Navachab Gold Mine is located 150km South West of B2Gold's Otjikoto Project

Navachab Gold Mine is located 150km South West of B2Gold’s Otjikoto Project

After successfully acquiring the Masbate Mine as part of their buyout of CGA Mining, it appears Clive Johnson and his team may be looking for more assets to buy.  This morning B2Gold (BTO:TSX) announced a US$225 million offering of senior subordinated convertible notes due in 2018.  The company currently has $95 million cash with an additional $100 million of unused credit from a $150 million credit facility.  They only have another approximately $70 million to spend on their $225 million 2013 capital budget, so it would appear this increased balance sheet may be used to buy more undervalued assets.  Clive successfully grew (and ultimately sold) his previous gold company, Bema, by doing a very similar thing; buying unattractive assets for cheap and then growing production in a rising gold price environment.

The company is not bashful about its plans to externally grow production: “our discipline toward potential acquisitions continues to focus on projects that would be accretive to our shareholders based on the existing asset.  The company will not pursue acquisitions that require the hope of exploration success or higher gold prices to be justified or accretive,” (from the company’s second quarter results news release here

There are a number of attractive and undervalued assets that B2Gold could buy with an approximate $400 million budget.  AngloGold Ashanti, who is B2Gold’s 51% joint venture partner on the Gramalote project in Colombia, is in the process of selling its Navachab Gold Mine in Namibia which produced 74,000 ounces of gold at $929 per ounce cash costs.  Anglo announced a the end of April this year, that it had ‘shortlisted’ a number of bidders, so the timing of this financing is in-line with the bidding timeline.  Beyond the fact that the management teams are well-known to each other, the Navachab Mine would be geographically attractive given that B2Gold’s Otjikoto project is located 150km away from Navachab.

News Release here: B2Gold Launches Private Offering