B2Gold Corp. (BTO) Earnings Call Transcript & Summary

Thank you for standing by. This is the conference operator. Welcome to B2Gold Corporation's Fourth Quarter and Full Year 2024 Financial Results Conference Call. [Operator Instructions] The conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Clive Johnson, President and CEO of B2Gold. Please go ahead.

Hello everyone, thanks for joining us. As you heard from the operator, we're going to talk about the fourth quarter 2024 results as we just released on the full year for 2024. I'll give a few highlights and then pass it over to Mike and Bill to give you some detail. We did meet our new guidance for the year coming in at the upper end of all-in sustaining costs and lower end of production. Basically, as we turn the page on 2024, we're looking for a much more positive 2025, increase of production at Fekola and looking to start trucking ore and also Fekola Underground as well. So Bill will give a little more detail on that. Of course, the other real highlight here will be Goose, where everything is going very well there for first gold pour in June of 2025. I will spend a bit of time on that. On Mali, as many of you are aware, we reached an agreement in September of last year with the government on how to proceed going forward, both with Fekola and also starting the truckloads from regional projects. That was an important agreement for us and the government, and we're now very much on the same page where both parties are looking forward to the revenue and the profits from mining in the regional area. We're now implementing the agreement with the government, and that's going very well, and we're looking at receiving in the near term permits to proceed. Based on media reports for the last couple of days, according to those reports, Barrick and the Mali Government have come to an agreement on a way forward. And that's very important for all of us, I guess, because I think we can all see a path forward now and relations hopefully with the Mali government can be positive going forward, not just for us but for the other parties there. So now all significant producers, if it's true about Barrick's, have reached an agreement with the Mali Government that we can get on what we do. It's important to note the Fekola -- the problems at Fekola were not about the government per se. Bill will talk about the reasons why production was down in 2024. We've continued to operate through all the discussions with the Government of Mali and the relationship has actually been positive in terms of our gold production and our requirements from the government. So that relationship remains solid during the period of negotiations. We're going to talk, as we said shortly about Goose. I think now I will -- actually one thing I want to touch on now is looking forward in terms of growth. So as we said, we're going to see a substantial increase in production from Fekola, but also there's a lot of other milestones coming up this year. Receiving the permits for Fekola would allow us to get up to 180,000 ounces on an annualized basis from the mining of the regional ore. And of course, Goose is going to represent significant growth for us as we bring it into production in June of this year. And on an annualized basis, it is expected that we'll improve over 300,000 ounces of gold annually from Goose. And subject to a positive feasibility study and the construction decision, potentially another 235,000 ounces of annual production from the Gramalote project in Colombia. Now as I said, that is subject to a positive feasibility study, which will come out in the middle of the year and the production decisions to go forward, we found the project quite attractive. We got the PEA a while ago that had good returns on IRR, net present value at $2,000 gold. So if you run it at some higher gold price, already, we think it would go to $2000. There's upside, in terms of the gold price and maybe locking in that gold price during construction. So if you add all that up, there's the expectation of 180,000 ounces from the Fekola Regional and the improvement of Fekola production overall. Over 300,000 ounces I mentioned from Goose and then the 240,000 ounces thereabouts annually potential from Gramalote, subject to the things I pointed out. In addition, we've got a new discovery, in Otjikoto area that are -- that is the potential of the Antelope Zone, a good discovery at that depth and that has the potential to add another 65,000 ounces at Otjikoto. So if you add all that up, you get over 650,000 ounces of gold production, and I think very importantly, from existing assets. These are not ounces we have to go buy through M&A, and we don't have to find them. I'm sure we'll find a lot more, but that's where we sit today. So a very impressive growth profile. And there's not a lot of speculation there. Of course, Gramalote would be the most speculative, but as I said, we're [indiscernible] about that. So that's our way forward. And we're getting -- we had a difficult 2024 as everyone knows, but that's a one-off. In 2025, we're going to get back to what this company does well, which is meet guidance also grow the company's production profile, which we've had great success doing over many years since B2Gold was created in 2007. So I think, with that, I'll hand it over to Mike, and he'll give us some highlights on the financial and then Bill is going to give us a quick summary of what happened at Fekola? What's -- more importantly, what's happening in Fekola, going into this year? And also he's going to talk -- of course, update us on the progress on the Goose feasibility study -- sorry, start of production and the feasibility study at Gramalote.

