Q3 2014 B2Gold Corp Earnings Call
Nov 14, 2014 AM EST
BTO.TO - B2Gold Corp
Q3 2014 B2Gold Corp Earnings Call
Nov 14, 2014 / 06:00PM GMT
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Corporate Participants
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* Clive Johnson
B2Gold Corp. - President, CEO, and Director
* Mike Cinnamond
B2Gold Corp. - SVP, Finance and CFO
* Dale Craig
B2Gold Corp. - VP, Operations
* Bill Lytle
B2Gold Corp. - VP and Country Manager, Namibia
* Tom Garagan
B2Gold Corp. - SVP of Exploration
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Conference Call Participants
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* Andrew Quail
Goldman Sachs - Analyst
* Rahul Paul
Canaccord Genuity - Analyst
* Ovais Habib
Scotiabank - Analyst
* Michael Gray
Macquarie Capital Markets - Analyst
* Chris Thompson
Raymond James & Associates, Inc. - Analyst
* Mark Malcoun
Zazove Associates - Analyst
* Jeff Killeen
CIBC World Markets - 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 third-quarter 2014 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. - President, CEO, and Director [2]
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Thanks, Melanie. Good morning or good afternoon, depending on where you are. Thanks for joining us for the B2Gold third-quarter -- our quarterly conference call. We are going to review the quarter and talk about our operations going forward a bit, and then we're going to open it up for questions at that time.
A few highlights from the third quarter -- a lot of you have seen the results. So far we've produced 90,000 ounces of gold. Cash operating costs of $732 an ounce, which was higher than we had been budgeting. We had gold revenue of $114.9 million for the quarter and maintained a strong cash position of almost $180 million at quarter-end.
We have had, as I think we've made it very clear, some -- a few operational challenges over the last couple of quarters. But we are happy with results, and now we are dealing with those.
And in fact, as you will hear, the Masbate Mine had a record month in October since the start of the mine of over 20,000 ounces. So it's recovering well, and Dale is going to tell us a bit more about the issues we face and how we have resolved them -- both at Masbate and also at the El Limon Mine.
So these are not systemic problems with either operation. They are one-off scenarios. And we think of we have learned from them, and moved on, and improved. We are actually on track for our renewed guidance for the year of between 380,000 ounces and 385,000 ounces of gold production.
And another couple of important developments during the quarter was the completion of the acquisition of the Papillon Resources transaction. We are very excited about the Fekola Project, and we will talk a bit about that.
And also a very important quarter in terms of the Otjikoto construction, which is going very well. And Bill Lytle is on the phone from Namibia; Bill is going to bring us up to speed up to today on what's happening in terms of Otjikoto preparing to pour its first gold in the next four weeks or so.
So for the nine months, gold production was a little over 270,000 ounces. And actually our consolidated cash operating costs of $694 for the period were actually in line with the year to date and tracking well for our guidance, which is actually pretty good, given that we went through some of the issues we talked about in the last couple of quarters.
So we're looking at cash flow from operating activities of about $100 million for the nine months. And it will be about $120 million for the year. That number will jump up significantly next year to -- at these gold prices -- to about $190 million, when we bring -- as you bring on the first full year of Otjikoto. So we got through the quarter, and have resolved some issues, and are looking very positively towards continuing to grow going forward and maintaining a strong cash position and being very focused on delivering from the assets.
I'm going to pass it over to Mike Cinnamond now, our Chief Financial Officer, who is going to give you a quick summary of the financial results. And then we are going to move on to operations.
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Mike Cinnamond, B2Gold Corp. - SVP, Finance and CFO [3]
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Okay, thanks, Clive. So I'll just walk us quickly through the quarterly results, and the P&L, and then a couple of comments on the cash flow and the balance sheet. So firstly, on the income statement, as Clive said, we had revenues for the period of about $115 million, which represents sales of about 91,000 ounces. And that was about 14,000 ounces less than originally budgeted.
And those shortfalls really came from about 6,500 less ounces sold from Masbate and about 7,000 ounces less sold for Limon. And we will touch on those shortfalls as we discuss the production numbers.
Overall, revenues were down about -- compared to the comparable period by about $14 million. The decline in gold price accounted for about $6 million of that. The decrease in ounces sold accounted for about $3 million. And in the prior year, there were also accounting entries that were positively hitting revenue of about $5 million which weren't repeated in the current year.
So looking at production, ounces produced in the period were just over 90,000 ounces, which, again, is just shy of 15,000 ounces less than budget. Those shortfalls are consistent with the sale to Masbate, a shortfall of 7,500 ounces; and Limon, at about 7,000 ounces
As Clive said, cash costs for the period were $732 an ounce consolidated. If you break that down, you will see Libertad performed very well, as production was almost exactly on budget and had cash costs of $560 an ounce, which is just about $17 higher than budget, but very close.
At Masbate you had cash costs of $793 an ounce, which is actually $9 less than budgeted. So although we had a shortfall in production there, Masbate benefited from lower strip ratios and higher volumes actually mined and put into the stockpile.
And then Limon for the period was just under $1,100 an ounce. And so if we looked at the operating issues that drove those shortfalls -- I think Dale will discuss in more detail -- but basically, Masbate reflected -- the shortfall there reflected just less throughput in the mill as a result of some of the commissioning issues in the SAG mill, which Dale will touch on.
In Limon the shortfall is a, again, temporary issue related to just accessing the higher grade ore in Santa Pancha 1, which we expect to be into in this quarter. So I think both those issues -- the SAG Mill and that Limon higher-grade access are items that, you know, temporary; we think non-recurring in nature; and we think we have them resolved now, so it shouldn't be an issue going forward.
Just looking at year-to-date cash costs, again, Clive touched briefly on it -- the consolidated cash costs year-to-date are $694 an ounce, which is actually still trading -- although we have lower production, it's actually still within our cash cost range. And as we move into Q4, especially at Masbate, where, as Clive again said, that there was record production of 20,000 ounces in October, we think that those cash cost on a consolidated basis will come down. And so we should be well within our previously reported range.
Just to comment briefly and depreciation for the quarter, it was $29 million or $318 an ounce. That is an increase from the prior year, but it really just reflects the impact of capital that we invested in the prior year into our operations now coming on and having a full year's depletion.
Touch also on G&A. G&A for the period is about $1 million more than on the comparable prior quarter. But $300,000 on that is salaries, just as we have more bodies here as we grow as a company. About $0.5 million of it is legal, just recurring legal expenses -- again, just routine in nature, as we are a bigger company and operate in more jurisdictions.
