B2Gold (BTO.T) has been extremely busy over the last several years acquiring companies and growing production. And management at the company is known in the industry for bringing mines into production on time and on budget.
However, quarterly results for B2Gold were reported today and reactions were mixed as the company moves into a big growth year in 2015.
Current operations include 3 operating mines with a fourth on track to begin production in December. The Otjikoto project in Nambia is nearing final construction and is expected to produce 140,000 ounces in 2015. Costs at the mine are expected to come in at all in sustaining cost of $800 per ounce.
B2Gold is focused on growth and with 4 operating mines it will see production jump from ~400,000 ounces this year to roughly 540,000 ounces next year. Additional projects in the pipeline could potentially cause a jump in growth to 900,000 ounces in 2017. A large part (300,000 ounces) of this growth is expected to come from the Fekola project.
The Fekola project in Mail, was acquired earlier this year in a deal with Papillon Resources that was finalized on October 3rd. A feasibility study is currently under way at the project.
In the third quarter the company posted a net loss of $272.04 million. On an adjusted basis the net loss was 4 million or 1 cent per share. The majority of the loss was due to a couple impairments charges that were taken as a result of using a lower gold price moving forward.
A few issues lead to lower production than guided in the quarter at the Masbate and El Limon mines. The shortfalls were roughly 7000 ounces at each mine. The operating issues were both temporary and are now resolved.
All in costs for the quarter came in at $1117 per ounce which with the current gold price at less than $1200 will have some investors worried. All in costs are expected to be lower as the Otjikoto mine comes online.
B2Gold stock has been weak this year but appears to be well set up for a move higher in 2015 with production growth of ~35%.
Over the next few years it looks as though B2Gold will move from a mid tier producer to a major.
Investors should be aware that there is risk in holding the stock in the next couple of months. With third quarter all in costs above $1100 ounce any further decline in gold will definitely hit the share price. In addition, tax loss selling may impact the share price, especially with 900+ million shares outstanding and the stock already down considerably in 2014.
Symbol: BTO.T
Share price: $1.90
Shares outstanding: 917.51 M
Market cap: $1.8 B
Read: B2Gold Reports 2014 Third Quarter Operational and Financial Results
Watch: Clive Johnston on BNN Commodities (Nov 14th)
I have no position in any of the stocks mentioned. This is not investment advice. As always please do your own due diligence.