B2Gold Corp. Reports Positive Third Quarter 2018 Results; Quarterly Operating Cash Flows Increase by $101 M (240%) to $143 M on Record Gold Production and Significantly Reduced All-In Sustaining Costs
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News Release
B2Gold Corp. Reports Positive Third Quarter 2018 Results;
Quarterly Operating Cash Flows Increase by $101 M (240%) to $143 M
on Record Gold Production and Significantly Reduced All-In Sustaining Costs
Vancouver, November 6, 2018 – B2Gold Corp. (TSX: BTO, NYSE AMERICAN: BTG, NSX: B2G )
(“B2Gold” or the “Company”) is pleased to announce its operational and financial results for the three and
nine months ended September 30, 2018. The Company previously released its gold production and gold
revenue results for the third quarter and first nine months of 2018 (see news release dated 10/11/2018). All
dollar figures are in United States dollars unless otherwise indicated.
2018 Third Quarter Highlights
• Record quarterly consolidated gold production of 2 42,040 ounces, a significant increase of 78%
(106,412 ounces) over the same period last year and in-line with budget, due to the continued strong
performances of the Fekola Mine in Mali, Masbate Mine in the Philippines and the Otjikoto Mine in
Namibia
• Consolidated gold revenue of $324 million, a significant increase of 110% ($170 million) over the same
period last year
• Consolidated cash operating costs (see “Non-IFRS Measures”) of $504 per ounce, in-line with budget
and $59 per ounce (10%) lower than the prior-year quarter
• Consolidated all-in sustaining costs (“AISC”) (see “Non-IFRS Measures”) of $749 per ounce, in-line
with budget and significantly lower by $172 per ounce (19%) than the prior-year quarter
• Consolidated cash flows from operating activities of $ 143 million ($0. 14 per share), signi ficantly
increasing by $101 million (240%) from $42 million ($0.04 per share) in the prior-year quarter
• Net income of $16 million ($0.01 per share) and adjusted net income (see “Non-IFRS Measures”) of
$45 million ($0.05 per share)
• Fekola Mine continued to operate above plan, producing 107,002 ounces of gold in the quarter
• Masbate Mine’s guidance revised favourably; for full-year 2018, the Masbate Mine is now forecast to
produce between 200,000 to 210,000 ounces of gold (original guidance was between 180 ,000 to
190,000 ounces)
• Subsequent to the third quarter, the Company repaid in full its $259 million aggregate principal amount
of convertible senior subordinated notes which matured on October 1, 2018
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• In October 2018, subsequent to the third quarter, the Company was granted the mine permit for the
Limon Central Pit in Nicaragua and announced positive results from the Expansion Study at El Limon
Mine and that a renewed collective agreement had been signed with El Limon labour unions
• On October 25, 2018, subsequent to the third quarter, the Company a nnounced a substantial increase
in the gold mineral resource estimate for the Fekola Mine and positive results from the ongoing Fekola
Mill Expansion Study
2018 First Nine Months Highlights
• Record consolidated year-to-date gold production of 721,817 ounces, 5% (3 1,888 ounces) above
original budget and 85% (332,005 ounces) higher than the first nine months of 2017
• Record consolidated year-to-date gold revenue of $953 million on record year-to-date sales of 749,102
ounces at an average price of $1,272 per ounce
• Consolidated cash operating costs of $4 86 per ounce, well below budget by $ 51 per ounce (9%) and
$99 per ounce (17%) lower than the first nine months of 2017
• Consolidated AISC of $740 per ounce, well below budget by $97 per ounce (12%) and $187 per ounce
(20%) lower than the first nine months of 2017
• Consolidated cash flows from operating activities of $ 377 million ($0. 38 per share), significantly
increasing by $248 million (192%) from $129 million ($0.13 per share) in the first nine months of 2017
• Net income of $95 million ($0.09 per share) and adjusted net income of $149 million ($0.15 per share)
• B2Gold is well on target to achieve transformational growth in 2018 and expects to meet the upper end
of its revised 2018 gold production guidance range of between 920,000 and 960,000 ounces (original
guidance was between 910,000 and 950,000 ounces) and also expects to meet the lower end of its 2018
cost guidance ranges for cash operating costs of between $505 and $550 per ounce and AISC of between
$780 and $830 per ounce
2018 Third Quarter and First Nine Months Operational Results
With the new large, low -cost Fekola Mine in Mali in its first full -year of production (after achieving
commercial production on November 30, 2017), consolidated gold production in the third quarter of 2018
was a quarterly record of 242,040 ounces, a significant increase of 78% (106,412 ounces) over the same
period last year and in-line with budget. In its third full-quarter of commercial operations, the new Fekola
