B2Gold Corp. (BTG) Q4 2021 Earnings Report, Transcript and Summary

Good afternoon. My name is Pam, and I will be your conference operator today. At this time, I'd like to welcome everyone to the B2Gold Fourth Quarter and Year-end 2021 Financial Results Conference Call. [Operator Instructions] Mr. Johnson, you may begin your conference.

Thanks, operator. Thanks for joining us. We're here as the operator said, to report on the fourth quarter of 2021 and the year-end results of 2021, financial results. And we had -- as the news release indicates that we had another very strong quarter and the year 2021, ending up at a very strong cash position. Our costs were in good shape. And -- we're pleased with those results, and I think we're well positioned to continue with our responsible mining from all of our sites and also continue to push to grow the company, and we'll talk about that as well. So we're going to keep it pretty brief in terms of the presentation slide and then open it up for all of your questions. I'm going to turn it over now to Mike Cinnamond, who's going to talk you through the highlights of the financial results, and then I'll come back on and talk a little bit about perhaps outlook, where we see ourselves going. And then we'll open it up to questions. We've got the whole B2Gold team, mostly in the office of in Vancouver and some of them home as well. So we'll be happy to take your calls after the presentation. Thank you. Over to you Mike.

Thanks, Clive. So I'm going to talk about the quarter and then the full year. And then I'll have a brief comment on the budget guidance that we already put out in a separate release, but reiterate it in this news release. So firstly, for the quarter, gold revenue for Q4 was $526 million. So that was still 292,000 ounces at average price of $1,800 per ounce. So the gold price pretty much averaged for the quarter and for the full year. In fact, where we thought it would when we put out our cash flow guidance at the start of the year, which is remarkable in the year where it bounced up and down. But -- and obviously, now we're seeing it at $1,900 an ounce with this Ukrainian crisis. So prospects for gold sales are good. We're currently selling into those higher prices. Production-wise, consolidated production was 305,000 ounces for the quarter and includes our share of Calibre's production. Pretty much on budget, just slightly -- slightly over 2,000 ounces over budget From our mines, Fekola, 164,000 ounces, that was 4,000 ounces ahead of budget in Fekola through the quarter and for full year, it's the same story we've talked about already all year. Just higher throughput than we thought. We averaged over 9 million tonnes this year, which is remarkable. We budgeted 7.75 million tonnes for this year. So average over 9 million tonnes throughput. And that was partially offset by lower recoveries from lower grade stockpile material that we put through the mill to feed that throughput. Masbate 47,000 ounces, that was 5,000 ounces lower than budget. But if you recall, in Q3, we already indicated that Masbate actually mined out of sequence at mine some of the higher-grade main vein material in Q3 that was budgeted for Q4. So we thought in Q4, we probably give back about 10,000 ounces of Masbate, but in the end, we only gave back 5,000. So Masbate actually performed a little better than we thought it would at the end of Q3. And then Otjikoto, 79,000 ounces, just 1,000 ounces over budget. In Otjikoto, just boiling along, it's pretty much everything on budget or better than budget. Recoveries for the Q are actually 99%, so pretty remarkable there. In terms of what that meant for cash costs and all-in sustaining costs or cash costs produced consolidated $484 an ounce, that was $79 higher than budget. And that's kind of reflected what we thought we'd see in Q4, impacted by inflationary pressures, as I think all mines have seen inflation on higher fuel reagent and fuel costs and stronger local currencies, particularly in Namibia, because the Namibian dollar was fairly strong. Next slide, Fekola was $379 an ounce produced $60 higher than budget. Masbate $952 an ounce, which is over $300 higher than budget. Masbate in particular experienced higher inflation in terms of the fuel prices in the fourth quarter. And also, it had slightly lower production, as I mentioned already than what's originally budgeted. So that contributed to that overall higher cash cost of Masbate. Otjikoto $338, $19 higher than budget, so pretty close overall. So overall, just under $80 an ounce higher than we budgeted, but it's kind of what we expected at the end of Q3. All-in sustaining costs for the per ounce sold, consolidated for the Q were $860 per ounce, that was $82 an ounce higher than budget. And that really reflects the flow through those higher cash costs. Some higher sustaining CapEx, where we had some catch up. We were slightly behind at the end of Q3, but then that was offset by higher ounces sold than we forecast and budgeted. So what we found on the sales side was that we actually had an extra shipment or 2 that went. We were able to sell by the end of the fourth quarter before Christmas higher than we thought we would. So that actually contributed slightly to higher ounces sold in the period. So overall, all-in sustaining cost, $860 an ounce, very -- $82 higher than budget. Comment on fuel, just as fuel is 1 of the main inflationary factors. So it's around 30% site total cost. Diesel is around 14%. So that's the [Indiscernible] in HFO on average, is around 17%. Just for your information. Then just some commentary on the full year results now. So revenue just under $1.8 billion for the Q, gain averaged $1,796 per ounce, a very close study to $1,800 mark. Production for the year, including our share of Calibre was 1,047,000 ounces. So excellent, and that's really up at the high end, but nearer the higher end of that production rates that we put out in Q3. Obviously Fekola, 568,000 ounces that was 25,000 ounces ahead of budget, and that was near the top end of our revised guidance range for Fekola of 560,000 to 570,000 ounces and it exceeded the upper end of our original guidance range of between 530,000 and 560,000. Same story as it was for the Q, higher throughput, lower grade material from the stockpiles all