B2GOLD, the Toronto-listed company developing Mali’s Fekola mine, was expected to upgrade 2017 production guidance currently estimated at between 545,000 to 595,000 ounces.
Guidance includes some 50,000 oz in pre-commercial production from Fekola, a $441.7m project which is forecast to produce between 375,000 to 400,000 oz/year on average for the first five years of its productive life, from 2018 to 2022. Consolidated cash operating costs were expected to be between $610 and $650/oz and consolidated all-in sustaining costs of $940 to $970/oz, the company said.
The company also said that once completed and contributing cash flow, the Fekola gold project would provide a platform for more acquisitions.
JP Morgan said in a report on B2Gold’s first quarter results announcement that the gold firm’s production guidance was conservative which was “the right thing to do” given uncertainty over the ramp-up of Fekola as well as grade controls at Otjikoto, a mine B2Gold operates in Namibia.
“Yet we suspect that the market will look through the practicalities of the mining industry and anticipate upgrades to the 2017 forecast after this result,” said JP Morgan.
Fekola is running some three months ahead of budget and is therefore expected to contribute to B2Gold from October. It was also under budget with capital spend at some $439m including about $40m on pre-construction expenditure.
The mine might therefore function as “a golden bookend” to B2Gold’s 2017 financial year, said JP Morgan.
B2Gold also operates mines in the Philippines (Masbate) and Nicaragua in El Limon and La Libertad. Including a fully ramped-up Fekola, total production for 2018 is estimated at as much as 950,000 oz.
In addition to Fekola, B2Gold also said it had targeted organic growth in west Africa, including the development of a satellite deposit at Fekola – Anaconda – and a higher grade portion of its Kiaka project in Burkina Faso.
Commenting in its first quarter figures, it said: “The most significant areas of exploration focus for the company are in West Africa where the company expects to complete initial resource estimates for its new Anaconda and Toega prospects in 2017”. Exploration budget for this year is $53m including a $7m increase it approved during the quarter.
The completion of Fekola – which would lift B2Gold’s 2016 production about 65% – would put the company “in a strong position to pursue additional accretive acquisitions”.
“To date, B2Gold’s dramatic production profile has been achieved through a series of accretive acquisitions, on time and budget project developments and exploration success,” it said. “The company’s objective is to continue its successful growth strategy, irrespective of the gold cycle.”
B2Gold posted adjusted net income of $19.4m, equal to 2 US cents per share, for the first quarter which compares to $18.9m in the prior-year quarter. Cash and cash equivalents totalled $103.2m compared to $144.7m as of December 31.
Production for the quarter came in at 132,736 oz, some 4% higher than the first quarter of 2016 by dint of out-performance against budget of its Masbate, Otjikoto and La Libertad mines.
