B2gold Corp 6-K, filed Nov 1, 2022
B2gold Corp (BTG)
6-K
2022-11-01
For: 2022-09-30
View Original
Added on
April 11, 2026
About this 6-K
B2gold Corp filed this 6-K on November 1, 2022.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of November, 2022
Commission File Number: 001-35936
B2Gold Corp.
(Translation of registrant’s name into English)
British Columbia, Canada
(Jurisdiction of incorporation or organization)
Park Place
Suite 3400 – 666 Burrard Street,
Vancouver, British Columbia V6C 2X8
Canada
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
[ ] Form 20-F [X] Form 40-F
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ]
DOCUMENTS INCLUDED AS PART OF THIS FORM 6-K
See the Exhibit Index hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| B2Gold Corp. | ||||||||
| Date: November 1, 2022 | By: | /s/ Randall Chatwin | ||||||
| Name: | Randall Chatwin | |||||||
| Title: | Senior Vice President, Legal & Corporate Communications | |||||||
EXHIBIT INDEX
| Exhibit | |||||
| No. | Description | ||||
B2GOLD CORP.
Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2022
(Unaudited)
B2GOLD CORP.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30
(Expressed in thousands of United States dollars, except per share amounts)
(Unaudited)
| For the three months ended Sept. 30, 2022 | For the three months ended Sept. 30, 2021 | For the nine months ended Sept. 30, 2022 | For the nine months ended Sept. 30, 2021 | |||||||||||||||||||||||
| Gold revenue | $ | 392,554 | $ | 510,859 | $ | 1,140,122 | $ | 1,236,151 | ||||||||||||||||||
| Cost of sales | ||||||||||||||||||||||||||
| Production costs | (185,704) | (130,770) | (466,967) | (374,695) | ||||||||||||||||||||||
| Depreciation and depletion | (94,207) | (111,768) | (253,344) | (256,304) | ||||||||||||||||||||||
| Royalties and production taxes | (26,644) | (33,154) | (76,235) | (84,351) | ||||||||||||||||||||||
| Total cost of sales | (306,555) | (275,692) | (796,546) | (715,350) | ||||||||||||||||||||||
| Gross profit | 85,999 | 235,167 | 343,576 | 520,801 | ||||||||||||||||||||||
| General and administrative | (10,384) | (10,410) | (33,761) | (31,026) | ||||||||||||||||||||||
Share-based payments (Note 11) | (5,808) | (5,996) | (18,253) | (15,835) | ||||||||||||||||||||||
Write-down of mineral property interests (Note 7) | (3,927) | — | (7,085) | (1,040) | ||||||||||||||||||||||
Reversal of impairment of long-lived assets (Note 7) | — | — | 909 | — | ||||||||||||||||||||||
Loss on sale of mineral property interests (Note 7) | (2,804) | — | (2,804) | — | ||||||||||||||||||||||
| Community relations | (873) | (855) | (1,945) | (2,169) | ||||||||||||||||||||||
| Foreign exchange losses | (7,982) | (2,718) | (16,439) | (3,758) | ||||||||||||||||||||||
| Share of net income of associate | 2,080 | 3,851 | 8,991 | 13,198 | ||||||||||||||||||||||
| Other expense | (1,776) | (563) | (2,746) | (3,972) | ||||||||||||||||||||||
| Operating income | 54,525 | 218,476 | 270,443 | 476,199 | ||||||||||||||||||||||
| Interest and financing expense | (2,709) | (3,112) | (7,983) | (9,057) | ||||||||||||||||||||||
(Losses) gains on derivative instruments (Note 13) | (8,751) | 5,484 | 18,297 | 23,024 | ||||||||||||||||||||||
Other income (Note 7) | 3,621 | 43 | 14,309 | 1,199 | ||||||||||||||||||||||
| Income from operations before taxes | 46,686 | 220,891 | 295,066 | 491,365 | ||||||||||||||||||||||
Current income tax, withholding and other taxes (Note 15) | (32,520) | (83,024) | (140,315) | (174,620) | ||||||||||||||||||||||
Deferred income tax expense (Note 15) | (35,400) | (2,996) | (44,496) | (9,060) | ||||||||||||||||||||||
| Net (loss) income for the period | $ | (21,234) | $ | 134,871 | $ | 110,255 | $ | 307,685 | ||||||||||||||||||
| Attributable to: | ||||||||||||||||||||||||||
| Shareholders of the Company | $ | (23,410) | $ | 123,110 | $ | 95,117 | $ | 283,122 | ||||||||||||||||||
Non-controlling interests (Note 12) | 2,176 | 11,761 | 15,138 | 24,563 | ||||||||||||||||||||||
| Net (loss) income for the period | $ | (21,234) | $ | 134,871 | $ | 110,255 | $ | 307,685 | ||||||||||||||||||
(Loss) earnings per share (attributable to shareholders of the Company) (Note 11) | ||||||||||||||||||||||||||
| Basic | $ | (0.02) | $ | 0.12 | $ | 0.09 | $ | 0.27 | ||||||||||||||||||
| Diluted | $ | (0.02) | $ | 0.12 | $ | 0.09 | $ | 0.27 | ||||||||||||||||||
Weighted average number of common shares outstanding (in thousands) (Note 11) | ||||||||||||||||||||||||||
| Basic | 1,064,301 | 1,054,747 | 1,060,826 | 1,053,127 | ||||||||||||||||||||||
| Diluted | 1,064,301 | 1,060,687 | 1,067,753 | 1,061,756 | ||||||||||||||||||||||
See accompanying notes to condensed interim consolidated financial statements.
B2GOLD CORP.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30
(Expressed in thousands of United States dollars)
(Unaudited)
| For the three months ended Sept. 30, 2022 | For the three months ended Sept. 30, 2021 | For the nine months ended Sept. 30, 2022 | For the nine months ended Sept. 30, 2021 | |||||||||||||||||||||||
| Net (loss) income for the period | $ | (21,234) | $ | 134,871 | $ | 110,255 | $ | 307,685 | ||||||||||||||||||
| Other comprehensive loss | ||||||||||||||||||||||||||
| Items that will not be subsequently reclassified to net income: | ||||||||||||||||||||||||||
Unrealized loss on investments | (5,207) | (2,807) | (14,577) | (3,446) | ||||||||||||||||||||||
| Other comprehensive loss for the period | (5,207) | (2,807) | (14,577) | (3,446) | ||||||||||||||||||||||
| Total comprehensive (loss) income for the period | $ | (26,441) | $ | 132,064 | $ | 95,678 | $ | 304,239 | ||||||||||||||||||
| Other comprehensive loss attributable to: | ||||||||||||||||||||||||||
| Shareholders of the Company | $ | (5,207) | $ | (2,807) | $ | (14,577) | $ | (3,446) | ||||||||||||||||||
| Non-controlling interests | — | — | — | — | ||||||||||||||||||||||
| $ | (5,207) | $ | (2,807) | $ | (14,577) | $ | (3,446) | |||||||||||||||||||
| Total comprehensive (loss) income attributable to: | ||||||||||||||||||||||||||
| Shareholders of the Company | $ | (28,617) | $ | 120,303 | $ | 80,540 | $ | 279,676 | ||||||||||||||||||
| Non-controlling interests | 2,176 | 11,761 | 15,138 | 24,563 | ||||||||||||||||||||||
| $ | (26,441) | $ | 132,064 | $ | 95,678 | $ | 304,239 | |||||||||||||||||||
See accompanying notes to condensed interim consolidated financial statements.
B2GOLD CORP.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30
(Expressed in thousands of United States dollars)
(Unaudited)
| For the three months ended Sept. 30, 2022 | For the three months ended Sept. 30, 2021 | For the nine months ended Sept. 30, 2022 | For the nine months ended Sept. 30, 2021 | |||||||||||||||||||||||
| Operating activities | ||||||||||||||||||||||||||
| Net (loss) income for the period | $ | (21,234) | $ | 134,871 | $ | 110,255 | $ | 307,685 | ||||||||||||||||||
Non-cash charges, net (Note 16) | 160,355 | 122,258 | 331,700 | 265,304 | ||||||||||||||||||||||
Changes in non-cash working capital (Note 16) | (34,362) | 57,871 | (87,833) | (113,107) | ||||||||||||||||||||||
| Changes in long-term value added tax receivables | (11,641) | 5,283 | (28,815) | (2,061) | ||||||||||||||||||||||
| Cash provided by operating activities | 93,118 | 320,283 | 325,307 | 457,821 | ||||||||||||||||||||||
| Financing activities | ||||||||||||||||||||||||||
Revolving credit facility transaction costs (Note 9) | — | — | (2,401) | — | ||||||||||||||||||||||
Repayment of equipment loan facilities (Note 9) | (879) | (7,236) | (12,374) | (21,806) | ||||||||||||||||||||||
| Interest and commitment fees paid | (725) | (3,967) | (3,049) | (5,700) | ||||||||||||||||||||||
Cash proceeds from stock option exercises (Note 11) | 335 | 1,943 | 12,966 | 3,777 | ||||||||||||||||||||||
Dividends paid (Note 11) | (42,949) | (42,186) | (127,695) | (126,151) | ||||||||||||||||||||||
Principal payments on lease arrangements (Note 9) | (1,732) | (1,196) | (5,399) | (2,624) | ||||||||||||||||||||||
| Distributions to non-controlling interests | (23,648) | (23,177) | (27,828) | (32,411) | ||||||||||||||||||||||
| Funding from non-controlling interests | 1,656 | — | 2,386 | — | ||||||||||||||||||||||
Changes in restricted cash accounts | 132 | 293 | 132 | 792 | ||||||||||||||||||||||
| Cash used by financing activities | (67,810) | (75,526) | (163,262) | (184,123) | ||||||||||||||||||||||
| Investing activities | ||||||||||||||||||||||||||
| Expenditures on mining interests: | ||||||||||||||||||||||||||
| Fekola Mine | (20,353) | (27,961) | (68,779) | (54,078) | ||||||||||||||||||||||
| Masbate Mine | (10,158) | (7,023) | (29,908) | (20,365) | ||||||||||||||||||||||
| Otjikoto Mine | (20,292) | (19,371) | (59,575) | (59,337) | ||||||||||||||||||||||
| Gramalote Project | (4,273) | (9,200) | (12,810) | (16,669) | ||||||||||||||||||||||
| Anaconda Property, pre-development | (5,154) | — | (12,083) | — | ||||||||||||||||||||||
Other exploration and development (Note 16) | (16,269) | (13,944) | (45,505) | (39,368) | ||||||||||||||||||||||
Cash paid for acquisition of mineral property (Note 7) | — | — | (48,258) | — | ||||||||||||||||||||||
Deferred consideration received (Note 7) | 45,000 | — | 45,000 | — | ||||||||||||||||||||||
Cash paid for acquisition of Oklo Resources Limited (Note 7) | (21,130) | — | (21,130) | — | ||||||||||||||||||||||
Cash acquired on acquisition of Oklo Resources Limited (Note 7) | 1,415 | — | 1,415 | — | ||||||||||||||||||||||
Loan to associate (Note 8) | (5,000) | — | (5,000) | — | ||||||||||||||||||||||
Cash paid on exercise of mineral property option (Note 7) | — | — | (7,737) | — | ||||||||||||||||||||||
| Funding of reclamation accounts | (954) | (1,071) | (5,052) | (4,570) | ||||||||||||||||||||||
| Purchase of common shares of associate | — | — | — | (5,945) | ||||||||||||||||||||||
| Other | 1,626 | 2,071 | 1,268 | (1,452) | ||||||||||||||||||||||
| Cash used by investing activities | (55,542) | (76,499) | (268,154) | (201,784) | ||||||||||||||||||||||
| (Decrease) increase in cash and cash equivalents | (30,234) | 168,258 | (106,109) | 71,914 | ||||||||||||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | (7,002) | (3,892) | (17,434) | (5,092) | ||||||||||||||||||||||
| Cash and cash equivalents, beginning of period | 586,692 | 382,141 | 672,999 | 479,685 | ||||||||||||||||||||||
| Cash and cash equivalents, end of period | $ | 549,456 | $ | 546,507 | $ | 549,456 | $ | 546,507 | ||||||||||||||||||
Supplementary cash flow information (Note 16) | ||||||||||||||||||||||||||
See accompanying notes to condensed interim consolidated financial statements.
B2GOLD CORP.
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
(Expressed in thousands of United States dollars)
(Unaudited)
| As at September 30, 2022 | As at December 31, 2021 | |||||||||||||
| Assets | ||||||||||||||
| Current | ||||||||||||||
| Cash and cash equivalents | $ | 549,456 | $ | 672,999 | ||||||||||
Accounts receivable, prepaids and other (Note 5) | 38,464 | 32,112 | ||||||||||||
| Deferred consideration receivable | 3,850 | 41,559 | ||||||||||||
| Value-added and other tax receivables | 12,000 | 14,393 | ||||||||||||
Inventories (Note 6) | 293,793 | 272,354 | ||||||||||||
Assets classified as held for sale (Note 7) | — | 12,700 | ||||||||||||
| 897,563 | 1,046,117 | |||||||||||||
| Long-term investments | 24,496 | 32,118 | ||||||||||||
| Value-added tax receivables | 91,924 | 63,165 | ||||||||||||
Mining interests (Note 7 and Note 19 - Schedules) | ||||||||||||||
| Owned by subsidiaries and joint operations | 2,292,047 | 2,231,831 | ||||||||||||
| Investments in associates | 118,685 | 104,236 | ||||||||||||
Other assets (Note 8) | 92,885 | 82,371 | ||||||||||||
| Deferred income taxes | — | 1,455 | ||||||||||||
| $ | 3,517,600 | $ | 3,561,293 | |||||||||||
| Liabilities | ||||||||||||||
| Current | ||||||||||||||
| Accounts payable and accrued liabilities | $ | 108,870 | $ | 111,716 | ||||||||||
| Current income and other taxes payable | 41,817 | 92,275 | ||||||||||||
Current portion of long-term debt (Note 9) | 19,796 | 25,408 | ||||||||||||
Current portion of mine restoration provisions (Note 10) | 734 | 734 | ||||||||||||
| Other current liabilities | 1,041 | 1,056 | ||||||||||||
| 172,258 | 231,189 | |||||||||||||
Long-term debt (Note 9) | 42,732 | 49,726 | ||||||||||||
Mine restoration provisions (Note 10) | 85,352 | 116,547 | ||||||||||||
| Deferred income taxes | 230,928 | 187,887 | ||||||||||||
| Employee benefits obligation | 7,323 | 7,115 | ||||||||||||
| Other long-term liabilities | 7,269 | 7,822 | ||||||||||||
| 545,862 | 600,286 | |||||||||||||
| Equity | ||||||||||||||
| Shareholders’ equity | ||||||||||||||
Share capital (Note 11) | 2,484,468 | 2,422,184 | ||||||||||||
| Contributed surplus | 73,756 | 67,028 | ||||||||||||
| Accumulated other comprehensive loss | (150,876) | (136,299) | ||||||||||||
| Retained earnings | 476,721 | 507,381 | ||||||||||||
| 2,884,069 | 2,860,294 | |||||||||||||
Non-controlling interests (Note 12) | 87,669 | 100,713 | ||||||||||||
| 2,971,738 | 2,961,007 | |||||||||||||
| $ | 3,517,600 | $ | 3,561,293 | |||||||||||
Commitments (Note 18) | ||||||||||||||
| Approved by the Board | "Clive T. Johnson" | Director | "Robert J. Gayton" | Director | |||||||||||||
See accompanying notes to condensed interim consolidated financial statements.
B2GOLD CORP.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30
(Expressed in thousands of United States dollars)
(Unaudited)
| 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 for the period | — | — | — | — | 95,117 | 15,138 | 110,255 | |||||||||||||||||||
Dividends (Note 11) | — | — | 869 | — | (128,775) | — | (127,906) | |||||||||||||||||||
Unrealised loss on investments | — | — | — | (14,577) | — | — | (14,577) | |||||||||||||||||||
Shares issued on exercise of stock options (Note 11) | 4,430 | 12,966 | — | — | — | — | 12,966 | |||||||||||||||||||
Shares issued on vesting of RSUs (Note 11) | 2,375 | 8,716 | (8,716) | — | — | — | — | |||||||||||||||||||
Shares issued on acquisition of Oklo Resources Limited (Note 7) | 10,743 | 35,658 | — | — | — | — | 35,658 | |||||||||||||||||||
Transactions with non-controlling interests (Note 12) | — | — | — | — | 2,998 | (28,182) | (25,184) | |||||||||||||||||||
Share-based payments (Note 11) | — | — | 19,519 | — | — | — | 19,519 | |||||||||||||||||||
| Transfer to share capital on exercise of stock options | — | 4,944 | (4,944) | — | — | — | — | |||||||||||||||||||
| Balance at September 30, 2022 | 1,073,882 | $ | 2,484,468 | $ | 73,756 | $ | (150,876) | $ | 476,721 | $ | 87,669 | $ | 2,971,738 | |||||||||||||
| 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 for the period | — | — | — | — | 283,122 | 24,563 | 307,685 | |||||||||||||||||||
Dividends (Note 11) | — | — | 800 | — | (127,112) | — | (126,312) | |||||||||||||||||||
Unrealised loss on investments | — | — | — | (3,446) | — | — | (3,446) | |||||||||||||||||||
Shares issued on exercise of stock options (Note 11) | 2,069 | 3,777 | — | — | — | — | 3,777 | |||||||||||||||||||
Shares issued on vesting of RSUs (Note 11) | 2,143 | 6,068 | (6,068) | — | — | — | — | |||||||||||||||||||
| Transactions with non-controlling interests | — | — | — | — | 1,697 | (29,244) | (27,547) | |||||||||||||||||||
Share-based payments (Note 11) | — | — | 19,231 | — | — | — | 19,231 | |||||||||||||||||||
| Transfer to share capital on exercise of stock options | — | 936 | (936) | — | — | — | — | |||||||||||||||||||
| Balance at September 30, 2021 | 1,055,350 | $ | 2,418,515 | $ | 61,499 | $ | (141,979) | $ | 412,050 | $ | 83,893 | $ | 2,833,978 | |||||||||||||
See accompanying notes to condensed interim consolidated financial statements.
B2GOLD CORP.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended September 30, 2022
(All tabular amounts are in thousands of United States dollars unless otherwise stated)
(Unaudited)
1 Nature 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 also has 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 other countries including Mali, Uzbekistan and Finland.
On September 7, 2022, the Company obtained control of Oklo Resources Limited ("Oklo"), including its 100% interest in the Dandoko Property in Mali (Note 7).
B2Gold is a public company which is listed on the Toronto Stock Exchange under the symbol “BTO”, the NYSE American LLC under the symbol “BTG” and the Namibian Stock Exchange under the symbol “B2G”. B2Gold’s head office is located at Suite 3400, Park Place, 666 Burrard Street, Vancouver, British Columbia, V6C 2X8.
2 Basis of preparation
These condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting of International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS"). These condensed interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2021, which have been prepared in accordance with IFRS.
These condensed interim consolidated financial statements follow the same accounting policies and methods of application as the most recent audited consolidated financial statements of the Company.
These condensed consolidated interim financial statements were authorized for issue by the Board of Directors on November 1, 2022.
3 Summary of significant accounting policies
The significant accounting policies used in the preparation of these financial statements not previously disclosed in the audited consolidated financial statements for the year ended December 31, 2021 are as follows:
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.
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 preliminary 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.
1
B2GOLD CORP.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended September 30, 2022
(All tabular amounts are in thousands of United States dollars unless otherwise stated)
(Unaudited)
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.
4 Significant 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.
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 judgements to interpret the data. The estimation of recoverable 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 and judgements made in estimating the size, and grade of the ore body. Changes in the reserve or 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 assets requires management to make estimates and assumptions that include such factors as reserves and resources, future production levels, metallurgical recovery estimates, operating and capital costs, future metal prices and discount rates. Changes in any of these assumptions or estimates used in determining the recoverable amount could impact the analysis. Such changes could be material.
Value-added tax receivables
The Company incurs indirect taxes, including value-added tax, on purchases of goods and services at its operating mines and development projects. Indirect tax balances are recorded at their estimated recoverable amounts within current or long-term assets, net of provisions, and reflect the Company’s best estimate of their recoverability under existing tax rules in the respective jurisdictions in which they arise. Management’s assessment of recoverability considers the probable outcomes and expected timing 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.
2
B2GOLD CORP.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended September 30, 2022
(All tabular amounts are in thousands of United States dollars unless otherwise stated)
(Unaudited)
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.
5 Accounts receivable, prepaids and other
| September 30, 2022 | December 31, 2021 | |||||||||||||
| $ | $ | |||||||||||||
| Supplier advances | 13,984 | 7,291 | ||||||||||||
Current portion of derivative instruments (Note 13) | 8,069 | 12,823 | ||||||||||||
| Prepaid expenses | 7,558 | 4,151 | ||||||||||||
| Other receivables | 8,853 | 7,847 | ||||||||||||
| 38,464 | 32,112 | |||||||||||||
6 Inventories
| September 30, 2022 | December 31, 2021 | |||||||||||||
| $ | $ | |||||||||||||
| Gold and silver bullion | 42,825 | 52,867 | ||||||||||||
| In-process inventory | 19,818 | 13,260 | ||||||||||||
| Ore stock-pile inventory | 74,711 | 72,242 | ||||||||||||
| Materials and supplies | 156,439 | 133,985 | ||||||||||||
| 293,793 | 272,354 | |||||||||||||
Ore stock-pile inventory includes amounts for the Fekola Mine of $54 million (December 31, 2021 - $52 million), for the Otjikoto Mine of $10 million (December 31, 2021 – $16 million), and for the Masbate Mine of $10 million (December 31, 2021 - $4 million).