year. Masbate was 222,000 ounces, so that's 15,000 ounces ahead of budget, and again, near the top end of our revised guidance range of between 215,000 and 225,000, and exceeding the upper end of our original guidance range of between 200,000 and 210,000. So I think at Masbate, we saw greater mill recoveries, higher metallurgical recoveries and more oxide than was modeled partially offset by a little lower than budgeted throughput, but still overall, a significant beat for Masbate. And then Otjikoto, 198,000 ounces for the period, 7,000 ounces ahead of budget, and that was actually a quarterly -- so I should have mentioned before, Otjikoto was a quarterly record and an annual gold production record. The 198,000 ounces, that was near the top end of its guidance range of between 190,000 and 200,000 ounces. Like I mentioned, Otjikoto pretty much everything on budget or slightly better than budget. In terms of consolidated cash costs and all-in results for the year, consolidated cash cost for per ounce produced came in at $535 per ounce. That was just $15 ahead of budget and within our overall guidance range for the year of $500 to $540. So we're pretty pleased with that. We did see those higher costs in Q4. But when you take it in the context of the whole year, we came in within our guidance range. Fekola was $449 per ounce produced. That was just 24 ounces ahead of budget, and it was at the upper end of our guidance range of $405 million to $445 million. Masbate $682, just $12 over budget and within our guidance range of $650 to $690 per ounce for the year. And Otjikoto $493 per ounce produced, which was actually $6 under budget and within our guidance range of between $480 and $520. So overall, very solid, good production where we actually re-guided earlier in the year and we came in on -- within our range for the cash cost per ounce produced. All-in sustaining costs, consolidated per ounce sold, $888 per ounce. That was actually $6 less than budget overall. And so those are in line with budget all-in sustaining costs for the year reflect higher than budgeted gold ounces sold, some higher than budget gains in fuel derivatives as we saw fuel prices increase through the year and that was partially offset by slightly higher than budgeted sustaining CapEx of about $10 million. And overall, that -- we came in at $888 per ounce that came in within our range, our refi guidance range of $870 to $910 per ounce. And of that Fekola $765, so right on budget. Masbate, $914, that was actually $54 under budget. And so Masbate, that was below the low end of Masbate's guidance range between $955 and $995. And that was a result of higher-than-budgeted gold ounces sold – those higher-than-budgeted fuel derivative gains and partially offset by some higher costs. Otjikoto was $908 per ounce, which was about $58 per ounce over budget. So it was above the high end of its guidance range of between $830 and $870. But overall, all-in sustaining cost consolidated were within the range. Maybe a couple of other comments just on the operations before I run through maybe a couple of income statement items and cash flow. So Fekola, like I said, had that excellent annualized throughput rate of over 9 million tonnes per annum, and we actually budgeted 9 million tonnes for 2022. We've now got the Cardinal zone permitted. We began production there later in 2021, and we're ramping up production from Cardinal in 2022. And we did recently just put out a new Cardinal resource. So for 2022, there's 50,000 ounces in the budget that relate to Cardinal and -- that are included in Fekola's overall guidance. And we think based on current studies, the engineering studies at Cardinal has the potential to add somewhere between around 60,000 ounces to Fekola's annual production for the next 6 to 8 years. Fekola, again, the solar plant came online. It's the large soft grid hybrid solar -- HFO solar plant in the world, we think. It contributes about -- or sorry, 7% reduction to our processing costs and that sort of equates to approximately 3% lower cash costs as a result of utilizing that solar energy and reducing our genset spending reserve. So we're pleased with that. Then as we announced, I guess, just early in the new year, we -- we've now got the Menankoto permit back, and we're making plans now to start -- in fact, I think we have started drilling, and exploration drills are now active on Menankoto and we intend to put out an updated resource for Menankoto by the end of this quarter. Otjikoto. Just to comment a little of Otjikoto, we had development in Wolfshag underground mine continue. We expect to see the first ore produce in the first half of 2022, and we will really ramp up that higher grade Wolfshag underground production in the second half of the year for 2022. And we did exit Burkina. We had -- we disposed of our interest in Kiaka and Toega during 2021. And both transactions with West African resources. Okay. So maybe make a couple of comments just on the income statement for the quarter. We saw a gain on sale of Burkina Faso assets, $22 million. That's as I mentioned, that’s the disposal of Kiaka and Toega. Now there was an impairment charge in there for about $6 million, and that relates to the sale of our interest in [Indiscernible] that's an exploration asset that we had in Namibia. And we've lended that out to [Indiscernible] Resources taking a mixture of cash insurers in return. Year-to-date, I think just maybe to comment on the losses, gains on derivative instruments. We had $24 million gain on derivatives reflect in the income statement and that's driven by fuel. Those are all fuel gains. So there's approximately $14 million in realized gains and another $10 million in unrealized gains for the period. And year-to-year tax charge for the full year, $270 million. So pretty significant tax at all sites now as we've seen revenues increase over the last few years and the mine is really ramping up and producing well. We're paying a full slate of taxes in all locations. When you look at what the -- in terms of earnings, so GAAP EPS for the quarter was $0.13, and GAAP earnings for the full year were $0.40 per share. And then on adjusted EPS basis, adjusted EPS per share was $0.11 for the quarter and $0.36 for the year. Maybe just round out the financial results with