B2Gold Corp. BTG has inked 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 Gold 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. Over the past decade, the company has invested more than $560 million in Nicaragua. It has significantly improved operations and economics of the El Limon Mine and constructed a mill facility. It also commenced profitable gold production at the La Libertad Mine and realized significant exploration success around both mines. Since 2009, these mines have produced more than 1.4 million ounces of gold. For fiscal 2019, the gold production from the two mines is expected to be 150,000-160,000 ounces.
Through its significant equity interest in Calibre, B2Gold will be involved with the Nicaraguan operations and have right to appoint one director to the Board of Calibre and will be able to participate in an Advisory Board to the primary Board of Calibre.
The consideration will be paid by a combination of cash, common shares and a convertible debenture. The closing of the transaction is subject to certain conditions including majority of minority shareholder approval, the successful negotiation and execution of a definitive agreement by B2Gold and Calibre, the closing of the concurrent private placement by Calibre and satisfactory due diligence by Calibre.
The deal will enable the company to remain involved with the Nicaraguan operations. The La Libertad and El Limon Mines have been an important contributor to the local and national economies, accounting for a major percentage of the country's gold exports. Gold currently ranks third in Nicaragua’s main exports.
With Calibre and the combined Nicaraguan management team focusing on these mines and other opportunities in the country, B2Gold will concentrate on continuing to optimize responsible production at its other existing mines in Mali, Namibia and the Philippines. It will also work toward developing its impressive pipeline of development and exploration projects. Additionally, B2Gold will continue to pursue additional greenfield and advanced exploration opportunities.
B2Gold’s shares have gained 17.9% in the past year, compared with the industry’s growth of 21.7%.
Zacks Rank & Key Picks
B2Gold currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are Materion Corporation MTRN, Flexible Solutions International Inc. FSI and Fortescue Metals Group Ltd. FSUGY. These stocks currently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Materion has an expected earnings growth rate of 27.3% for 2019. The company’s shares have gained 20.7% in the past year.
Flexible Solutions has projected earnings growth rate of 342.9% for the current year. The company’s shares have soared 152.1% in a year’s time.
Fortescue Metals has an estimated earnings growth rate of 230.4% for the current year. Its shares have rallied 101.8% in the past year.
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