B2Gold Reports Strong Q3 2020 Results; Quarterly and Year-to-date Records for Gold Revenues and Operating Cash Flows

Cash Operating Costs and AISC Lower than Budget

B2Gold Corp. (TSX: BTO) (NYSE AMERICAN: BTG) (NSX: B2G) (“B2Gold” or the “Company”) announced strong operational and financial results for the third quarter and first nine months of 2020. The Company previously released its gold production and gold revenue results for the third quarter and first nine months of 2020. All dollar figures are in United States dollars unless otherwise indicated.

2020 Third Quarter Highlights

  • Consolidated gold production of 248,733 ounces from the Company’s three operating mines, above budget by 1% (2,929 ounces) and a significant increase of 17% (35,455 ounces) over the third quarter of 2019 (excluding discontinued operations of El Limon and La Libertad)
  • Total gold production of 263,813 ounces (including 15,080 ounces of attributable production from Calibre Mining Corp. (“Calibre”))
  • Record quarterly consolidated gold revenue of $487 million, a significant increase of $176 million (57%) over the third quarter of 2019 (excluding discontinued operations)
  • Record quarterly consolidated cash flow provided by operating activities from the Company’s three operating mines of $301 million, a significant increase of $133 million (79%) over the third quarter of 2019
  • Consolidated cash operating costs (see “Non-IFRS Measures”) of $411 per ounce produced, below budget by $17 per ounce (4%), and consolidated all-in sustaining costs (“AISC”) (see “Non-IFRS Measures”) of $766 per ounce sold, below budget by $31 per ounce (4%) (excluding estimated attributable results for Calibre)
  • Net income of $277 million (including a net impairment reversal for the Masbate Mine of $122 million); net income attributable to the shareholders of the Company of $263 million ($0.25 per share); adjusted net income (see “Non-IFRS Measures”) attributable to the shareholders of the Company of $161 million ($0.15 per share)
  • The Fekola Mine continues to operate unimpeded and no operational days have been lost due to the recent political developments and demonstrations in Mali
  • No Lost-Time-Injury (“LTI”) incidents at the Company’s operating mines, extending the number of days without an LTI to 255 days for Fekola, 684 days for Masbate and 918 days for Otjikoto as at September 30, 2020
  • On August 5, 2020, the Company announced a 100% increase of its quarterly dividend to $0.04 per share (or an expected $0.16 per share on an annualized basis), which was reflected in the third quarter dividend paid on September 30, 2020
  • On September 10, 2020, the Company announced the successful commissioning of the Fekola mill expansion to 7.5 million tonnes per annum (“Mtpa”) (an increase of 1.5 Mtpa from an assumed base rate of 6 Mtpa), ahead of the scheduled completion date of September 30, 2020; the Fekola mill has the potential to run above the annualized throughput rate of 7.5 Mtpa and analysis is currently underway to determine the optimum throughput rate
  • B2Gold maintains a strong financial position and liquidity; during the third quarter of 2020, the Company fully repaid the outstanding Revolving Credit Facility (“RCF”) balance of $425 million with the full amount of the $600 million RCF now undrawn and available

2020 First Nine Months Highlights

  • Record year-to-date consolidated gold production from the Company’s three operating mines of 738,939 ounces, well above budget by 4% (26,412 ounces) and a significant increase of 19% (116,229 ounces) over the first nine months of 2019 (excluding discontinued operations)
  • Total gold production of 770,268 ounces (including 31,329 ounces of attributable production from Calibre)
  • Record year-to-date consolidated gold revenue of $1.3 billion, a significant increase of $467 million (56%) over the first nine months of 2019 (excluding discontinued operations)
  • Record year-to-date consolidated cash flow provided by operating activities of $755 million, a significant increase of $408 million (118%) over the first nine months of 2019
  • Consolidated cash operating costs of $388 per ounce produced, well below budget by $33 per ounce (8%), and consolidated AISC of $726 per ounce sold, well below budget by $77 per ounce (10%) (excluding estimated attributable results for Calibre)
  • Net income of $498 million (including a net impairment reversal for the Masbate Mine of $122 million); net income attributable to the shareholders of the Company of $460 million ($0.44 per share); adjusted net income attributable to the shareholders of the Company of $368 million ($0.35 per share)
  • For full-year 2020, the Company forecasts total consolidated gold production to come in towards the midpoint of its guidance range of between 1,000,000 and 1,055,000 ounces, with total consolidated cash operating costs expected to be at or below the low end of its guidance range of between $415 and $455 per ounce and total consolidated AISC to be at the lower end of its guidance range of between $780 and $820 per ounce
  • Based on current assumptions, including a gold price of $1,900 per ounce for the balance of 2020, the Company expects to generate cashflows from operating activities of more than $900 million in 2020

