Q4 2019 B2Gold Corp Earnings Call

Feb 28, 2020 PM UTC 查看原文
BTO.TO - B2Gold Corp
Q4 2019 B2Gold Corp Earnings Call
Feb 28, 2020 / 06:00PM GMT 

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Corporate Participants
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   *  Clive Thomas Johnson
      B2Gold Corp. - President, CEO & Director
   *  John Rajala
      B2Gold Corp. - VP of Metallurgy
   *  Michael Andrew Cinnamond
      B2Gold Corp. - Senior VP of Finance & CFO
   *  Thomas Alan Garagan
      B2Gold Corp. - SVP of Exploration
   *  William Lytle
      B2Gold Corp. - SVP of Operations

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Conference Call Participants
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   *  Carey MacRury
      Canaccord Genuity Corp., Research Division - Analyst of Metals and Mining
   *  Chris Thompson
      PI Financial Corp., Research Division - Head of Mining Research
   *  Geordie Mark
      Haywood Securities Inc., Research Division - Co-Head Mining Research
   *  Lawson Winder
      BofA Merrill Lynch, Research Division - VP & Research Analyst

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Presentation
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Operator   [1]
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 Good morning -- afternoon, ladies and gentlemen. Welcome to B2Gold Fourth Quarter and Year-End 2019 Financial Results Conference Call.

 I would now like to turn the call over to Mr. Clive Johnson, President and CEO. You may proceed, Mr. Johnson.

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 Clive Thomas Johnson,  B2Gold Corp. - President, CEO & Director   [2]
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 Thank you, operator. Welcome, everyone. We're here to talk about the -- as the operator said, the results for the fourth quarter last year and the full year. Obviously, just a great year for B2Gold, and Mike is going to come and -- Mike is going to get on shortly here and talk about the financial results for both the fourth quarter and year-end. But a solid fourth quarter, ending a tremendous year, as indicated in our news release and financial results, et cetera.

 I guess, I'll just talk, maybe give a little overview of where we see ourselves going here in 2020. We gave you quite a lot of detail in the news release and even more in the MD&A talking about where we are and where we see ourselves going. But the strategy going forward for this year, obviously, is to focus on some of the major things we're doing, such as the Fekola expansion, which is going very well. I'll ask Bill to say a few words on that. That's on budget and on schedule, and of course, that's a pretty dramatic expansion as it increases production from last year's 460,000 ounces to we're estimating somewhere around 600,000 ounces from Fekola for this year, bringing us in at about 1 million ounces to the company, including our 34% ownership of Calibre, reflecting the portion of their production. And Mike will take us through some of the details of what we're projecting in terms of costs as we're looking at a low-cost year for operating costs, and outstanding costs are pretty good as well. And we're also generating an awful lot of cash. We are projecting at $1,500 gold based on our current assumptions $600 million, $700 million from cash from operations. For every $100 gold is higher than that, so for that then with $1500 adds about $90 million per year in our cash from operations. So a significant year this year for cash flow.

 Free cash flow will continue to increase into next year as we see the expenditures on things like -- one-off expenditures like the Fekola expansion will be behind us into next year. So I'm very positive about looking forward in that regard.

 In terms of growth, we're going to focus on the pipeline. As we've said for many years now, we've got -- we still have an excellent pipeline of projects. And the 2 of the key ones -- while there's lots going on, 2 of the key ones would be at Gramalote. We gave you some detail in the MD&A and also the news release, but we'll be talking about Gramalote quite a bit more as we go through the year. A major drill program underway with 11 rigs turning to turn the inferred resources at Gramalote range, as we indicated. We put out what we thought was pretty positive numbers on the preliminary economic assessment, which is a dramatic change from the previous economic analysis, which is based on a model that needed some improving at some drilling health but also reinterpretation of the (inaudible).

 So we're keen to see if Gramalote has potential to be our next mine. We're the operator now in the joint venture and have an excellent relationship with AngloGold Ashanti. We're looking at a full feasibility study by the end of the year, and a potential decision whether go or no-go early next year. We have -- currently have -- there's lots of positives that we (inaudible) in the industry about where we are in Colombia and why we're so positive about Ethiopia as a place to build versus significant gold mine in Columbia, lots of government support at all levels.

 Another key factor is -- a key focus for this year will be further exploration. We've got a budget of over $50 million more for it. A lot of that is brownfield, so looking around (inaudible) Fekola and the other mines where we've had very good success, of course. But we also have a program with 5 rigs turning up on the Anaconda, or the Snakes area as we call it, 20 kilometers north of Fekola. We've had some very good results here. We have a large -- fairly large lettered result of saprolite down to 50 meters that continues to extend to the north. But perhaps more -- perhaps of greater excitement is the potential for what's beneath the saprolite, and we've had some very good drill results that we released a while ago from Mamba underneath the saprolite into the -- in the sulfide in the bedrock. So it's early days, but this is (inaudible) oversee at Fekola. So we've seen some good grades and good wins. So we're kind of excited about the potential of that vast area up in the north.

 And then we have lots of other exploration news coming out. We're definitely looking at still continuing to grow through the drill bit, especially in this climate where I think acquisitions are going to be more expensive, and we're looking to have a number of -- we're looking at a certain number of grassroots exploration programs worldwide, which we'd be talking more about as they come in, and then also looking for joint venture with junior exploration companies.

 So obviously, a bit of a strange state to come up with results in the sense of the overall market and the gold price, all of that, but we're in a wonderful position. We couldn't be happier of where we are. And we're looking at the occasion of $1,500 gold, we -- the assumption is we could be debt free in the third quarter of this year, which puts us in a great position that I'm looking forward to.

