B2Gold Corp.

Good afternoon. My name is Ernest and I'll be your conference operator today. At this time, I would like to welcome everyone to the B2Golf First Quarter 2022 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, then the number two. Thank you. Mr. Johnson, you may begin your conference.

Thanks, operator. Welcome everyone to the conference call today. As the operator said, we're here to talk about the first quarter results for 2022. The news release we put out is quite inclusive. We'll give you a little summary of some of the highlights of that, update you on a few things, and then we'll open up quite quickly here for your questions. pleased with the quarter uh we had a significant beat uh especially when versus our budget on operating cost all the sustaining costs and and uh earnings uh cash flow and earnings so um very good quarter and we can talk a little bit more about what that means in the context of of of going forward but we're very pleased with that and once again i think some many of you realize the challenges that the industry is facing in terms of you know inflationary pressures etc so we'll continue to remain committed to doing our thing and focusing on where we can, avoiding the full impact of higher costs where we can. We can talk about that a little bit more. In terms of the focus, obviously continue to be a profitable, responsible gold miners to go for. They're starting a strong financial position, as you know, with a tremendous cash balance, virtually no debt, and paying the highest dividend. I see Merit just came out today with even with their bonus dividend, they're still a behind us. I think we're at 3.8% yield today, which is the highest of the gold producers. But we're also very committed to continue to grow the company, so we want to find a balance between dividend and rewarding our shareholders for our great performance and their support, but also being able to continue to grow the company. We have great access to cash through a $600 million loan credit facility from our banks that has the ability to go to $800 million completely at the moment at this time. And just quickly looking forward to some of our priorities, and I'll pass it on to Mike. The priorities in terms of growth are we're closing in on a feasibility study at Gravelate, and we've talked about that. That's quite detailed in the news release. And where Anaconda is becoming a real focus for us, as you've seen, we're now able to talk about the new resource in Anaconda, not only in the satellite, but we're starting to get some very good So far, it's just 20 kilometers away from the Fricola mill. So we're going to start tracking more. Bill will update you on that. And then we have the potential for, we think, depending on exploration results, as they continue to be what we've seen, and it gets larger, the potential to build a second mill up in Anaconda. So it could become the Fricola complex, which we could have significant coal production from two mills in the not too distant future. Bill will touch on that and give you a little more color on that. Exploration has always been a big part of our world and a part of our success for We started this company in 2015 years ago, and we have some very exciting opportunities, not only around the existing mines, but we've had great success in turning inferred into indicated, finding new reserves, but also new targets in addition to existing targets, extended amount of properties. We've had a great success, track record of success of exploration of existing properties. We're still very global in our view and our belief that the cheapest ounces will always be the ones you find, so we have some exciting exploration projects and a budget of full budget of 65 this year, about 60 or 65% of that would be on brownfields exploration and the rest is to look at some grassroots targets. So exciting results came out today from Orion, our partner in Finland with the operator we've been doing the drilling and I think the guys who asked questions on that, sounds like the exploration group is pretty excited about early days but excited about the potential given the discovery that they've made and given our not only a proximity being right on the boundary, but the kind of results we're starting to see, so much more holes to come there. And we're drilling in interesting places like Uzbekistan and others, always looking for new discoveries. The M&A front, we will continue to look. We've looked at a couple things quite seriously in the recent time, but haven't been able to reach an agreement. So we continue to look. I think time is on our side in the sense of looking at getting the Gravelati study out and seeing if that's a go. Also getting out of focus over the next number of months. And maybe seeing our stock, which has been underperforming, seeing the share price start to come up as we continue to prove the value of the projects we have, our ability to operate them, and also as we unlock the value of our growth projects and potentially exploration. Thanks, Clive. Good morning, everyone.

