Q3 2024 B2Gold Corp Earnings Call
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Robert Wright, Unknown Executive R.O. W. I. C. R.O. W. I. C. R.O. W. I. C. R.O. W. I. C. R.O. W. I. C.
Speaker Change: Thank you for standing by. This is the conference operator and welcome to B2Gold Corporation's third quarter 2024 financial results conference call.
Speaker Change: As a reminder, all participants are in listen-only mode, and the conference is being recorded.
Speaker Change: After the presentation, there will be an opportunity for analysts to ask questions.
Speaker Change: To join the question queue, you may press star, then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star, then zero. I would now like to turn the conference over to Clive Johnson, President and CEO of B2Gold. Please go ahead.
Clive Johnson: Thank you, Operator. Welcome to the call. We're here in Vancouver with the B2Gold Executive Team and I'm going to pass it over to Mike Cinnamond to talk about the financial results for the third quarter and then Bill Lytle is going to give us an update.
Clive Johnson: on Mallet Operations and also on the Goose Project construction progress. So what would you like? Thanks Clive.
Speaker Change: So, on the operating side, I think a similar story to what we saw for the first two quarters of the year, Miss Valley, North Dakota results continued to meet or beat budget.
Speaker Change: But as we previously guided towards, the coal had a weaker quarter as a result of the delay in receiving a replacement excavator after an existing one was damaged beyond repair in the first half of 2014.
Clive Johnson: As we look to 2025, we expect to see significant production growth in Focola, driven by better grades being mined at the Focola pit, combined with the contribution of truck door from Focola Regional and the advancement of Focola underground production.
Clive Johnson: When you put it all together, so BEATS, Septimus Valley, North Dakota, Focola is slightly behind, but where we stand with that overall for the year, we still think we're on track to come in now at the low end of our revised production guidance range.
Clive Johnson: And with that lower production, we expect to come in towards the upper end of our revised cash costs and all unsustained cost guidance.
Clive Johnson: Another significant event in the quarter, we completed the MOU with the state of Mali on the future economic and governance parameters of the Focola complex, including the Focola mine and Focola Regional. And that's a significant event for B2Goal. It lets us move forward and
Clive Johnson: and realize the value that we see or the upside we see in those projects.
Clive Johnson: Financially, it's a strong quarter. Adjusting for one-time items, the company generated two cents per share of adjusted earnings, benefiting from a very strong average gold sales price.
Clive Johnson: continue to see go through what it's doing. Those adjusted earnings were negatively impacted by a one time $30 million tax accrual to record the charges related to the MOU with the state of Mali I just described that we announced this
Clive Johnson: in September. If you if you remove that accrual adjusted EPS would have been closer to five cents per share.
Clive Johnson: Basic earnings for sure was impacted by the non-cash write-down of the Back River Gold District and mainly as a result of the two initial capital cost increases that we previously announced.
Clive Johnson: 2024. But moving forward, as Bill will describe shortly, we feel confident in the timeline and budget that we put out a couple of months ago in September.
Clive Johnson: Operating capital for working capital adjustments for the quarter was 118 million at which is a strong result given the challenges that took over during Q3.
Clive Johnson: Spending in the Goose Project is talking well versus our latest budget, turn of the quarter, which we saw carry on into October as well.
Clive Johnson: Construction and mine development activities spanned with Canadian $165 million during Q3 and the working capital build-up was $150 million during the quarter. And remember that's kind of reflecting the results of the sea lift as it came in and the material got to the site.
Clive Johnson: Working capital buildup was elevated predominantly as a result of the purchase of diesel that will be brought to site on the 2025 Winter Ice Road.
Clive Johnson: In balance sheet wise, we continue to remain a strong financial position with cash and cash equivalents of $431 million at the end of the third quarter. During the quarter, we did draw $200 million on our line and that leaves us with half a billion of additional credit facility capacity going forward, as well as $100 million in the importing and future of that line.
Clive Johnson: So we've got a good amount of financial flexibility to be able to complete the goods construction by Q2 2025, complete the other sustaining growth initiatives across the portfolio.
Clive Johnson: and to continue to fund a healthy exploration program to extend mindless.
And that's the end of my remarks.
Speaker Change: Over to you, Bill. Okay, from an operational perspective, I guess what people are most interested in is the goose. So at Goose Construction Project, progress was significant throughout the summer months.
Speaker Change: And into the fall season, everything remains on track to deliver first gold production in Q2 2025.
Clive Johnson: In support of that, the 2024 Sealift was successfully completed in the third quarter. We had 10 ships and one barge unloading 123,000 cubic meters of dry cargo.
