B2Gold Corp. (BTG) Q3 2020 Earnings Report, Transcript and Summary

Good afternoon my name is James and I will be your conference operator today. At this time, I'd like to welcome everyone to the B2Gold Third Quarter 2020 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. [Operator Instructions] Thank you. Mr. Clive Johnson, President and CEO, you may begin.

Thanks, operator. Welcome everyone to our conference call to discuss the third quarter of 2020 financial results for B2Gold. Obviously, I think most of you probably seen our news release that came out last night, another very strong quarter, putting us on target to the lower end of our guidance for 2020 for the year. I'm going to pass it on to Mike Cinnamond. Now, Mike Cinnamond is going to walk you through the highlights of the financial results and then Bill Lytle, Senior VP Operations is going to give us an operational update and talk a little bit more about growth, and then we'll open up for questions. We had a very good session on analysts' session 10 days ago, so I'm pretty sure they won't have that many questions. But if they do, that's fine and this is an opportunity for our shareholders to ask some questions again. So once again, very happy with the quarter, another strong quarter. With that, I'll pass it over to Mike to give you some of the highlights. Thanks, Mike.

Thanks, Clive. So I'm going to start on the revenue side. The quarterly record revenue of $187 million. We sold 253,000 ounces at an average price of $1924 an ounce. Included in those gold sales were some sales over $2,000 an ounce. That's pretty fun to do and obviously, we're all watching closely to see what happens to the gold price analysis. Hopefully, we'll see the results of the U.S. election in a relatively short order. We can also say that year-to-date, we had record revenues of $1.3 billion. It's been an excellent year for B2 even in the midst of this COVID pandemic. Turning to the operating side. Production, we had total production of 264,000 ounces, that's made up of 249,000 from our three mines and then 50,000 ounces from our attributable share of Calibre's results. On our production side, lead is almost by [ph] Fekola, 153,000 ounces or 3,000 ounces above budget. Fekola had an excellent quarter again. Process grade and recovery both higher than budget more than offset a little bit of downtime on the throughput side as we took the mill down to do the Fekola mill expansion high end and also to do a full sag mill reline. So even with that time in place, we still managed to beat budget by 3,000 ounces at Fekola. Masbate right on budget 54,000 ounces. The only thing different in the quarter from Masbate was we had a magnitude 6.6 earthquake in mid-August and we had to take the mill down for about six days, while inspections were carried out by the Philippine Life Sciences Bureau. But those inspections confirmed no damage and Masbate is running very well. Otjikoto 43,000 ounces, 1,000 ounce above budget and basically Otjikoto continues to move along nicely. Yesterday, our consulted production was 770,000 ounces including our share of Calibre and that's about 20,000 ounces ahead of budget overall. In terms of the cost side of that equation, our total cash costs for the period including Fekola is $435 an ounce, which is $6 lower than budget. Looking at our three operations were $411 an ounce against the budget of $428 so $17 an ounce less the budget for the three-month periods. Fekola was $333 totally in line with the budget. That's really made up of slightly higher gold production as I just described earlier. But with generally in line total mining costs. We just see some costs that were marginally higher than budget due to changes in mining sequences and some COVID-related costs. We've also seen it in Mali that fuel costs have been on or slightly above budget, which sort of that's the trend that we've seen elsewhere in the world and just a reminder to everyone that in Mali fuels are set one month ago in advance by the government and don't always follow up with the underlying fuels lines. Mid Valley was $615 an ounce, which is $33 less than budget and they continue a great run. Same stories we've seen in Q1 and Q2. Mining processing costs were lower than budget with lower diesel and HFO prices and lower waste stripping and lower haulage distances as we had a bit of a mine sequence change there to deal with COVID during the current year. Otjikoto $435 an ounce, $66 an ounce was the budget so continuing to totally outperform the budget there. Again, same story, as the first two quarters higher than budgeted gold production, lower fuel costs, and a significantly weaker than budget in the Namibian dollar. All added to the positive outcome for Otjikoto. On the all-in sustaining cost rate. Our total all-in sustaining cost per ounce including Calibre was $785 an ounce to the 2019 less than budgets. When you take our three operations, it was $766 an ounce, which is $31 less than budget. It's, again, not sound like a broken record. Same is really the first two quarters, but we did see some CapEx catch up in Q3 so we've seen some CapEx moved around during the year. I'll comment a little bit more. We think CapEx is going to come out overall for the year. But we did see a little bit of lower CapEx earlier in the year and some of that caught up in the quarter and we do expect some of that to catch up in Q4. If you look at all-ins for the year-to-date on a consolidated basis were $740 an ounce which is $75 Less than budget so you can see that we're still expecting to see some of that CapEx catch up in Q4. Take all those results and where we think we're going to come out guidance wise. So personally on the production side of gold mine, we got it by 590,000 to 620,000 ounces. We think we're going to come out somewhere at the upper end, right at the upper end of that guidance range. The value is 200 to 210. We think we'll be in that range easily in the middle, and