Q4 2012 B2Gold Corp Earnings Conference Call
Mar 28, 2013 AM EDT
BTO.TO - B2Gold Corp
Q4 2012 B2Gold Corp Earnings Conference Call
Mar 28, 2013 / 05:00PM GMT
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Corporate Participants
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* Clive Johnson
B2Gold Corp. - Pres, CEO, Director
* Mark Corra
B2Gold Corp. - SVP of Finance & CFO
* Dale Craig
B2Gold Corp. - VP, Country Manager, Nicaragua
* Tom Garagan
B2Gold Corp. - SVP of Exploration
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Conference Call Participants
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* Rahul Paul
Canaccord Genuity - Analyst
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Presentation
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Operator [1]
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Good morning, ladies and gentlemen. Welcome to the B2Gold fourth-quarter and year-end results conference call. I would now like to turn the meeting over to Mr. Clive Johnson, President and CEO. Please go ahead, Mr. Johnson.
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Clive Johnson, B2Gold Corp. - Pres, CEO, Director [2]
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Thank you, operator. Good morning or afternoon, depending on where you are. The purpose of the meeting, as the operator stated, is to review the 2012 fourth-quarter results and the year end, and we had another very good quarter in the fourth quarter, setting a record for production, and for the year we set some records as well for gold revenue, gold sales, record cash from operations, another very good quarter and year from El Limon mines and La Libertad in Nicaragua. And, of course, the transformative news from the fourth quarter of the year was the announcement of the deal, the merger with CGA Mining, who have, of course, the Masbate mine in the Philippines, and we will talk about that as well. Obviously, that is a significant change in the Company as it increases our gold production ready dramatically to an estimate of somewhere around -- approximately 385,000 ounces of gold for 2013. We will talk a bit about our growth strategy as well. We are well positioned to continue our growth with the development of the Ojtikoto mine that is currently in construction. We will update you on that, and then we will talk about the Gramalote project joint venture with AngloGold Ashanti in Colombia.
So I am going to pass it over to Mark Corra now, our CFO, who is going to walk you through the financial highlights, and then we will get into a little discussion of operations and the other things that I mentioned. Over to you, Mark.
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Mark Corra, B2Gold Corp. - SVP of Finance & CFO [3]
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Thanks, Clive. As Clive mentioned, it was another record quarter both on a revenue basis as well as on a production basis. Gold revenue in the quarter was close to $71 million, an average of $1700 per ounce, very similar to the fourth quarter of 2011 when the average gold price received was $1691 on revenue of $66.9 million.
For the 12-month period, revenue was also a record, $259 million. The average price received was around $1671, which was an increase over the 12-month period in 2011, when it averaged about $1565. All in, the gold revenue was up about 15% for the year and that was a combination of a higher gold price as well as higher gold sales as, again, the operations continued to outperform.
Production costs came in for the year a bit below guidance. Actually, we guided around $590 to $625 on a cash operating cost basis for the combined operations; they came in at $587, so even lower than our lower end of guidance.
Production cost for the quarter came in at $604. That was an increase from last year of about $542. So, like all other companies, we are seeing the price pressure in a lot of the reagents that are being used as well as some of the mine contractor costs went up at La Libertad in the second half of the year, although it should remain steady in 2013. Production for the quarter was 44,300 ounces compared to just under 39,000 ounces last year. Again, that was a record quarterly production number. For the year, we produced 157,885 ounces, an increase from 144,600 last year.
You will note that royalty and production taxes actually decreased on a quarter-to-quarter basis as well as on a year-to-date basis, which is unusual given that the gold price was higher and the production and revenue numbers were higher. The reason for that is that at La Libertad, it's still under the old mining law in Nicaragua, and we went for a ruling there and it was confirmed by the courts that the 3% royalty tax that we are actually paying at La Libertad is not, in itself, a royalty tax, but more like a minimum tax. And so it can be applied against your taxes payable for the year. So, actually, our royalty and production taxes are lower now than what they were in 2011.
Gross profit from operations for the fourth quarter at $34.2 million, very similar to last year's $34.3 million, and on a year-to-date basis it was $127 million gross profit versus $111 million in 2011. G&A costs very similar to the prior year. Share-based payments were quite a bit higher in 2012 than 2011, and just want to reiterate that the founders and senior management of the Company do not take stock options. Instead, we reserve those for attracting talented people, and it's one of the reasons that we are successful in operating in different parts of the world. We do hire very good teams and we give them some skin in the game by giving them a good option package which motivates them to do the best they can do for the Company.
