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B2Gold (BTG) Shares Up 39% in a Year: What's Driving the Rally?

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Zacks Equity Research
·4 min read
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B2Gold Corp. BTG is well poised to gain from the solid performance of its operating mines and expected savings from cost-control actions. The company’s shares have gained 39.2% over the past year, outperforming the industry’s growth of 19.7%. Notably, the S&P 500 gained 18% in the same time frame.



The company recorded an earnings growth rate of 46.2% over the last five years, outperforming the industry’s growth of 13.2%. This momentum is likely to continue as evident from B2Gold’s projected earnings per share growth of 257% and 9% for the current year and 2021, respectively. B2Gold has a long-term estimated earnings per share growth rate of 20.7%

Let’s delve deeper and analyze the factors driving the stock.

Driving Factors

B2Gold’s total gold production in the first nine months of 2020 was a record 738,939 ounces, 4% above the budget, reflecting year-over-year growth of 19%. Backed by the better-than-expected performance of its operating mines, the company expects total consolidated gold production to come in at the midpoint of its guided range of 1,000,000-1,055,000 ounces for the current year.

With a higher gold production forecast for 2020, expected benefits from B2Gold’s ongoing cost-control actions and the sale of its higher-cost Nicaraguan mines, its consolidated cash operating costs per ounce and all-in sustaining costs (AISC) per ounce are expected to decline in the current year. Cash operating costs are projected to be at or below the lower end of its guided range of $415-$455 per ounce. Meanwhile, AISC is anticipated to be at the lower end of the range of $780-$820 per ounce. In 2019, the company's consolidated cash operating costs were $512 per ounce produced and consolidated AISC was $862 per ounce sold.

Moreover, gold prices have gained 23.5% so far this year, fueled by the coronavirus pandemic. Higher gold prices and lower costs will boost the company’s margins for the year.

B2Gold is also on track to realize a significant increase in gold production from the Fekola Mine, driven by the expansion of a larger mining fleet and the optimization of the pit designs and mine plans for 2020, which have provided access to higher-grade portions of the Fekola deposit earlier than anticipated. The Fekola mine expansion project was completed ahead of the scheduled date of Sep 30, 2020. The mine expansion and the larger mining fleet are likely to significantly increase Fekola’s processing throughput by 1.5 million tons per annum (Mtpa) to 7.5 Mtpa and enable the company to produce around 550,000 ounces of gold over 2020 to 2024.

Zacks Rank & Stocks to Consider

B2Gold currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Bunge Limited BG, BHP Group BHP and Rayonier Advanced Materials Inc. RYAM. While Bunge and BHP Group flaunt a Zacks Rank #1 (Strong Buy), Rayonier Advanced Materials carries a Zacks Rank of 2 (Buy), at present.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Bunge has a projected earnings growth rate of 43% for the current year. The company’s shares have gained around 18.1% in a year’s time.

BHP Group has an estimated earnings growth rate of 43.3% for fiscal 2021. Shares of the company have gained 20.1% in the past year.

Rayonier Advanced Materials has an estimated earnings growth rate of 92% for 2020. Over the past year, the stock has soared nearly 164%.

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