3
B2GOLD CORP.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended September 30, 2022
(All tabular amounts are in thousands of United States dollars unless otherwise stated)
(Unaudited)
7 Mining interests
| September 30, 2022 | December 31, 2021 | |||||||||||||
| $ | $ | |||||||||||||
| Property, plant and equipment (depletable) | ||||||||||||||
| Fekola Mine, Mali | ||||||||||||||
| Cost | 1,710,595 | 1,645,337 | ||||||||||||
| Accumulated depreciation and depletion | (731,507) | (609,899) | ||||||||||||
| 979,088 | 1,035,438 | |||||||||||||
| Masbate Mine, Philippines | ||||||||||||||
| Cost | 1,105,070 | 1,085,687 | ||||||||||||
| Accumulated depreciation and depletion | (517,311) | (449,675) | ||||||||||||
| 587,759 | 636,012 | |||||||||||||
| Otjikoto Mine, Namibia | ||||||||||||||
| Cost | 839,638 | 782,208 | ||||||||||||
| Accumulated depreciation and depletion | (526,543) | (475,303) | ||||||||||||
| 313,095 | 306,905 | |||||||||||||
| Exploration and evaluation properties (pre-depletable) | ||||||||||||||
| Gramalote Project, Colombia, net of impairment | 132,326 | 119,866 | ||||||||||||
| Dandoko Property, Mali | 56,354 | — | ||||||||||||
| Bakolobi Property, Mali | 50,426 | — | ||||||||||||
| Menankoto Property, Mali | 38,376 | 33,739 | ||||||||||||
| Bantako North Property, Mali | 21,752 | 15,351 | ||||||||||||
| Anaconda pre-development, Mali | 13,846 | — | ||||||||||||
| Finland Properties, Finland | 19,125 | 12,561 | ||||||||||||
| Kiaka Royalty, Burkina Faso | 18,488 | 18,488 | ||||||||||||
| Mocoa Royalty, Colombia | 10,230 | 10,230 | ||||||||||||
| Uzbekistan Properties, Uzbekistan | 11,601 | 8,802 | ||||||||||||
| Other | 12,201 | 11,019 | ||||||||||||
| 384,725 | 230,056 | |||||||||||||
| Corporate & other | ||||||||||||||
| Office, furniture and equipment, net | 27,380 | 23,420 | ||||||||||||
| 2,292,047 | 2,231,831 | |||||||||||||
| Investments in associates (accounted for using the equity method) | ||||||||||||||
| Calibre, Various | 108,484 | 93,728 | ||||||||||||
| BeMetals, Various | 10,201 | 10,508 | ||||||||||||
| 118,685 | 104,236 | |||||||||||||
| 2,410,732 | 2,336,067 | |||||||||||||
Acquisition of Oklo
On September 20, 2022, the Company completed the scheme of arrangement (“Scheme”) by which the Company acquired all of the issued and outstanding ordinary shares of 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.
4
B2GOLD CORP.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended September 30, 2022
(All tabular amounts are in thousands of United States dollars unless otherwise stated)
(Unaudited)
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 acquired 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 | ||||||||
Impairment of Gramalote Project long-lived assets
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 venture 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. Therefore, in conjunction with finalizing the optimized feasibility study, B2Gold and AngloGold have jointly made the decision to review the alternatives for the Gramalote Project over the coming months. The decision was considered to be an impairment indicator. The Company performed an impairment test on the Gramalote Project cash-generating unit (“CGU”) as at June 30, 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. 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, future metal prices, foreign exchange rates and the discount rate. 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.
Key assumptions used for the impairment test at June 30, 2022 were:
•Long-term gold price of $1,650/ounce
•Silver price of $23/ounce
•Mine life of 12 years with construction beginning in 2024
•Discount rate of 6.5%
The Company’s analysis concluded that the carrying value of the Gramalote Project at June 30, 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 $38 million. A 25 basis point increase in the discount rate would result in a reduction in the recoverable amount of approximately $9 million.
5
B2GOLD CORP.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended September 30, 2022
(All tabular amounts are in thousands of United States dollars unless otherwise stated)
(Unaudited)
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.
Kiaka project deferred consideration
On November 30, 2021, the Company completed the sale of its 81% interest in the Kiaka gold project (the “Kiaka Project”) to West African Resources Limited (“WAF"). The consideration received included $45 million of deferred consideration (the "deferred consideration") payable on the earlier of (i) commencement of construction at the Kiaka Project (provided such date will be a minimum of 6 months from the date of the Kiaka Agreement), (ii) completion of a positive feasibility study at the Kiaka Project, and (iii) October 25, 2022. The deferred consideration was receivable in cash or WAF ordinary shares, at the Company's option. 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.
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 Condensed Interim Consolidated Statement of Operations in the second quarter of 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 and a foreign exchange rate of Cdn. $1.2877 to $1;
•$4 million in cash to be received six months after closing;
•$2.5 million to be received upon the earlier of (i) completion of a feasibility study including the Ondundu Property or (ii) first gold production from the property, to which no value has been assigned.
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 Condensed Interim Consolidated Statement of Operations for the three and nine months ended September 30, 2022.
During the nine months ended September 30, 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.
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 $5 million was recognized in Other income in the Condensed Interim Consolidated Statement of Operations during the nine months ended September 30, 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.
Bantako North property
Subsequent to September 30, 2022, 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.
Other
During the three and nine months ended September 30, 2022, the Company wrote-off $4 million and $7 million, respectively, relating to non-core properties that it no longer plans to proceed with.
6
B2GOLD CORP.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended September 30, 2022
(All tabular amounts are in thousands of United States dollars unless otherwise stated)
(Unaudited)
8 Other assets
| September 30, 2022 | December 31, 2021 | |||||||||||||
| $ | $ | |||||||||||||
| Low-grade stockpile | 42,614 | 34,318 | ||||||||||||
| Reclamation deposits | 28,936 | 26,170 | ||||||||||||
Debt service reserve accounts | 7,486 | 8,701 | ||||||||||||
| Deferred financing costs | 7,283 | 8,959 | ||||||||||||
| Loan receivable from associate | 5,000 | — | ||||||||||||
| Other | 1,566 | 4,223 | ||||||||||||
| 92,885 | 82,371 | |||||||||||||
During the three months ended September 30, 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.
9 Long-term debt
| September 30, 2022 | December 31, 2021 | |||||||||||||
| $ | $ | |||||||||||||
| Equipment loans and lease obligations: | ||||||||||||||
| Fekola equipment loan facilities (net of unamortized transaction costs) | 27,744 | 42,408 | ||||||||||||
| Masbate equipment loan facility (net of unamortized transaction costs) | 1,313 | 3,865 | ||||||||||||
| Lease liabilities | 33,471 | 28,861 | ||||||||||||
| 62,528 | 75,134 | |||||||||||||
| Less: current portion | (19,796) | (25,408) | ||||||||||||
| 42,732 | 49,726 | |||||||||||||
The changes in debt balances during the nine months ended September 30, 2022 are as follows:
| Equipment loans | Lease liabilities | Total | ||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||
| Balance at December 31, 2021 | 46,273 | 28,861 | 75,134 | |||||||||||||||||
| Lease liabilities incurred | — | 11,938 | 11,938 | |||||||||||||||||
| Repayments | (12,374) | (5,399) | (17,773) | |||||||||||||||||
| Foreign exchange gains | (5,027) | (2,917) | (7,944) | |||||||||||||||||
| Non-cash interest and financing expense | 185 | 988 | 1,173 | |||||||||||||||||
| Balance at September 30, 2022 | 29,057 | 33,471 | 62,528 | |||||||||||||||||
| Less current portion | (14,735) | (5,061) | (19,796) | |||||||||||||||||
| 14,322 | 28,410 | 42,732 | ||||||||||||||||||
Revolving credit facility
The Company has a revolving credit facility ("RCF") with a syndicate of international banks for an aggregate amount of $600 million. The RCF also allows for an accordion feature whereby upon receipt of additional binding commitments, the facility may be increased to $800 million any time prior to the maturity date of December 16, 2025. As at September 30, 2022, the Company had available undrawn capacity of $600 million. 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 September 30, 2022, the Company was in compliance with these debt covenants.
7
B2GOLD CORP.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended September 30, 2022
(All tabular amounts are in thousands of United States dollars unless otherwise stated)
(Unaudited)
10 Mine restoration provisions
The Company’s mine restoration provisions consist primarily of costs associated with mine reclamation and closure activities. In calculating the present value of the Company’s mine restoration provisions at September 30, 2022, management used a risk-free rate applicable to each location’s functional currency of 3.80% (December 31, 2021 - ranged from 1.52% to 1.69%) and an inflation rate of 2.1% (December 31, 2021 - 2.5%). The undiscounted cash flows, before inflation adjustments, and including the Company's proportionate share of the reclamation costs for Gramalote, to settle the mine restoration provisions was estimated at approximately $105 million at September 30, 2022 (December 31, 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:
| September 30, 2022 | December 31, 2021 | |||||||||||||
| $ | $ | |||||||||||||
| Balance, beginning of year | 117,281 | 104,282 | ||||||||||||
| Reclamation spending | — | (343) | ||||||||||||
| Accretion expense | 1,767 | 1,438 | ||||||||||||
| Change in obligation | (32,962) | 12,484 | ||||||||||||
| Liabilities associated with assets sold | — | (580) | ||||||||||||
| Balance, end of period | 86,086 | 117,281 | ||||||||||||
| Less: current portion | (734) | (734) | ||||||||||||
| 85,352 | 116,547 | |||||||||||||
11 Share capital
The Company’s authorized share capital consists of an unlimited number of common shares and an unlimited number of preferred shares. As at September 30, 2022, the Company had 1,073,881,710 common shares outstanding (December 31, 2021 - 1,056,333,691 shares), including 1,705,000 common shares being held in trust under the Company’s Incentive Plan. No preferred shares were outstanding.
During the nine months ended September 30, 2022, the Company paid three quarterly dividends of $0.04 per share each totalling $128 million (2021 - $126 million).
During the nine months ended September 30, 2022, approximately 4 million stock options were granted to employees with exercise prices ranging from Cdn. $4.06 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 $5 million, is being recognized as a share-based payment expense 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 3.72%, an expected life of up to ten years, an expected volatility of up to 54% and a dividend yield rate of up to 5.5%.
For the three and nine months ended September 30, 2022, share-based payments expense relating to the vesting of stock options, was $2 million and $8 million, respectively, (2021 - $3 million and $10 million, respectively). For the nine months ended September 30, 2022, the Company issued 4 million shares for proceeds of $13 million upon the exercise of stock options. The weighted average market price of the shares at the time of exercise was Cdn. $5.52. As at September 30, 2022, 31 million stock options were outstanding.
8
B2GOLD CORP.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended September 30, 2022
(All tabular amounts are in thousands of United States dollars unless otherwise stated)
(Unaudited)
The following is a summary of changes to stock options outstanding:
| Number of outstanding options | Weighted-average exercise price | |||||||||||||
| ('000's) | (in Cdn. $) | |||||||||||||
| Outstanding at December 31, 2021 | 32,489 | 4.75 | ||||||||||||
| Granted | 3,952 | 5.46 | ||||||||||||
| Exercised | (4,430) | 3.71 | ||||||||||||
| Forfeited or expired | (907) | 5.36 | ||||||||||||
| Outstanding at September 30, 2022 | 31,104 | 4.97 | ||||||||||||
For the three and nine months ended September 30, 2022, share-based payments expense relating to the vesting of restricted share units ("RSUs") was $3 million and $6 million, respectively, (2021 - $1 million and $4 million, respectively). During the nine months ended September 30, 2022, the Company granted 1 million RSUs to employees and issued 2 million shares on the vesting of RSUs. As at September 30, 2022, 3 million RSUs were outstanding.
For the three and nine months ended September 30, 2022, share-based payments expense relating to the vesting of performance share units ("PSUs") was $2 million and $5 million, respectively, (2021 - $1 million and $3 million, respectively).
During the nine months ended September 30, 2022, the Company granted 1 million PSUs to employees of the Company. 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. The estimated fair value when granted of $8 million is being recognized over the vesting period. The fair value was calculated using a risk-neutral Monte Carlo simulation based on a correlated Geometric Brownian Motion. The model used historical share price volatility ranging from 32% to 81% for the group, a Canadian risk-free annual interest rate of 2.88%, and a United States risk-free annual interest rate of 2.76%.
As at September 30, 2022, 5 million PSUs were outstanding.
For the three and nine months ended September 30, 2022, share-based payments recovery relating to the change in fair value of deferred share units ("DSUs") was $1 million and $1 million, respectively, (2021 - $0 million and $2 million recovery, respectively). As at September 30, 2022, 2 million DSUs were outstanding.
9
B2GOLD CORP.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended September 30, 2022
(All tabular amounts are in thousands of United States dollars unless otherwise stated)
(Unaudited)
Earnings per share
The following is the calculation of basic and diluted (loss) earnings per share:
| For the three months ended Sept. 30, 2022 | For the three months ended Sept. 30, 2021 | For the nine months ended Sept. 30, 2022 | For the nine months ended Sept. 30, 2021 | |||||||||||||||||||||||
Net (loss) income and diluted net (loss) income (attributable to shareholders of the Company) | (23,410) | 123,110 | $ | 95,117 | 283,122 | |||||||||||||||||||||
Basic weighted average number of common shares outstanding (in thousands) | 1,064,301 | 1,054,747 | 1,060,826 | 1,053,127 | ||||||||||||||||||||||
| Effect of dilutive securities: | ||||||||||||||||||||||||||
| Stock options | — | 3,429 | 2,159 | 5,976 | ||||||||||||||||||||||
| Restricted share units | — | 1,320 | 705 | 1,462 | ||||||||||||||||||||||
| Performance share units | — | 1,191 | 4,063 | 1,191 | ||||||||||||||||||||||
Diluted weighted average number of common shares outstanding (in thousands) | 1,064,301 | 1,060,687 | 1,067,753 | 1,061,756 | ||||||||||||||||||||||
(Loss) earnings per share (attributable to shareholders of the Company) | ||||||||||||||||||||||||||
| Basic | $ | (0.02) | $ | 0.12 | $ | 0.09 | $ | 0.27 | ||||||||||||||||||
| Diluted | $ | (0.02) | $ | 0.12 | $ | 0.09 | $ | 0.27 | ||||||||||||||||||
12 Non-controlling interests
The following is a continuity schedule of the Company's non-controlling interests:
| Fekola | Masbate | Otjikoto | Other | Total | ||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Balance at December 31, 2021 | 59,089 | 16,653 | 24,927 | 44 | 100,713 | |||||||||||||||||||||||||||
| Share of net income (loss) | 9,674 | 4,032 | 1,909 | (477) | 15,138 | |||||||||||||||||||||||||||
| Distributions to non-controlling interest | (26,870) | — | (1,548) | — | (28,418) | |||||||||||||||||||||||||||
| Interest on loan to non-controlling interest | (2,548) | — | — | — | (2,548) | |||||||||||||||||||||||||||
| Participating funding from non-controlling interest | — | — | — | 2,026 | 2,026 | |||||||||||||||||||||||||||
| Other | — | — | 758 | — | 758 | |||||||||||||||||||||||||||
| Balance at September 30, 2022 | 39,345 | 20,685 | 26,046 | 1,593 | 87,669 | |||||||||||||||||||||||||||
13 Derivative financial instruments
During the nine months ended September 30, 2022, the Company entered into additional forward contracts for the purchase of 1,969,000 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 fair value through profit and loss ("FVTPL").
10
B2GOLD CORP.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended September 30, 2022
(All tabular amounts are in thousands of United States dollars unless otherwise stated)
(Unaudited)
The following is a summary, by maturity dates, of the Company’s fuel derivatives contracts outstanding as at September 30, 2022:
| 2022 | 2023 | 2024 | Total | |||||||||||||||||||||||
| Forward – fuel oil: | ||||||||||||||||||||||||||
| Litres (thousands) | 9,122 | 22,604 | 656 | 32,382 | ||||||||||||||||||||||
| Average strike price | $ | 0.32 | $ | 0.37 | $ | 0.43 | $ | 0.36 | ||||||||||||||||||
| Forward – gas oil: | ||||||||||||||||||||||||||
| Litres (thousands) | 6,410 | 17,066 | — | 23,476 | ||||||||||||||||||||||
| Average strike price | $ | 0.35 | $ | 0.43 | $ | — | $ | 0.41 | ||||||||||||||||||
The unrealized fair value of these contracts at September 30, 2022 was $8 million (December 31, 2021 - $15 million).
14 Financial instruments
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 September 30, 2022, the Company’s financial assets and liabilities that are measured at fair value are categorized as follows:
| As at September 30, 2022 | As at December 31, 2021 | |||||||||||||||||||||||||
| Level 1 | Level 2 | Level 1 | Level 2 | |||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||
Long-term investments | 24,496 | — | 32,118 | — | ||||||||||||||||||||||
Fuel derivative contracts (Note 13) | — | 8,153 | — | 15,425 | ||||||||||||||||||||||
The Company’s long-term investments consist of shares of publicly traded mining companies. The fair values of these were determined using market quotes from an active market for each investment.
The fair value of the Company's fuel derivative contracts 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.
11
B2GOLD CORP.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended September 30, 2022
(All tabular amounts are in thousands of United States dollars unless otherwise stated)
(Unaudited)
15 Income 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:
| For the three months ended Sept. 30, 2022 | For the three months ended Sept. 30, 2021 | For the nine months ended Sept. 30, 2022 | For the nine months ended Sept. 30, 2021 | |||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||
| Income from operations before taxes | 46,686 | 220,891 | 295,066 | 491,365 | ||||||||||||||||||||||
| Canadian federal and provincial income tax rates | 27.00 | % | 27.00 | % | 27.00 | % | 27.00 | % | ||||||||||||||||||
| Income tax expense at statutory rates | 12,605 | 59,641 | 79,668 | 132,669 | ||||||||||||||||||||||
| Increase (decrease) attributable to: | ||||||||||||||||||||||||||
| Effects of different foreign statutory tax rates | 2,230 | 10,838 | 12,496 | 20,785 | ||||||||||||||||||||||
| Change in income tax rates | — | — | — | (20,144) | ||||||||||||||||||||||
| Future withholding tax | 4,650 | 1,900 | (5,400) | 9,300 | ||||||||||||||||||||||
| Non-deductible expenditures | 5,403 | 8,840 | 17,952 | 21,525 | ||||||||||||||||||||||
| Reversal (use) of losses and temporary differences not previously recognised | 6,581 | (794) | — | (5,216) | ||||||||||||||||||||||
| Benefit of optional tax incentives | (3,470) | (6,182) | (10,799) | (15,283) | ||||||||||||||||||||||
| Withholding and other taxes | 682 | 2,012 | 24,314 | 20,889 | ||||||||||||||||||||||
| Change due to foreign exchange | 27,351 | 11,113 | 54,181 | 20,275 | ||||||||||||||||||||||
| Non-taxable portion of gains | (320) | (520) | (1,285) | (1,782) | ||||||||||||||||||||||
| Change in accruals for tax audits | 2,000 | — | 2,587 | — | ||||||||||||||||||||||
| Losses and tax bases for which no tax benefit has been recorded | 10,077 | (151) | 9,735 | — | ||||||||||||||||||||||
| Amounts under (over) provided in prior years | 131 | (677) | 1,362 | 662 | ||||||||||||||||||||||
| Income tax expense | 67,920 | 86,020 | 184,811 | 183,680 | ||||||||||||||||||||||
| Current income tax, withholding and other taxes | 32,520 | 83,024 | 140,315 | 174,620 | ||||||||||||||||||||||
| Deferred income tax expense | 35,400 | 2,996 | 44,496 | 9,060 | ||||||||||||||||||||||
| Income tax expense | 67,920 | 86,020 | 184,811 | 183,680 | ||||||||||||||||||||||
Included in current income tax expense for the three and nine months ended September 30, 2022 was $6 million and $18 million, respectively, (2021 - $12 million and $25 million, respectively), 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.
12
B2GOLD CORP.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended September 30, 2022
(All tabular amounts are in thousands of United States dollars unless otherwise stated)
(Unaudited)
16 Supplementary cash flow information
Supplementary disclosure of cash flow information is provided in the tables below:
Non-cash charges (credits):
| For the three months ended Sept. 30, 2022 | For the three months ended Sept. 30, 2021 | For the nine months ended Sept. 30, 2022 | For the nine months ended Sept. 30, 2021 | |||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||
| Depreciation and depletion | 94,207 | 111,768 | 253,344 | 256,304 | ||||||||||||||||||||||
Share-based payments (Note 11) | 5,808 | 5,996 | 18,087 | 15,835 | ||||||||||||||||||||||
Reversal of impairment of long-lived assets (Note 7) | — | — | (909) | — | ||||||||||||||||||||||
Write-down of mineral property interests (Note 7) | 3,927 | — | 7,085 | 1,040 | ||||||||||||||||||||||
Loss on sale of mineral-property interests (Note 7) | 2,804 | — | 2,804 | — | ||||||||||||||||||||||
| Share of net income of associate | (2,080) | (3,851) | (8,991) | (13,198) | ||||||||||||||||||||||
| Non-cash interest and financing expense | 2,090 | 4,610 | 6,126 | 7,616 | ||||||||||||||||||||||
| Unrealized losses (gains) on derivative instruments | 16,734 | (2,532) | 7,271 | (17,076) | ||||||||||||||||||||||
Deferred income tax expense (Note 15) | 35,400 | 2,996 | 44,496 | 9,060 | ||||||||||||||||||||||
| Other | 1,465 | 3,271 | 2,387 | 5,723 | ||||||||||||||||||||||
| 160,355 | 122,258 | 331,700 | 265,304 | |||||||||||||||||||||||
Changes in non-cash working capital:
| For the three months ended Sept. 30, 2022 | For the three months ended Sept. 30, 2021 | For the nine months ended Sept. 30, 2022 | For the nine months ended Sept. 30, 2021 | |||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||
| Accounts receivable and prepaids | 2,286 | 7,269 | (10,722) | (2,765) | ||||||||||||||||||||||
| Value-added and other tax receivables | (6,548) | 6,208 | 2,062 | (31,776) | ||||||||||||||||||||||
| Inventories | 2,106 | 4,075 | (24,230) | (15,939) | ||||||||||||||||||||||
| Accounts payable and accrued liabilities | 12,481 | 7,783 | (2,131) | (3,537) | ||||||||||||||||||||||
| Current income and other taxes payable | (44,687) | 32,536 | (52,812) | (59,090) | ||||||||||||||||||||||
| (34,362) | 57,871 | (87,833) | (113,107) | |||||||||||||||||||||||
13
B2GOLD CORP.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended September 30, 2022
(All tabular amounts are in thousands of United States dollars unless otherwise stated)
(Unaudited)
Other exploration and development:
| For the three months ended Sept. 30, 2022 | For the three months ended Sept. 30, 2021 | For the nine months ended Sept. 30, 2022 | For the nine months ended Sept. 30, 2021 | |||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||
| Fekola Mine, exploration | (3,392) | (2,096) | (13,848) | (9,323) | ||||||||||||||||||||||
| Masbate Mine, exploration | (696) | (1,446) | (3,111) | (3,871) | ||||||||||||||||||||||
| Otjikoto Mine, exploration | (896) | (1,257) | (2,275) | (2,846) | ||||||||||||||||||||||
| Bantako North, exploration | (2,378) | (2,934) | (6,734) | (6,568) | ||||||||||||||||||||||
| Menankoto, exploration | (3,222) | (1,123) | (4,729) | (4,087) | ||||||||||||||||||||||
| Finland Properties, exploration | (2,457) | (938) | (6,564) | (1,696) | ||||||||||||||||||||||
| Uzbekistan Properties, exploration | (1,120) | (1,156) | (2,693) | (2,624) | ||||||||||||||||||||||
| Kiaka Project, exploration | — | (588) | — | (3,639) | ||||||||||||||||||||||
| Other | (2,108) | (2,406) | (5,551) | (4,714) | ||||||||||||||||||||||
| (16,269) | (13,944) | (45,505) | (39,368) | |||||||||||||||||||||||
Non-cash investing and financing activities:
| For the three months ended Sept. 30, 2022 | For the three months ended Sept. 30, 2021 | For the nine months ended Sept. 30, 2022 | For the nine months ended Sept. 30, 2021 | |||||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||||
| Change in accrued distributions to non-controlling interests | (24,183) | (19,811) | — | (5,034) | ||||||||||||||||||||||
| Interest on loan to non-controlling interest | 1,011 | 944 | 2,998 | 2,801 | ||||||||||||||||||||||
| Share-based payments, capitalized to mineral property interests | 140 | 536 | 884 | 1,712 | ||||||||||||||||||||||
| Change in current liabilities relating to mineral property expenditures | 6,140 | 4,906 | (969) | 2,528 | ||||||||||||||||||||||
| Foreign exchange gain on Fekola equipment loan facilities | 1,935 | 1,174 | 5,027 | 3,289 | ||||||||||||||||||||||
Shares issued on acquisition of Oklo Resources Limited (Note 7) | 35,658 | — | 35,658 | — | ||||||||||||||||||||||
Share consideration received on sale of Ondundu Property (Note 7) | 6,955 | — | 6,955 | — | ||||||||||||||||||||||
Deferred consideration on sale of Ondundu Property (Note 7) | 3,850 | — | 3,850 | — | ||||||||||||||||||||||
| Share consideration received on sale of Kronk | — | — | — | 4,741 | ||||||||||||||||||||||
For the three and nine months ended September 30, 2022, the Company paid $79 million and $177 million, respectively, of current income tax, withholding and other taxes in cash (2021 - $43 million and $241 million, respectively).
