B2Gold Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 3, 2023

There are 9 speakers on the call.

Operator

Good day and thank you for standing by. Welcome to B2Gold Second Quarter Earnings 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 and CEO.

Operator

Please go ahead.

Speaker 1

Thank you, operator. Apologies on behalf of the phone service, our technical issues, but theirs. So we're a little bit late getting going. Welcome to the conference call to discuss B2Gold's Q2 2023 financial results. We had another very strong quarter, again highlighting the excellent performance of our buying operating team.

Speaker 1

And we're very pleased with the results and it makes us feel very comfortable. We're on track to put our guidance for 2023 for the year, Annual guidance. So I'm going to pass over to Mike Cinnamon soon, our CFO, who is going to walk you through at a high level what you probably already read, which is Details of the financial results and we're going to have an update from the Lydall focusing on Goose project construction in the back river. Things are going Very well there. So we remain in an extremely strong financial position in the company and that allows us and Mike can I'm talking about that to look at funding Goose and continuing on with our industry leading dividend and then maintain a very strong cash position with Looking to go into production as Bill will highlight in the Q1 of 2025.

Speaker 1

I want to deal with An issue that's come up, I guess, since we put out the news release about Mali and about the conversations around a potential new 2023 Mining Code. What we put out in our news release, what we said in our news release was that the Fekola mine ore will continue to be mined on Page 5 From the Fekola and Cardinal, actually Page 6, from the Cardinal pits receipt of an exploitation license for Bentayco, The area remains outstanding pending finalization. Expedition license from the BAM, TACO North Permian area remains outstanding pending finalization of proposed new 20 Jersey Mining Code by Desdemali. What we neglected to say is what I'll read actually from the MD and A, which is a more thorough analysis of the situation And goes into more detail. What we say in the MD and A on Page 11 is the company along with other mining companies in Mali are engaged Any new mining code is not expected to impact existing Fekola mine operations, which will continue to be covered by the existing mining convention entered into under the 2012 minutei code And the impact of the new 2023 Mining Code on the Pekola Regional license sorry, I'll end it there.

Speaker 1

So bottom line is what we're saying is that the Any proposed 2023 Mining Code that was not in our understanding of recent constitution with the government as of last week, The government is confirming that they are this is not this code is not going to look back to previous existing codes. That would be unlawful. The 2012 code and the mighty convention that comes That came out of that dictates the terms, the ownership Eightytwenty with ourselves and the government of Mali and also dictates your taxes and all of the details of that. That is in the 12 to 12 code. And we expect this is applying to other gold miners in Vale as well who have valid outstanding Codes and conventions from the past.

Speaker 1

So I just want to make sure people understand what we're talking about here. We remain convinced that the government of Mali Once more gold mining in the country and once people like ourselves as foreign investors to invest, we have hopes and plans to expand in Bali Initially by trucking ore, she ran from the Bentacol and other areas down to the Fekola Mill to feed saprolite material into the mill. We also have conceptually have been talking about and looking at a study at the end of the year that could involve building a second mill potentially if the economics Work and into all the other factors coming to bear with the new resource in the North and Central. So that's what we've been talking about potential expansion. I think it's really important to point out that if you look at Fekola Yes, great success in Mali and other mining companies have been great successes from all stakeholders.

Speaker 1

So we invested over $500,000,000 To build Fekola, 100 percent buy B2Gold. The government owns 20% Fekola. We've actually contributed $1,200,000,000 of revenue To Mali since the Perkoa mine started production. And based on our calculations, the people of Mali The country of Mali has benefited by over 50% of the economic benefit of the mine. So we took all the risk upfront, built the mine.

Speaker 1

They realized over 50% of the economic benefit. That's been a great success. So we remain committed to looking at further Opportunities in Vale where we believe that the government, from what we've heard, remains committed to increasing gold mining in the country. So when the new Mungo Mining Code comes out, we will have, I'm sure, further consultation with government to talk about how we can work with our partner in the government To potentially expand production at Fekola. So I just wanted to re clarify that situation.

Speaker 1

And in fact, we probably should A little better job explaining it in the news release. The news release was about the financial results and an update on things. So at the end

Speaker 2

of the day, I wanted

Speaker 1

to make sure we Communicate with everyone about the reality of the situation. Fekola, we expect will continue to be a great success for all stakeholders. With that, I'm going to pass it on to Mike to hit the highlights of the financials and Bill will talk about actually one more point I'll make before I pass over. I was I quoted out of context a few weeks ago at Arnall Hill that said that we were aggressively pursuing more M and A. That was not what I said.