Mine continued to operate above plan, producing 107,002 ounces of gold, 2% (1,583 ounces) above original
budget. In addition, t he Masbate Mine in the Philippines produced 57,542 ounces of gold , the second
highest quarterly production ever for the mine, which was 29% (12,845 ounces) above budget and 24%
(10,985 ounces) higher than the third quarter of 2017. Based on Masbate’s strong year-to-date performance,
Masbate’s 2018 guidance was favourably revised in the third quarter. For full-year 2018, the Masbate Mine
is now forecast to produce b etween 200,000 to 210,000 ounces of gold ( original guidance was between
180,000 to 190,000 ounces) at cash operating costs of between $545 to $595 per ounce (original guidance
was between $675 to $720 per ounce) and AISC of between $780 to $830 per ounce (original guidance was
between $875 to $925 per ounce). The Otjikoto Mine in Namibia also had another solid quarter and
exceeded its targeted production level. The strong operational performances by the Fekola, Masbate and
Otjikoto mines offset the production shortfalls relating to the Company’s La Libertad and El Limon mines
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in Nicaragua whose operations continued to be affected by the current national political unrest in that
country. In light of La Libertad’s underperformance, for the full -year 201 8, La Libertad Mine is now
forecast to produce between 90,000 to 95,000 ounces of gold (original guidance was between 115,000 to
120,000 ounces) at cash operating costs of between $855 to $905 per ounce (original guidance was between
$745 to $790 per ounce) and AISC of between $1,160 to $1,210 per ounce (original guidance was between
$1,050 to $1,100 per ounce).
Consolidated cash operating costs in the quarter were $504 per ounce, in-line with budget and $59 per
ounce (10%) lower than the prior-year quarter. Consolidated AISC were $749 per ounce, also in-line with
budget and significantly lower by $172 per ounce (19%) than the prior-year quarter, mainly attributable to
the new low-cost production from the Fekola Mine.
Consolidated gold production in the first nine months of 2018 was a year-to-date record of 721,817 ounces,
5% (31,888 ounces) above original budget and 85% (332,005 ounces) higher than the first nine months of
2017.
Year-to-date, consolidated cash operating costs were $486 per ounce, well below budget by $51 per ounce
(9%) and $99 per ounce (17%) lower than the comparable period in 2017. Consolidated AISC were $740
per ounce, well below budget by $97 per ounce (12%) and $187 per ounce (20%) lower than the first nine
months of 2017.
As outlined above, B2Gold remains well on target to achieve transformational growth in 2018. For full -
year 2018, with the planned first full -year of production from the Fekola Mine, consolidated gold
production is forecast to be at the upper end of the Company’s guidance range of between 920,000 and
960,000 ounces . This represents an increase in annual consolidated gold production of approximately
300,000 ounces in 2018 from 2017. The Company also expects to meet the lower end of its 2018 cost
guidance ranges for cash operating costs of between $505 and $550 per ounce and AISC of between $780
and $830 per ounce.
With the Fekola Mine in production, the resulting increase in gold production levels combined with low
costs have dramatically increased B2Gold’s production, revenues, cash from operations and free cash flows
with ongoing benefits expected to continue for many years, based on current assumptions. If a gold price
assumption of $1,200 per ounce is used for the balance of 2018, the Company expects to generate cash flow
from operations of approximately $450 million for the year.
2018 Third Quarter and First Nine Months Financial Results
Consolidated gold revenue in the third quarter of 2018 was $ 324 million on record quarterly sales of
268,527 ounces at an average price of $1,2 06 per ounce compared to $1 54 million on sales of 1 21,597
ounces at an average price of $1,2 67 per ounce in the third quarter of 2017. This significant increase in
revenue of 110% ($170 million) was mainly attributable to the higher gold production and timing of gold
sales, relating to the sale of opening gold bullion and in-circuit inventories at the beginning of the quarter.
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Consolidated cash flows from operating activities in the third quarter of 2018 increased by $101 million
(240%) to $14 3 million ($0.14 per share) from $ 42 million ($0.04 per share) in the prior -year quarter,
reflecting the strong increase in revenue (as discussed above) combined with lower per ounce production
costs.
For the third quarter of 2018, the Company generated net income of $16 million ($0.01 per share) compared
to a net income of $12 million ($0.01 per share) in the third quarter of 2017. Adjusted net income for the
third quarter of 2018 was $45 million ($0.05 per share) compared to adjusted net income of $14 million
($0.01 per share) in the third quarter of 2017.
