Reports a 20% Increase in Gold Production; Cash Operating Costs $51 Per Ounce Below Budget.
New Otjikoto Mine Continues to Beat Expectations.
Vancouver, May 15, 2015 – B2Gold Corp. (TSX: BTO, NYSE MKT: BTG, NSX: B2G) (“B2Gold” or
the “Company”) reports its operational and financial results for the first quarter of 2015. The Company
previously released its gold production and revenue for the first quarter of 2015 (see news release dated
03/12/15). All dollar figures are in United States dollars unless otherwise indicated.
2015 First Quarter Highlights
Record quarterly consolidated gold production of 115,859 ounces (including 18,815 ounces of precommercial
production from Otjikoto), 20% greater than in the same period in 2014
Record gold sales of 114,799 ounces (or 133,265 ounces including 18,466 ounces of pre-commercial
production sales from Otjikoto)
Gold revenue of $138.9 million (or a record of $162 million including $23.1 million of precommercial
production sales from Otjikoto)
Consolidated cash operating costs of $701 per ounce, $51 per ounce or 7% below budget, and all-in sustaining costs of $1,091 per ounce
Cash flow from operating activities of $58.7 million ($0.06 per share)
Strong cash position of $128.2 million at quarter-end
New Otjikoto Mine in Namibia successfully transitioned into production, achieving commercial production one month ahead of schedule on February 28, 2015
Otjikoto mill expansion from 2.5 million tonnes per year to 3.0 million tonnes per year remains on schedule, expecting to increase gold production starting in September 2015
Company is on track to meet its 2015 guidance of 500,000 to 540,000 ounces of gold production at cash operating costs between $630 to $660 per ounce and all-in sustaining costs between $950 and $1,025 per ounce
In Mali, Fekola Project feasibility study is well underway with completion expected by June 2015;
Road construction and site earthworks commenced in February 2015
2015 First Quarter Operational Results Consolidated gold production in the first quarter of 2015 was a record 115,859 ounces (including 18,815 ounces of pre-commercial production from Otjikoto), exceeding budget by 754 ounces and 20% greater than in the same period last year. The increased gold production was primarily attributable to the successful production start at Otjikoto. On February 28, 2015, the new Otjikoto Mine in Namibia
achieved commercial production, one month ahead of schedule, after a strong start-up following its first gold pour on December 11, 2014. For accounting purposes, gold revenue earned net of related production
costs from the sale of pre-commercial production were credited to Otjikoto’s mineral property development costs prior to commercial production. Gold production at the Company’s Masbate Mine in the Philippines and La Libertad and Limon Mines in Nicaragua were approximately in-line with budget.
As previously reported, 2015 consolidated gold production is anticipated to be weighted to the second half of the year.
In the first quarter of 2015, consolidated cash operating costs were $701 per ounce, $51 per ounce or 7% below budget. The favourable variance reflects the successful start-up of the low-cost Otjikoto Mine and lower costs for fuel/diesel and cost savings at both the Masbate and Limon mines. Consolidated cash operating costs are forecast to be significantly lower in the second half of 2015 compared to the first half of the year (as gold production increases) and average between $630 to $660 per ounce for the full-year.
All-in sustaining cash costs for the first quarter of 2015 were $1,091 per ounce.
B2Gold is projecting another record year for gold production in 2015. Company-wide production in 2015 from the newly constructed Otjikoto Mine, and the Masbate, La Libertad and Limon Mines is expected to
be in the range of 500,000 to 540,000 ounces of gold (including pre-commercial production from Otjikoto), an increase of approximately 35% over 2014 production. Consolidated cash operating costs are
expected to be in the range of $630 to $660 per ounce, compared to $680 per ounce in 2014. The substantial increase in the Company’s consolidated gold production and reduction in consolidated cash
operating costs per ounce reflect the positive impact of new production from the Company’s low-cost Otjikoto Mine. For the first half of 2015, consolidated gold production is expected to be in the range of
225,000 to 245,000 ounces and increasing to 275,000 to 295,000 ounces in the second half of the year, due to a number of factors including the continued ramp-up of gold production at Otjikoto and higher
forecast grades for the Masbate and Libertad mines in the second half of the year.
2015 First Quarter Financial Results
For the first quarter of 2015, the Company generated (GAAP) net income of $6.3 million ($0.01 per share) compared to a net loss of $24 million (negative $0.04 per share) in the same period last year. The net loss in the first quarter of 2014 included a non-cash mark-to-market loss of $38.3 million relating to the overall change in fair value of the Company’s convertible senior subordinated notes issued on August 23, 2013. The convertible notes are measured at fair value on each financial reporting period-end date.
