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B2Gold Announces Record Fourth Quarter and 2010 Financial Results; Reserve and Resource Update; New Large Higher Grade Resource at Jabali Zone, La Libertad Mine
March 31, 2011VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 31, 2011) - B2Gold Corp. (TSX:BTO)(OTCQX:BGLPF) ("B2Gold" or the "Company") reports its results from its operations for the fourth quarter and year ended December 31, 2010 and a significant increase in reserves and resources (see summary table at end of release). All dollar figures are in United States dollars unless otherwise indicated. Highlights from the fourth quarter and year end include:
2010 Fourth Quarter Results
- Record gold revenue of $47 million
- Record gold production of 36,824 ounces
- Consolidated operating cash cost of $535 per ounce of gold
- Adjusted net earnings of $15.5 million ($0.05 per share)
- Cash flow from operations of $21.9 million ($0.07 per share)
- Increase of cash and cash equivalents to $70 million at year end
2010 Twelve Month Results
- Record gold revenue $127.5 million, a 517% increase over 2009
- Record gold production of 108,700 ounces
- Record net income of $29.5 million
- Record cash flow from operations of $35.8 million
- Consolidated operating cash cost of $591 per ounce of gold
Significant Increase in Reserves and Resources
Based on the successful 2010 exploration drilling programs B2Gold has increased proven and probable reserves by 16%, measured and indicated resources by 11% and inferred resources by 7.7%. The new reserves and resources are outlined in tables at the end of this release.
The most significant increase is the 180% increase in inferred resources at La Libertad due to the new resource outlined on the Jabali Zone located approximately 10 kilometres ("km") east of the mill facility at La Libertad Mine. The new resource was based on a total of 55 diamond drill holes totaling �����9,660 metres. The drilling focused on the Antenna and Central Zones at Jabali.
The new resource totals 3.55 million tonnes at 4.58 g/t of gold containing 522,000 ounces of gold. The zones remain open to the east, west and to depth.
This new resource with infill drilling could not only add several years to La Libertad's current seven year mine life but more importantly, allow the potential to deliver in the near term higher grade ore to La Libertad mill.
The current average grade of ore being delivered to the 5,500 tonne per day La Libertad mill is 1.6 g/t gold. This includes approximately 70% from open pit mining at a grade of 1.91 g/t and approximately 30% from spent ore from the historic leach pads which has an average grade of 0.8 g/t. With the grade of the new Jabali resource of 4.58 g/t gold the opportunity is to delay processing of the 30% spent ore until later in the mine life and replace it by processing potentially higher grade from Jabali. The result of this could be processing the same 5,500 tonnes per day but significantly increasing annual gold production, beyond the current projected annual production of 90,000 ounces, and significantly reduce operating costs per ounce, with minimal additional capital requirements.
Based on the positive results from the 2010 drilling program and new resource at Jabali the Company has decided to increase the $4.6 million exploration budget at La Libertad by $4.1 million to drill a total of approximately 40,000 metres. The drilling will focus on in filling the Jabali Zone, and testing potential extension to the east, west and depth. In addition, drilling will follow up high grade intercepts at the Mojon and Crimea pits, and test other targets along the 20 km La Libertad belt.
Gold Revenue
Gold revenue for the fourth quarter of 2010 increased to $47 million on sales of 34,039 ounces compared to $3.5 million on sales of 3,211 ounces in the 2009 fourth quarter. The significant increase in revenue was attributable to higher gold production from the Company's Nicaraguan La Libertad Mine as it ramped up to full scale production and improved performance at Limon Mine as well as higher average realized gold prices. The average realized gold price was $1,381 per ounce (compared to the spot gold price average for the quarter of $1,367 per ounce) which was $277 per ounce higher than 2009.
La Libertad Mine accounted for $���34.4 million of gold revenue from the sale of 24,865 ounces while $12.6 million was contributed by the Limon Mine from the sale of 9,174 ounces.
Gold revenue for the twelve months of 2010 was a record high for the Company at $����127.5 million from the sale of 101,105 ounces at an average price of $1,261 per ounce, compared to the spot gold price average for the twelve months of 2010 of $1,225 per ounce. This is an increase of approximately 518% from the twelve months of 2009 of $20.6 million from the sale of 21,232 ounces at an average price of $972 per ounce. This increase was mainly attributable to production from La Libertad Mine which commenced commercial production on February 1, 2010 and to the benefit of including a full twelve months of production from the Limon Mine in the 2010 period which was acquired from Central Sun near the end of the first quarter of 2009. Also contributing to higher gold revenue was the increase in the average gold price received.
