B2Gold Corp.

Good afternoon, my name is Pam and I will be your conference operator today. At this time, I'd like to welcome everyone to the B2 Gold fourth quarter and year end 2021 financial results conference call. 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'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 for joining us. We're here, as the operator said, to report on the fourth quarter of 2021 and the year-end results for 2021 financial results. We had, as the news release indicates, we had another very strong quarter and year in 2021, ending up in a very strong cash position. Our costs were in good shape and we're pleased with those results and I think are well-positioned to continue with our responsible mining from all of our sites and also continue to push to grow the company. We'll talk about that as well. So we're going to keep it pretty brief in terms of the presentation side and then open it up for all of your questions. I'm going to turn it over now to Mike Cinnamon who's going to talk you through the highlights of the financial results and then I'll come back on and talk a little bit about perhaps outlook and where we see ourselves going. And then we'll open up to questions. We've got the whole B2Gold team, mostly in the office in Vancouver, and some on the phone as well. So we'll be happy to take your calls after the presentation. Thank you. Over to you, Mike.

Thanks, Clay. So I'm going to talk about the quarter and then the full year, and then I'll have a brief comment on the budget guidance that we already put out in a separate release, but reiterated in this next release. Firstly, for the quarter, gold revenue for Q4 was $526 million. So that was still 292,000 ounces, an average price of $1,800 per ounce. So the gold price pretty much averaged for the quarter and for the full year. In fact, where we thought it would when we put out our cash flow guidance at the start of the year, which is remarkable in a year where it bounced up and down. But obviously now we're seeing it at $1,900 an ounce with this Ukrainian crisis. So prospects for gold sales are good. We're currently selling into those higher prices. Production-wise, consolidated production was 305,000 ounces for the quarter, and that includes our share of Calibre's production. Pretty much on budget, just slightly over 2,000 ounces over budget. From our minds, Focola, 164,000 ounces. That was 4,000 ounces ahead of budget. Focola through the quarter and for a full year is the same story we've talked about already. all year, just higher throughput than we thought. I think we averaged over 9 million tons this year, which is remarkable. We budgeted 7.75 for this year, so averaged over 9 million tons throughput, and that was partially offset by lower recoveries from lower grade stockpile material that we put through the mill to feed that throughput. Ms. Batty, 47,000 ounces, that was 5,000 ounces lower than budget, but if you recall, In Q3, we'd already indicated that Ms. Batty actually mined out of sequence. It mined some of the higher-grade main vein material in Q3 that was budgeted for Q4. So we thought in Q4 we'd probably give back about 10,000 ounces of Ms. Batty, but in the end, we only gave back five, so Ms. Batty actually performed a little better than we thought it would at the end of Q3. And then Ojukoto, 79,000 ounces, just 1,000 ounces over budget. And Ojukoto, just bowling along, it's pretty much everything is on budget or better than budget. Recoveries for the Q are actually 99%, so pretty remarkable there. In terms of what that meant for cash costs and all unsustaining costs, for cash costs produced, consolidated, $484 an ounce. That was $79 higher than budget, and that kind of reflected what we thought we'd see in Q4. Impacted by inflationary pressures, as I think all mines have seen, inflation on higher fuel, reagent and fuel costs, and stronger local currencies, particularly in Namibia, where the Namibian dollar was fairly strong. By site, Focola was $379 an ounce produced, $60 higher than budget. Masbati, $952 an ounce, which was over $300 higher than budget. Masbati, in particular, experienced higher inflation in terms of the fuel prices in the fourth quarter, and also it had Slightly lower production, as I mentioned already, than was originally budgeted, so that contributed to that overall higher cash cost from Ms. Batty. OG code was $3.38, $19 higher than budget, so pretty close overall. So overall, just under $80 an ounce, higher than we thought budgeted, but it's kind of what we expected at the end of Q3. All unsustaining costs for ounce sold consolidated for the Q were $860.00. per ounce, that was $82, an ounce higher than budget. And that really reflects the flow through those higher cash costs. Some higher sustaining CapEx, we had some catch-up. We were slightly behind at the end of Q3, but then that was offset by higher ounces sold than we forecast and budgeted. So what we found on the sales side was that We actually had an extra shipment or two that went. We were able to sell by the end of the fourth quarter before Christmas, higher than we thought we would, so that actually contributed slightly to higher ounces sold in the period. So overall, all in sustaining costs, $860 an ounce, very $82 higher than budget. Comment on fuel, just as fuel is one of the main inflationary factors. So it's around 30% of sites. Total cost diesel is around 14%, so that's the fleet, and HFO on average is around 17%, just for your information. Then just some commentary on the full year results now. So revenue, just under $1.8 billion. For the Q, again, average $1796 per ounce, so very close to that $1800 mark. Production for the year, including our share of Caliber, was $1,047,000 ounces. So, excellent, and that's really up at the high end, near the higher end of that regatter production range that we put out in Q3. All this FUCOA, 568,000 ounces, that was 25,000 ounces ahead of budget, and that was near the top end of our revised guidance range for FUCOA of 560,000 to 570,000 ounces, and it exceeded the upper end of our original guidance range of between 530,000 and 560,000. Same story as it was for the Q, higher throughput, lower grade material from the