B2gold Corp 6-K, filed Feb 22, 2023
B2gold Corp (BTG)
6-K
2023-02-22
For: 2022-12-31
View Original
Added on
April 11, 2026
About this 6-K
B2gold Corp filed this 6-K on February 22, 2023.
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, 2023
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
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, 2023 | By: | /s/ Randall Chatwin | ||||||
| Name: | Randall Chatwin | |||||||
| Title: | Senior Vice President, Legal & Corporate Communications | |||||||
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"REGISTRATION STATEMENTS"), AND TO BE A PART THEREOF FROM THE DATE ON WHICH THIS REPORT IS SUBMITTED, TO THE EXTENT NOT SUPERSEDED BY DOCUMENTS OR REPORTS SUBSEQUENTLY FILED OR FURNISHED, AND EXHIBITS 99.3, 99.4 AND 99.5 ARE HEREBY INCORPORATED BY REFERENCE AS EXHIBITS TO THE REGISTRATION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, 2022 and 2021
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, 2022 and 2021, and the related consolidated statements of operations, comprehensive (loss) income, changes in equity and cash flows 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, 2022, 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, 2022 and 2021, 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, 2022, 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 25 of the 2022 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 matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate 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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Impairment tests of the Gramalote Project cash-generating unit (CGU)
As described in Notes 3, 4 and 8 to the consolidated financial statements, long-lived assets are tested for impairment whenever 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. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. 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 CGU to which the asset belongs is determined. During the year, management identified indicators of impairment for the Gramalote Project exploration and evaluation property and as a result, performed impairment tests for the Gramalote Project CGU as of June 30, 2022 and December 31, 2022. The carrying value of the Gramalote Project exploration and evaluation property as of December 31, 2022 amounted to $136 million. Management determined the recoverable amounts
based on their FVLCD using discounted cash flow models which required the use of assumptions related to reserves and resources, future production levels, operating and capital costs, the long-term gold price, foreign exchange rate, discount rate, mine life and construction start date. Management estimates reserves and resources based on information compiled by qualified persons (management’s specialists). The recoverable amounts as of June 30, 2022 and December 31, 2022 approximated the carrying values, and as a result, no impairment loss was recorded by management in the current year.
The principal considerations for our determination that performing procedures relating to the impairment tests of the Gramalote Project CGU is a critical audit matter are (i) the significant judgment by management, including the use of management’s specialists, when estimating the recoverable amounts of the Gramalote Project CGU; and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management's assumptions related to reserves and resources, future production levels, operating and capital costs, the long-term gold price, foreign exchange rate, the discount rate, mine life and construction start date. In addition, 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 tests, including controls over the determination of the recoverable amounts of the Gramalote Project CGU. These procedures also included, among others, testing management’s process for determining the recoverable amounts of the Gramalote Project CGU which included evaluating the appropriateness of the discounted cash flow models; testing the completeness and accuracy of underlying data used in these models; and evaluating the reasonableness of the assumptions used by management. Evaluating management’s assumptions with respect to the long-term gold price and foreign exchange rate involved evaluating whether these assumptions were reasonable considering: (i) the consistency with external market and industry data; and (ii) whether these assumptions were consistent with evidence obtained in other areas of the audit. The work of management’s specialists was used in performing the procedures to evaluate the reasonableness of the assumptions related to reserves and resources, future production levels, operating and capital costs, as well as mine life and construction start date. As a basis for using this work, the specialists’ qualifications were understood and the Company’s relationship with the specialists was assessed. The procedures performed also included evaluation of the methods and assumptions used by the 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 the evaluation of the reasonableness of the discount rates.
Impairment test of the Masbate Mine CGU
As described in Notes 3, 4 and 8 to the consolidated financial statements, long-lived assets are tested for impairment whenever 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. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s FVLCD and value-in-use. Where the asset does not generate cash flows that are independent from other assets, the recoverable amount of the CGU to which the asset belongs is determined. During the year, management identified an indicator of impairment for the Masbate Mine and as a result, performed an impairment test for the Masbate Mine CGU. The carrying value of the interest in the Masbate Mine as of December 31, 2022 amounted to $577
million. Management determined the recoverable amount based on its FVLCD using a discounted cash flow model which required the use of assumptions related to reserves and resources, future production levels, operating and capital costs, the long-term gold price and the discount rate. Management estimates reserves and resources based on information compiled by qualified persons (management’s specialists). Management concluded that the Masbate Mine CGU was not impaired.
The principal considerations for our determination that performing procedures relating to the impairment test of the Masbate Mine CGU 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 Masbate Mine CGU; and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s assumptions, related to reserves and resources, future production levels, operating and capital costs, the long-term gold price and the discount rate. In addition, 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 test, including controls over the determination of the recoverable amount of the Masbate Mine CGU. These procedures also included, among others, testing management’s process for determining the recoverable amount of the Masbate Mine CGU which included evaluating the appropriateness of the discounted cash flow model; testing the completeness and accuracy of underlying data used in the model; and evaluating the reasonableness of assumptions used by management. Evaluating management’s assumptions with respect to future production levels, operating and capital costs and the long-term gold price involved evaluating whether these assumptions were reasonable considering: (i) the current and past performance of the Masbate Mine CGU; (ii) the consistency with external market and industry data; and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit, as applicable. The work of management’s specialists was used in performing the procedures to evaluate the reasonableness of reserves and resources. As a basis for using this work, the specialists’ qualifications were understood and the Company’s relationship with the specialists was assessed. The procedures performed also included evaluation of the methods and assumptions used by the 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 the evaluation of the reasonableness of the discount rate.
/s/PricewaterhouseCoopers LLP
Chartered Professional Accountants
Vancouver, Canada
February 22, 2023
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) | ||
| 2022 | 2021 | |||||||||||||
| Gold revenue | $ | 1,732,590 | $ | 1,762,264 | ||||||||||
| Cost of sales | ||||||||||||||
Production costs (Note 19) | (626,526) | (493,389) | ||||||||||||
| Depreciation and depletion | (383,852) | (378,892) | ||||||||||||
| Royalties and production taxes | (117,968) | (121,431) | ||||||||||||
| Total cost of sales | (1,128,346) | (993,712) | ||||||||||||
| Gross profit | 604,244 | 768,552 | ||||||||||||
| General and administrative | (54,479) | (50,185) | ||||||||||||
Share-based payments (Note 12) | (24,843) | (22,571) | ||||||||||||
Write-down of mineral property interests (Note 8) | (12,366) | (1,055) | ||||||||||||
Net (losses) gains on sale of mineral properties (Note 8) | (2,804) | 22,463 | ||||||||||||
Reversal of impairment (impairment) of long-lived assets (Note 8) | 909 | (5,905) | ||||||||||||
| Community relations | (2,738) | (3,072) | ||||||||||||
| Foreign exchange losses | (10,054) | (5,895) | ||||||||||||
Share of net income of associates (Note 8) | 10,183 | 17,543 | ||||||||||||
| Other expense | (5,655) | (6,282) | ||||||||||||
| Operating income | 502,397 | 713,593 | ||||||||||||
| Interest and financing expense | (10,842) | (11,798) | ||||||||||||
| Interest income | 11,964 | 2,985 | ||||||||||||
Gains on derivative instruments (Note 14) | 18,969 | 24,373 | ||||||||||||
| Other income (expense) | 8,129 | (2,926) | ||||||||||||
| Income from operations before taxes | 530,617 | 726,227 | ||||||||||||
Current income tax, withholding and other taxes (Note 16) | (247,811) | (270,669) | ||||||||||||
Deferred income tax recovery (Note 16) | 3,917 | 5,267 | ||||||||||||
| Net income | $ | 286,723 | $ | 460,825 | ||||||||||
| Attributable to: | ||||||||||||||
| Shareholders of the Company | $ | 252,873 | $ | 420,065 | ||||||||||
Non-controlling interests (Note 13) | 33,850 | 40,760 | ||||||||||||
| Net income | $ | 286,723 | $ | 460,825 | ||||||||||
Earnings per share (attributable to shareholders of the Company)(Note 12) | ||||||||||||||
| Basic | $ | 0.24 | $ | 0.40 | ||||||||||
| Diluted | $ | 0.24 | $ | 0.40 | ||||||||||
Weighted average number of common shares outstanding (in thousands)(Note 12) | ||||||||||||||
| Basic | 1,064,259 | 1,053,809 | ||||||||||||
| Diluted | 1,071,004 | 1,061,542 | ||||||||||||
See accompanying notes to consolidated financial statements.
| B2GOLD CORP. | ||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME | ||
| FOR THE YEARS ENDED DECEMBER 31 | ||
| (Expressed in thousands of United States dollars) | ||
| 2022 | 2021 | |||||||||||||
| Net income | $ | 286,723 | $ | 460,825 | ||||||||||
| Other comprehensive (loss) income | ||||||||||||||
| Items that will not be subsequently reclassified to net income: | ||||||||||||||
Unrealized (loss) gain on investments (Note 7) | (9,570) | 2,234 | ||||||||||||
| Other comprehensive (loss) income | (9,570) | 2,234 | ||||||||||||
| Total comprehensive income | $ | 277,153 | $ | 463,059 | ||||||||||
| Other comprehensive (loss) income attributable to: | ||||||||||||||
| Shareholders of the Company | $ | (9,570) | $ | 2,234 | ||||||||||
| Non-controlling interests | — | — | ||||||||||||
| $ | (9,570) | $ | 2,234 | |||||||||||
| Total comprehensive income attributable to: | ||||||||||||||
| Shareholders of the Company | $ | 243,303 | $ | 422,299 | ||||||||||
| Non-controlling interests | 33,850 | 40,760 | ||||||||||||
| $ | 277,153 | $ | 463,059 | |||||||||||
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) | ||
| 2022 | 2021 | |||||||||||||
| Operating activities | ||||||||||||||
| Net income | $ | 286,723 | $ | 460,825 | ||||||||||
Mine restoration provisions settled (Note 11) | (793) | (343) | ||||||||||||
Non-cash charges, net (Note 17) | 425,944 | 369,556 | ||||||||||||
Changes in non-cash working capital (Note 17) | (48,604) | (104,615) | ||||||||||||
| Changes in long-term value added tax receivables | (67,472) | (1,310) | ||||||||||||
| Cash provided by operating activities | 595,798 | 724,113 | ||||||||||||
| Financing activities | ||||||||||||||
Revolving credit facility transaction costs (Note 10) | (2,401) | (3,368) | ||||||||||||
Repayment of equipment loan facilities (Note 10) | (19,802) | (28,797) | ||||||||||||
| Interest and commitment fees paid | (4,456) | (6,232) | ||||||||||||
Cash proceeds from stock option exercises (Note 12) | 14,276 | 6,435 | ||||||||||||
Dividends paid (Note 12) | (170,635) | (168,372) | ||||||||||||
Principal payments on lease arrangements (Note 10) | (6,616) | (3,889) | ||||||||||||
Distributions to non-controlling interest (Note 13) | (30,331) | (36,187) | ||||||||||||
| Participating funding from non-controlling interest | 2,463 | — | ||||||||||||
| Loan repayments from non-controlling interest | 663 | 5,312 | ||||||||||||
| Changes in restricted cash accounts | 5,554 | 870 | ||||||||||||
| Cash used by financing activities | (211,285) | (234,228) | ||||||||||||
| Investing activities | ||||||||||||||
| Expenditures on mining interests: | ||||||||||||||
| Fekola Mine | (117,622) | (110,637) | ||||||||||||
| Masbate Mine | (39,528) | (30,743) | ||||||||||||
| Otjikoto Mine | (79,096) | (80,936) | ||||||||||||
| Fekola Regional Property, pre-development | (26,309) | — | ||||||||||||
| Gramalote Project | (15,887) | (23,887) | ||||||||||||
Other exploration and development (Note 17) | (63,629) | (56,116) | ||||||||||||
Cash paid for acquisition of mineral property (Note 8) | (48,258) | — | ||||||||||||
Deferred consideration received (Note 8) | 45,000 | — | ||||||||||||
Cash paid for acquisition of Oklo Resources Limited (Note 8) | (21,130) | — | ||||||||||||
Cash acquired on acquisition of Oklo Resources Limited (Note 8) | 1,415 | — | ||||||||||||
Loan to associate (Note 9) | (5,000) | — | ||||||||||||
Cash paid on exercise of mineral property option (Note 8) | (7,737) | — | ||||||||||||
| Funding of reclamation accounts | (6,746) | (8,009) | ||||||||||||
Cash proceeds from sale of mineral properties, net of transaction costs (Note 8) | — | 31,684 | ||||||||||||
Cash paid for purchase of non-controlling interest (Note 8) | (3,336) | — | ||||||||||||
Purchase of common shares of associate (Note 8) | — | (5,945) | ||||||||||||
| Other | (919) | (1,688) | ||||||||||||
| Cash used by investing activities | (388,782) | (286,277) | ||||||||||||
| (Decrease) increase in cash and cash equivalents | (4,269) | 203,608 | ||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | (16,784) | (10,294) | ||||||||||||
| Cash and cash equivalents, beginning of year | 672,999 | 479,685 | ||||||||||||
| Cash and cash equivalents, end of year | $ | 651,946 | $ | 672,999 | ||||||||||
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, | |||||||||||||
| 2022 | 2021 | |||||||||||||
| Assets | ||||||||||||||
| Current | ||||||||||||||
| Cash and cash equivalents | $ | 651,946 | $ | 672,999 | ||||||||||
Accounts receivable, prepaids and other (Note 5) | 28,811 | 32,112 | ||||||||||||
Deferred consideration receivable (Note 8) | 3,850 | 41,559 | ||||||||||||
| Value-added and other tax receivables | 18,533 | 14,393 | ||||||||||||
Inventories (Note 6) | 332,031 | 272,354 | ||||||||||||
Assets classified as held for sale (Note 8) | — | 12,700 | ||||||||||||
| 1,035,171 | 1,046,117 | |||||||||||||
Long-term investments (Note 7) | 31,865 | 32,118 | ||||||||||||
| Value-added tax receivables | 121,323 | 63,165 | ||||||||||||
Mining interests (Note 8 and Note 23 – Schedules) | ||||||||||||||
| - Owned by subsidiaries and joint operations | 2,274,730 | 2,231,831 | ||||||||||||
| - Investments in associates | 120,049 | 104,236 | ||||||||||||
Other assets (Note 9) | 98,095 | 82,371 | ||||||||||||
Deferred income taxes (Note 16) | — | 1,455 | ||||||||||||
| $ | 3,681,233 | $ | 3,561,293 | |||||||||||
| Liabilities | ||||||||||||||
| Current | ||||||||||||||
| Accounts payable and accrued liabilities | $ | 114,791 | $ | 111,716 | ||||||||||
| Current income and other taxes payable | 95,623 | 92,275 | ||||||||||||
Current portion of long-term debt (Note 10) | 15,519 | 25,408 | ||||||||||||
Current portion of mine restoration provisions (Note 11) | 5,545 | 734 | ||||||||||||
| Other current liabilities | 2,138 | 1,056 | ||||||||||||
| 233,616 | 231,189 | |||||||||||||
Long-term debt (Note 10) | 41,709 | 49,726 | ||||||||||||
Mine restoration provisions (Note 11) | 95,568 | 116,547 | ||||||||||||
Deferred income taxes (Note 16) | 182,515 | 187,887 | ||||||||||||
| Employee benefits obligation | 8,121 | 7,115 | ||||||||||||
| Other long-term liabilities | 7,915 | 7,822 | ||||||||||||
| 569,444 | 600,286 | |||||||||||||
| Equity | ||||||||||||||
| Shareholders’ equity | ||||||||||||||
Share capital (Note 12) | 2,487,624 | 2,422,184 | ||||||||||||
| Contributed surplus | 78,232 | 67,028 | ||||||||||||
| Accumulated other comprehensive loss | (145,869) | (136,299) | ||||||||||||
| Retained earnings | 588,139 | 507,381 | ||||||||||||
| 3,008,126 | 2,860,294 | |||||||||||||
Non-controlling interests (Note 13) | 103,663 | 100,713 | ||||||||||||
| 3,111,789 | 2,961,007 | |||||||||||||
| $ | 3,681,233 | $ | 3,561,293 | |||||||||||
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) | ||
| 2022 | ||||||||||||||||||||||||||
| Shares (‘000’s) | Share capital | Contributed surplus | Accumulated other comprehensive loss | Retained earnings | Non- controlling interests | Total equity | ||||||||||||||||||||
| Balance at December 31, 2021 | 1,056,334 | $ | 2,422,184 | $ | 67,028 | $ | (136,299) | $ | 507,381 | $ | 100,713 | $ | 2,961,007 | |||||||||||||
| Net income | — | — | — | — | 252,873 | 33,850 | 286,723 | |||||||||||||||||||
Dividends (Note 12) | — | — | 1,163 | — | (172,086) | — | (170,923) | |||||||||||||||||||
| Unrealized loss on investments | — | — | — | (9,570) | — | — | (9,570) | |||||||||||||||||||
Shares issued on exercise of stock options (Note 12) | 4,955 | 14,276 | — | — | — | — | 14,276 | |||||||||||||||||||
Shares issued on vesting of RSUs (Note 12) | 2,663 | 10,015 | (10,015) | — | — | — | — | |||||||||||||||||||
Shares issued on acquisition of Oklo Resources Limited (Note 8) | 10,743 | 35,658 | — | — | — | — | 35,658 | |||||||||||||||||||
Transactions with non-controlling interests (Note 13) | — | — | — | — | (29) | (30,900) | (30,929) | |||||||||||||||||||
Share-based payments (Note 12) | — | — | 25,547 | — | — | — | 25,547 | |||||||||||||||||||
| Transfer to share capital on exercise of stock options | — | 5,491 | (5,491) | — | — | — | — | |||||||||||||||||||
| Balance at December 31, 2022 | 1,074,695 | $ | 2,487,624 | $ | 78,232 | $ | (145,869) | $ | 588,139 | $ | 103,663 | $ | 3,111,789 | |||||||||||||
| 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 | |||||||||||||
See accompanying notes to consolidated financial statements.
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2022 and 2021 | ||
| (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 has a 50% joint operation interest in the Gramalote gold project in Colombia (the "Gramalote Project"). The Company holds an approximately 25% interest in Calibre Mining Corp. ("Calibre") and an approximately 19% interest in BeMetals Corp. ("BeMetals"). In addition, the Company has a portfolio of evaluation and exploration assets in a number of countries including Mali, Uzbekistan and Finland.
B2Gold is a public company listed on the Toronto Stock Exchange (the "TSX") under the symbol “BTO”, the NYSE American LLC exchange 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, V6C 2X8.
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, 2023.
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 Project 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 Project. 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, 2022 and 2021 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
The Company's interest in Calibre and BeMetals are accounted for as investment in associates (Note 8). The Company does not control these entities, but does exert significant influence over their operations. The Company accounts for its interest in these associates 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.
Business combinations
A business combination requires that the assets acquired and liabilities assumed constitute a business. A business is an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing goods or services to customers, generating investment income (such as dividends or interest) or generating other income from ordinary activities. A business consists of inputs and processes applied to those inputs that have the ability to create outputs. Although businesses usually have outputs, outputs are not required for an integrated set to qualify as a business as the Company considers other factors to determine whether the set of activities or assets is a business.
The Company has an option to apply a ‘concentration test’ to assess whether an acquired set of activities and assets are not a business. If substantially all of the fair value of the gross assets acquired are concentrated in a single, identifiable asset or group of similar identifiable assets, the concentration test is met, and the transaction is accounted for as an asset acquisition. In such cases, the acquirer identifies and recognizes the individual identifiable assets acquired and liabilities assumed. The cost of the net assets is allocated to the individual identifiable assets and liabilities on the basis of their relative fair values at the date of purchase. Such a transaction or event will not give rise to goodwill. Acquisition-related costs in an asset acquisition are recognized as part of the cost of the assets acquired.
Business combinations are accounted for using the acquisition method whereby acquired assets and liabilities are recorded at fair value as of the date of acquisition with the excess of the purchase consideration over such fair value being recorded as goodwill. Non-controlling interest in an acquisition may be measured at either fair value or at the non-controlling interest’s proportionate share of the fair value of the acquiree’s net identifiable assets.
The excess of (i) total consideration transferred by the Company, measured at fair value, including contingent consideration, and (ii) the non-controlling interests in the acquiree’s, over the acquisition-date fair value of the net of the assets acquired and liabilities assumed, is recorded as goodwill. If the fair value attributable to the Company’s share of the identifiable net assets exceeds the cost of acquisition, the difference is recognized as a gain in the Consolidated Statement of Operations.
Should the consideration be contingent on future events, the cost of the acquisition recorded includes management’s best estimate of the fair value of the contingent amounts expected to be payable. Provisional fair values allocated at the reporting date are finalized within one year of the acquisition date with retroactive restatement to the acquisition date as required.
Transaction costs, other than those associated with the issue of debt or equity securities, which the Company incurs in connection with a business combination, are expensed as incurred.
2
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2022 and 2021 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
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.
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. Accounts receivable are classified as financial assets and accounts payable and accrued liabilities are classified as financial liabilities. They are initially measured at fair value and subsequently recorded at amortized cost, which approximates fair value due to the short term to maturity. Accounts receivable are net of expected credit losses.
Long-term investments
Equity investments in entities that are not subsidiaries, joint ventures or investments in associates are classified 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.
3
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2022 and 2021 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
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.
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.
4
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2022 and 2021 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
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.
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. 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.
5
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2022 and 2021 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
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 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.
6
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2022 and 2021 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
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, including restricted share units and performance share units, is recorded based on the estimated fair-value at the grant date and charged to earnings over the vesting period.
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.
The Company grants performance share units to certain officers and employees. 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 a risk neutral Monte Carlo simulation based on a correlated Geometric Brownian Motion. 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.
Cash settled share-based payment arrangements, including deferred share units and restricted phantom units are measured at fair value using the market value of the underlying shares on the date of issuance. The liability is then remeasured at market value on each reporting date until settlement with any gains or losses flowing through share-based payments expense.
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.
7
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2022 and 2021 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
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 reflects the potential dilution from common share equivalents on the weighted average number of common shares outstanding during the year if the resulting shares would be dilutive. For stock options, the potential dilutive impact is calculated using the treasury share method whereby all “in-the-money” options 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.
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.
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.
8
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2022 and 2021 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
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 influence 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 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
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, 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.
9
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2022 and 2021 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
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.
Value-added tax receivables includes amounts for the Fekola Mine of $77 million (2021 - $27 million), for the Masbate Mine of $37 million (2021 – $29 million), and for the Gramalote Project of $7 million (2021 - $7 million).
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.
5Accounts receivable, prepaids and other
| 2022 | 2021 | |||||||||||||
| $ | $ | |||||||||||||
| Supplier advances | 12,805 | 7,291 | ||||||||||||
Current portion of derivative instruments (Note 14) | 5,009 | 12,823 | ||||||||||||
| Prepaid expenses | 4,062 | 4,151 | ||||||||||||
| Other receivables | 6,935 | 7,847 | ||||||||||||
| 28,811 | 32,112 | |||||||||||||
6Inventories
| 2022 | 2021 | |||||||||||||
| $ | $ | |||||||||||||
| Gold and silver bullion | 49,467 | 52,867 | ||||||||||||
| In-process inventory | 14,653 | 13,260 | ||||||||||||
| Ore stock-pile inventory | 96,879 | 72,242 | ||||||||||||
| Materials and supplies | 171,032 | 133,985 | ||||||||||||
| 332,031 | 272,354 | |||||||||||||
Ore stock-pile inventory includes amounts for the Fekola Mine of $75 million (2021 - $52 million), for the Otjikoto Mine of $10 million (2021 – $16 million), and for the Masbate Mine of $12 million (2021 - $4 million).
