B2Gold Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
May 10, 2023

There are 12 speakers on the call.

Operator

Good day and thank you for standing by. Welcome to the B2Gold First Quarter 2023 Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Clive Johnson, President, CEO and Director.

Operator

Please go ahead.

Speaker 1

Good morning, afternoon, wherever you are, everyone, and thanks for joining us. We're here today, of course, to talk about the B2Gold Q1 2023 operational and financial results. We had another Strong quarter of operating performance, which led to some very positive financial results. Mike Cinnamon, Our CFO is going to walk you through that. And then Bill Lytle, our COO is going to update us on the Back when we project the status of that, and I talked a bit about the Fekola complex expansion Projects looking on them that can our CNGB do exploration.

Speaker 1

We'll talk to us a little bit about exploration plans For Bakker River, we've just approved the large exploration budget and he'll also update And then we'll open up for questions after that. So with that, I'll hand it over

Speaker 2

Thanks Clive. So I'll walk you through the operating results first and the cash flows. On the revenue side, we sold 4,000 ounces more than we'd budgeted, so a total of 249,000 ounces from our operating mines. And good news is we had an average price of just over $1900 for the Q. When we budgeted, we had $1700 so we're very happy to see that $200 plus an ounce and obviously gold prices continue to increase as you know to today.

Speaker 2

On our production side, from all the operations including our Sherical caliber 267,000 ounces And from our 3 operating mines, 251,000 ounces, both of which were 5,000 ounces ahead of budget. And most of the 5,000 ounces are spread pretty evenly across the three operations. So Fekola had 166,000 ounces. Production was higher. We expected it to be higher because we had that favorable Higher grade material coming from Phase 6 of the Fekola pit and the grade was 2.47 grams per ton, which is Right on budget.

Speaker 2

Then Ms. Batty, Ms. Batty was pretty much as planned. The grade this year is lower than it was in the Parable quarter last year as we know is the peak rate was 0.95 grams per ton. And in Otjikoto, 38,000 ounces, slightly ahead of budget.

Speaker 2

Again, we expected we were in some of the higher grade portions of Wolfshag underground mine. But reminder too for Oj As we look through the balance of the year, it's more weighted to the second half of the year as we get into more higher grade material in Phase 4 of the Ojogohuit plus continued high grade ore from Wolfshag. But overall, good results production pretty much on target, slightly ahead of budget.

Speaker 3

Cash costs,

Speaker 2

we actually did consider to be better than budget. So from all on a consolidated basis from all operations, total cash costs were $600 an ounce, which is $85 ahead of budget and if we take our 3 operating mines, dollars 5.76 an ounce, which was $88 lower than budget. And so looking at the individual operations for Kola, There were 2 main reasons why it was significantly, it was $60 lower than budget. One was that we mined less material in the period due to some of the tighter working Conditions in Phase 6, including only having one ramp available for haulage, which has now been resolved in April of this year. And then we also had lower fuel costs.

Speaker 2

The mining tonnage shortfall is expected to be caught up over the balance of 2023. On Medbanti, again, we were $176 an ounce below budgets. That was a function of slightly higher than budget gold production Quite significantly lower than budgeted diesel and heavy fuel oil costs. We haven't revisited any of the lower fuel costs The balance of the year, we've assumed that it will stay where we budgeted it at, but certainly current indicators are definitely the prices have dropped a bit. And While the forward curve is a forward curve and not in backwardation anymore for fuel, it's pretty flat.

Speaker 2

So we may see some benefit As we roll through the balance of the year in the cost side. The all in sustaining costs, total all in including our share caliber $10.60 which was $146 lower than budget and same story from our 3 standalone operating mines. And It's really a function of the lower cash operating costs as I mentioned. And then timing of CapEx, We've seen CapEx for Q1 was below budgets. Sustaining CapEx was about $10,000,000 below what we budgeted just for the timing of things like the completion of the TSF And then some of the other fleet equipment rebuilds.

Speaker 2

That's just timing. We expect to see all of that reverse as we go through the balance of the year. A few comments maybe on the operations of the building. Bill is going to talk to the Fekola complex Generally, but we are continuing with Fekola Regional Development through the period. And as we announced in our news release, We're now because we've done so much drilling on that Fekola Regional area since we did the original Anaconda area, Resources that we wanted to take those results and put them into a new resource for Anaconda.

Speaker 2

So that resource could take a bit longer to produce with the result The Fekola Regional Phase 2 mill study is now expected in the Q4 of 2023. On the Ojikoto side, we continue to develop Wolfshag Underground. We continue to explore Your geocoto pit itself is scheduled to ramp down in 'twenty four and wind up in 2025 based on our current plans, Let me disclose that. On the Gramalote project, that as announced, we have we are undertaking a joint sales process with our partner That process is moving along. It seems to be good interest in Phase 1.

Speaker 2

We're still in Phase 1 of the process. We expect to wrap that part up within probably the next 2 months, month to 2 months with a goal that we'll wrap up this whole process before year end. And on Sabina, I think Bill is going to give an update, but we have some disclosures in there about the acquisition of Sabina. We haven't put in the purchase Allocation here, we'll do that in Q2 when we publish our results. Bill is going to talk about currently what we're doing there.