We also had, I guess, some unusual items in the quarter, the CGA acquisition cost of just over $1 million in the quarter, $1.6 million for the year. Of course, that transaction closed in January of this year and we'll be seeing in the CGA results consolidated with the rest of B2 in the first quarter of 2013.
We also had our write-off of our property in Colombia that we had done some exploration work and had signed an option agreement. We wrote that off in the fourth quarter, so that increased our expenses by $1.5 million.
Operating income came in at a very good $22.6 million for the quarter versus $28.4 million last year, and on a 12-month period it was very similar, $84.1 million versus $85.7 million.
The other thing you will notice, that our current income tax expense was quite a bit higher in the fourth quarter of 2012 compared to 2011. That mainly relates to taxes at La Libertad. La Libertad has, of course, been operating very well and cash flowing well for us and they have now used up all their loss carry-forwards from previous year operations, and so now they are fully taxable at the 30% tax rate within Nicaragua. So we are likely the biggest taxpayers in Nicaragua now, and we think that's a good thing. And I know the government is very supportive of what we do there because of not only the social programs we run, but also the fact that they classify us as an A-1 taxpayer, which we are very proud of.
That left us with net income for the period of just under $11 million, or $0.03 per share on an adjusted earnings basis where we back out things like the share-based payments and one-time items like the CGA acquisition costs on that, our normalized earnings would have been about $17.6 million, $0.05 a share compared to $23.3 million last year or $0.07 a share.
On a GAAP basis for the 12-month period, net earnings were $52 million versus $56 million the previous year, $0.13 a share versus $0.17 the previous year. On an adjusted earnings basis net income was just under $80 million, very similar to the previous year where it was just over $80 million.
If you now look at the statement of cash flows, again, we are generating very strong cash from operations, $31.1 million or $0.08 a share in the four-month period ended December 31. In the 12-month period ended December 31 we generated cash flows of $114.4 million and $0.30 per share compared to $109 million in 2011, which was at that time about $0.32 a share, as we have slightly more shares outstanding in 2012 than 2011.
We did issue some common shares in the quarter, about 1.2 million, and that relates mainly to stock options that were exercised, and 8.6 million for the year which relates to RSU's and stock options, compared to about 8 million last year. You'll also notice, of course, that we have very aggressive exploration programs as well as development programs. Ojtikoto now is in full-scale production -- sorry, full-scale construction. I keep jumping ahead of myself there; we've got to wait another year and a half before we are in production. Anyway, everything is going really well there. The guys are doing a good job, and Gramalote is also advancing towards a pre-feasibility study.
We ended the year with just under $70 million in cash. Of course, with the completion of the CGA merger in the first quarter of 2013, that will probably add another $50 million or $60 million to our cash pool to start the quarter. And we have recently announced that we have come to -- we have also agreed a revolving credit facility led by Macquarie Bank and involving HSBC as well as RMB Bank, for a $150 million 4-year revolver, which gives us the cash we need to continue our aggressive expansion plans as well as the construction of Ojtikoto.
I think that's the main highlights I wanted to touch on, Clive, so I will hand it back to you.
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Clive Johnson, B2Gold Corp. - Pres, CEO, Director [4]
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Okay, thanks, Mark. I think we will save all the questions to the end. I think, Dale, do you want to give us a quick run-through on the operating mines and then talk about in the news as we talk about our projected production for 2013? Can you just give us a run through on 2012 and then touch on guidance for 2013?
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Dale Craig, B2Gold Corp. - VP, Country Manager, Nicaragua [5]
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Sure can, thank you very much, Clive. Can you hear me okay?
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Clive Johnson, B2Gold Corp. - Pres, CEO, Director [6]
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Yes, we can.
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Dale Craig, B2Gold Corp. - VP, Country Manager, Nicaragua [7]
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Okay, good. So for my Libertad, the open mine had a great year for 2012. And then summary for the fourth quarter, La Libertad experienced slightly better throughput and better recovery than the budget, resulting in a gold production of about 1350 ounces better than budget. The mill produced 30,113 ounces of gold at an operating cash cost of $589 compared to the budget of 28,763 ounces at an operating cash cost of $564 per ounce.
Daily throughput, slightly better at 5572 tonnes against the budget value of 5531 tonnes. Average grade, 1.94 grams against a budget plan grade of 1.95 grams. Recovery was significantly better at 94.1% for the quarter against 90.4% indicated in our budget, related to rock with metallurgy and good process controls and practices.
La Libertad mine had an operating cash cost that was about $25 an ounce more than budget, and this was related to consumption of reagents and cost for reagents, mill balls, explosives and revised contractor costs. Total cash costs for the La Libertad mine was $626 per ounce compared to a budget of $643. So we have achieved a great year at La Libertad by completing 2012 with another record quarter.
