B2Gold Corp.
TSX : BTO
OTCQX : BGLPF
PINK SHEETS : BGLPF

B2Gold Corp.

November 10, 2011 08:40 ET

B2Gold Reports on Third Quarter 2011 Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 10, 2011) - B2Gold Corp. (TSX:BTO)(OTCQX:BGLPF)(PINK SHEETS:BGLPF) ("B2Gold" or the "Company") reports its results from its operations for the third quarter ended September 30, 2011. All dollar figures are in United States dollars unless otherwise indicated. Highlights from the third quarter include:

2011 Third Quarter Results

  • Adjusted net earnings(1) of $18.3 million ($0.05 per share), an increase of 107% over the third quarter of 2010
  • Cash flow from operations of $20.0 million ($0.06 per share)
  • Cash and cash equivalents of $73.6 million at quarter end
  • Gold revenue of $50.5 million
  • Gold sales of 29,672 ounces
  • Gold production of 34,303 ounces
  • Consolidated operating cash cost of $529 per ounce of gold

2011 Year to Date Results

  • Adjusted net earnings(1) of $57.2 million ($0.17 per share)
  • Cash flow from operations of $73.6 million
  • Gold revenue of $158.5 million
  • Gold production of 105,796 ounces
  • Consolidated operating cash cost of $522 per ounce of gold
  • Full year gold production and operating cash cost per ounce guidance maintained

Financial Results

B2Gold reported adjusted net earnings(1) for the quarter, of $18.3 million ($0.05 per share) compared to $8.8 million ($0.03 per share) in the same period last year. Adjusted net income in the third quarter of 2011 was calculated by excluding non-cash deferred income tax expenses of $3.2 million, non-cash share-based compensation expense of $4.0 million, and unrealized foreign exchange losses of $2.0 million.

Cash flow from operating activities for the third quarter of 2011 was $20.0 million ($0.06 per share), compared to $13.5 million ($0.04 per share) in the third quarter of 2010, representing an increase of 48%. The increase reflects the Company's continued strong operating performance and strength in gold prices. As a result, the Company remains in a strong financial position with $73.6 million in cash as at September 30, 2011.

(1) Adjusted earnings is a non GAAP measure and consists of net earnings, adjusted to exclude deferred income taxes, stock based compensation and foreign exchange gain/losses. In addition, the adjusted loss in 2010 also excludes a $24.1 million gain from the sale of the Company's interest in the Kupol East and West licenses and a non-cash derivative loss relating to common share purchase warrants.

Gold Revenue

Gold revenue for the third quarter of 2011 was $50.5 million on sales of 29,672 ounces compared to $54.5 million on sales of 36,030 ounces in the 2011 second quarter and to $40.2 million on sales of 32,300 ounces in the 2010 third quarter. The decrease in gold revenue from the previous quarter in 2011 was mainly due to the Company's decision to defer the sale of 3,907 ounces of gold to the fourth quarter anticipating higher gold prices. The market value of the deferred gold sales based on the September 30, 2011 spot gold price of $1,629 per ounce was $6.4 million. Gold sales would have increased to a sixth consecutive record of $56.9 million had this gold been sold at September 30, 2011. Subsequent to the quarter end, the Company then sold the ounces held back at $1,675 per ounce. Gold sales increased by 26% compared to the corresponding quarter in 2010, mainly due to the significant increase in the average gold price received of $1,701 per ounce in the current quarter compared to $1,244 per ounce in the same quarter in 2010.

In the third quarter, La Libertad Mine accounted for $34.1 million of gold revenue from the sale of 19,972 ounces while $16.4 million was contributed by the Limon Mine from the sale of 9,700 ounces.

Liquidity and Capital Resources

The Company ended the quarter with $73.6 million in cash and cash equivalents, compared to $78.9 million at the end of the second quarter 2011. B2Gold has no debt and remains unhedged. Working capital at quarter end was $93.6 million compared to working capital of $95.8 million at the end of the second quarter 2011.

