued by the Government of Mali in compliance with the procedures and requirements set out under the Malian 2019 Mining Code (previous permit had been issued under the Malian 2012 Mining Code), which provides for an initial term of three years and renewable for 2 additional three year periods. B2Gold’s Malian subsidiary has now withdrawn the international arbitration proceedings against the Republic of Mali. The Company has resumed an aggressive exploration drilling program on the Menankoto Permit area initially with two drill rigs, with additional drill rigs to be added in the near future.
The potential to truck material from the Anaconda Area (comprised of the Menankoto Permit and the Bantako North Permit) is currently being developed and is not included in Fekola’s 2022 production guidance or the current Fekola life of mine plan. Preliminary planning by the Company has demonstrated that a pit situated on the Anaconda Area could provide saprolite material to be trucked to and fed into the Fekola mill commencing as early as late 2022, increasing the ore processed and annual gold production from the Fekola mill, subject to obtaining all necessary permits and completion of a final mine plan, with the potential to add an average of approximately 80,000 to 100,000 ounces per year to Fekola’s annual gold production. In 2022, a total of $33 million has been budgeted to facilitate Phase 1 saprolite mining at the Anaconda Area. An updated Mineral Resource estimate based on the results from the extensive 2020 and 2021 infill and exploration drill program at the Anaconda Area is expected in the first quarter of 2022 and will include an initial Mineral Resource estimate for the sulphide materials below the existing saprolite resource. The Company plans on commencing a Phase II study for the Anaconda Area when the updated Mineral Resource estimate on the sulphide material becomes available and based on 2022 exploration drilling results to review the project economics of trucking sulphide material to the Fekola mill as compared to constructing another stand-alone mill near Anaconda.
On February 2, 2022 the Company announced an updated Mineral Resource estimate for the Cardinal Zone, adjacent to the main Fekola Mine open pit in Mali. The updated resource included a significantly increased Mineral Resource estimate for Cardinal Zone as at December 31, 2021 with an initial Indicated Mineral Resource estimate of 8,000,000 tonnes at 1.67 grams per tonne (“g/t”) gold for 430,000 ounces of gold, and an updated Inferred Mineral Resource estimate of 19,000,000 tonnes at 1.21 g/t gold for 740,000 ounces of gold, constrained within a conceptual pit run at US$1,800 per ounce gold. Approximately 50,000 ounces are budgeted to be produced from the Cardinal Zone in 2022 and have been included in Fekola's 2022 production guidance. Based on engineering studies completed to date, the Cardinal Zone has the potential to add an average of approximately 60,000 ounces per year over the next 6 to 8 years to Fekola's annual gold production.
Notwithstanding the ongoing sanctions on Mali announced by the Economic Community of West African States (“ECOWAS”) on January 9, 2022, including closure of borders with Mali, the Fekola Mine continues to operate unimpeded and the Company expects to meet its 2022 production guidance for Fekola. The Fekola Mine appears well-positioned for any potential supply disruptions that might be caused by the border closures. Fuel supplies are not affected by the sanctions and continue passing through the border with Senegal and the Company continues to monitor alternative routings to bring in other critical supplies, if necessary. Gold sales from the Fekola Mine have continued and are expected to continue on an ordinary course basis.
On February 22, 2022, B2Gold’s Board of Directors declared a cash dividend for the first quarter of 2022 of $0.04 per common share (or an expected $0.16 per share on an annualized basis), payable on March 17, 2022 to shareholders of record as of March 9, 2022. The declaration and payment of future quarterly dividends remains at the discretion of the Board of Directors and will depend on the Company's financial results, cash requirements, future prospects and other factors deemed relevant by the Board of Directors.
5
REVIEW OF FINANCIAL RESULTS
Selected Quarterly and Full Year Financial and Operating Results
| Three months ended | Year ended | ||||||||||||||||
| December 31 | December 31 | ||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | 2019 | |||||||||||||
| Gold revenue ($ in thousands) | 526,113 | 479,525 | 1,762,264 | 1,788,928 | 1,155,637 | ||||||||||||
| Net income from continuing operations ($ in thousands) | 153,140 | 174,405 | 460,825 | 672,413 | 308,859 | ||||||||||||
| Net income (loss) from discontinued operations ($ in thousands) | — | — | — | — | 6,982 | ||||||||||||
| Net income ($ in thousands) | 153,140 | 174,405 | 460,825 | 672,413 | 315,841 | ||||||||||||
Earnings per share from continuing operations – basic (1) ($/share) | 0.13 | 0.16 | 0.40 | 0.60 | 0.28 | ||||||||||||
Earnings per share from continuing operations – diluted (1) ($/share) | 0.13 | 0.16 | 0.40 | 0.59 | 0.28 | ||||||||||||
Earnings per share – basic (1) ($/share) | 0.13 | 0.16 | 0.40 | 0.60 | 0.29 | ||||||||||||
Earnings per share – diluted (1) ($/share) | 0.13 | 0.16 | 0.40 | 0.59 | 0.29 | ||||||||||||
| Cash provided by operating activities of continuing operations ($ in thousands) | 266,292 | 196,690 | 724,113 | 950,645 | 449,438 | ||||||||||||
| Cash provided by operating activities of discontinued operations ($ in thousands) | — | — | — | — | 42,535 | ||||||||||||
| Cash provided by operating activities ($ in thousands) | 266,292 | 196,690 | 724,113 | 950,645 | 491,973 | ||||||||||||
| Total assets ($ in thousands) | 3,561,293 | 3,362,379 | 3,561,293 | 3,362,379 | 2,683,071 | ||||||||||||
| Non-current liabilities ($ in thousands) | 369,097 | 415,696 | 369,097 | 415,696 | 466,357 | ||||||||||||
| Average realized gold price from continuing operations ($/ounce) | 1,800 | 1,868 | 1,796 | 1,777 | 1,396 | ||||||||||||
Adjusted net income(1)(2)(3) ($ in thousands) | 112,724 | 146,729 | 384,330 | 514,891 | 219,145 | ||||||||||||
Adjusted earnings per share (1)(2)(3) - basic ($) | 0.11 | 0.14 | 0.36 | 0.49 | 0.22 | ||||||||||||
Excluding El Limon and La Libertad discontinued operations results: | |||||||||||||||||
| Gold sold (ounces) | 292,350 | 256,655 | 981,401 | 1,006,455 | 827,800 | ||||||||||||
| Gold produced (ounces) | 288,849 | 256,319 | 987,595 | 995,258 | 851,116 | ||||||||||||
Cash operating costs(2) ($/gold ounce sold) | 406 | 446 | 503 | 405 | 452 | ||||||||||||
Cash operating costs(2) ($/gold ounce produced) | 460 | 458 | 511 | 406 | 449 | ||||||||||||
Total cash costs(2) ($/gold ounce sold) | 533 | 566 | 626 | 526 | 548 | ||||||||||||
All-in sustaining costs(2) ($/gold ounce sold) | 844 | 917 | 874 | 774 | 794 | ||||||||||||
| Including El Limon and La Libertad discontinued operations results and Equity investment in Calibre: | |||||||||||||||||
Gold sold (ounces) | 308,395 | 270,725 | 1,041,381 | 1,051,716 | 955,943 | ||||||||||||
| Gold produced (ounces) | 304,897 | 270,469 | 1,047,414 | 1,040,737 | 982,219 | ||||||||||||
Cash operating costs(2) ($/gold ounce sold) | 433 | 461 | 528 | 422 | 519 | ||||||||||||
Cash operating costs(2) ($/gold ounce produced) | 484 | 473 | 535 | 423 | 512 | ||||||||||||
Total cash costs(2) ($/gold ounce sold) | 556 | 578 | 648 | 540 | 609 | ||||||||||||
All-in sustaining costs(2) ($/ounce gold sold) | 860 | 926 | 888 | 788 | 862 | ||||||||||||
(1) Attributable to the shareholders of the Company.
(2) Non-IFRS measure. For a description of how these measures are calculated and a reconciliation of these measures to the most directly comparable measures specified, defined or determined under IFRS and presented in the Company’s financial statements, refer to “Non-IFRS Measures”.
(3) Previous periods have been adjusted to reflect the removal of the adjustment for share-based compensation expense, refer to “Non-IFRS Measures”.
Annual results
Revenue
Consolidated gold revenue for the year ended December 31, 2021 was $1.76 billion on sales of 981,401 ounces at an average realized gold price of $1,796 per ounce, compared to $1.79 billion on sales of 1,006,455 ounces at an average realized gold price of $1,777 per ounce in 2020. The slight decrease in gold revenue of 1% ($0.03 billion) was due to a 2% decrease in gold ounces sold, partially offset by a 1% increase in the average realized gold price.
For the year ended December 31, 2021, the Fekola Mine accounted for $1.02 billion (2020 - $1.11 billion) of gold revenue from the sale of 570,450 ounces (2020 - 626,300 ounces), the Masbate Mine accounted for $399 million (2020 - $368 million) of gold revenue from the sale of 222,291 ounces (2020 - 206,680 ounces) and the Otjikoto Mine accounted for $339 million (2020 - $307 million) of gold revenue from the sale of 188,660 ounces (2020 - 173,475 ounces).
6
Production and operating costs
Despite the continuing challenges of the COVID-19 pandemic, B2Gold had another remarkable year of strong operational performance in 2021, with the achievement of B2Gold’s thirteenth consecutive year of record annual total gold production. The Company’s total gold production for 2021 was an annual record of 1,047,414 ounces (including 59,819 ounces of attributable production from Calibre) (2020 - 1,040,737 ounces), near the top end of its revised guidance range (of between 1,015,000 and 1,055,000 ounces) and exceeding the upper end of its original guidance range (of between 970,000 and 1,030,000 ounces). Consolidated gold production from the Company’s three operating mines was 987,595 ounces (2020 - 995,258 ounces), near the upper end of the revised guidance range (of between 965,000 - 995,000 ounces) and exceeding the upper end of the original guidance range (of between 920,000 and 970,000 ounces), with solid performances from each of the Company’s three mines (refer to "Review of Mining Operations and Development Projects" section below), including both the Masbate and Otjikoto mines achieving record annual gold production in 2021. In addition, the Fekola Mine achieved another strong year in 2021, producing 567,795 ounces of gold, near the upper end of its revised guidance range (of between 560,000 and 570,000 ounces) and exceeding the upper end of its original guidance range (of between 530,000 and 560,000 ounces).
For the year ended December 31, 2021, consolidated cash operating costs (refer to "Non-IFRS Measures") were $511 per gold ounce produced ($503 per gold ounce sold), in-line with the budget and $105 per gold ounce produced (26%) higher than 2020. Including estimated attributable results for Calibre, cash operating costs for the year ended December 31, 2021 were $535 per gold ounce produced ($528 per gold ounce sold) which were within the Company's guidance range of $500 to $540 per ounce and were $112 per gold ounce produced (26%) higher than 2020. Cash operating costs per ounce produced for the year ended December 31, 2021 were in-line with budget as a result of offsetting factors as the impact of the strong operating results from all of the Company's operations with above budget gold production was offset by inflation driven higher fuel costs, stronger local currencies and higher than budgeted processing of lower grade material at the Fekola Mine as low-grade stockpiles were used to provide additional unbudgeted mill feed required as a result of higher than budgeted processed tonnes. Cash operating costs for the year ended December 31, 2021 were higher than the year ended December 31, 2020 due to higher input costs for the year ended December 31, 2021 resulting from higher prestripping activities, inflation driven higher fuel costs and higher import duties.
Consolidated all-in sustaining costs (refer to “Non-IFRS Measures”) for the year ended December 31, 2021 were $874 per gold ounce sold compared to $774 per gold ounce sold for 2020. Including estimated attributable results for Calibre, all-in sustaining costs for the year ended December 31, 2021 were $888 per gold ounce sold ($788 per gold ounce sold for 2020) and were within the Company's guidance range of $870 to $910 per ounce. The in-line with budget all-in sustaining costs for the year ended December 31, 2021 reflect the higher than budgeted gold ounces sold, higher than budgeted gains on settled fuel derivatives, partially offset by higher than budgeted sustaining capital expenditures ($10 million).
Depreciation and depletion
Depreciation and depletion expense, included in total cost of sales, was $379 million for the year ended December 31, 2021 compared to $301 million in 2020. The 26% increase in depreciation expense was primarily due to a 29% increase in the depreciation charge per ounce of gold sold partially offset by a 2% decrease in gold ounces sold. The increase in the depreciation charge per gold ounce sold was a result of the reduction of the depreciable recoverable ounces for the mines and an increase in costs to be depreciated for the Masbate and Fekola mines. The Masbate Mine's depreciable cost base increased due to the impairment reversal recorded at September 30, 2020 while the Fekola Mine's depreciable cost base increased due to the Fekola mill expansion and solar plant. In addition, $9 million in additional depreciation was recorded by the Otjikoto Mine in the fourth quarter of 2021 to reflect a decrease in expected recoverable ounces for its prestripping asset.
Royalties and production taxes
Royalties and production taxes included in total cost sales were $121 million for the year ended December 31, 2021 and were comparable to 2020. Royalties and production taxes were comparable resulting from a 2% decrease in the gold ounces sold partially offset by a 1% increase in the gold price realized in 2021.
Other
General and administrative ("G&A") costs relate mainly to the Company’s head office in Vancouver, the Bamako office in Mali, the Makati office in the Philippines and the Windhoek office in Namibia. For the year ended December 31, 2021, G&A costs increased by $5 million to $50 million, primarily due to higher insurance premiums and bank charges for the year ended December 31, 2021 and the return to normal levels of activity due to the easing of COVID-19 restrictions.
Share-based payment expense for the year ended December 31, 2021 was $23 million compared to $17 million for 2020 reflecting additional stock-based compensation grants and related vesting in 2021.
For the year ended December 31, 2021, the Company reported a net gain on the disposal of its Burkina Faso assets (Kiaka and Toega projects) of $22 million.
At December 31, 2021, the Company reclassified its Ondundu Project to assets held for sale. In conjunction with this, the Company assessed its carrying value and recorded an impairment charge of $6 million for the year ended December 31, 2021.
7
During 2020, the Company identified a higher sustained long-term gold price forecast as an indicator of impairment reversal for the Masbate Mine resulting in a net impairment reversal of $122 million (pre-tax $174 million impairment reversal less $52 million deferred tax expense).
For the year ended December 31, 2020, the Company wrote off $11 million of non-core exploration stage properties in Mali, Burkina Faso, Botswana and Ghana following decisions not to proceed further with these exploration stage mineral property interests.
Community relations expense for the year ended December 31, 2021 was $3 million, which was $3 million lower than 2020, when two significant donations were made including $2 million for the Rhino Gold Bar initiative and a $1 million commitment to the Mali School of Mines.
For the year ended December 31, 2021, the Company's estimate of its share of Calibre's net income was approximately $18 million compared to $22 million in 2020. Calibre will report its annual 2021 financial results on February 23, 2022. The Company will update any differences in the first quarter of 2022.
The Company reported $6 million in foreign exchange losses for the year ended December 31, 2021 compared to a foreign exchange losses of $15 million in 2020. The foreign exchange losses for 2021 resulted from the strengthening of local currency in Mali and Namibia versus the US dollar.
Other operating expenses for the year ended December 31, 2021 were $6 million, mainly consisting of $2 million for the write-off of Fekola solar panels damaged by a fire in the storage yard during the first quarter of 2021 and $2 million for exploration evaluation costs.
The Company reported $12 million in interest and financing expense for the year ended December 31, 2021 compared to $16 million in 2020. The lower interest and financing expense resulted from lower debt levels in 2021 compared to 2020.
For the year ended December 31, 2021, the Company recorded derivative gains of $24 million compared to derivative losses of $6 million in 2020. The gains were driven by fuel forward contracts partially offset by losses from the interest rate swap derivative instruments and consisted of net unrealized gains of $13 million (2020 - net unrealized gains of $5 million) and realized gains of $11 million (2020 - realized losses of $11 million).
Current income tax, withholding and other taxes
For the year ended December 31, 2021, the Company recorded a net current income and other tax expense of $271 million compared to $310 million in 2020 consisting of current income tax of $209 million (2020 - $247 million), the 10% priority dividend to the State of Mali of $39 million (2020 - $49 million) and withholding tax (on dividends from subsidiaries/intercompany interest/management fees) of $23 million (2020 - $14 million). The priority dividend is accounted for as an income tax in accordance with IAS 12, Income Taxes. Compared to the 2020, current tax expense for 2021 was lower mainly as a result of lower taxable income and a reduction in the corporate tax rate for the Masbate Mine in 2021 compared to 2020. On March 26, 2021, RA No. 11534, otherwise known as the CREATE bill, was signed into law which reduced the corporate income tax rate to 25% beginning July 1, 2020 for domestic corporations and resident foreign corporations while January 1, 2021 for non-resident foreign corporations. Under the CREATE bill, the change in rate in the Philippines was applied retrospectively to July 1, 2020, which resulted in a reduction of current income tax expense of $3 million relating to 2020 which was recorded in 2021. Withholding tax for 2021 increased by $9 million compared to 2020 due to the increased repatriation of funds in 2021 from Mali and Namibia through intercompany dividends which attract withholding taxes. For the year ended December 31, 2021, the Company recorded a deferred income tax recovery of $5 million compared to a deferred income tax expense of $52 million in 2020. The decrease in deferred income tax expense for 2021 compared to 2020 is mainly attributable to the reversal of the impairment with respect to the Masbate Mine which resulted in a deferred income tax expense of $52 million in 2020. In addition, increased deferred tax expense from weakening of foreign currencies was partially offset by a deferred tax recovery from the reduction in the corporate tax rate for the Masbate Mine in the 2021.
Current income tax payments for the year ended December 31, 2021 totalled approximately $340 million (including $18 million which was settled by value-added tax offsets) and included approximately $140 million related to 2020 outstanding tax liability obligations (comprised mainly of Fekola outstanding 2020 tax liabilities of $75 million and Fekola 2020 priority dividend obligations of $46 million). Current income tax payments for the year ended December 31, 2021 were approximately $40 million lower than the original budgeted guidance of $380 million mainly as the result of $10 million lower than budgeted tax obligations at Otjikoto and a rollover amount of $20 million for Fekola tax installments which were budgeted for the fourth quarter of 2021 but which will now be paid by the second quarter of 2022.
In 2022, the Company is required to pay Fekola tax installments based on a percentage of 2021's total income tax obligations. Any difference between the actual cash installments paid during the year and the final tax amount owing for 2021 must be settled in the April of the subsequent year, based on Malian tax regulations. In addition, amounts owing for the Fekola 2021 priority dividend (which will be recorded in the income tax line for accounting purposes in the 2021 Consolidated Statement of Operations) must be settled in cash in the second quarter of 2022.
8
Based on current assumptions, including an average gold price of $1,800 per ounce for 2022, the Company is forecasting to make total cash income tax payments in 2022 of approximately $290 million, including $71 million related to the outstanding 2021 current income tax and priority dividend obligations which are included in current income and other taxes payable at December 31, 2021.
For the year ended December 31, 2021, the Company generated net income of $461 million compared to $672 million in 2020, and the Company generated net income attributable to the shareholders of the Company of $420 million ($0.40 per share) compared to $628 million ($0.60 per share) in 2020. Adjusted net income attributable to the shareholders of the Company (refer to “Non-IFRS Measures”) for the year ended December 31, 2021 was $384 million ($0.36 per share) compared to $515 million ($0.49 per share) in 2020. Adjusted net income for the year ended December 31, 2021 excluded net gain on the disposal of Burkina Faso assets of $22 million, impairment of long-lived assets of $6 million, unrealized gains on derivative instruments of $13 million and deferred income tax recovery of $9 million.
Cash flow provided by operating activities was $724 million for the year ended December 31, 2021 compared to $951 million for 2020, a decrease of $227 million. The decrease reflects lower revenues of $27 million, higher production costs of $86 million and higher non-cash working capital outflows for the year ended December 31, 2021, most significantly for current income and other taxes payables as well as value-added tax receivables. Current income tax payments for the year ended December 31, 2021 totalled approximately $340 million (including $18 million which was settled by value-added tax offsets) and included approximately $140 million related to 2020 outstanding tax liability obligations (comprised mainly of Fekola outstanding 2020 tax liabilities of $75 million and Fekola 2020 priority dividend obligations of $46 million). Current income tax payments for the year ended December 31, 2021 were approximately $40 million lower than the original budgeted guidance of $380 million mainly as the result of $10 million lower than budgeted tax obligations at Otjikoto and a rollover amount of $20 million for Fekola tax installments which were budgeted for the fourth quarter of 2021 but which will now be paid by the second quarter of 2022.
