B2Gold Corp. (BTG, Financial) closed 0.39% up to $2.55 per share at the end of regular hours trading on Thursday, June 28.
However, downsides in the market value of the gold stock are in the air. The company has experienced work delays as a result of massive anti-government protests near its El Limon and La Libertad mines in Nicaragua.
The protests, which resulted in blockades, targeted the cabinet of President Daniel Ortega. The unrest started in mid-April.
The company has altered its guidance on annual gold production of 55,000 ounces to 60,000 ounces at El Limon and of 115,000 ounces to 120,000 ounces at La Libertad. It is now projecting a lower production at El Limon, which ranges between 50,000 ounces and 55,000 ounces of gold. At La Libertad, the forecast is for 110,000 and 115,000 ounces for the entire year of 2018.
El Limon and La Libertad contribute for about 6% and 13% to the total the company's annual consolidated production.
With shares trading abundantly below the 200, 100 and 50-SMA lines, the current market valuation already represents an opportunity for investors who may want buy shares of B2Gold.
However, the market is expected to create a more convenient entry point. Also, the share price is only 24 cents off the 52-weeks low of $2.31 and far from the 52-weeks high of $3.30 per share. The current market value needs a 37.3% growth to match the price that analysts are targeting within the following 52-weeks of trading. The average target price is $3.50 per share and analysts recommend buying shares, as of Friday, June 29.
I would wait for the enterprise value to earnings before interest, taxes, depreciation and amortization, or Ebitda, ratio of 10.31 times to realign with the industry median of 9.9 times before buying B2Gold Corp. A declining commodity will assist the goal.
Catalysts in play
Of course, we need some catalysts to play out in favor after having invested in this gold stock.
The declines at El Limon and La Libertad will be more than offset by outputs from the Masbate Mine in the Philippines, the Fekola Mine in Mali and the Otjikoto Mine in Namibia. These assets will outperform to the extent that they will surpass the guidance on the 2018 production, which has been projected for each of the projects.
For fiscal 2018, B2Gold anticipates a total consolidated gold production ranging between 910,000 ounces and 950,000 ounces.
The Fekola North ExtensionZone Drill Program in Mali also is indicating the existence of the potential to meaningfully increase resources and reserves of the open-pit deposit, which is located at approximately one kilometre north of the boundary of the Fekola reserve pit. The release of a new mineral resource estimate for the Fekola mine, which is anticipated to occur in the fourt quarter of 2018, will positively impact the market value of B2Gold.
A third catalyst is the result of technical studies that the company is expected to release before the end of the year. The studies will examine the potential of an expected larger open-pit resource at Fekola, which may lead to a higher annual production of gold.
Fekola is projected to contribute 45% of the company’s total consolidated production of gold for full fiscal 2018.
A fourth catalyst is expected in the third quarter of 2018. The company plans to release additional technical studies at El Limon to ascertain the potential to increase the annual production of gold at the mine. The mine is located in the central zone, which is an area of new discovery near the mill facility at El Limon.
(Disclosure: I have no positions in B2Gold Corp.)