just some comments on the cash flow. So from operating, typically we generated $267 million for the Q. So very solid based on those -- that $1,800 gold price and good results from the sites. And that translated into cash flow per share from operations -- operating cash flow per share of about $0.25. And again, in Q4, we paid the same level of dividend of USD 0.04 per share as we have for the other quarters in the year. When I look at overall, cash flow results for the year, $724 million cash flow from operations, which, again, is a cash -- it's approximately $0.69 per share. That's actually higher than we guided in Q3. We've guided about $650 million in Q3. So what we saw in Q4, which is a -- it's a good variance. It was about 13,000 ounces more shipped and sold, and we expect to set out about $25 million roughly to our cash flows. And then approximately $40 million in tax payments we expected to make in the fourth quarter that didn't get made for -- mainly for timing reasons. There were about $20 million related to Mali, which we're actually going to pay early in the first quarter of 2022. That -- and then for Otjikoto, probably about $10 million lower tax exposure than we thought for the year. And then the other variance is between the guidance of $650 million and the $724 million were really related to working capital. Comment on taxes for the full year. We thought we paid $380 million in cash for taxes during the year. In the end, we paid $340 million. So the main reason for that are I just elaborated. Slightly lower tax payments in Q4 than we anticipated, but some of that is just going to roll and be settled in Q1 of this year, Q2 this year. We ended the year with taxes payable about $71 million, and that includes the Fekola priority dividend for 2021 of about $38 million. And for 2022, just for your -- for the analysts, total budgeted cash tax payments are about, we think, are somewhere around $290 million, and that includes settlement of that $71 million that we're carrying in accrued taxes payable at December 31, 2021. Total dividends for the year, $168 million, so USD 0.04 per share each quarter. So that's 1 of the highest dividend yields, I think, in the gold space, just somewhere around 4% yield. And then on the investing side, cash used by investing activities for the year, $286 million. Overall, full year, it's about $10 million under budget from where we thought. There's a couple of offsetting factors in there. Sustaining CapEx for the year was about $10 million more than originally budgeted. Some unplanned mobile purchases and some TSF work done at Fekola. And then offsetting that, we had some on reaches. So Gramalote, we spent, I think, about $11 million less than we budgeted for the year just based on timing as we work our way through the feasibility of Gramalote. And then exploration, some of the greenfield exploration cost to be expected to incur. In 2021, we didn't -- for some various reasons, some of which couldn't get access to some of the properties to about $10 million under for the year there. So overall, that $10 million under CapEx in the scheme of things very close. And we ended the year with cash and cash equivalents of $673 million in the bank plus in liquidity terms, we've also got $600 million undrawn. So we've got a full amount of our revolver, $600 million, which is undrawn and also $200 million available on the accordion feature of the revolver. So liquidity-wise, we're in good shape. So the last thing I'm just going to highlight with some of the budget guidance we put out. So for the year, for 2022, we've got total gold production, including our share of Calibre of between 90,000 and 1,050,000 ounces. Consolidated cash cost is forecast to be in the range of $620 million to $660 million. Consolidated all-in costs forecast to be somewhere just over $1,000 to $1,050 per ounce. Should comment as well that as based on very similar to 2021 just based on some of the stripping campaigns and the development of some of the higher-grade material from the Wolfshag underground in the second half of 2022, our results are definitely weighted more production wise to the second half of the year than the first half of the year. And due to that production weighting, you'll also see an offsetting, meaning more costs are higher in the first half than the second half and cash flows are lower in the first half and higher in the second half. So again, a very similar story in 2022, I think that we saw in 2021. Then a final comment on the budget numbers to reflect the fact, our costs are a bit higher, 2022 than we had guided for 2021. So we're up about -- cash costs were up about $120 an ounce or 24% compared to 2021 guidance. And just over half of that is inflation. There -- we've seen increases in fuel cost, mechanical parts, labor costs and a continued stronger foreign exchange rate for the Namibian dollar all of which contributed to some -- more than half of that cash cost increase. And then the remainder of that cash cost increase is really coming from operational-related items. We've got -- continue to ramp up that sort of higher strip in the early stages of Cardinal. So ramping that up in 2022, which is a little higher cost. And then for Wolfshag, also commencing operations at Wolfshag underground mining in the second half of 2022. The other factor at Wolfshag is in 2021, we had the benefit of higher grade material from the Wolfshag Phase 3 open pit flowing through for certainly significantly in the second half of 2021, but that pit is going to be mined out in the first half or in the first quarter of 2022. And therefore, it impacts the cost per ounce a bit. And consolidated all-in costs also budgeted to increase by about 18%. About half of that is the inflationary factors as noted above. And then there's also some higher sustaining capital as we do some planned tailings facility raises of Fekola and Masbate. So let's just -- at a very high level, how the budget looks for 2022. Again, we're in that 1 million-ounce -- per ounce range. We've got good costs, a little higher than current year, but assuming the gold price of $1,800 an ounce, we're still forecasting operating consolidated cash flow to come in somewhere around the $625 million mark. So very solid. And that concludes the remarks I was going to make.

