Q1 2017 B2Gold Corp Earnings Call

May 04, 2017 AM EDT
BTO.TO - B2Gold Corp
Q1 2017 B2Gold Corp Earnings Call
May 04, 2017 / 05:00PM GMT 

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Corporate Participants
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   *  Clive Thomas Johnson
      B2Gold Corp. - CEO, President and Director
   *  Dale Alton Craig
      B2Gold Corp. - VP of Operations
   *  Michael Andrew Cinnamond
      B2Gold Corp. - CFO and SVP of Finance
   *  Thomas A. Garagan
      B2Gold Corp. - SVP of Exploration
   *  William Lytle
      B2Gold Corp. - SVP of Operations

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Conference Call Participants
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   *  Chris Thompson
      Raymond James Ltd., Research Division - Mining Equity Research Analyst
   *  Jeff Killeen
      CIBC World Markets Inc., Research Division - Research Analyst
   *  Michael J. Gray
      Macquarie Research - Gold Analyst
   *  Rahul Paul
      Canaccord Genuity Limited, Research Division - Director

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Presentation
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Operator   [1]
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 Good day, ladies and gentlemen. Welcome to the First Quarter 2017 Financial Results Conference Call. I would now like to turn the meeting over to Mr. Clive Johnson, President and CEO. Please go ahead.

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 Clive Thomas Johnson,  B2Gold Corp. - CEO, President and Director   [2]
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 Thank you, operator. Good day, everyone. I guess, It could be morning or afternoon or evening. Thank you for joining us on the call to discuss the Financial Results for the B2Gold for the First Quarter of 2017. As most have seen from the news release that went out, that we've had another solid quarter and we have already announced our production beating our projected production on a consolidated basis and now we push lots of the cost and I think quite impressive in terms of how much we beat budget by.

 We're also going to take the opportunity since we are going to probably give you a very brief update and from the various sets of things that are happening in our world. And we will briefly answer some questions as well.

 Before we start, I've been told by our lawyers that these calls are, I could say, similar to a news release. So therefore, some of the things that we're going to say will be forward-looking and therefore, maybe subject to change. So that's the statement to assume, primarily covered the lawyers' ass and a little bit of ours as well.

 So I'll pass it over to Mike to give you a summary of the financial results.

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 Michael Andrew Cinnamond,  B2Gold Corp. - CFO and SVP of Finance   [3]
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 Thanks, Clive. So I'll just walk you through, I guess, the earnings statement and some production results, and then just talk a little bit about the cash flows as well.

 So firstly, on the earnings side, we recognized revenues of $146 million on sales of 120,000 ounces at a realized price of $1,219, pretty much the average spot price of the period.

 As you point out, sales of 120,000 ounces was 5,000 ounces less than budgeted sales, and that's really just due to timing of shipments when some of the shipments came in from the mines by just the period end and it's just a timing difference.

 I'd also point out that revenues include $50 million of earnings, which are recognized from those prepaid sales transactions that we completed last year. Plus, we did $120 million worth of prepaid sales where we get the cash upfront, and we're recognizing revenues on those as we deliver ounces into the -- we're going to deliver ounces into the prudent course of '17 and '18 and a little bit in '19.

 And just to remind everyone that when we recognize revenues of '15, but we got the cash in the prior year.

 So moving on to production. On a consolidated basis, we produced 133,000 ounces, which was 8,000 ounces better than budget. And that very positive performance was led by Otjikoto and by Masbate. So fairly similar to the prior year.

 On an individual basis, Otjikoto produced 43,000 ounces, which was 7,000 ounces or 20% more than original budget. Naturally, a function is greater grade that came from Wolfshag. That was originally modeled and then also a higher grade from the Otjikoto pit Phase 1, which we mined during the period and also pulled some stockpile materials from in the first quarter.

 The guiding continued to give very strong performance as well, 53,000 ounces in Q1 against the budgeted 50,000. And their positive performance continued as a function of greater throughput and recoveries. We're still getting more oxide from the Colorado pit than we originally budgeted. And we're also seeing the assets of that prior year decline upgrade that we did to improve coverage by a couple of percent.

 Libertad, 28,000 ounces, pretty much on budget. And Limon, 9,000 ounces, which is 2,000 less than budget. And that's a function of lower grade mainly as there were still some delays in access in higher grade Santa Pancha 1 due to dewatering. I think we've got that under control and we think we're going to head on our Limon guidance for the year, so there's no change there.

 On the production side, we should mention as well, Masbate, very positive in the period. There has been some press lately about recent DENR pronouncements and the appointment or non-ratification of the DNR secretary. So I think we're planning to discuss that in a little more detail after we went through the financial results here.

 On the cost fronts, basis on a consolidated operating cost fronts basis were $564 an ounce, that's $80 less than budget. So very, very positive. And that's a function of higher-than-budgeted production and lower-than-budgeted comp pretty much across all sites, driven by fuel costs and also driven by some profit grade.

 On an individual basis, Otjikoto, $413 an ounce, $120 less from budget and higher production, lower fuel and reagent cost, labor cost and basically softer we're going through the mill.

 Masbate, $524 an ounce, that's $110 less than budget. That's a function of a number of things, higher production gain, higher silver credits, lower maintenance costs and as I mentioned before, the benefits of that planned upgrade that we brought the first phase in last year flowing through the results now.

 Libertad, $728 an ounce, pretty much on budget, slightly ahead of budget, but pretty close. And then Limon, $994 an ounce. That was $112. That was over budget. And that's the function of that lower production that I mentioned earlier. Again, we expect Limon production to come back within the range. So no change to the guidance there.

