B2Gold Corp. (AMEX:BTG) Q2 2023 Earnings Call Transcript

B2Gold Corp. (AMEX:BTG) Q2 2023 Earnings Call Transcript August 3, 2023

Operator: Good day, and thank you for standing by. Welcome to B2Gold Second Quarter Earnings Conference Call. [Operator Instructions]. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Clive Johnson, President and CEO. Please go ahead.

Clive Johnson: Thank you, operator. Apologies on behalf of the phone service, not our technical issues, but theirs. So we’re a little bit late getting going. Welcome to the conference call to discuss B2Gold’s Second quarter 2023 Financial Results. We had another very strong quarter, again, highlighting the excellent performance of our — by operating team. And we’re very pleased with the results, and it makes us feel very comfortable we’re on track to — for our guidance for 2023 for the year of annual guidance. I’m going to pass over to Mike Cinnamond soon, our CFO, who’s going to walk you through, at a high level, what you probably already read, which is the details of the financial results, and we’re going to have an update from the line on focusing on Goose Project construction at Back River, and things are going very — pretty well there.

So we remain in an extremely strong financial position in the company, and that allows us, and Mike can talk at a high level about that to look at funding the Goose and continuing along with our industry-leading dividend and then maintain a very strong cash position with Goose now looking to come into production, as Bill will highlight, in the first quarter of 2025. I want to deal with an issue that’s come up, I guess, since we put out the news release about Mali and about the conversations around a potential new 2023 mining code. What we’ve put out in our news release, what we said in our news release set, the Fekola Mine will continue to be mined on Page 5 — in front of Fekola and Cardinal — actually Page 6 from the Cardinal pits. Receipt of an exploitation license for Bantako, which is one of the areas we were going to — we were hoping to start trucking ore down to Fekola, if you remember the Fekola mill.

The area remains outstanding pending finalization, exploration license for the Bantako North permit area remains outstanding, pending finalization of proposed new 2023 mining code at the state of Mali. What we neglected to say is well or read actually from the MD&A, which is a more thorough analysis of the situation and goes into more detail. What we say in the MD&A on Page 11 is the company, along with other mining companies in Mali, are engaged in discussions with the state of Mali to provide input into the proposed 2023 mining code. It’s still, at this point, remains a proposal. Any new mining code is not expected to impact the existing Fekola Mine operations, which will continue to be governed by the existing mining convention entered into under the 2012 Mining Code and the impact of the new 2023 mining code on Fekola Regional license — sorry, I’ll end it there.

So the bottom line is what we’re saying is that the — any proposed 2023 mining code that was not — in my understanding and recent consultation with the government as last week, the government’s confirming that they are not — this code is not going to look back to previous existing code. That would be unlawful. The 2012 code and the mining convention that comes — that came out of that dictates the terms; the ownership, 80/20, with ourselves and the government of Mali; and also dictate your taxes and all the details of that. That is in the code. And we expect this is implying to other gold miners in Mali as well who have valid outstanding codes and conventions from the past. So I just want to make sure people understand what we’re talking about here.

We remain convinced that the government of Mali wants more gold mining in the country and wants people like ourselves and for investors to invest. We have hopes and plans to expand in Mali initially by trucking ore as you’ve read from the Bantako and other areas down to the Fekola mill to feed soft saprolite material into the mill. We also conceptually have been talking about and looking at the study at the end of the year that could involve building a second mill potentially if the economics work and if all the other factors come into bear with the new resource in the North, et cetera. So that’s what we’ve been talking about potential expansion. I think it’s really important to point out that if you look at Fekola, has a great success in Mali, and other mining companies have had great successes for all stakeholders.

So we invested over USD 0.5 billion to build Fekola, 100% of mine B2Gold. The government owns 20% Fekola. We’ve actually contributed $1.2 billion of revenue to Mali since Fekola Mine started production. And based on our calculations, the people of Mali have benefited, the country of Mali has benefited by over 50% of the economic benefit of the mine. So we took all the risk upfront, built the mine. They realized over 50% of the economic benefit. That’s been a great success. So we remain committed to looking at further opportunities in Mali and where we believe that the government, from what we’ve heard, remains committed to increasing gold mining in the country. So when the new mining code comes out, we will have, I’m sure, further consultation with the government to talk about how we can work with our partner, the government, to potentially expand production at Fekola.

