B2Gold Live @ Cambridge House
Resource Intelligence speaks with Clive Johnson, President and CEO of B2Gold Corp.
RI: When I read your press releases one of the things that I really notice is terms such as increased, doubled, improved grades, improved recovery rates — and that goes on and on. I think that when you look at your stock price over the last several years it’s a continuous rise, so people are paying attention to that. You’re having a good year.
CJ: We’re having a very good year. There have been a lot of positive things. There have been some higher recoveries of gold at the mine in Nicaragua. There have been some very good results in terms of increasing our exploration budget and programs, which has resulted in some very good results that show we are finding more ore, but also finding higher grade ore. In our industry we always say the cheapest ounces are the ones you can find, and the best ounces are from an operating mill. At La Libertad in Nicaragua we have a 5,500 tonne per day mill and we’re mining about 1.6 grams of gold per tonne. We’re making money and it is very economic with costs at about $4.50 an ounce with 90,000 ounces this year. We made a major discovery just eight kilometres away, called Jabali, which is in its very early stages but has already shown half a million ounces in resources at more than three times the grade we’re currently mining.
RI: What you can do with that is bring that tonnage over, eventually, into the mill and increase the grade you’re getting now, and put the lower grade stuff back a couple of years?
CJ: That’s right. We’re actually starting to talk about doing that later this year. We have some open-pittable material around the surface right now that is actually some old waste material. Then we’re looking at full scale mining at Jabali possibly as early as the end of next year. Over the next few years we are projecting taking the La Libertad from 90,000 ounces to 150,000 ounces which will drop our costs and also increase the mine life.
RI: You’ve put a lot of numbers out there and one of the big ones is 90,000 ounces. Its a big improvement. Your first quarter press release is also your best quarter in the last while?
CJ: Last year was the full construction and ramp-up year at La Libertad. We really hit our stride late last year and that means this year is the first full year of production with the new facility.
RI: Looking at some of your highlights from the first quarter is: record gold revenue of $53 million. What are your present revenues annually?
CJ: We’re looking at the cash from operations at about $90 million for the year which is based on $1,300 gold price. We have no debt and no hedging and that puts us in a wonderful position to grow the projects we’re already working on, to provide additional capital to the two mines to further explore and develop the La Libertad belt and also do things like our project in Columbia with Anglo Gold Ashanti. All the exploration, which is about $40 million this year and $30 million of capital funding at the mines at the end of year, we are still projected to have about $70 million in the bank.
RI: In just five years you’ve done this, and one of the reasons is your team. Lets talk a bit about that. The Bema project that you’re all coming from was a $3.5 billion deal and now you’ve moved on to this project. What are you bringing with you?
CJ: Bema was a great success story over many years. I was with Bema, since we started it, for 30 years. A lot of the guys on the team were with Bema for 20 years. We have the geologists, the engineers, the financial people, the legal side and all of the support staff. Bema was a company that had made three world-class discoveries — two in Chile and one in Russia. We were also a company that was very good at building mines as well. Kinross came knocking, and we weren’t necessarily looking to sell the company, but we take being public very seriously and we negotiated a very good deal for our shareholders for $3.5 billion.
RI: You have a dream team there in the sense that you were saying earlier, a lot of companies produce and buy expensive ounces or they are exploration companies and they can’t deal with putting something into production. You guys do both very well.
CJ: We are what I call a hybrid. There aren’t many of us around who are very good at exploring and finding gold but also good at building mines as well. The producing companies, for all the money they spend on exploration, they don’t have successes and so they have to buy ounces. I’ve never paid for ounces in the ground in my career and I’m not going to start at $1,500 gold.
RI: You’ve had great success in just five years with La Libertad and Limon. Lets go through them briefly and talk about what each project is bringing to the table?
CJ: We’re being valued mainly as a producer from the assets that we have at La Libertad and Limon, which is 135,000 ounces this year. It’s very profitable production at around $5.50 per ounce operating cost. Then you’ve got growth from taking Nicaragua from 135,000 ounces to over 200,000 ounces from what we are finding and then we have a major development project in the pre-feasibility stage in Columbia with Anglo Gold Ashanti. So far the property has a resource of about 2.4 million ounces of gold in the 43-101 resource that looks open-pittable at 1g/t. We are spending $30 million this year. It’s a big project. We also have a very intriguing target in Uruguay from a geological and exploration point of view. We should be coming out with our first drill results from that shortly. We’ve had some good trench results. There is another exploration project in Nicaragua and we just announced our first results and they were very good.
RI: Let’s talk about the countries that you’re operating in, Nicaragua, Uruguay and Columbia. A lot of investors might not not be aware of the kinds of relationships that you can have as a mining company with the governments and permitting and so on?
CJ: Nicaragua is a great example. Not a lot of people know a lot about Nicaragua. For us coming in there, it wasn’t lost on President Ortega who we’ve established a very good rapport with, because he realized that we are already the fourth-largest employer in the country. We invested $100 million building the La Libertad mine during a worldwide recession. These jobs pay over three times the average wage in Nicaragua and they are very safe jobs. One of the things we are very proud of from Bema, and now, is our tremendous safety and environmental track record. So here’s a country that really needs jobs and really needs foreign investment, and I believe the La Libertad mine is the biggest form of foreign investment in the country to date. Nicaragua has very good mining law and a fair tax regime. It’s a very good place to do business and I think the secret is out, as there are a lot of others that are trying to follow us there.
RI: If you could summarize Nicaragua in one word what would it be?
CJ: I would say opportunity. The land of opportunity. It has great potential with great infrastructure and a government that wants foreign investment. I think there are tremendous opportunities not only in mining but in many other sectors over the next number of years.
RI: What are the next steps that investors can expect from B2Gold to show that you are following through?
CJ: I think there is going to be a tremendous amount of news-flow this year from our development and exploration projects. There will also be more drilling at Jabili and [we will be] starting to get higher grades at the mill. There will also be news from Columbia with Anglo Gold Ashanti as we take that project through into production through the various stages. Beyond that, exploration in Uruguay and Nicaragua and potentially some other ventures. We are always looking at acquisitions but we just don’t want to pay for ounces in the ground at these kind of gold prices, because some of the deals being done in my mind are over the top. Why would you go and buy something in the ground when you can find it?
RI: And you are doing very well at finding it.
CJ: We’re doing very well at finding it, and we said we’ve got that hybrid ability to do everything from exploration to feasibility to building.
RI: That’s what I like about you guys, you under promise and over deliver. That’s really clear in your press releases lately.
CJ: Well, we appreciate that. That’s what we try to do.
RI: Clive, thanks for talking to me today.
CJ: Cheers. My pleasure.
RI: B2Gold trades on the TSX exchange under the symbol BTO. You can check out more about the company and evaluate their projects at resourceintelligence.com.