B2Gold Q4 2023 Earnings Call Transcript

Quartr
Provided by Quartr
February 22, 2024

There are 9 speakers on the call.

Operator

Thank you for standing by. This is the conference operator. Welcome to B2Gold Corporation's 4th Quarter and Full Year 2023 Financial Results Conference Call. As a reminder, all participants are in a listen only mode and the conference is being recorded. After the presentation, there will be an opportunity for analysts to ask questions.

Operator

I would now like to turn the conference over to Clive Johnson, President and CEO of B2Gold. Please go ahead, sir.

Speaker 1

Thank you, operator. Hello, everyone. Thank you, operator. Hello, everyone. Thanks for joining us.

Speaker 1

We're here today, as the operator said, to discuss the Q4 2023 financial results and also the full year of 2024. I want to start the call off by, again, extending the condolences of all of us at V2Gold for the tragic loss of life in volume. February 15, there was an armed attack on a convoy of our buses. And fortunately, 4 people were killed in the attack. So we'd like to extend our condolences to the families of those in the past and also our best wishes for the full recovery of the veteran hospital.

Speaker 1

We are with the government working on an extensive investigation of what happened in the incident that happened about 300 kilometers from the Fekola mine on the National Highway, which is the way that many of the mines in the area and people in the area travel on the main highway. So we've had a trouble spot there in the past. We've taken steps with the government to improve security. We will continue to work with the government to improve the security for our employees traveling. To and from the mine, the investigation will help us understand the motivation of the attack, who the attackers were and with that report which will be done shortly, we'll take some additional steps.

Speaker 1

The priority of Beachgold has always been for our 6,700 employees, has always been the safety of our people, including transportation. We do have a top safety record on-site, one of them better track records in our industry. We are proud of that. And we consider that safety is the cleanup one priority. In terms of talking about the 2024, I'm going to hand off here shortly to Mike Sinnamon, our Chief Financial Officer, who is going to run through, give you a quick high level overview because the news release is quite excessive.

Speaker 1

We'll talk about the record gold production in 2024, talk about the 8th year in a row that the company has met or beaten its expectations or guidance, which is I think a tremendous track record that we intend to keep going into 2024 and beyond. 2024, as Michael talked about in 'twenty three results, just touched on 2024. We've signaled for quite a while now that this is a bit of a transitional year with the construction of the Goose plant, but also with some various capital expenditures that we have and that Fekola, for example, where we're building another new tailings bond, we're building another extension to the solar plant. We have a bit lower production for this year because we didn't get the permits from the time when the export diesel license from the government rally in time to produce the additional 8,200,000 ounces we were hoping to produce in 2024 as we start tracking ore from Fekola complex in the North Anaconda area down to the Fekola mill. So we're working with government.

Speaker 1

We're hoping to get clarity from the government quite soon and move on to starting to track that ore later this year, but we haven't put anything in 'twenty four, which stood in that up in 2025, which could add 8,200,000 ounces to the annual coal production, significant amount of that, of course, to the benefit of the government of Boeing. So we've had some positive meetings and we think we're closing on understanding the implications of the 2023 Mining Code, which the coal has grandfathered onto the 2012 code. It's a very important to remember. The regional projects are subject to the new code because those are exploration licenses right now for the eTrans transfer. So going into 2020 4, we are in an externally strong financial position that we were going at the end of the year.

Speaker 1

And subsequent to the year, I believe, completed a prepayment of gold revenue financing, which is an excellent way to further strengthen our financial position given the large capital expenditures that we have this year from some of the things I talked about, but also we'll obviously lose construction as well. So that financing was an excellent financing, so around 3% cost of capital. And it is a good move for many of our gold mines and it represents about it would be paid back in 2025 and 2026 and it represents about 11% of our gold production during those years and it was done at around 20 20 price of gold. So I think a very effective financing, you seen us do it before back in the day when I think it was 2014 when we pioneered this financing for the industry, which is subsequently good done by numerous companies, but it is an excellent way to maintain a very strong balance sheet. And when you have significant capital expenditures coming, it's a cheap form of financing that exposes very little of our gold in terms of very small percentage of production being locked in in those years.

Speaker 1

So 2025, we're looking to bounce back to another very strong year because of having the capital spends finished, some of the things we're doing at Fekola, etcetera, to schedule on schedule start production in the Q1 of 2025. And we should set record gold production again in 2025 with Goose coming on and then better production more with trucking ore and better creative for Kola in the beginning of 2025 and much less capital expenditures across the board. So I think with that, I'll pass it over to Mike to give you an overview of 2023. Again, another very strong year for the company. And after Mike does his thing, then Bill, who is up at Goose, who is going to give you a Goose update, so store independent.