Okay. Thanks, Mike. As I said before, were I'm going to make a few comments now looking forward, and then we'll open up for questions. We’ll talk about Mali, first and foremost. Obviously, our largest mine Fekola is in Mali and obviously, Mali is much in the news these days. But I want to talk about the reality of Mali from a gold mining perspective. Why companies like [Grandland] went there with great success in the early '90s and beyond and many other companies, international companies have gone to Mali for its tremendous wealth globalization and the government historically. Coming at the government have believed in the importance of mining in their economy and the support it for an investment in gold mine. And I think that gets lost sometimes in the noise of what our real events or issues that we deal with and they're dealing with Mali fundamental issue there. We've spent a long time, some of us 35 years scouting the globe looking for great opportunities to gold mining and often they didn't fit necessarily everyone else's model in terms of risk profile. We've done that remarkably well between B2Gold, in many, many different places all over the world. So 1 of our keys is due diligence. Due diligence is just about resources and potential mining costs and permitting [Indiscernible]. So about assessing countries being in places where they want us to come in and welcome us to be partners with government and create jobs and to all the great things we do for these economies around the world. There's probably never been more evidence than it has been during COVID what we contribute and how we do it. And not just us, of course, many other responsible mining companies have done a great job of that. So with the context of Mali, why are we there and why are we now looking at expanding in Mali, which includes Phase 1 at Anaconda, which we used to go into Menankoto but we won't anymore, the other licenses back, we'll call it Anaconda again. There's tremendous potential there. I think as you see in the news release for Phase 1, which is short term, trucking some saprolite material down to the gold mill, which is potentially 100,000 ounces a year. And then beyond that, we've had some great exploration results. The last time we reported resource from Anaconda area was based on 2016 drilling and that was about 770,000 ounces. They looked quite attractive because it was on surface, most of it weather material that could be trucked onto the mill and run through the mill very easily. But beyond that, we've had some good results, we'll come out with the new resource in March I think it's very important for the future of this company in terms of growth because we think there's a much -- going to be much larger resource there potentially leading to not only Phase 1 of mining the sampling and truck again starting as early as late this year in partnership with the government, but then also looking at the bigger picture, which is Phase 2, if we're successful, continued success in some of the intercepts we've had in sulfides below. This saprolite material, which is average 50 meters depth, being below that while the sulfides we've had some good results. So we have another multimillion ounce potential here, which could lead us to Phase 2, which could be another mill in the Anaconda area sharing some facilities with Fekola mill as it exists today. So we see lots of potential and upside in Mali, specifically in the belt we're in right now. We have the Cardinal discovery, which is adding production right now, 500 meters away from the Fekola mill. And of course, we have this -- from is almost in the sense of the Fekola, meaning more volume remains open to depth and we think we may end up with some underground mine there actually in the not-too-distant future, complementing open pit. And then, of course, we have the whole situation of the Anaconda, which we haven't been able to talk much about or in fact drill in Anaconda because of the license dispute. So we're very -- we're comfortable there. We're very good at profit solving, its what we've done for 35 years of our business to grow, still together. And that's 1 of the keys to our success is crisis management, whether it'd be pandemic, whether it be typhoons or earthquakes or political tools or whatever else. We’ve done pretty much all of it all over the world and we've done consistently and been successful with that. And the reason for that is fundamental that's delivering on the promises you make around the world. I find it in life not just in mining, if you deliver the promises you make, you make more friends than enemies. So we've learned a great social culture, and I think this is why I'm spending a bit of time on it, its just to understand really dig a little deeper or at least listen to the idea of why we and others are in Mali and want to do more in Mali. Because we believe the government today and the governments going forward will continue to honor their laws and continue to support for investment in gold mining. Post COVID in many, many countries in the world, almost everyone needs foreign investment, gold mining and mining has shown itself to be over the last couple of years, a really good foreign investor in terms of job and obviously, revenue creation, job creation, responsible mining, health and safety, which we lead the world and just critical for these economies in all the positive ways, education, agriculture, you name it, the things we do around the world. So we have a great social license in all the areas that we work in, and that's through many years of delivering on promises and treating people with fair respect and transparency. So Mali today, the dispute over Menankoto was a very specific issue. I consider it an anomaly in the bigger picture of our relationship. And at the end of the day, we were able to work with the government and we were able to -- the government was able to realize the best way forward with this was with us as the partner driving it, especially given the proximity where we are with Fekola, but also the government is going to be a 20% part of this. So if you look at the benefits of the government, I think we've got the stat somewhere. But what the Fekola mines meant to the people of Mali and the government of Mali, it's extraordinary, and they get that. So it's not as if we're good to war with the government of Mali. It's so easy to put headlines out there or people to make comments or not to be too single because of this Mali problems. Well, the issue we have is very specific and we did resolve it with the government. So they're very supportive going forward on that economy. And in fact, they could ask us when -- why don’t you start producing there. So that will create more jobs to -- so that's what to clear the air a little bit at least tell you why we are still there and mining profitably in partnership with the government to exceed great things in the country. And because of remarkable exploration team with Tom Garagan and his team we have been able to now do what we've done in many places, we just find a lot more gold. So if you look at the Fekola story and then you look at Anaconda, you see some similarities, you see some reps on the things that we've done. At the end of the day, we've always been prepared to go where others feared to trend, where they don't take the timing right, et cetera. That's 1 of the reasons we have had success in Africa in Otjikoto and also at Fekola because it wasn't [Indiscernible] M&A back then, and we did a contrary thing which we're talking to the market as well for our shareholders. So we will always be disciplined about what we do in terms of growth or what we do in terms of M&A. Over the last 13 years, we've taken this company from 0 ounces a year to 1 million ounces a year with a number of accretive acquisitions that we've done a great job in building the mines or making it better and also add announcements everywhere we are and doing -- having some great exploration success beyond that as well. So I just want to spend a little time on that, because I think Mali is a little bit misunderstood. And yes, there's some series issues with the government situation at the moment and is the government going to commit to relationships. We hope they will soon go back to what is it always been in our history. The bottom line is the importance of what we're doing in that country. That's not lost on anyone, including the current government. So I just want to touch on that because you're going to see us doing more in Mali, and we will continue to geographically diversify through exploration development projects and also perhaps M&A if it makes sense to do any in Mali. So -- we will continue to work with the government of Mali to make Mali an even more successful country and ourselves a more successful company in gold production from Mali. A couple of other things that I think are topical that I touched on previously, Gramalote. Before looking at the results of the feasibility study available internally at the end of the second quarter of this year with the ability to release those results shortly thereafter. As everyone is aware, I won't reiterate the news at least. We've taken a number of steps in the last while as operator with our engineering team to actually go back and look back at the work been done earlier in terms of engineering. So the bottom line is the capital cost per core is estimated at around $900 million to build the Gramalote mine, which could produce 40,000 ounces of gold a year. The operating cost and the all-in sustaining costs have always looked pretty attractive. The big investment capital. So how do you improve your IRR, how do you improve your project? Well, 2 ways to do that are to increase -- to reduce the capital cost and then divide it by more ounces. So we've had some success in reducing the capital cost, inflation will be a factor there. So that will be interesting to come out of the study. But also, we've just come in -- we have just completed a lot more drilling to go on the new resource, and we'll see what the ultimate size of the resource at being sold. So we're kind of optimistic about that, but we're going to know really soon. And we will continue the discipline we show for years in terms of what we do with Gramalote. We will not build it simply because we put a lot of money into it. That's not what we do. We build it if it's economically attractive to our shareholders, it makes sense in our world. There are not many Gramaloties in the world, it's a significant asset. AGA is our partner for 50%, and we're working very closely with them, and they're our partner. Both