B2Gold continues to maintain a strong financial position and liquidity. At December 31, 2021, the Company had cash and cash equivalents of $673 million compared to cash and cash equivalents of $480 million at December 31, 2020. Working capital at December 31, 2021 was $802 million compared to $465 million at December 31, 2020. At December 31, 2021, the full amount of the Company's $600 million RCF was undrawn and available.
Fourth quarter 2021 and 2020
Revenue
For the fourth quarter of 2021, consolidated gold revenue was $526 million on sales of 292,350 ounces at an average realized gold price of $1,800 per ounce, compared to $480 million on sales of 256,655 ounces at an average realized gold price of $1,868 per ounce in the fourth quarter of 2020. The increase in gold revenue of 10% ($46 million) was due to a 14% increase in gold ounces sold (mainly due to the higher gold production), partially offset by a 4% decrease in the average realized gold price.
In the fourth quarter of 2021, the Fekola Mine accounted for $312 million (fourth quarter of 2020 - $279 million) of gold revenue from the sale of 173,700 ounces (fourth quarter of 2020 - 149,000 ounces), the Masbate Mine accounted for $73 million (fourth quarter of 2020 - $129 million) of gold revenue from the sale of 40,650 ounces (fourth quarter of 2020 - 69,380 ounces), the Otjikoto Mine accounted for $141 million (fourth quarter of 2020 - $71 million) of gold revenue from the sale of 78,000 ounces (fourth quarter of 2020 - 38,275 ounces).
Production and operating costs
In the fourth quarter of 2021, B2Gold’s consolidated gold production was 288,849 ounces which was in-line with budget and 13% higher than the fourth quarter of 2020 resulting from higher gold production from the Fekola and Otjikoto mines, partially offset by lower gold production from the Masbate Mine. The Company’s total gold production for the fourth quarter of 2021 was 304,897 ounces (including 16,048 ounces of attributable production from Calibre).
In the fourth quarter of 2021, consolidated cash operating costs (refer to "Non-IFRS Measures") were $460 per gold ounce produced ($406 per gold ounce sold), $82 (22%) more per gold ounce produced than budget and in-line with the fourth quarter of 2020. Including estimated attributable results for Calibre, cash operating costs for the fourth quarter of 2021 were $484 per gold ounce produced ($433 per gold ounce sold), $79 (20%) more per gold ounce produced than budget and in-line with the fourth quarter of 2020. Consolidated cash operating costs for the fourth quarter of 2021 were higher than budget resulting from inflationary pressures including higher fuel, reagent and consumable costs and stronger local currencies.
Consolidated all-in sustaining costs (refer to "Non-IFRS Measures") for the fourth quarter of 2021 were $844 per gold ounce sold compared to a budget of $763 per gold ounce sold and $917 per gold ounce sold for the fourth quarter of 2020. Including estimated attributable results for Calibre, all-in sustaining costs for the fourth quarter of 2021 were $860 per gold ounce sold compared to a budget of $778 per gold ounce sold and $926 per gold ounce sold for the fourth quarter of 2020. The higher than budgeted all-in sustaining costs for the fourth quarter of 2021 reflect the higher than budgeted cash operating costs per gold ounce sold noted above and higher than budgeted sustaining capital expenditures partially offset by higher than budgeted gold
9
ounces sold and higher than budgeted gains on settled fuel derivatives. Higher than budgeted sustaining capital expenditures in the fourth quarter of 2021 reflect expenditures which were delayed from earlier quarters of 2021.
Depreciation and depletion
Depreciation and depletion expense included in total cost of sales was $123 million in the fourth quarter of 2021 compared to $78 million in the fourth quarter of 2020. The 58% increase in depreciation expense was primarily due to a 14% increase in the gold ounces sold and a 38% increase in the depreciation charge per ounce of gold sold. The increase in the depreciation charge per gold ounce sold was a result of the reduction of the depreciable recoverable ounces for the mines and an increase in costs to be depreciated for the Fekola Mine. The Fekola Mine's depreciable cost base increased due to the Fekola mill expansion and solar plant. In addition, $9 million in additional depreciation was recorded by the Otjikoto Mine in the fourth quarter of 2021 to reflect a decrease in expected recoverable ounces for its prestripping asset.
Royalties and production taxes
Royalties and production taxes included in total cost sales were $37 million for the fourth quarter of 2021 compared to $31 million in the fourth quarter of 2020. The 19% increase in royalties and production taxes resulted mainly from a 14% increase in gold ounces sold and a higher proportion of sales from the Fekola Mine in the fourth quarter of 2021 compared to the fourth quarter of 2020, which has a higher royalty rate, partially offset by a 4% decrease in the average realized gold price in the fourth quarter of 2021.
Other
G&A for the fourth quarter of 2021 of $19 million was comparable to the fourth quarter of 2020.
Share-based payment expense for the fourth quarter of 2021 was $7 million compared to $2 million for the fourth quarter of 2020 reflecting additional stock-based compensation grants in 2021.
For the fourth quarter of 2021, the Company reported a net gain on the disposal of its Burkina Faso assets of $22 million.
At December 31, 2021, the Company reclassified its Ondundu Project to assets held for sale. In conjunction with this, the Company assessed its carrying value and recorded an impairment charge of $6 million in the fourth quarter of 2021.
For the fourth quarter of 2021, the Company's estimate of its share of Calibre's net income was approximately $4 million compared to $9 million in the fourth quarter of 2020. Calibre will report its annual 2021 financial results on February 23, 2022. The Company will update any differences in the first quarter of 2022.
The Company reported $2 million in foreign exchange losses for the fourth quarter of 2021 compared to foreign exchange losses of $7 million in the fourth quarter of 2020. The foreign exchange losses for the fourth quarter of 2020 resulted from the strengthening of local currency in Mali and Namibia versus the US dollar including the impact of foreign currency denominated working capital balances.
For the fourth quarter of 2021, the Company recorded a net current income and other tax expense of $96 million compared to $80 million in the fourth quarter of 2020, consisting of current income tax of $80 million (fourth quarter of 2020 - $58 million), the 10% priority dividend to the State of Mali of $14 million (fourth quarter of 2020 - $11 million) and withholding tax (on dividends from subsidiaries/intercompany interest/management fees) of $2 million (fourth quarter of 2020 - $11 million). The priority dividend is accounted for as an income tax in accordance with IAS 12, Income Taxes. Compared to the fourth quarter of 2020, current tax expense in the fourth quarter of 2021 was higher mainly as a result of mines with higher tax rates having higher taxable income and mines with lower tax rates having lower taxable income. Withholding tax for the fourth quarter of 2021 decreased by $9 million compared to the fourth quarter of 2020 due to the declaration of intercompany dividends in the fourth quarter of 2020. For the fourth quarter of 2021, the Company recorded a deferred income tax recovery of $14 million compared to a deferred income tax recovery of $14 million in the fourth quarter of 2020. The deferred income tax recovery in the fourth quarter of 2020 was mostly due to strengthening of the local currencies in Mali and Namibia while in the fourth quarter 2021 there was a weakening of local currencies in Mali and Namibia which was more than offset by extra deferred tax recovery from increased temporary difference reversals and a $13 million reversal of deferred taxes payable in respect of future withholding tax.
Net income for the fourth quarter of 2021 was $153 million compared to $174 million for the fourth quarter of 2020 and the Company generated net income attributable to the shareholders of the Company of $137 million ($0.13 per share) for the fourth quarter of 2021 compared to $168 million ($0.16 per share) in the fourth quarter of 2020. Adjusted net income attributable to shareholders of the Company (refer to “Non-IFRS Measures”) for the fourth quarter of 2021 was $113 million ($0.11 per share) compared to $147 million ($0.14 per share) in the fourth quarter of 2020. Adjusted net income in the fourth quarter of 2021 excluded net gain on the disposal of Burkina Faso assets of $22 million, impairment of long-lived assets of $6 million, unrealized gains on derivative instruments of $4 million and deferred income tax recovery of $14 million.
10
REVIEW OF MINING OPERATIONS AND DEVELOPMENT PROJECTS
Fekola Mine - Mali
| Three months ended | Year ended | |||||||||||||
| December 31 | December 31 | |||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||
| Gold revenue ($ in thousands) | 312,123 | 278,735 | 1,024,425 | 1,113,288 | ||||||||||
| Gold sold (ounces) | 173,700 | 149,000 | 570,450 | 626,300 | ||||||||||
| Average realized gold price ($/ounce) | 1,797 | 1,871 | 1,796 | 1,778 | ||||||||||
| Tonnes of ore milled | 2,412,690 | 2,006,282 | 9,143,022 | 6,872,829 | ||||||||||
| Grade (grams/tonne) | 2.24 | 2.61 | 2.05 | 2.99 | ||||||||||
| Recovery (%) | 94.2 | 94.3 | 94.2 | 94.3 | ||||||||||
| Gold production (ounces) | 163,539 | 158,548 | 567,795 | 622,518 | ||||||||||
Cash operating costs(1) ($/gold ounce sold) | 314 | 385 | 439 | 320 | ||||||||||
Cash operating costs(1) ($/gold ounce produced) | 379 | 397 | 449 | 320 | ||||||||||
Total cash costs(1) ($/gold ounce sold) | 464 | 525 | 586 | 460 | ||||||||||
All-in sustaining costs(1) ($/gold ounce sold) | 749 | 736 | 765 | 599 | ||||||||||
| Capital expenditures ($ in thousands) | 56,559 | 28,378 | 110,637 | 184,037 | ||||||||||
| Exploration ($ in thousands) | 3,691 | 5,564 | 13,014 | 14,718 | ||||||||||
(1)Non-IFRS measure. For a description of how these measures are calculated and a reconciliation of these measures to the most directly comparable measures specified, defined or determined under IFRS and presented in the Company’s financial statements, refer to “Non-IFRS Measures”.
The Fekola Mine in Mali, in which the Company holds an 80% interest, achieved another strong year in 2021, producing 567,795 ounces of gold, near the upper end of its revised guidance range (of between 560,000 and 570,000 ounces) and exceeding the upper end of its original guidance range (of between 530,000 and 560,000 ounces), due to significantly higher than budgeted mill throughput, partially offset by lower processed grade, as Fekola’s low-grade stockpiles were used to supplement the additional unbudgeted mill feed required as a result of the significantly higher than budgeted processed tonnes. As expected, compared to the previous year of 2020, gold production was lower by 9% (54,723 ounces) as a result of higher planned prestripping and lower mined ore grades in the first half of 2021, as Phases 5 and 6 of the Fekola Pit were developed. For the year ended December 31, 2021, mill feed grade was 2.05 g/t compared to budget of 2.32 g/t and 2.99 g/t in 2020; mill throughput was 9.14 million tonnes compared to budget of 7.75 million tonnes and 6.87 million tonnes in 2020; and gold recovery averaged 94.2% compared to budget of 94.0% and 94.3% in 2020. Throughout 2021, Fekola’s processing facilities continued to significantly outperform (following the successful completion of the Fekola mill expansion in September 2020) resulting in record annual throughput of 9.14 million tonnes for 2021, 18% above budget and 33% higher than 2020, and record quarterly throughput of 2.41 million tonnes in the fourth quarter of 2021, 23% above budget and 20% higher than the fourth quarter of 2020. The higher than budgeted mill throughput for 2021 was due to favourable ore fragmentation and hardness, as well as optimization of the grinding circuit. Based on the positive results noted throughout 2021, Fekola's annualized throughput rate is now expected to average approximately 9.0 million tonnes per annum (“Mtpa”) (over the long-term), based on an ore blend including fresh rock and weathered material (saprolite). In the fourth quarter of 2021, the Fekola Mine produced 163,539 ounces of gold, 2% above budget (3,539 ounces), and 3% (4,991 ounces) higher compared to the fourth quarter of 2020, mainly due to the higher mill throughput. For the fourth quarter of 2021, mill feed grade was 2.24 g/t compared to budget of 2.71 g/t and 2.61 g/t in the fourth quarter of 2020; mill throughput was 2.41 million tonnes compared to budget of 1.96 million tonnes and 2.01 million tonnes in the fourth quarter of 2020; and gold recovery averaged 94.2% compared to budget of 94.0% and 94.3% in the fourth quarter of 2020.
For the year ended December 31, 2021, the Fekola Mine's cash operating costs (refer to “Non-IFRS Measures”) of $449 per ounce produced ($439 per gold ounce sold) were at the upper end of the guidance range of $405 to $445 per ounce. For the year ended December 31, 2021, higher than budgeted costs arising from inflation related fuel and consumable cost increases, less capitalized waste stripping than budget and higher site general and camp costs related to COVID-19 mitigation measures were partially offset by higher than budgeted production discussed above. For the year ended December 31, 2021, cash operating costs were $129 (40%) per ounce produced higher than in 2020 primarily due to lower production (54,723 ounces or 9% less than 2020) combined with higher fuel and consumable costs, import duties and ongoing COVID-19 related labour costs in Mali. Fekola’s cash operating costs for the fourth quarter of 2021 were $379 per gold ounce produced ($314 per gold ounce sold), compared to a budget of $319 per gold ounce produced and $397 per gold ounce produced for the fourth quarter of 2020. Fekola's cash operating costs in the fourth quarter of 2021 were above budget as a result of the inflation related cost increases discussed above and the processing of unbudgeted low grade stock pile material to supplement the higher than budgeted mill throughput in the quarter.
All-in sustaining costs (refer to “Non-IFRS Measures”) for the Fekola Mine for the year ended December 31, 2021 were $765 per gold ounce sold, within its guidance range of between $745 and $785 per ounce. For the year ended December 31, 2020, all-in sustaining costs were $599 per gold ounce sold. All-in sustaining costs for the fourth quarter of 2021 were $749 per gold ounce sold compared to a budget of $696 per gold ounce sold and $736 per gold ounce sold in the fourth quarter of 2020. As expected,
11
all-in sustaining costs for the fourth quarter of 2021 were impacted by the catch up of budgeted sustaining capital expenditures from earlier quarters of 2021 at Fekola, which was delayed from earlier quarters of 2021 and higher royalties resulting from a higher average gold price realized than budgeted for the fourth quarter of 2021.
Capital expenditures for the year ended December 31, 2021 totalled $111 million, primarily consisting of $50 million for prestripping, $13 million for the development of the Cardinal Zone including mobile equipment purchases, $10 million for mining fleet expansion, $9 million for the solar plant, $7 million for mobile equipment rebuilds and $6 million for tailings storage facility expansion and equipment. Capital expenditures in the fourth quarter of 2021 totalled $57 million and consisted of $29 million for prestripping, $9 million for the development of Cardinal including mobile equipment purchases, $7 million for the mining fleet expansion, $4 million for mobile equipment rebuilds and $3 million for tailings storage facility expansion and equipment. Due to the high processing throughput rates achieved with a blend of fresh rock and saprolite ore, expansion of Fekola’s existing tailings storage facility was required one year ahead of schedule and commenced in the third quarter of 2021. Design and planning for a new tailings storage facility is also underway, with construction commencing as early as the first quarter of 2022.
With the Fekola solar plant now 100% online (following the successful completion of the solar plant construction early in the second quarter of 2021), the Company expects to reduce Fekola’s Heavy Fuel Oil (“HFO”) consumption by over 13 million litres per year and lower carbon dioxide emissions by an estimated 39,000 tonnes per year. Fekola’s solar power production to date indicates that the plant has the capacity to exceed initial power production estimates.
After review of an Environmental and Social Impact Assessment by the Malian authorities, the existing Medinandi (Fekola) permit has been updated to include the Cardinal Zone, located within 500 metres of the current Fekola resource pit. On February 2, 2022, the Company announced an updated Mineral Resource estimate for the Cardinal Zone which, as at December 31, 2021, includes an initial Indicated Mineral Resource estimate of 8,000,000 tonnes at 1.67 g/t gold for 430,000 ounces of gold, and an updated Inferred Mineral Resource estimate of 19,000,000 tonnes at 1.21 g/t gold for 740,000 ounces of gold, constrained within a conceptual pit run at US$1,800 per ounce gold.
Initial mining operations at Cardinal have commenced and will continue to ramp up in 2022. To December 31, 2021, 164,340 tonnes at an average grade of 1.66 g/t have been mined at the Cardinal Zone. For 2022, oxide mineralization within the Cardinal Zone will be a low-cost source of mill feed to the Fekola Mine, with approximately 50,000 ounces budgeted to be produced from the Cardinal Zone (included in the Fekola Mine's 2022 annual production guidance). Based on current engineering studies, the Cardinal Zone has the potential to add an average of approximately 60,000 ounces per year to Fekola's annual gold production over the next 6 to 8 years. Exploration drilling at Cardinal is ongoing and recent drill results have returned good gold grades over significant widths below the current resource which remains open at depth and along strike.
The low-cost Fekola Mine in Mali is expected to produce between 570,000 and 600,000 ounces of gold in 2022 at cash operating costs of between $510 and $550 per ounce and all-in sustaining costs of between $840 and $880 per ounce. Fekola’s gold production is budgeted to be higher in 2022 (compared to 567,795 ounces produced in 2021) due to the optimization of the mining sequence to provide earlier access to high-grade ore from Phase 6 of the Fekola Pit as well as the ramping up of mining operations at the Cardinal zone (fully permitted and located within 500 metres of the current Fekola resource pit) primarily in the second half of 2022. As noted above, approximately 50,000 ounces is budgeted to be produced from the Cardinal zone in 2022 (and has been included in Fekola’s 2022 annual production guidance). The potential to truck material from the nearby Anaconda Area (comprised of the Menankoto Permit and the Bantako North Permit) is currently being developed and is not included in Fekola’s 2022 production guidance or the current Fekola life of mine plan. Preliminary planning by the Company has demonstrated that a pit situated on the Anaconda Area could provide saprolite material to be trucked to and fed into the Fekola mill commencing as early as late 2022, increasing the ore processed and annual gold production from the Fekola mill, subject to obtaining all necessary permits and completion of a final mine plan, with the potential to add an average of approximately 80,000 to 100,000 ounces per year to Fekola’s annual gold production. In 2022, a total of $33 million has been budgeted to facilitate Phase 1 saprolite mining at the Anaconda Area. An updated Mineral Resource estimate based on the results from the extensive 2020 and 2021 infill and exploration drill program at the Anaconda Area is expected in the first quarter of 2022 and will include an initial Mineral Resource estimate for the sulphide materials below the existing saprolite resource. The Company plans on commencing a Phase II study for the Anaconda Area when the updated Mineral Resource estimate on the sulphide material becomes available and based on 2022 exploration drilling results to review the project economics of trucking sulphide material to the Fekola mill as compared to constructing another stand-alone mill near Anaconda.
For 2022, the Fekola Mine is budgeted to process a total of 9.00 million tonnes of ore at an average grade of 2.15 g/t with process gold recovery of 94.7%. With Phase 5 of the Fekola Pit completed in December 2021, ore in 2022 is scheduled to be sourced from Phase 6 of the Fekola Pit and the Cardinal zone together with existing stockpiles. As a result of the planned prestripping and lower mined ore grades in the first half of 2022, as Phase 6 of the Fekola Pit continues to be developed and Cardinal is fully integrated, production is expected to be significantly weighted to the second half of 2022 when mining reaches the higher grade portion of Phase 6 of the Fekola Pit and Cardinal operations are at full capacity. For the first half of 2022, Fekola’s gold production is expected to be between 220,000 and 230,000 ounces, which is expected to increase significantly to between 350,000 and 370,000 ounces during the second half of 2022. Based mainly on the weighting of production and timing of prestripping, Fekola’s cash operating costs are expected to be between $720 and $760 per ounce in the first half of 2022, before significantly improving to between $380 and $420 per ounce during the second half of 2022. In addition, Fekola’s all-in sustaining
12
costs are expected to be between $1,140 and $1,180 per ounce in the first half of 2022, before significantly improving to between $660 and $700 per ounce during the second half of 2022.
