B2Gold Corp. (BTG - Free Report) recently announced that it has successfully commissioned the mill expansion at its flagship Fekola mine in Mali — ahead of the scheduled date of Sep 30, 2020. The company also declared dividend for the third quarter and provided an update of its efforts to lower debt levels so far. B2Gold also affirmed its consolidated production guidance of 1,000,000-1,055,000 ounces of gold for fiscal 2020.
Fekola Mine Expansion to Increase Throughput
Located in southwest Mali, the world-class Fekola Mine was acquired by B2Gold through a merger with Papillon Resources Limited in October 2014. On Sep 25, 2017, B2Gold announced that it had completed construction of the Fekola mill and commenced ore processing, more than three months ahead of schedule. The first gold pour at the mine was on October 2017. Within only 60 days from start-up, the mine achieved commercial production on Nov 30, 2017. On Mar 26, 2019, B2Gold announced positive results from the Expansion Study PEA for the Fekola Mine.
B2Gold has now completed all major construction activities associated with the expansion. It also concluded successful execution of a process performance test. A 5-day mill performance test was carried over from Aug 26 and the results exceeded design in throughput, gold recovery, grind and availability over the period. The minor remaining construction work on the project is expected to be completed by mid-September 2020.
The mine expansion and the larger mining fleet is likely to significantly increase Fekola's processing throughput by 1.5 Mtpa to 7.5 Mtpa. The mine expansion will enable the company to produce around 550,000 ounces of gold over the next five years.
B2Gold had earlier assured that Fekola Mine continues to operate as usual with no operational days despite the recent political developments in Mali or the COVID-19 pandemic. In the first half of 2020, the Fekola Mine produced 311,435 ounces of gold, well above budget by 7% and up 39% year over year. The low-cost mine is anticipated to produce between 590,000 and 620,000 ounces of gold this year. Cash operating costs are expected between $285 and $325 per ounce and AISC in the range of $555 to $595 per ounce.
Maintains 2020 Production Guidance
The company continues to project gold production between 1,000,000 and 1,055,000 ounces for 2020 on the better-than-expected performance of its operating mines. Cash operating costs are projected to decline 15% year over year to $415-$455 per ounce, while AISC is anticipated between $780 per ounce and $820 per ounce, down 7% from the year-ago level. Higher gold prices and lower costs will boost the company’s margins during the year.
Dividend Declared for Third Quarter of 2020
B2Gold also announced that its board of directors has declared a cash dividend of 4 cents per share, which will be paid on Sep 30, 2020 to shareholders of record as of Sep 22, 2020.
Debt Reduction Efforts Progressing Well
Backed by the ongoing strong operating performance at each of its mines and no significant disruptions amid the pandemic, B2Gold has started repaying the outstanding Revolving Credit Facility (RCF) balance of $425 million in August 2020. So far, the company has repaid $375 million of the outstanding balance and anticipates repaying the final remaining tranche of $50 million.
It expects be debt-free by late this month, other than mining equipment loans and leases totaling approximately $50 million, which are payable over several years. This will leave the company well positioned with the full amount of the $600 million RCF undrawn and available. B2Gold expects to generate cash flows from operating activities of more than $900 million in 2020.
Gold prices have been up 28% so far this year fueled by the coronavirus pandemic and low interest rate environment. Higher gold prices and lower costs will boost the company’s margins during the year. Its ongoing strategy to continue maximizing profitable production from its mines, growing its mineral reserves, advancing its pipeline of development and exploration projects will continue to drive growth.
Over the past year, B2Gold has gained 103.8% compared with the industry’s growth of 59%.
Zacks Rank & Stocks to Consider
B2Gold currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space include DAQO New Energy Corp. (DQ - Free Report) , Barrick Gold Corporation (GOLD - Free Report) and The Scotts MiracleGro Company (SMG - Free Report) , each carrying a Zacks Rank #1 (Strong Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
DAQO New Energy has an estimated earnings growth rate of 348.3% for 2020. The company’s shares have soared 103% in a year’s time.
Barrick Gold has an expected earnings growth rate of 79.6% for the current year. Its shares have appreciated 76% in the past year.
Scotts MiracleGro has a projected earnings growth rate of 52.7% for the ongoing year. The company’s shares have surged 59% over the past year.
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