Speaker 2

But one thing I will mention is that Subsequent to the completion of the transaction, we did revisit a fair amount of the Financing obligations that the financing plan that Sabina had put in place. And so we bought out the offtake agreement, All the 100 percent of it, so that's gone. We've also canceled that facility that they had and the gold prepays that they set up. And in addition, as we were permitted to under the terms of the agreement, we bought out 1 third of the streaming arrangement that was there with Wheaton Precious Metals. So That's total cost of $111,000,000 in cash, just which you'll see come through in Q2, but it does let us really Focus on financing with the facilities and the financing capacity that we have available through our own cash flows and our debt facilities And also allows us to benefit more from future upside, which as we've mentioned many times when we discuss Back wherever we see a lot of upside there.

Speaker 2

On the earnings side, when you translate all those operating results, attributable earnings to shareholders just under $86,000,000 or $0.08 per share. Adjusted earnings attributable to shareholders $106,000,000 or $0.10 per share. And a couple of comments on the cash flow. So cash flow, net cash flow from operating activities is 203,000,000 or $0.19 per share or as we've also disclosed in the news release, cash flow before working capital $223,000,000 or $0.21 per share. So Very solid cash flow quarter and of course the gold price helped as well as some of those lower costs that I mentioned.

Speaker 4

On the financing side, we

Speaker 2

continue to pay dividend at the same rate, dollars 0.04 It was an annualized $170,000,000 plus per year pre Sabina, but now with the additional Sabina shares that have been This would mean acquisition, you think we'll see that jump up to somewhere around $420,000,000 On the CapEx side, look at $131,000,000 spent in the Q, in total we were about $42,000,000 under budget, dollars 10,000,000 of that was lower Sustaining capital, as I mentioned already, and then $32,000,000 was just lower non sustaining capital, which is all related just to the timing of the underground development Again, these are all timing, I think, and we think they're all going to reverse in the queue. Also what are in the full year. And the other thing I'd highlight there is that, As we disclosed, we're excited to get going on the exploration site at Back River. So we've just approved an extra $20,000,000 that wasn't in the original That budget in total is now $84,000,000 for the year with $20,000,000 really focused on additional drilling that we plan to do at Back River. And I think Vic can I'll give you an update on that in a second.

Speaker 2

Overall, we finished the period $673,000,000 in the bank and nothing drawn on And really minimal debt on the balance sheet other than a few leases. And I think anything else you want me to touch on there? I think that's Those are the highlights.

Speaker 1

I think that's most of it like I said, yes.

Speaker 2

Okay. Thank you.

Speaker 1

Okay. So, Lyle is going to talk to us about Update on that, how we're doing it, Dusan, then talk a little bit about fashion and sort of lands at Tifical.

Speaker 5

Yes. So thanks Clive. Mike covered the operational stuff quite in-depth, so I'm not going to talk about any of that. But just quickly talking on The Anaconda Phase 1 study. So I think everyone is aware originally we've talked about potentially putting out a VA in Q2 that's been moved to Q4 And it is the based on some of the exploration success we've been seeing, but I would like to expand upon that a little bit.

Speaker 5

I don't think it's just the exploration success. As you know, the Anaconda Phase 1 or Phase 2 study is really about the oxides, but they're also having success on the sulfides. So what we're talking about doing now is more of an integrated kind of regional complex where we look at everything and We give you an update not only for what will be happening at the oxide plant, but also what will be happening as far as sulfides and where they would go. So all that has Come into play and we're talking about putting that out in Q4 this year. Related to what's currently going on there, the Phase 1, And our Phase 1 is a trucking study or a trucking program, which basically takes us between 80,001,000 ounces a year down to Kola, while we're finishing the study and building Phase 2, if that's what we so chose to do, That project remains on track.

Speaker 5

So basically all of the roads are in now. We're just finishing up the final culverts. The infrastructure is being built. We have received our ESIA for the Phase 1 study. We're currently waiting for them to Finalize our feasibility review and issue the exploitation license.

Speaker 5

And so what I can say is that really I'm going to say right at the end of Q3, beginning of Q4, You're going to start seeing ounces come out of there. And what I will tell you is that always remember what we said is just because that's what the study says, that's Not necessarily what we're going to do. We're going to take the ounces, the highest grade ounces, the highest NPV ounces and process those first. So, what I can say is that Right now, there's about 18,000 ounces we're talking about in 2023, which would come out of the Anaconda Phase 1.

Speaker 6

Anything else on that?

Speaker 1

That's good.

Speaker 5

Okay. So Sabina, everyone's aware that Sabina closed Kind of in the 3rd week of April. Since then, we've been extremely busy. Some of the questions that we got early on When people were asking about the deal was, did we think that we could keep that we could bring the B2Gold construction team back Together to build this one and I'll say with pleasure that almost to a person everybody jumped at the opportunity to come back. So we do have all of the necessary people in place to include Kieran Loughran and Tom Carter, who've been with us really For the last 20 years, building all of our projects in Far East Russia and Africa and Nicaragua, they're busy assembling the rest of the team.

Speaker 5

And I will say that We've had very few people turn us down. They want to come back. But on top of that, I think it's really important to highlight that the people that were at Sabina, The people that were running the site and kind of managing these contractors on-site have also agreed to come across and work with our team together. So now what we've got is we've got a very good Historical knowledge of the site, certainly the people that were in charge of logistics have been critical in both last year and this year, they're with us And we've got our build team to add on to that. So I feel very strongly that we have the right team, that they can certainly execute this project And we're still calling for it to be on time.