14
B2GOLD CORP.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended September 30, 2022
(All tabular amounts are in thousands of United States dollars unless otherwise stated)
(Unaudited)
17 Segmented 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.
The Company’s segments are summarized in the following tables:
| For the three months ended September 30, 2022 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Other Mineral Properties | Corporate & Other | Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| External gold revenue | 230,023 | 107,936 | 54,595 | — | — | 392,554 | ||||||||||||||
| Production costs | 93,808 | 55,023 | 36,873 | — | — | 185,704 | ||||||||||||||
| Depreciation & depletion | 50,116 | 26,524 | 17,567 | — | 617 | 94,824 | ||||||||||||||
| Net income (loss) | 4,638 | 14,685 | (5,540) | (15,990) | (19,027) | (21,234) | ||||||||||||||
| Capital expenditures | 23,745 | 10,854 | 21,188 | 20,732 | 44 | 76,563 | ||||||||||||||
| Total assets | 1,389,476 | 740,156 | 431,292 | 519,848 | 436,828 | 3,517,600 | ||||||||||||||
| For the three months ended September 30, 2021 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Other Mineral Properties | Corporate & Other | Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| External gold revenue | 288,306 | 117,795 | 104,758 | — | — | 510,859 | ||||||||||||||
| Production costs | 68,525 | 36,177 | 26,068 | — | — | 130,770 | ||||||||||||||
| Depreciation & depletion | 53,858 | 27,026 | 30,884 | 10 | 671 | 112,449 | ||||||||||||||
| Net income (loss) | 70,045 | 46,353 | 21,133 | 3,900 | (6,560) | 134,871 | ||||||||||||||
| Capital expenditures | 30,057 | 8,469 | 20,628 | 18,346 | (1,640) | 75,860 | ||||||||||||||
| Total assets | 1,319,807 | 778,518 | 458,595 | 417,324 | 430,067 | 3,404,311 | ||||||||||||||
| For the nine months ended September 30, 2022 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Other Mineral Properties | Corporate & Other | Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| External gold revenue | 652,361 | 290,704 | 197,057 | — | — | 1,140,122 | ||||||||||||||
| Production costs | 241,476 | 130,477 | 95,014 | — | — | 466,967 | ||||||||||||||
| Depreciation & depletion | 135,963 | 65,823 | 51,558 | — | 2,005 | 255,349 | ||||||||||||||
| Net income (loss) | 54,954 | 59,634 | 17,347 | (10,076) | (11,604) | 110,255 | ||||||||||||||
| Capital expenditures | 82,627 | 33,019 | 61,850 | 58,901 | 77 | 236,474 | ||||||||||||||
| Total assets | 1,389,476 | 740,156 | 431,292 | 519,848 | 436,828 | 3,517,600 | ||||||||||||||
15
B2GOLD CORP.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the nine months ended September 30, 2022
(All tabular amounts are in thousands of United States dollars unless otherwise stated)
(Unaudited)
| For the nine months ended September 30, 2021 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Other Mineral Properties | Corporate & Other | Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| External gold revenue | 712,302 | 325,627 | 198,222 | — | — | 1,236,151 | ||||||||||||||
| Production costs | 195,873 | 108,510 | 70,312 | — | — | 374,695 | ||||||||||||||
| Depreciation & depletion | 131,761 | 71,620 | 52,923 | 42 | 1,776 | 258,122 | ||||||||||||||
| Net income (loss) | 158,771 | 114,316 | 33,535 | 12,151 | (11,088) | 307,685 | ||||||||||||||
| Capital expenditures | 63,401 | 24,236 | 62,183 | 39,998 | 1,570 | 191,388 | ||||||||||||||
| Total assets | 1,319,807 | 778,518 | 458,595 | 417,324 | 430,067 | 3,404,311 | ||||||||||||||
The Company’s mining interests are located in the following geographical locations:
| September 30, 2022 | December 31, 2021 | |||||||||||||
| $ | $ | |||||||||||||
| Mining interests | ||||||||||||||
| Mali | 1,165,545 | 1,084,580 | ||||||||||||
| Philippines | 588,038 | 636,525 | ||||||||||||
| Namibia | 313,615 | 307,434 | ||||||||||||
| Colombia | 142,556 | 130,096 | ||||||||||||
| Investments in associates - various | 118,685 | 104,236 | ||||||||||||
| Canada | 27,380 | 23,420 | ||||||||||||
| Burkina Faso | 21,087 | 21,087 | ||||||||||||
| Finland | 19,125 | 12,561 | ||||||||||||
| Other | 14,701 | 16,128 | ||||||||||||
| 2,410,732 | 2,336,067 | |||||||||||||
18 Commitments
As at September 30, 2022, the Company had the following commitments (in addition to those disclosed elsewhere in these financial statements):
•For payments at the Fekola Mine of $20 million related to mobile equipment rebuilds, $13 million for the purchase of mobile equipment, $1 million related to the tailings facility expansion, $1 million for plant maintenance and $4 million for other capital projects. Of the total commitments of $39 million, $19 million is expected to be incurred in 2022 and $20 million is expected to be incurred in 2023.
•For payments of $17 million for mobile equipment and $1 million for other costs for the Anaconda project, $5 million of which is expected to be incurred in 2022 and $13 million of which is expected to be incurred in 2023.
•For payments at the Masbate Mine of $4 million for powerhouse rebuilds and maintenance and $1 million related to mobile equipment purchases, all of which is expected to be incurred in 2022.
•For payments at the Otjikoto Mine of $2 million for the Wolfshag underground project, all of which is expected to be incurred in 2022.
•For payments at the Gramalote Project of $2 million for the Company's share of development costs, all of which is expected to be incurred in 2022.
16
B2GOLD CORP.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Mining Interest Schedule (Note 19)
For the nine months ended September 30, 2022
(All tabular amounts are in thousands of United States dollars)
(Unaudited)
| Cost | Accumulated depreciation | Net carrying value | |||||||||||||||||||||||||||||||||||||||
| Balance at Dec. 31, 2021 | Additions / Equity pick-up | Disposals | Reclass / Mine restoration movements | Balance at Sept. 30, 2022 | Balance at Dec. 31, 2021 | Depreciation | Disposals | Balance at Sept. 30, 2022 | Balance at Sept. 30, 2022 | Balance at Dec. 31, 2021 | |||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| Property, plant and equipment (depletable) | |||||||||||||||||||||||||||||||||||||||||
| Fekola Mine | 1,645,337 | 88,877 | (12,773) | (10,846) | 1,710,595 | (609,899) | (132,534) | 10,926 | (731,507) | 979,088 | 1,035,438 | ||||||||||||||||||||||||||||||
| Masbate Mine | 1,085,687 | 33,131 | (11) | (13,737) | 1,105,070 | (449,675) | (67,647) | 11 | (517,311) | 587,759 | 636,012 | ||||||||||||||||||||||||||||||
| Otjikoto Mine | 782,208 | 66,254 | (445) | (8,379) | 839,638 | (475,303) | (51,510) | 270 | (526,543) | 313,095 | 306,905 | ||||||||||||||||||||||||||||||
| 3,513,232 | 188,262 | (13,229) | (32,962) | 3,655,303 | (1,534,877) | (251,691) | 11,207 | (1,775,361) | 1,879,942 | 1,978,355 | |||||||||||||||||||||||||||||||
| Exploration & evaluation properties (pre-depletable) | |||||||||||||||||||||||||||||||||||||||||
| Gramalote Project | 119,866 | 12,460 | — | — | 132,326 | — | — | — | — | 132,326 | 119,866 | ||||||||||||||||||||||||||||||
| Dandoko Property | — | 56,354 | — | — | 56,354 | — | — | — | — | 56,354 | — | ||||||||||||||||||||||||||||||
| Bakolobi Property | — | 50,426 | — | — | 50,426 | — | — | — | — | 50,426 | — | ||||||||||||||||||||||||||||||
| Menankoto Property | 33,739 | 5,793 | — | (1,156) | 38,376 | — | — | — | — | 38,376 | 33,739 | ||||||||||||||||||||||||||||||
| Bantako North Property | 15,351 | 6,401 | — | — | 21,752 | — | — | — | — | 21,752 | 15,351 | ||||||||||||||||||||||||||||||
| Finland Properties | 12,561 | 6,564 | — | — | 19,125 | — | — | — | — | 19,125 | 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 | 2,799 | — | — | 11,601 | — | — | — | — | 11,601 | 8,802 | ||||||||||||||||||||||||||||||
| Anaconda pre-development | — | 12,690 | — | 1,156 | 13,846 | — | — | — | — | 13,846 | — | ||||||||||||||||||||||||||||||
| Other | 11,019 | 9,307 | (8,125) | — | 12,201 | — | — | — | — | 12,201 | 11,019 | ||||||||||||||||||||||||||||||
| 230,056 | 162,794 | (8,125) | — | 384,725 | — | — | — | — | 384,725 | 230,056 | |||||||||||||||||||||||||||||||
| Corporate | |||||||||||||||||||||||||||||||||||||||||
| Office, furniture & equipment | 28,540 | 5,965 | — | — | 34,505 | (5,120) | (2,005) | — | (7,125) | 27,380 | 23,420 | ||||||||||||||||||||||||||||||
| 3,771,828 | 357,021 | (21,354) | (32,962) | 4,074,533 | (1,539,997) | (253,696) | 11,207 | (1,782,486) | 2,292,047 | 2,231,831 | |||||||||||||||||||||||||||||||
| Investments in associates (accounted for using the equity method) | |||||||||||||||||||||||||||||||||||||||||
| Calibre | 93,728 | 14,756 | — | — | 108,484 | — | — | — | — | 108,484 | 93,728 | ||||||||||||||||||||||||||||||
| BeMetals | 10,508 | (307) | — | — | 10,201 | — | — | — | — | 10,201 | 10,508 | ||||||||||||||||||||||||||||||
| 104,236 | 14,449 | — | — | 118,685 | — | — | — | — | 118,685 | 104,236 | |||||||||||||||||||||||||||||||
| 3,876,064 | 371,470 | (21,354) | (32,962) | 4,193,218 | (1,539,997) | (253,696) | 11,207 | (1,782,486) | 2,410,732 | 2,336,067 | |||||||||||||||||||||||||||||||
17
B2GOLD CORP.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Mining Interest Schedule (Note 19)
For the year ended December 31, 2021
(All tabular amounts are in thousands of United States dollars)
(Unaudited)
| Cost | Accumulated depreciation | Net carrying value | |||||||||||||||||||||||||||||||||||||||
| Balance at Dec. 31, 2020 | Additions / Equity pick-up | Disposals / write-offs | Reclass / Mine restoration movements | Balance at Dec. 31, 2021 | Balance at Dec. 31, 2020 | Depreciation | Disposals/ write-offs | Balance at Dec. 31, 2021 | Balance at Dec. 31, 2021 | Balance 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 Property | 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 joint ventures and 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 | |||||||||||||||||||||||||||||||
18
B2GOLD CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the quarter ended September 30, 2022
This Management’s Discussion and Analysis (“MD&A”) has been prepared as at November 1, 2022 and contains certain "forward-looking information" and “forward-looking statements” under Canadian and United States securities laws, respectively ("forward-looking statements"). All statements included herein, other than statements of historical fact, including without limitation statements regarding potential mineralization, exploration results and future plans, production and objectives of B2Gold Corp. (the “Company” or “B2Gold”), are forward-looking statements that involve various risks, uncertainties and assumptions. See the “Cautionary Statement on Forward-Looking Information” section. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements as a result of a number of factors, including those set out in “Risks and Uncertainties.”
The following discussion of the operating results and financial position of the Company should be read in conjunction with the unaudited condensed interim consolidated financial statements and the notes thereto of the Company for the three and nine months ended September 30, 2022 and the audited consolidated financial statements and the notes thereto of the Company for the year ended December 31, 2021. The unaudited condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard 34 - Interim Financial Reporting of the 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 (third quarter of 2021 - 33%), representing the Company’s indirect ownership interest in the Nicaraguan and Nevada 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 | ||||||||||||||
| Internal Control 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. 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 third quarter of 2022 was $393 million on sales of 229,400 ounces at an average realized gold price of $1,711 per ounce, compared to $511 million on sales of 286,650 ounces at an average realized gold price of $1,782 per ounce in the third quarter of 2021. The decrease in gold revenue of 23% ($118 million) was mainly attributable to a 20% decrease in gold ounces sold and a 3% decrease in average realized gold price. Consolidated gold revenue for the first nine months of 2022 was $1.14 billion on sales of 629,800 ounces at an average price of $1,810 per ounce compared to $1.24 billion on sales of 689,051 ounces at an average price of $1,794 per ounce in the first nine months of 2021. The decrease in gold revenue of 8% ($96 million) was attributable to a 9% decrease in gold ounces sold, partially offset by a 1% increase in average realized gold price.
Total gold production in the third quarter of 2022 was 227,016 ounces (including 12,113 ounces of attributable production from Calibre), below budget by 17% (45,200 ounces), and consolidated gold production from the Company’s three operating mines was 214,903 ounces, below budget by 18% due to temporary operational challenges at the Fekola and Otjikoto Mines (refer to "Review of Mining Operations and Development Projects" section below). In the third quarter of 2022, production from the Fekola Mine was impacted by an exceptionally challenging rainy season which temporarily delayed access to higher grade ore from Fekola open-pit Phase 6. The ore from Fekola open-pit Phase 6, which is currently being mined in the fourth quarter of 2022, is anticipated to average between 3.4 to 3.5 grams per tonne (“g/t”) gold. Over the full fourth quarter of 2022, gold grade mined is anticipated to average over 3.0 g/t gold at Fekola. In the third quarter of 2022, the Otjikoto Mine was impacted by delays in bringing the Wolfshag Underground mine into production due to contractor delays in prior quarters. The contractor has been replaced and development rates have recovered. Gold production from the Otjikoto Mine is forecast to significantly increase in the fourth quarter of 2022 as mining has reached a higher grade zone in the Otjikoto pit and with stope ore production from the Wolfshag Underground mine. Compared to the third quarter of 2021, total consolidated gold production was lower by 27% (83,245 ounces) for the reasons noted above. In addition, production in the third quarter of 2022 was expected to be lower than the third quarter of 2021 due to the planned mining sequence and overall planned lower mined grades. For the first nine months of 2022, total gold production was 660,004 ounces (including 39,770 ounces of attributable production from Calibre), below budget by 5% (33,286 ounces), and lower than the first nine months of 2021 by 11% (82,513 ounces) due to temporary operational challenges at the Fekola and Otjikoto mines in the third quarter of 2022. In addition, the first nine months of 2022 was expected to be lower than the first nine months of 2021 due to the planned mining sequence and overall planned lower mined grades. Consolidated gold production from the Company’s three operating mines was 620,234 ounces in the first nine months of 2022, below budget by 6% (38,367 ounces) and 11% (78,512 ounces) lower compared to the first nine months of 2021.
For the third quarter of 2022, consolidated cash operating costs1 were $798 per gold ounce produced ($810 per gold ounce sold), $186 (30%) per gold ounce produced higher than budget and $380 (91%) higher than the third quarter of 2021. Including estimated attributable results for Calibre, cash operating costs for the third quarter of 2022 were $815 per gold ounce produced ($824 per gold ounce sold), $186 (30%) per gold ounce produced higher than budget and $370 (83%) higher than the third quarter of 2021. Cash operating costs per ounce produced for the third quarter of 2022 were higher than budget and higher than the third quarter of 2021 as a result of the lower than budgeted production resulting from the exceptionally challenging rainy season at the Fekola Mine and delays in the Wolfshag Underground mine and higher than budgeted fuel and other consumables prices related to worldwide inflation. For the first nine months of 2022, consolidated cash operating costs were $749 per gold ounce produced ($741 per gold ounce sold), in line with budget and $217 (41%) per gold ounce produced higher than the first nine months of 2021. Including estimated attributable results for Calibre, cash operating costs for the first nine months of 2022 were $767 per gold ounce produced ($760 per gold ounce sold), in line with budget and $211 (38%) per gold ounce produced higher than the first nine months of 2021. Cash operating costs per ounce produced for the first nine months of 2022 were in line with budget largely as a result of lower production and higher fuel costs being partially offset by lower tonnes mined at Fekola, delays in incurring Wolfshag Underground costs (now expected in the fourth quarter of 2022) and a weaker Namibian dollar. Cash operating costs for the first nine months of 2022 were higher than the first nine months of 2021 due to lower production and inflation driven higher input costs in the first nine months of 2022, including higher fuel unit prices and other consumables prices related to worldwide inflation.
Consolidated all-in sustaining costs2 for the third quarter of 2022 were $1,154 per gold ounce sold compared to budget of $954 per gold ounce sold and $777 per gold ounce sold for the third quarter of 2021. Including estimated attributable results for Calibre, all-in sustaining costs for the third quarter of 2022 were $1,169 per gold ounce sold compared to budget of $962 per gold ounce sold and $795 per gold ounce sold for the third quarter of 2021. All-in sustaining costs for the third quarter of 2022 were 22% higher than budget as a result of the higher than budgeted cash operating costs described above and lower than budgeted gold ounces sold partially offset by higher than budgeted realized gains on the settlement of fuel derivatives.
1 “Cash operating 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 “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
Consolidated all-in sustaining costs for the first nine months of 2022 were $1,100 per gold ounce sold compared to budget of $1,147 per gold ounce sold and $887 per gold ounce sold for the first nine months of 2021. Including estimated attributable results for Calibre, all-in sustaining costs for the first nine months of 2022 were $1,108 per gold ounce sold compared to budget of $1,147 per gold ounce sold and $900 per gold ounce sold for the first nine months of 2021. All-in sustaining costs for the first nine months of 2022 were in line with budget and reflected slightly higher than budgeted production costs per ounce sold partially offset by higher than budgeted realized gains on the settlement of fuel derivatives and lower than budgeted sustaining capital expenditures ($36 million). The lower sustaining capital expenditures are mainly a result of timing of expenditures and are expected to be incurred in the fourth quarter of 2022.
For the full-year 2022, total consolidated production and cost guidance remains unchanged. Production shortfalls due to mining sequence changes at the Fekola and Otjikoto mines in the third quarter of 2022 are forecast to reverse in the fourth quarter of 2022 with higher grade production forecast from Fekola Phase 6 and Wolfshag Underground. As a result, the Company re-affirms its total gold production guidance for 2022 of between 990,000 and 1,050,000 ounces of gold (including 40,000 and 50,000 attributable ounces projected from Calibre). Overall and after factoring in the operating results for the first nine months of 2022, the Company's costs guidance ranges for full-year 2022 remain unchanged. The Company’s total consolidated cash operating costs are expected to be at the upper end of the original guidance range of between $620 and $660 per ounce and total consolidated all-in sustaining costs are expected to within the original guidance range of between $1,010 and $1,050 per ounce.
The Company’s operations continue to be impacted by global cost inflation with fuel costs reflecting the most significant increases. However, despite these ongoing cost pressures, draw downs of existing inventories, proactive management and the revised sequencing of certain mining and capital costs, and gains realized from the Company's fuel hedging program, the Company's consolidated cash operating costs and all-in sustaining costs in the first nine months of 2022 were in line with budget. For full-year 2022, the Company expects to be at the upper end of its original total consolidated cash operating cost guidance range and within its original total consolidated all-in sustaining cost guidance range. The Company will continue to closely monitor the levels of cost inflation over the remainder of 2022. B2Gold’s projects and operations continue to target long-term cash flow and value at industry leading costs per ounce of gold produced.