10
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2022 and 2021 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
7Long-term investments
| 2022 | 2021 | ||||||||||||||||||||||
| Cost | AOCI | Fair value | Cost | AOCI | Fair value | ||||||||||||||||||
| $ | $ | $ | $ | $ | $ | ||||||||||||||||||
West African Resources Ltd. (Note 8) | 20,530 | (2,766) | 17,764 | 20,530 | 759 | 21,289 | |||||||||||||||||
Osino Resources Corp. (Note 8) | 6,955 | 347 | 7,302 | — | — | — | |||||||||||||||||
| St. Augustine Gold & Copper Ltd. | 20,193 | (16,670) | 3,523 | 20,193 | (11,578) | 8,615 | |||||||||||||||||
| Matador Mining Ltd. | 2,362 | 68 | 2,430 | — | — | — | |||||||||||||||||
| RTG Mining Inc. | 13,400 | (12,798) | 602 | 13,400 | (12,114) | 1,286 | |||||||||||||||||
| Libero Copper & Gold Corporation | 632 | (394) | 238 | 632 | 272 | 904 | |||||||||||||||||
| Goldstone Resources Ltd. | 20 | (14) | 6 | 20 | 4 | 24 | |||||||||||||||||
| 64,092 | (32,227) | 31,865 | 54,775 | (22,657) | 32,118 | ||||||||||||||||||
11
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2022 and 2021 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
8Mining interests
| 2022 | 2021 | |||||||||||||
| $ | $ | |||||||||||||
| Property, plant and equipment (depletable) | ||||||||||||||
| Fekola Mine, Mali | ||||||||||||||
| Cost | 1,769,945 | 1,645,337 | ||||||||||||
| Accumulated depreciation and depletion | (819,882) | (609,899) | ||||||||||||
| 950,063 | 1,035,438 | |||||||||||||
| Masbate Mine, Philippines | ||||||||||||||
| Cost | 1,114,513 | 1,085,687 | ||||||||||||
| Accumulated depreciation and depletion | (537,474) | (449,675) | ||||||||||||
| 577,039 | 636,012 | |||||||||||||
| Otjikoto Mine, Namibia | ||||||||||||||
| Cost | 864,801 | 782,208 | ||||||||||||
| Accumulated depreciation and depletion | (558,687) | (475,303) | ||||||||||||
| 306,114 | 306,905 | |||||||||||||
| Pre-development properties (pre-depletable) | ||||||||||||||
| Fekola Regional pre-development, Mali | 30,716 | — | ||||||||||||
| Exploration and evaluation properties (pre-depletable) | ||||||||||||||
| Gramalote Project, Colombia, net of impairment | 135,625 | 119,866 | ||||||||||||
| Dandoko Property, Mali | 58,292 | — | ||||||||||||
| Bakolobi Property, Mali | 51,956 | — | ||||||||||||
| Menankoto Property, Mali | 41,569 | 33,739 | ||||||||||||
| Bantako North Property, Mali | 23,575 | 15,351 | ||||||||||||
| Finland Properties, Finland | 22,523 | 12,561 | ||||||||||||
| Kiaka Royalty, Burkina Faso | 18,488 | 18,488 | ||||||||||||
| Uzbekistan Properties, Uzbekistan | 12,996 | 8,802 | ||||||||||||
| Mocoa Royalty, Colombia | 10,230 | 10,230 | ||||||||||||
| Other | 8,724 | 11,019 | ||||||||||||
| 383,978 | 230,056 | |||||||||||||
| Corporate & other | ||||||||||||||
| Office, furniture and equipment, net | 26,820 | 23,420 | ||||||||||||
| 2,274,730 | 2,231,831 | |||||||||||||
| Investments in associates (accounted for using the equity method) | ||||||||||||||
| Calibre, Various | 111,774 | 93,728 | ||||||||||||
| BeMetals, Various | 8,275 | 10,508 | ||||||||||||
| 120,049 | 104,236 | |||||||||||||
| 2,394,779 | 2,336,067 | |||||||||||||
Acquisition of Oklo
On September 20, 2022, the Company completed the scheme of arrangement (the “Scheme”) by which it acquired all of the issued and outstanding ordinary shares of Oklo Resources Limited ("Oklo") based on an exchange ratio of 0.0206 of a common share of B2Gold for each Oklo share and A$0.0525 in cash for each Oklo ordinary share outstanding. The primary asset acquired was the Dandoko Property located in Mali.
The Scheme has been accounted for as a purchase of net assets. For accounting purposes, the acquisition date was determined to be September 7, 2022, the date at which the Company obtained control of Oklo.
The cost of the acquisition was approximately $57 million, and included the fair value of the shares issued of $36 million (based on the issuance of 10,742,814 shares at Cdn. $4.37 per share and a foreign exchange rate of Cdn. $1.3166 to $1), cash consideration of $18 million, a loan facility made available to Oklo of $1 million and transaction costs of approximately $1 million.
12
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2022 and 2021 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
The purchase price was calculated as follows:
| $ | ||||||||
Common shares issued (10,742,814 common shares) | 35,658 | |||||||
| Cash consideration | 18,426 | |||||||
| Loan facility | 1,346 | |||||||
| Transaction costs | 1,358 | |||||||
| Total purchase price | 56,788 | |||||||
The purchase price was allocated to the assets and liabilities as follows:
| $ | ||||||||
| Cash and cash equivalents | 1,415 | |||||||
| Accounts receivable, prepaids and other | 83 | |||||||
| Mining interests - Dandoko Property | 56,287 | |||||||
| Mining interests - Other | 3,690 | |||||||
| Accounts payable and accrued liabilities | (2,332) | |||||||
| Current income and other taxes payable | (2,355) | |||||||
| 56,788 | ||||||||
Subsequent to the acquisition, the Company settled the $2 million of taxes payable, relating to capital gains taxes on the acquisition, in cash.
Impairment tests of Gramalote Project cash-generating unit
During the years ended December 31, 2014 and December 31, 2015, the Company recorded impairment charges of $97 million and $36 million, respectively, for a cumulative impairment charge of $133 million. In July 2022, based on the preliminary results of the optimized feasibility study for the Gramalote Project, a joint operation between B2Gold and AngloGold Ashanti Limited (“AngloGold”), both partners determined that the project did not currently meet their investment thresholds for development of the project at this time. The decision was considered to be an impairment indicator. In December 2022, there were changes to tax legislation in Colombia which was considered to be an impairment indicator. As a result, the Company performed impairment tests on the Gramalote Project cash-generating unit (“CGU”) during the year-ended December 31, 2022.
The carrying value of the Gramalote Project’s exploration and evaluation property was compared to the property’s recoverable amount which was determined to be its fair value less costs of disposal as at June 30, 2022 and December 31, 2022. To estimate the recoverable amount of the Gramalote Project’s CGU for impairment, the Company utilized a discounted cash flow model incorporating estimates and assumptions that included such factors as reserves and resources, future production levels, operating and capital costs, a long-term gold price of $1,650 per ounce, foreign exchange rates, a discount rate of 6.5%, and a mine life of 12 years with construction beginning in 2024. Management’s estimate of the FVLCD of its CGU is classified as level 3 in the fair value hierarchy. The Company’s estimate of future cash flows is subject to risks and uncertainties and therefore could change in the future if the underlying assumptions change.
The Company’s analysis concluded that the carrying value of the Gramalote Project at December 31, 2022 was not impaired. The recoverable amount of the Gramalote Project CGU is most sensitive to changes in the gold price and discount rate. In isolation, a $50 per ounce reduction in the gold price would result in a reduction in the recoverable amount of approximately $37 million. A 25 basis point increase in the discount rate would result in a reduction in the recoverable amount of approximately $9 million.
Impairment test of the Masbate Mine cash-generating unit
During the year end December 31, 2022, the Company identified an indicator of impairment for the Masbate Mine and performed an impairment test of the Masbate Mine CGU.
The carrying value of the Masbate Mine CGU was compared to the mine’s recoverable amount which was determined to be its fair value less costs of disposal. To estimate the recoverable amount of the Masbate Mine CGU for impairment, the Company utilized a discounted cash flow model incorporating estimates and assumptions that included such factors as reserves and resources, future production levels, operating and capital costs, a long-term gold price of $1,650 per ounce,
13
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2022 and 2021 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
and a discount rate of 5%. Management’s estimate of the FVLCD of its CGU is classified as level 3 in the fair value hierarchy. The Company’s estimate of future cash flows is subject to risks and uncertainties and therefore could change in the future if the underlying assumptions change.
The Company’s analysis concluded that the carrying value of the Masbate Mine CGU was not impaired. The recoverable amount of the Masbate Mine CGU is most sensitive to changes in the gold price and discount rate. In isolation, a $50 per ounce reduction in the gold price would result in a reduction in the recoverable amount of approximately $53 million. A 25 basis point increase in the discount rate would result in a reduction in the recoverable amount of approximately $7 million.
Bakolobi permit
On April 21, 2022 the Company completed the acquisition of the Bakolobi permit in Mali from a local Malian company for $24 million in cash. The Company also paid $24 million in cash pursuant to a continuing obligation to the previous ownership group of the Bakolobi permit (which includes an international mining company) under the terms of a previous purchase and sale agreement related to the purchase of the Bakolobi permit.
Ondundu Property
In the second quarter of 2022, the initial agreement for the sale of the Ondundu Property in Namibia to Osino Resources Corp. ("Osino") was revised such that the Company would receive 12 million common shares of Osino initially estimated to be valued at $10 million at June 30, 2022 (based on a price Cdn. $1.08 per Osino common share and an exchange rate of Cdn. $1.29 to $1) instead of $4 million in cash and $5 million in Osino common shares as outlined in the original agreement signed in 2021. As a result of the change in consideration, $1 million of the previously recorded impairment loss on the Ondundu Property was reversed in the Consolidated Statement of Operations for the year ended December 31, 2022.
On July 20, 2022, the Company completed the sale of the Ondundu Property for total consideration of $11 million valued as follows:
•12 million Osino shares valued at $7 million based on a share price of Cdn. $0.77 per share and a foreign exchange rate of Cdn. $1.2877 to $1;
•$4 million in deferred consideration to be received in cash 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.
Due to the decline in value of the Osino share price between the date of the agreement modification and the closing date, the transaction was completed at a further loss of $3 million. This amount was recognized in the Consolidated Statement of Operations for the year ended December 31, 2022.
During the year ended December 31, 2022, the Company paid $8 million to exercise its option to acquire the remaining 51% interest in the Ondundu property prior to the closing of the sale.
Subsequent to December 31, 2022, the Company received the $4 million deferred consideration.
Bantako North Property
On October 11, 2022, the Company purchased the remaining 10% interest in Dampan Resources SARL, which owns the Bantako North Property for consideration of $4 million plus certain future contingent consideration payments.
14
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2022 and 2021 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
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 to be paid 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.
On August 2, 2022, WAF announced the results of the feasibility study for the Kiaka Project. On September 2, 2022, the Company received the $45 million deferred consideration in cash.
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 of the Kiaka Royalty was classified as level 3 in the fair value hierarchy. For accounting purposes, the Kiaka Royalty was classified as a Mining Interest on the Consolidated Balance Sheet as at December 31, 2022.
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 | |||||||
Deferred 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.
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 was classified as level 3 in the fair value hierarchy. For accounting purposes, the Toega Royalty was classified as a Mining Interest on the Consolidated Balance Sheet at December 31, 2022.
15
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2022 and 2021 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
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) | |||||||
Investment in Calibre
On January 12, 2022, the Company's associate, Calibre, acquired Fiore Gold Ltd. for a combination of shares and cash. As a result of the shares issued in the transaction, the Company's investment was diluted from approximately 33% of the outstanding shares of Calibre to approximately 25%. A gain on this dilution of $6 million was recognized in Other income in the Consolidated Statement of Operations during the year ended December 31, 2022. The Company determined that it still has significant influence over the decision-making process of Calibre as a result of holding approximately 25% of the outstanding shares and having an executive of the Company sit on Calibre's Board of Directors.
The trading price of Calibre on December 31, 2022 was Cdn $0.90 per share which corresponds to a quoted market value of $74 million (at a closing exchange rate of Cdn $1.35 per US$) for the Company's investment in Calibre.
The following table summarizes the change in the carrying amount of the Company's investment in associate:
| $ | ||||||||
| 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 | |||||||
| Share of net income for the year | 12,416 | |||||||
| Gain on dilution | 5,630 | |||||||
| Balance at December 31, 2022 | 111,774 | |||||||
The equity accounting for Calibre is based on its published results to September 30, 2022 and an estimate of results for the period of October 1, 2022 to December 31, 2022. The following is a summary of the Condensed Interim Consolidated Statement of Financial Position of Calibre at September 30, 2022 on a 100% basis: Current assets - $175 million, non-current assets - $469 million, total assets - $644 million, current liabilities - $67 million, non-current liabilities - $142 million and net assets - $435 million. The following is a summary of the Condensed Interim Consolidated Statement of Operations of Calibre for the nine months ending September 30, 2022 on a 100% basis: Revenues - $296 million, production costs - $171 million, royalties and production taxes - $12 million, depreciation and depletion - $36 million, general and administrative expense - $9 million, stock-based compensation - $1 million, current income tax expense - $24 million, deferred income tax expense - $2 million and net income - $29 million. The Company's equity share of Calibre's estimated net income for the year ended December 31, 2022 was $12 million (2021 - $18 million).
16
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2022 and 2021 | ||
| (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. 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 was recorded in Other Operating Income in the Consolidated Statement of Operations for the year ended December 31, 2021. 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, 2022 was Cdn $0.13 per share which corresponds to a quoted market value of $3 million (at a closing exchange rate of Cdn $1.35 per US$) 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 | |||||||
| Share of net loss for the year | (2,233) | |||||||
| Balance at December 31, 2022 | 8,275 | |||||||
The equity accounting for BeMetals is based on its most recent published results to September 30, 2022 and publicly available information to December 31, 2022 including an estimate of the write-down of the South Mountain property which was abandoned in 2022. 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. $1.35 and the Condensed Statement of Loss and Comprehensive Loss has been converted at a rate of Cdn. $1.30. The following is a summary of the Condensed Interim Consolidated Statement of Financial Position of BeMetals at September 30, 2022 on a 100% basis: Current assets - $6 million, non-current assets - $25 million, total assets - $31 million, and net assets - $26 million. The following is a summary of the Condensed Interim Consolidated Statement of Loss and Comprehensive Loss of BeMetals for the nine months ending September 30, 2022 on a 100% basis: net loss and comprehensive loss - $1 million.
Other
During the year-ended December 31, 2022, the Company wrote-off $12 million relating to non-core properties that it no longer plans to proceed with.
As at December 31, 2022 the Company had leased assets of $40 million under IFRS 16. The leased assets primarily consisted of the corporate offices of $25 million (cost of $29 million net of $4 million in accumulated depreciation) included in Corporate & Other and other leased assets of $15 million (cost of $21 million net of accumulated depreciation of $6 million) included with their respective mineral properties.
17
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2022 and 2021 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
9Other assets
| 2022 | 2021 | |||||||||||||
| $ | $ | |||||||||||||
| Low-grade stockpile | 48,882 | 34,318 | ||||||||||||
| Reclamation deposits | 32,203 | 26,170 | ||||||||||||
Deferred financing costs (Note 10) | 6,711 | 8,959 | ||||||||||||
| Loan to associate | 5,095 | — | ||||||||||||
Debt service reserve account (Note 10) | 2,801 | 8,701 | ||||||||||||
| Other | 2,403 | 4,223 | ||||||||||||
| 98,095 | 82,371 | |||||||||||||
During the year ended December 31, 2022, the Company issued a promissory note to its associate BeMetals Corp. for the principal amount of $5 million. The note has a term of 3 years and bears interest at 4.7% annually.
10Long-term debt
| 2022 | 2021 | |||||||||||||
| $ | $ | |||||||||||||
| Equipment loans/finance lease obligations: | ||||||||||||||
| Fekola equipment loan facilities (net of unamortized transaction costs) | 23,102 | 42,408 | ||||||||||||
| Masbate equipment loan facility (net of unamortized transaction costs) | 872 | 3,865 | ||||||||||||
| Lease liabilities | 33,254 | 28,861 | ||||||||||||
| 57,228 | 75,134 | |||||||||||||
| Less: current portion | (15,519) | (25,408) | ||||||||||||
| 41,709 | 49,726 | |||||||||||||
The following is a continuity schedule of the Company's debt balances:
| Revolving credit facility | Equipment loans | Lease Liabilities | Total | |||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||
| 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 | 5,769 | — | — | 5,769 | ||||||||||||||||||||||
Reclass of deferred financing costs to other assets (Note 9) | (5,769) | — | — | (5,769) | ||||||||||||||||||||||
| Non-cash interest and financing expense | — | 700 | 1,140 | 1,840 | ||||||||||||||||||||||
| Balance at December 31, 2021 | — | 46,273 | 28,861 | 75,134 | ||||||||||||||||||||||
| Lease liabilities incurred | — | — | 11,882 | 11,882 | ||||||||||||||||||||||
| Debt repayments | — | (19,802) | (6,616) | (26,418) | ||||||||||||||||||||||
| Foreign exchange gains | — | (2,716) | (2,218) | (4,934) | ||||||||||||||||||||||
| Non-cash interest and financing expense | — | 219 | 1,345 | 1,564 | ||||||||||||||||||||||
| Balance at December 31, 2022 | — | 23,974 | 33,254 | 57,228 | ||||||||||||||||||||||
| Less: current portion | — | (10,614) | (4,905) | (15,519) | ||||||||||||||||||||||
| — | 13,360 | 28,349 | 41,709 | |||||||||||||||||||||||
18
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2022 and 2021 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
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 RCF provides for the transition from LIBOR to a new benchmark rate prior to its replacement effective July 1, 2023. The new benchmark rate is based the Secured Overnight Financing Rate (“SOFR”) plus a term credit spread adjustment in addition to the existing sliding scale premium of between 2.00% to 2.50%.
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, 2022, the Company was in compliance with these debt covenants.
At December 31, 2022, the Company had drawn $nil on the RCF with the entire facility of $600 million remaining available for future draw downs.
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, 2022, the balance in the DSRA account was Euro 3 million ($3 million equivalent). At December 31, 2021, the balance in the DSRA account was Euro 8 million ($9 million equivalent). During the year ended December 31, 2022, Euro 5 million ($5 million equivalent) was released from the DSRA due to the full repayment of some loans advanced under the facility.
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 facility.
19
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2022 and 2021 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
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 was 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 was 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, 2022, the Company recognized depreciation expense of $5 million (2021 - $4 million) on right-of-use assets recognized under IFRS 16, Leases in the Consolidated Statement of Operations and made payments on these leases of $7 million (2021 - $4 million).
Subsequent to December 31, 2022, on January 4, 2023, the Company de-recognized lease assets (and the associated liabilities) of $5 million upon early termination of a lease agreement for an office in Vancouver.
The expected timing of undiscounted lease payments at December 31, 2022 for leases accounted for under IFRS 16 is as follows:
| $ | ||||||||
| Less than one year | 5,297 | |||||||
| One to five years | 16,344 | |||||||
| More than five years | 19,228 | |||||||
| 40,869 | ||||||||
For the year ended December 31, 2022, payments totalling $7 million (2021 - $2 million) relating to short-term leases (those with a term of 12 months or less) and $13 million (2021 - $7 million) relating to variable lease payments (including both lease and non-lease components) have been expensed in the Consolidated Statement of Operations.
The following table summarizes the Company’s scheduled debt repayments on its outstanding debt as at December 31, 2022:
| 2023 | 2024 | 2025 | 2026 | 2027 | Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Fekola equipment loan facilities: | ||||||||||||||||||||
| Principal | 9,643 | 7,788 | 5,987 | — | — | 23,418 | ||||||||||||||
| Interest (estimated) | 993 | 548 | 148 | — | — | 1,689 | ||||||||||||||
| Masbate equipment loan facility: | ||||||||||||||||||||
| Principal | 872 | — | — | — | — | 872 | ||||||||||||||
| Interest (estimated) | 28 | — | — | — | — | 28 | ||||||||||||||
| Lease liabilities | ||||||||||||||||||||
| Principal | 4,022 | 3,238 | 2,638 | 1,981 | 2,078 | 13,957 | ||||||||||||||
| 15,558 | 11,574 | 8,773 | 1,981 | 2,078 | 39,964 | |||||||||||||||
20
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2022 and 2021 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
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, 2022, management used a risk-free rate applicable to each location’s functional currency ranging from 3.88% to 3.90% and a long-term inflation rate of 2.1%. 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 $122 million at December 31, 2022 (2021 - $105 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 2032 to 2043.
The following table shows the movement in the provision for mine restoration provisions:
| 2022 | 2021 | |||||||||||||
| $ | $ | |||||||||||||
| Balance, beginning of year | 117,281 | 104,282 | ||||||||||||
| Reclamation spending | (793) | (343) | ||||||||||||
| Accretion expense | 2,571 | 1,438 | ||||||||||||
| Change in obligation | (17,946) | 12,484 | ||||||||||||
| Liabilities associated with assets sold | — | (580) | ||||||||||||
| Balance, end of year | 101,113 | 117,281 | ||||||||||||
| Less: current portion | (5,545) | (734) | ||||||||||||
| 95,568 | 116,547 | |||||||||||||
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, 2022, the Company had 1,074,694,856 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, 2022, the Company paid a quarterly dividend of $0.04 per share totalling $172 million for the year. 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 respective period.
Subsequent to December 31, 2022, on February 22, 2023, B2Gold’s Board of Directors declared a cash dividend for the first quarter of 2023 of $0.04 per common share, payable on March 17, 2023 to shareholders of record as of March 8, 2023.
During 2022, the Company received $14 million (2021 - $6 million) pursuant to the exercise of 5 million (2021 – 3 million) stock options.
Stock options
During the year ended December 31, 2022, 4,534,000 stock options were granted to employees with exercise prices ranging from Cdn. $3.95 to Cdn. $5.79 per share. These stock options have a term of up to ten years and vest over a period of up to five years. The estimated fair value when granted of these options totalling $6 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 4.0%, an expected life of up to 10 years, an expected volatility of up to 54% and a dividend yield rate of up to 5.5%.
During 2021, approximately 19,461,000 stock options were granted to employees and directors 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%.
21
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2022 and 2021 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
Option pricing models require the input of subjective assumptions regarding the expected volatility. The Company calculates expected volatility based on the historical volatility of its stock price. Changes in this assumption can materially affect the fair value estimate.
For the year ended December 31, 2022, share-based payments expense, relating to the vesting of stock options, was $10 million (2021 - $13 million), net of $1 million (2021 - $2 million) capitalized to mining interests.
A summary of changes to stock options outstanding is as follows:
| Number of outstanding options | Weighted- average exercise price | |||||||||||||
| (‘000’s) | (in Cdn.$) | |||||||||||||
| Outstanding at December 31, 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 | ||||||||||||
| Granted | 4,534 | 5.29 | ||||||||||||
| Exercised | (4,955) | 3.67 | ||||||||||||
| Forfeited or expired | (1,141) | 5.35 | ||||||||||||
| Outstanding at December 31, 2022 | 30,927 | 4.98 | ||||||||||||
During 2022, 5 million (2021 – 3 million) stock options were exercised. The weighted average share price at the time of exercise was Cdn. $5.42 (2021 – Cdn. $5.66).
Stock options outstanding and exercisable as at December 31, 2022 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 | 20 | 0.75 | 2.94 | 20 | 2.94 | ||||||||||||
3.00 – 3.99 | 5,241 | 0.74 | 3.34 | 5,166 | 3.33 | ||||||||||||
4.00 – 4.99 | 4,709 | 5.55 | 4.47 | 1,375 | 4.41 | ||||||||||||
5.00 – 5.99 | 18,739 | 3.84 | 5.41 | 10,157 | 5.38 | ||||||||||||
6.00 – 6.99 | 2,098 | 3.23 | 6.25 | 1,298 | 6.24 | ||||||||||||
7.00 – 8.53 | 120 | 2.57 | 8.01 | 80 | 8.01 | ||||||||||||
| 30,927 | 3.52 | 4.98 | 18,096 | 4.79 | |||||||||||||
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, 2022, the Company granted approximately 2 million (2021 – 1 million) RSUs to executive officers and employees of the Company. One-third of the RSUs vest 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 $8 million (2021 - $7 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, 2022, share-based payments expense relating to the vesting of RSUs was $8 million (2021 - $6 million).