Total production for the year was at the upper end of our guidance at 108,935 ounces at an operating cash cost of $529 per ounce. The budget was $550 per ounce cash operating cost.
CapEx costs in 2012 totaled $29.6 million, reflecting work in pre-strip, tailings pond work, infrastructure and equipment purchases.
For Jabali, the focus was to continue the private road preparation into the infrastructure as we developed the pit, and the 2012 CapEx budget for the development of Jabali deposit and associated infrastructure was about $22.7 million, which included construction -- continued construction of the private hall road, engineering, metallurgy and socioeconomic programs. Some of that infrastructure will be completed in early 2013.
Looking to 2013, the budgeted production from La Libertad will increase some 24%, delivering from 131,000 to 137,000 ounces of gold at a cash operating cost of $560 to $590 per ounce. Both throughput and grade improved. In 2012 our budget grade was 1.77 grams per ton; in 2013, 2.19 grams per ton.
Our CapEx for the year for La Libertad alone is just over $31 million and includes preparation of Jabali pits, surface mining equipment purchases and a plant expansion that will increase the throughput approximately 10% in the back half of the year.
For El Limon, El Limon achieved its highest quarterly output since the incorporation into B2Gold in 2009, and we had a great year. The challenge in the final quarter was to bring the new pit invested in 2011 into production, and that's a high-grade pit that carries slightly over 5 grams per ton in for a two-year mine life. The process grade was 4.53 grams per ton versus the budget of 4.92 grams per ton in the budget. Nonetheless, El Limon had its best year over the past nine.
For the quarter, production was 14,211 ounces, slightly less than the budget value of 15,628 ounces. Recovery is slightly better at 91.4 against 91.1. Processed pounds were about, on view, 107,000 tonnes against 108,000 tonnes in the budget. Operating cash cost, $635 per ounce compared to the budget of $612.
So production for the year totaled 48,950 ounces with an operating cash cost of $715 compared to the budget of $701 per ounce.
CapEx at El Limon totaled about $21.4 million. Capital expenditures included pit expansion, equipment purchases and mine development.
In 2013, B2Gold anticipates an increase in production at El Limon to between 54,000 and 58,000 ounces as result of slightly higher-grade ore and improved throughput and recovery as a result of plant expansion, specifically plant tankage additions. CapEx is set for $21.7 million, which includes mine development and mill upgrades.
Thank you, Clive.
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Clive Johnson, B2Gold Corp. - Pres, CEO, Director [8]
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Okay, thanks, Dale. Let's talk about Masbate. Obviously, the impact of the acquisition closing in late January -- for now, we have just gone with the guidance as had been provided by CGA in their public guidance, and they were talking about the potential of up to 200,000 ounces of gold production a year. We are in the middle of getting to know the project and working with the people down there, and will -- there's a lot of drilling been done. We will be coming out with a new resource and reserves and new guidance, B2Gold guidance on Masbate by the middle of the year. We are putting together all the drill results and the resources and generating a new mine plan, and that's why it's taking a little while. But it's all -- we are happy with what we are seeing.
I think one of the benefits of this acquisition -- there's many of them -- one of them is that this project is largely de-risked in the sense that CGA did all the permitting; they did the heavy lifting of construction. They did a very good job and the mine has been running for over 2.5 years.
So there is also a very impressive group of people there, Filipino and Australian ex-pats. There's a highly talented group of people and we are very much enjoying working with them. And we think we can help with our experience and expertise as well, and we see upside at Masbate and we will, as I said, come out with new guidance in June. We see great exploration potential and we will also be exploring the potential for expansion. We will probably come out with our views on that by the end of this year. We like what we see. We think it's a very good project and it's a very strong epithermal system that has definitely a lot more exploration to be done. So we will come out with more guidance on that.
So I think from our perspective, as I mentioned, it's a de-risked acquisition in the sense that it's in production. It comes with a very well educated, trained staff of people and they seem very enthusiastic about becoming part of a bigger company with B2Gold. We have had great response from the people on-site and we have had many trips down there with our executive group and our technical group and integrating very well and working well with an impressive group of people there.
Maybe we want to -- while I think of it, Tom, can I -- I am going to get Tom to talk about exploration around La Libertad and Limon, because we got significant results at El Limon that actually have quite a good impact on the mine in the very near term. Can you maybe just touch on those for us, Tom?
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Tom Garagan, B2Gold Corp. - SVP of Exploration [9]
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Sure. At La Libertad we are going to be drilling about 11,000 meters for $4.7 million. That drilling is going to be focused in part on underground potential underneath the main pits and a couple new areas that have been recently discovered, one late last year and something new this year.