Net loss for the third quarter of 2022 was $21 million compared to net income of $135 million for the third quarter of 2021. For the third quarter of 2022, the Company generated a net loss attributable to the shareholders of the Company of $23 million (net loss of $0.02 per share) compared to a net income attributable to the shareholders of the Company of $123 million ($0.12 per share) in the third quarter of 2021. Adjusted net income attributable to the shareholders of the Company3 for the third quarter of 2022 was $32 million ($0.03 per share) compared to $123 million ($0.12 per share) in the third quarter of 2021. The net loss incurred in the third quarter of 2022 was driven by a number of factors including: lower than budget consolidated gold production of 45,750 ounces and related gold sales due to mining sequence changes at the Fekola and Otjikoto mines (these temporary sequence timing differences are expected to be caught up in the fourth quarter of 2022); non-cash exploration write-offs and losses on disposal of mineral property costs totalling $8 million; non-cash unrealized derivative losses of $17 million recorded for changes in the fair value of the Company's fuel hedge book (losses in the current quarter were driven by changes in fuel prices between July 1, 2022 and September 30, 2022). Since January 1, 2022, the Company has recorded realized gains of $25 million and unrealized losses of $7 million related to its fuel hedging program); and non-cash deferred income tax charges of $35 million primarily driven by a weakening of the Malian and Namibian currencies compared to the United States dollar which generated higher temporary differences between the accounting and tax basis. For the first nine months of 2022, the Company generated net income of $110 million compared to a net income of $308 million in the first nine months of 2021, including net income attributable to the shareholders of the Company of $95 million ($0.09 per share) in the first nine months of 2022 compared to $283 million ($0.27 per share) in the first nine months of 2021. Adjusted net income attributable to the shareholders of the Company for the first nine months of 2022 was $142 million ($0.13 per share) compared to adjusted net income of $273 million ($0.26 per share) in the first nine months of 2021.
Cash flow provided by operating activities was $93 million in the third quarter of 2022 compared to $320 million in the third quarter of 2021, a decrease of $227 million due mainly to lower revenues of $118 million, higher production costs of $55 million and higher working capital outflows in the third quarter of 2022 (most significantly for current income taxes with cash taxes paid in the third quarter of 2022 being $36 million higher than the third quarter of 2021 as the Fekola priority dividend of $31 million was paid in the third quarter of 2022 rather than in the second quarter of 2021). Cash income and withholding tax payments in the third quarter of 2022 totalled $79 million (third quarter of 2021 - $43 million). Cash flow provided by operating activities was $325 million in the first nine months of 2022 compared to $458 million in the first nine months of 2021, a decrease of $133 million due mainly to lower revenues of $96 million, higher production costs of $92 million and higher long-term value-added taxes outflows, partially offset by lower working capital outflows in the first nine months of 2022 (most significantly for current income taxes with cash taxes paid in the first nine months of 2022 being $64 million lower than the first nine months of 2021) and higher realized gains on fuel contracts of $20 million. In the first nine months of 2021, income tax payments were significantly higher than the first nine months of 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. Cash income and withholding tax payments in the first nine months of 2022 totalled $177 million (first nine months of 2021 - $241 million), 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 the balance of 2022, the Company is now forecasting to make total cash income and withholding tax payments in 2022 of approximately $260 million compared to $280 million disclosed previously.
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
B2Gold continues to maintain a strong financial position and liquidity. At September 30, 2022, the Company had cash and cash equivalents of $549 million (December 31, 2021 - $673 million) and working capital (defined as current assets less assets classified as held for sale and current liabilities) of $725 million (December 31, 2021 - $802 million). At September 30, 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 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. Approximately 50,000 ounces has been budgeted to be produced from the Cardinal Zone in 2022 and included in Fekola's 2022 production guidance. Based on engineering studies completed to date, the Cardinal Zone has the potential to add an average of approximately 60,000 ounces per year over the next 6 to 8 years to Fekola's annual gold production.
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 km2. The acquisition of the Bakolobi permit results in the ownership by the Company of four contiguous exploration and/or exploitation permits covering 237 km2, 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.
On July 3, 2022, the Economic Community of West African States (“ECOWAS”) removed the economic, financial and diplomatic sanctions imposed on Mali earlier in 2022 following the interim Malian Government’s announcement of a two-year transition to presidential elections and the promulgation of a new electoral law. 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 km2 covering highly prospective greenstone belts in Mali, including Oklo’s flagship Dandoko project (550 km2), 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 license 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. Trucking of selective higher grade saprolite material to the Fekola mill will increase the ore processed and annual gold production from the Fekola mill, with the potential to add an average of approximately 80,000 to 100,000 ounces of gold per year to the Fekola mill's annual production.
In 2022, the Company budgeted $33 million for development of saprolite mining at the Anaconda Area including road construction, mine infrastructure, and mining equipment. The construction mobile equipment fleet is arriving, and the Company expects to break 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 for saprolite production from the Bantako license area as early as the second quarter of 2023 and from the Dandoko license area as early as the fourth quarter of 2023. Production from Bantako and Dandoko is contingent upon receipt of all necessary permits as well as optimizing long-term project value from the various oxide and sulphide material sources now available including Fekola Pit, Fekola Underground, Cardinal, Bantako, Menankoto, Dandoko, and Bakolobi.
In the third quarter of 2022, the Company commenced a feasibility level engineering study of stand-alone mill and oxide processing facilities at the Anaconda Area. The study will be based on processing at least 4 million tonnes per annum (“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 Anaconda processing facilities could have the potential to produce more than 800,000 ounces of gold per year commencing as early as 2026.
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 the best interests of all stakeholders for a new party to own the Gramalote Project. Accordingly, both parties intend to commence a joint sales process for the Gramalote Project in the fourth quarter of 2022.
4
On February 22, 2022, June 8, 2022 and September 12, 2022, B2Gold’s Board of Directors declared a cash dividend for the first, second and third quarter of 2022, respectively, of $0.04 per common share (or an expected $0.16 per share on an annualized basis), paid on March 17, 2022, June 29, 2022 and September 29, 2022, respectively. The declaration and payment of future quarterly dividends remains at the discretion of the Board and will depend on the Company's financial results, cash requirements, future prospects and other factors deemed relevant by the Board.
REVIEW OF FINANCIAL RESULTS
Selected Quarterly Financial and Operating Results
| Three months ended | Nine months ended | |||||||||||||
| September 30, | September 30, | |||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||
| Gold revenue ($ in thousands) | 392,554 | 510,859 | 1,140,122 | 1,236,151 | ||||||||||
| Net (loss) income ($ in thousands) | (21,234) | 134,871 | 110,255 | 307,685 | ||||||||||
(Loss) earnings per share – basic(1) ($/ share) | (0.02) | 0.12 | 0.09 | 0.27 | ||||||||||
(Loss) earnings per share – diluted(1) ($/ share) | (0.02) | 0.12 | 0.09 | 0.27 | ||||||||||
| Cash provided by operating activities ($ thousands) | 93,118 | 320,283 | 325,307 | 457,821 | ||||||||||
| Average realized gold price ($/ ounce) | 1,711 | 1,782 | 1,810 | 1,794 | ||||||||||
Adjusted net income(1)(2) ($ in thousands) | 31,996 | 122,750 | 142,340 | 272,646 | ||||||||||
Adjusted earnings per share(1)(2) – basic ($) | 0.03 | 0.12 | 0.13 | 0.26 | ||||||||||
| Excluding equity investment in Calibre: | ||||||||||||||
| Gold sold (ounces) | 229,400 | 286,650 | 629,800 | 689,051 | ||||||||||
| Gold produced (ounces) | 214,903 | 295,723 | 620,234 | 698,746 | ||||||||||
Cash operating costs(2) ($/ gold ounce sold) | 810 | 456 | 741 | 544 | ||||||||||
Cash operating costs(2) ($/ gold ounce produced) | 798 | 418 | 749 | 532 | ||||||||||
Total cash costs(2) ($/ gold ounce sold) | 926 | 572 | 862 | 666 | ||||||||||
All-in sustaining costs(2) ($/ gold ounce sold) | 1,154 | 777 | 1,100 | 887 | ||||||||||
| Including equity investment in Calibre: | ||||||||||||||
| Gold sold (ounces) | 241,558 | 301,153 | 669,776 | 732,986 | ||||||||||
| Gold produced (ounces) | 227,016 | 310,261 | 660,004 | 742,517 | ||||||||||
Cash operating costs(2) ($/ gold ounce sold) | 824 | 482 | 760 | 568 | ||||||||||
Cash operating costs(2) ($/ gold ounce produced) | 815 | 445 | 767 | 556 | ||||||||||
Total cash costs(2) ($/ gold ounce sold) | 939 | 596 | 878 | 687 | ||||||||||
All-in sustaining costs(2) ($/ gold ounce sold) | 1,169 | 795 | 1,108 | 900 | ||||||||||
(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”.
Third quarter 2022 and 2021
Revenue
Consolidated gold revenue for the third quarter of 2022 was $393 million on sales of 229,400 ounces at an average realized gold price of $1,711 per ounce, compared to $511 million on sales of 286,650 ounces at an average realized gold price of $1,782 per ounce in the third quarter of 2021. The decrease in gold revenue of 23% ($118 million) was mainly attributable to a 20% decrease in gold ounces sold and a 3% decrease in average realized gold price.
In the third quarter of 2022, the Fekola Mine accounted for $230 million (third quarter of 2021 - $288 million) of gold revenue from the sale of 135,150 ounces (third quarter of 2021 - 161,550 ounces), the Masbate Mine accounted for $108 million (third quarter of 2021 - $118 million) of gold revenue from the sale of 62,600 ounces (third quarter of 2021 - 66,300 ounces) and the Otjikoto Mine accounted for $55 million (third quarter of 2021 - $105 million) of gold revenue from the sale of 31,650 ounces (third quarter of 2021 - 58,800 ounces).
5
Production and operating costs
Total gold production in the third quarter of 2022 was 227,016 ounces (including 12,113 ounces of attributable production from Calibre), below budget by 17% (45,200 ounces), and consolidated gold production from the Company’s three operating mines was 214,903 ounces, below budget by 18% due to temporary operational challenges at the Fekola and Otjikoto Mines (refer to "Review of Mining Operations and Development Projects" section below). In the third quarter of 2022, production from the Fekola Mine was impacted by an exceptionally challenging rainy season which temporarily delayed access to higher grade ore from Fekola open-pit Phase 6. The ore from Fekola open-pit Phase 6, which is currently being mined in the fourth quarter of 2022, is anticipated to average between 3.4 to 3.5 grams per tonne (“g/t”) gold. Over the full fourth quarter of 2022, gold grade mined is anticipated to average over 3.0 g/t gold at Fekola. In the third quarter of 2022, the Otjikoto Mine was impacted by delays in bringing the Wolfshag Underground mine into production due to contractor delays in prior quarters. The contractor has been replaced and development rates have recovered. Gold production from the Otjikoto Mine is forecast to significantly increase in the fourth quarter of 2022 as mining has reached a higher grade zone in the Otjikoto pit and with stope ore production from the Wolfshag Underground mine. Compared to the third quarter of 2021, total consolidated gold production was lower by 27% (83,245 ounces) for the reasons noted above. In addition, production in the third quarter of 2022 was expected to be lower than the third quarter of 2021 due to the planned mining sequence and overall planned lower mined grades.
For the third quarter of 2022, consolidated cash operating costs (refer to "Non-IFRS Measures") were $798 per gold ounce produced ($810 per gold ounce sold), $186 (30%) per gold ounce produced higher than budget and $380 (91%) higher than the third quarter of 2021 consolidated cash operating costs of $418 per gold ounce produced. Including estimated attributable results for Calibre, cash operating costs for the third quarter of 2022 were $815 per gold ounce produced ($824 per gold ounce sold), $186 (30%) per gold ounce produced higher than budget and $370 (83)% higher than the third quarter of 2021 cash operating costs of $445 per gold ounce produced. Cash operating costs per ounce produced for the third quarter of 2022 were higher than budget and higher than the third quarter of 2021 as a result of the lower than budgeted production resulting from the exceptionally challenging rainy season at the Fekola Mine and delays in the Wolfshag Underground mine and higher than budgeted fuel and other consumables prices related to worldwide inflation.
The Company’s operations continue to be impacted by global cost inflation with fuel costs reflecting the most significant increases. However, despite these ongoing cost pressures, draw downs of existing inventories, proactive management and the revised sequencing of certain mining and capital costs, and gains realized from the Company's fuel hedging program, the Company's consolidated cash operating costs and all-in sustaining costs in the first nine months of 2022 were in line with budget. For full-year 2022, the Company expects to be at the upper end of its original total consolidated cash operating cost guidance range and within its original total consolidated all-in sustaining cost guidance range. The Company will continue to closely monitor the levels of cost inflation over the remainder of 2022. B2Gold’s projects and operations continue to target long-term cash flow and value at industry leading costs per ounce of gold produced.
Consolidated all-in sustaining costs (refer to "Non-IFRS Measures") for the third quarter of 2022 were $1,154 per gold ounce sold compared to budget of $954 per gold ounce sold and $777 per gold ounce sold for the third quarter of 2021. Including estimated attributable results for Calibre, all-in sustaining costs for the third quarter of 2022 were $1,169 per gold ounce sold compared to budget of $962 per gold ounce sold and $795 per gold ounce sold for the third quarter of 2021. All-in sustaining costs for the third quarter of 2022 were 22% higher than budget as a result of the higher than budgeted cash operating costs described above and lower than budgeted gold ounces sold partially offset by higher than budgeted realized gains on the settlement of fuel derivatives.
Depreciation and depletion
Depreciation and depletion expense included in total cost of sales was $94 million in the third quarter of 2022 compared to $112 million in the third quarter of 2021. The 16% decrease in depreciation expense was primarily due to a 20% decrease in the gold ounces sold partially offset by a 5% increase in the depreciation charge per ounce of gold sold.
Royalties and production taxes
Royalties and production taxes included in total cost of sales were $27 million for the third quarter of 2022 compared to $33 million for the third quarter of 2021. The 20% decrease in royalties and production taxes was primarily due to a 20% decrease in the gold ounces sold.
Other
General and administrative (“G&A”) costs relate primarily 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. G&A for the third quarter of 2022 was $10 million which was in line with the third quarter of 2021.
Share-based payment expense for the third quarter of 2022 was $6 million, which was in line with the third quarter of 2021.
In the third quarter of 2022, the Company recorded a net $4 million write-off of mineral property interests relating to greenfield exploration targets.
6
A loss on sale of mineral property interest of $3 million was recorded in the third quarter of 2022 relating to the completion of the sale of the Ondundu Property.
For the third quarter of 2022, the Company's estimate of its share of Calibre's net income based on publicly available information was $2 million. Calibre will report its third quarter of 2022 financial results on November 2, 2022. The Company will update any differences in the fourth quarter of 2022. The Company held approximately 25% of the total issued and outstanding Calibre common shares and the Company's investment in Calibre had a market value of $77 million at September 30, 2022.
The Company reported $8 million in foreign exchange losses for the third quarter of 2022 compared to foreign exchange losses of $3 million for the third quarter of 2021. The foreign exchange losses for the third quarter of 2022 resulted from the weakening of the local currency in Mali and Namibia versus the US dollar and mainly reflects its impact on foreign currency denominated working capital balances.
The Company reported $3 million in interest and financing expense during the third quarter of 2022 in line with the third quarter of 2021.
For the third quarter of 2022, the Company recorded derivative losses of $9 million compared to derivative gains of $5 million in the third quarter of 2021. The losses were driven by fuel forward contracts and consisted of net unrealized losses of $17 million (Q3 2021 - net unrealized gains of $3 million) and realized gains of $8 million (Q3 2021 - realized gains of $2 million).
For the third quarter of 2022, the Company recorded a net current income and other tax expense of $33 million, compared to $83 million in the third quarter of 2021, consisting of current income tax of $26 million (Q3 2021 - $69 million), the 10% priority dividend to the State of Mali of $6 million (Q3 2021 - $12 million) and withholding tax (on intercompany dividends/management fees) of $1 million (Q3 2021 - $2 million). The priority dividend is accounted for as an income tax in accordance with IAS 12, Income Taxes. Current tax expense decreased by $50 million in the third quarter of 2022 compared to the third quarter of 2021 mainly as a result of lower taxable income. For the third quarter of 2022, the Company recorded a deferred income tax expense of $35 million compared to $3 million in the third quarter of 2021. Deferred income tax expense increased by $32 million in the third quarter of 2022 compared to the third quarter of 2021 mainly due to the weakening of the Malian, Namibian and Colombian currencies relative to the United States dollar in the third quarter of 2022 which resulted in higher temporary differences between accounting and taxable income.
Net loss for the third quarter of 2022 was $21 million compared to net income of $135 million for the third quarter of 2021. For the third quarter of 2022, the Company generated a net loss attributable to the shareholders of the Company of $23 million (net loss of $0.02 per share) compared to a net income attributable to the shareholders of the Company of $123 million ($0.12 per share) in the third quarter of 2021. The net loss incurred in the third quarter of 2022 was driven by a number of factors including: lower than budget consolidated gold production of 45,750 ounces and related gold sales due to mining sequence changes at the Fekola and Otjikoto mines (these temporary sequence timing differences are expected to be caught up in the fourth quarter of 2022); non-cash exploration write-offs and losses on disposal of mineral property costs totalling $8 million; non-cash unrealized derivative losses of $17 million recorded for changes in the fair value of the Company's fuel hedge book (losses in the current quarter were driven by changes in fuel prices between July 1, 2022 and September 30, 2022). Since January 1, 2022, the Company has recorded realized gains of $25 million and unrealized losses of $7 million related to its fuel hedging program); and non-cash deferred income tax charges of $35 million primarily driven by a weakening of the Malian and Namibian currencies compared to the United States dollar which generated higher temporary differences between the accounting and tax basis. Adjusted net income attributable to the shareholders of the Company (refer to “Non-IFRS Measures”) for the third quarter of 2022 was $32 million ($0.03 per share) compared to $123 million ($0.12 per share) in the third quarter of 2021. Adjusted net income in the third quarter of 2022 excluded the write-down of mineral property interests of $4 million, loss on sale of mineral interests of $3 million, non-cash interest income on deferred consideration receivable of $1 million, unrealized losses on derivative instruments of $17 million and a deferred income tax expense of $33 million.
Cash flow provided by operating activities was $93 million in the third quarter of 2022 compared to $320 million in the third quarter of 2021, a decrease of $227 million due mainly to lower revenues of $118 million, higher production costs of $55 million and higher working capital outflows in the third quarter of 2022 (most significantly for current income taxes with cash taxes paid in the third quarter of 2022 being $36 million higher than the third quarter of 2021 as the Fekola priority dividend of $31 million was paid in the third quarter of 2022 rather than in the second quarter of 2021). Cash income tax payments in the third quarter of 2022 totalled $79 million (third quarter of 2021 - $43 million). Based on current assumptions, including an average gold price of $1,700 per ounce for the balance of 2022, the Company is now forecasting to make total cash income and withholding tax payments in 2022 of approximately $260 million compared to $280 million disclosed previously.
B2Gold continues to maintain a strong financial position and liquidity. At September 30, 2022, the Company had cash and cash equivalents of $549 million (December 31, 2021 - $673 million) and working capital (defined as current assets less assets classified as held for sale and current liabilities) of $725 million (December 31, 2021 - $802 million). At September 30, 2022, the full amount of the Company's $600 million RCF was undrawn and available.
7
Year to date results
Revenue
Consolidated gold revenue for the first nine months of 2022 was $1.14 billion on sales of 629,800 ounces at an average price of $1,810 per ounce compared to $1.24 billion on sales of 689,051 ounces at an average price of $1,794 per ounce in the first nine months of 2021. The decrease in gold revenue of 8% ($96 million) was attributable to a 9% decrease in gold ounces sold, partially offset by a 1% increase in average realized gold price.
In the first nine months of 2022, the Fekola Mine accounted for $652 million (first nine months of 2021 - $712 million) of gold revenue from the sale of 361,800 ounces (first nine months of 2021 - 396,750 ounces), the Masbate Mine accounted for $291 million (first nine months of 2021 - $326 million) of gold revenue from the sale of 160,150 ounces (first nine months of 2021 - 181,641 ounces) and the Otjikoto Mine accounted for $197 million (first nine months of 2021 - $198 million) of gold revenue from the sale of 107,850 ounces (first nine months of 2021 - 110,660 ounces).
Production and operating costs
For the first nine months of 2022, total gold production was 660,004 ounces (including 39,770 ounces of attributable production from Calibre), below budget by 5% (33,286 ounces), and lower than the first nine months of 2021 by 11% (82,513 ounces) due to temporary operational challenges at the Fekola and Otjikoto mines in the third quarter of 2022 (refer to "Review of Mining Operations and Development Projects" section below). In the third quarter of 2022, the Fekola Mine was impacted by an exceptionally challenging rainy season which delayed access to higher grade ore from Fekola Phase 6. The ore from Fekola Phase 6, which is currently being mined in the fourth quarter of 2022, is anticipated to average between 3.4 to 3.5 g/t gold. In the third quarter of 2022, the Otjikoto Mine was impacted by delays in bringing the Wolfshag Underground mine into production due to contractor delays in prior quarters. The contractor has been replaced and development rates have recovered. Gold production from the Otjikoto Mine is forecast to significantly increase in the fourth quarter of 2022 when mining reaches a higher grade zone in the Otjikoto pit and stope ore production commences from the Wolfshag Underground mine. In addition, production in the first nine months of 2022 was expected to be lower than the first nine months of 2021 due to the planned mining sequence and overall planned lower mined grades. Consolidated gold production from the Company’s three operating mines was 620,234 ounces in the first nine months of 2022, below budget by 6% (38,367 ounces) and 11% (78,512 ounces) lower compared to the first nine months of 2021.
For the first nine months of 2022, consolidated cash operating costs (refer to "Non-IFRS Measures") were $749 per gold ounce produced ($741 per gold ounce sold), in line with budget and $217 (41%) per gold ounce produced higher than the first nine months of 2021. Including estimated attributable results for Calibre, cash operating costs for the first nine months of 2022 were $767 per gold ounce produced ($760 per gold ounce sold), in line with budget and $211 (38%) per gold ounce produced higher than the first nine months of 2021. Cash operating costs per ounce produced for the first nine months of 2022 were in line with budget largely as a result of lower production and higher fuel costs being partially offset by lower tonnes mined at Fekola, delays in incurring Wolfshag Underground costs (now expected in the fourth quarter of 2022) and a weaker Namibian dollar. Cash operating costs for the first nine months of 2022 were higher than the first nine months of 2021 due to lower production and inflation driven higher input costs in the first nine months of 2022, including higher fuel unit prices and other consumables prices related to worldwide inflation.