 On an all-in sustaining basis, consolidated all-in sustaining costs, $889 an ounce, that's $262 an ounce less than budget. Some of that comes from that $80 an ounce benefit that we see in the operating cost side. And the majority of the rest of it is just timing of CapEx. We did have some CapEx savings, lower strip cost in Otjikoto that we don't expect to reverse. So those are positive gains in the period. But by and large, most of the CapEx related gains they are just a function of timing, and we expect to see that flow through later in the year in subsequent quarters.

 All in all, through the period, we realized losses, $4.5 million for the period, $0.01 per share or once you strip out significant noncash items, $19.3 million in earnings for the period or $0.02 per share adjusted EPS. Most significant noncash item that hit the earnings statement this period is related to the fair value convertible notes. So we mark those notes to market. Given the gold price and the running share price, the notes were actually trading at 107% of their face value at the end of the quarter. So that led to a loss of almost $14.5 million in the income statement, which is noncash. And by the time those notes becomes due towards the end of 2018, they will return to par value.

 I'm just going to move now and talk a little bit about cash flow, cash flow statement. So $40 million operating cash flow for the period. And in the prior year, we had $171 million. But that included $120 million proceeds from prepaid sales. So if you stretch that out on a like-for-like basis, that's $40 million compared to $50 million. And the main difference between those 2 is just that of timing of working capital changes, which will reverse in due course. On a per share basis, cash flow per share for the period for operating cash flows after taking noncash working capital is $0.04 a share.

 From the financing side, we didn't draw anything on revolving credit facility this period. We -- on the pre-existing RCF, we had $150 million undrawn capacity there. As we announced at the year-end, CIBC -- we documented a letter with CIBC, we're just finalizing the papering of that to bring them into the accordion part of the RCS for another -- and that we'll increase the total amount on the facility from $350 million to $425 million. So lots of undrawn capacity there.

 We did draw some amounts down just recall (inaudible) during the period. We still have EUR 46 million available, and we expect to draw the majority of that throughout the remainder of the year. We are still working on new cash leases for the Masbate' fleets expansion and for some of the new fleet in Otjikoto, and we expect to have those papers shortly.

 On the other sort of cash inflow that we had in period was we had $18 million from the exercise of options. We didn't draw anything else or issue anything else equity-wise under the ATM. So the only equity issue was related to options.

 On the investing side, we're actually -- as I mentioned, before, CapEx due to timing we're $24 million under budget overall for CapEx during the period. But majority of that, we expect will reverse in subsequent quarters. So overall, there's no change to the CapEx guidance for the year.

 Fekola is the most significant area of spend. And right now, it's still the right on budget and on schedule for the revised target that we previously disclosed on October 1, 2017. The total project expenditures to date are $438 million against the project to date budget of $441 million. So right on budget at this stage.

 A couple of CapEx items that we're changing to the budget that we have approved for this year. So in the original budget for exploration was $45 million. And as part of our year-end release we disposed we bumped that by another $5 million for some further West Africa related exploration activities. That brought it to $50 million. And we just approved another $7 million again prominently just to continue drilling at some of the targets that we like in both Mali and Burkina Faso. So total exploration budget now for the year is $57 million.

 And then on the Gramalote. We did -- we were previously looking at a sales process for Gramalote. We revalued that with our joint venture partners Anglo. And we've decided that optimally, what we like to advance Gramalote to prefeas. It's early stage this year. So we actually approved a budget of -- our share will be $30 million for this year to get it to that stage by the end of the year. So that's another increase in over the original budget.

 Overall, we ended the period with $103 million in cash and cash equivalents. On the RCF, we have $150 million that's undrawn on the original RCF and with the exercise of the accordion and CIBC coming in which will be effective -- the papering of that we'll finish very shortly, then the total amount -- that would be on that one facility including that will be $225. So I think that concludes the highlights of the financial results. But, happy to answer any questions. Clive, if you want to leave it to the end, I'm not sure you...

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 Clive Thomas Johnson,  B2Gold Corp. - CEO, President and Director   [4]
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 Yes, we'll maybe leave it to the analysts. Thanks, Mike. Well, one of the things in terms of the, obviously, strong financial position and due to that, we -- the people will be aware of some months ago, we came up with -- at the market financing (inaudible) raised up to CAD 100 million which was basically going to be used for same type of working capital but also for -- partly for initial exploration based on good results and second to cushion there and they so... That's the time you want to get involved with (inaudible) based on falling gold prices in that product of share price. So we did do $46 of the $80, $100 million at over $4 a share. And -- but it served its purpose where some people may remember that (inaudible) said that the strip pricing has been the discretion of the company completely and it's going to be active in the market as it's called. So when the price starts falling we pulled it. We did (inaudible) a couple parts. But we did the amount where we very comfortable with past position. There is no way we're going to file equity inward here. No, we don't need to. So we're going to pull that -- that's the (inaudible) to be filed. To be honest with you, one of the great things about the ATM, especially for the company, maybe that's much of the debt writers who use 60% commissions on the mill on the chambers too but it's a quick financing for company especially liquidity. But now the dramatic and always increasing the legal scrutiny, especially in the United States. So that's one of the reasons that we're pulling in because it's just a major pain in the ass, frankly, even not there all the time, to prospective status in terms of due diligence, which just gets worse and worse in my opinion there is distinct threat to the future of this industry.

 So we're pulling that. And we will, if and when we have a chance again, we'll look at our various alternatives. (inaudible) if we still believe in the cost but we can't, it can work well for the company in the insurance perspective. In terms of other things that we get built, there was rundown a very positive -- you heard very positives at the operating mines, which is great to see again. Bill is going to give us a quick update and John Rajala is on the call as well for any questions for those guys at the end about specifics about Fekola. So Bill, I'll hand it to you to give us an update on construction and where we are today and then how it's going, et cetera.

