B2Gold Corp.

Ladies and gentlemen, thank you for your patience. Please do not disconnect. B2 Gold conference call will begin momentarily. Once again, please continue to stand by. Do not disconnect. The conference call will begin momentarily. Good morning and afternoon. My name is Sylvie and I will be your conference operator today. At this time, I would like to welcome everyone to B2Gold third quarter 2021 financial results conference call. Note that all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then number one on your telephone keypad. And if you would like to withdraw your question, please press star then number two. Thank you. Mr. Johnson, you may begin the conference.

Thank you, operator. Welcome everyone to our third quarter financial results call. I'm just going to see if you open your marks and pass it over to Mike Cinnamon to walk you through the financials, and then we're going to open it up to any questions. As you can see from the release, we had another strong quarter in the third quarter, and despite, once again, the challenges of COVID and some inflationary pressures on the cost side, so we're pretty... We're pleased with the results of what we're seeing with third quarter. Leaves in, as you'll hear from Mike, a very strong financial position now and going forward, being strong in cash and debt-free and looking to generate some $650 million over the year from cash operations. Mike will give you all the details on that. The focus for the company going forward will be to continue to optimize responsible, profitable gold production. And Mike will talk more about about our new guidance for a couple of the mines for Pecola and Aspati. And other things, we're going to continue to advance our development projects. Obviously, Gramalate, we're looking now at a feasibility study for the second half of next year. We've had some positive results from some of our engineering reviews so far, and we're looking at the capability to reduce capital costs, and also we're drilling away, looking to turn some more inferred into indicated so we can divide the capital potentially over time by more ounces. So we're We think that's heading in a positive direction for Gramma Latte. I think the other thing that's got us pretty excited is the potential that we're seeing from Bentaco in the Anaconda area, 20 kilometers north of Focola. And the excitement there is the ability, initially, to start hauling satellite weather material 20 kilometers from Bentaco down to the Focola Mill. The Focola Mill has been running extremely well. and it can definitely handle saccharine material because it's softer material on top of the hard rock. So we see the potential there by the second half of next year to start trucking ore. And also, of course, the other big excitement has been the cardinal discovery 500 meters from Focola on the same license as Focola. So we received a permit from the government to start mining there and are mining there, and that can add to production as well. So positive developments there in the short term. In the longer term, The Manicoto license, we continue to have very productive, successful conversations with the government of Maui to resolve that situation where we'll see, we hope in the next few months, we will see our license extended or renewed for Manicoto. And that will be an important part. We've mentioned several times that Bentaco is a separate license, so we can start tracking from there, but obviously we'd like to be drilling both of them. So extensive drilling, continuing on Bentaco with some very, very good results. And the ultimate target there is to see if we have in the sulphides below the satellite is the potential for fecola-type sulphide mineralization. We're starting to see that now in some of the recent drawing. In addition to that, we have a very substantial, aggressive but high-quality exploration budget, some $65 million. mines and you've seen some good results come basically from everywhere there from the three mines in terms of additional success from the drill bit. But we have a significant $25 million budget for grassroots this year. We've always been driven by, trying to be driven by geology more than geography, so we've ended up now with some targets we've been chasing for years in some cases and some exciting opportunities in places like Uzbekistan. We've recently seen our partner Orion release some pretty exciting results from Finland And I think there's great potential there for another discovery. We are looking at M&A opportunities. We always are looking, but I would say that we're looking at a few different opportunities that might increase our production through an accretive deal or could add another development project to what we're doing. But we feel pretty good about the pipeline if you include the anaconda potential. And, of course, you look at Gran Vellante. Those are two projects we like in the pipeline. We did announce recently a sale to West African Mining of the Kiaka project in Burkina Faso, and we thought that was a good thing to do. Corporately, we've got other things we're focusing on, plus they are established in Burkina Faso. We're happy to be a shareholder of the company and wish them all the way forward on a sizable deposit in Burkina Faso. We are happy to be shareholders of West Africa. It's not the same, but there are similarities to the deal we did with Caliber in Nicaragua in the sense that we take these assets and want to focus on other things we're doing, but we like them, so we want to be involved. And in the same case, Caliber's done a very good job in Nicaragua with the Nicaraguan assets, so we're happy shoulders there as well. So there's sort of a pattern here of the way we deal with these situations where we want to focus on what we're doing, but we want to get value back for the projects that we have and continue to give value as they're developing forward. So Once again, just as in the case of Nicaragua, all of our employees from Burkina Faso will now be among the employees of West Africa. So that's a really nice way to do these deals where you have continuity of people, their jobs are secure, and the project gets advanced. And the government of Burkina Faso, I don't blame them like every government, if there's a project that can be economically developed, they expect it to be developmentally built. And so West Africa's got a good program going forward on that. One thing to mention is is we did get a, just recently got a three-year extension on the Bentaco license, which is really quite significant in the sense that it shows our relationship with the government of Maui is very good. So that's the license immediate to the north of Minn Kota, as many of you know. But we received that very rapidly and quickly working with the government, the three-year extension that we had the right to apply for. So that's a good sign. Also, of course, we got the cardinal mining permit from the government as well. So the government relations continued very positive, and of course the government's a 20% partner in everything that we do, so as I said, we look forward to the code resolution in the very near term. I think that's all I have to say for now. I'll pass it over to Mike, and he can run you through the financials, and then we'll open it up for any questions.

