B2Gold Corp. (BTO) Earnings Call Transcript & Summary

Thank you for standing by. This is the conference operator. Welcome to B2Gold Corporation's First Quarter 2025 Financial Results Conference Call. [Operator Instructions] And 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.

Welcome, everyone. Today, we're here to talk primarily about the first quarter results. Then we're going to talk a little bit about [indiscernible] construction update, touch on where we are on projects, I'm talking about a bit about some of the other developments and catalysts going forward for us. Nice to see a good first quarter. As everyone is aware, we had a difficult 2024, really primarily based on Fekola and Fekola's production, that was due as a little bit to the operation issue with the equipment issues. So that's first step, we've had to reguide. I guess we have 8 years to roll it out. We guided. So obviously, we're just going to have to do that. We predicted we have a good 2025, and we started off with a pre-quarter with all the mines performing well. I think it's worth pointing out that Fekola had issues with operations in two mines [indiscernible] you're gonna hear more of about when that has been resolved. We've just received some positive value from the government. We're moving to the terms of the MOU that we signed in September last year and Randall will speak to that. It's a positive step forward. The structure continues. Those we are going to talk about. Talking about how, when we're going to transition from the construction project into operations. We're in the final stages, so you would hear the first production from this. I want to talk a little bit about catalysts going forward this year, just a number of them. Obviously, the biggest one is the completion of construction and that sort of action into this project, but also Fekola, what priority that is we've heard yesterday from the government. To prove the idea there is to continue work with government to get the permits required from the government to commence work from the regional area. Now that could add an 80,000 ounces per year on annualized basis. So that's obviously a priority combined with the 300,000 ounces from Goose, and that's pretty good growth profile. This year, there's a couple of important studies coming up. The feasibility study Gramalote in Columbia will be completed by the end of June, and we'll be in a position to announce that. If this was positive as we're hoping for, then we'll be moving towards a development decision not that long after, later on this year to decide if we're gonna go forward with that and start to prepare for construction work. We've got a lot to there. We already have a permit in place from the previous days and a lot of investment, support there from the local governments and also at the federal level. So we are ahead of the curve in terms of permitting requirements. In addition to that, we'll continue review opportunities. We'll be focused primarily on exploration. We've got a $64 million budget for this year probably and we've got half of that. $2 billion is focused on Back River. [indiscernible] to answer any questions you might have about on explorations, the fact that half of our budget is focused on Back River gives you an indication of what we think will be exploring some new targets as well as do some infill drilling. You can see how it's focused going forward. We're going to continue if we have the opportunities on investing in exploration companies, look for companies that are well run and have good assets that they are gonna advance so we could access. We do the slow line and a few others; we'll continue to be good shareholders and then we'll see what comes out of those deals down the road. If anybody needs assistance in construction, how to operate a line and all those things that we're good, we're open to the possibilities of how to get some of these deals to get us into. So I think that's primarily what I wanted to do. But one additional point, we've got a lot of questions about every day. I'm sure was saying, please don't surprise us. We'll be getting a phone number and see if that's a big deal. We're not interested -- I think we can say virtually categorically, we're not interested in acquiring another development company or development project or taking over a company. That is because of the growth profile that we have both, obviously, reduced for the line, moving to Fekola towards starting the chart work, we hear very well. I tend to grab a lot of feasibility study. So if you were to add all that up, but we use about 720,000 ounces of annual production with those three potentially giving us a very strong growth profile. Clearly, our share price reflects, I don't think the production of those happen right now according to [indiscernible] by the end of this. But the other big thing for our share by advancing all of these developments. So we need to buy it. We need to buy it for our shareholders by advancing all of these development opportunities that we have. We're gonna be open for questions after we hear from Mike. [indiscernible] those on the line. Anyone else here with those on the line, we see some money in the construction project. So we're very happy with the quarter. We are operationally that we're back on track and we're back on track to get responsible production. We're also doing what this company has done very well since its inception in terms of growth. In this case, from existing assets. So that's kind of the second catalyst going forward. With that, I'll pass it on to Mike for some of the financial detail and talk about from that point of view, then we're going to have an update from Bill in terms of the operations. There's some real amount of interest in the touch base between the two, touch base on the base development with the government, positive development with the government looking towards permitting in the valley. Mike over to you.