And then a couple hundred thousand dollars just relate to our other offices that we currently run that we acquired from the various acquisitions, our tenure in which is winding down over the period. So we wouldn't expect to be counting those next year.
Then the other -- the big item, maybe, to touch on here in the P&L is the impairment of goodwill and other long-lived assets. So at September 30, as required under our accounting guidance, we looked at what we thought might be impairment indicators. And the sustained decline in gold price was determined to be one. So we dropped our long-term gold price estimate from $1,350 to $1,300 and ran impairment tests on all our operating mines' long-lived assets, including goodwill. So no impairment of the mines was identified.
However, for goodwill we determined that the whole amount of the Masbate goodwill of $202 million was impaired and was written off. And again, I think we should remember that when we purchased Masbate, it was in a period of much higher gold prices. So I think we've seen a lot of goodwill write-downs triggered over the last years, which -- I don't think it's a surprise, when you get down to $1,300 gold, that we'd have triggered an impairment.
And then for Gramalote we also ran that model -- there is the PEA a model that had been done by Anglo. So we did run that model at $1,300 gold and determined that the Gramalote joint venture at $1,300 was impaired by $96 million. So all in all we had impairments for the period of just shy of $300 million.
And at that flowthrough -- the only other item in the P&L maybe to touch on is the gain on the fair value of convertible. We had a positive gain of $31.5 million. As you've noticed in the prior quarters, we see that fluctuate a lot. We carry that converted mark-to-market basis. So as its trading value goes up and down, we get big gains and losses in the P&L related to it. Again, similar to the goodwill, that's a non-cash item.
So all of that flowed down. We had a net loss for the period of $274 million or $0.39 a share. On an adjusted basis we had a net loss of $4 million or $0.01 per share. And maybe just to touch as well on our all-in sustainment costs -- we have a range of $1,025 to $1,125. Our costs for the quarter were just shy of $1,120 and year-to-date were $1,176. Again, with the positive results that we see from the mines in the quarter, Limon coming back onto regular operation and with Masbate operating at record levels, we expect that overall all-in sustaining cost to come down and be within guidance, albeit at the upper end of our guidance range.
Just to comment briefly now on the cash flows, cash flows before changes in non-cash working capital was $27 million or $0.04 per share and year-to-date was $100 million or $0.15 per share. For the quarter there was a declining period-on-period of $6 million, and that really reflects -- the change in gold revenues accounted for $4 million of that decrease.
Cash flow after changes in non-cash working capital was $33 million for the quarter and $75 million year to date. And for the quarter it's very similar period on period. Year to date we are about $34 million less than the prior year.
But in 2013 we acquired $32 million worth of inventory when we acquired CGA, which we got the benefit of in those numbers. So if you strip that out, we are very comparable period on -- from year to date/year to date in terms of cash flow after changes in working capital of $75 million.
From the financing side, we drew down another $55 million on our revolving credit facility. We've still got $75 million left. And at this point we don't foresee that we would be drawing any more down in the current quarter. We paid $5 million of interest and commitment fees, as expected there.
And, overall, on the investing side we had a net amount of cash used in investing activities of $32 million. That's net of cash acquired on the Papillon acquisition, also, of $32 million. So on the Papillon side, although the deal didn't legally close until October 3, once the final court decision and ruling had been made in late September, it was only a passage-of-time issue before we acquired control.
So for accounting purposes we brought Papillon into the books and consolidated at that date. So we show $32 million of cash acquired in investing activities because of that. So that leaves us at the end of the period with $179 million and still a further $75 million undrawn on our revolving credit facility, so good liquidity there.
Finally, I'll just touch on a couple of things in the balance sheet. The main change period on period is the change in mining interests. And that reflects just over $0.5 billion allocated to the Fekola assets when we acquired it, and then reduced by write-downs in the Gramalote joint venture of $96 million, and also the write-down of $200 million related to the goodwill.
And the only other item I'd point to in the balance sheet, then, in the equity section -- because Papillon wasn't actually acquired legally until October 2, the shares weren't issued until that date. So we do show the shares -- the consideration payable, then, in equity as a separate line. But we did factor in the shares to be issued into a parent when we calculated the earnings per share and the cash flow per-share numbers.
And I think that's all that I was going to tell you.
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Clive Johnson, B2Gold Corp. - President, CEO, and Director [4]
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Thanks, Mike. I'm going to pass it over to Dale Craig now, VP of Operations. Dale is responsible for overseeing production at the Masbate Mine in the Philippines and at the two operating mines in Nicaragua. Over to you, Dale.
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Dale Craig, B2Gold Corp. - VP, Operations [5]
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Thank you, Clive. Operations in the third quarter we continue to focus on resolution of some specific issues in two of operations. For Masbate, third-quarter production was 43,746 ounces, which was 7,514 ounces below budget.
Reduced gold production was directly related to issues encountered with SAG Mill after the initial run-in period. As the operational team commenced to charge a full mill ball load in mid-July, elevated bearing temperatures were observed in the SAG discharge. Throughput and recovery was affected as maintenance crews worked through a series of exercises to determine the causes for the temperature increase. And these included checks and modifications were necessary for pedestal clearance, pinion movement, lubrication function, cooling efficiency, and mill alignment.
The mill is functioning well now. Currently we are running with a high throughput and a low ball mill load, which really suits the soft ore that we are processing from now through to year-end. In January that pinion locking plate, which will keep the pinion drive in position during loaded startups, will be installed, and a new discharge bearing will be installed.
Additional modifications to the cooling system will be carried out later -- although, frankly, the current operating temperatures are well within operational limits. In fact, they are at the low end of the operational limits. The changes in January are designed to permit the operation of the SAG Mill at its full design performance. The pending consultant report will indicate what, if any, critical spares we should be keeping at hand.
For the final quarter in 2014 the mine is operating two excavators in Colorado Pit to process softer, higher-grade oxide ore, which will work really well with our current SAG configuration. We observed that through September, October, and November we were achieving higher throughput with good grades, and high recoveries have been achieved. And this is using softer oxide material at 70% of mill feed.
And so far in the fourth quarter by mid-November, we are about 6,000 ounces better than budget for that same six-week period. October was a record month. Throughput in October was 19,700 tonnes per day. And month to date in November we are showing 19,300 tonnes per day.
We anticipate as we head into 2015 a similar configuration on the mill feed. Budgets are under development right now. We are anticipating, first half of the year, 60% oxide feed in our mills. B2Gold anticipates that Masbate will produce 180,000 ounces this year. The former guidance was 190,000 ounces.