Speaker 1

At the end of the day, our strategy remains very much Same as it's been for a while here, which is focused on our development projects, which includes the Goose Mine, which is Bill will talk about also was the potential. We continue to be committed to building roads, etcetera, for the expansion of Fekola by trucking ore. We are very committed to that. We are very committed to a large exploration budget, a very large budget We're excited about the exploration upside there and other projects around the world that we're exploring, including around existing mines. We are not anxiously not pursuing actively pursuing M and A, at the moment, we will not take on another development project.

Speaker 1

We've never done that before. We will not start doing it now, trying to build 2 mills at the same time. So I just wanted to get that on the record that we are always looking at what's out there in terms of other avenues of Production growth, etcetera, we are not interested in strapping anything on whether it be a problem buying or someone else or whether it be a further another project to build. We are busy. We are very committed.

Speaker 1

We are very focused. Part of our success is our ability to focus on one project at a time. So with that, I'll pass it over to Mike.

Speaker 3

Hey, thanks, Clive. I'll just touch briefly, I think, on the results. As Clive mentioned, I think, Good quarter from the operations financially. Firstly, on the revenue side, we sold just under 240,000 ounces at a realized price of $1969 an ounce, that's more than $1 an ounce higher than we were in And I think we're $250,000,000 as we look forward to the balance of the year as an estimate.

Speaker 2

On the production side, Again, very

Speaker 3

much on budget. The total production from our 3 operating mines, 246,000 ounces, just almost exactly on budget. And when you take in our Share of Caliber's results, which is 24% share right now, 263,000 ounces right on budget overall. So a little over and unders there. Fekola was a little under for the period, 8,000 ounces below budget at 152,000 ounces.

Speaker 3

There was a delay of excavator there and slightly lower production from Phase 6 just through ability to access the pit and The amount of production mining we could actually do there, but we believe we'll certainly hit Fekola's target for the year. Masbate was a little over budget, It's 49,000 ounces, so 5,000 ounces higher than budget and they benefited from higher than budgeted mill feed grade and built through boat. And I know what you called it was a couple of 1,000 ounces over for just generally better or slightly better on budget on all factors. So overall, right on budget, 263,000 ounces in total production for the company. Translating that on the cost side, so $6.36 an ounce Overall, including our share of caliber, dollars 6.07 an ounce from our 3 mines.

Speaker 3

So both of those numbers were between $35 to $40 Lower than budget overall, we did see some offsetting factors. Fekola was $538 an ounce, it was actually a little higher than budget, Which is a function of that lower than budgeted gold production effectively. On the fuel side for Fekola, we saw some offsets there. So diesel was a little lower The budget, but then we also saw HFO, we're switching to a new HFO source or we've switched the new HFO source, HFO 180, which is it's a little greener, I think we're environmentally friendly, so that's a little more expensive than what was budgeted. Masbate, dollars 8.17 an ounce, which is More than $200 an ounce lower than budget and it really benefited from lower fuel costs over 20% plus lower on both the Diesel and HFO at Masbate.

Speaker 3

Ojikoto was also more than $200 an ounce, lower than budget $6.11 an ounce for the period And it benefited both from the slightly higher production, as I mentioned, and also lower fuel costs, not as significantly lower as much as that, but still lower and also a weaker So remember, a high proportion of our costs in Namibia are denominated in Namibian dollars. So when the Namibian dollar is weaker, it translates To lower U. S. Dollars and we benefited from that. When you look at the all in sustaining cost side, including everything our share caliber $12.14 an ounce.

Speaker 3

So it was a little over budget for the period and that's really a function of overall lower cash costs, but Higher CapEx that are almost exclusively based on timing. We were lower in the Q1 on a lot of CapEx timing we caught up in the second quarter, Particularly on some of the mobile costs across all the operations and some of the stripping costs. So overall, a little higher than budget, but No change overall to our guidance for the year. So I'll just comment on that. So I think as we reiterated in our MD and A and the news release.

Speaker 3

We expect our guidance is unchanged for the year annual guidance. So including our share of caliber, somewhere And on the cost side, no change to the cash cost operating guidance or the all in sustaining cost guidance. We did mention, and as I mentioned there in the remarks, we are benefiting from lower fuel costs as we go through both The first and second quarter, so we are watching that. We'll watch that as we go through Q3. If we still see the benefit of that rolling through miss Patty and Namibia for the balance of I think we'll come back and look at our guidance again, but right now we're maintaining our guidance as is.

