B2Gold Corp. (TSX: BTO) (NYSE AMERICAN: BTG) (NSX: B2G) is pleased to announce its consolidated gold production and gold revenues for the fourth quarter and full-year 2019, in addition to its production and budget guidance for 2020. All dollar figures are in United States dollars unless otherwise indicated.
2019 Gold Production and Revenue Highlights
2020 Budget Highlights
|(1)||On October 15, 2019, B2Gold and Calibre Mining Corp. (“Calibre”) completed the transaction for B2Gold to restructure its interests in, and for Calibre to acquire, the El Limon and La Libertad mines. Accordingly, for the period to October 15, 2019, for financial reporting purposes, the Company has classified the El Limon and La Libertad mines’ production and results as discontinued operations.|
|(2)||Commencing from October 15, 2019, B2Gold applies the equity method of accounting for its ownership interest in Calibre (approximately 34%) and reports its attributable share of Calibre production ounces as part of its total production results.|
2019 Gold Production
Mine-by-mine gold production (ounces) in the fourth quarter and full-year 2019 was as follows:
|Fekola||119,243||455,810||445,000 – 455,000||420,000 – 430,000|
|Masbate||50,741||217,340||200,000 – 210,000||200,000 – 210,000|
|Otjikoto||58,422||177,966||165,000 – 175,000||165,000 – 175,000|
|From Continuing Operations||228,406||851,116||810,000 – 840,000||785,000 – 815,000|
|La Libertad||2,914||71,091||73,000 – 77,700||95,000 – 100,000|
|El Limon||3,096||47,288||41,800 – 46,100||55,000 – 60,000|
|From Discontinued Operations (1)||6,010||118,379||114,800 – 123,800||150,000 – 160,000|
|B2Gold Consolidated (2)||234,416||969,495||924,800 – 963,800||935,000 – 975,000|
|Equity interest in Calibre (3)||10,724||10,724||10,200 – 11,200||–|
|Total||245,140||980,219||935,000 – 975,000||935,000 – 975,000|
|(1)||“Discontinued Operations” includes El Limon’s and La Libertad’s gold production for the period from January 1, 2019 to the date of their sale on October 15, 2019.|
|(2)||“B2Gold consolidated” production and guidance are presented on a 100% basis.|
|(3)||“Equity interest in Calibre” represents the Company’s (approximate 34%) indirect share of production from Calibre’s El Limon and La Libertad mines for the stub period from October 15, 2019 to December 31, 2019. B2Gold applies the equity method of accounting for its 34% ownership interest in Calibre.|
Consolidated cash costs are projected to remain low for 2019 with cash operating costs forecast to be at or below the lower end of the Company’s $520 and $560 per ounce guidance range and AISC to be within the Company’s $835 and $875 per ounce guidance range. B2Gold will release its 2019 year-end consolidated financial statements after the North American markets close on February 27, 2020. Details of the consolidated cash operating costs per ounce and AISC per ounce will be included.
2020 Production Outlook and Cost Guidance
In 2020, B2Gold remains well positioned for continued strong operational and financial performance with consolidated gold production forecast to be in the range of between 955,000 and 1,005,000 ounces. Including the Company’s 34% share of attributable ounces projected from Calibre’s El Limon and La Libertad mines (of between 45,000 and 50,000 ounces), the Company’s total gold production is expected to be between 1,000,000 and 1,055,000 ounces in 2020. Gold production in 2020 is anticipated to be marginally weighted towards the second-half of the year (52%).
With higher gold production forecast for 2020, continued cost controls and the sale of the Company’s higher-cost Nicaraguan mines completed, the Company’s consolidated cash operating costs per ounce and AISC per ounce are both projected to further decrease in 2020 (compared to 2019 guidance). The Company’s consolidated cash operating costs are forecast to decrease significantly in 2020 and be between $415 and $455 per ounce (including forecast cash operating costs from B2Gold’s attributable 34% share of Calibre production), approximately 19% lower than the Company’s 2019 guidance range (of between $520 and $560 per ounce). The Company’s consolidated AISC are forecast to be between $780 and $820 per ounce (including forecast AISC from B2Gold’s attributable 34% share of Calibre production), approximately 6% lower than the Company’s 2019 guidance range (of between $835 to $875 per ounce).