Speaker 1

With Houston's Telus connection and then we're going to open up for questions. So with that, over to you, Mike.

Speaker 2

Okay. Thanks, Faj. So I'm going to start just on the quarterly results. Revenue for the quarter $512,000,000 We averaged just under $2,000 an ounce, dollars 1993. So thank you, gold price.

Speaker 2

It's a good quarter and a good year for the gold price. I think for the full year, we came in $1,900,000,000 at an average price of $19.46 an ounce, which when you think about the fact that we budgeted at $1700 an ounce, that's a good result. Production wise for the quarter, gold produced from our operating mines, 271,000 and then 289,000 if you include our share of caliber. I think production played out like we bought for Q4. The big winner was Fekola 143 1,000 ounces versus 109,000 ounces and that's really Fekola, as expected, we had some changes in timing there between Q3 and Q4, just with some delays.

Speaker 2

At the end of Q3, we get into Fekola's Phase 6, but we got in there in Q4. We got the grade we're expecting kind of like we did the year before, and Fekola beat budget significantly by almost 35,000 ounces. And then if you look at Shadow 2 for the quarter, I think for Otjikoto, 81,000 ounces is a couple of 1000 ounces higher than budget, but that's actually quarterly rock work for Otjikoto. And it just reflects the fact that we got into the good grade both in the Otjikoto pit and the Wolfshag underground mine. Then looking at the full year pictures, again kind of how we guided it, I think at Q3.

Speaker 2

Total including our share caliber, 1,061,000 ounces, which is in the upper half of our guidance range. And I would say again that that on a consolidated basis is a record annual production level for B2BOLD. Let's talk a little bit now about what that all meant on the cost side. Again, not spending too much time on this because I think really these results rolled out what we saw through the year and what we guided in Q3 and what we expected to Q4. So in the quarter, the big winners on the cash cost side were Fekola and Masbate.

Speaker 2

Fekola with that additional production that came through and ability to sell it, dollars 605 an ounce, quite a bit, dollars 67 under budget. And Mesbate, dollars 9.10 an ounce, which is $71 under budget. And overall, we came in for all of the operations we came in $6.33 a match, which was $20 under budget. Continuing to benefit, I think, from lower fuel prices against budget that we saw and then production beats every mine beat production slightly for the year. And when you look at the all in sustaining cost side, it kind of mirrors what we're saying there.

Speaker 2

For all operations, including our share count, we're $12.57 an ounce for the quarter, which was slightly above budget, but when and it's really a function of 2 things. You've got the beat that we had on the cash cost side, and then you've got some CapEx that we were catching up on from prior quarters, particularly in Mali where we had pretty significant CapEx here sustaining capital to get us ready to start moving into 'twenty four and beyond. So cost side, I'd say overall, when you look at total cost for the year cash cost, dollars 6.54 an ounce. That's below our original guidance range for the full year, dollars 6.70 to $7.30 So good result. Again, as we said, we thought we'd come out Q4 at the end of Q3.

Speaker 2

And then all in sustaining costs for the year, just $1201 an ounce, and that's right at the low end of our consolidated guidance range of $11.95 to 12.55 per ounce. So really more of the same as we saw as we went through the year and very solid results from the operations. Comments on maybe a couple of the other operations where they are and a couple of things to comment on before we get into the other results. So at Fekola Regional, as Clive mentioned, we're still waiting to get licenses there. But I would say that we had 18,000 ounces in there as part of regional production in the current year's budget for 'twenty three.

Speaker 2

And even though we weren't able to get in and access that, the performance of Fekola meant that overall for Fekola Complex, we still met our guidance range for Fekola overall. And we have continued to work on regional through the year. We have got most of the mining infrastructure, the roads, the warehouses, workshops built through the course of 'twenty three and we're just finishing that in the Q1 of 'twenty four. So we're really well positioned I think in terms of any trucking scenarios there for regional, just waiting now for receipt of mining license. Gramalote, as you know, in the year we purchased we bought Anglo's other 50% of the Gramalote project.

Speaker 2

So we own that 100% now. And we're working on an updated PEA for that that we expect to have in the Q2 of 2024. Thinking about smaller scale operation with potentially smaller mill and better recovery in cost profile, smaller CapEx upfront. Phil is going to give us good project updates, so I won't dwell on that right now. But just to highlight Ojikoto again, Ojikoto is coming near the end of its open pit mine life.

