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Good afternoon. My name is James, and I will be your conference operator today. At this time, I'd like to welcome everyone to the B2Gold Third Quarter 2020 Financial Results Conference call. [Operator Instructions] Mr. Clive Johnson, President and CEO, you may begin.
Thanks, operator. Welcome, everyone, to our conference call to discuss the third quarter 2020 financial results for B2Gold. Obviously, I think most of you have probably seen our news release that came out last night, another very strong quarter, putting us on target to the lower end of our guidance for 2020 for the year. I'm going to pass it on to Mike Cinnamond. Now Mike is going to talk -- walk you through the highlights of the financial results. And then Bill Lytle, the Senior VP of Operations is going to give us an operational update, talk through a little bit more about growth, and then we'll open up for questions. We had a very good session with analysts session 10 days ago. So I'm pretty sure they won't have that many questions, but if they do, that's fine. And this is an opportunity for our shareholders to ask some questions again. So once again, very happy with the quarter, another strong quarter. And with that, I'll pass it over to Mike to give you some of the highlights. Thanks, Mike.
Thanks, Clive. So I'm going to start on the revenue side. So with quarterly record revenue $487 million. We sold 253,000 ounces at an average price of $1,924 an ounce. So included in those gold sold sales were some sales over $2,000 an ounce. So that's pretty fun to do. And obviously, we're all watching closely to see what happens to the gold price now. Hopefully, we'll see the results of the U.S. election in short order, a relatively short order. Should also say that year-to-date, we had record revenues of $1.3 billion. So it's going to be an excellent year for B2, even in the midst of this COVID pandemic.Turning to the operating side. So production, we had total production of 264,000 ounces. That's made up of 249,000 ounces from our 3 mines and then 50,000 ounces from our attributable share of Calibre's results. On our production side is -- lead is always by Fekola, 153,000 ounces or 3,000 ounces above budget. Fekola had excellent quarter again. Processed grade and recovery, both higher than budget and more than offset a little bit of downtime on the throughput side as we took the mill down to do the Fekola mill expansion tie-in and also to do a full SAG mill reline. So even with that tie-in in place, we still managed to beat budget by 3,000 ounces at Fekola. Masbate, right on budget, 54,000 ounces. Masbate, the only thing different in the quarter from Masbate was that we had a magnitude of 6.6 earthquake in early or mid-August, and we had to take the mill down for about 6 days while inspection were carried out by the Philippines' sciences bureau. But those inspections confirm no damage and Masbate is running very well. Otjikoto, 43,000 ounces. 1,000 ounces above budget and basically, Otjikoto continues to move along nicely. Year-to-date, our consolidated production has 770,000 ounces, including our share at Calibre, and that's about 20,000 ounces ahead of budget overall. Turn to the cost side of that equation. Our total cash costs for the period, including our share of Calibre is $435 an ounce, which is $6 lower than budget. Looking at our 3 operations, we're $411 an ounce against the budget of, $428, so $17 an ounce less than budget for the 3-month period. And Fekola was $333, broadly in line with budget. And that's really, in fact, made up of slightly higher gold production, as I just described earlier, with generally in line total mining costs. We did see some cost of that were marginally higher than budget due to changes in mining sequences and some COVID-related costs. We've also seen it in Mali that fuel costs have been on or slightly above budget, which sort of bucks the trend that we've seen elsewhere in the world. And just a reminder to everyone that in Mali, [Audio Gap] are set 1 month in advance by the government and don't always follow with the underway fuel indices. Masbate was $615 an ounce, which is $33 less than budget, and they continue a great run. Same story we've seen in Q1 and Q2. Mining and processing costs were lower than budget, with lower diesel and HFO prices and lower waste stripping and lower haulage distances as we had a bit of a mine sequence change there to deal with COVID during the current year. And then Otjikoto, $435 an ounce, $66 an ounce less than budget. So continued to totally outperform the budget there. And again, same story, as the first 2 quarters, higher than budgeted gold production, lower fuel costs and a significantly weaker than budgeted in Namibian dollar all added to the positive outcome for Otjikoto. On the all-in sustaining cost side, our total all-in sustaining cost per ounce for the -- and including Calibre were $785 an ounce, so that's $19 less than budget. And when you take our 3 operations, it was $766 an ounce, which is $31 less than budget. And again, it's not to sound like a broken record. Same was really the first 2 quarters, but we did see some CapEx catch up in Q3. So we've seen some CapEx moved around during the year. And I'll comment a little bit more, we think CapEx is going to come out overall for the year. But we did see a little bit of lower CapEx earlier in the year and some of that caught up in the quarter. We do expect some of that to catch up in Q4. So if you look at all-ins for the year-to-date, on a consolidated basis, we're $740 an ounce, which is $75 less than budget. So you can see that we're still expecting to see some of that CapEx catch up in Q4. Take all those results and where we think we're going to come out guidance-wise. So first thing on the production side, Fekola mine, we guided by 590,000 to 620,000 ounces. We think we're going to come out somewhere at the upper end -- or right at the upper end of that guidance range. Masbate was 200,000 to 210,000. We think we'll be in that range easily in the middle. And Otjikoto, 165,000 