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 William Lytle,  B2Gold Corp. - SVP of Operations   [5]
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 Clive, do you hear me?

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 Clive Thomas Johnson,  B2Gold Corp. - CEO, President and Director   [6]
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 Fine.

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 William Lytle,  B2Gold Corp. - SVP of Operations   [7]
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 Okay. As Mike indicated in his talk, Fekola remains 3 months ahead of schedule and on budget. Really, what we're talking about, the main thing to talk about now is more the transition to operations. If you look at what's happening in the pit, we've moved -- it's almost 3 million tonnes of material already. All the major mining equipments that we expected this year is on site. We've now started moving some of the construction operators over to the operation site. And that's going very well. We have a mine trainer on site, the GM's on site, the mine manager's on site.

 Looking at the mill, the mill continues on schedule. Karen and his group are doing an excellent job. They had -- they continue to install the ball mill on SAG mill. Most of the other major equipment has already been installed. The main things that remain is mostly electrical and piping. The plan is to finish up the powerhouse in June and July and get those commissioned and then start commissioning the mills with an October 1 production start date. On the tailings facility, the tailings remains in good shape. We had to get all the liner before the rainy season. The liner is now in. It has been -- most of it has been welded. We're now in the process of QA, QC-ing it, and we don't anticipate any issues in the rain. We're in the process now of sourcing our water to make sure the pumps are in for the wells, that our water dam is filling up with water. And overall, things are you going very well. We currently have in excess of 1,100 people on-site, which is the maximum higher that we're going to have during construction. So over the next couple of months, we'll be ratcheting back down to the @ that we'll see during in operations. So overall, things are going very well. Anything else you'd like me to talk about, Clive?

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 Clive Thomas Johnson,  B2Gold Corp. - CEO, President and Director   [8]
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 Maybe sort of talking about the transition of local workforce that's been working at construction and operations. So the number of local people you see as the workforce now and as we go forward.

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 William Lytle,  B2Gold Corp. - SVP of Operations   [9]
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 Sure. So the goal -- B2's model of operation is always because we do our own construction, what we do is we hire a lot of people during construction that basically get a 2-year apprenticeship or a 2-year chance to show what they can do for operations. And so all of these people that have been working, not only on the earthwork side, which all these people are being taken across to the operations team. But on the mill side, all of the people that we have found, they have a real desire to work and a real aptitude for the milling side. It started coming across. So we're in the process -- the mill manager, which was a previous mill manager in the Philippines, Dan Clark. He's now in the process of reviewing the construction team along with Jack Stanley, who's the laboratory manager. Those guys have started reviewing all the people that are doing all the construction work and train them for operations skill. So basically, our goal is to maximize, not only in-country, that being Mali and higher, but also to maximize local content, that being within the region. So right now, we have more than 800 Malians on staff. We anticipate that the percentage, as we go towards operations, of expats, will decrease down to what we're targeting about 5% when we start out. So 5% of the 800-person workforce will be expat and the rest will all be Malian.

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 Clive Thomas Johnson,  B2Gold Corp. - CEO, President and Director   [10]
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 Great. Okay. Bill, that's great. And then we'll note questions for you and everyone else after we go through a couple of other things. So obviously, Philippines has been a hot topic for a long time now. And there's been some developments in the last week, 10 days. But I think that we see a positive development. I think that the -- through all of this that has been dealt with living this day today from the executive perspective here, doing a great job with remarkable team. We have at mine in Masbate mine and Manila those teams have worked very closely in well in respect to the government of the Philippines and local governments and local people for many, many years. So we've set a very high standard there in every way, including environmental, social programs, safety record. We're -- where we are now, Dale, at safety?

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 Dale Alton Craig,  B2Gold Corp. - VP of Operations   [11]
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 565 days.

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 Clive Thomas Johnson,  B2Gold Corp. - CEO, President and Director   [12]
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 565 days from the last-time accident, which is pretty remarkable. So we've always believed that the Philippines government, at the highest level, wants responsible mining in the Philippines. And we believe that's where this (inaudible) started from. So from the big picture point of view, we've always believed that and which seem to going off in a different track, obviously, for a period of time here. But, so Dale will give you the most recent updates where we're in the last week, we won't go into all of the background because we are not just at a dinner here. And it's a long story. But suffice it to say, we did what we do very well, which was respectfully get with the government right way to go through the audit process. I respect the process and have been told verbally that we are, a couple of times, we have been through -- we're through the audit process, and we have before been on (inaudible). So we see that this is positive development. Dale, can you just give us a little more detail on the last 10 days and how the team there and you see us?

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 Dale Alton Craig,  B2Gold Corp. - VP of Operations   [13]
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 Sure. Well, Clive, you're right. We've been well supported by the management team in the Philippines, and they've done a great job over there. Because a lot has happening in the last 10 months and a lot has happened, as we know, in the last 10 days. But we talked about the DENR and the mine's audit in our quarterly review. The takeaway that we will get from that is that we feel we're in a good position with regard to that audit and we're really waiting for written confirmation that we have a positive conclusion for the mine's audit. We also note from the meetings on Tuesday and Wednesday that we will have a change in the DENR Secretary, Department of Environment and Natural Resources Secretary. We expect that, that announcement will be named soon. It's a large department and it needs good management. That candidate will go through the same confirmation process like any other candidate who acts as secretary for a major agency in the Philippine government process. But we've worked hard to maintain a good relationship with the DENR. But we're hopeful that with the arrival of the new secretary, we'll see a more consultative and a more cooperative approach in working with the mines industry and in the promotion of responsible mining.

