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B2Gold (BTG) Gains From Upbeat Mine Performance Amid Cost Woes

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B2Gold Corp. (BTG - Free Report) is benefiting from strong mine performances amid cost inflation and market volatility. B2Gold’s strategic actions have provided it with a solid portfolio and better positioned it for future growth. The recent pickup in gold prices also bodes well.

Shares of B2Gold, a Zacks Rank #3 (Hold) stock, have lost 18.5% over the past year compared with the industry’s fall of 17.1%.

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The Fekola Mine in Mali reported record quarterly gold production in the fourth quarter of 2022, owing largely to the processing of additional high-grade ore from the Fekola Phase 6 pit.

The Otjikoto Mine delivered a year-over-year improvement as well as a record monthly production in December 2022. Backed by this upbeat performance, and expectations of a solid delivery and further pickup in mine performances, the company has projected its 2023 total gold production between 10,00,000 ounces and 10,80,000 ounces. The company intends to pursue additional internal growth through further exploration, development and expansion of existing projects.

Recent acquisition, such as Oklo Resources Limited in September 2022 provides B2Gold with an additional landholding of 1,405 square kilometers covering highly prospective greenstone belts in Mali, West Africa, including the Dandoko Project, which now forms part of the Fekola Complex.  

Another recent strategic action was the signing of an agreement in February 2023 to acquire Sabina Gold & Silver Corp. This will increase operational and geographic diversification by combining B2Gold's stable production base with a high-grade, advanced development asset in a Tier-1 mining jurisdiction. BTG intends to increase production in the first five years of the mine's life by accelerating the underground mine development of the Goose project.

The company has a strong balance sheet, maintains a strong cash position and continues to generate solid operating results. Its focus on lowering debt levels will also aid results. B2Gold’s long-term debt was $41.7 million at the end of 2022, down from $49.7 million at the end of 2021.

It has an available revolving credit facility of $600 million. The company has an accordion feature, available on additional binding commitments, for a further $200 million.

B2Gold maintains its dividend rate of 4 cents per share, driven by the company’s strong cash position and strong operating results. It has one of the highest dividend yields in the gold sector.

Gold prices fell in February on strong U.S. economic data and recently rebounded to above $1,900 an ounce. This was triggered by the fall in the value of the U.S. dollar post the sudden collapse of SVB Financial Group . This bodes well for B2Gold.

However, B2Gold’s profitability might be affected by changes in the market price of gold and other mineral commodities. Prices fluctuate and are affected by numerous factors beyond the company’s control.

The company is also exposed to headwinds from cost inflation pressure across all sites, which is impacting input prices including reagents, fuel and consumables. Higher fuel and labor costs, coupled with a stronger foreign exchange rate, are driving operating costs.

Stocks to Consider

Some better-ranked stocks in the basic materials space are CalMaine Foods, Inc. (CALM - Free Report) , and Carpenter Technology Corporation (CRS - Free Report) . CALM currently flaunts a Zacks Rank #1 (Strong Buy) and CRS carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for CalMaine Foods’ fiscal 2023 earnings per share is pegged at $16.75, suggesting 515.8% growth from the year-ago reported figure. The estimate for fiscal 2023 has moved 106.8% north in the past 60 days.

CALM has a trailing four-quarter earnings surprise of 15.3%, on average. Shares of the company have gained 17.7% in the past year.

The Zacks Consensus Estimate for Carpenter Technology’s fiscal 2023 earnings per share is pegged at $1.05, suggesting 199.1% growth from the year-ago reported figure.

CRS has a trailing four-quarter earnings surprise of 33.6%, on average. Shares of the company have gained 31.7% in the past year.

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