B2Gold Reports Positive Second Quarter & First-Half 2018 Results; Strong Growth in Gold Production/Revenues and Operating Cash Flows; Significant Beat Against Budget for Cash Operating Costs and AISC
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News Release
B2Gold Reports Positive Second Quarter & First-Half 2018 Results;
Strong Growth in Gold Production/Revenues and Operating Cash Flows;
Significant Beat Against Budget for Cash Operating Costs and AISC
Vancouver, August 7, 201 8 – B2Gold Corp. (TSX: BTO, NYSE AMERICAN: BTG, NSX: B2G )
(“B2Gold” or the “Company”) is pleased to announce its operational and financial results for the second
quarter and first -half 2018. The Company previously released its gold production and revenue s for the
second quarter of 201 8 (see news release dated 07/ 11/18). All dollar figures are in United States dollars
unless otherwise indicated.
2018 Second Quarter Highlights
• Record quarterly consolidated gold production of 2 40,093 ounces, a significant increase of 98%
(118,645 ounces) over the same period last year and 7% (16, 308 ounces) above budget , due to the
continued strong performances of the Fekola Mine in Mali, the Masbate Mine in the Philippines and
the Otjikoto Mine in Namibia
• Consolidated gold revenue of $285 million, a significant increase of 73% ($121 million) over the same
period last year
• Consolidated cash operating costs (see “Non-IFRS Measures”) of $474 per ounce, well below budget
by $86 per ounce (15%) and $157 per ounce (25%) lower than the prior-year quarter
• Consolidated all -in sustaining costs (“AISC”) (see “Non -IFRS Measures”) of $7 21 per ounce,
significantly below budget by $146 per ounce (17%) and $253 per ounce (26%) lower than the prior-
year quarter
• Consolidated cash flows from operating activities of $ 86 million ($0. 09 per share), significantly
increasing by $38 million (79%) from $48 million ($0.05 per share) in the prior-year quarter
• Net income of $21 million ($0.02 per share) and adjusted net income (see “Non-IFRS Measures”) of
$46 million ($0.05 per share)
• Fekola Mine continued to operate above plan, producing 112,644 ounces of gold in the quarter, 11%
(11,225 ounces) above budget, at cash operating costs of $318 per ounce and AISC of $445 per ounce
• Based on Fekola’s strong year-to-date performance, Fekola’s annual production guidance was revised
higher to be between 4 20,000 to 430,000 ounces of gold (original guidance was between 400,000 to
410,000 ounces)
• Masbate Mine continued its remarkable safety performance, extending the number of days without a
Lost-Time-Injury to 989 days at the end of the second quarter of 2018
• The 2018 Mali exploration budget has been increased by $4 million (from $15 million to $19 million),
based on good drill results to date, to accelerate the current Fekola North Extension zone drill program
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2018 First-Half Highlights
• Record consolidated first-half gold production of 479,777 ounces, 7% (32,560 ounces) above budget
and 89% (225,593 ounces) higher than the first-half of 2017
• Record consolidated first-half gold revenue of $ 629 million on record sales of 480,575 ounces at an
average price of $1,309 per ounce
• Consolidated cash operating costs of $477 per ounce, well below budget by $77 per ounce (14%) and
$119 per ounce (20%) lower than the first-half of 2017
• Consolidated AISC of $735 per ounce, significantly below budget by $147 per ounce (17%) and $194
per ounce (21%) lower than the first-half of 2017
• Consolidated cash flows from operating activities of $ 233 million ($0. 24 per share), significantly
increasing by $145 million (165%) from $88 million ($0.09 per share) in the first-half of 2017
• Net income of $79 million ($0.08 per share) and adjusted net income of $104 million ($0.11 per share)
• B2Gold is well on target to achieve transformational growth in 2018 and has revised its annual gold
production guidance higher to between 920,000 and 960,000 ounces (original guidance was between
910,000 and 950,000 ounces) in 2018 at cash operating costs of between $505 and $550 per ounce and
AISC of between $780 and $830 per ounce
2018 Second Quarter and First-Half Operational Results
With the new large low-cost Fekola Mine now in full production (after achieving commercial production
on November 30, 2017), consolidated gold production in the second quarter of 2018 was a quarterly record
of 240,093 ounces, a significant increase of 98% (118,645 ounces) over the same period last year and 7%
(16,308 ounces) above budget. In its second full-quarter of commercial operations, the new Fekola Mine
continued to operate above plan, producing 112,644 ounces of gold in the second quarter of 2018, 11%
(11,225 ounces) above budget. Based on Fekola’s strong year -to-date performance, the Company has
revised Fekola’s annual 2018 production guidance range higher to be between 420,000 to 430,000 ounces
of gold (original guidance range was between 400,000 to 410,000 ounces). The Masbate Mine and Otjikoto
Mine also had another solid quarter with both mines exceeding their targeted production levels for the
quarter.