Clive Johnson: More than 84 million liters of Arctic-grade diesel fuel, and the 58 additional trucks for the 2025 Winter Ice Road, which will significantly de-risk the movement of cargo down the ice road.
Clive Johnson: On the construction side, progress was significant in the third quarter. We completed the vast majority of concrete placement, all the e-houses on the mill pad, the electricians were finishing up connecting power to various components, and the construction of additional fuel storage tanks at Goose.
Clive Johnson: On the mining side, we did quite well with the Echo Open Pit.
The underground development at Omwelt is consistently hitting new highs.
Now turning to the operations.
Clive Johnson: In Mali, we're on track to get both the Fekola Regional and the Fekola Underground into development or into production in 2025. That'll obviously develop. That'll benefit the operations for years to come.
Clive Johnson: At Masbati, once again the little mine that could, continues to form at world-class levels. The operation has delivered all its sustaining costs in 2024 material lower than our guidance range.
Clive Johnson: At Ochicota, the team is preparing a PEA study on mining for the Antelope Zone, which will be able to mine through the early 2030s. This would extend the life of mine through the years of stockpiling and processing.
Speaker Change: And at Grand Maloti, we're working through a feasibility study ready to be released in mid-2025. With that, I'll turn it back over to you, Clive.
Next bill, I think that will open up for questions.
Speaker Change: We will now begin the analyst question and answer session. To join the question queue you may press star then one on your telephone keypad. You will hear a tone acknowledging your request and if you're using a speakerphone please pick up your handset before pressing any keys.
Speaker Change: To withdraw your question, please press star then 2. We will pause just for a moment as callers join the queue.
Speaker Change: And our first question comes from Anita Soni with CIBC World Markets. Please go ahead.
Speaker Change: Hi, good morning Clive, Bill and team. I just wanted to ask a quick question on Focola.
Speaker Change: I think you guys mentioned that the impact the issues that you've had with the equipment and the shovel and then also some inclement weather
is impacting Q4, could you give us an idea of
Speaker Change: what kind of grades you'll be pulling in Q4 and the expected tonnage. I'm unsure whether or not this is kind of within the original guidance revision of like 800 to 870 for this year or are we gearing even more towards the low end of that number?
So, basically what has happened is
Speaker Change: As you know, when we lost the excavator, it slowed down the development into the phases. We had to get into phase 7 of the open pit. We are now just getting ready to enter phase 7 now, so you will see grades increasing somewhat.
Speaker Change: But with that being said, you're not going to see all of that come through in Q4.
Speaker Change: Okay, so a little bit more of a push out than you had originally when you originally revised guidance in August, a little bit, a little bit, a little bit more of a delay in accessing that or than originally thought.
Speaker Change: Yeah, I would say a little bit more, but we're still within the revised guidance range that we just put out.
Okay, that's it for my questions. Thanks.
Excellent.
Speaker Change: And the next question comes from Don DeMarco with National Bank. Please go ahead.
Speaker Change: Thank you, Operator, and good morning, Clive and team. Hope all's well. The first question, Bill, you just talked about mass batting Ojakoto. Some outperformance in Q3, you know, provided some offsets to Kola. Was this just a one-off quarter for both these mines, or can we expect...
Transdevelop Performance to extend into Q4.
Speaker Change: So you know Masbati, right? Masbati is highly dependent on kind of which material ends up from the
Speaker Change: The pits as far as the recoveries and in the hardness, you know, we've always kind of
Speaker Change: Outperform there, so you could see an outperform at Masbati, but right now we're calling for exactly what we had projected for Masbati, for Q4. And Ochoa Kota is kind of the same way.
Speaker Change: We're kind of gearing towards what we had originally projected for Q4, knowing that we could potentially see higher grades at Masbate.
Okay.
Thank you for that. And my next question on Mally.
Speaker Change: There's been some discussion about outstanding payments. Can you remind us how much of that was paid in Q3 and how much is still remaining to be paid in Q4?
Speaker Change: Yeah, I can answer that Don. So on signing, we paid the first tranche payment of $16 million U.S.
Speaker Change: Unknown Speaker Hello. Unknown Speaker Hello. Hi. Unknown Speaker Hello. Unknown Speaker
Speaker Change: What remains and then in October We paid second tranche payment, which is part of the tax of settlement of 42 million. So those those payments have been made what remains is Dividend payment that's the most significant one. We expect to make that
Speaker Change: in probably this month, I think. And as disclosed in the financials, that's about $114 million. And then there's a residual payment, final settlement payment, $30 million that we expect to make by the end of the year.