22
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2022 and 2021 | ||
| (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, 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 | ||||
| Granted | 1,751 | ||||
| Vested and converted to common shares | (2,663) | ||||
| Forfeited | (119) | ||||
| Reinvested dividend equivalents | 136 | ||||
| Outstanding at December 31, 2022 | 2,784 | ||||
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, 2022, the Company issued 0.2 million DSUs (2021 - 0.4 million) with a fair market value of $1 million (2021 - $1 million) to directors of the Company. As at December 31, 2022, there were 2 million DSUs outstanding (2021 - 2 million). For the year ended December 31, 2022, share-based payments recovery relating to DSUs was $0 million (2021 - recovery of $1 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, 2022, the Company granted approximately 1 million (2021 - 1 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, 2022 to December 31, 2024 (2021 - January 1, 2021 to December 31, 2023). The estimated fair value when granted of $8 million (2021 - $7 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 81% (2021 - 32% to 99%) for the group, a Canadian risk-free annual interest rate of 2.88% (2021 - 0.81%), and a United States risk-free annual interest rate of 2.76% (2021 - 0.35%).
As at December 31, 2022, 5 million PSUs were outstanding under the plan (2021 - 3 million). For the year ended December 31, 2022, share-based payments expense relating to PSUs was $7 million (2021 - $4 million).
23
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2022 and 2021 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
Restricted phantom unit plan
The Company has 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 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, 2022, the Company issued 0.1 million RPUs with a fair market value of $1 million to directors of the Company. As at December 31, 2022, there were 0.1 million RPUs outstanding (2021 - nil). For the year ended December 31, 2022, share-based payments expense relating to RPUs was $0.3 million.
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, 2022, 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:
| 2022 | 2021 | |||||||||||||
| $ | $ | |||||||||||||
Net income and diluted net income (attributable to shareholders of the Company) | 252,873 | 420,065 | ||||||||||||
Basic weighted average number of common shares outstanding (in thousands) | 1,064,259 | 1,053,809 | ||||||||||||
| Effect of dilutive securities: | ||||||||||||||
| Stock options | 1,928 | 4,883 | ||||||||||||
| Restricted share units | 732 | 1,478 | ||||||||||||
| Performance share units | 4,085 | 1,372 | ||||||||||||
Diluted weighted average number of common shares outstanding (in thousands) | 1,071,004 | 1,061,542 | ||||||||||||
Earnings per share (attributable to shareholders of the Company) | ||||||||||||||
| Basic | $ | 0.24 | $ | 0.40 | ||||||||||
| Diluted | $ | 0.24 | $ | 0.40 | ||||||||||
24
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2022 and 2021 | ||
| (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, 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 | |||||||||||||||||||||||||||
| Share of net income (loss) | 25,467 | 5,567 | 3,471 | (655) | 33,850 | |||||||||||||||||||||||||||
| Interest on loan to non-controlling interest | (3,499) | — | — | — | (3,499) | |||||||||||||||||||||||||||
| Distributions to non-controlling interest | (26,870) | — | (4,051) | — | (30,921) | |||||||||||||||||||||||||||
| Participating funding from non-controlling interest | — | — | — | 2,980 | 2,980 | |||||||||||||||||||||||||||
| Other | — | — | 732 | (192) | 540 | |||||||||||||||||||||||||||
| Balance at December 31, 2022 | 54,187 | 22,220 | 25,079 | 2,177 | 103,663 | |||||||||||||||||||||||||||
The following is the summarized financial information of subsidiaries with material non-controlling interests:
| Fekola | Otjikoto | |||||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||
| Summarized Balance Sheets | ||||||||||||||||||||||||||
| Current assets | 395,017 | 289,614 | 79,187 | 84,477 | ||||||||||||||||||||||
| Non-current assets | 967,148 | 1,002,062 | 335,802 | 325,544 | ||||||||||||||||||||||
| Total assets | 1,362,165 | 1,291,676 | 414,989 | 410,021 | ||||||||||||||||||||||
| Current liabilities | 230,574 | 115,548 | 13,258 | 31,586 | ||||||||||||||||||||||
| Non-current liabilities | 55,135 | 67,972 | 153,251 | 121,993 | ||||||||||||||||||||||
| Total liabilities | 285,709 | 183,520 | 166,509 | 153,579 | ||||||||||||||||||||||
| Summarized Statements of Operations | ||||||||||||||||||||||||||
| Revenue | 1,067,482 | 1,024,425 | 280,394 | 338,960 | ||||||||||||||||||||||
| Net income | 243,823 | 301,834 | 36,792 | 55,844 | ||||||||||||||||||||||
14Derivative financial instruments
Fuel derivatives
During the year ended December 31, 2022, the Company entered into additional series of forward contracts for the purchase of 2 million litres of fuel oil with scheduled settlement between November 2023 and January 2024. These derivative instruments were not designated as hedges by the Company and were recorded at FVTPL.
25
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2022 and 2021 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
For the year ended December 31, 2022, the Company recorded an unrealized fuel derivative loss of $10 million (2021 – gain of $11 million) and a realized fuel derivative gain of $29 million (2021 - gain of $14 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, 2022:
| 2023 | 2024 | Total | ||||||||||||||||||
| Forward – fuel oil: | ||||||||||||||||||||
| Litres (thousands) | 22,604 | 656 | 23,260 | |||||||||||||||||
| Average strike price | $ | 0.37 | $ | 0.43 | $ | 0.37 | ||||||||||||||
| Forward – gas oil: | ||||||||||||||||||||
| Litres (thousands) | 17,066 | — | 17,066 | |||||||||||||||||
| Average strike price | $ | 0.43 | $ | — | $ | 0.43 | ||||||||||||||
The unrealized fair value of these contracts at December 31, 2022 was $5 million (see Note 5).
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, 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, 2022, the Company’s financial assets and liabilities measured at fair value are categorized as follows:
| As at December 31, 2022 | As at December 31, 2021 | |||||||||||||||||||||||||
| Level 1 | Level 2 | Level 1 | Level 2 | |||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||
Long-term investments (Note 7) | 31,865 | — | 32,118 | — | ||||||||||||||||||||||
Fuel derivative contracts (Note 14) | — | 5,009 | — | 15,424 | ||||||||||||||||||||||
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
26
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2022 and 2021 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
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.
Credit risk
As at December 31, 2022, the Company’s maximum exposure to credit risk was the book value of cash and cash equivalents, accounts receivable, deferred consideration 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, 2022, the Company had cash and cash equivalents of $652 million. Cash provided by operating activities totalled $596 million for the year ended December 31, 2022. As at December 31, 2022, the Company had a $600 million revolving credit facility of which the entire balance of $600 million is undrawn.
As at December 31, 2022, the Company had drawn down the full amount under its equipment loan facilities at Fekola and Masbate.
As at December 31, 2022, 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.
| 2023 | 2024 | 2025 | 2026 | 2027 | Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Accounts payable and accrued liabilities | 114,791 | — | — | — | — | 114,791 | ||||||||||||||
| Fekola equipment loan facilities: | ||||||||||||||||||||
| Principal | 9,643 | 7,788 | 5,987 | — | — | 23,418 | ||||||||||||||
| Interest (estimated) | 993 | 548 | 148 | — | — | 1,689 | ||||||||||||||
| Masbate equipment loan facility: | ||||||||||||||||||||
| Principal | 872 | — | — | — | — | 872 | ||||||||||||||
| Interest (estimated) | 28 | — | — | — | — | 28 | ||||||||||||||
| Lease liabilities | ||||||||||||||||||||
| Principal | 4,022 | 3,238 | 2,638 | 1,981 | 2,078 | 13,957 | ||||||||||||||
| 130,349 | 11,574 | 8,773 | 1,981 | 2,078 | 154,755 | |||||||||||||||
| Capital expenditure commitments | 72,013 | — | — | — | — | 72,013 | ||||||||||||||
| Commitment fees on revolving credit facility | 2,700 | 2,700 | 2,588 | — | — | 7,988 | ||||||||||||||
| Other liabilities | 2,331 | — | — | — | — | 2,331 | ||||||||||||||
| 207,393 | 14,274 | 11,361 | 1,981 | 2,078 | 237,087 | |||||||||||||||
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, 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, 2022, $437 million of the Company’s $652 million in cash and cash equivalents
27
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2022 and 2021 | ||
| (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 $20 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 $2 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:
| 2022 | 2021 | |||||||||||||
| $ | $ | |||||||||||||
| Income from operations before taxes | 530,617 | 726,227 | ||||||||||||
| Canadian federal and provincial income tax rates | 27.00 | % | 27.00 | % | ||||||||||
| Income tax expense at statutory rates | 143,267 | 196,081 | ||||||||||||
| Increase (decrease) attributable to: | ||||||||||||||
| Effects of different foreign statutory tax rates | 26,256 | 40,067 | ||||||||||||
| Change due to foreign exchange | 24,950 | 28,261 | ||||||||||||
| Withholding and other taxes | 26,041 | 28,249 | ||||||||||||
| Non-deductible expenditures | 31,948 | 24,356 | ||||||||||||
| Change in income tax rates | — | (20,143) | ||||||||||||
| Benefit of optional tax incentives | (13,965) | (16,544) | ||||||||||||
| Use of losses and temporary differences not previously recognized | — | (10,481) | ||||||||||||
| Future withholding tax | (12,000) | (3,300) | ||||||||||||
| Non-taxable portions of gains | (2,135) | (4,754) | ||||||||||||
| Losses and tax bases for which no tax benefit has been recorded | 7,178 | 1,876 | ||||||||||||
| Change in accruals for tax audits | 11,209 | 1,200 | ||||||||||||
| Amounts under provided for in prior years | 1,145 | 534 | ||||||||||||
| Income tax expense | 243,894 | 265,402 | ||||||||||||
| Current income tax, withholding and other taxes | 247,811 | 270,669 | ||||||||||||
| Deferred income tax recovery | (3,917) | (5,267) | ||||||||||||
| Income tax expense | 243,894 | 265,402 | ||||||||||||
Included in current income tax expense for the year-ended December 31, 2022, is $36 million (2021 - $39 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.
Fekola Tax Audits
The Company's subsidiary, Fekola SA, received a Notice for Reassessment dated September 6, 2022, from the Malian Directorate General of Taxes (“DGT”) asserting proposed adjustments and other tax liabilities amounting to $26 million excluding penalties, $45 million including penalties, (based on the December 31, 2022 exchange rate of CFA 611 to $1) arising from tax audits conducted for fiscal years 2016-2018. The Company has reviewed the reassessment and concluded that there is no merit to the tax audit adjustments. Fekola SA filed a contentious claim, dated November 3, 2022, outlining its objections to the reassessment in accordance with the Mali Income Tax Act, and remains in discussions with the DGT with respect to this matter.
28
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2022 and 2021 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
Total contingent liabilities recognized related to tax are as follows:
| 2022 | 2021 | |||||||||||||
| $ | $ | |||||||||||||
| Opening balance | 2,971 | 640 | ||||||||||||
| Additions | 11,209 | 2,571 | ||||||||||||
| Reductions | (1,230) | (240) | ||||||||||||
| Closing balance | 12,950 | 2,971 | ||||||||||||
During the year ended December 31, 2022, the company recorded a deferred tax recovery of $12 million (2021 - recovery of $3 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 $125 million (2021 – $112 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.
Total income tax expense attributable to geographical jurisdiction is as follows:
| 2022 | 2021 | |||||||||||||
| $ | $ | |||||||||||||
| Mali | 195,917 | 216,560 | ||||||||||||
| Philippines | 13,453 | (5,044) | ||||||||||||
| Namibia | 28,496 | 45,773 | ||||||||||||
| Other | 6,028 | 8,113 | ||||||||||||
| 243,894 | 265,402 | |||||||||||||
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, 2022 | As at December 31, 2021 | 2022 | 2021 | |||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||
| Operating loss carry-forwards | 22,119 | 30,735 | 8,616 | (9,630) | ||||||||||||||||||||||
| Current assets and liabilities | (7,030) | (5,502) | 1,528 | 10,507 | ||||||||||||||||||||||
| Mining interests | (207,133) | (211,581) | (4,448) | (10,333) | ||||||||||||||||||||||
| Mine restoration provisions | 24,622 | 29,052 | 4,430 | 1,393 | ||||||||||||||||||||||
| Future withholding tax | (9,000) | (21,000) | (12,000) | (3,300) | ||||||||||||||||||||||
| Unrealized gains | (7,510) | (8,097) | (587) | 5,012 | ||||||||||||||||||||||
| Other | 1,417 | (39) | (1,456) | 1,084 | ||||||||||||||||||||||
| (182,515) | (186,432) | (3,917) | (5,267) | |||||||||||||||||||||||
29
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2022 and 2021 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
Represented on the balance sheet as:
| 2022 | 2021 | |||||||||||||
| $ | $ | |||||||||||||
| Deferred tax asset | — | (1,455) | ||||||||||||
| Deferred tax liability | 182,515 | 187,887 | ||||||||||||
| Balance, end of year | 182,515 | 186,432 | ||||||||||||
The Company has the following unrecognized deferred tax assets:
| 2022 | 2021 | |||||||||||||
| $ | $ | |||||||||||||
| Capital and non-capital tax losses | 116,273 | 109,567 | ||||||||||||
| Long-term debt | 3,615 | 3,256 | ||||||||||||
| Mining interests and other | 1,916 | 600 | ||||||||||||
| Mine restoration provisions | 586 | 431 | ||||||||||||
| 122,390 | 113,854 | |||||||||||||
The Company has not recognized potential deferred tax assets of $122 million (2021 - $114 million) as it is not probable that future taxable profits will be available against which the Company can utilize the potential deferred tax assets.
The change for the year in the Company’s net deferred tax liability was as follows:
| 2022 | 2021 | |||||||||||||
| $ | $ | |||||||||||||
| Balance, beginning of year | 186,432 | 196,356 | ||||||||||||
| Deferred income tax (recovery) expense | (3,917) | (5,267) | ||||||||||||
| Deferred income tax liability related to Kiaka disposal | — | (4,657) | ||||||||||||
| (3,917) | (9,924) | |||||||||||||
| Balance, end of year | 182,515 | 186,432 | ||||||||||||
At December 31, 2022, 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 $290 million (2021 - $295 million) in Canada which expire between 2027 and 2042, and $1 million (2021 - $1 million) in Colombia which expire between 2031 and 2033.
At December 31, 2022 the Company had capital losses in Canada of $311 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, 2022 the Company paid $239 million (2021 - $324 million) of current income tax, withholding and other taxes in cash.
30
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2022 and 2021 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
17Supplementary cash flow information
Supplementary disclosure of cash flow information is provided in the table below:
Non-cash (credits) charges:
| 2022 | 2021 | |||||||||||||
| $ | $ | |||||||||||||
| Depreciation and depletion | 383,852 | 378,892 | ||||||||||||
Share-based payments (Note 12) | 24,676 | 22,571 | ||||||||||||
(Reversal of impairment) impairment of long-lived assets (Note 8) | (909) | 5,905 | ||||||||||||
Net losses (gains) on sale of mineral properties (Note 8) | 2,804 | (22,463) | ||||||||||||
Share of net income of associates (Note 8) | (10,183) | (17,543) | ||||||||||||
Write-down of mineral property interests (Note 8) | 12,366 | 1,055 | ||||||||||||
| Non-cash interest and financing expense | 10,842 | 11,798 | ||||||||||||
Unrealized losses (gains) on derivative instruments (Note 14) | 10,442 | (12,884) | ||||||||||||
Deferred income tax recovery (Note 16) | (3,917) | (5,267) | ||||||||||||
| Other | (4,029) | 7,492 | ||||||||||||
| 425,944 | 369,556 | |||||||||||||
Changes in non-cash working capital:
| 2022 | 2021 | |||||||||||||
| $ | $ | |||||||||||||
| Accounts receivable and prepaids | (3,915) | 568 | ||||||||||||
| Value-added and other tax receivables | 3,402 | (48,820) | ||||||||||||
| Inventories | (50,273) | (24,042) | ||||||||||||
| Accounts payable and accrued liabilities | 1,188 | 12,078 | ||||||||||||
| Current income and other taxes payable | 994 | (44,399) | ||||||||||||
| (48,604) | (104,615) | |||||||||||||
Other exploration and development:
| 2022 | 2021 | |||||||||||||
| $ | $ | |||||||||||||
| Fekola Mine, exploration | (15,214) | (13,014) | ||||||||||||
| Masbate Mine, exploration | (4,759) | (5,013) | ||||||||||||
| Otjikoto Mine, exploration | (3,476) | (4,424) | ||||||||||||
| Menankoto Property, exploration | (8,166) | (4,942) | ||||||||||||
| Bantako North Property, exploration | (8,608) | (9,057) | ||||||||||||
| Finland Properties, exploration | (9,962) | (3,527) | ||||||||||||
| Uzbekistan Properties, exploration | (4,072) | (4,456) | ||||||||||||
| Kiaka Project, exploration | — | (4,313) | ||||||||||||
| Other | (9,372) | (7,370) | ||||||||||||
| (63,629) | (56,116) | |||||||||||||
31
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2022 and 2021 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
Non-cash investing and financing activities:
| 2022 | 2021 | |||||||||||||
| $ | $ | |||||||||||||
| Change in current liabilities relating to mineral property expenditures | 1,956 | 8,762 | ||||||||||||
| Interest on loan to non-controlling interest | 4,116 | 3,746 | ||||||||||||
| Share-based payments, capitalized to mineral property interests | 1,036 | 2,124 | ||||||||||||
| Foreign exchange gains on Fekola equipment loan facility | 2,716 | 4,145 | ||||||||||||
Shares issued on acquisition of Oklo Resources Limited (Note 8) | 35,658 | — | ||||||||||||
Share consideration received on sale of Ondundu Property (Note 8) | 6,955 | — | ||||||||||||
Deferred consideration on sale of Ondundu Property (Note 8) | 3,850 | — | ||||||||||||
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) | |||||||||||||
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:
| 2022 | 2021 | |||||||||||||
| $ | $ | |||||||||||||
| Salaries and short-term employee benefits | 9,929 | 8,891 | ||||||||||||
| Share-based payments | 14,276 | 11,946 | ||||||||||||
| 24,205 | 20,837 | |||||||||||||
19Production costs by nature
| 2022 | 2021 | |||||||||||||
| $ | $ | |||||||||||||
| Raw materials and consumables | 484,466 | 408,219 | ||||||||||||
| Salaries and employee benefits | 114,014 | 120,690 | ||||||||||||
| Contractors | 48,235 | 32,926 | ||||||||||||
| Equipment rental | 3,350 | 3,752 | ||||||||||||
| Other | 45,346 | 37,207 | ||||||||||||
| Change in inventories | (26,135) | (15,986) | ||||||||||||
| Capitalized to mining interests | (42,750) | (93,419) | ||||||||||||
| 626,526 | 493,389 | |||||||||||||
Salaries and employee benefits expense included in general and administrative costs were $28 million for the year ended December 31, 2022 (2021 - $28 million).
20Segmented information
The Company’s reportable operating segments for 2022 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 Project and Calibre. The “Corporate and Other” segment includes corporate operations.
32
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2022 and 2021 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
The Company’s segments are summarized in the following tables:
| 2022 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Other Mineral Properties | Corporate & Other | Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| External gold revenue | 1,067,482 | 384,714 | 280,394 | — | — | 1,732,590 | ||||||||||||||
| Production costs | 326,529 | 177,705 | 122,292 | — | — | 626,526 | ||||||||||||||
| Depreciation & depletion | 215,664 | 88,834 | 79,348 | 6 | 2,613 | 386,465 | ||||||||||||||
| Reversal of impairment of long-lived assets | — | — | — | (909) | — | (909) | ||||||||||||||
| Write-down of mineral property interests | — | 313 | — | 12,053 | — | 12,366 | ||||||||||||||
| Current income tax, withholding and other taxes | 196,499 | 24,676 | 26,512 | 124 | — | 247,811 | ||||||||||||||
| Net income (loss) | 231,587 | 71,252 | 33,844 | (20,967) | (28,993) | 286,723 | ||||||||||||||
| Capital expenditures | 132,836 | 44,287 | 82,572 | 90,111 | 174 | 349,980 | ||||||||||||||
| Total assets | 1,456,040 | 755,297 | 439,051 | 549,632 | 481,213 | 3,681,233 | ||||||||||||||
| 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 | ||||||||||||||
The Company’s mining interests are located in the following geographical locations:
| 2022 | 2021 | |||||||||||||
| $ | $ | |||||||||||||
| Mining interests | ||||||||||||||
| Mali | 1,159,931 | 1,084,580 | ||||||||||||
| Philippines | 577,039 | 636,525 | ||||||||||||
| Namibia | 306,718 | 307,434 | ||||||||||||
| Colombia | 145,855 | 130,096 | ||||||||||||
| Investments in associates - various | 120,049 | 104,236 | ||||||||||||
| Canada | 26,820 | 23,420 | ||||||||||||
| Burkina Faso | 21,087 | 21,087 | ||||||||||||
| Finland | 22,523 | 12,561 | ||||||||||||
| Other | 14,757 | 16,128 | ||||||||||||
| 2,394,779 | 2,336,067 | |||||||||||||
33
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2022 and 2021 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
21Commitments
As at December 31, 2022, the Company had the following commitments (in addition to those disclosed elsewhere in these financial statements):
•For payments of $29 million for mobile equipment, $9 million related to mobile equipment rebuilds, $6 million related to plant and powerhouse maintenance, $1 million for the tailings storage facility expansion, $1 million for underground development and $3 million for other capital projects at the Fekola Mine, all of which is expected to be incurred in 2023.
•For payments of $13 million for mobile equipment and $2 million for infrastructure for Fekola Regional pre-development, all of which is expected to be incurred in 2023.
•For payments of $8 million for mobile equipment at the Masbate Mine, all of which is expected to be incurred in 2023.
•For payments of $1 million for the Gramalote Project, all of which is expected to be incurred in 2023.
.
22Acquisition of Sabina Gold and Silver Corp.
Subsequent to December 31, 2022, on February 13, 2023, the Company entered into a definitive agreement pursuant to which it had agreed to acquire all of the issued and outstanding common shares of Sabina Gold & Silver Corp. ("Sabina Gold") (the “Transaction”).
The Transaction will result in the Company acquiring Sabina Gold’s 100% owned Back River Gold District located in Nunavut, Canada. Under the terms of the Transaction, the Company will issue 0.3867 of a common share for each Sabina Gold common share held. All outstanding Sabina Gold stock options will be exchanged for B2Gold stock options based on the exchange ratio.
The Transaction will be implemented by way of a court-approved Plan of Arrangement under the Business Corporations Act (British Columbia) and will require approval by 66 2/3% of the votes cast by Sabina Gold shareholders at a special meeting expected to be held in April 2023. In addition to Sabina Gold shareholder approval, the Transaction is subject to normal course regulatory approvals and the satisfaction of customary closing conditions.