Consolidated cash operating costs in the quarter were $474 per ounce, well below budget by $86 per ounce
(15%) and $157 per ounce (25%) lower than the prior-year quarter. This favourable budget variance was
mainly attributable to the higher than budgeted production at the Fekola and Masbate mines combined with
lower than budgeted production costs at these mines. Compared to the prior -year quarter, the significant
reduction in the consolidated cash operating costs was mainly attributable to the new low-cost production
from the Fekola Mine. Consolidated AISC were $721 per ounce, significantly below budget by $14 6 per
ounce (17%) and $253 per ounce (26%) lower than the prior-year quarter, mainly reflecting the lower cash
operating costs noted above. In addition, consolidated AISC were below budget due to lower than budgeted
corporate general and administrative costs (due to timing) and sustaining capital expenditures (see
Operations section below).
Consolidated gold production in the first -half of 201 8 was 479,777 ounces, 7% (32,560 ounces) above
budget and 89% (225,593 ounces) higher than the first-half of 2017.
For the first-half of 2018, consolidated cash operating costs were $477 per ounce, well below budget by
$77 per ounce (14%) and $119 per ounce (20%) lower than the first-half of 2017. Consolidated AISC were
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$735 per ounce, significantly below budget by $147 per ounce (17%) and $194 per ounce (21%) lower than
the first-half of 2017.
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 now forecast to
be between 9 20,000 and 9 60,000 ounces (revised higher from the original guidance range of between
910,000 and 950,000 ounces) . This represents an increase in annual consolidated gold production of
approximately 300,000 ounces in 2018 from 2017. The Company’s forecast consolidated cash operating
costs are expected to remain low in 2018 and be between $505 and $550 per ounce and AISC are expected
to decrease by approximately 6% from 2017 and be between $780 and $830 per ounce.
With the Fekola Mine in production, the resulting increase in production levels combined with low costs
are projected to dramatically increase B2Gold’s production, revenues, cash from operations and cash flow
for many years, based on current assumptions. As previously announced, o n average over the next three
years, beginning in 2018, assuming a gold price of $1,300 per ounce, the Company is projecting per annum
gold sales revenues of approximately $1.2 billion, cash flow from operations of approximately $0.5 billion
and a significant increase in free cash flow (operating cash flows less investing cash flows). If a gold price
assumption of $1,200 per ounce is used for the balance of 2018 and for 2019 and 2020 , the Company
expects to average cash flow from operations of approximately $0.4 billion per annum over the next three
years.
2018 Second Quarter and First-Half Financial Results
Consolidated gold revenue in the second quarter of 2018 was $285 million on sales of 220,738 ounces at
an average price of $1,290 per ounce compared to $164 million on sales of 131,737 ounces at an average
price of $1,247 per ounce in the second quarter of 2017. This significant increase in revenue of 73% ($121
million) was attributable to the new production from the Fekola Mine and a 3% increase in the average
realized gold price, partially offset by lower sales volumes due to the timing of gold sales from the Fekola
and Masbate mines.
Consolidated cash flows from operating activities in the quarter significantly increased by $38 million
(79%) to $86 million ($0.09 per share) from $48 million ($0.05 per share) in the prior-year quarter. The
significant increase in operating cash flows was driven by the record quarterly consolidated gold production
(as discussed above) combined with lower per ounce production costs. Cash flows from operating activities
in the second quarter of 2018 were negatively impacted by non-cash working capital changes of negative
$19 million (compared with negative $8 million in the second quarter of 2017 ). The main change in non -
cash working capital in the quarter related to a $20 million increase in inventory, mainly relating to higher
gold bullion balances at Fekola and Masbate due to the timing of sales (which are expected to reverse in
the third quarter of 2018) and to the purchase of supplies inventory for Fekola.
