Operator: Good afternoon, ladies and gentlemen, and welcome to B2Gold Corp’s First Quarter 2019 Financial Results Conference Call. I’d now like to turn the call over to Mr. Clive Johnson, President and CEO. You may proceed, Mr. Johnson.

Clive Johnson: Thanks, operator. Welcome everyone to the conference call to discuss the 2019 first quarter results for – financial results for B2Gold. We had another strong quarter, and I’m going to hand over to Mike in a minute; Mike Cinnamond, our CFO to give us a run through of the highlights. I think the news release is quite thorough and self explanatory, it’s backed up by MD&A that we filed as well, so there’s lots of information there, so I’m going to keep it short and sweet. Mike will give us a run through of the financial results, and then we’re going to quickly turn it over to questions after that to see if we can answer any of your questions.

With the quarter and going forward, we continue to remain focused on maximizing our operations around the world. We are very focused on continuing to generate free cash flow. We’re looking at another very good year this year as Mike will outline as well in terms of our guidance for the year. We’re also very focused on debt repayment. It’s an important part where we continued after last year repaying $220 million of debt last year to have – reduced our debt significantly and we’ll continue on that path as well.

When we look to the future, we’re very focused on our pipeline. I think we’ve talked about it a little bit before. In the pipeline, some of it’s pretty immediate. One is, of course, the expansion of Fekola, which is underway. We expect to kick in next year.

But given our view of the preliminary economic assessment that we filed, we think that it is going to make a significant increase in production and we talked about averaging 550,000 ounces a year for five years starting next year, but we haven’t done detailed mine plans. Those will come later in the year, but the results of the PEA on the expansion of Fekola were extremely robust and it’s been a no-brainer. So that’s a real focus going forward. We’re also very excited and focused on exploration. In addition to the North Fekola, other zones, we’ve discovered around Fekola and then further to the North, the Anaconda zones.

So there’ll be a lot more drilling production, infill drilling is a big part in this part of the year, but looking forward to rest of the year, a lot of the exploration drilling. We’re pretty excited about the ultimate potential of Fekola above and beyond large resources we drilled so far. So that’s a real focus. Other things, we have our joint venture, Gramalote, in Colombia with AngloGold Ashanti. We’ll wrap that right now as we’re in discussions with AGA about a budget going forward.

We have a new model, which is a lot better model than we had in the past and that model does, however, indicates that there’s a lot more drilling required. So the next step would be to do more drilling. So we’re in discussions with AngloGold Ashanti whether we’re going to spend more money on Gramalote, and if so, who is going to spend it and what’s it going to look like. So we’ll probably have something to talk a little bit there over the next couple of months whether we go forward and spend more money on Gramalote or not. Just a little comment on another thing Mike will talk about, which we did increase our revolving credit facility with our great group of bankers, who been extremely supportive of us.

The reason though why we’ve increased – look to increase that facility, we don’t need the cash, it’s pretty clear and are generating positive cash flow, but the banks offered to renegotiate the terms, more attractive terms to us. I guess, I think, we’ve earned it by our performance, stellar performance. They’re very happy. We’re also very happy with them. So we increased it by just $100 million debt for facility that’s available and it’s a very low standby rate, we’re not using it, but the key feature is that we got better terms from the banks.

So increasing our line by $100 million shouldn’t suggest anything other than we got really good returns with the banks and to slightly increase the size of our facility. That’s the reason we did. Comment on M&A. For 4.5 years, I’ve been saying we’re not seriously looking at M&A. So let’s say it one more time.

We’re not seriously looking at M&A. We’ve a pipeline of projects. We’re very excited about the potential to build them. I said 4.5 years ago, we’re not likely to do any serious M&A until we get credit for Fekola. That was 4.5 years ago.

We’re still not getting credit for Fekola. We’re definitely not getting credit for the Fekola expansion and what else might be in the pipeline. So we’re not close to doing any M&A. I hope that’s clear. We don’t see anything else that we like and we don’t want to use our shares anywhere near this to do anything.

And we got a great pipeline of projects. And if and when we do another acquisition, I don’t think that somebody would do something really stupid after 30 years of doing some pretty good deals. So, no, we’re not doing it. And B, if we ever do, I think we probably do another good deal. Fekola turned out pretty good, so the others ones did as well.

So I hope that’s clear on that point. Spread the word, no M&A from us. The only thing we’re looking at acquiring are great exploration opportunities. We’ve acquired some of them. We’re going to acquire more of them, but we’re not going to pay for ounces that aren’t there.