to 175,000, again right in the middle of that range. Overall, including our share at Calibre, our total consolidated guidance for the year was 1 million to 1.055 million ounces. And we think we'll come in right in the middle of that consolidated range. On the cash cost and all-in sustaining cost side for Fekola, it was a range of $285 to $325, we think we'll be in the range. Masbate, $665 to $705, we think we'll be at or below the low end of that range. And Otjikoto, $480 to $520, we think we'll be at or below the low end of that range. When you take in our consolidated position, including Calibre, it's $415 to $455, we think we'll be at or even slightly below the low end of that consolidated range. On the all-in sustaining cost side, Fekola ranges $555 to $595. We think we'll be at the upper end of that range when all of them been said and done for the year. Masbate, $965 to $1005 per ounce. We think we'll be in the range. Otjikoto, $ 1,010 to $1,050 ounces. We think we'll be at our -- dollars per ounce, we think we'll be at or below the low end of that range. Overall, consolidated, $780 to $820. We think we'll be at the lower end of the range. So as I mentioned, we do have some CapEx catch-up in Q4. We think it'll be somewhere in the range of $100 million to $110 million. Overall for the year, if you look at our total CapEx, if you budgeted, we'll likely come in somewhere around $100 million less than that total. So when you factor that in, you're looking at somewhere around $100 million, $110 million in CapEx in Q4. So you will see higher all-in sustaining costs in Q4. But overall, as I said, we think we're going to come in at the low end of that range, $780 to $820 for the year, consolidated. A couple of other comments maybe on the operations generally. The Fekola mine expansion, the mill expansion is now materially complete. The new mill came online and that's been commissioned in September. Two comments to be made. The final construction cost for that plant expansion, we're a little higher than we budgeted, about $13 million higher overall when all was said and done. And the majority of those overruns related to COVID-19 costs and delays and increased labor and camp costs related to dealing with the pandemic and bringing the people in and out to get that expansion finished. But overall, very solid performance and they came in basically ahead of schedule. On the Fekola Solar site, we -- as we announced previously and disclosed, we did have some delays on that earlier in the year as we used, as we were trying to manage bringing people in and out of the camp. We restarted the solar plant activity mid-September, and we are expecting completion to be by the end of the Q1 2021, assuming that we're still able to bring people in, uninterrupted to get that done. To remind everyone, so it doesn't impact 2020 guidance at all, the solar plants, but we do think we'll bring it online sort of early on 2021. Maybe on a comment overall on the Mali situation. Mali and Fekola, Fekola is just run very well through the year considering everything we've had to deal with, and the country has to deal with in terms of the COVID pandemic and the coup, and we still see in Fekola operating at record levels. Just to remind you too, that in Mali, the state of Mali is a 20% partner in the Fekola mine. So they're a direct beneficiary of the results on the mine. And we didn't put in some highlights of the total amounts that have been paid to the government state since we started operations there. So in 2017 to 2019, we paid $140 million plus in wages and benefits, and total payments to the government were around $276 million. So it is contributing. It's a big contributor to the economy in Mali there. And that $276 million includes priority dividends that the government gets for 10% of its share. In addition, a second 10% it owns are also eligible for ordinary dividends. And we're just getting to the point where we're going to start paying those dividends. We just reached a point where all our initial capital investment and the loans that we put into the country to get Fekola up and running have been repaid. So we're now starting to pay ordinary dividends. So again, a stable benefit from that. And also as to remind for everyone, Fekola is governed by the 2012 Mining Code, and we have a 2012 mining convention. And when the 2019 mining convention came in, it did include specific stabilization terms, just confirming that Fekola and the way Fekola operates is grandfathered under the 2012 code. I'm going to move on, just talk a little bit about some of the other income statement items and then a couple of comments on the cash flow. So on the income statement, I have a few items just to raise to your attention. One of the most significant ones below the gross profit line relates to the reversal of impairment of long-lived assets. So we have a reversal there of $174 million. Net of deferred income taxes, that reversal has an impact on the bottom line of $122 million, and that relates to Masbate. We had booked an impairment on the Masbate mine years ago when gold prices really dipped. This adjustment here represents the final reversal of any final amounts still remaining on -- of that impairment charge that could be reversed. And it was driven by a change in our forecast gold price assumption based on analyst consensus and other analysis we did. Long-term gold price now we're using an assumption of $1,500 an ounce, so for accounting purposes, so that led to that impairment reversal. Then in common share of income of associate Calibre, we've got almost $11 million there. So Calibre is back up and running in Q3, and we picked up a net $11 million share of their results for the period. And the highlights of the taxes section, the taxes are significant. We're taxable in all jurisdictions. Mali, there were no accelerated deductions. So we're paying taxes out of the gate. Masbate and Otjikoto, we're also fully taxable there now. Any residual tax loss carryforwards that we had there, accelerated investment deduction, et cetera are all gone now. We're paying