Otjikoto 165 to 175, again, is right in the middle of that range. Overall, including in our share of Calabre, our total consolidated guidance for the year was 1,000,000 to 1,055,000 ounces and we think we'll come in right the middle of that consolidated range. On the cash cost and all-in sustaining cost rate for Fekola, it was a range of 285 to 325. We think we'll be in the range. Masbate, 665 to 705. We think we'll be at or below the low end of that range. Otjikoto 485 to 520, we think we'll be at or below the low end of that range. When you take in a consolidated position include Calibre, it's 415 to 455, we think we'll be at or even slightly below the low end of that consolidation range. On the all-in sustaining cost side, Fekola range is 555 to 595, we think we'll be at the upper end of that range when all said and done for the year. Masbate 965 to 1,005 per ounce. We think we'll be in the range. Otjikoto 1,010 to 1,050 ounces. We think we'll be at - cost dollar per ounce, we think we'll be at or below the low end of that range. Overall consolidated 780 to 820. We think we'll be at the lower end of the range. So as I mentioned, we do have some CapEx catch up in Q4. We think it'll be somewhere in the range $100 million to $110 million. Overall for the year, if you look at our total CapEx that we budgeted we'll likely come in somewhere around $10 million less than that total. So when you factor that in, you're looking at somewhere around $100 million to $110 million CapEx in Q4. So you will see higher all-in sustaining costs in Q4 but overall, as I said, we think we're going to come in at the low end of that range 780 to 820 for the year consolidated. A couple of other comments may be on the operations generally. The Fekola mine invention, the mill expansion is now materially complete. The new mill came online and has been commissioned in September. Two comments lead me into the final construction costs of that plant expansion were a little higher than we budgeted. They were about $13 million higher overall when all is said and done. The majority of those overruns related to COVID-19 costs and delays and increased labor and camp costs related to dealing with the pandemic and bringing the people in and out to get that expansion finished but overall, it's all performance and they came in basically, ahead of schedule. On the Fekola's store site, as we announced previously and disclosed, we did have some delays in that earlier in the year as we were trying to manage, bringing people in out of the camp. We restarted the solar plant activity mid-September and we are expecting completion to be by the end of Q1 2021 assuming that we're still able to bring people in uninterrupted to get that done. To remind everyone, it doesn't impact 2020 guidance and all the solar plants but we do think we'll bring it online sort of earlier in 2021. Maybe in a comment overall and on the Mali situation. Mali and Fekola, Fekola just run very well through the year considering everything we've had to deal with in the country. Had to deal with in terms of the COVID pandemic and the coup, and we still see Fekola operating at record levels. In Mali, the State of Mali is a 20% partner in the Fekola mine so they're a direct beneficiary of the results in the mine. We just put in some highlights of the total amounts that have been paid to the government and state since we started operations there. So from 2017 to 2019, we paid $140 million-plus in wages and benefits and total payments to the government were around $276 million so it is contributing - it's a big contributor to the economy in Mali there. That's $276 million includes priority dividends that the government gets for 10% of its share. In addition that 10% it owns are also eligible for ordinary dividends and we're just getting to the point where we're going to start paying those dividends. We've just reached the point where all our initial capital investment and the loans that we put into the country to get Fekola up and running have been repaid. So we're now starting to pay ordinary dividends. So again, the state will benefit from that. Also to remind everyone, Fekola is governed by the 2012 mining code, and we have a 2012 mining convention. When the 2019 mining convention came in, it did include specific stabilization terms just confirming that Fekola and the way Fekola operates is governed under the 2012 code. We're going to move on just talk a little bit about some of the other income statement items, and then a couple of comments on the cash flow. So on the income statement, I have a few items just to raise to your attention. One of the most significant ones for below the gross profit line relates to the reversal of [indiscernible] with assets. We have a reversal there of $174 million. Net of deferred income taxes that reversal has an impact on the bottom line of $122 million. That relates to Masbate. We had booked on impairment on Masbate years ago when gold prices really dipped. This adjustment here represents the final reversals of any final amount remaining on an impairment charge that could be reversed. It was driven by a change in our forecast gold price assumption based on analysts' consensus and other analyses we did. Long term gold price now we're using an assumption of $1,500 an ounce. For accounting purposes, that have that impairment reversal. Then common share of income on associate Calibre, we got almost $11 million there. So Calibre is back up and running in Q3 and we picked up a net $11 million share of their results for the period. Then to highlight the taxes section, the taxes are significant. We're taxable in all jurisdictions. Mali, there were no accelerated deductions so we're paying taxes out of the gate. Masbate and Otjikoto were also fully taxable there now. Any residual tax loss carry-forwards that we had there, accelerated investment deductions, etcetera. All are gone now, we're paying taxes everywhere and that's really