companies' Board of Directors will have seating to make in the third quarter, I would think about the development plan for Gramalote. The government wants us to go the permits, et cetera, we have on permit, but we're updating the permits with some changes we've made that the government is very supportive locally and federally up this project on. So what happens? Well, there's going to be a decision made by both parties. The AGA, -- lets speak for them, AGA will evaluate and decide their growth profile going forward with everything encouraging and we’ll decide where to pit based on the economics, based on what else we've got going on, et cetera. But you have to think if we're going to do the heavy lifting and be the operator to build a mine, which AGA wanted us to do. Then if you like, 50% of something, then good argument to suggest you might like 100%, but that's not for sure. There's other significant gold producers that have already approached us to say, well, if AGA decides not to go forward, we'd be interested in coming in and partner with you on Gramalote. So a number of alternatives there, and 1 is to not go ahead, 1 is to go ahead with AG as partners and that has the gold production to our account 2,000 ounces starting up. The other is to -- another part of your goal -- financial cloud restrict we have right now today, we can clearly take out Gramalote for 100%. We chose to do that now. So a lot of things that will factor into that decision not just because we have cash available. So we'll see very shortly Gramalote, and we're hopeful that it can become approaching the SIP industry for our shareholders. Now it is 1 of those projects where I would consider for us was to say this, was to blame it on the bench all the time if you do any hedging at all. Gramalote's a situation where it has to make sense -- investor sense that lower gold price in today. But if you could lock in some of your gold production during payback on the mine like that, I think that's pretty attractive. I think our shareholders can see the logic of that. You can increase your production by 200,000 or 400,000 a year of low cost, relatively low-cost production. So that's Gramalote, I’ve touched on Anaconda and which I think is a huge asset opportunity for the company that is yet to be put in the context and release publicly what that new resource might mean and we can do a Phase 1 and Phase 2 mean there as well. In terms of exploration, it has always been 1 of our strengths and the B2Gold started exploration companies. So there's an unusual story of taking the company from exploration through development production and being put at all, but most of the -- few people who find gold economic ones don't produce it, they shouldn't. They should be buying up the bigger companies and know what they're doing in production. I find a lot of production companies are not good in exploration because they don't have the entrepreneurial hunger to go out and actually find things or go sometimes we're on the sametrend. So I think that's 1 of the exciting things about what we've done and where we go in the future. So we've got some great exploration projects going on. We've got a budget, I think a $67 million of shared exploration. And some go, well, that's a lot of money. And I go, "Great, isn't it great? Because if you look at our per -- what we've discovered in terms of ounces at existing minorities over the years of B2Gold, I think we got calculated somewhere around $15 an ounce cost through exploration per ounce. That's money well spent. So about 65% of that budget is brownfields exploration around existing sites and the rest, which is a monster, so really exciting greenfield. So I won't go to the much detail that we can put you together with the geology team if you're into geology and you want to hear about it. But Finland, we just -- our partner announced again today and on behalf some exciting results there. Next to a major discovery by Resources, good for them major new discovery here if it's early days for us, but we're seeing some interesting realization. So that's exciting, and we're also in Uzbekistan, speaking of outside the box and has a very exciting growth targets there and a number of other locations as well. So we'll continue to try and find the cheap ounces of all or generating ounces of gold, which are the ones you find always with numerous high-quality exploration targets around the world. Finally, on M&A, I think the best way to describe our attitude towards M&A right now is ambivalent and potentially disappointing. Now I'm doing 1 with assessment we don't need. When you look at the potential -- the unrealized potential in the marketplace of what Anaconda could be and you look at the Gramalote to go. And if you look at those 2 opportunities, there's a lot of growth in those 2, dramatic growth for this company barring any further exploration success. So we're -- our job is to realize value for our shareholders, and we just haven’t realized so far because we haven't been able to come up with the new numbers and also Gramalote is still a question mark, obviously. So in the meantime, though, our stock has been hampered over the last 1.5 years starting to recover now, partly because of the Menankoto situation, and need to get a reaction on the downside, you'll get it on the upside so much sometimes, but that's the nature of our business perhaps. But so when it comes to M&A, we are only going to do what we've done for the last 30 years, which is accretive deals that makes sense for our shareholders. We haven't had growth for the sake of growth. I think that's 1 of the reasons we've been successful is highly disciplined due diligence and accretive deals that we then turn into different great mines that make us successful. So we're not going to suddenly change that approach. So with M&A, we're looking at some opportunities out there. But I think if we do something, it's going to make sense to our board because they're going to go for it and it's going to ultimately makes sense for our shareholders because we will be continuing on the discipline we've shown for a long time. So sometimes people think because we're a very aggressive company, and always have been that there's somehow as a negative. I always say there's a huge difference between being aggressive, being reckless. We're never reckless, but we're extremely successful in seizing opportunities and going for it, but also some of the highest standards in our industry, what we're able to maintain. So we're at the middle of decent opportunities, we just got to make sense in the context of our shareholders, where our share price is trading at. But for the first time in my career, perhaps, we have the opportunity to use not only shares but cash for M&A because of the extraordinary connection position we find ourselves in. So if there's something other that makes sense, it's an existing producer perhaps who has had struggles, et cetera, and maybe there's some synergies there or some development purchase opportunity if you look along. The disappointment potential for disposal comes in because of a drum I've beaten for a long time, and I will beat it that today. But it's 1 of the biggest -- the 2 things is -- the 2 biggest problems with M&A and the reason we're not seeing it despite a lot of institutions wanting it, and we do need more and better gold mining companies as we go forward. And everyone says it, so think we're open to mergers for sure. We're open to a deal and a lot of them are in the truth as shareholders because they work for you, but they're actually entrenched management. They're entrenched because they want to keep their jobs and they don't -- they're not acting their best is in the shows at all who they work for. They have a fiduciary duty as directors of these public companies to build shareholder value. We've got a couple of situations -- numerous situations over the years where companies are not telling the truth to management. They want to keep their jobs. That's not thing right. We know what we speak. Meanwhile this approach acted on us in 2006 about a potential merger. We said we're not interested, not interested at all. But we said, you know what, it's about show. So why don't we sign a CA, we're building 1 of the greatest gold mines in the world and the Russia. We don't want to sell the company, but it's not to us. So we told to put forward their best offer, then ask them for another 1 then another 1. And then we decided that it was not our right to the side and we'll let to the shareholders. And our Board of Directors immediately said to us back in the day, we never said to the board, do you think we should take this to the shareholders. It was so obvious, and that's what a responsible gold mining company does or any public company does when they're faced with an opportunity for the shareholders that may hurt their pocket book or their ego. So at the end of the day, we'll see what happens, but the 2 big disappointments potentially in M&A are ship projects because there are many goods in the world. And the second is entrenched management. And I just find it offensive and on behalf of shareholders, we want to talk on the other side. So at the end of the day, we're open to do accretive acquisitions for us, and there's some deals out there, not many, but a few that might make a lot of sense for both sets of shareholders in these situations. Yet there are shareholders out there that are not hearing about opportunities because management is putting themselves ahead of the shareholders and not taking -- decision's not management’s, the decision is not for directors, the decision of the commission or potential M&A is their shareholders. So the institutional shareholders out there, and I may have a few words to say with us at next week, but join us. Don't fight me over how many years the directors should be allowed to be a director of the company. Let us run the business. We do it rather well. Help us by forcing the shareholders of companies that are not telling the truth, force them to do the right thing for you that shows in the company. Let's grow this business. We have to grow this business by having people act in the interest of the shareholders not in self-interest. So we're open for business, don't run around saying now, they're going to go to and buy something that's stupid. No, we're very disciplined. We've got a great growth profile, extraordinary financial strength, we'll use it to build the company that we got around so far. We'll continue to do that. So that's the most of what I wanted to say. I think with that, let's open up for questions.