taxes everywhere, and that's really a function of the mine is running well and the higher gold prices. All that translated into net income for the period of $277 million. Of that, $262 million attributable to shareholders of the company or $0.25 a share. If you adjust that for significant noncash items, including that Masbate impairment reversal, you get to adjusted income $161 million or $0.15 a share. And then if you look at our results year-to-date, net income for the 9 months, almost $0.5 billion, $498 million. Of that, $460 million attributed to shareholders of the company, $0.44 a share or adjusted net income, $368 million or $0.35 a share. I'm now going to talk about a few items in the cash flow. So first of all, operating cash flow, we had a great quarter, $300 million, just over $300 million of operating cash flow, $0.31 a share or $755 million, operating cash flow of $0.73 a share year-to-date. So when you look at that, it looks like we're well positioned to get up to that $1 billion level, cash flow-wise, if you prorate it up. But we have been reminding you, we've given you some detail on the MD&A. Part of that operating cash flow includes significant taxes that aren't yet paid in cash. We've accrued them in the financials, but they're not yet paid. And so in Q4, in total for the years -- today, we paid cash taxes of about $94 million. For the year-to-date, we're anticipating somewhere around $205 million cash taxes. So some pretty happy cash payments to come in Q4. So just remember that for your models. And also, there will be some true-up of Mali in taxes and Q1, Q2 next year as is laid out under the rules for payment of taxes in Mali. One of the items that we have highlighted in there, that -- those cash tax numbers, I gave you $200 million -- $205 million for the year, that does include about -- We're looking at up to maybe $50 million of tax prepayments for the year that aren't strictly due until Q1 or early Q2 next year. But we think the taxes have already been incurred and we have the cash on hand, so we may prepay some of those taxes and a significant chunk of those would relate to Mali. On the financing side, I guess the story you can see there is that we have now repaid the revolver fully. So we -- in the quarter, we paid back down $425 million, which was a total outstanding balance on our revolver. So we're now -- we have no amount drawn under the revolver. We have -- we just have a little bit of debt under the finance leases related to mainly to Fekola about $50 million, but other than that, there's no other debt. And what we have left on the revolver is $600 million undrawn capacity, plus another $200 million, accordion. So we really have $800 million of [ far fire ] there with the revolver as it stands. We will, in Q4, expect to see about USD 40 million come in from CAT loans, though, because we've always used CAT to help finance part of our fleets around the world. And as part of the Fekola fleet expansion, the ties in with Fekola mill expansion, we financed about $40 million of that in cash. So you will see that come in, in Q4.Dividend-wise, we paid $62 million in the quarter and $73 million year-to-date. We're paying dividends right now at the rate of $0.04 per share quarterly, that would be $0.16 annualized, which equates about $170 million a year. That's a yield right now about 2.4%, which I think puts us right up near the top of the dividend-paying gold companies. And maybe a comment on that from a capital allocation point of view. So we are continuing to generate strong cash here. You can see in the cash flow here that we ended the quarter with $365 million, and we'll continue to generate that cash over the course of the rest of the year. As we move into next year, we've got a couple of big capital allocation decisions. The most significant one being for Gramalote. At Gramalote, and we're expecting to get the feasibility study complete by the end of the first quarter next year. And that will put us in a position to make a build decision and then discuss with our partner, AGA. And so at that point, we will have a significant capital allocation decision to make. In addition to that, we're also looking at our options at Kiaka in Burkina, how we might want to advance that project. And then also just looking at -- we've got big drilling campaign on the exploration side and got good results in Mali and elsewhere around the world. And so we'll be looking at the results of that and just deciding what we want to do, allocation of capital versus that. So once we have a look at all of those things and decide what our capital needs are, then we can also revisit our dividend allocation and see if we want to do anything about changing the dividend rate. And just final comment really on the investing side of CapEx. As I mentioned, overall, we had budgeted about $390 million for the year, total CapEx. We think we'll be about $10 million under, so we forecast about $380 million. If you look at the cash spent on CapEx to date, it's about $265 million cash outflow for Capex. So we got somewhere in the region higher than $110 million, $115 million to go. So that's what we expect to see somewhere around that mark in Q4. And Gramalote itself, we haven't talked about that CapEx. So we are slightly behind for Q3, but overall for the year, our share at Gramalote is about, I think, about $26 million. And we think we're going to be broadly in line at having spent most of that. And then exploration, we are a bit behind year-to-date, but our total exploration budget for the year is $53 million. And again, we're forecasting to have spent most, if not all, of that by the end of the year. So that's kind of where we are overall and leaves us with cash and cash flow at the end of Q3 and a very strong cash flow generating position. Cash and cash flow was $365 million at the end of the year, and we look forward to moving forward. And continue to see that cash balance grow as we move forward into the end of the year and into next year. And those are -- that really sums up the main comments I'm going to make on the results.