Speaker 2

That is scheduled to ramp down in 2025. But we did put out a news release in January just highlighting that we to have very positive exploration drill results from the Antelope deposit that we're looking at now. And we think that with further drilling has the potential to be developed as an underground mining operation, which could help us change the mix of the mill feed line as we move into the stockpile phase of Ojikoto. We hopefully will have more high grade from underground deposit at Antelope if that comes through. Okay, now I'm just going to talk a little bit about some of the other results for the period.

Speaker 2

So on the earnings side, net income for shareholders for the quarter was negative $113,000,000 as a result of impairment charge or $0.09 negative share. Year to date, dollars 10,000,000 or $0.01 per share. Then adjusted net income, once we remove the impact of any significant non recurring non cash items, dollars 90,000,000 for the Q, dollars 0.07 a share or $346,000,000 $0.28 a share for the full year. In conjunction with that and really reflecting how well the operations performed. On the cash flow side, we had $714,000,000 operating cash flow for the period sorry, for the full year, including $205,000,000 for Q4.

Speaker 2

And for full year, cash flow from operations per share was $0.58 So again, very good performance by the sites in getting that done. We found some good uses for it through the year. If you recall, some of the things we spent it on, we had the dividend, so we've got our $0.04 per share USD per quarter dividend that turned in 186,000,000 dollars dividend payment for the full year. And remember too that as part of the Bank River acquisition, there were certain financing obligations that we thought because we believe in the future outside of that project that we wanted to buy out our inception. So that cost is just under $112,000,000 earlier in the second quarter.

Speaker 2

And then on the investing side, a total for the full year of $845,000,000 which really reflects significant capital investment in Fekola as we continue to advance projects like the TSF, Fekola Underground, the Fekola Solar Phase 2, and then of course, the GOES project as we came into that. We've been working hard on that and Bill will give some update there. We did finish the year with 306,000,000 dollars cash in the bank, and that included drawing down on the line for $150,000,000 in Q4 just in advance of some of the anticipated later Q4 expenses, early Q1 expenses. As Clive mentioned, we did do a prepaid financing early in Q1. So with that, we used a portion of that $500,000,000 prepaid financing to pay down the outstanding balance on the line just a little later in January, early Feb.

Speaker 2

So that where we sit today is we've got the full $700,000,000 line available and we were on cash in the bank from the results of prepaid financing as we look through the 1st couple of quarters development, finishing and construction at various sites. One thing I will highlight, most significant transactions impacted Q4, so we did have an impairment for the Fekola complex of just over $200,000,000 maybe a couple of comments on that. As we've mentioned through the year, there was a new 20 20 Mining Code that was enacted later in 'twenty three in country. However, it was put into law, but there's an accompanying draft implementation degree, which is currently out for industry comment. We provided feedback along with the other big mining houses.

Speaker 2

It's not enacted yet and exactly how some elements of the new code will be applied remains outstanding, could be subject to change, but we are where we are at this point in time. With that mining code being out there, what it did prompt us to do was examine later in the Q4 what were our plans for the Fekola regional licenses that we discussed previously. We thought about whether there's a we can build a second mill, oxide only mill at Fekola Regional or whether we should look at a trucking scenario. As I mentioned, we already have that broad infrastructure built, so should we look at a trucking scenario to the Fekola Mill? And I think given the uncertainty about the new code and what we saw was in there, it's not as attractive for things like the tax royalty regime and some new funds that they built in there.

Speaker 2

We did a comparative analysis and we decided that for now certainly that trucking aboard from Fekola Regional to Fekola Mill is the optimal scenario. In that trucking scenario, we see it's optimal because it really eliminates any significant mill CapEx exposure if we wanted to build a mill while at the same time providing close to the similar cash flows from just trucking it down there, less capital upfront. So in looking at that and having done that trade off and that analysis, that also prompted us then to update our current high level Fekola mine and Fekola regional and mine plans, how we see production profiles coming from those. I'd highlight again that these are point in time estimates, so the best estimates we have right now. It doesn't take into account future changes in variables, finalization of the 2023 code, production changes, cost changes or further exploration success.

Speaker 2

But we're still lots of plans to drill there and further define the oxide and even more importantly perhaps the sulfides below those oxides to see how they can benefit both Fekola Regional production and Fekola Production per se. But by looking at those new mine plans, they triggered an impairment review process. And key to highlight here I think is that because those both mine plans assumed that we will process ore from both Regional and Fekola at the Fekola Mill, we had to look at them jointly. And for accounting purposes, they're treated as one combined cash flow generating unit. So Fekola is the combination of the 2.

