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Vancouver, British Columbia--(Newsfile Corp. - August 7, 2018) - B2Gold Corp. (TSX: BTO) (NYSE AMERICAN: BTG) (NSX: B2G) ("B2Gold" or the "Company") is pleased to announce its operational and financial results for the second quarter and first-half 2018. The Company previously released its gold production and revenues for the second quarter of 2018 (see news release dated 07/11/18). All dollar figures are in United States dollars unless otherwise indicated.
2018 Second Quarter Highlights
2018 First-Half Highlights
2018 Second Quarter and First-Half Operational Results
With the new large low-cost Fekola Mine now in full production (after achieving commercial production on November 30, 2017), consolidated gold production in the second quarter of 2018 was a quarterly record of 240,093 ounces, a significant increase of 98% (118,645 ounces) over the same period last year and 7% (16,308 ounces) above budget. In its second full-quarter of commercial operations, the new Fekola Mine continued to operate above plan, producing 112,644 ounces of gold in the second quarter of 2018, 11% (11,225 ounces) above budget. Based on Fekola's strong year-to-date performance, the Company has revised Fekola's annual 2018 production guidance range higher to be between 420,000 to 430,000 ounces of gold (original guidance range was between 400,000 to 410,000 ounces). The Masbate Mine and Otjikoto Mine also had another solid quarter with both mines exceeding their targeted production levels for the quarter.
Consolidated cash operating costs in the quarter were $474 per ounce, well below budget by $86 per ounce (15%) and $157 per ounce (25%) lower than the prior-year quarter. This favourable budget variance was mainly attributable to the higher than budgeted production at the Fekola and Masbate mines combined with lower than budgeted production costs at these mines. Compared to the prior-year quarter, the significant reduction in the consolidated cash operating costs was mainly attributable to the new low-cost production from the Fekola Mine. Consolidated AISC were $721 per ounce, significantly below budget by $146 per ounce (17%) and $253 per ounce (26%) lower than the prior-year quarter, mainly reflecting the lower cash operating costs noted above. In addition, consolidated AISC were below budget due to lower than budgeted corporate general and administrative costs (due to timing) and sustaining capital expenditures (see Operations section below).
Consolidated gold production in the first-half of 2018 was 479,777 ounces, 7% (32,560 ounces) above budget and 89% (225,593 ounces) higher than the first-half of 2017.
For the first-half of 2018, consolidated cash operating costs were $477 per ounce, well below budget by $77 per ounce (14%) and $119 per ounce (20%) lower than the first-half of 2017. Consolidated AISC were $735 per ounce, significantly below budget by $147 per ounce (17%) and $194 per ounce (21%) lower than the first-half of 2017.
B2Gold remains well on target to achieve transformational growth in 2018. For full-year 2018, with the planned first full-year of production from the Fekola Mine, consolidated gold production is now forecast to be between 920,000 and 960,000 ounces (revised higher from the original guidance range of between 910,000 and 950,000 ounces). This represents an increase in annual consolidated gold production of approximately 300,000 ounces in 2018 from 2017. The Company's forecast consolidated cash operating costs are expected to remain low in 2018 and be between $505 and $550 per ounce and AISC are expected to decrease by approximately 6% from 2017 and be between $780 and $830 per ounce.
With the Fekola Mine in production, the resulting increase in production levels combined with low costs are projected to dramatically increase B2Gold's production, revenues, cash from operations and cash flow for many years, based on current assumptions. As previously announced, on average over the next three years, beginning in 2018, assuming a gold price of $1,300 per ounce, the Company is projecting per annum gold sales revenues of approximately $1.2 billion, cash flow from operations of approximately $0.5 billion and a significant increase in free cash flow (operating cash flows less investing cash flows). If a gold price assumption of $1,200 per ounce is used for the balance of 2018 and for 2019 and 2020, the Company expects to average cash flow from operations of approximately $0.4 billion per annum over the next three years.
2018 Second Quarter and First-Half Financial Results
Consolidated gold revenue in the second quarter of 2018 was $285 million on sales of 220,738 ounces at an average price of $1,290 per ounce compared to $164 million on sales of 131,737 ounces at an average price of $1,247 per ounce in the second quarter of 2017. This significant increase in revenue of 73% ($121 million) was attributable to the new production from the Fekola Mine and a 3% increase in the average realized gold price, partially offset by lower sales volumes due to the timing of gold sales from the Fekola and Masbate mines.
