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Alberto Abaterusso
Alberto Abaterusso
Articles (618) 

B2Gold's 2nd-Quarter Earnings in Line With Expectations

A lower gold price per ounce offset a slightly higher sales volume

August 11, 2017 | About:

B2Gold Corp. (BTG) closed the second quarter showing at the bottom line of its income statements for the second quarter of this fiscal an EPS – adjusted to one-time charges – of 1 cent or an adjusted net profit of $12.9 million. This was a 66.7% worsening from the comparable quarter of fiscal 2016 when the miner reported an adjusted EPS of 3 cents or an adjusted net profit of $29 million.

The actual EPS was in line with analysts’ expectations; thus the second-quarter earnings announcement didn’t produce any surprise. Any statistically significant impact on the market value of B2Gold is expected over the coming trading days following the earnings announcement.

Source: Yahoo Finance

Revenue for the quarter in question came in at $164.3 million, a 0.3% decline year over year, and B2Gold beat expectations by $13.14 million since analysts forecasted that the precious metal miner would report revenue of $151.16 million.

Revenue was generated by the sale of 131,737 ounces of the yellow metal at an average price of $1,247 per ounce.

In the comparable quarter of fiscal 2016, the miner sold 130,829 ounces of gold at an average price of $1,260 per ounce of the yellow metal.

Sales volumes were backed on a quarterly gold production of 121,448 ounces, a 10% decline year over year due to the operational issues B2Gold experienced during the quarter at La Libertad mine and the El Limon mine that more than offset the positive effects of having processed the mineral at higher grade from the Main Vein Stage 1 Pit no longer active at Masbate mine. The quarterly production of gold was 1% above the miner’s budget.

The all-in sustaining cost (AISC) per ounce of gold sold was $974 on a consolidated basis and 33% higher than the AISC reported by the company on June 30, 2016, due to the year-over-year decline in the gold production, to higher energy costs, to a strengthening of the Namibian dollar currency versus the U.S. dollar and to more funds used by B2Gold as capex. The latter was a consequence as reported by B2Gold of “Masbate's planned 2017 mine fleet and expansion costs and capitalized prestripping costs.”

For the second quarter B2Gold reported a higher operating cash flow of $87.6 million compared to the same quarter of 2016 when the miner generated an operating cash flow of $239.2 million. The company attributed this decrease “to the company's prepaid sales transactions in March 2016 of $120 million and to noncash working capital adjustments.”

On June 30 B2Gold had $88.193 million in cash on hand and securities, a 39% decline from the fourth quarter of fiscal 2016, plus an undrawn capacity of $175 million and an existing revolving credit facility of $425 million. In addition, B2Gold says that “the company also had 36.4 million euros ($42.75 million) of undrawn capacity on its Fekola equipment loan facility, $17.8 million of undrawn capacity on its Masbate equipment loan facility and $6.5 million of undrawn capacity on its Otjikoto equipment loan facility.”

The total debt amounted to $582.4 million of which $20.7 million represents the portion of short-term debts that, when an equity valued $1.495 billion is considered, leads to a total debt-equity ratio of 39% versus an industry average ratio of 50.8%. The interest coverage ratio is about 1.05.

For full fiscal 2017, the company guides a gold production on a consolidated basis of 530,000 ounces to 570,000 ounces at an unchanged AISC of $940 per ounce of gold to $970 per ounce of gold sold.

The first production from the Fekola Project, as planned by the company for full fiscal 2018 that will bring B2Gold’s total production from the current levels to 900,000 to 950,000 ounces of gold  is the real catalyst to the market value of this gold stock that is trading at $2.56 per share.

From the production of Fekola mine, B2Gold also expects to receive benefits in terms of lower AISC which are expected to range between $780 and $810 per ounce of metal sold in 2018, significantly lower than the current levels as guided by the company for 2017.

The company has a market capitalization of $2.56 billion, a price-book value (P/B) ratio of 1.71, a price-sales (P/S) ratio of 3.74 and a price-earnings (P/E) ratio of 128.25. The forward P/E ratio is 12.21.

As of Dec. 31, 2016, B2Gold has 7.281 million gold ounces in probable reserves for an EVO metric of $416.15. It is not one of cheapest gold stocks in the industry. The EV-to-EBITDA ratio is 11.15.

Disclosure: I have no positions in B2Gold.

About the author:

Alberto Abaterusso
Alberto Abaterusso is a freelance writer based in The Netherlands. He primarily writes about gold, silver and precious metals mining stocks. His articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. Alberto holds a MBA from Università degli Studi di Bari (Italy), Aldo Moro.

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