Speaker 2

So we looked at that, looked at the plans and the most significant impact in there is that the new regional licenses are all under the 2023 code, so they have to bear this sort of the regime that's under that current code as we know it, including the higher taxes and royalties. And overall, this resulted in a non cash net impairment charge of just over $200,000,000 for the combined Afekola complex cash generating unit. And like all impairment assessments, we made our best estimates of a number of variables. You look at gold prices, appropriate discount rates for the country and the 2023 quota impact on. And obviously, for regional, we looked at that, that was fully impacted by 'twenty three quota and for Kola mine, we assume that all stabilized factors under the 2012 code are still stabilized.

Speaker 2

So that's our scenario. I can't speak for each company in Mali because everyone has a slightly different scenario and where they are in their project life, the new projects. For us, the most significant issue here is that we have new projects that we know would be pulled in under the new code. So I think that's those are the main items. I was going to highlight and if anyone has any questions, I'd be happy to answer them.

Speaker 1

Yes, we'll go to Bill first. Then we'll open it up for questions. So Bill, do we have you on the line?

Speaker 3

You do? How do you hear me? Fine.

Speaker 1

Yes.

Speaker 3

Okay. So this is reporting in from the North Pole. I'm actually at the Goose site right now in anticipation of the Winter Road opening up. And so I'm happy to say that the two sides are at point. They can see the stacks off of each other's equipment.

Speaker 3

So we anticipate that pending good weather for the next 48 hours that the road will open up, that will not be fully opened up, but the certainly the first lighter load to come down the road. So what we're doing now is we're in the process on the MLA side of loading ready to go. And so we can anticipate certainly this weekend that we will be seeing on the road. Everyone remembers that's in a good space. We've got double the number of trucks that we've had since last year and double the capacity.

Speaker 3

So we think we're in really good shape of the winter road equipment. Additionally here, the millwrights are in the mill, installing the mill.

Speaker 1

We've always for

Speaker 3

drilling remains 3 to 4 months. Most of the buildings are now completely putting in generators in the underground. The open pit is operating. The underground is looking good. The camp Phase 2 is getting ready to go.

Speaker 3

So that will be some of the first pieces of equipment that come down the road, the Phase 2 camp, which will allow us to get to 500 beds. Just on cost, I don't have the latest numbers. But what

Speaker 4

I will tell you is that if

Speaker 3

you remember, we've pretty much de risked the project because we've ordered all of the stuff obviously, which is coming down the 24 Road. We're in the process of ordering guide

Speaker 5

shipping stuff

Speaker 3

is basically on budget which I think January and we anticipate that we're not seeing any material scope or to budget. I don't know, Clyde, is there anything else you want me to talk about?

Speaker 1

I guess maybe just highlight, I think you just did, but the fact that we've spent a lot of the capital and ordered a lot of equipment for the next year and a half. So we've actually derisked the project. But it doesn't even know how much money we spent on the capital estimated capital cost for Goose that we've spent at 2. Well, cash spent to the end of

Speaker 2

the year was approximately $750,000,000 for Goose CapEx in total, including

Speaker 4

Sabina's share that they spent and what

Speaker 1

we spent post acquisition. And what how do we have to spend this on our recent budget? Well, we've given

Speaker 2

the budget estimate for CapEx for $10.50 for the main project plus the funding of development of the open pit and underground. Also for some of the working capital funding that

Speaker 1

we think we need. So, Bill, I guess just to remind people about the schedule of the ice road starting here shortly, but how many weeks we have and how many weeks we think we have on that ice road and when do we think it will wrap up or we'll have utilized it to the maximum.

Speaker 3

So some of the numbers that we'd always talked about kind of a maximum of 3,000 containers. We actually strip. As I said, we'll be open and there will be open this weekend and we have April or into the 1st week of May. Assume that we're running 50 trucks or 48 trucks, what you're going to see is that we've got more than double the capacity to bring the loads down the road. So, the thing is very good as far

Speaker 6

to bring this.

Speaker 1

You're breaking up a bit, but thanks for that. Just another couple of things to remind you of. We still have obviously as a company, one of our priorities and one of our great strengths is also exploration. And our exploration success not only in finding more gold around our existing operations or mines or acquisitions we've made, but also making additional discoveries as a group, as a company over a long period of time. So we have an aggressive exploration program.

Speaker 1

We have the King and Andy Bell with us here. If there's questions on exploration, We are pulling back on exploration in Mali. Mike mentioned, we're far from realizing the ultimate value of this Fekola complex. There's lots of targets, lots of zones we hit that are open. We are drilling, frankly.