Operations

The Company's consolidated gold production during the third quarter of 2011 was 34,303 ounces at an operating cash cost of $529 per ounce and total cash cost of $620 per ounce compared to 30,675 ounces produced over the same period last year at an operating cash cost of $517 per ounce and a total cash cost of $581 per ounce. The incremental increase to total cash costs between periods relates to higher royalty costs resulting from higher gold spot prices.

Based on the positive operating results to date (in spite of the unbudgeted closure of Limon's Santa Pancha underground mine and pit #2 in July and August (see news release dated July 28, 2011)), the Company is projecting another record year for gold production in 2011, with gold production at La Libertad Mine projected to be between 93,000 and 99,000 ounces at an operating cash cost of $440 to $460 per ounce and the Limon Mine forecast to produce between 42,000 to 46,000 ounces of gold at an operating cash cost of $720 to $740 per ounce.

Based on year to date results, the Company maintains its 2011 consolidated guidance to produce approximately 135,000 to 145,000 ounces of gold at average operating cash costs of approximately $540 - $560 per ounce.

La Libertad Mine, Nicaragua (B2Gold 100%)

La Libertad open pit Mine continued to perform well in the third quarter of 2011 producing 24,227 ounces of gold at an operating cash cost of $456 per ounce and a total cash cost of $543 per ounce from 484,872 tonnes of ore milled at an average grade of 1.72 grams per tonne ("g/t"). This compares to the budget of 23,076 ounces at an operating cash cost of $436 per ounce.

Gold production in the third quarter was higher than budgeted production mainly due to higher gold recoveries of 91% compared to budget of 87%, and higher grade ore than budget. The higher gold recovery was the result of upgrades to the plant during 2011 and 2010. Mill throughput averaged 5,270 tonnes of ore per day versus the budget of 5,442 tonnes of ore per day at an average feed grade of 1.72 g/t versus budget of 1.65 g/t.

Per ounce operating cash costs for La Libertad in the third quarter were slightly higher than budget mainly due to increases in the cost of electrical power, diesel fuel and mill reagents, primarily offset by higher than budgeted gold production.

During the first nine months of 2011, La Libertad Mine generated gold revenue of $107.7 million from the sale of 71,011 ounces at an average price of $1,517 per ounce, compared to $45.1 million from the sale of 37,244 ounces at an average price of $1,212 per ounce in the same period of 2010. Total gold production was 73,409 ounces at an operating cash cost of $453 per ounce compared to budget of 67,280 ounces at $462 per ounce. Higher production for the year-to-date was mainly due to higher gold recoveries and mill head grades. Operating expenses have been marginally higher than budget but due to increased gold production operating costs per ounce have been better than projected.

Production guidance for La Libertad Mine remains between 93,000 to 99,000 ounces of gold in 2011, an increase of 5,000 ounces over the original estimate, with projected operating cash costs for the year unchanged at approximately $440 to $460 per ounce of gold.

The 2011 capital expenditure budget for La Libertad totals approximately $28.3 million. The majority of this capital is being expended on pre-stripping to access future ore by enlarging existing pits, a tailings pond expansion and mill upgrades.

During the second quarter of 2011, the board of directors of the Company approved a 2011 development budget for the Jabali resource of $15.2 million. Expenditures are for engineering, environmental and permitting, haul roads and mobile mining equipment. The Company expects to commence hauling higher grade colluvium material in November 2011 with actual hard rock mining commencing in late 2012. The Jabali resource is 3.55 million tonnes at a gold grade of 4.58 g/t containing 522,000 ounces of gold. The new resource at Jabali, with infill drilling will significantly increase Libertad's seven year mine life and result in the delivery of higher grade ore to the mill which will result in higher annual gold production with minimal capital expenditure.

Based on the successful exploration drilling results to date, the 2011 exploration budget for La Libertad property has been increased to $8.75 million to further explore the 20 km long gold belt and to drill the Jabali deposit to indicated resource status. During the third quarter, the Company announced further positive results from the exploration drilling program at Jabali increasing the size of the Jabali Zones (see press release dated September 15, 2011). Drilling is ongoing. Further drill results will be released later this year.