We never have. So with that, I’ll pass it over to Mike to give you the financial headlines, and then we’ll open up for questions.

Mike Cinnamond: Thanks, Clive.

Clive Johnson: Is that clear?

Mike Cinnamond: I think that was fairly clear. A quick – I’ll walk you through the revenues and the operating results and then some comments, I guess, on some elements of the cash flow statement.

So first on the revenue side. In the quarter, we reported $302 million in revenues on sales of 232,000 ounces, also about $42 million less than the prior year quarter. And the main reason for that is as we sold 28,000 fewer ounces, but we have to just want to remind you that in the prior year quarter Q1 2018, that’s the quarter when we sold down more than 20,000 ounces of low costs of Fekola. And between that, we built up in the Fekola ramp-up stage, so that wasn’t opening inventory at the end of 2017, which was sort of one-off as we brought Fekola online. So still a very strong sales quarter for us this year.

And just there was a sort of one-off explanation for last year’s even higher quarter. On the production side, consolidated production was 231,000 ounces, which beat budget of 218,000 ounces by 13,000 ounces and this continues to reflect the outperformance of Fekola and Masbate. Otjikoto was slightly up and then in Nicaragua, El Limon was basically on budget and Libertad by about 3,000 ounces. Looking at individually, Fekola had a production of about 110,000 ounces, beat budget by 7,700. That was due to higher throughput.

During the period, we processed a fair amount of weathered saprolite that requires less grinding. And because the mill throughput was doing so well, we also made a decision in the quarter to process more of our low-grade stockpiles than we originally budgeted. Because the low-grade stockpiles were lower grade, overall our grade was slightly down. The average grade for the quarter was 2.1 grams versus 2.5 grams as budgeted. And that did result in slightly a moderate increase in Fekola costs which we’ve already pre-released.

Masbate production was 57,000 ounces. We gained 7,000 ounces up on budget. Masbate continues to outperform at all levels, higher grade, higher recoveries, and in particular, a lot more oxide content than was budgeted. We’re now mining the main vein, and the oxide content there was 31% from processed tonnage versus 8% of the budget. We should also comment that Masbate expansion came up and online early in the quarter and we’re now running full tilt now, with a processing capacity of 8 million tonnes for the year.

Otjikoto, 33,000 ounces, couple 1,000 ounces above budget, basically online. And El Limon was 12,000 ounces on budget and Libertad of 18,000 ounces or 3,000 ounces less than budget. Libertad was mainly due to lower grade than plan from San Diego, which partially offset by our production in San Jaun, but overall resulted in 3,000 ounces over the budget. On a cash cost base, consolidated cash costs for the quarter was $545 an ounce, that was $27 an ounce less than budget, driven mainly by Masbate and Otjikoto, offset by slightly higher cost at Fekola and some higher cost at El Limon and Libertad. Individually, Fekola is still our lower cost producer, $309,000 an ounce, which was $28 higher than budget.

But that was for the reason I just elaborated on earlier, we made a decision to process a lot more low grade material than originally budgeted, which raised the cost marginally. Masbate had a crappy quarter, $546 an ounce, which is $123 less than budget, and that’s driven by a number of factors, above budget gold production and then gross mining costs, which were actually well below budget. There were cost savings in a number of areas. Drilling and blasting was lower in part because some of the material we were mining came from backfill areas within these blasting, and we’re also able to increase the spacing from some of our other blasting in the period. And then load and haul costs were lower because we focused a lot more activity around the Main Vein Pit rather than running up to the ROM Stockpile.

Otjikoto costs, $519 an ounce that was $136 less than budget. Key reason for that is that we took out more work tons than we thought. We have budgeted from Phase 2 of the Otjikoto Pit and Phase 2 of Wolfshag, that resulted lower strip ratio. And so we actually stockpile a bunch of material that we mined in the period and that had a positive impact on cost reported. In Nicaragua, at the moment, $991 an ounce, which is $515 higher than budget, in Libertad $1,295 an ounce, which is $249 higher than budget due to the lower production as I mentioned earlier.

On the all-in sustaining costs side $848 an ounce consolidated which is $133 less than budget, and that’s a combination of two main factors. The first one is the $27 per ounce lower, cash operating costs for the period. And the balances is mainly related to just cash flow of our capital expenditure timing. We were $24 million lower in the quarter on the CapEx side than we originally budgeted, but almost all of that will reverse. It may be of a $4 million of strip at Otjikoto, that we won’t see reverse, but other than that we’ll see the majority of that CapEx reverse later in the year.