Cash operating costs for the third quarter were $793 per ounce, slightly lower than budget. Lower costs were the result of lower processing costs related to lower throughput, but also lower strip ratios and lower mine volumes and less stockpile drawdowns than we are finding in the budget. Year-to-date cash costs are $784 per ounce, in line with budget, and $37 per ounce less than last year.
In other areas the transition to self-mining is proceeding smoothly. The labor force has been assimilated, and our maintenance staff is in place and ready to complete the takeover of maintenance functions in December, which is the final step in our transition. The metallurgical study regarding potential plant expansion is still pending and is being worked on.
For La Libertad, La Libertad mine again delivered a strong quarter. Production was 36,624 ounces at a cash operating cost of $560 per ounce, which compares to the budget of 37,000 ounces and $543 per ounce. Year to date the production is 4,051 ounces ahead of budget at 112,901 ounces.
Cash operating costs for the year are $551 per ounce. That's an improvement of $18 an ounce over budget, an improvement of $42 an ounce over the same period in 2013.
CapEx expenditures of $5.6 million include deferred stripping at Mojon and Jabali areas and development in the Jabali project. Year-to-date CapEx spent is $23.9 million compared to a budget of $34 million.
Pending expenditures in the final quarter include Jabali land purchases, advances in the Antenna area relocation program and deferred stripping. The mine permitting at Jabali Antenna is proceeding on schedule, and our relocation team is now working actively with the Santo Domingo residents who will be affected by our development. We are receiving good support from the national, district, and municipal levels of government.
In November B2Gold received a national award for CSR work in sustainable development in Nicaragua from the organization UniRSE. The award is for development of a milk handling facility in the Chontales Department in Nicaragua, which provides sustainable benefits for more than 800 persons.
The center has processed more than 1 million liters of milk in the last eight months and has allowed producers to increase the value of their product by 4 times, because the product arrives at market more quickly and in better quality. That's a great example of the kind of opportunity that can arise, partly with our assistance and partly as a result of the improved infrastructure and transportation that occurs when you have responsible mine development.
In August, for the third consecutive year, the La Libertad mine received an award for leadership and occupational safety from the Nicaraguan National Health and Safety Commission. This award follows a comprehensive audit and a review system, and we are really proud of this achievement.
In El Limon production was affected in the third quarter by delays in development of the dewatering system in Santa Pancha 1. The principal cause for the delay was difficulty in establishing stable wall conditions at the bottom of two boreholes which are located about 100 meters below an underground pump station.
Our goal has been to install in-line pumps at the bottom of those holes in order to pump water down and lower the level of hot water in the mine. The lower level will allow us to expand the mine to deeper levels while maintaining safe operating conditions. As of November 10, the system was operational; and it is anticipated that crews will be able to access higher-grade stopes in December, when the operation will return to normal production levels.
During the third quarter, El Limon used other ore sources from lower-grade areas in Santa Pancha 1, in limited amounts from Santa Pancha 2, and ore from the open pits. In the third quarter El Limon produced 9,822 ounces of gold, which was 6,829 ounces below budget. Average grades were 2.82 grams per tonne compared to a budget of 4.34 grams per tonne.
Lower production levels resulted in cash operating costs of $1,099 in the third quarter compared to a budget of $667 per ounce. Year-to-date cash costs are $830 per ounce compared to a budget of $693 per ounce. These costs will normalize on commencement of mining in the higher-grade stopes.
And, in fact, our ongoing operating costs are much better than budget -- about $550,000 lower than budget for the quarter. And some of these savings are from energy and reduced mine activity in Santa Pancha 1. But there are other areas, of such as in the admin and contracting costs, where those savings should remain and have a positive impact as we resume normal production.
CapEx year-to-date totals just over $13.31 million, which includes deferred stripping, underground development, mine equipment, and pump purchases. Remaining expenditures in 2014 include construction of a detox pond, preorder of tailings dam construction material, deferred pit and underground development, and a variety of small projects; and that should total about $7.7 million.
So as we look to the close of 2014 and the start of the New Year, the budget focuses on management of costs; reduction of external costs, such as those from suppliers; improvement of mine efficiencies; and maximization of production. In Nicaragua in the past years we have invested in our operation, and it's our expectation that that investment will pay off in the coming years. Thank you.
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Clive Johnson, B2Gold Corp. - President, CEO, and Director [6]
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Thanks, Dale. As I said, we will leave it to the end for any questions. I'm going to ask Bill Lytle, who is in Namibia, to give us an update on the exciting construction developments down at Otjikoto. Bill?
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Bill Lytle, B2Gold Corp. - VP and Country Manager, Namibia [7]
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All right. Clive, how do you hear me?
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Clive Johnson, B2Gold Corp. - President, CEO, and Director [8]
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Fine.
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Bill Lytle, B2Gold Corp. - VP and Country Manager, Namibia [9]
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Okay, excellent. Well, I think Clive started out by summing it all up. We continue to remain on time and on budget. Basically, we are coming right down to the very end of construction on the earthworks side. On the civil side, we are more than 95% complete, with only the final grading and drainage remaining.
On the mill side, the primary crusher has been commissioned and handed over to operations. You've actually run waste through the circuit, and we are now piling material onto the stockpile pad. The SAG and ball mills are complete. They are planning on putting a ball charge in them next week, and the plan is to get them running by the end of this month and hand them over to operations.
The leach circuit is completely filled with water. All the agitators are running. They are pushing load against the power plant. And the intention is to produce gold by the middle of December.
The tailings facility has been complete since the beginning of the year. Basically, what we are doing now is just finalizing the fence around the edges, putting the spigots in, and putting the walkways in.
The mill -- on budget, basically on schedule. Slightly more than 14 million tonnes produced. The powerhouse was commissioned at the end of October and handed over to an O&M contractor. It's fully operational.
So the schedule shows us at plus-95% complete, with no major outstanding item to be completed to produce gold. We are currently in the process of transitioning from construction to operational employees. So we have been doing a very strong stakeholder engagement program, both with employees and with government officials, to make sure everyone is aware of what's happening. And as I said, the plan is to produce gold by the end of the year.
That's all I have.
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Clive Johnson, B2Gold Corp. - President, CEO, and Director [10]
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Okay. Thanks, Bill. We talked in the news release a little bit about Otjikoto and the plans going forward. As everyone is aware, we have had the discovery and the drilling of the higher-grade Wolfshag zone, very close to the planned pit. So you have seen us talk about production increasing pretty dramatically over the next couple of years at Otjikoto.
And we have planned all along to build a plant that could run 2.6 million tonnes a year, which is what we are completing construction on right now. But we said that, given the existence of Wolfshag, perhaps we should leave the ability to, for very little extra money, upgrade the facilities so they can handle 3.1 million tonnes a year.