Speaker 5

So we're still talking about a Q1 2025 commissioning. As far as the logistics, I think everyone's aware this is a logistics project even more than the mining project. The winter road this year was a success that while they were saying that they needed that they had 1200 containers, They had 600 which were on the critical path. They brought in more than 800 containers this year. So we have all of the necessary equipment and supplies to do all The key things that need to be done in order to keep us on the schedule.

Speaker 5

So Really the intent of this year is to get the camp up, which they're already doing, I can say with confidence. This morning I talked to them, the kitchen is already up and they're getting ready to run power into the kitchen. So then the wings would come up next. So we're seeing kind of a July one date for the opening up of the kitchen or of the first phase of the camp. And then over the next couple of weeks after that they'll finish Drop it down into August.

Speaker 5

We have to pour concrete this year. That's concrete for the warehouse, the mill building and potentially the powerhouse. All of that concrete is on-site, all the steel for those facilities are on-site and we're just currently scheduling in which order we want to do them. As far as orders for 2023, 2024, C List Winter Road, that all remains on schedule. We've done a very good job of Integrating the former Sabina team with the B2Gold Construction team.

Speaker 5

They were in the office last week finalizing orders. Everything has to be on the sealift and heading up towards the marine lay down area in kind of August, September. So by July, everything has to be at The point where they consolidate, all of that remains on schedule at this point. And then we're actually shooting for an earlier opening date of the Winter Road next year. We have as many as 2,000 containers we want to drag up the road next year.

Speaker 5

So we're talking about an early February date and we worked with the Sabina team, The former Sabina team to make that happen. And what we've done is we've brought in more trucks. We've brought in more equipment To operate to open up the road from 2 directions, actually three directions from the middle and from both ends. And we're hoping That

Speaker 2

it will get open as

Speaker 5

I said early like the 1st week of February. What else can I say on that? As far as additional logistics, we have extended the airstrip, so we're able to bring stuff on directly on the site with something as big as a 727. And overall, that project remains on schedule. I will tell you that before the end of June, it is our intent to update the budget based on what we Have put forth and come up with what our final cost is going to be.

Speaker 5

Yes. So we continue as far as things that are happening off-site, we continue to maintain Very good relationships with the Inuit community, the Kitikmeot Association in Nunavut. We just attended a conference out there. I don't know if Clive wants to talk about it a little bit more, but in general, because we've maintained all of the Sabina key personnel to include Matthew Piccard and Andrew Moore, those people have really Continue to bridge that relationship and we maintain very strong relationships within U. S.

Speaker 5

Community. Sure.

Speaker 1

Yes, I'll just touch on, we went to the symposium in Nunavut, the mining symposium at the time was really good because We were able to introduce everyone there to B2Gold and talk about the fact that some of our experiences, the Russia days, as Bill mentioned, construction for some of us go back to that in terms of knowledge about Knowledge about a logistical challenge in the North, so we that was very well received. And I also talked to him about a bit of a personal homecoming for me having 40 some years ago, but a line cut on a claims suit and expediter in the Yukon. So I'm sort of back to the north as well. But I think the most important message that we Brought to them was continuity, as Bill mentioned, from some of the great work that we've been doing with the Landowners' Kitikbayal Group, continuing along with some Very good CSR projects, so we'll be able to increase the budget on that. This is BT Bull's financial strength.

Speaker 1

But the big message to us that we were, as Bill said, maintaining the schedule That was a great relief to many people because unfortunately, like Nico E. Eagle, so taking over TMAC had Run the mine for a while, hope and then decided to shut it down and go back to drilling. I think they were very concerned whether or not a big company might come in bigger company might come in and do the same thing. When we did the acquisition, when we started looking at I made it very clear to Bill that it was up to him and his team to decide the schedule that we can live with. And I did say to Bill that if we thought we needed more time, I thought our shareholders would understand that to get it right.

Speaker 1

But the good news is with the quality of work done by Sabina, very good work and Bruce McLeod and his entire team, we were able to, after lots of Scrutiny and tremendous amount of due diligence conclude that we could in fact maintain the schedule as Bill has said. So Great symposium that we went to and frankly, it's nice to We're not a forward investor on this one. And I think as long as we can do what we've done for a long time, deliver on the promises we made In the North side, I think we'll have a great success and made relationships with the local communities. So it was very positive. Chip, we're also talking potentially whether they need legal, are there some things we can combine as 2 companies do a bit to do some projects together, maybe CSR chip projects, etcetera.

Speaker 1

So I think this is a real positive view of our from our perspective going north and also Of the community, of the industry, we felt very welcome. The key is to deliver as always on the promises that we made. I think with that, I'll get Vic King to talk a bit about this new budget and maybe he can talk a little bit about, Vic, about the team. Not only inherited some great people and whether it be the indigenous relationships, but also in terms of construction, etcetera. But obviously, you You can tell me what you think of the of us joining forces with the existing team from Sabina and the exploration

Speaker 4

Thanks Clive. Yes, absolutely. The quality of the work that's been done by the Thanks, Sabina team. It's top class.

Speaker 1

And I'm very

Speaker 4

happy to say that we've virtually retained Almost the entire team. So we'll be hitting the ground running for sure and supplemented by people From our existing B2Gold team as well. The budget has increased by Our global budget, as Mike mentioned, has increased by US20 $1,000,000 That is to put it into context, I think Sabina had in the order of around CAD 5,000,000 I think on average As an exploration budget, so this is this CAD 20.27 is a 5 fold increase To be spent in 6 months, it's a 10 times increase. So we intend to hit the ground really hard. So bringing in additional rigs, we plan to complete at least 25,000 meters Diamond Drilling.