Consolidated cash flows from operating activities in the quarter significantly increased by $38 million (79%) to $86 million ($0.09 per share) from $48 million ($0.05 per share) in the prior-year quarter. The significant increase in operating cash flows was driven by the record quarterly consolidated gold production (as discussed above) combined with lower per ounce production costs. Cash flows from operating activities in the second quarter of 2018 were negatively impacted by non-cash working capital changes of negative $19 million (compared with negative $8 million in the second quarter of 2017). The main change in non-cash working capital in the quarter related to a $20 million increase in inventory, mainly relating to higher gold bullion balances at Fekola and Masbate due to the timing of sales (which are expected to reverse in the third quarter of 2018) and to the purchase of supplies inventory for Fekola.
For the second quarter of 2018, the Company generated net income of $21 million ($0.02 per share) compared to $19 million ($0.02 per share) in the second quarter of 2017. Adjusted net income was $46 million ($0.05 per share) compared to $13 million ($0.01 per share) in the prior-year quarter.
For the first-half of 2018, consolidated gold revenue was a record $629 million on record sales of 480,575 ounces at an average price of $1,309 per ounce compared to $311 million on sales of 251,674 ounces at an average price of $1,234 per ounce in the first-half of 2017. This significant increase in revenue of 103% ($318 million) was attributable to the new production from the Fekola Mine and 7% increase in the average realized gold price.
Consolidated gold revenue in the three and six months ended June 30, 2018 included $15 million and $30 million, respectively, related to the delivery of gold into the Company's Prepaid Sales contracts (accounted for as deferred revenue). During the three and six months ended June 30, 2018, 12,908 ounces and 25,816 ounces, respectively, were delivered under these contracts. At June 30, 2018, the Company had total outstanding Prepaid Sales contracts of $60 million for the delivery of 51,099 ounces with 25,817 ounces to be delivered during the remainder of 2018 and 25,282 ounces during 2019.
For the first-half of 2018, consolidated cash flows from operating activities significantly increased by $145 million (165%) to $233 million ($0.24 per share) from $88 million ($0.09 per share) in the first-half of 2017.
For the six months ended June 30, 2018, the Company generated net income of $79 million ($0.08 per share) compared to $15 million ($0.02 per share) in the comparable period of 2017. Adjusted net income was $104 million ($0.11 per share) compared to $32 million ($0.03 per share) in the first-half of 2017.
Liquidity and Capital Resources
At June 30, 2018, the Company had cash and cash equivalents of $107 million compared to cash and cash equivalents of $147 million at December 31, 2017. The Company had a working capital deficit at June 30, 2018 of $111 million compared to a working capital deficit of $99 million at December 31, 2017. The working capital deficits resulted from the classification of the Company's convertible senior subordinated notes to current liabilities since they are due on October 1, 2018. In 2016, the Company made a strategic decision to fund the construction of the Fekola Mine without using equity to fund part of the construction cost. Construction and pre-development of the Fekola Mine were funded using a combination of operating cash flows from the Company's existing mines as well as available debt facility capacity including the Company's revolving credit facility ("RCF") and Fekola equipment financing loans. In addition, the Company entered into $120 million Prepaid Sales arrangements, the proceeds of which were used to help fund Fekola construction costs in 2016. With the successful and earlier than anticipated ramp up of the Fekola Mine in 2017, the Company has begun to reduce its overall consolidated debt levels, including making $125 million of net repayments on its RCF in the first-half of 2018. The planned repayment of debt in 2018 also includes the anticipated repayment of the Company's $259 million convertible notes which mature on October 1, 2018, unless the notes are converted into shares prior to that date (conversion price of $3.93 per share). The Company projects that based on current assumptions, including a $1,200 per ounce gold price for the remainder of 2018, that it will have sufficient liquidity from its 2018 operating cash flows and existing credit facilities to repay the notes in full and maintain a strong cash position.
At June 30, 2018, the Company had $225 million outstanding under the $500 million RCF, leaving an undrawn and available balance under the RCF of $275 million. Subsequent to June 30, 2018, the Company repaid an additional $25 million of the RCF, leaving a current and undrawn available balance of $300 million under the facility.
Mine-by-mine gold production in the second quarter and first-half of 2018 was as follows:
|2018 Annual Guidance|
|Fekola||112,644||226,786||420,000 - 430,000 (2)|
|Masbate||54,254||107,401||180,000 - 190,000|
|Otjikoto||40,678||80,177||160,000 - 170,000|
|La Libertad||21,408||40,775||110,000 - 115,000 (3)|
|El Limon||11,109||24,638||50,000 - 55,000 (3)|