B2Gold Corp.

Good afternoon. My name is Colin and I'll be your conference operator today. At this time, I'd like to welcome everyone to the B2 Gold second quarter 2021 financial results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there'll be a question and answer session. If you'd like to ask a question during this time, simply press star then the number one on your telephone keypad. If you'd like to withdraw your question, please press star followed by two. Thank you. Mr. Johnson, you may begin your conference.

Thanks, operator. Thanks, everyone, for joining us. As the operator said, we're here today to talk about our financial results from a strong Q2 of 2021 and continued strong gold production performance above budget, and we are on track to meet or exceed the upper end of our annual production guidance range, which sits between 970,000 ounces per of gold to 1.030 million ounces of gold. I'm just going to give a couple of remarks in the front, and Mike's going to walk us through the key financial results. We put out a pretty extensive news release talking about the results of the quarter and also where we sit financially overall, but also updating you on a few other issues. The three mines continue to produce well. I think as we've signaled very early and very often, that the second quarter of this year was the first half of the year was going to be lower production and the production weighted to the second half of the year and the second quarter this year we knew was going to be the weaker quarter on the financial results basis which hopefully we signaled that very well to the market. That's all we're seeing the reality of that. We're also seeing a positive start to the second half of the year. In terms of overview, we'll hear that the three mines continue to operate very well. They've worked very hard and diligently through the COVID experience with our local communities, our employees, and the governments in the areas we work. We're very proud of the contribution from everyone, and I think that we really showed off the amount of social license and trust we have in the places that we work and that we were able to collaborate very early on in the mutual trust relationship to ensure that we could continue to mine, which is critical in the countries we're in for the economy, but continue to mine, but only if we could do it. So I'm proud of the contribution from all of our employees and people. So in terms of looking forward a little bit, I'm talking about some of the catalysts going forward. I'll touch on that now for those that don't make it through the whole call. But at the end of the day, as I said, we're on guidance to meet the year. But that does not include a couple of upside potentials as well. We have the Cardinal zone, which is adjacent to the FACOLA deposit. And we've already done a bulk test, and we're looking to start moving over from Cardinal to some good grade material from Cardinal through the Focola Mill, which is not included in any of our projections. So that could bump up production there. And then looking a little bit further out, we are looking at the Anaconda area, which consists of Minnokoto and Bentaco. As we all know, we're currently in a dispute with the government over the ownership of the Minnokoto license. We continue discussions with the government looking to solutions. We believe we have a legal right to an extension to that exploration license where we've spent $27 million and have identified a significant resource that has potential to get larger and can be tracked down potentially to the Focola Mill. But importantly, the Anaconda area is really these two licenses, and the Bataco North, just immediately north of Minnokoto, has a significant amount of saprolite weather material at surface with good grades. That's actually where we would start mining the Anaconda area, and that's the license that is not under dispute. So we're looking potentially subject to a Subject to the final mine plan and the permit working with the government is our partner there as in Ficola as well. We'll be looking to start shipping more potentially to separate it or down to the Ficola mill. And then as early as the second half of, starting in the second half, early second half of next year. The Ficola mill, we talked about in the news release, but we've had spectacular performance in the mill from when we first constructed it and through the two expansions of the mill and we're getting some very good tonnage throughput. So that's another upside. given the projections we've made for tonnage throughput, given the reality of what we're seeing. If that continues through the year, that's another potential positive upside. And the Sapper Lake, really because of its weathered nature material, can run through the mill on top of the normal capacity for the mill. So there's some upside scenarios there. The overall picture of the Anaconda area, we think there's tremendous exploration upside in Minnetonka and in Bentanco and continue to in Bentanco while we resolve, hopefully positively resolve and get on with business in Minnetonka. In terms of that scenario, I just want to comment that Mali's been a very good place to do business for GoMoney for many years, as Rango, now Barrick, and Atestu, and other companies, including ourselves. So we expect to resolve this current situation and get back to exploring the Minn Kota on behalf of our partners, the government, and the people of Mali, and creating jobs in the short term. But in the meantime, we'll go ahead with Bintaco, as we would have started there anyway. But we think Mali's a good place to be in the GoMoney business. We still believe that, and we believe that the government will continue to honor the laws as it has for decades, making it an attractive place for foreign investment in gold mining. Other than that, the Gramalati project, everyone knows we decided to delay the feasibility study there to do some additional work on engineering, looking at some different concepts there to lower the, ostensibly to look