The Company continues to address the COVID-19 pandemic and minimize its potential impact at B2Gold’s operations. B2Gold places the safety and well-being of its workforce and all stakeholders as the highest priority and continues to encourage input from all its stakeholders as the situation evolves. The Company has implemented several measures and introduced additional precautionary steps to manage and respond to the risks associated with COVID-19 to ensure the safety of B2Gold’s employees, contractors, suppliers and surrounding communities where the Company works while continuing to operate. The Company is continually updating these plan and response measures based on the safety and well-being of its workforce, the severity of the pandemic in areas where it operates, global response measures, government restrictions and extensive community consultation. The Company is working closely with national and local authorities and continues to closely monitor each site’s situation, including public and employee sentiment to ensure that stakeholders are in alignment with continued safe operation of its mines.

2020 Third Quarter and First Nine Months Operational Results and Development    

Consolidated gold production from the Company’s three operating mines in the third quarter of 2020 was 248,733 ounces, above budget by 1% (2,929 ounces) and a significant increase of 17% (35,455 ounces) over the third quarter of 2019 (excluding discontinued operations) with solid performances from all of the Company’s operations. The significant increase in gold production over the third quarter of 2019 was driven by the Fekola Mine in Mali, which continued its very strong operational performance with gold production of 152,535 ounces, above budget by 2% (2,535 ounces), and 36% (40,214 ounces) higher compared to the third quarter of 2019. Fekola’s significant increase in gold production over the third quarter of 2019 was mainly due to the expansion of the Fekola mining fleet and optimization of the pit designs and mine plan for 2020, which have provided access to higher grade portions of the Fekola deposit earlier than anticipated in previous mine plans. The Otjikoto Mine in Namibia also had a solid third quarter of 2020, producing 42,591 ounces of gold, 2% (985 ounces) above budget. The Masbate Mine in the Philippines continued to perform well through the third quarter of 2020 despite a 6-day mill shutdown following an earthquake on August 18, 2020, producing 53,607 ounces of gold, substantially in-line with budget (of 54,198 ounces), and 4% higher (2,061 ounces) compared to the third quarter of 2019. Including attributable ounces from Calibre (15,080 ounces), the Company’s total gold production in the third quarter of 2020 was 263,813 ounces.

For the third quarter of 2020, consolidated cash operating costs were $411 per ounce produced ($414 per ounce sold), below budget by $17 (4%) per ounce and well below the third quarter of 2019 by $32 (7%) per ounce (excluding discontinued operations), reflecting the strong operating results from all of the Company’s operations. Including estimated attributable results for Calibre, the Company’s total cash operating costs were $435 per ounce produced ($437 per ounce sold).    

For the third quarter of 2020, consolidated AISC were $766 per ounce sold, below budget by $31 per ounce (4%) and slightly above the third quarter of 2019 (1%) (excluding discontinued operations). The favourable budget variance reflected lower-than-budgeted cash operating costs, higher-than-budgeted gold ounces sold, lower-than-budgeted general and administrative costs and lower-than-budgeted sustaining capital expenditures ($13 million), partially offset by higher-than-budgeted royalties (as a result of higher gold prices). The Company expects total sustaining capital expenditures for full-year 2020 to be approximately $11 million under budget. Including estimated attributable results for Calibre, the Company’s total AISC for the third quarter of 2020 were $785 per ounce sold. 

Consolidated gold production for the first nine months of 2020 was a year-to-date record 738,939 ounces, 4% (26,412 ounces) above budget and 19% (116,229 ounces) higher than the first nine months of 2019 (excluding discontinued operations). Including attributable ounces from Calibre (31,329 ounces), the Company’s total gold production in the first nine months of 2020 was 770,268 ounces.

For the first nine months of 2020, consolidated cash operating costs were $388 per ounce produced ($391 per ounce sold), well below budget by $33 (8%) per ounce and significantly lower than the first nine months of 2019 by $63 (14%) per ounce (excluding discontinued operations). Including estimated attributable results for Calibre, the Company’s total cash operating costs were $405 per ounce produced ($409 per ounce sold).    

