B2Gold - Earnings Call - Q4 2024

Transcript

Operator (participant)

Thank you for standing by. This is the conference operator. Welcome to B2Gold Corporation's Fourth Quarter and Full Year 2024 financial results conference call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity for analysts to ask questions. To join the question queue, you may press star and one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the conference over to Clive Johnson, President and CEO of B2Gold. Please go ahead.

Clive Johnson (CEO)

Hello everyone. Thanks for joining us. As you heard from the operator, we're going to talk about the Fourth Quarter of 2024 results that we just released on the full year of 2024. I'll give you two highlights from the past that Mike and Bill should give you some detail. We did meet our new guidance for the year coming in at the upper end of all-in sustaining costs and lower end of production. Basically, as we turn the page on 2024, we're looking for a much more positive 2025, increase of production at Fekola, and looking to start trucking ore and also Fekola Underground as well. So Bill will give you a little more detail about all that. Of course, the real highlight here will be Fekola where everything is going very well, like for first quarter forward and Q2 of 2025.

We'll spend a bit of time on that. On Mali, as many of you are aware, we reached an agreement in September of last year with the government on how to proceed going forward, both with Fekola and also starting to tackle on regional projects. That was an important agreement for us and the government that we're now on the same page where both parties are looking forward to the revenue of the profits from mining, from mining in the regional area. We're now implementing the agreements with the government, and that's going very well. We're looking at receiving in the near term permits to proceed. Based on media reports over the last couple of days, according to those reports, Barrick and the Mali government have come to an agreement on a way forward.

That's very important for all of us, I guess, because I think we can all see a path forward now, and relations, hopefully, with the Mali government can be positive going forward, not just for us, but for the other parties there. Now all significant producers, if it's true about Barrick, have reached an agreement with the Mali government that we can get on with what we do. It's important to note that Fekola problems at Fekola were not about the government per se. Bill will talk about the reasons why production was down in 2024. We've continued to cooperate through all the discussions with the government of Mali, and the relationship has actually been positive in terms of our gold production and our requirements from the government. That relationship really means the end of a period of negotiations.

We're going to talk about this shortly about Goose, but I think now I will actually one thing I'll touch on now is looking forward to growth. So we said that we see potentially increase in production from Fekola, but also there's a lot of other milestones coming up this year. Receiving the permits for Fekola will allow us to have 80,000 ounces on an annualized basis from the mining of the regional ore. And of course, Goose is going to represent significant growth for us as we bring it into production in June of this year. And on an annualized basis, it is expected that we'll produce over 300,000 ounces of gold annually from Goose. And subject to a positive feasibility study and the construction decision, potentially another 235,000 ounces of annual production from the Gramalote project in Colombia.

So now it's just another subject to a positive feasibility study which will come out in the middle of the year and the production decision to go forward. We found the pricing quite attractive. Again, at the PEA a while ago that had been returns on IRR, net present value, but $3,000 gold. So if you wanted some IRR gold price, at $2,000 we think of on the upside in terms of the gold pricing maybe locking the gold price during construction. So if you add all that up, there's the expectation of 180,000 ounces from Fekola Regional and then going to Fekola production overall. Over 200,000 ounces from Otjikoto and Masbate and then 240,000 ounces thereabouts annually potential from Gramalote subject to the exact permitting. In addition, we've got a new discovery in the Fekola area that there's the massive potential in the alluvial zone.

Good discovery and depth of all this potential at another 65,000 ounces at Otjikoto. So if you add all that up, you get over 650,000 ounces of gold production and notably very importantly from existing assets. These are not ounces we have to go buy. If we had a mine, then we don't have to find them. Sure, we'll find a lot more, but that's where we sit today. So very impressive growth profile, and there's not a lot of speculation there. Of course, Gramalote would be the most speculative, but like I said, there's really no talk about that. So that's our way forward.

You know we had a difficult 2024, as everyone knows, but that's a one-off, and 2025 is going to get back to what this company does well, which is meet times and also grow the company's production profile, which we've had great success doing over many years since B2Gold was created in 2007. So I think we'll now hand it over to Mike to give us some highlights of the financial, and then Bill's going to give us a quick summary of what we're having at Fekola, what's going on, what's happening at Fekola according to this year. And also he's going to talk, of course, update us on the programs on the Goose feasibility study. Sorry, Goose production, and feasibility study of Gramalote.