Speaker 4

The allocation of that drilling will be on the Goose project, which comprises a number of deposits. But a lot of that will be on the Umuel deposit, which is the highest grade and also the biggest contributor to the resource. Some of that drilling will be infill to improve the Density of drilling to optimize the underground planning, underground mining planning, but also to extend What is clearly open ended mineralization on each of the four deposits on the Goose project itself? That's going to be about $15,000,000 of the budget. There's another $5,000,000 that we intend to Spend on what are clearly top class projects, gold opportunities in this Badadyne formation hosted Apologies.

Speaker 4

George, which is about 50 kilometers to the northwest of Goose is where there has been there is a resource there already and over 40 targets On that license, hello, on those claim blocks. Sabina had been drilling there this year, Completed drilling, I think, 2 weeks ago, the current program. We'll get back in there and drill it, George. And just to highlight, I've just mentioned 2 projects there. Within this 80 kilometer belt, this gold district, We also have another 3 project areas Boulder, Dell and Boot that have had economic intersections of mineralization, which We'll certainly be following up on as well over time.

Speaker 4

That covers Just to get back to Mali, Mali had the lion's share of the budget this year Over $34,500,000 and that really is a record amount We have more rigs turning there, more people busy in exploration than we've ever had. We've already completed over 100,000 meters of drilling in Mali. A lot of that, as Bill mentioned earlier, Has been focused on infill drilling in the saprolite, so moving more material into The indicated category to support the studies that are going into the Phase 2 mill options that we Looking at in the area, that infill drilling is complete and we're back. We're currently updating the resource, had to complete that certainly before the end of this quarter and it will feed into the timeline That both Bill and Mike mentioned earlier. We haven't only been doing in full.

Speaker 4

As you would have seen in the press release an earlier press release, I think earlier this month, We've had some significant success in sulfides on the Anaconda properties. At Mamba, we hit actually our highest biggest intersection we've ever had across in West Mali, 8.6 grams over 46 meters. This supports another hit in the same zone, Mabra main zone Over 8 grams of nearly 16 meters. So the sulfides potential here is certainly Not over yet for sure. And there are plenty of more Intersections that would tend to support the potential for underground and certainly extension of the sulfide, a lot of the pits into the sulfides Additionally, you'll recall that we acquired the Bacalobi license, It is essentially the piece of the jigsaw sitting between the 2 Anaconda properties and Medanadi where our Fekola mine is located.

Speaker 4

We've extended the drilling onto the Bacalove license, particularly one of the snakes, Cobra has shown to be extent significant for over 2.5 kilometers of additional strike On the Bacalome side of the fence, that's within the oxide. So that will certainly contribute as well. In the last press release, we also named a indicated a new zone, which is Further to the south, but still on Bacalove, which we call Taipan. And we've had some pretty good intersections there as well. Yes.

Speaker 4

For instance, 28 meters at 1.8, 23 at over 4 grams and that's really just getting started. So I think a lot more work planned For Molly, keeping those rigs and those people busy. I guess those are the highlights.

Speaker 5

I forgot something. Can I jump back in? Yes. One of the things that we've been asked to do As we've taken on this project, as you know, B2 does things a little bit different than the schedule that they are the way they were going to do it. So we've been asked to generate Kind of a new capital schedule and a new operating cost profile.

Speaker 5

It is our intent to have those done in Q2, so internally by the end of this month, but I think by the end of Q2 we're ready to talk about. That also includes As Sabina was talking about, they were talking about bringing some ounces forward from the underground. We are currently revisiting the underground, both the methodology And the schedule and we will include that in our next update on how far we think we can push this thing as it comes up out of the ground. Okay.

Speaker 1

Great. One of the studies that will be Sabine is the start and will pick up is the study on Potentially for wind power. Obviously, we're a leader in the industry in solar power with what we've done

Speaker 4

in Namibia Mall, but we'll

Speaker 1

be having a hard look. There's no assumptions for anything. Currently, we're waiting for a study to be done, but there is pressure there for it in the North of Canada. That could be an interesting opportunity in terms of Reducing emissions, but also could have a positive effect on cost up there as well. In terms of strategy going forward, we are very happy with the growth profile we have right now in terms of looking at In two stages of expansion, Fekola Complex and also of course, the exciting project that's used.

Speaker 1

And a lot of that is because of our one of the reasons we did the acquisition and are confident about our ability to accomplish these things subject to a study on this second mill. Call is of course extraordinarily strong financial position. And if you look back at our history, the strategy really if you put it quite simply is that our strong operational and therefore Financial performance for years has fueled growth by our ability to do accretive acquisitions, build mines ourselves and also Do a lot of exploration work. So I think that's one of the keys to our success, but we're also a very focused group. So you've heard us talk about the sequencing of the expansion Fekola, if we go forward with the second mill, how that works within doing the first expansion, which is trucking, which is happening now And Goose Construction and then potentially building the 2nd mill.