Financial Results
B2Gold reported adjusted net earnings for the quarter, of $15.5 million ($0.05 per share) compared with an adjusted loss of $3.7 million in the same period last year (negative $0.02 per share). Net income in the fourth quarter of 2010 included a non-cash future income tax expense of $6.4 million (resulting mainly from a decrease in non-capital tax loss carry-forwards) and a $2.8 million write-off of exploration costs relating to the Calibre Option Agreement.
Cash flow from operating activities (before non-cash working capital changes) for the fourth quarter of 2010 was approximately $21.9 million, compared to negative $0.7 million in the fourth quarter of 2009. The fourth quarter operating cash flow was the highest quarterly cash flow in the Company's history, reflecting the Company's strong operating performance and continued strength in gold prices.
Cash flow from operating activities (before non-cash working capital changes) for the twelve months ended December 31, 2010 was $35.8 million ($0.12 per share) compared to negative $3.5 million last year (negative $0.01 per share).
For the twelve months ended December 31, 2010, the Company reported net income of $29.5 million ($0.10 per share) on revenue of $127.5 million compared with a net loss of $27.8 million (negative $0.12 per share) on revenue of $20.6 million for the prior year. The significant improvement in the Company's results was mainly due to production from the Libertad Mine which commenced commercial production on February 1, 2010 and to the benefit of including a full year of production from the Limon Mine which was acquired from Central Sun near the end of the first quarter of 2009. Also contributing to higher gold revenue was the increase in the average gold price received of $1,261 per ounce compared to $972 per ounce in 2009. The 2010 results also included a gain of $22.1 million from the sale of the Company's interest in the Kupol East and West licenses.
Liquidity and Capital Resources
The Company ended the year with $70 million in cash and cash equivalents, compared to $2.9 million at the end of 2009. Working capital at year end was $84.6 million compared to working capital of $11.6 million at the end of 2009. The increase in cash and cash equivalents from December 31 2009 was mainly due to strong operating cash flow of approximately $34.3 million generated by the La Libertad and Limon Mines, cash proceeds of $33 million received from the sale of the Company's interest in the Kupol East and West licenses, the Cdn$32 million share offering completed in February 2010, and the exercise of warrants and employee stock options. The Company also has a $25 million Credit Facility that is undrawn and available for use.
Operations
B2Gold's consolidated gold production during the fourth quarter of 2010 was 36,824 ounces compared to �3,577 ounces produced over the same period last year as La Libertad Mine commenced commercial gold production on February 1, 2010. Operating cash cost was $535 per ounce and total cash cost was $609 per ounce in the fourth quarter of 2010. This compared to an operating cash cost of $1,115 per ounce and a total cash cost of $1,193 per ounce in the corresponding periods last year. The improvement was attributable to the commencement of milling operations at La Libertad Mine and the improved performance of the Limon Mine.
Consolidated gold production for the twelve months of 2010 was 108,688 ounces of gold at an operating cash cost of $591 per ounce compared to 20,612 ounces being produced in 2009 at an operating cash cost of $798 per ounce.
La Libertad Mine, Nicaragua (B2Gold 100%)
La Libertad produced 26,771 ounces of gold during the fourth quarter of 2010 at an operating cash cost of $458 per ounce and a total cash cost of $531 per ounce from 472,065 tonnes of ore milled at an average grade of 1.97 grams per tonne ("g/t").
From the start of commercial production on February 1, 2010 La Libertad produced 68,562 ounces of gold at an operating cash cost of $522 per ounce and a total cash cost of $585 per ounce from 1,498,614 tonnes of ore milled at an average grade of 1.61 g/t.
Gold production in the fourth quarter was within guidance while operating cash costs was better than expected. The continued performance in operating cash cost compared to forecast guidance was due to several factors, the more significant ones being:
- Improved gold grade from ore mined at the Mojon and Crimea pits compared to that encountered in the third quarter. The average grade milled improved to 1.97 g/t compared to 1.66 g/t in the third quarter.
- Gold recovery improved to 91% in the fourth quarter compared to 85% during the previous quarters. Upgrades in the process plant process controls and improved stripping and carbon management in the ADR plant contributed to improved recoveries.
- Mill reagent, grinding media and electrical power costs were also below budget.
Gold production for the last half of 2010 was 47,005 ounces at an operating cash cost of $441 per ounce compared to mid-year guidance of 45,000 to 47,500 ounces at an operating cash cost of $475 to $500 per ounce.