Mike Cinnamond (CFO)

In Q2, just on a few highlights from the quarter, basic earnings per share, we're slightly negative for this Q, and that's primarily due to lower than the budgeted production of Fekola, FX impacts from weakening of the West African CFA and the dollar, and also recording of the increase in the Fekola priority dividend, which is now 20% after they implemented that as part of the MOU. It was previously 10 to 20. That gets recorded as a tax. Adjusted net earnings for the quarter were $0.01 per share. Operating cash flow after working capital adjustments for the quarter was $145 million, benefiting from higher average gold price. Adding in the Goose Project construction and mine development activities was CAD 209 million during the quarter and $55 million for working capital.

Goose Project, we were reiterating our total construction and development cash expenditures to first gold for 2025 were maintained at a total of CAD 1.54 billion. Balance sheet-wise, we're good, strong financial position. We finished the year with cash and equivalents of CAD 337 million. We have CAD 400 million drawn on our revolving credit facility, but as you saw in early 2025, we completed a convertible loan offering for gross proceeds of CAD 460 million, which we subsequently used to fully pay down the balance of the RCF. We currently have nothing drawn in the revolver at CAD 800 million capacity with the existing syndicate, plus another CAD 200 million accordion feature should we want to ever use that. We have a good amount of financial flexibility.

We think to be able to complete the Goose construction by the second quarter of 2025, complete the other sustaining growth initiatives, accretive portfolio of some of which Clive mentioned already, and continue to fund healthy exploration programs across all its sites to extend mine lives. That's all. Those are the highlights I was going to touch on. I'll pass the floor to Will.

William Lytle (COO)

All right, thanks, Mike. Okay, maybe stepping back in the Q3 last year, remember that we had a sealift in September, August, September. The 2024 sealift was successfully completed with 10 ships and one barge unloading approximately 123,000 cubic meters of dry cargo and more than 84 million liters of Arctic-grade diesel fuel. We also added 58 additional trucks to help us bring down the supplies down the winter road of 2025. I'm happy to say we opened the 2025 Winter Ice Road two days ago. This is ahead of schedule, and I've already begun transporting material down to the Goose site. As far as construction at site, all planned activities for 2024 were completed on schedule, and the process plant is on track to produce first gold at the end of Q2. On the mining side, significant progress was made in the mining of the Echo Pit.

We are now currently ahead of our announced schedule, and the underground development at Umwelt is consistently hitting new highs on mining efficiency. In Mali, we're gearing up to have contributions in 2025 from both the Fekola Regional and the Fekola Underground, which would benefit the operations for years to come. As Clive indicated, we did have a couple of one-offs in 2024. Just to refresh everyone's memory, we had an upset condition where we had operator error, and we lost an excavator for a quarter. We also had some illegal union activities, which we have since gone through our disciplinary procedure, and all cases have been finalized. As Masbate, the operations continue to perform to a world-class level. I think everyone saw they outperformed last year, and the operations delivered All-In Sustaining Costs in 2024, materially lower than our guidance.

Very strong free cash flow at these gold prices. And at Otjikoto, once again in 2024, they outperformed. We also have, as Clive mentioned, the new discovery, the Antelope Deposit. This PEA was released earlier this month and is a positive step towards new production later this decade. And this continues to remain open for exploration. Gramalote, we're working through a feasibility study, which we believe will be ready by the end of mid-2025. It'll be released in mid-2025. With that, Clive, I'll turn it back to you.

Clive Johnson (CEO)

Thanks, Bill. Thanks, Mike. And just a final thought, you know what's been hanging over us for a while has been the reality and the perception of dealing with Mali when we needed to reach an agreement with the government based on the government coming out with the 2023 mine code. So I think with the developments we've had in terms of reaching an agreement in September and other companies reaching an agreement since then, and then finally, once again, if the media reports are true with Barrick solving their issues and moving forward. That takes a lot of weight off of, I think, pressure off of those things that our shares have got beat up a lot over the last couple of years based in part or large parts of that uncertainty about the future.