So I just wanted to really clarify that situation. And in fact, we probably should have done a little better job explaining it in the news release. The news release was about the financial results and an update on things. So at the end of the day, I wanted to make sure we communicate with everyone about the reality of the situation. Fekola, we expect will continue to be a great success for all stakeholders. With that, I’m going to pass it on to Mike to hit the highlights of the financials, and Bill will talk about — actually one more point on me before I pass over. I was quoted out of context a few weeks ago at an article that said that we were aggressively pursuing more M&A. That was not what I said. But at the end of the day, our strategy remains very much the same as it’s been for a while here, which is focused on our development projects, which includes the Goose Mine, which is — Bill will talk about, also was the potential — we continue to be coming in and building roads et cetera, for the expansion of Fekola by trucking ore.

We’re very committed to that. We’re very committed to a large exploration budget, a very large budget of Goose. We’re excited about the exploration upside there and other projects around the world that we’re exploring, including around existing mines. We are not anxious, we are not pursuing, actively pursuing M&A at the moment. We will not take on other development project that we’ve never done that before. We will not start doing it now trying to build 2 mills at the same time. So I just wanted to get that on the record that we are always looking at what’s out there in terms of other avenues of production growth, et cetera. We are not interested in strapping anything on, whether it would be a problem, mine or someone else or whether it be a further another project to build.

We’re busy. We’re very committed. We’re very focused. Part of our success is our ability to focus on one project at the time. So with that, I’ll pass it over to Mike.

Michael Cinnamond: Thanks, Clive. I’ll just touch briefly. I think, in the results, as Clive mentioned, I think the good quarter from the operations and financially. Firstly, on the revenue side, we sold just under 240,000 ounces at a realized price of $1,969 an ounce. That’s more than dollars an ounce, higher than we were in the same period last year. So benefiting from a good gold price. It’s obviously bouncing around a bit recently, but it’s still well above $1,900, [indiscernible] and as we look forward for the balance of the year as an estimate. On the production side, again, very much on budget. The total production from our 3 operating mines, 246,000 ounces. It’s just almost exactly on budget. And when you take in our share of Calibre’s results, which is 24% share right now, 263,000 ounces right on budget overall.

Saw a little over as under there. Fekola was a little under for the period, 8,000 ounces below budget at 152,000 ounces. There was a delay of excavator there and slightly lower production from Phase 6 just through building access to pit and the amount of production and mining we could actually do there. But we believe we’ll certainly hit Fekola’s target for the year. Masbate was a little over budget. It’s 49,000 ounces. So 5,000 ounces higher than budget, and they benefited from higher-than-budgeted mill feed grade and mill throughput. And in Otjikoto was a couple of thousand ounces over for just generally better, slightly better on budget on all factors. So overall, right on budget, 263,000 ounces in total production for the company. Translating that on the cost side, I saw $636 an ounce overall, including our share of Calibre, an ounce from our 3 mines.

So that — both of those numbers were between $35 and $40 lower than budget overall. We did see some offsetting factors. Fekola was $538 an ounce. It was actually a little higher than budget, which is a function of that lower-than-budgeted gold production effectively. On the fuel side, Fekola, we saw some offsets there. So diesel was a little lower than budget, but then we also saw HFO, we’ll switch into a new HFO source. We switched to new HFO source, HFO-180, which was — it’s a little greener, I think, for environmentally friendly. So that’s a little more expensive than what was budgeted. Masbate, $817 an ounce, which is more than $200 an ounce lower than budget. It didn’t really benefited from lower fuel costs. We were 20% plus lower on both the diesel and HFO at Masbate.

Otjikoto was also more than $200 an ounce, lower than budget, $611 an ounce for the period. And it benefited both from the slightly higher production, as I mentioned, and also lower fuel costs, not as significant lower as Masbate, but still lower and also weaker Namibian dollar. So remember, a high proportion of our costs and then maybe our denominated in Namibian dollars. So when the Namibian dollar is weaker, it translates into lower U.S. dollars, and we benefited from that. When you look at the all-in sustaining cost side, including everything, our share of Calibre, $1,214 an ounce. So it was a little over budget for the period, and that’s really a function of overall lower cash cost but higher CapEx that are almost exclusively based on timing.

We were lower in the first quarter on a lot of CapEx timing, and we caught up in the second quarter, particularly on some of the mobile cost across all the operations and some of the stripping costs. So overall, a little higher than budget, but no change overall to our guidance for the year. So I’ll just comment on that. So I think as we reiterated in our MD&A and news release, we expect our guidance is unchanged for the year annual guidance. So including our share at Calibre, somewhere between 1 million and 1,060,000 ounces or 1,080,000 ounces for the year. And on the cost side, no change to the cash cost operating guidance for the all-in sustaining cost guidance. We did mention, and as I mentioned there in the remarks, we are benefiting from lower fuel costs as we go through both the first and second quarter.