And we are starting that now, actually, so that will be completed by the third quarter of next year. And that will take the capacity up, as I mentioned -- and for only about $15 million, which involves installing a pebble crusher, a couple more tanks, and a little bit more equipment. So obviously a no-brainer in terms of the return.
So what that does is that, simply by mining the Otjikoto ore body faster, that's where we see a significant increase in production. Next year we are looking at about 140,000 to 150,000 ounces, low operating costs at around $500, a little higher than $500. And all-in sustaining, that should be less than $800 an ounce.
And a big jump in production in 2016 as we have the larger tonnage and better grade at that part in the Otjikoto ore body. So we are looking at approaching 200,000 ounces with similar low operating costs is what we're expecting in 2016. And then it comes back down a little bit, so far in the 170,000 ounces for 2017.
Now, all of that is without Wolfshag yet. So what we are doing now is we've drilled the upper portion of Wolfshag. And some part of Wolfshag, whether it's two or three years, is going to be, we expect, open pittable. And then we expect that, given what we are seeing -- some of the good grades down there, we think we will end up going underground, not only in Wolfshag, but in the long-term, probably the Otjikoto deposit itself.
So what we're going to -- next year we will be able to give you more information about how Wolfshag comes in and then how it plays out. So we will be looking at bringing Wolfshag into 2016. We will be able to show the implications in 2017 and going forward. So it's a very positive development, having Wolfshag there. And that has given us the confidence to go ahead and pull the trigger on increasing the throughput as well.
Just another thing I thought of while Dale was talking was that we have been talking for some time about doing an expansion study on Masbate. We are getting close to completing that study, and that study has gone back. And we always knew that in order to -- as we got into harder ores at Masbate, the transitional and the sulfide material, that we would have to at some point in time look at an expansion to handle that ore, and decrease the grind size, and look at mining the harder ores. That part of that is depending on exploration success, because we have had some exploration success in oxide zones and also some higher-grade sulfide zones, so that's encouraging.
In terms of the expansion, we don't know the results of that report. But frankly, if the expansion looks like it's a positive thing, I think you'll see us defer that, given the fact that our focus for the Company is really looking to build the Fekola.
So we want to be very focused on that. So unlikely we would try and do both at the same time, expand Masbate and build Fekola. So just a heads up on that. We will come up with more information on that moving into the early part of next year.
In terms of other projects before we get to Fekola, we are continuing to advance Kiaka, doing some metallurgical test work there. We've done some drilling. Frankly, in this current environment today, cash is king. And we're going to be continuing to advance it, but on a bit of a slower pace. So sometime in the second half of next year we'd be looking at coming out with a feasibility study on Kiaka.
We like it a lot. It's a good ore body. We do think it needs a little help from the gold price to be economic, but that's one of our projects, along with Gramalote, I guess, that perhaps represents -- well, it does represent -- some optionality.
On the gold price, if you think gold is still cyclical, and one day you might see it back at $1,500 or $1,600 an ounce, I think that both of those projects look like they could become mines in the future. We're going to stay very focused on what we are doing in terms of moving on to building Fekola.
So on from -- just before I get to Fekola/Gramalote, we are in the process right now of reviewing budgets with Anglo. Obviously, everyone is -- Anglo is in a position of trying to cut costs, like everyone, maybe more than some. And they will come to agree a budget.
We are committed to the project in the sense of holding it as an asset. We would like to continue to advance it towards a permitting to get the environmental impact assessment done. So that's ongoing. And we expect to see a very low budget from Anglo for this coming year, because the focus will be to keep the claims in good standing and to advance the permitting and look at the project again when and if the gold price makes it interesting.
Their projected capital in their preliminary economic assessment of $1.1 billion, we think, is high. We would build it for less than that. So over time we'd expect some work to come in lowering the capital cost.
So onto Fekola -- we've done a lot of work there. We were very happy to get the merger agreement with Papillon concluded and issue the shares. Obviously whenever you issue a large block of shares like that, even on an accretive deal, which we think this clearly is, you are going to get some of those shares back in the market. And also, of course, the timing of the deal was unfortunate and opposite the gold price. So I think we got hit a little bit harder than we normally do.
And of course we had, for us, the weaker quarter than normal as well. So all that has conspired to give us, for us, a bit of a harder hit in the market, which we are hoping to see -- as we get a good ramp-up at Otjikoto, we are hoping to see a re-rating in the marketplace.
So about Fekola -- love the project, great gold belt. As everyone knows, one of the best projects we've looked at, not only in Africa, but pretty much anywhere else for a number of years. And we've looked at lots of stuff -- good grade, low strip ratio, good logistics. We are moving on it very rapidly. We are doing a lot of feasibility work now.
We've taken a lot of the good work that was done by Papillon in some of their engineering groups they've used, and we have been working very closely over the last four months. What we have tried to do is -- while we were closing the deal, and these Australian deals take a long time to close -- we were able to not lose the schedule by committing that we would continue to work together.
So we did a lot of engineering work behind the scenes over the last four months. And now we are into deciding what tonne-a-day case we should do or tonne-per-year. And right now, I would say we are leaning to some probably 4 million tonnes a year, which would yield over 300,000 ounces of gold a year. That's what we are leaning towards now. And the capital -- we don't know yet, but rough order of magnitude, depending on how you finance it, opposite of fleet lease or contract mining, et cetera -- the capital is probably going to end up somewhere between $350 million, $400 million, in that range. We are working on that now.
We're moving equipment right -- very shortly from Namibia to Mali to Fekola. So we are not going to wait for a feasibility study, which should be closer to midyear; we are going to get going. And we want to get going on construction, so we're going to mobilize the team.
And the team is the same team that's just coming off, finishing their great work at Namibia, the B2Gold construction team. One of our great advantages is having our own construction team. They are going to take a well-deserved couple months off and go fishing in Mexico, and then they will be back and ready to go in Mali on the next one.
So we are looking to get going in February. We are going to start off with road construction, airstrip construction, so we will be completely independent there in terms of flying in and out. And we will be looking at doing earthworks and starting some cab construction.
And then we will be looking at, as we go further through year, how much money we need to add to Fekola. Obviously, we've got some cash from mining operations next year -- at these gold prices, could be around $190 million. We have our revolving facility with the banks, a $200 million facility.
The bottom line is we will -- in this gold price environment, we will need to add some financing for Fekola. But there are -- alternatives are numerous. There is a lot of money out there today for gold companies, if you have robust projects that you are looking to build, like Fekola; and if you have cash flow and credibility; the credibility of building mines, which clearly we have, because we are demonstrating it again now with Otjikoto coming on.