stockpiles all year. Ms. Batty was 222,000 ounces, so that was 15,000 ounces ahead of budget. And again, near the top end of our revised guidance range of between 215 and 225, and exceeding the upper end of our original guidance range of between 200 and 210. So I think at Ms. Batty, we saw... Greater mill recoveries, you know, higher metallurgical recoveries and more oxide than was modeled. Partially offset by a little lower than budgeted throughput, but still overall a significant beat from Aspati. And then Ojikodo, 198,000 ounces for the period, 7,000 ounces ahead of budget. And that was actually a quarterly, I should have mentioned before, Ojikodo was a quarterly record and an annual gold production record. The 198,000 ounces, that was near the top end of its guidance range, between 190,000 and 200,000 ounces. Like I mentioned, at OJECOTA, pretty much everything on budget or slightly better than budget. In terms of consolidated cash costs and all-in results for the year, consolidated cash costs per ounce produced came in at $535 per ounce. That was just $15 ahead of budget, and within our overall guidance range for the year of $500 to $540, So we're pretty pleased with that. We did see there was higher costs in Q4, but when you take it in the context of the whole year, we came in within our guidance range. FACOLA was $449 per ounce produced. That was just 24 ounces ahead of budget, and it was at the upper end of our guidance range of $405 to $445. PISVATI 682, just $12 over budget and within our guidance range of $650 to $690 per ounce for the year. Nano Jakota, $4.93 per ounce produced, which was actually $6 under budget and within our guidance range of between $4.80 and $5.20. So overall, very solid, good production where we actually got it earlier in the year and we came in within our range for the cash costs per ounce produced. All in sustaining costs, consolidated per ounce sold, $888 per ounce. That was actually $6 less than budget overall. And So those sort of in line with budget all-in sustaining costs for the year reflect higher-than-budgeted gold ounces sold, some higher-than-budgeted gains in fuel derivatives as we saw fuel prices increase through the year, and that was partially offset by slightly higher-than-budgeted sustaining capex of about $10 million. And overall, we came in at $888 per ounce. That came in within our range. Our original guidance raised $870 to $910 per ounce. And of that for coal of $7.65, so right on budget, Ms. Batty, $9.14, that was actually $64 under budget. And so Ms. Batty, that was below the low end of Ms. Batty's guidance range between $9.55 and $9.95. And that was a result of higher than budgeted coal ounces sold. It was higher than budgeted fuel derivative gains and partially offset by some higher costs. Ojakota was $908 per ounce. It was about $58 per ounce over budget, so it was above the high end of its guidance range between $830 and $870. But overall, coal and sustained cost consolidated within the range. Maybe a couple other comments just on the operations, just before I run through maybe a couple income statement items and the cash flow. So Focola, like I said, had that excellent annualized throughput rate of over 9 million tons per annum, and we actually budgeted 9 million tons for 2022. We've now got the Cardinal zone permitted. We began production there later in 2021, and we're ramping up production from Cardinal in 2022. And we did recently just put out a new Cardinal resource. So for 2022, there's 50,000 ounces in the budget that relate to Cardinal and that are included in FACOLA's overall guidance. And we think based on current studies, engineering studies, the Cardinal has the potential to add somewhere between around 60,000 ounces to Focola's annual production for the next six to eight years. Focola, again, the solar plant came online. It's the largest off-grid hybrid solar HFO solar plant in the world, we think. It contributes about 7% reduction to our processing costs, and that sort of equates to approximately 3%. lower cash costs as a result of utilizing that solar energy and reducing our genset spending reserve. So we're pleased with that. Then as we announced, I guess just early in the new year, we've now got the Manicoto permit back, and we're making plans now to start. In fact, I think we have started drilling, exploration drills are now active on Manicoto. And we intend to put out an updated resource for Manicoder by the end of this quarter. Ojikodo, just comment as well with Ojikodo, we had development in the Wolfshag underground mine continues. We expect to see the first ore produced in the first half of 2022 and we'll really ramp up that higher grade Wolfshag underground production in the second half of the year for 2022. And we did exit Burkina. dispose of our interest in kiak and tuiga during 2021 and both transactions with uh west african resources okay so let me make a couple comments just on the income statement for the quarter we saw a gain on sale burkina faso assets 22 million that's that's as i mentioned that that this disposal of kiak and tuiga now there was there was an impairment charge in there for about six million And that relates to the sale of our interest in Undundu. That was an exploration asset that we had in Namibia. And we banded that out to Asino Resources, taking a mixture of cash and shares in return. Year-to-date, I think just maybe to comment on the losses, gains on derivative instruments. We had a $24 million gain on derivatives, reflecting the income statement in that. That's driven by fuel. Those are all fuel gains. So there's approximately 14 in realized gains and another 10 in unrealized gains for the period. And year-to-year tax charge for the full year, $270 million. So pretty significant tax at all sites now as we've seen revenues increase over the last few years and the mine's really ramping up and producing well. We're paying a full slate of taxes in all locations. When you look at what the, in terms of earnings, so gap EPS for the quarter was 13 cents and gap earnings for the full year were 40 cents per share. And then on an adjusted EPS basis, adjusted EPS per share was 11 cents for the quarter and then 36 cents for the year. And