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'Run it like a real business' - B2Gold's Clive Johnson has a fix for the sector's slump

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(Kitco News) - B2Gold (TSX:BTO) has agreed to purchase half of the Gramalote project it doesn't already own from AngloGold Ashanti. B2Gold would spend $60 million for the South African miner's 50% share, including a $20 million initial payment. The project is in Antioquia, Colombia.

President and CEO Clive Johnson spoke to Kitco mid-September at the Gold Forum Americas 2023 held in Colorado Springs, CO.

He said Gramalote was never seen as a smaller potential mine because AngloGold Ashanti and B2Gold each needed to add around 200,000 ounces. That changed when AU asked if BTG would buy out its share.

"No one's ever looked at it and said what if we don't need 400,000 ounces to satisfy two companies? What if it's 200,000 oz a year for a single company, which would be in our wheelhouse."

"We believe that if we look at it as a smaller project there's a higher-grade core in Gramalote and therefore can we drop the capital dramatically, build a smaller mill, have less of all expenses, lower our actual environmental footprint there as well."

The company plans do an updated PEA in 2024 to determine whether it can be a profitable smaller mine.

Regarding B2Gold's other single-asset purchase, the Goose project in Nunavut, Johnson said construction is on budget and on schedule at a cost of CAD$800 million, targeting first gold in early 2025. About $530 million has been spent so far between B2Gold and the previous owner, Sabina Gold & Silver.

B2Gold picked up Sabina for $1.1 billion back in April, a 47% premium on its stock price. However, Johnson said he was focused on value, not the premium.

"Their stock was trading at such a low level, 0.3 times NAV, we were 0.9 times NAV, we could pay that premium and still pay the $1.1 billion, so it's about value it's not about premiums."

Asked what it will take to recapture investor interest in gold companies, Johnson said the companies need to show they are being run like "real businesses", not speculations on the gold price.

"We haven't raised equity for more than five years, we can pay a big dividend to our shareholders, and we continue to grow the company and be a very responsible miner," he said.

Kitco Mining's coverage of the Gold Forum Americas 2023 was sponsored by Metalla Royalty & Streaming Ltd.

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