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 Clive Thomas Johnson,  B2Gold Corp. - CEO, President and Director   [14]
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 Okay. Thanks, Dale. Once again, surely, we'll put questions on may of the topics, including that one that we've discussed. Okay. I've got a note to talk on Gramalote but Mike already did that. So I will just add to that would be that we -- the idea of getting the pre-feasibility study at the end of year and reasonable amount of investment was attracted to us. So at the time, we will either let ourselves to make a decision, whether we proceed to the proper feasibility study. We think with the pre-feasibility study, it will logically, hopefully, increase the value of the asset and then we'll reevaluate ourselves, whether we want to look forward as part of the joint venture or if we want to test the waters at that point to see if there is a -- if there is another party that wants to join in building them. So probably it's become a better place. We believe mining we'll set up those issues and well supportive government. And make that something's set to suggestive of recent improvements to the project. So we think for the amount of money we'll be spending out of budget, this is descent capital in terms of (inaudible) to further determine the value of Gramalote. [AGA] of course, has a first-right-of-refusal to match any offer that we get. So it will probably depend on -- perhaps on dispatch, going forward. That's our decision. And That's what we do, and apparently (inaudible) decision process after they complete (inaudible). I think we're going to hand it over to Tom. We've -- as everyone knows we've lot of (inaudible) going on and lots of places that I guess that where our major focus is honestly is around (inaudible) and other things we're working on is exploring in West Africa (inaudible). But hopefully will grow as another Kupol, but perhaps not. All right, so Tom is grown in Kupol. And Tom is going to talk about the (inaudible).

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 Thomas A. Garagan,  B2Gold Corp. - SVP of Exploration   [15]
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 Thanks, Clive. As Mike mentioned, we've increased our exploration budget in West Africa by $7 million to the total of $27 million for West Africa and a worldwide increase to $53 million. The exploration rate now is ongoing on almost all of the projects and certainly around all the mines and development projects. In Mali, we've got 3 drills going and 1 aircore drill -- so 4 drills, I guess -- working along the whole belt, looking at multiple targets including the saprolite target and also Kiwi which I'll talk about briefly later. In Burkina Faso -- sorry, that 7 million, 4 of that is in Mali alone. In Burkina Faso, we had 2 drills going right now. We're looking for a third rig, and these are working in and around the [Tuarega] area near Kiaka and we are having some success there. The plan there for Tuarega guy is to come up with the resource later in the year. And certainly, we'll have a drill result update on opening by the time of the AGM. We'll see how that goes. In Nicaragua, we've got a total of 7 drills -- sorry, 6 drills going and looking for another drill. 3 of them are tad and 3 of them on and the other drill we're looking for is we're having a fair bit of success from them right now and we're going to get more aggressive there as the year goes on.

 In the Philippines, we've got only 1 drill working right now. It's all mine site stuff, working with mine finding pit engines. And we'll start testing some of the original targets probably later in the year once the mine information is gotten.

 In Namibia, we're only working right now with 1 drilling in Ondundu. We plan to add a second drill later on in the year. That's a project of 200 farmers Southwest of (inaudible) and we also find to start drilling (inaudible) quarter later in the year. As for the other projects, Finland, Nevada, and Guyana, we have small programs plan for starting mid this year and the plan is with success, we will have some drilling on those projects later in the year. It would be limited with the exception of (inaudible) and start it in the summer. Now on to -- back to Mali. We just completed or in the process of completing the resource from a satellite target, Anaconda. We plan to come out with a news release within the next couple of weeks with the initial resource. And we will include with that some of the Kiwi results. We are having fair bit of success in Kiwi just for those who didn't look right on the site visit or haven't recalled, the Kiwi is the continuation of the Fekola structure to the North. There's about 200 to 300 meters between the Kiwi surface mineralization at the deeper Fekola higher grade mineralization or what we call the Fekola extension. The whole bit certainly the plan is to -- the program is to develop our resource to Kiwi, but the resource to Kiwi can be continuous down to the Fekola feeds, and there is a potential of expanding the pit towards the North. So that's the active product and we will come out with some of the results here shortly.

 On Anaconda, with the resource coming out, it remains open. And active exploration will continue to try to expand that resource. And we're going to start looking at the salt like source of that satellite. We've identified multiple structures we just completed a mac program that's helped with the Anaconda structures and we plan to follow those up this year also.

 At Tuarega, the drilling, as I said, is at the level of 2 rigs. We are adding a third rig. It remains open in several directions and the hope is to have a resource later in the year. But if it continues to grow, I'm not sure that will come out with a resource. It's better to get our hands around something. But we do believe that we are heading towards something that is a standalone.

 So with that, I'll turn it back to Clive and get questions later.