Limon Mine, Nicaragua (B2Gold 95%)

The Limon open pit and underground Mine produced 10,076 ounces of gold during the third quarter of 2011 at an operating cash cost of $705 per ounce and a total cash cost of $805 per ounce from 97,624 tonnes of ore milled at an average grade of 3.57 g/t at a processed gold recovery of 91%, compared to budget of 12,360 ounces at an operating cash cost of $675 per ounce.

The lower than budgeted gold production and higher cash costs was due to the closure of the Santa Pancha underground mine (and pit #2) for the months of July and August for remediation, due to a force majeure event on June 18, 2011 when heavy rains caused a portion of the underground mine workings to begin flooding. These two ore sources comprise the highest grade ore bodies in Limon's production profile. As a result, ore from lower grade open pit sources was milled during the quarter. Both areas were reopened for production in September. The Limon Mine processed 97,624 tonnes of ore at an average grade of 3.57 g/t at a processed gold recovery of 91% compared to budget of 97,074 tonnes at a grade of 4.4 g/t at a processed gold recovery of 89%.

For the nine months ended September 30, 2011, the Limon Mine generated gold revenue of $50.8 million from the sale of 33,445 ounces at an average price of $1,518 per ounce. The operating cash cost per ounce was $680 compared to budget of $741 per ounce and was lower than budget mainly due to a higher percentage of ore being supplied from nearby high grade open pits rather than from the underground operations in the first half of this year.

For the year, the Company maintains its guidance that Limon will produce between 42,000 and 46,000 ounces of gold at an operating cash cost of $720 to $740 per ounce.

The Company has budgeted capital expenditures at Limon for 2011 of $24.5 million. The majority of this capital expenditure is funding Santa Pancha deep underground development and equipment purchases, construction of a new tailings pond, process plant upgrades and spares, and several infrastructure upgrades. Capital expenditures for 2012 are expected to be lower than 2011.

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. The Company believes there is potential to further increase the current five year 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.

B2Gold / Auryx Gold Corp. ("Auryx") Business Combination

On October 11, 2011, the Company and Auryx announced that they have signed a binding agreement (the transaction) to combine the two companies at the agreed exchange ratio of 0.23 B2Gold shares plus a cash payment of $0.001 per Auryx common share. Based on the 20 day volume weighted average share price of B2Gold of Cdn$3.81 per share, the transaction was valued at a total equity value of approximately Cdn$160 million based on the fully-diluted in-the-money shares outstanding of Auryx.

The combination of B2Gold and Auryx would result in a merged entity holding a 92% interest in the Otjikoto gold project in Namibia, Africa and a 100% interest in two additional exploration projects in Namibia. The Otjikoto gold project has forecast average annual production of over 100,000 ounces of gold over a ten year life of mine based on a Preliminary Economic Assessment released by Auryx in September 2011. Auryx's Otjikoto project hosts a National Instrument ("NI") 43-101 compliant indicated resource of 25 million tonnes grading 1.44 g/t gold for 1.2 million ounces of gold. Otjikoto also hosts a NI 43-101 compliant inferred resource of 16 million tonnes grading 1.31 g/t gold for 0.7 million ounces of gold.

The Auryx Board of Directors has approved the transaction and unanimously recommended that Auryx shareholders vote in favour of the transaction. The B2Gold Board of Directors has also unanimously approved the transaction.

Upon completion of the transaction, B2Gold will have approximately 381.9 million common shares issued and outstanding, with former Auryx shareholders holding approximately 10.5% of the fully-diluted in the- money shares outstanding of the combined company.

The transaction is subject to, among other things, the receipt of all necessary regulatory and court approvals, receipt of all necessary consents from the government of Namibia, and obtaining shareholder approval of the Transaction at a meeting of the Auryx shareholders to be held no later than December 21, 2011. Closing of the transaction is set to occur by no later than December 31, 2011.