Approximately 50% of the budgeted increase in Fekola’s all-in sustaining costs for 2022 (compared to 2021 guidance of between $745 and $785 per ounce) is driven by inflation and reflects higher budgeted prices for fuel, equipment components and other key consumables and higher labour costs. The remainder of the cost increase relates to operational factors including the continued ramp up of operations at Cardinal, fleet rebuilds and maintenance and accelerated sustaining capital expenditures (including $10 million budgeted for a tailings storage facility raise).
Sustaining capital costs in 2022 at the Fekola Mine are budgeted to total $98 million, including $43 million for prestripping (primarily for the continued development of Phase 6 of the Fekola Pit), $20 million for mobile equipment rebuilds, $10 million for construction of a tailings storage facility raise, $6 million for power plant engine rebuilds, and $5 million for process plant equipment replacements. Non-sustaining capital costs are budgeted to total $19 million which includes $11 million in equipment purchases for the Cardinal project, and $6 million in future tailings storage facility site study and construction costs.
Masbate Mine – Philippines
| Three months ended | Year ended | |||||||||||||
| December 31 | December 31 | |||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||
| Gold revenue ($ in thousands) | 73,252 | 129,325 | 398,879 | 368,473 | ||||||||||
| Gold sold (ounces) | 40,650 | 69,380 | 222,291 | 206,680 | ||||||||||
| Average realized gold price ($/ounce) | 1,802 | 1,864 | 1,794 | 1,783 | ||||||||||
| Tonnes of ore milled | 1,948,003 | 1,929,286 | 7,600,094 | 7,760,372 | ||||||||||
| Grade (grams/tonne) | 0.95 | 1.11 | 1.11 | 1.00 | ||||||||||
| Recovery (%) | 78.5 | 84.0 | 81.6 | 82.3 | ||||||||||
| Gold production (ounces) | 46,629 | 57,566 | 222,227 | 204,699 | ||||||||||
Cash operating costs(1) ($/gold ounce sold) | 939 | 546 | 660 | 638 | ||||||||||
Cash operating costs(1) ($/gold ounce produced) | 952 | 585 | 682 | 629 | ||||||||||
Total cash costs(1) ($/gold ounce sold) | 1,070 | 647 | 766 | 740 | ||||||||||
All-in sustaining costs(1) ($/gold ounce sold) | 1,331 | 930 | 914 | 985 | ||||||||||
| Capital expenditures ($ in thousands) | 10,378 | 14,619 | 30,743 | 34,041 | ||||||||||
| Exploration ($ in thousands) | 1,142 | 2,421 | 5,013 | 8,266 | ||||||||||
(1)Non-IFRS measure. For a description of how these measures are calculated and a reconciliation of these measures to the most directly comparable measures specified, defined or determined under IFRS and presented in the Company’s financial statements, refer to “Non-IFRS Measures”.
The Masbate Mine in the Philippines had a record year in 2021, producing an annual record of 222,227 ounces of gold, near the upper end of its revised guidance range (of between 215,000 and 225,000 ounces) and exceeding the upper end of its original guidance range (of between 200,000 and 210,000 ounces), due to higher than budgeted mill recoveries (11% above budget), partially offset by lower than budgeted mill throughput (5% below budget). In addition, Masbate’s 2021 annual gold production was 9% (17,528 ounces) higher compared to 2020, mainly due to higher mined ore grades as a result of mining through higher-grade zones of the Main Vein and Montana pits in 2021. For the year ended December 31, 2021, mill feed grade was 1.11 g/t compared to budget of 1.10 g/t and 1.00 g/t in 2020; mill throughput was 7.60 million tonnes compared to budget of 8.00 million tonnes and 7.76 million tonnes in 2020; and gold recovery averaged 81.6% compared to budget of 73.4% and 82.3% in 2020. Average gold recoveries were above budget in 2021 due to higher metallurgical recoveries than modelled and to mining a higher proportion of oxide ore than budgeted. Masbate’s mill throughput was below budget in 2021 due to unplanned maintenance and repairs occurring mostly in the third quarter of 2021 when the Company took the opportunity to accelerate mill maintenance activities due to the positive variances on mill feed grade and recoveries which benefited Masbate’s gold production in that quarter. In the fourth quarter of 2021, the Masbate Mine produced 46,629 ounces of gold (Q4 2020 – 57,566 ounces), below budget by 10% (4,918 ounces), reflecting the fact that a portion of its budgeted fourth quarter production had been rescheduled and mined in the third quarter of 2021, as previously disclosed. For the fourth quarter of 2021, mill feed grade was 0.95 g/t compared to budget of 1.13 g/t and 1.11 g/t in the fourth quarter of 2020; mill throughput was 1.95 million tonnes compared to budget of 1.98 million tonnes and 1.93 million tonnes in the fourth quarter of 2020; and gold recovery averaged 78.5% compared to budget of 71.9% and 84.0% in the fourth quarter of 2020.
The Masbate Mine’s cash operating costs (refer to “Non-IFRS Measures”) of $682 per ounce produced for the year ended December 31, 2021 ($660 per gold ounce sold) were within the guidance range of between $650 to $690 per ounce. Cash operating costs per gold ounce produced for the year ended December 31, 2021 were on budget resulting from higher than budgeted gold production, as discussed above, partially offset by inflation driven higher than budgeted mining and processing costs. Mining and processing costs for the year ended December 31, 2021 were higher than budget due to inflation driven higher diesel and HFO prices. Cash operating costs per ounce produced for the year ended December 31, 2021 were 8% higher than
13
the year ended December 31, 2020 mainly as of a result of higher diesel and HFO prices partially offset by higher production in the year ended December 31, 2021. Masbate's cash operating costs for the fourth quarter of 2021 were $952 per gold ounce produced ($939 per gold ounce sold) which was $302 per ounce produced higher than budget and $367 per ounce produced higher than the fourth quarter of 2020. The higher cash operating costs per gold ounce produced in the fourth quarter of 2021 compared to budget and the fourth quarter of 2020 arose from the lower planned gold production in the fourth quarter of 2021 as well as inflation driven higher than budgeted fuel prices as previously noted.
All-in sustaining costs (refer to “Non-IFRS Measures”) for the Masbate Mine were $914 per gold ounce sold for the year ended December 31, 2021, below the lower end of its guidance range of between $955 and $995 per ounce. For the year ended December 31, 2020, all-in sustaining costs were $985 per gold ounce sold. All-in sustaining costs for the year ended December 31, 2021 were below the lower end of Masbate's guidance range as a result of higher than budgeted gold ounces sold and higher than budgeted realized gains on fuel derivatives, partially offset by the higher cash operating costs discussed above. All-in sustaining costs for the fourth quarter of 2021 were $1,331 per gold ounce sold compared to a budget of $966 per gold ounce sold and $930 per gold ounce sold in the fourth quarter of 2020. As expected, all-in sustaining costs for the fourth quarter of 2021 were higher than budget as a result of the planned lower production during fourth quarter of 2021 as discussed above, higher than budgeted operating costs resulting from inflation driven higher than budgeted diesel and HFO prices and the expected catch up of budgeted sustaining capital, which was delayed from earlier quarters of 2021, partially offset by higher than budgeted realized gains on fuel derivatives.
Capital expenditures totalled $31 million in 2021, including mobile equipment rebuilds and purchases of $8 million, processing equipment replacement costs of $8 million, tailings storage facility related projects of $8 million and prestripping costs of $3 million. Capital expenditures for the fourth quarter of 2021 totalled $10 million consisting primarily of $5 million of processing equipment replacement costs, tailings storage facility related projects of $2 million and $3 million of mobile equipment rebuilds.
The Masbate Mine in the Philippines is expected to produce between 205,000 and 215,000 ounces of gold in 2022 at cash operating costs of between $740 and $780 per ounce and all-in sustaining costs of between $1,070 and $1,110 per ounce. For 2022, Masbate is budgeted to process a total of 7.68 million tonnes of ore at an average grade of 1.09 g/t with process gold recovery of 77.5%. Mill feed is budgeted to consist primarily of fresh ore (98.5%), sourced from the Main Vein Pit (Stages 4, 6, and 7) and the Montana Pit (which is expected to be completed in the first half of 2022). Masbate’s gold production is scheduled to be relatively consistent throughout 2022. Approximately 60% of the budgeted increase in Masbate’s all-in sustaining costs for 2022 (compared to 2021 guidance of between $955 and $995 per ounce) is driven by inflation, including higher budgeted fuel and consumable costs. The remainder of the increase is driven mainly by higher sustaining capital expenditures including fleet rebuilds and the planned addition of a powerhouse plant generator budgeted for approximately $10 million.
Sustaining capital costs in 2022 at the Masbate Mine are budgeted to total $39 million, including $13 million for process and power plant equipment, $7 million for scheduled mine equipment rebuilds, $7 million for mine equipment replacements, $5 million for tailings storage facility related costs, and $1 million for capitalized prestripping. Non-sustaining capital costs are budgeted to total $13 million which consist mostly of land purchase related costs.
Otjikoto Mine - Namibia
| Three months ended | Year ended | |||||||||||||
| December 31 | December 31 | |||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||
| Gold revenue ($ in thousands) | 140,738 | 71,465 | 338,960 | 307,167 | ||||||||||
| Gold sold (ounces) | 78,000 | 38,275 | 188,660 | 173,475 | ||||||||||
| Average realized gold price ($/ounce) | 1,804 | 1,867 | 1,797 | 1,771 | ||||||||||
| Tonnes of ore milled | 885,232 | 898,503 | 3,541,599 | 3,505,569 | ||||||||||
| Grade (grams/tonne) | 2.79 | 1.41 | 1.76 | 1.52 | ||||||||||
| Recovery (%) | 99.1 | 98.4 | 98.6 | 98.4 | ||||||||||
| Gold production (ounces) | 78,681 | 40,205 | 197,573 | 168,041 | ||||||||||
Cash operating costs(1) ($/gold ounce sold) | 334 | 501 | 511 | 437 | ||||||||||
Cash operating costs(1) ($/gold ounce produced) | 338 | 520 | 493 | 453 | ||||||||||
Total cash costs(1) ($/gold ounce sold) | 407 | 576 | 583 | 508 | ||||||||||
All-in sustaining costs(1) ($/gold ounce sold) | 583 | 1,200 | 908 | 920 | ||||||||||
| Capital expenditures ($ in thousands) | 21,599 | 25,119 | 80,936 | 66,815 | ||||||||||
| Exploration ($ in thousands) | 1,578 | 1,462 | 4,424 | 3,183 | ||||||||||
(1)Non-IFRS measure. For a description of how these measures are calculated and a reconciliation of these measures to the most directly comparable measures specified, defined or determined under IFRS and presented in the Company’s financial statements, refer to “Non-IFRS Measures”.
The Otjikoto Mine in Namibia, in which the Company holds a 90% interest, had a strong second half in 2021 and finish to the year, resulting in new quarterly and annual gold production records. For the year ended December 31, 2021, the Otjikoto Mine
14
produced an annual record of 197,573 ounces of gold, near the upper end of its guidance range (of between 190,000 and 200,000 ounces), and 18% (29,532 ounces) higher compared to 2020. For the year ended December 31, 2021, mill feed grade was 1.76 g/t compared to budget of 1.77 g/t and 1.52 g/t in 2020; mill throughput was 3.54 million tonnes compared to budget of 3.40 million tonnes and 3.51 million tonnes in 2020; and gold recovery averaged 98.6% compared to budget of 98.1% and 98.4% in 2020. In the fourth quarter of 2021, the Otjikoto Mine produced a quarterly record of 78,681 ounces of gold, in-line with budget, and significantly higher by 96% (38,476 ounces) over the fourth quarter of 2020. For the fourth quarter of 2021, mill feed grade was 2.79 g/t compared to budget of 2.87 g/t and 1.41 g/t in the fourth quarter of 2020; mill throughput was 0.89 million tonnes compared to budget of 0.86 million tonnes and 0.90 million tonnes in the fourth quarter of 2020; and gold recovery averaged 99.1% compared to budget of 98.4% and 98.4% in the fourth quarter of 2020. As planned, with the completion of the prestripping campaigns at the Wolfshag and Otjikoto pits in the first half of 2021, Otjikoto’s gold production increased significantly in the second half of 2021, as mining reached the higher-grade zone at the base of the Wolfshag Pit beginning in the third quarter of 2021.
The Otjikoto Mine's cash operating costs (refer to “Non-IFRS Measures”) for the year ended December 31, 2021 were $493 per gold ounce produced ($511 per gold ounce sold), within its guidance range of between $480 to $520 per ounce. Cash operating costs per ounce for the year ended December 31, 2021 were in-line with budget as a result of the higher than budgeted production discussed above and slightly above budget operating costs. Operating costs were impacted by inflation driven higher fuel prices and a stronger Namibian dollar but were offset by higher than budgeted capitalized prestripping resulting in overall cost per ounce which was in-line with budget. For the year ended December 31, 2021, cash operating costs were 9% higher than 2020 cash operating costs of $453 per gold ounce produced due to higher fuel prices and a stronger Namibian dollar. For the fourth quarter of 2021, the Otjikoto Mine's cash operating costs were $338 per gold ounce produced ($334 per ounce gold sold), $19 higher than budget and $182 per ounce produced lower than the fourth quarter of 2020. Fourth quarter of 2021 cash operating costs per gold ounce produced were higher than budgeted due to the higher than budgeted fuel prices and a stronger Namibian dollar and were lower than the fourth quarter of 2020 cash operating costs per gold ounce produced due to higher gold production in the fourth quarter of 2021 as discussed above.
All-in sustaining costs (refer to “Non-IFRS Measures”) for the Otjikoto Mine for the year ended December 31, 2021 were $908 per gold ounce sold, which was above the high end of its guidance range of between $830 and $870 per ounce and were lower than $920 per gold ounce sold in 2020. All-in sustaining costs for the year ended December 31, 2021 were higher than guidance as a result of higher than budgeted sustaining capital expenditures which were $8 million higher than budgeted, mainly due to higher than budgeted prestripping ($5 million) and mobile equipment rebuilds ($3 million) partially offset by higher than budgeted gold ounces sold and higher than budgeted realized fuel derivative gains. All-in sustaining costs for the fourth quarter of 2021 were $583 per gold ounce sold comparable to the budget of $563 per gold ounce sold and lower than $1,200 per gold ounce sold in the fourth quarter of 2020.
Capital expenditures totalled $81 million in 2021, primarily consisting of $41 million for prestripping for the Otjikoto Pit Phase 4 and Wolfshag Pit Phase 3, $21 million for Wolfshag underground development, $11 million in mobile equipment rebuilds and purchases and $7 million for the national power grid connection line. Capital expenditures for the fourth quarter of 2021 totalled $22 million primarily consisting of $8 million for prestripping for the Otjikoto Pit Phase 4, $7 million for Wolfshag underground development, $4 million for the national power grid connection line and $3 million in mobile equipment rebuilds and purchases.
Development of the Wolfshag underground mine continues to progress with ore production expected to begin in the first half of 2022. The initial underground Mineral Reserve estimate for the down-plunge extension of the Wolfshag deposit includes 210,000 ounces of gold in 1.2 million tonnes of ore at 5.57 g/t gold.
The Otjikoto Mine in Namibia is expected to produce between 175,000 and 185,000 ounces of gold in 2022 at cash operating costs of between $740 and $780 per ounce and all-in sustaining costs of between $1,120 and $1,160 per ounce. Otjikoto’s gold production is budgeted to be lower in 2022 (compared to Otjikoto’s record annual gold production of 197,573 ounces in 2021) as lower grade ore is anticipated to be processed in 2022 following the planned completion of mining at the higher grade Wolfshag Pit Phase 3 in the first quarter of 2022. Approximately 30% of the budgeted increase in Otjikoto’s all-in sustaining costs for 2022 (compared to 2021 guidance of between $830 and $870 per ounce) is driven by inflation and reflects higher budgeted prices for fuel, labour and other key consumables while a stronger Namibian dollar accounts for approximately 10% of the cost increases. The remainder of the all-in sustaining cost increases were driven by operational related issues including higher mining costs as underground mining at Wolfshag ramps up and mining out of the higher grade Wolfshag Pit Phase 3 in the first quarter of 2022.
For 2022, Otjikoto is budgeted to process a total of 3.40 million tonnes of ore at an average grade of 1.68 g/t with process gold recovery of 98.0%. In the first half of 2022, processed ore is expected to be sourced from Phase 3 of the Wolfshag Pit (scheduled to be completed in the first quarter of 2022) and Phase 3 of the Otjikoto Pit, supplemented by medium and high-grade ore stockpiles, expected to result in an average head grade of approximately 1.26 g/t. In the second half of 2022, head grade is expected to increase and average approximately 2.10 g/t, when mining is scheduled to reach the higher-grade portions of Phase 3 of the Otjikoto Pit and high-grade ore production ramps up at the Wolfshag underground mine. As a result of this timing of high-grade ore mining, Otjikoto’s gold production is expected to be significantly weighted to the second half of 2022. For the first half of 2022, Otjikoto’s gold production is expected to be between 65,000 and 70,000 ounces, which is expected to increase significantly to between 110,000 and 115,000 ounces during the second half of 2022. Based mainly on the weighting of the planned production and timing of prestripping, Otjikoto’s cash operating costs are expected to be between $960 and $1,000 per ounce in the first half of 2022, before significantly improving to between $620 and $660 per ounce during the second half of
15
2022. In addition, Otjikoto’s all-in sustaining costs are expected to be between $1,460 and $1,500 per ounce in the first half of 2022, before significantly improving to between $930 and $970 per ounce during the second half of 2022.
Sustaining capital costs in 2022 at the Otjikoto Mine are budgeted to total $49 million, including $38 million for capitalized prestripping and underground development and $10 million for mobile equipment rebuilds and equipment purchases. Non-sustaining capital costs are budgeted to total $28 million, including $22 million for development of the Wolfshag underground project and $5 million for a connection to the national power grid, originally planned for 2020 and delayed due to the COVID-19 pandemic. The connection to the national power grid is expected to be online in August 2022.
Investment in Calibre
On October 15, 2019, B2Gold completed the sale of the Nicaraguan Assets to Calibre. Prior to closing, B2Gold accounted for the Nicaraguan Assets as discontinued operations for financial reporting purposes in accordance with IFRS 5, Non-current assets held for sale and discontinued operations. Commencing October 15, 2019, the Company no longer consolidates the results of its Nicaraguan operations in its consolidated financial statements, but rather equity accounts for its 33% ownership interest in Calibre. The results of the Nicaraguan Assets for the year ended December 31, 2019 have been presented as discontinued operations for all periods in the Consolidated Statement of Operations and the Consolidated Statements of Cash Flows. The market value of the Company's 33% common shareholding of Calibre at December 31, 2021 was $117 million. For the year ended December 31, 2021, the Company's estimate of its share of Calibre's net income based on publicly available information was approximately $18 million. For the fourth quarter of 2021, the Company's estimate of its share of Calibre's net income based on publicly available information was approximately $4 million. Calibre will report its fourth quarter and full year 2021 financial results on February 23, 2022. The Company will update any differences in the first quarter of 2022.
On January 12, 2022, Calibre completed its acquisition of Fiore Gold Ltd. ("Fiore") and issued 101,321,923 Calibre common shares reducing B2Gold's ownership interest in Calibre to approximately 25%. As a result of the acquisition, Calibre acquired a 100% interest in Fiore’s operating Pan Gold Mine, adjacent advanced-stage Gold Rock Project and the past producing Illipah Gold Project in Nevada, as well as the Golden Eagle project in Washington State.
Attributable share of Calibre production and costs
Based on Calibre's production press release dated January 6, 2022, consolidated production of Calibre from the El Limon and La Libertad mines for the year ended December 31, 2021 was 182,755 ounces (exceeding the high end of Calibre's production guidance range) of which the Company's attributable share was 59,819 ounces (2020 - 45,479 ounces). For the fourth quarter of 2021, consolidated production of Calibre was 49,218 ounces of which the Company's attributable share was 16,048 ounces (fourth quarter of 2020 - 14,150 ounces).