For the first nine months of 2018, consolidated gold revenue was a year-to-date record of $953 million on
record year-to-date sales of 749,102 ounces at an average price of $1, 272 per ounce compared to $ 465
million on sales of 373,271 ounces at an average price of $1,245 per ounce in the first nine months of 2017.
This significant increase in revenue of 10 5% ($488 million) was mainly attributable to the higher gold
production and timing of gold sales, relating to the sale of opening gold bullion and in-circuit inventories
at the beginning of the year.
Year-to-date, consolidated c ash flow s from operating activities significantly increased by $24 8 million
(192%) to $377 million ($0.38 per share) from $129 million ($0.13 per share) in the first nine months of
2017.
For the first nine months of 2018, the Company generated net income of $95 million ($0.09 per share)
compared to a net income of $27 million ($0.03 per share) in the first nine months of 2017. Adjusted net
income for the nine months ended September 30, 201 8 was $149 million ($0.15 per share) compared to
adjusted net income of $46 million ($0.05 per share) in the comparable period of 2017.
Liquidity and Capital Resources
At September 30, 2018, the Company had cash and cash equivalents of $355 million compared to cash and
cash equivalents of $147 million at December 31, 2017. Working capital at September 30, 2018 was $132
million compared to a working capital deficit of $99 million at December 31, 2017. In anticipation of
repayment of the Company's converti ble senior subordinated notes (the "Notes") on October 1, 2018, the
Company made a drawdown of $200 million on its revolving credit facility (“RCF”) which was included
in working capital at September 30, 2018. Subsequent to September 30, 2018, the Company repaid in full
its $259 million aggregate principal amount of Notes (plus accrued interest) which matured on October 1,
2018. The repayment of all outstanding principal and accrued interest under the Notes amounted to
approximately $263 million. The workin g capital deficit at December 31, 2017 resulted from the
classification of the Company's convertible senior subordinated notes to current liabilities since they were
due on October 1, 2018. Repayment of the Notes reflects the ongoing second phase of B2Gold ’s strategy
to fund construction of the Fekola Mine in Mali without using equity financing. The Company funded
construction of Fekola using a combination of operating cashflows from existing mines, debt facilities and
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prepaid gold contract sales. Following the successful achievement of commercial production at the Fekola
Mine in late 2017, the Company has been reducing its total debt outstanding throughout the course of 2018.
The Company started 2018 with total debt outstanding of approximately $700 million (comprised of the
drawn portion of the RCF, convertible notes and equipment loans and leases). The Company expects to
have reduced its total debt outstanding to approximately $500 million by December 31, 2018, a reduction
of $200 million for the year.
At September 30, 2018, the Company had drawn $400 million under the $500 million RCF, leaving an
undrawn and available balance under the existing facility of $100 million.
Operations
Mine-by-mine gold production in the third quarter and first nine months of 2018 was as follows:
Mine Q3 2018
Gold
Production
(ounces) (1)
YTD 2018
Gold
Production
(ounces) (1)
Revised
Annual Guidance
Gold Production
(ounces) (1)
Original
Annual Guidance
Gold Production
(ounces) (1)
Fekola 107,002 333,788 420,000 - 430,000 400,000 - 410,000
Masbate 57,542 164,943 200,000 - 210,000 180,000 - 190,000
Otjikoto 42,403 122,580 160,000 - 170,000 160,000 - 170,000
La Libertad 21,995 62,770 90,000 - 95,000 115,000 - 120,000
El Limon 13,098 37,736 50,000 - 55,000 55,000 - 60,000
B2Gold
Consolidated 242,040 721,817 920,000 - 960,000 910,000 - 950,000
(1) B2Gold’s Q3 2018 and year-to-date 2018 production results and its revised 2018 annual production guidance reflect the
total production at the mines B2Gold operates.
Mine-by-mine cash operating costs and AISC per ounce in the third quarter and first nine months of 2018
were as follows:
Mine Q3 2018
Cash Operating
Costs
($ per ounce) (2)
YTD 2018
Cash Operating
Costs
($ per ounce) (2)
Revised
Annual Guidance
Cash Operating
Costs
($ per ounce) (2)
Original
Annual Guidance
Cash Operating
Costs
($ per ounce) (2)
Fekola $383 $321 $345 - $390 $345 - $390
Masbate $528 $534 $545 - $595 $675 - $720
Otjikoto $470 $514 $480 - $525 $480 - $525
La Libertad $871 $919 $855 - $905 $745 - $790
El Limon $875 $928 $850 - $900 $700 - $750
B2Gold
Consolidated $504 $486 $505 - $550 $505 - $550
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(2) B2Gold’s Q3 2018 and year -to-date 2018 cash operating costs and its revised 2018 annual cost guidance for cash
operating costs are based on the total production at the mines B2Gold operates.
