B2Gold Corp.

Good afternoon. My name is Jason and I will be your conference operator today. At this time, I would like to welcome everyone to the B2Gold first quarter 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 would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. I would now like to turn the call over to Clive Johnson, President and CEO. Mr. Johnson, you may begin your conference.

Thanks, Jason. Welcome to the conference call to discuss the financial results for the first quarter 2021. Thanks for attending. We had another very strong quarter, as you're going to hear from Mike shortly, as evidenced and as laid out in the news release. Very good financial performance, again, driven by Strong operating performance at the mines, which allowed us a significant beat on operating and also safety costs. And all of this, as everyone is still aware, is during COVID. So once again, it speaks to the tremendous leadership and the tremendous management and the employees we have on all of our sites, everyone on the same page, which was committed to continuing to mine during COVID if we could do it safely and responsibly. We've had great relations with the governments in the countries that we mine, and I think we've We've earned a lot of trust there, I think, over time with the cultural approach that we bring to the business of treating people with fairness, respect, and transparency. I think that pays off at a time of crisis or in a situation like COVID because we establish a mutual trust. So the government, our employees, and the company all wanted to do the same thing. They wanted us to keep mining but do it safely and recognizing the impact of COVID. So we took many steps we've talked about before to assist the areas we're in opposite COVID. as we do with all sorts of aspects of their lives but i think it's been a great um success in a very difficult scenario all around these countries don't have a safety net so the fact that um we can continue to mine and pay taxes and keep these good paying jobs going and keep our communities as safe as possible i think it's been a it's been a good thing for the for the industry i think there's a positive going forward potentially in the mining space, because I think post-COVID, many governments will look at who were the good performers, what were the good businesses to have in your country during COVID. And I think the responsible miners, not just others as well, have shown governments that global mining can be a very positive thing in a time of crisis. So just in general, we're going to review the results of the quarter, and then we're going to talk a little bit about Grand Lafayette. And as everyone sees in the news this week, We delayed the completion of a final feasibility study, and then we think that will be about a year. And the economics are positive for the feasibility work that we've done so far. But we feel there's a much better project there, or potentially better project there with an optimization for the drilling and other things that we can do. So while the economics are positive, we want to make it a better project, and we're going to take the time to do that. I think it's important to know that also we were going to be looking at, we originally hoped to potentially have boots on the ground in September of this year if there was a positive development decision. There was going to be some delay in that anyway because the government was interested in our idea of doing resettlement in stages instead of all together waiting two and a half years to do all the resettlement and then start construction. So we've had conversations with the government where they've been interested in hearing more about that idea, but they did ask us to go And then do some public consultation, understandably, and also to have the government review this proposal, which will take some time. So we probably would have been looking at a six-month delay, the poops on the ground, regardless of the economics and whether we've had a positive development season. So now we're talking about a feasibility study of the year. And Bill will use your detail as to what we think and why we think more drilling and some of the other things are important. People talk about optimization sometimes. to perhaps try and negate some negative. But in this case, there's a number of things you'll hear from Bill that we identified in the project some time ago that we thought were things we may have liked to have optimized. But at the time, we were trying not to change the footprint because HEA in the pre-feasibility study had realized a construction permit. So we were trying to stay within the bounds of that. Now we can open that up and look at the authorization and hear more about that from Bill. We remain very positive on the project. We've had good conversations with AG, our partner, and we're looking to briefly, to shortly finalize a budget over the next year, an increase in budget, and we should be able to hopefully announce that soon. But conversations we've had that were on the same page were disappointed that we didn't have the robust economics we saw in the PEA. We'll talk to some of the things that changed, but they, I think, along with ourselves, remain positive that this can become a good-ass and a good project for us. So we'll go and do all that work. I think it's really important to know as well the government relations remain very good in Ethiopia and within the federal government. We had a meeting yesterday. I had a call with a representative of the Minister of Mines in Colombia, and they've been very supportive, and they're a bit disappointed to hear that it's not going to happen in a regular way, but very supportive of our desire to build the best project for everyone, including the Colombian people and the government as well. So very supportive there. And there's a lot of activity going to be happening, as you will hear, on the site in terms of working towards the resettlement program. All of our social programs are doing there, working with the government, with small miners. So a lot of good things are going to happen in addition to the optimization to pretty much keep this project moving forward. Generally, corporately, I think I'll just touch on strategy briefly. We remained pretty much on the same page in strategy. We've been on for some time, which is to continue to optimize production around our sites. are at the sites, as we've seen. We're going to continue to pursue our development opportunities to see where we're going with those, including Granolatte, Hakiaka, and also looking at the potential for additional production of Ficola from