Okay. Thanks, Mike. I just realized that in my intro, I may have left the words -- I think I said the words lower end of guidance for 2020. I meant the lower end of cost guidance, of course, as Mike thankfully got it right. So obviously, a very strong quarter, good financial results. And as we said on track for the mid-range of our production guidance of between 1 million and 1.055 million ounces of gold. And our costs, we're expecting to be at or below the low end of our guidance range on operating cost between $415 and $455. And all-in sustaining costs, we expect to be at the lower end of our guidance, which is the range of between $780 and $820 per ounce. I just wanted to make sure I clarified that. Okay, I think we'll pass it over to Bill now and he will give us a quick review and more focused on, I guess, some of the growth opportunities we see going forward. As I mentioned, we had a discussion with the analysts recently, we've covered a lot of ground. So -- but Bill, maybe you can just give us an update on that?
Yes, sure, sure.
Then we'll open for questions.
All right. Thanks, Clive. Yes. I don't want to really go rehash kind of what Mike said through the first 3 quarters of 2020. So I'll just reiterate what he said that we remain on guidance for the year. Obviously, a great quarter given everything that's going on around the world. I would like to just point out real quickly once again that we did have another amazing health and safety quarter where we had the second quarter in a row with no lost time accidents. So our lost time indices or injury frequency rate is down really than most industry leaders for sure, if not at the lower end of industry leaders. And then, of course, we continue to perform on all of our ESG commitments as best-in-class as well. Maybe looking forward a little bit. So the budgets turn out for 2020, we normally put them out right after the first of the year publicly, but I do want to talk a little bit about production, as Clive said, over the next couple of years, for sure, the next 5 years even. We did put out a slide for the analysts, which kind of showed us really kind of production, assuming everything goes according to plan, should basically look like what it did as good as it did this year, kind of right around that 1 million-ounce range. So -- and there's a couple of things coming up. By the end of this year, the exploration group has agreed or has told us that they're going to turn over an updated resource for Anaconda, and we'll be using that to look at some long-term potential, which I'll talk about in just a minute, at Fekola. And then in Q1 of next year, Mike's already talked about the Gramalote feasibility. We feel pretty good about that so far. And so I'm going to talk a little bit about how that fits in our profile potentially. And then at the end of Q1, also, the exploration group is going to put out a resource on Cardinal FMZ. And that really has the potential. If you look at what we're doing right now, that really has the potential to have almost immediate impact because when we did the expansion for the mill, we talk about that we're going to -- from 6 million to 7.5 million tonnes per annum. But we've always been a bit cagey about that. We've always said it's really -- whatever we think the maximum production is, plus 1.5 million tonnes per annum. And so now that we've got the expansion done, we're in the process of really -- we just finished up a 2-week test on where we think that mill can run at least for 2020, 2021. We put some more through that was representative of next year's mill feed. There's the potential certainly that we can have additional capacity above that 7.5 million tonnes per annum. Now of course, we could feed that with low grade, and that would have kind of a marginal impact on our ounce profile. But -- or we could actually, if there is something in that Cardinal FMZ that area, we could fast track that into production. And we could see even potentially late 2021 and 2022, seeing some production from Cardinal FMZ, if that pans out at the end of Q1. So we're kind of tentatively scheduling some material that's come through next year for that, and that would help us with our ounce profile in 2020 or 2021 and 2022. Additionally, 1 of the things that we want to do is we want to take a big bulk sample from the saprolite in Anaconda. And we're talking 200,000 tonnes or something like that and run that through the mill. We've always been very open saying that if we can get saprolite, there is a percentage, 10% to 15% above our maximum operating rate that we could feed the saprolite through. So there's the potential, once again, to get ounces from there. And of course, even the existing resource shows a lot of potential for some high-grade pockets that we could truck down to Fekola while we're waiting to figure out what we're going to do long-term with Anaconda. And that -- we could see that fitting into our production profile kind of in that 2023 and 2024 range. So once we get that all sorted out with the bulk sample. Looking at 2021. So our production will come from Fekola main, potentially Anaconda -- or sorry, Cardinal FMZ and then, of course, the regular sources in Masbate and Otjikoto. Now if you go on to 2022, again, you'd have the same thing at Fekola, Cardinal FMZ. You'd have the same thing at Masbate. You'd have Otjikoto for the open pit, but you'd also start to see the ounces flowing from the underground. So those underground ounces could see is up around 200,000 ounces at Otjikoto in 2022. On the 2023, then you'd start to see the Cardinal come in. You see, obviously, the same thing from Fekola. You'd have Masbate, you'd have Otjikoto, you'd have Otjikoto underground. And then all the way out in 2024, what you'd see Fekola, you'd Cardinal, Masbate, Otjikoto, Otjikoto underground. But by this time, it's our opinion that we would have -- it's our intention that we'd have Gramalote up and running. So that would hit us in 2024. And once again, so you'd see a very nice profile of just about 1 million ounces for all 5 of those years, obviously, with a potential for anything which might be developed through Kiaka or other sources coming in on top of that. Clive, is there anything else you want me to talk about?