 That's a bit of summary from me on the strategy, and I'll pass it over to Mike now to give you the detailed financial results of the year 2019 and the fourth quarter.

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 Michael Andrew Cinnamond,  B2Gold Corp. - Senior VP of Finance & CFO   [3]
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 Thanks, Clive. Just before we start, just to remind everyone, we restructured our interest in the Nicaraguan operations in October. So in Q4, so -- for financial statement reporting purposes, results from Nicaragua up to that date are reported as a one-liner in the financials as discontinued operations. And thereafter, we pick up our 34% attributable interest and equity commit for Nicaragua from October 15 to December 31. So when I run through the results, I'm going to talk about results from continuing, and then I'm going to talk about what they also were when you take into account Nicaragua.

 So revenues for the quarter for -- from continuing operations, $314 million, a significant increase over the prior year mainly driven by the increase in gold price and more ounces sold. If you take in adjusted revenues, so including $10 million discounted -- revenues from discontinued operations, it was $324 million from the Q, very significant increase over the prior year quarter.

 Production, very solid in the Q. So total from continuing operations was 228,000 ounces driven mainly outperformance by Fekola and Otjikoto. Fekola was 11,000 ounces ahead of its original plan, and that's driven by the same stories we had through the year. There's more throughput going through the mill, and because of that, we were able to process more tonnage than we thought, some of which is lower-grade stockpile tonnage. Now that did lower the grade a bit, but the throughput out beat -- or beat the impact of the reduction in grade. So overall, we have performed. And Fekola had 119,000 ounces in the Q.

 Otjikoto is 58,000 ounces, again, ahead of budget by about 4,000 ounces, and that continues to be driven by just more ore and better grade come out of Wolfshag than was originally planned.

 Slightly offsetting that was Masbate. Masbate is 51,000 ounces, just 3,000 ounces below plan, and that was as expected and as discussed in Q3. We did plan to have production from Montana in Q4 of 2019, but that -- as we indicated previously, that was pushed out into the first quarter of 2020. But work at Montana commenced sort of mid-February of this year. The result -- the impact of that was that we had ore with slightly lower recoveries in Q4 than we'd anticipated, and therefore, we were about 3,000 ounces under budget.

 But overall, production from continuing operations was 12,000 ounces ahead of where we had planned. When you take our share of Nicaragua discontinued operations and our attributable share from October 15 onwards, total production was 245,000 ounces.

 Just a comment a little bit on the costs for the Q. So cash costs -- and this is on an ounce-produced basis, from continuing operations of $442 and from all operations $467 per ounce for the quarter. We beat plan overall, and that's, again, a function of the strong performance at both Fekola and Otjikoto with the higher production coming from those operations. Masbate was a little higher than originally planned. Masbate, $694 cash cost per ounce. And again, it's a direct impact of that not having that ore come from Montana in Q4. But overall, we beat budget by close to $30 an ounce on a cash cost side.

 On the all-in cost side, from continuing operations, all-in cost per ounce -- sustaining cost per ounce were $869 an ounce, and the total from all operations, including Nicaragua, was $882 an ounce. And what we saw in the Q was mainly catch-up of CapEx. Although we had it beat overall on the cash cost per ounce, we were ahead of plan, we did have CapEx that had been postponed from the first 3 quarters of the year and was incurred in the fourth quarter. And that's -- so we had some higher capital at Fekola and Otjikoto as we had CapEx caught up in that period.

 Also impact all-in sustaining cost is that we need to remember that we actually budgeted on the basis of $1,200 per ounce last year, and the royalties were based on that price. In fact, through the year, we realized gold price for the whole year of close to $1,400 an ounce, so there's a bump in the total royalties that were included in the all-in sustaining costs. So the total on a consolidated basis from all operations, again, was $882 per ounce.

 Just a comment on some of the results now for the year. Revenues from all operations, including our share of discontinued operations, was a record $1.3 billion and reflects the fact that all the mines have run very well through the period.

 On a production basis, from continuing operations, we had 851,000 ounces, well ahead of budget of 800,000. And including our share of Nicaragua, overall, we had 980,000 ounces, against -- which beat the upper end of our guidance range of 975,000 ounces. So pretty much -- we've already prereleased those numbers.

 If you break it down and look at each op, Fekola had 456,000 ounces, 33,000 ahead of budget, and it's for the same reasons as discussed on the cash cost side, just more throughput. Slightly lower grade but more throughput through the mill overall gave us more ounces than we planned. And that beat the upper end -- the 456,000 ounces beat the upper end of its already increased guidance range of between 445,000 and 455,000.

 Masbate had 217,000 ounces, 9,000 ounces ahead of where we overall budgeted. It's an annual record for Masbate, and it beat the upper end of its guidance range of 200,000 to 210,000.

 And then Otjikoto, 178,000 ounces. And that, again, beat the upper end range of its 165,000 to 175,000. And the production stories at each of those sites is basically the same as I just described for the quarter, just outperformance at all sites.

 Just also to comment that our 2020 guidance, so we -- on a full year kind of basis, including Nicaragua, 980,000 ounces for the year. Next year, with the impact of the Fekola expansion coming online throughout the year, I guess, partly from the expanded fleet and then when the mill -- the full mill expansion comes online in Q3, we're now -- we're guiding 1 million to 1.55 million ounces, including our 34% attributable share of Nicaragua.