For the first nine months of 2020, consolidated AISC were $726 per ounce sold, well below both budget by $77 (10%) per ounce and the first nine months of 2019 by $42 (5%) per ounce (excluding discontinued operations). Including estimated attributable results for Calibre, the Company’s total AISC for the first nine months of 2020 were $740 per ounce sold.    

B2Gold remains well positioned for continued strong operational and financial performance in 2020. For full-year 2020, the Company forecasts total consolidated gold production (including attributable ounces from Calibre) to come in towards the midpoint of its production guidance range of between 1,000,000 and 1,055,000 ounces. Consolidated cash costs are expected to remain low in 2020, and the Company expects to be at or below the low end of its guidance range for total consolidated cash operating costs of between $415 and $455 per ounce and at the lower end of its guidance range for total consolidated AISC of between $780 and $820 per ounce.

The Company’s expansion and development projects also progressed well through the third quarter of 2020: 

  • At Fekola, on September 10, 2020, the Company announced the successful commissioning of the Fekola mill expansion to 7.5 Mtpa (an increase of 1.5 Mtpa from an assumed base rate of 6 Mtpa), approximately one month ahead of the scheduled completion date of September 30, 2020. The Fekola mill has the potential to run above the annualized throughput rate of 7.5 Mtpa and analysis is currently underway to determine the optimum throughput rate. Remobilization of the Fekola solar plant construction group began in mid-September 2020 (following a temporary suspension of construction activities in April 2020 due to COVID-19) and will continue to ramp up as camp space becomes available. The target date for completion of the solar plant is the end of the first quarter of 2021 but has the potential to be delayed by several months as COVID restrictions are limiting the available workforce and site support.
  • At Otjikoto, development of the Wolfshag underground mine continues to progress on schedule. In the third quarter of 2020, the mining contractor was mobilized, and development of the portal and primary underground ramp has now commenced. Stope ore production is expected to commence in early 2022, in-line with original estimates.
  • At the Gramalote Project, feasibility work continued as planned from the recommencement of drilling on May 11, 2020, with infill resource drilling completed on August 21, 2020. During the third quarter of 2020, work continued to advance for infrastructure design, process plant design, pit design and social initiatives. Resource modelling is anticipated to be completed in November 2020 at which time the final phase of the Gramalote Feasibility Study work will proceed based upon updated resources. The Gramalote Feasibility Study is expected to be completed in the first quarter of 2021.

2020 Third Quarter and First Nine Months Financial Results

Consolidated gold revenue in the third quarter of 2020 was a quarterly record of $487 million from the Company’s three operating mines on sales of 253,200 ounces at an average price of $1,924 per ounce, compared to $311 million on sales of 208,900 ounces at an average price of $1,488 per ounce in the third quarter of 2019 (excluding discontinued operations). Compared to the third quarter of 2019, consolidated gold revenue increased significantly by 57% ($176 million), of which 36% related to the increase in the average realized gold price and 21% to the increase in gold ounces sold (mainly due to the higher gold production).

For the third quarter of 2020, cash flow provided by operating activities was a quarterly record of $301 million compared to $168 million in the third quarter of 2019. This significant increase of $133 million (79%) reflected the significant increase in gold revenue, as a result of higher realized gold prices and sales. 

For the third quarter of 2020, net income was $277 million compared to $66 million for the third quarter of 2019. In the third quarter of 2020, the Company identified a higher sustained long-term gold price as an indicator of impairment reversal for the Masbate Mine resulting in a net impairment reversal of $122 million (pre-tax $174 million impairment reversal less $52 million deferred tax expense). Net income attributable to the shareholders of the Company was $263 million ($0.25 per share) compared to $56 million ($0.05 per share) for the third quarter of 2019. Adjusted net income attributable to shareholders of the Company was $161 million ($0.15 per share) compared to $85 million ($0.08 per share) in the third quarter of 2019.

Consolidated gold revenue for the first nine months of 2020 was a year-to-date record of $1.3 billion on sales of 749,800 ounces at an average price of $1,746 per ounce, compared to $842 million on sales of 616,000 ounces at an average price of $1,367 per ounce in the first nine months of 2019 (excluding discontinued operations). Compared to the first nine months of 2019, consolidated gold revenue increased significantly by 56% ($467 million), of which 34% related to the increase in the average realized gold price and 22% to the increase in gold ounces sold.

