Earnings Call Transcript - BTG Q2 2023

Operator, Operator

Good day, and thank you for standing by. Welcome to B2Gold Second Quarter Earnings Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Clive Johnson, President and CEO. Please go ahead.

Clive Johnson, President and CEO

Thank you, operator. Apologies on behalf of the phone service, not our technical issues, but theirs. So we're a little bit late getting going. Welcome to the conference call to discuss B2Gold's Second quarter 2023 Financial Results. We had another very strong quarter, again, highlighting the excellent performance of our operations team. We're very pleased with the results, and it makes us feel very comfortable we're on track for our guidance for 2023. I'm going to pass over to Mike Cinnamond soon, our CFO, who's going to walk you through the details of the financial results, and we'll have an update from Bill on the Goose Project construction at Back River, where things are going pretty well. We remain in an extremely strong financial position, which allows us to consider funding the Goose, continue with our industry-leading dividend, and maintain a strong cash position with Goose now looking to come into production in the first quarter of 2025. I want to address an issue that's come up since we released news about Mali and the conversations around a potential new 2023 mining code. The Fekola Mine will continue to be mined as we previously outlined. Receipt of an exploitation license for Bantako, one of the areas we intended to truck ore down to Fekola, remains pending finalization of the new mining code in Mali. We, along with other mining companies, are engaged in discussions with the government to provide input into the proposed new code. However, we do not expect any new code to impact our existing Fekola Mine operations, which will be governed by the existing mining convention under the 2012 Mining Code. Indeed, the government has confirmed that the proposed code will not apply retroactively. We remain convinced that the government of Mali wants more gold mining in the country and for investors like us to engage. We are committed to further opportunities in Mali, including trucking ore from Bantako to the Fekola mill. Overall, we invested over USD 0.5 billion to build Fekola, 100% owned by B2Gold. We've contributed $1.2 billion of revenue to Mali since Fekola started production. We believe this has greatly benefited the people of Mali, who have realized over 50% of the economic benefits from the mine. This remains a success for all stakeholders. I'm confident that with the new mining code discussions, we can work with the Malian government to potentially expand production at Fekola. This will allow us to continue our commitment to looking towards future opportunities. With that, I'll pass it over to Mike to discuss the financial highlights.

Michael Cinnamond, CFO

Thanks, Clive. I'll just touch briefly on the results. As Clive mentioned, we had a good quarter from both operations and financial perspectives. On the revenue side, we sold just under 240,000 ounces at a realized price of $1,969 an ounce, which is higher than we were in the same period last year. Production was very much on budget. Total production from our three operating mines was 246,000 ounces, almost exactly on budget. Our share of Calibre's results was 263,000 ounces overall. Fekola produced 152,000 ounces, slightly below budget due to some delays and lower production from Phase 6. Masbate performed above budget, producing 49,000 ounces, and Otjikoto produced a couple of thousand ounces over budget, benefitting from better mill throughput. Overall, we maintained a cost of $636 an ounce, which was lower than budget. On the cash cost side, we see some offsetting factors, particularly concerning fuel. Fekola's costs were a little higher than budget, while Masbate and Otjikoto performed better than anticipated. On the all-in sustaining cost side, we expect our guidance remains unchanged for the year. Overall, we're on track to hit our guidance for production and costs. Our guidance continues to be between 1 million and 1,080,000 ounces for the year. We're maintaining our outlook and watching fuel costs as we progress through Q3. In terms of Fekola regional developments, we've continued infrastructure work and saw 18,000 ounces of Bantako production. However, we don't anticipate this production to come through now in '23, but expect it to roll into '24. Our guidance for the Fekola complex remains unchanged. Regarding Goose, we updated our CapEx estimates for the project which remains on track for completion in Q1 '25. So overall, we see good financial positioning going forward.

William Lytle, Project Manager

Sure. Thanks, Clive. I want to start by discussing the key aspects of the Goose project. We continue to maintain excellent relationships with the Kitikmeot Inuit Association in Nunavut. We have had several stakeholder meetings over the last quarter, with very positive outcomes. This project relies heavily on logistics, and we are trying to maintain our timeline, aiming to produce first gold in Q1 2025. Overall logistics have been excellent. We've successfully conducted a C-130 logistics program, bringing in more than 60 loads for the summer season. All shipping and ordering have been completed, and everything is on schedule. Currently, we have more than 130 beds available at the camp, which will increase to over 200 soon, allowing our full construction team on site. This year, we are focusing on completing three major areas: the mill, powerhouse, and workshop, with concrete pouring already underway. We've brought back our successful contractor team, ensuring project delivery standards are met. On the underground side, we've progressed more than 1,300 meters in the decline and over 374 meters in the access ramp. This all remains on schedule. We anticipate the potential for over 300,000 ounces per year in the first five years of production, which is significantly more than the previous feasibility study suggested. The operational cost is estimated at around $1,000 per ounce, plus/minus. I also want to mention an upcoming analyst trip on September 26th, where we will introduce stakeholders to our progress and management team.

Clive Johnson, President and CEO

Thanks, Bill. In our recent Board meetings, we reviewed the quarter's results and discussed Goose's progress extensively. The Board feels confident in the team's experience and the successful completion of projects on budget and schedule. We're committed to establishing a high standard in northern development, aware of the challenges in the North, but we believe we can achieve great success at Goose. Our history shows our commitment to clients and communities, so we aim to maximize benefits for the Inuit communities in the area. We've been successful in hiring locally, and we will continue to focus on creating job training opportunities as we advance our progress in the North.

Victor King, Exploration Manager

Thanks, Clive. We have been active at the George Project, completing 12 holes. The focus now shifts to the Goose Project, where we have great opportunities to extend known deposits down plunge. We have ramped up exploration, now planning for five rigs on the surface at Goose and possibly adding underground drilling rigs soon. Our exploration budget is significantly increased compared to what Sabina spent, reflecting our commitment to unlocking potential at Back River, with $20 million allocated for exploration this year.

Operator, Operator

At this time, I would now like to turn the conference back over to Clive Johnson for closing remarks.

Clive Johnson, President and CEO

Thanks, operator. Thanks for your questions. As we move forward at Goose and Back River, we will focus on maximizing Inuit employment and training, which is vital for our operation in Canada. We pride ourselves on local hiring, aiming for high employment within local communities. Overall, we covered a lot of ground in this call, and I appreciate your participation. Let's remember, this is a solid quarter that reflects how well we're doing as a company, and we are excited about our growth prospects. Thank you very much.