Yes. Thanks, Clive. Financially, it was a strong quarter. After adjusting for onetime items, the company generated the $0.09 per share of adjusted earnings, in that we benefited, obviously, from the strong average gold sales price. Basic earnings per share were $0.04 per share, and they included noncash mark-to-market adjustments for the gold stream that we inherited when we bought Sabina. And also from the zero-cost collars that we put in place at the end of last year in conjunction with bringing in our revolver. Operating cash flow before working capital adjustments for the quarter was $244 million, another strong result and again highlights the cash generation potential of our operating assets and a strong gold price environment. And on the CapEx side, spending of the Goose Project remains in line with our latest budget during the quarter. Construction mine development activities spend was CAD 136 million during the first quarter of '25. I would comment in late '24 and early '25 we accelerated approximately $60 million in plant and equipment purchases, including deposits and some longer lead items that were pulled forward from second half '25 or subsequent years, so factoring these into account, excluding them from the total good cash expenditures to first gold pour remained in line with budget. Balance sheet wise, we continue to remain in a strong financial position of cash, cash equivalents of $330 million at the end of the first quarter and during the quarter, I think as we discussed in our last call, we repaid the outstanding balance on our revolving credit facility with the proceeds of the convertible note that we issued in January '25. And at the end of the quarter, we had $800 million of full capacity undrawn on our revolving credit facility. So we have a good amount of financial flexibility to be able to complete the Goose construction very shortly to fully repay the obligation under the gold prepays as we deliver into them over the course of the year from July '25 to June '26 and to complete all the stating growth initiatives across the portfolio and to continue to fund very healthy exploration programs, which will hopefully expand mine life. That's the financial update. I guess the key points. And with that, I'll turn the call over to Bill for an operation and project update.

All right. So I'll start off with probably what people are most interested in. At Goose, it was a very successful winter ice road season. We did start 1 month earlier than we have previously and completed 1 month earlier than expected, and that was based on the additional capital we put in last year in our new ice road building plan. It was a great result. Everything came up the road, that's 4,000 container units and almost 80 million liters of fuel. On the construction side, progress was significant in the first quarter and all activities are nearly complete and ready for first gold and subsequent ramp-up to commercial production in Q3. On the open pit mining side, Mining of the Echo pit was recently completed and is now being set up to receive tailings. So when the mill turns on the open pit mine of the unwell open pit will be mining and will be depositing tails in the Echo. On the underground mining side, mining rates at unwell underground are hitting new records, and we're confident that the high-grade stope ore production as in our current life of mine will begin in the third quarter of this year. Looking at Mali, Mali had a strong start to the year, exceeded gold production expectations, had lower all-in sustaining costs than we anticipated. The mill feed grade over the course of the year as we get through Page 7 will steadily increase, and we remain very confident in our 2025 production guidance. Of course, this will be highlighted by the contributions from the Fekola underground and if we get all our permits to Fekola Regional later in 2025. At Masbate, the operations continue to perform well. World-class safety record, I just want to call that out. They're now coming up on 2,300 days without an LTI. We anticipate another strong year of consistent production of Masbate with strong margins. At Otjikoto, the open pit and underground went very well in the first quarter. And currently, we're basically -- we're focused on advancing the Antelope deposit to a development decision in the third quarter of this year. And finally, and maybe not lastly, Gramalote, we're getting close to the finalization of the feasibility study. We want to release it over the next couple of months. With that, I will turn it back to you, Clive.

Thanks Bill. Randall, can you update on the recent developments at Mali over the last couple of days?