Speaker 3

Few comments on some of the other operations, I know Bill is going to talk But in terms of Fekola Regional Development, we've continued infrastructure development there. We got the roads in. We did have 18,000 ounces for Bentayco production in our guidance for the overall Fekola complex for the year, as mentioned and Clive mentioned, we don't see that coming through now In 'twenty three, we think that will roll into 'twenty four. But we think we have enough optionality in the availability of I have Fekola generally that our guidance will remain unchanged. We'll still meet guidance for Fekola complex.

Speaker 3

On Goose, Bill is going to talk to you. We did put out a news release I just updated our CapEx estimate in the period and it came in very close to what we said as we went through the acquisition itself. So CAD800 1,000,000 for the core construction of the plant and then about CAD90 1,000,000 for accelerated underground development Where we see that we can actually we can do some more than was originally planned upfront and then we'll benefit from that in the 1st few years of operation at Goose. So, we're still on track to break those on in Q1 'twenty five and our share of post acquisition costs when you translate it into U. S.

Speaker 3

Dollars After taking into account the spend that Sabina already had, it's just over US400000 dollars That's what we expect to incur to complete the project. Ojikoto continues on. And just a reminder as well, there is Ojikoto's scheduled ramp down in 'twenty four and open pit mining activity at Ojikoto pit To conclude in 'twenty five, but then we will have ongoing production from Wolfshag Underground as well as Stockpile Processing that should take us right through into early 20,301, somewhere around there. Gramalote, the sales process is ongoing. No updates to Strategic investments, you saw us look at the most significant one in the current period and they put out a great number today was Snowline.

Speaker 3

So We invested $32,000,000 there for a 9.9 percent interest in Snowline. That's kind of part of the company's ongoing strategy, just like you saw us invest in Matador And then the other thing to highlight, maybe on just project side, we did disclose $20,000,000 more And exploration for the year, we're well over $80,000,000 now, exploration budget for 2023, and that $20,000,000 addition is exclusively for Backriver, the Backriver District. So both Goose, some more work there in the George prospect there as well. So we're excited to get up there and see what else we can make for Backriver. Couple of other comments on the results.

Speaker 3

So, earnings overall attributable to shareholders $80,000,000 or $6 per share. Adjusted earnings were $86,000,000 or $0.07 per share. And then On the cash flow side, we had good operating and overall cash flow quarter, dollars 195,000,000 in cash flow from operations or $0.16 per share. So we benefited, Like I said from the higher gold price production right on schedule, good cash costs overall and some working capital timing. So $195,000,000 was a good result.

Speaker 3

On the financing side, there's a couple of items to comment on there. With the acquisition, the main item that impacted certainly the balance sheet overall In the quarter, it was the acquisition of Sabina as we brought in those projects on the balance sheet. And in doing so, we took the opportunity to extinguish Some of the existing financial obligations that Sabine had entered into as part of their financing package. So In total, we spent $111,000,000 which included extinguishing the offtake agreement that was there with a private equity firm And we did that because we there's effectively royalties And we obviously really like the prospectivity at Ghost and Back River generally. So, it makes sense to try and take those out upfront of the path.

Speaker 3

So, we took that opportunity. Then on the dividend side, we've maintained our $0.04 per share for the quarter. The dividend is higher this quarter overall in gross terms Because of that extra 200,000,000 plus shares that were issued as part of the Sabina acquisition, and it's our goal to maintain that dividend going forward, that level of dividend going forward, This project is currently underway. We did finish the period with, as Clive said, great financial shape, over 0.5000000000 U. S.

Speaker 3

And the bank, we still have an undrawn revolving credit facility. It was $600,000,000 We added National Bank in for another 100,000,000 $700,000,000 available on the line undrawn, dollars 500,000,000 in the bank at the end of the quarter. So, dollars 1,200,000,000 in sort of Available right on hand liquidity. And as we look forward to bringing Goose online as we go through, I think what we see is we're very comfortable in our ability to finance Goose, keep paying the dividend as we see it and then also evaluate sort of the other capital needs that we have around So I think we're in good shape financially there. And with that, I think the only other thing I'd add, we'd like to give you an update on cash taxes Each period for your model.

Speaker 3

So we did update the MD and A. There is an increased cash taxes to just over $250,000,000 and that's because we budgeted at $1700 gold And now we've come through the first half of the year over $1900,000,000 and we're forecasting $18.50 So our new cash tax is approximately $250,000,000 just for your models. And with that, I'll hand it back to Clay.

Speaker 1

Thanks, Michael. I'll pass it over to Bill to give us a high level update on the exciting progress we're making at Goose Construction?