Now, additionally, I think there's been great concern about Goose just in the sense of this is going to be timing and this is going to come in and around the budget that we outlined when we updated. As Bill said, the good news is we're very much on track at Goose. So I think that's another factor that's been putting pressure on our market value has been the concern about Goose with significant cash cost overruns, sorry, construction cost overruns which we're not seeing, and also the timeline of Goose, which is we're doing very much on track. So with that, we thought that the market might turn around a little bit. And in fact, hopefully, this last couple of days is the start of that as we remove these risk factors going forward.

The other significant thing is going to be the Gramalote feasibility study that's going to be completed by the middle of the year. So in all, 2024, as I said, was a challenging year. We met the challenges. And as we go into 2025, we're turning the page back to solid production performance, strong financial position, and growth from existing assets. So I think with that, we'll open it up to questions.

Operator (participant)

Thank you. We will now begin the analyst question and answer session. To join the question queue, you may press star then one on your telephone keypad. You will hear a sound acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. We'll pause for just a moment as callers join the queue.

Today's first question comes from Ovais Habib with Scotiabank. Please go ahead.

Ovais Habib (Analyst)

Hi, Clive and B2Gold team. A couple of questions for me. Sorry if you've already addressed some of these questions. I've just been bouncing between a couple of conference calls, so I apologize for that. Just wanted to start off with Fekola in regards to the permit, and I'm glad to see things are moving ahead with Barrick as well. Is there any additional info the regulators require on the Fekola Regional or Fekola Underground, or are we just waiting for the final sign-offs?

Clive Johnson (CEO)

What we're working with the government on right now is consolidating three licenses that make up the majority of the property, which to the north and that's what we've called Anaconda in the past. So that's on track. We're really expecting that at any time. And then hopefully shortly after that, we will get the permit from the government to start hauling ore. There'll be a bit of a pre-strip to start on that. But basically, if we achieve those things, which we're expecting to do, as I mentioned, we're very much on the same page as the government of wanting this mining to start. This year, we've only projected 10-20,000 ounces to come from the regional. It would be, as we said, about 180,000 ounces on an annualized basis for the first five years from the regional.

I think the other thing that's significant is the government gave us permission a while ago to build the infrastructure for regional mining and trucking of ore down to the Fekola mill. So that meant building the roads and other facilities, maintenance facilities, workshops, etc. So that was a good sign that the government was agreeing for us to get going even before we reached a full agreement as we did this September.

Ovais Habib (Analyst)

Okay, thanks for the comment on that, Clive. And just then moving quickly on to Goose. Again, great to hear you guys ahead on the ice road. You also mentioned in the press release that underground mining rates are a bit behind schedule. Is this just a function of experienced miners, or is there anything else in terms of rock hardness or anything else, ground conditions, that is causing that?

William Lytle (COO)

If I'm being honest, Ovais, once again, so it's two things really. Both of them historical, both of them which we have fixed. The first one being, as you correctly pointed out, the quality of the miners that we inherited, which has been, we certainly have brought that team up to scratch. And that's why you can see, and I think I said it in my statement, that the daily rates are coming up every day. The second one is the equipment that was purchased by our predecessor, which we have now, well, are in the process of changing out during this ice road. First time on the first stop down the road is some new equipment to bring the speed up. But we have seen, we started meeting targets kind of in Q4, our daily production rates.

And so we've readjusted our schedule, and we don't see any real impact to 2025 production at our current rates.

Ovais Habib (Analyst)

Perfect. Thanks for that, Clive, on that note. And yeah, that's it for me, guys. Looking forward to the ramp-up at Goose. Thank you.

Clive Johnson (CEO)

Thanks, Ovais.

Operator (participant)

Thank you. And this concludes our question and answer session. I'd like to turn the conference back over to Clive Johnson for the closing remarks.

Clive Johnson (CEO)

Okay, well, I guess that means we have a very complete presentation, everyone, so thanks for your time, and you can see why we're pretty excited about the future here at B2Gold. Thank you, operator.

Operator (participant)

Thank you, sir. This brings us to the close of today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.