B2Gold Achieves Stellar Gold Production on Rising Gold Prices
B2Gold CorpBTG recently delivered record annual gold production and gold revenues for first-quarter 2020.
In the first quarter, the company recorded consolidated gold production of 250,632 ounces, 7% above the budget level. It marks a year-over-year increase of 25% driven by the Fekola Mine in Mali. Consolidated gold revenues were $380 million on sales volume of 239,500 ounces compared with the $264 million on sales of 203,400 ounces in the prior-year quarter. Increase in gold revenues was driven by a 22% increase in the average realized gold price and 18% increase in gold ounces sold. The company witnessed solid performances across its Fekola, Masbate and Otjikoto mine operations outpacing the respective targeted production for the quarter.
Backed by the current assumptions in 2020, B2Gold is well poised to gain from a strong operational and financial performance. The company has reaffirmed the consolidated production and financial guidance, backed by the better-than-expected performance of its operating mines. B2Gold continues to expect gold production between 1,000,000 and 1,055,000 ounces for 2020. Cash operating costs are envisioned between $415 and $455 per ounce and All-in sustaining costs (AISC) are projected between $780 and $820 per ounce for the year.
Mining Operations in Detail
Fekola mine recorded gold production of 164,011 ounces during the first-quarter 2020, 9% above the budget. It also highlights year-over-year growth of 49%. Significant increase in gold production primarily resulted from the expansion of the Fekola mining fleet as well as optimization of the pit designs and mine plan for the current year. The low-cost Fekola mine is projected to produce between 590,000 and 620,000 ounces of gold this year.
Cash operating costs are expected between $285 and $325 per ounce and AISC between $555 and $595 per ounce. The mine’s expansion is on track and is expected to be completed by the end of the third-quarter 2020. However, the company has temporarily suspended the off-grid Fekola solar plant project due to the coronavirus outbreak. However, the suspension is unlikely to impact Fekola’s current-year production guidance. Construction of the solar plant is expected to be completed within six months of the restart.
The Masbate mine in the Philippines produced 44,872 ounces of gold during the quarter, slightly above budget by 2%. The company has resumed operations at the mine, which had been suspended for few days in the previous month, due to temporary fuel shortage. New regulations imposed by the Philippine Government to ensure that all materials, including fuel, arriving on Masbate island are not contaminated by the coronavirus outbreak was the primary reason behind the shortage. Meanwhile, the milling activity continued, processing ore from stockpiles. Mining has now restarted in the Montana pit, using an estimated 50% of the mining fleet. For the ongoing year, the mine is expected to produce between 200,000 and 210,000 ounces of gold from the Main Vein and Montana Pits.
In Namibia, the Otjikoto Mine produced 41,749 ounces of gold in the first quarter, 3% above budget, with year-over-year growth of 29%. The mine is projected to produce between 165,000 and 175,000 ounces of gold in 2020, from the Otjikoto and Wolfshag Pits.
Including attributable gold production from the Calibre mine, the company recorded total quarterly gold production of 262,632 ounces. However, at the end of first-quarter 2020, the Calibre mine declared the temporary suspension of its Nicaraguan operations due to the coronavirus pandemic.
Financial Position & Liquidity
The company continues to maintain a strong financial position and liquidity. It had $140 million in cash in hand at the end of 2019. Recently, B2Gold completed the drawdown of $250 million on its $600-million revolving credit facility given the turbulent situation.
In response to the virus outbreak, B2Gold has implemented several measures and introduced additional precautionary steps to manage and respond to the risks associated to ensure the safety of employees and surrounding communities while it continues to operate. Additionally, the company is providing financial support to local and national authorities in the countries in which it operates.
Coronavirus has become a major threat to public health worldwide. Several mining companies like Newmont Corporation NEM, Freeport-McMoRan Inc. FCX, Vale S.A. VALE and others are halting their operations as governments across the globe are imposing restrictions to contain the spread of the virus.
However, though gold has gained from its safe-haven demand, other commodities are bearing the brunt of the pandemic. In fact, gold prices have been up 9.6%, so far this year, fueled by the slowdown in manufacturing activities, rate cuts, lower oil prices, geopolitical tensions and uncertainties related to the coronavirus outbreak. The combination of lower mined-gold supply and higher demand, and geopolitical tensions are likely to drive prices north. This, in turn, will drive Franco-Nevada’s margins.