Speaker 2

Sure. Thanks, Clive. I guess, I want to start out with talking a little bit about really the key things for this project. Number 1, obviously, we continue to maintain excellent relationships with the Cotychmid Inuit Association Up in Nunavut, we've had several stakeholder meetings over the course of the quarter, introducing them to the B2 philosophies and very positive outcomes. Additionally, I think everyone is aware this really more than anything, this project relies on logistics for success.

Speaker 2

And if you look at the timeline, we've been very publicly stating that, yes, in fact, we will try and maintain the existing timeline, which has us producing 1st gold in Q1 2025. With that, the logistics the overall logistics has gone excellent so far. I think everyone's aware B2Gold has their own logistics group, procurement logistics group that has done this before. We did it in Far East Russia. And so they've jumped right in and really maintained the excellent progress that had already been done.

Speaker 2

So far there's been a HURP program, a C-one hundred and thirty program. We brought in more than 60 loads for the summer season this year. All of the shipping and ordering has basically been completed now. So things are on the boat heading towards the Marine lay down area. Barges which were stranded last year by Sabina have been picked up and they've arrived at the Mermaid Marine lay down area.

Speaker 2

So overall, as of today, We see that the procurement logistics remains on schedule. As part of the next phase, We needed to come out and finish the Phase 1 construction of the camp. That was completed at the end of July. So, we currently have More than 130 beds, we'll be going up to over 200 here over the next little bit and that allows us really to bring our full construction team on-site. So the construction team, at least the first wave has arrived.

Speaker 2

And just to remind everybody kind of what the scope is this year. This year we've got kind of 3 major areas that we need to work on. We've got the mill, of course, we've got the powerhouse, We've got a big workshop that we have to get done. And really the scope for this year is to get the concrete in, get the steel up and get it all weathered in. So the Concrete Group has arrived on-site.

Speaker 2

They are currently pouring concrete. And I should add that originally we had inherited from Sabina Kind of an EPC contract, which you know was not the typical B2 model. The B2 model is self perform. So we've ended that relationship And we've now brought back the same group that really has made us successful for the last five projects has arrived back on-site and is in the process So that is going very well. And actually so far even the structural steel superintendents and supervisors have arrived on-site.

Speaker 2

They're busy sorting steel with the intent of getting everything put together as they can on the ground and waiting for the concrete to be poured so we can move forward very quickly on that. On the underground side, just looking at it, 1, from an operational perspective, that goes very well. We have so far on the open pit, we've come down a couple of benches already. Remember, the first open pit is going to be used, It has to be mined out for our tailings location, so that remains on schedule. The underground, we've developed more than 1300 meters in the decline, So basically, Everything remains at or ahead of schedule.

Speaker 2

And what's probably of more interest to you, we talked about initially when B2 acquired the project, The potential to kind of front end some more ounces. And so the engineering team here in Vancouver has been working with the site engineers. And I'm pretty happy to say without having the final details that certainly we are looking at kind of an in excess of 300,000 ounces a year Over the 1st 5 years of production, which I think is significantly more than what was in the Sabina feasibility study, and along with that, we've, of Taking a first cut at what kind of the operational cost would be at. And I think we've already said it at least several times in the market. But What we're really talking about is we're talking about $1,000 an ounce plusminus right in there, remembering sorry, yes, as in the all in sustaining cost And remembering that that is still preliminary with still some final work left to do.

Speaker 2

Mike already talked about the costs. We are talking right around CAD800 1,000,000 plus an additional CAD90 million for supercharging the development of the underground. And I guess maybe I'd end with it, I believe everyone's aware that there's an analyst trip coming up. I think it's the 26th September, where we'll be introducing people to the work that we've done on-site, but also the excellent management team that we have, That we brought over from Sabina and also of course our construction team and of course showing all the excellent progress in logistics that we've had to date.

Speaker 1

Thanks, Bill. Just we had a wordings over the last couple of days, of course, to review the quarter and present results. A lot of discussion on the presentation around Goose and what we're doing there. And I think I can say the Board takes great comfort as I do in what we're doing there and the experience factor As Bill touched on, this is what we do. We build our own mines and we have history of doing a lot of budget on schedule.

Speaker 1

We're even ahead We feel very comfortable where we are today as Bill has highlighted it. You'll all see that those people that make the chip up there. There's a lot of companies who've struggled in the North. We're very aware of that and we believe that we can set a new standard here for how we do it, whether it's Northern Western or Northern Canada. So we're referring to the Board as feeling very comfortable with the work that's been done and that we did inherit a good situation in Rosh Bila.