34
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2022 and 2021 | ||
| (All tabular amounts are in thousands of United States dollars unless otherwise stated) | ||
23Mining interest schedules
| Cost | Accumulated depreciation | Net carrying value | |||||||||||||||||||||||||||||||||||||||
| Balance at Dec. 31, 2021 | Additions / Equity pick-up | Disposals / write-offs | Reclass / Mine restoration provision movements | Balance at Dec. 31, 2022 | Balance at Dec. 31, 2021 | Depreciation | Disposals / write-offs | Balance at Dec. 31, 2022 | As at Dec. 31, 2022 | As at Dec. 31, 2021 | |||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| Property, plant and equipment (depletable) | |||||||||||||||||||||||||||||||||||||||||
| Fekola Mine | 1,645,337 | 140,710 | (12,898) | (3,204) | 1,769,945 | (609,899) | (221,119) | 11,136 | (819,882) | 950,063 | 1,035,438 | ||||||||||||||||||||||||||||||
| Masbate Mine | 1,085,687 | 44,103 | (1,032) | (14,245) | 1,114,513 | (449,675) | (88,610) | 811 | (537,474) | 577,039 | 636,012 | ||||||||||||||||||||||||||||||
| Otjikoto Mine | 782,208 | 84,873 | (1,558) | (722) | 864,801 | (475,303) | (84,703) | 1,319 | (558,687) | 306,114 | 306,905 | ||||||||||||||||||||||||||||||
| 3,513,232 | 269,686 | (15,488) | (18,171) | 3,749,259 | (1,534,877) | (394,432) | 13,266 | (1,916,043) | 1,833,216 | 1,978,355 | |||||||||||||||||||||||||||||||
| Pre-development properties (pre-depletable) | |||||||||||||||||||||||||||||||||||||||||
| Fekola Regional pre-development | — | 29,560 | — | 1,156 | 30,716 | — | — | — | — | 30,716 | — | ||||||||||||||||||||||||||||||
| Exploration & evaluation properties (pre-depletable) | |||||||||||||||||||||||||||||||||||||||||
| Gramalote Project | 119,866 | 15,759 | — | — | 135,625 | — | — | — | — | 135,625 | 119,866 | ||||||||||||||||||||||||||||||
| Dandoko Property | — | 58,292 | — | — | 58,292 | — | — | — | — | 58,292 | — | ||||||||||||||||||||||||||||||
| Bakolobi Property | — | 51,956 | — | — | 51,956 | — | — | — | — | 51,956 | — | ||||||||||||||||||||||||||||||
| Menankoto Property | 33,739 | 8,986 | — | (1,156) | 41,569 | — | — | — | — | 41,569 | 33,739 | ||||||||||||||||||||||||||||||
| Bantako North Property | 15,351 | 8,224 | — | — | 23,575 | — | — | — | — | 23,575 | 15,351 | ||||||||||||||||||||||||||||||
| Finland Properties | 12,561 | 9,962 | — | — | 22,523 | — | — | — | — | 22,523 | 12,561 | ||||||||||||||||||||||||||||||
| Kiaka Royalty | 18,488 | — | — | — | 18,488 | — | — | — | — | 18,488 | 18,488 | ||||||||||||||||||||||||||||||
| Mocoa Royalty | 10,230 | — | — | — | 10,230 | — | — | — | — | 10,230 | 10,230 | ||||||||||||||||||||||||||||||
| Uzbekistan Properties | 8,802 | 4,194 | — | — | 12,996 | — | — | — | — | 12,996 | 8,802 | ||||||||||||||||||||||||||||||
| Other | 11,019 | 11,114 | (13,409) | — | 8,724 | — | — | — | — | 8,724 | 11,019 | ||||||||||||||||||||||||||||||
| 230,056 | 168,487 | (13,409) | (1,156) | 383,978 | — | — | — | — | 383,978 | 230,056 | |||||||||||||||||||||||||||||||
| Corporate | |||||||||||||||||||||||||||||||||||||||||
| Office, furniture & equipment | 28,540 | 6,013 | (2,134) | — | 32,419 | (5,120) | (2,613) | 2,134 | (5,599) | 26,820 | 23,420 | ||||||||||||||||||||||||||||||
| 3,771,828 | 473,746 | (31,031) | (18,171) | 4,196,372 | (1,539,997) | (397,045) | 15,400 | (1,921,642) | 2,274,730 | 2,231,831 | |||||||||||||||||||||||||||||||
| Investments in associates (accounted for using the equity method) | |||||||||||||||||||||||||||||||||||||||||
| Calibre | 93,728 | 18,046 | — | — | 111,774 | — | — | — | — | 111,774 | 93,728 | ||||||||||||||||||||||||||||||
| BeMetals | 10,508 | (2,233) | — | — | 8,275 | — | — | — | — | 8,275 | 10,508 | ||||||||||||||||||||||||||||||
| 104,236 | 15,813 | — | — | 120,049 | — | — | — | — | 120,049 | 104,236 | |||||||||||||||||||||||||||||||
| 3,876,064 | 489,559 | (31,031) | (18,171) | 4,316,421 | (1,539,997) | (397,045) | 15,400 | (1,921,642) | 2,394,779 | 2,336,067 | |||||||||||||||||||||||||||||||
35
| B2GOLD CORP. | ||
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
December 31, 2022 and 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 / Equity pick-up | 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 Project | 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 | — | ||||||||||||||||||||||||||||||
| Finland Properties | 9,034 | 3,527 | — | — | 12,561 | — | — | — | — | 12,561 | 9,034 | ||||||||||||||||||||||||||||||
| Mocoa Royalty | 10,230 | — | — | — | 10,230 | — | — | — | — | 10,230 | 10,230 | ||||||||||||||||||||||||||||||
| 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 | |||||||||||||||||||||||||||||||
36
B2GOLD CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2022
This Management’s Discussion and Analysis (“MD&A”) has been prepared as at February 22, 2023 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, 2022. 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, El Limon and Pan mines owned by Calibre Mining Corp. ("Calibre") is presented on an approximate 25% basis (fourth quarter of 2021 and previous periods - 33%), representing the Company’s indirect ownership interest in Calibre's operations through its equity investment in Calibre (subject to reduction if B2Gold’s interest in Calibre dilutes).
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 has a 50% interest in the Gramalote Project in Colombia. The Company also has an approximately 25% interest in Calibre and an approximately 19% interest in BeMetals Corp. ("BeMetals"). In addition, the Company has a portfolio of other evaluation and exploration projects in a number of countries including Mali, Uzbekistan and Finland.
Summary
Consolidated gold revenue for the year ended December 31, 2022 was $1.73 billion on sales of 969,155 ounces at an average realized gold price of $1,788 per ounce, compared to $1.76 billion on sales of 981,401 ounces at an average realized gold price of $1,796 per ounce in 2021. The slight decrease in gold revenue of 2% ($0.03 billion) was due to a 2% decrease in gold ounces sold. For the fourth quarter of 2022, consolidated gold revenue was $592 million on sales of 339,355 ounces at an average realized gold price of $1,746 per ounce, compared to $526 million on sales of 292,350 ounces at an average realized gold price of $1,800 per ounce in the fourth quarter of 2021. The increase in gold revenue of 13% ($66 million) was due to a 16% increase in gold ounces sold (mainly due to the higher gold production), partially offset by a 3% decrease in the average realized gold price.
B2Gold had another year of strong operational performance in 2022, with the achievement of B2Gold’s seventh consecutive year of meeting or exceeding annual production guidance. Total gold production for 2022 was 1,027,874 ounces (including 54,871 ounces of attributable production from Calibre) (2021 - 1,047,414 ounces), above the mid-point of the guidance range (of between 990,000 and 1,050,000 ounces). Consolidated gold production from the Company’s three operating mines was 973,003 ounces (2021 - 987,595 ounces), near the mid-point of the guidance range (of between 950,000 - 1,000,000 ounces), with solid performances from each of the Company’s three mines (refer to "Review of Mining Operations and Development Projects" section below). The Fekola Mine achieved another strong year in 2022, producing 598,661 ounces of gold, near the upper end of its guidance range (of between 570,000 and 600,000 ounces). In the fourth quarter of 2022, B2Gold’s consolidated gold production was 352,769 ounces, 11% (35,058 ounces) higher than budget and 22% (63,920 ounces) higher than the fourth quarter of 2021 resulting from higher than budgeted gold production from the Fekola Mine of 244,014 ounces, a quarterly record for the operation. The Masbate Mine was in-line with budget, while the Otjikoto Mine was slightly below budget. The Company’s total gold production for the fourth quarter of 2022 was 367,870 ounces (including 15,101 ounces of attributable production from Calibre).
For the year ended December 31, 2022, consolidated cash operating costs1 were $637 per gold ounce produced ($646 per gold ounce sold), in-line with the budget and $126 per gold ounce produced (25%) higher than 2021. Including estimated attributable results for Calibre, cash operating costs for the year ended December 31, 2022 were $660 per gold ounce produced ($669 per gold ounce sold) at the upper end of the Company's guidance range of $620 to $660 per ounce, $125 per gold ounce produced (23%) higher than 2021. Cash operating costs per ounce produced for the year ended December 31, 2022 were at the upper end of the guidance range as a result higher fuel costs, partially offset by lower tonnes mined at Fekola, delays in incurring Wolfshag underground costs and a weaker Namibian dollar. Cash operating costs for the year ended December 31, 2022 were higher than the year ended December 31, 2021 due to lower production and inflation driven higher input costs during the year ended December 31, 2022, including higher fuel unit prices and other consumables prices. In the fourth quarter of 2022, consolidated cash operating costs were $440 per gold ounce produced ($470 per gold ounce sold), in line with budget and the fourth quarter of 2021. Including estimated attributable results for Calibre, cash operating costs for the fourth quarter of 2022 were $468 per gold ounce produced ($497 per gold ounce sold), in line with budget and the fourth quarter of 2021. Consolidated cash operating costs for the fourth quarter of 2022 were in line with budget and the fourth quarter of 2021, as a result of record gold production in the fourth quarter of 2022 and the benefit of weaker local currencies being partially offset by higher fuel and reagent costs.
Consolidated all-in sustaining costs2 for the year ended December 31, 2022 were $1,022 per gold ounce sold compared to $874 per gold ounce sold for 2021. Including estimated attributable results for Calibre, all-in sustaining costs for the year ended December 31, 2022 were $1,033 per gold ounce sold ($888 per gold ounce sold for 2021), within the Company's guidance range of $1,010 to $1,050 per ounce sold. Consolidated all-in sustaining costs for the fourth quarter of 2022 were $876 per gold ounce sold compared to a budget of $746 per gold ounce sold and $844 per gold ounce sold for the fourth quarter of 2021. Including estimated attributable results for Calibre, all-in sustaining costs for the fourth quarter of 2022 were $892 per gold ounce sold compared to a budget of $760 per gold ounce sold and $860 per gold ounce sold for the fourth quarter of 2021. As expected, all-in sustaining costs for the fourth quarter of 2022 were higher than budget due to the catch up of budgeted sustaining capital expenditures, which were delayed from earlier quarters of 2022 as well as higher than budgeted general and administrative ("G&A") costs, partially offset by higher than budgeted gold ounces sold.
For the year ended December 31, 2022, mine sustaining capital expenditures were lower than budget by $6 million mainly as a result of delays in accessing the Wolfshag underground at the Otjikoto Mine. Non-sustaining mine capital expenditures for the year ended December 31, 2022 were $4 million lower than budget. In addition, exploration costs were approximately $9 million less than revised guidance.
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 “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”
2
B2Gold expects to continue its strong operational performance in 2023 with total gold production forecast to be between 1,000,000 and 1,080,000 ounces (including 60,000 to 70,000 attributable ounces from Calibre). The Company's total consolidated cash operating costs for the year (including estimated attributable results for Calibre) are forecast to be between $670 and $730 per ounce and total consolidated all-in sustaining (including estimated attributable results for Calibre) are forecast to be between $1,195 and $1,255 per ounce. The slight anticipated increase in the Company's consolidated cash operating costs per ounce for 2023 reflects higher expected prices for fuel, labour and other key consumables across all operations. In addition, the increase in all-in sustaining costs per ounce is impacted by higher expected sustaining capital expenditures, including an estimated $181 million in capitalized stripping across the three producing mines. Elevated capitalized stripping levels are due to the Fekola open pit Phase 7 pushback and activities related to accessing the high grade ore at the Otjikoto pit. Total capitalized stripping expenditures are anticipated to moderate in 2024. The Company's consolidated gold production is expected to be relatively consistent throughout 2023 with the exception of the Otjikoto Mine, where it will be weighted 60% to the second half of the year as a result of the timing of mining high grade ore from the Otjikoto pit and an increase in ore tonnage from the Wolfshag underground mine starting mid-2023.
For the year ended December 31, 2022, the Company generated net income of $287 million compared to $461 million in 2021 including net income attributable to the shareholders of the Company of $253 million ($0.24 per share) compared to $420 million ($0.40 per share) in 2021. Adjusted net income attributable to the shareholders of the Company3 for the year ended December 31, 2022 was $264 million ($0.25 per share) compared to $385 million ($0.37 per share) in 2021. Net income for the fourth quarter of 2022 was $176 million compared to $153 million for the fourth quarter of 2021. For the fourth quarter of 2022, the Company generated net income attributable to the shareholders of the Company of $158 million ($0.15 per share) compared to $137 million ($0.13 per share) in the fourth quarter of 2021. Adjusted net income attributable to shareholders of the Company for the fourth quarter of 2022 was $121 million ($0.11 per share) compared to $113 million ($0.11 per share) in the fourth quarter of 2021.
For the year ended December 31, 2022, cash flow provided by operating activities was $596 million compared to $724 million during 2021, a decrease of $128 million. The decrease reflects higher production costs of $133 million, lower revenues of $30 million, higher long-term value added tax receivable outflows, partially offset by higher realized gains on fuel contracts of $16 million and lower non-cash working capital outflows for the year ended December 31, 2022, most significantly for current income and other taxes payables as well as value-added tax receivables. During the year ended December 31, 2022 the Company paid $239 million (2021 - $324 million) of current income tax, withholding and other taxes in cash. For the year ended December 31, 2021, income tax payments were significantly higher than the year ended December 31, 2022 as a result of tax installments to settle the final 2020 tax liability of $138 million (including payment of the final 2020 priority dividend of $47 million due to the State of Mali) after a record earnings year in 2020), including approximately $27 million related to 2021 outstanding tax liability obligations. Based on current assumptions, including an average gold price of $1,700 per ounce for 2023, the Company is forecasting to make total cash income tax payments for current income tax, withholding and other taxes in 2023 of approximately $187 million.
B2Gold continues to maintain a strong financial position and liquidity. At December 31, 2022, the Company had cash and cash equivalents of $652 million compared to cash and cash equivalents of $673 million at December 31, 2021. Working capital (defined as current assets less assets classified as held for sale and current liabilities) at December 31, 2022 was $802 million compared to $802 million at December 31, 2021. At December 31, 2022, the full amount of the Company's $600 million revolving credit facility ("RCF") was undrawn and available.
On February 2, 2022, the Company announced that B2Gold’s Malian subsidiary had received a new exploration permit covering the same perimeter as the Menankoto permit, which together with the Bantako North permit comprises the Anaconda Area, located 20 kilometres from the Fekola Mine. The Menankoto permit was 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.
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 the 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.
On April 21, 2022 the Company completed the acquisition of the Bakolobi permit in Mali from a local Malian company. The Bakolobi permit is located between the Menankoto permit, to the North, and the Fekola Mine's Medinandi permit, wrapping around the latter to its south-west end, covering an area of 100 sq km. The acquisition of the Bakolobi permit results in the ownership by the Company of four contiguous exploration and/or exploitation permits covering 237 sq km, extending from the northwestern end of the Bantako North permit and the North-East of the Menankoto permit, southwest of the Medinandi permit (Fekola Mine and Cardinal Zone) to the southeast end of the Bakolobi permit. Collectively the Bantako, Menankoto, Bakolobi and newly acquired Dandoko permits (see below) make up the Fekola Regional permits. For financial reporting purposes, commencing in 2023, the Company intends to report the Fekola Mine (Medinandi permit which includes the Fekola Mine, Fekola Underground and the Cardinal Zone) and Fekola Regional as separate reporting segments.
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”
3
On July 3, 2022, following the interim Malian Government’s announcement of a two-year transition to presidential elections and the promulgation of a new electoral law, the Economic Community of West African States (“ECOWAS”) removed the economic, financial and diplomatic sanctions imposed on Mali earlier in 2022. As a result, Mali’s borders with its neighbours are now open to normal commercial traffic and ordinary supply routes are once again available.
On September 20, 2022, the Company completed the acquisition of Oklo Resources Limited ("Oklo"), which provides B2Gold with an additional landholding of 1,405 sq km covering highly prospective greenstone belts in Mali, including Oklo’s flagship Dandoko project (550 sq km), located approximately 25 kilometres from each of the Fekola Mine and the Anaconda Area.
Based on the updated Anaconda Area Mineral Resource estimate and B2Gold’s preliminary planning, the Company has demonstrated that the Anaconda Area (Bantako and Menankoto permit areas) could provide selective higher grade saprolite material (average grade of 2.2 g/t gold) to be trucked to and fed into the Fekola mill at a rate of up to 1.5 million tonnes per annum ("Mtpa"). Trucking of selective higher grade saprolite material to be toll milled at the Fekola mill has the potential to generate an average of approximately 80,000 to 100,000 ounces of gold production per year from the Fekola Regional permits (Fekola Regional Phase 1).
In 2022, the Company invested $26 million for the development of saprolite mining at the Fekola Regional permits including road construction, mine infrastructure, and mining equipment. The construction mobile equipment fleet is now in operation, and the Company broke ground on roads and mining infrastructure construction in the fourth quarter of 2022. Engineering and procurement of the mine workshop and mobile equipment is on schedule to support saprolite production from the Bantako permit area as early as the third quarter of 2023. Production from Bantako is contingent upon receipt of all necessary permits as well as optimizing long-term project value from the various oxide and sulphide material sources from the overall Fekola Complex which includes the Fekola Pit, Fekola Underground, Cardinal Zone, Bantako, Menankoto, Dandoko, and Bakolobi.
Preliminary results of a Fekola Complex optimization study, coupled with 2022 exploration drilling results, indicate that there is a significant opportunity to increase gold production and resource utilization with the addition of oxide processing capacity. The Company has therefore commenced an engineering study of a Fekola Regional stand-alone mill and oxide processing facilities (expected to be located on the Anaconda Area). Construction of a stand-alone oxide mill will be Phase II of the Fekola Regional Development Plan. The engineering study will be based on processing at least 4 Mtpa of saprolite and transitional (oxide) resources, with an option to add fresh rock (sulphide) capabilities in the future. Results of this study are expected in the second quarter of 2023. Conceptual analysis indicates that the combined Fekola and Fekola Regional processing facilities could have the potential to produce more than 800,000 ounces of gold per year from the Fekola Complex commencing as early as 2026, subject to delineation of additional mineral resources and development, completion of feasibility studies, and the receipt of all necessary regulatory approvals and permits. Following the Company's recently announced acquisition of Sabina Gold & Silver Corp. (see below), the construction timeline for a Fekola Regional stand-alone oxide mill will be scheduled to allow for completion of the Goose Project in the first quarter of 2025. Further expansion of the Mamba and Cobra sulphide zones has the potential to increase Fekola Regional production and sustain the Fekola Complex potential production profile over the longer term. Drilling is currently ongoing at the Mamba and Cobra oxide and sulphide zones.
The Gramalote Feasibility Study has been completed for the Gramalote gold project in Colombia (the “Gramalote Project”), a joint venture between B2Gold and AngloGold Ashanti Limited (“AngloGold”), and both partners have determined that the project does not meet their investment thresholds for development of the project. The Gramalote Project continues to benefit from strong federal and local government support as well as continuing support from local communities. B2Gold and AngloGold have completed a comprehensive review of the alternatives relating to the Gramalote Project and consider that it would be in the best interests of all stakeholders for a new party to own the Gramalote Project. The partners commenced a joint sales process for the Gramalote Project in the fourth quarter of 2022.
On February 22, 2022, June 8, 2022, September 12, 2022, and November 24, 2022, B2Gold’s Board of Directors declared a cash dividend for the first, second, third and fourth quarter of 2022, respectively, of $0.04 per common share (or an expected $0.16 per share on an annualized basis), paid on March 17, 2022, June 29, 2022, September 29, 2022 and December 16 2022, respectively. 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 February 13, 2023, the Company entered into a definitive agreement pursuant to which it had agreed to acquire all of the issued and outstanding common shares of Sabina Gold & Silver Corp. ("Sabina Gold") (the “Transaction”). The Transaction will result in the Company acquiring Sabina Gold’s 100% owned Back River Gold District located in Nunavut, Canada. The Back River Gold District consists of five mineral claim blocks along an 80 km belt. The most advanced project in the district, Goose, is fully permitted, construction ready, and has been de-risked with significant infrastructure currently in place. The Goose Project has an estimated two year construction period with first gold production expected in the first quarter of 2025. B2Gold recognizes that respect and collaboration with the Kitikmeot Inuit Association is central to the license to operate in the Back River Gold District and will continue to prioritize developing the project in a manner that recognizes Indigenous input and concerns and brings long-term socio-economic benefits to the area. Under the terms of the Transaction, the Company will issue 0.3867 of a common share for each Sabina Gold common share held. All outstanding Sabina Gold stock options will be exchanged for B2Gold stock options based on the exchange ratio. The Transaction will be implemented by way of a court-approved Plan of Arrangement under the Business Corporations Act (British Columbia) and will require approval by 66 2/3% of the votes cast by Sabina Gold shareholders at a special meeting expected to be held in April 2023. In addition to Sabina Gold shareholder approval, the Transaction is subject to normal course regulatory approvals and the satisfaction of customary closing conditions.
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REVIEW OF FINANCIAL RESULTS
Selected Quarterly and Full Year Financial and Operating Results
| Three months ended | Year ended | ||||||||||||||||
| December 31 | December 31 | ||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | 2020 | |||||||||||||
| Gold revenue ($ in thousands) | 592,468 | 526,113 | 1,732,590 | 1,762,264 | 1,788,928 | ||||||||||||
| Net income ($ in thousands) | 176,468 | 153,140 | 286,723 | 460,825 | 672,413 | ||||||||||||
Earnings per share – basic (1) ($/share) | 0.15 | 0.13 | 0.24 | 0.40 | 0.60 | ||||||||||||
Earnings per share – diluted (1) ($/share) | 0.15 | 0.13 | 0.24 | 0.40 | 0.59 | ||||||||||||
| Cash provided by operating activities ($ in thousands) | 270,491 | 266,292 | 595,798 | 724,113 | 950,645 | ||||||||||||
| Total assets ($ in thousands) | 3,681,233 | 3,561,293 | 3,681,233 | 3,561,293 | 3,362,379 | ||||||||||||
| Non-current liabilities ($ in thousands) | 335,828 | 369,097 | 335,828 | 369,097 | 415,696 | ||||||||||||
| Average realized gold price ($/ounce) | 1,746 | 1,800 | 1,788 | 1,796 | 1,777 | ||||||||||||
Adjusted net income(1)(2) ($ in thousands) | 121,442 | 112,724 | 263,782 | 385,370 | 514,891 | ||||||||||||
Adjusted earnings per share (1)(2) - basic ($) | 0.11 | 0.11 | 0.25 | 0.37 | 0.49 | ||||||||||||
| Consolidated operations results: | |||||||||||||||||
| Gold sold (ounces) | 339,355 | 292,350 | 969,155 | 981,401 | 1,006,455 | ||||||||||||
| Gold produced (ounces) | 352,769 | 288,849 | 973,003 | 987,595 | 995,258 | ||||||||||||
Cash operating costs(2) ($/gold ounce sold) | 470 | 406 | 646 | 503 | 405 | ||||||||||||
Cash operating costs(2) ($/gold ounce produced) | 440 | 460 | 637 | 511 | 406 | ||||||||||||
Total cash costs(2) ($/gold ounce sold) | 593 | 533 | 768 | 626 | 526 | ||||||||||||
All-in sustaining costs(2) ($/gold ounce sold) | 876 | 844 | 1,022 | 874 | 774 | ||||||||||||
| Operations results including equity investment in Calibre: | |||||||||||||||||
Gold sold (ounces) | 354,496 | 308,395 | 1,024,272 | 1,041,381 | 1,051,716 | ||||||||||||
| Gold produced (ounces) | 367,870 | 304,897 | 1,027,874 | 1,047,414 | 1,040,737 | ||||||||||||
Cash operating costs(2) ($/gold ounce sold) | 497 | 433 | 669 | 528 | 422 | ||||||||||||
Cash operating costs(2) ($/gold ounce produced) | 468 | 484 | 660 | 535 | 423 | ||||||||||||
Total cash costs(2) ($/gold ounce sold) | 618 | 556 | 788 | 648 | 540 | ||||||||||||
All-in sustaining costs(2) ($/ounce gold sold) | 892 | 860 | 1,033 | 888 | 788 | ||||||||||||
(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”.