So we don’t expect that underperformance – or that cost under it the $133 to flow through the rest of the year. Couple of general comments on the operation. The Fekola PEA level will be out shortly in a couple of days’ time, and then I think, Clive’s already mentioned though, what are our plans for Gramalote. I should say that Gramalote, we originally had budgeted $5 million just as our share of whole cost for the year, and we’re still waiting to determine what growth program we might see for the balance of 2019 and into 2020 potentially. So at some point in the next little while, I think we’ll probably land on adjusted budget for Gramalote and we’ll be able to report that in the next quarter.

I want to mention a few things on the segment operations and then the cash flows. So just running down segment operations, few comments. On the G&A segment we are about $3 million higher than the prior year quarter, that’s mainly for two reasons. One, as our increases across the sort of consolidated group and then also a couple of million dollars for under-accrual of bonuses at the end of 2018 which floated the Q1 2019. On the derivative side, we have $6.2 million in derivative gains, that’s almost all fuel.

$7 million came from our fuel hedging program, but it was offset by about $1 million unrealized loss on our interest rate hedges. Then on the tax side, we’re going to start seeing higher taxes on a consistent basis now as we go through because Fekola is fully taxable on Masbate, that came out of the tax holiday about a year ago, so we’re going to start seeing taxes reported on a consistent basis now. So out of the $27 million current income taxes $14 million of that were Fekola; current income taxes of $4 million of that was Fekola priority dividends. Just remind you that, that’s where the government’s recarrying 10% as reported. And with that, we made a $4 million with tax number, and then we also had some alternative minimum taxes in Nicaragua and some other withholding taxes.

All that translated into a net income for the period of $26 million or $0.02 a share. On an adjusted earnings basis, we reported $0.04 cents a share adjusted earnings. Just a few comments on the cash flow, and then I’ll turn it back to Clive and Bill. So on the operating cash flows that we generated $86 million in the quarter, which was very solid number, but it’s $60 million less than we reported in 2018. So again, a couple of comments on that comparator.

The main one is the lower sales number that I discussed earlier when we mentioned revenues. So we were about $40 million lower in sales, mainly because of the one-off Fekola inventory drawdown in 2018. And we also paid $1 million tax installments, and we also funded some other working capital movements mainly in inventory build-up. Overall, $86 million, it translates to cash flow per share of $0.09. Post quarter end, we paid another $30 million in Fekola taxes, that was to clear off 2018 Fekola’s tax liability.

And we’re also going to pay in the second quarter $17 million for the Fekola priority dividend that built up in 2018, just for your model to be aware of that. For the full year, we’re forecasting, at current gold prices somewhere around $400 million in operating cash flows. On the financing side, you’ll see new drawdowns and repayments of the revolver, but as Clive mentioned, we are so focused on repaying the debt. We did have $140 million of cash at the end in Q1, and normally, we were to pay down some of the revolver, but because we knew we were going to make those Fekola tax installments and priority dividend payments, we didn’t pay anything in Q1. But as we move later in the year and especially with the waiting production results and cash flows for the second half of the year versus the first half, that’s when we expect to start paying some more down on the revolver.

On the investing, CapEx about $58 million for the quarter. As we said, we were $24 million under across all the sites for various reasons, but we expect most of that to reverse in the period. What we’ll Also see now as we go forward, that wasn’t the original budget, it is approximately $25 million will be added to CapEx for Fekola expansion. I think we disclosed that in our last press release. That’s the 2019 share of the mill expansion costs.

And we’re evaluating once we need, we might have as well, and we expect to have some more information about that as we determine that a bit later in the year. We do expect that it will – some of that may – it will be financed from used and existing cash flows and revolver, we may also look for some sort of cash facility for that. And in total, we have security of $140 million in cash. I would like to say, good shape to meet our liabilities and also as we go forward to start paying down some more debt. I think, that’s basically all the main points I wanted to highlight there, but I guess I’ll turn it back to Clive.

Clive Johnson: Okay. Thanks, Mike. We’ll open up to questions now.

Operator: Thank you. [Operator Instructions] And your first question comes from Carey MacRury from Canaccord.

Carey, your line is open.

Carey MacRury: Hi, good morning. Just had a question on Fekola. In Q1, you had throughput of about 6.9 million tonnes annualized. And I know your guidance for the year is 5.75 million tonnes.

Just wondering how we should think about throughput this year? I mean, obviously, the plants can do well about nameplates. Any color you can provide on that?

Clive Johnson: Bill?

Bill Lytle: Yes, well, we’ve always said that if we have some of the softer material that we can run more for sure. What we are saying is that our base case is 6 million tonnes per annum based on grinding sites on the harder ore that we found at Fekola. So I would say, if we continue to find the softer ore, which we’re in, then you can expect that we’ll be up higher than 6 million tonnes.