Speaker 1

They did a lot of good work in exploration feasibility And kicked off construction in a difficult circumstance as a single asset company to be able to arrange financing At the behest of projects, it was built that we've combined our team with some very good people of Sabina that we're pleased to have stayed with the project and joined forces with us. So A lot of good work has been done with KAA, our partners and the landowners, excellent relationship there. If you look at the history of B2Gold will be taking that culture of fairness, respect and transparency around the world and the key is to deliver the promises she makes. So we're very excited about What we can do working with the KAA for to advance and progress same site education, healthcare and other areas in the North, we're closely with our partners. So the other exciting thing that Sabina knows this very well and so Sabina shareholders know this very well that Bruce and his group were kind of doing the right thing, which Focusing on advancing the Goose project and therefore they were not going to spend an awful lot of money in exploration, although they would have definitely liked to.

Speaker 1

At the end of the day, they did the right thing for their shareholders. So they had a relatively modest exploration budget because of the fact they were trying to build to finance building mine. That was the focus, of course. So we're very excited about the exploration upside, and I'm just going to pass over to Nick here quickly to talk about how many rigs are outside and what our plan is for this year. We're exploring the Back River, the Hughes Back River property as well as further looking at the extensions of Goose and the George deposit.

Speaker 1

So what do you think?

Speaker 4

Thanks, Clive. I guess straight out of the gate, we were active up at the George project. It was basically the focus there was due to waiting for space to open up for the exploration team down at Goose project. We've completed 12 holes there. We don't have many of the results back yet, but That program has been completed.

Speaker 4

The focus now with the Accessibility of accommodation down at Goose for the exploration team is Goose itself. To remind you, we have 5 excellent Deposits there and these are all open down time. So, there's an immediate Potential there to actually extend these resources down plunge and we're looking forward to that. As Mike pointed out, we have $20,000,000 for the balance of this year In the budget, which is to put it in context, Sabina was spending around CAD5 1,000,000 on annual exploration. The CAD25 million, CAD27 million It's 5 times that much in half the time.

Speaker 4

So there's been a very extensive Ramping up of exploration at the back river project. We have 5 rigs Plan for surface drilling at Goose itself. And then as we get access to Underground drilling possibilities, we've been strapping in 1 or 2 rigs to that hopefully Early towards the end of this year or early next year. So, yes, Very, very active in terms of our exploration and ramping up very fast.

Speaker 1

I said the other thing is we heard in terms of at least a Great exploration team of Sabina and everyone knows our strength in exploration has been a great we would benefit from the experience of the Sabina and Chalmers Exploration team, they have all their knowledge of the projects. So that's another area where we're combining forces to aggressively pursue the exploration opportunities that we see there. I think with that, so operator, we'll open it up for questions.

Operator

Thank Please standby while we compile the Q and A roster. Our first question comes from the line of Ralph Profiti from 8 Capital.

Speaker 5

Thanks, operator. Good morning, good afternoon, everyone. Clive, I appreciate the clarification on the Moly situation. But I want to come back and maybe ask a question sort of in broad terms. When you've engaged in discussions and they solicit your feedback, Where have you think that the concentration should be in terms of giving your input, right?

Speaker 5

Are there any specific issues that should take precedent in these discussions in your view?

Speaker 1

Well, I think the discussions with the government, ourselves and from what I've heard other mining foreign investment mining companies Successful in Mali is the fact of maintaining the importance of maintaining an attractive economic environment to go and invest in So that's what we emphasize to government. We always do this everywhere we go in our conversations with government, which is find the balance there, Fair reasonable tax regime, which we feel we have under the Fekola scenario. And obviously, for a public company, Part of the incentive of what we do is profitable mining. So our conversations with government and all governments is always surrounded about What is fair and equitable and what maintains an attractive environment? NOLs has such a rich history of gold mining for 1000 of years And the governments for we've ran gold, it's been there a lot longer than us now, of course, Merrick.

Speaker 1

But they've been very they've benefited a lot and have been very Good to work with. They have changed the mining codes over time to more reflect the reality of the kind of standards that we see worldwide. So I would say the 2012 COVID reflects what we consider to be a very fair and equitable environment for all stakeholders, as I mentioned. So That's kind of the focus when we talk to governments all around the world is how to find that balance where the people of Vale should, of course, benefit from gold production in their country, of course, it's their gold. At the end of the day, what's the balance because they are not at this point in time able to raise the 100 of 1,000,000 of dollars as we have done to build something like Fekola.

Speaker 1

So that's the balance and We've had successful conversations in the history of Malias Gold Producer, I believe. We believe going forward, the government is keen on. I I mean, the economy is driven more to a pretty significant step in gold production, and we believe they're going to want to see more successful development of gold mines in Bali.