So we have a number of alternatives. One that has been discussed is talking to our banks, who are pretty happy with us about increasing the size of our revolver, which might be one of the better alternatives for us, because Fekola has got a very rapid payback. So it's nice to pay interest as you go; it's attractive. So we're going to look hard at that.
The high-yield bond market -- it's pretty volatile these days, but you pick the right week, and there's lots of money there. We are turning down offers all the time of doing the high-yield market.
And a number of other alternatives -- frankly, the banks would love to do a project loan on a gold mine, and Fekola would be a great candidate. But we don't think that gives us the most flexibility as a company, but it's an alternative. If we needed to, we could look at that.
So we will be working over the next number of months to pull all that together. But very confident -- I think our view of Fekola is if the gold price stays right where it is for a number of years, it's going to be a good acquisition. If the gold price goes down, it's going to look like a good acquisition. And if gold price goes up, it's going to look like a great acquisition.
So we are very happy with it. And if you look at Fekola combined with Otjikoto, between those two, you could be approaching 0.5 million ounces a year, potentially, of production of -- operating cost at somewhere around $500 and all-in sustaining at less than $800. We're ready -- we think that's a tremendous position to be in as a company today and looking forward to that kind of growth.
So more to come, a lot more to come on Fekola. And we'll be able to, getting into the New Year, talk more about our plans and specifics and where we are going. We've got a few things to do down there on the ground. We've got to negotiate now with the government, which -- the normal procedure down in Mali, and that is to negotiate a convention with the government. The government will end up with an interest in the project. And we are going to follow the conventions as they have been done in the past and get in and work with that.
The government is very, very keen to see the mine build. They are very excited about that. They know the importance of this mine to Mali. A couple of the other mines there in the community that are very important will be running down over the next couple of years, so this becomes a very important project and definitely are getting very strong support from the government of Mali.
And it's nice to be -- you know, we are not pioneering. We have done our share of that, but we are in a recognized gold belt that has a series of world-class deposits. And we think the upside of Fekola, beyond the robust economics that we see in the main ore body, we think the upside is huge. It's open, and there's lots of targets along the belt.
Papillon did what a lot of one-project companies do: they focused on something and getting something to the point where they felt they might be able to go and get it funded and built. So we think that exploration upside there is huge.
In exploration this year it's a bit frustrating, a lot frustrating for our geos. These guys have made world-class discoveries and they would like to be out there, tromping around, looking at new stuff. We all recognize the importance of cash is king this year. And we are looking to build another mine starting next year.
So we are going to do exploration that will be focused largely around the mines. We've had a great track record of finding additional that seems to be higher-grade ounces in each of the operations that we are at with our great expiration team. So we will continue to do that.
And then, hopefully, as we get into stronger positions, we will be able to go out and do more grassroots exploration. We still believe very much that the cheapest ounces are the ones you find. And we have one of the best exploration teams in the world. So for now they are going to take one for the team and do things like infill drilling, and brownfield drilling and metallurgical test drilling and all other things.
Just one thing that we should talk about: we put it in the news release, but it is -- the Ebola situation in Africa obviously is on everyone's mind. We have been impressed with the preparedness in Mali. Because Mali knew that it was in neighboring countries, there has been a good level of preparedness. And we are actually working with a group of mining companies that conference on a regular basis and talking about the various things we can do.
We have put in place strict guidelines that require the internal and external communication and the training and preparedness of workers where people have been visiting in the past. And we are going to take all the precautions appropriate, as our other mining companies. But we all comparing notes. We are working very closely with the government, and we are very confident that it will be contained, as it has been now in some other areas.
So I think with that, you know, difficult times in the gold sector. We are very encouraged looking forward. We think we are perhaps uniquely positioned in the sector to grow dramatically from this point on, with Otjikoto coming on and then Fekola, and really focusing on our operations and continuing to look at reducing our costs.
Might mention G&A. I think people have to realize that you can't go from no gold production in 2009 to 500,000 ounces plus in 2015 without an increase in your G&A. But we will see lower G&A next year, and we will be focusing on that coming down as well. I don't think our G&A will jump up again dramatically over the next few years. We are at a level now where we have the people, we believe, the majority of the people in place to build the Company from its existing assets.
I think that's most of what we want to tell you about the quarter and going forward. Melanie, I think we will open it up now for questions.
==============================
Questions and Answers
------------------------------
Operator [1]
------------------------------
(Operator Instructions) Andrew Quail of Goldman Sachs.
------------------------------
Andrew Quail, Goldman Sachs - Analyst [2]
------------------------------
Just a couple from me. Just firstly on Masbate -- obviously, for reasons you guys have highlighted, the recovery rate was low and we can point to things like that, but could you see that rebounding in Q4, and obviously in 2015? But do we get back to a more level rate that we saw at the end of, say, 2013 on the recovery rate?
------------------------------
Clive Johnson, B2Gold Corp. - President, CEO, and Director [3]
------------------------------
Well, we're -- Dale, why don't you talk about the fourth-quarter first there?
------------------------------
Dale Craig, B2Gold Corp. - VP, Operations [4]
------------------------------
Sure. In our initial production schedule we knew the back half of 2014 would be a better half. And we are certainly seeing that now that we've got the issues of the SAG Mill laid to bed. We are certainly looking for a big final quarter in order to recoup some of the challenges that we've had in the third quarter. Recoveries are sitting better than 80% at this point, with a high oxide value. And about as anticipated, I'd say, given the feed that we are providing at this point.
------------------------------
Clive Johnson, B2Gold Corp. - President, CEO, and Director [5]
------------------------------
For next year, we haven't come at kit with our projections for each of the mines, which -- we will do so shortly or early into the new year. And also, we are awaiting the results from the expansion test, which included a bunch of additional metallurgical drill work. So we are putting all that data together to see what it looks like going forward.
------------------------------
Andrew Quail, Goldman Sachs - Analyst [6]
------------------------------
And just on maybe with the build at Otjikoto, what sort of -- can you just run us through what -- the breakdown in the power costs?
------------------------------
Clive Johnson, B2Gold Corp. - President, CEO, and Director [7]
------------------------------
Bill, have you got that?
------------------------------
Andrew Quail, Goldman Sachs - Analyst [8]
------------------------------
And just exactly if there were any savings, given oil price selloffs, and --
------------------------------
Bill Lytle, B2Gold Corp. - VP and Country Manager, Namibia [9]
------------------------------
It's hard for me to hear the question. Can you repeat it?
------------------------------
Clive Johnson, B2Gold Corp. - President, CEO, and Director [10]
------------------------------
The question was the power costs at Otjikoto -- what fuel price are we using, and what do we see there?