to lower the capital cost. Looks like we're getting some traction there from some of the early indications from the engineers. And also we're doing additional drilling on the Gramalati switch itself, but also on the two other areas, Trinidad and Mohas West, and getting some interesting early results from Trinidad, which has been a low-grade zone that might have added my life back in the day. Now we're seeing some potentially a bit higher grade there. We'll see how that pans out. So we're now looking at, because of COVID-related delays, and getting going on the drilling and adding some more additional drilling to the program for the Gramalate area, we're looking at hopefully early in the second quarter now for the release of the new feasibility study. So we're optimistic that Gramalate can we can improve the project through some of the initiatives we have going on, and we'll be able to talk about that as I said earlier in the second quarter. Other than that, we've got a very active exploration program going around. Many targets around the world, things we've been working on, in some cases for years, to get opportunities like Uzbekistan where we're drilling, exciting targets in Finland, and of course all of our various brownfield exploration programs around the mines where we've had great success over the years, continuing to add ounces, and therefore mine life to our operating minds. So exploration will continue to be an important part of our growth profile. The Ikeaka project in Burkina Faso, we are updating the feasibility study there and we're considering various alternatives to unlock the value of that for our shareholders. M&A, we're looking, definitely we're always looking at opportunities. We don't see a ton of things that we really love out there that we think are fair value. We'll continue to look and look for opportunities. But for instance, to M&A, it's more likely we'll find some different situation where somehow bringing our expertise to bear with the opportunity that may suit us that may not suit other companies. It's going to be a pretty competitive environment for M&A. And we'll continue to look at that and look at opportunities, but very selectively. We're not going to start overpaying for assets now we never have before. So with that, I think I'll general overview, pass it over to Mike, and he'll tell you about the financial position we find ourselves in, continuing to pay a very robust dividend, one of the highest dividend yields in the gold sector. and talk about our strong cash position and our lack of debt and continued financial strength looking into the future. So with that, I'll pass it over to Mike Cinnamon to give us an update. We also have the entire B2Gold executive team on the line available to answer questions after Mike's given his presentation. So over to you, Mike.

Thanks, Clive. And good morning, everybody. So I'm just going to run through the quarterly results, quick comment on the year to date, and then sort of where we are cash flow-wise and balance sheet-wise. So firstly, on the quarter, for the second quarter, we had $363 million in revenues. That's from the sale of 200,000 ounces at an average price of $1,814 per ounce. So gold still holding its own, as everyone's seen in the quarter. It's a bit range-bound around that $1,800 mark, but certainly holding its own. And when we gave guidance on cash flows for the year, set to right at the start of the year, we actually used $1,800 gold. So right in that ballpark of where we thought when we were budgeting and giving guidance to everyone. Sales were 12,000 ounces higher than budget in the queue, and that's really a function of the overproduction at the sites. So turning to that production for the quarter, so consolidated and including our share of Caliber, production was 212,000 ounces, which is basically 10,000 ounces higher than budget. And that came really from outperformance from each of our sites. Focola, same kind of story as the first quarter. The throughput of the mill continues to outperform even our expectations. We did budget 7.75 million tons annualized throughput for the newly expanded Focola mill, but even in Q1 we did 2.29 million tons, so well in excess of what we budgeted. That's a combination of a few things. favorable over fragmentation and hardness and optimizing the grinding circuit. But it's all very promising. What we did see in the queue was that to feed some of that excess production, more than we thought we'd have, we did use some low-grade stockpiles, which provided that sort of additional unbudgeted mill feed. And that did lead to a slightly lower grade in the queue as a result. But overall for COLA, 114,000 ounces, or 4,000 ounces ahead of budget. Then Ms. Batty, 57,000 ounces production for the quarter, again, 4,000 ounces ahead of budget. And same story for Ms. Batty as we saw in Q1. Mill recovery has continued to outperform our model and process great from our transitional ore and main vein where we're working right now was above budget. We did actually have time in the queue to run a couple of metallurgical test campaigns. just to try and help us optimize our recoveries as we move forward into the harder ore later in the mine's life. And what we found from one of the test campaigns involved high-grade ore from the main vein pit. So even though we had a bit of a downturn in throughput because of the campaign, we actually improved grade overall because of some of the tests that we ran. So overall, Ms. Batty running very well and still beating the model on recoveries and grade. And Ojikodo, 27,000 ounces, and that's 2,000 ounces ahead of budget. And really, as you know, and as we guided, I think, in the budget all the way through the year so far, a lot of the production from Ojikodo, or a majority of it, was coming from stockpiles in the first half. And then Ojikodo, as we get into the mining, the higher grade in both Woolshag and Ojikodo pit in the second half of the year, we're going to see a real upturn, I think, in the production from that mine. But in