Speaker 5

Got you. Yes, thanks. I want to switch topics and come back to the construction That goes that was given last month and the move to long haul underground for Umwelt, Right then. And I'm just wondering, does that move sort of stope and ore pass and all this development as one of the critical path items? The reason I ask is that that particular deposit and the old Sabina plant was at the front end of the mine plan.

Speaker 5

I'm just wondering how ore sequencing by deposit happens now that you're Changing the mining method.

Speaker 2

Yes. So you're actually like right in where we're at right now in the design. So I don't really want to comment. I would maybe say give us another quarterback, give us another quarter to really kind of come back and answer that correctly. We are looking at the sequencing and really a lot of it revolves around the crown pillar that needs to be mined out ahead of when you When you use the pit for tailings and so sequencing, I don't think we're ready to talk about exactly which one, but certainly long haul stoping seems like the way to go for us.

Speaker 1

That we think we could add positively add to production profile. Yes.

Speaker 6

Yes. All right. Thanks, Bill. Thanks, Clive.

Speaker 1

Thanks. Thanks, Ashwin.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Elias Habib from Scotiabank.

Speaker 2

Thanks, operator.

Speaker 7

Hi, Clive and Peter team. Just want to say congrats on another strong quarter and great to see development of Good. Progressing well. A couple of questions from me. Number 1, just on a sustaining cost, 2023 seemed to be a lot of a high sustaining CapEx year.

Speaker 7

A lot of projects came in At the beginning of the year at the same time, should we expect sustaining capital to subside going to 2024 or should we maintain the same kind of

Speaker 3

I think you can see it come. I think we guided that, Omaze, when we put the budget out. It means A chunk of sustaining capital, some of its fleet, it's time to upgrade some of the fleet, but also deferred stripping was quite a big number as we put out in the budget. So There were significant stripping campaigns both at Fekola, the new phases and in Namibia or Otjikoto. So, obviously, like you said, Ojikoto, it's winding down, I guess, by 'twenty five.

Speaker 3

So, you shouldn't expect the same levels. Mine plans Bump up and down a little bit, but generally speaking, last year and this year, we're happier stripping periods.

Speaker 7

Got it. Got it. And thanks for the color on that. And just moving on to Fekola then and specifically Fekola Underground. And maybe this question is for Bill.

Speaker 7

I believe you're looking to release a new mine plan at the end of the year that includes the plan on the Fekola Underground. Bill, is there any update info you can provide on what Fekola Underground looks like or how you're envisioning that?

Speaker 2

Yes. Well, I can provide an update kind of where we're at for sure. So you have to remember the Fekola underground development More than anything was to really get down to the deposit and drill it off to an indicated resource, right? So Well, we do have what I would say a conceptual mine plan on that. What we really did was prepare development and got approval from the government To get the development down in the face, I will tell you that that development, because it was a rather new concept in Mali where you did exploration from underground, It took a little longer, so we were about a quarter behind, but all indications are burn cut is on-site right now.

Speaker 2

They're doing the development for us Is that they will catch up and we will see that in Q1 2025. So I guess the short answer is yes, it will be part of the update at the end of the year. It will contain really the resource that you've already seen at an inferred level as it fits to the whole plan. There won't be any update for that, But it will be part of the year end update, the comprehensive Fekola complex.

Speaker 7

And basically, I mean, is this Study kind of trying to see if this is feasible or is this kind of already given the green light and we should start seeing some production out from underground Fekola underground in the near term?

Speaker 2

In 2025 is when you'll see production out of the underground.

Speaker 7

Got it. Okay. Thanks for that. And just moving on to the exploration program at Goose and George. You guys mentioned drilling has commenced.

Speaker 7

So when can we start expecting some results from the program? And again, is the priority of this exploration program to kind of target near mine exploration or are you looking more regionally as well?

Speaker 4

The target at this stage, we started, as I said earlier, at tours For basically logistical reasons. So that's the regional work that's been done to date. The focus now will be at Goose and there's a mix there of both as I indicated earlier, Looking at extensions of the known deposits, that's the focus this year. There's also Targeting particularly the crown pillar area and below that to actually provide more detailed in full drilling To some extent, for to allow that planning

Speaker 3

of that

Speaker 4

drilling of the mining On that crown pillar within the timeframe. So, in terms of more regional work both at Goose itself and George will probably pick up on that next year more. But certainly we've got a lot to do even on the extensions that we have of the existing deposits. The Synchronoss results? I'm sorry, the timing of the results.

Speaker 4

I guess because of the location, the turnaround It's not great on assays. So we're looking at 4 to 6 weeks at least. So having just I started basically this week at Goose. We're looking at probably another 2 months at least before we start seeing some of the results coming in from Goose.