a function of the mines running well and the higher fuel prices. All that translated into net income for the period of $277 million. Of that $262 attributable to shareholders of the company, or $0.25 a share. If you adjust that for significant non-cash items, including that Masbate impairment reversal, you get to adjusted income of $161 million or $0.15 a share. Then if you look at our results year-to-date, net income for the nine months, almost half $0.5 billion, $498 million, of that $468 million attributed to shareholders of the company $0.44 a share or adjusted net income $368 million or $0.35 a share. I'm going to talk about a few items in the cash flow. So first of all, operating cash flow we had a great quarter, $300 million, just over $300 million operating cash flow, $0.31 a share, or $755 million operating cash flow $0.73 year-to-date. When you look at that it looks like we're well-positioned to get up to that billion-dollar level cash flow wise if you prorate it up. We have been reminding you, we've given you some detail on the MD&A. Part of our operating cash flow includes significant taxes that aren't yet paid in cash. We've accrued them in the financials, but they're not yet paid. And so in Q4 and total for the years, to-date, we paid cash taxes of about $94 million. For the year today we're anticipating somewhere around $205 million cash taxes, plus some pretty hefty cash payments to come in Q4. So just remember that for your models. And also there will be some true [ph] up of Malian taxes in Q1-Q2 next year as was laid out under the rules for payment of taxes in Mali. One of the items that we have highlighted in there, those cash tax numbers I gave you of $200 million-$205 million for the year, that does include about - we're looking at up to maybe $50 million of tax prepayments for the year that aren't strictly due until Q1 early or Q2 next year. But we think the taxes have already been incurred and we have the cash on hand. So we may prepay some of those taxes and a significant chunk of those would relate to Mali. On the financing side, I guess the story you can see there is that we have now repaid the revolver fully. So in the quarter, we paid that down $425 million, which was the total outstanding now on our revolver. So we have no amount drawn under the revolver. We just have a little bit of debt under the finance leases related to mainly to Fekola, about $50 million, but other than that there's no other debt. And what we have left on the revolver is $600 million undrawn capacity plus another $200 million accordion so we really have $800 million of firepower [ph] there where the revolver as it stands. We will at Q4 expect to see about US$40 million come in from [indiscernible] though because we we've always used cash to help finance part of our fleets around the world. And as part of the Fekola fleet expansion that ties in with Fekola mill expansion, we financed about $40 million of that in cash. So you will see that come in Q4. Dividend-wise, we paid $62 million in the quarter and $73 million year-to-date. We're paying dividends right now at the rate of $0.04 per share quarterly that would be $0.16 annualized U.S., which equates about $170 million a year. That's the yield right now about 2.4%, which I think puts us right up near the top of the dividend paying gold companies. And maybe a comment on that from a capital allocation point of view. So we are continuing to generate strong cash flow. You can see in the cash flow here that we ended the quarter with $365 million and we'll continue to generate that cash over the course of the rest of the year. As we move into next year, we've got a couple of big capital allocation decisions, the most significant one being for Gramalote. At Gramalote, we're expecting to get the feasibility study complete by the end of the first quarter next year and that will put us in a position to make build decision then discuss with our partner, AGA. And so at that point, we will have a significant capital allocation decision to make. In addition to that, we're also looking at our options Kiaka, in Burkina, however we might want to address that project. And then, also just looking that we got big drilling campaign on the exploration side and got us good results in Mali and elsewhere around the world. And so we'll be looking at the results of that, just deciding what we want to do allocation and capital versus that. So once we have a look at all of those things and decide what our capital needs are, then we can also revisit our dividend allocation and see if we want to do anything about changing the dividend rate. And just a final comment, really on the investing side of CapEx. As I mentioned, overall, we had budgeted about $390 million for the year total CapEx. We think we'll be about 10 under, so forecasts about $380 million. If you look at the cash - as a matter of CapEx today, it's about $265 million cash outflow for CapEx. So we got somewhere in the region higher than $110 million to $115 million to go. So that's what we expect to see, somewhere around that mark in Q4. And Gramalote itself, we haven't talked about that CapEx, but we are slightly behind for Q3, but overall for the year, our share at Gramalote is about I think $26 million and we think we're going to be broadly in line and haven't spent most of that. And then exploration. We are a bit behind year-to-date, but our total exploration budget for the year is $53 million and again, we're forecasting to have spent most, if not all of that by the end of the year. So that's kind of where we are overall and leaves us with cash and cash flow at the end of Q3 and very strong cash flow generating position. Cash and cash flow is $365 million in the end of the year and we look forward to moving forward and continue to see that cash balance grow as we move forward into the end of the year and into next year. That really sums up the main comments I was going to make on the results.