The Company’s operations continue to be impacted by global cost inflation with fuel costs reflecting the most significant increases. However, despite these ongoing cost pressures, draw downs of existing inventories, proactive management and the revised sequencing of certain mining and capital costs, and gains realized from the Company's fuel hedging program, the Company's consolidated cash operating costs and all-in sustaining costs in the first nine months of 2022 were in line with budget. For full-year 2022, the Company expects to be at the upper end of its original total consolidated cash operating cost guidance range and within its original total consolidated all-in sustaining cost guidance range. The Company will continue to closely monitor the levels of cost inflation over the remainder of 2022. B2Gold’s projects and operations continue to target long-term cash flow and value at industry leading costs per ounce of gold produced.
Consolidated all-in sustaining costs (refer to "Non-IFRS Measures") for the first nine months of 2022 were $1,100 per gold ounce sold compared to budget of $1,147 per gold ounce sold and $887 per gold ounce sold for the first nine months of 2021. Including estimated attributable results for Calibre, all-in sustaining costs for the first nine months of 2022 were $1,108 per gold ounce sold compared to budget of $1,147 per gold ounce sold and $900 per gold ounce sold for the first nine months of 2021. All-in sustaining costs for the first nine months of 2022 were in line with budget and reflected slightly higher than budgeted production costs per ounce sold partially offset by higher than budgeted realized gains on the settlement of fuel derivatives and lower than budgeted sustaining capital expenditures ($36 million). The lower sustaining capital expenditures are mainly a result of timing of expenditures and are expected to be incurred in the fourth quarter of 2022.
8
Depreciation and depletion
Depreciation and depletion expense included in total cost of sales was $253 million for the first nine months of 2022 compared to $256 million in the first nine months of 2021. The 1% decrease in depreciation expense was due to a 9% decrease in gold ounces sold partially offset by a 8% increase in the depreciation charge per gold ounce sold. The increase in the depreciation charge per gold ounce sold was a result of the reduction of the depreciable recoverable ounces for the Fekola and Masbate mines, an increase in costs to be depreciated for the Fekola Mine and higher depreciation of prestripping assets at the Otjikoto and Fekola mines.
Royalties and production taxes
Royalties and production taxes included in total cost of sales were $76 million for the first nine months of 2022 compared to $84 million in the first nine months of 2021. The 10% decrease in royalties and production taxes was due to a 9% decrease in gold ounces sold and a 1% increase in the average realized gold price.
Other
G&A for the first nine months of 2022 was $34 million, which was $3 million higher than the first nine months of 2021. The higher G&A in the first nine months of 2022 resulted from higher bank charges and travel expenses as the restrictions on travel due to the COVID-19 pandemic continue to be lifted.
Share-based payment expense for the first nine months of 2022 was $18 million, which was $2 million higher than the first nine months of 2021. The higher share-based payment expense resulted from the timing of share-based payment grants and related vesting.
In the first nine months of 2022, the Company recorded a net $7 million write-off of mineral property interests relating to greenfield exploration targets compared to $1 million in the first nine months of 2021.
A loss on sale of mineral property interest of $3 million was recorded in the first nine months of 2022 relating to the completion of the sale of the Ondundu Property.
For the first nine months of 2022, the Company's estimate of its share of Calibre's net income based on publicly available information was $9 million (first nine months of 2021 - $13 million). Calibre will report its third quarter of 2022 financial results on November 2, 2022. The Company will update any differences in the fourth quarter of 2022.
The Company reported $16 million in foreign exchange losses for the first nine months of 2022 compared to foreign exchange losses of $4 million for the first nine months of 2021. The foreign exchange losses for the first nine months of 2022 resulted from the weakening of the local currency in Mali and Namibia versus the US dollar and mainly reflect its impact on foreign currency denominated working capital balances.
The Company reported $8 million in interest and financing expense during the first nine months of 2022 in line with the first nine months of 2021.
For the first nine months of 2022, the Company recorded derivative gains of $18 million compared to $23 million in the first nine months of 2021. The gains were driven by fuel forward contracts and consisted of net unrealized losses of $7 million (first nine months of 2021 - net unrealized gains of $17 million) and realized gains of $25 million (first nine months of 2021 - realized gains of $6 million).
Other non-operating income for the first nine months of 2022 was $14 million, mainly consisting of a dilution gain on investment of Calibre of $5 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. In addition, in the first nine months of 2022 the Company recorded $3 million of non-cash interest income on the Deferred Consideration Receivable in connection with the Kiaka Project disposal and $5 million of cash interest income.
9
For the first nine months of 2022, the Company recorded a net current income and other tax expense of $140 million compared to $175 million in the first nine months of 2021, consisting of current income tax of $98 million (first nine months of 2021 - $129 million), the 10% priority dividend to the State of Mali of $18 million (first nine months of 2021 - $25 million) and withholding tax (on intercompany dividends/management fees) of $24 million (first nine months of 2021 - $21 million). The priority dividend is accounted for as an income tax in accordance with IAS 12, Income Taxes. Current tax expense decreased by $34 million in the first nine months of 2022 compared to the first nine months of 2021 mainly as a result of lower taxable income. For the first nine months of 2022, the Company recorded a deferred income tax expense of $44 million compared $9 million in the first nine months of 2021. Deferred income tax expense increased by $35 million in the first nine months of 2022 compared to the first nine months of 2021, mainly due to the weakening of the Malian, Namibian and Colombian currencies relative to the United States dollar in the first nine months of 2022 which was partially offset by lower future withholding taxes on amounts to be repatriated by intercompany dividends. In addition, deferred income taxes in the first nine months of 2021 benefited from a reduction in the in the Philippine corporate income tax rate which was not repeated in 2022.
For the first nine months of 2022, the Company generated net income of $110 million compared to a net income of $308 million in the first nine months of 2021, including net income attributable to the shareholders of the Company of $95 million ($0.09 per share) in the first nine months of 2022 compared to $283 million ($0.27 per share) in the first nine months of 2021. Adjusted net income attributable to the shareholders of the Company (refer to “Non-IFRS Measures”) for the first nine months of 2022 was $142 million ($0.13 per share) compared to adjusted net income of $273 million ($0.26 per share) in the first nine months of 2021. Adjusted net income in the first nine months of 2022 excluded the write-down of mineral property interests of $7 million, reversal of impairment of long-lived assets of $1 million, loss on sale of mineral interests of $3 million, unrealized losses on derivative instruments of $7 million, dilution gain on Calibre investment of $5 million, non-cash interest income on deferred consideration receivable of $3 million and deferred income tax expense of $39 million.
Cash flow provided by operating activities was $325 million in the first nine months of 2022 compared to $458 million in the first nine months of 2021, a decrease of $133 million due mainly to lower revenues of $96 million, higher production costs of $92 million and higher long-term value-added taxes outflows, partially offset by lower working capital outflows in the first nine months of 2022 (most significantly for current income taxes with cash taxes paid in the first nine months of 2022 being $64 million lower than the first nine months of 2021) and higher realized gains on fuel contracts of $20 million. In the first nine months of 2021, income tax payments were significantly higher than the first nine months of 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. Cash income and withholding tax payments in the first nine months of 2022 totalled $177 million (first nine months of 2021 - $241 million), 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 the balance of 2022, the Company is now forecasting to make total cash income and withholding tax payments in 2022 of approximately $260 million compared to $280 million disclosed previously.
REVIEW OF MINING OPERATIONS AND DEVELOPMENT PROJECTS
Fekola Mine - Mali
| Three months ended | Nine months ended | |||||||||||||
| September 30, | September 30, | |||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||
| Gold revenue ($ in thousands) | 230,023 | 288,306 | 652,361 | 712,302 | ||||||||||
| Gold sold (ounces) | 135,150 | 161,550 | 361,800 | 396,750 | ||||||||||
| Average realized gold price ($/ ounce) | 1,702 | 1,785 | 1,803 | 1,795 | ||||||||||
| Tonnes of ore milled | 2,285,423 | 2,361,042 | 6,906,172 | 6,730,332 | ||||||||||
| Grade (grams/ tonne) | 1.90 | 2.30 | 1.72 | 1.98 | ||||||||||
| Recovery (%) | 93.1 | 94.8 | 92.9 | 94.2 | ||||||||||
| Gold production (ounces) | 129,933 | 165,557 | 354,647 | 404,256 | ||||||||||
Cash operating costs(1) ($/ gold ounce sold) | 694 | 424 | 667 | 494 | ||||||||||
Cash operating costs(1) ($/ gold ounce produced) | 728 | 363 | 667 | 478 | ||||||||||
Total cash costs(1) ($/ gold ounce sold) | 829 | 563 | 809 | 640 | ||||||||||
All-in sustaining costs(1) ($/ gold ounce sold) | 978 | 716 | 971 | 772 | ||||||||||
| Capital expenditures ($ in thousands) | 20,353 | 27,961 | 68,779 | 54,078 | ||||||||||
| Exploration ($ in thousands) | 3,392 | 2,096 | 13,848 | 9,323 | ||||||||||
(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) produced 129,933 ounces in the third quarter of 2022, 17% lower than budget and 22% lower than the third quarter of 2021 due to a challenging rainy season in West
10
Mali which temporarily delayed access to higher grade ore from Fekola Phase 6. For the third quarter of 2022, mill feed grade was 1.90 g/t compared to budget of 2.35 g/t and 2.30 g/t in the third quarter of 2021; mill throughput was 2.29 million tonnes compared to a budget of 2.19 million tonnes and 2.36 million tonnes in the third quarter of 2021; and gold recovery averaged 93.1% compared to budget of 95.0% and 94.8% in the third quarter of 2021. The Fekola processing facilities continued to outperform budget due to favorable ore fragmentation and hardness as well as continued optimization of the grinding circuit. Mill feed grade was impacted in the third quarter of 2022 due to the processing of low-grade ore stockpiles as a replacement for delayed volumes of higher grade ore from Fekola open-pit Phase 6. Mined ore tonnage and grade continue to reconcile well with the Fekola resource model. In early October 2022, mining commenced from the higher grade Fekola open-pit Phase 6 as the region exited its rainy season (which typically runs from June to September). Ore production in the fourth quarter of 2022 from Fekola open-pit Phase 6 is anticipated to average between 3.4 to 3.5 g/t gold. Over the fourth quarter of 2022, gold grade mined is anticipated to average over 3.0 g/t gold. For the first nine months of 2022, the Fekola Mine produced 354,647 ounces of gold, 7% below budget for the reasons outlined above. Compared to the first nine months of 2021, gold production for the first nine months of 2022 was 12% lower partially due to the planned mining sequence and partially due to the operational challenges encountered in the third quarter of 2022. For the first nine months of 2022, mill feed grade was 1.72 g/t compared to budget of 1.86 g/t and 1.98 g/t in the first nine months of 2021; mill throughput was 6.91 million tonnes compared to budget of 6.74 million tonnes and 6.73 million tonnes in the first nine months of 2021; and gold recovery averaged 92.9% compared to budget of 94.4% and 94.2% in the first nine months of 2021.
The Fekola Mine’s cash operating costs (refer to “Non-IFRS Measures”) for the third quarter of 2022 were $728 per ounce produced ($694 per gold ounce sold) compared to a budget of $488 per ounce produced and $363 per ounce produced for the third quarter of 2021. Cash operating costs per ounce produced for the third quarter of 2022 were $240 per ounce produced or 49% higher than budget as a challenging wet season delayed access to expected high grade mining areas, leading to lower production in the third quarter of 2022. Operating costs were also higher than budgeted in the third quarter of 2022 largely due to higher than budgeted fuel and explosive prices and increases in mining equipment maintenance costs. The Fekola Mine’s cash operating costs for the first nine months of 2022 were $667 per ounce produced ($667 per gold ounce sold) compared to a budget of $635 per ounce produced and $478 per ounce produced for the first nine months of 2021. Cash operating costs per ounce produced for the first nine months of 2022 were $32 per ounce produced or 5% higher than budget as a result of lower than budgeted gold production. Total mining, processing and site general costs were in line with budget. Total costs were largely in line with budget due to lower overall tonnes mined compared to budget and in line with budget fuel prices realized in the first nine months of 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 second and third quarters of 2022, fuel prices increased resulting in fuel prices being in line with budget for the nine months ended September 30, 2022. Compared to the third quarter of 2021 and first nine months of 2021, cash operating costs per ounce produced for the third quarter of 2022 and first nine months of 2022 were higher, as expected, mainly due to lower planned production, higher fuel and consumables costs and increased mining costs from operating deeper in the Fekola Pit.
All-in sustaining costs (refer to “Non-IFRS Measures”) for the third quarter of 2022 for the Fekola Mine were $978 per gold ounce sold compared to a budget of $777 per gold ounce sold and $716 per gold ounce sold in the third quarter of 2021. All-in sustaining costs for the third quarter of 2022 were $201 per gold ounce sold or 26% higher than budget as a result of higher than budgeted cash operating costs described above and lower than budgeted gold ounces sold partially offset by higher than budgeted realized gains on the settlement of fuel derivatives. All-in sustaining costs for the first nine months of 2022 for the Fekola Mine were $971 per gold ounce sold compared to a budget of $1,003 per gold ounce sold and $772 per gold ounce sold in the first nine months of 2021. All-in sustaining costs for the first nine months of 2022 were $32 per gold ounce sold or 3% lower than budget as a result of lower sustaining capital expenditures (mainly due to lower than budgeted prestripping costs and the deferral of other site capital projects) and higher than budgeted realized gains on the settlement of fuel derivatives partially offset by slightly higher than budgeted cash operating costs (5%) described above and lower gold ounces sold. The lower than budgeted sustaining capital expenditures are mainly a result of timing of expenditures and expected to be incurred in the fourth quarter of 2022.
Capital expenditures in the third quarter of 2022 totalled $20 million primarily consisting of $11 million for mobile equipment purchases and rebuilds, $6 million for tailings storage facility expansion and equipment, $2 million for process plant and other site costs and $1 million for the development of the Cardinal zone. Capital expenditures in the first nine months of 2022 totalled $69 million primarily consisting of $18 million for mobile equipment purchases and rebuilds, $18 million for tailings storage facility expansion and equipment, $14 million for prestripping, and $12 million for the development of the Cardinal zone.
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 are now open 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.
Based on an expected strong performance in the fourth quarter of 2022, as the region exits its rainy season and with higher grade production forecast from Fekola open-pit Phase 6, the Company re-affirms the Fekola Mine’s annual production guidance range of between 570,000 to 600,000 ounces of gold. Overall and after factoring in the operating results for the first nine months of 2022, Fekola's costs guidance ranges for full-year 2022 remain unchanged. For full-year 2022, cash operating costs are expected to be within Fekola's guidance range of between $510 and $550 per ounce produced and all-in sustaining costs are also expected to be within Fekola's guidance range of between $840 and $880 per ounce.
11
Masbate Mine – Philippines
| Three months ended | Nine months ended | |||||||||||||
| September 30, | September 30, | |||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||
| Gold revenue ($ in thousands) | 107,936 | 117,795 | 290,704 | 325,627 | ||||||||||
| Gold sold (ounces) | 62,600 | 66,300 | 160,150 | 181,641 | ||||||||||
| Average realized gold price ($/ ounce) | 1,724 | 1,777 | 1,815 | 1,793 | ||||||||||
| Tonnes of ore milled | 1,888,722 | 1,840,379 | 5,885,163 | 5,652,091 | ||||||||||
| Grade (grams/ tonne) | 1.10 | 1.24 | 1.12 | 1.17 | ||||||||||
| Recovery (%) | 74.7 | 81.6 | 77.1 | 82.5 | ||||||||||
| Gold production (ounces) | 49,902 | 61,207 | 164,041 | 175,598 | ||||||||||
Cash operating costs(1) ($/ gold ounce sold) | 879 | 546 | 815 | 597 | ||||||||||
Cash operating costs(1) ($/ gold ounce produced) | 867 | 609 | 801 | 611 | ||||||||||
Total cash costs(1) ($/ gold ounce sold) | 977 | 643 | 922 | 698 | ||||||||||
All-in sustaining costs(1) ($/ gold ounce sold) | 1,110 | 751 | 1,076 | 820 | ||||||||||
| Capital expenditures ($ in thousands) | 10,158 | 7,023 | 29,908 | 20,365 | ||||||||||
| Exploration ($ in thousands) | 696 | 1,446 | 3,111 | 3,871 | ||||||||||
(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 produced 49,902 ounces in the third quarter of 2022, below budget by 4% (2,110 ounces) as the ratio of sulphide and transitional ore to oxide ore was higher than budgeted in the third quarter of 2022, which contributed to the lower than budgeted throughput and recovery and higher than budgeted gold mill feed grade. Compared to the third quarter of 2021, gold production was lower by 18% (11,305 ounces) due to higher grade and recoveries in the third quarter of 2021. Processed grade was higher in the third quarter of 2021 (compared to the third quarter of 2022) due to mining of higher-grade zones of the Main Vein and Montana pits in the third quarter of 2021. Gold recoveries for processed ore were also higher in the third quarter of 2021 (compared to the third quarter of 2022) as mill recoveries outperformed Masbate’s modelled mine plan recoveries in the third quarter of 2021. For the third quarter of 2022, mill feed grade was 1.10 g/t compared to budget of 1.06 g/t and 1.24 g/t in the third quarter of 2021; mill throughput was 1.89 million tonnes compared to budget of 1.97 million tonnes and 1.84 million tonnes in the third quarter of 2021; and gold recovery averaged 74.7% compared to budget of 77.2% and 81.6% in the third quarter of 2021. For the first nine months of 2022, Masbate Mine’s gold production of 164,041 ounces was above budget by 3% (4,596 ounces) as a result of higher than budgeted mill throughput and higher than budgeted gold mill feed grade partially offset by lower than budgeted recovery. Compared to the first nine months of 2021, gold production was lower by 7% (11,557 ounces) due to lower grade and recoveries in the first nine months of 2022 due to mining of higher-grade zones of the Main Vein and Montana pits in 2021. For the first nine months of 2022, mill feed grade was 1.12 g/t compared to budget of 1.10 g/t and 1.17 g/t in the first nine months of 2021; mill throughput was 5.89 million tonnes compared to budget of 5.78 million tonnes and 5.65 million tonnes in the first nine months of 2021; and gold recovery averaged 77.1% compared to budget of 78.4% and 82.5% in the first nine months of 2021.
The Masbate Mine's cash operating costs (refer to “Non-IFRS Measures”) for the third quarter of 2022 were $867 per ounce produced ($879 per gold ounce sold) compared to a budget of $812 per ounce produced and $609 per ounce produced for the third quarter of 2021. Cash operating costs per ounce produced for the third quarter of 2022 were higher than budget by $55 per ounce produced, or 7%, as a result of slightly lower than budgeted gold production and higher than budgeted mining and processing costs resulting from higher than budgeted diesel and heavy fuel oil ("HFO") cost. Cash operating costs for the first nine months of 2022 were $801 per ounce produced ($815 per gold ounce sold) compared to a budget of $768 per ounce produced and $611 per ounce produced for the first nine months of 2021. Cash operating costs per ounce produced for the first nine months of 2022 were in line with budget due to 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 third quarter of 2022 and the first nine months of 2022 were higher than the third quarter of 2021 and first nine months of 2021 by 42% and 31%, respectively, which was planned due to lower expected production as a function of the mine plan and expected increases to operating costs due to inflation including higher fuel and other consumable costs.
All-in sustaining costs (refer to “Non-IFRS Measures”) for the third quarter of 2022 were $1,110 per ounce sold compared to a budget of $1,109 per gold ounce sold and $751 per gold ounce sold in the third quarter of 2021. All-in sustaining costs for the third quarter of 2022 were in line with budget as a result of offsetting factors. Slightly higher than budgeted cash operating costs as describe above and slightly higher than budgeted capital expenditures due to timing differences were offset by higher than budgeted realized gains on the settlement of fuel derivatives and higher than budgeted gold ounces sold. All-in sustaining costs for the first nine months of 2022 were $1,076 per ounce sold compared to a budget of $1,133 per gold ounce sold and $820 per gold ounce sold in the first nine months of 2021. All-in sustaining costs for the first nine months of 2022 were $57 per gold ounce sold or 5% lower than budget as a result of lower than budgeted capital expenditures and higher than budgeted realized gains on the settlement of fuel derivatives which were partially offset by slightly higher than budgeted cash operating costs. The lower than
12
budgeted sustaining capital expenditures were primarily a result of timing of expenditures and expected to be incurred in the fourth quarter of 2022.
Capital expenditures in the third quarter of 2022 totalled $10 million, primarily consisting of $5 million for mobile equipment purchases and rebuilds, $2 million for an additional powerhouse generator and $1 million for tailings storage facility construction. Capital expenditures in the first nine months of 2022 totalled $30 million, primarily consisting of $16 million for mobile equipment purchases and rebuilds, $5 million for an additional powerhouse generator and $3 million for tailings storage facility projects.
For the full year 2022 the Masbate Mine is expected to produce towards the lower end of its increased guidance range of between 215,000 and 225,000 ounces of gold (original guidance range was between 205,000 and 215,000 ounces of gold). For full-year 2022, with the increases being experienced in fuel prices, Masbate's cash operating costs are now expected to be at the lower end of Masbate's previously revised 2022 guidance range of between $820 and $860 per ounce (original guidance range was between $740 and $780 per ounce). The all-in sustaining cost guidance range remains unchanged and are expected to be at the upper end of Masbate's guidance range of between $1,070 and $1,110 per ounce.