So we are watching that. We’ll watch that as we go through Q3. If we still see the benefit of that rolling through Masbate and Namibia for the balance of Q3, I think we will come back and look at our guidance again. But right now, we’re maintaining our guidance as is. A few comments on some of the other operations. I know Bill is going to talk to some of them. But in terms of Fekola regional development, we’ve continued infrastructure development there. We got the roads in. We did have 18,000 ounces for Bantako production. And our guidance for the overall Fekola Complex for the year, as mentioned and Clive mentioned. We don’t see that coming through now in ’23. We think that will roll into ’24. But we think we have enough optionality in the availability of ore.

At Fekola generally, that — our guidance will remain unchanged. We’ll still meet guidance for Fekola Complex. On Goose, Bill is going to talk to it. We did put out a news release just updating our CapEx estimate in the period, and it came in very close to what we said as we went through the acquisition itself. So CAD 800 million for the core construction of the plant and then about CAD 90 million that for accelerated underground development where we see that we can actually — we can do some more than was originally planned upfront, and then we’ll benefit from that in the first few years of operation at Goose. So we’re still on track to bring Goose on in Q1 ’25. And our share post acquisition costs when you translate it into U.S. dollars after taking into account the spend that Sabina already had, it’s just over USD 400,000.

That’s what we expected to incur to complete the project. Otjikoto continues on. And just a reminder as well, there is a — Otjikoto [indiscernible] was around ’24, and open pit mining activity at Otjikoto pit to conclude in ’25. But then we will have ongoing production from Wolfshag underground as well as stockpile. Processing that, that should take us right through into early 2031, somewhere around there. Gramalote, the sales process is ongoing. No updates to — to update you there at the present. Strategic investments, you saw us, look at the most significant one in the current period, and they put out a great number today with snowline. So we invested $32 million there for a 9.9% interest in Snowline. That’s part of the company’s ongoing strategy, just like you saw us invest in Matador from 9.9% investment last year.

And the other thing to highlight, maybe on just project side, we did disclose $20 million more in exploration for the year. We’re well over $80 million now, exploration budget for 2023. And that $20 million addition is exclusively for Back River, the Back River District. So both Goose, some more work there and the George prospects there as well. So we’re excited to get up there and see what else we can make for Back River. A couple of other comments on the results. So earnings overall attributable to shareholders is $80 million or $0.06 per share. Adjusted earnings were $86 million or $0.07 per share. And then on the cash flow side, we have good operating and overall cash flow quarter, $195 million in cash flow from operations or $0.16 per share.

So we benefited, like I said, from the higher gold price production, right on schedule, good cash costs overall and some working capital timing. So $195 million was a good result. On the financing side, there’s a couple of items to comment on there. With the acquisition, the main item that impacted the — certainly the balance sheet overall in the quarter was the acquisition of Sabina and while we — as we brought in those projects on the balance sheet. And in doing so, we took the opportunity to extinguish some of the existing financial obligations that Sabina had entered into as part of their financing package. So in total, we spent $111 million, which included extinguishing the offtake agreement that was there with a private equity firm and also to extinguish 1/3 of the existing gold stream with Wheaton precious metals.

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And we did that because we — they’re effectively royalties, and we obviously really liked the prospectivity at Goose and Back River generally. So it makes sense to try and take those out upfront if we can. So we took that opportunity. Then on the dividend side, we’ve maintained our USD 0.04 per share for the quarter. The dividend is higher this quarter overall in gross terms because of that actually 200 million-plus shares that were issued as part of the Sabina acquisition, and it’s our goal to maintain that dividend going forward, that level of dividend going forward as well as financing our capital obligations that we have for our various development prospects globally with more significantly that the Goose prospect — Goose project is currently underway.

We did finish the period with, as Clive said, great financial shape, over USD 0.5 billion in the bank. We still have an undrawn revolving credit facility. It was $600 million. We added National Bank in for another $100 million. So now we’re $700 million available on the line undrawn, $0.5 billion in the bank at the end of the quarter. So $1.2 billion in sort of available right on hand liquidity. And as we look forward to bring in Goose online, as we go through, I think what we see is we’re very comfortable in our ability to finance Goose, keep paying the dividend as we see and then also evaluating sort of the other capital needs that we have on the group. So I think we’re in good shape financially there. And with that, I think — the only other thing I’d add, we’d like to give you an update on cash taxes each period for your model.

So we did update the MD&A. There is an increase in cash taxes to just over $250 million, and that’s because we budgeted at $1,700 gold, and now we’ll reforecast — we’ve come through the first half of the year over $1,900 and we’re forecasting $1,850. So our new cash tax is approximately $250 million, just for your models. And with that, I’ll hand it back to Clive.