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 kilometres ("km") northeast of Medellin in central Colombia.

During the third quarter, the Company released additional positive results from the drilling and prefeasibility work underway on the Gramalote Project (see news release dated September 19, 2011). Highlights from the 2011 prefeasibility and exploration work include positive metallurgical test results showing in excess of 90% recovery, encouraging drill results from the outside targets and consistent grade from the infill drilling on the Gramalote Ridge resource. Exploration drill results indicate the Gramalote Ride Zone remains open.

B2Gold and AngloGold are completing a 2011 prefeasibility and exploration budget of $37.6 million. This budget includes 29,000 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 and environmental studies. Each joint venture partner will fund their share of expenditures pro rata. The two companies plan to continue exploration and conduct prefeasibility work for the remainder of 2011 and into 2012, with a goal of completing a prefeasibility study by June 2012 and a final feasibility study by October 2013.

Exploration

In addition to exploration at La Libertad and Limon properties and the Gramalote project, exploration is ongoing on the Trebol property in Nicaragua and the Cebollati project in Uruguay.

The Company has recently announced positive drilling and trenching results from exploration activities on the Trebol property (see news release dated August 23, 2011). Drill results indicate numerous good grade gold bearing zones and trenching results have discovered a new zone to the east. Trenching and soil sampling is continuing and further drilling is scheduled to recommence in January 2012. The potential is for flat lying near surface gold deposits with low strip ratios and high grade feeder zones.

On the Cebollati property, recently announced positive drill results has confirmed the presence of significant gold bearing zones (see news release dated September 16, 2011). B2Gold's management believes the Cebollati property has the potential to host multiple zones of potentially economic gold mineralization. Surface sampling, trenching and drilling is ongoing.

In total, B2Gold's combined 2011 exploration and pre-feasibility budgets total approximately $39 million and is being funded by cash flow from operations. Combined drilling for all projects total approximately 84,000 metres in 2011. Further drill results will be released later this year.

Outlook

In conclusion, given our proven technical team, strong operational and financial performance, and high quality development and exploration projects, B2Gold is well positioned to continue our growth as an intermediate gold producer from existing assets and potential acquisitions. With our strong cash position and impressive cash from operations, we can continue to advance all of our planned projects in 2011 without requiring further funding, and end the year in a strong financial position.

Conference Call Details

B2Gold will host a conference call and webcast to discuss third quarter results on Thursday, November 10, 2011 at 10:00 am PST / 1:00 pm EST. You may access the call by dialing the operator at 416-340-2216 or toll free 1-866-226-1792 prior to the scheduled start time. A playback version of the call will be available for one week after the call by dialing 905-694-9451 or within North America call toll free 1-800-408-3053 (pass code: 1803614). The webcast of the call can be accessed from B2Gold's web site at www.b2gold.com.

ON BEHALF OF B2GOLD CORP.

Clive T. Johnson, President and Chief Executive Officer

For more information on B2Gold please visit the Company web site at www.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.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Expressed in thousands of United States dollars, except shares and per share amounts)
(Unaudited)
For the three months
ended
Sep. 30, 2011
For the three months
ended
Sep. 30, 2010
For the nine months
ended
Sep. 30, 2011
For the nine months
ended
Sep. 30, 2010
Gold revenue $ 50,459 $ 40,191 $ 158,458 $ 80,508
Cost of sales
Production costs (15,350 ) (17,704 ) (54,078 ) (44,625 )
Depreciation and depletion (5,720 ) (4,244 ) (18,249 ) (9,448 )
Royalties and production taxes (3,126 ) (1,947 ) (8,746 ) (4,419 )
Other – (Limon Mine underground flood) (692 ) - (692 ) -
Total cost of sales (24,888 ) (23,895 ) (81,765 ) (58,492 )
Gross profit 25,571 16,296 76,693 22,016
General and administrative (3,358 ) (3,529 ) (12,616 ) (10,441 )
Share-based payments (4,013 ) (483 ) (5,245 ) (1,998 )
Accretion of mine restoration provisions (332 ) (301 ) (886 ) (987 )
Foreign exchange losses (2,031 ) (417 ) (865 ) (335 )
Gain on sale of interest in Kupol EW licenses - 24,062 - 24,062
Other (455 ) (1,142 ) 216 (3,052 )
Operating income 15,382 34,486 57,297 29,265
Interest and financing costs (61 ) (1,260 ) (543 ) (3,493 )
Loss on derivative instrument ("Share purchase
warrants")