For the first nine months of 2020, cash flow provided by operating activities was a year-to-date record of $755 million, a significant increase of $408 million (118%) compared to the first nine months of 2019, as a result of higher realized gold prices and sales. 

For the first nine months of 2020, net income was $498 million compared to $133 million for the first nine months of 2019. Net income attributable to the shareholders of the Company was $460 million ($0.44 per share) compared to $116 million ($0.11 per share) for the first nine months of 2019. Adjusted net income attributable to the shareholders of the Company was $368 million ($0.35 per share) compared to adjusted net income of $154 million ($0.15 per share) for the first nine months of 2019.

Liquidity and Capital Resources

B2Gold maintains a strong financial position and liquidity. During the third quarter of 2020, the Company fully repaid the outstanding RCF balance of $425 million with the full amount of the $600 million RCF now undrawn and available. In addition, at September 30, 2020, the Company had cash and cash equivalents of $365 million (December 31, 2019 – $141 million) and working capital of $356 million (December 31, 2019 – $242 million).

Due to the Company’s strong net positive cash position, strong operating results and the current higher gold price environment, B2Gold’s quarterly dividend rate was increased in the third quarter of 2020 by 100% to $0.04 per common share (or an annualized rate of $0.16 per common share), which was reflected in the third quarter dividend paid on September 30, 2020.

Based on current assumptions, including an average gold price of $1,900 per ounce for the balance of 2020, the Company expects to generate cashflows from operating activities of more than $900 million in 2020. The Company’s ongoing strategy is to continue to maximize profitable production from its mines, grow its mineral reserves, utilize cash flow to continue the dividend payment, further advance its pipeline of development and exploration projects and evaluate growth opportunities.

Operations

Mine-by-mine gold production in the third quarter and first nine months of 2020 (including the Company’s approximate 34% share of Calibre’s production) was as follows:  

MineQ3 2020
Gold Production
(ounces)
First Nine Months 2020
Gold Production
(ounces)
2020
Annual Guidance
Gold Production
(ounces)
Fekola152,535463,970590,000 – 620,000
Masbate53,607147,133200,000 – 210,000
Otjikoto42,591127,836165,000 – 175,000
B2Gold Consolidated (1)248,733738,939955,000 – 1,005,000
Equity interest in Calibre (2)15,08031,32945,000 – 50,000 (3)
Total263,813770,2681,000,000 – 1,055,000 (3)
(1)“B2Gold Consolidated” – gold production is presented on a 100% basis, as B2Gold fully consolidates the results of its Fekola, Masbate and Otjikoto mines in its consolidated financial statements (even though it does not own 100% of these operations).   
(2)“Equity interest in Calibre” – represents the Company’s approximate 34% indirect share of the operations of Calibre’s El Limon and La Libertad mines in Nicaragua. B2Gold applies the equity method of accounting for its ownership interest in Calibre.   
(3)On June 24, 2020, Calibre provided its revised 2020 production guidance following the temporary suspension of its Nicaraguan operations due to COVID-19. The Company’s attributable gold production from Calibre is now estimated to be between 37,000 and 42,000 ounces for 2020 (or 8,000 ounces lower than the original estimate of between 45,000 and 50,000 ounces of gold).

Mine-by-mine cash operating costs per ounce (on a per ounce of gold produced basis) in the third quarter and first nine months of 2020 were as follows (presented on a 100% basis):  

MineQ3 2020
Cash Operating Costs
($ per ounce produced)
First Nine Months 2020
Cash Operating Costs
($ per ounce produced)
2020
Annual Guidance
Cash Operating Costs
($ per ounce)
Fekola$333$294$285 – $325
Masbate$615$646$665 – $705
Otjikoto$435$432$480 – $520
B2Gold Consolidated$411$388$395 – $440
Equity interest in Calibre$831$819$720 – $760
Total$435$405$415 – $455

Mine-by-mine cash operating costs per ounce (on a per ounce of gold sold basis) in the third quarter and first nine months of 2020 were as follows (presented on a 100% basis):  

MineQ3 2020
Cash Operating Costs
($ per ounce sold)
First Nine Months 2020
Cash Operating Costs
($ per ounce sold)
2020
Annual Guidance
Cash Operating Costs
($ per ounce)
Fekola$341$299$285 – $325
Masbate$655$684$665 – $705
Otjikoto$423$419$480 – $520
B2Gold Consolidated$414$391$395 – $440
Equity interest in Calibre$817$822$720 – $760
Total$437$409$415 – $455