Speaker 1

We've cut back dramatically on the drilling there because we don't understand yet the full implications of the 2023 code and understanding whether we it might be an option to build a second Moderna Road, etcetera. But trucking looks like the option. We're pursuing that, as we said, and hopefully, we'll start be able to start that sometime later this year. But the exploration, why would you go out and drill off lots more additional houses when it's not clear whether they're economic, I. E, the 2nd mill potential.

Speaker 1

So but we will get back to that. If we forget what we want to get to the government and understanding that the 2023 code has written is going to be very detrimental to the future of the low binding industry in Mali because we'll make it from being a very attractive company for foreign investment over many decades, make it one of the lesser attractive company. We have choices where we spend our money. Gramalote, for example, if we get a good result in the study in the middle of the year, that could be a good project with more than 100% by V2Gold. So exploration remains a priority in the Goose exploration.

Speaker 1

I haven't seen Tom and Vic and Andy, these guys are excited about the exploration upside maybe since Kupo or some of the days at Fekola. But we have numerous targets, a big budget there. And we always knew the acquisition, we don't pay for answers that might be there in our acquisitions, but then we think there's going to be a lot. We've already had one very good result by drilling the deepest hole ever drilled on the well. And that was a really good result.

Speaker 1

I think it was 20 meters of 18 grams underneath the 100 meters below the deepest hole before wide open and there's many other zones as well. So I think with that, we'll open it up to questions.

Speaker 3

While we wait. Still,

Speaker 7

we can still hear you.

Speaker 1

Okay. While we wait, just give comments on.

Operator

Pardon me, sir. My line dropped. So thank you. We will now begin the analyst question and answer session. The first question?

Operator

The first question comes from Wayne Lam of RBC.

Speaker 7

Just a question on the sequencing of mining activity at that river. I'm just wondering if you might be able to provide a bit more detail on the increased spend there and the rationale in terms of the resequencing of upfront mining activity?

Speaker 3

Yes. I think Peter is on the line with me breaking up.

Speaker 6

Yes. Thank you for that question. Basically, there are a couple of things that we've done here. One is really focusing on the echo pit. That's going to be the 1st tailings facility.

Speaker 6

So that's something that we want to move forward and focus on. But really of more interest is the underground mining at Elmwealth. What we've done is looked at the development, the size of the resource and realize that by going with long hole stoping, not only on a mining method basis, but also on a material flow, we can upsize the mining equipment. So going from 30 ton trucks to 50 ton trucks and then also increasing the size of the scoops. So much of the capital that you're seeing there is a larger mining fleet, physically larger equipment to start with and that's going to allow us to increase the mining rates from underground and also reduce the mining costs.

Speaker 7

Okay, great. Thanks. And then just curious on the upcoming life of mine update there. You guys had previously kind of soft guided higher costs with the update closer to $1,000 an ounce ASIC. Just wondering, given how things have evolved on the CapEx side over the past few months, have you seen any additional pressures where that could actually end up higher in the update relative to that prior target?

Speaker 1

I think you might have lost Bill.

Speaker 3

Bill, do you want me to take this one?

Speaker 2

Yes, sure.

Speaker 6

Yes. So we don't have the detailed cost analysis yet for the OpEx. There are some fuel costs that have gone up and some maintenance costs. So there will probably be some normal inflationary increases there. But like I said, we're offsetting these with a higher production rate.

Speaker 6

So in the end, we don't have the final numbers yet, but I think it would be fair to assume some inflationary impact.

Speaker 7

Okay, great. Thank you. And then maybe just last one for me, on the security front in Mali. It seems like it seems as though the historic issues have been much further east of the operations at Fekola. I'm just wondering if you've kind of seen some of that activity start to shift further west?

Speaker 7

And then with the most recent incident, how are you guys kind of reconsidering your operations

Speaker 6

in terms of transport of personnel to site?

Speaker 1

Yes. We're always transparent and happy to be so. But I think it's really important to understand we're in an investigation with the government to understand the motivation of the attack, understand who the attackers were and really review the process. We do that additional safety measures by having that vehicle out in front and a couple of vehicles in the back of the 3 bus convoy. So, it's just too early to talk about that.

Speaker 2

It would be inappropriate for

Speaker 1

us to try and predict what we're going to do. We need to get with the government as we are, understand more about the attack and then talk about what measures and there are a few alternatives, but what measures we can take to further improve security. And again, I encourage the government to continue to improve security on their national highway, okay? This is the national highway for Mali. So the safety of their citizens is just, I've shed, it was a priority for the government as well.