Clive Johnson: Thanks, Mike. I’ll pass it over to Bill to give us that high-level update on the exciting progress we’re making at Goose construction.

William Lytle: Sure. Thanks, Clive. I guess I want to start out with talking a little bit about really the key things for this project. Number one, obviously, we continue to maintain excellent relationships with the Kitikmeot Inuit Association up in Nunavut. We’ve had several stakeholder meetings over the course of the quarter, introduced them to the B2 philosophies and very positive outcomes. Additionally, and I think everyone is aware, this really — more than anything, this project relies on logistics for success. And if you look at the timeline, we’ve been very publicly stating that, yes, in fact, we will try and maintain the existing timeline, which has us producing first gold in Q1 2025. With that, the logistics — the overall logistics has gone excellent so far.

I think everyone is aware, B2Gold has their own logistics group — procurement and logistics group that has done this before. We did it in Far East Russia. And so they jumped right in and really maintained the excellent progress that had already been done. So far, there’s been a herc program, a C-130 program. We brought in more than 60 loads for the summer season this year. All of the shipping and ordering has basically been completed now. So things are on the boat heading towards a marine laydown area. Barges, which were stranded last year by Sabina, have been picked up, and they’ve arrived at the marine laydown area. So overall, as of today, we see that the procurement and logistics remain on schedule. As part of the next phase, we needed to come out and finish the Phase I construction of the camp.

That was completed at the end of July. So we currently have more than 130 beds. We’ll be going up to over 200 here over the next little bit. And that allows us really to bring our full construction team on site. So the construction team, at least the first wave, has arrived. And just to remind everybody kind of what the scope is this year, this year, we’ve got kind of 3 major areas that we need to work on. We’ve got the mill, of course, we’ve got the powerhouse, and we’ve got a big workshop that we have to get done. And really, the scope for this year is to get the concreting, get the steel up and get it all weathered in. So the concrete group has arrived on site. They are currently pouring concrete. And I should add that originally, we had inherited from Sabina, kind of an EPC contract, which was not the typical B2 model.

The B2 model is self-performed. So we’ve ended that relationship, and we’ve now brought back the same group that really has made us successful for the last 5 projects, has arrived back on site and is in the process of pouring concrete. So that is going very well. And actually so far, even the structural steel superintendents and supervisors have arrived on site. They’re busy sorting steel with the intent of getting everything put together as they can on the ground and waiting for the concrete to be poured, so we can move forward very quickly on that. On the underground side, just looking at it, one, from an operational perspective, that goes very well. We have — so far on the open pit, we’ve come down a couple of benches already. Remember, the first open pit is going to be used — has to be mined out for our tailings location.

So that remains on schedule. The underground, we’ve developed more than 1,300 meters in the decline, more than 128 meters in the vent raise and more than 374 meters in the access ramp. So basically, everything remains at or ahead of schedule. And what’s probably of more interest to you, we talked about initially when B2 acquired the project, the potential of kind of front-end, some more ounces. And so the engineering team here in Vancouver has been working with the site engineers. And I’m pretty happy to say, without having the final details that certainly, we are looking at kind of in excess of 300,000 ounces a year over the first 5 years of production, which I think is significantly more than what was in the Sabina feasibility study. And along with that, we’ve, of course, taken a first cut at what kind of the operational cost would be.

And I think we’ve already said it at least several times in the market. But what we’re really talking about is we’re talking about $1,000 an ounce, plus/minus right in there. Remembering — sorry, is in the all-in sustaining cost. And remembering that, that is still preliminary, with still some final work left to do. Mike already talked about the costs. We are talking right around CAD 800 million, plus an additional CAD 90 million for supercharging the development of the underground. And I guess maybe I’d end with it. I believe everyone is aware that there’s an analyst trip coming up. I think it’s the 26th of September, where we’ll be introducing people to the work that we’ve done on site, but also the excellent management team that we have that we brought over from Sabina and also, of course, our construction team and of course, showing all the excellent progress in logistics that we’ve had to date.

Clive Johnson: Just we had Board meetings over the last couple of days, of course, to review the quarter and present results. And a lot of discussion of the presentation around Goose, of what we’re doing there. And I think I can say, the Board takes great comfort as I do in the — in what we’re doing there and the experience factor of the team, as Bill touched on. This is what we do. We build our own mines, and we have history of doing it on budget, on schedule or even ahead. And we feel very comfortable where we are today. As Bill has highlighted, you’ll all see that those will be able to make the chip up there. There’s a lot of companies who have struggled in the North. We’re very aware of that. And we believe that we can set a new standard here for how we do it, whether it’s Northern Russia or Northern Canada.