[Operator Instructions] Your first question comes from Ovais Habib with Scotiabank.

Congrats on a solid 2021. Just a couple of questions from me, Clive. My first question is on Anaconda. Now you're expecting at least a resource update in Q1, and then you're looking to have a Phase 2 drilling. Is the plan to complete a PEA on stand-alone versus trucking or down to Fekola. I mean I'm trying to figure out what are the parameters? How large you need Anaconda to become before you consider Anaconda as a stand-alone project?

Sure. Well, I guess in terms of -- I'll pass it over to Bill in terms of the PEA and what we're doing there in terms of working with the new -- the resources, but coming off and working on the PEA right now on the Phase 1, which is exactly with the material trucking that down, that's when we talked about potential 100,000 ounces of additional production a year starting as early as potentially late this year, early next year. Bill, do you want to talk about the time of the that study, where we are?

Yes, for sure. Thanks for the question, Ovais. I think you remember when we talked before, we already have a study based on the previous resource, which was announced, which really shows economically that trucking is a viable option, right? So as you pointed out, we're coming out with a new resource right now which will be out by the end of Q1. Our plan is to take that resource and look at it and really kind of expand on the trucking concept for 2022. Basically, once we get that, we've already done all the environmental work. We've already done all the permit or all the feasibility work on that. We'll be going to the Malian government with that concept for a truck -- a Phase 1 trucking study as they continue to expand the resource, then we'll look at the next iteration of what does it look like for a stand-alone mill. I mean knowing that it would take a couple of years in any case to get the equipment ordered and to get it built up there, if that was the choice. There's some time on that. But in the meantime, we think there's real value in trucking down to Fekola.