------------------------------
Bill Lytle, B2Gold Corp. - VP and Country Manager, Namibia [11]
------------------------------
No, the actual power costs for Otjikoto -- it's basically in line with the feasibility. We are slightly less than the feasibility, which is about $0.16 per kilowatt hour. The actual -- in the feasibility it had slightly less power consumption than what we are actually going to -- what we're projecting for 2015, so that the actual costs will be slightly higher. But the cost per kilowatt hour is slightly lower. So it's about a wash.
------------------------------
Clive Johnson, B2Gold Corp. - President, CEO, and Director [12]
------------------------------
Bill, where are we at on the solar possibility for Otjikoto?
------------------------------
Bill Lytle, B2Gold Corp. - VP and Country Manager, Namibia [13]
------------------------------
Yes, so we've completed a feasibility with a company called Suntrace out of Europe to deliver between 5 and 10 megawatts of solar power. Currently we are in the process of negotiating what the long-term ramifications of that would be.
It's basically going to be a take-or-pay contract, and so we are trying to figure out what the maximum or optimal amount of megawatts would be. And so that's really up to the executive committee right now to bring a proposal to the Board. But that looks very positive.
------------------------------
Andrew Quail, Goldman Sachs - Analyst [14]
------------------------------
Okay, thanks.
------------------------------
Operator [15]
------------------------------
Rahul Paul of Canaccord Genuity.
------------------------------
Rahul Paul, Canaccord Genuity - Analyst [16]
------------------------------
A question on Otjikoto -- development seems to be going quite well. Good to see. Just wondering if you could tell me what the size of the ore stockpile is, in terms of tonnes and grades.
------------------------------
Clive Johnson, B2Gold Corp. - President, CEO, and Director [17]
------------------------------
First of all, Rahul, it's not going quite well; it's going great. And you are allowed to say that. Okay?
Bill, do you know what we've got in terms of the stockpile there, what we are going to have? I think we have -- did we put it in the release?
------------------------------
Bill Lytle, B2Gold Corp. - VP and Country Manager, Namibia [18]
------------------------------
Did we put it in the release? I'm not sure we did. In the stockpile we are sitting at currently it's just under 350,000 tonnes at a grade of about 1.1 grams per tonne.
------------------------------
Rahul Paul, Canaccord Genuity - Analyst [19]
------------------------------
Okay. And just also went to clarify, on the capital of the $244 million, initially, capital -- how much is left to spend? And how much do you expect to spend in Q4? And do you expect some of that to carry over into 2015?
------------------------------
Clive Johnson, B2Gold Corp. - President, CEO, and Director [20]
------------------------------
Mike, do you want to answer that?
------------------------------
Mike Cinnamond, B2Gold Corp. - SVP, Finance and CFO [21]
------------------------------
Yes. Yes, well, the total capital, all-in, with everything, for the feasibility was $337 million, including the stuff that was originally intended to be leased in the pre-strip. So of that we've got approximately, in the fourth quarter, $32 million left to spend to bring us in line on budget, as we've discussed.
It's likely that a little bit of that might rollover into next year in terms of the actual cash spend. But right now, that's what we've got budgeted.
------------------------------
Rahul Paul, Canaccord Genuity - Analyst [22]
------------------------------
Okay. So you have spent everything aside from another $32 million to be spent?
------------------------------
Mike Cinnamond, B2Gold Corp. - SVP, Finance and CFO [23]
------------------------------
Yes, correct.
------------------------------
Rahul Paul, Canaccord Genuity - Analyst [24]
------------------------------
Okay. Thanks.
------------------------------
Operator [25]
------------------------------
Ovais Habib of Scotiabank.
------------------------------
Ovais Habib, Scotiabank - Analyst [26]
------------------------------
Most of my questions were answered. But just a couple of questions that I wanted to ask -- just on Limon, you guys were talking about starting up the Santa Pancha 2, I believe, in Q2. And now it looks like you guys are back at going forward with developing Santa Pancha 1. Is the plan still to develop Santa Pancha 2 in conjunction with 1? And does that give you more flexibility going forward?
------------------------------
Dale Craig, B2Gold Corp. - VP, Operations [27]
------------------------------
The short answer is yes. Santa Pancha 2 originally was budgeted for only about 10,000 ounces -- or 10,000 tonnes of contribution in the 2014 budget. Our development as well extended in Santa Pancha 2, and it will be a significant contributor to our production profile in 2015.
------------------------------
Ovais Habib, Scotiabank - Analyst [28]
------------------------------
That's great, guys. Okay, and in terms of the Masbate expansion, Clive, you were mentioning that, obviously, Fekola comes at a better priority than the Masbate expansion right now. Depending on the study, would you still be looking at an expansion there? Or do you have any other projects in place right now before the Masbate expansion comes into play?
------------------------------
Clive Johnson, B2Gold Corp. - President, CEO, and Director [29]
------------------------------
Well, that we have to see, of course, Ovais, what the report says. But if the report suggests that it's a positive in the future to look at an expansion, which could be adding more ball mill capacity, I guess; and more tanks; things like that, obviously, yes, in the future we can look at that.
The nice thing is that it's under our control. There's no debt on Masbate. So down the road somewhere, you could do a -- if you wanted to, you could use part of your revolver to go in and do an expansion there. But the good thing is it's at our option, at our call.
------------------------------
Ovais Habib, Scotiabank - Analyst [30]
------------------------------
That's great. Thanks. And just a final question on Libertad. In terms of the Jabali Antenna, you guys are going through permitting; and you also mentioned the relocation that's ongoing as well. How many people are you relocating? And can you give us some color as to how that's going about?
------------------------------
Dale Craig, B2Gold Corp. - VP, Operations [31]
------------------------------
Yes, sure. The short answer is really quite well. We are really happy with the advances. There are about 70 houses that we see that will be needed to be relocated. Our relocation team has already been in the field in the last month reviewing the coming event with residents and coordinating with them for a move. So we anticipate that that will move forward and should be complete in time for our anticipated Jabali Antenna development roughly midyear next year.
------------------------------
Ovais Habib, Scotiabank - Analyst [32]
------------------------------
That's great, guys. That's it for me. Thanks so much.
------------------------------
Operator [33]
------------------------------
Michael Gray of Macquarie Capital Markets.
------------------------------
Michael Gray, Macquarie Capital Markets - Analyst [34]
------------------------------
Otjikoto, the stockpile -- was that a total grade in between high-grade and low-grade stockpiles? Can you just clarify?
