B2Gold Corp. (BTG) Q3 2025 Earnings Report, Transcript and Summary

Thank you for standing by. This is the conference operator. Welcome to B2Gold Corporation's Third Quarter 2025 Financial Results Conference Call. [Operator Instructions] The conference is being recorded [Operator Instructions]. I would now like to turn the conference over to Clive Johnson, President and CEO of B2Gold. Please go ahead.

Thank you, operator. Good morning or afternoon or evening, everyone. Thanks for joining the call. We're here to talk about the financial results of the third quarter of 2025. We had a strong operational and financial quarter. Fekola, Masbate and Otjikoto mines all came in ahead of expectations in the third quarter on the production side, resulting in lower-than-expected cash operating cost per ounce. On October 2 of this year, we announced that we achieved commercial production at our newly constructed Goose mine. This milestone comes just 3 months after the inaugural gold pour, and we look forward to many years of successful operations; in Nunavut in close collaboration with our partner with our partners Kitikmeot Inuit Association. At Goose, third quarter production was impacted by the previous disclosed crushing capacity shortfall and a temporary delay in accessing higher grade from Umwelt underground. We are now in the higher-grade. To ensure a consistent feed of crushed ore to the mill, the company has implemented the use of supplemental mobile crushing capacity. Permanent modification and modifications are in progress and are expected to be implemented in 2026. Continued use of the mobile crusher will assist in operating at higher throughput until these modifications are implemented. We expect to be at design capacity of 4,000 tonnes per day by the end of the year. Underground mining of the Umwelt deposit commenced in late October 2025 and will be a strong contributor of high-grade ore at Goose over the next few years. In Namibia, B2Gold announced a construction decision on the Antelope underground deposit. Production from Antelope is substantial to increase Otjikoto mine gold production, leveraging the low-cost platform and extend the life of the mine into the 2030s. In this strong gold price environment, B2Gold is well positioned to take advantage with annual gold production of approximately 1 million ounces this year with both capital spending at Goose now complete, the company is set up well to add significant shareholder value over the coming years. Before I turn it over to Mike to give us more financial detail, I just want to talk a little bit about the political situation in Mali. We've had some news come out, I think what I think are some responsible headlines from some of the media talking about that it's imminent that a terrorist group organization is going to take over Bamako in the country of Mali. We think that is completely erroneous, and it's a great exaggeration of the situation. Yes, there have been some fuel challenges, particularly in Bamako, but we continue to run the mine as we have for many years now and haven't missed any mining due to any kind of political situation or turmoil associated with that. So the mine continues to run well. We're 500 kilometers from Bamako. And we look at the situation that the government still enjoys popular support from the population. And they see these organizations that are cutting off fuel to Bamako as foreigners. This is not the bad of the people of Mali from our understanding from the intelligence that we have received. So operations continue. It's nice to see some support from other governments in the United States and others. The U.S. came out and posted -- they supported Mali military and said they're looking forward to closer collaboration, working on intelligence together. There's no Western company that wants to see Mali fall into other hands, and there's a lot of international support gathering. So we're very confident of our ability to continue to produce in Mali and work very closely with the Mali government. We're expecting the permit for our regional mining and trucking at the Fekola mill. That's imminent. And we received not that long ago the permit to go underground at Fekola. So we think we're on track there. And once again, we're not impacted by any of the things going on in Mali right now, and we're disappointed to see this irrational or not true headlines that are running around and lasted little while. And clearly, that's hurt the value of B2Gold. With the benefit of time, I think we'll see that this is a situation not impacting the mine. With that, I'll hand it over to Mike to give us a financial summary of the quarter.