The Company has assumed that the consolidated cash operating costs per ounce produced and all-in sustaining costs for Calibre for the year ended December 31, 2021 will be within the guidance ranges of approximately $920 per ounce and $1,020 per ounce and $1,040 to $1,140 per ounce, respectively. Consolidated cash operating costs per ounce produced and all-in sustaining costs for Calibre for the fourth quarter of 2021 reflect the adjustment for actual third quarter of 2021 results.
In 2022, Calibre operations (excluding those of recently acquired Fiore) are forecast to produce between 180,000 and 190,000 ounces of gold from the El Limon and La Libertad mines. The Company’s expected share (25%) of attributable ounces produced projected from Calibre is between 40,000 and 50,000 ounces. Calibre’s cash operating costs are forecast to be between $970 and $1,070 per ounce and all-in sustaining costs are forecast to be between $1,100 and $1,200 per ounce.
Gramalote Project - Colombia
The Gramalote Project, owned 50% B2Gold/50% AngloGold Ashanti Limited (“AngloGold”) is located in central Colombia, northeast of Medellin, in the Province of Antioquia. Following on the positive results of the Gramalote preliminary economic assessment in January 2020 (the “Gramalote PEA”), B2Gold commenced the Gramalote feasibility study to evaluate recovery of gold from an open-pit mining operation with 11.0 Mtpa processing plant that includes crushing, grinding, flotation and a carbon-in-pulp recovery process to produce doré bullion. The Gramalote feasibility study approach has focused solely on a production scenario based on the Indicated Mineral Resource estimate from the Gramalote Ridge deposit of 173,400,000 tonnes grading 0.73 g/t gold for a total of 4,060,000 ounces of gold. The feasibility study approach to date has not included any potential production from the nearby Trinidad deposit, which has a current Inferred Mineral Resource estimate, and the Monjas West zone.
16
On May 4, 2021, based on the feasibility study work completed by B2Gold as operator of the Gramalote Project to date, and assuming an effective date of January 1, 2021, and a gold price of $1,500 per ounce, the Company announced project economic highlights (100% basis) as follows:
•Open-pit gold mine with an initial life of mine (“LoM”) of 10.6 years based on current Indicated Mineral Resources (for Gramalote Ridge only)
•LoM gold production of 2.97 million ounces and average annual gold production of 347,000 ounces per year for the first five full years of production
•Average annual gold production LoM of 281,000 ounces per year at cash operating costs of $514 per ounce of gold and all-in sustaining cost of $744 per ounce of gold
•Average LoM gold recovery of 95.4% from conventional milling, flotation and cyanide leach of the flotation concentrate
•Estimated pre-production capital cost of $925 million (includes approximately $160 million for mining equipment)
•LoM pre-tax net cash flow of $1,444 million, and after-tax net cash flow of $948 million
•Post-tax NPV at a 5% discount rate of $483 million.
•After-tax internal rate of return (“IRR”) of 15% at the project construction decision date with a project payback (including construction capital) of 3.5 years
Following a review of these preliminary results and the Gramalote feasibility study work done to date, B2Gold believes that there is strong potential to improve the economics of the project, which could be developed by revisiting the original Gramalote Project design parameters included in the existing mining permit (as applied in the Gramalote Preliminary Economic Assessment in January 2020 and historical AngloGold studies) and further optimizing project design. Review of the updated Gramalote Ridge Mineral Resource also shows that further value can be created through additional drilling of the Inferred portions of the Mineral Resource area, both within and adjacent to the designed pit.
The Gramalote Project team is continuing to advance work on the different project optimization opportunities to potentially reduce capital and operating costs, as well as improve operability and sustainability of the Gramalote Project. Those activities include road optimization and layout, pit design and phasing, blast design optimization, river deviation changes, improved infrastructure layout, and further optimization of plant design. Optimization efforts also include continuing exploration drilling at the Gramalote deposit with additional drilling at the Trinidad deposit, continuing to implement the resettlement action plan, advancing the purchase of key properties required for project development, entering into a development agreement with a power company to commence studies to bring power to the Gramalote mill site, continuing the process of formalization and removal of artisanal miners to outside of the industrial area, and completing environmental and social studies necessary to support the permit modifications that are identified as part of the optimization process.
As the evaluation of the different optimization opportunities advances, B2Gold is reviewing what changes in the design could require minor and major permit amendments of the approved Environmental and Social Impact Assessment (ESIA). The supporting environmental and social studies continue to move forward as planned.
Gramalote 2021 capital expenditures totalled $48 million (Company's share $24 million) which was $21 million lower than the final approved Gramalote budget for 2021 of $69 million (Company’s share $34.5 million). The Company's share of Gramalote capital expenditures was $11 million lower than budgeted as a result of COVID-19 delays and the rescheduling of land purchase and resettlement programs while the Gramalote Project optimization is completed.
Currently under review by B2Gold and AngloGold, is the 2022 budget for the Gramalote Project in Colombia which will fund the Gramalote Feasibility Study optimization, exploration, community support, continued advancement of key social initiatives and compliance with regulatory and Environmental Impact Assessment requirements. A separate construction budget is expected to be developed subsequently upon a positive (optimized) Gramalote Feasibility Study and construction decision.
B2Gold now expects that the results of final feasibility study for the Gramalote Project will be available by the end of the second quarter of 2022 with a final feasibility study delivered in the third quarter of 2022. If the final economics of the feasibility study are positive and B2Gold and AngloGold make the decision to develop Gramalote as an open-pit gold mine (decision date now expected by the end of the third quarter of 2022), B2Gold would utilize its proven internal mine construction team to build the mine and mill facilities and operate the mine on behalf of the Gramalote Project.
The Gramalote Project continues to benefit from strong federal and local government support as well as continuing support from local communities.
Fekola Regional Development
In 2022, a total of $33 million has been budgeted to commence Phase 1 saprolite mining at the Anaconda Area (comprised of the Menankoto Permit and the Bantako North Permit). Saprolite ore could be mined and hauled to Fekola commencing as early as late 2022. The budget includes $12 million for mining fleet and haulage equipment, $6 million for roads infrastructure and earthworks, $2 million for buildings and $3 million for project management and engineering costs.
17
Community Relations Update
In 2021, the Company incurred a total of $7 million on its community relations programs, comprised of direct expenditures of $4 million and related social taxes (mandated to be used for social programs) of $3 million across the various countries where it operates.
Mining projects provide a unique opportunity for engaging with and contributing to the development of host communities. As part of the Company's approach to generate positive socio-economic impact and legacy, one of B2Gold's goals is to help build sustainable communities, with B2Gold acting as a catalyst and community members playing a lead role in their own development. The Company believes that working through an inclusive process with local stakeholders, government and non-government organization ("NGO") partners to identify, select and implement projects is an important factor in the success of the community development projects. By putting decision-making in the hands of stakeholders, B2Gold aims for local ownership of projects and outcomes, improved alignment between government and B2Gold efforts, and strengthened local capacity to build prosperous and healthy communities. B2Gold's Community Investment Standard, which aligns with the IFC Performance Standards and International Council on Mining and Metals guidance on community development, defines how the Company focuses on sustainable contributions to the communities where B2Gold operates. As the COVID-19 pandemic and its operational impacts and restrictions continued in 2021 (and still today), our projects and operations have continued to emphasize support to local and national governments’ response plans as a key part of ongoing programs. Highlights of the Company’s community investment programs and support in response to the COVID-19 pandemic is set out below.
Fekola Mine
In 2021, Fekola continued implementation of its social investments and livelihood restoration in a multifaceted approach lead by the Fekola Community Development Plan (CDP). CDP projects are selected by community members and approved by a steering committee led by the Subprefect of Kenieba, to help ensure their ownership by communities and their long-term success. Approximately $0.5 million was invested in the Kenieba District on various projects in the areas of water and sanitation, education and health access, and livelihood restoration. In 2021, investments include community water infrastructure and management, construction of a community market, and market gardening, poultry and fish farming projects.
B2Gold has partnered with UNICEF since 2019, investing a total of $0.45 million, to support and empower girls and young women in artisanal mining communities from the Kenieba District. Children working in artisanal mining, especially girls, are among the most vulnerable in Mali as they can be exposed to violence, abuse and exploitation. In 2021, the final year of the partnership, the mobile play and recreational spaces installed in the communities in 2019 and 2020 continued to provide safe spaces for children and access to psychosocial support. Additional learning spaces and schooling opportunities for a larger number and age range (including children up to 12 years of age) of children were provided in 2021. Project activities are developed in close collaboration with local government and linked to formal education services.
Masbate Mine
Philippines regulations mandate that a social tax equal to 1.5% of operational costs is invested in support of socio-economic development in the areas impacted by a mining operation, resulting in a significant community investment budget managed by the Masbate Mine in coordination with local stakeholders through an annual Social Development Management Plan (SDMP). B2Gold also delivers further community investment where needs arise. For the funding delivered around the Masbate Mine, projects are identified and implemented in coordination with multi-stakeholder committees and town councils and support education, infrastructure, health services, and livelihood development.
In 2021, approximately $2.4 million was invested through the SDMP (of a $3.2 million budget) and approximately $0.62 million was invested through Information Education and Communication/Development of Mining Technology and Geosciences (IEC/DMTG) initiatives (of a $0.99 million budget). Procurement of resources was limited to the Masbate province due to COVID-related restrictions. During 2021, existing projects received additional funding and new projects were implemented, including greenhouse and hydroponics construction, development of a mangrove nursery, and the establishment of an oyster farm. The Company helped to organize 11 livelihood associations engaged in aquatic resources, farming, and lending enterprise.
Otjikoto Mine
Namibia, through its Community Social Investment Strategy, targets health, education, culture, environment, and small business development as community investment initiatives. Investment is carried out not only within the Otjikoto Mine area of influence but also in Windhoek and other vulnerable localities in the country. In 2021, the Company supported programs in early childhood development, primary and secondary schools, vocational training and entrepreneurial enterprise. The Company also entered into a multi-year partnership with UNICEF to support its UPSHIFT program, a youth social innovation and social entrepreneurship programme designed to build skills and create opportunities for young people. A total of $1 million was invested in these social development programs in 2021.
18
Gramalote Project
The Gramalote Project in Colombia invested approximately $2.1 million in community investment programs targeting education, health, livelihoods, arts and culture. Initiatives supported the sugarcane and plantain production systems in the region, rural community education programs, and rural community water utilities. The Company continued the implementation of the La Maria pilot project for the formalization of informal artisanal and small-scale miners in line with applicable national policies and regulations, including advancement of the design and construction of a dedicated processing plant. The pilot project expanded in 2021 to support additional miners in the region in the formalization process.
The Company continued in 2021 with the planning of the resettlement of neighborhood communities that will be impacted by the proposed development of the Gramalote Project. The Company provided support to the Project Affected Persons (PAPs), including capacity building regarding the resettlement process and consultation to establish the resettlement compensation matrix. In continued response to the impacts of the COVID-19 pandemic, Gramalote supported the local governments and communities through donations of medical equipment and tests to local hospitals and food support to local communities. The Gramalote Project was recognized in 2021 for its socio-economic commitments as the Secretary of Mines awarded Gramalote Colombia with the 2021 Social Seal of Mining Prize for its social investment practices in its direct and indirect impact area.
Vancouver, Canada, Corporate Office
B2Gold actively supports sustainable projects in health, education, livelihoods and environmental conservation throughout the world where it operates. As a Canadian company, B2Gold is also committed to supporting CSR initiatives at home through its More than Mining Fund. In 2021, the Company provided CDN$1 million of financial support to community organizations in Metro Vancouver, Canada including CDN$750,000 to provide further financial support to four partner organizations in Metro Vancouver to assist with their continued response to address the social issues in Metro Vancouver that are further impacted by the COVID-19 pandemic:
•CDN$250,000 to the Greater Vancouver Food Bank, which provides healthy food to those in need, including over 10,000 clients and approximately 110 Community Agency Partners across Metro Vancouver.
•CDN$200,000 to PHS Community Services Society and CDN$100,000 to The Bloom Group Community Services Society, which provide housing, health care, harm reduction and health promotion for some of the most vulnerable and under-served people in Vancouver's Downtown Eastside community.
•CDN$200,000 to Covenant House Vancouver, which provides food, shelter and medical care to Vancouver's homeless and at-risk street youth.
B2Gold also donated to various other initiatives that align with the Company's More than Mining Fund criteria. Funds were donated to PLEA Community Services' Children of the Street Program to support the delivery of their prevention programs and services that give children and families information and practical tools to help keep young people safe from all forms of sexual exploitation; Ronald McDonald House BC & Yukon to support the equipment needs for their Musical Therapy Program for children with cancer; and YWCA Metro Vancouver to support their Violence Prevention Program for women.
In addition, the Company donated CDN$100,000 to the Canadian Red Cross to support the ongoing relief efforts, long-term recovery, resiliency and risk reduction activities in and beyond the region at the individual and community levels in response to the heavy rains, flooding and mudslides across British Columbia in November 2021 which impacted people, animals and livestock, businesses and critical infrastructure. This donation was then matched by the Federal Government of Canada and the Provincial Government of British Columbia, through the Canadian Red Cross 2021 British Columbia Floods & Extreme Weather Appeal, increasing the overall impact of the provided aid.
LIQUIDITY AND CAPITAL RESOURCES
B2Gold continues to maintain a strong financial position and liquidity. At December 31, 2021, the Company had cash and cash equivalents of $673 million compared to cash and cash equivalents of $480 million at December 31, 2020. Working capital at December 31, 2021 was $802 million compared to $465 million at December 31, 2020. At December 31, 2021, the full amount of the Company's $600 million RCF was undrawn and available.
On December 16, 2021, the Company entered into a revised RCF agreement with its existing syndicate of banks. The maximum available for drawdown under the facility remains at $600 million with an accordion feature, available on the receipt of additional binding commitments, for a further $200 million. The RCF bears interest on a sliding scale of between LIBOR plus 2.00% to 2.50% based on the Company’s consolidated net leverage ratio. Commitment fees for the undrawn portion of the facility are also on a sliding scale basis of between 0.45% and 0.563%. The term of the RCF is four years, maturing on December 16, 2025. The Company has provided security on the RCF in the form of a general security interest over the Company’s assets and pledges creating a charge over the shares of certain of the Company’s direct and indirect subsidiaries. In connection with the RCF, the Company must also maintain certain ratios for leverage and interest coverage. As at December 31, 2021, the Company was in compliance with these debt covenants.
19
During 2016, the Company entered into a Euro 71 million term equipment facility with Caterpillar Financial SARL, as Mandated Lead Arranger, and Caterpillar Financial Services Corporation, as original lender. The aggregate principal amount of up to Euro 71 million is available to the Company’s majority-owned subsidiary, Fekola SA (the “Borrower”) to finance or refinance the mining fleet and other mining equipment at the Fekola Mine and has been fully drawn. Each equipment loan is repayable in 20 equal quarterly installments. The final repayment date shall be five years from the first disbursement under each equipment loan. The interest rate on each loan is a rate per annum equal to EURIBOR plus a margin of 5.10%. A commitment fee of 1.15% per annum on the undrawn balance of each tranche for the first twenty-four months after December 7, 2016 and 0.5% thereafter is also due, each payable quarterly. In each case, from October 1, 2017, 0.4167% per annum on the undrawn balance of each tranche. The Company and its subsidiary, Mali Mining Investments Limited, have guaranteed the equipment facility and security is given over the equipment of the Borrower which has been financed by the equipment facility, related warranty and insurance, and over the debt service reserve account ("DSRA"). The Borrower is required to maintain a deposit in a DSRA equal at all times to the total of the principal, interest and other payments that become payable over the next six months. As at December 31, 2021, the balance in the DSRA account was Euro 8 million ($9 million equivalent). On September 29, 2020, the Company entered into a new term equipment facility (the "new equipment facility") with Caterpillar Financial Services Corporation for an aggregate principal amount of up to the Euro equivalent of $40 million. The new equipment facility is available to the Borrower to finance or refinance up to 75% of the cost of mining fleet and other mining equipment at the Company's Fekola Mine in Mali. The new equipment facility is available from the date of the agreement and ends on the earlier of the day when the new equipment facility is fully drawn and September 29, 2021. The new equipment facility may be drawn in installments of not less than Euro 5 million, and each such installment shall be treated as a separate equipment loan. On October 26, 2020, the Borrower drew down the entire amount under the new equipment facility for proceeds of Euro 36 million.
Each equipment loan is repayable in 20 equal quarterly installments. The final repayment date shall be five years from the first disbursement under each equipment loan. The interest rate on each loan is a rate per annum equal to EURIBOR plus a margin of 4.25%. A commitment fee of 0.85% per annum on the undrawn balance of the new equipment facility for the term of the facility is also due, payable quarterly commencing 12 months from the date of the agreement. The Company and its wholly-owned subsidiary, Mali Mining Investments Limited, have guaranteed the new equipment facility and security is given over the equipment of the Borrower which has been financed by the new equipment facility, related warranty and insurance.
On June 1, 2017, the Company entered into an $18 million term equipment facility with Caterpillar Financial Services Philippines Inc. The aggregate principal amount is available to the Company’s Philippines subsidiaries to finance or refinance the mining fleet and other mining equipment at the Company's Masbate Mine and has been fully drawn. Each equipment loan is repayable in 20 equal quarterly installments. The final repayment date shall be five years from the first disbursement under each equipment loan. The interest rate on each loan is a rate per annum equal to LIBOR plus a margin of 3.85%. The Company has guaranteed the equipment facilities and security is given over the equipment of the Borrower which has been financed by the equipment facilities. At December 31, 2021, the facility had been fully drawn.
On May 30, 2017, the term over which the Otjikoto equipment loans may be advanced under the facility was extended to June 30, 2018 and an additional $6 million was made available for drawdown which was fully drawn. During the year ended December 31, 2020, the Company repaid the equipment loans in full.
For the year ended December 31, 2021, capital expenditures totalled $302 million. The most significant expenditures were the Fekola Mine expenditures of $111 million, the Masbate Mine expenditures of $31 million, the Otjikoto Mine expenditures of $81 million and the Gramalote Project expenditures of $24 million. Exploration and development costs for the year ended December 31, 2021 totalled $56 million, while cash paid into reclamation accounts totalled $8 million.
On November 30, 2021, the Company completed the sale of 100% of the issued and outstanding shares of Volta Resources (Cayman) Inc., the holder of an 81% interest in the Kiaka Project to WAF and received cash proceeds of $23 million in the year ended December 31, 2021. Total consideration for the sale was as follows:
•cash payment of $0.45 million paid on execution of the Kiaka Agreement;
•$45 million paid on closing of the Kiaka Transaction, comprised of 50% cash and 50% in WAF ordinary shares;
•$45 million payable on the earlier of (i) commencement of construction at the Kiaka Project (provided such date will be a minimum of 6 months from the date of the Kiaka Agreement), (ii) completion of a positive feasibility study at the Kiaka Project, and (iii) October 25, 2022, in cash or WAF ordinary shares, at B2Gold’s option but subject to any required WAF shareholder approval to issue WAF ordinary shares; and
•2.7% net smelter return (“NSR”) royalty interest on the first 2.5 million ounces of gold produced at the Kiaka Project, and a 0.45% NSR royalty interest on the next 1.5 million ounces of gold produced at the Kiaka Project.
In addition, on November 30, 2021, the Company completed the sale of the Toega Project to WAF and received cash proceeds of $9 million ($9 million was received in 2020). In addition, under the terms of the Amended Toega Agreement, B2Gold received on the first 1.5 million ounces of gold produced at the Toega Project, a 2.7% NSR royalty until such time as the royalty payments total $22.5 million and thereafter a 0.45% NSR royalty interest.
20
As at December 31, 2021, and in addition to those commitments disclosed elsewhere in this MD&A, the Company had the following commitments:
•For payments of $38 million for the Wolfshag underground project at the Otjikoto Mine, of which $36 million is expected to be incurred in 2022 and $2 million is expected to be incurred in 2023, and payments of $5 million related to the national power grid connection, all of which is expected to be incurred in 2022.
•For payments of $8 million for mobile equipment, $2 million for the tailings storage facility expansion and $2 million for other capital projects at the Fekola Mine, all of which is expected to be incurred in 2022.
