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B2Gold (BTG) Raises Stake in Gramalote Gold JV in Colombia

Zacks Equity Research

B2Gold Corp BTG and AngloGold Ashanti Limited AU have agreed to amend the shareholding percentage and management structure of their Gramalote gold joint venture (JV) project in Colombia.

Notably, the companies have agreed that B2Gold will solely fund the project expenditures of $13.9 million to raise its ownership to 50% from the current holding of 48.3%. Hence, under the modified agreement, each company will own half of the project.

B2Gold and AngloGold have set up a $40-million budget for feasibility study of the Gramalote Project for the remainder of the current year through the end of 2020. In fact, this budget will bear the expenses of 42,500 metres of infill drilling and 7,645 metres of geotechnical drilling for site infrastructure. Drillings will likely be over by the end of next May. B2Gold also aims to complete a final feasibility study by Dec 31, 2020.

Additionally, the budget will fund feasibility work, which includes upgradation of the Inferred Mineral Resources, detailed mine planning, metallurgical test work, additional environmental studies, engineering and detailed economic analysis.

The Gramalote Project has the potential to become a large low-cost open pit gold mine.  Further, its key advantages namely falling in a high rainfall region ensuring reliable water supply, logistics, close to a low cost-power electricity grid and availability of a technically- capable workforce makes it a compelling investment.

Recently, B2Gold reported encouraging drilling results from the Mamba zone located near the Fekola Mine and positive infill drilling results from the Fekola mineral resource. Hence, in July, the company raised the 2019 exploration budget in Mali by $3 million to $20.5 million backed by solid drilling results.

Moreover, the company continues expansion of the Fekola mine. B2Gold plans to complete an additional drilling of 30,000 metres before the end of this year. It intends to go ahead with an aggressive exploration program in 2020.

On Mar 26, the company announced favorable results for the Fekola Mine in Mali from the Expansion Study Preliminary Economic Assessment (PEA). The company is on track with an expansion project to boost processing throughput by 1.5 million ton per annum (Mtpa) to 7.5 Mtpa from the current rate of 6 Mtpa.

The PEA was conducted to assess the life-of-mine (LoM) options for expanded mining and processing facility, in a bid to maximize value of the increased Indicated and Inferred Mineral Resource at the company’s Fekola Mine. On Oct 25, 2018, B2Gold announced positive results from the Fekola mill-expansion study and substantially increased the mineral resource estimate for the mine.

Interestingly, the PEA project and Mineral Resource expansion plan will help the Fekola Mine produce huge amount of gold, over a longer period of time, with higher average gold production, cash flows and revenues.

Based on B2Gold's current projections, gold production at the Fekola Mine is estimated to be approximately 600,000 ounces in 2020. This upside will mainly be backed by the addition of a larger mining fleet at Fekola and optimization of the mining sequence early next year.

In July, B2Gold signed an agreement, per which the company will sell two gold mines and assets in Nicaragua to Calibre Mining Corp. for $100 million and 31% direct equity interest in Calibre. The two concerned gold mines are the El Limon and La Libertad mines, which B2Gold had acquired in 2009. The deal also includes the Pavon gold project and additional mineral concessions in Nicaragua currently held by B2Gold. The deal will enable the company to remain involved with the Nicaraguan operations.

With Calibre and the combined Nicaraguan management team focusing on these mines and other opportunities in the country, B2Gold will concentrate on optimizing responsible production at its other existing mines in Mali, Namibia and the Philippines.

B2Gold Corp Price and Consensus

B2Gold Corp Price and Consensus

B2Gold Corp price-consensus-chart | B2Gold Corp Quote

Zacks Rank & Other Stocks to Consider

B2Gold currently carries a Zacks Rank #2 (Buy).

A few other top-ranked stocks in the basic materials space are Kinross Gold Corporation KGC, and Arconic Inc ARNC, both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kinross has an expected earnings growth rate of a whopping 155.7% for 2019. The company’s shares have surged 63.4% in the past year.

Arconic has an estimated earnings growth rate of 50% for the current year. Its shares have moved up 18.3% in a year’s time.

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