then maybe just I'll round out the, Financial results, but just some comments on the cash flow. So from operating activity, we generated $267 million for the Q, so very solid based on that $1,800 gold price and good results from the sites. And that translated into cash flow per share from operations. Operating cash flow per share of about $0.25. And again, in Q4, we paid the same level of dividend, that $0.04 U.S. per share, as we have the other quarters in the year. When I look at overall cash flow results for the year, $724 million cash flow from operations, which, again, is approximately 69 cents per share. That's actually higher than we guided at Q3. We guided about $650 million at Q3. So what we saw in Q4, which is a good variance, was about 13,000 ounces more shipped and sold than we expected. So that added about $25 million, roughly, to our cash flows. And then there were approximately $40 million in tax payments we expected to make in the fourth quarter that didn't get made mainly for timing reasons. There were about $20 million related to Mali, which we're actually going to pay early in the first quarter of 2022. And then for Ojikota, it was probably about $10 million lower tax exposure than we thought for the year. And then the other variance is between the to work for capital. Comment on taxes for the full year. We thought we'd pay $380 million in cash for taxes during the year, and in the end we paid $340 million. So the main reasons for that are I just elaborated. Slightly lower tax payments in Q4 than we anticipated, but some of that's just going to roll and be settled in Q1 of this year, Q2 of this year. We ended the year with taxes payable about $71 million. And that includes the FACOLA priority dividend for 2021 of about $38 million. And for 2022, just for the analysts, total budgeted cash tax payments are about, we think, somewhere around $290 million. And that includes settlement of that $71 million that we're carrying in accrued taxes payable at December 31st, 2021. Total dividends for the year, $168 million, so $0.04 per share U.S. each quarter, so that's one of the highest dividend yields, I think, in the gold space, just somewhere around 4% yield. And then on the investing side, cash used by investing activities for the year, $286 million. Overall, full year, it's about $10 million under budget, from where we thought. There's a couple of offsetting factors in there. Sustaining CapEx for the year was about $10 million more than Then originally budgeted some unplanned mobile purchases and some TSF work done for COLA. And then offsetting that, we had some unreaches. So Gramalati, we spent, I think, about $11 million less than we budgeted for the year just based on timing as we work our way through to feasibility at Gramalati. And then exploration, some of the greenfield exploration costs we didn't expect it to incur. In 2021, we didn't. for various reasons, some of which we couldn't get access to some of the properties. So we're about $10 million under for the year there. So overall, about $10 million under in CapEx, but in the scheme of things, very close. And we ended the year with cash and cash equivalent, $673 million in the bank. Plus, in liquidity terms, we've also got $600 million undrawn. So we've got a full amount of our revolver, $600 million, which is undrawn, and also $200 million available in the accordion feature of the revolver. So Liquidity-wise, we're in good shape. The last thing I'm just going to highlight was some of the budget guidance we put out. So for the year, for 2022, we've got total goal production, including our share of Caliber, of between 990,000 and 1,050,000 ounces. Consolidated cash costs forecast to be in the range 620 to 660. Consolidated all-in costs forecast to be somewhere It should come in as well, very similar to 2021, just based on some of the stripping campaigns and the development of some of the higher-grade material from the Wolfshag Underground in the second half of 2022. Our results are definitely weighted more production-wise to the second half of the year than the first half of the year. And due to that production weighting, you'll also see an offsetting weighting where costs are higher in the first half than the second half and cash flows are lower in the first half. higher in the second half. So again, a very similar story in 2022, I think, than we saw in 2021. And a final comment on the budget numbers to reflect the fact, you know, our costs are a bit higher in 2022 than we had guided for 2021. So we're up about, cash costs were up about $120 an ounce or 24% compared to 2021's guidance. And, you know, just over half that is inflation. We've seen increases in fuel costs, mechanical parts, labor costs, and a continued stronger foreign exchange rate for the Namibian dollar, all of which contributed to some, you know, more than half of that cash cost increase. And then the remainder of that cash cost increase is really coming from operational related items. We've got continued ramp up that sort of higher strip in the early stages at Cardinal. So ramping that up in 2022, which is a little higher cost. And then for Wolfshag, also commencing operations of the Wolfshag underground mine in the second half of 2022. The other factor of Wolfshag is in 2021, we had the benefit of higher-grade material from the Wolfshag Phase 3 open pit flowing through for certainly significantly in the second half of 2021, but that pit's going to be mined out. in the first half or in the first quarter of 2022. And therefore it impacts the cost per ounce. But making solid all-in costs. Also budgets increased by about 18%. You know, about half of that's the inflationary factors as noted above. And then there's also some higher sustaining capital as we do some planned killings. Facility raises for coal MS Batty. So that's just in a very high level how the budget looks for 2022. Again, we're in that million ounce per ounce range. We've got good costs, a little higher than current year, but assuming the gold price of $1,800 an ounce, we're still forecasting operating consolidated cash flow to come in somewhere around the $625 million mark. So very solid. And that concludes the remarks I was going to make.