Mine Q3 2018
AISC
($ per ounce) (3)
YTD 2018
AISC
($ per ounce) (3)
Revised
Annual Guidance
AISC
($ per ounce) (3)
Original
Annual Guidance
AISC
($ per ounce) (3)
Fekola $607 $511 $575 - $625 $575 - $625
Masbate $675 $717 $780 - $830 $875 - $925
Otjikoto $662 $747 $700 - $750 $700 - $750
La Libertad $1,036 $1,183 $1,160 - $1,210 $1,050 - $1,100
El Limon $1,315 $1,500 $1,385 - $1,435 $1,135 - $1,185
B2Gold
Consolidated $749 $740 $780 - $830 $780 - $830
(3) B2Gold’s Q3 2018 and year -to-date 2018 AISC and its revised 2018 annual cost guidance for AISC are based on the
total production at the mines B2Gold operates.
Fekola Gold Mine - Mali
The Fekola Mine in Mali continued to outperform budget in its third full-quarter of commercial operations
(after achieving commercial production on November 30, 2017), running above plan on mill throughput
and recoveries. This resulted in the Fekola Mine producing 107,002 ounces of gold in the third quarter of
2018, 2% (1,583 ounces) above original budget. Mill throughput and recoveries were 1, 403,992 tonnes
(compared to budget of 1, 278,473 tonnes) and 94.7% (compared to budget of 9 2.7%), respectively. It is
expected that the recoveries will continue to be within the range of design (92.7%) and observed (95%)
recoveries. The average grade processed was 2.50 grams per tonne (“g/t”), below budget of 2.77 g/t as the
additional tonnage processed consisted of medium and low-grade ore. The block model continues to
perform as expected compared to actual mined grade and tonnage.
Fekola’s third quarter cash operating costs were $383 per ounce, above budget by $34 per ounce (10%) but
remained well below budget year-to-date. This third quarter variance was mainly attributable to higher fuel
costs and slightly higher than budgeted processing throughput. Diesel prices were 18% higher than budget
and fuel oil prices were 13% above budget, increasing cash operating costs by approximately $15 per ounce.
On the processing side, the Fekola Mine is now running consistently at an annualized throughput of over
5.5 million tonnes per annum ("Mtpa"), 10% higher than name plate and budget . A decision was made to
feed this additional throughput using medium and low-grade ore stockpiles which had two benefits. Firstly,
it allowed Fekola to increase its overall production levels (without utilizing high-grade stockpiles which
are scheduled for pr ocessing in 2019). Secondly, it allowed the Company to complete a limited medium
and low-grade ore campaign to confirm that the Fekola mill recoveries continue to remain above design
predictions over a broad range of ore types. Overall, the additional proc essed tonnage during the third
quarter increased cash operating costs by approximately $10 per ounce. Slightly higher than budgeted
processing costs per ounce were partially offset by lower than budgeted mining costs, resulting in part from
mining in a zone consisting of near surface weathered rock in phase 4 of the Fekola Pit, therefore lowering
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the operational and maintenance costs of the mining equipment. Fekola’s AISC for the quarter were $607
per ounce, above budget by $42 per ounce (7%), mainly reflecting the higher than budgeted cash operating
costs, but also remained well below budget year -to-date. Included in Fekola’s AISC were the Company’s
gains on fuel derivatives of $9 per ounce which partially offset the higher than budgeted cash operating
costs.
Year-to-date, the Fekola Mine produced 333,788 ounces of gold, above original budget by 8% (24,036
ounces). To-date (since the commencement of ore processing began in September 2017 to September 30,
2018), gold production from the Fekola Mine totaled 445,238 ounces (including 79,243 ounces of pre -
commercial production).
Fekola’s per ounce cash costs remained well below budget in the first nine months of the year with cash
operating costs of $321 per ounce, $38 per ounce (11%) below budget, and AISC of $511 per ounce, $79
per ounce (13%) below budget. Cost savings were largely driven by lower than budgeted mining costs and
higher than budgeted gold production, partially offset by higher fuel costs.