So just run briefly through the operating results and some of the sort of key financial results that we've reported for the quarter. Firstly, on the revenue side, revenue of $366 million, and that reflects a sale of 195,000 ounces at an average realized price of $1,874 per ounce. So high gold price during the quarter, and sales were about 7,000 ounces higher than budget, which really mirrors the higher production that we saw in the quarter in the budget. Speaking of production, the total consolidated production, including our share of Calibre's results, was 209,000 ounces. And we saw a higher than budgeted production at each of our three mines. The coal was 102,000 ounces, so just 1,000 slightly above budget. That was mainly due to higher than budgeted process grade and offset by lower than budgeted process tons. And the process tons were lower, as I've a result of a reduction in the saprolite processed. And that was because as a precautionary measure to protect ourselves against some of the potential supply chain problems that we saw arising in Mali from ECOWAS sanctions earlier in the quarter, we prioritized processing a higher-grade fresh ore in the period to reduce reagent consumption. That was a temporary measure. I would say the sanctions continue there, but our supply chain was normalized, and we've built up regular levels of reagent and fuel at site now. So as a result of that, Saprite was reintroduced back into the circuit at the end of February, and processing is ongoing as budgeted. I'll remind you as well, Focola's gold production is expected to be 16%. of the year, as we had guided when we put out our budgeted numbers. And that's because the second half is really when we reached the high-grade portion of Phase 6 in the Focola pit, and we have the new Cardinal production stream fully online. That started Cardinal. Planning for Cardinal started later last year, but we got it fully online through the course of this year. Amos Batty, 60,000 ounces in the period. That was 6,000 ounces ahead of budget, so quite a beat there. mainly due to higher process grade in the period, grade which was above budget, because we mined additional unbudget higher grade areas within the plant mine areas. And in addition, as a function of shorter haulage periods and haulage optimizations related to the expansion of the tailings facility, we were able to see increased mining rates, which contributed significantly to the mining of higher-than-budgeted, higher-grade ore in the period. But that's a temporary issue, I think, as we were working on the tailings, the TSF. But that's also the 6,000-ounce beat in the period. And Ojikodo, 35,000 ounces, 2,000 ounces over budget. That's really kind of the same story for Ojikodo. It's usually slightly ahead of all factors, grade, recoveries, and mined ore. And again... Ojakota is scheduled to be weighted to the second half of the year like Focola, and that's because that's when we get to the higher grade portion, phase three of the Ojakota pit, and also in the second half of the year is when the Wolfshag underground mine really ramps up. Let's talk a bit about costs related to that production. I'm talking here cash costs. These are all on a per ounce produced basis. Consolidated cash costs for the Q were $699, so that was almost $100 $94 less than budget. And that's primarily a function of lower than stripping in some areas, lower than budgeted fuel at Focola. And that was partially offset by higher than budgeted fuel costs at Miss Batty and Ojikoto. So I'll touch on each of those now individually. So Focola is $624 per ounce produced. That's $157 lower than budget. And that's primarily a function of slightly higher than budgeted production, as I mentioned before, and then lower than budgeted mining, processing, and site general costs. And those costs were lower than budget, largely due to lower than budgeted fuel prices realized in the period. And just to remind everyone, and I think we've talked about it in previous calls, in Mali, the fuel prices are set in advance by the state, and therefore you're always going to have some timing delay between... costs that you might see in the broader fuel market and at the pump, and then what we realized in that site. We also had lower than budgeted volumes of fuel consumables that we utilized in the period because we mined and processed lower overall tons than budgeted. And mined tons were lower than budgeted due to, again, a temporary change in mine sequencing to accommodate that temporary change in saprolyte processing. Reminder to everyone as well on the power side, The solar plant of Focola, which we got up and running last year, is running very nicely. And actually over 20% of the power that we generated in the first quarter of 2022 was solar. So that's been a great investment, I think, for current operations and as we look forward. Ms. Batty, cash cost for us reduced $710 per ounce. That was $50 per ounce lower than budget. And that was really, again, a result of higher than budgeted production. partially offset by higher-than-budget mining and processing costs, which, again, were driven by a little bit higher-than-budgeted diesel and HFO costs at Misbadi for the period. In Ojikoto, cash costs pronounced reduced $770. That was $35 less than budget, slightly lower than budget, and again, a result of higher-than-budget production and budgeted operating costs that were pretty much in line with budget. And those operating costs, they saw some increase in fuel prices, but that was offset by a weaker Namibian dollar. If you might recall, last year we actually saw the Namibian dollar strengthen, so it actually increased our cost lately this period so far. We've seen the dollar weaken. We budgeted at $14.50, and the Namibian dollar is the U.S. dollar for the period, and we saw it come in somewhere over $15. So it's probably a benefit in the period of a couple of million bucks in foreign exchange gains. Touch briefly on all-in, it's really the same story as the cash costs. So consolidated all-in sustaining costs, including our share of Calibre, was $1,036 per ounce sold, and that was $318 overall, lower than budget. And so it's a function of those almost $100 less on the cash operating cost side. And then also higher-than-budget gold ounces sold, as I mentioned earlier, and lower sustaining CapEx. During the period, we were $33 million lower than budget on the CapEx side, and part of that came from the temporary change in sequencing at Focola, so we had lower stripping in the period. We also had some lower stripping costs at Ojikoto in the period, and then just the timing of some fleet purchases and rebuilds. So you put all those together, we were $33 million lower than budget for the period, but we think these are timing issues, and we expect to see those reversed later in the year. Just a couple of comments on guidance. So firstly, just to remind everyone I've mentioned already in this call, we are weighted pretty substantially, 40% in the first half, 