In addition, for Limon, the plan is to drill 17,000 meters, spend $5.7 million, and that money is almost exclusively to be spent on Santa Pancha, the Santa Pancha 5 area, or Pozo 5 area, on the northern part of the Santa Pancha deposit, and this is quite significant. We are going to be coming out with our new resource very shortly on that area. It will be part of our AIF, which I believe -- I don't know when the AIF comes out -- (multiple speakers) end of the month. It will come out with the AIF for sure. And the significance of that is it is higher up in the Santa Pancha system near the surface, in an area of cold water as opposed to Santa Pancha deep, which is warmer water and deeper with, obviously, higher cost. So it represents potentially several more years of production on the Santa Pancha itself and is an area of potentially lower cost due to being higher up in the vein system. So it's very, very significant for the Limon Mine.
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Clive Johnson, B2Gold Corp. - Pres, CEO, Director [10]
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Thanks, Tom. I think we will now talk about Ojtikoto. Before I do that, I should have mentioned that Dale Craig has joined us in Vancouver. Dale was the Country Manager in Nicaragua and responsible for a lot of the great success we've had there, and Dale has been promoted to Vice President of Operations, and he oversees Nicaragua and the Philippines operation, reporting to George Johnson, our Senior VP, Operations.
Bill Lytle has been with us for a long time, and Bill is now the Vice President and Country Manager for Ojtikoto. Bill has been doing a great job leading the charge there. And I am going to pass it over to Bill now and ask Bill to give us a quick summary on what is happening in Ojtikoto. Over to you, Bill.
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Operator [11]
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I apologize; Mr. Lytle is not on the conference at this time.
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Clive Johnson, B2Gold Corp. - Pres, CEO, Director [12]
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He has had trouble dialing in for some reason. He mentioned it when we had a little call before this. Okay, well I will start. I will just give a quick summary, then, of what we are doing and I will pass it over to Tom because there's some very exciting exploration results at Ojtikoto.
But Ojtikoto is on schedule. The construction camp is currently being built on-site. We purchased it very cheaply from within country, a slightly used camp, and it has been deconstructed and it's being constructed on site. We are de-bushing and we have heavy equipment starting to arrive on-site to begin laying the foundations.
And for the mill, etc., we are on schedule. We are looking at a completion of construction by the fourth quarter of next year, commencement of production in the fourth quarter of next year, the first full year of production being 2015. We are estimating 140,000 ounces a year for the first five years and a total of an 11-year mine life at 112,000 ounces. So, frankly, our goal is to not see the production dip after year five, and Tom will talk about one of the reasons why we think that there is a good chance that we will be able to maintain or increase our production level from the first five years.
The feasibility study showed some very strong economics on the project and it is going to be a new open pit gold mine, one of the first new mines built in Namibia for many years. We have had tremendous government support. We have received all of our permits on schedule and have everything in hand to go. It's in a very great location to build a mine in the desert, a few kilometers away from a major highway in Namibia, yet we have drilled and have more water in the aquifers than we could ever use. So it's an ideal spot to build a mine and we have had great support from the federal government, the local government. We are a major player in Namibia and this is a country that, like many, that really needs these jobs. So we are doing a very good job there and everything is on schedule, as I mentioned.
I am going to pass it over to Tom to talk about the Wolfshag zone, which is a new discovery late last year, originally discovered by Auryx, who we took over and we have had some good results there. And Tom will talk to you about the significance of what we are seeing.
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Tom Garagan, B2Gold Corp. - SVP of Exploration [13]
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Thank you, Clive. The exploration at Ojtikoto for this year -- we are spending $8 million for 24,000 meters, and the bulk of that is almost exclusively for infill drilling on the Wolfshag zone. This was a discovery made late in the life of the previous operators and we have followed that up. And at this point, it has got a strike length of over 1 kilometer long. It's at least 15 meters thick, although locally up to 40 meters thick, and it is at least 75 meters wide.
The best intersection we have had to date so far was one we released late last year, was 15 grams over 20 meters, but there has been other holes such as hole 61, where we have had 3.7 grams over 31 meters, hole 68, 2.7 grams or 11.4 meters, and then, right at surface, hole 65, 10 meters and 1.7 grams.
The Wolfshag deposit runs parallel to the main Ojtikoto zone, does come to surface. We have done some internal work on it suggesting that a very, very large part of it would be able to be mined open pit. So we are focusing aggressively on the in-fill drilling of this because if we can get it to an inferred stage this year and an indicated stage next year, it can come in the mine plan very quickly. And the significance of that is, as was Jabali for Libertad. It seems to be better grade top date than the existing resource and of some decent size potential. So this would allow the mine to either justify an early expansion or to look for a long-range as maintaining projected production levels of the 140,000 ounces a year that we are currently projecting.
