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Alberto Abaterusso
Alberto Abaterusso
Articles (629) 

B2Gold's 1st Gold Poured at Gold Mine in Mali

With the production from Fekola mine, company expects a 70% increase in total gold production in 2018

October 12, 2017 | About:

There is positive news for B2Gold Corp.’s (BTG) investors.

The Canadian gold mining company reported through a news release published on its website Oct. 11 that about three months ahead of what the company initially planned the first gold was poured Oct. 7 at its Malian asset Fekola Gold Mine.

B2Gold expects to reach the level of saleable gold before Dec. 30; for the last quarter of fiscal 2017, the Canadian gold mining company forecasts a production of 50,000 to 55,000 ounces of gold at Fekola mine.

While for the entire year of 2018, B2Gold guides a gold production ranging between 400,000 ounces and 410,000 ounces.

“Based on current assumptions this represents an increase in annual gold production of over 70% for B2Gold in 2018,” reports the company.

This company’s release will have a positive influence on analysts’ expectations of B2Gold’s earnings and revenue for full fiscal 2018 as well as on this gold stock’s recommendation rating and average target price.

Analysts forecast that B2Gold will close the full fiscal 2018 with an EPS of 21 cents. This already represents a hefty 425% upside in year-over-year earnings since analysts forecast that the Canadian gold producer will close the full fiscal year of 2017 with an EPS of 4 cents. Considering this positive news from Mali, analysts may increase their expectations further on B2Gold’s full fiscal 2018 EPS.

Revenue for full fiscal 2018 is expected to come in at $1.17 billion. This average figure represents a sizable 90.90% increase from full fiscal 2017 revenue.

Of course, any further increase in B2Gold’s earnings and revenue following this news release cannot be done without an involvement of sell-side analysts also on B2Gold’s recommendation rating that is already high at 1.5 out of a total of 5, and on the Canadian stock’s target price of $3.50 per share. The latter is the expression of only one analyst who was surveyed on B2Gold’s target price, but the estimate already represents a 25.4% likelihood of upside in the market value of $2.79 per share of this Canadian gold producer.

It is highly possible that the target price on B2Gold may also be revised upward following the news release and get more analysts involved in its survey.

In addition, the company has also informed the stock markets that the level of yearly gold production of 400,000 ounces is expected to be produced by the company at Fekola not only for the year 2018 but also for the following two years of 2019 and 2020. For each of these three fiscal years the operating cash cost is expected to be $357 per ounce of gold while the AISC is expected to be $604 per ounce of yellow metal sold.

B2Gold’s projections on Fekola Gold Mine’s annual gold production and costs for the first seven years and for the first 10 years over the entire life of the Malian’s mine are as follows:

  • For the first seven years: 374,000 ounces of annual gold production at an operating cash cost per ounce of $391 and at an AISC per ounce of metal sold of $643.
  • For the first 10 years: 345,000 ounces of annual gold production at an operating cash cost per ounce of $428 and at an AISC per ounce of metal sold of $664.

Thanks to exploration drilling activities that the B2Gold team is undertaking at Fekola Gold Mine, the Canadian miner is highly confident about a further rise in the life of the Malian mine and in the total volume of gold reserves.

B2Gold says that “the resources identified to date could add up to 900,000 ounces to reserves with further infill drilling.” Results from exploration activities and infill drillings are expected to be released sometime during the next month.

This news release will produce a positive impact on B2Gold’s market value of $2.7 billion for a total volume of 978.01 million shares outstanding, of which approximately 97.7% is float.

The price-book (P/B) ratio is 1.74, the price-sales (P/S) ratio is 3.85, and the price-earnings (P/E) ratio is 50.42.

The enterprise value-EBITDA ratio is 12.74.

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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