Okay, thanks, Clive. So I'll start, I'll walk us through the three, the results for the quarter, some commentary on year-to-date, and then just how we see the year panning out. Firstly, on the quarter, revenues of $511 million. So that was based on the sale of 287,000 ounces at an average realized price in the quarter of $1,782. So year-to-date, our average realized price for our sales is $1,794 per ounce. So very close to that $1,800 price that we used just to put out our cash flow guidance. So that really reinforces that we're still on track there. On the production side, good production quarter. We were on a consolidated basis, including our share of Caliber. As a result, total production was 310,000 ounces, which is 21,000 ounces ahead of budget, where we thought we'd be. And the reasons for that are really the same as we've talked about in the earlier quarters in the year. Focola is still a production machine. There's higher melt going through there, closer to the 8.4 million tons annualized. so far this year versus the 7.75 million tons that we assumed in the budget. And now that FACOLA is pulling some low-grade material from the stockpiles in to fill that additional production mill feed. So we did see slightly lower grade overall going through the mill, but production is up. So for the quarter, FACOLA, 166,000 ounces. The feed budget by 10,000 ounces. Ms. Batty, 61,000 ounces in the queue, 8,000 ounces better than budget. Ms. Batty just continues to outperform the model with better grades and better recoveries than the model shows. So that's a good positive difference. Now there was, but to highlight, and we did mention it in the MD&A and the news release, we did mine slightly out of sequence at Ms. Batty for this quarter. Some of the higher grade main vein material that was originally scheduled for Q4 was mined and produced in the third quarter. So you will see some of that clawed back in the fourth quarter as we go forward. But we did, because we had that additional production and better output from the mill in the quarter, we did take the opportunity just to accelerate some mill maintenance in the queue. And Ochicoto, 69,000 ounces, 2,000 ounces ahead of budget, and it's just everything slightly better than budget. So just very solid production all around from Ochicoto. And if you translate that, look at how we did in the cost side, very positive. So consolidated, including our shearer caliber, $445 an ounce, almost exactly on budget. And so good results there. If you look at that high-level big picture, what we're seeing is that there is cost inflation across the sites just because of the environment they're in. Fuel costs are up. Some shipping costs are up. Some reagent costs are up. But at the same time, we had stronger production, better production, and that really helped to offset those additional higher costs. So we really came out pretty neutral and right on budget. For your models, if you want to know on the fuel side, it's probably up about $25 an ounce year-to-date, I would say, on fuel. But remember, we also have a fuel hedging program in place, so derivative gains have offset at least half of that, we think, as we go through the year. So we're pretty solid on fuel, I think. And then the other thing that did impact Ojikodo's results in the quarter was stronger Namibian dollar. We budgeted at $16.50 to the U.S. dollar. It's coming in somewhere around $14.50, so probably had an impact of like $45 an ounce year-to-date on those costs. But like I say, the benefit of higher production really has managed to offset most of the cost increases. So when we look at all-in sustaining costs, year-to-date consolidated again, including our share caliber, at $795 an ounce, which is just $14 over budget, so really right on budget in the scheme of things. And the story there is sort of the same. So we have cash costs that are on budget. We do have higher royalties in the quarter and year-to-date because we originally budgeted $1,700 gold, and we've come in, as I mentioned, very close to $1,800 gold so far. So royalties are higher. But that is offset by higher production, and it's also offset by the fact that some of our CAMPEX has been pushed forward into the fourth quarter. So we did have lower sustaining capital in the quarter and year-to-date, and those expenditures are really mostly as a result of timing, and we do expect them to be caught up in the fourth quarter. We're forecasting that will happen. And for the nine months, just very briefly, Commenting on the nine-month results, so production year-to-date, 699, including our share of Caliber, 743,000 ounces, so 49,000 ounces ahead of budget. And I'll comment where we're going to be for the year in a second, but very solid and for the same reasons I described for the quarter. And then on the cost side for that production, so cash cost per ounce produced, $556 an ounce, consolidated, including share of calibre, which is $14 less than budget, so right on budget for the