Speaker 1

So we have 3,000 Malian employees at the mine. And their safety is our top priority. And I think it's I believe I know it's a priority for the government, and they've taken steps along with us to improve safety. So that's really all we see on that topic for now when we go report more when we have finished our investigation.

Speaker 6

Okay. Thanks. Understood. Appreciate the color.

Speaker 3

Can I just add to that? I mean, certainly, everything that is ongoing right now. I'll tell you is that not only with the government, but also with the employees because they're ultimately the ones that really have to do the travel and they've been a very willing partner and this situation will change to be handled. But it is a kind of a tripartite

Speaker 1

question? Yes. I want to just go I need your input here on the questions asked before about Goose costs because I don't want to make sure we get that right. Can you talk a little bit about what where we are in terms of the last estimates we put out or we discussed the estimates about all the sustaining costs at Nusa? I think we built in quite a lot of inflationary factors.

Speaker 1

Would that be fair to say?

Speaker 3

Absolutely, Clive. I think the marketing out there saying 1100. I guess I'm pretty broke up now. I'm getting tech. Can you hear?

Speaker 1

Yes, you broke up there. But I think you were talking about the fact that our recently discussed in our market that $1100,000,000 of sustaining cost, we think it's reflective of some projecting some additional inflationary cost in that number. Okay. Let's move on to initial questions.

Operator

Certainly, the next question comes from Uvais Habib of Scotiabank. Please go ahead.

Speaker 5

Hi, Clive and B2B. First of all, please also pass on Michael Rollins to the families of the deceased as well. On another note, congrats on a strong year, especially cash costs coming in below your guidance for 2023. Since we're on Goose, I was going to start off with just asking in terms of how the underground at Goose is progressing, as well as are you doing any sort of drilling into the initial stopes that's expected to be mined out? So maybe we can start up there.

Speaker 2

Peter, can you comment on

Speaker 4

the mining and then Rick can

Speaker 1

talk about what drilling we're doing or what we're doing it. Peter, underground mining?

Speaker 6

Yes, I'm sorry, I cut off at the beginning of that. Was this for Fekola or for Goose? Goose. For Goose. Yes, so we have 2 options.

Speaker 6

The standing option, basically following what Sabina had was to target the lower unwealth section. And then we're also working on the crown pillar section. That's our upside case and really what we're driving for. We are on schedule there. Development has been continuing.

Speaker 6

We've had a couple interruptions in normal operational interruptions throughout the winter, but absolutely on schedule and no concerns about having those stockpiles ready for mill startup.

Speaker 4

We're not drilling from underground yet, but the Carmela area and the area that's going to be subject to mining, underground mining is well covered with existing resource drilling. And obviously, the focus of our drilling moving forward and we expect to start surface drilling towards the end of March, beginning of April. There is extending the conversion of inferred to indicated on wormhole and at Llama. And obviously, over 56% of our drilling will be focused on extensions of our existing resources and tackling numerous other targets that we've identified at this.

Speaker 5

Perfect. Thanks for the color for that. And just moving on to Fekola and Fekola Regional. Flavio, Mike, you provided a good overview in terms of how great relationships are with the Malayan government and how much they want to move these projects forward. I mean, the question here is, are you still in discussions with the Malian government or have the Malian government gone back internally to figure out how to proceed with this new mining code?

Speaker 1

We had about 6 or 7 weeks ago now, it's been a busy time, but we were down there in discussions with the government representatives and made clear our concerns about the 2023 code. As I know, other, I think, Sears Gold, significant gold miners here have done as well. The ball was in the government's court now. We did get come up with a better understanding of certain issues and we just made some progress in our discussions and it was left. The government was going to go and come back with some ideas about some of the questions that we had asked.

Speaker 1

So I understand the government, I guess there's some material discussions going on between perhaps the ministries of Mines and Finance, etcetera. And we're waiting to hear back from them about the ultimate nature of the 2023 code and the implementation of the code. So, it's still a bit unknown where we hope that our arguments, our discussions with the government about the real impact of certain aspects the 2023 code and the negative impact on potential future investment, which is the reason why we unfortunately had to tell them that the 2023 code, the second mill was off the table. And that seemed to frankly be they wanted to know more about why that was. Trucking award looks like some good economics there because we have got good grade material, starting off with oxide material to truck, good grade material with no blasting, no crushing and the roads are already built, we are ready to go as soon as we get the implementation permit.

