comB2Gold was founded in 2007 by the former executive and management team of Bema Gold Corporation. Bema was acquired by Kinross Gold Corporation for $3.3 billion in February 2007.
B2Gold, hmm, interesting name. "Bema 2″ perhaps? At least I have always thought that was the implied meaning. So now all these Bema guys formed this company, but they needed a couple of projects that would immediately contribute production to the newly formed company. In early 2009 they found some by acquiring Central Sun Mining, which was struggling greatly in the market crash of late 2008/early 2009.
B2Gold's purchase of Central Sun resulted in them acquiring two mines in Nicaragua and a portfolio of development and exploration assets in Nicaragua and Costa Rica. B2Gold also owns some exploration projects in Far East Russia and Colombia.
B2Gold's main mine is La Libertad. The company acquired 100% interest in the open pit gold mine in March 2009 when it purchased Central Sun Mining. La Libertad began operating as a heap leach mine in 1996. However, operations were suspended in 2007 after studies showed that gold recovery could be improved from approximately 40% through heap leaching to over 90% using a conventional milling operation. After investing over US$70 million in a new SAG and ball mill grinding circuit, carbon-in-pulp recovery tanks, and a tailings storage facility, La Libertad Mine is currently ramping up to its full processing capacity of 5,500 tonnes of ore per day.
La Libertad Mine currently has a minimum seven year mine life and is expected to produce approximately 80,000 to 90,000 ounces of gold annually at an estimated cash cost of approximately $500 per ounce. B2Gold is also excited about exploration targets adjacent to the mine, as they believe there is a very good chance the mine life will be extended.
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Limon
The Limon Mine is located in northwestern Nicaragua. B2Gold holds a 95% interest in the mine, with the remaining 5% being held by Inversiones Mineras S.A., a holding company representing unionized mine workers in Nicaragua. Limon has been in operation as an underground and open pit gold mine since 1941. To date it has produced approximately three million ounces of gold.
The current operation is a 1,000 tonne per day underground and open pit mine. The Limon Mine currently has a mine life of 3.5 years with projected average annual production of approximately 40,000 ounces of gold in 2010 at an estimated cash cost of approximately $675-$685 per ounce.
B2Gold has identified several exploration targets at the Limon Mine site and the company believes there is excellent potential to increase the Limon Mine life and discover additional veins.
The mine has had its problems though in the past. In 2009 there were a number of illegal union strikes. However, B2Gold has worked with the local unions and the government to ensure the company and the unions honour the current binding collective agreement.
Bellavista – Costa Rica
For those of you unfamiliar with Central Sun Mining, they owned and operated the Bellavista mine, but were forced to shut the mine down a few years ago because of instability of the property. A landslide occurred where the ore was being leached, and there were all sorts of environmental worries. They said that there wasn't any contamination though after they tested the ground.
B2Gold is currently re-evaluating the Bellavista project, by turning it into a milling operation. B2Gold has had initial positive meetings with the federal and local government regarding amending the permit to mine. The Company is updating a feasibility study and has commenced environmental studies.
Exploration
I don't talk about exploration properties much since there is so much speculation when discussing these, but I want to mention that B2Gold does have an interest in the Gramalote Project in Colombia (B2Gold 51% / AngloGold Ashanti 49%). The project has an inferred gold resource estimate of 74 million tonnes grading 1 g/t gold for a total of 2.39 million oz of gold (NI 43-101 compliant).
One of Bema Gold's main assets before they were acquired by Kinross was the Kupol mine. Bema began construction of the mine in 2005, and Kinross finished up the project after they acquired Bema in 2007. The mine began production in 2008 and currently produces roughly 700,000 oz of gold per year. When B2Gold was formed(at the same time Bema was being acquired by Kinross) the management team from Bema wanted the surrounding exploration area around the Kupol mine, and they got it. Just recently though they decided to sell their rights to the surrounding area back to Kinross. B2Gold will receive $33 million upfront, plus they get another $15 million for each incremental million ounces of gold reserves that are found at Kupol East and West. They also get a 1.5% net smelter return from any production, which Kinross has the right to repurchase the royalty for $30 million.
Q2 2010 highlights
* Consolidated gold revenue increased by approximately 300% in the second quarter of 2010 compared to the same period in 2009. Gold revenue totalled $23.3 million (Q2 2009 – $7.9 million) on the sale of 19,319 ounces(Q2 2009 – 8,513 ounces) at an average realized price of $1,204 per ounce (Q2 2009 – $922 per ounce).
* Consolidated gold production for the second quarter of 2010 totalled 24,924 ounces at an operating cash cost of $648 per ounce compared to 6,832 ounces being produced in the corresponding period of 2009 at an operating cash cost of $858 per ounce.
* The Company reported a net loss of $4.2 million (negative $0.01 per share) for the second quarter of 2010 compared to a net loss of $2.8 million (negative $0.01 per share) in the equivalent period of 2009.
B2Gold is projected to produce approximately 105,000-110,000 oz of gold in 2010 from its two mines in Nicaragua, La Libertad and Limon. The company expects production to average 120,000-130,000 oz of gold over the next several years.
$14 million in cash and and $17 million of debt. These figures don't include the $33 million the company will/has received from Kinross.
Common shares outstanding: 313 million
Stock options & warrants (approx): 67 million
Fully diluted: 380 million
Conclusion
When looking at B2Gold you have to look at the risk reward here. On one hand you have a company being run by a proven management team. The Libertad mine is a nice producing asset now, and the Limon mine could have more potential to grow. Plus B2Gold also has an interest in Gramalote. In other words, the company has a lot going for them now.
On the other hand, they are operating in regions that aren't exactly the most stable places to have a mine. They do seem to be building good relationships with the governments of these areas though, which is extremely important. Still though, there is always that risk.
The company currently has a market cap of $615 million(using basic shares), so shares are probably faily valued here giving that they are only going to produce a little over 100,000 oz of gold this year.
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almamor
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