------------------------------
Clive Johnson, B2Gold Corp. - President, CEO, and Director [35]
------------------------------
Bill, did you hear that?
------------------------------
Dale Craig, B2Gold Corp. - VP, Operations [36]
------------------------------
Yes, it was.
------------------------------
Bill Lytle, B2Gold Corp. - VP and Country Manager, Namibia [37]
------------------------------
Yes, I heard that. But that's the overall grade; that's correct.
------------------------------
Michael Gray, Macquarie Capital Markets - Analyst [38]
------------------------------
Okay. So you have multiple stockpiles of high-grade and low-grade right now?
------------------------------
Bill Lytle, B2Gold Corp. - VP and Country Manager, Namibia [39]
------------------------------
That's correct. We have a high-grade stockpile at about 1.3 grams and a low-grade stockpile at about 0.5 grams per tonne.
------------------------------
Michael Gray, Macquarie Capital Markets - Analyst [40]
------------------------------
Okay, great, thanks. And on Wolfshag, I noticed you've got neutral results in the MD&A uncapped with some over 0.5 ounce over 15 meters. Are these in line with expectations overall? And is the structural stratigraphic models continuing to be predictive?
------------------------------
Clive Johnson, B2Gold Corp. - President, CEO, and Director [41]
------------------------------
I'm going to pass that over to Tom. We are just trying to find the results --.
------------------------------
Tom Garagan, B2Gold Corp. - SVP of Exploration [42]
------------------------------
Sorry, Mike. I'm not sure what we put in the MD&A. But the core of Wolfshag is as expected. The WA zone and WB zones are both coming in the way they are. Locally, you get some pretty good grades. But there's nothing to say that there's a huge supply that's either positive or negative. We know that we get some really high-grade zones in there.
In terms of the structural model, it's changing slightly but not a lot. Based on what we see in the open pits -- or the open pit right now at Otjikoto, the thrust fault is still real, but there is a strikes but component to it also that is creating the openings.
------------------------------
Michael Gray, Macquarie Capital Markets - Analyst [43]
------------------------------
Okay, interesting. Thanks. And finally, just congratulations on the CSR award in Nicaragua.
------------------------------
Operator [44]
------------------------------
Chris Thompson of Raymond James.
------------------------------
Chris Thompson, Raymond James & Associates, Inc. - Analyst [45]
------------------------------
A couple of quick questions here -- probably for you, Dale. Looking at mill feed mix for Masbate, the percentage of grades, actually, that came from the Colorado Pit for the quarter against, I guess, the main vein?
------------------------------
Dale Craig, B2Gold Corp. - VP, Operations [46]
------------------------------
Overall oxide feed was 70% percentage of grade. Give me a minute; let me see if I can infer it from our summary sheets here. Yes; I don't have a good breakdown here, but I can tell you that we are running about 1.24 grams per tonne, and the material coming out of Colorado will be a pretty significant contributor to that area. Other background grades we are running typically on transition, and primary ores would be in the 1.1 range.
------------------------------
Chris Thompson, Raymond James & Associates, Inc. - Analyst [47]
------------------------------
Okay, great. So just looking, I guess, at the reserves, I guess, the last-quarter reserves from Colorado, obviously significantly lower in grade. Obviously this is under review and we are anticipating a new reserve update shortly. But you have enough good grade, I guess, at Colorado to satisfy maybe six months of production at that sort of rate?
------------------------------
Dale Craig, B2Gold Corp. - VP, Operations [48]
------------------------------
Yes; our budget is still under development. So that being said, things may change a little bit. But we see carrying 60% oxide through the front half of the coming year.
------------------------------
Clive Johnson, B2Gold Corp. - President, CEO, and Director [49]
------------------------------
And one of the things that could positively affect Masbate going forward, and it does pertain to expansion as well -- but that's the -- we meant to tell you, the discovery of additional oxide material or better-grade transitional or sulfide material. We are definitely seeing that into zones, Pajo and Montana.
And this is some new drilling that Tom and his guys have been doing. So the other way to push out the need for expansion, and the other way to continue with better recoveries has always been at Masbate and the exploration potential, which we rate very highly, to find near-surface oxide or better recovering transitional sulfide material.
So that's happening, and that's encouraging. And as that goes on, some of that material -- maybe we will be able to get in mining that sooner rather than later. So that could improve things.
------------------------------
Chris Thompson, Raymond James & Associates, Inc. - Analyst [50]
------------------------------
All right, thanks, guys. Just quickly moving on to Libertad, again I understand that you guys are preparing your guidance and that for next year, and budgets and whatever. But the sort of mix that we saw, I guess, as far as from the pits for the mill feed for the Q3 -- is Santa Maria still around? Or is that -- what's the status there?
------------------------------
Dale Craig, B2Gold Corp. - VP, Operations [51]
------------------------------
Santa Maria has been completed. Crimea -- we are in the process of finishing up. So the primary mill feed that you will see over the coming months in the Mojon development area, Jabali Central, and expand ore as we can use it.
------------------------------
Chris Thompson, Raymond James & Associates, Inc. - Analyst [52]
------------------------------
All right, okay. Any comments, any color on the underground potential at Mojon?
------------------------------
Dale Craig, B2Gold Corp. - VP, Operations [53]
------------------------------
Sure. We are in active process of looking at that development. And our plans are to include that development in our 2015 budget.
------------------------------
Chris Thompson, Raymond James & Associates, Inc. - Analyst [54]
------------------------------
All right. So there's a chance you might go underground, I guess, at Mojon?
------------------------------
Dale Craig, B2Gold Corp. - VP, Operations [55]
------------------------------
Yes, next year.
------------------------------
Chris Thompson, Raymond James & Associates, Inc. - Analyst [56]
------------------------------
All right. And then, finally, just something, obviously, that I noticed in the MD&A, and I've noticed it before -- but just comment very quickly on ownership, I guess, at Fekola -- something to do with this ZTS claim of ownership? Thanks.
------------------------------
Clive Johnson, B2Gold Corp. - President, CEO, and Director [57]
------------------------------
As disclosed by Papillon in the past, there's an underlying ownership of the Fekola Project, and they've been in discussions with a local owner. And they have been looking at negotiating an agreement with the local owner.
So we are understanding what that is now. We've got some people down there right now, actually, and that's part of the way going forward here is to -- we have to finish up our convention with the government. In addition to that, we need to get with the local party there and then see if we can find a way forward for everyone.
We do believe that the local ownership has the right to a certain ownership. Our view of what that is and theirs; or, at least, Papillon's view on theirs seem to have in a bit apart in the past. But we will be getting involved in that, and we are confident that it's in everyone's interest to move along and move forward. So we are looking forward to getting that wrapped up as part of the whole convention to go forward with the government.