Mine-by-mine 2020 ranges (including the Company’s 34% share of Calibre’s El Limon and La Libertad mines) for forecast gold production, cash operating costs per ounce and AISC per ounce are as follows:
Cash Operating Costs
($ per ounce)
($ per ounce)
|Fekola||590,000 – 620,000||$285 – $325||$555 – $595|
|Masbate||200,000 – 210,000||$665 – $705||$965 – $1,005|
|Otjikoto||165,000 – 175,000||$480 – $520||$1,010 – $1,050|
|B2Gold Consolidated (1)||955,000 – 1,005,000||$395 – $440||$765 – $805|
|Equity interest in Calibre (2)||45,000 – 50,000||$720 – $760||$1,020 – $1,060|
|Total||1,000,000 – 1,055,000||$415 – $455||$780 – $820|
|(1)||“B2Gold consolidated” forecasts are all presented on a 100% basis, as B2Gold fully consolidates the results of its Fekola, Masbate and Otjikoto mines in its consolidated financial statements (even though it does not own 100% of these operations).|
|(2)||“Equity interest in Calibre” forecasts represent the Company’s 34% indirect share of the operations of Calibre’s El Limon and La Libertad mines. B2Gold applies the equity method of accounting for its 34% ownership interest in Calibre.|
Fekola Gold Mine – Mali
The low-cost Fekola Mine is forecast to produce between 590,000 and 620,000 ounces of gold in 2020, a significant increase of 33% (approximately 150,000 ounces) over 2019. Gold production is forecast to be marginally weighted to the second half of the year (52%) and be relatively consistent throughout the year, even though the expansion of the Fekola processing plant is not scheduled to be completed until the end of the third quarter of 2020. The consistent production throughout the year is mainly due to the expansion of the Fekola mining fleet and optimization of the mining sequence early in the year which will provide access to higher grade portions of the deposit earlier on in the sequence. When the mill expansion comes into service, lower grade ore is expected to be processed (rather than being stockpiled) during the second half of the year.
With the significant increase in gold production forecast for 2020 (as well as the planned impact of the new Fekola solar plant once construction is completed), Fekola’s cash operating costs are forecast to significantly decline and be between $285 and $325 per ounce (approximately 22% below its 2019 guidance range of between $370 and $410 per ounce). Fekola’s AISC are also forecast to decline and be between $555 and $595 per ounce (approximately 11% below its 2019 guidance range of between $625 and $665 per ounce).
In 2020, the Fekola Mine is budgeted to process a total of 6.84 million tonnes of ore at an average grade of 2.91 grams per tonne (“g/t”) and process gold recovery of 93.8%.
Sustaining capital costs in 2020 at the Fekola Mine are budgeted to total $77 million, including $46 million for pre-stripping (relating to Phases 5 and 6 of the Fekola Pit), $12 million for mobile equipment rebuilds and $8 million for a tailings facility expansion. The tailings facility expansion is a double raise and will provide tailings storage capacity through 2022. Non-sustaining capital costs total $105 million, including $51 million to expand the mining fleet (of which $40 million is expected to be funded by equipment loans), $25 million to expand the processing facilities, and $21 million to construct a solar power plant.