•For payments of $3 million for mobile equipment at the Masbate Mine, all of which is expected to be incurred in 2022.
•For payments of $4 million for the Gramalote Project, all of which is expected to be incurred in 2022.
For 2022, the Company has budgeted total capital expenditures of $117 million at the Fekola Mine, $52 million at the Masbate Mine and $77 million at the Otjikoto Mine. The Company’s total 2022 exploration budget is approximately $65 million.
As at December 31, 2021, the Company’s significant commitments are disclosed in the table below:
| 2022 | 2023 | 2024 | 2025 | 2026 | Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Accounts payable and accrued liabilities | 111,716 | — | — | — | — | 111,716 | ||||||||||||||
| Fekola equipment loan facilities: | ||||||||||||||||||||
| Principal | 18,028 | 10,320 | 8,334 | 6,183 | — | 42,865 | ||||||||||||||
| Interest (estimated) | 1,816 | 1,063 | 586 | 158 | — | 3,623 | ||||||||||||||
| Masbate equipment loan facility: | ||||||||||||||||||||
| Principal | 3,076 | 766 | 106 | — | — | 3,948 | ||||||||||||||
| Interest (estimated) | 167 | 26 | 2 | — | — | 195 | ||||||||||||||
| Lease liabilities | ||||||||||||||||||||
| Principal | 3,269 | 2,605 | 2,144 | 1,387 | 1,429 | 10,834 | ||||||||||||||
| Interest (estimated) | 11 | — | — | — | — | 11 | ||||||||||||||
| Capital expenditure commitments | 59,712 | 2,401 | — | — | — | 62,113 | ||||||||||||||
| Commitment fees on RCF | 2,700 | 2,700 | 2,700 | 2,588 | — | 10,688 | ||||||||||||||
| Other liabilities | 1,040 | 1,565 | — | — | — | 2,605 | ||||||||||||||
| 201,535 | 21,446 | 13,872 | 10,316 | 1,429 | 248,598 | |||||||||||||||
The Company believes that its future cash flows from operations along with the undrawn and available balances on its current facilities will allow it to meet its current obligations as they come due.
Derivative financial instruments
Fuel contracts – fuel oil, gas oil, diesel
The Company uses forward contracts for fuel oil, gas oil and diesel to manage the risk of volatility in the Company's future operating costs. The Company reviews the open positions and the potential for additional forward contracts on an ongoing basis. During the year ended December 31, 2021, the Company entered into additional series of forward contracts for the purchase of 27 million litres of gas oil and 41 million litres of fuel oil with scheduled settlement between February 2022 and October 2023. These derivative instruments were not designated as hedges by the Company and are being recorded at their fair value at the end of each reporting period with changes in fair value recorded in the Consolidated Statement of Operations.
The following is a summary, by maturity dates, of the Company’s fuel derivative contracts outstanding as at December 31, 2021:
| 2022 | 2023 | Total | ||||||||||||||||||
| Forward – fuel oil: | ||||||||||||||||||||
| Litres (thousands) | 51,884 | 21,292 | 73,176 | |||||||||||||||||
| Average strike price | $ | 0.32 | $ | 0.37 | $ | 0.33 | ||||||||||||||
| Forward – gas oil: | ||||||||||||||||||||
| Litres (thousands) | 40,171 | 17,066 | 57,237 | |||||||||||||||||
| Average strike price | $ | 0.37 | $ | 0.43 | $ | 0.39 | ||||||||||||||
21
The unrealized fair value of these contracts at December 31, 2021 was $15 million.
Interest rate swaps
On January 24, 2019, the Company entered into a series of interest swaps with a notional amount of $125 million with settlements scheduled between April 2019 and July 2021. Under these contracts, the Company received a floating rate equal to the 3 month United States dollar LIBOR rate and paid a fixed rate of between 2.36% and 2.67%. These derivative instruments were not designated as hedges by the Company and were recorded at FVTPL. At December 31, 2021, all of these contracts had been settled and there were no further contracts outstanding.
Operating activities
Cash flow provided by operating activities was $724 million for the year ended December 31, 2021 compared to $951 million during 2020, a decrease of $227 million. The decrease reflects lower revenues of $27 million, higher production costs of $86 million and higher non-cash working capital outflows for the year ended December 31, 2021, most significantly for current income and other taxes payables as well as value-added tax receivables. Current income tax payments for the year ended December 31, 2021 totalled approximately $340 million (including $18 million which was settled by value-added tax offsets) and included approximately $140 million related to 2020 outstanding tax liability obligations (comprised mainly of Fekola outstanding 2020 tax liabilities of $75 million and Fekola 2020 priority dividend obligations of $46 million). Current income tax payments for the year ended December 31, 2021 were approximately $40 million lower than the original budgeted guidance of $380 million mainly as the result of $10 million lower than budgeted tax obligations at Otjikoto and a rollover amount of $20 million for Fekola tax installments which were budgeted for the fourth quarter of 2021 but which will now be paid by the second quarter of 2022. Based on current assumptions, including an average gold price of $1,800 per ounce for 2022, the Company is forecasting to make total cash income tax payments in 2022 of approximately $290 million. This will include settlement of $71 million of 2021 corporate income tax and Fekola priority dividend payments which are included in current income and other taxes payable at December 31, 2021.
Financing activities
The Company’s cash used by financing activities for the year ended December 31, 2021 was a net outflow of $234 million. For the year ended December 31, 2021, the Company made equipment loan facility repayments of $29 million, received proceeds from the exercise of stock options of $6 million, made interest and commitment fees payments of $6 million, made distributions to non-controlling interests of $36 million and received loan repayments from non-controlling interests of $5 million. In addition, total dividends of $168 million were paid to shareholders for the year ended December 31, 2021 at $0.04 per share on a quarterly basis ($0.16 per share on an annualized basis).
As part of the long-term strategy to maximize shareholder value, B2Gold expects to declare future quarterly dividends at the same rate of $0.04 per common share ($0.16 per share on an annualized basis). This dividend is designated as an "eligible dividend" for the purposes of the Income Tax Act (Canada). Dividends paid by B2Gold to shareholders outside Canada (non-resident investors) will be subject to Canadian non-resident withholding taxes.
The declaration and payment of future dividends and the amount of any such dividends will be subject to the determination of the Board, in its sole and absolute discretion, taking into account, among other things, economic conditions, business performance, financial condition, growth plans, expected capital requirements, compliance with the Company's constating documents, all applicable laws, including the rules and policies of any applicable stock exchange, as well as any contractual restrictions on such dividends, including any agreements entered into with lenders to the Company, and any other factors that the Board deems appropriate at the relevant time. There can be no assurance that any dividends will be paid at the intended rate or at all in the future.
Investing activities
For the year ended December 31, 2021, capital expenditures totalled $302 million. The most significant expenditures were Fekola Mine expenditures of $111 million, Masbate Mine expenditures of $31 million, Otjikoto Mine expenditures of $81 million and Gramalote Project expenditures of $24 million (refer to “Review of Mining Operations and Development Projects" section for additional details of capital expenditures). Exploration and development costs for the year ended December 31, 2021 totalled $56 million. In addition, for the year ended December 31, 2021, the Company received $32 million in proceeds from the sale of the Kiaka and Toega projects to WAF and paid $8 million into reclamation accounts.
For the year ended December 31, 2021, the Company purchased an additional 17 million common shares of BeMetals Corp. ("BeMetals") at C$0.44 per share or $6 million. As at December 31, 2021, the Company owned approximately 19% of BeMetals outstanding common shares.
22
Exploration
Resource property expenditures on exploration are disclosed in the table below:
| For the three months ended December 31, 2021 | For the three months ended December 31, 2020 | For the year ended December 31, 2021 | For the year ended December 31, 2020 | |||||||||||
| $ | $ | $ | $ | |||||||||||
| (000’s) | (000’s) | (000’s) | (000’s) | |||||||||||
| Fekola Mine, exploration | 3,691 | 5,564 | 13,014 | 14,718 | ||||||||||
| Masbate Mine, exploration | 1,142 | 2,421 | 5,013 | 8,266 | ||||||||||
| Otjikoto Mine, exploration | 1,578 | 1,462 | 4,424 | 3,183 | ||||||||||
| Menankoto, exploration | 855 | 1,051 | 4,942 | 4,489 | ||||||||||
| Bantako North, exploration | 2,489 | 575 | 9,057 | 3,199 | ||||||||||
| Kiaka Project, exploration | 674 | 1,434 | 4,313 | 4,032 | ||||||||||
| Ondundu Project, exploration | 44 | 149 | 188 | 922 | ||||||||||
| Finland Properties, exploration | 1,831 | 895 | 3,527 | 2,336 | ||||||||||
| Uzbekistan Properties, exploration | 1,832 | 917 | 4,456 | 1,967 | ||||||||||
| Other | 2,612 | 1,193 | 7,182 | 5,070 | ||||||||||
| 16,748 | 15,661 | 56,116 | 48,182 | |||||||||||
For the year ended December 31, 2021, B2Gold continued to pursue a program of aggressive exploration, incurring $58 million (including $2 million of target generation costs included in other operating expenses in the Statement of Operations) compared to a budget $66 million, excluding drilling included in the Gramalote Project budget. Exploration for 2021 at existing properties was once again focused predominantly in West Africa, as well as the other operating mine sites in Namibia and the Philippines.
B2Gold is planning another year of aggressive exploration in 2022 with a budget of approximately $65 million (excludes drilling included in the Gramalote Project budget). Exploration will focus predominantly in Mali, other operating mine sites in Namibia and the Philippines, and continued focus on grassroots targets around the world. Many years of target generation and pursuing opportunities in prospective gold regions has culminated in the Company allocating a record $29 million in 2022 for its grassroots exploration programs, including several new regions.
Fekola Mine
In 2021, approximately $8 million was budgeted to be spent on exploration around the Fekola Mine, including Fekola North and Cardinal/FMZ. A total of approximately 34,000 metres of diamond and reverse circulation drilling were drilled at Cardinal/FMZ and Fekola North, with drilling at Cardinal/FMZ prioritized and accelerated in 2021. Exploration drilling focused on infilling the high-grade portions of the Cardinal zone and extend these down plunge. Drilling at Fekola North also continued to track the main Fekola structure north of the existing open pit. For the year ended December 31, 2021, the Company ultimately incurred $13 million on Fekola Mine exploration, including Cardinal.
In 2022, approximately $10 million is budgeted to be spent on exploration of Cardinal/FMZ, Fekola Deeps and Fekola North.
On February 2, 2022, the Company announced an updated Mineral Resource estimate for the Cardinal Zone, adjacent to the main Fekola Mine open pit in Mali. The updated resource included a significantly increased Mineral Resource estimate for Cardinal Zone as at December 31, 2021 with an initial Indicated Mineral Resource estimate of 8,000,000 tonnes at 1.67 grams per tonne (“g/t”) gold for 430,000 ounces of gold, and an updated Inferred Mineral Resource estimate of 19,000,000 tonnes at 1.21 g/t gold for 740,000 ounces of gold, constrained within a conceptual pit run at US$1,800 per ounce gold. Drilling down plunge of the high-grade portions of the Cardinal Zone in 2021 has been successful and will be continued in 2022.
Deeper drilling beneath and down plunge of the Fekola open pit is planned to follow high grade shoots that could potentially be amenable to mining underground. The Company will also continue to track the main Fekola structure north of the existing open pit.
Anaconda Area (comprised of the Menankoto and Bantako North permits)
In 2021, approximately $12.7 million was budgeted to be spent on exploration in the Anaconda Area, including $6.2 million for the Menankoto Permit and $6.5 million for the Bantako North permit. A total of approximately 57,000 meters of diamond and reverse circulation drilling were drilled in 2021, focused on the Bantako North permit. For the year ended December 31, 2021, the Company ultimately incurred $14 million on Menankoto development and Bantako North exploration.
23
In December 2021, B2Gold and the Government of Mali were pleased to reach an agreement in principle relating to the dispute on the Menankoto Permit, where the Government of Mali agreed that it would grant a new exploration permit covering the same perimeter as the Menankoto Permit to a new Malian subsidiary of B2Gold, and B2Gold would withdraw the international arbitration proceedings that its Malian subsidiary previously commenced against the Republic of Mali. On February 2, 2022 the Company announced that B2Gold’s Malian subsidiary had received the new Menankoto Permit, issued by the Government of Mali in compliance with the procedures and requirements set out under the Malian 2019 Mining Code (previous permit had been issued under the Malian 2012 Mining Code), which provides for an initial term of three years and renewable for 2 additional three year periods. B2Gold’s Malian subsidiary has now withdrawn the international arbitration proceedings against the Republic of Mali.
In 2022, approximately $17 million is budgeted to be spent on exploration in the Anaconda Area (comprised of the Menankoto and Bantako North permits). With the receipt of the Menankoto Permit, exploration on the Menankoto Permit has commenced, initially with two drill rigs operating, which will build on the $31 million that the Company has spent to date on Menankoto Permit, with additional drill rigs to be deployed shortly. The Company plans to continue focusing on upgrading and expanding the existing saprolite Inferred Mineral Resource estimate of 21.6 million tonnes at 1.11 g/t for 770,000 ounces for the Anaconda Area (originally released in June 2017). An updated Mineral Resource estimate for the Anaconda Area based on the results from the extensive 2020 and 2021 infill and exploration drill program is expected in the first quarter of 2022 and will feed into engineering studies currently underway. This new resource estimate will also include an initial Mineral Resource estimate for the sulphide material below the saprolite. The Company will continue to follow up on the sulphide mineralization at the Mamba, Adder and several other targets below the saprolite mineralization in 2022. Additionally, the Company has completed environmental and social studies to support permitting efforts.
Other West African Exploration
In 2021, a total of $2.5 million was planned in other areas of West Africa, leveraging off the considerable geological experience gained at Fekola. This budget included establishing an exploration presence and pursuing opportunities in the highly prospective and under-explored country of Cote d’Ivoire. The Company was granted two exploration licences in Cote d'Ivoire in the third quarter of 2021.
In 2022, a total of $1.7 million is planned for the Company’s newly acquired early stage permits in Cote d’Ivoire, which is part of the other greenfield exploration budget noted below.
Masbate Mine
For the years ended December 31, 2021, the Company incurred $5 million for Masbate Mine exploration, which was in-line with the budget of $6.3 million (included approximately 15,000 metres of diamond and reverse circulation drilling). The 2021 exploration program followed up where 2020 drilling intersected higher grades in previously low-grade areas that had been sparsely drilled. It also focused on drill testing the most prospective Inferred Mineral Resource areas below existing design pits to determine if existing open pits could be expanded as a result of higher gold prices. Several grassroot greenfield targets were further tested as well.
The Masbate exploration budget for 2022 is approximately $5.8 million, including approximately 10,200 metres of drilling. The 2022 exploration program will be mainly focused on the Dabu and Main Vein zones at Masbate, converting Inferred Mineral Resource areas below existing design pits to support expanding the existing open pits. Several grassroot greenfield targets will be further tested as well.
Otjikoto Mine and Regional Exploration
For the year ended December 31, 2021, the Company incurred $4 million for Otjikoto Mine exploration in-line with the total exploration budget for Namibia of $4.8 million. Exploration in 2021 included 25,000 metres of diamond drilling and 3,200 metres of RAB drilling split between the Otjikoto Mine and the Ondundu joint venture. The majority of the diamond drilling targeted the extension of the existing Wolfshag underground mineral resource area and a lone drillhole intersection more than 700 metres down plunge. Several new zones located parallel to and east of Wolfshag with the potential to enhance the underground project were also tested.
The total exploration budget for Namibia in 2022 is approximately $4 million. Exploration in 2022 will include 12,320 metres of diamond drilling and 5,400 metres of RAB drilling at the Otjikoto Project. The majority of the diamond drilling will continue to target the extension of the existing Wolfshag underground mineral resource area and a new zone located parallel to and east of Wolfshag.
Other Greenfield Exploration
Given B2Gold’s exploration team's successful discovery history, the Company budgeted $25 million for greenfield exploration opportunities internationally in 2021, including Finland, Uzbekistan and a number of new regions, as it continued to pursue early stage exploration discoveries through property acquisitions and joint ventures with junior exploration companies. The actual spend on greenfield exploration for the year ended December 31, 2021 was approximately $17 million.
24
B2Gold has allocated approximately $29 million in 2022 for its grassroots exploration programs, including Finland, Uzbekistan, Zimbabwe and several new regions.
In Finland, the Company has allocated $8 million to the Central Lapland Joint Venture with Aurion Resources Ltd. Most significantly, the westward extension of Rupert Resources’ Ikarri discovery trends directly onto the joint venture ground. This trend coincides with B2Gold’s base-of-till drilling and the same interpreted structure as defined by airborne geophysics. Diamond drilling in 2021 has confirmed the presence of mineralization on this structure and will be followed up in 2022, with 11,600 metres planned.
In Uzbekistan, the Company has allocated $6 million to advance exploration on the ground it has acquired in proximity to the world class Muruntau super-mine. Multiple targets on structures and lithologies with comparable alteration and geochemical characteristics as Muruntau were identified by mapping, RAB drilling and trenching. Reverse circulation and diamond drilling were carried out on some of these targets in 2021. Some of these targets will be followed up in 2022, as well ongoing drill testing of remaining and new targets. A total of 32,700 metres of diamond and reverse circulation drilling has been planned.
In addition, the Company has allocated approximately $15 million for several other greenfield targets currently being pursued.
CRITICAL ACCOUNTING ESTIMATES
Full disclosure of the Company’s accounting policies and significant accounting judgments and estimation uncertainties in accordance with IFRS can be found in Notes 3 and 4 of its audited consolidated financial statements for the year ended December 31, 2021. Management considers the following estimates to be the most critical in understanding the judgements involved in preparing the Company’s consolidated financial statements and the uncertainties that could impact its results of operations, financial condition and cash flows:
COVID-19 estimation uncertainty
A global pandemic related to COVID-19 was declared by the World Health Organization in March 2020. The current and expected impacts on global commerce have been and are anticipated to continue to be far-reaching. To date, globally, there has been significant volatility in commodity prices and foreign exchange rates, restrictions on the conduct of business in many jurisdictions, including travel restrictions, and supply chain disruptions. There is significant ongoing global uncertainty surrounding COVID-19 and the extent and duration of the impact that it may have.
The areas of estimation uncertainty for the Company which may be impacted include estimates used to determine recoverable reserves and resources, estimates used to determine the recoverable amounts of long-lived assets, estimates used to determine the recoverable amounts of value-added tax receivables and estimates regarding deferred income taxes and valuation allowances. The impact of COVID-19 on the global economic environment, and the local jurisdictions in which the Company operates, could result in changes to the way the Company runs its mines. These changes could result in revenues or costs being different from the Company's expectations. This impact could be material.
Mineral reserve and resource estimates
Mineral reserves are estimates of the amount of ore that can be economically and legally extracted from the Company’s mining properties. The Company estimates its mineral reserves and mineral resources based on information compiled by appropriately qualified persons relating to the geological data on the size, depth and shape of the ore body, and requires complex geological assessments to interpret the data. The estimation of recoverable mineral reserves is based upon factors such as estimates of foreign exchange rates, commodity prices, future capital requirements, metallurgical recoveries, permitting and production costs along with geological assumptions made in estimating the size, and grade of the ore body. Changes in the mineral reserve or mineral resource estimates may impact the carrying value of mining interests, mine restoration provisions, recognition of deferred tax assets, depreciation and amortization charges and royalties receivable.
Impairment of long-lived assets
Long-lived assets are tested for impairment, or reversal of a previous impairment, if there is an indicator of impairment or a subsequent reversal. Calculating the estimated recoverable amount of cash generating units for long-lived asset requires management to make estimates and assumptions that include such factors as reserves and resources, future production levels, metallurgical recovery estimates, operating and capital costs, future metal prices and discount rates. Changes in any of these assumptions or estimates used in determining the recoverable amount could impact the analysis. Such changes could be material.