Annual results
Revenue
Consolidated gold revenue for the year ended December 31, 2022 was $1.73 billion on sales of 969,155 ounces at an average realized gold price of $1,788 per ounce, compared to $1.76 billion on sales of 981,401 ounces at an average realized gold price of $1,796 per ounce in 2021. The slight decrease in gold revenue of 2% ($0.03 billion) was due to a 2% decrease in gold ounces sold.
For the year ended December 31, 2022, the Fekola Mine accounted for $1.07 billion (2021 - $1.02 billion) of gold revenue from the sale of 599,600 ounces (2021 - 570,450 ounces), the Masbate Mine accounted for $385 million (2021 - $399 million) of gold revenue from the sale of 214,015 ounces (2021 - 222,291 ounces) and the Otjikoto Mine accounted for $280 million (2021 - $339 million) of gold revenue from the sale of 155,540 ounces (2021 - 188,660 ounces).
Production and operating costs
B2Gold had another year of strong operational performance in 2022, with the achievement of B2Gold’s seventh consecutive year of meeting or exceeding annual production guidance. Total gold production for 2022 was 1,027,874 ounces (including 54,871 ounces of attributable production from Calibre) (2021 - 1,047,414 ounces), above the mid-point of the guidance range (of between 990,000 and 1,050,000 ounces). Consolidated gold production from the Company’s three operating mines was 973,003 ounces (2021 - 987,595 ounces), near the mid-point of the guidance range (of between 950,000 - 1,000,000 ounces), with solid performances from each of the Company’s three mines (refer to "Review of Mining Operations and Development Projects" section below). The Fekola Mine achieved another strong year in 2022, producing 598,661 ounces of gold, near the upper end of its guidance range (of between 570,000 and 600,000 ounces).
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For the year ended December 31, 2022, consolidated cash operating costs (refer to "Non-IFRS Measures") were $637 per gold ounce produced ($646 per gold ounce sold), in-line with budget and $126 per gold ounce produced (25%) higher than 2021. Including estimated attributable results for Calibre, cash operating costs for the year ended December 31, 2022 were $660 per gold ounce produced ($669 per gold ounce sold) at the upper end of the Company's guidance range of $620 to $660 per ounce, $125 per gold ounce produced (23%) higher than 2021. Cash operating costs per ounce produced for the year ended December 31, 2022 were at the upper end of the guidance range as a result higher fuel costs, partially offset by lower tonnes mined at Fekola, delays in incurring Wolfshag underground costs and a weaker Namibian dollar. Cash operating costs for the year ended December 31, 2022 were higher than the year ended December 31, 2021 due to lower production and inflation driven higher input costs during the year ended December 31, 2022, including higher fuel unit prices and other consumables prices.
Consolidated all-in sustaining costs (refer to “Non-IFRS Measures”) for the year ended December 31, 2022 were $1,022 per gold ounce sold compared to $874 per gold ounce sold for 2021. Including estimated attributable results for Calibre, all-in sustaining costs for the year ended December 31, 2022 were $1,033 per gold ounce sold ($888 per gold ounce sold for 2021) and were within the Company's guidance range of $1,010 to $1,050 per ounce.
Depreciation and depletion
Depreciation and depletion expense, included in total cost of sales, was $384 million for the year ended December 31, 2022 compared to $379 million in 2021. Gold ounces sold and depreciation charge per ounce gold sold were consistent for both years.
Royalties and production taxes
Royalties and production taxes included in total cost sales were $118 million for the year ended December 31, 2022 and were comparable to 2021 as gold ounces sold and gold price realized were consistent for both years.
Other
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, 2022, G&A costs increased by $4 million to $54 million, primarily due to higher bank charges and travel expenses as the restrictions on travel due to the COVID-19 pandemic continued to be lifted.
Share-based payment expense for the year ended December 31, 2022 was $25 million compared to $23 million for 2021 reflecting additional stock-based compensation grants and related vesting in 2022.
For the year ended December 31, 2022, the Company recorded a $12 million write-down of mineral property interests relating to greenfield exploration targets compared to $1 million in 2021.
A loss on sale of mineral property interest of $3 million was recorded during the year ended December 31, 2022 relating to the completion of the sale of the Ondundu Property compared to a net gain on the disposal of its Burkina Faso assets (Kiaka and Toega projects) of $22 million for the year ended December 31, 2021.
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.
For the year ended December 31, 2022, the Company's estimate of its share of its associates net income was approximately $10 million compared to $18 million in 2021. For the year ended December 31, 2022, this included an estimate of the Company's share of net income for Calibre of $12 million partially offset by an estimate of the Company's share of net loss of BeMetals of $2 million which reflected the expected write-down of the South Mountain property which was abandoned by BeMetals in 2022. The Company will update any differences in the first quarter of 2023.
The Company reported $10 million in foreign exchange losses for the year ended December 31, 2022 compared to foreign exchange losses of $6 million in 2021.
Other operating expenses for the year ended December 31, 2022 were $6 million, which included $2 million for exploration evaluation costs.
The Company reported $11 million in interest and financing expense for the year ended December 31, 2022 in line with $12 million in 2021.
For the year ended December 31, 2022, the Company recorded derivative gains of $19 million compared to derivative gains of $24 million in 2021. The gains were driven by fuel forward contracts derivative instruments and consisted of net unrealized losses of $10 million (2021 - net unrealized gains of $13 million) and realized gains of $29 million (2021 - realized gains of $11 million).
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For the year ended December 31, 2022, the Company recorded interest income of $12 million compared to $3 million in 2021 due to higher interest rates earned on its cash balances in 2022 as well as $3 million of non-cash interest income on the Deferred Consideration Receivable in connection with the Kiaka Project disposal.
Other non-operating income for the year ended December 31, 2022 was $8 million, mainly consisting of a dilution gain on investment in Calibre of $6 million following dilution of the Company's investment in Calibre from 33% to 25% as a result of Calibre's acquisition of Fiore Gold Ltd. ("Fiore"), which closed in January 2022.
Current income tax, withholding and other taxes
For the year ended December 31, 2022, the Company recorded a net current income, withholding and other taxes expense of $248 million compared to $271 million in 2021 consisting of current income tax of $186 million (2021 - $209 million), the 10% priority dividend to the State of Mali of $36 million (2021 - $39 million) and withholding tax (on dividends from subsidiaries/intercompany interest/management fees) of $26 million (2021 - $23 million). The priority dividend is accounted for as an income tax in accordance with IAS 12, Income Taxes. Compared to 2021, current tax expense for 2022 was lower mainly as a result of lower income partially offset by accruals of $11 million for the expected settlement of various tax assessments. In addition, under RA No. 11534, otherwise known as 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 current income taxes in 2021. Withholding tax for 2022 increased $3 million compared to 2021 due to the increased repatriation of funds from Mali and Namibia through intercompany dividends in 2022 which incur withholding taxes. For the year ended December 31, 2022, the Company recorded a deferred income tax recovery of $4 million compared to a deferred income tax recovery of $5 million in 2021. The decrease in deferred income tax recovery for 2022 compared to 2021 is mainly attributable to reduction of the corporate tax rate for the Masbate Mine in 2021 which created a deferred tax recovery of $18 million in 2021, which was mostly offset by an additional $9 million recovery in the 2022 deferred taxes for future withholding taxes, additional temporary difference reversals in 2022 of $6 million and $2 million lower weakening of foreign currencies in 2022.
For the year ended December 31, 2022, the Company generated net income of $287 million compared to $461 million in 2021, and the Company generated net income attributable to the shareholders of the Company of $253 million ($0.24 per share) compared to $420 million ($0.40 per share) in 2021. Adjusted net income attributable to the shareholders of the Company (refer to “Non-IFRS Measures”) for the year ended December 31, 2022 was $264 million ($0.25 per share) compared to $385 million ($0.37 per share) in 2021. Adjusted net income for the year ended December 31, 2022 excluded the write-down of mineral property interests of $12 million, reversal of impairment of long-lived assets of $1 million, loss on sale of mineral properties of $3 million, unrealized losses on derivative instruments of $10 million, dilution gain on Calibre investment of $6 million, non-cash interest income on deferred consideration receivable of $3 million and deferred income tax recovery of $5 million.
Cash flow provided by operating activities was $596 million for the year ended December 31, 2022 compared to $724 million during 2021, a decrease of $128 million. The decrease reflects higher production costs of $133 million, lower revenues of $30 million, higher long-term value added tax receivable outflows partially offset by higher realized gains on fuel contracts of $16 million and lower non-cash working capital outflows for the year ended December 31, 2022, most significantly for current income and other taxes payables as well as value-added tax receivables. During the year ended December 31, 2022 the Company paid $239 million (2021 - $324 million) of current income tax, withholding and other taxes in cash. For the year ended December 31, 2021, income tax payments were significantly higher than the year ended December 31, 2022 as a result of tax installments to settle the final 2020 tax liability of $138 million (including payment of the final 2020 priority dividend of $47 million due to the State of Mali) after a record earnings year in 2020), including approximately $27 million related to 2021 outstanding tax liability obligations. Based on current assumptions, including an average gold price of $1,700 per ounce for 2023, the Company is forecasting to make total cash income tax payments for current income tax, withholding and other taxes in 2023 of approximately $187 million.
B2Gold continues to maintain a strong financial position and liquidity. At December 31, 2022, the Company had cash and cash equivalents of $652 million compared to cash and cash equivalents of $673 million at December 31, 2021. Working capital at December 31, 2022 was $802 million compared to $802 million at December 31, 2021. At December 31, 2021, the full amount of the Company's $600 million RCF was undrawn and available.
Fourth quarter 2022 and 2021
Revenue
For the fourth quarter of 2022, consolidated gold revenue was $592 million on sales of 339,355 ounces at an average realized gold price of $1,746 per ounce, compared to $526 million on sales of 292,350 ounces at an average realized gold price of $1,800 per ounce in the fourth quarter of 2021. The increase in gold revenue of 13% ($66 million) was due to a 16% increase in gold ounces sold (mainly due to the higher gold production), partially offset by a 3% decrease in the average realized gold price.
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In the fourth quarter of 2022, the Fekola Mine accounted for $415 million (fourth quarter of 2021 - $312 million) of gold revenue from the sale of 237,800 ounces (fourth quarter of 2021 - 173,700 ounces), the Masbate Mine accounted for $94 million (fourth quarter of 2021 - $73 million) of gold revenue from the sale of 53,865 ounces (fourth quarter of 2021 - 40,650 ounces), the Otjikoto Mine accounted for $83 million (fourth quarter of 2021 - $141 million) of gold revenue from the sale of 47,690 ounces (fourth quarter of 2021 - 78,000 ounces).
Production and operating costs
In the fourth quarter of 2022, B2Gold’s consolidated gold production was 352,769 ounces, 11% (35,058 ounces) higher than budget and 22% (63,920 ounces) higher than the fourth quarter of 2021 resulting from higher than budgeted gold production from the Fekola Mine of 244,014 ounces, a quarterly record for the operation. The Masbate Mine was in-line with budget, while the Otjikoto Mine was slightly below budget. The Company’s total gold production for the fourth quarter of 2022 was 367,870 ounces (including 15,101 ounces of attributable production from Calibre).
In the fourth quarter of 2022, consolidated cash operating costs (refer to "Non-IFRS Measures") were $440 per gold ounce produced ($470 per gold ounce sold), in line with budget and the fourth quarter of 2021. Including estimated attributable results for Calibre, cash operating costs for the fourth quarter of 2022 were $468 per gold ounce produced ($497 per gold ounce sold), in line with budget and the fourth quarter of 2021. Consolidated cash operating costs for the fourth quarter of 2022 were in line with budget and the fourth quarter of 2021, as a result of record gold production in the fourth quarter of 2022 and the benefit of weaker local currencies being partially offset by higher fuel and reagent costs.
Consolidated all-in sustaining costs (refer to "Non-IFRS Measures") for the fourth quarter of 2022 were $876 per gold ounce sold compared to a budget of $746 per gold ounce sold and $844 per gold ounce sold for the fourth quarter of 2021. Including estimated attributable results for Calibre, all-in sustaining costs for the fourth quarter of 2022 were $892 per gold ounce sold compared to a budget of $760 per gold ounce sold and $860 per gold ounce sold for the fourth quarter of 2021. As expected, all-in sustaining costs for the fourth quarter of 2022 were higher than budget due to the catch up of delayed budgeted sustaining capital expenditures from earlier quarters of 2022, as well as higher than budgeted G&A costs partially offset by higher than budgeted gold ounces sold.
Depreciation and depletion
Depreciation and depletion expense included in total cost of sales was $131 million in the fourth quarter of 2022 compared to $123 million in the fourth quarter of 2021. The 7% increase in depreciation expense was primarily due to a 16% increase in the gold ounces sold partially offset by a 9% decrease in the depreciation charge per ounce of gold sold. The decrease in the depreciation charge per gold ounce sold was a result of $9 million in additional depreciation recorded by the Otjikoto Mine in the fourth quarter of 2021 to reflect a decrease in expected recoverable ounces for its prestripping asset which was not repeated in the fourth quarter of 2022.
Royalties and production taxes
Royalties and production taxes included in total cost sales were $42 million for the fourth quarter of 2022 compared to $37 million in the fourth quarter of 2021. The 14% increase in royalties and production taxes resulted mainly from a 16% increase in gold ounces sold partially offset by a 3% decrease in the average realized gold price in the fourth quarter of 2021.
Other
G&A for the fourth quarter of 2022 increased by $2 million (to $21 million) compared to the fourth quarter of 2021 due to higher bank charges and travel expenses as the restrictions on travel due to the COVID-19 pandemic continued to be lifted.
Share-based payment expense for the fourth quarter of 2022 was $7 million, in line with the fourth quarter of 2021.
In the fourth quarter of 2022, the Company recorded a $5 million write-down of mineral property interests relating to greenfield exploration targets.
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 2022, the Company's estimate of its share of Calibre's and BeMetals' net income was approximately $1 million compared to $4 million in the fourth quarter of 2021. The Company will update any differences in the first quarter of 2023.
The Company reported $6 million in foreign exchange gains for the fourth quarter of 2022 compared to foreign exchange losses of $2 million in the fourth quarter of 2021. The foreign exchange gains for the fourth quarter of 2022 resulted from the
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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 2022, the Company recorded interest income of $4 million compared to $1 million in the fourth quarter of 2021 due to higher interest rates earned on its cash balances in 2022.
For the fourth quarter of 2022, the Company recorded a net current income, withholding and other taxes expense of $107 million compared to $96 million in the fourth quarter of 2021, consisting of current income tax of $87 million (fourth quarter of 2021 - $80 million), the 10% priority dividend to the State of Mali of $18 million (fourth quarter of 2021 - $14 million) and withholding tax (on dividends from subsidiaries/intercompany interest/management fees) of $2 million (fourth quarter of 2021 - $2 million). The priority dividend is accounted for as an income tax in accordance with IAS 12, Income Taxes. Compared to the fourth quarter of 2021, current tax expense in the fourth quarter of 2022 was higher mainly as a result of higher income from the mines in the fourth quarter of 2022 as compared to the fourth quarter of 2021 as well as accruals of $9 million for the expected settlement of various tax assessments. For the fourth quarter of 2022, the Company recorded a deferred income tax recovery of $48 million compared to a deferred income tax recovery of $14 million in the fourth quarter of 2021. The change in the deferred income tax recovery in the fourth quarter of 2022 was mostly due to the strengthening of the local currencies in Mali and Namibia whereas in the fourth quarter of 2021 there had been a weakening of local currencies. The deferred tax recovery from temporary difference reversals and lower deferred taxes payable in respect of future withholding tax were similar in the fourth quarters of 2022 and 2021.
Net income for the fourth quarter of 2022 was $176 million compared to $153 million for the fourth quarter of 2021 and the Company generated net income attributable to the shareholders of the Company of $158 million ($0.15 per share) for the fourth quarter of 2022 compared to $137 million ($0.13 per share) in the fourth quarter of 2021. Adjusted net income attributable to shareholders of the Company (refer to “Non-IFRS Measures”) for the fourth quarter of 2022 was $121 million ($0.11 per share) compared to $113 million ($0.11 per share) in the fourth quarter of 2021. Adjusted net income in the fourth quarter of 2022 excluded the write-down of mineral property interests of $5 million, unrealized losses on derivative instruments of $3 million and deferred income tax recovery of $44 million.
REVIEW OF MINING OPERATIONS AND DEVELOPMENT PROJECTS
Fekola Mine - Mali
| Three months ended | Year ended | |||||||||||||
| December 31 | December 31 | |||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||
| Gold revenue ($ in thousands) | 415,121 | 312,123 | 1,067,482 | 1,024,425 | ||||||||||
| Gold sold (ounces) | 237,800 | 173,700 | 599,600 | 570,450 | ||||||||||
| Average realized gold price ($/ounce) | 1,746 | 1,797 | 1,780 | 1,796 | ||||||||||
| Tonnes of ore milled | 2,469,924 | 2,412,690 | 9,376,096 | 9,143,022 | ||||||||||
| Grade (grams/tonne) | 3.31 | 2.24 | 2.14 | 2.05 | ||||||||||
| Recovery (%) | 92.8 | 94.2 | 92.9 | 94.2 | ||||||||||
| Gold production (ounces) | 244,014 | 163,539 | 598,661 | 567,795 | ||||||||||
Cash operating costs(1) ($/gold ounce sold) | 358 | 314 | 545 | 439 | ||||||||||
Cash operating costs(1) ($/gold ounce produced) | 348 | 379 | 537 | 449 | ||||||||||
Total cash costs(1) ($/gold ounce sold) | 495 | 464 | 684 | 586 | ||||||||||
All-in sustaining costs(1) ($/gold ounce sold) | 708 | 749 | 867 | 765 | ||||||||||
| Capital expenditures ($ in thousands) | 48,843 | 56,559 | 117,622 | 110,637 | ||||||||||
| Exploration ($ in thousands) | 1,366 | 3,691 | 15,214 | 13,014 | ||||||||||
(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 (owned 80% by the Company and 20% by the State of Mali) achieved another strong year in 2022, producing 598,661 ounces of gold, at the top end of the annual guidance range of 570,000 to 600,000 ounces and 5% (30,866 ounces) higher compared to 2021. For the year ended December 31, 2022, mill feed grade was 2.14 g/t compared to budget of 2.15 g/t and 2.05 g/t in 2021; mill throughput was 9.38 million tonnes (an annual record) compared to budget of 9.00 million tonnes and 9.14 million tonnes in 2021; and gold recovery averaged 92.9% compared to budget of 94.7% and 94.2% in 2021. In the fourth quarter of 2022, the Fekola Mine in Mali produced a quarterly record of 244,014 ounces of gold, 18% (37,245 ounces) higher than budgeted and 49% (80,475 ounces) higher compared to the fourth quarter of 2021, largely due to processing of additional high grade ore from Fekola Phase 6 pit. Full production from Phase 6 was made possible during the fourth quarter of 2022 by improvements made to the pit dewatering system. During the fourth quarter of 2022, the Fekola processing facilities continued to outperform budget with 2.47 million tonnes processed as a result of continued favorable ore fragmentation,
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availability of supplemental saprolite feed and continued optimization of the grinding circuit. Mill feed grade was higher in the fourth quarter of 2022 due to the increased volume of high grade ore processed from Fekola Phase 6 pit. Mined ore tonnage and grade continue to reconcile well with the Fekola resource model. For the fourth quarter of 2022, mill feed grade was 3.31 g/t compared to budget of 2.99 g/t and 2.24 g/t in the fourth quarter of 2021; mill throughput was 2.47 million tonnes compared to budget of 2.26 million tonnes and 2.41 million tonnes in the fourth quarter of 2021; and gold recovery averaged 92.8% compared to budget of 95.2% and 94.2% in the fourth quarter of 2021.
For the year ended December 31, 2022, the Fekola Mine's cash operating costs (refer to “Non-IFRS Measures”) of $537 per ounce produced ($545 per gold ounce sold) were within the guidance range of $510 to $550 per ounce and $88 (20%) per ounce produced higher than in 2021. For the year ended December 31, 2022, Fekola's cash operating costs reflected total mining, processing and site general costs generally in line with budget. Total costs were largely in line with budget due to lower overall tonnes mined compared to budget and slightly higher than budgeted fuel prices realized in 2022. Fuel prices are set in advance by the State and therefore subject to timing delays between market fuel price increases and those experienced at the Fekola Mine. Fekola fuel prices were significantly lower than budget in the first quarter of 2022 but following the reset of State fuel pricing in the last nine months of 2022, fuel prices increased resulting in fuel prices overall being slightly higher than budget for 2022. For the year ended December 31, 2022, cash operating costs per ounce produced were higher, as expected, compared to the year ended December 31, 2021 mainly due to higher fuel and consumables costs and increased mining costs from operating deeper in the Fekola Pit. Fekola’s cash operating costs for the fourth quarter of 2022 were $348 per gold ounce produced ($358 per gold ounce sold), in line with the budget of $332 per gold ounce produced and lower than the $379 per gold ounce produced for the fourth quarter of 2021. For the fourth quarter of 2022, cash operating costs per ounce produced were lower compared to the fourth quarter of 2021 mainly due to the record quarterly production in the fourth quarter of 2022.
All-in sustaining costs (refer to “Non-IFRS Measures”) for the Fekola Mine for the year ended December 31, 2022 were $867 per gold ounce sold, within the guidance range of between $840 and $880 per ounce. For the year ended December 31, 2021, all-in sustaining costs were $765 per gold ounce sold. All-in sustaining costs for the year ended December 31, 2022 were within the Fekola Mine's guidance range and higher than the year ended December 31, 2021 as a result of the higher cash operating costs discussed above and higher G&A costs, partially offset by higher than budgeted realized gains on fuel derivatives and higher gold ounces sold. All-in sustaining costs for the fourth quarter of 2022 were $708 per gold ounce sold compared to a budget of $606 per gold ounce sold and $749 per gold ounce sold in the fourth quarter of 2021. As expected, all-in sustaining costs for the fourth quarter of 2022 were impacted by the catch up of budgeted sustaining capital expenditures delayed from earlier quarters of 2022 at Fekola, as well as higher than budgeted G&A costs.
Capital expenditures for the year ended December 31, 2022 totalled $118 million, primarily consisting of $40 million for mobile equipment purchases and rebuilds, $21 million for tailings storage facility expansion and equipment, $14 million for prestripping, and $19 million for the development of the Cardinal zone, including mobile equipment purchases. Capital expenditures in the fourth quarter of 2022 totalled $49 million and consisted of $22 million for mobile equipment purchases and rebuilds, $7 million for the development of Cardinal including mobile equipment purchases and $5 million for processing plant equipment.
On July 3, 2022, ECOWAS removed the economic, financial and diplomatic sanctions imposed on Mali in January 2022. The sanctions were removed by ECOWAS after the interim Malian Government announced a two-year transition to presidential elections and promulgated a new electoral law. Mali’s borders with its neighbouring countries have now re-opened to normal commercial traffic and ordinary supply routes are available. Throughout the period of the sanctions, the Fekola Mine continued to operate normally and meet its production targets while maintaining a good working relationship with the interim Government.