the Anaconda area. As we announced in the newsreel, we applied for an extension of the Minicola license, which is part of Anaconda, with the government. We felt we fulfilled all the requirements and obligations to legally do that. And we're in discussions with the government as we speak about remedying the situation, and we hope to have a positive resolution of that. But we will take whatever legal means we have to us if required, because we think legally we should have been awarded that extension to the license. So we're working to eliminate any confusion about that, also working with the government on that. It's an important project for us, and in fact, as you'll hear from Bill, We are planning to be trucking ore from Manicola Manaconda down to the Focola Mill as early as early next year. Obviously, that's subject to the getting the license issue sorted out. And once again, we think there's tremendous potential in Manaconda. not only for the saprolite, which we've seen the resource about 800,000 ounce so far, but much greater potential in the saprolite and underneath in sulfites. Very good drill intercepts. So it's an important project to us. I think it's a very important project to the people and the government of Maui as well. And we're uniquely suited to produce from there to everyone's benefit, given the proximity to the Fukuoka Mill. Other than that, we're going to continue to focus on another thing we've done extremely well, which is exploration. We've had great results around I've asked Tom to say a few words today because we traditionally had great results around the mines, you know, turning resources into reserves, increasing mine life. That work continues, and this continues to go very well. But also, you know, we were bored of exploration twice, and being on Beach and Gold, we're very good at grassroots exploration as well as brownfields. And we've got a very good exploration budget this year, a large budget, which I think is a good thing. If you look at the return on investment over, let's say, the last three years or so, I think somebody worked out that it's about $19 an ounce is there. per exploration span to discover ounces of gold, their costs are remarkably low. So as I always say, the cheapest ounces will be the ones that you find. So Tom will talk about some of the exciting grassroots projects that we're doing, and we'll touch on the brownfields as well. In addition, we're always looking at opportunities to grow. M&A has been top of these days. We've said repeatedly that for us to go into that area would have to be something that we could find value. for our shareholders on an accretive basis, not anticipating higher gold prices or exploration success. That's the discipline we've had for decades, and that will continue. So we're looking in the mirror. If anything, if we enact transits or anything, it's going to be something that we think there's an opportunity for us to add shareholder value. We're not likely, frankly, to win any bidding wars on a few decent deposits that are out there because we won't overpay. We did some of the heavy lifting before in the sense of building with Jakoto. when it was very unpopular to be growing, hence the opportunity at the time being contrarian. But we continue to look at things that make sense to ensure the value from an acquisition point of view. So that is an overview. I'll pass it over to Mike, and he's going to give us some of the financial highlights, discuss our financial position, and then we'll be hearing from Bill and then Tom. Over to you, Mike.

Thanks, Clive. I think I can run through the results of the quarter fairly quickly. It was a good, clean quarter and some nice results. So just starting firstly with revenues, we had revenue of $362 million on the sale of 257,000 ounces and realized an average price of $1,791 an ounce. And overall, we sold 14,000 ounces more than we'd originally budgeted, and that's really a function of having higher production than budgeted in the quarter. So total production in the quarter, including our share of Caliber, was 221,000 ounces, basically 19,000 ounces ahead of budget. Total production from our three sites, operating mines, was 206,000 ounces, which was 18,000 ounces ahead of budget. So looking at those individually, Focola, we produced 125,000 ounces, which is about 8,000 ounces higher than budget, and that's primarily a function of Focola processing facilities, continuing to outperform. We had originally expanded the Focola Mill to a notional annual throughput rate of 7.5 million tons. We did budget 7.75 million tons for 2021, but in the first quarter of 2021, we had a quarterly record of almost 2.1 million tons, or an annualized rate of well above 8 million. So Focola Mill is outperforming, and we're seeing more production as a result. Ms. Batty was 58,000 ounces, 7,000 ounces ahead of budget, and that's a function mainly of higher than budgeted mill recoveries. If you look at the ore feed that was processed in the period, we had better recoveries from the high-grade sulfide ore that we mined from main vein in the period, and also better recoveries from the low-grade stockpile, some of which material we ran through the mill, and that was originally mined from Colorado, but both of them had better recoveries Then Ojikodo production was 23,000 ounces, 2,000 ounces higher than budget, and that was really just slightly better on all fronts, processed tons, grade, and recoveries. Looking at that in the context of cash costs per ounce produced, consolidated cash cost per ounce produced for the quarter, $609 per ounce. That was $54 lower than budget. And from our three operating mines, $581 per ounce, and that was $60 per ounce. less than budgeted. And if you look at the individual components, FACOA, $503 per ounce, $55 less than budget. And the beat on budget in terms of cash cost for ants is a function of a few things. It's higher than budgeted production, as I mentioned, and lower than budgeted mining and processing costs. We had lower maintenance costs at the mill in terms of our, sorry, lower maintenance costs for the mining fleet. And then we had lower budgeted processing costs at the mill uh higher melt throughput and lower cyanide juice also to note uh the new focal power facility actually came online in the quarter slightly earlier than we thought and we think that probably benefited cash cost by approximately four dollars per ounce in the period against budget ms batty 608 dollars Owns cash cost $80 less in budget and that's almost exclusively higher production in the period. We did have some savings in mining cost, but it's mainly driven by higher