Thanks, Clive. As Clive said, financially, it was a strong quarter. I mean GAAP earnings were $0.01 per share, but they were impacted by several noncash derivative mark-to-market adjustments. And after adjusting for those onetime items, the company's earnings per share were $0.14 per share of adjusted earnings. And clearly, you can see that benefiting from the strong average gold sales price that we saw in the Q and continues now. The company recorded revenue of approximately $783 million in Q3, and that included $144 million related to the delivery of just over 66,000 ounces under the company's gold prepay obligations. And by the end of October, we had another delivery into those obligations. So we've now delivered into 1/3 of what we own there, and that leaves us just under 200,000 ounces that we'll need to deliver into by the end of June. So we're in good shape there. Operating cash flows totaled $171 million in the third quarter and or before working capital adjustments, $180 million, which is another strong result, and it highlights the continuing cash-generating potential of our assets and the strong gold price environment. Balance sheet-wise, we continue to remain in a strong financial position with cash and cash equivalents of $367 million at the end of the quarter. During the quarter, we drew down -- as we disclosed last time, we drew down $200 million on the revolver. That just helped us manage through some of the working capital timing differences that we have, especially as we deliver in the prepaid. So we'll continue to do that. But with these gold prices, we expect to repay some or all of it by the year-end. So I'd say, overall, we maintain excellent financial flexibility to deliver to the prepaid, complete our other sustaining growth initiatives, continue to fund the healthy exploration programs that we have and I think continue to return capital under our share buyback plan. So I think that's the summary that I want to touch on in the financial sections. And with that, I'll turn it over to Bill for an operational project update.

All right. Thanks, Mike. So at Goose having key commercial production, the focus now moves to steady-state operations and consistent performance at nameplate capacity. We've identified the source of the crushing issues that impacted performance early in Q3 and have made a temporary fix to the use of the mobile crushing unit. Permanent optimization to the primary crusher and secondary grinding circuits and the installation of the surging capacity are being engineered and designed with a finalized study and remediation plan in December '25. Use of the mobile crusher is expected to continue until the modifications are implemented. Due to the shortfall of the crushing capacity and temporary delays in accessing the higher grade ore at Umwelt underground, B2Gold has revised its 2025 gold production guidance for the Goose mine down to between 50,000 and 80,000 ounces. Underground mining of the Umwelt deposit commenced in late October '25, and the company expects underground operations to ramp up quickly through the final months of 2025, setting the operation up well for the first full operating year in 2026. The company reiterates the near-term and gold and long-term gold production estimates at the Goose Mine, which includes a production forecast of approximately 250,000 ounces of gold in 2026 and approximately 330,000 ounces of gold in 2027 and average annual gold production for the initial full 6 years of operation of approximately 300,000 ounces based only on existing mineral resources. Significant construction activities for the first 9 months of 2025 included completion of the mining in the Echo pit and commissioning of the pit as a TSF to include construction of the winter deposition infrastructure. Mining of the Umwelt open pit commenced ahead of schedule with full ramp-up achieved during the second quarter of 2025. Development of the Umwelt underground continued, including development of Fresh Air Raise 1 and 2 to support stope ore production in the fourth quarter of 2025, continued dewatering of the future site of the Llama pit, commissioning of 3 large glycol heating systems, excavation and construction of foundation for the arctic corridor for the camp and construction of mechanically stabilized earth wall for the reclaim tunnel. In Mali, the site continues its strong performance in 2025, exceeding gold production expectations again in the third quarter. Cash costs per ounce were also lower than expected. Of note, Fekola underground is also performing above expectations despite operations commencing earlier in Q3 on July 30, 2025. At Masbate, the operation continues to perform well with a world-class safety record. Mine throughput has significantly outperformed expectations in 2025, and we anticipate consistent production in the fourth quarter. At Otjikoto, open pit and underground mining went very well in the third quarter with production also exceeding expectations. During the third quarter, the company approved a development decision for the Antelope deposit. The company has also completed further optimization and believes preproduction capital costs can reduce from $129 million in the PEA to $105 million. Production from the Antelope has the potential to increase Otjikoto mine gold production to approximately 110,000 ounces over the life of the Antelope underground mine. With that, I'll turn it back over to Clive for an intro to Q&A.

Thanks, Bill. Operator, we're ready for Q&A.