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 Clive Thomas Johnson,  B2Gold Corp. - CEO, President and Director   [16]
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 Thanks, Tom. Well, it's a good segue as we're talking a little bit about the future. We are the -- Fekola, the cheapest ounces are always the ones that you find, especially when there are properties that you acquired and are assuming that place is a success and you just can't -- so we don't do that. So rather, every acquisition we've done to date, we've not paid for us to be there, yet we still have more ounces, and significantly in almost every case. So we will continue to look for those companies to fill exploration around existing assets. Also, we will look for a few additional joint ventures or high quality projects. So we have one in (inaudible) and the model there is to earn interest. We're not, once again, going to pay comps that might be there, but we were -- we are prepared to take a very successful exploration team, but that's compared to the high risk dollars (inaudible) maturing interest in a project. And that's pretty attractive to lots of [dealers]. I think, they know us by reputation, we would -- our excavation team has (inaudible) ice. Even be too cold, and I think we're very fair to partners and we will spend the money well and spend it fairly. So that's attractive to a lot more companies. So we'll continue to do that (inaudible) very, very high. (inaudible) waiting to have features in the (inaudible) discoveries. Of actual M&A interest we're looking at developer project for more so basic expression or production, we are always looking. And I think we've made it clear over the last year, so that we found it very difficult to find something and not to be looking that hard, but find something that looks accretive, given what we see is a pending [derailing] of the company which is what we view as being actually based on a 65% to 70% increase in production starting October 1. We expect that this year, as we've been for quite a long while (inaudible) dramatic increase in production, dramatic drop in operating costs. We think -- I can tell you that potentially, it won't be reflected in the market or in the sense of the impact it has on cash flow and production, et cetera -- everything we're doing. So clearly, we will perhaps, see a better opportunity. If we get a re-rating to use our shares and raise cash from our shares potentially for other acquisitions. We've been looking at a few things along those lines. So we're looking for things that can probably be as much as 200,000 ounces per year potential where we got the team's built anywhere around the world, so that's definitely attractive to us. But as we've said, let's get the -- call it up and running and we believe that either we will stay the same as close as we are and everyone else to drop. I guess no one's stopped, and no one else has (inaudible) the growth or go somewhere where it is today. We don't have that re-rating on the upside to reflect the growth and realization of the growth that we have. So always looking but long-term goal, we've said it before is to -- we think this group is more than capable of taking our additional acquisitions and doing additional lines or acquiring production, et cetera. All of it has to be accretive to become a 2-plus million ounce producer. Even though I never put a timeframe on that, as I think that's a mistake, but you take the opportunities as they come. But (inaudible) there's -- that's our check, but -- so we're going to continue this dramatic probe that we have from no production in 2008, to very close to (inaudible) ounces by the end of this year. Just a second, just a brief comment on the markets. We're mystified -- we've seen it before, I guess, in terms of what happens in the market when things seem to go so well. So we've lost another $1 billion of market capital in the last while here, which is a bit of a mystery if you look at what we're doing as a company and the success we're having (inaudible) by the quarter. Operating results (inaudible) financial strength of course, Fekola pretty much has scheduled and what Fekola will brings. So we're a little mystified now (inaudible) explanation (inaudible) a lot in terms of the gold (inaudible). And you'll see that the rumors of that were highly liquid and these issues like that. So that's the curse of the shareholders, because in a closed in fund if you have to sell something because (inaudible) retention, is you're going to sell something liquid which you can sell without hammering the pricing. (inaudible) more money depending on where you're investing or your profit. So we tend to -- so those times we would be more likely to sell (inaudible) than something else, where they could really have a huge impact from selling something else because it's much less liquid (inaudible). So those are the reasons and I think it sounds like a lot of money's just sitting on the sidelines generally in (inaudible), and a lot of money in the (inaudible) sector, which is the good news because (inaudible) are buying gold shares.

 So I guess, for those shareholders there (inaudible) concerned, I think we're mystified. More than anything else (inaudible) ounce probably or $0.80 a share which is really rather remarkable. So we will continue to -- we're going to continue to communicate our message well and look out for when investors will look for a rare company that has good financials, operating cost (inaudible) lower. So sustaining and have actually dramatic growth because of the way we pushed ourselves. Well, we're looking for growth again as we were a few months ago. We think we can be the company with more attractive potential, and reward the shareholders (inaudible). I think we'll open it up for questions.

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Questions and Answers
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Operator   [1]
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 (Operator Instructions) Our first question is from Rahul Paul from Canaccord Genuity.

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 Rahul Paul,  Canaccord Genuity Limited, Research Division - Director   [2]
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 So at Fekola, looks like big development is ahead of schedule. Just wondering if you could tell me how big your stockpile is, tonnes and grade.

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 William Lytle,  B2Gold Corp. - SVP of Operations   [3]
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 Yes, I'm just looking to see what they actually put in the press release versus what it's been since there. Certainly, we've got over 20,000 tonnes right now on the stockpile and I think it's actually close to 300,000 tonnes and we're at a grade of about 4 grams per tonne.

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 Rahul Paul,  Canaccord Genuity Limited, Research Division - Director   [4]
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 Okay. And then the other question a related question, I guess, is that all satellite-owned? Have you started mining threshold this time and is the mill feed in the second half of 2017 likely to be predominantly saprolite ore?

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 William Lytle,  B2Gold Corp. - SVP of Operations   [5]
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 Yes. So far, it's been basically all saprolite. We have -- we've just started blasting. The blast contractor, BME, is on site. We've done the first couple of blasts which has definitely given the resettlement plan a bit of an impetus to move forward for sure with the local community. But so far, it's been basically all saprolite, but we are in hard rock right now, both in the Phase I and Phase II bit. And the plan certainly, John has been very clear on this, is that we want to start the mill on hard rock, so we're going to continue to blast on all the hard rock.

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 Rahul Paul,  Canaccord Genuity Limited, Research Division - Director   [6]
------------------------------
 So it sounds like it's going to be a more consistent blend in the second half of the year, as opposed to (inaudible) the saprolite (inaudible)?

------------------------------
 William Lytle,  B2Gold Corp. - SVP of Operations   [7]
------------------------------
 Yes, that's absolutely the case, Rahul.

------------------------------
 Rahul Paul,  Canaccord Genuity Limited, Research Division - Director   [8]
------------------------------
 Just last question. Would you expect mining rates to slow down in the fall or the rainy season? If so, by how much?