Value-added tax receivables
The Company incurs indirect taxes, including value-added tax, on purchases of goods and services at its operating mines and development projects. Indirect tax balances are recorded at their estimated recoverable amounts within current or long-term assets, net of provisions, and reflect the Company’s best estimate of their recoverability under existing tax rules in the respective
25
jurisdictions in which they arise. Management’s assessment of recoverability considers the probable outcomes of claimed deductions and/or disputes. The provisions and balance sheet classifications made to date may be subject to change and such change may be material.
Uncertain tax positions
The Company’s operations involve the application of complex tax regulations in multiple international jurisdictions. Determining the tax treatment of a transaction requires the Company to apply judgement in its interpretation of the applicable tax law. These positions are not final until accepted by the relevant tax authority. The tax treatment may change based on the result of assessments or audits by the tax authorities often years after the initial filing.
The Company recognizes and records potential liabilities for uncertain tax positions based on its assessment of the amount, or range of amounts, of tax that will be due. The Company adjusts these accruals as new information becomes available. Due to the complexity and uncertainty associated with certain tax treatments, the ultimate resolution could result in a payment that is materially different from the Company’s current estimate of the tax liabilities.
Current and deferred income taxes
The Company is periodically required to estimate the tax basis of assets and liabilities. Where applicable tax laws and regulations are either unclear or subject to varying interpretations, it is possible that changes in these estimates could occur that materially affect the amounts of deferred income tax assets and liabilities recorded in the financial statements. Changes in deferred tax assets and liabilities generally have a direct impact on earnings in the period that the changes occur.
Each period, the Company evaluates the likelihood of whether some portion or all of each deferred tax asset will not be realized. This evaluation is based on historic and future expected levels of taxable income and the associated repatriation of retained earnings, the pattern and timing of reversals of taxable temporary timing differences that give rise to deferred tax liabilities, and tax planning initiatives. Levels of future taxable income are affected by, among other things, metal prices, production costs, quantities of proven and probable gold reserves, interest rates and foreign currency exchange rates. The availability of retained earnings for distribution depends on future levels of taxable income as well as future reclamation expenditures, capital expenditures, dividends and other uses of available cash flow.
RISKS AND UNCERTAINTIES
The exploration and development of natural resources are highly speculative in nature and the Company’s business operations, investments and prospects are subject to significant risks. For details of these risks, please refer to the risk factors set forth in the Company’s current Annual Information Form, which can be found under the Company’s corporate profile on SEDAR at www.sedar.com, the Company’s current Form 40-F Annual Report, which can be found on EDGAR at www.sec.gov, and the Company’s other filings and submissions with securities regulators on SEDAR and EDGAR, which could materially affect the Company’s business, operations, investments and prospects and could cause actual events to differ materially from those described in forward-looking statements relating to the Company. Additional risks and uncertainties not presently known to the Company or that the Company currently considers immaterial may also impair the business, operations, investments and prospects of the Company. If any of the risks actually occur, the business of the Company may be harmed and its financial condition and results of operations may suffer significantly.
DISCLOSURE CONTROLS AND INTERNAL CONTROL OVER FINANCIAL REPORTING
Disclosure controls and procedures
Disclosure controls and procedures are designed (a) under Canadian law, to provide reasonable assurance and (b) under U.S. law, to ensure that information required to be disclosed in reports filed or submitted by the Company under Canadian securities legislation and the U.S. Securities and Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms and include, without limitation, controls and procedures designed to ensure that information required to be disclosed in reports filed or submitted by the Company under Canadian securities legislation and the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
As at December 31, 2021, management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures, as defined in the rules of the Canadian Securities Administrators and under the Exchange Act. Based upon the results of that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that as of December 31, 2021, the Company's disclosure controls and procedures were effective.
26
Management’s annual report on internal control over financial reporting
The Company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer is responsible for establishing and maintaining adequate internal control over financial reporting. Any system of internal control over financial reporting, no matter how well designed, has inherent limitations and may not prevent or detect misstatements. Even when the Company's system of internal control over financial reporting is determined to be effective, it can only provide reasonable assurance with respect to financial statement preparation and presentation.
Management has used the criteria established in the Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) to evaluate the effectiveness of the Company's internal control over financial reporting.
As at December 31, 2021, management, with the participation of the Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of the Company's internal control over financial reporting and concluded that the Company's internal control over financial reporting was effective.
The effectiveness of the Company’s internal control over financial reporting has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, who have expressed their opinion in their report included with our annual consolidated financial statements.
Changes in internal control over financial reporting
There has been no change in our internal control over financial reporting during the year ended December 31, 2021 which has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
NON-IFRS MEASURES
Cash operating costs per gold ounce sold and total cash costs per gold ounce sold
‘‘Cash operating costs per gold ounce’’ and “total cash costs per gold ounce” are common financial performance measures in the gold mining industry but, as non-IFRS measures, they do not have a standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. Management believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate our performance and ability to generate cash flow. Accordingly, these measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The measures, along with sales, are considered to be a key indicator of the Company’s ability to generate earnings and cash flow from its mining operations.
Cash cost figures are calculated on a sales basis in accordance with a standard developed by The Gold Institute, which was a worldwide association of suppliers of gold and gold products and included leading North American gold producers. The Gold Institute ceased operations in 2002, but the standard is the accepted standard of reporting cash cost of production in North America. Adoption of the standard is voluntary and the cost measures presented may not be comparable to other similarly titled measures of other companies. Other companies may calculate these measures differently. Cash operating costs and total cash costs per gold ounce sold are derived from amounts included in the statement of operations and include mine site operating costs such as mining, processing, smelting, refining, transportation costs, royalties and production taxes, less silver by-product credits. The tables below show a reconciliation of cash operating costs per gold ounce sold and total cash costs per gold ounce sold to production costs as extracted from the annual consolidated financial statements on a consolidated and a mine-by-mine basis:
27
| For the three months ended December 31, 2021 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Production costs | 54,464 | 38,161 | 26,069 | 118,694 | 14,687 | 133,381 | ||||||||||||||
| Royalties and production taxes | 26,105 | 5,327 | 5,648 | 37,080 | 1,080 | 38,160 | ||||||||||||||
| Total cash costs | 80,569 | 43,488 | 31,717 | 155,774 | 15,767 | 171,541 | ||||||||||||||
| Gold sold (ounces) | 173,700 | 40,650 | 78,000 | 292,350 | 16,045 | 308,395 | ||||||||||||||
| Cash operating costs per ounce ($/gold ounce sold) | 314 | 939 | 334 | 406 | 915 | 433 | ||||||||||||||
| Total cash costs per ounce ($/gold ounce sold) | 464 | 1,070 | 407 | 533 | 983 | 556 | ||||||||||||||
| For the three months ended December 31, 2020 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Production costs | 57,376 | 37,871 | 19,183 | 114,430 | 10,383 | 124,813 | ||||||||||||||
| Royalties and production taxes | 20,867 | 7,050 | 2,858 | 30,775 | 1,003 | 31,778 | ||||||||||||||
| Total cash costs | 78,243 | 44,921 | 22,041 | 145,205 | 11,386 | 156,591 | ||||||||||||||
| Gold sold (ounces) | 149,000 | 69,380 | 38,275 | 256,655 | 14,070 | 270,725 | ||||||||||||||
| Cash operating costs per ounce ($/gold ounce sold) | 385 | 546 | 501 | 446 | 738 | 461 | ||||||||||||||
| Total cash costs per ounce ($/gold ounce sold) | 525 | 647 | 576 | 566 | 809 | 578 | ||||||||||||||
| For the year ended December 31, 2021 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Production costs | 250,337 | 146,671 | 96,381 | 493,389 | 56,221 | 549,610 | ||||||||||||||
| Royalties and production taxes | 84,132 | 23,675 | 13,624 | 121,431 | 4,227 | 125,658 | ||||||||||||||
| Total cash costs | 334,469 | 170,346 | 110,005 | 614,820 | 60,448 | 675,268 | ||||||||||||||
| Gold sold (ounces) | 570,450 | 222,291 | 188,660 | 981,401 | 59,980 | 1,041,381 | ||||||||||||||
| Cash operating costs per ounce ($/gold ounce sold) | 439 | 660 | 511 | 503 | 937 | 528 | ||||||||||||||
| Total cash costs per ounce ($/gold ounce sold) | 586 | 766 | 583 | 626 | 1,008 | 648 | ||||||||||||||
28
| For the year ended December 31, 2020 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Production costs | 200,228 | 131,780 | 75,857 | 407,865 | 36,028 | 443,893 | ||||||||||||||
| Royalties and production taxes | 87,790 | 21,183 | 12,312 | 121,285 | 3,185 | 124,470 | ||||||||||||||
| Total cash costs | 288,018 | 152,963 | 88,169 | 529,150 | 39,213 | 568,363 | ||||||||||||||
| Gold sold (ounces) | 626,300 | 206,680 | 173,475 | 1,006,455 | 45,261 | 1,051,716 | ||||||||||||||
| Cash operating costs per ounce ($/gold ounce sold) | 320 | 638 | 437 | 405 | 796 | 422 | ||||||||||||||
| Total cash costs per ounce ($/gold ounce sold) | 460 | 740 | 508 | 526 | 866 | 540 | ||||||||||||||
Cash operating costs per gold ounce produced
In addition to cash operating costs on a per gold ounce sold basis, the Company also presents cash operating costs on a per gold ounce produced basis. Cash operating costs per gold ounce produced is derived from amounts included in the statement of operations and include mine site operating costs such as mining, processing, smelting, refining, transportation costs, less silver by-product credits. The tables below show a reconciliation of cash operating costs per gold ounce produced to production costs as extracted from the annual consolidated financial statements on a consolidated and a mine-by-mine basis:
| For the three months ended December 31, 2021 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Production costs | 54,464 | 38,161 | 26,069 | 118,694 | 14,687 | 133,381 | ||||||||||||||
| Inventory sales adjustment | 7,553 | 6,209 | 488 | 14,250 | — | 14,250 | ||||||||||||||
| Cash operating costs | 62,017 | 44,370 | 26,557 | 132,944 | 14,687 | 147,631 | ||||||||||||||
| Gold produced (ounces) | 163,539 | 46,629 | 78,681 | 288,849 | 16,048 | 304,897 | ||||||||||||||
| Cash operating costs per ounce ($/gold ounce produced) | 379 | 952 | 338 | 460 | 915 | 484 | ||||||||||||||
| For the three months ended December 31, 2020 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Production costs | 57,376 | 37,871 | 19,183 | 114,430 | 10,383 | 124,813 | ||||||||||||||
| Inventory sales adjustment | 5,506 | (4,199) | 1,739 | 3,046 | — | 3,046 | ||||||||||||||
| Cash operating costs | 62,882 | 33,672 | 20,922 | 117,476 | 10,383 | 127,859 | ||||||||||||||
| Gold produced (ounces) | 158,548 | 57,566 | 40,205 | 256,319 | 14,150 | 270,469 | ||||||||||||||
| Cash operating costs per ounce ($/gold ounce produced) | 397 | 585 | 520 | 458 | 734 | 473 | ||||||||||||||
29
| For the year ended December 31, 2021 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Production costs | 250,337 | 146,671 | 96,381 | 493,389 | 56,221 | 549,610 | ||||||||||||||
| Inventory sales adjustment | 4,878 | 4,974 | 1,113 | 10,965 | — | 10,965 | ||||||||||||||
| Cash operating costs | 255,215 | 151,645 | 97,494 | 504,354 | 56,221 | 560,575 | ||||||||||||||
| Gold produced (ounces) | 567,795 | 222,227 | 197,573 | 987,595 | 59,819 | 1,047,414 | ||||||||||||||
| Cash operating costs per ounce ($/gold ounce produced) | 449 | 682 | 493 | 511 | 940 | 535 | ||||||||||||||
| For the year ended December 31, 2020 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Production costs | 200,228 | 131,780 | 75,857 | 407,865 | 36,028 | 443,893 | ||||||||||||||
| Inventory sales adjustment | (1,094) | (3,067) | 328 | (3,833) | — | (3,833) | ||||||||||||||
| Cash operating costs | 199,134 | 128,713 | 76,185 | 404,032 | 36,028 | 440,060 | ||||||||||||||
| Gold produced (ounces) | 622,518 | 204,699 | 168,041 | 995,258 | 45,479 | 1,040,737 | ||||||||||||||
| Cash operating costs per ounce ($/ gold ounce produced) | 320 | 629 | 453 | 406 | 792 | 423 | ||||||||||||||
All-in sustaining costs per gold ounce
In June 2013, the World Gold Council, a non-regulatory association of the world’s leading gold mining companies established to promote the use of gold to industry, consumers and investors, provided guidance for the calculation of the measure “all-in sustaining costs per gold ounce”, but as a non-IFRS measure, it does not have a standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. The World Gold Council standard became effective January 1, 2014. On November 16, 2018, the World Council announced an update to its Guidance Note on all-in sustaining costs with application effective starting January 1, 2019. This update provides additional transparency about the costs of gold production and support further consistency of application of the Guidance Note. The major updates to the Guidance Note include providing a more specific definition of non-sustaining costs as those costs incurred at ‘new operations’ and costs related to ‘major projects at existing operations’ where these projects will materially benefit the operation in the future. The Guidance Note has defined ‘material benefit’ as an increase of at least 10% in annual or life of mine production, net present value or reserves compared to the remaining life of the operation. In addition, the Guidance Note has been updated to clarify that production phase capitalized stripping only meets the definition of non-sustaining if the stripping is expected to take at least 12 months and the subsequent ore production phase is expected to be more than 5 years. The Company adopted the updates to the Guidance Note, effective January 1, 2019.
Management believes that the all-in sustaining costs per gold ounce measure provides additional insight into the costs of producing gold by capturing all of the expenditures required for the discovery, development and sustaining of gold production and allows the Company to assess its ability to support capital expenditures to sustain future production from the generation of operating cash flows. Management believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate the Company's performance and ability to generate cash flow. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Adoption of the standard is voluntary and the cost measures presented may not be comparable to other similarly titled measures of other companies. The Company has applied the principles of the World Gold Council recommendations and has reported all-in sustaining costs on a sales basis. Other companies may calculate these measures differently.
B2Gold defines all-in sustaining costs per ounce as the sum of cash operating costs, royalties and production taxes, capital expenditures and exploration costs that are sustaining in nature, sustaining lease expenditures, corporate general and administrative costs, share-based payment expenses related to RSUs/DSUs/PSUs, community relations expenditures,
30
reclamation liability accretion and realized (gains) losses on fuel derivative contracts, all divided by the total gold ounces sold to arrive at a per ounce figure.
The tables below show a reconciliation of all-in sustaining costs per ounce to production costs as extracted from the annual consolidated financial statements on a consolidated and a mine-by-mine basis:
| For the three months ended December 31, 2021 | |||||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Corporate | Total | Calibre equity investment | Grand Total | |||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||
| Production costs | 54,464 | 38,161 | 26,069 | — | 118,694 | 14,687 | 133,381 | ||||||||||||||||
| Royalties and production taxes | 26,105 | 5,327 | 5,648 | — | 37,080 | 1,080 | 38,160 | ||||||||||||||||
| Corporate administration | 2,337 | 1,720 | 1,710 | 13,393 | 19,160 | 498 | 19,658 | ||||||||||||||||
Share-based payments – RSUs/DSUs/PSUs(1) | — | — | — | 3,016 | 3,016 | — | 3,016 | ||||||||||||||||
| Community relations | 542 | 71 | 290 | — | 903 | — | 903 | ||||||||||||||||
| Reclamation liability accretion | 131 | 151 | 99 | — | 381 | — | 381 | ||||||||||||||||
| Realized gains on fuel derivative contracts | (2,035) | (2,381) | (1,125) | — | (5,541) | — | (5,541) | ||||||||||||||||
| Sustaining lease expenditures | 232 | 328 | 39 | 666 | 1,265 | — | 1,265 | ||||||||||||||||
Sustaining capital expenditures(2) | 47,850 | 9,588 | 11,452 | — | 68,890 | 2,145 | 71,035 | ||||||||||||||||
Sustaining mine exploration(2) | 464 | 1,142 | 1,294 | — | 2,900 | — | 2,900 | ||||||||||||||||
| Total all-in sustaining costs | 130,090 | 54,107 | 45,476 | 17,075 | 246,748 | 18,410 | 265,158 | ||||||||||||||||
| Gold sold (ounces) | 173,700 | 40,650 | 78,000 | — | 292,350 | 16,045 | 308,395 | ||||||||||||||||
| All-in sustaining cost per ounce ($/gold ounce sold) | 749 | 1,331 | 583 | — | 844 | 1,147 | 860 | ||||||||||||||||
(1) Included as a component of Share-based payments on the Consolidated Statement of Operations.
(2) Refer to Sustaining capital expenditures and Sustaining mine exploration reconciliations below.
The table below shows a reconciliation of sustaining capital expenditures to operating mine capital expenditures as extracted from the annual consolidated financial statements on a consolidated and a mine-by-mine basis:
| For the three months ended December 31, 2021 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Operating mine capital expenditures | 56,559 | 10,378 | 21,599 | 88,536 | 2,145 | 90,681 | ||||||||||||||
| Cardinal Pit development and mobile equipment | (8,363) | — | — | (8,363) | — | (8,363) | ||||||||||||||
| Solar plant | (346) | — | — | (346) | — | (346) | ||||||||||||||
| Other | — | (368) | — | (368) | — | (368) | ||||||||||||||
| Land acquisitions | — | (422) | — | (422) | — | (422) | ||||||||||||||
| Underground development | — | — | (6,560) | (6,560) | — | (6,560) | ||||||||||||||
| National power grid connection | — | — | (3,587) | (3,587) | — | (3,587) | ||||||||||||||
| Sustaining capital expenditures | 47,850 | 9,588 | 11,452 | 68,890 | 2,145 | 71,035 | ||||||||||||||
31
The table below shows a reconciliation of sustaining mine exploration to operating mine exploration as extracted from the annual consolidated financial statements on a consolidated and a mine-by-mine basis:
| For the three months ended December 31, 2021 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Operating mine exploration | 3,691 | 1,142 | 1,578 | 6,411 | 1,423 | 7,834 | ||||||||||||||
| Regional exploration | (3,227) | — | (284) | (3,511) | (1,423) | (4,934) | ||||||||||||||
| Sustaining mine exploration | 464 | 1,142 | 1,294 | 2,900 | — | 2,900 | ||||||||||||||
The tables below show a reconciliation of all-in sustaining costs per ounce to production costs as extracted from the annual consolidated financial statements on a consolidated and a mine-by-mine basis:
| For the three months ended December 31, 2020 | |||||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Corporate | Total | Calibre equity investment | Grand Total | |||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||
| Production costs | 57,376 | 37,871 | 19,183 | — | 114,430 | 10,383 | 124,813 | ||||||||||||||||
| Royalties and production taxes | 20,867 | 7,050 | 2,858 | — | 30,775 | 1,003 | 31,778 | ||||||||||||||||
| Corporate administration | 2,366 | 2,006 | 1,422 | 12,791 | 18,585 | 684 | 19,269 | ||||||||||||||||
Share-based payments – RSUs/DSUs/PSUs(1) | — | — | — | 2,267 | 2,267 | — | 2,267 | ||||||||||||||||
| Community relations | 1,213 | 62 | 293 | — | 1,568 | — | 1,568 | ||||||||||||||||
| Reclamation liability accretion | 58 | 73 | 45 | — | 176 | — | 176 | ||||||||||||||||
| Realized losses on fuel derivative contracts | 260 | 518 | 263 | — | 1,041 | — | 1,041 | ||||||||||||||||
| Sustaining lease expenditures | 168 | 342 | 38 | 179 | 727 | — | 727 | ||||||||||||||||
Sustaining capital expenditures(2) | 21,853 | 14,238 | 20,614 | — | 56,705 | 2,566 | 59,271 | ||||||||||||||||
Sustaining mine exploration(2) | 5,564 | 2,370 | 1,199 | — | 9,133 | 700 | 9,833 | ||||||||||||||||
| Total all-in sustaining costs | 109,725 | 64,530 | 45,915 | 15,237 | 235,407 | 15,336 | 250,743 | ||||||||||||||||
| Gold sold (ounces) | 149,000 | 69,380 | 38,275 | — | 256,655 | 14,070 | 270,725 | ||||||||||||||||
| All-in sustaining cost per ounce ($/gold ounce sold) | 736 | 930 | 1,200 | — | 917 | 1,090 | 926 | ||||||||||||||||
(1) Included as a component of Share-based payments on the Consolidated Statement of Operations.