So we’re feeling — the board is feeling very comfortable with the work that’s been done, and that we did inherit a good situation from Sabina. They’ve done a lot of the work and exploration feasibility and had kicked off construction in a difficult circumstance as a single-asset company to be able to arrange financing and advance the project. So as Bill said, we’ve combined our team with some very good people of Sabina that we’re pleased to have stayed with the project, joining forces with us. So a lot of good work has been done with KIA, our partners, the landowners, excellent relationship there. If you look at the history of B2Gold, where we’ve taken that culture of fairness, respect and transparency around the world, and the key is to deliver on the promises you make.

So we’re very excited about what we can do working with the KIA for — to advance and progress in Fintech, education, health care and other areas in the North we’re close with our partners. So the other exciting thing, and Sabina knows this very well and some Sabina shareholders know this very well, that Bruce and his group, Mcloed did the right thing, which is focusing on advancing the Goose project. And therefore, they went out and spent an awful lot of money in the exploration, although they would have — they would have liked to. At the end of the day, they did the right thing for their shareholders. So they had a relatively modest exploration budget because of the fact they were trying to build — to finance building the mine, that was the focus, of course.

So we’re very excited about the exploration upside, and I’m just going to pass it over to Vic here quickly to talk about how many rigs are on site and what our plan is for this year, exploring the Back River, the Huge Back River property as well as further looking at the extensions of Goose and the George deposits. So over to you, Vic.

Victor King: Thanks, Clive. I guess straight out of the gate, we were active up at the George Project. It was basically — the focus there was due to waiting for space to open up for the exploration team down at the Goose Project. We’ve completed 12 holes there. We don’t have all the — many of the results back yet, but that program has been completed. The focus now with the accessibility of accommodation down at Goose for the exploration team is Goose itself. To remind you, we have 5 excellent deposits there, and these are all open down plunge. So there’s a immediate potential there to actually extend these resources down plunge, and we’re looking forward to that. As Mike pointed out, we have $20 million for the balance of this year in the budget, which is to put it into context, Sabina was spending around CAD 5 million on annual exploration.

The $25 million, $27 million is 5x that much in half the time. So there’s been a very extensive ramping up of exploration at the Back River Project. We have 5 rigs planned for surface drilling at Goose itself. And then as we get access to underground drilling possibilities, we’ll be strapping in 1 or 2 rigs to that, hopefully, early towards the end of this year or early next year. So yes, very, very active in terms of our exploration and ramping up very fast.

Clive Johnson: The other thing is we have there at least a great exploration team of the Sabina, and everyone knows our strength in exploration has been a great — we have a benefit from the experience of the Sabina and exploration team, all their knowledge of the project. So that’s another area where we’re combining forces to aggressively pursue the exploration opportunities that we see there. I think with that, operator, we’ll open it up for questions.

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Q&A Session

Operator: [Operator Instructions]. Our first question comes from the line of Ralph Profiti from Eight Capital.

Ralph Profiti: Clive, I appreciate the clarification on the Mali situation. But I want to come back and maybe ask a question sort of in broad terms, when you’ve engaged in discussions and they solicit your feedback, where have you think that the concentration should be in terms of giving your input, right? Where are there any specific issues that should take precedent in these discussions in your view?

Clive Johnson: Well, I think the discussions with the government, ourselves and from what I’ve heard, other mining foreign investment mining companies successful in Mali is the fact of maintaining — the importance of maintaining an attractive economic environment to go and invest in Mali as we’ve done in the past. So that’s what we emphasized to government, and we always do the same and where we go in our conversations with the government, which is find a balance there; fair reasonable tax regime, which we feel we have under the — we’ve had in the Fekola scenario. And obviously, for a public company, part of the incentive of what we do is profitable mining. So our conversations with government and all governments is always surrounded about what is fair and equitable and what maintains an attractive environment.

Mali’s had such a rich history of gold mining for thousands of years. And the governments — for has been there a lot longer than us now, of course, . But they’ve been very — benefit a lot and have been very good to work with. They have changed the mining codes over time to more reflect the reality of the kind of standards that we see worldwide. So I would say the 2012 code reflects what we considered to be a fair and equitable environment for all stakeholders, as I mentioned. So that’s kind of the focus when we talk to governments all around the world is how to find that balance with the people of Mali should, of course, benefit from gold production in their country, of course, it’s their gold. At the end of the day, what’s the balance because they are not, at this point in time, able to raise hundreds of millions of dollars as we have done to build something like Fekola.

So that’s the balance, and we’ve had successful conversations in the history of Mali as a gold producer, I believe. We believe going forward, the government is keen on — I mean, the economy is driven in part to a pretty significant step of gold production, and we believe they’re going to want to see more successful development of gold mines in Mali.