Gold production for 2011 at La Libertad Mine is projected to be between 88,000 and 94,000 ounces at an operating cash cost of $440 to $460 per ounce. Cash from operations at La Libertad Mine is projected at approximately $70 million (at $1,300 per ounce gold price). The Company has budgeted significant capital costs at La Libertad in 2011, totaling approximately $28 million. The majority of this capital cost will be expended on pre-stripping to access future ore by enlarging existing pits, a tailings pond expansion and mill upgrades. Capital costs for 2012 are expected to be significantly lower.
Limon Mine, Nicaragua (B2Gold 95%)
The Limon Mine produced ��10,053 ounces of gold during the fourth quarter of 2010 at an operating cash cost of $740 per ounce and a total cash cost of $818 per ounce from 87,271 tonnes of ore milled at an average grade of 4.08 g/t.
In the fourth quarter of 2009 Limon produced 3,577 ounces of gold at an operating cash cost of $1,115 per ounce and a total cash cost of $1,193 per ounce from 39,193 tonnes of ore milled at an average grade of 3.35 g/t.
In 2010, the Limon Mine had its best production year since 2004. For the twelve months of 2010, Limon milled 342,673 tonnes of ore at an average grade of 4.18 g/t gold, producing 40,126 ounces of gold at an operating cash cost of $710 per ounce and a total cash cost of $781 per ounce. The improvement in gold production in 2010 was mainly due to no work stoppages in the year from improved union relations.
For the nine month period since the acquisition date in 2009 Limon produced 20,612 ounces of gold at an operating cash cost of $798 per ounce and a total cash cost of $859 per ounce from 176,511 tonnes of ore milled at an average grade of 4.30 g/t.
Gold production for the last half of 2010 was 20,494 ounces at an operating cash cost of $723 per ounce compared to mid-year guidance of 20,000 ounces at an operating cash cost of $650 to $675 per ounce.
Operating costs were higher than budget mainly due to the use of a contract miner to supply ore from pits at the Villa Nueva I concession located 30 km from the Limon mill. The 2010 budget did not include any ore being supplied from the Villa Nueva I concession which accounts for most of the increase in costs. Year-to-date operating cash cost was also impacted by higher import duties (for urgent items) and by an increase in the cost allocation for salaries and benefits relating to employees who had been budgeted to work on underground development which did not occur.
In 2011, the Limon Mine is forecast to produce between 42,000 to 46,000 ounces of gold at an operating cash cost of $720 to $740 per ounce. Operating cash cost in the first quarter of 2011 is projected to be approximately $850 per ounce of gold due to contract ore sourcing and is expected to decline to approximately $690 to $715 per ounce for the remainder of 2011 as contract ore sourcing is scheduled to be completed by the end of the first quarter.
The Company plans to undertake significant capital expenditures at the Limon Mine in 2011 totaling approximately $20 million. The majority of this capital expenditure will fund a major underground mine development program, surface mine pre stripping and tailings pond construction. The underground development work will access deeper ore at the Santa Pancha vein. Capital expenditures for 2012 are expected to be significantly lower.
The 2011 exploration budget for Limon is $3.2 million including 10,000 metres of drilling. For the remainder of the year two drill rigs will continue drilling to increase the mine life and explore potential higher grade targets. In some previous years the Limon Mine processed significantly higher grade ore resulting in a substantial increase in gold production. Based on the positive deeper exploration drill results at the Santa Pancha vein and other exploration targets the Company has increased proven and probable reserves at Limon to 1,949,692 tonnes at a grade of 4.48 g/t containing 280,000 ounces of gold yielding a five year mine life. The Company believes there is excellent potential to further increase the current mine life and also discover higher grade open pit and underground deposits that could increase annual gold production and reduce operating costs per ounce of gold.
Health, Safety, Environmental and Corporate Social Responsibility (HSES)
B2Gold has a strong safety and environmental track record. The Company continues to build on our strong historical commitment to HSES responsibility. Recently the Company hired a full time Vice President for Environment, Health, Safety, and Permitting. Bill Lytle has had more than 15 years experience specializing in providing operational health, safety, environmental, and social assistance during all phases of the mining cycle as well as extensive experience working with international lending institutes such as the IFC. Bill has been involved as a consultant to B2Gold and previously a senior management employee of Bema, notably working on the permitting and development of the Kupol project in Russia for Bema and briefly Kinross.
Additionally, the Company has begun implementation of an environmental management program that will continue standardization of all health, safety, environmental, and social policies and procedures, facilitate transparency to all stakeholders, and allow consistent check and review procedures at all operations. It is anticipated that the corporate policies and procedures will be developed and implemented in 2011 and 2012. As part of this effort, B2Gold has adopted new policies on Occupational Health and Safety, Environment, and Biodiversity.