Otjikoto Mine - Namibia
| Three months ended | Nine months ended | |||||||||||||
| September 30, | September 30, | |||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||
| Gold revenue ($ in thousands) | 54,595 | 104,758 | 197,057 | 198,222 | ||||||||||
| Gold sold (ounces) | 31,650 | 58,800 | 107,850 | 110,660 | ||||||||||
| Average realized gold price ($/ ounce) | 1,725 | 1,782 | 1,827 | 1,791 | ||||||||||
| Tonnes of ore milled | 877,249 | 901,216 | 2,573,360 | 2,656,367 | ||||||||||
| Grade (grams/ tonne) | 1.27 | 2.41 | 1.25 | 1.42 | ||||||||||
| Recovery (%) | 98.0 | 98.7 | 98.3 | 98.3 | ||||||||||
| Gold production (ounces) | 35,068 | 68,959 | 101,546 | 118,892 | ||||||||||
Cash operating costs(1) ($/ gold ounce sold) | 1,165 | 443 | 881 | 635 | ||||||||||
Cash operating costs(1) ($/ gold ounce produced) | 958 | 382 | 948 | 597 | ||||||||||
Total cash costs(1) ($/ gold ounce sold) | 1,234 | 515 | 954 | 707 | ||||||||||
All-in sustaining costs(1) ($/ gold ounce sold) | 1,625 | 781 | 1,247 | 1,137 | ||||||||||
| Capital expenditures ($ in thousands) | 20,292 | 19,371 | 59,575 | 59,337 | ||||||||||
| Exploration ($ in thousands) | 896 | 1,257 | 2,275 | 2,846 | ||||||||||
(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, produced 35,068 ounces in the third quarter of 2022, 32% (16,147 ounces) lower than budget and 49% (33,891 ounces) lower than the third quarter of 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 have been 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. Mined ore tonnage and grade continue to reconcile well with Otjikoto's resource model, with production expected to significantly increase in the fourth quarter of 2022 when mining reaches a higher-grade zone in the Otjikoto pit and with stope ore production from the Wolfshag Underground mine. 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. Ongoing delineation drilling for the initial stope indicates very good reconciliation with the resource model and stope location. For the third quarter of 2022, mill feed grade was 1.27 g/t compared to budget of 1.90 g/t and 2.41 g/t in the third quarter of 2021; mill throughput was 0.88 million tonnes compared to budget of 0.86 million tonnes and 0.90 million tonnes in the third quarter of 2021; and gold recovery averaged 98.0% compared to budget of 98.0% and 98.7% in the third quarter of 2021. For the first nine months of 2022, the Otjikoto Mine produced 101,546 ounces of gold, 14% (16,371 ounces) lower than budget mainly due to underground delays discussed above and 15% (17,346 ounces) lower than the first nine months of 2021 due planned changes in our sources available from the open pits and underground. For the first nine months of 2022, mill feed grade was 1.25 g/t compared to budget of 1.47 g/t and 1.42 g/t in the first nine months of 2021; mill throughput was 2.57 million tonnes compared to budget of 2.54 million tonnes and 2.66 million tonnes in the first nine months of 2021; and gold recovery averaged 98.3% compared to budget of 98.0% and 98.3% in the first nine months of 2021.
Cash operating (refer to “Non-IFRS Measures”) costs for the third quarter of 2022 were $958 per gold ounce produced ($1,165 per ounce gold sold), compared to a budget of $789 per ounce produced and $382 per ounce produced for the third quarter of 2021. Cash operating costs for the first nine months of 2022 were $948 per gold ounce produced ($881 per ounce gold sold), compared to a budget of $899 per ounce produced and $597 per ounce produced for the first nine months of 2021. Cash operating costs per ounce produced for the third quarter of 2022 and first nine months of 2022 were higher than budget as a result of lower production due to delays in accessing Wolfshag Underground production (which has commenced in the fourth
13
quarter of 2022) and higher fuel costs partially offset by a weaker Namibian dollar. Cash operating costs per ounce sold for the third quarter of 2022 were 48% higher than budget, as a result of the sale of higher cost inventory produced in prior periods. Cash operating costs per ounce produced for the third quarter of 2022 and first nine months of 2022 were 151% and 59% higher, respectively, than the third quarter of 2021 and first nine months of 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 third quarter of 2022 were $1,625 per gold ounce sold compared to a budget of $1,140 per gold ounce sold and $781 per gold ounce sold in the third quarter of 2021. All-in sustaining costs for the third quarter of 2022 were $485 per gold ounce sold or 43% higher than budget as a result of the higher than budgeted cash operating costs described above and lower than budgeted gold ounces sold, partially offset by lower sustaining capital expenditures and higher than budgeted realized gains on the settlement of fuel derivatives. All-in sustaining costs for the first nine months of 2022 were $1,247 per gold ounce sold compared to a budget of $1,330 per gold ounce sold and $1,137 per gold ounce sold in the first nine months of 2021. All-in sustaining costs for the first nine months of 2022 were $83 per gold ounce sold or 6% lower than budget as a result of lower sustaining capital expenditures which include lower prestripping and capitalized waste in the open pit and underground mines and higher than budgeted realized gains on the settlement of fuel derivatives partially offset by the slightly higher than budgeted cash operating costs described above and lower than budgeted gold ounces sold. The lower sustaining capital expenditures are mainly a result of delays in underground development resulting in underground development costs being classified as non-sustaining instead of sustaining as budgeted.
Capital expenditures for the third quarter of 2022 totalled $20 million, primarily consisting of $8 million for Wolfshag underground mine development, $7 million for prestripping in the Otjikoto pit, $3 million for mobile equipment purchases and rebuilds and $1 million to complete the national power grid connection line. Capital expenditures for the first nine months of 2022 totalled $60 million, primarily consisting of $27 million for Wolfshag underground mine development, $18 million for prestripping in the Otjikoto pit, $8 million for mobile equipment purchases and rebuilds and $5 million for the national power grid connection line.
The Otjikoto Mine is expected to produce towards the lower end of its previously revised guidance range of between 165,000 and 175,000 ounces of gold in 2022 (original guidance range of 175,000 to 185,000 ounces). Overall and after factoring in the operating results for the first nine months of 2022, Otjikoto's costs guidance ranges for full-year 2022 remain unchanged. For full-year 2022, cash operating costs are expected to be within Otjikoto's guidance range of between $740 and $780 per ounce and all-in sustaining costs are expected to be within its guidance range of between $1,120 and $1,160 per ounce.
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 September 30, 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 September 30, 2022 was $77 million. For the third quarter of 2022 and the first nine months of 2022, the Company's estimate of its share of Calibre's net income based on publicly available information was approximately $2 million and $9 million, respectively. Calibre will report its third quarter of 2022 financial results on November 2, 2022. The Company will update any differences in the fourth quarter of 2022.
Attributable share of Calibre production and costs
Based on Calibre's production press release dated October 12, 2022, consolidated production of Calibre for the third quarter of 2022 was 49,081 ounces of which the Company's attributable share was 12,113 ounces and gold sales were 49,260 ounces of which the Company's attributable share was 12,158 ounces. Nicaragua gold production for the third quarter of 2022 was 38,928 ounces and Nevada gold production was 10,153 ounces. Consolidated production of Calibre for the first nine months of 2022 was 160,702 ounces of which the Company's attributable share was 39,770 ounces.
The Company has assumed that the consolidated cash operating costs per ounce produced and all-in sustaining costs for Calibre for the first nine months of 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 third quarter of 2022 reflect the adjustment for actual first half of 2022 results.
Fekola Complex Regional Development
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 license 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 to the Fekola mill will increase the ore processed and annual gold production from the Fekola mill, with the potential to add an average of approximately 80,000 to 100,000 ounces of gold per year to the Fekola mill's annual production (Fekola Complex optimization Phase I).
14
In 2022, the Company budgeted $33 million for the development of saprolite mining at the Anaconda Area including road construction, mine infrastructure, and mining equipment. The construction mobile equipment fleet is arriving, and the Company expects to break 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 for saprolite production from the Bantako license area as early as the second quarter of 2023 and from the Dandoko license area as early as the fourth quarter of 2023. Production from Bantako and Dandoko is contingent upon receipt of all necessary permits as well as optimizing long-term project value from the various oxide and sulphide material sources now available including Fekola Pit, Fekola Underground, Cardinal, 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 a feasibility level engineering study of stand-alone mill and oxide processing facilities at the Anaconda Area (Fekola Complex optimization Phase II). The 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 Anaconda processing facilities could have the potential to produce more than 800,000 ounces of gold per year commencing as early as 2026, subject to completion of final feasibility studies, and the receipt of all necessary regulatory approvals and permits. Further expansion of the Mamba and Cobra sulphide zones (see September 15, 2022 press release) could sustain a production profile averaging over 800,000 ounces of gold per year over a 10-year period. Drilling is currently ongoing at the Mamba and Cobra 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 intend to commence a joint sales process for the Gramalote Project in the fourth quarter of 2022.
LIQUIDITY AND CAPITAL RESOURCES
B2Gold continues to maintain a strong financial position and liquidity. At September 30, 2022, the Company had cash and cash equivalents of $549 million (December 31, 2021 - $673 million) and working capital (defined as current assets less assets classified as held for sale and current liabilities) of $725 million (December 31, 2021 - $802 million). At September 30, 2022, the full amount of the Company's $600 million RCF was undrawn and available.
The Company has a RCF with a syndicate of international banks for an aggregate amount of $600 million. The RCF also allows for an accordion feature whereby upon receipt of additional binding commitments, the facility may be increased to $800 million any time prior to the maturity date of December 16, 2025. The RCF bears interest on a sliding scale of between LIBOR plus 2.00% to 2.50% based on the Company’s consolidated net leverage ratio. Commitment fees for the undrawn portion of the facility are also on a sliding scale basis of between 0.45% and 0.563%. The 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 September 30, 2022, the Company was in compliance with these debt covenants.
For the third quarter of 2022, capital expenditures totalled $76 million. The most significant capital expenditures were on the Fekola Mine with capital expenditures of $20 million, the Masbate Mine had capital expenditures of $10 million, the Otjikoto Mine had capital expenditures of $20 million, the Gramalote Project had capital expenditures of $4 million and the Anaconda Area had capital expenditures of $5 million. Other exploration and development costs for the third quarter of 2022 totalled $16 million. In addition, for the third quarter of 2022, the Company incurred $21 million in acquisition costs for Oklo and received $45 million in deferred consideration for the sale of the Kiaka project in 2021. For the first nine months of 2022, capital expenditures totalled $229 million. The most significant capital expenditures were on the Fekola Mine with capital expenditures of $69 million, the Masbate Mine had capital expenditures of $30 million, the Otjikoto Mine had capital expenditures of $60 million, the Gramalote Project had capital expenditures of $13 million and the Anaconda Area had capital expenditures of $12 million. Other exploration and development costs for the first nine months of 2022 totalled $46 million. In addition, for the first nine months of 2022, the Company made a $8 million mineral property exercise option payment in relation to the Ondundu Project which was subsequently sold in July 2022, incurred $48 million in acquisition costs for the Bakolobi permit in Mali, incurred $21 million in acquisition costs for Oklo and received $45 million in deferred consideration receivable for the sale of the Kiaka project in 2021.
15
As at September 30, 2022, the Company had the following commitments (in addition to those disclosed elsewhere in the MD&A):
•For payments at the Fekola Mine of $20 million related to mobile equipment rebuilds, $13 million for the purchase of mobile equipment, $1 million related to the tailings facility expansion, $1 million for plant maintenance and $4 million for other capital projects. Of the total commitments of $39 million, $19 million is expected to be incurred in 2022 and $20 million is expected to be incurred in 2023.
•For payments at the Anaconda Area of $17 million for mobile equipment and $1 million for other costs, $5 million of which is expected to be incurred in 2022 and $13 million of which is expected to be incurred in 2023.
•For payments at the Masbate Mine of $4 million for powerhouse rebuilds and maintenance and $1 million related to mobile equipment purchases, all of which is expected to be incurred in 2022.
•For payments at the Otjikoto Mine of $2 million for the Wolfshag underground project, all of which is expected to be incurred in 2022.
•For payments at the Gramalote Project of $2 million for the Company's share of development costs, all of which is expected to be incurred in 2022.
Derivative financial instruments
Forward 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 first nine months of 2022, the Company entered into additional forward contracts for the purchase of 1,969,000 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 fair value through profit and loss ("FVTPL").
The following is a summary, by maturity dates, of the Company’s fuel derivative contracts outstanding as at September 30, 2022:
| 2022 | 2023 | 2024 | Total | |||||||||||
| Forward – fuel oil: | ||||||||||||||
| Litres (thousands) | 9,122 | 22,604 | 656 | 32,382 | ||||||||||
| Average strike price | $ | 0.32 | $ | 0.37 | $ | 0.43 | $ | 0.36 | ||||||
| Forward – gas oil: | ||||||||||||||
| Litres (thousands) | 6,410 | 17,066 | — | 23,476 | ||||||||||
| Average strike price | $ | 0.35 | $ | 0.43 | $ | — | $ | 0.41 | ||||||
The unrealized fair value of these contracts at September 30, 2022 was $8 million.
Operating activities
Cash flow provided by operating activities was $93 million in the third quarter of 2022 compared to $320 million in the third quarter of 2021, a decrease of $227 million due mainly to lower revenues of $118 million, higher production costs of $55 million and higher working capital outflows in the third quarter of 2022 (most significantly for current income taxes with cash taxes paid in the third quarter of 2022 being $36 million higher than the third quarter of 2021 as the Fekola priority dividend of $31 million was paid in the third quarter of 2022 rather than in the second quarter of 2021). Cash income and withholding tax payments in the third quarter of 2022 totalled $79 million (third quarter of 2021 - $43 million). Cash flow provided by operating activities was $325 million in the first nine months of 2022 compared to $458 million in the first nine months of 2021, a decrease of $133 million due mainly to lower revenues of $96 million, higher production costs of $92 million and higher long-term value-added taxes outflows, partially offset by lower working capital outflows in the first nine months of 2022 (most significantly for current income taxes with cash taxes paid in the first nine months of 2022 being $64 million lower than the first nine months of 2021) and higher realized gains on fuel contracts of $20 million. In the first nine months of 2021, income tax payments were significantly higher than the first nine months of 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. Cash income and withholding tax payments in the first nine months of 2022 totalled $177 million (first nine months of 2021 - $241 million), 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 the balance of 2022, the Company is now forecasting to make total cash income and withholding tax payments in 2022 of approximately $260 million compared to $280 million disclosed previously.
Financing activities
The Company’s cash used by financing activities for the third quarter of 2022 was a net outflow of $68 million. During the third quarter of 2022, the Company made equipment loan facility repayments of $1 million, principal payments on lease arrangements of $2 million, interest and commitment fee payments of $1 million, dividend payments of $43 million and distributed $24 million to non-controlling interests.
16
For the first nine months of 2022, the Company’s cash used by financing activities was a net outflow of $163 million. During the first nine months of 2022, the Company received proceeds from the exercise of stock options of $13 million, made equipment loan facility repayments of $12 million, principal payments on lease arrangements of $5 million, interest and commitment fee payments of $3 million, dividend payments of $128 million and distributed $28 million to non-controlling interests.
On February 22, 2022, June 8, 2022 and September 12, 2022, B2Gold’s Board of Directors declared a cash dividend for the first, second and third 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 and September 29, 2022, respectively.
As part of the long-term strategy to maximize shareholder value, B2Gold expects to declare future quarterly dividends at the same level 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 third quarter of 2022, capital expenditures totalled $76 million. The most significant capital expenditures were on the Fekola Mine with capital expenditures of $20 million, the Masbate Mine had capital expenditures of $10 million, the Otjikoto Mine had capital expenditures of $20 million, the Gramalote Project had capital expenditures of $4 million and the Anaconda Area had capital expenditures of $5 million. Other exploration and development costs for the third quarter of 2022 totalled $16 million. In addition, for the third quarter of 2022, the Company incurred $21 million in acquisition costs for Oklo, issued a $5 million loan to an associate and received $45 million for the deferred consideration in relation to the sale of the Kiaka project in 2021. For the first nine months of 2022, capital expenditures totalled $229 million. The most significant capital expenditures were on the Fekola Mine with capital expenditures of $69 million, the Masbate Mine had capital expenditures of $30 million, the Otjikoto Mine had capital expenditures of $60 million, the Gramalote Project had capital expenditures of $13 million and the Anaconda Area had capital expenditures of $12 million. Other exploration and development costs for the first nine months of 2022 totalled $46 million. In addition, for the first nine months of 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, 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.
Exploration
Resource property expenditures on exploration are disclosed in the table below:
| For the three months ended September 30, 2022 | For the three months ended September 30, 2021 | For the nine months ended September 30, 2022 | For the nine months ended September 30, 2021 | |||||||||||
| $ | $ | $ | $ | |||||||||||
| (000’s) | (000’s) | (000’s) | (000’s) | |||||||||||
| Fekola Mine, exploration | 3,392 | 2,096 | 13,848 | 9,323 | ||||||||||
| Masbate Mine, exploration | 696 | 1,446 | 3,111 | 3,871 | ||||||||||
| Otjikoto Mine, exploration | 896 | 1,257 | 2,275 | 2,846 | ||||||||||
| Menankoto, exploration | 3,222 | 1,123 | 4,729 | 4,087 | ||||||||||
| Bantako North, exploration | 2,378 | 2,934 | 6,734 | 6,568 | ||||||||||
| Finland Properties, exploration | 2,457 | 938 | 6,564 | 1,696 | ||||||||||
| Uzbekistan Properties, exploration | 1,120 | 1,156 | 2,693 | 2,624 | ||||||||||
| Kiaka Project, exploration | — | 588 | — | 3,639 | ||||||||||
| Other | 2,108 | 2,406 | 5,551 | 4,714 | ||||||||||
| 16,269 | 13,944 | 45,505 | 39,368 | |||||||||||
17
B2Gold is executing another year of aggressive exploration in 2022 with a revised budget of approximately $75 million, an increase of $10 million over the original budget of $65 million. The increased exploration budget for 2022 will allow for exploration at the newly acquired Bakolobi and Dandoko permits and additional targets in the Anaconda Area. Exploration is focused predominantly in Mali, other operating mine sites in Namibia and the Philippines, as well as continued focus on grassroots targets around the world. Many years of target generation and pursuing opportunities in prospective gold regions has culminated in the Company allocating a record $29 million in 2022 for its grassroots exploration programs, including several new regions.
B2Gold is currently conducting a 225,000 metre drill program in western Mali with a 2022 exploration budget of $35 million, including drill programs on the Fekola North deposit to further test the underground potential, and the Anaconda Area, including the Mamba, Adder, Anaconda. Cascabel, Viper and Cobra zones as well as the newly acquired Bakolobi and Dandoko permits. To date in 2022, the Company has completed approximately 128,000 metres of combined diamond, reverse circulation and aircore drilling on targets near the Fekola Mine, primarily targeting deep extensions of the Fekola deposit to the north and below the current reserve pit, and in the Anaconda Area, primarily on the Mamba, Adder and Cascabel zones), between 20 and 25 kilometres north of the Fekola Mine.
Fekola Mine
In 2022, approximately $10 million is budgeted to be spent on exploration of Cardinal/FMZ, Fekola Deeps and Fekola North.
On February 2, 2022, the Company announced an updated Mineral Resource estimate for the Cardinal Zone, adjacent to the main Fekola Mine open pit in Mali. The updated resource included a significantly increased Mineral Resource estimate for Cardinal Zone as at December 31, 2021 with an initial Indicated Mineral Resource estimate of 8,000,000 tonnes at 1.67 g/t gold for 430,000 ounces of gold, and an updated Inferred Mineral Resource estimate of 19,000,000 tonnes at 1.21 g/t gold for 740,000 ounces of gold, constrained within a conceptual pit run at US$1,800 per ounce gold. Drilling down plunge of the high-grade portions of the Cardinal Zone in 2021 has been successful and will be continued in 2022.
Deeper drilling beneath and down plunge of the Fekola open pit 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 20,000 metres of deep diamond drilling on the Fekola North deposit in 2022.
Anaconda Area (comprised of the Menankoto and Bantako North permits) and Bakolobi
On March 23, 2022, the Company announced an updated and significantly increased Mineral Resource estimate for the Anaconda Area, comprised of the Menankoto permit and the Bantako North permit, 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).
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-west end, covering an area of 100 km2 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 is underway for the second half of 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.
In 2022, approximately $24 million is now budgeted to be spent on exploration in the Anaconda Area (comprised of the Menankoto permit and Bantako North permit) and the Bakolobi permit; an increase of $7 million over the original budget of $17 million.
18
In 2022, the Company is drilling to infill and extend the saprolite resource area and to follow up on the sulphide mineralization at the Anaconda Area, including the Mamba and Adder zones, and several other targets below the saprolite mineralization. The good grade and width combinations at the Anaconda Area continue to provide a strong indication of the potential for Fekola-style south plunging bodies of sulphide mineralization, which remains open down plunge. Seven drill rigs are currently drilling in the Anaconda Area and one drill rig is currently operating on Bakolobi. On the Mamba zone, drill results are particularly significant as they confirm the continuity of high grade sulphide mineralization 110 metres below the limit of the updated Mineral Resource pit boundaries. In the main Anaconda Area Mineral Resource pit, drill results demonstrate the potential to add sulphide Mineral Resources beneath the currently defined saprolite resources, where the mineralization remains open at depth.
2022 West Mali Regional Exploration
B2Gold’s completed acquisition of Oklo and its flagship Dandoko project extends the footprint of B2Gold’s exploration in Mali to over 1,700 km2 and add 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.
The Company also has been drilling on the Kolomba regional target, which is located approximately 15 kilometers 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.
In October 2022, a diamond drill rig dedicated to the Dandoko project was on site with the objective of completing up to 4,000 meters of combined metallurgical and geotechnical drilling and the initial phase of strategic exploration drilling. Additional early-stage targets within the newly acquired landholding are also being assessed at this time.
Other West African Exploration
In 2022, a total of $1.7 million is planned for the Company’s newly acquired early stage permits in Cote d’Ivoire, which is part of
the other greenfield exploration budget noted below.
Masbate Mine
The Masbate exploration budget for 2022 is approximately $5.8 million, including approximately 10,200 metres of drilling. The 2022 exploration program has 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.
Otjikoto Mine and Regional Exploration
The total exploration budget for Namibia in 2022 is approximately $4 million. Exploration in 2022 will include 12,320 metres of diamond drilling and 5,400 metres of RAB drilling at the Otjikoto mine area. Diamond drilling earlier this year 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 next year. Current diamond drilling has been directed to the extension of the Otjikoto structure several kilometers south of the Otjikoto open pit. Drilling is also underway on several other regional targets in proximity to the Otjikoto mine infrastructure.
Other Greenfield Exploration
B2Gold has allocated approximately $29 million in 2022 for its grassroots exploration programs, including Finland, Uzbekistan,
Zimbabwe and several new regions.