Thank you, Clive. So I'll touch just on a few highlights from the quarter. Basic earnings per share were slightly negative for this Q, that's primarily due to lower-than-budgeted production at Fekola, FX impact from weakening of the West African [ CFA and Namibian Dollar ] and also recording of the increase in the Fekola priority dividend, which is now 20% after the -- we implemented as part of the MOU. It was previously [ 10-20 ], that gets recorded as a tax. Adjusted net earnings for the quarter were $0.01 per share. Operating cash flow before working capital adjustments for the quarter was $145 million, benefiting from the average -- higher average gold price. And I think, Goose Project construction and mine development activities was CAD 209 million during the quarter and CAD 55 million for working capital. And Goose -- we reiterated Goose total construction and development cash expenditures to first go for Q2 '25 were maintained at a total of CAD 1.4 billion. Balance sheet-wise, we're in a good, strong financial position. We finished the year with cash and cash equivalent of $337 million. We had $400 million drawn on our revolving credit facility. But as you saw in early '25, we completed a convertible note offering for gross proceeds of $460 million, which we subsequently used to fully pay down the balance on the RCF so we currently have nothing drawn in the revolver and $800 million capacity with the existing syndicate plus another $200 million accordion feature should we want to ever use that. We have a good amount of financial flexibility, and we think, to be able to complete the Goose construction by the second quarter '25 and complete the other sustaining growth initiatives across our portfolio, some of which Clive mentioned already, and to continue to fund healthy exploration programs across all our sites to extend mine lives. So that's all I'm just going to -- those are the highlights that I was going to touch on. I'll pass it over to Bill.

All right, thanks Mike. Okay, maybe stepping back into Q3 last year, remember that we had the sealift in September -- August, September. 2024 Sealift was successfully completed with 10 ships and 1 barge unloading approximately 123,000 cubic meters of dry cargo and more than 84 million liters of arctic-grade diesel fuel. We also added 58 additional trucks to help us bring down the supplies down the Winter Road in 2025. I'm happy to say we opened the 2025 Winter Ice Road two days ago. This is ahead of schedule and have already begun transporting material down to the Goose site. As far as construction at site, all planned activities for 2024 were completed on schedule, and the process plant is on track to produce first gold at the end of Q2. On the mining side, significant progress was made in the mining of the Echo pit. We are now currently ahead of our announced schedule and the underground development at Umwelt is consistently hitting new highs on mining efficiency. In Mali, we're gearing up to have contributions in 2025 from both the Fekola Regional and the Fekola Underground, which would benefit the operations for years to come. And as Clive indicated, we did have a couple of one-offs in '24 and just to refresh everyone's memory, we had an upset condition where we had operator error and we lost an excavator for a quarter. And we also had some illegal union activities, which we have since gone through our disciplinary procedure and all cases have been finalized. At Masbate, we continue -- the operations continued to perform to a world-class level. I think everyone saw they were -- they outperformed last year, and the operations delivered all-in sustaining costs in 2024, materially lower than our guidance range, delivering very strong free cash flow at these gold prices. And at Otjikoto, once again, in 2024, they outperformed. We also have, as Clive mentioned, the new discovery, the Antelope Deposit. This PEA was released earlier this month and is a positive step towards new production later this decade, and this continues to remain open for exploration. Gramalote, we're working through a feasibility study, which we believe will be ready by the end of mid-2025 -- release in mid-2025. With that, Clive, I'll turn it back to you.