Q2, even when we mined from the sort of medium-grade stockpiles, the grade that we actually got was actually better than model, so we saw a beat overall in the numbers for Ochicota. So when you translate that into cash costs, and this is on a per-ounce produced basis, overall, across all our sites, and including our share caliber, we're basically right on budget, $664 an ounce. against the budget of 662. But there were some offsetting factors in there, offsetting sites. So Focola was $617 an ounce. Now that was just over $70 an ounce higher than budget, but that's primarily a function of a couple of things. The first one, the main one, is that we were running that lower grade material through the mill to feed the excess throughput. So lower grade leads to higher costs overall per ounce. And then we did see some... higher cost in terms of higher than budget fuel prices, and we've seen that across all operations, and I'm sure you're hearing the same thing from all mining operations. But even with that, we still managed to overall on a consolidated basis to come in right on budget. So offsetting the FACOLA, higher cost misbatty was $616 an ounce produced, which is over $80 lower than budget. That's primarily a function of higher than budgeted production with generally online budgeted operating costs, although again, fuel was higher at Mesbadi site. And then Ochocoto, $854 an ounce, again, just over $80 an ounce lower than budget, and same kind of story, higher than budgeted production, slightly higher fuel costs, and stronger than maybe a dollar, but that was also offset by higher than budgeted prescripts, so we saw some more costs capitalized as part of that prescript. So overall, right on budget for the Q, consolidated for cash costs, All ends, we were overall, a consolidated basis, $30 an ounce lower. That's a function, as always, of what happened with the cash cost in the queue, and also lower than budgeted sustaining capex is the primary reason that there's a beat on budget there. And most of that, or all of that, really is timing related. The main part that wasn't incurred on the sustaining capital side relates to, I guess, fleet, fleet rebuilds and stripping. mainly at Focola and Uchikoto, and we do expect to see that reverse in the second half of the year. But overall, $30 per ounce, lower than budget on a consolidated basis. And just quick commentary on year-to-date. So year-to-date on production, we're 29,000 ounce ahead of budget, so really reflecting a very good first and second quarter that we had. And as Clive mentioned, I think he gave a good outline of some of what we don't have in our guidance right now relates to what we can get from Cardinal as we move into Q3. We expect it to come online at some point in Q3 and later in the year, and also the higher production that's going through the Focola mill right now. So I think the engineers are working on those numbers so that we can try and factor them in. So right now, they weren't included in the guidance that we put out for the year, the budgeted guidance. We do think that there's definitely a chance that we could beat the high end of our production range when that's factored in, so we expect to be able to give you a bit more Color on that as we move into Q3 as part of the Q3 reporting. And then just a comment on the cash costs and the all-in costs for the year. So on a cash cost basis for the six months, we're $26 lower than budget. That really reflects the, you know, although we may have some cost inflation, cost pressures across the sites, we're beating it on the production side. So overall, we're below budget there. And all-in sustaining costs were $88 below budget. Again, a function of those better cash costs and some of this deferred capex. We're also seeing, on the all-in sustained cost side, we're also seeing the benefit of some fuel hedging that we've done. So as I mentioned, there were some higher fuel costs in the period, but we've had a hedging program for quite a few years now where we hedge 50% of the next 12 months and 25% of the subsequent 12 months on fuel basis. Those hedges right now at the end of the quarter were about $18 million. in the positives, and we're seeing the boundaries of those hedging gains when you look at the all-in sustaining costs because they're factored in there. So, guidance-wise, like we say, at or above the high-end overproduction range of 970,000 to 1030,000 ounces for the year. Haven't re-guided on the costs, still expecting to meet or be within the ranges for our costs overall. Again, once we see the updated production numbers for Q3, we'll have a better idea of how that may impact any of the cost per ounce parameters. Just a couple other comments maybe on the operations themselves. Clive mentioned FACOLA and what's going on there and Cardinal. FACOLA Solar Plant also came fully online in the queue. The construction of the plant is complete. We're still working on a few commissioning things, but really it's there. and it's expected to reduce FACOLA's HFO consumption by over 13 million liters of HFO per year. We've already seen solar be very successful in Namibia, and now we're seeing the benefit of it in FACOLA. Manicoto, I think Claire's already given you an overview on that. Then just to comment on Ochocoto, development of Wolfshag, the underground line continues. We've got the portal developments completed, and now We're working on the primary underground ramp and we hope to get into spillboard production sometime in early 2022 as was forecast. Maybe just a couple of comments on some P&L items that don't fall automatically out of some of the production stats that we talked about. G&A is up a little bit in the queue and that's really Primarily, it's a function of two things, the increase in insurance costs. The whole industry is seeing insurance costs go up, unfortunately. That's just a fact of life. And part of that comes with higher gold prices because you have higher values and BI numbers to deal with. And then some of it's just ongoing higher COVID costs as you