Speaker 1

So we're not going to build 2 mines at the mills at the same time, we've always said that. But Also, we're not going to be looking now as hard at M and A, development project M and A. For that same reason, we're going to stay very focused on the growth profile we have now in the company. We will Continue to look at exploration opportunities, something we've been very good at, and that will include not only entering deals with landowners or but also smaller companies. We've started to invest in some junior companies with exciting projects like Snowline that ended up in the Yukon And Batador, Eastern Canada.

Speaker 1

So that's a pretty exciting strategy. We think Also offering to these groups that have good exploration teams offering if there's any assistance we can provide in terms of looking at their exploration plans etcetera. So Well, the junior expansion companies, unfortunately, they're struggling these days even with gold going higher. So for a lot of these companies, I think it's quite attractive to have a friendly Shareholder, I'm not sure to bear egg anybody, but a friendly shareholder would feature gold. So we're going to be exploring those kind of alternatives as well as we go forward.

Speaker 1

But the thing we're going to continue to do as we've done for many years is be very focused on what we're now on the acquisitions we've done and the opportunities we have To grow the company. Michael, do you have anything that you think we should add to that? Okay. Well, I think with that, we'll open it up for questions.

Operator

Thank and wait for your name to be announced. Please standby while we compile the Q and A roster. Our first question comes from the line of Ovais Habib from Scotiabank.

Speaker 7

Thanks, operator. Hi, Clive and B2 team. Again, congrats on the beat and strong start to the year. And really great to see the development of Back River progressing well. Just a couple of questions for me.

Speaker 7

Just starting off with Anaconda Phase 2 study. Now looks like based on exploration success, especially on the sulfides, you pushed out the study to Q4. Now, maybe this is a question for Bill as well. Would you look to change the scope of the project with larger processing facility? Or Any color you can provide as to the size and scope of the project kind of looking going forward?

Speaker 5

Yes. Sure, Oates. Once again, it's Never enough to put a second mill on. Now it needs to be bigger, harder, faster, stronger. But what I would say is We're definitely not changing the scope of the second mill that we're looking at

Speaker 2

a 4,000,000 ton per

Speaker 5

annum Oxide mill, but we as you know, as B2 often does, we did put in capacity to expand and or Eventually add a sulfide circuit if necessary. That's all being looked at. But really what we're talking about is remember, you're going to have this very interesting situation if you build the mill there Because it only takes oxides, the sulfides have to come south to Fekola. So instead Instead of kind of cheating you and saying, okay, I've got this great oxide mill and then my sulfides as you know in the long term of gold start to decrease, I'll be able to tell you, listen, my life of mine is extended because of sulfides, which means I've now got 2 options for oxides. Don't forget, we've got We've got Bacalove.

Speaker 5

The whole concept is to roll this thing into a regional play and really show you what this complex can do.

Speaker 7

Thanks, Will. And just,

Speaker 4

Clive, I'd call you, asked me

Speaker 5

to mention that as B2 is want to do from time to time, They get all of the decision makers in a room with the technical people and they beat these things about the head, Clive calls them swirls, And we just had one yesterday and it was an interesting swirl in the sense that all the options put on the table seemed very good. It's just a question of which way you want to go inside of a larger corporate strategy.

Speaker 7

Right. Thanks, Will. And just any sort of color you can provide right now how things are moving along with the underground at Fekola or underground component of Fekola?

Speaker 5

Yes, I can talk about it a little bit and then I'll turn it over to Dennis Stanford, who was just there working with the regulators To get the permits, what I'll tell you, remember the exploration project or sorry, the underground project is an exploration project at this time, right, with the concept of to develop it Get down to the face so you can drill it off and put the resource into reserves. So we're basically we've done a stepwise where all the surface Infrastructure had been approved already and now we're up to really putting in the portal and all the supporting infrastructure for that. So Dennis, maybe you want to say a few words so that you were just over there?

Speaker 1

Yes, we met with the regulators last week, had a good session with them. They've come back with a very, very short list of questions. We're We're putting that together right now this week to submit. And with the tone of their letter, it sounds like we will have the permit to go full speed On that underground property next week. With any luck, that's what we hope.

Speaker 1

They're ready in the pit. They're getting down to the final level. They prepared Face for the 1st blast. The access is quite good. It looks like Burncat is doing an excellent job there.

Speaker 1

The work looks very, very first blast. So they're Hopefully, we'll be kicking off the 1st rounds and heading underground very, very shortly. Thanks, guys.

Speaker 7

Perfect. Thanks for the color, Dennis. And then maybe moving a little bit to Ochoguru, I believe open pit mining is ending in 2024, Underground kind of ending around in 2026, do you right now see potential to increase, extend that underground mine life at Otjikoto or Pretty much, we're kind of wrapping up Ojikoto around in the next couple of years.

Speaker 5

So the answer is yes. I think we've always said that there's a resource down plunge that has to be drilled off from underground, which we're getting down to that We'll start to do that now. We've always cautioned that we're not going to extend the life the overall life of mine. Of course, you'll extend the underground, But it's unlikely that we'll find enough resource at that spot to extend the life of mine. We are to something which has potential, Which I think is a bit preliminary to talk about, but at the end of the day, the existing underground will not extend the life of mine, it might extend the house profile, But we're certainly digging around and we're on the stuff that we think could do that somewhere else.

Speaker 1

We'll fix an expiration so he can talk about it.

Speaker 5

Yes. Okay.