Mine-by-mine AISC (on a per ounce of gold sold basis) in the third quarter and first nine months of 2020 were as follows (presented on a 100% basis):  

MineQ3 2020
AISC
($ per ounce sold)
First Nine Months
2020
AISC
($ per ounce sold)
2020
Annual Guidance
AISC
($ per ounce)
Fekola$584$556$555 – $595
Masbate$1,072$1,012$965 – $1,005
Otjikoto$917$841$1,010 – $1,050
B2Gold Consolidated$766$726$765 – $805
Equity interest in Calibre$1,090$1,090$1,020 – $1,060
Total$785$740$780 – $820

Fekola Gold Mine – Mali

The Fekola Mine in Mali continued its very strong operational performance in the third quarter of 2020 with gold production of 152,535 ounces, above budget by 2% (2,535 ounces), as processed grade and recovery both exceeded budget and which more than offset lower-than-budgeted throughput in the quarter due to additional downtime for planned mill expansion tie-ins and a full SAG mill reline. Compared to the third quarter of 2019, gold production was significantly higher by 36% (40,214 ounces). Fekola’s significant increase in gold production over the third quarter of 2019 was mainly due to the expansion of the Fekola mining fleet and optimization of the pit designs and mine plan for 2020, which have provided access to higher grade portions of the Fekola deposit earlier than anticipated in previous mine plans. As at September 30, 2020, the Fekola Mine achieved 255 days without an LTI.

For the third quarter of 2020, mill feed grade was 3.22 grams per tonne (“g/t”) compared to budget of 2.93 g/t and 2.16 g/t in the third quarter of 2019; mill throughput was 1.56 million tonnes compared to budget of 1.70 million tonnes and 1.70 million tonnes in the third quarter of 2019; and gold recovery averaged 94.6% compared to budget of 94.0% and 94.1% in the third quarter of 2019.

For the third quarter of 2020, Fekola’s cash operating costs were $333 per ounce produced ($341 per gold ounce sold), slightly above budget (1%). Compared to the third quarter of 2019, Fekola’s cash operating costs were lower by $50 per ounce produced (13%), mainly as a result of higher gold production. Fekola’s AISC for the third quarter of 2020 were $584 per ounce sold, below budget by $20 per ounce (3%) and well below the third quarter of 2019 by $58 per ounce (9%). 

For the first nine months of 2020, the Fekola Mine produced 463,970 ounces of gold, well above budget by 5% (22,970 ounces) and significantly higher than the first nine months of 2019 by 38% (127,403 ounces). Through effective mine planning and a successful stockpiling strategy, Fekola was able to exceed its gold production budget during the construction of its mill expansion in 2020.

For the first nine months of 2020, Fekola’s cash operating costs were $294 per ounce produced ($299 per gold ounce sold), below budget by $11 per ounce (4%) and significantly lower than the first nine months of 2019 by $84 per ounce (22%). Fekola’s AISC were $556 per ounce sold, well below both budget by $34 per ounce (6%) and the first nine months of 2019 by $70 per ounce (11%). Fekola’s AISC for the first nine months of 2020 included lower-than-budgeted sustaining capital expenditures relating to lower pre-stripping costs for the Fekola Pit Phases 5 and 6 (which resulted from mining sequence changes and are no longer expected to be incurred in 2020) and approximately $4 million of overall sustaining costs savings versus budget on the tailings storage facility project completed during the year. The Company expects total sustaining capital expenditures for the Fekola Mine for full-year 2020 to be approximately $8 million lower than budget.

Capital expenditures in the third quarter of 2020 totaled $29 million primarily consisting of $10 million for the mining fleet expansion, $11 million for the processing plant expansion, $3 million for pre-stripping and $1 million for the solar plant. Capital expenditures in the first nine months of 2020 totaled $156 million primarily consisting of $58 million for the mining fleet expansion, $39 million for the processing plant expansion, $21 million for pre-stripping, $19 million for the solar plant and $4 million for the tailings storage facilities.

The Fekola Mine continues to operate unimpeded and no operational days were lost due to the recent political developments in Mali. With the establishment of a new interim government in September 2020, expected to lead Mali through to new presidential and legislative elections within 18 months, the Economic Community of West African States has now lifted its sanctions on Mali, including air, border and financial restrictions. B2Gold will continue to work with regional and national governments to ensure that its mining operations continue normally, providing important economic benefits to all stakeholders, including our employees, governments and the communities around the mine.

