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B2Gold Evaluates LoM Options, Expands Processing Throughput

Zacks Equity Research

B2Gold Corp BTG has announced favorable results for the Fekola Mine in Mali from the Expansion Study Preliminary Economic Assessment (PEA). The company is on track with an expansion project to boost processing throughput by 1.5 million ton per annum (Mtpa) to 7.5 Mtpa from the current rate of 6 Mtpa.

The PEA was conducted to assess the life-of-mine (LoM) options for expanded mining and processing facility to maximize the value of the increased Indicated and Inferred Mineral Resource at the company’s Fekola Mine. On Oct 25, 2018, B2Gold announced positive results from the Fekola mill-expansion study and substantially increased Mineral Resource estimate for the mine. The study was focused on expanding mill throughput to 7.5 Mtpa. The company reported an updated Indicated Mineral Resource estimate of 92,810,000 tons and an Inferred Mineral Resource estimate of 26,500,000 tons for the Fekola Mine.

Notably, the new mining plan is set to boost the mining capacity of the Fekola mine, along with additional mining equipment, to accelerate the supply of high-quality ore to the expanded processing facilities. Interestingly, the PEA project and Mineral Resource expansion plan will help the Fekola Mine produce huge amount of gold over a longer period of time with higher average gold production, cash flows and revenues.

Per the PEA expansion study, B2Gold assumes gold price of $1,300 per ounce and a discount rate of 5%, effective Jan 1, 2019. The company expects large number of explorations drilling to commence in third-quarter 2019.

Based on the revised mine life, cash operating cash costs and all-in sustaining costs (AISC) are estimated at less than $500 and $700 per ounce, respectively. During 2020-2024, under the new LoM, AISC is expected to average approximately $630 per ounce. PEA expansion estimates average annual gold production above 400,000 ounces per year over the new LoM and more than 550,000 ounces of gold per year in 2020-2024. Moreover, under the current Expansion Study, PEA assumes, mine life will be extended to 12 years with increased processing rate of 7.5 Mtpa.

Coming to the price performance, over the past year, B2Gold has gained 5.9% outperforming the industry’s gain of 5.5%.



During the Oct-Dec quarter, the Fekola Mine produced 105,280 ounces of gold, exceeding the original budget. The company reported consolidated cash operating costs of $523 per ounce in the quarter, reflecting a year-over-year increase of 10.5%. Consolidated AISC of $814 per ounce came in 8% higher than the year-ago quarter.

For 2019, Fekola's gold production is projected to be between 420,000 and 430,000 ounces (previous guidance was 400,000-410,000 ounces). Moreover, B2Gold expects to continue its strong operational and financial performance from existing mines in the current year. It envisions consolidated gold production between 935,000 and 975,000 ounces for 2019. Cash operating costs are forecast in the range of $520-$560 per ounce and AISC is predicted in the band of $835-$875 per ounce for the year. The company will focus on growth through the expansion of mines, as well as exploration and development of the existing projects while reducing debt levels.

B2Gold Corp Price and Consensus

B2Gold Corp Price and Consensus | B2Gold Corp Quote

Zacks Rank and Stocks to Consider

B2Gold currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the Basic Materials sector are Ingevity Corporation NGVT , Innospec Inc. IOSP and Materion Corporation MTRN, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ingevity has an expected earnings growth rate of 17.9% for 2019. The company’s shares have rallied 41.8%, over the past year.

Innospec has a projected earnings growth rate of 3.5% for the current year. The stock has appreciated 20.8% in a year’s time.

Materion has an estimated earnings growth rate of 12.6% for 2019. The company’s shares have gained 9.4%, in the past year.

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