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Research Note - B2Gold Corp. (BTO:TSX,$4.13|BUY $11.00 TARGET) Strong Q2 - Production Ramping in H2/22

This morning, B2Gold Corp. reported Q2/22 production results, producing 209 Koz of gold from its three operating mines in line with our estimate of 213 Koz Au. Consolidated production, including an additional attributable 15 Koz Au from Calibre, was 224 Koz Au for the quarter. Revenue for Q2 was $382M on sales of 205 Koz Au at a gold price of $1,861/oz, in line with our estimate of $391M. Q2 production was on the upper end of guidance and the Company is on track to achieve its annual guidance of 990-1,050 Koz. We note that production is heavily weighted to H2/22, where production is guided to increase by roughly 45%. We are expecting production in Q3 & Q4 to average 285 Koz Au per quarter. We are pleased with the quarter given the challenges at the Otjikoto operation where production missed our estimate. We are maintaining our BUY rating and our 12-month target price of C$11.00.

At Fekola production beat our quarterly expectation, producing 123 Koz compared to our estimate of 105 Koz. The Fekola processing plant achieved record quarterly throughput of 2.42 Mt, 8% above budget and 6% higher than Q2/21. We expect a strong H2/22 from the Fekola mine as the Company previously announced that it is going to begin mining from the Cardinal zone which has the potential to add an average of 60 Koz per year to the Fekola operation over the next 6-8 years.

On July 3rd, 2022, the ECOWAS removed the economic, financial and diplomatic sanctions imposed on Mali earlier in 2022 following the interim Malian Government’s announcements of a two-year transition until presidential elections. We note that throughout this sanction period, the Fekola Mine continued to operate normally and meet its production targets while BTO maintained a strong relationship with the government.

The Otjikoto operation produced 31 Koz in Q2/22 which was below our estimated 46 Koz. The miss was primarily due to a slower than planned ramp up in development from the Wolfshag underground, which resulted in lower than planned grade mined. BTO has appointed a new contractor and development rates in the Wolfshag mine have recovered. As a result, the 2022 annual guidance range for Otjikoto has been revised to between 165-175 Koz (previously 175-185Koz). Production is stated to be heavily weighted to the back half of the year when mining is scheduled to reach a higher-grade portion of Phase 3 of the Otjikoto Pit and production also ramps up at the Wolfshag underground mine in Q4.

Q2/22 financial results will be released after market close on Tuesday, August 3rd, 2022.

20220714 - M Partners - BTO - Q2 Prod
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