For full-year 2020, the Fekola Mine is expected to produce at the upper end of its guidance range of between 590,000 and 620,000 ounces of gold. Fekola’s cash operating costs are expected to be between $285 and $325 per ounce and AISC are expected to be near the upper end of its guidance range of between $555 and $595 per ounce (due to increased royalties as a result of higher gold prices).

Fekola Mine Expansion

On September 10, 2020, the Company announced the successful commissioning of the Fekola mill expansion to 7.5 Mtpa (an increase of 1.5 Mtpa from an assumed base rate of 6 Mtpa), ahead of the scheduled completion date of September 30, 2020. The Fekola mill has the potential to run above the annualized throughput rate of 7.5 Mtpa and analysis is currently underway to determine the optimum throughput rate (using ore blends comparable to those planned for 2021 and future production). Commissioning included completion of all major construction activities associated with the Fekola mill expansion, as well as successful execution of a process performance test to compare with design expectations. Four days after start-up, a 5-day mill performance test was conducted from August 26 to August 30, 2020. The results of the performance test exceeded design in throughput, gold recovery, grind and availability over the 5-day day period. In addition, substantially all of the Fekola mine fleet expansion equipment planned for 2020 (including excavators, trucks, and drill rigs) have now arrived on site and are operational, with the overall mine expansion now materially complete. The final non-sustaining costs incurred for the plant expansion were approximately $13 million higher than budget, of which the majority of overruns related to COVID-19 costs and increased labour and camp costs.

Fekola Solar Plant

Remobilization of the solar plant construction group began in mid-September 2020 (following a temporary suspension of construction activities in April 2020 due to COVID-19) and will continue to ramp up as camp space becomes available. The target date for completion of the solar plant is the end of the first quarter of 2021 but has the potential to be delayed by several months as COVID restrictions are limiting the available workforce and site support. The existing HFO and diesel power plant have an installed capacity of 64 megawatts while Fekola’s expanded mill facilities require only approximately 40 megawatts for continuous operations. The solar plant is therefore not a necessary component of the mill expansion but is expected to reduce Fekola’s operating costs and emissions by decreasing power plant fuel consumption and maintenance costs.

B2Gold’s Strong Investment and Partnership in Mali  

B2Gold is one of the largest Canadian and foreign investors in Mali, with total investment to date of approximately $1 billion and the Company continues to have a strong and mutually beneficial relationship with the Government of Mali. As B2Gold’s 20% partner at the Fekola Mine, the State of Mali is a direct economic beneficiary of the Fekola Mine’s operating results, and in addition the mine employs more than 2,200 Malians. Since the commencement of commercial production in late 2017, the Fekola Mine has provided important economic benefits and revenues to both local Malians and the Government of Mali. For fiscal 2017 to 2019, total employee wages and benefits paid by the Company were approximately $140 million, and total payments to the Government of Mali by the Company were approximately $276 million. Payments to the Government of Mali included corporate income tax, withholding taxes, royalties and production-based taxes, and priority dividends, which are payable each year on the first 10% tranche of the State of Mali’s overall 20% ownership interest in the Fekola Mine.

In addition to the priority dividends payable annually to the State of Mali, the second 10% tranche of the State’s interest in the Fekola Mine will also attract ordinary dividends. Based on current assumptions and following the final repayment of B2Gold’s initial intercompany loans for construction of the Fekola Mine, the Company expects that distribution of ordinary dividends to the State will commence in late 2020.

The Fekola Convention, as amended, was established under the 2012 Mining Code and governs the legal, administrative, tax, economic, mining, social and environmental conditions under which B2Gold operates the Fekola Mine and is enforceable between the parties for the term of the Fekola Mine mining permit, an initial 30 year period, renewable for successive periods of 10 years. A new mining code was adopted in Mali in September 2019 (the “2019 Mining Code”), which outlines certain tax and customs stabilization of existing mining conventions and the enforceability of the existing conventions, including the Fekola Convention. The 2019 Mining Code expressly states that mining titles that are valid at the time of the entry into force of the 2019 Mining Code remain valid for their term and for the substance for which they have been issued. In addition, the mining conventions in force at the date of the 2019 Mining Code, including the Fekola Convention, remain valid for their term and benefit from the stabilization of their tax and customs regime as provided under such mining convention.