 On the other hand, the other -- I'll maybe just comment at this stage as well as Fekola. During -- in Q4 '19, Fekola produced its 1 million ounce since it started production, which is quite an achievement when you consider it's only been going just over 2 years.

 Just to comment on the overall cost and all-in sustaining costs for the full year. So on the cash cost side, per ounce produced from continuing operations, $449 an ounce, and including our share of Nicaragua, $512 an ounce. So -- and overall, that consolidated number of $512 per ounce produced, that beat the low end of our guidance range of $520 to $560.

 Next year, as we go through the year with, a, the impact, again, of Fekola expansion coming online through the year and a smaller percentage share of the higher-cost Nicaraguan operations, we're guiding cash cost of between $415 and $445 per ounce.

 On the all-in sustaining cost side, consolidated, including all operations Nicaraguan, $862 an ounce, and from continuing operations, $794 an ounce. And that's right in the range that we gave. We originally gave a guidance range of $835 to $875. So the $862 an ounce came just at the midpoint of that range. And as I said, it was partly impacted by higher royalties in the period, and also the fact that for the year, we produced 980,000 ounces and we sold 944,000. So the sales were slightly lower, and therefore, increased the cost per ounce slightly because all-in sustaining costs are presented on an ounce-sold basis.

 Next year, for 2020, we're sort of mirroring the lower cost we see on the cash cost per ounce size. We're guiding between $780 and $820 overall.

 So to comment on the income statement for first the quarter and then the year. So a couple of items to highlight, I think, in the 3-month period to December, sort of unusual items. So impacting earnings, firstly, were a couple of -- 1 significant noncash item, which was a reversal of an impairment for $100 million. So a few years ago, we booked an impairment of our interest -- or the carrying value of the Masbate mine. We originally had purchased that line when gold was $1,500 plus, higher than $1,500, and impairment tax for this gold debt would subsequently run at $1,250 and we booked an impairment. With the increases in the gold price that we've seen, today's plummet excluded, of course, we changed our long-term gold price assumption to $1,350. And with that, we realized the reversal of $100 million on that impairment that we previously recorded at Masbate.

 And then also impacting the income statement for the period was gain on sale of the Nicaragua assets of $40 million. So as you may recall from our disclosure previously, we -- that restructuring of our interest in Nicaragua was for proceeds of $100 million plus working capital adjustments. And included in that -- and so that resulted -- because we had that in -- that was finalized in October, we booked that gain of $40 million in Q4. I should also comment that as part of the consideration made up in that $100 million, we took USD 40 million worth of equity in Calibre. There was also a $10 million convertible debenture that with the subsequent increase in Calibre share price was converted, and today, we hold an effective interest in Calibre of 34%.

 Bottom line net income for the quarter, $182 million. As noted, that includes the impact of those 2 items I just discussed, and that's EPS of $0.17 per share. On an adjusted net income basis, adjusted net income as reconciled in our MD&A is $69 million or adjusted EPS of $0.07 per share.

 A comment now on the 12-month financial results. As mentioned before, $1.3 billion in revenues. If you include Nicaragua, $1.2 billion rounded, if discontinued operations are included. We had operating income for the 12 months of over $0.5 billion. A couple of areas, as mentioned in the P&L. Interest and financing expense is $26 million -- or $26.5 million for the year versus closer to $31 million last year, and that's due to the lower debt levels that we've had through the period.

 The -- in 2019, we repaid approximately $220 million of our debt, including $200 million on the revolver. And as we currently look forward, we're expecting that by the end of Q3 of 2020, we will have repaid the remaining $200 million on the outstanding revolver balance. So leaving us with $600 million undrawn and available. But you should also expect to see a significant decrease in interest expense through next year as we pay that debt down.

 Also another item to highlight, current income tax expense for the year was $114 million, and we'll see higher tax expense as we go forward compared to some prior years for B2 as Fekola is very profitable and there's no accelerated deductions in Mali. So you pay your share of income taxes straight out of the gate, and you get your deductions to your original investment over time. And also, any previously unutilized losses -- the loss carryforwards of both Masbate and Otjikoto had been utilized by the time we got to 2019, so we're starting to see a higher income tax expense there.

 On a cash basis, total income -- cash income taxes paid during the year were $119 million. And just a reminder that, that also includes payment of the Fekola priority dividend. On a comparable basis for 2020, I think you can expect -- we're currently estimating total income taxes -- cash income tax payments, including Fekola's dividend, of approximately $115 million.

 Bottom line earnings for the year attributable to shareholders, $316 million -- or sorry, attributable to shareholders was, sorry, $293 million, and that added up to $0.29 per share EPS. If you adjusted the noncash items for the period, adjusted earnings were $237 million or $0.23 a share.

 Just going to comment on a couple of line items in the cash flow, firstly for the quarter. Cash provided by operating activities, $145 million or approximately $0.14 per share. Just to highlight, in Q4, we did make a voluntary $12.5 million installment -- cash tax installment payment for Fekola. We paid installments for the year, but the final balance was due to be settled up in full in Q2 2020, but we actually prepaid $12.5 million in Q4.

 Also in Q4, we repaid -- as we indicated at the end of Q2, we repaid another $100 million in the revolver, leaving us with $200 million at the period end. And in Q4, we paid -- we declared to pay our first dividend for B2Gold. So USD 0.01 per share at the expense of $10 million overall for the Q. And looking forward, we've also highlighted in our news release that we declared our dividend for Q1 in the same amount, USD 0.01 per share.