No, Bill. I think that's a good summary. So I think with that, we'll open up for questions. We've got the team on the phone. As I said, we have pretty extensive good session with the analysts recently. Tom is on the phone to answer those questions on exploration. But we'll open up for questions. So thanks.
[Operator Instructions] And our first question comes from the line of Ovais Habib from Scotiabank.
Clive and B2 team, congrats on a good quarter. My first question was going to be on capital allocation, but Mike covered that well. So my next question then is for Bill. In regards to both sites, B2 has guided towards production about 500 tonnes per day, which equates to about 182,000 tonnes per year. And you currently have about 1.6 million tonnes of recoverable tonnes. And in the Analyst Day, you have guided towards the underground ending in mid-2025 and starting in 2022. Are you just being conservative on the underground mine life? Or am I kind of missing something here? Hello, Bill?
Sorry. I was -- I've been talking like for 2 minutes on mute, apologies. The answer is yes. It is a bit conservative, Ovais. There absolutely is production rate upside. And the reality is if you remember, we've always talked about this potential down plunge extension, which can take us even further. So at this time, we're talking primarily about reserves that are in the existing mine life with a potential upside for down plunge expansion.
Okay. So that's just a more functional drilling then, and just better understanding?
That's correct.
Okay. Got it. And just moving on to Cardinal. So on Cardinal FMZ, which -- I mean what are you looking to see at Cardinal basically in the resource update to get the deposit across the line into production? Is there anything kind of metallurgy or anything else that you need to see before it comes into production?
Yes. So certainly, I think maybe -- certainly, I can't talk about it from an exploration standpoint. What I can tell you is that they're going to put a resource on it. What we've done is we've looked at what they have, which is at an inferred level, and we put a mine plan on it and it really saw how it really fit in as far as our waste dumps and everything else. And so what we're just looking for is additional confidence in what their inferred resources. I think the reality is, this thing, even without a lot more drilling, we could put into our mine plan. We do have metallurgical testing already done on it at a high level. And we don't see any issues from it, from a milling standpoint.
Our next question comes from the line of Geordie Mark with Haywood Securities.
Yes. Maybe you can run over the Masbate reversal and perhaps the implications or potential implications for updating future resource reserve estimates, whether that's an easy migration given the change in commodity price assumption? And/or -- I mean are you looking at additional drilling there to flesh out the geological confidence of resources? And what sort of life of mine expansion that we could expect to come into that financial assumption out to 2036, as shown in the MD&A?
Sorry, could you maybe just clarify your question just a little bit? Like, it sounds like there's two parts. I just want to clarify again.
Sure. Just I guess the first part would be any near-term changes in the reserve resource estimates sort of to arise from a higher gold price assumption. And the other component there is what would be required on a drilling basis to fill that, if any.
Yes, Geordie, just to answer your question, we took the existing resource that we had, and we projected it to depth and looked at it with increasing gold prices. And what came out of that was, yes, the pits can get bigger with the higher gold price -- or current gold prices. So the drill program we're doing right now and we've been doing this year was to take that material and get as much of that into indicating as possible. It's not going to be complete. We're going to have to continue that program next year. But with the results from this year, we'll be able to update some of the resources in the areas we drilled through, and hopefully, some of that will get into the AIF. Does that answer your question?
Yes. That's pretty good. And maybe one last question because we had a good Analyst Day a little while back. Just on Cardinal, following from [ Masbate ] and maybe some of Bill's commentary. You're currently drilling -- continuing to drill at Cardinal with 2 rigs and still looking at sort of pushing out the known boundaries on the down-plunge bases?
Right now, at Cardinal, we're down to just 1 drill, drilling deeper in Cardinal. We're only capable at this year with our camp setup and isolation for COVID to really manage 4 drills. So the other 3 drills now we've pushed up in the Mamba as we see that area as being a significant upside for us. But we're still continuing with the 1 drill going down plunge in the deeper part of Cardinal.
Our next question comes from the line of Carey MacRury from Canaccord Genuity.
Maybe just another question on Cardinal. How does it compare versus Fekola proper in terms of things like width and strip ratio in terms of like getting in there and mining it and maybe grade?
