THE B2Gold stock price has soared to record levels above C$5 a share thanks to the successful delivery of the Fekola gold mine in Mali, but the firm’s CEO, Clive Johnson, told delegates at the Investment in Africa Mining Indaba on Tuesday he expected further production growth from exploration work north of the new mine.
“When we bought Fekola we believed there was significant potential for more Fekola-style mineralisation in an area about 20km to the north called Anaconda which had already been identified by Papillon”.
B2Gold acquired Fekola in 2014 when it took over Australian junior Papillon Resources in a share deal worth $500m for which Johnson commented: “We were widely criticised for at the time”.
Johnson added that: “Last year, drilling operations there hit some significant sulphide intercepts below the mineralised saprolite zone and those intercepts are giving us the same kind of grades as the ones we saw in the early days on the main Fekola deposit when Papillon was drilling it.
“It’s early days, but we are spending $20m on exploration in Mali this year to extensively drill multiple targets in that area. We are clearly in elephant country here when it comes to new gold mines and we are looking aggressively.”
The original Fekola feasibility study estimated annual production averaging 276,000 ounces over a 12.5 year life-of-mine but the group’s 2020 production guidance is now looking at output of between 590,000 oz and 620,000 oz at all-in sustaining costs (AISC) of between $555/oz and $595/oz following a decision to expand the mine.
Fekola is expected to produce an average of 400,000 oz of gold annually over a 12-year lifespan with production during the first five years averaging 550,000 oz annually.
One of the immediate benefits of this performance is that B2Gold expects to become debt-free during the third quarter of 2020 down from $700m in debt in 2017.
Johnson said the group’s organic exploration pipeline meant that B2Gold was not interested in getting involved in any merger and acquisition activity because it did not need to.
Asked if B2 Gold itself could become an M&A target Johnson replied that was unlikely because – given the success at Fekola – the company’s shareholders were likely to demand a high premium in any takeover deal which major gold groups would be unwilling to pay because of the likely negative impact on the value of their own shares.