Okay, thanks, Mike. I just realized that in my intro, I may have left to words - I think I said the words the lower end of guidance for 2020. I meant the lower end of cost guidance, of course, as Mike, thankfully got it, right. So obviously, very strong quarter of good financial results and as we've said, on track. For the mid-range of our production guidance of 3 million [ph] and 1.05 million to 5 million ounces of gold and our costs, we're expecting to be at or below the low end of our guidance range and operating costs between $4.15 and $4.55 [ph]. And all sustaining costs, we expect to be at the lower end of our guidance, which is the range of between $7.80 and $8.20 per ounce. Just want to make sure I clarified that. Okay. I think we'll pass it over to Bill now and he'll give us a quick review and more focused on I guess some of the growth opportunities we see going forward. As I mentioned, we have a session with the analysts recently and we've covered a lot of ground. So - but Bill, maybe you can just give us an update on that?

Yes, sure. Sure.

Then we'll open up questions.

All right. Thanks, Clive. Yes, I don't want to really go rehash kind of what Mike said through the first three quarters of 2020. So I'll just reiterate what he said that we'll remain on guidance for the year. Obviously, a great, great quarter, given everything that's going on around the world. I would like to just point out real quickly once again that we did have another amazing health and safety quarter where we had a second quarter and really with no lost time and accident. So our lost time in this year, our injury frequency rate is down really amongst industry leaders for sure, if not, at the lower end of industry leaders. And then of course, we continue to perform on all of our ESG commitments as best in class as well. Maybe looking forward a little bit; so the budget turnout for 2020, we normally put them out right after the first year, publicly. But I do want to talk a little bit about production as Clive said over the next couple of years, for sure. In the next five years, even. We did put out a slide for the analysts, which kind of showed us really kind of production, assuming everything goes according to plan should basically look like what it did, as good as it did this year; kind of right around that million ounce range. So there's a couple things coming up by the end of this year. The exploration group has agreed or has told us that they're going to turn over an updated resource for Anaconda and we'll be using that to look at some long-term potential, which I'll talk about in just a minute. At Fekola and then in Q1 of next year, Mike's already talked about the Gramalote feasibility, we feel pretty, pretty good about that so far and so I'm going to talk a little about how that fits in our profile, potentially. And then, at the end of Q1, also, the exploration group is going to put out a resource on Cardinal FMZ. That really has the potential. If you look at what we're doing right now, that really has the potential to have almost immediate impact because when we did the expansion for the mill, we talked about that we're going to from 6 million tonnes to 7.5 million tonnes per annum. But we've always been a bit cagey about that. We've always said it's really whatever we think the maximum production is plus 1.5 million tonnes per annum. And so now that we've got the expansion done, we're in the process of really - we just finished up a two-week test on where we think that mill can run at least for 2020-2021. We put some word through that it` was representative of next year's mill feed. There's the potential certainly that we can have additional capacity above that 7.5 million tonnes per annum. Now of course, we could feed that with low grade and that would have kind of a marginal impact on our ounce profile, or if there is something in that Cardinal FMZ area, we could fast track that into production and we could see even potentially late 2021 and 2022, seeing some production from Cardinal FMZ, if that pans out at the end of Q1. So we're kind of tentatively scheduling some material that's come through next year for that and that would that would help us with our ounce profile in 2021 and 2022. Additionally, one of the things that we want to do is we want to take a big bulk sample from the saprolite in [ph] Anaconda and we're talking 200,000 tonnes or something like that, and run that through the mill. We've always been very open saying that if we can get saprolite, there is a percentage 10% to 15% above our maximum operating rate that we could feed the saprolite through. So there's the potential once again, to get ounces from there. And of course, even the existing resource shows a lot of potential for some high-grade pocket that we could truck down to Fekola while we're waiting for that, we're going to do long term with Anaconda and we could see that fitting into our production profile, kind of in that 2023 and 2024 range. So once we get that all sorted out with the bulk sample. Looking at 2021, our production will come from Fekola main. Potentially Cardinal FMZ and then of course the regular sources in Masbate and Otjikoto. Now if you go on to 2022, again, you'd have the same thing at Fekola, Cardinal FMZ, you'd have the same thing at Masbate, you'd have Otjikoto from the open pit, but you'd also start to see the ounces flowing from the underground. So there's underground or underground ounces could see as up around 200,000 ounces at Otjikoto in 2022. On the 2023, then you'd start to see the Cardinal come in, you see obviously the same thing from Fekola, you'd have Masbate, you'd have Otjikoto, you'd have Oshikoto underground. And then all the way out in 2020 to 2024, what you'd see, Fekola, you'd see Cardinal, Masbate, Otjikoto, Otjikoto underground, but by this time, it's our opinion that it's our intention and we'd have Gramalote up and running. So that would hit us in 2024. And once again, so you'd see a very nice profile, just about a million ounces for all five of those years. Obviously with the potential for anything, which might be developed through Kiaka or other sources coming in on top of that. Clive, is there anything else you want me to talk about?