Speaker Change: Okay, thank you. So, you know, we're all looking forward to Goose ramping up first pour on Q2 and so on.
Speaker Change: But beyond ramp up, you know, higher free cash flow, what can you talk about your capital allocation strategy?
Speaker Change: Of course, we have Gramo Latte that's under review right now. That might be one option. The dividends there, of course, very strong. But how do you see yourselves deploying the cash flow, higher cash flow once Goose has been ramped up?
Speaker Change: Well, I think, you know, for us, for sure, it goes up and running.
them.
Speaker Change: Remember as well, we then will be delivering into some of the prepaids that we've got as well over the course of the next year, so we'll be managing that process.
Speaker Change: and then beyond that, that timeline kind of falls in nicely.
for when it's a grandmother.
Speaker Change: is a positive feasibility study and we want to start progressing it, then we sort of fall into that timeline where, you know, there will be those significant strong cash flows that are freely available to us that we could use to advance development there. Yeah, grab a lot of slots and quite nicely if the feasibility study is positive.
and we decided to go ahead after Goose construction.
Speaker Change: because slotted quite nicely in terms of additional growth. And just to remind everyone, we're talking about in terms of
Speaker Change: production growth, the potential additional production of the 100,000 ounces for coal or from trucking ore down to the regional. Obviously goose coming on at a manualized rate of 310,000 ounces a year starting mid-year.
Speaker Change: and the Gold Production from Grab-a-Lotty, which we now own 100% of. So, we always talk about this as a transitional year and those are the kind of opportunities going forward to continue to grow gold production.
Speaker Change: Okay, thanks, Clive. And can you just remind us then on Gramma Latte when the feasibility is expected and when a go-forward decision might be made?
Clive Johnson: middle of next year. Yeah, the PEA is due in Q2. Sorry, excuse me. The feasibility study in Q2 2025.
Speaker Change: Okay, we'll look forward to that. Well, that's all for me. Thanks a lot guys. Good luck with Q4.
Speaker Change: Next question comes from Ralph Property with 8 Capital. Please go ahead.
Speaker Change: Thanks, Operator. So, you know, Clive, I just want to maybe get a little bit more detail on Focola Regional and some of the timelines on how things get mobilized.
Speaker Change: In terms of workforce, in terms of stripping and sort of, you know, maybe sort of a little bit of a walkthrough how the early part of 2025 is going to look like in terms of some of these milestones.
Sure, I'll go, I'll be best to let you know.
Yeah, so let's start with reminding everybody that
because they had given us previously a permit to
Speaker Change: Build out all the infrastructure that everything is there already. So the hall road is there all of all of the buildings. Those have already been built.
Speaker Change: And so what we're really talking about is once we get the permit, right, and once we get all the government approvals to start mining, you've got a quarter of pre-stripping. So...
Speaker Change: We've been talking about trying to get this permit by the end of this year, and I think that's that's still
seems feasible.
As far as I can tell, we have
Speaker Change: At the end of Q3, we did submit what was the requirement as far as the ESIA.
Speaker Change: They are saying that they need just like six to eight weeks to turn that around, and then they actually get into the physical part of the permitting process. So let's assume that everything happens as we thought it would by the end of the year. And then in Q1, we have to do pre-stripping. What's happening on the ground, physically on the ground now, as part of our
Speaker Change: local content initiative, we are talking about potentially going to contract minor and what that will do is that allow us to fulfill some of the modeling requirements and so we are
Speaker Change: issuing contract for that right now. So we anticipate that if in fact
Speaker Change: We do get the permit by the end of the year and everything's in place. We could, in fact, start pre-stripping in Q1 of 2025.
Just to add to that.
Speaker Change: We've reached an important agreement with the government, with the relative understanding and have undertaken to take the steps we need to take, and the government has undertaken the steps. So we have two partners now aligned, very keen on seeing the ore trucking down and additional production for cola. So the government's on the same page as us.
Speaker Change: of the regional gold production, and they're very keen to increase gold production in the country and taxes, etc. So we're very much on the same page and aligned to look to fast-track this process of permitting and get going with it. So we're on the same page.
Speaker Change: Okay, great. Yeah, that's helpful. Um, you know, Mike, this this impairment
Speaker Change: at Back River, it looks like the amount is sort of in line with sort of the two successive CapEx increases, right? And I'm just wondering, is that the way to think about it? And that there has been no change.
Speaker Change: Unknown Speaker In the proportion of the carrying value that is net present value related, right, that could have been offset by their gold prices, for example.