So from my view, it's extremely material for the Company and the project. Thank you, Clive.
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Clive Johnson, B2Gold Corp. - Pres, CEO, Director [14]
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Thanks, Tom, and we are going to be putting out a news release in the next two weeks with some additional drill results from Ojtikoto.
Let's talk a bit about a joint venture with AngloGold Ashanti at the Gramalote project in Colombia. We were looking to originally complete a pre-feasibility study in November of last year working with Anglo. Anglo is the manager of the project. We are working very closely together, and technically -- and it has been a very good, transparent joint venture to date; it has been quite encouraging, actually.
We didn't complete the pre-feasibility study in November, and the reason we didn't was because we were seeing some encouraging results both in terms of the potential of exploration making the resource larger, but also because of things like the metallurgical change which was going to flotation, which gives -- with the testing shield we can get significantly better recoveries than the 94% to 95% range, and it could have a positive impact on both capital cost and operating costs. That was an important aspect of the project, plus test work was done to show that we can go to coarser grind.
So we wanted to give more time to detail those changes and also do more drilling. And we have now agreed or we are reaching agreement with Anglo here to continue the drilling based on some recent, very recent positive results largely around the Gramalote ridge, and we are continuing to drill and we are going to now come out with a final pre-feasibility study in about probably around August, is the expectation.
The good news is that even though the final pre-feasibility study has been delayed, but for good reasons, we have not lost anything on schedule. We are still aggressively working on the environmental impact assessment; that's on schedule, and we are on schedule to produce a final feasibility study if we decide to do that after the pre-feasibility study. We are looking to do a final feasibility study by about August or actually, late -- I would say, late next year. So that's on the schedule. So we have not lost the schedule and we are still talking about the potential to commence production in 2017.
We like the project. What we have seen, we are keen on it as a significant, first significant open pit gold mine in Colombia. It's in the best place you could be in Colombia, being in Antioquia. And I think Anglo, from our conversations, agrees with us that this looks like a project that we believe is going to become a significant producer.
The issues we have going forward is going to be, besides the ultimate scale of the project, we want to build a mine that is justified based on the resources that are drilled. We never want to build a mine that is based on exploration success or a mill that is based on exploration success, and that is why, one of the reasons why we want to keep drilling is to understand the size and understand what we should be building. But the potential would be in our minds something that could produce 300,000 ounces a year, maybe more than that, for a significant mine life.
So what we have done right now is we are in negotiations or discussions, rather, with Anglo about a budget that will take us through to the end of August. And that budget is focused largely on drilling, so we are working with Anglo right now to agree to the drill plans, to agree on methodology for the new geologic model that's being done and also working with Anglo to run various cases is what we want to see in the prefeasibility study in various scales, to see which is the best economics and which is the most realistic scale to build the middle to at Gramalote. So we will have more news and I think we will come out with some drill results of Gramalote probably in the next couple of weeks as well. We've had some good results there as well.
Things that we really maybe neglected to mention in the presentation, just a couple of things I was thinking about, one is when we talk about La Libertad, Dale touched on it, that we have better grade this year. That's partly because we were into a better grade in the Santa Maria Pit, but later in the year we will start to see some more coming in from Jabali as well. And the production from Jabali, of course, is significantly better grade, so we are looking at an increase in production, as Dale mentioned this year 131,000 to 137,000 ounces from Libertad. And then next year, as we get more into Jabali central, we will be looking at producing approximately 150,000 ounces a year from La Libertad with some of the better grade coming from Jabali.
I guess I will talk a little bit about some of the comments that I put in the news release about outlook and going forward. Obviously, we are very well positioned here. All gold producers are leveraged to gold; we are as well, but we like the fact that -- to be very highly leveraged to growth. And as everyone knows, our projected production is looking to increase dramatically. Of course, this year that's somewhere around 385,000 ounces with the inclusion of Masbate, along with Limon and La Libertad, and then increasing next year with more production from Libertad to somewhere potentially around 400,000 ounces, and then a big increase in 2015 when we bring on the first full year of Ojtikoto, looking at seeing production of around 540,000 ounces.
Now, we see the potential and we will deal with it later in the year for perhaps some expansion at Masbate, we discussed, and ultimately if we develop the Gramalote project in a joint venture with Anglo, that could take our production over 700,000 ounces a year by 2017. I guess one of the exciting aspects about that is that it's not based on any additional acquisitions or based on any exploration success; that's based on the existing projects that we have, which probably makes us if not the fastest, one of the fastest-growing gold producers in the world. We remain very well-funded.