Masbate Gold Mine – the Philippines

The Masbate Mine in the Philippines also continued to perform well through the third quarter of 2020, producing 53,607 ounces of gold, substantially in-line with budget (of 54,198 ounces), and 4% higher (2,061 ounces) compared to the third quarter of 2019. Following a magnitude 6.6 earthquake approximately 90 kilometres from the mine site on August 18, 2020, Masbate’s mining and processing operations were temporarily suspended for five and six days, respectively, for inspections mandated by the Philippines Mines and Geo-sciences Bureau. Planned maintenance was performed ahead of schedule during the shutdown period, and normal operations continued after the inspections determined that there was no damage to the mine from the earthquake. The Company worked with local communities to provide medical, food, and other support to the impacted areas. In addition, operations continue to run normally at the Masbate Mine, following Typhoon Goni which first made landfall in the Philippines on November 1, 2020. The Masbate Mine continued its remarkable safety performance, extending the number of days without an LTI to 684 days as at September 30, 2020.

For the third quarter of 2020, mill feed grade was 1.05 g/t compared to budget of 1.05 g/t and 1.09 g/t in the third quarter of 2019; mill throughput was 1.97 million tonnes compared to budget of 2.1 million tonnes and 2.0 million tonnes in the third quarter of 2019; and gold recovery averaged 81.1% compared to budget of 76.4% and 72.4% in the third quarter of 2019. Average gold recoveries were above budget due to mining more oxide ore than budgeted.

Masbate’s third quarter of 2020 cash operating costs were $615 per ounce produced ($655 per ounce sold), well-below budget by $33 per ounce produced (5%) and slightly lower (1%) than the third quarter of 2019. The favourable budget variance was attributable to lower-than-budgeted mining and processing costs, as fuel prices, tonnes mined, and waste stripping were all below budget for the third quarter of 2020. Masbate’s AISC for the third quarter of 2020 were $1,072 per ounce sold (Q3 2019 – $833 per ounce sold), above budget by $162 per ounce (18%). This resulted from lower-than-budgeted gold ounces sold during the period (due to the timing of gold shipments) and higher-than-budgeted sustaining capital expenditures resulting from a backlog of COVID-19 delayed equipment purchases and projects that were scheduled for earlier in the year. The remaining backlog of capital purchases is expected to be incurred in the fourth quarter of 2020 and the Company expects that Masbate’s total sustaining capital expenditures for 2020 will be approximately $7 million higher than budget as a result of accelerating 2021 capital expenditures. However, for the full-year 2020, Masbate’s AISC are expected to be within guidance of between $965 and $1,005 per ounce.

For the first nine months of 2020, the Masbate Mine produced 147,133 ounces of gold, in-line with budget (of 147,381 ounces) and 12% (19,466 ounces) lower compared to the first nine months of 2019 (as planned, mainly due to lower head grade). The on-budget production was achieved despite a 6-day mandated mill shutdown following an earthquake on August 18, 2020 (for inspections which confirmed that there was no damage to the mine from the earthquake) and COVID-19-related constraints (including a five-day mining shutdown in the first quarter of 2020 and working with a reduced workforce through the second quarter of 2020). 

For the first nine months of 2020, Masbate’s cash operating costs were $646 per ounce produced ($684 per gold ounce sold), well below budget by $60 per ounce (8%). Compared to the first nine months of 2019, cash operating costs were higher by $82 per ounce produced (15%) due to lower production (as planned, mainly due to lower head grade). Masbate’s AISC for the first nine months of 2019 were $1,012 per ounce sold (first nine months of 2019 – $773 per ounce sold), below budget by $34 per ounce (3%).  

Capital expenditures for the third quarter of 2020 totaled $10 million, including $5 million for mobile equipment purchases and rebuilds, $2 million for pre-stripping and $1 million for tailings storage facility projects. Capital expenditures in the first nine months of 2020 totaled $19 million, including mobile equipment acquisition costs and rebuilds of $8 million, processing equipment replacement costs of $3 million, pre-stripping costs of $3 million and $2 million for tailings storage facility projects.

For full-year 2020, the Masbate Mine is expected to produce between 200,000 and 210,000 ounces of gold, from the Main Vein and Montana Pits. Masbate’s cash operating costs are expected to be at or below the low end of its guidance range of between $665 and $705 per ounce and AISC are expected to be within its guidance range of between $965 and $1,005 per ounce.