In terms of width, it's quite a bit narrow than Fekola. You got to remember, Fekola in places is close to a couple of hundred meters wide. We don't see anything like that at Cardinal. I think the maximum width we've seen at Cardinal or upwards are close to 30 meters. Generally, Cardinal is less than 10 meters. Strip ratio, don't have those yet because we haven't completed the resource. And other resource, we can't really put a decent mine plan on. So when we complete our resource in the first quarter, it will be an updated inferred, a portion of it will be indicated. Then the engineering guys will put a mine plan on it. And at that point, we'll have a better idea of what the strip ratio is going to be. Did I answer the question?
Yes. So -- and maybe -- sorry. Maybe just switching to Kiaka. You mentioned the technical study coming there. Can you give us a bit of a sense of what you're looking to do there in terms of plant size? Is this like a smaller, higher grade project than what the previous owner considered? Or just some context around what you're thinking there.
You want me to answer that, Clive, or do you want to pass it on to Dennis?
Sorry, I missed the question.
Yes. So in general, what we're looking to do is we're looking to update the existing feasibility study. And so we're really -- the plant size and through, but I think we're talking around 12 million tonnes per annum is what we're really looking at. And that's primarily because all those studies have already been done. The key difference is, is we're looking at things like obviously, the cost -- the fuel cost, natural gas is in play now. We're talking about running a dual fuel truck system there. And so really, we're looking at the cost side and about 12 million tonnes per annum to make that project economic.
[Operator Instructions] And our next question is from the line of Lawson Winder with Bank of America Securities.
Just on Fekola, I might ask, with the increased mining equipment you now have and the increased mining you're doing. I mean should we be expecting the grades to be materially higher in like 2022 than what we saw in the last technical study?
Well, so I'll answer it, and then Randy can correct me. I think Randy is on the call, he'll correct me if I'm wrong. If you remember, when we did the study, we optimized it for that mining equipment, right? So what we did is, is we employed kind of an optimized stockpiling strategy from day one. And so I don't think you're going to see anything different than what you're seeing in the PEA for coming up in the next -- in 2022, for sure. So I kind of think what we had in the PEA is what you're going to get. Am I correct, Randy?
Yes, that's correct, Bill.
Good.
Okay. That's very helpful. And then I did want to ask again on Kiaka. So I think it's intriguing, you're looking at it. But as we know it now, I mean, it seems to me like it's an asset that probably dilute the portfolio to some extent, just given the very high quality of the existing assets you guys have. And I'm wondering if potential sale is still something you guys are considering or are you leaning towards building it yourselves at this point.
Yes. A good question. I think it's pretty early data in that regard. I mean just to [indiscernible] we have some -- we've been doing some internal valuations, and we mentioned it, I think, in the news release that we've been looking at natural gas as an option, fuel and some other things, solar, et cetera, that actually can have a pretty significant impact potentially on the economics of Kiaka. So we have some internal runs that show some pretty compelling economics. And if we can prove that up with the new resource and the updated feasibility study by the middle of next year, then we'll have a clear picture. I think it's become -- not just because of gold price, it's become more interesting asset to us for some of the reasons I explained. It's a good ore body. It's 4 million ounces. So I think it has some unrealized value for our shareholders. So our job is to get value for our shareholders. So as we go through the next months, understanding it better, I think we'll start looking at timing. We're not going to change our strategy and start building 2 gold mine, big gold mines at the same time. We've always said that's something we would not do. So you start looking at scheduling between Gramalote and Kiaka. And we'll look at that and say, is there potential opportunity to unlock the value of both of them over a period of time without detracting from what we're doing at once. So we're going to stay disciplined on our approach to 1 mine at a time construction. So the other alternatives would be to bring a partner in to build the mine, and there's other active players and key players in Burkina Faso. As I mentioned, it's a good deposit. We think [indiscernible] would find it attractive as well. Or ultimately, the potential, of course, is always to consider selling the asset. So we'll look at those alternatives over the next few months. The government of Burkina Faso understandably expect this project to move forward if it's economic, and we think that there -- with the current internal view, which is early. But if the current internal technical view with lower fuel costs, obviously, a better gold price environment. But if those become reality, we think we've got a very significant asset that has the potential to produce for a long period of time or somewhere of 300,000 or 350,000 ounces of gold a year in a country where many others have succeeded. So that's our current take on Kiaka. I think it's becoming potentially a significant asset for our shareholders.
Okay. No, that's great. Tremendously helpful color, Clive. And then just remind us the attention still is sort of mid-2021, to have an updated study out now. I can't recall it, is that going to be pre-feas or feasibility level study?
We will get a sense of -- ahead [ of our desk ]. We've got a full feasibility study that we had done before. Now we're going -- we'll do updating the resource, but it will be a full feasibility study. We'll have a better view in the first quarter internally, I think, but it will be a full feasibility bill, I think, by the middle of the year, sorry, Dennis?