same reasons as the quarter. And then all in sustaining costs, $900 consolidated per ounce sold, including our share of calibre, and that's $45 lower than budget. And the reason for that $45 lower than budget really is mainly just the timing of CapEx. So where are we for the year? We did put out some revised production guidance for the year based on where we are today. So our original consolidated dated guidance, including share caliber, was 970,000 to a million and 30,000 ounces. We've bumped that up now to a million and 15,000 ounces, between a million and 15,000 ounces and a million and 55,000 ounces. And the bumps came with Focola. The low range of the guidance was previously 530. We've now bumped it up to between 560 and 570,000 ounces, just because Focola's performed so well. And then Mizbati also, because we had we've outperformed in the year. Originally 200,000 to 210,000 ounces, we bumped that up to 215,000 to 225,000. Now remember, though, that part of that big outperform in Q3 was some of that mining out of sequence, so we will see a little bit of that clawed back in the year, in the fourth quarter. And so that's why we end up with a guidance range for this value, 215,000 to 225,000. Then when we looked at the cost side of things, we looked at our overall guidance ranges and what we see based on what I mentioned about some cost inflation but offset by higher production and the benefit of some derivative gains, is that we think for cash costs, we're going to come in within our overall guidance range for the year of $500 to $540 per ounce. If you look at the individual sites in there, FACOA will probably come in at the upper end of that just because it's putting lower grade material through higher volumes of low grade material. But the other two sites we think will be certainly just right in the middle of their ranges. And then on the all-in sustaining cost side, again, our original guidance was $870 to $910 per ounce. These are including our share of caliber. We still think we'll be in that range, but we think we'll be on a consolidated basis at the upper end of the guidance. And that has some offsetting factors in it. For FACOLA, we think we'll be at the upper end of the all-in guidance range that we gave, again, because of the nature of the low-grade material going through. At Miss Batty, we think we may be at or below the low end of the range just because of the production beat we have to date. And Ojikoto, just depending on the timing of sales as we go through the end of the year, we may be at or slightly above the upper end of the guidance range. But overall, for all unsustaining costs, we think we'll be at the upper end of the range. We think that's a pretty good testament, I think, to a very good testament reflection of how well the sites have performed because we are in an inflationary cost environment. And I think you've seen that across the reporting that's going out across the industry right now. But even despite of that, and because of the production that we've managed to pull forward and be against budget, we think we're going to meet those ranges. Maybe give a few other thoughts just on where we are. Just general comments on some of the operations as well, just as we go through. So for COLA, just to remind you that the mill really is performing so well now. And we've said that we expect it to be somewhere in the $8.3 million, maybe $8.4 million. million tons range annualized for 2021. And as we go over a life of mine long term, including feeding some separately material through the mill, we might think we may be able to manage 9 million tons per annum for Focola. Reminder to you that we now started pulling Cardinal into the mine plan. We started developing that Q3 and we've got some production now coming from Cardinal. We did get permitted to do that as part of the overall Well, it's really as part of the overall FACOLA permit, but we got our environmental assessment done and approved by the authority. So we think Cardinal, over the longer term, can benefit the overall production of FACOLA somewhere around 60,000 ounces a year for the next six to eight years, based on the resource that we've built, the inferred resources that we've built there already. FACOLA solar plant, just to remind you too, that that is now complete, up and running, and really the overall benefit of that is that it allows us to to hold back some of the spending reserves that we have with our gen sets there. And the net impact on costs overall has probably managed to reduce Focola's overall cash cost by about 3%, because it reduces the cost of our power cost for milling. From Ochicoto, the Wolf's Shag Underground continues and is still scheduled to get in and get some ore from that underground development by the end of Q1 next year. Work in Gramalati continues. Work continues on the feasibility both to drill out some of the remaining inferreds at the site and also to update the engineering and look at the revised permitting required to