So from what I understand is Phase 1 is the trucking situation, that's likely happening or starting in 2022. Then as you increase your resource, then you'll start looking at the stand-alone, and then you've require additional permits and obviously, additional studies for that.

Yes. For sure. I mean, 1 of the -- you made it may be more simplistic than it is. Knowing that we haven't seen the resource size at the end of March. I mean maybe those studies have start to happen, the Phase 2, start to happen immediately. But in the meantime, we still would have to look at trucking while we're getting everything set up for the Phase 2 portion of that.

Yes. I think the whole custom business, which I think is really well, while we're permitting. And then don't forget, permitting of the saprolite. We're just talking about a little bit of washing and basically digging this out of the ground and putting the trucks and take it down. So there's no facility. There's nothing when it comes to permitting and it should be pretty straightforward in the government. It's very, very keen to within the laws and within the rules to get that permit in our hands as soon as possible. Basically, we're on the same page there. So that we're not -- conclude a process that we've been through it before, but we're not that concerned about that because of that stage. But while we're trucking the material now to add production through the Fekola mill in the saprolite material we're going to be doing extensive drilling. What's the next question, you mentioned this year for Anaconda area?

$12 Million full --

So that's a lot of drilling. It's not expensive drilling, we’re actually drilling from surface, and this is basically the ore body and the saprolite comes to the surface in many places. So we're going to find out a lot more by the end of this year with all the extensive drilling going on below the saprolite resource. So we have a new resource in mind, but we don't think that will be the end of it. But the potential basically is for another multimillion ounce discovery in Mali between saprolite and the sulfide. And that’s not something we say lightly. So that's why 1 of the reasons it's so attractive to us is putting that together in the near term, Phase 1 and then ultimately Phase 2. But I would suggest to you by the end of this year with all that’ts doing going on, we're not going to have that indicated resource on the huge amounts of the sulfide material. But we're going to have real indications of how big this thing might be, and that's the approach. And in theAnaconda areas the upside. Could the Fekola complex, if we dare to project ahead a little bit, produce 1 million-ounce gold a year, we think it has that kind of potential subject to we're drilling and what we're seeing becoming reality.

Got it. Okay. And just quickly moving on to the -- towards Fekola. Last time we talked -- and this is maybe a question for Tom. Any update you can provide on the TMG zone, which is adjacent to the Cardinal Zone, how that's shaping up? Is it looking like another Cardinal or how should we perceive the TMG zone?

I assume you mean the FNZ on or FMZ zone.

That's right.

Yes. It's a parallel zone that hasn't been drilled to the same extent as Cardinal, although part of the FMZ zone is included within the Cardinal resource. Exploration this year will we're spending most of -- not most, a good significant part of our exploration dollars are going to be in the in the Mamba area for sulfide in the down plunge extension and the underground potential for Fekola, but we will be doing some drilling in FMZ. And also in Cardinal. Cardinal has opened down plunge also. There's 2 significant looking– of should we say we see there that have potential for future underground also. So we'll be looking at that. So yes, that will be part of our program.

Your next question comes from Josh Wolfson with RBC.

When looking at the upside from the various sources of Fekola, the prior guidance was that Anaconda could add 80,000 to 100,000 ounces and then Cardinal could add 60,000 ounces. I guess I'm just wondering what that baseline is. And then if we think about what the net result is from those additions, can that sustain the mine at 600,000 ounces. And I guess, for how long?

Well, for the how long you can add capacity exploration right.

So yes, so Josh, talking -- let's go back to -- you got to step back a little bit further than what your question is. Remember, last year, we were operating at 7.75 million tonnes per annum. This year, we've increased to 9 million tonnes per annum. And as part of that, the Cardinal resource is already in there, right? So that kind of 60,000 to 80,000 is already kind of baked into what we're talking about for 2022 and going forward. Now with the additional 1 million tons, what you're really talking about is how much additional can you add from Anaconda. And quite frankly, at this point, without getting a full mine plan together, I don't want to put a hard number on it. What I will tell you is that we've been kind of very public that in the short term, we're looking at 80,000 to 100,000 ounces over the next couple of years -- per year. That's correct, per year. And the long term, we kind of see that 600,000 ounces plus/minus, and I'm going to do plus minus hand wave a little bit, is pretty achievable certainly in the near term at Fekola.

Okay. So I guess, in other words, what point would you start to see some pressure materialize from maybe the grade profile? Is that after a year 3, 4, 5? Just wondering how much visibility we have today.

Yes. I think if you -- first, you should go all the way back to when we did the feasibility study put it out, and then look at what the kind of overall profile was for Fekola, and then take a look at what we updated. And what I can say is really, I think, really out to 2026, we feel pretty good about where we're at. And then, of course, we have -- we haven't even talked at all about what could be the potential of the Fekola underground, what that looks like. So there's a lot of things still in the work. So what I can tell you is in the short term, 600,000 sounds great. In 2026, we really have to look at how we're going to supplement that grade.

In terms of the ultimate as we said, we're going to lock by the end of the year in terms of all the exploration really going on and we feel really going on and had a comp in the not only separate sulfide as well. So we'll have a pretty good idea of where we're going. And as the resource that comes on in March, is of interest in terms of the sulfide portion of that, then we will alleviate very well around that time, we start to kick off permitting for something for a mill to get that process started. So if the plant is aligned, we'll progress for a year, for example, you've progressed into substantially larger production potentially with a mill subject to all the drilling we're doing, and then the ore reserves ultimately. So that's the -- as we see it, the play out right now, the timing could work rather well because you have this great source initially on a saprolite material, which you can cheaply turn to the mill. And because it's so soft, you can actually add it on top of the $9 million.