------------------------------
 William Lytle,  B2Gold Corp. - SVP of Operations   [9]
------------------------------
 Are you talking about Fekola?

------------------------------
 Rahul Paul,  Canaccord Genuity Limited, Research Division - Director   [10]
------------------------------
 Yes.

------------------------------
 William Lytle,  B2Gold Corp. - SVP of Operations   [11]
------------------------------
 Okay, yes. So the answer is certainly, we believe that the mining rates will slow down. We have no experience, really, in this pitch yet to make a judgment call on what we think it's going to be. But we do have those 6-wheel trucks still available and we'll use those as necessary.

------------------------------
Operator   [12]
------------------------------
 The following question is from Michael Gray from Macquarie.

------------------------------
 Michael J. Gray,  Macquarie Research - Gold Analyst   [13]
------------------------------
 I've got 2 on Masbate and then 1 on Fekola questions. First of all, just with the high percentage of oxide feed, has it been a challenge to predict the oxide transition contact of the Colorado pit? Or just what's the color on that high percentage versus the model?

------------------------------
 Thomas A. Garagan,  B2Gold Corp. - SVP of Exploration   [14]
------------------------------
 Mike, it's Tom here. When the model was created, a lot of the drilling was RC chips with a little bit of core. And when you look at the chips in the core, very often, what you see is that -- well, especially the chips, there's quite a bit of sulfide which were actually in the wall rock and not in the structure itself. And so the oxidations going further down the structures than it is on the wall rock. So you get misled into thinking that you're actually in transitional when you're logging chips and I think that's probably the main reason.

------------------------------
 Michael J. Gray,  Macquarie Research - Gold Analyst   [15]
------------------------------
 Right. Is there any requirement to supplement it with some core drilling? Or is it just something you're able to live with?

------------------------------
 Thomas A. Garagan,  B2Gold Corp. - SVP of Exploration   [16]
------------------------------
 Well, I mean, as it's a positive reconciliation (inaudible) as well.

------------------------------
 Clive Thomas Johnson,  B2Gold Corp. - CEO, President and Director   [17]
------------------------------
 I'm actually glad you asked that question, Michael, because we went through a model we built in February and we've seen an increasing amount of oxide through the year. I think that question was announced in (inaudible) in January, we're sitting at about 24% oxide. We'll see that increase through the year.

------------------------------
 Michael J. Gray,  Macquarie Research - Gold Analyst   [18]
------------------------------
 Okay. So it'd fair to say that the mine plant hasn't necessarily been changed to prioritize oxide material?

------------------------------
 Michael Andrew Cinnamond,  B2Gold Corp. - CFO and SVP of Finance   [19]
------------------------------
 No, not at all. Our mine phases continue to advance as planned. Just an impact on the metallurgical mix that we see in the plant.

------------------------------
 Michael J. Gray,  Macquarie Research - Gold Analyst   [20]
------------------------------
 Okay, very good. And then on Fekola. Tom, could you elaborate on the scope of Fekola, the drilling for the sulfide source around Anaconda? And you mentioned an ag survey. Is that really pointing you towards the rights swat to be drilling?

------------------------------
 Thomas A. Garagan,  B2Gold Corp. - SVP of Exploration   [21]
------------------------------
 Well, Mike, as you've seen in there, Fekola has a -- to step back from your question. Fekola has a surface footprint of only a couple 100 meters by 100 meters at the most. But it's a plunging type shape line. Now try to pick that out in geophysics and any work is not easy. I can do -- especially the saprolite and the laterite cover (inaudible) surface looking for a needle in a haystack. So what the geophysics has done for us is find multiple structures. We had (inaudible) 5 main structures that are running through that part of the property, all of which have had -- well, all of which we would spawn a new one, but all of which have had saprolite mineralization above them. So our exploration approach is to try and define the satellite area where we're seeing better gold values. Hopefully, we're picking up some change in direction in the structure, something within the structure that suggests maybe an ore shift and then the exploration drilling will be focused there. In terms of the scope, our budget is a little bit open in that area. The reason I say that is the engineers are working on -- we just give it on the saprolite resource to work on. Then we still got some tweaking to do. Once they complete their economic analysis, then we'll have to make a sort of corporate decision, whether we're going to focus, kill most of our bugs on saprolite or we have enough for what we need, and then we'll adjust the rest of the program accordingly. It's not really answering your question, but we don't have the answers now.

------------------------------
 Michael J. Gray,  Macquarie Research - Gold Analyst   [22]
------------------------------
 Yes, I think you answered it in a sense that it's not a systematic grid drilling program. You're trying to find that small footprint from all those strands.

------------------------------
 Thomas A. Garagan,  B2Gold Corp. - SVP of Exploration   [23]
------------------------------
 Mike, we're talking about structures that are formed across a this portion of property that's 4.5, 5 kilometers long, and the saprolite footprint is anywhere up to -- in the case Anaconda, 500 meters wide. So it's a big footprint where we wish to find something. If we started grid drilling, I mean, it all sounds nice but I think we'll run through a lot more than the current budget in a hurry.

------------------------------
 Michael J. Gray,  Macquarie Research - Gold Analyst   [24]
------------------------------
 Okay. And just a final follow-up on Fekola, Anaconda resource timing, I might have missed it, what were you guys targeting?

------------------------------
 Thomas A. Garagan,  B2Gold Corp. - SVP of Exploration   [25]
------------------------------
 Next couple of weeks.

------------------------------
Operator   [26]
------------------------------
 (Operator Instructions) The following question is from Chris Thompson from Raymond James.

------------------------------
 Chris Thompson,  Raymond James Ltd., Research Division - Mining Equity Research Analyst   [27]
------------------------------
 Just a couple of quick questions. We'll start off with Otjikoto. Can you affirm for me that we're still looking for a life of mine plan Q3 of this year?