(2) Refer to Sustaining capital expenditures and Sustaining mine exploration reconciliations below.
32
The table below shows a reconciliation of sustaining capital expenditures to operating mine capital expenditures as extracted from the annual consolidated financial statements on a consolidated and a mine-by-mine basis:
| For the three months ended December 31, 2020 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Operating mine capital expenditures | 28,378 | 14,619 | 25,119 | 68,116 | 2,566 | 70,682 | ||||||||||||||
| Mine expansion equipment | (2,710) | — | — | (2,710) | — | (2,710) | ||||||||||||||
| Plant expansion | 486 | — | — | 486 | — | 486 | ||||||||||||||
| Solar plant | (3,683) | — | — | (3,683) | — | (3,683) | ||||||||||||||
| Other | (618) | (36) | (51) | (705) | — | (705) | ||||||||||||||
| Land acquisitions | — | (345) | — | (345) | — | (345) | ||||||||||||||
| Underground development | — | — | (4,454) | (4,454) | — | (4,454) | ||||||||||||||
| Sustaining capital expenditures | 21,853 | 14,238 | 20,614 | 56,705 | 2,566 | 59,271 | ||||||||||||||
The table below shows a reconciliation of sustaining mine exploration to operating mine exploration as extracted from the annual consolidated financial statements on a consolidated and a mine-by-mine basis:
| For the three months ended December 31, 2020 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Operating mine exploration | 5,564 | 2,421 | 1,462 | 9,447 | 700 | 10,147 | ||||||||||||||
| Regional exploration | — | (51) | (263) | (314) | — | (314) | ||||||||||||||
| Sustaining mine exploration | 5,564 | 2,370 | 1,199 | 9,133 | 700 | 9,833 | ||||||||||||||
The tables below show a reconciliation of all-in sustaining costs per ounce to production costs as extracted from the annual consolidated financial statements on a consolidated and a mine-by-mine basis:
| For the year ended December 31, 2021 | |||||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Corporate | Total | Calibre equity investment | Grand Total | |||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||
| Production costs | 250,337 | 146,671 | 96,381 | — | 493,389 | 56,221 | 549,610 | ||||||||||||||||
| Royalties and production taxes | 84,132 | 23,675 | 13,624 | — | 121,431 | 4,227 | 125,658 | ||||||||||||||||
| Corporate administration | 7,602 | 3,577 | 5,528 | 33,478 | 50,185 | 2,376 | 52,561 | ||||||||||||||||
Share-based payments – RSUs/DSUs/PSUs(1) | — | — | — | 11,700 | 11,700 | — | 11,700 | ||||||||||||||||
| Community relations | 1,596 | 144 | 1,332 | — | 3,072 | — | 3,072 | ||||||||||||||||
| Reclamation liability accretion | 486 | 582 | 370 | — | 1,438 | — | 1,438 | ||||||||||||||||
| Realized gains on fuel derivative contracts | (5,137) | (5,723) | (2,686) | — | (13,546) | — | (13,546) | ||||||||||||||||
| Sustaining lease expenditures | 677 | 1,342 | 160 | 1,710 | 3,889 | — | 3,889 | ||||||||||||||||
Sustaining capital expenditures(2) | 89,121 | 27,805 | 52,827 | — | 169,753 | 4,354 | 174,107 | ||||||||||||||||
Sustaining mine exploration(2) | 7,691 | 4,990 | 3,797 | — | 16,478 | — | 16,478 | ||||||||||||||||
| Total all-in sustaining costs | 436,505 | 203,063 | 171,333 | 46,888 | 857,789 | 67,178 | 924,967 | ||||||||||||||||
| Gold sold (ounces) | 570,450 | 222,291 | 188,660 | — | 981,401 | 59,980 | 1,041,381 | ||||||||||||||||
| All-in sustaining cost per ounce ($/gold ounce sold) | 765 | 914 | 908 | — | 874 | 1,120 | 888 | ||||||||||||||||
(1) Included as a component of Share-based payments on the Consolidated Statement of Operations.
(2) Refer to Sustaining capital expenditures and Sustaining mine exploration reconciliations below.
33
The table below shows a reconciliation of sustaining capital expenditures to operating mine capital expenditures as extracted from the annual consolidated financial statements on a consolidated and a mine-by-mine basis:
| For the year ended December 31, 2021 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Operating mine capital expenditures | 110,637 | 30,743 | 80,936 | 222,316 | 4,354 | 226,670 | ||||||||||||||
| Solar plant | (9,144) | — | — | (9,144) | — | (9,144) | ||||||||||||||
| Cardinal Pit development and mobile equipment | (12,372) | — | — | (12,372) | — | (12,372) | ||||||||||||||
| Land acquisitions | — | (1,910) | — | (1,910) | — | (1,910) | ||||||||||||||
| Other | — | (1,028) | — | (1,028) | — | (1,028) | ||||||||||||||
| Underground development | — | — | (21,039) | (21,039) | — | (21,039) | ||||||||||||||
| National power grid connection | — | — | (7,070) | (7,070) | — | (7,070) | ||||||||||||||
| Sustaining capital expenditures | 89,121 | 27,805 | 52,827 | 169,753 | 4,354 | 174,107 | ||||||||||||||
The table below shows a reconciliation of sustaining mine exploration to operating mine exploration as extracted from the annual consolidated financial statements:
| For the year ended December 31, 2021 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Operating mine exploration | 13,014 | 5,013 | 4,424 | 22,451 | 4,805 | 27,256 | ||||||||||||||
| Regional exploration | (5,323) | (23) | (627) | (5,973) | (4,805) | (10,778) | ||||||||||||||
| Sustaining mine exploration | 7,691 | 4,990 | 3,797 | 16,478 | — | 16,478 | ||||||||||||||
The tables below show a reconciliation of all-in sustaining costs per ounce to production costs as extracted from the annual consolidated financial statements on a consolidated and a mine-by-mine basis:
| For the year ended December 31, 2020 | |||||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Corporate | Total | Calibre equity investment | Grand Total | |||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||
| Production costs | 200,228 | 131,780 | 75,857 | — | 407,865 | 36,028 | 443,893 | ||||||||||||||||
| Royalties and production taxes | 87,790 | 21,183 | 12,312 | — | 121,285 | 3,185 | 124,470 | ||||||||||||||||
| Corporate administration | 5,942 | 4,391 | 4,664 | 30,608 | 45,605 | 2,730 | 48,335 | ||||||||||||||||
Share-based payments – RSUs/DSUs/PSUs(1) | — | — | — | 9,894 | 9,894 | — | 9,894 | ||||||||||||||||
| Community relations | 3,346 | 625 | 2,513 | — | 6,484 | — | 6,484 | ||||||||||||||||
| Reclamation liability accretion | 329 | 339 | 248 | — | 916 | — | 916 | ||||||||||||||||
| Realized losses on fuel derivative contracts | 2,156 | 2,542 | 1,280 | — | 5,978 | — | 5,978 | ||||||||||||||||
| Sustaining lease expenditures | 721 | 1,407 | 808 | 701 | 3,637 | — | 3,637 | ||||||||||||||||
Sustaining capital expenditures(2) | 59,854 | 33,144 | 59,182 | — | 152,180 | 5,931 | 158,111 | ||||||||||||||||
Sustaining mine exploration(2) | 14,718 | 8,122 | 2,715 | — | 25,555 | 1,460 | 27,015 | ||||||||||||||||
| Total all-in sustaining costs | 375,084 | 203,533 | 159,579 | 41,203 | 779,399 | 49,334 | 828,733 | ||||||||||||||||
| Gold sold (ounces) | 626,300 | 206,680 | 173,475 | — | 1,006,455 | 45,261 | 1,051,716 | ||||||||||||||||
| All-in sustaining cost per ounce ($/gold ounce sold) | 599 | 985 | 920 | — | 774 | 1,090 | 788 | ||||||||||||||||
(1) Included as a component of Share-based payments on the Consolidated Statement of Operations.
(2) Refer to Sustaining capital expenditures and Sustaining mine exploration reconciliations below.
34
The table below shows a reconciliation of sustaining capital expenditures to operating mine capital expenditures as extracted from the annual consolidated financial statements:
| For the year ended December 31, 2020 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Operating mine capital expenditures | 184,037 | 34,041 | 66,815 | 284,893 | 5,931 | 290,824 | ||||||||||||||
| Mine expansion equipment | (60,469) | — | — | (60,469) | — | (60,469) | ||||||||||||||
| Plant expansion | (38,902) | — | — | (38,902) | — | (38,902) | ||||||||||||||
| Solar plant | (22,434) | — | — | (22,434) | — | (22,434) | ||||||||||||||
| Other | (2,378) | (166) | (285) | (2,829) | — | (2,829) | ||||||||||||||
| Land acquisitions | — | (731) | — | (731) | — | (731) | ||||||||||||||
| Underground development | — | — | (7,348) | (7,348) | — | (7,348) | ||||||||||||||
| Sustaining capital expenditures | 59,854 | 33,144 | 59,182 | 152,180 | 5,931 | 158,111 | ||||||||||||||
The table below shows a reconciliation of sustaining mine exploration to operating mine exploration as extracted from the annual consolidated financial statements:
| For the year ended December 31, 2020 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Operating mine exploration | 14,718 | 8,266 | 3,183 | 26,167 | 1,460 | 27,627 | ||||||||||||||
| Regional exploration | — | (144) | (468) | (612) | — | (612) | ||||||||||||||
| Sustaining mine exploration | 14,718 | 8,122 | 2,715 | 25,555 | 1,460 | 27,015 | ||||||||||||||
Adjusted net income and adjusted earnings per share - basic
Adjusted net income and adjusted earnings per share – basic are non-IFRS measures that do not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other issuers. The Company defines adjusted net income as net income attributable to shareholders of the Company adjusted for non-recurring items and also significant recurring non-cash items. The Company defines adjusted earnings per share – basic as adjusted net income divided by the basic weighted number of common shares outstanding.
Management believes that the presentation of adjusted net income and adjusted earnings per share - basic is appropriate to provide additional information to investors regarding items that we do not expect to continue at the same level in the future or that management does not believe to be a reflection of the Company's ongoing operating performance. Management further believes that its presentation of these non-IFRS financial measures provide information that is useful to investors because they are important indicators of the strength of our operations and the performance of our core business. Accordingly, it is intended to provide additional information and should not be considered in isolation as a substitute for measures of performance prepared in accordance with IFRS. Other companies may calculate this measure differently. In order to improve comparability with other senior gold producers, effective September 30, 2020, the Company no longer adjusts for share-based payments expense. Prior
periods have been updated to reflect this change.
35
A reconciliation of net income to adjusted net income as extracted from the annual consolidated financial statements is set out in the table below:
| Three months ended | Year ended | |||||||||||||
| December 31, | December 31, | |||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||
| $ | $ | $ | $ | |||||||||||
| (000’s) | (000’s) | (000’s) | (000’s) | |||||||||||
| Net income attributable to shareholders of the Company for the period: | 136,943 | 168,462 | 420,065 | 628,063 | ||||||||||
| Adjustments for non-recurring items and significant recurring non-cash items: | ||||||||||||||
| Net gain on disposal of Burkina Faso assets | (22,463) | — | (22,463) | — | ||||||||||
| Impairment (reversal) of long-lived assets | 5,905 | — | 5,905 | (174,309) | ||||||||||
| Write-down of mineral property interests | 15 | (98) | 15 | 10,895 | ||||||||||
COVID-19 relief donations(1) | — | — | — | 2,752 | ||||||||||
| Unrealized loss (gain) on derivative instruments | 4,192 | (8,159) | (12,884) | (5,336) | ||||||||||
| Office lease termination costs | 2,651 | — | 2,651 | — | ||||||||||
| Deferred income tax (recovery) expense | (14,519) | (13,476) | (8,959) | 52,826 | ||||||||||
| Adjusted net income attributable to shareholders of the Company for the period | 112,724 | 146,729 | 384,330 | 514,891 | ||||||||||
| Basic weighted average number of common shares outstanding (in thousands) | 1,055,833 | 1,050,752 | 1,053,809 | 1,043,385 | ||||||||||
| Adjusted net earnings attributable to shareholders of the Company per share–basic ($/share) | 0.11 | 0.14 | 0.36 | 0.49 | ||||||||||
(1) COVID-19 donations were considered to be non-recurring up to June 30, 2020. Subsequently, any COVID-19 donations have been considered to be normal course.
36
SUMMARY OF QUARTERLY RESULTS
| Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||
| 2021 | 2021 | 2021 | 2021 | 2020 | 2020 | 2020 | 2020 | |||||||||||||||||||
| Gold revenue ($ in thousands) | 526,113 | 510,859 | 362,990 | 362,302 | 479,525 | 487,166 | 441,939 | 380,298 | ||||||||||||||||||
| Net income for the period ($ in thousands) | 153,140 | 134,871 | 73,982 | 98,832 | 174,405 | 277,039 | 137,961 | 83,008 | ||||||||||||||||||
Earnings per share (1) – basic ($) | 0.13 | 0.12 | 0.07 | 0.09 | 0.16 | 0.25 | 0.12 | 0.07 | ||||||||||||||||||
Earnings per share (1) – diluted ($) | 0.13 | 0.12 | 0.06 | 0.09 | 0.16 | 0.25 | 0.12 | 0.07 | ||||||||||||||||||
| Cash flows provided by (used) operating activities ($ in thousands) | 266,292 | 320,283 | (8,316) | 145,854 | 196,690 | 300,762 | 238,089 | 216,213 | ||||||||||||||||||
| Gold sold (ounces) | 292,350 | 286,650 | 200,071 | 202,330 | 256,655 | 253,200 | 257,100 | 239,500 | ||||||||||||||||||
| Average realized gold price ($/ounce) | 1,800 | 1,782 | 1,814 | 1,791 | 1,868 | 1,924 | 1,719 | 1,588 | ||||||||||||||||||
| Gold produced (ounces) | 288,849 | 295,723 | 197,380 | 205,643 | 256,319 | 248,733 | 239,574 | 250,632 | ||||||||||||||||||
| Gold produced, total including equity investment(ounces) | 304,897 | 310,261 | 211,612 | 220,644 | 270,469 | 263,813 | 241,593 | 264,862 | ||||||||||||||||||
Cash operating costs (2) ($/gold ounce sold) | 433 | 482 | 675 | 582 | 461 | 437 | 383 | 405 | ||||||||||||||||||
Total cash costs (2) ($/gold ounce sold) | 556 | 596 | 794 | 709 | 578 | 567 | 498 | 516 | ||||||||||||||||||
All-in sustaining costs (2) ($/gold ounce sold) | 860 | 795 | 1,016 | 932 | 926 | 785 | 712 | 721 | ||||||||||||||||||
Adjusted net income (1)(2)(3) ($ in thousands) | 112,724 | 122,750 | 51,866 | 96,990 | 146,729 | 161,183 | 111,690 | 95,289 | ||||||||||||||||||
Adjusted earnings per share (1)(2)(3) – basic ($) | 0.11 | 0.12 | 0.05 | 0.09 | 0.14 | 0.15 | 0.11 | 0.09 | ||||||||||||||||||
(1)Attributable to the shareholders of the Company.
(2)Non-IFRS Measure. For a description of how these measures are calculated and a reconciliation of these measures to the most directly comparable measures specified, defined or determined under IFRS and presented in the Company’s financial statements, refer to “Non-IFRS Measures”.
(3)Previous periods have been adjusted to reflect the removal of the adjustment for share-based payments expense, refer to “Non-IFRS Measures”
Quarterly gold revenue throughout the eight quarters is a function of quarterly production levels, the timing of bullion shipments and changes in average realized gold price while cash flows from operating activities are also impacted by cash operating costs of each quarter and changes in working capital, in addition to the factors noted for gold revenue. The net income in the third quarter of 2020 reflects an impairment reversal of $122 million related to the Masbate Mine, net of deferred income tax and the recognition of a deferred income tax liability of $24 million related to future withholding tax expected to be incurred on retained earnings the Company is planning to repatriate from its foreign subsidiaries.
SUMMARY AND OUTLOOK
Despite the continuing challenges of the COVID-19 pandemic, B2Gold had another remarkable year of strong operational performance in 2021, with the achievement of B2Gold’s thirteenth consecutive year of record annual total gold production. The Company’s total gold production for 2021 was an annual record of 1,047,414 ounces (including 59,819 ounces of attributable production from Calibre) (2020 - 1,040,737 ounces), near the upper end of its revised guidance range (of between 1,015,000 and 1,055,000 ounces) and exceeding the upper end of its original guidance range (of between 970,000 and 1,030,000 ounces).
Looking forward to 2022, B2Gold remains well positioned for continued strong operational and financial performance. The Company’s total gold production is forecast to be between 990,000 and 1,050,000 ounces (including 40,000 and 50,000 attributable ounces projected from Calibre) in 2022, with total consolidated cash operating costs forecast to be between $620 and $660 per ounce and total consolidated all-in sustaining costs forecast to be between $1,010 and $1,050 per ounce.
Due to the Company's strong net positive cash position, strong operating results and cash flows and the current higher gold price environment, B2Gold’s quarterly dividend rate is expected to be maintained at $0.04 per common share (or an annualized rate of $0.16 per common share), one of the highest dividend yields in the gold sector.
Following the receipt of the Menankoto Permit in Mali, the Company plans to expand the scope of its exploration activities on the Anaconda Area (comprised of the Menankoto Permit and the Bantako North Permit) to build on the successful exploration programs already completed to date. The Company plans to continue focusing on upgrading and expanding the existing Anaconda Area saprolite Inferred Mineral Resource estimate of 21.6 million tonnes at 1.11 g/t for 770,000 ounces for the Anaconda Area (originally released in June 2017). An updated Mineral Resource estimate based on the results from the extensive 2020 and 2021 infill and exploration drill program is expected in the first quarter of 2022 and will feed into engineering studies currently underway. This new resource estimate will also include an initial Mineral Resource estimate for the sulphide
37
material below the existing saprolite resource. The Company will continue to follow up on the sulphide mineralization at the Mamba, Adder and several other targets below the saprolite mineralization in 2022.
The potential to truck material from the Anaconda Area in late 2022 is currently being developed and is not included in Fekola’s 2022 production guidance or the current Fekola life of mine plan. Preliminary planning by the Company has demonstrated that a pit situated on the Anaconda Area could provide saprolite material to be trucked to and fed into the Fekola mill commencing in late 2022, increasing the ore processed and annual gold production from the Fekola mill, subject to obtaining all necessary permits and completion of a final mine plan. This has the potential to add an average of approximately 80,000 to 100,000 ounces per year to Fekola’s annual gold production. In 2022, a total of $33 million has been budgeted to facilitate Phase 1 saprolite mining at the Anaconda Area. The Company plans on commencing a Phase II study when the updated Mineral Resource estimate on the sulphide material becomes available and based on 2022 exploration drilling results to review the project economics of trucking sulphide material to the Fekola mill as compared to constructing another stand-alone mill near the Anaconda Area.
On February 2, 2022 the Company announced an updated mineral resource estimate for the Cardinal Zone, adjacent to the main Fekola Mine open pit in Mali. The updated resource included a significantly increased Mineral Resource estimate for Cardinal Zone as at December 31, 2021 with an initial Indicated Mineral Resource estimate of 8,000,000 tonnes at 1.67 grams per tonne (“g/t”) gold for 430,000 ounces of gold, and an updated Inferred Mineral Resource estimate of 19,000,000 tonnes at 1.21 g/t gold for 740,000 ounces of gold, constrained within a conceptual pit run at US$1,800 per ounce gold. Approximately 50,000 ounces are budgeted to be produced from the Cardinal Zone in 2022 and have been included in Fekola's 2022 production guidance. Based on engineering studies completed to date, the Cardinal Zone has the potential to add an average of approximately 60,000 ounces per year over the next 6 to 8 years to Fekola's annual gold production.