 In the quarter, cash from investing activities was -- net was $58 million, but that was inclusive our net of $51 million proceeds of cash from the Calibre transaction. So gross was the $108 million. And like I mentioned, as I talked about the all-in cost per share, that included approximately $11 million catch-up for some deferred stripping costs at both Fekola and Otjikoto. It also included, in the Q, $54 million for the Fekola expansion. Overall, in 2019, we incurred $76 million costs related to Fekola expansion. And remember, that includes both fleet expenses, mine expansion costs and work that we've done on the solar plant. So $76 million overall in 2019, and we budgeted the remaining $97 million for 2020.

 And also, just a reminder that we do expect that for the fleet costs, which total approximately $85 million overall, we expect to finance approximately $40 million of that with Caterpillar loans in the latter part of next year -- in 2020, sorry.

 Then finally, just to comment on the cash flow for the full year. Cash from operating activities overall was $492 million or $0.49 per share. Like I said, we did pay off in Q4 $12.5 million prepayment on our final Fekola tax expenses. And also, right at the end of 2019, we did have about 25,000 ounces, but because of late shipments and delays in shipments from the sites, we had sitting in refineries but it wasn't available for sale until just into the start of 2020. So we sold those 25,000 ounces for proceeds of approximately $39 million at a significantly higher gold price, actually, than we would've realized had we sold them at the -- in December.

 Overall, for the year on the financing side, we repaid $200 million in debt, as discussed. We had proceeds from option exercise of $73 million and $10 million for that first dividend payment.

 Investing activities for the full year, $263 million, or gross of the Nicaragua proceeds of $316 million. And that was a bit higher than the original budget because, remember, included in there are $76 million of Fekola expansion expenses, which weren't in the original budget. We approved and announced those midway through 2019. And then we had other sort of main differences with Masbate. We were probably $12 million over -- underbudget, sorry, overall, mainly due to Montana timing and the timing of final acquisition and development cost from Montana, which we're now incurring in the first quarter of 2020. At Nicaragua, we were about $6 million just because of the timing of the sale there, we're $6 million ahead that we incurred before we sold it.

 Overall, ended the year with cash and cash equivalents of $140 million, $400 million undrawn on the revolver and in good shape to go forward as we work to complete, firstly, the Fekola expansion through the year and then also to fund our increased share now of the Gramalote budget where we're planning to drill Gramalote out now in 2020 to feasibility stage and have a feasibility completed by year-end. And to earn -- our plan there is to earn back to 50-50 interest and also to, therefore -- thereafter, fund their share of the 50-50 JV expenses going forward. So in total, in 2020, we've got $25 million in the budget for that. But overall, we're well placed to fund all the current activities that we've got.

 And I think that probably summarizes what I was going to talk about.

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 Clive Thomas Johnson,  B2Gold Corp. - President, CEO & Director   [4]
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 Okay. Great, mike. Thanks. Let me pass it over to Bill Lytle, Senior VP, Operations, to give us a run-through on the progress to date of the expansion of the Fekola mill and the new fleet.

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 William Lytle,  B2Gold Corp. - SVP of Operations   [5]
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 Okay. Thanks, Clive. Maybe just by way of introduction to the projects, I think everyone remembers last year, we were challenged to look at should we expand the mill at Fekola, and so we did a study, which really showed the optimized -- optimizing the mill and increasing throughput was positive. But as part of that, we looked at optimizing the entire facility. And one of the interesting things that came out of it was that the optimization actually indicated that we should also expand the mining fleet and bring some of the higher-grade ounces forward. So we -- that was approved in June of last year, and we immediately started ordering our mining fleet. And it's important to realize that because for 2020, the key for getting the 600,000 ounces really relates to the mining fleet and pulling those high-grade ounces forward. I'm happy to say that on the mining side, the mining fleet actually is arriving ahead of schedule, on budget and ahead of schedule. We already have received our first big excavator to -- 6040 excavator. That has been commissioned and will shortly move into mining in phase 6. We also have received the first 5 of our 200-tonne trucks. Those have been put together and will almost momentarily be put into operation as soon as we put some tires on them. So that remains ahead of schedule.

 On the milling side, if you remember, we're expanding from 6 million tonnes per annum to a throughput of 7.5 million tonnes per annum at a budget of $50 million. That -- half of which was going to be spent last year and half this year. That, again, remains on schedule for a Q3 commissioning. There -- obviously, we're currently watching all the issues related to the coronavirus, but we are still forecasting at this time that we will be on budget for a Q3 delivery of the mill.

 In addition to that, we looked at expanding. Because of the throughput at the mill and some of the past outperformances of the mill, we want to make sure that the tailings facility had sufficient capacity. And so we actually called for a double lift last year, which would take us up into 2023 before it had to be lifted again. That remains on schedule and will be completed prior to the rainy season this year.

 We also looked at the success at Otjikoto, the solar plant and the economics of implementing a solar plant at Fekola. And we approved last year a $38 million budget to expand the power plant by 30 megawatts AC solar. That remains on schedule and on budget. We're currently looking at some of the equipment which is coming out of China related to the batteries, which may be delayed slightly. But overall, the solar plant will be started up at the end of Q3. And that solar plant is not needed to support the expansion. That's just better economics over the long term.

 Thank you.

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 Clive Thomas Johnson,  B2Gold Corp. - President, CEO & Director   [6]
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 Okay. Thanks, Bill.

 I think with that, we'll turn it over to questions. So we have the entire executive team here in Vancouver. So if there's any questions, we can answer. Go ahead.