Okay, thanks. As I said before, I'm going to make a few comments now about looking forward, and then we'll look around for questions. I'm going to talk about Mali, first and foremost. Obviously, our largest mine is in Mali, and obviously, Mali is much in the news these days. But I want to talk about the reality of Mali from the gold mining perspective. Hawaii, companies like Rand Gold went there with great success in the early 90s and beyond. And many other companies, international companies, have gone to Mali for its tremendous wealth, globalization, and a government, historically, government after government, have believed in the importance of mining in their economy and have supported foreign investment in gold mining. I think that gets lost sometimes in the noise of what are real events or issues that we deal with. and they're dealing with the Mali. But there's sort of a fundamental issue there. You know, we've spent a long time, some of us 35 years, scouring the globe looking for great opportunities in gold mining, and often they didn't fit necessarily everyone else's model in terms of risk profile. Yet we've done it remarkably well between BEMA and Beach Gold in many, many different places all over the world. So one of our keys is due diligence, and due diligence is just about resources and to come in and welcome us to be partners with government and create jobs and do all the great things we do for these economies around the world. There's probably never been more evidence than there has been during COVID, what we contribute and how we do it. And not just us, of course, many other responsible mining companies have done a great job of that. So with the context of Mali and why are we there and why are we now looking at expanding in Mali, which includes phase one at Anaconda, which we used to call Minacota, but we won't anymore. Now the license is back. We'll call it Anaconda again. for phase one, which is short-term, trucking some saprolite soft material down to the piccolo mill, which is potentially 100,000 ounces a year. And then beyond that, we've had some great excavation results. The last time we reported a resource from that Anaconda area was based on 2016 drilling, and that was about 770,000 ounces. It looked quite attractive because it was on surface. Most of the weather material that could be trucked down to the mill and run through the mill very easily. But beyond that, we've had some good results. We'll come out with a new resource in March, which I think is very important for the future of this company in terms of growth, because we think there's going to be a much larger resource there, potentially leading to not only phase one of mining the sapling material and trucking it, starting as early as late this year in partnership with government, but then also looking at the bigger picture, which is phase two. If we're successful and continue success in some of the intercepts we've had on the self-leds below the sapling material, which averages 50 meters depth, being below that, well, the sulfides would have some good results. Do we have another multi-million ounce potential here, which could lead us to phase two, which could be another mill in the Anaconda area, sharing some facilities with the Fercola mill as it exists today. So we see lots of potential in upside in Mali, specifically in the belt we're in right now. We have the Cardinal New Discovery, which is adding production right now, 500 meters away from the Focola mill. And of course we have this embarrassment of riches almost in the sense that the Focola ore volume remains open to depth, and we think we may end up as an underground mine there, actually in the not too distant future, complementing open pit. And then of course we have the whole situation of the Anaconda, which we haven't been able to talk much about, or in fact drill in Minn Kota because of license dispute. So we're very comfortable there. We're very good at problem solving. That's what we've done for 35 years. A lot of us as a group are still together. And that's one of the keys to our success is crisis management, whether it be pandemic, whether it be typhoons or earthquakes or political coups or whatever else. We've dealt with pretty much all of it all over the world. And we've consistently been successful at is delivering on the promises you make around the world. I find that in life, not just in mining, if you deliver on the promises you make, you make more friends than enemies. So we've earned a great social culture, and I think this is why I'm spending my time on this, is to understand, really dig a little deeper, or at least listen to the idea of why we and others are in Mali and want to do more in Mali, because we believe the government today and the government that's going forward will continue to honor their laws and continue to support foreign investment and gold mining. Post-COVID, many, many countries in the world, almost everyone needs foreign investment, Gold mining and mining has shown itself to be, over the last couple of years, a really good foreign investor in terms of job creation, obviously, revenue creation, job creation, responsible mining, health and safety, which we lead the world in, and just critical for these economies in all the positive ways, education, agriculture, you name it, the things we do around the world. So we have a great social license in all the areas we work in, and that's earned over many years of delivering any promises and treating people with fairness and respect. transparency. So not only today, the dispute over Minnokota was a very specific issue. I considered it an anomaly in the bigger picture of our relationship. And at the end of the day, we were able to work with the government and we were able to, the government was able to realize that the best way forward with this was with us as the partner driving it, especially given the proximity where we are with Focola. But also the government's going to be a 20% partner what the Fagotamides meant to the people of Mali and the government of Mali. It's extraordinary, and they get that. So it's not as if we're in a bit of war with the government of Mali. It's so easy to put headlines out there or people to make comments about, oh, we're not, you know, beaching over and staying away because of those Mali problems. Well, the issue we have is very specific, and we did resolve it amicably with the government. So they're very supportive of going forward with that conduct. And, in fact, they keep asking us when, you know, when are you going to start producing them there. So that'll create more jobs. That'll be one of those great things. So I just want to try to clear the air a little bit, or at least tell you why we are still there and mining profitably in partnership with the government, doing some great things in the country, and partly because of our remarkable exploration team, Tom Berrigan and his team, we have been able to now do what we've done in many places, which is find a lot more gold. So if you look at the Pakola story and then you look at Anaconda, you see some similarities and see similarities to other things that we've done. At the end of the day, we've always been prepared to go where others fear to tread, where they don't take a thing which worked out remarkably well for our shareholders. So we will always be disciplined about what we do in terms of growth or what we do in terms of M&A. In the last 13 years, we've taken this company from zero ounces a year to a million ounces a year with a number of accretive acquisitions that we've done a great job of building the minds or making it better. And also added ounces everywhere we are and having some great exploration success beyond that as well. So I just want to spend a little time on that because I think Malik's a little bit misunderstood. And yes, there's some serious democratic history. The bottom line is the importance of what we're doing in that country. That's not lost on anyone, including the current government. So I just want to touch on that because you're going to see us doing more in Mali, and we will continue to geographically diversify through exploration. Development projects are also perhaps M&A, if it makes sense to do any of that. So we will continue to work with the government of Mali to make Mali an even more successful country and ourselves a more successful company in the world. production from Mali. A couple of other things that I think are topical that I'll touch on briefly. Gravelate. We're looking at the results of the feasibility study available internally at the end of the second quarter of this year with the ability to release those results shortly thereafter. As everyone's aware, I won't reiterate the news release, we've taken a number of steps in the last while estimated at around $900 million to build the Garbalache mine, which could produce 400,000 ounces of gold a year. The operating costs and the all-sustaining costs have always looked pretty attractive. The big nuts are capital. So how do you improve your IRR? How do you improve your project? Well, two ways to do that are to reduce the capital costs and then divide it by more ounces. So we've had some success in reducing the capital costs. Inflation will be a factor there, so that will be interesting to come out of the study. But also we've just come in kind of We have just completed a lot more drilling to come up with a new resource. We'll see what the ultimate size of the resource is going to be. So we're kind of optimistic about that, but we're going to know really soon. And we will continue the discipline we've shown for years in terms of what we do with Gramelati. We will not build it simply because we put a lot of money into it. That's not what we do. We'll build it if it's economically attractive to our shareholders and makes sense in our world. There are not many Gramelatis in the world. It's a significant asset. AGA is our partner for 50%, and we're working very closely with them, and they're a good partner. Both companies, board of directors, will have a decision to make in the third quarter, I would think, about a development plan for Guam. The government wants us to go. We're updating the permits, et cetera. We have a permit in hand, but we're updating the permits with some changes we've made that the government is very supportive, locally and federally, of this project at the moment. So what happens? Well, there's going to be a decision made by both parties. The AGA, I can't speak for