production. Ojikodo was $940, that was $56 per ounce, lower than budget, and that again is primarily a function of the higher production. Then turning to all-in sustaining cost per ounce sold, consolidated, including caliber, $932 an ounce, which was $146 dollars lower than budget. And if you look at our three operating mines, it was $919 per ounce, or $159 per ounce lower than budget. And that's a function of a few things. Obviously, the lower cash costs as described a second ago, and also the higher than budgeted ounces sold. We produce more and sold more, and that has a positive impact on the sort of fixed capital element when you look at it in terms of all-in-sustaining cost per ounce. And also, we have lower CapEx. That's mainly lower sustaining capital. It's really the timing of fleet maintenance and rebuilds. Those are really the primary drivers. The capital costs, we think, are just timing, and we think they'll reverse later in the year. Just to give you the individual components of the all-in costs, Focola was $770 per ounce. That was $128 lower than budget. Miss Batty was $818, $194 lower than budget. 1475, which is a larger number, but it's still $240 less in budget. Just a reminder for everyone on the line, the production from Ojikoda was very significantly weighted to the second half of the year. In the first half of the year, we're processing almost exclusively from stockpiles at site, while we continue to strip the Ojikoda and Wonshaik pits. And when we get into those pits later in the year, especially the higher grade components of wolf jag in the second half of the year, we'll see that production level significantly increase. Overall, production-wise, cash cost-wise, we still think we're on target for our guidance for the year. Guidance is maintained. Again, reminder, it's significantly weighted to the second half of the year. Our production for the first half is between 390 and 415,000 ounces. and the second half is 580 to 615,000 ounces, and that reflects us getting into the better grade material in the second half of the year, both at FECOLA and at OJECOTO. This BATTI is fairly consistent as it goes all the way through the year. A couple other comments on the operation. I know Bill's going to give you some comments later, but just a couple other thoughts. At FECOLA, What's not included in the budget or that guidance for Focola is any new material from the Cardinal area. We're currently looking at that now and what we can pull into the 2021 mine plan, but that wasn't included in our budget or guidance. Focola Solar, I mentioned, that came online. I think we've now managed to source the remaining solar panels and get them on the way to site. They were on a ship at one point waiting to go through the Suez Canal, Fortunately, that's resolved, and so we're still on track to finish the solar plant by the end of the second quarter. But in the meantime, we did bring it online, the first part of it, online earlier than expected. A couple of comments, I think, on really income statement, good results, nothing major to highlight. The earnings for the period, $99 million. Earnings attributable to shareholders, the company, $91 million, or $0.09 per share. And adjusted EPS was also $0.09 per share. And a few things to highlight on the cash flow statement. So cash provided by operating activities was $146 million. So that's pretty close to our budget in the end. So we did have a beat, as I mentioned, on the cash cost side. So the costs of our operations were lower. But offsetting that, we had some working capital movements really related to the timing of that and certain tax payments that offset that. So we ended up pretty much right on budget for the quarter for operating cash flow. And assuming a goal price of $1,800 for the full year, we're still on track, we think, for that guided operating cash flow number of somewhere around $630 million. Approximately $500 million of that will come in the second half of the year as we get into that higher-grade material and higher production, higher sales. And just to remind everyone that the second quarter's operating cash flow will be impacted by the payment of those outstanding 2020 tax liabilities. There's about $140 million worth of 2020 tax obligations that will be settled in the second quarter, the largest part of which is for FACOLA, but $125 million of that total relates to either FACOLA taxes or priority dividend payments, which are triggered as a tax. And we'll also have, in addition to that 140, we'll also have some other withholding tax payments we'll make for monies that we're going to pay, remit up from sites as dividends to pull the cash up from sites. A couple other things to highlight in the cash flow statement. Dividends to shareholders, so in the quarter, $42.4 million U.S. per share. We're pretty comfortable with our dividend level right now. Annualized, it would be $170 million U.S. We are paying one of the highest dividend yields right now in the gold sector. And it's a significant component of our 2021 free cash flows. So we will look at it again in the second half of the year. But as I mentioned, I think we're pretty comfortable with that level just now. The only other couple items I'd highlight on the cash flow statement, investing activities, just under $60 million for the period. That's about $18 million less than budget. And as I mentioned in the all-in sustaining cost discussion, some of that's timing on CapEx for mobile fleet and rebuilds. at sites, we think that will reverse later in the year. And on the non-sustaining site, we were under fairly significantly. Gramalati was under $6 million. It's under budget, but we're continuing to work on the feasibility study, so we expect that will reverse. And in fact, as we noted in the news release, we are currently in discussions with AGA about increasing the feasibility study budget by approximately $34 million, so our share would be $17 million. million higher than we've currently budgeted, and that would take us through to the end of the first quarter of 2022 when we expect to finish a feasibility study. Also under on the CapEx side, we were about $5 million under in the quarter of expiration. That's just a function of timing, again, and we expect that to reverse later in the year. And so overall, we finished Q1 $512 million in the bank and $600 million undrawn. We've got the full amount of our revolving credit facility available to draw. And so we're in good shape cash flow-wise, liquidity-wise, and it was a good solid production quarter and results quarter. So I think those are the main things I was going to highlight there. So thanks.