Otjikoto Gold Mine – Namibia

The Otjikoto Mine in Namibia also had a solid third quarter of 2020, producing 42,591 ounces of gold, 2% (985 ounces) above budget, as processed tonnes and recoveries were both slightly better than budget. Compared to the third quarter of 2019, gold production, as planned, was lower by 14% (6,820 ounces), due to fewer high-grade ore tonnes being mined from the Wolfshag Phase 2 Pit (when compared to the third quarter of 2019). Ore production from the Wolfshag Phase 2 Pit had resumed in the second half of 2019 following pre-stripping. The Otjikoto Mine continued its remarkable safety performance, extending the number of days without an LTI to 918 days as at September 30, 2020.

For the third quarter of 2020, mill feed grade was 1.53 g/t compared to budget of 1.54 g/t and 1.84 g/t in the third quarter of 2019; mill throughput was 0.88 million tonnes compared to budget of 0.86 million tonnes and 0.84 million tonnes in the third quarter of 2019; and gold recovery averaged 98.2% compared to budget of 98.0% and 98.8% in the third quarter of 2019.

For the third quarter of 2020, Otjikoto’s cash operating costs were $435 per ounce produced ($423 per ounce sold), well-below budget by $66 per ounce (13%). This resulted mainly from higher gold production, lower fuel prices and a weaker than budgeted Namibian dollar. Compared to the third quarter of 2019, Otjikoto’s cash operating costs were higher by $41 per ounce (10%), as a result of lower production (as planned) when compared to the third quarter of 2019. Otjikoto’s AISC for the third quarter of 2020 were $917 per ounce sold (Q3 2019 – $743 per ounce sold), significantly below budget by $174 per ounce (16%). AISC were lower than budget as a result of lower-than-budgeted cash operating costs, higher-than-budgeted gold ounces sold and lower-than-budgeted sustaining capital expenditures. Sustaining capital expenditures for the third quarter of 2020 were below budget by $3 million (and for the first nine months of 2020 were below budget by $13 million). For the full-year 2020, the Company expects permanent sustaining capital expenditure savings of $10 million mainly relating to pre-stripping. All other budgeted capital expenditures are expected to be incurred by the end of the year.

For the first nine months of 2020, the Otjikoto Mine produced 127,836 ounces of gold, above budget by 3% (3,690 ounces) and 7% (8,292 ounces) higher than the first nine months of 2019.

For the first nine months of 2020, Otjikoto’s cash operating costs were $432 per ounce produced ($419 per ounce sold), well below both budget by $65 per ounce (13%) and the first nine months of 2019 by $69 per ounce (14%). Otjikoto’s AISC were $841 per ounce sold, significantly below budget by $179 per ounce (18%) and well below the first nine months of 2019 by $54 per ounce (6%).  

Capital expenditures in the third quarter of 2020 totaled $19 million, primarily consisting of $13 million for pre-stripping in the Otjikoto Phases 3 and 4 and Wolfshag Phase 3 pits, $3 million for mobile equipment rebuilds and replacements and $2 million for Wolfshag underground development. For the first nine months of 2020 capital expenditures totaled $42 million, primarily consisting of $31 million for pre-stripping, $6 million for mobile equipment rebuilds and replacements and $3 million for Wolfshag underground development.

Development of the Wolfshag underground mine (the initial underground Mineral Reserve estimate for the down-plunge extension of the Wolfshag orebody included 210,000 ounces of gold in 1.2 million tonnes of ore at 5.57 g/t gold) continues to progress on schedule. Engineering of the underground mine continued and an underground mining contractor was appointed for the development of the underground workings up to the production stopes. In the third quarter of 2020, the mining contractor was mobilized, and development of the portal and primary underground ramp has now commenced. Stope ore production is expected to commence in early 2022, in-line with original estimates.

Exploration at Otjikoto continues to focus on drilling down plunge on the Wolfshag and Otjikoto deposits which remain open at depth as well as testing stratigraphy east of Wolfshag for new mineralized horizons.

For full-year 2020, the Otjikoto Mine is forecast to produce between 165,000 and 175,000 ounces of gold, from the Otjikoto and Wolfshag Pits. Otjikoto’s cash operating costs are expected to be at or below the low end of its guidance range of between $480 and $520 per ounce and AISC are also expected to be at or below the low end of its guidance range of between $1,010 and $1,050 per ounce.

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