B2Gold poised to beat 2018 forecasts after stellar Q3

B2Gold Corp. [BTO-TSX; BTG-NYSE] shares have rallied sharply in recent days as investors anticipate better than expected production numbers in 2018 following an impressive third quarter.

On October 10, 2018, the day before the company announced its production results for the third quarter, B2Gold shares opened at $3.08.  By October 15, 2018, the stock had jumped to a high of $3.55, marking a gain of 15.3%.

Based in Vancouver, B2Gold is a senior gold producer with five operating mines and numerous exploration and development projects in various countries, including Nicaragua, the Philippines, Namibia, Mali, Burkina Faso, Colombia and Finland.

Its roster of producing mines includes the Fekola Mine in Mali, West Africa, the Masbate Mine in the Philippines, and the Otjikoto Mine in Namibia. The company also has two mines in Nicaragua – La Libertad and El Limon.

On October 11, 2018, B2Gold said highlights from the third quarter included consolidated gold production of 242,040 ounces, an increase of 78% from the same period last year. The company attributed the increase to the continued strong performance of the Fekola Mine, the Masbate Mine, and the Otjikoto Mine.

Fekola continued to operate above plan, producing 107,002 ounces of gold in the quarter. Masbate produced 57,542 ounces, the second highest quarterly production ever for the mine. Otjikoto produced 42,403 ounces, exceeding budget by 4%.

The company’s third quarter production beat a Scotiabank estimate of 233,000 ounces.

As a result, B2Gold is guiding the market to anticipate 2018 consolidated production at the top end of its forecasted range of between 920,000 ounces and 960,000 ounces.  It could even exceed production guidance for the year, Scotiabank said.

At Fekola, B2Gold plans to release a new resource estimate in the second half of October 2018. It will include a portion of the Fekola North Extension. The company is also working on a technical report due in the first quarter of 2019 that will consider an expansion at Fekola.

In the event that the mill can be expanded to 7.0 million tonnes per year (from 5.0 million currently) and reserves can be expanded by 1.0 million ounces, our scenario analysis indicates that the Fekola project net asset value would increase by up to 15%, Scotiabank said.

The company has estimated that it could add up to 900,000 ounces of gold, consisting of 720,000 ounces from the existing indicated category and 180,000 ounces from the existing inferred category to the Fekola mine plan with further infill drilling.

Meanwhile, B2Gold said consolidated gold revenue of $324 million in the quarter marked a significant increase of 110% over the same period last year.

Subsequent to the third quarter, the company repaid in full its $259 million aggregate principal amount of convertible senior subordinated notes, which matured on October 1, 2018.