Clive Johnson: In future, we expect to get into some harder ore.

Bill Lytle: Yes.

Carey MacRury: And what’s the mix roughly of soft to hard currently?

Bill Lytle: Well, Mike talked a little bit about that for sure. I mean, in Q1, we were running, what, was it 9% – 12% saprolite and some of the other stuff was higher up, up in the dome. So we didn’t see much hard stuff in Q1.

Carey MacRury: Okay.

Thank you.

Clive Johnson: Thanks.

Operator: And your next question comes from Chris Thompson of PI Financial. Chris, your line is open.

Chris Thompson: All right, thanks a lot.

Good morning, guys, congratulations on a great quarter. Just – and by the way thanks for all the detail on the M&A, really appreciate that. Two quick questions. First one on Masbate. Second one on Otjikoto.

Obviously, great results from Masbate. Obviously, you beat on grade and oxide tonnage. Can we expect any more juice in the tank by way of oxide ore before the mine reverts back to, let’s call it, a normal transition fresh oxide mill mix?

Clive Johnson: Bill?

Bill Lytle: Yes, as we continue, we see – foresee in this quarter continuing on a similar mix. So this quarter, I think you will see continued positive results reverting to as planned by Q3 of this year.

Chris Thompson: Okay.

And thanks for that. And then, finally, Otjikoto. Obviously, you’re expecting, back-half weighted, obviously more production, I guess, in the back half, higher grade, it looks like from Wolfshag 2 Pits, Phase 2 there. What are you guys thinking about the underground potential? Is that something you’re still evaluating there?

Bill Lytle: The answer is absolutely, yes. As a matter of fact, if you remember, the long kind of drawn-out saga that we had last year, it was almost a – it was a push on the economics open pit versus underground, and a lot of that really depended on the geotech that we had felt was going to be there and the geohydrology.

Those studies have now come in much more positive than we anticipated. And so we are now thinking that we will go underground there for sure, and we may go underground sooner than later. The current plan is to develop our study by the end of Q3, so we can present it for the Board in Q4 of this year. And obviously, we’ll report our life of mines next year and we’ll come out.

Chris Thompson: Great.

Thanks, Bill. Thanks, guys.

Clive Johnson: Great. Thanks, Chris. I appreciate it.

Operator: [Operator Instructions] And your next question comes from Alvin Islam of Haywood Securities. Alvin, your line is open.

Alvin Islam: Hi, good afternoon, guys. Congrats on a good quarter. Just two questions on Fekola, if I may.

Given the higher run rate at Fekola, are you guys noticing any benefits on any particular fixed cost items?

Clive Johnson: John, you want to…

John Rajala: Yes, I think we’re seeing lower costs per tonne processed with the softer ore because of the higher divisor with the – that goes along with the higher throughput, less reagent consumptions because of the nature of the ore – the oxide nature of the ore as well. So yes, we’re seeing cost reductions from it.

Alvin Islam: And last one, if I may. How sensitive are you guys to fuel cost variations at Fekola?

Mike Cinnamond: Well, fuel overall for Fekola is about 30% of our production costs, and that’s kind of split half-and-half between the fleet and the mill, really. So that gives you an idea of the quantum of fuel and the overall production mix.

Alvin Islam: Okay. Thanks, guys.

Bill Lytle: Yes. And one of the things we are looking at in conjunction with that, similar to Otjikoto, we are undertaking right now a solar study to put in a solar plant, and those results are coming out, they’re imminent. And we anticipate, probably in the next little bit, to announce what amount we would switch over to at least some of the power plant being on solar.

Clive Johnson: We’re feeling quite positive about that so far.

Operator: Your next question comes from Lawson Winder from BoA Merrill. Lawson, your line is open.

Lawson Winder: Hey, guys. Thanks for taking my call.

I just wanted to ask about Jabali Antenna. Obviously, you’ve made progress there, sort of positive progress. But I mean you still need a resettlement and then ultimately, you still need the final permit. I mean, my thinking is and correct me if I’m wrong, that the permit is probably going to be easier than the resettlement, but does one depend on the other? And then what gives you confidence that the resettlement will ultimately happen in time for H2? And where is that right now? Thanks.

Clive Johnson: Mike?

Mike Cinnamond: Yes.

Resettlement is down to the pointy end. So we’ve made some good advances there. That’s the only impediment as you indicated. Yes, the permit. We’ve gone through the public consultation process, and we’re in good order there.