Thanks, Bill. Thanks, Mike. Just a final thought. What's been hanging over us for a while has been the reality and the perception of dealing with Mali when we needed to reach agreement with the government based on the government coming out with a 2023 mining code. So I think with the developments we've had in terms of reaching agreement in September and other companies reaching an agreement since then, and then finally, once again, if the media report are true with Barrick [indiscernible] that takes solving new issues and moving forward. That takes a lot of weight off of -- I think the pressure off of [indiscernible] of our shares that beat up a lot over the last couple of years based on the part -- or large parts of that uncertainty about the future in Mali. Additionally, I think there's been a great concern about Goose just in the sense of is it going to be timing and is going to come in around the budget that we outlined when we [ reguided ]. As Bill said, the good news is we're very much on track at Goose. So I think that's another factor that's been putting pressure on our market value, has been the concern about Goose with significant cash cost overrun -- sorry, construction cost overruns which we're not seeing, but also the timing of Goose, which is very much on track. So with that, we felt that the market might turn around a little bit. And in fact, hopefully, this last couple of days [indiscernible] the start of that as we remove these risk factors going forward. The other significant thing is going to be the Gramalote feasibility study. It's going to be completed by the middle of the year. So all in all, 2024, as I said, was a challenging year. We met the challenges. And as we go into '25, we're turning a page back to solid production performance, strong financial position and growth from existing assets. So I think with that, we'll open it up to questions.

[Operator Instructions] And today's first question comes from Ovais Habib with Scotiabank.

Clive and B2Gold team, a couple of questions from me. Sorry if you've already addressed on some of these questions, I've just been bouncing between a couple of conference calls, so I apologize for that. Just want to start off with Fekola in regards to the permit, and I'm glad to see things are moving ahead with Barrick as well. Is there any additional info the regulators require on the Fekola Regional or Fekola Underground? Or are we just waiting for the final sign-off?

What we're working with the government on right now is consolidating three licenses that make up the majority of the property at which -- to the north, and that's what you called Anaconda in the past. So that's on track. We're really expecting that at any time. And then hopefully, shortly after that, we will get the permit from the government to start [indiscernible], there will be a bit of a pre-strip to start on that. But basically, if we achieve those things, which we're expecting to do, as I mentioned, we're very much on the same page as the government is wanting this mining to start. This year, we've only projected 10,000 to 20,000 ounces to come from the regional. It will be, as we said, about 180,000 ounces on an annualized basis for the first 5 years from the regional. I think the other thing that is significant is the government gave us permission a while ago to build the infrastructure for regional mining and trucking of ore down to the Fekola mill. So that meant building the roads and other facilities -- maintenance facilities, workshops, et cetera. So that was a good sign that the government was agreeing for us to get going even before we had reached the full agreement as we did in September.

Okay. And just -- and then moving quickly on to Goose. Again, great to hear you guys are ahead on the ice road. You also mentioned in the press release that underground mining rates are a bit behind schedule. Is this just a function of experienced miners? Or is there anything else in terms of rock hardness or anything else, ground conditions that is causing that?

If I'm being honest, Ovais, once again, so it's 2 things really. Both of them historical, both of which we have fixed. The first one being, as you correctly pointed out, the quality of the miners that we inherited, which has been -- we certainly brought that team up to scratch, and that's why you can see -- and I think I said it in my statement that the daily rates are coming up every day. The second one is the equipment that was purchased by our predecessor, which we have now -- we are in the process of changing out during the Ice Road, first -- some of the first stuff down the road, is some new equipment to bring that -- to bring the speed up. But we have seen -- we started meeting targets kind of in Q4, our daily production rates. And so we readjusted our schedule, and we don't see any real impact to 2025 production at our current rates.

Looking forward to the ramp up at Goose. Thank you.

This concludes our question-and-answer session. I'd like to turn the conference back over to Clive Johnson for any closing remarks.

Okay. Well, I guess that means we have a very complete presentation, everyone. So thanks for your time, and you can see why we're pretty excited about the future here at B2Gold. Thank you, operator.

Thank you, sir. This brings to a close of today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.