Yeah. Absolutely. As all of you know, we've been working with the government of Mali follow the 2023 mining code on the Fekola Regional project, a part of the MOU was that they finally allowed a company to consolidate a large land package which we are using to combine the Menankoto, Bentako and Bakolobi permits. For the first time, the 2023 mining code now allows for a larger overall land area under one consolidated land package so we've been working with them since September on what has really been a novel process for them. And finally, it came through just yesterday where the council of ministers has approved the decree to go ahead with that consolidated land package. What that does is really a catalyst for us to be able to now submit our application for exploitation permit which will then just be one license currently named Menankoto. It will be -- and so that will find its way into a new operating company. And with that application for exploitation permits should go in within the week. And then we're looking -- the standard time, turnaround time has been around 30 to 60 days for us to be able to see an exploitation license. So really, they lived up to another obligation in the MOU, that's one of the more important ones for us. And so now it's a matter of us continuing to work with that government to show them and demonstrate the value that the Fekola regional will have for all stakeholders, them being a 35% holder in Fekola Regional and look towards later on this year of getting into production.

So that's 35% under the 2023 code for the regional area and obviously we were the other 65% of that. So I think that's a good summary of where we sit today as we've discussed. We've said so many catalysts moving forward. Very happy in the first quarter. Excited to continue that good performance for the rest of year and significantly advanced the catalyst that we've talked about today. So you've got entire executive team here in Vancouver with the exception of those [indiscernible], so I think with that, we'll open it up to any questions.

[Operator Instructions]. Our first question comes from Francesco Costanzo from Scotiabank.

Francesco calling on behalf of Ovais Habib. I just want to start with maybe a question for Bill. So construction development is tracking to plan. And you've noted in the release that mining of the Echo pit and completion of the tailings slurry pipeline are some of the critical path items that are needed before first gold pour, but can you speak to any of the other critical path items to highlight ahead of first gold pour for achieving commercial production that we should look for?

Yes. Well, obviously, everything is going to be happening all very rapidly now. We're currently in the process of commissioning the powerhouse, right? So that's a key thing, obviously, for the mill. That is basically complete at this time. We have enough to run the mill. So in the very near future, we're going to start commissioning through the mill. And then it's just working through the circuits, obviously, trying to get over in there and then producing gold by the end of Q2.

Okay. Great. And then just on the capital budget. So you've reiterated the CAD 1.54 billion budget with CAD 136 million spent during Q1, although the initial guidance -- initial '25 guidance published earlier in the year outlined a little bit more non-sustaining capital in the first half of '25 than was implied by the total Goose budget. So just wondering if you can clarify your expectation of sustaining and non-sustaining capital spending ahead of first gold, ahead of commercial production and through the balance of the year.

Well, in terms of the total CapEx, the items that we identified that we did expand some of this on sustaining CapEx that pull forward. I mentioned it's somewhere in the region of $60 million. Some of that was extended right at the end '24 and with another component of it done in Q1 '25? And a couple of things like powerhouse enhancements that we're planning for next year. Actually, some of the deposits there -- we've accelerated some equipment purchases from purchase of CAT 777loaders and some Volvo trucks. And those are things that we had originally in the second half '25. We've also got some fuel on hand that we purchased for construction. So it's purchased but hasn't been consumed yet. So if you pull all those things together, you get something in the region of $60 million plus that we think are really things that are either accelerated and will be concerned in Q2 or that are pulled forward from subsequent periods of year.

Okay. And just my final question for Randall or whoever wants to take it. I mean, great to see progress -- meaningful progress on the Fekola Regional permit. I guess, expected within the next 60 days or so. I just wanted to clarify, do you still expect to need around 3 months or so to prepare the site before we can actually see ore production start to come from Anaconda.

I'll leave that to Bill.

Yes, we do. There's 3 months of pre-stripping there.

The next question comes from Anita Soni from CIBC World Markets.

