B2Gold Corp. (BTG, Financial) has officially opened its Otjikoto mine in Namibia, among the first autonomous hybrid plants in the world that is expected to reduce the miner's energy costs by 10% this year.
The B2Gold Solar Plant will not only reduce the impact on the environment in terms of lower greenhouse gas emissions but it will also reduce the company’s consumption of heavy fuel oil by approximately 2.3 million liters.Â
The Otjikoto Mine is one of the company's five producing assets with an estimated total production of gold of 160,000 to 170,000 ounces for 2018. That is about 17.5% to 18% of the company’s total production that is anticipated for the current year.
The company is estimating that the cash operating cost for the entire year will range between $480 and $525 per ounce. As a result of the cost-savings in Namibia, B2Gold is on schedule to report an improvement in on-site general costs and in all-in sustaining cost (AISC) per ounce of metal sold. The AISC at Otjikoto stands at the expected range of $700 to $750, which is already below the full fiscal 2018 guidance of $780 to $830 per ounce.
B2Gold Corp’s bottom line should benefit from a higher-than-expected gold margin as it brings the Solar Plant at Otjikoto on-line. This also should trigger a higher market valuation of the stock.
The company's stock has slightly recovered after a retreat in mid-May, however, the stock is still underneath the 200, 100 and 50-SMA lines. That means that acquiring shares at current valuations is not a bad idea if you want to take advantage of the cost-savings catalyst. With an average target price of $3.50 per share, consensus is for a nearly 30% stock appreciation in the following 52-weeks of trading. The recommendation rating is set on a 1.5 value out of a total of 5.
The current share price is still below the midst of the 52-week range of $2.31 to $3.30 per share.
According to GuruFocus, the stock in B2Gold Corp has a price-book ratio of 1.66 times versus an industry median of 2.06 times and an enterprise value to earnings before interest taxes, depreciation and amortization (EBITDA) ratio of 10.63 times versus an industry average of 9.9 times.
The trailing 12-month EBITDA margin of B2Gold Corp is 36%. That is well beyond the industry median of nearly 25% signaling that B2Gold Corp’s operations are more profitable than the industry.
With an expected advancement in the company’s gold margin, the company is bound to increase its peer ranking..
(Disclosure: I have no positions in B2Gold Corp.)