For the second quarter of 2018, the Company generated net income of $ 21 million ($0.0 2 per share)
compared to $ 19 million ($0.02 per share) in the second quarter of 2017. Adjusted net income was $ 46
million ($0.05 per share) compared to $13 million ($0.01 per share) in the prior-year quarter.
For the first-half of 2018, consolidated gold revenue was a record $629 million on record sales of 480,575
ounces at an average price of $1,309 per ounce compared to $311 million on sales of 251,674 ounces at an
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average price of $1,2 34 per ounce in the first -half of 2017. This significant increase in revenue of 103%
($318 million) was attributable to the new production from the Fekola Mine and a 7% increase in the
average realized gold price.
Consolidated gold revenue in the three and six months ended June 30, 2018 included $15 million and $30
million, respectively, related to the delivery of gold into the Company’s Prepaid Sales contracts (accounted
for as deferred revenue). During the three and six months ended June 30, 2018, 12,908 ounces and 25,816
ounces, respectively, were delivered under these contracts. At June 30, 2018, the Company had total
outstanding Prepaid Sales contracts of $60 million for the delivery of 51,099 ounces with 25,817 ounces to
be delivered during the remainder of 2018 and 25,282 ounces during 2019.
For the first-half of 2018, consolidated cash flows from operating activities significantly increased by $145
million (165%) to $233 million ($0.24 per share) from $88 million ($0.09 per share) in the first-half of
2017.
For the six months ended June 30, 201 8, the Company generated net income of $79 million ($0.08 per
share) compared to $15 million ($0.02 per share) in the comparable period of 2017. Adjusted net income
was $104 million ($0.11 per share) compared to $32 million ($0.03 per share) in the first-half of 2017.
Liquidity and Capital Resources
At June 30, 2018, the Company had cash and cash equivalents of $107 million compared to cash and cash
equivalents of $147 million at December 31, 2017. The Company had a working capital deficit at June 30,
2018 of $111 million compared to a working capital deficit of $99 million at December 31, 2017. The
working capital deficits resulted from the classification of the Company's convertible senior subordinated
notes to current liabilities since they are due on October 1, 2018. In 2016, the Company made a strategic
decision to fund the construction of the Fekola Mine without using equity to fund part of the construction
cost. Construction and pre-development of the Fekola Mine were funded using a combination of operating
cash flows from the Company's existing mines as well as available debt facility capacity including the
Company's revolving credit facility ("RCF") and Fekola equipment financing loans. In addition, the
Company entered into $120 million Prepaid Sales arrangements, the proceeds of which were used to help
fund Fekola construction costs in 2016. With the successful and earlier than anticipated ramp up of the
Fekola Mine in 2017, the Company has begun to reduce its overall consolidated debt levels, including
making $125 million of net repayments on its RCF in the first-half of 2018. The planned repayment of debt
in 2018 also includes the anticipated repayment of the Company's $259 million convertible notes which
mature on October 1, 2018, unless the notes are converted into shares prior to that date ( conversion price
of $3.93 per share). The Company projects that based on current assumptions, including a $1,200 per ounce
gold price for the remainder of 2018, that it will have sufficient liquidity from its 2018 operating cash flows
and existing credit facilities to repay the notes in full and maintain a strong cash position.
At June 30, 2018, the Company had $225 million outstanding under the $500 million RCF, leaving an
undrawn and available balance under the RCF of $275 million. Subsequent to June 30, 2018, the Company
repaid an additional $25 million of the RCF, leaving a current and undrawn available balance of $300
million under the facility.