No, Bill. I think that's a good summary. So I think with that, we'll open up the questions. We've got the team on the phone. As I said, we have pretty extensive concession with the analysts recently. But Tom's on the phone on answering those questions on exploration. But we'll open up the questions. So, thanks.

[Operator Instructions] Our first question comes from the line of Ovais Habib from Scotiabank. Go ahead, please. Your line is open.

Thanks, operator. Hi, Clive and B2 team. Congrats on a good quarter and thanks for taking my questions. My first question was going to be on capital allocation. But Mike covered that well. So my next question is for Bill. In regards to Wolfshag, B2 has got it towards production about 500 tonnes per day, which equates to about 182,000 tonnes per year. And you currently have about 1.6 million tonnes of recoverable tonnes. And in the Analyst Day, you have got it towards the underground ending in mid-2025 and starting in 2022. Are you just being conservative on the underground mine life [ph]? Or am I kind of missing something here?

Hello, Bill?

Oh, sorry. I've been talking for two minutes on mute. Apologies. The answer is yes, it is a bit conservative, Ovais. There absolutely is production rate upside and the reality is if you remember, we've always talked about this potential down plunge extension, which can take us even further. So at this time, we're talking primarily about reserves that are in the existing mine life with the potential upside for down plunge expansion.

Okay. So that's just a more functional drilling then? Just better understanding.

That's correct.

Okay, got it. And just moving on to Cardinal. So on Cardinal FMZ, what are you looking to see at Cardinal? Basically, in the resource update to get the deposit across the line into production? Did anything in got in the metallurgy or anything else that you need to see before it comes into production?

Yes. I think maybe, certainly, I can't talk about it from an exploration standpoint, what I can tell you is that they're going to put a resource on it. What we've done is we've looked at what they have, which is at an inferred level and we put a mine plan on it, and it really saw how it really fit in as far as our waste dumps and everything else. And so what we're just looking for is additional confidence in what their inferred resource is. I think the reality is this thing, even without a lot more drilling, we could put into our mine plan. We do have metallurgical testing already done on it at a high-level, and we don't see any issues from it from a milling standpoint.

Okay, that's great. That's it for me. Thanks so much.

Our next question comes from the line of Geordie Mark with Haywood Securities. Go ahead, please, your line is open.

Thanks for the call today. Maybe you can run over the Masbate reversal, and perhaps the implications or potential implications for updating future resource-reserve estimates? That's an easy migration, given the change in commodity price assumption. And/or, are you looking at additional drilling there to flesh out the geological confidence of resources? And what sort of life of mine expansion that we could expect to come into that financial assumption now to 2036 as shown in the MD&A [ph]?

Could you maybe clarify your question just a little bit, it sounds like there's two parts? Just want to clarify again.

Sure, the first part would be any near-term changes in the reserve resource estimates to arise from a higher gold price assumption? And the other component there is what would be required on a drilling basis to fulfill that, if any?

Geordie, to answer your question, we took the existing resource that we had, we projected it to death, and looked at it with increasing gold prices. And what came out of that was - yes, the pitch can get bigger with the higher gold price or current gold prices. So the drill program we're doing right now, and we've been doing this year was to take that material and get as much of that into indicating as possible. It's not going to be complete, we're going to have to continue that program next year. But with the results from this year, we'll be able to update some of the resources in the areas we drill too. And hopefully some of that will get into the AIF.

That's pretty good, thanks. And maybe one last question, because we do that on stay there [ph], a little while back. Just on Cardinal, following from [indiscernible], and maybe some of Bill's commentary. You're currently drilling - continuing to drill at Cardinal with two rigs and still looking at sort of pushing out the loan boundaries on the down planned basis [ph]?

Right now at Cardinals, we're down to just one drill, drilling deeper in Cardinal, we're only capable this year with our camp set up and isolation for COVID to really manage core drills. So the other three drills now we've pushed up into Mamba, as we see that areas being a significant upside for us, but we still continue with the one drill going down plunge in a different part of Cardinal.

Thank you. Appreciate it.

Our next question comes from line of Carey MacRury from Canaccord Genuity. Go ahead, please, your line is open.

Hi, good morning. Maybe just another question on Cardinal. How does it compare versus the Fekola proper in terms of things like widths and strip ratio, in terms of getting in there mining, and maybe grade?