Yes. And maybe just to expand on that, 1 of the things we're looking at, we did this when we did Fekola. We kind of looked at this optimization, little optimization. And we see that as a very real project coming up where we've really got an outlook at -- you've got Cardinal, you've got Anaconda, you've got the underground, you've got Fekola. You've got a mill now that runs at 9 million tonnes per annum at least. So we really want to take a look at kind of optimizing all the sources. And that's a study that we're going to start this year. And of course, that will be ongoing as the resource gets updated. So I don't want to be too cagy, but I just think projecting too far out there is really not appropriate at this time because I don't think we know how good it can actually get yet.

Between March new resource at the end of the year alone, we're doing those are the important things we will fill in. Hopefully, this -- we'll be able to supply you with the detail. I mean if you want to look back for a reference point, you look back at what Fekola was when we acquired with the formally announced resource and 3 million of value reserves. And look what Fekola became 70 million. These situations can grow rapidly as we get in Fekola by ceasing the opportunity to drill construction covering a much larger deposit than we acquired in the highly accretive [Indiscernible]

Okay. Stay tuned. And moving over to Gramalote for a second. We've seen commentary from some of your peers about inflation for capital running at a rate at least year-over-year, consistent, I guess, in the 10% to 20% range, most of them are towards the upper end of that. Ignoring the potential impact from the optimization, is there any sort of reason we should not apply the same sort of thinking to what the base case would be for Gramalote.

Yes. So remember, the last feasibility was based on Q1 2021 costs. So we don't have -- the costs haven't come in yet, but we do believe there is going to be an increase. And I would say that it's not going to be that different than what you're seeing in the industry.

So remember, we've been working hard at significant changes realistic changes in engineering design, et cetera, rods, et cetera, and tunnels and stuff to bring that capital cost down because we thought it was a better project with a -- we were basing this before what kind of worked on a long time ago work, but that's where we decided the -- this could be a better project by some fundamental changes to the approach that's where the capital is potential to reduce. So if the capital comes down from the $900 million, which it is, then the question is, how does it come down? And then is there a portion of that you lose back because of inflation. So that's going to be the issue, but the good news is we won’t have to expect for too much longer here with the study available -- results of the study hopefully at the end of the second quarter study and its not in the third quarter, so -- and that will lead to more development decision or not.

[Operator Instructions] Your next question comes from Don DeMarco with National Bank Financial.

First question for Mike. Mike, what is the quarterly weighting of the $290 million in cash taxes? I mean is it just simply like similar to last year, like heavier in H1?

I think -- give me a second here, and I'll tell you that. It's probably pretty even through the year, I'd say.

Okay.

In 2021, we had that big catch up because we had that fumble year in ’20 that we had to pay higher taxes on in 2021. And what you saw through the current year, remember, like I said, we've got about $70 million to pay at the end of 2021. More than half of that -- so that's the dividend. So really, there's not that much outstanding tax related to '21 to be settled up in '22. So it's -- I would say it's more evenly distributed in the Qs next year.

Okay. Good. So you guys have had a couple of years now where production costs are back-end loaded. Would you expect recurring back-end loaded years going forward?

As in after '22 or just for '22?

After '22.

Yes. No, that's kind of the beauty of some of the things we're doing, like the Otjikoto with the underground coming online, we think the that house profile is going to kind of level itself up. Same thing in Fekola. Now with Cardinal and everything, we've got additional sources. It was really related to the way the ore body was laid out around Fekola and Otjikoto, where you're kind of working up and down within the zone to the high-grade material. So I think that, that will kind of level itself out.

Okay. I figured that might be the case. Now just shifting over to Fekola. We see that you're forecasting potential Cardinal production of about 60,000 ounces over the next 6 to 8 years. Even if you hit 60,000 over 8 years, I mean, that's total production less than 500,000 ounces versus a total resource of 1.2 million. Can you comment on that differential? It seems to me a face value that there is some upside at Cardinal beyond what this preliminary forecast is.

Yes. I think you answered your own question. There's a lot of upside. I mean, once again, on the operational side, we just kind of looked at what we can put into a reserve based on the drilling there. But of course, they continue to drill and explore that and turn that -- inferred into indicated. So the answer is yes, there's upside.

Its beyond that. We're opened that to depth of strike where it opens the north -- So yes, more they're both journey inferred into indicated but also it's still open. Can we add more.

Okay. And just finally, for 2021, which is the Fekola throughput around 7.75 million, you hit 9.14 million 2022 were nice to see 9 million, but does that all things equal -- are you aiming for higher than 9 million. What does 9 million do?

Is 1 of the thing what have you done for us lately questions. So the answer is, remember, we started at 4 million and went to 5 million and then went to 6 million to 7.5 million and now we're at 9 million. We did originally maybe John should -- but we did do a study where we looked at 10 million and go into 10 million. And we've got the capacity to do that. It will be tight, but it will also be very expensive because it's not just upgrading the pumps and the motors and everything, it's actually adding an additional line. So we certainly think that there is some, I would say, incremental upside, but we don't see that operating this thing at full on all the time is in the best interest to make sure as far as the maintenance goes. So I think 9 million is probably the right number, plus/minus, given the 10% to 15% saprolite.

And congratulations again on a strong finish to the year.

[Operator Instructions] There are no further questions at this time. Please proceed.

Okay. Thanks, operator. Thanks, everyone, for your good questions and your attention, and we look forward to further positive reporting as we go forward. Thank you all.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a great day.