Ralph Profiti: Got you, yes. I want to switch topics and come back to the construction update at Goose that was given last month. And the move to long-haul underground for Umwelt, right? And I’m just wondering, does that move sort of stope an ore pass and all this development as one of the critical path items. The reason I asked is that, that particular deposit and the old Sabina plan was at the front end of the mine plan. I’m just wondering how sort of ore sequencing by deposit happens now that you’re sort of changing the mining method.

William Lytle: Yes. So you’re actually like right in where we’re at right now in the design. So I don’t really want to comment. I would maybe say give us another quarter back — give us another quarter to really kind of come back and answer that correctly. We are looking at the sequencing. And really, a lot of it revolves around the crown pillar that needs to be mined out ahead of when you use the pit for tailings. And so sequencing. I don’t think we’re ready to talk about exactly which one, but certainly long haul stoping seems like the way to go for us.

Clive Johnson: That we think — that will add, positively add to the production profile.

William Lytle: Yes.

Operator: Our next question comes from the line of Ovais Habib from Scotia Bank.

Ovais Habib: Just wanted to say congrats on another strong quarter and great to see development of Goose progressing well. A couple of questions from me. Number one, just on the sustaining cost, 2023 seemed to be a bit of a high sustaining CapEx year. A lot of projects came in at the beginning of the year at the same time. Should we expect sustaining capital to subside going to 2024? Or should we maintain the same kind of spend going into the next year?

Clive Johnson: I think you can see it — I think we guided that, Ovais, when we put the budget out. It means a chunk of sustaining capital, some of it’s fleet. It’s time to upgrade some of the fleet, but also deferred stripping was quite a big number as we put out in the budget. So there were significant stripping campaigns both at Fekola, the new phases, and Namibia or Otjikoto. So obviously, like you said, Otjikoto, it’s winding down, I guess, by the end — by ’25. So you shouldn’t expect the same levels. Mine plunges bump up and down a little bit, but generally speaking, the last year and this year were happier stripping periods.

Ovais Habib: Got it. Got it. And just moving on to Fekola then and specifically Fekola underground. And maybe this question is for Bill. I believe you’re looking to release a new mine plan at the end of the year. That includes the plan on the Fekola underground. Bill, is there any update info you can provide on what Fekola underground kind of looks like? Or how you’re envisioning that?

William Lytle: Yes. Well, I can provide an update kind of where we’re at for sure. So you have to remember, the Fekola underground development, more than anything, was to really get down to the deposit and drill it off to an indicated resource, right? So while we do have, what I would say, a conceptual mine plan on that, what we really did was prepare development and got approval from the government to get the development down to the phase. I will tell you that, that development, because it was a rather new concept in Mali where you did exploration from underground, it took a little longer. So we were about a quarter behind, but all indications, our burn-cut is on site right now. They’re doing the development for us, is that they will catch up, and we will see that in Q1 2025.

So I guess the short answer is yes, it will be part of the update at the end of the year. It will contain really the resource that you’ve already seen at an inferred level as it fits to the whole plans. There won’t be any update for that, but it will be part of the year-end update, the comprehensive Fekola Complex.

Ovais Habib: And basically, I mean, is this study kind of trying to see if this is feasible? Or is this kind of already given the green light, and you — we should start seeing some production from underground — Fekola underground in the near term?

William Lytle: In 2025 is when you’ll see production out of the underground.

Ovais Habib: Got it. Okay. And just moving on to the exploration program at Goose and George. You guys mentioned drilling has commenced. So when can we start expecting some results from the program? And again, is the priority of this exploration program to kind of target near mine exploration? Or are you looking more regionally as well?

Victor King: The target at this stage, we started, as I said earlier, at George for basically logistical reasons. So that’s the regional work that’s been done to date. The focus now will be at Goose. And there’s a mix there of both, as I indicated earlier, looking at extensions of the known deposits. That’s the focus this year. There’s also targeting particularly the Crown Pillar area and below that to actually provide more detailed infill drilling to some extent for — to allow that planning of that drilling — of the mining of that crown pillar within the time frame. So in terms of more regional work both at Goose itself and George, we’ll probably pick up on that next year more. But certainly, we’ve got a lot to do even on the extensions that we have of the existing deposits.

Clive Johnson: Some Goose results.

Victor King: I’m sorry, the timing of the results. I guess because of the location, the turnaround is not great on assays. So we’re looking at 4 to 6 weeks at least. So having just started basically this week at Goose, we’re looking at probably another 2 months at least before we start seeing some of the results coming in.

Clive Johnson: From Goose.

