B2Gold (TSX: BTO; NYSE-A: BTG) won a key permit Friday for its Fekola Regional gold expansion project in Mali, removing a growth hurdle a day after it cut its 2026 production outlook.
The Fekola complex lies about 500 km west of Bamako on Mali’s border with Senegal, while Fekola Regional is about 20 km from the existing mine. The Menankoto exploitation permit, together with the Dandoko exploration permit, allows B2Gold to start work ahead of regional mining.
“The Fekola Complex is currently the largest producing gold mine in Mali and issuance of the Menankoto Exploitation Permit secures the future of the operation well into the late 2030s,” CEO Mike Cinnamond said in a release Friday.
The approval removes one of the two problems analysts tied to Thursday’s guidance cut. The other, the fire-damaged crushing circuit at Goose in Nunavut, remains the main operational test for the rest of the year, National Bank of Canada (TSX: NA) analyst Don DeMarco said in a note before Mali issued the permit.
Despite the permit, any Fekola Regional output this year is unlikely to materially change production, BMO analyst Brian Quast said.
Shares of B2Gold surged 22% to C$7 apiece in Toronto late Friday afternoon, giving B2Gold a market capitalization of C$9.4 billion ($6.7 billion).
Permit terms
B2Gold will own 65% of Fekola Regional and Mali 35% under the country’s 2023 mining code. The existing Fekola mine remains 80% owned by B2Gold and 20% by Mali under the 2012 code.
The permit allows B2Gold to start stripping waste ahead of mining and finalize terms for processing regional ore. The company expects Fekola Regional to ramp up through the end of next year and produce more than 150,000 oz. annually from 2028 through the mid-2030s.
The approval follows a September 2024 agreement between B2Gold and Mali governing Fekola and its regional deposits. Mali approved underground mining at the existing operation in July last year.
Guidance cut
B2Gold on Thursday narrowed its 2026 production forecast to 820,000 to 920,000 oz. from 820,000 to 970,000 ounces. The midpoint fell 25,000 oz. to 870,000 ounces.
Its Fekola Complex is now projected to produce 390,000 to 420,000 oz. this year, down from 410,000 to 460,000 oz., with the company blaming the reduction mainly on delays receiving the Menankoto permit. Goose is expected to produce between 170,000 and 200,000 oz., compared with a previous forecast of 170,000 to 230,000 ounces.
Stronger results at Masbate in the Philippines and Otjikoto in Namibia partly offset those reductions. National Bank calculated that the midpoint of Fekola guidance fell by 30,000 oz. and Goose by 15,000 oz., while Masbate and Otjikoto each rose by 10,000 ounces.
B2Gold also lowered its full-year all-in sustaining cost forecast to $2,370 to $2,550 per oz. sold from $2,400 to $2,580, despite the production cut.
Quarterly results
B2Gold produced 203,648 oz. in the second quarter as Fekola, Masbate and Otjikoto beat expectations enough to offset weaker output at Goose.
Production ran 7% above Scotia Capital’s estimate, while all-in sustaining costs of $2,356 per oz. sold were 18% below its forecast. But adjusted earnings of 3¢ a share missed the 7¢ market consensus, leading Scotia Capital mining analyst Ovais Habib to rate the quarter “mixed.”
B2Gold reported net income of $417 million, or 31¢ a share, compared with adjusted earnings of $41 million, or 3¢. The adjusted figure excluded a $292-million gain from mining-interest sales and $135 million in unrealized derivative gains, while including $71 million in realized losses on gold-price collar contracts.
Weaker-than-expected realized gold prices and the collar losses drove the earnings miss, Habib said. Without the collar losses, adjusted earnings would have matched its estimate.
Goose recovery
Goose produced 12,890 oz. during the quarter, 70% less than in the first quarter, after an April fire damaged parts of its crushing circuit. All-in sustaining costs climbed to $6,390 per oz. sold from $2,806 in the previous quarter.
B2Gold has relied on mobile crushers while repairing and upgrading the permanent circuit. The company is targeting 80% of its planned 4,000-tonne-per-day crushing capacity, or 3,200 tonnes per day, by the end of September and full capacity in the first half of next year, Canaccord Genuity Group (TSX: CF) analyst Carey MacRury said.
Cash reset
B2Gold completed deliveries under its gold prepayment agreements in June after handing over 264,768 oz. in total. That amounted to about 66,000 oz. per quarter over the past year, MacRury said. B2Gold expects cash flow to improve in the second half now that future gold sales are expected at spot prices.
The company ended June with $287 million cash and its entire $800-million revolving credit facility available after repaying $75 million during the quarter. It also spent $92 million buying back shares.
Scotia Capital forecasts free cash flow of about $236 million this year and $1.1 billion next year under its gold-price assumptions, with the end of the prepayment deliveries helping drive the increase.
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