-

(3,952
)
-

(8,171
)
Other (1,680 ) (852 ) (2,410 ) (852 )
Income before withholding and other taxes 13,641 28,422 54,344 16,749
Income and other taxes (1,393 ) (366 ) (3,272 ) (1,055 )
Deferred income tax expense (3,212 ) - (15,609 ) -
Net income and comprehensive income for the
period

$

9,036

$

28,056

$

35,463

$

15,694
Earnings per share
Basic $ 0.03 $ 0.09 $ 0.11 $ 0.05
Diluted $ 0.03 $ 0.09 $ 0.10 $ 0.05
Weighted average number of common shares
outstanding (in thousands)
Basic $ 339,541 $ 307,462 $ 336,347 $ 300,819
Diluted $ 346,267 $ 324,281 $ 342,161 $ 314,970
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in thousands of United States dollars)
(Unaudited)
For the three months
ended
Sep. 30, 2011
For the three months
ended
Sep. 30, 2010
For the nine months
ended
Sep. 30, 2011
For the nine months
ended
Sep. 30, 2010
Operating activities
Net income for the period $ 9,036 $ 28,056 $ 35,463 $ 15,694
Mine restoration provisions settled (265 ) (258 ) (796 ) (1,152 )
Non-cash charges (credits)
Depreciation and depletion 5,720 4,244 18,249 9,448
Deferred income tax expense 3,212 - 15,609 -
Share-based payments 4,013 483 5,245 1,998
Income tax expense on expired warrants (2,182 ) - (2,182 ) -
Accretion of mine restoration provisions 332 301 886 987
Amortization of deferred financing costs - 1,019 358 2,569
Loss on derivative instrument ("Share purchase warrants")
-

3,952

-

8,171
Gain on sale of interest in Kupol EW licenses
-

(24,062
)
-

(24,062
)
Other 105 (190 ) 737 1,137
Cash provided by operating activities before changes in non-cash working capital
19,971

13,545

73,569

14,790
Changes in non-cash working capital (2,345 ) 1,314 (5,248 ) 25
Cash provided by operating activities after changes in non-cash working capital
17,626