Speaker 4

Yes. About 3 kilometers south of the Otjikoto pit on what we call, hopefully, The Otjikoto feeder structure, we've hit some interesting intersections. These are at definitely will have to be mined underground. The question here is whether we can actually Get these to hang together over sufficient strike extent to actually build up a resource that would warrant Basically developing down to those levels. It is early stage as Bill said.

Speaker 4

It's still very encouraging.

Speaker 7

Thanks, Bhaiyal, Rick, for the color and Bill as well. And maybe I'll stop there and jump back in the queue, but thanks for taking my questions.

Speaker 1

Thanks, Suresh.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Ralph Profiti from 8 Capital.

Speaker 8

Thanks, operator. Good afternoon, everyone. Just a couple of questions on sort of the success that we've seen on the logistics side. Is there an ability to take advantage of some of the sequencing on delivery of material, critical material between the ice road and the sealift? Just wondering if that's being taken advantage of in order to sort of stay ahead of schedule.

Speaker 8

And then sort of a follow on question from that. If Talking about an early opening in February, could you put that in context for me how the sort of the 2022 season figured out In terms of the timing and just sort of what's behind that more opportunistic approach? Is there actually been work done on the ice road that's opening up that window a little bit more positively?

Speaker 5

So the answer is I'll start in reverse. The answer is yes. So the logistics question, At the end of the day, as you know, basically what happens is, as you get 15,000 tons or 18,000 tons onto a vessel, We bring it up normally on the eastern route up past Ontario and then Quebec and then down into that area. That happens Everything has to be in by July or sorry, by September, October. There we have the marine lay down area where we do Prioritize things to come up the winter road.

Speaker 5

So that's what actually happened in 2022. They listed things which were critical for the 2023 Construction season and operational season and those came up the road first. That's why, as I said, they only got 800 out of 1200, but that still was enough Surely to make sure that we were able to maintain the schedule. Related to the extension of the hauling The increased number of containers we want to bring down, the answer is yes. We they did kind of a deep dive after this year And they looked at a couple of things.

Speaker 5

1, last year they only had or in 2022 they only had 28 trucks. We currently have we've increased that to 40 trucks They will come up the road and each truck could basically do a load a day, so up and back in a day. And then we tried to increase the season. The season started out in March this year for a couple of reasons. 1, They changed the contracting group that did the ice road.

Speaker 5

So this was the first time that they constructed this particular ice road And they struggled a little bit. My understanding was with the sea ice. The sea ice has to be actually done last because it has to freeze up a little harder. So what they should have done is they should have what we're actually doing is they should have scheduled equipment kind of in the middle and worked out towards The sea ice and towards the site and from the site where the sea ice is the last to go. So that is on plan For this year and then additionally there's always talk about kind of this bedding material, not Creating a permanent road, but actually being able to build kind of a gravel sub base up, which will allow you to get the freeze in earlier and get road in.

Speaker 5

They can actually this year even before, the road opens up just because it's within our license Within our operational area, they can put another 6 or 7 kilometers of kind of permanent road in. That would actually fit very well, I think, with some of the exploration activities That are happening up at that end, which we're looking at. So we see opportunities really to get these incremental gains. And of course, it's one of these things that each year you learn more And you get more experience at it. I would say that I think 2 years ago I heard that they brought up not 2 years ago, they didn't do anything 2 years ago.

Speaker 5

But The last time before this last one, they brought up 80 containers, right? So they didn't have this experience of this full on ice road. 2022, they had full on experience and I think they've done a I think they've done a pretty good job. Looking at the lay down area unto itself, it is a very adequate facility complete with Currently, what is it, 10,000,000 liters of fuel capacity. We're putting up an additional 15 this year and then we'll put up more capacity on-site.

Speaker 5

So we're going to have 50,000,000 liters of fuel capacity at the end of this year. So overall, I think we're

Speaker 1

in really good shape for 2022, 2024. Yes. And maybe just a reminder, back in the day, in the BIMA days, when we built Kupol, we actually had to I build 4 70 kilometers of ice roads every year to get everything in before the road disappears. So the individuals involved in that, a lot of the individuals are involved here and there's always some logistical challenges, but I don't can't think of a group more qualified to handle these types of things and working with the existing Sabina So we're feeling pretty good about that. Bill mentioned by looking at the end of the second quarter to have more information On the capital costs we see and then also the operating costs, etcetera.

Speaker 1

So we're targeting to have that available for the ATM. So at our Annual General Meeting, June 23, we'll have a lot more information to tell you about our view

Operator

Thank you. One moment for our next question. Our next question comes from the line of Justin Stevens from PI Financial.

Speaker 9

Hey, Clive and team. Yes, congrats on a good quarter. Definitely beat what I was looking for. And a few more questions just in terms of the modeling for the rest of the year here. Obviously, Fekola Phase VI was a nice boost for the quarter, but should we expect a bit of a tail off in grades in the coming quarters as that sort of works its way through the mine plan?

Speaker 9

Was that Fekola? Yes. Fekola Phase X. The answer

Speaker 2

is yes.

Speaker 5

We are in Q3, Q4 producing Slightly fewer ounces, so the grade will be lower. But of course, on guides.

Speaker 2

And remember, as we mentioned, the Otjikoto production It's weighted the other way, so they kind of offset to large degree.

Speaker 9

Yes. Makes sense. And then just staying with Fekola, obviously, the Phase 7 strip Is underway. Should that be modeled pretty evenly throughout the year or is

Speaker 7

there going to be a

Speaker 9

bit of a bump in a particular quarter?