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

Congrats on a good quarter. A couple of questions from me. Just starting off with Fekola. Fekola underground seems to be ramping up really well. What are the kind of grades you're expecting going into 2026? And is there a target that you have in mind in terms of ore tonnes mined and kind of grade on the Fekola underground?

Yes, I don't have what the exact grade is, but I think we were targeting about 4.5 grams is what I remember, 4.5 grams and a throughput of about 1,500 tonnes a day. So you can do the math on what it's going to be. It's something like that. And remember, those are replacement ounces of low grade.

And Bill, in terms of the development rates into Fekola underground, is that all progressing well and kind of confident in terms of what you guys are going to be producing in 2026 then?

Absolutely. So the contractor is Byrnecut, the same contractor we've had in Namibia, very good relationships and the development has actually been on or at schedule really the whole way.

Good stuff. And then just moving on quickly to Fekola regional permit. I know we are expecting the permit by the end of 2025. In terms of any sort of predevelopment or anything that you guys can do prior to that? Or basically, you guys are just ready as soon as the permit comes in, you start pre-stripping and then start bringing the ore?

We are, in fact, pre-stripping some. We've been given approval to go out and do some clearing and grubbing. So all of that is happening. Obviously, we're hiring people, getting the equipment. So really, we're putting a little bit of money at risk, knowing that everything we've been told that the permit is coming.

Got it. And then just moving quickly to Goose. Underground grades seems to be picking up as kind of we're going into Q4. Are development rates also picking up as well? And again, I think this is kind of a question that has come up in other mining operations as well. Do you have the right people and kind of equipment in place right now?

Yes. We have the right people for sure. Remember, this is remote mining, remote stope mining. So it is a specialized skill. And we do have the right people on site now, and we see that it will be coming up as planned.

The next question comes from Anita Soni with CIBC World Markets.

I just wanted to ask a few questions on Goose. And I just want to understand the key drivers of the cost increase into -- obviously -- sorry, into the fourth quarter. Obviously, there's lower tonnes are going to be pushed and that's going to impact the numbers. But how do you expect that to evolve into next year? I mean you maintained the production guide for next year. So I'm just trying to get an understanding on what we should be thinking about on costs? Are they going to be as indicated previously? Or will there will be some impact?

So it's Mike. Just on the cost, Anita, for the fourth quarter, we guided that the per ounce costs are a little higher. You're right, then we had before. We've left the production costs that were in the budget for Q4 there, but we reguided down the ounces to 45,000 ounces just on the basis that we're a little later getting into the higher-grade stopes and the total production for the Q. So I don't think those are reflective of the cost going forward. This is just a function of the continued ramp-up. And then on the cost, as we look forward, the 250,000 that Bill was talking about and beyond into the later years of the mine life. We don't have any change to those right now. We're doing the budget for next year and then also an updated sort of upside like mine case as well that we're looking at. So I think we don't have anything new to put out on those at this point. But certainly, the key message is these Q4 ones are ramp-up ounces. So the cost related to those shouldn't be extrapolated into anything in the future. And we've tried to be relatively conservative in that guidance. We had to re-guide it down just for the fourth quarter. So we've tried to be conservative in that guidance and give a chance to meet or even beat it for the Q.

Okay. And sorry, could you just -- Bill, could you just give me an idea of what's actually going on with the delay accessing on well? Like what was the reason for the delay?

The reason for the delay was lack of equipment parts for Sandvik and then operators to run it. And so it's one of those things that you assume in Canada, these things come on a very set schedule, and it just didn't happen. And so we have rectified the situation. We do have the people on site now, and we do have the appropriate drilling media. So it's been solid.

The next question comes from Don DeMarco with National Bank.

Maybe first off, at Goose, you're looking at some different options regarding the crushing, the optimization of the crushing. Among the options that you're considering, we look forward to the results of your report and so on. But what's the potential magnitude of these range of solutions just to get away from that mobile crushing.