Speaker 1

So we think that we will find a way forward on that part of it, by still waiting for ultimate resolution and some things we discussed with the government and the ultimate proposed implementation of the 2023 code.

Speaker 5

Okay. Thanks for the color there, Clive. And yes, that's it for me and thanks for taking my questions.

Speaker 1

Thanks, Subash.

Operator

The next question is from Anita Soni of CIBC World Markets. Please go ahead.

Speaker 8

Hi, Clive and team. Thanks for taking my questions. And I apologize if you addressed it in your beginning comments. I've been hopping from different calls. So I just really want to understand, I know you took a write down at Fekola and it says it's based on your impression of the mining code and that mining code is subject to change.

Speaker 8

And I didn't find it in the release last night, but could you provide any color on what you do know about the proposed mining code at this stage?

Speaker 2

I really don't think we're going

Speaker 1

to go into details, Suneet, on that at the moment. It's just in the state of flux right now. We're waiting to go to the government's court. We've made our case. I understand other producers have made their case about the new code.

Speaker 1

So I think it's just wouldn't want to speculate right now. I think we had good conversations and the government better understands our issues, why we wouldn't build a second mill if the 2023 code remains as it was initially proposed. But I think I don't really not feel comfortable getting into detail. We are not going to negotiate on conference calls. So respectfully, I will come back to you on that as soon as we have clarification.

Speaker 8

Okay. No, thanks. I get it. Thank you for that. And then with respect to they are very encouraging on building the trucking option, it seems like.

Speaker 8

So was that part of like is the trucking option separate in terms of what kind of write down that you took? Like is the write down really just related to the mill Is that the case?

Speaker 2

Yes. And then you know I kind of gave I'm not sure when you came on, I gave an overview of how we had to look at it. But we had to look at the trucking option because it goes through coal and mill. It meant that when we looked at the results and the future cash flows that we used in impairment model for Fekola, we did it as what we call Fekola complex cash generating units. So it includes both regional and the Fekola mine put together because it's coming through the Fekola Mill.

Speaker 2

So we have to look at the combined cash flows and then and what the biggest significant impact being that Regional was under the full 23 coke fields and new operation.

Speaker 1

Yes, I think what we can tell you, Sean, you clearly from our trip down there. The government reiterated their appreciation of B2Gold and respect for B2Gold as being what they call one of the top 4 investors in the country in terms of the way we approached the project, the way we dealt with the government and dealt with our employees, etcetera. So we seem to have a good well, we do have a very good relationship there. Before they can give us an exploitation permit and that includes finalizing the code. But there's definitely they need revenue for sure.

Speaker 1

They understand that we're ready to go. They did agree that we could build the infrastructure even without an exploitation license. So we could build the infrastructure, which includes the roads. We're ready to go now because we built all the infrastructure necessary. So if we're on the same page with the government, we want to start hauling ore.

Speaker 1

They want us to as well. We need some more detail of the code and we need that exploitation early, hopefully soon.

Speaker 8

Okay. And then my final question pertains to Goose and the $937,000,000 that you have ascribed to the transaction. So you've got $740,000,000 in mineral interest that you outlined in there. And there was also the royalty obligation. Did you not cancel that royalty obligation?

Speaker 8

Is that like not should we be thinking about that being removed or is it still there? And then there's another royalty that you guys are collecting and what is your intention with that second royalty?

Speaker 1

The first one is still we do have royalty there with Wheaton. Mike, you want to touch on the wheat part?

Speaker 2

Yes, I think there's maybe 2 things. We acquired the Hackett River royalty, that's an asset from our perspective, and we all look to that as part of the purchase price. And then the other part was we inherited Wheaton's Sabina's Goldstream obligation with Wheaton. And if you recall, when we did the acquisition, in addition to unwinding a couple of other things, we bought back the max that we could have had stream obligations. We bought back 1 third.

Speaker 2

And in our own production world,

Speaker 1

it's a so small it's a soft stream in our production world and we're comfortable to have a relationship the. In terms of other royalties, we're not in the royalties business and if we have an opportunity to realize to sell the royalties at reasonable levels, we were open to doing that for sure.

Speaker 2

Yes. And I mean, if you want a bit more detail on the stream, it is on the financial notes. If you look at Note 18, we kind of laid out how the gold stream works and what we initially acquired and what we bought back. So if you need any more detail, note 18 pretty much gives you that information.

Operator

The next question comes from Don DeMarco of National Bank Financial. Please go ahead. Thank you, operator, and good morning, Clyde and team. I'll start off first question at Goose. We know that the winter ice road is expected to finish up tomorrow.