60% second half for production. We're maintaining our production guidance. We were 8,000 ounces ahead for the quarter. We're saying we're still on our overall guidance for the year, so our consolidated guidance is 990,000 to 1,050,000 ounces. We haven't changed our re-guider on the cost side. We reiterate our annual cost guidance. We have seen, as I've run through here, a very good first quarter where we beat budget on the cost and all in sustaining cost side. And I think we can expect that that could benefit the first half of the year as well. However, on the other side, we are seeing some cost inflation, particularly some fuel increases I've mentioned already. And there's also the CapEx timing issues that I mentioned as well. So we're going to see those reversed. So I think we're seeing some cost volatility in the market. We're going to continue to watch it, and we'll look at it again in the second quarter. So in the meantime, we've just maintained our annual cost guidance and also our annual production guidance. A couple of general comments maybe just on the operations as we've just run through them. So we're still a big focus in Mali. In early February, we put out an updated mineral resource estimate for the Cardinal Zone. So in that we had for indicated resources 430,000 ounces, and then we had an updated inferred resource of 740,000 ounces. Also subsequent to the end of March, we completed the acquisition of the Bacalobi permit, and that allowed us to consolidate that whole land package from Focola all the way up to Patanko, an area of over 200 square kilometers. And Anaconda remains a big focus. We've got $17 million, as Clive mentioned, on the exploration site. $17 million budgeted for an exploration for Anaconda for this year. We've got a lot of flight drill rigs on and active there. And then in late March, we put out an updated resource for Anaconda. A reminder to you that Anaconda includes the Manicoto Permit and the Patanko North Permit. And that resource had initially indicated... mineral resources of 1.1 million ounces, and inferred resources of 2.3 million ounces. So a lot of upside in Mali. We budgeted $33 million to start developing that Anaconda area, and that has potential, I think, with a view to Phase I saprolite mining that could start as early as late this year, could add 80,000 to 100,000 ounces per year to our production profile, which isn't in our budget right now. Cardinal is in our budget, but Anaconda is not. I think Bill is going to talk a bit more about this after my comments. And there's also a phase two scoping study that we're starting to look at. We're actually going to look at what, beyond just separately trucking to the Focola mill, what we might do in terms of standalone mill at Anaconda. Then at Ochocoto, we continue to develop the Wolfshag Underground Mine. First development ore production is expected by the end of the first half, 2022. And then, as I said, we kind of move into full tilt production there at Woolshag Underground in the second half of the year. A couple of comments on the income statements on the other operating results. Just gains on derivative instruments. We reported $19 million in gains for the period. That $13 million, that all relates to fuel. $13 million was unrealized and $6 million was realized. But just so that you've got it in your minds, our fuel book, our hedge book at the end of the quarter with $29 million in the money. So about two-thirds of that will benefit 2022. And we flow those benefits through the all-in, sustaining cost number, as I realized. And then about one-third will come in in 2023. And I'll comment as well. Historically, we've said for fuel, we'd hedge up to 50% of one year's needs and 25% of the next year's. We're not quite at those levels at the minute. We're about 35% of 2022's needs and about 17% of 2023. And that's because We are realizing a ban for those hedges, but with some of the fuel pricing that we've seen, it's higher. Not as keen to jump into the market and put new hedges on, but we're constantly watching it, and we'll jump in if we see a dip in prices or something that looks like a good opportunity. On a net income basis, $90 million net income for the period. That was EPS of $0.08 per share for a shareable shareholder's company. And then on an adjusted net income basis, $65 million or $0.06 per share. Let's talk a little bit about the cash flow. Again, solid cash flow generating period. A reminder as well, because we're saying we're weighted so much for the second half of the year, we definitely see the majority of our cash flow, the greater part of our cash flows come in the second half of 2022. But even with that said, cash from operating activities in the first quarter was $107 million or $0.10 per share. I know a bunch of the analysts look at it on operating cash flow before changes in working capital. So if you look at that number, it's $152 million for the period or $0.14 per share. We've maintained our guidance on operating cash flow for the year. This is net operating cash flow, $625 million. And we have seen some higher prices that we realized in Q1, as I've talked about, in terms of selling price for gold. We're also seeing some slowdown in VAT recoveries at several sites, as you'd expect, as governments fight their way through the post-COVID period. So I think overall we've maintained our operating cash flow guidance at $625 million for the year. On the financing side, $42 million went out in dividends. This is a cue we've maintained our dividend at $0.04 U.S. per share, and as Clive said, that's providing one of the highest yields out there in the gold sector. Cash taxes, for those that are interested in such things, We haven't changed it. Clive will probably talk in detail about this because he loves talking about cash taxes. But it's going to be, we've maintained it at $290 million, same as we guided at the start of the year. And on the investing side, $77 million or $78 million cash outflow from investing, that's quite a bit lower. That's about almost $70 million under budget for the period. We're sustaining CapEx at $40 million, which was $33 million lower than budget for the reasons I mentioned earlier. Then on the non-sustaining side, we're about $35 million lower than budget. That related to the timing of fleet rebills, fleet purchases, underground development at Walsh Egg, just the timing of some of the payments related to that, and then some of the timing of exploration activities. But we do expect those to be timing issues, and we do expect to see them reverse later in the year. And Grand Malati, we continue to work towards getting a feasibility study done. We should know the results of that by the end of the second half. or the first half of the year with the feasibility study to come in Q3. And not left, as I said, very healthy cash position, $648 million at the end of the quarter with $600 million on drone and the revolver. And I think that concludes the comments I was going to make on the financial side.