Capital expenditures in the third quarter of 2 018 totaled $17 million , mainly consisting of $5 million for
pre-stripping, $5 million for mobile equipment purchases and rebuilds and $3 million for Fadougou Village
relocation costs. Year-to-date, capital expenditures totaled $54 million , mainly consisting of $14 million
for pre-stripping, $12 million in construction carryover for the completion of the powerhouse and other
projects, $8 million for Fadougou Village relocation costs, $6 million for the construction of stages 2 and
3 of the tailings storage facility and $8 million for mobile equipment purchases and rebuilds.
For full-year 2018, Fekola’s gold production continues to outperform and is on track to be at or above its
revised production guidance range of between 420,000 to 430,000 ounces of gold (original guidance was
400,000 to 410,000 ounces). Fekola’s cash operating costs are expected to be at the low end of its guidance
range of between $345 and $390 per ounce and AISC are expected to be at or below the low -end of its
guidance range of between $575 and $625 per ounce.
On August 8, 2018, the Company was informed that the Malian Council of Ministers approved the
participation of the State in Fekola SA for a total of 20% (being the 10% free carried interest plus the
additional 10% int erest), through an ordinance and a decree of the Council of Ministers, signed by the
President. Now that the State of Mali’s interest in Fekola SA has been formally authorized by the Malian
authorities, the Company has transferred ownership of 20% of Fekola SA to the State of Mali.
Masbate Gold Mine - Philippines
The Masbate Mine in the Philippines also continued its very strong operational performance through the
third quarter of 2018, producing 57,542 ounces of gold (the second highest quarterly pr oduction ever for
the mine), 2 9% (12,845 ounces) above budget and 24% (10,985 ounces) higher than the third quarter of
2017. Gold production was significantly higher than forecast as mill throughput, recoveries and grade all
exceeded budget. This resulted mainly from higher than expected oxide ore tonnage and grade from the
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Colorado Pit. Oxide ore represented 49% of the processed tonnage for the quarter versus budget of 29%.
The Colorado Pit was completely mined out on August 19 (2 months earlier than budgeted, as mining from
the Colorado Pit had been accelerated to complete mining prior to the rainy season). However, Masbate
maintains an ore feed stockpile from the Colorado Pit that will be used to blend with the material from the
Main Vein and Mon tana South Pits through the end of 2018. The Masbate Mine also continued its
outstanding safety performance, achieving almost three years (1,083 days) without a Lost-Time-Injury by
quarter-end.
For the third quarter 2018, mill throughput and recoveries were 1,762,124 tonnes (compared to budget of
1,684,233 tonnes and 1, 704,723 tonnes in the third quarter of 2017) and 73.0% (compared to budget of
64.8% and 7 7.4% in the third quarter of 2017) , respectively. The average grade processed was 1. 39 g/t
compared to budget of 1.28 g/t and 1.10 g/t in the third quarter of 2017.
Masbate’s third quarter cash operating costs were $528 per ounce, significantly below budget by $179 per
ounce (25%) and $13 per ounce (2%) lower than the prior-year quarter. Cash operating costs were below
budget mainly due to the higher than expected production. Masbate’s AISC for the quarter were $675 per
ounce, significantly below budget by $2 32 per ounce (2 6%) and were also $42 per ounce (6%) lower
compared to the third quarter of 2017.
Year-to-date, gold production at the Masbate Mine was 164,943 ounces of gold, significantly above budget
by 22% (29,639 ounces) and 11% (15,894 ounces) higher than the first nine months of 2017.
Masbate’s cash costs remained significantly below budget in the first nine months of the year with cash
operating costs of $534 per ounce (year-to-date 2017 - $527 per ounce), $176 per ounce (2 5%) below
budget, and AISC of $717 per ounce (year-to-date 2017 - $800 per ounce), $213 per ounce (23%) below
budget.
Capital expenditures in the third quarter of 2018 totaled $12 million, mainly including Masbate processing
plant upgrade costs of $6 million, mobile equipment purchases and rebuilds of $1 million, and pre-stripping
costs of $1 million. For the first nine months of 2018, capital expenditures totaled $33 million, mainly
including Masbate processing plant upgrade costs of $13 million, mobile equipment acquisition costs and
rebuilds of $5 million, pre-stripping costs of $4 million and $2 million for the tailings storage facility.
Based on Masbate’s strong year-to-date performance, Masbate’s 2018 guidance was favourably revised in
the third quarter . For full -year 2018, the Masbate Mine is now forecast to produce between 200,000 to
210,000 ounces of gold (original guidance was between 180,000 to 190,000 ounces) at cash operating costs
of between $545 to $595 per ounce (original guidance was between $675 to $720 per ounce) and AISC of
between $780 to $830 per ounce (original guidance was between $875 to $925 per ounce).