Yes. That's our -- our goal is to get to a completed -- we're going to redesign the thing at $12 million. We're going to do all of the work, first principal study and really get the economics to where we have really good solid economics to base decisions on. We hope to have that by the end of the first quarter. And then we'll take that information and put it into a full feasibility study around the middle of the year -- by around the middle of the year.
Okay. That's very helpful. And then just one final question on the gold price assumption. During the Analyst Day, you guys had mentioned that for reserves, you intend to use $1,500. And I just wanted to follow-up and kind of ask what your thinking was around that particular level, partly in light of how some of your peers are choosing to be a little bit more conservative and not change prices versus the year-end 2019, whereas others are planning to go still higher.
Mike, do you want to touch that?
Well, I think if you look at the reserve price, the $1,500, we faced that on long-term consensus. So we think that's a reasonable basis as anything to look at. And if you look back, I think the trailing 3-year average is not a whole lot different anyway. So that's kind of where we got to in the reserves. And then on the resources side, which is higher, 18, it's still obviously a fair bit less in current pricing and resources, by definition, need to be priced higher than the reserved level. So this is kind of where we are. We think that 18 again, if you look at the consensus range is something I have that's in the ballpark for sure. So it's in the range. So that's kind of how we arrived at it. It's a common look at what has happened and kind of where the analysts see things going forward in order to come up with what we think is a reasonable price to at least know what we have in each location, especially you heard Tom comment Masbate there. It's significant for Masbate a change in price there in terms of reserves and resources.
Yes. Maybe just from a covenant point of view, I mean we don't use $1,500 gold to try and bring in -- to try and bring in reserves resources per se. I mean at the end of the day, we're a low-cost producer. We're talking about, based on what we know today, the next 5 years being around 1 million ounces a year on average. And we [ invest ] somewhere around that [indiscernible] of all-sustaining cost. So we're one of the lowest cost, if not the lowest cost, producer. So we could have used $1,200 or $1,100, I guess, I don't know. Many people think we're conservative. We're really conservative and we're very good at being a low-cost producer. So the gold price we choose to use is not a reflection like many other companies desperately using higher gold price to try and make a bit of money or to bring in resources. That's not -- we don't play that game. So I would focus on our costs, $1,500 gold. Using it for reserves does not mean we expect our costs to go dramatically higher and need [ $1,500 ] gold to make money. We are making a lot of money at $1,500 gold. So I just want to give you a little bit of insight. You can play the ultraconservative game, I guess, but we don't need to. We don't need to do that. I think the evidence of what we've accomplished in the last 13 years or so should speak to that, I think.
Yes. And maybe just to add to that, Clive, I mean, one of the things that we really struggle with from an operational standpoint when you have numbers which are much lower than what they actually are, is how do you plan for things? How do you design for your waste dumps and where you're going to put low-grade stockpiles? What is going to be your cutoff rate? All this stuff, which is not really based on what we're seeing in reality, it makes it a lot harder. So you kind of end up running kind of 2 books. And so for us, $1,500 is operationally what we think is right.
Yes, okay. That's very helpful. And again, great quarter.
I think we -- Bill, I just think you might need to better raise more questions on Cardinal. So we like it, even though it's narrower. In Fekola, we're fast-tracking it for a reason, right? I mean Bill, you can respond to that from engineering point of view. Yes, we don't have a full resource on it yet, but why have we moved all those drill rigs onto it and despite the fact that it's narrower in Fekola? And my understanding is we think it has some good open pit potential in the near...
Yes. Actually, when Tom was answering, I thought maybe I'd throw that in there, but we kind of moved past it too quick. So I guess it requires some historical context originally, that's where we wanted to put our next waste dumps. We were thinking about moving right there. And so before they could do it, they obviously had to condemn it. And so they started at surface, identifying this is an area which has great potential at surface for some sort of small pit. So we didn't want to bury that with a waste dump. So we said, okay, we put on a mine plan on a very rough inferred resource and said, "Geez, there's a potential to pull those ounces." And so those ounces actually that I was talking about in kind of that 2021 and 2022, those are from that study that we did. So we know that there's an open pit potential there regardless of what they come up with. But then what actually happened is then once we started doing that, the exploration group came and said, "Stop on the short pit, this little pit. We think there's a much bigger project there." And so that's what they're drilling right now. So we're very confident at the very least at this small open pit with the potential for it to get much, much larger.
And ultimately, underground potentially?
And ultimately, underground potentially.
[Operator Instructions] Our next question comes from the line of Don DeMarco with National Bank Financial.
A question for Mike. So Mike, given that some of the tax prepayments from 2020 that are not due till 2021, should we model an offset in 2021 with maybe lower tax payments?
Yes. The way Mali works is -- mainly Mali, most other -- the other jurisdictions, basically you settle it up in the year in question. So Mali, you pay based on the prior year, taxes you pay. It's like you do in Canada. You're paying installment based on the prior year, then you true it up in the following year. It's April, actually, that you do it. So yes, whatever you've modeled as actual taxes payable this year, that whatever we prepay in December, you would reduce from the true-up in April next year. That's right.