In the news release, we talk about cash at the year end 2012 of $67 million, but don't forget we didn't consolidate the cash from CGA at that time. So that would add about another $50 million of cash. So strong cash position and our intention is to maintain that; we should. At today's gold prices, we should realize somewhere around $300 million, approximately, from cash from operations. Our focus, of course, is to take that money and some of the money from our revolving line to advance our existing projects. Our priority is to always maintain a strong cash position going forward as well.
So we think we are very well positioned for the development of Ojtikoto. And then, of course, Gramalote, if we have a positive feasibility study and decide to build the mine, there will be some financing we will be lining up with AngloGold Ashanti if we get there to do a financing to bring into production. Of course, a lot of our -- we will have significantly growing cash from operations over the next few years, particularly as Ojtikoto kicks in as well. So a significant amount of money to build Gramalote could come from existing cash at that time, and cash from operations.
We are also continuing to look at acquisitions. Obviously, our top priority is to develop what we have, and we think we have a great group to do that. Just to comment on Ojtikoto construction, we have an excellent team at Ojtikoto led by Bill Lytle, and George Johnson is very involved in that as well. And a lot of people ask us -- why can we continue to perform so well and do what we do in a market where so few can? And I think it really comes down to the teams that we have, obviously an excellent team in the Nicaragua, a very strong team in the Philippines.
In Ojtikoto, it's interesting to note that the supervisors of construction at Ojtikoto were the supervisors of construction for La Libertad mine, for the Kupol mine, built by B2Gold people for B2Gold; and then for, ultimately, the last third of construction by B2Gold people working short-term for Kinross. And also, this group built the Julietta mine as well.
These are a group of supervisors that a lot of people like to work for, so we actually have a lot of the construction team that worked with them heading to Namibia to build Ojtikoto. It's wonderful to have that kind of bench strength and that kind of depth, and that's one of the reasons why we are expecting Ojtikoto to be built on budget and on schedule, as we have done in our other projects.
But back to acquisitions, and this is obviously an interesting time in the industry. We have major companies who are afraid to do deals now because they have done too many deals that had a nonexistent return on investment or they paid too much, or the capital costs tripled or etc., etc., lots of problems. So major companies are going to shed assets. They are going to hunker down and try and make some money, and there might be interesting opportunities there for potential acquisitions. And of course, on the junior sector, I don't think they can hide anymore in the sense of this market is very difficult and it's very difficult to raise money if you have a one-project company.
So I think that we are finally seeing some of the entrenched management groups around in the junior companies have to give it up and actually go out and work for their shareholders to pursue deals.
Having said all that, we are not looking to do a lot of deals in the short term here. We are very pleased with what we have. We think we have the people and able to do what we are doing. We are looking, of course, because this is an interesting time because we have the capability in our group and I think there may be opportunities over the next two or three years to do significant acquisitions of potentially adding more production or more development projects. We are clearly interested in more exploration. We always like to have two or three grassroots targets in the Company because the cheapest ounces are the ones you find, and we have an extraordinarily successful exploration team altogether from the Bema team, together at B2Gold.
Right now, we have a couple of targets like that which would be the property Cebollati project in Uruguay and the joint venture with Caliber and Primavera in Nicaragua, which was an interesting gold/copper/porphyry that we have discovered there, and we are trying to figure out how big that might be.
So we are always looking at that. And I think that's interesting because a lot of the junior exploration companies are hurting, and would they be interested in us coming in and earning a majority interest in their project by spending the risk dollars that they can't seem to raise right now? So there's a lot of opportunity out there. We are extremely selective. I think the three deals we have done so far since 2009, being Nicaragua. We are taking over Central Sun, being the Auryx deal late last year -- sorry, the year before last. That gave us, of course, Ojtikoto. And then, of course, the CGA deal.
Our discipline on acquisitions will remain the same, and that discipline is to not pay for ounces that might be there. We do a very intense due diligence -- not with consultants; we do it with the people that are going to build the mine or are going to run the mine, if we do a deal, and we are looking at accretive deals that are based on existing deposits, existing resources, not based on ounces that might be there, and I think this is what has gotten a lot of other people in trouble.
Now, we do have the tremendous benefit of our exploration team, who, when we acquire an asset, have been shown to be very good at exploring some of these areas that already have a deposit on them and, in some cases, already have a mine and the La Libertad/Jabali is a great example of the value add of exploration. Tom and his group did an excellent job of recognizing the Libertad sat on a 20-kilometer-long epithermal belt and made a significant discovery of Jabali of at least 500,000 ounces of much higher-grade material, almost double the grade that we had been milling.