Ovais Habib: Sounds good. And just shifting gears to the situation in Niger. Now B2 obviously doesn’t have any exposure in Niger. But Clive, maybe can you provide any color or thoughts on Niger? And any sort of impact to your brand portfolio?

Clive Johnson: Well, obviously, everyone is watching what’s happening there. I mean, we feel that our — for our circumstances in the — in Mali, we are working with the current government, and the government is popular. The coup a few years ago was a bloodless coup. There was dissatisfaction widespread amongst the people with the government of the day at the time. And I think if you talk to our people in Mali and many people in Mali, they feel that it’s — the government of Mali has done some good things for the people of Mali. So I think there’s some stability there, and they are heading into elections — committed to elections next year. So sometimes, the west misinterprets or misreads what’s happening in each of these countries.

I’m not an expert at Nigeria, and I really won’t comment much about that. At the end of the day, we’re hoping to see continued political stability, and we believe we will see that in Mali, I’m not a expert on all the other countries in West Africa.

Operator: Our next question comes from the line of Don DeMarco from National Bank Financial.

Don DeMarco: First question. At Fekola, Bill, you mentioned that there’s ore available to replace the 18,000 ounces that would have otherwise been trucked in. Would this replacement ore be comparable in terms of grade, operating cost and CapEx to the ore that would have been trucked in?

William Lytle: The answer is yes. The short answer is yes. It will most likely come from Cardinal or some of the kind of extensions of Fekola. So with it being closer than coming from Bantako, it has to be at or better the overall cost that you would see at Cardinal. So you should model it as the same.

Don DeMarco: Okay. And it seems like you’ve got some flexibility there with Cardinal, Fekola in general. If some of these trucking delays persist into Q1, do you also have the flexibility to replace what you might have otherwise trucked for a period of time?

William Lytle: Yes. And I mean, we are — so remember, we’ve always talked about the kind of flexibility. That’s the beauty of having all those licenses getting set up the way we are, to be able to mine for multiple pits. We still are projecting that in 2024, we will be trucking from the Bantako area, right? That’s still in our life of mine. So if that changes, which I can’t imagine at this time that it would. I mean, when we were just there meeting with the government. Now that they’ve kind of gone through the review of their mining code and are trying to sort of what they’re going to do with it, the technical guys are saying, we need to start moving this stuff as forward as fast as possible. So we absolutely see bringing some regional stuff in, in 2024 to the Fekola mill.

Don DeMarco: Okay. And while we’re talking about Fekola and Mali, you’ve been there firsthand with these negotiations. How would you describe the sort of the tenor of the meetings? And I mean, obviously, you have a long-standing positive relationship with the government there. Are you seeing, based on what — your engagement there, that this should continue?

William Lytle: Absolutely. I mean what we’ve been saying over the last quarter in which I just validated being down there for 2 weeks, was that the Malian government considers B2 kind of the poster child of what they want in mining there. So Clive didn’t really hit on it, but the reality is that some of this talk about changing the mining code is really bringing up some of the other people that are not under the 2012 code to kind of what we’re doing, right? So as far as we’re concerned, we continue to have a very good relationship. And quite frankly, we expressed our concern on, one, really the way that these discussions around the mining code have been happening. And every one of the government officials I met was saying, we do not want to slow down mining in Mali. It is a cornerstone for our economy.

Don DeMarco: Okay. That’s good. That’s encouraging. At Goose then, shifting to Goose, congratulations on the progress so far. And one of the items you guys did was successfully completed the ice road without any incident. And you actually create — came up with some creative ways to expedite development next year. But my question is have you looked at the cost and benefit of building a permanent road to the site? And if so, what might that cost and some of the benefits be?

William Lytle: Well, I think that Sabina had looked at it. There’s never going to be, at least in the short term, a permanent — and unless you never say never. But the government and the KIA up there do not want a permanent road into the site. And so that would really require extensive, extensive discussions. What you can do is there is some talk that you could actually put down some base within your license area to shorten what the ice road would look like. But I don’t think you’ll ever see an all-season road in there.

Don DeMarco: Okay. Great. Well, that’s interesting, but it seems that’s good for that — thanks for that color. Last question on Masbate. Okay, we see Masbate benefiting from lower fuel prices. There could be a guidance, cost reduction. Are the fuel costs running below budget at the other mines?

Michael Cinnamond: Yes. It’s Mike, as I mentioned, they are also — at Namibia, they’re lower than — they are not as much below budget as Masbate. Remember, Namibia, we’ve kind of of HFO because now we’re connected to the grid. So we’re — it’s only really diesel cost that we’re exposed to fluctuations there. And in Mali, diesel is a bit lower, but HFO — this new blend of HFO is a little higher. So kind of more neutral in terms of overall fuel costs. Masbate is the one that is impacted the most by fuel right now.