Okay. And just remind me then, what did you do in 2019? Did you prepay in 2019 as well for 2020?
In 2019, we had a small prepayment. I think we paid, from memory, it was either $12 million or $15 million in December as well...
Okay. My next question is, in the past, you've only built 1 mine at a time. Would you guys ever consider overlapping construction of 2 mines like Gramalote and Kiaka or maybe Gramalote and Anaconda stand-alone?
I mean I'll get Bill to add on to that. But I think the principle is we've been very successful by focusing and building 1 mine at a time. My initial reaction when Kiaka started to look more interesting, was to say, "Well, okay, great. But we're not going to build 2 mines at the same time." So if it's in the same time frame as Gramalote, then we need to bring a partner in or [ south ] was kind of my first response. And then, Bill and the guys started playing around and say, "Well, actually, maybe from a scheduling point of view, we might be able to consider 1 alternative." Yes, very early. But we might consider an alternative to be able to progress both without -- by overlapping, as you said. So I'll pass it on to Bill for his thoughts. It's very early, but that's where we were. I was assuming we're going to need to find a partner or sell that to stay within our conservative strategy of building 1 mine at a time. So just want to give some -- I mean it's the early days, but we can throw it around. If you can share some of that with these guys?
Yes, sure, sure. And as you said, Clive, at this point, everything we're talking about is purely conceptual, but the question came up. If we had the money and the ability, would the construction team be able to do it? And of course, then you start looking at it, can you slot in your earthworks team to come in first and then rotate off the site while they're waiting for the next big earthworks job to come back to? So basically, you'd have people rotating into various facets of the project. And we think there is a path to do that. We've never done it, with the exception of maybe some smaller projects. So it would definitely be new for us, but we certainly have -- we have the team, we have the capability. If you look at kind of our senior -- the top guys, they almost always have at least 1 cross-shift to maybe another person waiting in the wings. And so there probably is the potential to do it, but it is something that would take a lot of scheduling.
Okay...
Go ahead.
I was just going to move on to next question. But -- so go ahead, sorry.
No, I'll just say at those that obviously, we proceed with great caution. We don't just look at it now as an asset. As I said, how do we lock the value? And we still believe that there are some investors in the industry that want growth. I think a lot of the gold funds are still scared from the mistakes of the past of management and some of their investments. So they're still really -- if you think about some of our growth. But we're looking at general response who want a well-run company that pays the dividend and is good at what they do and can grow the business. So we think we've shown that over 13 years sort of an unprecedented ability to grow the response. So that will be the driving [Audio Gap] we've got lots of assets in the pipeline. We'll review them and we'll take our approaches and review ourselves.
Okay. And maybe just a final question then. Previously, you've mentioned how you've combed over potential greenfield opportunities. And you made remarks that there is not a lot out there. But where do you stand right now with respect to greenfield M&A? Is it still something you're pretty actively looking at and maybe adding something small stage to your pipeline still?
Yes. I think I should or meant to say that when we look at development is out there today, we don't see a lot that we're in love with. And those that are there are scarce and therefore, perhaps highly valued. We have always believed we've always had a very strong budget in the Bema years' and the B2 years' industry-leading budget and exploration and the other success that's come from that. So we will -- we are always looking for greenfield exploration opportunities, whether they be joint ventures, whether they be opportunities that we generate ourselves such as Uzbekistan, a joint venture with the government of Uzbekistan. Finland, we're drilling an interesting target there, and others. That will continue. So I think we always felt there was exploration potential in the world. We'll continue to be driven by geology, not geography. Very, unlikely first to do any major M&A here. You know the growth profile, the assets we have, let's find out what saprolite -- let's get that going. If it's going to be a mine and realize value. And let's find out more about Cardinal and Anaconda, and ultimately what's beneath the saprolite in Anaconda and now, of course, Kiaka as well. So we see a pipeline of potential -- very good assets somewhat unrealized in the market, understandably at these stages. We're going to continue to -- probably the budget somewhere this year is $54 million I think in exploration. Next year is probably haven't taken to the Board yet, probably going to be $60 million, a lot of that will be brownfield. But we're definitely going to be looking for significant exploration opportunities worldwide. And there's a bunch in the pipeline that we can't talk about yet with other -- some of the advanced exploration opportunities. So that's kind of the way we see our growth and looking forward, definitely with a great team, we have in exploration. Of course, we want to continue, as we always have utilized them a few years down. So the gold will always be the ones you find.
And there are no further questions in queue at this time. I'd like to turn the call back over to Clive Johnson.
Okay. Thank you all for your time, and if other questions occur to any of you, including shareholders, feel free to reach out to Ian Maclean, and he'll put you in touch with the appropriate party to answer your questions. So thank you for your time.
Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation. You may now disconnect.