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Questions and Answers
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Operator   [1]
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 (Operator Instructions) Your first question comes from the line of Lawson Winder with Bank of America.

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 Lawson Winder,  BofA Merrill Lynch, Research Division - VP & Research Analyst   [2]
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 Just on Gramalote, maybe -- just looking at that project, becoming more and more attractive to you. And then I compare it to the other 3 sort of core assets in your portfolio where you are not only 100% in control of the operations but a majority owner. In the event that your partner were to be interested in tendering their half of that project, is that something that you guys would be interested in considering?

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 Clive Thomas Johnson,  B2Gold Corp. - President, CEO & Director   [3]
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 Well, I think we're both -- AGA and ourselves are very focused on getting to the final feasibility by the end of the year. There is a provision agreement. And I think both AGA and ourselves believe that on a 50-50 joint venture, neither party should be able to stay to block development of a mine if it's economic. So there is a provisioning agreement where if we -- after a final feasibility study, if we move to a development plan to present that to AGA, they neglect not to participate to 50%, then there's a mechanism where each of us would appoint an independent financial adviser. And based on the economics of the feasibility/development plan, if they or we wanted to sell our 50% interest as a mechanism to come up with that.

 So there's also a provision where they can drop potentially to 30% interest. And so we feel very confident that it's [got a long ways to go]. And I think if it's -- if the economics are good, I would expect there's a good chance AGA would want to participate in 50%, especially since we're going to do all the work. And secondly, though, there's a mechanism whereby we can move on. And this is a big nut to crack in terms of the financing and that we were looking at economics a lot. But we have lots of alternatives if we -- if that happens because we could bring another partner in for 30% or whatever percent, if we didn't want to take on the total hit.

 I think it's worth noting, though, I mean, it's still early. We've got work to do here to get the feasibility and development decision. But if you look at the cash generation from us based on current projections over the next -- this year and the next 2 years, it's somewhere around $1.6 billion to $2 billion. So given the fact that we could be testing by the third quarter this year, we'll be in an extraordinary position to be able to finance projects going forward from cash flow.

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 Lawson Winder,  BofA Merrill Lynch, Research Division - VP & Research Analyst   [4]
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 Clive, that's a very helpful answer. And then in -- just looking at your portfolio, there's one asset that you guys -- or project, rather, that you guys haven't spoken a lot about lately, and that is Kiaka in Burkina Faso. And I was wondering if maybe you could just quickly update us on what your thinking is around that asset. But then also in doing so, maybe comment on sort of geopolitical risk exposure with that asset. And where I'm coming from is, assuming the project economics were far superior than they are today, with Kiaka, I mean, would building it be an obvious choice for you? Or is there an element of geopolitical risk in Burkina Faso now that would perhaps make you think twice about that decision?

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 Clive Thomas Johnson,  B2Gold Corp. - President, CEO & Director   [5]
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 Well, obviously, all countries have some political risk, and unfortunately, Burkina Faso has had a lot of significant issues that concern all of us over the last while, whether it be the mining industry or in general. Safety of our people is paramount. But I think we continue to evaluate the economics of Kiaka and see what kind of gold prices might make some sense. But I think we're also looking to see the government continue to work hard if they are to continue to improve security in the country. If we had Fekola in the Burkina Faso, I believe -- I think we'd be working very hard with the government to build it and ensure the safety of our people. So we'll continue to evaluate Kiaka as we go forward. To be honest, if there was someone interested in the partnership or something like that, we'd probably consider that. Otherwise, we'll continue to evaluate it and we'll monitor the situation in Burkina Faso and then hopefully, it continues to improve. Unfortunately, Burkina Faso faces some additional challenges in the neighboring country, Mali, who's -- who made a major commitment to improving safety with 10,000 troops being trained as we speak and further ongoing support from France and the United Nations, et cetera. So it's a -- Burkina Faso is a great -- good country -- great. They're really good people, and we hope that they have a safer future, and then we can progress -- the mining's issue can progress there. So there are other operations that are looking to move forward. I'm sure safety is their first priority as well.

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Operator   [6]
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 (Operator Instructions) Your next question comes from the line of Chris Thompson with PI Financial.

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 Chris Thompson,  PI Financial Corp., Research Division - Head of Mining Research   [7]
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 Congratulations on a great year last year. Just a quick point of clarification. Are we anticipating, I guess, revised mine plans for Otjikoto and Fekola in the AIF?

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 Clive Thomas Johnson,  B2Gold Corp. - President, CEO & Director   [8]
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 Yes. We should have mentioned that. Who wants to take that?

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 William Lytle,  B2Gold Corp. - SVP of Operations   [9]
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 Short answer's yes.

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 Clive Thomas Johnson,  B2Gold Corp. - President, CEO & Director   [10]
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 Yes. The answer's -- short answer's yes.

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 William Lytle,  B2Gold Corp. - SVP of Operations   [11]
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 Apart from AIF, we will be updating those mine plans, both the underground addition -- I'm sorry, we will be updating the mine plans both at Fekola based on the latest resource, which came out in December, I think, of 2019, and then the approval by the Board to go underground at Otjikoto and also be part of the AIF.