them, but the AGA will evaluate and decide if it fits in with their and we'll decide where it fits in our world based on the economics, based on what else we've got going on, et cetera. But you have to think, if we're going to do the heavy lifting and be the operator to build a mine, which AGA wanted us to do, then if you like 50% of something, then it's a good argument to suggest you might like 100%. But that's not for sure. There's other significant gold producers that have already approached us to say, well, if AGA decides not to go forward, we'd be interested in coming in and partnering with you on Granolatte. So a number of alternatives there. One is to not go ahead One is to go ahead with EG as partners and have half the gold production to our account, 200,000 ounces to our account. The other is to bring another part of your gold along. The financial strength we have right now today, we can clearly take on something like Gramalate for 100%. We chose to do that. Now there's a lot of things that will factor into that decision, not just because we have cash available. So we'll see you very shortly at Gramalate, and we're hopeful that it can become Now, it is one of those projects where I would consider, and we're not supposed to say this, we're supposed to blame it on the banks all the time if you do any hedging at all. But Gramalati is a situation where, you know, it has to make sense, and it has to make sense at a lower gold price than today, but if you could lock in some of your gold production during payback on a mine like that, I think that's pretty demonstrated. I think our shareholders can see the logic of that. If you can increase your production by 2,000 or 4,000 ounces a year of low-cost, relatively low-cost production, So that's, let's grab a latte, touched on Anaconda, which I think is a huge asset opportunity for the company that is yet to be put in the context, at least publicly, of what that new resource might mean, and what phase one and phase two mean there as well. In terms of expiration, it's always been one of our strengths, and, you know, even when B2 Gold started, its chain of expiration companies at zero, so that's an unusual story of taking the entrepreneurial hunger to go out and actually find things or go sometimes where others fear to tread. So I think that's one of the exciting things about what we've done and where we go in the future. So we've got some great exploration projects going on. We've got a budget of $67 million to share in exploration. And some of you will go, whoa, that's a lot of money. for an ounce. That's money well spent. So about 65% of that budget is ground fields, exploration around existing sites, and the rest, which is a substantial amount, is for some really exciting green fields. So I won't go into too much detail on that. We can put you together with the geology team if you're into geology and you want to hear about it. But Finland, our partner announced again today on our behalf some exciting results there next to a major discovery by Rupert Resources. Good for them, a major new discovery here if it's early days for us. But we're seeing some interesting mineralizations So that's exciting. We're also in Uzbekistan, speaking of outside the box, and have some very exciting drill targets there and a number of other locations as well. So we'll continue to try and find the cheapest ounces of all or generate the cheapest ounces of all, which are the ones you find always with numerous high-quality exploration targets around the world. Finally, on M&A, I think the best way to describe our attitude towards M&A right now is ambivalent and potentially disappointing. Now, I'm doing it in the sense that we don't need, when you look at the potential, the unrealized potential in the marketplace of what Anaconda can be, and you look at, if Gramalati should go, and you look at those two opportunities, there's a lot of growth in those two, dramatic growth for this company, barring any further exploration of success. So, where our job is to realize value for sure isn't solved and realized so far, because we haven't been able to come up with the new Anaconda numbers, and also, Gramalati's still a question mark, obviously. In the meantime, though, our stock's been hammered over the last year and a half, starting to recover now, partly because of the Minnacota situation and the knee-jerk reaction to that, which I understand, but you always get a little bit of an overreaction to the downside. You don't get it on the upside so much sometimes, but that's the nature of our business, perhaps. So when it comes to M&A, we're only going to do what we've done for the last 30 years, which is accretive deals that make sense for our shareholders. We've never been about growth for the sake of growth. I think that's one of the reasons we've been successful is highly disciplined due diligence. and accretive deals that we then turn into great minds that make us successful. So we're not going to suddenly change that approach. So with M&A, we're looking at some opportunities out there, but I think if we do something that's going to make sense to our board, they're going to vote for it, and it's going to ultimately make sense to our shareholders because we'll be continuing on the discipline we've shown for a long time. You know, sometimes people think because we're a very aggressive company and always have been that there's somehow, that's a negative. I always say there's a huge difference between being aggressive and being reckless. We're never reckless. but also some of the highest standards in our industry, what we're able to maintain. So we're ambivalent in the sense the opportunity's got to make sense in the context of our shareholders, where our share price is trading at. But for the first time in my career, perhaps, we have the opportunity to use not only shares, but cash for M&A because of the extraordinary financial position we find ourselves in. So if there's something out there that makes sense, it's an existing producer, perhaps, that's had struggles, et cetera, and maybe there's some synergies there or a development project opportunity, we look at a lot. The disappointment, the potential for disappointment comes in of a drum I've beaten for a long time, and I won't beat it to that today. But it's one of the biggest, the two biggest risks, the two biggest problems with M&A, and the reason we're not seeing it, despite a lot of institutions wanting it, and we do need more better run-and-go money companies as we go forward. And everyone says it. Everyone says the right things. Oh, yeah, yeah, yeah. We're open to mergers for sure. We're open to a deal. And a lot of them aren't telling you the truth. That's true. It's because they work for you, but they're actually entrenched management. They're entrenched because they want to keep their jobs. and they don't, they're not acting their best interest in the shareholders at all, who they work for. They have a fiduciary duty as directors of these public companies to build shareholders. We've got a couple of situations, numerous situations over the years, where companies are not telling the truth to management. They want to keep their jobs. That's not their right. We know what we speak. Even with this approach by Kinross in 2006 about a potential merger, we said we're not interested. Management was not interested at all. But we said, you know what, it's about the shareholders, so why don't you We signed the CEA. We're building one of the greatest gold mines in the world, the Kupo mine in the forest of Russia. We don't want to sell the company, but it's not up to us. So we told Keros to put forward their best offer, then asked for another one, then another one. And then we decided that it was not our right to decide, and we went to the shareholders. And our board of directors immediately said to us back in the day, we never said to the board, do you think we should take us to the shareholders? It was so obvious, and that's what a responsible gold mining company does, or any public company does, when they're faced with an opportunity for the shareholders. that may hurt their pocketbook or their ego. So at the end of the day, we'll see what happens, but the two big disappointments potentially in M&A are ship projects, because there aren't many good ones in the world, and the second is entrenched management. And I just find that offensive on behalf of shareholders. We've walked the talk on the other side. So at the end of the day, we're open to do accretive acquisitions for us, and there's some deals out there, not many, but a few that might make a lot of sense for both sets of shareholders in these situations. Yet, There are shareholders out there that are not hearing about opportunities because management is putting themselves ahead of the shareholders and not taking, the decision is not management's. The decision is not the board of directors. The decision of these situations of potential M&A is the shareholders. So for the institutional shareholders out there, and I may have a few words to say about this in Nemo next week, but join us. Join us. Don't fight me over how many years the director should be allowed to be a director of the company. Let us run the business. We do it rather well. Help us. Help us by forcing the shareholders of companies that are not so injured, force them to do the right thing for you, the shareholders of the company. Let's grow this business. We have to grow this business by having people act in the interest of the shareholders, not in self-interest. So that's my little speech for today. So we're open for business. Don't run around saying now that, oh my God, they're going to go and acquire something that's stupid. No, we're very disciplined. We've got a great growth profile. Extraordinary financial strength. We'll use that to build a company. I haven't got it wrong so far. We'll continue to do that. So that's most of what I wanted to say. I think with that, let's open it up for questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you have a question, please press star followed by one on your touchtone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be pulled in the order they are received. Should you wish to decline from the polling process, please press star followed by two. And if you're using a speakerphone, please lift your handset before pressing any key. One moment for your first question. Your first question comes from Ovaze Habib with Scotiabank. Please go ahead.