So it doesn't get any better than that, in terms of added value at a mine. It always surprises me when you look at mines around the world and deposits around the world how often they have not been properly explored. People get focused on building a mine, which is fine, but often they don't have good exploration teams or they don't have the funding or either of those.
So that's what we'll always do, is look to do accretive deals like CGA, accretive in reserves and resources, accretive on a cash flow basis and slightly accretive on an NAV basis. And yes, we think there's great upside. We didn't pay for the upside. That's our discipline in acquisitions and I think we have done three very good acquisitions so far, but we have looked at probably 2000 projects.
So that speaks to the lack of quality projects out there and it speaks to our standards for projects that we want to take on.
So that's -- just a couple other points. We are pursuing a US listing right now. Part of the reason that our stock has struggled in the last while after doing so well for so long -- we are still a better sector performer than most -- has been because we were punted off of the Junior Gold Index, which is, to me, a bit absurd because we were one of the biggest positions in the index and we were one of the most successful stocks in the index, and they punted us off because we were too big. So I guess we were victims of our own success and our shareholders suffered a bit for that, and 47 million shares had to be sold from the index, which I think they should re-look at that.
We would probably be a very good candidate for the more senior GDX index, but we cannot be on this index until we have a US listing. So we are hoping to have a US listing probably initially on AMEX by the middle of the year, and then as we move through $4 we would look to go on the New York Stock Exchange.
In addition to that, our priority, as we mentioned, with our cash is to stay cash strong and to build our mines. We later, in the year, will turn our attention to looking at if a dividend is appropriate for our shareholders and, if we did that, we would start with a modest dividend later in the year and look to grow that significantly over the next number of years as we bring our additional projects into production.
That's most of what we wanted to talk to you about. I am going to open it up now to questions.
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Questions and Answers
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Operator [1]
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(Operator instructions) Rahul Paul, Canaccord Genuity.
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Rahul Paul, Canaccord Genuity - Analyst [2]
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Hi, everyone, congratulations on a great 2012. Just one thing that B2Gold has done quite well that not many other companies have is you have expanded production by improving grades at the mil. You are doing that at the Libertad, at Jabali, Santa Maria. You are increasing grades to the mill at Limon. You could be doing the same in Namibia with Wolfshag.
Do you see opportunities to do the same in the Philippines? CGA had been talking about lowering the cutoff grade and substantially increasing throughput, which is not necessarily a bad thing, but I'm wondering if you see any other opportunities here.
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Tom Garagan, B2Gold Corp. - SVP of Exploration [3]
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Yes, this is Tom. I would say it's maybe a little bit early to say that. We are still in the study phase. However, it's a pretty large deposit, a very, very large resource. In the next few months one of the things we will be looking at is with the existing resources that are wasted to increase the grade by being more selective in the way we do the mining and which areas we mine.
But in addition to that, I won't be critical of the previous exploration, but our exploration, we are shifting focus on the project to have the exploration being focused on the higher-grade target areas or potentially higher-grade target areas, in areas with better than metallurgy. So, to answer your question, I believe there's very good potential to do that. But it's too early yet to say that we are going to be able to do that.
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Clive Johnson, B2Gold Corp. - Pres, CEO, Director [4]
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I think, further to that, Rahul, what we've found and are looking at all the test work done in Masbate and our own work showed that we think there's different recoveries for oxide, transitional material sulfide, which is typical, obviously, in many cases. So one of the exciting things we are seeing so far, and we can't really put a number to it yet, but we are definitely seeing, from what we are looking at, I think a significant increase in the oxide material. So when we come out with new, in the middle of the year, new resources and reserves, one of the upside potentials here is to have more oxide material, and that's the best recovery. So that's kind of exciting potential maybe in the near term there for that as well.
And of course, we will be looking at the studies they were doing. They were in the process of doing some expansion studies at CGA. We are reviewing those now and we will be doing our own, as we mentioned. Probably that will be something we will look to crystallize by the end of the year, when we've come up with a new mine plan and we have really got our hands wrapped around this thing.
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Rahul Paul, Canaccord Genuity - Analyst [5]
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Okay, thanks for that. Could you give me the cost per ton breakdown at La Libertad, at least mining and processing?
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Clive Johnson, B2Gold Corp. - Pres, CEO, Director [6]
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Why don't we just get Dale to give you a call separately and go through that with you, Rahul.
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Rahul Paul, Canaccord Genuity - Analyst [7]
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Sure, that should be fine. And then just moving on, in terms of development work at Jabali, could you talk a little more about what exactly remains to be done before you can start trucking the ore to the mill?