move that project forward. We're still expecting to have an update on new feasibility studies sometime around the middle of next year. And then Burkina Faso, as Clive alluded to, that's In the period, we sold our 81% interest in the Kayaka project, so we've signed a deal, and that deal is expected to close right about the end of November. And in conjunction with that, we also updated the previous deal that we had to sell West Africa our interest in the Tuega project. So for Kayaka, the consideration for that deal is that we expect to get $45 million in half-cash, half-shares. in West Africa on closing, which is, as I said, expected by the end of November. Then another $45 million cash or shares at our option sometime next year, certainly no later than a year from when we close the deal. And then we retain our interest as well as any shares that we might take by retaining our royalty in the project. So our share, 2.7% royalty on the first 2.5 million ounces produced from Kiaka and then 0.45% royalty for the next 1.5 million ounces produced. And then just to remind you, too, that in conjunction with revising that Toowega deal, with the closing of that deal, then there is another $9 million tranche, original option payment that will be due now, with closing the deal at the end of November when the deal closes as well. So we can expect to see that in Q3. And maybe just on the earnings side, Gap earnings, $0.12 per share. Our share adjusted for the quarter, $0.12 per share as well. And year-to-date, our share gap earnings, $0.27 per share, and our share adjusted EPS, $0.26 per share. And a couple of comments on the cash flow statement. So we had an excellent quarter for generating operating cash flow in the period, $320 million, which would certainly be our expectations. And that translated to $0.30 per share operating cash flow. And that beat is in part due to the fact that we produced and sold more ounces than we'd originally forecast, which was great. Gold price behaved itself for us during the quarter. And we also had the benefit of some working capital movement changes that went through there that actually benefited cash flow. So in the end, $320 million for the quarter. Now, we had guided before that for the half year. For 2021, the second half, we do somewhere around $500 million. We bumped that slightly in our guidance that we put out there. At the end of this quarter, we're now seeing somewhere around $510 million for the half year. So you can expect somewhere between $190 million, $200 million operating cash flow, therefore, for Q4. As we claw back some of those working capital changes that we benefited from in Q3, and we make some year-end tax payments that are required. Our total cash tax guidance, $380 million for the full year, remains unchanged. So I'll just remind you of that. On the investing side, for the quarter, we were only probably about $6 million under budget, with some pluses and minuses across the sites. I will say that for the year to date, on the investing side, just over $200 million. We're probably about $35 million under budget. As I mentioned in discussing the all-in costs, we are behind in some of the sustaining CAMPECs. through the piece, and we haven't spent as much as originally budgeted yet on summaries like expiration. But we do expect that we're going to catch up those CapEx costs by the end of the year. So what we've guided overall for CapEx, if you look in the MD&A, we've given you some guidance there. For sustaining CapEx, we're probably going to be about $10 million over all in for the year, which is fractional based on the total sustaining CapEx that we have. And then for non-sustaining, probably also about $10 million over budget overall for the year. But the main component of that being just some cost for Cardinal, some development and fleet cost for Cardinal, which weren't originally budgeted because we didn't have Cardinal in the original budget. We paid dividend in the quarter of the $0.04 per share U.S. and annualized $0.16 per share, which still puts us up somewhere, you know, 3.7 to 4%. Over the piece dividend yield, which is still one of the highest in the industry. And we still are maintaining the line there and our intent is to keep paying at that level. And then the quarter, we ended the quarter with $546 million in the bank. So very solid. And we've still got $600 million available on the revolver. And none of that's drawn right now. So I think those are the highlights, just what I wanted to emphasize. So just as a reminder, too, the operating cash flow for the year, we think we're going to come in around $650 million. We had originally guided $630 million, but with the better beat that we have so far on the production and revenues, offset by some higher costs, at least the inflationary costs through the year, we think overall we're going to come in somewhere around $650 million for operating cash flow, with approximately $190 to $200 million of IMQ for it. And that's my update.