------------------------------
Chris Thompson, Raymond James & Associates, Inc. - Analyst [58]
------------------------------
Great. Clive, thanks a lot. And the team -- congratulations, and I look forward to Otjikoto.
------------------------------
Operator [59]
------------------------------
Marc Malcoun, Zazove.
------------------------------
Mark Malcoun, Zazove Associates - Analyst [60]
------------------------------
Just real quick, once you get Otjikoto online, what will be the maintenance or sustaining CapEx going forward?
------------------------------
Clive Johnson, B2Gold Corp. - President, CEO, and Director [61]
------------------------------
What are we showing for that? Do you have an idea of that?
------------------------------
Mike Cinnamond, B2Gold Corp. - SVP, Finance and CFO [62]
------------------------------
Otjikoto -- next year we are looking at somewhere in the region of between 20 -- right about $25 million. There's some pre-strip in there. And we are in the process of updating the life-of-mine plan for Otjikoto, so I don't think I can comment on it. Fully sustainable, recurring sustaining capital number --
------------------------------
Clive Johnson, B2Gold Corp. - President, CEO, and Director [63]
------------------------------
We would hope it would be lower than that probably, I guess, on a sustaining basis. But will come out with that soon.
------------------------------
Mark Malcoun, Zazove Associates - Analyst [64]
------------------------------
Okay, thanks.
------------------------------
Operator [65]
------------------------------
Jeff Killeen of CIBC.
------------------------------
Jeff Killeen, CIBC World Markets - Analyst [66]
------------------------------
Just to go back, perhaps, Clive, I had a question on that claim at Fekola. Just to clarify, was that something that had been disclosed through the acquisition process? And did you get -- if so, did you get a feeling from Papillon that this was something they had already been working on?
------------------------------
Clive Johnson, B2Gold Corp. - President, CEO, and Director [67]
------------------------------
It was definitely that we were happy with their disclosure. And obviously, our due diligence -- they disclosed all of the history of the legal agreements. And if you wind your way through that, you end up at a certain percentage of ownership that we agree with that.
So we focused on that in due diligence, and we came to the similar view of Papillon's legal people about the rights of ownership for that percentage. And now we will get involved in negotiations, discussions, with the local owner. And I think this should be -- I would hope they would be positive, because we are clearly going to be in a position to move this project forward now. So that will be part of what goes on in the next few months is looking to put that to bed. We satisfied ourselves that Papillon was in a very -- was in a strong legal position, and that is still our view today.
------------------------------
Jeff Killeen, CIBC World Markets - Analyst [68]
------------------------------
Okay, great. And then just from this previous work that you've looked at, do you get a sense of a deal that comes down the road -- would it be of a monetary sense? Or is this more of something looking on the interest in the project? Or where would you gravitate towards?
------------------------------
Clive Johnson, B2Gold Corp. - President, CEO, and Director [69]
------------------------------
Well, it may very well be -- we are going to move into negotiating some here soon, so I don't want to say too much. But at the end of the day we think that the owner has a right to a certain interest in the proceeds from the project. So the question would be defining that.
And there's lots of different ways to do that. There may be a combination of some. But I guess we have assumed a combination of some form of a payment, along with something that may run longer.
------------------------------
Jeff Killeen, CIBC World Markets - Analyst [70]
------------------------------
Okay, great, thanks. And then, lastly, you've noted you would like to get moving on the project, Fekola, fairly quickly; and that obviously it's a lower cost asset. It makes sense at these kind of prices. What do you think your flexibility is just from a decision of maybe financing taking longer than expected, something like that? What do you think your flexibility is in terms of moving that project timeline around?
------------------------------
Clive Johnson, B2Gold Corp. - President, CEO, and Director [71]
------------------------------
Well, I think we have the right to do that. We are moving from an exploration to an exploitation license now. There's a lot of precedent for that. And we think we understand the way forward there.
And then I think it's about a three-year, initial three-year term to get going on construction. So we have the ability to move that schedule if need be. And frankly, you've got some very good grade there. So the alternative would be -- and I don't see this coming about -- but the alternative would be in the lower gold environment, you could potentially build something smaller to start and look at expansion.
But we are comfortable with the interest level we've got and our positive performance to date. And also there's a lot of keen interest out there. So I'm very confident we can put together an attractive package for whatever additional financing we require. And as I said, a lot of it might be as simple as renegotiating our revolver.
And there's a lot of banks that are very keen. A lot of the French banks are very keen on Mali and have done a lot of work there. So we are very confident that we can get going.
And this is the right time to build a mine like this. So we are going to be cognizant in making sure we don't have a Company in too much depth. That's something we're always cognizant of. But this is the kind of mine you want to build in a market like this. So we are really committed to getting that done.
------------------------------
Jeff Killeen, CIBC World Markets - Analyst [72]
------------------------------
Okay, very well, thanks. And then I'm sorry, just lastly then, can you give us an idea on -- you said there's a possibility it could be staged. The long-term gold price you are using now for your current mine plans is $1,300. Is that what we should expect for Fekola updates and potentially for a Masbate expansion as well?
------------------------------
Clive Johnson, B2Gold Corp. - President, CEO, and Director [73]
------------------------------
Yes, we are looking at -- we are using internally, of course, we look at $1,200 and have a hard look at even below that. But I think, yes, and we are not uncomfortable with looking at around $1,300 as a guide for going forward for now. But of course, in our budgets for next year we will be using $1,250.
------------------------------
Mike Cinnamond, B2Gold Corp. - SVP, Finance and CFO [74]
------------------------------
We will use $1,150 for cash flow purposes.
------------------------------
Clive Johnson, B2Gold Corp. - President, CEO, and Director [75]
------------------------------
Yes, so we will use $1,150 for running our cash flows.
------------------------------
Jeff Killeen, CIBC World Markets - Analyst [76]
------------------------------
Okay, great. That's all from me. Thanks for your time.
------------------------------
Operator [77]
------------------------------
Thank you. This concludes today's question-and-answer session. I would now like to turn the meeting back over to Mr. Johnson.
------------------------------
Clive Johnson, B2Gold Corp. - President, CEO, and Director [78]
------------------------------
Okay. Well, thanks, Everyone, for your time. We are looking forward very much to getting Otjikoto up and running, and we are excited about what the future holds for B2Gold. And we feel very fortunate to be in this is strong position going into what is obviously a challenging market for the metal.
But we are responding well to that. And fortunately, we have a lot of, we think, attainable growth in front of us. So we look forward to reporting again soon. Thank you.
------------------------------
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