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Clive Johnson, B2Gold Corp. - Pres, CEO, Director [8]
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Dale, do you want to take that?
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Dale Craig, B2Gold Corp. - VP, Country Manager, Nicaragua [9]
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Yes, I sure can. We have done our dump designs, so it's the dump base preparation, stripping, drainage preparation for the dumps and water controls around the pit areas. Those are the prime infrastructure, plus finishing off the private road. It's, at this point, about 70% done, so early into Q2 we will finish up that road. Those are the major infrastructure work that we need to do as well as finish off installing our mine offices and those sort of things on-site.
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Rahul Paul, Canaccord Genuity - Analyst [10]
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Okay, thanks for that, that's it for me.
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Operator [11]
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(Operator instructions). There are no questions registered at this time. I would now like to turn the meeting over to Mr. Johnson.
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Clive Johnson, B2Gold Corp. - Pres, CEO, Director [12]
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I guess everyone has gone for their Easter break already. One last thing I wanted to talk about, just something that came up with some of our shareholders recently, and that was some media attention in Nicaragua. I just want to clarify and give the Company's view of that.
There was some publicity in Nicaragua about a demonstration near a deposit called Pavon, which is one that we acquired from Radius. It's a high grade, it is potentially truckable to Limon. It would be a small pit that could complement Limon production at some time in the future. It's very early stages, and there was a demonstration about some media attention there. And we are working very closely with the community there to bring them up to speed about modern mining, just as we did at Libertad and as we have done at Limon and as we have done at Santo Domingo for Jabali.
So I think that those things need to be kept in context. Santo Domingo got some media attention as well because we dealt very successful with four of five small minor groups, which is exactly what we had done at La Libertad very successfully in the past. The deal at La Libertad is that we asked the small miners to form a cooperative, and we negotiated with the leaders of the cooperative and we reached an agreement to move the small miners at Libertad off of our concessions that we wanted to mine, and we moved them to spill roads and moved them to smaller veins where that could continue to work but not use mercury to try to recover the gold and hurt the environment and themselves and get 40% recovery. So the deal was they would bring their ore to our mill, and we run it through our mill and get them 90% recovery with a very small tolling fee. That has been very successful.
Now, one group at Santo Domingo has caught some media attention that has been picked up internationally by some people suggesting that they are the champions of the environment at Santo Domingo. That's really not true at all. We've dealt very successful with 4 or 5 small miner groups that are happy. The local community is very -- for the most part, very happy with our presence there. We are not going to be milling at Santo Domingo; we are going to be hauling the ore down from Libertad. And we are building a secondary road that will be a -- we have already upgraded the existing road, which used to take 2.5 hours to drive from Jabali to La Libertad; now it takes 20 minutes. So they are pretty happy about that, and we will be building a separate road, a secured road adjacent to that, which we are doing right now.
So we did have a group that was a demonstrating group at Santo Domingo that were just -- they were not interested in negotiating. They didn't have any rights to be mining on our area at all, and they were simply trying to extort a large amount of money out of the Company and they were just intransigent.
So the Nicaraguan government, recognizing that what they were doing was unlawful, stepped in and stepped in with a group and encouraged them to basically negotiate with us and to stop their illegal protest.
So that's something that you've got to deal with in many countries that have local communities. I think our reputation speaks for itself in Nicaragua. Dale and the guys down there have done an incredible job and we are held up in Nicaragua as the example of the kind of foreign investments they want in the country. We have done a great job of safety and environmental responsibility, social programs. Every time I go down to Nicaragua, I cut about 8 or 10 ribbons at all sorts of different new water wells or schools or other great things that we do in the community.
So we will continue to work with transparency with the local communities, but I just wanted to get that out there that some of the media has gotten a little out of control in Nicaragua about the situation. For the most part, I must say we have been very fairly dealt with in the media in Nicaragua because I think they have seen it as a very positive story that we have been very transparent with the media.
So I just wanted to get that out there, that we have done an excellent job in Nicaragua working with the local people and we will continue to do that and work with reasonable people who recognize that modern mining can be a very positive thing in Nicaragua. So I just wanted to touch on that.
I think that's about all from us. Any further questions, feel free to drop us an e-mail. And thanks, the shareholders on the lines, for your support. And we look forward to a very exciting rest of 2013 and beyond. When this market turns around and people start buying gold stocks, I'm pretty confident that we are going to be high on the list. So thank you very much.
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Operator [13]
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Thank you. The conference is now ended. Please disconnect your lines at this time and we thank you for your participation.
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