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Operations
Mine-by-mine gold production in the second quarter and first-half of 2018 was as follows:
Mine Q2 2018
Gold Production
(ounces) (1)
First-Half 2018
Gold Production
(ounces) (1)
2018 Annual Guidance
Gold Production
(ounces) (1)
Fekola 112,644 226,786 420,000 - 430,000 (2)
Masbate 54,254 107,401 180,000 - 190,000
Otjikoto 40,678 80,177 160,000 - 170,000
La Libertad 21,408 40,775 110,000 - 115,000 (3)
El Limon 11,109 24,638 50,000 - 55,000 (3)
B2Gold Consolidated 240,093 479,777 920,000 - 960,000
(1) B2Gold’s Q2 2018 and first-half 2018 production results and 2018 annual production guidance are presented on a 100%
basis.
(2) Based on Fekola’s strong year-to-date performance, the Company has revised Fekola’s production guidance range higher
to be between 420,000 to 430,000 ounces of gold (original guidance range was between 400,000 to 410,00 ounces).
(3) Based on the restricted production in Nicaragua for the month of June, La Libertad is now forecast to produce between
110,000 and 115,000 ounces of gold (original guidance was between 115,000 to 120,000 ounces) and El Limon is now
forecast to produce between 50,000 and 55,000 ounces of gold (original guidance was between 55,000 to 60,000 ounces)
in 2018.
Mine-by-mine cash operating costs and AISC per ounce in the second quarter and first-half of 2018 were
as follows:
Mine Q2 2018
Cash Operating Costs
($ per ounce)
First-Half 2018
Cash Operating Costs
($ per ounce)
2018 Annual Guidance
Cash Operating Costs
($ per ounce)
Fekola $318 $293 $345 - $390
Masbate $531 $537 $675 - $720
Otjikoto $505 $536 $480 - $525
La Libertad $875 $945 $745 - $790
El Limon $893 $956 $700 - $750
B2Gold Consolidated $474 $477 $505 - $550
Mine Q2 2018
AISC
($ per ounce)
First-Half 2018
AISC
($ per ounce)
2018 Annual Guidance
AISC
($ per ounce)
Fekola $445 $466 $575 - $625
Masbate $727 $739 $875 - $925
Otjikoto $824 $792 $700 - $750
La Libertad $1,200 $1,262 $1,050 - $1,100
El Limon $1,614 $1,599 $1,135 - $1,185
B2Gold Consolidated $721 $735 $780 - $830
Fekola Gold Mine - Mali
In its second full-quarter of commercial operations (after achieving commercial production on November
30, 2017), the new Fekola Mine in Mali continued to outperform budget, running above plan on mill feed
grade, throughput and recoveries. This resulted in the Fekola Mine produc ing 112,644 ounces of gold in
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the second quarter of 2018, 11% (11,225 ounces) above budget. Mill feed grade, throughput and recoveries
were 2.77 grams per tonne (“g/t”) (compared to budget of 2.75 g/t), 1,330,038 tonnes (compared to budget
of 1,235,573 tonnes) and 95.3% (compared to budget of 9 2.7%), respectively. The mining fleet has also
performed well throughout the first-half of the year with total m ined tonnage nearly 20% above budget.
This added mining production allows for flexibility in developing the Fekola open-pit phases and managing
stockpiles. Current ore stockpiles, including both high and low-grade ore, contain approximately 3.9 million
tonnes averaging 2.0 g/t of gold. The low-grade ore stockpile is currently scheduled to be processed near
the end of the mine life. The Fekola Mine also continued its outstanding safety performance, achieving 785
days without a Lost-Time-Injury by the end of the second quarter.
Fekola’s second quarter cash operating costs were $318 per ounce, well below budget by $73 per ounce
(19%). This was mainly the result of lower than budgeted mining costs and the higher than budgeted
throughput in the processing plant (generating more ounces than budgeted). The lower than budgeted
mining costs are related in part to the zone that is being mined (near surface weathered rock in phase 4 of
the Fekola Pit). The higher processing t hroughput has been achieved over a variety of ore types and the
Company now believes that a minimum 10% increase (to 5.5 million tonnes per annum) is
sustainable. Additionally, as part of the current expansion study, the Company is currently conducting
grinding and debottlenecking studies to determine the maximum throughput the mill can achieve. It is
anticipated that these studies will be available by the end of 2018. The mill recoveries continue to remain
above design predictions (95.3% compared to a budg et of 92.7%) over a broad range of ore types. It is
expected that the recoveries will continue to be within the range of design (92.7%) and observed
(95.3%). Fekola’s AISC for the quarter were $445 per ounce, significantly below budget by $160 per ounce
(26%), mainly due to the lower cash operating costs noted above. In addition, Fekola’s AISC were below
budget due to lower than budgeted exploration costs, due to timing of expenses and to allow for the
increased exploration at the Fekola North Extension zone, which is a non -sustaining capital
expenditure.