In terms of width, it's quite a bit narrower than Fekola, you got to remember, Fekola place is close to a couple hundred meters wide. We don't see anything like that at Cardinal. I think the maximum width we've seen at Cardinal or upwards are close to 30 meters. Generally, Cardinal is less than 10 meters. Strip ratio, don't have those yet, because we haven't completed the resource and the other resorts, we can't really put a decent mine plan on. So when we complete the resource in the first quarter, it'll be an updated, inferred, a portion of that will be indicated. Then, the engineering guys will put a mine plan on it. And at that point, we'll have a better idea of what the strip course is going to be.

Just switching to Kiaka. You mentioned the technical study coming there. Can you give us a bit of a sense of what you're looking to do there in terms of plant sizes, is this like a smaller, higher grade project and what the previous owner considered or just some context around what you're thinking there?

You want me to answer that. You want to pass it on to Dennis?

Sorry, I missed the question.

Yes. So in general, what we're looking to do is we're looking to update the existing feasibility study. So we really, the plant size and through, but I think we're talking around 12 million tons per annum is what we're really looking at. And that's primarily because all those studies have already been done. The key differences is we're looking at things like, you know, obviously, the fuel costs, natural gas is in play now, we're talking about running a dual fuel truck system there. And so really, we're looking at the cost side, and about 12 million tons per annum to make that project economic.

[Operator Instructions] And our next question is from the line of Lawson Winder with Bank of America Securities. Go ahead, please. Your line is open.

Hello, gentlemen, thank you for taking the question. Great quarter, just on Fekola, I might ask. With the increased mining equipment, you now have an increased mining and doing? I mean, should we be expecting the grades to be materially higher in like 2022 then what we saw in the last technical study?

Well, so I'll answer it and then Randy can correct, Randy is on the call here, he'll correct me if I'm wrong. If you remember, when we did this study, we optimized it for that mining equipment, right. So what we did is, is we employed kind of an optimized stockpiling strategy from day one. And so I don't think you're going to see anything different than what you're seeing in a PA coming up in the next in 2022 for sure. So I kind of think what we had in the PA is what you're going to get, am I correct, Randy?

That's correct, though. Good.

Okay, that's very helpful. And then I do want it to ask again on Kiaka. So I think it's intriguing, you're looking at it. But as we know it now, I mean, it seems to me like it's an asset that probably dilutes the portfolio to some extent, just given the very high quality of the existing assets you guys have? And I'm wondering if you know, potential sale is still something you guys are considering? Or are you leaning towards building it yourself at this point?

Yes, good question. I think it's pretty early days in that regard. I mean, just to - we have some that we've been doing some internal evaluations. And we mentioned it, I think in the news release. And we've been looking at, you know, natural gases is our option, fuel and some other things, solar, etcetera, that actually have a pretty significant impact, potentially, on the economics of Kiaka. So we have some internal runs that show some pretty compelling economics. And if we can prove that up with a new resource and the updated feasibility study by the middle of next year, then we'll have a clearer picture. I think, you know, it's become not just because of gold price; it's become more interesting asset to us for some of the reasons I explained. Its good ore body, it's 4 million ounces. So I think it has some unrealized value for our shareholders. So our job is to get value for shareholders. So as we go through the next month understanding it better, I think we'll start looking at timing, you know, we're not going to change our strategy and start building two gold mines, dig gold mines at the same time. We've always said that's something we would not do. So you start looking at scheduling between Gramalote and Kiaka, you know, we'll look at that and say, is there potential opportunity to unlock the value of both of them over a period of time without detracting from what we're doing at once. So we're going to see disciplined on our approach to one mine at a time construction. So the other alternatives would be to bring a partner in to build the mine. And there are other active players and key players in Burkina Faso. As I mentioned it's a good deposit, we think others would find it attractive as well. Or ultimately, the potential, of course, is always to consider selling the asset. So we'll look at those alternatives over the next few months. You know, the government of Burkina Faso, understandably, is that this project to move forward if it's economic. And we think that they will see current internal view, which is early. And if the current internal technical view could lower fuel costs, obviously better go [ph]. If those become reality, we can, we've got a very significant asset that has the potential to produce for a long period of time or somewhere around 300,000 or 350,000 ounces of gold a year in a country where many others have succeeded. So that's our current take on Kiaka. I think it's becoming potentially a significant asset for sure.

Okay, no, that's great. That's tremendously helpful color. And then just remind us, the attention still is sort of mid-2021, to have an updated study out now, I can't recall, is that going to be preceded or feasibility level study?

Well, we - we [indiscernible] desk, we've got a full feasibility study that we have done before. Now we're going to redo updating the resource, but it'll be a full feasibility study, we'll have a better view on the first quarter internally I think but it will be full feasibility though, I think, by the middle of the years, I guess.