Speaker 7

Sounds good. And thanks for the color on that one as well. And just shifting gears to the situation in Niger. B2 obviously doesn't have any exposure in Niger. But, Clyde, maybe can you provide any color or thoughts on Niger and any sort of impact to your current portfolio?

Speaker 1

Well, obviously, everyone is watching what's happening there. I mean, we feel that for our circumstance in And Ali, we are working with the current government and the current government is popular.

Speaker 7

The coup

Speaker 1

a few years ago was a bloodless coup. It was dissatisfaction and widespread amongst the people with the government of the day at the time. And I think if you talk to our people in Mali and many The government of Mali has done some good things for the people of Mali. So I think there's some Stability there, and they are heading into elections, committed to elections next year. So sometimes the West misinterprets or This reads what's happening in each of these countries.

Speaker 1

I'm not an expert in Nigeria and I really won't comment much about that. At the end of the day, We're hoping to see continued political stability and we believe we will see that in Valley, about an expert on all the other countries in West Africa.

Speaker 7

Okay. Thanks for that Clive. And that's it for me. And thanks for taking my questions.

Speaker 1

Thanks, Uday.

Operator

Our next question comes from the line of Don DeMarco from National Bank Financial.

Speaker 6

Hi. Thank you, operator, and good morning. Good afternoon, Clive and team. First question, at Fekola, Bill, you mentioned that there is ore available to replace the 18,000 ounces that would have otherwise been trucked in. Would this replacement ore be comparable in terms of grade, Operating costs and CapEx to the ore that would have been trucked in?

Speaker 2

The answer is yes. The short answer is yes. It will most likely come from Cardinal or some of the kind of extensions of Fekola. So with it being closer than coming from Medaco, it has to be at or better the overall cost

Speaker 6

And it seems like you've got some flexibility there with Cardinal, Coca Cola in general. If some of these trucking delays persist into Q1, do you also have the flexibility to replace what you might have otherwise trucked for a period of time?

Speaker 2

Yes. I mean, we are remember, we have always talked about the kind of flexibility. That's the beauty of Having all those licenses and getting set up the way we are to be able to mine for multiple pits, we still are projecting that in 2024, We will be trucking from the Bentacol area, right? That's still in our life of mine. So if that changes, which I can't imagine at this time that it would, I mean, when we were just there meeting with the government, now that they've kind of gone through the review of their mining code and are Trying to

Speaker 3

sort out what they are

Speaker 2

going to do with it. The technical guys are saying we need to start moving this stuff as forward as fast as possible. So we absolutely see Bringing some regional stuff in, in 2024 to the Fekola Mill.

Speaker 6

Okay. And while we are talking about Fekola and Nalie, you've been there firsthand with these negotiations. How would you describe the sort of the tenor of the meetings? And I I mean, obviously, you have a long standing positive relationship with the government there. Are you seeing based on what your engagement there that this should continue?

Speaker 2

Absolutely. I mean, what we have been saying over the last quarter and which I just validated being down there for 2 weeks Was that the Malian government considers B2 kind of the poster child of what they want in mining there. Clyde didn't really hit on it, but the reality is that some of this talk about changing the mining code is really bringing up some of the other people That are not under the 2012 code to kind of what we are doing, right. So as far as we are concerned, we continue to have a very good relationship And quite frankly, we expressed our concern on, 1, really the way that the discussions around the mining code have been happening. And every one of the government officials I met was saying, we do not want to slow down mining in Mali.

Speaker 2

It is a cornerstone for our economy.

Speaker 6

Okay. That's good. That's encouraging. At Goose then, shifting to Goose, congratulations on the progress so far. And one of

Speaker 7

the items you guys did is

Speaker 6

You successfully completed the ice road without any incident. And you actually created came up with some creative ways to expedite development next year. But my question is, have you looked at the cost and benefit of building a permanent road to the site? And if so, what might that cost and benefit some of the benefits be?

Speaker 2

Well, I think that Sabina had looked at it. There's never going to be, at least in the short term, a permanent, I should never say never, But the government and the KIA up there do not want a permanent road into the site. And so that would really require Extensive discussions. What you can do is there is some talk that you could actually put down some base within your license area to Shorten what the ice road would look like, but I don't think you'll ever see an all season road in there.

Speaker 6

Okay, great. Well, that's interesting, but it seems like that's good for that. Thanks for that color. Last question on Masbate. Okay, We see Masbate benefiting from lower fuel prices.

Speaker 6

There could be a guidance cost reduction. Are the fuel costs running below budget at the other mines?