In Finland, the Company has allocated $8 million to the Central Lapland Joint Venture with Aurion Resources Ltd. With the proportional contribution by Aurion to the Joint Venture, the total budget for 2022 is $11 million. Drilling this year 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. Diamond drilling in 2021 has confirmed the presence of mineralization on this structure and is being successfully followed up in 2022, with 17,000 metres planned.
In Uzbekistan, the Company has allocated $6 million to advance exploration on the ground it has acquired in proximity to the world class Muruntau super-mine. Multiple targets on structures and lithologies with comparable alteration and geochemical characteristics as Muruntau were identified by mapping, RAB drilling and trenching. Reverse circulation and diamond drilling were carried out on some of these targets in 2021. Some of these targets will be followed up in 2022, as well ongoing drill testing of remaining and new targets. A total of 32,700 metres of diamond and reverse circulation drilling has been planned.
In addition, the Company has allocated approximately $15 million for several other greenfield targets currently being pursued around the world.
19
CRITICAL ACCOUNTING ESTIMATES
Full disclosure of the Company’s accounting policies and significant accounting judgments and estimation uncertainties in accordance with IFRS can be found in Notes 3 and 4 of its audited consolidated financial statements for the year ended December 31, 2021. Management considers the following estimates to be the most critical in understanding the judgments involved in preparing the Company’s interim 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 judgments to interpret the data. The estimation of recoverable 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 and judgments made in estimating the size, and grade of the ore body. Changes in the reserve or 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 assets requires management to make estimates and assumptions that include such factors as reserves and resources, future production levels, metallurgical recovery estimates, operating and capital costs, future metal prices and discount rates. Changes in any of these assumptions or estimates used in determining the recoverable amount could impact the analysis. Such changes could be material.
Gramalote Project
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 venture between B2Gold and AngloGold, both partners have determined that the project does not currently meet their investment thresholds for development of the project at this time. Therefore, in conjunction with finalizing the optimized feasibility study, B2Gold and AngloGold have jointly made the decision to review the alternatives for the Gramalote Project over the coming months. The decision was considered to be an impairment indicator. The Company has performed an impairment test on the Gramalote Project cash-generating unit (“CGU”) as at June 30, 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. 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, future metal prices, foreign exchange rates and the discount rate. 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.
Key assumptions used for the impairment test at June 30, 2022 were:
•Long-term gold price of $1,650/ounce
•Silver price of $23/ounce
•Mine life of 12 years with construction beginning in 2024
•Discount rate of 6.5%
The Company’s analysis concluded that the carrying value of the Gramalote Project at June 30, 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 $38 million. A 25 basis point increase in the discount rate would result in a reduction in the recoverable amount of approximately $9 million.
20
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 and expected timing of claimed deductions and/or disputes. The provisions and balance sheet classifications made to date may be subject to change and such change may be material.
Uncertain tax positions
The Company’s operations involve the application of complex tax regulations in multiple international jurisdictions. Determining the tax treatment of a transaction requires the Company to apply judgement in its interpretation of the applicable tax law. These positions are not final until accepted by the relevant tax authority. The tax treatment may change based on the result of assessments or audits by the tax authorities often years after the initial filing.
The Company recognizes and records potential liabilities for uncertain tax positions based on its assessment of the amount, or range of amounts of tax that will be due. The Company adjusts these accruals as new information becomes available. Due to the complexity and uncertainty associated with certain tax treatments, the ultimate resolution could result in a payment that is materially different from the Company’s current estimate of the tax liabilities.
Current and deferred income taxes
The Company is periodically required to estimate the tax basis of assets and liabilities. Where applicable tax laws and regulations are either unclear or subject to varying interpretations, it is possible that changes in these estimates could occur that materially affect the amounts of deferred income tax assets and liabilities recorded in the financial statements. Changes in deferred tax assets and liabilities generally have a direct impact on earnings in the period that the changes occur.
Each period, the Company evaluates the likelihood of whether some portion or all of each deferred tax asset will not be realized. This evaluation is based on historic and future expected levels of taxable income and the associated repatriation of retained earnings, the pattern and timing of reversals of taxable temporary timing differences that give rise to deferred tax liabilities, and tax planning initiatives. Levels of future taxable income are affected by, among other things, market gold prices, production costs, quantities of proven and probable gold reserves, interest rates and foreign currency exchange rates. The availability of retained earnings for distribution depends on future levels of taxable income as well as future reclamation expenditures, capital expenditures, dividends and other uses of available cash flow.
RISKS AND UNCERTAINTIES
The exploration and development of natural resources are highly speculative in nature and the Company’s business operations, investments and prospects are subject to significant risks. For details of these risks, please refer to the risk factors set forth in the Company’s current Annual Information Form, which can be found under the Company’s corporate profile on SEDAR at www.sedar.com, the Company’s current Form 40-F Annual Report, which can be found on EDGAR at www.sec.gov, and the Company’s other filings and submissions with securities regulators on SEDAR and EDGAR, which could materially affect the Company’s business, operations, investments and prospects and could cause actual events to differ materially from those described in forward-looking statements relating to the Company. Additional risks and uncertainties not presently known to the Company or that the Company currently considers immaterial may also impair the business, operations, investments and prospects of the Company. If any of the risks actually occur, the business of the Company may be harmed and its financial condition and results of operations may suffer significantly.
INTERNAL CONTROL OVER FINANCIAL REPORTING
The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, are responsible for establishing and maintaining adequate internal control over financial reporting. The 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 IFRS. Any system of internal control over financial reporting, no matter how well designed, has inherent limitations. As a result, even those systems determined to be effective can only provide reasonable assurance regarding the preparation of financial statements.
The Company’s management has determined that there have been no significant changes in the Company’s internal control over financial reporting during the three months ended September 30, 2022, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
21
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 unaudited condensed interim consolidated financial statements on a consolidated and a mine-by-mine basis:
| For the three months ended September 30, 2022 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Production costs | 93,808 | 55,023 | 36,873 | 185,704 | 13,443 | 199,147 | ||||||||||||||
| Royalties and production taxes | 18,286 | 6,164 | 2,194 | 26,644 | 929 | 27,573 | ||||||||||||||
| Total cash costs | 112,094 | 61,187 | 39,067 | 212,348 | 14,372 | 226,720 | ||||||||||||||
| Gold sold (ounces) | 135,150 | 62,600 | 31,650 | 229,400 | 12,158 | 241,558 | ||||||||||||||
| Cash operating costs per ounce ($/ gold ounce sold) | 694 | 879 | 1,165 | 810 | 1,106 | 824 | ||||||||||||||
| Total cash costs per ounce ($/ gold ounce sold) | 829 | 977 | 1,234 | 926 | 1,182 | 939 | ||||||||||||||
| For the three months ended September 30, 2021 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Production costs | 68,525 | 36,177 | 26,068 | 130,770 | 14,372 | 145,142 | ||||||||||||||
| Royalties and production taxes | 22,453 | 6,472 | 4,229 | 33,154 | 1,069 | 34,223 | ||||||||||||||
| Total cash costs | 90,978 | 42,649 | 30,297 | 163,924 | 15,441 | 179,365 | ||||||||||||||
| Gold sold (ounces) | 161,550 | 66,300 | 58,800 | 286,650 | 14,503 | 301,153 | ||||||||||||||
| Cash operating costs per ounce ($/ gold ounce sold) | 424 | 546 | 443 | 456 | 991 | 482 | ||||||||||||||
| Total cash costs per ounce ($/ gold ounce sold) | 563 | 643 | 515 | 572 | 1,065 | 596 | ||||||||||||||
22
| For the nine months ended September 30, 2022 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Production costs | 241,476 | 130,477 | 95,014 | 466,967 | 41,732 | 508,699 | ||||||||||||||
| Royalties and production taxes | 51,233 | 17,130 | 7,872 | 76,235 | 3,026 | 79,261 | ||||||||||||||
| Total cash costs | 292,709 | 147,607 | 102,886 | 543,202 | 44,758 | 587,960 | ||||||||||||||
| Gold sold (ounces) | 361,800 | 160,150 | 107,850 | 629,800 | 39,976 | 669,776 | ||||||||||||||
| Cash operating costs per ounce ($/ gold ounce sold) | 667 | 815 | 881 | 741 | 1,044 | 760 | ||||||||||||||
| Total cash costs per ounce ($/ gold ounce sold) | 809 | 922 | 954 | 862 | 1,120 | 878 | ||||||||||||||
| For the nine months ended September 30, 2021 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Production costs | 195,873 | 108,510 | 70,312 | 374,695 | 41,534 | 416,229 | ||||||||||||||
| Royalties and production taxes | 58,027 | 18,348 | 7,976 | 84,351 | 3,147 | 87,498 | ||||||||||||||
| Total cash costs | 253,900 | 126,858 | 78,288 | 459,046 | 44,681 | 503,727 | ||||||||||||||
| Gold sold (ounces) | 396,750 | 181,641 | 110,660 | 689,051 | 43,935 | 732,986 | ||||||||||||||
| Cash operating costs per ounce ($/ gold ounce sold) | 494 | 597 | 635 | 544 | 945 | 568 | ||||||||||||||
| Total cash costs per ounce ($/ gold ounce sold) | 640 | 698 | 707 | 666 | 1,017 | 687 | ||||||||||||||
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 unaudited condensed interim consolidated financial statements on a consolidated and a mine-by-mine basis:
23
| For the three months ended September 30, 2022 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Production costs | 93,808 | 55,023 | 36,873 | 185,704 | 13,443 | 199,147 | ||||||||||||||
| Inventory sales adjustment | 805 | (11,773) | (3,267) | (14,235) | — | (14,235) | ||||||||||||||
| Cash operating costs | 94,613 | 43,250 | 33,606 | 171,469 | 13,443 | 184,912 | ||||||||||||||
| Gold produced (ounces) | 129,933 | 49,902 | 35,068 | 214,903 | 12,113 | 227,016 | ||||||||||||||
| Cash operating costs per ounce ($/ gold ounce produced) | 728 | 867 | 958 | 798 | 1,110 | 815 | ||||||||||||||
| For the three months ended September 30, 2021 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Production costs | 68,525 | 36,177 | 26,068 | 130,770 | 14,372 | 145,142 | ||||||||||||||
| Inventory sales adjustment | (8,372) | 1,081 | 254 | (7,037) | — | (7,037) | ||||||||||||||
| Cash operating costs | 60,153 | 37,258 | 26,322 | 123,733 | 14,372 | 138,105 | ||||||||||||||
| Gold produced (ounces) | 165,557 | 61,207 | 68,959 | 295,723 | 14,538 | 310,261 | ||||||||||||||
| Cash operating costs per ounce ($/ gold ounce produced) | 363 | 609 | 382 | 418 | 989 | 445 | ||||||||||||||
| For the nine months ended September 30, 2022 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Production costs | 241,476 | 130,477 | 95,014 | 466,967 | 41,732 | 508,699 | ||||||||||||||
| Inventory sales adjustment | (4,877) | 886 | 1,276 | (2,715) | — | (2,715) | ||||||||||||||
| Cash operating costs | 236,599 | 131,363 | 96,290 | 464,252 | 41,732 | 505,984 | ||||||||||||||
| Gold produced (ounces) | 354,647 | 164,041 | 101,546 | 620,234 | 39,770 | 660,004 | ||||||||||||||
| Cash operating costs per ounce ($/ gold ounce produced) | 667 | 801 | 948 | 749 | 1,049 | 767 | ||||||||||||||
24
| For the nine months ended September 30, 2021 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Production costs | 195,873 | 108,510 | 70,312 | 374,695 | 41,534 | 416,229 | ||||||||||||||
| Inventory sales adjustment | (2,675) | (1,235) | 625 | (3,285) | — | (3,285) | ||||||||||||||
| Cash operating costs | 193,198 | 107,275 | 70,937 | 371,410 | 41,534 | 412,944 | ||||||||||||||
| Gold produced (ounces) | 404,256 | 175,598 | 118,892 | 698,746 | 43,771 | 742,517 | ||||||||||||||
| Cash operating costs per ounce ($/ gold ounce produced) | 478 | 611 | 597 | 532 | 949 | 556 | ||||||||||||||
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 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.
25
The tables below show a reconciliation of all-in sustaining costs per ounce to production costs as extracted from the unaudited condensed interim consolidated financial statements on a consolidated and a mine-by-mine basis for the three months ended September 30, 2022:
| For the three months ended September 30, 2022 | |||||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Corporate | Total | Calibre equity investment | Grand Total | |||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||
| Production costs | 93,808 | 55,023 | 36,873 | — | 185,704 | 13,443 | 199,147 | ||||||||||||||||
| Royalties and production taxes | 18,286 | 6,164 | 2,194 | — | 26,644 | 929 | 27,573 | ||||||||||||||||
| Corporate administration | 1,851 | 590 | 1,215 | 6,728 | 10,384 | 787 | 11,171 | ||||||||||||||||
Share-based payments – RSUs/DSUs/PSUs/RPUs(1) | — | — | — | 4,278 | 4,278 | — | 4,278 | ||||||||||||||||
| Community relations | 364 | 54 | 455 | — | 873 | — | 873 | ||||||||||||||||
Reclamation liability accretion | 259 | 244 | 190 | — | 693 | — | 693 | ||||||||||||||||
| Realized gains on derivative contracts | (3,021) | (3,456) | (1,506) | — | (7,983) | — | (7,983) | ||||||||||||||||
| Sustaining lease expenditures | 138 | 298 | 732 | 564 | 1,732 | — | 1,732 | ||||||||||||||||
Sustaining capital expenditures(2) | 18,721 | 9,882 | 10,847 | — | 39,450 | 2,399 | 41,849 | ||||||||||||||||
Sustaining mine exploration(2) | 1,827 | 696 | 443 | — | 2,966 | — | 2,966 | ||||||||||||||||
| Total all-in sustaining costs | 132,233 | 69,495 | 51,443 | 11,570 | 264,741 | 17,558 | 282,299 | ||||||||||||||||
| Gold sold (ounces) | 135,150 | 62,600 | 31,650 | — | 229,400 | 12,158 | 241,558 | ||||||||||||||||
| All-in sustaining cost per ounce ($/ gold ounce sold) | 978 | 1,110 | 1,625 | — | 1,154 | 1,444 | 1,169 | ||||||||||||||||
(1) Included as a component of Share-based payments on the 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 unaudited condensed interim consolidated financial statements for the three months ended September 30, 2022:
| For the three months ended September 30, 2022 | |||||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | ||||||||||||||||||
| $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Operating mine capital expenditures | 20,353 | 10,158 | 20,292 | 50,803 | 2,399 | 53,202 | |||||||||||||||||
| Cardinal mobile equipment | (903) | — | — | (903) | — | (903) | |||||||||||||||||
| Tailings facility life-of-mine study | (399) | — | — | (399) | — | (399) | |||||||||||||||||
| Fekola underground study | (270) | — | — | (270) | — | (270) | |||||||||||||||||
| Other | (60) | (34) | — | (94) | — | (94) | |||||||||||||||||
| Land acquisitions | — | (242) | — | (242) | — | (242) | |||||||||||||||||
| Underground development | — | — | (8,387) | (8,387) | — | (8,387) | |||||||||||||||||
| National power grid connection | — | — | (1,058) | (1,058) | — | (1,058) | |||||||||||||||||
| Sustaining capital expenditures | 18,721 | 9,882 | 10,847 | 39,450 | 2,399 | 41,849 | |||||||||||||||||
26
The table below shows a reconciliation of sustaining mine exploration to operating mine exploration as extracted from the unaudited condensed interim consolidated financial statements for the three months ended September 30, 2022:
| For the three months ended September 30, 2022 | |||||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | ||||||||||||||||||
| $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Operating mine exploration | 3,392 | 696 | 896 | 4,984 | — | 4,984 | |||||||||||||||||
| Regional exploration | (1,565) | — | (453) | (2,018) | — | (2,018) | |||||||||||||||||
| Sustaining mine exploration | 1,827 | 696 | 443 | 2,966 | — | 2,966 | |||||||||||||||||
The tables below show a reconciliation of all-in sustaining costs per ounce to production costs as extracted from the unaudited condensed interim consolidated financial statements on a consolidated and a mine-by-mine basis for the three months ended September 30, 2021:
| For the three months ended September 30, 2021 | |||||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Corporate | Total | Calibre equity investment | Grand Total | |||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||
| Production costs | 68,525 | 36,177 | 26,068 | — | 130,770 | 14,372 | 145,142 | ||||||||||||||||
| Royalties and production taxes | 22,453 | 6,472 | 4,229 | — | 33,154 | 1,069 | 34,223 | ||||||||||||||||
| Corporate administration | 1,943 | 451 | 1,465 | 6,551 | 10,410 | 565 | 10,975 | ||||||||||||||||
Share-based payments – RSUs/DSUs/PSUs(1) | — | — | — | 4,131 | 4,131 | — | 4,131 | ||||||||||||||||
| Community relations | 502 | 38 | 315 | — | 855 | — | 855 | ||||||||||||||||
Reclamation liability accretion | 124 | 147 | 95 | — | 366 | — | 366 | ||||||||||||||||
| Realized gains on derivative contracts | (1,324) | (1,556) | (736) | — | (3,616) | — | (3,616) | ||||||||||||||||
| Sustaining lease expenditures | 159 | 330 | 40 | 667 | 1,196 | — | 1,196 | ||||||||||||||||
Sustaining capital expenditures(2) | 23,262 | 6,269 | 13,404 | — | 42,935 | 681 | 43,616 | ||||||||||||||||
Sustaining mine exploration(2) | — | 1,446 | 1,034 | — | 2,480 | — | 2,480 | ||||||||||||||||
| Total all-in sustaining costs | 115,644 | 49,774 | 45,914 | 11,349 | 222,681 | 16,687 | 239,368 | ||||||||||||||||
| Gold sold (ounces) | 161,550 | 66,300 | 58,800 | — | 286,650 | 14,503 | 301,153 | ||||||||||||||||
| All-in sustaining cost per ounce ($/ gold ounce sold) | 716 | 751 | 781 | — | 777 | 1,151 | 795 | ||||||||||||||||
(1) Included as a component of Share-based payments on the Statement of operations.