The low-cost Fekola Complex4 in Mali is expected to produce between 580,000 and 610,000 ounces of gold in 2023 at cash operating costs of between $565 and $625 per ounce and all-in sustaining costs of between $1,085 and $1,145 per ounce. At the Fekola Mine, ore will continue to be mined from the Fekola and Cardinal pits and for Fekola Regional operations, initial saprolite production (to be processed in the Fekola Mill) is expected to commence from the Bantako permit starting in the third quarter of 2023. Saprolite production from the Bantako permit is expected to generate approximately 18,000 ounces of gold production in 2023 with Fekola Regional production levels continuing to ramp-up through 2024. The Fekola Mine is expected to process 9 million tonnes of ore during 2023 at an average grade of 2.20 g/t with a process gold recovery of 93.4%. The expected increase in Fekola's all-in sustaining costs for 2023 reflects, predominantly, higher sustaining capital expenditures.
Capital expenditures in 2023 at Fekola are expected to total approximately $352 million, of which approximately $214 million is classified as sustaining capital expenditures and $138 million is classified as non-sustaining capital expenditures. Sustaining capital expenditures are anticipated to include, amongst other items, $101 million for capitalized stripping, $51 million for new and replacement Fekola mining equipment, including capitalized rebuilds, and $35 million to commence construction of a new tailings storage facility. Non-sustaining capital expenditures are anticipated to include $63 million to develop and equip Fekola Regional's Anaconda Area and Dandoko project, $54 million for underground mine development (Fekola Mine underground ore production anticipated to commence in the second half of 2025) and $16 million for haul road construction to Fekola Regional's Anaconda Area and Dandoko project.
4 Fekola Complex is comprised of Fekola Mine (Medinandi permit hosting the Fekola and Cardinal zones) and Fekola Regional (Anaconda Area (Bantako and Menankoto permits), Bakolobi and Dandoko permits).
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Masbate Mine – Philippines
| Three months ended | Year ended | |||||||||||||
| December 31 | December 31 | |||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||
| Gold revenue ($ in thousands) | 94,010 | 73,252 | 384,714 | 398,879 | ||||||||||
| Gold sold (ounces) | 53,865 | 40,650 | 214,015 | 222,291 | ||||||||||
| Average realized gold price ($/ounce) | 1,745 | 1,802 | 1,798 | 1,794 | ||||||||||
| Tonnes of ore milled | 2,043,931 | 1,948,003 | 7,929,094 | 7,600,094 | ||||||||||
| Grade (grams/tonne) | 1.08 | 0.95 | 1.11 | 1.11 | ||||||||||
| Recovery (%) | 68.3 | 78.5 | 74.9 | 81.6 | ||||||||||
| Gold production (ounces) | 48,687 | 46,629 | 212,728 | 222,227 | ||||||||||
Cash operating costs(1) ($/gold ounce sold) | 877 | 939 | 830 | 660 | ||||||||||
Cash operating costs(1) ($/gold ounce produced) | 872 | 952 | 817 | 682 | ||||||||||
Total cash costs(1) ($/gold ounce sold) | 984 | 1,070 | 937 | 766 | ||||||||||
All-in sustaining costs(1) ($/gold ounce sold) | 1,187 | 1,331 | 1,104 | 914 | ||||||||||
| Capital expenditures ($ in thousands) | 9,620 | 10,378 | 39,528 | 30,743 | ||||||||||
| Exploration ($ in thousands) | 1,648 | 1,142 | 4,759 | 5,013 | ||||||||||
(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 continued its strong operational performance for 2022, producing 212,728 ounces of gold, slightly below the revised guidance range of 215,000 to 225,000 ounces (but at the upper end of the original guidance range of 205,000 to 215,000 ounces). Masbate's 2022 annual gold production was 4% (9,499 ounces) lower compared to 2021, mainly resulting from lower average gold recoveries, partially offset by higher mill throughput. Lower gold recoveries for 2022 as compared to 2021 were primarily due to processing more sulphide and transitional ore in 2022, which has lower gold recovery as compared to ore processed in 2021 containing a higher percentage of oxide feed. For a similar reason, average 2022 gold recoveries were slightly less than budget due to planned changes in mining sequence that prioritized processing a higher percentage of sulphide and transitional ore as compared to budget. Masbate's mill throughput was above budget in 2022 due to improved ore fragmentation, optimization of mill operations and improved blending of mill feed. Mined ore tonnage and grade continue to reconcile well with the Masbate resource model. For the year ended December 31, 2022, mill feed grade was 1.11 g/t compared to budget of 1.09 g/t and 1.11 g/t in 2021; mill throughput was 7.93 million tonnes compared to budget of 7.68 million tonnes and 7.60 million tonnes in 2021; and gold recovery averaged 74.9% compared to budget of 77.4% and 81.6% in 2021. In the fourth quarter of 2022, Masbate produced 48,687 ounces of gold, in line with budget. Lower gold recoveries during the quarter were offset by slightly higher than budgeted gold mill feed grades and higher than budgeted mill throughput. Fourth quarter 2022 mill feed grade was 1.08 g/t compared to budget of 1.07 g/t and 0.95 g/t in the fourth quarter of 2021; mill throughput was 2.04 million tonnes compared to budget of 1.90 million tonnes and 1.95 million tonnes in the fourth quarter of 2021; and gold recovery averaged 68.3% compared to budget of 75.5% and 78.5% in the fourth quarter of 2021. Fourth quarter 2022 gold production was higher by 4% (2,058 ounces) compared to the fourth quarter of 2021 due to higher processed ore grade and mill throughput partially offset by lower recoveries. Processed grade was higher in the fourth quarter of 2022 (compared to the fourth quarter of 2021) due to planned mining of more high grade ore during the fourth quarter of 2022. Gold recoveries for processed ore were lower in the fourth quarter of 2022 (compared to the fourth quarter of 2021) due to the processing of a higher ratio of sulphide and transitional ore to oxide ore as compared to 2021.
The Masbate Mine’s cash operating costs (refer to “Non-IFRS Measures”) of $817 per ounce produced for the year ended December 31, 2022 ($830 per gold ounce sold) were slightly below the revised guidance range of between $820 to $860 per ounce (but above the original guidance range of $740 to $780 per ounce). Cash operating costs per gold ounce produced for the year ended December 31, 2022 were above budget resulting from higher than budgeted mining and processing costs resulting from higher than budgeted diesel and HFO costs, partially offset by higher than budgeted gold produced. Cash operating costs per ounce produced for the year ended December 31, 2022 were 20% higher than the year ended December 31, 2021 mainly as a result of expected increases to operating costs due to inflation including higher fuel and other consumables costs. The Masbate Mine's cash operating costs for the fourth quarter of 2022 were $872 per gold ounce produced ($877 per gold ounce sold) which was $120 per ounce produced higher than budget and $80 per ounce produced lower than the fourth quarter of 2021. The higher cash operating costs per gold ounce produced in the fourth quarter of 2022 compared to budget arose from inflation driven higher than budgeted fuel prices as previously noted. Cash operating costs for the fourth quarter of 2022 were lower than the fourth quarter of 2021 due to higher gold production in the fourth quarter of 2022.
All-in sustaining costs (refer to “Non-IFRS Measures”) for the Masbate Mine were $1,104 per gold ounce sold for the year ended December 31, 2022, at the upper end of its guidance range of between $1,070 and $1,110 per ounce, compared to $914 per gold ounce sold for the year ended December 31, 2021. All-in sustaining costs for the year ended December 31, 2022 were at the upper end of the Masbate Mine's guidance range as a result of the higher cash operating costs discussed above, partially offset by higher than budgeted realized gains on fuel derivatives. All-in sustaining costs for the fourth quarter of 2022 were
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$1,187 per gold ounce sold compared to a budget of $956 per gold ounce sold and $1,331 per gold ounce sold in the fourth quarter of 2021. As expected, all-in sustaining costs for the fourth quarter of 2022 were higher than budget as a result of higher than budgeted operating costs resulting from inflation driven higher than budgeted fuel prices and the expected catch up of budgeted sustaining capital delayed from earlier quarters of 2022, partially offset by higher than budgeted realized gains on fuel derivatives and higher than budgeted gold ounces sold.
Capital expenditures totalled $40 million in 2022, including mobile equipment rebuilds and purchases of $19 million, $8 million for an additional powerhouse generator and $4 million for tailings storage facility projects. Capital expenditures for the fourth quarter of 2022 totalled $10 million consisting primarily of mobile equipment rebuilds and purchases of $4 million, $3 million for an additional powerhouse generator and $1 million for tailings storage facility projects.
The Masbate Mine in the Philippines is expected to produce between 170,000 and 190,000 ounces of gold in 2023 at cash operating costs of between $985 and $1,045 per ounce and all-in sustaining costs of between $1,370 and $1,430 per ounce. For 2023, Masbate is expected to process 7.8 million tonnes of ore at an average grade of 0.96 g/t with a process gold recovery of 74.5%. Gold production is scheduled to be relatively consistent throughout 2023. Mill feed will be a blend of mined fresh ore sourced from the Main Vein Pit and low-grade ore stockpiles. The anticipated increase in Masbate's all-in sustaining costs for 2023 reflects, predominantly, higher sustaining capital expenditures.
Capital expenditures for 2023 at Masbate are expected to total $44 million, of which approximately $38 million is classified as sustaining capital expenditures and $6 million is classified as non-sustaining capital expenditures. Sustaining capital expenditures are anticipated to include $9 million for deferred stripping, $18 million for mining equipment replacement and rebuilds and $4 million for tailing storage facility development and equipment. Non-sustaining capital expenditures are anticipated to include $5 million for land acquisition and development.
Otjikoto Mine - Namibia
| Three months ended | Year ended | |||||||||||||
| December 31 | December 31 | |||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||
| Gold revenue ($ in thousands) | 83,337 | 140,738 | 280,394 | 338,960 | ||||||||||
| Gold sold (ounces) | 47,690 | 78,000 | 155,540 | 188,660 | ||||||||||
| Average realized gold price ($/ounce) | 1,747 | 1,804 | 1,803 | 1,797 | ||||||||||
| Tonnes of ore milled | 839,599 | 885,232 | 3,412,960 | 3,541,599 | ||||||||||
| Grade (grams/tonne) | 2.25 | 2.79 | 1.50 | 1.76 | ||||||||||
| Recovery (%) | 98.8 | 99.1 | 98.5 | 98.6 | ||||||||||
| Gold production (ounces) | 60,068 | 78,681 | 161,614 | 197,573 | ||||||||||
Cash operating costs(1) ($/gold ounce sold) | 572 | 334 | 786 | 511 | ||||||||||
Cash operating costs(1) ($/gold ounce produced) | 465 | 338 | 769 | 493 | ||||||||||
Total cash costs(1) ($/gold ounce sold) | 642 | 407 | 858 | 583 | ||||||||||
All-in sustaining costs(1) ($/gold ounce sold) | 965 | 583 | 1,161 | 908 | ||||||||||
| Capital expenditures ($ in thousands) | 19,521 | 21,599 | 79,096 | 80,936 | ||||||||||
| Exploration ($ in thousands) | 1,201 | 1,578 | 3,476 | 4,424 | ||||||||||
(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 finish to 2022 and produced 161,614 ounces of gold, slightly below the revised guidance range of 165,000 to 175,000 ounces (original guidance range was 175,000 to 185,000 ounces) and 18% (35,959 ounces) lower compared to 2021, mainly due to delays in bringing the Wolfshag underground mine into production. Project delays were due to issues achieving development rates in prior periods, which were addressed through the appointment of a new underground development contractor in April 2022. Development rates in the Wolfshag underground mine have improved and are in line with budget, with access to initial development ore achieved in the third quarter of 2022 and stope ore production having commenced in the fourth quarter of 2022. To start 2023, Wolfshag underground ore production rates are at expected levels, open pit high grade ore stockpile balances are above budgeted volumes and mined ore tonnage and grade continue to reconcile well with Otjikoto’s resource model. 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. For the year ended December 31, 2022, mill feed grade was 1.50 g/t compared to budget of 1.68 g/t and 1.76 g/t in 2021; mill throughput was 3.41 million tonnes compared to budget of 3.40 million tonnes and 3.54 million tonnes in 2021; and gold recovery averaged 98.5% compared to budget of 98.0% and 98.6% in 2021. In the fourth quarter of 2022, the Otjikoto Mine produced 60,068 ounces of gold which was 4% (2,179 ounces) lower than budget and 24% (18,613 ounces) lower than the fourth quarter of 2021. The fourth quarter of 2022 included a monthly production record of 30,493 ounces of gold in December 2022. Fourth quarter of 2022 gold production was slightly lower than anticipated mainly due to the previously disclosed delayed ramp-up of ore production from the Wolfshag underground mine. For the fourth quarter of 2022, mill feed grade was 2.25 g/t
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compared to budget of 2.31 g/t and 2.79 g/t in the fourth quarter of 2021; mill throughput was 0.84 million tonnes compared to budget of 0.86 million tonnes and 0.89 million tonnes in the fourth quarter of 2021; and gold recovery averaged 98.8% compared to budget of 98.0% and 99.1% in the fourth quarter of 2021.
The Otjikoto Mine's cash operating costs (refer to “Non-IFRS Measures”) for the year ended December 31, 2022 were $769 per gold ounce produced ($786 per gold ounce sold), within its guidance range of between $740 to $780 per ounce. Cash operating costs per ounce for the year ended December 31, 2022 were in line with budget as a result of lower underground mining costs due to the delays in accessing the Wolfshag underground and a weaker than budgeted Namibian dollar partially offset by lower than budgeted production and higher than budgeted fuel and reagent costs. For the fourth quarter of 2022, the Otjikoto Mine's cash operating costs were $465 per gold ounce produced ($572 per ounce gold sold), $46 per ounce produced lower than budget, as a result of lower underground mining costs due to the delays in accessing the Wolfshag underground and a weaker than budgeted Namibian dollar partially offset by higher than budgeted fuel and reagent costs. Cash operating costs per ounce produced for the fourth quarter of 2022 and the year ended December 31, 2022 were 38% and 56% higher, respectively, than the fourth quarter of 2021 and the year ended December 31, 2021, respectively, mainly as a result of higher ounces produced in 2021, advancing into lower grade ore zones in the open pits in 2022 and higher fuel unit costs in 2022.
All-in sustaining costs (refer to “Non-IFRS Measures”) for the Otjikoto Mine for the year ended December 31, 2022 were $1,161 per gold ounce sold, which was at the high end of its guidance range of between $1,120 and $1,160 per ounce and higher compared to $908 per gold ounce sold in 2021. All-in sustaining costs for the year ended December 31, 2022 were at the high end of its guidance range as a result of lower than budgeted gold ounces sold and higher than budgeted lease expenditures partially offset by lower than budgeted sustaining capital expenditures and higher than budgeted realized gains on fuel derivatives. All-in sustaining costs for the fourth quarter of 2022 were $965 per gold ounce sold compared to the budget of $789 per gold ounce sold and higher than $583 per gold ounce sold in the fourth quarter of 2021. All-in sustaining costs for the fourth quarter of 2022 were higher than budget as a result of lower than budgeted gold ounces sold and higher than budgeted capital expenditures partially offset by higher than budgeted realized gains on fuel derivatives.
Capital expenditures totalled $79 million in 2022, primarily consisting of $35 million for Wolfshag underground development, $27 million for prestripping for the Otjikoto pit, $12 million in mobile equipment rebuilds and purchases and $5 million for the national power grid connection line. Capital expenditures for the fourth quarter of 2022 totalled $20 million primarily consisting of $8 million for prestripping for the Otjikoto pit, $7 million for Wolfshag underground development and $3 million in mobile equipment rebuilds and purchases.
The Otjikoto Mine in Namibia is expected to produce between 190,000 and 210,000 ounces of gold in 2023 at cash operating costs of between $590 and $650 per ounce and all-in sustaining costs of between $1,080 and $1,140 per ounce. For 2023, Otjikoto is expected to process a total of 3.4 million tonnes of ore at an average grade of 1.87 g/t with a process gold recovery of 98.0%. In the first half of 2023, processed ore will be sourced from the Otjikoto pit and the Wolfshag underground mine, supplemented by existing medium and high grade ore stockpiles. Otjikoto's gold production is expected to be weighted approximately 60% to the second half of 2023 due to the timing of high grade ore mining from the Otjikoto pit and increased ore volumes from the Wolfshag underground mine. The anticipated decrease in Otjikoto's all-in sustaining costs for 2023 reflects the benefits of processing higher grade ore from the Otjikoto pit and the Wolfshag underground mine in the second half of 2023.
Capital expenditures in 2023 at Otjikoto are expected to total $77 million, of which approximately $74 million is classified as sustaining capital expenditures and $3 million is classified as non-sustaining capital expenditures. Sustaining capital expenditures are anticipated to include $71 million for capitalized stripping and capitalized development and $3 million for mobile equipment rebuilds.
Investment in Calibre
On January 12, 2022, Calibre completed its acquisition of 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.
At December 31, 2022, B2Gold held approximately 25% of the total issued and outstanding Calibre common shares and equity accounts for this ownership interest. The market value of the Company's 25% common shareholding of Calibre at December 31, 2022 was $74 million. For the year ended December 31, 2022, the Company's estimate of its share of Calibre's net income based on publicly available information was approximately $12 million. For the fourth quarter of 2022, the Company's estimate of its share of Calibre's net income based on publicly available information was approximately $3 million. Calibre will report its fourth quarter and full year 2022 financial results on February 22, 2023. The Company will update any differences in the first quarter of 2023.
Attributable share of Calibre production and costs
Based on Calibre's production press release dated January 10, 2023, consolidated production of Calibre for the year ended December 31, 2022 was 221,996 ounces of which the Company's attributable share was 54,871 ounces. Consolidated production of Calibre for the fourth quarter of 2022 was 61,294 ounces of which the Company's attributable share was 15,101 ounces.
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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, 2022 will be at the mid-point of the guidance ranges of approximately $970 to $1,070 per ounce and $1,100 to $1,200 per ounce, respectively. Consolidated cash operating costs per ounce produced and all-in sustaining costs for Calibre for the fourth quarter of 2022 reflect the adjustment for actual first nine months of 2022 results.
In 2023, Calibre operations are forecast to produce between 250,000 and 275,000 ounces of gold. The Company’s expected share (25%) of attributable ounces produced projected from Calibre is between 60,000 and 70,000 ounces. Calibre’s cash operating costs are forecast to be between $960 and $1,060 per ounce and all-in sustaining costs are forecast to be between $1,175 and $1,275 per ounce.
Fekola Complex - Fekola Mine and Fekola Regional Development
The Fekola Complex is comprised of the Fekola Mine (Medinandi permit hosting the Fekola and Cardinal zones) and Fekola Regional (Anaconda Area (Bantako and Menankoto permits), Bakolobi and Dandoko permits).
Based on the updated Anaconda Area Mineral Resource estimate and B2Gold's preliminary planning, the Company has demonstrated that the Anaconda Area (Bantako and Menankoto permit areas) could provide selective higher grade saprolite material (average grade of 2.2 g/t gold) to be trucked approximately 20 kilometres and fed into the Fekola mill at a rate of up to 1.5 Mtpa. Trucking of selective higher grade saprolite material from the Anaconda Area to the Fekola mill will increase the ore processed and has the potential to generate approximately 80,000 to 100,000 ounces of initial gold production per year from Fekola Regional annual production (Fekola Regional Phase I). Initial saprolite production is expected to commence from the Bantako permit starting in the third quarter of 2023 and is expected to contribute approximately 18,000 ounces of gold in 2023 with Fekola Regional production levels continuing to ramp-up through 2024.
In 2022, the Company invested $26 million for the development of Fekola Regional (Anaconda Area) saprolite mining including road construction, mine infrastructure, and mining equipment. The construction mobile equipment fleet is now in operation, and the Company broke ground on roads and mining infrastructure construction in the fourth quarter of 2022. Engineering and procurement of the mine workshop and mobile equipment is on schedule to support saprolite production from the Bantako permit area as early as the third quarter of 2023. Production from Bantako is contingent upon receipt of all necessary permits. The Company continues to focus on optimizing long-term Fekola Complex project value from all of the various oxide and sulphide material sources including Fekola Pit, Fekola Underground, Cardinal, and the Bantako, Menankoto, Dandoko and Bakolobi permits.
Preliminary results of a Fekola Complex optimization study, coupled with 2022 exploration drilling results, indicate that there is a significant opportunity to increase gold production and resource utilization with the addition of oxide processing capacity. The Company has therefore commenced an engineering study of a Fekola Regional stand-alone mill and oxide processing facilities (expected to be located on the Anaconda Area). Construction of a stand-alone oxide mill will be Phase II of the Fekola Regional Development Plan. The engineering study will be based on processing at least 4 Mtpa of saprolite and transitional (oxide) resources, with an option to add fresh rock (sulphide) capabilities in the future. Results of this study are expected in the second quarter of 2023. Conceptual analysis indicates that the combined Fekola and Fekola Regional processing facilities could have the potential to produce more than 800,000 ounces of gold per year from the Fekola Complex commencing as early as 2026, subject to delineation of additional mineral resources and development, completion of feasibility studies, and the receipt of all necessary regulatory approvals and permits. Following the Company's recently announced acquisition of Sabina Gold, the construction timeline for a Fekola Regional stand-alone oxide mill will be scheduled to allow for completion of the Goose Project in the first quarter of 2025. Further expansion of the Mamba and Cobra sulphide zones has the potential to increase Fekola Regional production and sustain the Fekola Complex potential production profile over the longer term. Drilling is currently ongoing at the Mamba and Cobra oxide and sulphide zones.
Gramalote Project - Colombia
The Gramalote Feasibility Study has been completed for the Gramalote Project, a joint venture between B2Gold and AngloGold, and both partners have determined that the project does not meet their investment thresholds for development of the project. The Gramalote Project continues to benefit from government support as well as continuing support from local communities. B2Gold and AngloGold have completed a comprehensive review of the alternatives relating to the Gramalote Project and consider that the interests of all stakeholders would be best served by finding a buyer for the Project. The partners commenced a joint sales process for the Gramalote Project in the fourth quarter of 2022.
Community Relations Update
In 2022, the Company invested a total of $6 million in its community relations programs, comprised of direct expenditures of $3 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 a 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 long-term
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success of community development. 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.
Fekola Mine
Fekola implements its social investment activities under the framework of the Fekola Community Development Plan ("CDP"). The CDP has a three year cycle and projects are selected by community members and approved by a steering committee led by the Sub-prefect of Kéniéba. Through the CDP, approximately $0.5 million was invested in 2022 in the Kéniéba District on various projects in the areas of water and sanitation, education and health access, and livelihood restoration.
Beyond the CDP, B2Gold is developing a 70 hectare ("ha") irrigation project that will provide opportunities to impacted communities for market gardening and winter crop production. The project has the potential to expand to 300 ha and accommodate approximately 600 local farmers. Governance of the project is shared between representatives of customary chiefs and local youth and women’s associations. In 2022, B2Gold invested $0.5 million in this irrigation project.
B2Gold, in partnership with Global Affairs Canada, is also supporting the FEMA Project (Femmes et Enfants des communautés Minières Artisanales), which aims to improve conditions for women and children living in artisanal mining communities within the Fekola Mine’s area of influence. The FEMA Project will continue for five years. FEMA’s focus is on developing livelihood opportunities for women, reducing child labour, and improving social conditions for vulnerable populations. The project is being implemented by Cowater International in association with Canadian NGOs Right to Play and IMPACT, and the Federation of Women in Mining of Mali. In 2022, B2Gold contributed $0.4 million to the FEMA Project.
In addition, B2Gold provides community donations where meaningful opportunities are identified, including scholarship programs and food security initiatives.