So given our advances on resettlement, we’re pretty confident looking at the H2, that we’ll be there happily in time.

Lawson Winder: And then just on Gramalote. In your most recent release prior to the Q1 results out last night, I mean, you basically mentioned that before making decisions that you would complete an internal PEA on Gramalote. So I’m just curious. I mean, was that completed? And then if you do ultimately decide or when you decide to increase the budget for Gramalote? Will you be releasing those results of the PEA, just sort of the outline – sort of a justification for that investment? And then anything on time line around that investment decision will be helpful as well.

Thanks.

Clive Johnson: Yes, I mean, we don’t really know the way forward right now with Gramalote. Let’s say we are in discussions with AGA, our partner. We’ve a new model there now, and so much better model than it was before than the new model that AGA used in their – what they called the pre-feasibility study in 2017. So we were always of the view that there was issues on the model and we need more drilling.

And now there’s been a meeting in the minds that we need more drilling. So the question now is there is – the new model has some much better economics, but the key to that is we’ll need more drilling to make it indicated, and ultimately, that should become reserves, it’s economics. So that’s the conversations going on now. So the question is who wants to spend more money in Gramalote? If so, how much? Who is going to spend it? And the next step would be bunch of drilling. Gramalote has had a lot of engineering.

Whether AGA’s direction as operator, there’s been huge amounts of money spent, probably should have been a little more drilling. But there’s been huge amounts of money spent, so the metallurgy is in great shape, the engineering is in great shape. We have a permit in hand, and we’re going to keep the permit going, that’s part of the process. But it’s got a lot of things going for it. Low grade, yes, but low strip ratio, but very attractive metallurgy, et cetera, et cetera.

So all of a sudden, there may be some new life in Gramalote based on our new model, but the key will be who wants to do what going forward, and ultimately, what does the new model mean. It needs more drilling for sure. So we are moving within a month – are moving in a month, and we’re going have – be able to have reached an agreement one way or the other with our partner.

Lawson Winder: Okay, thank you. That’s great.

And then just how do you think about the 49% interest at this point? I mean, do have a preference one way or another whether you like to see your interest stay the same, increase or decrease?

Clive Johnson: The unusual thing about the joint venture agreement at Gramalote is the fact that 49% is basically effectively 50-50. All the powers you would normally see in a 50-50 joint venture but all the things you have to unanimously agree are in this joint venture whether you own 49% or 35%, frankly. It’s an unusual agreement in that regard. So the 49% is very powerful in that sense. So we’re not really stuck on percentages a whole lot.

We’re keen to be operator. If that’s something our partner wants us to do, we’ll seriously consider.

Lawson Winder: Okay, great. And then, Mike, sorry, I don’t think I heard the numbers that you gave for the Fekola tax makeup, so both the tax installment and the priority dividend. Did you give the amount that was in Q1? And then I think you gave the amount that was expected for Q2.

Just I apologize, I missed it.

Mike Cinnamond: Well, what’s in the actual current income tax charge is $18 million for Fekola, $14 million for current income taxes and $4 million for the priority dividends, so that’s on an accruals basis in the P&L. What was physically paid in cash during the quarter, Fekola was $6 million and Fekola tax installment, but subsequent to the quarter end, we paid another $30 million to settle out our final 2018 tax liability for Fekola. We’re also expecting to pay $17 million in Q2 to settle the 2018 priority dividend.

Lawson Winder: Got you.

Okay, that’s great. Thanks. That’s all from me guys. Thank you.

Mike Cinnamond: Thanks.

Operator: And your next question comes from Craig Stanley of Eight Capital. Craig, your line is open.

Craig Stanley: Thank you. You mentioned that you increased the revolver because you get better terms. Can you give us an idea of just what the terms are or just maybe how much you might save per year?

Clive Johnson: That’s probably got some details in the MD&A, but Mike, do you want to have it?

Mike Cinnamond: We haven’t fully closed it yet, so we didn’t disclose the details, but we will when we close it, which is expected very shortly.

I can say the pricing is generally a little better than it was and less onerous on the covenants. And the thing we’d probably focus on the most is just the baskets of what carve-outs that you can have, but I think we’ll disclose a bit more on that when we actually close it. We’re almost there.

Clive Johnson: Second quarter.

Mike Cinnamond: Second quarter.

Craig Stanley: Okay, thank you.

Mike Cinnamond: Thanks.

Operator: And we have no further questions at this time. So I’ll turn it back over to Mr. Johnson for closing remarks.

Clive Johnson: Okay. Thanks for your time, everyone. Have a good day.