B2Gold continues to invest heavily in the communities where we operate with more than $2 million spent on social programs at La Libertad and the Limon communities in 2010. These monies were focused on issues related to public health, education, and development of small business.
Other Projects
Gramalote Property, Colombia
(B2Gold 49% / AngloGold Ashanti Limited ("AngloGold") 51%)
Drilling and prefeasibility work is well underway on the Gramalote Project in Colombia, with joint venture partner and project manager AngloGold. The Gramalote property is located 80 km northeast of Medellin in central Colombia.
The Gramalote Ridge Zone on the Gramalote property has a National Instrument 43-101 compliant inferred mineral resource estimate of 74.375 million tonnes grading 1.00 g/t gold for a total of 2.39 million troy ounces of gold at a 0.5 g/t cut-off and within a $1,000 per ounce gold optimized Whittle pit (Technical Report Gramalote Property dated February 27, 2009 and the update report dated June 12, 2008). The Gramalote Ridge Zone remains open to the east and west.
B2Gold and AngloGold have agreed to a 2011 prefeasibility and exploration budget of $30 million. This budget will fund 20,000 metres of diamond drilling to explore additional targets on the property, infill drilling of the Gramalote deposit, drilling for metallurgical test samples and conducting engineering studies. Each joint venture partner will fund their share of expenditures pro rata.
The two companies plan to continue exploration and conduct prefeasibility work in 2011 and into 2012, with a goal of completing a final feasibility study by April 2013.
Nicaraguan Joint Ventures
In addition to La Libertad and Limon property exploration programs, the Company is involved in two exploration joint ventures in Nicaragua. The Company has the right to earn a majority interest from Radius Gold in two Nicaraguan properties called Trebol and Pavon. Work which is ongoing at Trebol has consisted trenching and geochemical soil sampling over the 25 km strike length of the system. The 2011 exploration budget is approximately $2.4 million. A total of 31 holes totaling 2,500 metres have been drilled so far this year. The Company expects to release assay results in April 2011.
The Company has the right to earn a majority interest in the Borosi project, located in north east Nicaragua, owned by Calibre Mining. The companies continue to explore the property.
Cebollati Gold Property, Uruguay
The 2011 exploration program for the Cebollati Property has a budget of $4.5 million, which includes 10,000 metres of drilling. Drilling commenced on the Cebollati Property in December 2010. The purpose of the drilling program is to test the bulk mining potential of the property, following up on the high grade surface gold mineralization, soil geochemical anomalies and the recently released high grade trench results.
To date, eight holes totaling 1,400 metres have been drilled at Cebollati. The Company expects to release initial assay results from the program in May 2011. Drilling is ongoing.
Outlook
B2Gold's strategy is to grow the Company's gold production through the exploration and development of existing assets and timely acquisitions. The executives and management team of B2Gold worked together for many years at Bema Gold to successfully build this model. Because most gold producers fail to discover enough gold reserves to maintain their production levels or grow, they have to acquire ounces of gold in the ground. In our view, given the robust gold price, these acquisitions are becoming more and more expensive. The Bema / B2Gold model is the exception, combining a highly successful exploration team with strong financing capability and a proven team of engineers building and operating gold mines.
In conclusion, the management of B2Gold is pleased with our operations, financial and exploration results for 2010. The Company is well positioned to continue our growth as an intermediate gold producer. With our strong cash position and impressive cash from operations, we have the potential to advance all of our planned projects without requiring further funding.
Conference Call Details
B2Gold will host a conference call and webcast to discuss third quarter results and an exploration update on Thursday, March 31, 2011 at 10:00 am PST / 1:00 pm EST. You may access the call by dialing the operator at 416-695-7848 or toll free at 1-800-766-6630 prior to the scheduled start time. A playback version of the call will be available for one week after the call at 905-694-9451, or within North America call toll free 1-800-408-3053 (pass code: 1251652). The webcast can be accessed from B2Gold's web site at www.b2gold.com.