14,859

68,321

14,815
Financing activities
Common shares issued for cash 2,257 2,822 7,242 34,992
Interest & commitment fees (61 ) (317 ) (235 ) (998 )
Credit Facility, net draw downs - (20,000 ) - (13,500 )
Repayment of related party loans (21 ) - (21 ) (959 )
Cash provided by (used by) financing activities 2,175 (17,495 ) 6,986 19,535
Investing activities
Libertad Mine, development & sustaining capital (5,160 ) (1,673 ) (23,033 ) (15,926 )
Libertad Mine, Jabali development (4,476 ) - (4,476 ) -
Libertad, exploration (3,489 ) (1,315 ) (7,537 ) (3,385 )
Limon Mine, development & sustaining capital (4,507 ) (1,518 ) (15,919 ) (3,863 )
Limon, exploration (1,001 ) (796 ) (2,603 ) (2,043 )
Gramalote, exploration and development (4,079 ) (546 ) (10,280 ) (1,916 )
Cebollati, exploration (1,413 ) (548 ) (3,653 ) (548 )
Radius, exploration (475 ) (411 ) (1,914 ) (1,543 )
Calibre, exploration (182 ) (663 ) (879 ) (2,303 )
Cash proceeds from sale of interest in Kupol EW licenses - 33,000 - 33,000
Other (311 ) 1,490 (1,453 ) (299 )
Cash (used by) provided by investing activities (25,093 ) 27,020 (71,747 ) 1,174
Increase (decrease) in cash and cash equivalents (5,292 ) 24,384 3,560 35,524
Cash and cash equivalents, beginning of period 78,864 14,064 70,012 2,924
Cash and cash equivalents, end of period $ 73,572 $ 38,448 $ 73,572 $ 38,448
Supplementary cash flow information
CONSOLIDATED BALANCE SHEETS
(Expressed in thousands of United States dollars)
(Unaudited)
As at
September 30,
2011
As at
December 31,
2010
Assets
Current
Cash and cash equivalents $ 73,572 $ 70,012
Accounts receivable and prepaids 8,121 5,605
Value-added and other tax receivables 10,193 5,525
Inventories 25,135 19,438
Marketable securities
(carried at quoted market value)
483
117,021 101,063
Mining interests 285,618 232,535
Other assets 927 1,056
$ 403,566 $ 334,654
Liabilities
Current
Accounts payable and accrued liabilities $ 21,934 $ 15,003
Current portion of mine restoration provisions 1,383 1,389
Related party loans 81 102
23,398 16,494
Mine restoration provisions 17,916 18,714
Deferred income taxes 22,148 6,539
Other liabilities 3,619 2,776
67,081 44,523
Equity
Shareholders' equity
Share capital
Issued: 344,654,241 common shares
(Dec 31, 2010 – 337,570,170)
326,620 312,829
Contributed surplus 17,071 19,971
Accumulated deficit (7,206 ) (42,669 )
336,485 290,131
$ 403,566 $ 334,654

Subsequent event

Approved by the Board

Clive T. Johnson, Director

Robert J. Gayton, Director

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Expressed in thousands of United States dollars)
(Unaudited)
2011







Share
capital




Contributed surplus





Accumulated deficit





Total
equity

Balance at January 1, 2011 $ 312,829 $ 19,971 $ (42,669 ) $ 290,131
Total comprehensive income for the period - - 35,463 35,463
Shares issued for cash:
Exercise of stock options 5,207 - - 5,207
Exercise of warrants 2,014 - - 2,014
Incentive Plan – shares issued from trust 21 - 21
Shares issued for finder's fee 150 - 150
Share-based payments - expensed - 5,245 - 5,245
Share-based payments – capitalized to mining interests
-

436

-

436
Income tax on expired warrants - (2,182 ) - (2,182 )
Transfer to share capital the fair value assigned to stock options & warrants from contributed surplus

6,399


(6,399
)

-


-
Balance at September 30, 2011 $ 326,620 $ 17,071 $ (7,206 ) $ 336,485
2010







Share
capital




Contributed surplus





Accumulated deficit





Total
equity

Balance at January 1, 2010 $ 233,842 $ 23,212 $ (62,700 ) $ 194,354
Total comprehensive loss for the period - - 15,694 15,694
Shares issued for cash:
Equity financing 29,157 - - 29,157
Exercise of stock options 2,603 - - 2,603
Exercise of warrants 3,232 - - 3,232
Share-based payments - expensed - 1,998 - 1,998
Share-based payments – capitalized to mining interests
-

283

-

283
Transfer to share capital the fair value assigned to share purchase warrants exercised from derivative liability

2,426


-


-


2,426
Transfer to share capital the fair value assigned to stock options & warrants from contributed surplus

1,210


(1,210
)

-


-
Balance at September 30, 2010 $ 272,470 $ 24,283 $ (47,006 ) $ 249,747

The Toronto Stock Exchange neither approves nor disapproves the information contained in this News Release.

Contact Information

  • B2Gold Corp.
    Ian MacLean
    Vice President, Investor Relations
    604-681-8371

    B2Gold Corp.
    Kerry Suffolk
    Manager, Investor Relations
    604-681-8371
    www.b2gold.com