Thanks, operator. Hi, Clive and B2 team, and congrats on a solid 2021. Just a couple of questions for me, Clive. My first question is on Anaconda. Now you're expecting to release a resource update in Q1 and then you're looking to have a phase two drilling. Is the plan to complete a PEA on standalone versus trucking or down to FECOLA? I'm trying to figure out what are the parameters, how large you need Anaconda to become before you can consider Anaconda as a standalone project.

Sure. Well, I guess in terms of that, I'll pass it over to Bill in terms of the PEA or what we're doing there in terms of working with the new resources coming up. We're working on a PEA right now on the phase one, which is to separate whether material, tracking that down. That's what we talked about, potentially 100,000 ounces of additional production a year starting as early as potentially late this year, early next year. Bill, you want to talk about the timing of that study? Yeah, for sure. Thanks for the question, Luis.

I think you remember when we talked before, We already have a study based on the previous resource, which was announced, which really shows economically that trucking is a viable option. So as you pointed out, we're coming out with a new resource right now, which will be out by the end of Q1. Our plan is to take that resource and look at it and really kind of expand on the trucking concept for 2022. Basically, once we get that, we've already done all the environmental work. We've already done all the feasibility work on that. We'll be going to the Malian government with that concept for a phase one trucking study. As they continue to expand the resource, then we'll look at the next iteration and what does it look like for a standalone mill. I mean, knowing that it would take a couple of years in any case, to get the equipment ordered and to get it built up there if that was the choice. You know, there's some time on that. But in the meantime, we think there's real value in trucking down to FACOLA.

So from what I understand is phase one is the trucking situation. That's likely happening or starting in 2022. Then as you increase your resource, then you'll start looking at the stand loan, and then you'll require additional permits and obviously additional studies for that.

Yeah, for sure. I mean, you made it maybe more simplistic than it is. Knowing that we haven't seen the resource size at the end of March, I mean, maybe those studies happen, the Phase 2 starts happening immediately. But in the meantime, we still would have to look at trucking while we're getting everything set up for the Phase 2 portion of that.