Operator: [Operator Instructions]. Our next question comes from the line of Anita Soni from CIBC World Markets.

Anita Soni: Just following on Don’s question about the fuel. As I recall — or maybe I’m thinking of it incorrectly, but — and it wasn’t you, but is there a little bit of a lag in terms of the sort of your inventories and the effect that you have in terms of fuel pricing? So the question really being is, could we see like more of an effect going into next year as fuel prices come down?

Michael Cinnamond: There’s probably 2 or 3 parts to that. Historically, we had disclosed — there was a lag in Mali because the government sets fuel. And what we’ve seen certainly initially over the last couple of years was they were much slower to react to change the fuel price than the underlying market price was. Whereas in the Philippines, you see that correlation impacted much more quickly, for example. So that’s one, the setting of the fuel price by the state, and Mali does create a lag sometimes. The other one to think about as you go forward, that’s not an operation now, but Goose. There’s a short shipping season. So you’re going to be shipping fuel in large increments over the summer, and that fuel is going to be used over the course of the year.

So you’re not going to see the same direct correlation with the market price there for Goose fuel because it’s going to be inventory . So as we get near to Goose coming into production, we’ll be able to give you more guidance on that, as to the quantity of fuel and the valuation that subscribed to it. But those are the 2 main timing differences. I think you got to think about government pricing in Mali and then the impact of Goose having the short shipping season when it comes into operation.

Anita Soni: Okay. And then just in terms of the sort of cadence for the rest of the year-end quarters, you’re running, I think, at about 50% already. Was there — was it expected to be slightly more back half weighted at these assets? Or was it relatively even like we could just continue to…

Michael Cinnamond: Consolidated relatively even, but we did disclose in Otjikoto. They were — they had more of a — as you get into both the Wolfshag underground and some of the higher grade parts of the later Otjikoto open pit, you get — it was weighted like 60-40 second half to first half of the year. So you’ll see a slightly higher production in Otjikoto.

William Lytle: And Fekola is the opposite.

Michael Cinnamond: And Fekola has a little tapering. So overall, not really significant fluctuation on the total production from our sites.

Anita Soni: And you would expect, all else being equal, that the costs would sort of follow the opposite trend then, I guess?

Michael Cinnamond: Historically, that’s correct. And like I said, we haven’t reguided half 2, our — after the first half, but we will come back and let you know where we think things are at just as we gauge fuel prices going through Q3.

Anita Soni: Okay. And then lastly, on the Goose Project. You mentioned that you’ve gotten rid of the EPCM contract and moved to your own owner-operated building fleet, I guess. Can you — are there any costs associated with the terminations of those contracts that we should be thinking about? Or is that already included within the budget that you just announced a couple of weeks ago?

Clive Johnson: Yes, it sounds like a legal question.

Michael Cinnamond: The cost of termination was nominal, and you won’t see it an impact on the budget that was put out.

William Lytle: It’s factored in for sure.

Clive Johnson: Great legal answer.

Operator: Thank you. At this time, I would now like to turn the conference back over to Clive Johnson for closing remarks.

Clive Johnson: Okay. Thanks, operator. Thanks for your good questions. So just a couple of things. One thing I noticed that I forgot to have mentioned, a very important thing on that is that as part of our going forward at Goose and Back River, we will be looking to, of course, maximize Inuit employment and training. I don’t know if you want to touch on that, but that’s a very important part of — as we — in all of the countries we’re in, I think everyone is aware that we are well known for having very high employment from locals in the 98% range, I think as a company. So here we are back in Canada, bringing in the culture. We’ve been so successful around the world, the B2Gold, the culture back to Canada. We can do a lot of good work there in terms of working with the Inuit community in treating unemployment.

William Lytle: Yes. No. Sure, Clive. I mean, as you pointed out, we have a very good relationship with the Inuit communities up there. We have an agreement signed with them. It was signed under Sabina, which does ask us to maximize kind of local hires, and we’ve really taken that to heart. I think with that, we’re well over — I want to say we’re in double-digits percentage already in hiring of the Inuits. And I think that number is going to only go up as we create job training programs and opportunities for them.

Clive Johnson: Thanks. Well, we covered a lot of ground. Thanks for your time and your questions. And for any follow-up questions, I’ll talk to Michael McDonald, and he’ll get the right individual to answer your further questions. So thanks for your time. And let’s remember, this is a really good quarter that we just put out, and reflective of how I believe how well this — how well we’re doing as a company and that we’re excited and that we are excited about our growth prospects going forward. So thank you very much.

Operator: Thank you. This concludes today’s conference call. Thank you for participating. You may now disconnect.