Speaker 5

Well, we're already stripping in phase status, so I'd say it will continue to be throughout the rest of the year.

Speaker 9

Got it. Just in terms of the modeling, for the Fekola Regional Phase 1 trucking, how should we be looking at the attributable production? Obviously, there's a million 10% free carry. Is the Trucks saprolite going to be 90% attributable to V2? Or is that potentially still in flux?

Speaker 5

Well, do you handle the mic?

Speaker 2

Well, sorry, I think you're asking what percentage were you. I think you must assume the state is going to end up 20%. Yes, eightytwenty is the same as we have for Fekola. Maybe under different mining, depending on how they settle out on the final code, Right, 2019 versus 2012. Right now, it's a good of influx, but either way, you can expect they're going to have 20%, I think.

Speaker 10

Got it. And that would

Speaker 9

be subject to the same sort of independent valuation procedure that happened with the initial plan there too, right?

Speaker 2

That's correct.

Speaker 9

Got it. Perfect. And then last one for me. For Goose, given the bulk of the required supplies To meet the timeline, I'm assuming you're going to be coming in those 2023 sea lift to make the 2024 ice road season. Do we Expect a spike in terms of the capital spending sort of the middle of this year?

Speaker 5

I think we're kind of Even this

Speaker 2

year, are we? I mean I think we spread it out pretty evenly over the 3 quarters from Q3, Q4.

Speaker 5

Yes. So if you remember what's happening, so we We've already ordered the stuff, which is already we've already paid for all the stuff that is getting on a boat right now to go up to the marine lay down area. And so That's already paid for. What you'll see is the labor is kind of it's I think I heard something like more than 90% of all the material that we need per site It's already been purchased or is under PO for sure.

Speaker 4

Got it. So yes, if you

Speaker 9

cut the POs already, then yes, it should be fairly even. It will just be Transportation then.

Speaker 5

It's not just labor and how we schedule that.

Speaker 4

But that should be yes.

Speaker 2

So Q2, we can give you a better idea of timing. Got it. But right now, we've scheduled it out pretty evenly through the 3 quarters.

Speaker 9

Perfect. Sounds great. All right. That's it for me. Thanks.

Speaker 1

Cheers. Thanks.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Don DeMarco from Nation Bank Financial.

Speaker 6

Thank you, operator. Good morning. Congratulations, Clive and team. So, hey guys, Continuing with the question on CapEx, so it's going to be evenly distributed, but what should we model for the magnitude of the CapEx I know that Bill has mentioned there's going to be more color in Q2, but can you give us any kind of order of magnitude right now for what to put in our model for this year

Speaker 5

Well, I think what's out there is what the subpoena model has. I don't think at this point, we're holding that in our budgets or in our estimates, right?

Speaker 2

Got it. Okay. I mean, I think we've guided, we think it's somewhere between CAD750, CAD850, so why don't we assume CAD800, by the way in that range. For total capital, Sabine had spot between $102,000,000 So why don't you take $150,000,000 And assuming that the balance is left for us.

Speaker 5

Yes. And remember that includes supercharge in the underground, which we're currently Placing POs on as well.

Speaker 2

And we will I think we'll expect that it'll again, we haven't guided this yet, so it's coming in Q2, But you can expect they're pretty evenly balanced between 2023 and 2024 with the goal that we get at least physical construction

Speaker 6

Okay. And you mentioned that you extended the airstrip. Can you now fly directly to the project site from Vancouver or Edmonton?

Speaker 5

From Edmonton, for sure. They're bringing in, I guess Dash 8s right now with the rotations. So the answer is yes.

Speaker 6

Okay.

Speaker 4

Yes. Tom, just to supplement that 2 as well. We're going to be planning a site visit for the analysts up to Back River in September. So obviously, a good Time of year to see the progress that we've made and good to see your strip firsthand.

Speaker 6

Okay, great. Look forward to that. And I noticed in the financials, it indicated that you incurred a $16,000,000 write off of some mineral property interest, Non core greenfield targets, not a big magnitude, but can you just give us a little more color on where this might have been?

Speaker 2

I can comment on the majority of that is Uzbekistan. We had 3 projects, but properties we were working on. And so we evaluated those and decided that we weren't going to pursue those, but we are still interested. There are other things of interest there for us. So we're currently in discussions with the state.

Speaker 2

I don't know if Ed, do you want to add anything to that?

Speaker 4

Yes. The 3 projects that we had in the Kisil Coom Gold Fields, which is near Murintao, Really didn't measure up. We've identified another area closer to Samarkand, closer to the capital That we're in discussions with the Minister of Asset.

Speaker 6

Okay. So just In conclusion, and so the for some of these greenfield targets, I know you're kind of across the world over the last few years. So Uzbekistan is still There's still some interest there. What about Japan and Finland? And is there any others where there might be some early stage rebuild interest still ongoing?

Speaker 4

Well, Finland is definitely up there as an area that we're spending quite a bit of Money and putting a lot of effort in and it's ongoing. Japan is through our interest in B Metals. They're running that project. Elsewhere, We've upped our budget in Cote D'ivoire. Obviously, leveraging of our West African experience, the geology is the same.