manage the sort of COVID protocols at sites. Just pointing out, the gains in derivative instruments, the $9 million for the Q and $17 for the year, that's fuel. Almost all of that is fuel, and that's just the positive gains on some of the hedges that we have in place. Taxes, $50 million for the Q, CIT withholding. We're going to see higher taxes now as we're profitable at all sites and with these higher gold prices. The one thing that's in there that you're gonna see on an ongoing basis now, there was 18 million in there for withholding tax, mostly for FACOLA and mostly related to dividends as we pull money up from the sites. The loans at all sites have been repaid some time ago, and now monies that are pulled up from sites repatriated via dividends. So again, it's a function of being profitable and successful, but you're gonna see some higher taxes there because of withholdings on dividends. Overall earnings. For the period earnings per share, unadjusted $0.07, adjusted EPS $0.05, and then for the six months, EPS $0.15 per share and adjusted $0.14 per share. The adjustments are primarily to remove unrealized derivative gains and DIT charges and credits. Okay, and then just finally we just wanted to mention our comments on a few items in the cash flow. You know, we've spent a lot of time certainly trying to guide over the last couple of periods or few quarters as to how we see cash flow unwind through this year. So it is definitely a tale of two halves this year. You know, we had around about $140 million in Q1, and we expect about half a billion in Q2. So overall for the year, we expect about $630 million. That's what we guided at $1,800 gold, and we expect certainly to come in at that or close to that. So that guidance is unchanged. But what it did mean is that we had basically breakeven or just actually a slight cash outflow of $8 million for the quarter for operating activities for Q2. And as guided frequently, that really relates mainly to working capital changes. And the biggest component of that is payment of last year's tax obligations, most of which relate to Mali. So paying off the Mali tax obligations and the government dividend, which is due in the June following the next year. So 2020 government dividend, ordinary dividend for Mali was paid in the second quarter of 2021. So a significant outflow there, but right as planned. I think when we look at what we got at the end of Q1, we couldn't really be any closer for this queue, I think, how we turned out. So we're feeling very positive about the second half of the year, and now that the sites are getting into the battery grade ore, both Namibia and Focola, we expect to see a significant upturn in that operating cash flow as we go through the next few quarters. A couple other comments, maybe dividend paid. We paid, as Clive mentioned, we paid $0.04 per share again in the queue. Our dividend yield is somewhere just under 4%, so it's still right up there in terms and we feel very comfortable maintaining that level of dividend. Distributions to non-controlling interests, you'll see in the cash flow, $7 million outflow for the Q, $9 million for the year. That's, again, a function of profitability, so those are related payments to minority interest partners, both Mali, where the government has a 10% dividend interest, and then in Namibia, where we have a 10% minority interest partner for Ojikoto. And finally, just to comment on investing activity, so $66 million for the quarter, $125 million cash outflow year-to-date. We're about $30 million lower than budget for the year-to-date number, and about $5 million of that relates to sustaining CapEx, so mostly stripping that we'll see roll over into next year, and then non-sustaining There's about $24 million behind a non-sustaining right now. $9 million of that relates to Gramalati. That's just a timing thing. We're certainly doing a lot of work there now, and I think we'll catch up those costs very quickly. And in fact, we're just in the process of finalizing Gramalati's revised budget for 2021 with our partners, AGA. We just have to have that formally approved now in the joint venture meeting that's going to happen next week. So the new budget there, is $69 million. That's an increase from the $52 million that we had originally in the budget and our share is roughly $9 million of that additional for the year. And then we also expect to agree on an updated amount for the early part of next year. Right now it's estimated to be about $17 million to get us right through to final completion of the feasibility study for Gramalate. That revised look at that feasibility study and how we think we want to approach it there. So, we think now the groundwater feasibility study will be done sometime in Q2 next year. It's pushed out slightly from Q1 as a result of more drilling that we've now agreed with AGA that we're going to do at Trinidad and Monash and also just ongoing COVID restrictions in Columbia, which haven't stopped us from doing work, but just makes it a little slower than we had planned. So like I said, on that CapEx side, that $30 million that we're under for year-to-date, we do expect to see that reverse and flow through the second half of the year. Oh, sorry, I should mention, the other thing on the non-sustaining CapEx that was under, it's about $11 million for exploration that hasn't been spent yet, but we've definitely got the plans and the teams assembled and working now at various sites, so we expect to catch that exploration underspend up in the second part of the year. That leaves us at the end of the queue with $382 million in the bank. And like I say, waiting for the big cash flow part of the year to come now in the second half of the year, approximately half a billion from cash flow from operations to flow through. And we've got the line undrawn. We've got a $600 million line revolver sitting with our syndicated banks that's undrawn. So liquidity-wise, we're in excellent shape. And that concludes my remarks. on the financial side of the quarter. Back to you, Clay.