The Fekola Mine expansion project to increase Fekola’s processing throughput by 1.5 million Mtpa to 7.5 Mtpa from an assumed base rate of 6 Mtpa is scheduled to be completed by the end of the third quarter of 2020. The processing upgrade will focus on increased ball mill power, with upgrades to other components including a new cyclone classification system, pebble crushers, and additional leach capacity to support the higher throughput and increase of operability. The mining rate at Fekola will also be increased, along with additional mining equipment to accelerate the supply of higher-grade ore to the expanded processing facilities. Construction of the processing expansion commenced in October 2019 and is expected to be completed by the end of the third quarter of 2020. Mining fleet expansion equipment has started to arrive on site ahead of schedule, with one excavator and two haul trucks expected to enter service in January 2020.
The Fekola solar plant engineering and construction progressed well in the second half of 2019 and remains within budget and on schedule for completion in the third quarter of 2020. The Fekola solar plant will be one of the largest off-grid hybrid solar/Heavy Fuel Oil (“HFO”) plants in the world with a 30 Megawatt (“MW”) solar component combined with 64 MW of HFO and diesel generating capacity. The solar plant will also have a 15.4 MW hour battery component with up to 17.3 MW of discharge power. The project has a four-year payback and is estimated to reduce processing costs by over 7%. HFO consumption is estimated to be reduced by approximately 13.1 million litres per year, eliminating approximately 39,000 tonnes per year of carbon dioxide emissions.
Further details of the Fekola pit design, production schedule, and costs will be included in B2Gold’s Annual Information Form to be filed by March 30, 2020, and in a Technical Report to be filed concurrently.
Masbate Gold Mine – the Philippines
In 2020, the Masbate Mine is expected to produce between 200,000 and 210,000 ounces of gold. Gold production is scheduled to be weighted towards the second half of the year (54%), as mined grade from the new Montana Pit is expected to be higher in the second half of the year. Masbate’s cash operating costs are forecast to be between $665 to $705 per ounce, approximately 6% higher than its 2019 guidance (of between $625 to $665 per ounce). Masbate’s AISC are forecast to be between $965 to $1,005 per ounce, approximately 12% higher than its 2019 guidance (of between $860 to $900 per ounce), reflecting higher budgeted costs for processing, mobile equipment rebuilds and exploration (see “2020 Exploration Guidance” section).
In 2020, Masbate is budgeted to process a total of 8.2 million tonnes of ore at an average grade of 1.01 g/t and process gold recovery of 76.3%. Mill feed is budgeted to consist primarily of fresh ore (86%), sourced from the Main Vein Pit (Stages 4, 5 and 7) (78%) and from the Montana Stage 1 Pit (22%).
Sustaining capital costs in 2020 at the Masbate Mine are budgeted to total $28 million, including $10 million for pre-stripping, $9 million for mobile fleet rebuilds and replacements, and $3 million for power plant rebuilds. Non-sustaining capital costs are budgeted to total $5 million.
Otjikoto Gold Mine – Namibia
The Otjikoto Mine is forecast to produce between 165,000 and 175,000 ounces of gold in 2020, from the Otjikoto and Wolfshag Pits. Gold production is scheduled to be consistent throughout the year, as high-grade ore from the Wolfshag Pit is blended with medium-grade ore from the Otjikoto Pit. Otjikoto’s cash operating costs are forecast to be between $480 and $520 per ounce, a reduction of approximately 7% compared to its 2019 guidance range (of between $520 and $560 per ounce). Otjikoto’s AISC are forecast to be between $1,010 to $1,050 per ounce, approximately 11% higher than its 2019 guidance range (of between $905 and $945 per ounce), mainly due to higher budgeted pre-stripping sustaining capital costs (relating to Phase 3 of the Otjikoto Pit and Phase 3 of the Wolfshag Pit).
In 2020, Otjikoto is budgeted to process a total of 3.4 million tonnes of ore at an average grade of 1.55 g/t and process gold recovery of 98%. The Wolfshag Pit will be the primary ore source (accounting for 65% of the high-grade and medium-grade ounces due to higher grades).
Sustaining capital costs in 2020 at the Otjikoto Mine are budgeted to total $70 million, including $57 million for pre-stripping and $11 million for mobile equipment rebuilds and equipment purchases. Non-sustaining capital costs total $25 million, including $18 million for initial development of the Wolfshag Underground project and $7 million for a connection to the national power grid.