For the first-half of 2018, the Fekola Mine produced 226,786 ounces of gold, above budget by 11% (22,453
ounces). To date (since the commencement of ore processing began in September 2017 to June 30, 2018),
gold production from the Fekola Mine totaled 338,236 ounces (including 79,243 ounces of pre-commercial
production).
Fekola’s cash costs were significantly below budget for the first-half of the year with cash operating costs
of $293 per ounce, $71 per ounce (20%) below budget, and AISC of $466 per ounce, $138 per ounce (23%)
below budget.
Capital expenditures in the second quarter of 2018 totaled $15 million , mainly consisting of $4 million in
construction carryover for the completion of the powerhouse and other projects, $3 million for Fadougou
Village relocation costs, $3 million for pre -stripping of phases 3 and 4 of the Fekola Pit, $2 million for
mobile equipment purchases and $2 million for the construction of stages 2 and 3 of the tailings storage
facility (with capacity through 2021). Capital expenditures in the first -half of 2018 totaled $36 million ,
mainly consisting of $11 million in construction carryover for the completion of the powerhouse and other
projects, $10 million for pre-stripping, $6 million for the construction of stages 2 and 3 of the tailings
storage facility, $4 million for Fadougou Village relocation costs and $3 million for mobile equipment
purchases.
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Based on Fekola’s strong year-to-date performance, the Company has revised Fekola’s production guidance
range higher to be b etween 420,000 to 430,000 ounces of gold (original guidance range was between
400,000 to 410,000 ounces), at cash operating costs of between $345 and $390 per ounce and AISC between
$575 and $625 per ounce.
As recently announced (see news release dated 6/28/2018) , the 2018 Mali exploration budget has been
increased by $4 million (from $15 million to $19 million) to accelerate the current Fekola North Extension
zone drill program, which is extending and infilling mineral resources to the north of the main Fekola
deposit. The Company is increasing the number of diamond drills from the current six rigs to eight rigs, as
well as one reverse circulation rig and one aircore rig. Exploration drilling of the Fekola North Extension
has now extended gold mineralization over one kilometre north of the Fekola reserve pit boundary. The
drilling to date has indicated that the high -grade mineralized shoot in the Fekola reserve deposit not only
continues to be well -mineralized over one kilometre to the north, but the shoot has now been intersected
higher up, closer to surface than originally projected in the Fekola North Extension zone. These results and
previous drill results indicate that the potential exists, subject to further drilling, to significantly increase
open-pit resources and reserves, north of the current Fekola open-pit reserve. The Fekola North Extension
remains open to the north. Due to the increasing size of the mineralized area, B2Gold now intends to release
a new mineral resource for the Fekola deposit including a portion of the Fekola North Extension early in
the fourth quarter of 2018.
In addition, based on the positive exploration results to date, the Company’s in -house technical team is
conducting engineering and other technical studies to ascertain the potential to expand the current Fekola
Mine and mill facilities, and increase tonnage throughput beyond its current 5.5 million tonnes per annum
rate, thereby increasing annual gold production, if, as expected, a larger open-pit resource is confirmed by
the current exploration and in-fill drilling. Results of these studies are projected to be available by year-end
2018.
Masbate Gold Mine - Philippines
The Masbate Mine in the Philippines continued its strong operational performance through the second
quarter of 2018 , producing 54,254 ounces of gold, 25% ( 10,940 ounces) above budget and 9% ( 4,324
ounces) higher compared to the prior-year quarter. Gold production was significantly above budget largely
due to mining unexpected ore tonnage from backfilled areas in the lower levels of the Colorado Pit (that
had historically been mined using underground methods and not included in the Masbate open-pit mine
plan). Th is backfilled material is distinct from the in -situ ore , having higher than budgeted grade and
recoveries. The Masbate Mine also continued its remarkable safety performance, extending the number of
days without a Lost-Time-Injury to 989 days at the end of the second quarter of 2018.