Yes, that's our goal is to get to a completed, we're going to redesign the thing that $12 million, we're going to do all of the work first principles study and really get the economics to where we have really good solid economics to base decisions on, we hope to have that by the end of the first quarter. And then we'll take that information and put it into a full feasibility study around the middle of the year, by around the middle of the year.

Okay, that's very helpful. Thank you. And then, just one final question on the gold price assumption, during the NRC [ph], you guys had mentioned that for reserves, intend to use $1500. And I just wanted to follow up and kind of ask what your thinking was around that particular level, partly in light of how some of your peers are choosing to be a little bit more conservative and not change prices versus the year 2019, whereas others are planning to go still higher? Thanks

Mike, do you want to take that?

Well, I think, you know, if you look at the reserve price the $1500, we repeat [ph] that on long term consensus. So we take that as reasonable basis of anything to look at. You know, and if you look back, I think the trailing three-year average is not a whole lot different anyway. So that's kind of where we got to in the reserves. And then on the resources side, which is higher 18. Still, honestly, fair bit less in current pricing and resources by definition, needs to be priced higher than the reserve level. So this is kind of where we are, we think that 18, again, if you look at the consensus range from the NFS [ph] in the ballpark, for sure, so it's in the range. So that's kind of how we arrived at it, it's a combo of looking at what has happened, and where the analysts see things going forward, in order to come up with what we think so reasonable price, at least know what we have in each location, especially your, Tom, comments must value that significant change in the price there in terms of reserves and resources.

Yes, maybe just from a corporate point of view, I mean, we don't use $1500 gold to try and bring in resources versus per se, I mean at the end of the day, we're a low-cost producer, we're talking about, based on what we know, today. So next five years being around million ounces a year on average. And we've pressed up around [indiscernible] sustaining costs. So we're one of the lowest costs, if not the lowest cost producer. So we could have use $1200, or $1100, I guess, I don't know, maybe people think we're conservative. We're really conservative and we're very good at a low-cost producer. So the gold price we choose to use, it's not a reflection, like many other companies, desperately using higher gold price to try and make a bit of money, or to bring in resources. That's not, we don't play the game. So I would focus on our costs $1500 gold, using it for reserves, does not mean we expect our costs to go dramatically higher and neither [ph] $100 gold to make money, we're making a lot of money, at $1500 dollar gold. So I just want to give you a little bit of insight. You can play the ultra-conservative game, I guess. But we don't need to. We don't need to do that. I think the evidence of what we've accomplished in the last 13 years or so should speak that, I think.

Yes, and maybe just to add to that. One of the things that we really struggle with from an operational standpoint, when you have numbers, which are much lower than what they actually are, is how do you plan for things? How do you design for your waste dumps? And where you're going to put low grade stockpiles, what is going to be your cutoff grade all this stuff, which is not really based on what we're seeing in reality, it makes it a lot harder. So you kind of end up running kind of two books and so for us $1500 is operationally what we think is right.

Yes. Okay, that's very helpful. Thanks for illuminating that guys and, again, great quarter. Thanks.

I think we, I was just thinking, we might need to better [ph] raise more questions on Cardinal. We like it, even though it's narrower. And for Cola, we're fast tracking it for a reason, right? The ability can respond to that, from an engineering point of view. Yes, we don't have a full resource on it yet, so why have we moved those [indiscernible]? And despite the fact that it's narrower for Cola, my understanding is we think that there's some good open potential in the near-term.

Yes, actually, when Tom was answering, I thought maybe I'd throw that in there. But we moved past it too quick. So I guess, it requires some historical context, originally, that's where we wanted to put our next waste dumps, we were thinking about moving right there. And so before they could do it, they obviously had to condemn it. And so, they started at surface, identifying this is an area which has great potential at surface for some sort of small pit. So we didn't want to bury that with a waste dump. So we said, okay, we put on a mine plan on a very rough, inferred resource and said, Jesus, there's a potential to pull those ounces. And so those ounces is actually that I was talking about, and that 2021 and 2022. Those are from that study that we did. So we know that there's an open pit potential there, regardless of what they come up with. But then, what actually happened is then once we started doing that, the exploration group came and said - - oh, stop on this short pit, this little pit, we think there's a much bigger project here. And so, that's what they're doing right now. So, we're very confident, at the very least, at this at this small open bit, with the potential to for it to get much, much larger.

And ultimately underground, potentially?

And ultimately, underground, potentially.

[Operator Instructions] Our next question comes from the line of Don DeMarco with National Bank Financial. Go ahead, please, your line is open.

Thank you, operator. It's a question for Mike. So Mike, given that some of the tax pre-payments from 2020, they're not due until 2021. Should we model an offset in 2021 with maybe lower tax payments?