Adjusted net income was $10.9 million ($0.01 per share) in the first quarter of 2015 compared to $17.2 million ($0.03 per share) in the first quarter of 2014.
Consolidated gold revenue for the first quarter of 2015 was $138.9 million (or a record of $162 million including $23.1 million of pre-commercial production sales from Otjikoto) on record sales of 114,799 ounces (or 133,265 ounces including 18,466 ounces of pre-commercial production sales from Otjikoto) at
an average price of $1,210 per ounce compared to $129 million on sales of 98,995 ounces at an average price of $1,303 per ounce in the 2014 first quarter. The 8% increase in gold revenue was mainly
attributable to a 16% increase in gold sales volume, partially offset by an approximately 8% decline in the average realized gold price.
Cash flow from operating activities was $58.7 million ($0.06 per share) in the first quarter of 2015 compared to $18.4 million ($0.03 per share) in the first quarter of 2014. Cash flow from operations in the
current quarter increased by $40.3 million, mainly due to a $37.7 million positive change in working capital in the quarter. The main changes in working capital related to value-added and other tax receivables and inventories.
Cash flow from operating activities before changes in working capital increased to $44.9 million ($0.05 per share) from $44 million in the first quarter of 2014, despite an 8% decline in the average realized gold
price, reflecting the continued strong operational performance of the Company’s mines, and most significantly the addition of the low cost Otjikoto Mine.
Liquidity and Capital Resources
At March 31, 2015, the Company remained in a strong financial position with cash and cash equivalents of $128.2 million and working capital of $143.4 million. In 2015, the Company's cash from operations is expected to increase significantly due to gold production from the new Otjikoto Mine.
Regarding financing the construction of the Fekola Project, discussions with the Company’s lenders are ongoing and the Company expects to complete an updated revolving credit facility to increase the available credit facility from $200 million to approximately $400 million range in the second quarter.
Coupled with the Company’s substantial operating cash flows, the Company expects that the updated facility will be sufficient to fund its budgeted capital expenditures over the next three years, including Fekola construction costs.
At March 31, 2015, the Company had available a $200 million Senior Credit Facility of which $125 million had been utilized, leaving $75 million available for further borrowings. The Company also has a
$40.9 million Otjikoto equipment loan facility available (based on current foreign exchange rates), of which $34.4 million had been drawn down as at March 31, 2015.
For the three months ended March 31, 2015, resource property expenditures totaled $56.9 million with the
most significant components being Fekola Project development costs of $18.5 million and Otjikoto Mine net capital expenditures of $13.5 million. Strong operating cash flows for the first quarter of 2015 of
$58.7 million were used to fund the Company’s capital expenditure needs.
Operations
Otjikoto Mine, Namibia
The new Otjikoto Mine achieved commercial production on February 28, 2015. In its first month of commercial production, in March, the Otjikoto Mine produced 12,319 ounces of gold, exceeding budget by 355 ounces. The average daily mill throughput was 7,668 tonnes of ore per day (compared to budget of
6,855 tonnes) with mill recoveries averaging 98.6% (compared to budget of 95.9%). The average gold grade processed was 1.65 grams per tonne (“g/t”) compared to budget of 1.83 g/t. The processed gold
grade continues to increase towards budget as the mine optimizes mining grade control and continues to fine tune the new on-site assay lab. This improvement is expected to continue as the mine gets below the
complex upper oxide portion of the orebody and reaches primary ore.
In April (subsequent to the first quarter), Otjikoto continued to beat expectations. Otjikoto produced 13,414 ounces of gold, 21% higher than budget of 11,078 ounces. In addition, gold grades milled averaged 1.77 g/t, exceeding budget of 1.74 g/t.
Otjikoto’s cash operating costs for the first month of commercial production were $477 per ounce, $64 per ounce or 12% below budget. Mining costs were positively impacted by lower than budgeted maintenance work on heavy mobile equipment and lower in-pit drilling costs. Mining and processing
costs were also positively impacted by lower diesel and gasoline prices (13% lower than budget) and lower heavy fuel oil prices (6% lower than budget). Cash operating costs were also positively impacted by a 7% weaker than budgeted Namibian dollar relative to the United States dollar.
Net capital expenditures in the first quarter of 2015 totaled $13.5 million (on a cash basis), mainlym consisting of $6.3 million for the mill expansion and $14.3 million for development costs, partially offset by positive net cash proceeds of $7.1 million (pre-commercial gold sales less pre-commercial production
costs). The development costs of $14.3 million included payments of $8.1 million which had been accrued and included in liabilities as at December 31, 2014.
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