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 through an annual Social Development Management Plan ("SDMP"). Projects are identified and implemented in coordination with multi-stakeholder committees and town councils, and support education, infrastructure, health services, and livelihood development.
As a component of the SDMP, Masbate is partnering with the Philippines Department of Information and Communications Technology (DICT) on the Digital Jobs Project. The Project provides training to community members in various technical courses such as virtual assistance, web development, search engine optimization, graphic design, e-commerce, and online bookkeeping.
In 2022, the Company invested $4 million in community initiatives, of which approximately $3 million was invested through the SDMP and approximately $1 million was invested through other initiatives, including the donation of school supplies and equipment, ambulances, hospital equipment, medicines, vaccines, and personal protective equipment; and the sponsorship of various cultural events.
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 Namibia. In 2022, the Company supported programs in early childhood development, primary and secondary schools, vocational training and small-scale enterprise. A total of $1.5 million was invested in these social development programs in 2022.
Gramalote Project
In Colombia, community investment initiatives targeted education, health, livelihoods, arts and culture activities in the San Roque District. In 2022, projects included support of a local training and skills development centre and the provision of community education programs. The Company continues its formalization programs for artisanal mining and has agreed to invest resources with the miners of La Maria to pilot an infrastructure project.
For the third consecutive year, the Gramalote Project was recognized for its socio-economic contributions by the Secretary of Mines with the 2022 Social Seal of Mining award.
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Vancouver, Canada, Corporate Office
B2Gold actively supports sustainable projects in health, education, livelihoods and environmental conservation throughout the world in jurisdictions where it operates. As a Canadian company, B2Gold is also committed to supporting CSR initiatives at home through its More Than Mining Fund. The fund invests in programs to support people living with challenges associated with poverty, mental health, addiction, violence, and abuse. The fund partners with local charity organizations that deliver complex social services to the most vulnerable and at-risk people.
In 2022, the Company provided financial support of approximately CDN$1 million to community organizations in Canada. In Metro Vancouver, four partner organizations received CDN$550,000 to address socio-economic issues:
•Supporting Access to Food: The demand for food support in the local community has increased dramatically during the pandemic and food insecurity for many families and individuals continues. The Greater Vancouver Food Bank provides healthy food to those in need, including over 10,000 clients and approximately 110 Community Agency Partners across Metro Vancouver.
•Housing, Health Care and Harm Reduction: Vulnerable communities and people living with mental health challenges are at greater risk when combined with poverty or homelessness. The PHS Community Services Society and the Bloom Group Community Services Society 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.
•Support for At-Risk Youth and Homeless: Young people are a vulnerable subset of the homeless population. Covenant House Vancouver provides food, shelter, medical care, and other support services to Vancouver’s homeless and at-risk street youth.
B2Gold also donated CDN$350,000 to the following programs and campaigns in Metro Vancouver that align with the More Than Mining Fund criteria:
•First United’s First Forward Campaign, which will address critical housing, health, and social justice needs in the community by redeveloping their current site into a purpose-built space offering four floors of community amenities, programs and services, and below-market rental housing for Indigenous Peoples;
•PLEA Community Services' Children of the Street Program, to deliver prevention initiatives that provide children and families with information and practical tools to keep young people safe from sexual exploitation; 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 their Hurricane Fiona relief efforts, long-term recovery, and resilience and risk reduction activities following widespread flooding and damage to homes, buildings and infrastructure, impacting communities across five provinces: Newfoundland, Prince Edward Island, Nova Scotia, New Brunswick and Quebec. This donation was matched by the Federal Government.
LIQUIDITY AND CAPITAL RESOURCES
B2Gold continues to maintain a strong financial position and liquidity. At December 31, 2022, the Company had cash and cash equivalents of $652 million compared to cash and cash equivalents of $673 million at December 31, 2021. Working capital at December 31, 2022 was $802 million compared to $802 million at December 31, 2021. At December 31, 2022, the full amount of the Company's $600 million RCF was undrawn and available.
On December 16, 2021, the Company entered into an amended 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. (The RCF provides for the transition from LIBOR to a new benchmark rate prior to its replacement effective July 1, 2023. The new benchmark rate is based the Secured Overnight Financing Rate (“SOFR”) plus a term credit spread adjustment in addition to the existing sliding scale premium of between 2.00% to 2.50%.) 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, 2022, the Company was in compliance with these debt covenants.
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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 was 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, 2022, the balance in the DSRA account was Euro 3 million ($3 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 was 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 was 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, 2022, the facility had been fully drawn.
For the year ended December 31, 2022, capital expenditures totalled $342 million. The most significant expenditures were Fekola Mine expenditures of $118 million, Masbate Mine expenditures of $40 million, Otjikoto Mine expenditures of $79 million, Fekola Regional pre-development expenditures of $26 million and Gramalote Project expenditures of $16 million (refer to “Review of Mining Operations and Development Projects" section for additional details of capital expenditures). Exploration costs for the year ended December 31, 2022 totalled $64 million. In addition, for the year ended December 31, 2022, the Company made a $8 million mineral property exercise option payment in relation to the Ondundu Project, incurred $48 million in acquisition costs for the Bakolobi permit in Mali, incurred $21 million in acquisition costs for Oklo, funded reclamation escrow accounts of $7 million, issued a $5 million loan to an associate and received $45 million for the deferred consideration receivable in relation to the sale of the Kiaka project in 2021.
As at December 31, 2022, and in addition to those commitments disclosed elsewhere in this MD&A, the Company had the following commitments:
•For payments of $29 million for mobile equipment, $9 million related to mobile equipment rebuilds, $6 million related to plant and powerhouse maintenance, $1 million for the tailings storage facility expansion, $1 million for underground development and $3 million for other capital projects at the Fekola Mine, all of which is expected to be incurred in 2023.
•For payments of $13 million for mobile equipment and $2 million for infrastructure for Fekola Regional pre-development, all of which is expected to be incurred in 2023.
•For payments of $8 million for mobile equipment at the Masbate Mine, all of which is expected to be incurred in 2023.
•For payments of $1 million for the Gramalote Project, all of which is expected to be incurred in 2023.
For 2023, the Company has budgeted total capital expenditures of $352 million at the Fekola Complex, $44 million at the Masbate Mine and $77 million at the Otjikoto Mine. The Company’s total 2023 exploration budget is approximately $64 million.
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As at December 31, 2022, the Company’s significant commitments are disclosed in the table below:
| 2023 | 2024 | 2025 | 2026 | 2027 | Post 2027 | Total | |||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||
| (000's) | (000's) | (000's) | (000's) | (000's) | (000's) | (000's) | |||||||||||||||||
| Accounts payable and accrued liabilities | 114,791 | — | — | — | — | — | 114,791 | ||||||||||||||||
| Fekola equipment loan facilities: | |||||||||||||||||||||||
| Principal | 9,643 | 7,788 | 5,987 | — | — | — | 23,418 | ||||||||||||||||
| Interest (estimated) | 993 | 548 | 148 | — | — | — | 1,689 | ||||||||||||||||
| Masbate equipment loan facility: | |||||||||||||||||||||||
| Principal | 872 | — | — | — | — | — | 872 | ||||||||||||||||
| Interest (estimated) | 28 | — | — | — | — | — | 28 | ||||||||||||||||
| Lease liabilities | |||||||||||||||||||||||
| Principal | 4,022 | 3,238 | 2,638 | 1,981 | 2,078 | 19,297 | 33,254 | ||||||||||||||||
| Capital expenditure commitments | 72,013 | — | — | — | — | — | 72,013 | ||||||||||||||||
| Commitment fees on RCF | 2,700 | 2,700 | 2,588 | — | — | — | 7,988 | ||||||||||||||||
| Mine restoration provisions | 5,545 | 589 | 1,814 | 4,915 | 2,102 | 107,291 | 122,256 | ||||||||||||||||
| Employee benefits obligation | — | — | — | — | — | 8,121 | 8,121 | ||||||||||||||||
| Other liabilities | 2,331 | — | — | — | — | — | 2,331 | ||||||||||||||||
| 212,938 | 14,863 | 13,175 | 6,896 | 4,180 | 134,709 | 386,761 | |||||||||||||||||
We accrue mine restoration provisions over the life of our mining operations and amounts shown are estimated expenditures in the indicated years at their undiscounted values.
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, 2022, the Company entered into additional forward contracts for the purchase of 2 million litres of fuel oil with settlements scheduled between November 2023 and January 2024. 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, 2022:
| 2023 | 2024 | Total | ||||||||||||||||||
| Forward – fuel oil: | ||||||||||||||||||||
| Litres (thousands) | 22,604 | 656 | 23,260 | |||||||||||||||||
| Average strike price | $ | 0.37 | $ | 0.43 | $ | 0.37 | ||||||||||||||
| Forward – gas oil: | ||||||||||||||||||||
| Litres (thousands) | 17,066 | — | 17,066 | |||||||||||||||||
| Average strike price | $ | 0.43 | $ | — | $ | 0.43 | ||||||||||||||
The unrealized fair value of these contracts at December 31, 2022 was $5 million.
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Operating activities
Cash flow provided by operating activities was $596 million for the year ended December 31, 2022 compared to $724 million during 2021, a decrease of $128 million. The decrease reflects higher production costs of $133 million, lower revenues of $30 million, higher long-term value added tax receivable outflows partially offset by higher realized gains on fuel contracts of $16 million and lower non-cash working capital outflows for the year ended December 31, 2022, most significantly for current income and other taxes payables as well as value-added tax receivables. During the year ended December 31, 2022 the Company paid $239 million (2021 - $324 million) of current income tax, withholding and other taxes in cash. For the year ended December 31, 2021, income tax payments were significantly higher than the year ended December 31, 2022 as a result of tax installments to settle the final 2020 tax liability of $138 million (including payment of the final 2020 priority dividend of $47 million due to the State of Mali) after a record earnings year in 2020), including approximately $27 million related to 2021 outstanding tax liability obligations. Based on current assumptions, including an average gold price of $1,700 per ounce for 2023, the Company is forecasting to make total cash income tax payments for current income tax, withholding and other taxes in 2023 of approximately $187 million.
Financing activities
The Company’s cash used by financing activities for the year ended December 31, 2022 was a net outflow of $211 million. For the year ended December 31, 2022, the Company made equipment loan facility repayments of $20 million, made principal payments on lease arrangements of $7 million, received proceeds from the exercise of stock options of $14 million, made interest and commitment fees payments of $4 million, made distributions to non-controlling interests of $30 million, received loan repayments from non-controlling interests of $3 million and received $5 million from reductions in the DSRA account. In addition, total dividends of $171 million were paid to shareholders for the year ended December 31, 2022 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, 2022, cash flows used in investing activities totalled $389 million including capital expenditures of $342 million. The most significant expenditures were Fekola Mine expenditures of $118 million, Masbate Mine expenditures of $40 million, Otjikoto Mine expenditures of $79 million, Fekola Regional pre-development expenditures of $26 million and Gramalote Project expenditures of $16 million (refer to “Review of Mining Operations and Development Projects" section for additional details of capital expenditures). Exploration costs for the year ended December 31, 2022 totalled $64 million. In addition, for the year ended December 31, 2022, the Company made a $8 million mineral property exercise option payment in relation to the Ondundu Project, incurred $48 million in acquisition costs for the Bakolobi permit in Mali, incurred $21 million in acquisition costs for Oklo, funded reclamation escrow accounts of $7 million, issued a $5 million loan to an associate and received $45 million for the deferred consideration receivable in relation to the sale of the Kiaka project in 2021.
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Exploration
Resource property expenditures on exploration are disclosed in the table below:
| For the three months ended December 31, 2022 | For the three months ended December 31, 2021 | For the year ended December 31, 2022 | For the year ended December 31, 2021 | |||||||||||
| $ | $ | $ | $ | |||||||||||
| (000’s) | (000’s) | (000’s) | (000’s) | |||||||||||
| Fekola Mine, exploration | 1,366 | 3,691 | 15,214 | 13,014 | ||||||||||
| Masbate Mine, exploration | 1,648 | 1,142 | 4,759 | 5,013 | ||||||||||
| Otjikoto Mine, exploration | 1,201 | 1,578 | 3,476 | 4,424 | ||||||||||
| Menankoto Property, exploration | 3,437 | 855 | 8,166 | 4,942 | ||||||||||
| Bantako North Property, exploration | 1,874 | 2,489 | 8,608 | 9,057 | ||||||||||
| Finland Properties, exploration | 3,398 | 1,831 | 9,962 | 3,527 | ||||||||||
| Uzbekistan Properties, exploration | 1,379 | 1,832 | 4,072 | 4,456 | ||||||||||
| Kiaka Project, exploration | — | 674 | — | 4,313 | ||||||||||
| Other | 3,821 | 2,656 | 9,372 | 7,370 | ||||||||||
| 18,124 | 16,748 | 63,629 | 56,116 | |||||||||||
B2Gold executed another year of aggressive exploration in 2022 incurring $66 million (including $2 million of target generation costs included in other operating expenses in the Consolidated Statement of Operations) compared to a revised budget of approximately $75 million (original budget of $65 million). Exploration in 2022 was focused predominantly in Mali, other operating mine sites in Namibia and the Philippines, as well as continued focus on grassroots targets around the world.
B2Gold is planning another year of extensive exploration in 2023 with a budget of approximately $64 million. A significant focus will be in proximity to our operating mines in Mali, Namibia and the Philippines. Ongoing exploration will continue to advance our early stage projects in Finland and Cote d’Ivoire. Target generation and pursuing new opportunities in prospective gold regions in Africa, South America, the Philippines, Central Asia and Canada continue. This generative initiative could include equity placements and new joint ventures with junior companies, similar to the 2022 agreement with Matador Mining Ltd. on its Cape Ray Gold project in Newfoundland.
West African Exploration
Fekola Mine
In 2022, approximately $10 million was budgeted to be spent on exploration of Cardinal/FMZ, Fekola Deeps and Fekola North. A total of approximately 31,600 metres of diamond and reverse circulation drilling were drilled at Cardinal/FMZ, Fekola Deeps and Fekola North. For the year ended December 31, 2022, the Company ultimately incurred $15 million on Fekola Mine exploration.
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 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 continued in 2022.
Deeper drilling beneath and down plunge of the Fekola open pit has been undertaken to follow high grade shoots that could potentially be amenable to mining underground. The Company has also continued to track the main Fekola structure north of the existing open pit.
Drilling undertaken since December 2021 at the Fekola North deposit has partially infilled areas of the deepest portions of the current Mineral Resource area and also tested beyond the limits of the current Mineral Resource pit in areas believed to be amenable to underground development. Drill holes intersect high grade sulphide mineralization in step outs beyond the limit of the current Mineral Resource pit and provide strong positive support to the ongoing evaluation of underground mining at Fekola. The Company has completed approximately 17,500 metres of deep diamond drilling on the Fekola North deposit in 2022.
Fekola Regional
In 2022, approximately $24 million was budgeted to be spent on exploration in the Anaconda Area (Bantako and Menankoto permits) and the Bakolobi permit; an increase of $7 million over the original budget of $17 million. For the year ended December 31, 2022, the Company ultimately incurred $19 million.
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On March 23, 2022, the Company announced an updated and significantly increased Mineral Resource estimate for the Anaconda Area (Bantako and Menankoto permits), located approximately 20 kilometres from the Fekola Mine. The updated and significantly increased Anaconda Area Mineral Resource estimate (as at January 11, 2022) constrained within a conceptual pit shell at a gold price of $1,800 per ounce included an initial Indicated Mineral Resource estimate of 32,400,000 tonnes at 1.08 g/t gold for a total 1,130,000 ounces of gold, and Inferred Mineral Resource estimate of 63,700,000 tonnes at 1.12 g/t gold for 2,280,000 ounces of gold. The Mineral Resource estimate included first time reporting of 1,130,000 ounces of Indicated Mineral Resources and an increase of 1,510,000 ounces (196% increase) of Inferred Mineral Resources since the initial Inferred Mineral Resource estimate in 2017 (21,590,000 tonnes at 1.11 g/t gold, for 767,000 ounces). Approximately 86,500 metres of diamond and reverse circulation drilling were completed on the Anaconda Area in 2022.
In April 2022, the Company acquired the Bakolobi permit in Mali from a local Malian company. The Bakolobi permit is located between the Menankoto permit, to the North, and the Fekola Mine's Medinandi permit, wrapping around the latter to its south-east end, covering an area of 100 sq km and providing approximately 25 km of contiguous exploration potential along the Senegal-Mali Shear Zone An initial $2.2 million exploration program on the Bakolobi permit was initiated in the second half of 2022. Approximately 16,500 metres of diamond and reverse circulation drilling were completed on Bakolobi in 2022. Drilling is focused on the southward extension of known resources in the Anaconda Area. The Company believes that the Bakolobi permit is a highly prospective area that has the potential to provide for the near-term addition of both saprolite- and sulphide-hosted gold deposits.
Dandoko
B2Gold’s completed acquisition of Oklo and its flagship Dandoko project adds the Dandoko project’s JORC 2012 compliant Measured and Indicated Mineral Resource estimate of 8.70 million tonnes at 1.88 g/t for 528,000 ounces of gold and an Inferred Mineral Resource estimate of 2.63 million tonnes at 1.67 g/t for 141,000 ounces of gold, to B2Gold’s rapidly growing Mineral Resource inventory in the region. The Company believes there is strong potential to extend the mineralization at the Dandoko project.
In October 2022, a diamond drill rig dedicated to the Dandoko project was on site with the objective of completing up to 4,000 metres of combined metallurgical and geotechnical drilling and the initial phase of strategic exploration drilling and was completed in 2022. Additional early-stage targets within the newly acquired landholding are also being assessed at this time.
Mali Regional Targets
The Company has also been drilling on the Kolomba regional target, which is located approximately 15 kilometres from the Anaconda Area. Initial results from these drilling programs have been encouraging. This target is located north of the same structural corridor that hosts the Dandoko project.
2023 Guidance for Mali
In 2023, a total of approximately $35 million is budgeted for exploration in Mali with an ongoing focus on the Anaconda Area (Bantako and Menankoto permits). In addition, the extensions of known prospective structures in the Anaconda Area and on the Fekola Mine are also being targeted in the area between them on the newly acquired and relatively under explored Bakolobi permit. The Dandoko permit located to the east of Fekola also provides a focus for exploration. A total of 127,000 metres of diamond and reverse circulation drilling is planned for Mali in 2023.
In the Anaconda Area, drilling will be directed at increasing the existing saprolite Indicated Mineral Resource and expanding the Inferred Mineral Resource. This will feed into and support the ongoing engineering study of a stand-alone mill and oxide processing facilities at the Anaconda Area. The success of the drilling campaigns pursuing sulphide material beneath the saprolite mineralization will continue on the Mamba, Cobra and Adder zones in the Anaconda Area.
The mineralized structures identified at the Fekola Mine track northward onto the Bakolobi permit and onward onto the Anaconda Area. Drilling undertaken in 2022 has already identified significant mineralization on the southward extensions of the Cobra and Adder zones. Drilling will continue to advance these zones of gold mineralization, which are contiguous from saprolite to fresh rock (sulphide).
Another north trending structure parallel to and approximately 25 kilometres east of the Fekola structure is being drilled on the Dandoko permit. The mineral resources are distributed across the Seko, Koko, Disse and Diabarou deposits, which all remain open and are expected to grow with ongoing exploration drilling both along strike and at depth.
In addition, $2 million is included in the Mali exploration budget to pursue multiple grassroots targets on other permits held in West Mali.
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The Philippines Exploration
The Masbate exploration budget for 2022 was approximately $5.8 million, including approximately 10,200 metres of drilling. The 2022 exploration program was mainly focused on the Main Vein, Old Lady and Blue Quartz zones at Masbate, converting Inferred Mineral Resource areas below existing design pits to support expanding the existing open pits. In addition, several grassroot greenfield targets are also being further tested. For the year ended December 31, 2022, the Company incurred $5 million for Masbate Mine exploration, which was in-line with the budget (included approximately 9,500 metres of diamond and reverse circulation drilling).
2023 Guidance for the Philippines
The total budget for the Philippines in 2023 is $6 million, of which the Masbate exploration budget is $4 million, including approximately 8,000 metres of drilling. The 2023 exploration program will continue to focus on 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.
$1 million will be applied to targeting new regional projects in highly prospective areas in the Philippines, leveraging off our presence and operational experience in the country.
Namibia Exploration
The total exploration budget for Namibia in 2022 was approximately $4 million. For the year ended December 31, 2022, the Company incurred $3 million which included 17,000 metres of diamond drilling and 3,800 metres of RAB drilling at the Otjikoto mine area. Diamond drilling earlier in 2022 targeted the extension of the existing Wolfshag underground Mineral Resource area and a new zone located parallel to and east of Wolfshag. This has largely been completed, with further drilling planned from underground platforms in 2024. Current diamond drilling has been directed to the extension of the Otjikoto structure several kilometres south of the Otjikoto open pit. Drilling is also underway on several other regional targets in proximity to the Otjikoto mine infrastructure.
2023 Guidance for Namibia
The total exploration budget for Namibia in 2023 is approximately $3 million. Exploration in 2023 will include 16,320 metres of diamond and reverse circulation drilling and 3,400 metres of RAB drilling at the Otjikoto Mine. Much of the diamond drilling will target the southern extension of the Otjikoto structure, as well as several regional targets.
Greenfield Exploration
B2Gold had allocated approximately $29 million in 2022 for its grassroots exploration programs, including Finland, Uzbekistan, Zimbabwe and several new regions. The actual spend on greenfield exploration for the year ended December 31, 2022 was approximately $19 million.
In Finland, the Company had allocated $8 million to the Central Lapland Joint Venture with Aurion Resources Ltd. With the proportional contribution by Aurion to the Joint Venture, the total budget for 2022 is $11 million. In 2022, drilling has focused on the westward extension of Rupert Resources’ Ikarri discovery trends directly onto the Joint Venture ground. This trend (named the Helmi trend on the Joint Venture ground) coincides with B2Gold’s base-of-till drilling and the same interpreted structure as defined by airborne geophysics. Approximately 18,000 metres of diamond drilling was completed in 2022, which continued to confirm the presence of mineralization on this structure. This will be followed up further drilling to the west, as well as several other regional targets on the large ground package held.
In Uzbekistan, the Company had 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. A total of approximately 11,500 meters of reverse circulation and diamond drilling were carried out on some of these targets in 2022.
In 2022, a total of $1.7 million was planned for the Company’s newly acquired early stage permits in Cote d’Ivoire.
In addition, the Company had allocated approximately $15 million in 2022 for several other greenfield targets currently being pursued around the world.
2023 Guidance for Greenfields Exploration
B2Gold has allocated approximately $24 million (including $3 million for the grassroots projects in Mali and the Philippines) in 2023 for its grassroots exploration programs, including Finland, Cote d’Ivoire, Uzbekistan and several new regions. This also includes a budget allocation for target generation and pursuing new opportunities in prospective gold regions of Africa, South America, the Philippines, Central Asia and Canada.
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In Finland, the Company has allocated $6 million to fund its 70% contribution to the Central Lapland Joint Venture with Aurion Resources Ltd. Drilling will continue on the Helmi trend, which is the westward extension of Rupert Resources' Ikkari discovery. This trend coincides with B2Gold's base-of-till drilling and appears to be hosted by the same structure as Ikkari, based the interpretation of airborne geophysical data. A total of 11,600 metres of diamond drilling is planned for Finland. B2Gold will also fund exploration on the early stage conceptual target that is part of the Kuortis Joint Venture, also with Aurion Resources Ltd.
A budget of $3 million has been allocated for ongoing exploration in Cote d’Ivoire. The 2023 program will include follow up work on positive soil geochemical anomalies defined in 2022 on the wholly owned Guiberoua and Soubre properties in southwest Cote d’Ivoire. A total 6,000 metres of diamond and reverse circulation drilling and 14,000 metres of aircore and auger drilling is planned.