Speaker 4

Yes, it's Mike. Yes, as I

Speaker 3

mentioned, they are also at Namibia, they are lower than They're not as much below budget as Ms. Batty. Remember, Namibia, we've kind of weaned ourselves off HFO because now we're connected to the grid. So It's only really diesel costs that we're exposed to fluctuations there. And in Mali, diesel is a bit lower, but HFO, this new blend of HFO is a little higher.

Speaker 3

So, Ken, more neutral in overall fuel costs. Masbate is the one that is impacted the most by fuel right now.

Speaker 6

Okay. Okay. Well, that's all for me. Thanks a lot for that and good luck with Q3.

Speaker 1

Thanks. Thanks, Tom.

Operator

Thank Our next question comes from the line of Anita Soni from CIBC World Markets.

Speaker 8

Hi, good morning guys and thanks for taking my questions. Just following on Don's question about The fuel, as I recall, maybe I'm thinking of it incorrectly, but and it wasn't you, but is there a little bit of a lag in terms of The sort of your inventories and the effect that you have in terms of fuel pricing. So the question really being is, could we see more of an effect Going into next year as fuel prices come down?

Speaker 3

There's probably 2 or 3 parts to that. Historically, we had There was a lag in Mali because the government sets fuel. And what we've seen certainly initially Over the last couple of years was they were much slower to react to change the fuel price than the underlying market price In the Philippines, you see that correlation impacting much more quickly, for example. So that's one. The setting of the fuel price by the state in Mali does create a lag sometimes.

Speaker 3

The other one to think about As you go forward, it's not an operation now, but Goose, there's a short shipping season. So, you're going to be shipping fuel In large increments over the summer and that fuel is going to be used over the course of the year. So, you're not going to see the same direct correlation with the market price there Because it's going to be inventory to net used. So as we get near to goose coming into production, we'll be able to give you more guidance on that As to the quantity of fuel and the valuation that's ascribed to it, but those are the 2 main timing differences I think you got to think about, Government pricing in moly and then the impact of Goose having the short shipping season when it comes into operation.

Speaker 8

Okay. And then just in terms of these sort of cadence for the rest of the year end quarters, You're running, I think, at about 50% already. Was there was it expected to be slightly more back half weighted At these assets or was it relatively even like we could just continue to model?

Speaker 3

Consolidated was relatively even, but We did disclose in Otjikoto, they had more of a as you get into both the wash ag underground and some of the higher grade Parts of the later Ochocot open pit, you get, it was weighted like sixty-forty second half to first half of the year. So, you'll see a slightly higher production in And Fekola is the officer. And Fekola has a little table. So overall, not really significant fluctuation on the total production from our sites.

Speaker 8

And you would expect, all else being equal, that the costs would sort of follow the opposite trends then, I guess?

Speaker 3

Historically, that's correct. And like I said, We haven't re guided half to after the first half, but we will come back and let you know where we think things are at Just as we gauge fuel prices going through Q3.

Speaker 8

Okay. And then lastly on the Goose project, you mentioned that you've gotten rid of the EPCM contract

Speaker 3

The cost of termination was nominal and you won't see an impact on the budget that was put out.

Speaker 2

It's factored in for sure, Kevin. Okay.

Speaker 8

Well, I look forward to going on the tour. Thanks.

Operator

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

Speaker 1

Thanks, operator. Thanks for your good questions. Just a couple of things. One thing I noticed that I forgot to mention, a very important thing and that is that as part of our Going forward at Goose and Back River, we will be looking to, of course, maximize Inuit employment and training. I don't I don't know if you want to touch on that, but that's a very important part of as we in all of the countries we're in, I think everyone's aware that we are well known for having very high Employment from locals is in the 98% range, I think, as a company.

Speaker 1

So here we are back in Canada, bringing in the culture. We've been so successful around the world The B2Gold will go back to Canada. We did do a lot of good work there in terms of working with the Indian community and training and employment. Yes.

Speaker 2

Sure, Clyde. I mean, as you pointed out, we have a very good relationship with the Inuit communities up there. We have an agreement Signed with them, it was signed under Sabina, which does ask us to maximize kind of local hires and we've really taken that to heart. I think that we're well over, I want to say we're in double digits percentage already in hiring of the Inuits. And

Speaker 1

Thanks. Well, we covered a lot of ground. Thanks for your time and your questions. And any follow-up questions, I'll talk to Michael McDonald and you'll We'll get the right individual to answer your further questions. So thanks for your time and let's remember this is a really good quarter that we We just put out a reflective of how I believe how well this how well we are doing as a company and I am very excited about we are excited about our growth prospects going forward.

Speaker 1

So

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Earnings Conference Call
B2Gold Q2 2023
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