Operator

Just interested in your comments on construction. Was it completed without incident? No concerns on temperature, is there anything you would do differently next year?

Speaker 1

Let's try and see how it goes, Peter for backup. Well, sort of, but you are very broken up. Peter, I know you were just there. Could you just talk about what we're learning from this reconstruction? And what if anything we would do differently next year?

Speaker 1

It seems like it's a very good success in what we've done with the 160 kilometers, I guess, 158 so far, but the road that we built.

Speaker 6

That's right, Clive. So we had we made a couple of changes this year. We staged some equipment at Midway Point. We had some forward camps at we had forward from both ends and also had more equipment, more water trucks is one of the biggest changes that we made. And also optimize some of the routes over a few of the lakes.

Speaker 6

Those work really well. And basically, the initial schedule was built on the road being open March 1, fairly conservatively. It looks like well, we are going to beat that. So we'll have it open in a day or 2. And so first of all, I want to say emphasize that the changes that we made from last year have been very successful.

Speaker 6

As far as further changes, this year with the El Nino, we had a little bit of a challenge getting started with the warmer temperatures to start. That's not really anything that we can control. Other than that, it's been a really nice construction season. So obviously, we'll go back, we'll compare notes during the warmer during the summer and make any changes that we come up with. But all in all, we're very happy with how this is going.

Speaker 1

Yes. And just maybe a little color there. At the end of the day, often people build an ice truck starting from the ocean. In this case, Bathurst didn't let the ocean freezes last. So by moving the equipment last year to the middle of being able to start construction, that way we got well ahead of the schedule.

Speaker 1

We are well over to have a better schedule to do that. So and also some of the people involved here were involved with Kupol back in the Bemidaze. We would build 4 70 kilometers of ice roads to get everything from the northern part of the back and Russia down to the Kupol site. So we have a lot of expertise in this and of course, and a lot was learned from last year and what the I showed successes of the challenges that were faced by Sabina at the time. So I think the guys have done an excellent job as we hope to see.

Operator

Okay. Thanks for that. And then just final question. A few weeks ago, you released some updates on the Antelope target at Otjikoto. I think you could add maybe 50,000 ounces a year beyond 2026.

Operator

What do you need to see in the scoping study that's pending Q1 'twenty five to confirm? And is there any other sort of high priority targets on the site that you're interested in that could add additional extensions?

Speaker 1

Well, the study will give us an economic view to what we've tapped into so far. And I'll let Vic talk about the potential here. And so we haven't got more assays back yet, but we're very encouraged by what we're seeing in the drilling.

Speaker 2

So

Speaker 4

the results that or the initial resource that will put out will be on the Springbok zone, which is one of several zones within the Antelope deposit. The Springbok zone is about 3 kilometers, 7, 3 kilometers south of the Otjikoto pit. It lines up the liniment that lines up Springbok and the Otjikoto pit is run straight towards it and we do have several hits between Springbok and the Archicottopid that we'll obviously follow-up on and are going to be following up on this year. So that potential is wide open, 3 kilometers of strike. Obviously that needs to be drilled out.

Speaker 4

So there's huge potential. There could be quite a few more answer that's out there.

Operator

Okay, great to hear. Thanks so much gentlemen and good luck with Q1.

Speaker 1

Thanks,

Operator

Todd. This concludes the question and answer session. I would like to turn the conference back over to Clive Johnson for any closing remarks.

Speaker 1

Thanks, operator. Well, thank you all for your questions and your attention today. Obviously, I guess maybe the elephant in the room or the rhino in the room is the fact that the performance of the gold equities including ours will be up very pretty strong and looks like a pretty solid gold price. Those are the challenges we face. I think we've presented our case here about 2024 and as a transitional year leading into getting back to some excellent years of very strong years in cash flow and an increase production as we bring Koosah and do some of the other things we were doing in 2024.

Speaker 1

So at the end of the day, I've doing this for a long time. I have never seen the others agree the disconnect between the gold price and the gold equity. So somewhere along the way here, someone is going to find some gold equities attractive and we will continue to tell our story. We will be at the Bebo Conference with the tremendous amount of interest in having meetings at PDAC, etcetera. So we will be out there talking to people about how BT Gold is going to continue to be a very successful gold producer, very strong financially and BSG and continue to grow gold production as we move forward into 2025.

Speaker 1

So thank you all for your contribution and your questions and your time. Thanks operator.

Powered by Quartr
Earnings Conference Call
B2Gold Q4 2023
00:00 / 00:00