For the quarter, m ill throughput was 1,686,716 tonnes (compared to budget of 1,664,828 tonnes and
1,824,714 tonnes in the second quarter of 2017) and gold recoveries averaged 77.3% (compared to budget
of 70.0% and 75.9% in the second quarter of 2017). The average grade processed was 1.29 g/t compared to
budget of 1.16 g/t and 1.12 g/t in the second quarter of 2017. Oxide ore represented 59% of the processed
tonnage for the quarter versus a budget of 58%.
Masbate’s second quarter cash operating costs were $531 per ounce, significantly below budget by $199
per ounce (27%) and comparable with the pri or-year quarter. Cash operating costs were below budget
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mainly due to the higher than expected production, combined with lower than budgeted mining costs (with
cost savings in drilling, blasting and grade control ) and a favourable (to budget) deferred stripping cost
adjustment. Masbate’s AISC for the quarter were $727 per ounce, significantly below budget by $270 per
ounce (27%) which mainly reflects the lower cash operating costs noted above and were also $ 142 per
ounce (16%) lower compared to the second quarter of 2017.
Year-to-date, gold production at the Masbate Mine was 107,401 ounces of gold, significantly above budget
by 19% (16,794 ounces) and 5% (4,909 ounces) higher than the first -half of 2017. The above budgeted
production was mainly due to the combination of higher than expected oxide ore tonnage (from Vein 5 of
the Colorado Pit) in the first quarter followed by unexpected backfilled ore (from the lower levels of the
Colorado Pit), having higher grade and better recovery than the in-situ ore in the second quarter. Oxide ore
represented 69% of the processed tonnage in the first-half of the year versus a budget of 54%.
Masbate’s cash costs remained significantly below budget in the first -half of the year with cash operating
costs of $537 per ounce (YTD 2017 - $520 per ounce), $174 per ounce (24%) below budget, and AISC of
$739 per ounce (YTD 2017 - $838 per ounce), $202 per ounce (21%) below budget.
Capital expenditures in the second quarter of 201 8 totaled $1 0 million, mainly including Masbate
processing plant upgrade costs of $3 million, mobile equipment purchases and rebuilds of $2 million, $1
million for the tailings storage facility and pre -stripping costs of $1 million. For the first -half of 201 8,
capital expenditures totaled $21 million, mainly including Masbate processing plant upgrade costs of $7
million, mobile equipment acquisition costs and rebuilds of $ 4 million, pre-stripping costs of $3 million
and $2 million for the tailings storage facility.
Based on Masbate’s stron g year -to-date performance, the Company now expects full -year Masbate
production to be at or above the top end of its original annual production guidance range of between 180,000
and 190,000 ounces of gold (at cash operating costs of between $675 and $720 per ounce and AISC of
between $875 and $925 per ounce).
The Masbate expansion project for the upgrade of the processing plant to 8 million tonnes per year (from
6.5 million tonnes per year) remains on track for completion in early 2019. The upgrade, which is being
conducted by B2Gold’s in -house team, primarily consists of adding a third ball mill and upgrading the
existing crushing circuit. The ball mill is currently onsite and preliminary works including construction of
the mill pli nths, steel fabric ation and ordering equipment and materials are well advanced. When the
expansion is online, it is projected to keep Masbate's annual gold production near 200,000 ounces per year
during the mining phase and is expected to keep gold production above 100,000 ounces per year when the
low-grade stockpiles are processed at the end of the open-pit mine life.
On July 3, 2018, the Department of Environment and Natural Resources ("DENR") Secretary, Roy Cimatu,
lifted the Ban on accepting, processing and approving applications for Exploration Permits that was put in
place by former Secretary, Gina Lopez, with DAO No. 2016-01. The text refers to attracting foreign direct
investment to the Philippines, “in -line with the President’s Economic Agenda .” The Company views th is
as a significant step towards normalizing the process for permitting new mining development in the country.