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 Clive Thomas Johnson,  B2Gold Corp. - President, CEO & Director   [12]
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 Yes. Thanks for the reminder, Chris. Yes, the other thing, with the expansion of Fekola, of course, was based on the tremendous results of increasing Fekola, (inaudible) with our new indicated resource. Recently at 6 million ounces, we mined 1 million ounces. So it's really 7 million ounces when we started the -- (inaudible) we started at [4 million], we remain open. So the expansion is still having -- got ways to continue mine ledging with the expansion. So the expansion is showing to have been a great decision. And I think that's one of the things that we're very proud of because it's the -- obviously, we're the bricks and mortars. But we maintain our entrepreneurial approach to this business, having expanded Fekola twice already since we've decided first to build a leading wide open expansion and having a commitment to try to find out if it was bigger as we were building it. So it's a great example of, I think, the way we approach the business. It's the success of Fekola having produced 1 million ounces already related to this and it's just coming into the second expansion.

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 Chris Thompson,  PI Financial Corp., Research Division - Head of Mining Research   [13]
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 Great. And just another quick question, I guess. Can you just sort of walk us through what's happening with the Snakes -- the Snake deposits at Fekola?

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 Clive Thomas Johnson,  B2Gold Corp. - President, CEO & Director   [14]
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 Sure. I'll hand it over to Tom. You saw me put up some pretty intriguing results a while ago, but Tom could give you a little more detail and what the focus is there.

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 Thomas Alan Garagan,  B2Gold Corp. - SVP of Exploration   [15]
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 Yes. Chris, the exploration at the Snakes right now is, I would say, threefold. We're expanding the saprolite mineralization to the north with RC drilling. We are drilling Mamba to try and understand it and try to extend Mamba, the sulfide deposit of Mamba. And then we would be looking at a couple of other sulfide targets that are sitting underneath Anaconda and Adder. So that will be the focus for this year's exploration.

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 Chris Thompson,  PI Financial Corp., Research Division - Head of Mining Research   [16]
------------------------------
 Okay. Great. And then just a final question, guys, I hope you don't mind. But just Masbate, just a very, very quick comment on the -- I guess, the grade and metallurgical characteristics of Montana compared with Main Vein.

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 Clive Thomas Johnson,  B2Gold Corp. - President, CEO & Director   [17]
------------------------------
 John, do you want to take that?

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 John Rajala,  B2Gold Corp. - VP of Metallurgy   [18]
------------------------------
 Great. I believe we're going to average about 1.8 to 2 grams per tonne. Correct? And we're expecting about 80% gold recovery, Chris, from Montana. A bit of a soft drawer. So no issues with throughput.

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Operator   [19]
------------------------------
 Your next question comes from the line of Geordie Mark with Haywood.

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 Geordie Mark,  Haywood Securities Inc., Research Division - Co-Head Mining Research   [20]
------------------------------
 If I can maybe just to extend the question from Chris' line of thought, particularly on Anaconda in the context of, I guess, rounding out Fekola, however many expansions are -- there are now. Plus the context of probably moving with the decision to go through to Gramalote next and moving your [owner's] team there and the time commitments, I guess, and the cash flow required for that. I'm just wondering, how does -- holistically, how does the Anaconda sort of potential of Snakes fit within that in terms of human resource capital, so development time frames, cash flow requirements to attribute to that along with permitting? So it's more of a holistic sort of midterm growth plan because you've already got, obviously, another [takeaway] with Gramalote likely to come through, I guess. Yes. So just getting some sort of more broader scale theme [on the quarter view].

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 Clive Thomas Johnson,  B2Gold Corp. - President, CEO & Director   [21]
------------------------------
 Sure. I mean we waved our arms a bit to see if we come up with a positive final feasibility study at Gramalote and we make a development decision to proceed, then you're looking at about north of 30 months of construction, that's 11 million tonne a day plant. So we might be starting it in the second half of the next year. Once again, if you're waving your arms a bit. But -- and the team out will be ready to roll because they're going to be coming off finishing the Fekola expansion. So that timing works out well. In terms of that economy, it's such early days, but there's a number of alternatives there. Yes, we're seeing the saprolite now increase to 6 kilometers and before that, the 5 kilometers. It looks like we had 800,000 ounces at a little over ground. So as you know, it's -- it really doesn't require any blasting or crushing, this is because of the nature of the weather, cracking the saprolite down to 50 meters. So we've always thought that -- as that's getting bigger now, we'll call it a new resource during the new year for the saprolite and then looking at is that, potentially, a stand-alone situation. Or other higher grade parts of the saprolite, then there seem to be, where there are some, that you might truck down to Fekola one day. Let's say, after Fekola's first 5 years, averaging 550,000 ounces a year. That's one of many alternatives it would be to do that. When Tom tells us that we might be still wasting our time to analyze too much of the saprolite because he's feeling cautiously optimistic on (inaudible) about the potential of the sulfide below those huge areas. So then you could be looking at a significant stand-alone mine, and you can sort of look at that, once again, a little arm-waving, if that [mine is a go], that could be started after Gramalote. But we don't build these things -- get everyone on-site at the same time, all the time. As Bill always reminds us, you have -- [we're doing] people coming first and then they do their thing and then they could be ready to go somewhere else. We're not going to take on building 2 plants at the same time. I don't expect us to change that strategy, but we have lots of alternatives on how to get there. We've got -- obviously, Anaconda's behind Gramalote in the sense of where it is, I mean, in terms of the process of feasibility and permitting. So we -- so right now, we're slotted behind that. But there's many alternatives. And especially having this huge mill down the road, 20 kilometers down the road when you start looking at Anaconda.

 Bill, you have anything to add to that?