In December 2019, the B2Gold Board of Directors approved the development of the Wolfshag Underground Mine. This project will bring forward production of high-grade ore from the Wolfshag orebody and reduce production costs. The mine development will also provide access for down-plunge and parallel exploration and has been designed to support future expansions. Project spending is currently estimated to total $57 million (of which $18 million is budgeted to be incurred in 2020) from completion of the internal study to production of stope ore. Portal development is expected to begin in the third quarter of 2020 with initial stope ore production in the first quarter of 2022. Further details will be included in B2Gold’s Annual Information Form to be filed by March 30, 2020.
2020 Gramalote Joint Venture Budget
Based on an amended and restated shareholders agreement with Anglogold Ashanti, on January 1, 2020 B2Gold became the operator of the joint venture Gramalote Gold Project in Colombia. Under the terms of the agreement, B2Gold will sole fund the first $13.9 million of expenditures on the Gramalote Project (the “Sole Fund Amount”), following which B2Gold will hold a 50% ownership interest in the joint venture (B2Gold currently holds a 48.3% interest). Both joint venture partners will continue to have equal representation on the joint venture management committee. Following the expenditure of the Sole Fund Amount, each joint venture partner will fund its share of expenditures pro rata.
The 2020 budget for the project is $37.4 million and under the terms of the agreement B2Gold will fund $25.7 million (including the Sole Fund Amount). The budget will fund 42,500 metres of infill drilling and 7,645 metres of geotechnical drilling for site infrastructure. The purpose of the infill drilling is to confirm and upgrade the Inferred Mineral Resources to Indicated status and is expected to be completed by the end of May 2020. The budget will also fund additional feasibility work including an updated Mineral Resource estimate, detailed mine planning, additional environmental studies, metallurgical test work, engineering and detailed economic analysis.
B2Gold plans to announce the results of a Preliminary Economic Assessment for the Gramalote Project within the week of January 20, 2020 and to complete a final feasibility study by December 31, 2020. With prior testing programs that have been completed and the high level of engineering performed in 2017 for an internal pre-feasibility study, the engineering work remaining to get to final feasibility is not extensive.
The Environmental Impact Study and Project Implementation Plans for the Gramalote Project have been fully approved by the National Authority of Environmental Licenses of Colombia. Due to the desired modifications to the processing plant and infrastructure locations, a Modified Environment Impact Study and a Modified Project Implementation plan were submitted and are currently in the final approval process. If the final economics of the feasibility study are positive and the joint venture makes the decision to develop Gramalote as an open-pit gold mine, B2Gold would utilize its proven internal mine construction team to build the mine and mill facilities.
2020 Exploration Guidance
Following a very successful year for exploration in 2019 (the Company intends to announce an updated Fekola Mineral Resource Statement later this week), B2Gold is planning another year of aggressive exploration in 2020 with a budget of approximately $33 million (excludes drilling included in the Gramalote joint venture budget). Exploration will once again focus predominantly in West Africa, as well as the other operating mine sites in Namibia and the Philippines. The Company has also allocated an additional $18 million for its grassroots exploration programs for a total exploration budget of $51 million for 2020.
In 2020, approximately $18 million is budgeted to be spent on exploration in Mali. The Company plans to focus on expanding the main Fekola deposit to the north and test several near mine potential open pit targets such as Fekola South, Cardinal, FNZ and Kingfisher structures with an allocation of approximately 20,000 metres of drilling. In January 2020, drilling recommenced in Mali.