Yeah, I think the whole concept is, which I think fits really well, while we're permitting, and then don't forget, permitting of the sapper lake, We're just talking about a little bit of bossing and basically digging this out of the ground and putting it in trucks and taking it down. So there's nothing when it comes to permitting. It should be pretty straightforward to cover. It's very, very keen to, within the laws and within the rules, to get that permit in our hands as soon as possible, basically. We're on the same page there. So it's a process, and we've been through it before, but we're not that concerned about that because at that stage, But while we're trucking material down to add production through the Focola Mill, the Sapper Lake material, we're going to be doing extensive drilling. What's the budget this year for the Minnicoat area? $12 million. So that's a lot of drilling. It's not expensive drilling because you're drilling from surface, and this is basically the ore body, and the Sapper Lake comes to the surface in many places. So we're going to find out a lot more by the end of this year with all this extensive drilling going on below the Sapper Lake. resource. So we'll come up with a new resource in March, but we don't think that'll be the end of it. But the potential year is basically as for another multi-million ounce discovery in Mali between the saprolate and the sulfide. And, you know, that's not something we see lightly. So that's one of the reasons it's so attractive to us, is putting that together in the near term, phase one and then ultimately phase two. But I would suggest to you by the end of this year, with all that's really going on, we're not going to have that indicated resource on a huge amount of the saprolate. might be, and that's the approach. Then, in the Anaconda area is the upside. You know, could the Ficola complex, if we dare to project ahead a little bit, produce a million ounces a year? We think it has that kind of potential, subject to more drilling and what we're seeing becoming reality.

Got it. Okay, thanks for the credit to you there. And just quickly moving on towards FECOLA, last time we talked, and this is maybe a question for Tom, any update you can provide on the TMZ zone, which is adjacent to the Cardinal zone, how that's shaping up? Is it looking like another Cardinal, or how should we perceive the TMZ zone?

I assume you mean the FNZ zone or FNZ zone.

That's correct.

Yeah, it's a parallel zone that hasn't been drilled to the same extent as Cardinal, although part of the FMZ zone is included within the Cardinal resource. Exploration this year will, you know, we're spending most of our, not most of our, a good significant part of our exploration dollars are going to be in the Mamba area for sulfide and the down plunge extension and the underground potential for Pecola. But we will be doing some drilling in FMZ and also in Cardinal. Cardinal is open now. down plunge also. There's two significant looking ore chutes that we see there that have potential for future underground also. So we'll be looking at that. So yes, that'll be part of our program.

Perfect. Thanks, Don. And that's it for me for right now. I'll get back into the queue. Okay. Thanks, Luis.

Your next question comes from Josh Wolfson with RBC. Please go ahead.

Thanks, operator. When looking at the upside from the various sources at Ficola, the prior guidance was that Anaconda could add 800,000 to 100,000 ounces, and then Cardinal could add 60,000 ounces. I guess I'm just wondering what that baseline is, and then if we think about what the net result is from those additions, can that sustain the mine at 600,000 ounces, and I guess for how long?

Well, for the how long, you can ask me. Right, so Josh, let's go back to, you've got to step back a little bit further than what your question is. Remember, last year we were operating at 7.75 million tons per annum. This year we've increased to 9 million tons per annum. And as part of that, the cardinal resource is is already in there. So that kind of 60 to 80 is already kind of baked into what we're talking about for 2022 and going forward. Now, with the additional million tons, what you're really talking about is how much additional can you add from Anaconda. And quite frankly, at this point, without getting a full mine plan together, I don't want to put a hard number on it. What I will tell you is that we've been kind of very public that In the short term, we're looking at 80,000 to 100,000 ounces over the next couple of years. Per year. Per year. That's correct. Sorry, Glenn. Per year. And long term, we kind of see that 600,000 ounces, plus minus, and I'm going to do the plus minus hand wave a little bit, as pretty achievable, certainly in the near term at Ficola.

Okay. So I guess, in other words... you know, what point would you start to see some pressure materialize, you know, from maybe the grade profile? Is that, you know, is that after year three, four, five? Like, just wondering how much visibility we have today.

Yeah, I think if you, first you should go all the way back to when we did the feasibility study, put it out, you know, and then look at what the kind of overall profile was for PCOLA. And then, you know, then take a look at what we updated and And what I can say is really, I think really out to 2026, we feel pretty good about where we're at. And then, of course, you know, we haven't even talked at all about what could be the potential of the Pecola Underground, you know, what that looks like. So there's a lot of things still in the works. So what I can tell you is in the short term, 600 sounds great. In 2026, we really have to look at how we're going to supplement that grade.

In terms of the ultimate, as you said, we're going to run a lot more by the end of the year because of all those exhibitions really going on. And infill drilling going on in the not only sapwood, but in the sulfide as well. So we'll have a pretty good idea of where we're going. And as Bill said, if the resource that comes out in March is of interest in terms of the sulfide portion of that, then we may very well, around that time, start to kick off permitting for a mill to get that process started. So if the plants align, you'll progress from 1,000 oz a year from sapwood, you'll progress As we see it playing out right now, the timing could work rather well because you have this great source initially of saccharine material, which you can chuck cheaply down to the mill. And because it's so soft, you can actually add it on top of the 9 million.

Yeah, and maybe just to expand on that, one of the things we're looking at, you know, we did this when we did Pecola. We kind of looked at this optimization, you know, whittle optimization. And we see that as a very real project coming up where we've really got to now look at, You've got Cardinal, you've got Anaconda, you've got the Underground, you've got Focola, you've got a mill now that runs at 9 million tons per annum at least. So we really want to take a look at kind of optimizing all the sources. And that's a study that we're going to start this year. And, of course, that will be ongoing as the resource gets updated. So I don't want to be too cagey, but I just think projecting too far out there is really not appropriate at this time because I don't think we know how good it can actually get yet.