------------------------------
 Clive Thomas Johnson,  B2Gold Corp. - CEO, President and Director   [28]
------------------------------
 Bill?

------------------------------
 William Lytle,  B2Gold Corp. - SVP of Operations   [29]
------------------------------
 Correct, correct.

------------------------------
 Chris Thompson,  Raymond James Ltd., Research Division - Mining Equity Research Analyst   [30]
------------------------------
 Okay. And what's the general thinking there as far as Wolfshag? Mix open pit underground or more and more leaning towards open pit rather than underground?

------------------------------
 William Lytle,  B2Gold Corp. - SVP of Operations   [31]
------------------------------
 Yes. So certainly, we're still looking at mix. I mean the plan was always a mix of open pit and underground. Certainly, what we're seeing now, we're getting some geotechnical and geo-hydrological results back which are leaning us maybe more to a little bit more of an old pit than we had anticipated. But it's still too early really to make a final decision. So Q3 is what we're targeting.

------------------------------
 Chris Thompson,  Raymond James Ltd., Research Division - Mining Equity Research Analyst   [32]
------------------------------
 Okay. Just quickly moving on, I guess, to Libertad. I mean, I understand it's a bit of a moving target. Obviously, pretty much determined by the ability of, I guess, permitting and resettlement, whatever, Jabali Antena. But can you just help me understand what the mine plan is going to look like for the remainder of this year?

------------------------------
 Dale Alton Craig,  B2Gold Corp. - VP of Operations   [33]
------------------------------
 Yes, the (inaudible) essentially remains as fixed showing Jabali Antena in the back half of the year. And we continue to negotiate on getting that resettlement advanced. As we talked about in the last quarter conversation, we wanted to spend a little time looking around the properties and look at all those alternatives. It would provide us with some flexibility. We've done that, we've talked about it in the quarterly summary as well.

------------------------------
 Chris Thompson,  Raymond James Ltd., Research Division - Mining Equity Research Analyst   [34]
------------------------------
 Okay, all right. And then just finally. Mike, this is probably for you, 2 financial questions. But just correct me if I'm wrong but Masbate, you're shortly going to be in a position where you'd be paying taxes there, is that right?

------------------------------
 Michael Andrew Cinnamond,  B2Gold Corp. - CFO and SVP of Finance   [35]
------------------------------
 Yes, halfway through the year. So our tax only runs out in the end of June. So yes, we're just moving into being taxable there.

------------------------------
 Chris Thompson,  Raymond James Ltd., Research Division - Mining Equity Research Analyst   [36]
------------------------------
 Okay. And then just for Fekola, again, just a sense of where we stand as far as finalizing that Himalayan government participating interest.

------------------------------
 Michael Andrew Cinnamond,  B2Gold Corp. - CFO and SVP of Finance   [37]
------------------------------
 We're still -- we got to the valuation and we think the parties agree on -- we each had our own value there, so that's been done for a while. So we're just waiting for them to come back for any final comments in the shareholders agreement so that we can drop that value in there and finalize it. So all materials all backed, it's all with the government now, just come back for any final comment they have, we'll be ready to over and talk to them again and try and get it wrapped up.

------------------------------
Operator   [38]
------------------------------
 The following question is from Jeff Killeen from CIBC.

------------------------------
 Jeff Killeen,  CIBC World Markets Inc., Research Division - Research Analyst   [39]
------------------------------
 I wanted to start with Otjikoto. You noted you're having some positive reconciliation in Wolfshag and it sounds like maybe even in the Otjikoto Phase II as well. Particularly for Wolfshag, can you give me a sense if it's -- are you just finding the structures, ore bearing structures in that are wider than expected? Are you finding more shoots than you had anticipated? And is that influence going to be able to feed through into the optimization study later this year?

------------------------------
 Clive Thomas Johnson,  B2Gold Corp. - CEO, President and Director   [40]
------------------------------
 Bill, you want me to answer or you want to answer it?

------------------------------
 William Lytle,  B2Gold Corp. - SVP of Operations   [41]
------------------------------
 Why don't you take a crack, and then I'll tell you what little I know.

------------------------------
 Clive Thomas Johnson,  B2Gold Corp. - CEO, President and Director   [42]
------------------------------
 Certainly, were seeing positive reconciliation in Wolfshag. I mean, we are closer to completing the resource model, due to some (inaudible) that we're doing; but also, related to some more information we've gotten out of the mine. In addition, for Otjikoto, it's a nuggety deposit, super nuggety deposit. And over time, we saw early on in Otjikoto that we were underperforming in terms of reconciliation. And now we're over-performing. This is going to be the nature of that deposit. It's a sh*tload of coarse gold

------------------------------
 Jeff Killeen,  CIBC World Markets Inc., Research Division - Research Analyst   [43]
------------------------------
 Okay, understood. And thinking about the cost specifically at Otjikoto, very good cost in the first quarter. Seems like a great opportunity to come in under your guidance for the first half. Is that why you're still being a little conservative with that number or just thinking that there could be some swings with the Otjikoto pit?

------------------------------
 William Lytle,  B2Gold Corp. - SVP of Operations   [44]
------------------------------
 Yes, so I'll answer that one. The answer is yes for sure. We always projected that we'd be better off in the second half of the year. And certainly, with the positive reconciliation in Wolfshag and Otjikoto, Q1 has improved our economics. And we think that Q2 is going to look better but we don't know based on -- we don't have the additional information that Wolfshag is going to continue to prove out what it was, so we're cautiously optimistic.