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 William Lytle,  B2Gold Corp. - SVP of Operations   [22]
------------------------------
 Well, maybe just to add that the part that's often forgotten is the engineering side, which we have a very good engineering team and it actually slots, I think, very nicely. If you look at what's happening at Fekola now, we do have some of our key engineers on site. They would in kind of the third quarter or after, be rotated over to Gramalote, that worked very well. Once again, hand-waving of the project, getting it into detailed engineering. And of course, that would also work very well to give time -- Tom the time to finish up actually drilling at Anaconda and handing it over to the engineers, sometime maybe in the second half of next year to really start looking at what's happening there. So on engineering side, it fits very well.

------------------------------
 Clive Thomas Johnson,  B2Gold Corp. - President, CEO & Director   [23]
------------------------------
 I guess just one final point that when you talk about Gramalote that we didn't mention, it's very, very advanced for allegedly a PEA, which we put out. We only put it out as a PEA because we were a bit surprised to find out that 45% of the ore body was inferred, when that wasn't what had been advertised before. So we have [SWAC of] drilling to do and the infill drilling. I guess it's a very consistent ore body that they -- Tom tells us. So we're -- it's infill drilling, it's always a measured risk, but we think that -- we're hopeful that we'll be a success in terms of similar type of economics and create something we're looking at now.

 But in so many ways, it's so advanced, Gramalote, because AGA had it for 10 years and spent a lot of money and quite a bit of well. [They love the AGA work], permitting work, doing great -- a very good job dealing with local artisanal miners, the community and we have a permit, so they obviously did a good job. And the nice thing about this is we're inheriting the Gramalote team, which is really -- which is there's a lot of very good people there. And rather than having to restart, let's say if -- and AGA sold out and we have to take over as operator from scratch, we'd be a long [with buffer] behind than we are today.

 So in terms of metallurgy, there's always good -- more work to do, but -- I mean when a team tells you they're feeling very comfortable with that. And of course, it's got super cheap power, between $0.17 a kilowatt hour in Africa. This is projected to be around $0.07 a kilowatt hour because of the nearby power line. And the great thing now, the grade deal -- your people criticize the grade. We understand sometimes the obsession with low grade. No surprise given the [fillings] of many low-grade projects. But here, you have a very low strip ratio, I think an average 2:1 to the project and 1:1 at the start. So that's -- those are very attractive factors that actually forgive, to some extent, the lower grade. We can show you some 1.5 gram ore bodies with a huge strip ratio of some inferior metallurgy that we'd not have the economics that we're seeing in Gramalote. So as we always like to say, nothing matters. Nothing matters in isolation. Grades, strip ratio, logistics, all that, it all matters. It's all about how it comes together. So a lot more on Gramalote by the end of this year, a lot more. There's quite a lot more as we think about the Anaconda area.

------------------------------
 Geordie Mark,  Haywood Securities Inc., Research Division - Co-Head Mining Research   [24]
------------------------------
 That's a very, very, very robust answer. And if I can extend one more to Mike there. Just in terms of -- obviously, free cash flow is going nicely, a reduction in the revolver, balanced but obviously, for future growth going forward with an elevated gold price. Second dividend payment's coming out there soon. What are you thinking in terms of -- are you thinking in terms of opportunities going forward to put in a specific impact ratio? Or something to gather exposure to rising gold price? Or just thinking about -- obviously, you're putting a lot of cash on the balance sheet and how you might look at using that going forward.

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 Michael Andrew Cinnamond,  B2Gold Corp. - Senior VP of Finance & CFO   [25]
------------------------------
 Yes. I think we're looking at what we may do as we go forward. I think that maybe the way to look at it is we're going to get ourselves to more of a decision point later in the year on what we wanted to do. We'll have the Gramalote feasibility study by Q4. We'll know a lot more about Anaconda and what we're seeing from the drilling in Mali and have ideas about what we might need in terms of project finance there. And so it's really -- right now, we're using the funds to pay the debt down in the absence of having a larger dividend. So we'd like to do that to Q3. And then obviously, we can evaluate what our dividend policy is, what our capital needs are for Gramalote and potentially a bit longer-term out there, what our capital needs are -- would be for Anaconda. All of those things can be used or considered. And really, the first key decision point to come out there will be the end of the year when we see what the Gramalote feasibility study [shakes out like].

------------------------------
 Clive Thomas Johnson,  B2Gold Corp. - President, CEO & Director   [26]
------------------------------
 Yes. We -- over time, we'd like to see the dividend increase. As we said, we don't want to rush into that, that we have got some capital expenditure things happening this year. Let's get to the debt reduction, let's get to the fourth quarter, and then we'll evaluate that situation. I mean the objective here is to -- we used to be a company that takes some of that hard -- its hard-earned money earned by producing gold and uses it to find more ounces and develop some things that are in the pipeline, build more gold mines but also at the same time, reward our shareholders by giving something back. So that's the strategy. Then we've started that process, and we'll evaluate by the end of the year if it's appropriate to consider increasing the dividend. And of course, that partly speaks to gold price as well.

------------------------------
Operator   [27]
------------------------------
 Your next question comes from the line of Carey MacRury with Canaccord Genuity.

------------------------------
 Carey MacRury,  Canaccord Genuity Corp., Research Division - Analyst of Metals and Mining   [28]
------------------------------
 Just another question on Gramalote. You've mentioned that the project is pretty well advanced. So I'm just wondering beyond the infill drilling, are there other opportunities that you're looking at there to potentially tweak the economics?

------------------------------
 Clive Thomas Johnson,  B2Gold Corp. - President, CEO & Director   [29]
------------------------------
 Sure. Tom, you want to take that?