Yes, the way Mali works is - mainly Mali, the other jurisdictions basically settled up in the year in question. So Mali, you pay based on the prior-year taxes, it's like you do in Canada, you pay installments based on the prior-year, then you true it up in the following year. It's April, actually, that you do it. So yes, whatever you've modeled as actual taxes payable this year, that whatever we prepay in December, you would reduce from the true up in April next year. That's right.

Okay. And just remind me then, what did you do in 2019, did you prepay in 2019, as well, for 2020?

In 2019, we had a small prepay, I think we paid - from memory, it was either $12 million or $15 million.

Okay, so it's just your practice. My next question is, in the past, you've only built one mine at a time. Would you ever consider overlapping construction of two mines like Gramalote and Kiaka, or maybe Gramalote and Anaconda standalone?

I'll add on to that. But I think the principle is, we've been very successful by focusing and building one mine at a time. My initial reaction when Kiaka started to look more interesting was to say, well, okay, great, but we're not going to build two mines at the same time. So if it's in the same timeframe as Gramalote them we need to bring a partner in, or sell it, was my first response. And then Bill and the guys started playing around and saying, well, actually, maybe from a scheduling point of view, we might be able to consider long term, but we might consider an alternative to be able to progress both without overlapping, as you said. I'll pass it on to Bill for his thoughts. It's very early. But that's where we were. I was assuming we're going to need to find the partner, or someone to stay within our conservative strategy and build one mine at a time. So I just want to give some early notes on early days, but we can throw it around if you can share some of that with these guys.

Sure. And as you said, Clive, at this point, everything we're talking about is purely conceptual. But the question came up, if we had the money and the ability, would the construction team be able to do it and of course, then you start looking at it, can you slot in your earthworks team to come in first, and then rotate off the site while they're waiting for the next big earthworks job to come back to. So basically, you'd have people rotating into various facets of the project. And we think there is a path to do that. We've never done it, the exception of maybe some smaller projects, so it would definitely be new for us. But we certainly have the team, we have the capability. If you look at our seniors, the top guys, they almost always have at least one crush up to maybe another person waiting in the wings. And so, there probably is the potential to do it. But it is something that would take a lot of scheduling.

I'll just say as Bill said, obviously, we proceed with caution, we don't just look at it now as an asset. We still believe that there are some investors in the industry that want growth. I think a lot of gold funds are still scared from the mistakes of the past, of management and some of their investments. So they're really freaked out about - some of them about growth. But we're looking at generalist funds, who want a well-run company that pays a dividend, and is good at what they do and can grow the business. So we think we've shown that over 13 years, an impressive ability to grow responsibly. We've got lots of assets in the pipeline, we'll review them and we'll take our approach yourself.

Okay. And maybe just a final question, previously you've mentioned how you combed over potential Greenfield opportunities and made remarks that there's just not a lot out there. But where do you stand right now with respect to Greenfield M&A? Is it still something you're pretty actively looking at, and maybe adding something small stage to your pipeline still?

Yes, I think I shared or meant to say that, when we look at development that's out there today, we don't see a lot that we're in love with. And those that are there are scarce and therefore, perhaps, highly valued. We have always believed Nevis [ph] has a very strong budget, the Bema years and the B2 years, industry-leading budget and exploration, with all their success that's come back. So, we are always looking for Greenfield exploration opportunities, whether they be joint ventures, whether they be opportunities that we generate ourselves, such as Pakistan, a joint venture with the Government of Uzbekistan, Finland, we're drawing an interest in there, and others, that will continue. So I think we always felt there was exploration potential in the world, and it will continue to be driven by geology, not geography. Very unlikely for us to do any major M&A here. You know the growth profile, the assets we have, let's find out what that will all take; let's get that going if it's going to be a mine with realized value. And let's find out more about Cardinal and Anaconda and ultimately, once beneath the saprolite in Anaconda, and now of course, Kiaka, as well. So we see a pipeline of potential very good assets, somewhat unrealized in the market, understandably at these stages. And we're going to continue to probably budget somewhere - this year was $54 million and expiration next year is probably think of - probably going to be $60 million. A lot of that will be Brownfield, but we're definitely going to be looking for significant exploration opportunities worldwide. And there's a bunch in the pipeline that we can't talk about yet, with some of the more advanced exploration opportunities. So that's the way we see our growth and looking forward, definitely with a great team, we have an exploration. Of course, we want to continue as we always utilize them; [indiscernible] gold will always be the ones you want.

Okay, thank you very much for that and thank you for answering my questions.

There are no further questions in queue. At this time, I'd like to turn the call back over to Clive Johnson.

Okay, thank you all, for your time. And if other questions occur to any of you, including shareholders, feel free to reach out to Ian MacLean and he'll put you in touch with the appropriate party to answer your questions. So thank you for your time.

Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation. You may now disconnect.