------------------------------
 Jeff Killeen,  CIBC World Markets Inc., Research Division - Research Analyst   [45]
------------------------------
 And then switching to Nicaragua, somewhat following on from what Chris was asking. With the San Juan pit, if I understood correctly from the release, it's a bit of a shift from thinking a bit more of an underground target versus an open pit target. So is there any real material work you have to do to re-scope that on the ground? Or is it more just doing the hard work in the office?

------------------------------
 Dale Alton Craig,  B2Gold Corp. - VP of Operations   [46]
------------------------------
 You're right, that is a reject from underground to open pit. And we want to say that that's investing really nicely. We had conversations in Nicaragua with Daniel Ortega and Ministry of Mines that well supported our permitting process. That's advancing quickly. There is some negotiations with small miners in the area who actually have approached us to move from the area, so we're really happy with that development as well. Our time schedule puts the availability of San Juan pit around August of this year.

------------------------------
 Jeff Killeen,  CIBC World Markets Inc., Research Division - Research Analyst   [47]
------------------------------
 And if I may, one final one for you, Clive. You were commenting on just the way the share prices have been moving despite all the good things coming out of the company. Do you think that there's any need to revisit the strategy? Or it's really just you keep selling these out and then you're going to ultimately benefit once Fekola comes online and so forth?

------------------------------
 Clive Thomas Johnson,  B2Gold Corp. - CEO, President and Director   [48]
------------------------------
 Well, I guess, I'm not sure what you mean. If the -- when you have a remarkably successful strategy well, twice, start material and really legitimate multi-billion dollar companies to creative acquisitions to (inaudible) success than all the things (inaudible) in our mines, et cetera. Then it's, I guess, it's hard to target management changing the strategy. Like I'd throw that back change to what we could -- change to a lot of our competitors who have struck their hand in the sand or more for the last 5 years, partly because of the mistakes they made in the past, and they end up licensed for (inaudible) deals, most of them. And mostly they just didn't have the courage that we tend to have to be contrarian at times. So I think the strategy's quite, I'm supposed to say this. I guess, but I think -- well, I think it's a very -- it's a great business model and highly successful. And so I don't know why we would change it. We haven't accomplished it ultimately, but (inaudible) with them. We gave up (inaudible) and try to measure our own value of our own production. And our (inaudible) what we base on our shipments on (inaudible), because that's a fickle thing. So I don't know any suggestions on what your actions -- if you were to change strategy, what would you -- who else should we model ourselves after?

------------------------------
 Jeff Killeen,  CIBC World Markets Inc., Research Division - Research Analyst   [49]
------------------------------
 Yes, fair point. I don't disagree with it at all, Clive. Just wanted confirmation on that and certainly expect once you finish up with what you're doing at Fekola, the market will start to recognize it.

------------------------------
 Clive Thomas Johnson,  B2Gold Corp. - CEO, President and Director   [50]
------------------------------
 Yes, well, then you know what? We might have another Fekola, one more. Then in the meantime, we'll go out and look for other accretive things when the time is right. So yes, we're very happy with what we've done and proud of the success we've had.

------------------------------
Operator   [51]
------------------------------
 That concludes the question-and-answer session. I would like to return your meeting to Mr. Johnson.

------------------------------
 Clive Thomas Johnson,  B2Gold Corp. - CEO, President and Director   [52]
------------------------------
 Okay. Maybe just a clarification. Maybe you guys were asking more about what's happening in Jabali Antena. I was just down there talking strategy with the team down there because (inaudible) this was a Jabali Antena situation that kept on moving on and moving out through really no fault of our own. But it was just a situation where we don't like whether it's permitting or whether it's making projections, in corporate production (inaudible). So we revisited and changed the strategy which was to say well, we have a very difficult issue there in Jabali Antena, and assuming much less of a permanent there just for the land owner. So at the end of the day, we with the group down there just decided to change the strategy. And said well, let's take the pressure off the Jabali Antena permit and let's see if this guy wants to be realistic. So we're not -- we don't need to mine in the Antena to prove the future now because we changed the strategy to 2 areas where San Juan that -- and another one, that have much less -- we don't have the same issues at all. So we sat with Mr. Ortega for one hour. We had a great meeting with him about where we change in 2009 and have seen the whole country (inaudible) to where we are today, and we were reminiscing about the (inaudible) and then how we delivered all our promises and (inaudible). So a great meeting. And then near the end, well, partly through, we talked about the need for permitting to carry on in San Juan, to give us (inaudible) ultimately Jabali Antena. So we looked to the minister while he was there and (inaudible) and he said get these permits done for you. So it's going very well. So I just wanted to clarify that because I don't know if that came across quite clearly, so that will -- at the end of the day, who knows? With exploration going all around, maybe we'll never mind Jabali Antena because maybe coast to coast, and north to south. And at the end of the day, (inaudible) community as well because the jobs that are right now, because the people who were scheduled to go to Jabali Antena, well, they're not going to go there now. And some of them will be moving to different areas, so there could be consequences. So he will probably feel the pressure from some other people as well. So I just wanted to clarify that issue, that what we did is I think, appropriately moving around in terms of the permitting. And that's the benefit of having a (inaudible) places. So that's a better story and it takes it away from one person that (inaudible) where we built it.

 So I guess, thank you all very much for your time. And we'll look forward to talk to you soon. I guess, the next events press will be news release on the initial resource from Anaconda and the South Lake and update -- other expectation updates as we go -- as we move along with further updates on Fekola (inaudible). So thanks for your time.

------------------------------
Operator   [53]
------------------------------
 Thank you. That concludes today's conference call. Please disconnect your lines at this time, and we thank you for your participation.




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