Yes. So we talked before. Remember, the initial one when we were in Denver was the concept of really kind of a very small change. Obviously, we've disappointed on it. And so we've got a third-party consultant coming in that will deliver a report in December. So I really don't want to once again tell you a number and then have to walk it back. But it's still a small magnitude compared to fixing it and getting the throughput.

Okay. And I guess, like whatever you decide, I mean, you got the sea lift coming up and decisions to be made to kind of sequence with that and you'd have things on the ground as needed, I would imagine.

That's correct.

Okay. So in Mali, the regional permits, we're looking forward to year-end to have them. The time frame for getting these permits has been somewhat fluid. What are the reasons behind that? I mean you guys have a good line of communication with the government. You've been out there a number of times. Is it a different priority for the government? I mean from your point of view, what's the reason for the pushing back the schedule multiple times?

Well, I think we're in the bureaucracy of Mali in terms of winding its way through various approval levels. Our understanding most recently is that it's -- we're in the final stages of approval, and we expect that definitely before the end of the year and maybe quite imminently.

Okay. Well, we'll look forward to that. And then -- but I see in the report, too, that you're going to start right away with the stripping once you get that and other prep work and look forward to seeing all that production reflected in guidance next year. So that's all for me.

As Bill said, we've already started some prep work, let's say.

The next question comes from Kerry MacRury with Canaccord Genuity.

Maybe a question for Mike. You drew down $200 million last quarter, and I see you paid off $50 million. Do you anticipate needing to use the credit facility as you go through these prepay payments?

I think you'll see us -- like you said, I think if gold prices stay where we see them right now for the fourth quarter, then we expect that we'll have paid down a substantial part of that line, if not all of it by year-end. I think you'll see us utilize it a little bit as we move through Q1 and Q2 just to manage the timing of the prepaid deliveries and the fact that we already got the cash for those. But after that, the line be repaid and it's off to the races. So I think we'll use it as a temporary inter-quarter thing and it's a relatively small draws. And then as we move forward, we're into these cash flow harvest years.

And then just maybe on CapEx at Goose. I mean Q3 CapEx seemed a bit higher than what we were expecting. Maybe that's just seasonality in Nunavut. But any guidance on what we should be expecting for growth capital at Goose for Q4?

Yes. So I'd say if you look at the budget that we put out for half 2, it was $176 million. And we didn't give a split, but it was heavily weighted to Q3. So the budget was roughly $130 million for Q3 and then $45 million, $46 million for Q4. So in Q3, the recorded CapEx in the financials was $157 million, but that includes -- we ended up capitalizing a bunch of site general costs and commissioning costs just because of the timing of the ramp-up, which are -- they were budgeted as operating costs. And so we ended up capitalizing them so they flow through the CapEx line. Like-for-like, the hard assets in the budget, we were $120 million versus the budget of $131 million plus these site G&A costs. So on the capital front, the pure CapEx front that we budgeted we're pretty much on budget. Q4, we did add $15 million to Goose's capital budget. So it's gone from $45 million to $60 million. And that really is to factor in some -- there's still quite a few folks on site that are gradually being wound down, but there are a few more people on site than we thought for a little longer. So we added that $15 million. So the way to think about Q3 is if you look at the capital and operating costs, we were pretty much right on budget. It's just to split how we ended up. We capitalized some of the site G&A and some of the commissioning costs that we didn't expect. But that was just a reallocation of cost from 2 areas of the budget. And then Q4, yes, adding $15 million for CapEx for Q4. So it goes from $45 million to $60 million.

This concludes the question-and-answer session. I would like to turn the conference back over to Clive Johnson for any closing remarks. Please go ahead.

Thanks, operator. As we said at the outset, a strong quarter operationally and financially, and we look forward to progressing ramp-up at Goose and continuing our strong performance at the other operations. So if you have any follow-up questions, feel free to reach out to Michael McDonald, and he can put you in touch with the right party to answer your questions. So thanks for joining us today.

This brings to an end today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.