I just had a question on the Gramalote study that's coming up soon. Could you just give us an idea of some of the, I guess, parameters that you'd be looking at? Obviously, we know you're looking for a smaller footprint at that asset. But just wondering what kind of gold price that you would be expecting to use in that study. .

Well, I'll give it over to Bill to tell you. I mean, we could talk a little bit about what was in the PEA before in previous studies. I think it's quite a quite a lot of lines with PEA. We're hoping to be similar or even improve upon that. But that was, as you said, it's smaller footprint, which is good from the updated current point of view. But basically, we're looking at because it's one order now, we're looking at the potential to produce 220,000 ounces a year. And for the first 5 years of the 12-year mining rights. The 12-year continuous study of PEA was a bit misleading because it actually had some of the training required to do the feasibility and there's a lot of engineering work that went into that PEA. So a lot of work has happened since then and we're on track with the feasibility study for the end of the year. That's what we've done. We're on track to be able to release the new studies.

Yes, Clive, just -- I don't mean to walk on you there, but you're absolutely right. The PEA is the absolute best reference for what we're looking at for the feasibility study. Everything is tracking very nicely against that. And I'll leave it for Mike on what the gold price renews.

Yes. I think gold price, I mean, you'll see us like, look there's going to be some scenarios running there. But I think you'll see us look at consensus as a base just to see where we are. So if you look at where CIBC's latest consensus came out, obviously, it's higher in the short term, but we'll -- those will be years anyway. And then long term, you're looking at somewhere $2,300 to $2,400, that's current consensus.

I think that we have a logic and potentially, if we have a positive study, we make a development decision to go forward. It could slide it very nicely after Goose to reserve pricing profile. And as everyone is aware, we don't try to build two lines at the same time. Also, when you look at funding Gramalote, there's a number of sources of funding from the existing cash flow we're generating from existing facilities we have, some access to, you know, good term debt facilities. But also, of course, this is not one that we would necessarily be afraid of hedging a bit of gold in terms of spending good amount of capital. The previous was around $800 million, but there're numerous ways to finance that, some we are used to do that. But also, we would be looking at what option this would be to perhaps protect the company and the project from the construction period. But that would be -- as i said that would be a small percentage of our gold production as a company. So I hope that answers your questions.

It does. And then just last question on the timing was, so as you mentioned, not wanting to build Goose or building too many things at the same time, but you're coming to the tail end of Goose now. So would it be right to think about Gramalote potentially coming on stream just at the end of the decade? .

Bill, you touch base on that. Obviously, you will know the schedules.

Yes. So Anita, really, it comes down to the feasibility study, remember, we're going to have to make some minor modifications because there is a construction permit to it right now. So that construction permit has to be modified for whatever we've changed in the PEA. We're kind of estimating a 12- to 15-month period on that. So your answer is absolutely correct. It could be earlier if the government wants to play. But you're right, it's kind of that 28%, 29% is probably right.

Our next question comes from Carey MacRury from Canaccord Genuity.

Just another question on Goose. What kind of stockpile do you expect to have and grade ahead of the mill start-up?

Well, I can tell you that we've got significant stockpile already prepared from the open pit. I was just looking at it this morning. But I'll tell you, for the mill, we're talking about as we start up, once we get kind of the low-grade stuff, we're going to run at least 20,000 and maybe more, maybe as much as 35,000 tons at plus 10 grams right away. So we're looking good for meeting our projections and certainly, this kind of 120 at this point, 120 to 130 is not really an issue. So we can see that for sure in 2025.

[indiscernible] 120 to what?

120 to 150 is right?

Yes. Okay. And just in terms of the ore mix with the underground coming on more so in Q3, I'm assuming most of the ore mix for the first half of the year is really stockpiles and the open pit, is that correct? Or what is the mix roughly?

What is the mix between open pit and underground, I don't have that at my fingertips right now. But certainly, in 2025, a lot of the materials coming from the open pit.

Yes. I can comment on that. So Carey, it's about 40% from the Echo open pit for the feed that we give through the year, 40% of material from the unwell open pit and then about 20% of material from unwell underground is the mix throughout the balance of the year.