The Company also continues to advance its other development projects while at the same time reviewing its portfolio and divesting non-core assets which it determines do not meet the Company's investment criteria. Work continues on the Gramalote Project and based on a review of the feasibility study work to date, B2Gold believes that there is strong potential for a more robust project. Results from the Gramalote feasibility study are now expected to be available by the end of the second quarter of 2022 with a the full feasibility study completed by the end of the third quarter of 2022. If the final economics of the feasibility study are positive and B2Gold and AngloGold make the decision to develop Gramalote as an open-pit gold mine (decision date now expected by the end of the third quarter of 2022), B2Gold would utilize its proven internal mine construction team to build the mine and mill facilities and operate the mine on behalf of the Gramalote Project. In addition, on November 30, 2021, the Company completed the sale of the Company's Kiaka and Toega projects in Burkina Faso to WAF for a combination of cash, WAF shares and production royalties, which enables the Company to both monetize its investment in the Kiaka and Toega projects to-date while at the same time benefitting from the future development of the projects.
After a very successful year for exploration in 2021, B2Gold is conducting an aggressive exploration campaign in 2022 with a budget of approximately $65 million (excluding the Gramalote Project). Exploration will focus predominantly in Mali, other operating mine sites in Namibia and the Philippines, and continued focus on grassroots targets around the world. Many years of target generation and pursuing opportunities in prospective gold regions has culminated in the Company allocating a record $29 million for its grassroots exploration programs, including several new regions.
The Company's ongoing strategy is to continue to maximize profitable production from its mines, further advance its pipeline of development and exploration projects, evaluate new exploration, development and production opportunities and continue to pay an industry leading dividend yield.
OUTSTANDING SHARE DATA
At February 22, 2022, 1,056,690,544 common shares were outstanding. In addition, there were approximately 32.3 million stock options outstanding with exercise prices ranging between Cdn.$2.64 to Cdn.$8.53 per share, approximately 3.6 million RSUs outstanding and approximately 3.2 million PSUs outstanding.
The number of unoptioned shares available for issuance under the Company's stock option plan but not subject to outstanding options was 19.2 million and 6.1 million as at January 1, 2021 and December 31, 2021, respectively.
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
Production results and production guidance presented in this MD&A reflect the total production at the mines B2Gold operates on a 100% basis. Please see our most recent Annual Information Form for a discussion of our ownership interest in the mines B2Gold operates. In respect of La Libertad and El Limon mines, production is presented on a 100% basis for the period up until October 14, 2019 and on a 33% basis to December 31, 2021 (to reflect B2Gold's approximate interest in Calibre during the period).
This MD&A includes certain “forward-looking information” and “forward-looking statements” (collectively “forward-looking statements”) within the meaning of applicable Canadian and United States securities legislation, including: projections; outlook; guidance; forecasts; estimates; and other statements regarding future or estimated financial and operational performance, gold production and sales, revenues and cash flows, and capital costs (sustaining and non-sustaining) and operating costs, including projected cash operating costs and all-in sustaining costs, and budgets on a consolidated and mine by mine basis; the impact of the COVID-19 pandemic on B2Gold's operations, including any restrictions or suspensions with respect to our operations and the
38
effect of any such restrictions or suspensions on our financial and operational results; the ability of the Company to successfully maintain our operations if they are temporarily suspended, and to restart or ramp-up these operations efficiently and economically, the impact of COVID-19 on the Company's workforce, suppliers and other essential resources and what effect those impacts, if they occur, would have on our business, our planned capital and exploration expenditures; future or estimated mine life, metal price assumptions, ore grades or sources, gold recovery rates, stripping ratios, throughput, ore processing; statements regarding anticipated exploration, drilling, development, construction, permitting and other activities or achievements of B2Gold; and including, without limitation: generating operating cashflows of approximately $625 million in 2022, which are expected to be significantly weighted to the second half of 2022; remaining well positioned for continued strong operational and financial performance for 2022; projected gold production, cash operating costs and all-in sustaining costs on a consolidated and mine by mine basis in 2022, including production being weighted heavily to the second half of 2022; total consolidated gold production of between 990,000 and 1,050,000 ounces in 2022 with cash operating costs of between $620 and $660 per ounce and all-in sustaining costs of between $1,010 and $1,050 per ounce; the Fekola mill being expected to run at an annualized throughput rate of approximately 9.0 Mtpa (over the long-term); the completion of an updated mineral resource estimate for the Anaconda area in the first quarter of 2022; the potential upside to increase Fekola's gold production in 2022 by trucking material from the Anaconda area, including the potential to add approximately 80,000 to 100,000 per year to Fekola’s annual production profile, and for the Anaconda area to provide saprolite material to feed the Fekola mill starting in late 2022; the commencement of a Phase II study for the Anaconda area upon completion of the updated mineral resource estimate on the sulphide material becomes and based on 2022 exploration drilling results to review the project economics of trucking sulphide material to the Fekola mill as compared to constructing another stand-alone mill near Anaconda; the potential for production from the Cardinal zone to add approximately 50,000 ounces in 2022 to the Company's production profile and approximately 60,000 per year over the next 6 to 8 years; the Fekola Mine to be well-positioned for any potential supply disruptions caused by the border closures following the ECOWAS sanctions; the development of the Wolfshag underground mine at Otjikoto, including the results of such development and the costs and timing thereof; stope ore production at the Wolfshag underground mine at Otjikoto commencing in the first half of 2022; the completion of the Gramalote Feasibility Study and the results therein, and a construction decision to be made shortly thereafter; the potential payment of future dividends, including the timing and amount of any such dividends, and the expectation that quarterly dividends will be maintained at the same level; and B2Gold's attributable share at El Limon and La Libertad. All statements in this news release that address events or developments that we expect to occur in the future are forward-looking statements. Forward-looking statements are statements that are not historical facts and are generally, although not always, identified by words such as "expect", "plan", "anticipate", "project", "target", "potential", "schedule", "forecast", "budget", "estimate", "intend" or "believe" and similar expressions or their negative connotations, or that events or conditions "will", "would", "may", "could", "should" or "might" occur. All such forward-looking statements are based on the opinions and estimates of management as of the date such statements are made.
Forward-looking statements necessarily involve assumptions, risks and uncertainties, certain of which are beyond B2Gold's control, including risks associated with or related to: the duration and extent of the COVID-19 pandemic, the effectiveness of preventative measures and contingency plans put in place by the Company to respond to the COVID-19 pandemic, including, but not limited to, social distancing, a non-essential travel ban, business continuity plans, and efforts to mitigate supply chain disruptions; escalation of travel restrictions on people or products and reductions in the ability of the Company to transport and refine doré; the volatility of metal prices and B2Gold's common shares; changes in tax laws; the dangers inherent in exploration, development and mining activities; the uncertainty of reserve and resource estimates; not achieving production, cost or other estimates; actual production, development plans and costs differing materially from the estimates in B2Gold's feasibility and other studies; the ability to obtain and maintain any necessary permits, consents or authorizations required for mining activities; environmental regulations or hazards and compliance with complex regulations associated with mining activities; climate change and climate change regulations; the ability to replace mineral reserves and identify acquisition opportunities; the unknown liabilities of companies acquired by B2Gold; the ability to successfully integrate new acquisitions; fluctuations in exchange rates; the availability of financing; financing and debt activities, including potential restrictions imposed on B2Gold's operations as a result thereof and the ability to generate sufficient cash flows; operations in foreign and developing countries and the compliance with foreign laws, including those associated with operations in Mali, Namibia, the Philippines and Colombia and including risks related to changes in foreign laws and changing policies related to mining and local ownership requirements or resource nationalization generally, including in response to the COVID-19 outbreak; remote operations and the availability of adequate infrastructure; fluctuations in price and availability of energy and other inputs necessary for mining operations; shortages or cost increases in necessary equipment, supplies and labour; regulatory, political and country risks, including local instability or acts of terrorism and the effects thereof; the reliance upon contractors, third parties and joint venture partners; the lack of sole decision-making authority related to Filminera Resources Corporation, which owns the Masbate Project; challenges to title or surface rights; the dependence on key personnel and the ability to attract and retain skilled personnel; the risk of an uninsurable or uninsured loss; adverse climate and weather conditions; litigation risk; competition with other mining companies; community support for B2Gold's operations, including risks related to strikes and the halting of such operations from time to time; conflicts with small scale miners; failures of information systems or information security threats; the ability to maintain adequate internal controls over financial reporting as required by law, including Section 404 of the Sarbanes-Oxley Act; compliance with anti-corruption laws, and sanctions or other similar measures; social media and B2Gold's reputation; risks affecting Calibre having an impact on the value of the Company's investment in Calibre, and potential dilution of our equity interest in Calibre; as well as other factors identified and as described in more detail under the heading "Risk Factors" in B2Gold's most recent Annual Information Form, B2Gold's current Form 40-F Annual Report and B2Gold's other filings with Canadian securities regulators and the U.S. Securities and Exchange Commission (the "SEC"), which may be viewed at www.sedar.com and www.sec.gov, respectively (the "Websites"). The list is not exhaustive of the factors that may affect B2Gold's forward-looking statements.
B2Gold's forward-looking statements are based on the applicable assumptions and factors management considers reasonable as of the date hereof, based on the information available to management at such time. These assumptions and factors include,
39
but are not limited to, assumptions and factors related to B2Gold's ability to carry on current and future operations, including: the duration and effects of COVID-19 on our operations and workforce; development and exploration activities; the timing, extent, duration and economic viability of such operations, including any mineral resources or reserves identified thereby; the accuracy and reliability of estimates, projections, forecasts, studies and assessments; B2Gold's ability to meet or achieve estimates, projections and forecasts; the availability and cost of inputs; the price and market for outputs, including gold; foreign exchange rates; taxation levels; the timely receipt of necessary approvals or permits; the ability to meet current and future obligations; the ability to obtain timely financing on reasonable terms when required; the current and future social, economic and political conditions; and other assumptions and factors generally associated with the mining industry.
B2Gold's forward-looking statements are based on the opinions and estimates of management and reflect their current expectations regarding future events and operating performance and speak only as of the date hereof. B2Gold does not assume any obligation to update forward-looking statements if circumstances or management's beliefs, expectations or opinions should change other than as required by applicable law. There can be no assurance that forward-looking statements will prove to be accurate, and actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements. Accordingly, no assurance can be given that any events anticipated by the forward-looking statements will transpire or occur, or if any of them do, what benefits or liabilities B2Gold will derive therefrom. For the reasons set forth above, undue reliance should not be placed on forward-looking statements.
CAUTIONARY STATEMENT REGARDING MINERAL RESERVE AND RESOURCE ESTIMATES
The disclosure in this MD&A was prepared in accordance with Canadian National Instrument 43-101 (“NI 43-101”), which differs significantly from the requirements of the SEC, and resource and reserve information contained or referenced in this MD&A may not be comparable to similar information disclosed by public companies subject to the technical disclosure requirements of the SEC. Historical results or feasibility models presented herein are not guarantees or expectations of future performance.
QUALIFIED PERSONS
Bill Lytle, Senior Vice President and Chief Operating Officer, a qualified person under National Instrument 43-101, has reviewed and approved the disclosure of all scientific and technical information related to operational matters contained in this MD&A. Tom Garagan, Senior Vice President of Exploration, a qualified person under NI 43-101, has approved the scientific and technical information regarding exploration matters contained in this MD&A.
40
Consent of Independent Registered Public Accounting Firm
We hereby consent to the incorporation by reference into the Registration Statements on Form S-8 (No. 333-239197, 333-232158, 333-226063, 333-218710, 333-206811, 333-200228 and 333-192555) of B2Gold Corp. (the “Company”) of our report dated February 22, 2022 relating to the 2021 consolidated financial statements and the effectiveness of the Company’s internal control over financial reporting, which appears in Exhibit 99.1 to the Company’s current report on Form 6-K filed on February 22, 2022.
/s/ PricewaterhouseCoopers LLP
Chartered Professional Accountants
Vancouver, Canada
February 22, 2022
Exhibit 99.4
Consent of Thomas Garagan
I consent to the inclusion in the Management’s Discussion and Analysis of B2Gold Corp. (the “Company”) for the year ended December 31, 2021 (the “MD&A”), of references to my name with respect to the disclosure of scientific and technical information regarding the Company’s properties (the “Technical Information”).
I also consent to the incorporation by reference in the Company’s Registration Statements on Form S-8 (Nos. 333-239197, 333-232158, 333-206811, 333-200228, 333-218710, 333-226063 and 333-192555), filed with the United States Securities and Exchange Commission, of the references to my name and the Technical Information in the MD&A.
| Date: February 22, 2022 | /s/ Thomas Garagan | ||||
| Thomas Garagan | |||||
Exhibit 99.5
Consent of William Lytle
I consent to the inclusion in the Management’s Discussion and Analysis of B2Gold Corp. (the “Company”) for the year ended December 31, 2021 (the “MD&A”), of references to my name with respect to the disclosure of scientific and technical information regarding the Company’s operations (the “Technical Information”).
I also consent to the incorporation by reference in the Company’s Registration Statements on Form S-8 (Nos. 333-239197, 333-232158, 333-206811, 333-200228, 333-218710, 333-226063 and 333-192555), filed with the United States Securities and Exchange Commission, of the references to my name and the Technical Information in the MD&A.
| Date: February 22, 2022 | /s/ William Lytle | ||||
| William Lytle | |||||
FORM 13-501F1 CLASS 1 REPORTING ISSUERS AND CLASS 3B REPORTING ISSUERS – PARTICIPATION FEE MANAGEMENT CERTIFICATION I, ____________________, an officer of the reporting issuer noted below have examined this Form 13-501F1 (the Form) being submitted hereunder to the Alberta Securities Commission and certify that to my knowledge, having exercised reasonable diligence, the information provided in the Form is complete and accurate. _________________________________ _________________________________ Name: Date: Title: Reporting Issuer Name: End date of previous financial year: Type of Reporting Issuer: [ ] Class 1 reporting issuer [ ] Class 3B reporting issuer Highest Trading Marketplace: Market value of listed or quoted equity securities: Equity Symbol 1st Specified Trading Period (dd/mm/yy) _______________ to ______________ Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace $ ______________________ (i) Michael Cinnamond Chief Financial Officer X Michael Cinnamond 5.4100 March 31, 2021January 1, 2021 BTO TSX December 31, 2021 B2GOLD CORP. February 22, 2022(s) Michael Cinnamond
Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period ________________________ (ii) Market value of class or series (i) x (ii) $ ______________________ (A) 2nd Specified Trading Period (dd/mm/yy) _______________ to ______________ Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace $ ______________________ (iii) Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period ______________________ (iv) Market value of class or series (iii) x (iv) $ ______________________ (B) 3rd Specified Trading Period (dd/mm/yy) _______________ to ______________ Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace $ ______________________ (v) Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period ______________________ (vi) Market value of class or series (v) x (vi) $ ______________________ (C) 4,569,664,378.53 1,055,349,741 4.3300 5,481,271,796 1,054,090,730 5.2000 June 30, 2021April 1, 2021 5,689,683,328.93 1,051,697,473 September 30, 2021July 1, 2021
4th Specified Trading Period (dd/mm/yy) _______________ to ______________ Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace $ ______________________ (vii) Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period ______________________ (viii) Market value of class or series (vii) x (viii) $ ______________________ (D) 5th Specified Trading Period (dd/mm/yy) _______________ to ______________ Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace $ ______________________ (ix) Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period ______________________ (x) Market value of class or series (ix) x (x) $ ______________________ (E) Average Market Value of Class or Series (Calculate the simple average of the market value of the class or series of security for each applicable specified trading period (i.e. A through E above)) $ ______________________ (1) (Repeat the above calculation for each other class or series of equity securities of the reporting issuer (and a subsidiary, if applicable) that was listed or quoted on a marketplace at the end of the previous financial year) October 1, 2021 December 31, 2021 4.9800 1,056,333,691 5,260,541,781.18 N/A N/A 0.0000 0.00 0.0000 5,250,290,321.16
Fair value of outstanding debt securities: (Provide details of how value was determined) $ ______________________ (2) Capitalization for the previous financial year (1) + (2) $ ______________________ Participation Fee $ ______________________ Late Fee, if applicable $ ______________________ Total Fee Payable $ ______________________ (Participation Fee plus Late Fee) 0.0000 5,250,290,321.16 36,500.0000 0.0000 36,500.0000
FORM 13-502F1 CLASS 1 AND CLASS 3B REPORTING ISSUERS – PARTICIPATION FEE MANAGEMENT CERTIFICATION I, _______________________, an officer of the reporting issuer noted below have examined this Form 13-502F1 (the Form) being submitted hereunder to the Ontario Securities Commission and certify that to my knowledge, having exercised reasonable diligence, the information provided in the Form is complete and accurate. (s)________________________________ __________________________ Name: Date: Title: Reporting Issuer Name: End date of previous financial year: Type of Reporting Issuer: Class 1 reporting issuer Class 3B reporting issuer Highest Trading Marketplace: (refer to the definition of “highest trading marketplace” under OSC Rule 13-502 Fees) Market value of listed or quoted equity securities: (in Canadian Dollars - refer to section 7.1 of OSC Rule 13-502 Fees) Equity Symbol _________________________ 1st Specified Trading Period (dd/mm/yy) (refer to the definition of “specified trading period” under OSC Rule 13-502 Fees) _________________ to _________________ Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace $________________________ (i) Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period _________________________ (ii) Market value of class or series (i) x (ii) $_________________________ (A) 2nd Specified Trading Period (dd/mm/yy) (refer to the definition of “specified trading period” under OSC Rule 13-502 Fees) _________________ to _________________ Michael Cinnamond Chief Financial Officer Michael Cinnamond Michael Cinnamond February 22, 2022 B2GOLD CORP. DECEMBER 31, 2021 ✔ TORONTO STOCK EXCHANGE BTO January 1, 2021 March 31, 2021 5.41 1,051,697,473 5,689,683,328.93 April 1, 2021 June 30, 2021
Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace $______________________ (iii) Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period ________________________ (iv) Market value of class or series (iii) x (iv) $________________________ (B) 3rd Specified Trading Period (dd/mm/yy) (refer to the definition of “specified trading period” under OSC Rule 13-502 Fees) _________________ to _________________ Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace $ _______________________ (v) Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period ________________________ (vi) Market value of class or series (v) x (vi) $________________________ (C) 4th Specified Trading Period (dd/mm/yy) (refer to the definition of “specified trading period” under OSC Rule 13-502 Fees) _________________ to _________________ Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace ________________________ (vii) Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period ________________________ (viii) Market value of class or series (vii) x (viii) $________________________ (D) 5th Specified Trading Period (dd/mm/yy) (if applicable - refer to the definition of “specified trading period” under OSC Rule 13-502 Fees) _________________ to _________________ Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace $_______________________ (ix) Number of securities in the class or series of such ________________________ (x) N/A 5.20 1,054,090,730 5,481,271,796.00 July 1, 2021 September 30, 2021 4.33 1,055,349,741 4,569,664,378.53 October 1, 2021 December 31, 2021 4.98 1,056,333,691 5,260,541,781.18 N/A N/A N/A
security outstanding at the end of the last trading day of the specified trading period Market value of class or series (ix) x (x) $________________________ (E) Average Market Value of Class or Series (Calculate the simple average of the market value of the class or series of security for each applicable specified trading period (i.e. A through E above)) $_________________________ (1) (Repeat the above calculation for each other class or series of equity securities of the reporting issuer (and a subsidiary pursuant to paragraph 2.8(1)(c) of OSC Rule 13-502 Fees, if applicable) that was listed or quoted on a marketplace at the end of the previous financial year) Fair value of outstanding debt securities: (See paragraph 2.8(1)(b), and if applicable, paragraph 2.8(1)(c) of OSC Rule 13-502 Fees) $_________________________ (2) (Provide details of how value was determined) Capitalization for the previous financial year (1) + (2) $_________________________ Participation Fee $_________________________ (For Class 1 reporting issuers, from Appendix A of OSC Rule 13-502 Fees, select the participation fee) (For Class 3B reporting issuers, from Appendix A.1 of OSC Rule 13-502 Fees, select the participation fee) Late Fee, if applicable (As determined under section 2.7 of OSC Rule 13- 502 Fees) $_________________________ Total Fee Payable (Participation Fee plus Late Fee) $_________________________ N/A 5,250,290,321.16 N/A 5,250,290,321.16 76,425.00 N/A 76,425.00