In 2020, the Company has also budgeted approximately 41,000 metres of diamond drilling and RC drilling on several zones in the Anaconda Area, located approximately 20 kilometres from Fekola. Exploration will focus on increasing the known saprolite resources at the Adder and Mamba zones and further testing the underlying sulphide mineralization at the Mamba zone. At Adder, drilling has extended the strike extent of mineralization up to 1 kilometre north of the known resource area. At Mamba, recent drilling has extended the high-grade mineralized saprolite zone by approximately 600 metres, resulting in more than 1 kilometre of known strike length, and has led to the discovery of a continuous bedrock sulphide zone down plunge of the Mamba zone’s saprolite mineralization. This Fekola-style, south-plunging body of sulphide mineralization remains open down plunge and will be the subject of extensive drilling in 2020.
Masbate Gold Mine – the Philippines
The Masbate exploration budget for 2020 is approximately $8 million, including approximately 25,000 metres of diamond and RC drilling. The 2020 exploration program will focus on drill testing the most prospective inferred mineral resources below existing design pits to determine if existing open pits can be expanded. Several grassroot greenfield targets that have seen variable exploration and drilling will be further tested with mapping, trenching and drilling as well.
The total exploration budget for Namibia in 2020 is $4 million. Exploration in 2020 will include 19,500 metres of diamond drilling and 3,300 metres of RAB drilling split between the Otjikoto Project and the Ondundu joint venture, located approximately 200 kilometres southwest of Otjikoto. The majority of the diamond drilling will be allocated towards testing the Wolfshag zone and near Wolfshag open pit and underground targets.
B2Gold has allocated $18 million dollars on several exploration ventures around the world in jurisdictions and geologic environments that B2Gold believes warrant a commitment of exploration expertise and dollars to determine if the projects have resource potential.
Liquidity and Capital Resources
Based on current assumptions, including a gold price of $1,500 per ounce, the Company expects to generate cashflows from operating activities of approximately $700 million in 2020.
At December 31, 2019, the Company had total long-term debt of approximately $260 million outstanding, composed of $200 million drawn under the RCF with the balance of $60 million relating to equipment loans. The Company expects to repay the remaining $200 million of the outstanding RCF balance in 2020, leaving the Company the full amount of the facility of $600 million as undrawn and available by the end of the year. During fiscal 2020, the Company expects to draw down an additional $40 million of funding under its mining fleet loans related to the Fekola expansion fleet and repay approximately $29 million of principal under its existing mining fleet loans over the course of the year.
In the fourth quarter of 2020, the Company will receive the final cash installment ($10 million) and final working capital proceeds ($5 million) payments from Calibre related to the disposal of the Nicaraguan operations in late 2019.
As part of the Company’s long-term strategy to maximize shareholder value, in the fourth quarter of 2019, B2Gold’s Board of Directors declared its first dividend of $0.01 per common share, and expects to declare future dividends quarterly at the same level (which on an annualized basis would amount to $0.04 per common share), subject to authorization of the Board of Directors and all applicable laws.
The Company’s ongoing strategy is to continue to maximize profitable production from its mines, reduce debt, expand the Fekola Mine throughput and annual production, further advance its pipeline of development and exploration projects and evaluate exploration opportunities.
Headquartered in Vancouver, Canada, B2Gold is the world’s new senior gold producer. Founded in 2007, today, B2Gold has three operating gold mines and numerous exploration and development projects in various countries including Mali, the Philippines, Namibia and Colombia. B2Gold also has a 34% ownership interest in Calibre (which indirectly holds two mines in Nicaragua). In 2020, B2Gold forecasts consolidated gold production of between 1,000,000 and 1,055,000 ounces.
Peter D. Montano, P.E., the Project Director of B2Gold, a qualified person under NI 43-101, has approved the scientific and technical information related to operations matters contained in this news release.
John Rajala, Vice President of Metallurgy at B2Gold, a qualified person under NI 43-101, has approved the scientific and technical information regarding engineering matters related to Fekola expansion studies.
Tom Garagan, Senior Vice President of Exploration of B2Gold, a qualified person under NI 43-101, has approved the scientific and technical information regarding exploration matters contained in this news release.
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