Speaker 4

It's Francophone country, it is less volatile, I guess you could say, in terms of the Francophones in West Africa And it has huge potential. So we picked up 2 licenses there in our own right, on our own right, worked them up from basic Absolute greenfields from concept through soil sampling and we're basically doing All we're drilling next on 15 kilometers of strike of anomalies. So that's going well. Yes, I think those are the main ones at this point in time. We've shared a few as well Other areas that we're consolidating obviously have intent now in Canada as Clive said Through placements and hopefully building those relationships with junior companies Picking up our own ground in Canada.

Speaker 6

Sure enough. Okay. Okay, well, thanks for that added color and that's all for me. So congratulations again on a Strong start to the year.

Speaker 1

Thanks. Thanks, Tom.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Stephen Green from TD Cowen.

Speaker 10

Thanks guys. Just a couple of quick follow ups. Bill, you talked about developing A plan for Fekola and kind of giving us some guidance on that plan in Q2. Would that include kind of your roadmap To the 800,000 ounces or will we have to wait until Q4 with your kind of mill plan for that?

Speaker 5

Yes. What I said was that the original plan for Q2 was going to be in Q4. So you're not going to see anything at the end of Q2. What you're going to see is a comprehensive In Q4 for the whole complex?

Speaker 1

With the new resource.

Speaker 5

With the new resource, that's right.

Speaker 1

Okay. And

Speaker 10

would that include a new reserve as well?

Speaker 5

Pete, is your reserve for Fekola Regional Complex Q4?

Speaker 1

It depends on the outcome of

Speaker 6

the study. I mean, that's why we're doing the study.

Speaker 9

There will be certainly portions of that that would be eligible to be reserves and We would evaluate all of those, but as far as which specific pieces would come in, I think it's too early to comment on that.

Speaker 5

But in really kind of direct answer to your question, that is one of the reasons we're doing this whole comprehensive study is to kind of show where all the pieces fit together for this 800,000 that we've been putting out there.

Speaker 10

Okay, fair enough. And just a clarification on Otjikoto. I know you have some lower grade stockpiles there and there's been discussions in some of your literature on that taking you out to 2,000 and And beyond, is that still the case or is it dependent on kind of keeping some of the grade up with the underground through those years?

Speaker 5

So it is absolutely the case. As a matter of fact, some of the things that we're doing with power and locking in these We're getting some off take agreements on some solar power. That absolutely is giving us a hedge against any potential increases in fuel price, that type of stuff. To make it Abundantly clear that this project is economic out to 2,031 with the low risk stockpiles.

Speaker 10

Okay. So that remains the base case. Okay.

Speaker 5

Yes. That's all I have. Thanks guys.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Mohammed Sidby from CIBC World Markets Inc.

Speaker 3

Hi, Clive and team. Congrats on a good quarter. It's Mohammed Sidibe from Cheddiche on behalf of Sunita Fani. She's on the line to Orion Hub. So Most of my questions have been answered, but I just wanted to clarify on the Fekola on the anaconda area study, which will be released in Q4 'twenty three.

Speaker 3

Is the thinking to hit the ground running as soon as the study is out or would you delay the economic decision on the project For some time later, I'm basically thinking about the time line of the 800,000 out of school as early as 2026. Is that still ahead?

Speaker 5

Yes. So I would say that obviously we got to wait until the study comes out to get the results. But as of right now, we see no reason that our current kind of projections don't hold. I mean, obviously, what we're doing is we're doing the studies to prove it. But at the end of the day, as far as how it gets how the Phase 2 gets scheduled if we go, We see holding schedule on that, kind of if we do Phase 2, it will be a 2026 kind of into production.

Speaker 3

That's perfect. Thanks for that color. And then just final question, let me take more on the modeling front really. Thinking about the mass That is on full conference. Should we expect this to flow through in Q2 or maybe it will be sometime later,

Speaker 4

I didn't get that. It was I

Speaker 5

heard something about Masbate in Q2, I thought.

Speaker 3

Yes, exactly. Sorry, Just a question on the Magdalene unsold ounces after the unsold ounces from Q1, Should we expect that to be sold in Q2 or would it be later or during the year?

Speaker 2

Yes. It's just a timing issue of getting it through customs So you can't because it's on a non GAAP. It doesn't always work perfectly with the quarter end. So yes, absolutely.

Speaker 3

Okay, perfect. Thank you. That's everything on my end.

Speaker 1

Thanks,

Operator

and wait for your name to be announced. Our next question comes from the line of Harman Puri from Bank of America Securities.

Speaker 11

Hi, operator. Thank you and thank you for the update today. Most of my questions have actually been answered. I just have another sort of modeling question. Can you provide us with some color on sort of the grade profile at Sekola?

Speaker 11

In the results, you noted that You had a favorable mine phasing sequence start to 2023. Could you sort of provide color on as to whether or not you're still Going to be hitting that 2.2 gram per ton, guided number for 2023?

Speaker 5

Yes, I don't think overall for the annual amount, we're reguiding. We say it's at least to That number, so whatever was 2.2 or 2.3, that is our annual number.

Speaker 2

Yes. I mean, we were right on budget in Q1 for grades, like we're right on budget.

Speaker 11

Okay. Thank you.

Operator

Thank you. At this At this time, I would now like to turn the conference back over to Clive Johnson for closing remarks.

Speaker 1

Okay. Well, thanks everyone for taking the time to have us present the Q1 results and talk about our plans going forward. So thank you all very much.

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Earnings Conference Call
B2Gold Q1 2023
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