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.