B2Gold Mineral Reserves and Resources (as at December 31, 2010)
| Mineral Reserves - Proven and Probable(1,2,3,5) | ||||||
| Mine | Tonnes | Grade (g/t) | Gold (Ounces) | |||
| La Libertad (2) | 13,189,498 | 1.51 | 642,293 | |||
| Limon (2,7) | 1,949,692 | 4.48 | 280,983 | |||
| Total Proven and Probable Mineral Reserves | 15,139,190 | 923,276 | ||||
| Mineral Resources - Measured and Indicated(1,2,3,8,9,10,11) | ||||||
| Property | Tonnes | Grade (g/t) | Gold (Ounces) | |||
| La Libertad | 5,553,011 | 1.45 | 258,841 | |||
| Limon | 839,889 | 4.35 | 117,557 | |||
| Total Measured and Indicated Mineral Resources | 6,392,900 | 376,398 | ||||
| Mineral Resources - Inferred(1) | ||||||
| Property | Tonnes | Grade (g/t) | Gold (Ounces) | |||
| La Libertad | 7,365,245 | 2.89 | 683,277 | |||
| Limon | 942,428 | 5.01 | 151,732 | |||
| Gramalote (4) | 36,443,750 | 1.00 | 1,169,630 | |||
| Total Inferred Mineral Resources (4) | 44,751,423 | 2,004,639 | ||||
| Notes: | ||
| 1. | Mineral reserves and resources reported herein are based on the CIM Standards. Mineral resources that are not mineral reserves do not have demonstrated economic viability. | |
| 2. | Mineral resources are in addition to mineral reserves. | |
| 3. | The mineral reserve and mineral resource estimates for La Libertad and Limon projects were compiled and verified as of December 31, 2010 under the supervision of Tom Garagan,P. Geo., Senior VP Exploration for B2Gold and Peter Montano, P.Eng., Senior Mine Engineer, both Qualified Persons as defined under NI 43-101. The estimates reflect the attributable mineral reserves based on the Company's 100% interest in La Libertad Mine and its 95% interest in the Limon Mine. | |
| 4. | The inferred resource estimate for the Gramalote property, which reflects the attributable resources to the Company based on its 49% interest in the Gramalote property, was prepared as of January 26, 2009 under the supervision of Susan N. Meister, MAusIMM, a Qualified Person as defined under NI 43-101. The aggregate attributable inferred resource reflects the Company's 49% interest in the Gramalote property, its 100% interest in La Libertad Mine and its 95% interest in the Limon Mine. | |
| 5. | Reserves are reported at a gold price of $1200. | |
| 6. | Reserves are Libertad are reported above a cutoff grade of 0.50 g/t gold. | |
| 7. | Reserves at El Limon are reported above a variable cutoff grades between 1.5 and 3.5 g/t gold. | |
| 8. | Mineral resources have not been adjusted for metallurgic recoveries. | |
| 9. | Open Pit mineral resources at La Libertad and Limon are reported within an optimized whittle pit shell at a $1250 gold price. | |
| 10. | Mineral Resources at La Libertad are reported above a cut off grade of 0.55 grams per tonne gold within an optimized pit shell. The Jabali inferred resource is reported as an insitu resource above two cut-off grades. Blocks are reported above a cut-off grade of 0.6 g/t gold between surface and 50 metres vertically and any additional resources below 50 metres are reported above a 3 gram per tonne gold cutoff for the Antenna Zone. Blocks are reported above a cut-off grade of 0.6 g/t gold between surface and 100 metres vertically and any additional resources below 100 metres are reported above a 3 gram per tonne gold cutoff for the Central Zone. | |
| 11. | Mineral resources at El Limon are reported above a set of variable cut off grades based on location. |
Qualified Person(s)
The mineral reserves and resources were estimated as at December 31, 2010 in accordance with the definitions adopted by the Canadian Institute of Mining Metallurgy and Petroleum and incorporate into National Instrument 43- 101 Standards of Disclosure for Mineral Projects (NI 43-101). Mineral reserves and resources estimates were completed by B2Gold under the direction and supervision of Peter Montano, PE, Senior Engineer for B2Gold Corp. and Tom Garagan, P.Geo., Senior VP Exploration for B2Gold Corp., both Qualified Persons as defined by National Instrument 43-101 of the Canadian Securities Administrators. Drilling, sampling, QA/QC protocols and analytical methods for individual resource areas are as outlined in the respective news releases for these areas and as reported in the Company's 2010 Annual Information Form (AIF) dated March 25, 2010 available atwww.sedar.com, or the Company's website. A technical report, prepared in accordance with the provisions of National Instrument 43-101 will be filed within 45 days of this press release for the Jabali inferred resource.
ON BEHALF OF B2GOLD CORP.
Clive T. Johnson, President and Chief Executive Officer
Tom Garagan, Senior Vice President of Exploration
For more information on B2Gold please visit the Company web site atwww.b2gold.com.
The securities described herein have not been and will not be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
Some of the statements contained in this release are forward-looking statements, such as estimates and statements that describe the Company's future plans, objectives or goals, including words to the effect that the Company or management expects a stated condition or result to occur. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ materially from those currently anticipated in such statements.
The Toronto Stock Exchange neither approves nor disapproves the information contained in this News Release.