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 Thomas Alan Garagan,  B2Gold Corp. - SVP of Exploration   [30]
------------------------------
 First, just on the drilling, to bear in mind that the PEA gold price is really at $1,100. So when you look at higher gold prices, the Gramalote has the potential to get significantly bigger. And certainly, it remains open as you go deeper in the project, and we'll find out some of that with our drilling this year. As far as sort of other opportunities...

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 William Lytle,  B2Gold Corp. - SVP of Operations   [31]
------------------------------
 Well, us. Trinidad.

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 Thomas Alan Garagan,  B2Gold Corp. - SVP of Exploration   [32]
------------------------------
 There's other satellite deposits that we have not included in the PEA. We did not do that deliberately because we wanted to get to a decision point with this thing, with the feasibility study, and we just work -- we've been getting those drilled off to an indicated resource to be able to do that. So that could add to it.

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 Clive Thomas Johnson,  B2Gold Corp. - President, CEO & Director   [33]
------------------------------
 And the resource before that has vastly improved was taking into account the Trinidad and Monjas West. So it -- the grade -- the increase in grade is a bit -- a little bit because we're focusing on Gramalote Ridge. But as [Bill] has said and Tom said, there's -- these 2 other deposits, so 1 deposit, 1 zone open with these 2.

 So we're going to be doing a little bit of drilling in Trinidad this year, right?

------------------------------
 Thomas Alan Garagan,  B2Gold Corp. - SVP of Exploration   [34]
------------------------------
 Yes. We'll be doing some drilling on Trinidad and then Monjas and [Snakes] next year.

------------------------------
 Clive Thomas Johnson,  B2Gold Corp. - President, CEO & Director   [35]
------------------------------
 So one of the odd thoughts we have is typical of our style of doing things like Fekola and Otjikoto, is we may look to, if feasibility is positive and looks very good and we go to a final decision, this will allow build for cheap expansion again, the mill.

 So that if in fact Monjas West and Trinidad come in and we want to crank the tonnes or whatever, we have the potential to do it. That's kind of one of our strategies that I think sets us a little bit apart sometimes. And that's where we don't lose value by not exploring those now. We like the way that -- like the way we move forward, get going, get this thing built, if it's appropriate. And then leave room to have more to -- for more opportunity if that adds up.

------------------------------
 Carey MacRury,  Canaccord Genuity Corp., Research Division - Analyst of Metals and Mining   [36]
------------------------------
 And maybe one more, just your thoughts on your relationships in Colombia. Obviously, you've been there for a while. AngloGold's been there for a while, just relative to the rest of your portfolio.

------------------------------
 Clive Thomas Johnson,  B2Gold Corp. - President, CEO & Director   [37]
------------------------------
 Well, so far, it's a great relationship. We've got some really good meetings coming out next week with Ministry of Mines and a lot of senior people from Colombia, and the guys have been down. I'm planning a trip down soon to meet the government officials. But that's -- Kelvin Dushnisky has done a great job there and some of the people before him of dealing with government. The social relationships in many countries, including Colombia, well, they're more and more important everywhere these days. But I think AG has start there. We're going to start to do it for a long time.

 But the relationships with the government, the President, the cabinet -- Kelvin was telling me he met with all -- the entire cabinet 6 months ago or so -- a year ago. They were very, very positive about gold mining, responsible gold mining.

 And then you've got Antioquia where the new Governor of Antioquia recently elected, there's a mining family -- mining in his family background and he's come up very pro-mining and so is his Minister of Mines and others.

 So every -- all the indications are, the questions we could ask them as we're down there, the questions are, when are you going to start? When are you going to start building this thing?

 We also have -- hit the ground running, as I said, with having the Gramalote team. We've also -- Dale Craig was VP Operations here and was the Country Manager a long time ago in Nicaragua that came out to Vancouver and assumed a more senior position.

 Dale put his hand up and volunteered to go down to be the Country Manager in Colombia, which is fantastic. So we've got one of our very experienced guys at the helm there. He'll be well supported by all of us, of course, here. So we have a good team underneath Dale.

 So, so far, that part of it is very, very encouraging. It seems that there's a real push from the local people. They've done a good job, the artisanal miners there, everyone's on board to move this thing forward, and we'll continue to work with what we've done all of our careers in respect to transparency and accountability in the way we deal with local governments (inaudible).

 I know the government is very happy to have a Canadian company who have been here at the helm of this one, and there's a great Canada-Colombia relationship. It doesn't get -- we were the operator here before, so we have some history with them as well.

 So that -- so far that seems to us to be -- the economics have to be there, but it seems like this would be the best place in Colombia to build a gold mine being an old mining district and all these other positive factors we're talking about. So that's looking very good.

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Operator   [38]
------------------------------
 There are no further questions at this time. I will turn the call back over to the presenters.

------------------------------
 Clive Thomas Johnson,  B2Gold Corp. - President, CEO & Director   [39]
------------------------------
 Okay. Well, thank you, everyone, for joining us. It's obviously a bit of a challenging day given the meltdown of the gold price and the gold attributes, which is perhaps a little bit surprising. But we see these liquidity crisis, I guess, sometimes as we move through -- the price to do business.

 But we're very happy with where we sit and we didn't build this company based on the fact that gold had to be higher. This is a hell of a company at whatever gold price, really, almost you want to pick in terms of historic prices for the last while.

 So we're excited about the future, and we look forward to continuing to deliver for our shareholders and all our stakeholders on the promises we make. Thank you.

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Operator   [40]
------------------------------
 Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.




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