In addition to the defined programs noted above, the Company has allocated approximately $12 million for the generation of new greenfield targets.
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, 2022. 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:
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, 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.
Gramalote Project cash-generating unit
During the years ended December 31, 2014 and December 31, 2015, the Company recorded impairment charges of $97 million and $36 million, respectively, for a cumulative impairment charge of $133 million. In July 2022, based on the preliminary results of the optimized feasibility study for the Gramalote Project, a joint operation between B2Gold and AngloGold, both partners determined that the project did not currently meet their investment thresholds for development of the project at this time. The decision was considered to be an impairment indicator. In December 2022, there were changes to tax legislation in Colombia which was considered to be an impairment indicator. As a result, the Company performed impairment tests on the Gramalote Project cash-generating unit (“CGU”) during the year-ended December 31, 2022.
The carrying value of the Gramalote Project’s exploration and evaluation property was compared to the property’s recoverable amount which was determined to be its fair value less costs of disposal as at June 30, 2022 and December 31, 2022. To estimate the recoverable amount of the Gramalote Project’s CGU for impairment, 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, a long-term gold price of $1,650 per ounce, foreign exchange rates, a discount rate of 6.5%, and a mine life of 12 years with construction beginning in 2024. Management’s estimate of the fair value less costs of disposal ("FVLCD") of its CGU is classified as level 3 in the fair value hierarchy. The Company’s estimate of future cash flows is subject to risks and uncertainties and therefore could change in the future if the underlying assumptions change.
The Company’s analysis concluded that the carrying value of the Gramalote Project at December 31, 2022 was not impaired. The recoverable amount of the Gramalote Project CGU is most sensitive to changes in the gold price and discount rate. In isolation, a $50 per ounce reduction in the gold price would result in a reduction in the recoverable amount of approximately $37 million. A 25 basis point increase in the discount rate would result in a reduction in the recoverable amount of approximately $9 million.
23
Masbate Mine cash-generating unit
During the year end December 31, 2022, the Company identified an indicator of impairment for the Masbate Mine and performed an impairment test of the Masbate Mine CGU.
The carrying values of the Masbate Mine CGU was compared to the mine’s recoverable amount which was determined to be its fair value less costs of disposal. To estimate the recoverable amount of the Masbate Mine CGU for impairment, 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, a long-term gold price of $1,650 per ounce, and a discount rate of 5%. Management’s estimate of the FVLCD of its CGU is classified as level 3 in the fair value hierarchy. The Company’s estimate of future cash flows is subject to risks and uncertainties and therefore could change in the future if the underlying assumptions change.
The Company’s analysis concluded that the carrying values of the Masbate Mine CGU was not impaired. The recoverable amount of the Masbate Mine CGU is most sensitive to changes in the gold price and discount rate. In isolation, a $50 per ounce reduction in the gold price would result in a reduction in the recoverable amount of approximately $53 million. A 25 basis point increase in the discount rate would result in a reduction in the recoverable amount of approximately $7 million.
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.
Value-added tax receivables includes amounts for the Fekola Mine of $77 million (2021 - $27 million), for the Masbate Mine of $37 million (2021 – $29 million), and for the Gramalote Project of $7 million (2021 - $7 million).
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.
Fekola Tax Audits
The Company's subsidiary, Fekola SA, received a Notice for Reassessment dated September 6, 2022, from the Malian Directorate General of Taxes (“DGT”) asserting proposed adjustments and other tax liabilities amounting to $26 million excluding penalties, $45 million including penalties, (based on the December 31, 2022 exchange rate of CFA 611 to $1) arising from tax audits conducted for fiscal years 2016-2018. The Company has reviewed the reassessment and concluded that there is no merit to the tax audit adjustments. Fekola SA filed a contentious claim, dated November 3, 2022, outlining its objections to the reassessment in accordance with the Mali Income Tax Act, and remains in discussions with the DGT with respect to this matter.
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
24
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, 2022, 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, 2022, the Company's disclosure controls and procedures were effective.
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, 2022, 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, 2022 which has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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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:
| For the three months ended December 31, 2022 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Production costs | 85,053 | 47,228 | 27,278 | 159,559 | 16,636 | 176,195 | ||||||||||||||
| Royalties and production taxes | 32,660 | 5,757 | 3,316 | 41,733 | 1,137 | 42,870 | ||||||||||||||
| Total cash costs | 117,713 | 52,985 | 30,594 | 201,292 | 17,773 | 219,065 | ||||||||||||||
| Gold sold (ounces) | 237,800 | 53,865 | 47,690 | 339,355 | 15,141 | 354,496 | ||||||||||||||
| Cash operating costs per ounce ($/gold ounce sold) | 358 | 877 | 572 | 470 | 1,099 | 497 | ||||||||||||||
| Total cash costs per ounce ($/gold ounce sold) | 495 | 984 | 642 | 593 | 1,174 | 618 | ||||||||||||||
| 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 | ||||||||||||||
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| For the year ended December 31, 2022 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Production costs | 326,529 | 177,705 | 122,292 | 626,526 | 58,368 | 684,894 | ||||||||||||||
| Royalties and production taxes | 83,893 | 22,887 | 11,188 | 117,968 | 4,163 | 122,131 | ||||||||||||||
| Total cash costs | 410,422 | 200,592 | 133,480 | 744,494 | 62,531 | 807,025 | ||||||||||||||
| Gold sold (ounces) | 599,600 | 214,015 | 155,540 | 969,155 | 55,117 | 1,024,272 | ||||||||||||||
| Cash operating costs per ounce ($/gold ounce sold) | 545 | 830 | 786 | 646 | 1,059 | 669 | ||||||||||||||
| Total cash costs per ounce ($/gold ounce sold) | 684 | 937 | 858 | 768 | 1,135 | 788 | ||||||||||||||
| 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 | ||||||||||||||
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, 2022 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Production costs | 85,053 | 47,228 | 27,278 | 159,559 | 16,636 | 176,195 | ||||||||||||||
| Inventory sales adjustment | (82) | (4,781) | 662 | (4,201) | — | (4,201) | ||||||||||||||
| Cash operating costs | 84,971 | 42,447 | 27,940 | 155,358 | 16,636 | 171,994 | ||||||||||||||
| Gold produced (ounces) | 244,014 | 48,687 | 60,068 | 352,769 | 15,101 | 367,870 | ||||||||||||||
| Cash operating costs per ounce ($/gold ounce produced) | 348 | 872 | 465 | 440 | 1,102 | 468 | ||||||||||||||
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| 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 year ended December 31, 2022 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Production costs | 326,529 | 177,705 | 122,292 | 626,526 | 58,368 | 684,894 | ||||||||||||||
| Inventory sales adjustment | (4,959) | (3,895) | 1,938 | (6,916) | — | (6,916) | ||||||||||||||
| Cash operating costs | 321,570 | 173,810 | 124,230 | 619,610 | 58,368 | 677,978 | ||||||||||||||
| Gold produced (ounces) | 598,661 | 212,728 | 161,614 | 973,003 | 54,871 | 1,027,874 | ||||||||||||||
| Cash operating costs per ounce ($/gold ounce produced) | 537 | 817 | 769 | 637 | 1,064 | 660 | ||||||||||||||
| 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 | ||||||||||||||
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 original World Gold Council standard became effective January 1, 2014 with further updates announced on November 16, 2018 which were effective starting 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
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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/RPUs, community relations expenditures, 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, 2022 | |||||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Corporate | Total | Calibre equity investment | Grand Total | |||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||
| Production costs | 85,053 | 47,228 | 27,278 | — | 159,559 | 16,636 | 176,195 | ||||||||||||||||
| Royalties and production taxes | 32,660 | 5,757 | 3,316 | — | 41,733 | 1,137 | 42,870 | ||||||||||||||||
| Corporate administration | 3,955 | 1,201 | 1,290 | 14,272 | 20,718 | 768 | 21,486 | ||||||||||||||||
Share-based payments – RSUs/DSUs/PSUs/RPUs(1) | — | — | — | 4,157 | 4,157 | — | 4,157 | ||||||||||||||||
| Community relations | 564 | 81 | 148 | — | 793 | — | 793 | ||||||||||||||||
| Reclamation liability accretion | 300 | 286 | 216 | — | 802 | — | 802 | ||||||||||||||||
| Realized gains on fuel derivative contracts | (1,189) | (1,910) | (745) | — | (3,844) | — | (3,844) | ||||||||||||||||
| Sustaining lease expenditures | 348 | 295 | 129 | 445 | 1,217 | — | 1,217 | ||||||||||||||||
Sustaining capital expenditures(2) | 45,790 | 9,378 | 13,480 | — | 68,648 | 204 | 68,852 | ||||||||||||||||
Sustaining mine exploration(2) | 985 | 1,648 | 922 | — | 3,555 | — | 3,555 | ||||||||||||||||
| Total all-in sustaining costs | 168,466 | 63,964 | 46,034 | 18,874 | 297,338 | 18,745 | 316,083 | ||||||||||||||||
| Gold sold (ounces) | 237,800 | 53,865 | 47,690 | — | 339,355 | 15,141 | 354,496 | ||||||||||||||||
| All-in sustaining cost per ounce ($/gold ounce sold) | 708 | 1,187 | 965 | — | 876 | 1,238 | 892 | ||||||||||||||||
(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, 2022 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Operating mine capital expenditures | 48,843 | 9,620 | 19,521 | 77,984 | 204 | 78,188 | ||||||||||||||
| Cardinal mobile equipment | (947) | — | — | (947) | — | (947) | ||||||||||||||
| Tailings facility life-of-mine study | (887) | — | — | (887) | — | (887) | ||||||||||||||
| Fekola underground study | (740) | — | — | (740) | — | (740) | ||||||||||||||
| Other | (479) | — | (87) | (566) | — | (566) | ||||||||||||||
| Land acquisitions | — | (242) | — | (242) | — | (242) | ||||||||||||||
| Underground development | — | — | (5,466) | (5,466) | — | (5,466) | ||||||||||||||
| National power grid connection | — | — | (488) | (488) | — | (488) | ||||||||||||||
| Sustaining capital expenditures | 45,790 | 9,378 | 13,480 | 68,648 | 204 | 68,852 | ||||||||||||||
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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, 2022 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Operating mine exploration | 1,366 | 1,648 | 1,201 | 4,215 | — | 4,215 | ||||||||||||||
| Regional exploration | (381) | — | (279) | (660) | — | (660) | ||||||||||||||
| Sustaining mine exploration | 985 | 1,648 | 922 | 3,555 | — | 3,555 | ||||||||||||||
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.
30
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 | ||||||||||||||
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 year ended December 31, 2022 | |||||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Corporate | Total | Calibre equity investment | Grand Total | |||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||
| Production costs | 326,529 | 177,705 | 122,292 | — | 626,526 | 58,368 | 684,894 | ||||||||||||||||
| Royalties and production taxes | 83,893 | 22,887 | 11,188 | — | 117,968 | 4,163 | 122,131 | ||||||||||||||||
| Corporate administration | 10,093 | 3,019 | 5,380 | 35,987 | 54,479 | 3,101 | 57,580 | ||||||||||||||||
Share-based payments – RSUs/DSUs/PSUs/RPUs(1) | — | — | — | 15,314 | 15,314 | — | 15,314 | ||||||||||||||||
| Community relations | 1,311 | 272 | 1,155 | — | 2,738 | — | 2,738 | ||||||||||||||||
| Reclamation liability accretion | 942 | 940 | 688 | — | 2,570 | — | 2,570 | ||||||||||||||||
| Realized gains on fuel derivative contracts | (11,097) | (12,766) | (5,549) | — | (29,412) | — | (29,412) | ||||||||||||||||
| Sustaining lease expenditures | 871 | 1,230 | 2,307 | 2,208 | 6,616 | — | 6,616 | ||||||||||||||||
Sustaining capital expenditures(2) | 100,479 | 38,265 | 40,572 | — | 179,316 | 2,603 | 181,919 | ||||||||||||||||
Sustaining mine exploration(2) | 6,805 | 4,759 | 2,522 | — | 14,086 | — | 14,086 | ||||||||||||||||
| Total all-in sustaining costs | 519,826 | 236,311 | 180,555 | 53,509 | 990,201 | 68,235 | 1,058,436 | ||||||||||||||||
| Gold sold (ounces) | 599,600 | 214,015 | 155,540 | — | 969,155 | 55,117 | 1,024,272 | ||||||||||||||||
| All-in sustaining cost per ounce ($/gold ounce sold) | 867 | 1,104 | 1,161 | — | 1,022 | 1,238 | 1,033 | ||||||||||||||||
(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.
31
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, 2022 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Operating mine capital expenditures | 117,622 | 39,528 | 79,096 | 236,246 | 2,603 | 238,849 | ||||||||||||||
| Cardinal mobile equipment | (9,849) | — | — | (9,849) | — | (9,849) | ||||||||||||||
| Tailings facility life-of-mine study | (5,216) | — | — | (5,216) | — | (5,216) | ||||||||||||||
| Fekola underground study | (1,378) | — | — | (1,378) | — | (1,378) | ||||||||||||||
| Land acquisitions | — | (1,229) | — | (1,229) | — | (1,229) | ||||||||||||||
| Other | (700) | (34) | (449) | (1,183) | — | (1,183) | ||||||||||||||
| Underground development | — | — | (32,783) | (32,783) | — | (32,783) | ||||||||||||||
| National power grid connection | — | — | (5,292) | (5,292) | — | (5,292) | ||||||||||||||
| Sustaining capital expenditures | 100,479 | 38,265 | 40,572 | 179,316 | 2,603 | 181,919 | ||||||||||||||
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, 2022 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Operating mine exploration | 15,214 | 4,759 | 3,476 | 23,449 | — | 23,449 | ||||||||||||||
| Regional exploration | (8,409) | — | (954) | (9,363) | — | (9,363) | ||||||||||||||
| Sustaining mine exploration | 6,805 | 4,759 | 2,522 | 14,086 | — | 14,086 | ||||||||||||||
32
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:
| 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 | ||||||||||||||
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.
34
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, | |||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||
| $ | $ | $ | $ | |||||||||||
| (000’s) | (000’s) | (000’s) | (000’s) | |||||||||||
| Net income attributable to shareholders of the Company for the period: | 157,756 | 136,943 | 252,873 | 420,065 | ||||||||||
| Adjustments for non-recurring items and significant recurring non-cash items: | ||||||||||||||
| Write-down of mineral property interests | 4,905 | 15 | 11,778 | 1,055 | ||||||||||
| Impairment (reversal) of long-lived assets | — | 5,905 | (909) | 5,905 | ||||||||||
| Net (gains) losses on disposal of mineral properties | — | (22,463) | 2,804 | (22,463) | ||||||||||
| Unrealized loss (gain) on derivative instruments | 3,171 | 4,192 | 10,442 | (12,884) | ||||||||||
| Dilution gain on investment in Calibre | (172) | — | (5,630) | — | ||||||||||
| Non-cash interest income on deferred consideration receivable | — | — | (2,806) | — | ||||||||||
| Office lease termination costs | — | 2,651 | — | 2,651 | ||||||||||
| Deferred income tax recovery | (44,218) | (14,519) | (4,770) | (8,959) | ||||||||||
| Adjusted net income attributable to shareholders of the Company for the period | 121,442 | 112,724 | 263,782 | 385,370 | ||||||||||
| Basic weighted average number of common shares outstanding (in thousands) | 1,074,448 | 1,055,833 | 1,064,259 | 1,053,809 | ||||||||||
| Adjusted net earnings attributable to shareholders of the Company per share–basic ($/share) | 0.11 | 0.11 | 0.25 | 0.37 | ||||||||||
35
SUMMARY OF QUARTERLY RESULTS
| Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||
| 2022 | 2022 | 2022 | 2022 | 2021 | 2021 | 2021 | 2021 | |||||||||||||||||||
| Gold revenue ($ in thousands) | 592,468 | 392,554 | 381,985 | 365,583 | 526,113 | 510,859 | 362,990 | 362,302 | ||||||||||||||||||
| Net income (loss) for the period ($ in thousands) | 176,468 | (21,234) | 40,686 | 90,803 | 153,140 | 134,871 | 73,982 | 98,832 | ||||||||||||||||||
Earnings (loss) per share (1) – basic ($) | 0.15 | (0.02) | 0.04 | 0.08 | 0.13 | 0.12 | 0.07 | 0.09 | ||||||||||||||||||
Earnings (loss) per share (1) – diluted ($) | 0.15 | (0.02) | 0.04 | 0.08 | 0.13 | 0.12 | 0.06 | 0.09 | ||||||||||||||||||
| Cash flows provided by (used) operating activities ($ in thousands) | 270,491 | 93,118 | 124,879 | 107,310 | 266,292 | 320,283 | (8,316) | 145,854 | ||||||||||||||||||
| Gold sold (ounces) | 339,355 | 229,400 | 205,300 | 195,100 | 292,350 | 286,650 | 200,071 | 202,330 | ||||||||||||||||||
| Average realized gold price ($/ounce) | 1,746 | 1,711 | 1,861 | 1,874 | 1,800 | 1,782 | 1,814 | 1,791 | ||||||||||||||||||
| Gold produced (ounces) | 352,769 | 214,903 | 208,858 | 196,473 | 288,849 | 295,723 | 197,380 | 205,643 | ||||||||||||||||||
| Gold produced, total including Calibre equity investment(ounces) | 367,870 | 227,016 | 223,623 | 209,365 | 304,897 | 310,261 | 211,612 | 220,644 | ||||||||||||||||||
Cash operating costs (2) ($/gold ounce sold) | 497 | 824 | 786 | 656 | 433 | 482 | 675 | 582 | ||||||||||||||||||
Total cash costs (2) ($/gold ounce sold) | 618 | 939 | 900 | 784 | 556 | 596 | 794 | 709 | ||||||||||||||||||
All-in sustaining costs (2) ($/gold ounce sold) | 892 | 1,169 | 1,111 | 1,036 | 860 | 795 | 1,016 | 932 | ||||||||||||||||||
Adjusted net income (1)(2) ($ in thousands) | 121,442 | 31,996 | 45,248 | 65,096 | 112,724 | 122,750 | 51,866 | 98,030 | ||||||||||||||||||
Adjusted earnings per share (1)(2) – basic ($) | 0.11 | 0.03 | 0.04 | 0.06 | 0.11 | 0.12 | 0.05 | 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”.
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. Net income throughout the eight quarters is a function of quarterly revenues and cash operating costs and related taxes.
SUMMARY AND OUTLOOK
B2Gold expects to continue its strong operational performance in 2023 with total gold production forecast to be between 1,000,000 and 1,080,000 ounces (including 60,000 to 70,000 attributable ounces from Calibre). The Company's total consolidated cash operating costs for the year (including estimated attributable results for Calibre) are forecast to be between $670 and $730 per ounce and total consolidated all-in sustaining (including estimated attributable results for Calibre) are forecast to be between $1,195 and $1,255 per ounce.
Due to the Company's strong net positive cash position and available liquidity, 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), which represents one of the highest dividend yields in the gold sector.
After a very successful year for exploration in 2022, B2Gold is conducting an aggressive exploration campaign in 2023 with a budget of approximately $64 million with the vast majority allocated to growth exploration expenditures to support the next phase of organic growth across the portfolio.
The announcement of the acquisition of Sabina Gold and the Goose Project, which remains subject to regulatory, Court and shareholder approvals, will add a high grade, fully permitted, construction ready gold project in Nunavut, Canada to Company's portfolio which will enhanced operational and geographic diversification by combining B2Gold’s stable production base with a high grade, advanced development asset in a Tier-1 mining jurisdiction. The Goose Project has an estimated two year construction period with first gold production expected in the first quarter of 2025. In addition, B2Gold will obtain significant untapped exploration potential across an 80 km belt.
The Company's ongoing strategy is to continue to maximize profitable production from its mines, further advance its pipeline of remaining development and exploration projects, evaluate new exploration, development and production opportunities and continue to pay an industry leading dividend yield.
36
OUTSTANDING SHARE DATA
At February 22, 2023, 1,075,492,209 common shares were outstanding. In addition, there were approximately 31.3 million stock options outstanding with exercise prices ranging between Cdn.$2.94 to Cdn.$8.53 per share, approximately 2.8 million RSUs outstanding and approximately 4.6 million PSUs outstanding.
The number of common shares available for issuance under the Company's stock option plan but not subject to outstanding options was 6.1 million and 11.3 million as at January 1, 2022 and December 31, 2022, 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 Calibre’s operations, production is presented on a 100% basis for the period up until October 14, 2019 and on a 25% basis to December 31, 2022 (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, which 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: remaining well positioned for continued strong operational and financial performance for 2023; projected gold production, cash operating costs and all-in sustaining costs on a consolidated and mine by mine basis in 2023;total consolidated gold production of between 1,000,000 and 1,080,000 ounces in 2023, with cash operating costs of between $670 and $730 per ounce and all-in sustaining costs of between $1,195 and $1,255 per ounce; B2Gold’s continued prioritization of developing the Goose project in a manner that recognizes Indigenous input and concerns and brings long-term socio-economic benefits to the area; the Company's consolidated gold production to be relatively consistent throughout 2023 with the exception of the Otjikoto mine, where it will be weighted 60% to the second half of the year; the Company’s total capitalized stripping expenditures moderating in 2024; the potential for Fekola Regional (Anaconda area) to provide saprolite material to feed the Fekola mill starting in the third quarter of 2023; the timing and results of a study for the Fekola Regional (Anaconda area) to review the project economics of a stand-alone oxide mill; the potential for the Fekola complex to produce 800,000 ounces of gold per year starting in 2026; 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 of Calibre’s operations. All statements in this MD&A 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 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; 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 Gold 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
37
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, but are not limited to, assumptions and factors related to B2Gold's ability to carry on current and future operations, including: 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. Brian Scott, P. Geo., Vice President, Geology & Technical Services, a qualified person under NI 43-101, has approved the scientific and technical information regarding exploration matters contained in this MD&A.
38
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, 2023 relating to the 2022 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, 2023.
/s/ PricewaterhouseCoopers LLP
Chartered Professional Accountants
Vancouver, Canada
February 22, 2023
Exhibit 99.4
Consent of Brian Scott
I consent to the inclusion in the Management’s Discussion and Analysis of B2Gold Corp. (the “Company”) for the year ended December 31, 2022 (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, 2023 | /s/ Brian Scott | ||||
| Brian Scott | |||||
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, 2022 (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, 2023 | /s/ William Lytle | ||||
| William Lytle | |||||
Note: [01 Mar 2017] – The following is a consolidation of 13-501F1. It incorporates amendments to this document that came into effect on March 1, 2017. This consolidation is provided for your convenience and should not be relied on as authoritative. 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 5.74 March 31January 1 BTO Toronto Stock Exchange December 31, 2022 B2Gold Corp. February 22, 2023(s) Michael Cinnamond Michael Cinnamond Chief Financial Officer
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) 4,768,034,792.40 1,073,881,710 4.44 4,633,432,704.28 1,062,713,923 4.36 June 30April 1 6,075,034,811.16 1,058,368,434 September 30July 1
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 December 31 4.81 1,074,694,856 5,169,282,257.36 N/A N/A N/A N/A N/A 5,161,446,141.30
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) 0.00 5,161,446,141.30 36,500.00 36,500.00
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 Michael Cinnamond February 22, 2023 B2Gold Corp. December 31, 2022 ✔ Toronto Stock Exchange BTO January 1 March 31 5.74 1,058,368,434 6,075,034,811.16 April 1 June 30 Michael Cinnamond Chief Financial Officer
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) 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 4.36 1,062,713,923 4,633,432,704.28 September 30 4.44 1,073,881,710 4,768,034,792.40 October 1 December 31 4.81 1,074,694,856 5,169,282,257.36 N/A N/A N/A July 1
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 5,161,446,141.30 0.00 5,161,446,141.30 76,425.00 76,425.00