Speaker Change: Yeah, I think big picture, that's the way to think about it. I mean, there obviously were some changes in the gold price as we look from when we first bought it to where we are now, but really the triggering factors were the increase in the costs.
Speaker Change: And, you know, we updated, say, fuel prices, things like that in there as well. And that was in that result. But I think the capital cost increase, especially the latest one, really triggered the need to revisit that.
Okay, yeah, that's helpful. Thanks to the team.
Thanks, Ralph.
Speaker Change: And the next question comes from Obeys Habib with Scotiabank. Please go ahead.
Speaker Change: Hi Clive, Mike and Bill. Sorry I came in late into this call juggling through a bunch of conference calls. A lot of my questions have been answered, but in terms of
and, you know, the.
Speaker Change: The fact that now, you know, things are moving forward in Mali. You know, you guys are kind of getting your bearings kind of settled down in terms of goose as well. How do we really looking at exploration in Mali and exploration around a goose as well? Is that going to ramp up going into 2025? Where do we stand on exploration side?
Transcription by CastingWords
Speaker Change: Sure, I'll pass it a little bit, but suffice to say, you know, as a base of aggressive exploration budgets now with Mali, there's no point in going out and...
Speaker Change: doing more exploration drilling in the region if we hadn't reached an agreement with the government about going forward with that. So we're back to drilling there, Vic can talk about that, and Goose, we're going to come out with a new solution the next...
are
Speaker Change: Moving forward, there's certainly a full plan of exploration going into the back end of the year and then certainly next year as well. We see budgets
increased maybe slightly at Goose. The
Speaker Change: The big change is that we've had a very successful summer program.
Speaker Change: We've identified numerous targets, both on the Goose project itself and also in our large land package there. We've got five other projects, regional projects around there.
Speaker Change: where we've had some positive results and we will be drilling some of those next year. So there's definitely a switch or a pivot in the exploration.
Speaker Change: putting in quite a chunk of money on our regional projects up at Back River.
Speaker Change: So, that's full steam ahead for sure. In Mali, there's probably about the similar budget as we had this year, is the view for next year. The focus will be on...
Open Pitable, Higher Grade Sulphite Targets on the Focola Regional.
Speaker Change: and that's simply because, you know, we have a lot of our oxide resource at Focola Regional is pretty impressive already. What helps the mill down south at Focola itself is these high-grade sulfide resources.
and we have targets.
Speaker Change: to tackle next year, Taipan, Cobra and so on. So yeah, strong exploration commitment at both those projects next year.
for the National Endowment for Young People.
Speaker Change: You know people in terms of financing if you wanted to do a small flow through financing for Goose It's an obviously perfect candidate for that potentially so both of them extending the progress we have coming up and
Speaker Change: prepared to look at increasing those budgets, if appropriate, based on successful exploration results.
Speaker Change: Perfect. Thanks, Clive and Vicky. Just in terms of GOOSE, when we were there at site in September, you know, the infiltrate program on the GOOSE underground was going fairly well. You know, confidence level was definitely increasing significantly. Where do things stand right now? I mean, you know, in terms of just, you know, confidence going into this new resource update and then, you know, into the new mine plan coming up in Q1.
We're basically wrapping up the
for the modelling on
Speaker Change: on the resource work. The idea is that that will come out with our AIF next year, but the models themselves are being turned over to the engineers and I guess between now and the end of the year is
that will be incorporated in the planning.
What we can say is we have a
The info work that we've done has certainly improved our...
Speaker Change: geological understanding of the deposits, the geometry, the extents, and so on.
Speaker Change: and we have a much improved model. The trend is towards higher grades and lower tonnages, which is kind of what we expected when we acquired the project.
Speaker Change: perfect thanks for that color and that that's when we that's it for me guys thanks for taking my questions
Thanks so much.
Speaker Change: This concludes the question and answer session. I would like to turn the conference back over to Clive Johnson for any closing remarks.
Clive Johnson: We know you've had a busy day out there with a lot of companies reporting today, but thanks for taking the time to join the call. One final comment I'll make is...
Clive Johnson: You can continue to see us invest in junior companies looking to broaden our exploration exposure and that strategy will continue looking at new projects in our own right and exploration around the world.
Clive Johnson: around the world. I think that's a great strategy for the market today given the fact that junior exploration companies to spot a higher
a robust gold price.
Thank you for joining the call.
Speaker Change: The springs are closed to today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.
Speaker Change: Conductor Steve Shekke Self-Introduction Music Music Music Music Music Music Music