Next question comes from Ovais Habib from Scotiabank.

Sorry, got a bit delayed coming on the call. I just bouncing between some conference calls. Just -- a lot of questions have been answered. But just one question on -- maybe on the Otjikoto side. And in terms of any sort of expansions on the Antelope side, you're looking to make a construction decision, I believe, in Q3 of this year. what's pending in terms of making that decision? A PEA was released? Do you need to do further studies or more drilling? Or -- can you give us a little bit more color on that? .

Yes, thanks for raising it. We didn't really talk much in detail about that. I guess that Bill will answer.

Yes. The only thing that's really kind of outstanding of it is the geotech. Overall, we have the mining method lockdown. We're currently looking at what is the surface infrastructure layout, basic kind of supporting type questions. So do we want to have extra facilities. And so we're right now going through a third-party review of what we've done.

Okay. So you guys should be in a good position then just -- based on that for that construction decision in Q3 then?

100%.

Okay. Sounds good. And just -- you may have already touched upon this during the call, so I apologize if I'm asking again. But just in terms of the permits on the Mali specifically on the Fekola underground. Now the Fekola underground from what I understand is an amendment to your permit. Is that expected sooner than the regional? I mean is that separate? Is that together now from where I understand the Malian government or the regulators had combined the two. Any color on that, please?

I'll pass it over to Randall. But what you missed earlier in the call, you really should have a bunch of different calls to go back and forward with a significant development in terms of moving the permitting board of the government [indiscernible] the last day, we've already covered it, but we'll give you a base highlight view of that and also the [indiscernible].

Yes. Let me answer your first question. They are not connected, Ovais. I'm not sure where that one came from. But they are our 2 distinct processes, the underground and the regional. And when we talk about them together in our press releases, just because that's the kind of the future and some of the catalysts at Fekola. But certainly, everything that needs to be submitted for the underground, the approvals have been submitted and that process is underway. We expect that we'll be up and producing in the -- early in the second half. And so I don't see any issues there with the underground. That one is well in hand. With the regional, we did receive the council of minister's decree yesterday for the combination of the three permits, the three permit area, of which -- that's 200-plus square kilometers out to the north covering continuous north of Mali of the Fekola permit. So that really is the catalyst that allows us to now submit the exploitation application. It's been completed. It's translated. It's ready to go. We need a little bit of time to include all of the details that come out of that consolidated permit and flow those through the application. But then we expect kind of the turnaround time has been historically about 30 to 60 days in this instance.

And the next question is a follow-up from Carey MacRury from Canaccord Genuity.

Yes. Just a question for Mike. Obviously, the balance sheet is in great shape. Just asking about the prepay given that you'd be ramping up in Q3. Is there any thought of deferring that to later? Or you're comfortable just settling that in the quarter?

Well, we can defer it. We could roll them if we want to. Our goal is not to, if you look at what we -- what's the rationale for pulling in the convert, putting a bit of longer-term money on the balance sheet there to free up the line. We're going to use the line to help us maneuver through the prepaids and to do some of these other capital early-stage Antelope, whatever we might [indiscernible] finishing Fekola Regional, all those things. But also going to use the line just to maneuver through, we set them up for a 1-year delivery period so that they're done pretty quickly. So we've got them. We use them. Goose will be built. Goose will be running, will deliver into the prepaids, we're done, we'll put them behind us.

Already a billion-dollar facility available to us. Obviously, as Mike said, we'll use parts of that as we move forward, and plan is [indiscernible].

Yes, there's lot of room. I mean, if gold stays where it is, we won't be touching the facility, but you don't plan on record gold prices all the time you plan and managing things. So we're in good shape to do it, Carey. That's the bottom line.

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

Yes, thanks to everyone present in this conference and you can always follow up with us if there's any additional questions that occur to you after. So good quarter. Looking forward to the great year in the 2025.

This brings to an end to today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.