U.S.-China tension sparks flight to gold

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B2Gold Corp. [BTO-TSX; BTG-NYSE] and other gold stocks rallied Wednesday August 7 after the price of the yellow metal hit a 6-year high of US$1,500 an ounce. Gold is traditionally a safe haven in times of uncertainty. Analysts attribute the latest move to heightened U.S.-China trade tensions.

“The world’s two largest economies have been locked in a bitter trade tussle for over a year now, which rapidly escalated last week when U.S. President Donald Trump said he would impose additional tariffs on Chinese goods,” said Scotiabank in a research report.

“On Monday, China responded by allowing its currency to weaken past the key seven-per-dollar mark, prompting Washington to label Beijing a currency manipulator,” Scotiabank said.

The price of silver also rallied on the trade concerns, rising US$0.62 to US$17.09 an ounce.

On Wednesday, B2Gold emerged as the volume leader on the TSX, rising 11.6% or 54 cents to $5.17 on volume of over eight million shares traded.

Barrick Gold Corp. [ABX-TSX; GOLD-NYSE], Kinross Gold Corp. [K-TSX; KGC-NYSE] and Roxgold Inc. [ROXG-TSX] were also among the most actively traded stocks on Wednesday.

The surge in the value of B2Gold shares coincided with the release second quarter results that beat street forecasts.

The company posted record consolidated production of 246,000 ounces of gold in the second quarter at an all-in-sustaining cost of US$914 an ounce. That was 8% above budget and marked a 2% increase from the same period last year.

B2Gold also posted adjusted net income of $52 million or $0.05 per share in the second quarter.

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. That’s in addition to the two mines in Nicaragua.

The company recently said it is reducing its exposure to Nicaragua by agreeing to sell its El Limon and La Libertad mines to Calibre Mining Corp. [CXB-TSXV; CXBMF-OTC] for US$100 million.

Under an agreement announced on July 2, 2019, B2Gold will receive US$40 million cash on closing, US$40 million worth of Calibre Mining shares, US$10 million in convertible debt, and another US$10 million cash one year after the deal closes. As a result, B2Gold expects to wind up with a 35% interest in Calibre.

In the second quarter, B2Gold benefitted from the strong performance of its Fekola and Masbate mines. Fekola and Masbate produced 114,000 ounces and 57,600 ounces respectively.

B2Gold reiterated its 2019 production guidance and said it is expected to hit the low end of its forecast of between 935,000-975,000 ounces. The estimate follows the expected sale of the Nicaraguan assets in the fourth quarter of 2019.

Meanwhile, the company said a new large-scale, off-grid solar power project is expected to deliver significant operating cost reductions at the Fekola mine. Scheduled for completion in August 2020, the project is expected to cut Fekola’s processing costs by 7%.

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