Between March new resource and the end of the year, all the drilling we're doing, those are the important things we will fill in. Hopefully this will be able to supply you with the detail. I mean, if you want to look back for a reference point, look back at what Focola was when we acquired it with a 4 million ounce resource and 3 million of that in the reserves. And look what Focola became, 7, 8 million. a much larger deposit than we acquired in the highly accrued we did in 2009.

Okay, we'll stay tuned then. And moving over to Gramalote for a second, we've seen commentary from some of your peers about inflation for capital running at a rate at least year over year, consistently, I guess, in the 10% to 20% range. Most of them are toward the upper end of that. you know, ignoring the potential impact from the optimization, is there any sort of reason we should not apply the same sort of thinking to what the base case would be for Granolote?

Yeah, so remember, the last feasibility was based on Q1 2021 costs. So we don't have, the costs haven't come in yet, but we do believe there is going to be an increase. And I would say, you know, that that it's not going to be that different than what you're seeing in industry.

So remember, we've been working hard on significant changes, realistic changes in engineering, design, et cetera, roads, et cetera, tunnels and stuff to bring that capital cost down because we thought it was a better project. We were basing this before work done a long time ago, a lot of good work, but that's where we decided this could be a better project by some fundamental changes to the approach. That's where the capital has potential to reduce, so If the capital comes down from the niner mill, which it is, then the question is how much does it come down, and then is there a portion of that you lose back because of inflation? So that's going to be the issue. The good news is we won't have to speculate for too much longer here with the study, available results in the study, hopefully at the end of the second quarter, and the study itself in the third quarter. So that will lead to a development decision or not.

Perfect. I will also stay tuned to that. Those are all my questions. Thank you.

Okay.

Ladies and gentlemen, as a reminder, if you do have any questions, please press star 1. Your next question comes from Don DeMarco with National Bank Financial. Please go ahead.

Thank you, operator, and good afternoon, gentlemen. First question from Mike. Mike, what is the quarterly weighting of the $290 million in cash taxes? I mean, is it just simply like similar to last year, like heavier in H1?

I think, give me a second there and I'll tell you. Okay. You know, it's probably pretty even through the year, I'd say. Okay. That's fine. Remember, in 2021, we had that big catch-up because we had that bumper year in 2020 that we had to pay higher taxes on in 2021. And what you saw through the current year, remember, like I said, we've got about $70 million to pay at the end of 2021. More than half of that's the dividends. So really, there's not that much outstanding tax related to 2021. to be settled up in 22. So I would say it's more evenly distributed in the queues next year.

Okay, good. So you guys have had a couple years now where production costs are back-end loaded. Would you expect recurring back-end loaded years going forward?

As in after 22 or just for 22? After 22. Yeah, no, that's kind of the beauty of some of the things we're doing. You know, like the Ochicoto with the underground coming online, we think that that house profile is going to kind of level itself up. Same thing at Ficola. You know, now with Cardinal and everything, we've got additional sources. It was really related to the way the ore body was laid out around Ficola and Ochicoto where you're kind of working up and down within the zone to the high-grade material. So I think that that will kind of level itself out.

Okay, I figured that might be the case. Now, just shifting over to COLA, we see that you're forecasting potential cardinal production of about 60,000 ounces over the next 68 years. Even if you hit 60 over eight years, I mean, that's total production less than 500,000 ounces versus a total resource of 1.2 million. Can you comment on that differential? It seems to me at face value that there is some upside at cardinal beyond what this preliminary forecast is.

Yeah, I think you answered your own question. There's a lot of upside. I mean, once again, on the operational side, we've just kind of looked at what we can put into a reserve based on the drilling that's there. But, of course, they continue to drill and explore that and turn that inferred into indicated. So the answer is yes, there's upside.

But it's also open beyond that.

For sure.

In terms of where it's open, open that to depth of strike, where is it open? It's open to the north. So, yeah, more income there, both in terms of this. turning inferred into indicated growth, so it's still open. Can we add more?

Okay, and just finally, for 2021, the FACOLA throughput around 7.75, you hit 9.14. For 2022, it's nice to see 9 million, but does that all things equal, are you aiming for higher than 9 million? What can the mill do? Yeah.

It's one of these, what have you done for us lately questions. So the answer is, remember, we started at four and went to five and then went to six to seven and a half, and now we're at nine. We did originally, maybe John should pipe in here, but we did do a study where we looked at 10 going to 10, and we've got the capacity to do that. It'll be tight, but it'll also be very expensive because it's not just, you know, upgrading the pumps and the motors and everything. It's actually adding an additional line. So we certainly think that there is some, I would say, incremental upside, but we don't see that operating this thing at full on all the time is in the best interest to make sure as far as, you know, the maintenance goes. So I think nine is probably the right number, plus minus, given the 10% to 15% satellite. Right. Okay. Thanks for that, Bill.

And congratulations again on a strong finish to the year. Good luck, guys.

Yeah, thanks.

Ladies and gentlemen, as a final reminder, if you do have any questions, please press star 1. There are no further questions at this time. Please proceed.

OK. Thanks, operator. Thanks. Thanks, everyone, for your good questions and your attention. We look forward to further positive reporting as we go forward. Thank you.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a great day.