(2) Refer to Sustaining capital expenditures and Sustaining mine exploration reconciliations below
27
The table below shows a reconciliation of sustaining capital expenditures to operating mine capital expenditures as extracted from the unaudited condensed interim consolidated financial statements for the three months ended September 30, 2021:
| For the three months ended September 30, 2021 | |||||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | ||||||||||||||||||
| $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Operating mine capital expenditures | 27,961 | 7,023 | 19,371 | 54,355 | 681 | 55,036 | |||||||||||||||||
| Solar plant | (690) | — | — | (690) | — | (690) | |||||||||||||||||
| Cardinal pit development | (4,009) | — | — | (4,009) | — | (4,009) | |||||||||||||||||
| Land acquisitions | — | (460) | — | (460) | — | (460) | |||||||||||||||||
| Other | — | (294) | — | (294) | — | (294) | |||||||||||||||||
| Underground development | — | — | (4,559) | (4,559) | — | (4,559) | |||||||||||||||||
| National power grid connection | — | — | (1,408) | (1,408) | — | (1,408) | |||||||||||||||||
| Sustaining capital expenditures | 23,262 | 6,269 | 13,404 | 42,935 | 681 | 43,616 | |||||||||||||||||
The table below shows a reconciliation of sustaining mine exploration to operating mine exploration as extracted from the unaudited condensed interim consolidated financial statements for the three months ended September 30, 2021:
| For the three months ended September 30, 2021 | |||||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | ||||||||||||||||||
| $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Operating mine exploration | 2,096 | 1,446 | 1,257 | 4,799 | 1,840 | 6,639 | |||||||||||||||||
| Regional exploration | (2,096) | — | (223) | (2,319) | (1,840) | (4,159) | |||||||||||||||||
| Sustaining mine exploration | — | 1,446 | 1,034 | 2,480 | — | 2,480 | |||||||||||||||||
28
The tables below show a reconciliation of all-in sustaining costs per ounce to production costs as extracted from the unaudited condensed interim consolidated financial statements on a consolidated and a mine-by-mine basis for the nine months ended September 30, 2022:
| For the nine months ended September 30, 2022 | |||||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Corporate | Total | Calibre equity investment | Grand Total | |||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||
| Production costs | 241,476 | 130,477 | 95,014 | — | 466,967 | 41,732 | 508,699 | ||||||||||||||||
| Royalties and production taxes | 51,233 | 17,130 | 7,872 | — | 76,235 | 3,026 | 79,261 | ||||||||||||||||
| Corporate administration | 6,138 | 1,818 | 4,090 | 21,715 | 33,761 | 2,333 | 36,094 | ||||||||||||||||
Share-based payments – RSUs/DSUs/PSUs/RPUs(1) | — | — | — | 11,157 | 11,157 | — | 11,157 | ||||||||||||||||
| Community relations | 747 | 191 | 1,007 | — | 1,945 | — | 1,945 | ||||||||||||||||
Reclamation liability accretion | 642 | 654 | 472 | — | 1,768 | — | 1,768 | ||||||||||||||||
| Realized gains on derivative contracts | (9,908) | (10,856) | (4,804) | — | (25,568) | — | (25,568) | ||||||||||||||||
| Sustaining lease expenditures | 523 | 935 | 2,178 | 1,763 | 5,399 | — | 5,399 | ||||||||||||||||
Sustaining capital expenditures(2) | 54,689 | 28,887 | 27,092 | — | 110,668 | 2,399 | 113,067 | ||||||||||||||||
Sustaining mine exploration(2) | 5,820 | 3,111 | 1,600 | — | 10,531 | — | 10,531 | ||||||||||||||||
| Total all-in sustaining costs | 351,360 | 172,347 | 134,521 | 34,635 | 692,863 | 49,490 | 742,353 | ||||||||||||||||
| Gold sold (ounces) | 361,800 | 160,150 | 107,850 | — | 629,800 | 39,976 | 669,776 | ||||||||||||||||
| All-in sustaining cost per ounce ($/ gold ounce sold) | 971 | 1,076 | 1,247 | — | 1,100 | 1,238 | 1,108 | ||||||||||||||||
(1) Included as a component of Share-based payments on the 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 unaudited condensed interim consolidated financial statements for the nine months ended September 30, 2022:
| For the nine months ended September 30, 2022 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Operating mine capital expenditures | 68,779 | 29,908 | 59,575 | 158,262 | 2,399 | 160,661 | ||||||||||||||
| Cardinal mobile equipment | (8,902) | — | — | (8,902) | — | (8,902) | ||||||||||||||
| Tailings facility life-of-mine study | (4,329) | — | — | (4,329) | — | (4,329) | ||||||||||||||
| Fekola underground study | (638) | — | — | (638) | — | (638) | ||||||||||||||
| Other | (221) | (34) | (362) | (617) | — | (617) | ||||||||||||||
| Land acquisitions | — | (987) | — | (987) | — | (987) | ||||||||||||||
| Underground development | — | — | (27,317) | (27,317) | — | (27,317) | ||||||||||||||
| National power grid connection | — | — | (4,804) | (4,804) | — | (4,804) | ||||||||||||||
| Sustaining capital expenditures | 54,689 | 28,887 | 27,092 | 110,668 | 2,399 | 113,067 | ||||||||||||||
29
The table below shows a reconciliation of sustaining mine exploration to operating mine exploration as extracted from the unaudited condensed interim consolidated financial statements for the nine months ended September 30, 2022:
| For the nine months ended September 30, 2022 | |||||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | ||||||||||||||||||
| $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Operating mine exploration | 13,848 | 3,111 | 2,275 | 19,234 | — | 19,234 | |||||||||||||||||
| Regional exploration | (8,028) | — | (675) | (8,703) | — | (8,703) | |||||||||||||||||
| Sustaining mine exploration | 5,820 | 3,111 | 1,600 | 10,531 | — | 10,531 | |||||||||||||||||
The tables below show a reconciliation of all-in sustaining costs per ounce to production costs as extracted from the unaudited condensed interim consolidated financial statements on a consolidated and a mine-by-mine basis for the nine months ended September 30, 2021:
| For the nine months ended September 30, 2021 | |||||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Corporate | Total | Calibre equity investment | Grand Total | |||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||
| Production costs | 195,873 | 108,510 | 70,312 | — | 374,695 | 41,534 | 416,229 | ||||||||||||||||
| Royalties and production taxes | 58,027 | 18,348 | 7,976 | — | 84,351 | 3,147 | 87,498 | ||||||||||||||||
| Corporate administration | 5,265 | 1,857 | 3,818 | 20,085 | 31,025 | 1,878 | 32,903 | ||||||||||||||||
Share-based payments – RSUs/DSUs/PSUs(1) | — | — | — | 8,684 | 8,684 | — | 8,684 | ||||||||||||||||
| Community relations | 1,054 | 73 | 1,042 | — | 2,169 | — | 2,169 | ||||||||||||||||
Reclamation liability accretion | 355 | 431 | 271 | — | 1,057 | — | 1,057 | ||||||||||||||||
| Realized gains on derivative contracts | (3,102) | (3,342) | (1,561) | — | (8,005) | — | (8,005) | ||||||||||||||||
| Sustaining lease expenditures | 445 | 1,014 | 121 | 1,044 | 2,624 | — | 2,624 | ||||||||||||||||
Sustaining capital expenditures(2) | 41,271 | 18,217 | 41,375 | — | 100,863 | 2,209 | 103,072 | ||||||||||||||||
Sustaining mine exploration(2) | 7,227 | 3,848 | 2,503 | — | 13,578 | — | 13,578 | ||||||||||||||||
| Total all-in sustaining costs | 306,415 | 148,956 | 125,857 | 29,813 | 611,041 | 48,768 | 659,809 | ||||||||||||||||
| Gold sold (ounces) | 396,750 | 181,641 | 110,660 | — | 689,051 | 43,935 | 732,986 | ||||||||||||||||
| All-in sustaining cost per ounce ($/ gold ounce sold) | 772 | 820 | 1,137 | — | 887 | 1,110 | 900 | ||||||||||||||||
(1) Included as a component of Share-based payments on the 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 unaudited condensed interim consolidated financial statements for the nine months ended September 30, 2021:
| For the nine months ended September 30, 2021 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Operating mine capital expenditures | 54,078 | 20,365 | 59,337 | 133,780 | 2,209 | 135,989 | ||||||||||||||
| Solar plant | (8,798) | — | — | (8,798) | — | (8,798) | ||||||||||||||
| Cardinal pit development | (4,009) | — | — | (4,009) | — | (4,009) | ||||||||||||||
| Land acquisitions | — | (1,488) | — | (1,488) | — | (1,488) | ||||||||||||||
| Other | — | (660) | — | (660) | — | (660) | ||||||||||||||
| Underground development | — | — | (14,479) | (14,479) | — | (14,479) | ||||||||||||||
| National power grid connection | — | — | (3,483) | (3,483) | — | (3,483) | ||||||||||||||
| Sustaining capital expenditures | 41,271 | 18,217 | 41,375 | 100,863 | 2,209 | 103,072 | ||||||||||||||
The table below shows a reconciliation of sustaining mine exploration to operating mine exploration as extracted from the unaudited condensed interim consolidated financial statements for the nine months ended September 30, 2021:
| For the nine months ended September 30, 2021 | ||||||||||||||||||||
| Fekola Mine | Masbate Mine | Otjikoto Mine | Total | Calibre equity investment | Grand Total | |||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||
| Operating mine exploration | 9,323 | 3,871 | 2,846 | 16,040 | 3,382 | 19,422 | ||||||||||||||
| Regional exploration | (2,096) | (23) | (343) | (2,462) | (3,382) | (5,844) | ||||||||||||||
| Sustaining mine exploration | 7,227 | 3,848 | 2,503 | 13,578 | — | 13,578 | ||||||||||||||
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.
31
A reconciliation of net (loss) income to adjusted net income as extracted from the unaudited condensed interim consolidated financial statements is set out in the table below:
| Three months ended | Nine months ended | |||||||||||||
| September 30, | September 30, | |||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||
| $ | $ | $ | $ | |||||||||||
| (000’s) | (000’s) | (000’s) | (000’s) | |||||||||||
| Net (loss) income attributable to shareholders of the Company for the period: | (23,410) | 123,110 | 95,117 | 283,122 | ||||||||||
| Adjustments for non-recurring and significant recurring non-cash items: | ||||||||||||||
| Reversal of impairment of long-lived assets | — | — | (909) | — | ||||||||||
| Write-down of mineral property interests | 3,846 | — | 6,873 | 1,040 | ||||||||||
| Loss on sale of mineral interests | 2,804 | — | 2,804 | — | ||||||||||
| Unrealized losses (gains) on derivative instruments | 16,734 | (2,532) | 7,271 | (17,076) | ||||||||||
| Dilution gain on investment in Calibre | — | — | (5,458) | — | ||||||||||
| Non-cash interest income on deferred consideration receivable | (716) | — | (2,806) | — | ||||||||||
| Deferred income tax expense | 32,738 | 2,172 | 39,448 | 5,560 | ||||||||||
| Adjusted net income attributable to shareholders of the Company for the period | 31,996 | 122,750 | 142,340 | 272,646 | ||||||||||
| Basic weighted average number of common shares outstanding (in thousands) | 1,064,301 | 1,054,747 | 1,060,826 | 1,053,127 | ||||||||||
| Adjusted net earnings attributable to shareholders of the Company per share–basic ($/share) | 0.03 | 0.12 | 0.13 | 0.26 | ||||||||||
32
SUMMARY OF QUARTERLY RESULTS
| Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | |||||||||||||||||||
| 2022 | 2022 | 2022 | 2021 | 2021 | 2021 | 2021 | 2020 | |||||||||||||||||||
| Gold revenue ($ in thousands) | 392,554 | 381,985 | 365,583 | 526,113 | 510,859 | 362,990 | 362,302 | 479,525 | ||||||||||||||||||
Net (loss) income for the period ($ in thousands) | (21,234) | 40,686 | 90,803 | 153,140 | 134,871 | 73,982 | 98,832 | 174,405 | ||||||||||||||||||
(Loss) earnings per share (1) – basic ($) | (0.02) | 0.04 | 0.08 | 0.13 | 0.12 | 0.07 | 0.09 | 0.16 | ||||||||||||||||||
(Loss) earnings per share (1) – diluted ($) | (0.02) | 0.04 | 0.08 | 0.13 | 0.12 | 0.06 | 0.09 | 0.16 | ||||||||||||||||||
Cash provided (used) by operating activities ($ in thousands) | 93,118 | 124,879 | 107,310 | 266,292 | 320,283 | (8,316) | 145,854 | 196,690 | ||||||||||||||||||
Gold sold (ounces) | 229,400 | 205,300 | 195,100 | 292,350 | 286,650 | 200,071 | 202,330 | 256,655 | ||||||||||||||||||
Average realized gold price ($/ ounce) | 1,711 | 1,861 | 1,874 | 1,800 | 1,782 | 1,814 | 1,791 | 1,868 | ||||||||||||||||||
Gold produced (ounces) | 214,903 | 208,858 | 196,473 | 288,849 | 295,723 | 197,380 | 205,643 | 256,319 | ||||||||||||||||||
Gold produced, total including Calibre equity investment (ounces) | 227,016 | 223,623 | 209,365 | 304,897 | 310,261 | 211,612 | 220,644 | 270,469 | ||||||||||||||||||
Cash operating costs (2) ($/ gold ounce sold) | 824 | 786 | 656 | 433 | 482 | 675 | 582 | 461 | ||||||||||||||||||
Total cash costs (2) ($/ gold ounce sold) | 939 | 900 | 784 | 556 | 596 | 794 | 709 | 578 | ||||||||||||||||||
All-in sustaining costs (2) ($/ gold ounce sold) | 1,169 | 1,111 | 1,036 | 860 | 795 | 1,016 | 932 | 926 | ||||||||||||||||||
Adjusted net income (1)(2) ($ in thousands) | 31,996 | 45,248 | 65,096 | 112,724 | 122,750 | 51,866 | 98,030 | 146,729 | ||||||||||||||||||
Adjusted earnings per share (1)(2) – basic ($) | 0.03 | 0.04 | 0.06 | 0.11 | 0.12 | 0.05 | 0.09 | 0.14 | ||||||||||||||||||
(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.
SUMMARY AND OUTLOOK
For the full-year 2022, total consolidated production and cost guidance remains unchanged. Lower than expected production at the Fekola and Otjikoto mines in the third quarter of 2022 were due to temporary mining sequence changes (refer to "Review of Mining Operations and Development Projects" section). Strong production is anticipated in the fourth quarter of 2022 at both operations. As a result, the Company re-affirms its total gold production guidance for 2022 of between 990,000 and 1,050,000 ounces of gold (including 40,000 and 50,000 attributable ounces projected from Calibre). Overall and after factoring in the operating results for the first nine months of 2022, the Company's costs guidance ranges for full-year 2022 remain unchanged. The Company’s total consolidated cash operating costs are expected to be at the upper end of the original guidance range of between $620 and $660 per ounce and total consolidated all-in sustaining costs are expected to within the original guidance range of between $1,010 and $1,050 per ounce.
The Company is expanding the scope of its exploration activities on the Anaconda Area to build on the successful exploration programs already completed to date. The Company will continue to follow up on the sulphide mineralization at the Mamba, Adder and several other targets below the saprolite mineralization in 2022. 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 km2. The acquisition of the Bakolobi permit results in the ownership by the Company of four contiguous exploration and/or exploitation permits covering 237 km2. On September 20, 2022, the Company completed the acquisition of Oklo. This provides B2Gold with an additional landholding of 1,405 km2 covering highly prospective greenstone belts in Mali, including Oklo’s flagship Dandoko project (550 km2), located approximately 25 kilometres from each of the Fekola Mine and the Anaconda Area.
In 2022, the Company budgeted $33 million for development of saprolite mining at the Anaconda Area including road construction, mine infrastructure, and mining equipment. The construction mobile equipment fleet is arriving, and the Company expects to break 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 for saprolite production from the Bantako license area as early as the second quarter of 2023 and from the Dandoko license area as early as the fourth quarter of 2023. Production from Bantako and Dandoko is contingent upon receipt of all necessary permits as well as optimizing long-term project value from the various oxide and sulphide material sources now available including Fekola Pit, Fekola Underground, Cardinal, 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
33
Company has therefore commenced a feasibility level engineering study of stand-alone oxide processing facilities at the Anaconda Area. The 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 Anaconda processing facilities could have the potential to produce more than 800,000 ounces of gold per year commencing as early as 2026, subject to completion of final feasibility studies, and the receipt of all necessary regulatory approvals and permits.
After a very successful year for exploration in 2021, B2Gold is conducting an aggressive exploration campaign in 2022 with a revised budget of approximately $75 million. Exploration is focused predominantly in Mali, other operating mine sites in Namibia and the Philippines, and continued focus on grassroots targets around the world. Many years of target generation and pursuing opportunities in prospective gold regions has culminated in the Company allocating a record $29 million for its grassroots exploration programs, including several new regions. Included in the grassroots exploration program is $8 million allocated to Finland for the Central Lapland Joint Venture with Aurion Resources Ltd. Most significantly, the westward extension of Rupert Resources’ Ikarri discovery trends directly onto the Joint Venture ground. This trend (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. Diamond drilling in 2021 has confirmed the presence of mineralization on this structure and is being successfully followed up with 17,000 metres planned in 2022.
In conjunction with the Company's continued growth plans in Mali and its ongoing global exploration program, it is also continuing to take stock of its existing brownfield and exploration programs and seek alternative opportunities for realizing value of such properties when the Company decides that they do not meet its investment criteria. In 2021, the Company completed the sale of its Kiaka and Toega projects to West African Resources Corp. The final deferred consideration cash installment of $45 million was received in the third quarter of 2022 and the Company still retains upside in the future operation of the projects through share ownership and royalties. In October 2022, the Company and its 50/50 partner, AngloGold, completed a comprehensive review of the alternatives relating to the Gramalote Project and consider that it would be the best interests of all stakeholders for a new party to own the Gramalote Project. Accordingly, both parties intend to commence a joint sales process for the Gramalote Project in the fourth quarter of 2022.
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.
OUTSTANDING SHARE DATA
At November 1, 2022, 1,074,566,665 common shares were outstanding. In addition, there were approximately 31 million stock options outstanding with exercise prices ranging between Cdn.$2.94 to Cdn.$8.53 per share, approximately 2.9 million RSUs outstanding and approximately 4.6 million PSUs outstanding.
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
Production results and production guidance presented in this MD&A reflect the total production at the mines B2Gold operates on a 100% basis. Please see our most recent Annual Information Form for a discussion of our ownership interest in the mines B2Gold operates. In respect of La Libertad and El Limon mines, production is presented on a 100% basis for the period up until October 14, 2019 and on a 25% basis for the first quarter of 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; the impact of the COVID-19 pandemic on B2Gold's operations, including any restrictions or suspensions with respect to our operations and the effect of any such restrictions or suspensions on our financial and operational results; the ability of the Company to successfully maintain our operations if they are temporarily suspended, and to restart or ramp-up these operations efficiently and economically, the impact of COVID-19 on the Company's workforce, suppliers and other essential resources and what effect those impacts, if they occur, would have on our business, our planned capital and exploration expenditures; future or estimated mine life, metal price assumptions, ore grades or sources, gold recovery rates, stripping ratios, throughput, ore processing; statements regarding anticipated exploration, drilling, development, construction, permitting and other activities or achievements of B2Gold; and including, without limitation: remaining well positioned for continued strong operational and financial performance for 2022; projected gold production, cash operating costs and all-in sustaining costs on a consolidated and mine by mine basis in 2022, including production being weighted heavily to the second half of 2022; total consolidated gold production of between 990,000 and 1,050,000 ounces in 2022 with cash operating costs of between $620 and $660 per ounce and all-in sustaining costs of between $1,010 and $1,050 per ounce; the grade at Fekola Mine to average between 3.4 to 3.5 g/t gold in the fourth quarter of 2022; the potential upside to increase Fekola's gold production by trucking material from the Anaconda Area, including the potential to add approximately 80,000 to 100,000 per year to Fekola’s annual production profile, and for the Anaconda area and the Dandoko project to provide saprolite material to feed the Fekola mill starting in the second quarter of 2023 and the fourth quarter of 2023, respectively; breaking ground on roads and mining infrastructure construction at the Anaconda Area in the fourth
34
quarter of 2022 the timing and results of a feasibility level engineering study for the 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 over a 10-year period starting in 2026; the potential for production from the Cardinal zone to add approximately 50,000 ounces in 2022 to the Company's production profile and approximately 60,000 per year over the next 6 to 8 years; the intention to commence a joint sales process with AngloGold for the Gramalote Project in the fourth quarter of 2022; the potential payment of future dividends, including the timing and amount of any such dividends, and the expectation that quarterly dividends will be maintained at the same level; and B2Gold's attributable share at Calibre's El Limon, La Libertad and Pan mines. All statements in this news release that address events or developments that we expect to occur in the future are forward-looking statements. Forward-looking statements are statements that are not historical facts and are generally, although not always, identified by words such as "expect", "plan", "anticipate", "project", "target", "potential", "schedule", "forecast", "budget", "estimate", "intend" or "believe" and similar expressions or their negative connotations, or that events or conditions "will", "would", "may", "could", "should" or "might" occur. All such forward-looking statements are based on the opinions and estimates of management as of the date such statements are made.
Forward-looking statements necessarily involve assumptions, risks and uncertainties, certain of which are beyond B2Gold's control, including risks associated with or related to: the effectiveness of preventative measures and contingency plans put in place by the Company to respond to the COVID-19 pandemic, including, but not limited to, social distancing, a non-essential travel ban, business continuity plans, and efforts to mitigate supply chain disruptions; escalation of travel restrictions on people or products and reductions in the ability of the Company to transport and refine doré; the volatility of metal prices and B2Gold's common shares; changes in tax laws; the dangers inherent in exploration, development and mining activities; the uncertainty of reserve and resource estimates; not achieving production, cost or other estimates; actual production, development plans and costs differing materially from the estimates in B2Gold's feasibility and other studies; the ability to obtain and maintain any necessary permits, consents or authorizations required for mining activities; environmental regulations or hazards and compliance with complex regulations associated with mining activities; climate change and climate change regulations; the ability to replace mineral reserves and identify acquisition opportunities; the unknown liabilities of companies acquired by B2Gold; the ability to successfully integrate new acquisitions; fluctuations in exchange rates; the availability of financing; financing and debt activities, including potential restrictions imposed on B2Gold's operations as a result thereof and the ability to generate sufficient cash flows; operations in foreign and developing countries and the compliance with foreign laws, including those associated with operations in Mali, Namibia, the Philippines and Colombia and including risks related to changes in foreign laws and changing policies related to mining and local ownership requirements or resource nationalization generally, including in response to the COVID-19 outbreak; remote operations and the availability of adequate infrastructure; fluctuations in price and availability of energy and other inputs necessary for mining operations; shortages or cost increases in necessary equipment, supplies and labour; regulatory, political and country risks, including local instability or acts of terrorism and the effects thereof; the reliance upon contractors, third parties and joint venture partners; the lack of sole decision-making authority related to Filminera Resources Corporation, which owns the Masbate 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; as well as other factors identified and as described in more detail under the heading "Risk Factors" in B2Gold's most recent Annual Information Form, B2Gold's current Form 40-F Annual Report and B2Gold's other filings with Canadian securities regulators and the U.S. Securities and Exchange Commission (the "SEC"), which may be viewed at www.sedar.com and www.sec.gov, respectively (the "Websites"). The list is not exhaustive of the factors that may affect B2Gold's forward-looking statements.
B2Gold's forward-looking statements are based on the applicable assumptions and factors management considers reasonable as of the date hereof, based on the information available to management at such time. These assumptions and factors include, but are not limited to, assumptions and factors related to B2Gold's ability to carry on current and future operations, including: the duration and effects of COVID-19 on our operations and workforce; development and exploration activities; the timing, extent, duration and economic viability of such operations, including any mineral resources or reserves identified thereby; the accuracy and reliability of estimates, projections, forecasts, studies and assessments; B2Gold's ability to meet or achieve estimates, projections and forecasts; the availability and cost of inputs; the price and market for outputs, including gold; foreign exchange rates; taxation levels; the timely receipt of necessary approvals or permits; the ability to meet current and future obligations; the ability to obtain timely financing on reasonable terms when required; the current and future social, economic and political conditions; and other assumptions and factors generally associated with the mining industry.
B2Gold's forward-looking statements are based on the opinions and estimates of management and reflect their current expectations regarding future events and operating performance and speak only as of the date hereof. B2Gold does not assume any obligation to update forward-looking statements if circumstances or management's beliefs, expectations or opinions should change other than as required by applicable law. There can be no assurance that forward-looking statements will prove to be accurate, and actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements. Accordingly, no assurance can be given that any events anticipated by the forward-looking statements will transpire or occur, or if any of them do, what benefits or liabilities B2Gold will derive therefrom. For the reasons set forth above, undue reliance should not be placed on forward-looking statements.
35
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.
36
Form 52-109F2
Certification of Interim Filings
Full Certificate
I, Clive Johnson, President and Chief Executive Officer of B2Gold Corp., certify the following:
1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of B2Gold Corp. (the “issuer”) for the interim period ended September 30, 2022.
2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.
5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings
(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
(i)material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and
(i)information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.
5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the Internal Control-Integrated Framework published by The Committee of Sponsoring Organizations of the Treadway Commission.
5.2 ICFR – material weakness relating to design: N/A
5.3 Limitation on scope of design: N/A.
6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2022 and ended on September 30, 2022 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.
Date: November 1, 2022
| /s/ Clive Johnson | |||||
| Clive Johnson | |||||
| President and CEO | |||||
Form 52-109F2
Certification of Interim Filings
Full Certificate
I, Michael Cinnamond, Chief Financial Officer of B2Gold Corp., certify the following:
1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of B2Gold Corp. (the “issuer”) for the interim period ended September 30, 2022.
2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.
5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings
(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
(i)material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and
(i)information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.
5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the Internal Control-Integrated Framework published by The Committee of Sponsoring Organizations of the Treadway Commission.
5.2 ICFR – material weakness relating to design: N/A
5.3 Limitation on scope of design: N/A.
6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2022 and ended on September 30, 2022 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.
Date: November 1, 2022
| /s/ Michael Cinnamond | |||||
| Michael Cinnamond | |||||
| Chief Financial Officer | |||||