B2Gold Corp

TSX:BTO

Earnings Call Analysis

Company Beats Cost Guidance, Expands Operations

The company closed their fiscal year on a positive note with cash costs per ounce at $654, outperforming their guidance. The all-in sustaining costs reached $1,201 per ounce, aligning with the lower end of the forecast range. Fekola's performance offset the delays in licensing, cementing the company's adaptability. Net income hit $113 million for the quarter, adjusted for nonrecurring items, translating to robust operational cash flow generation of $714 million for the year. They managed a handsome dividend payout of $186 million and strategically invested $845 million in growth projects, like Fekola and Grand Lotto, showcasing a balance between rewarding shareholders and fueling expansion. Despite some operational hiccups, such as nearing the end of Otjikoto's open pit life, the firm is well-capitalized for ongoing projects into 2024.

Operational and Fiscal Efficiency

The company displayed strong operational performance, achieving a year cash cost of $654 per ounce, surpassing their guidance range. This efficiency carried over to their all-in sustaining costs, which were $1,201 per ounce, meeting the lower spectrum of their projected range of $1,195 to $1,235 per ounce.

Robust Cash Flow and Shareholder Returns

Contributing to shareholder value, the company announced an operating cash flow of $714 million for the full year, with $205 million in Q4 alone, and distributed $0.04 per share quarterly dividend, culminating in a $186 million payout for the year. These financial decisions are part of a strategic approach to manage the capital effectively, balancing investments with shareholder returns.

Strategic Capital Allocation

The company is focused on strategic capital projects, which includes investing $845 million over the entire year with specific emphasis on the development of major projects like TSF and Fekola underground operations. Additionally, they finished the year with substantial liquidity, having $306 million in cash, and an available $700 million credit line after strategically managing their financing operations.

Potential Expansion and Exploration Successes

A positive note was struck with the announcement of promising exploration results at the Antelope deposit, suggesting the potential for underground mining operations. Further drilling could lead to the development of additional mining zones, possibly enhancing the production profile with high-grade ore inputs beyond 2025, highlighting a progressive growth outlook for production capacity.

Operational Innovations

Adaptation and innovation are at the forefront of operational changes, demonstrated by the proactive adjustments to construction processes, such as optimizing routes and adding more water trucks, which have contributed to successful and ahead-of-schedule advancements this year despite challenges presented by El Niño-induced warmer temperatures.

Navigating Financial Instruments strategically

Financial acumen is evident in the management of royalty obligations and streaming agreements. The firm took a strategic stance on inherited obligations from Wheaton, ensuring they retain autonomy in their production rights. The willingness to monetize royalties when advantageous showcases a prudent yet flexible approach to financial instrument management.

Looking Ahead: 2024 as a Transitional Year

The executive team communicated a message of resilience despite the volatility in gold equities, envisioning 2024 as a transitional year. They are setting the stage for high cash flow and increased production, particularly with projects like Gusan. Confidence in the company's prospects is clear as they continue to champion their strengths at major industry events with an eye on solidifying their market position and attracting new investment.

Earnings Call Transcript 2023-Q4

[Operator]

Thank you for standing by. This is the conference operator. Welcome to B2Gold Corporation's Fourth Quarter and Full Year 2023 Financial Results Conference Call. As a reminder, parent-only mode and the conference is being recorded. After the presentation, there will be an opportunity for analysts to ask questions. [Operator Instructions] . I would now like to turn the conference over to Clive Johnson, President and CEO of B2Gold. Please go ahead, sir.

[Clive Johnson, executive]

Thank you, Apio. Hello, everyone. Thanks for joining us today, as the operator said, to discuss the fourth quarter 2023 financial results and also the full year of 2024. I want to start the call off by again extending the counts of all of us at BitGold for the tranche loss of life and comping volume. On February 15, it was in a [ areata ] on the club buses. And fortunately, for people who were killed in the tab, So we'd like to extend our control as to the families of those in the past and also our best wishes for the full recovery of the people that are in the hospital. With government growth, you got to an extensive investigation of what happened in the incident that happened about 300 kilometers from the Fekola mine on the National Highway, which is the way that many of the mines and areas and people in the area travel along the main highway. So we've had trouble spots there in the past. We've taken steps with the government to improve security. We will continue to work with the government to improve the security for our employees traveling to and from the mine. The investigation will help us understand the motivation of the attack and who the attackers were, and with that, which will be done shortly, we'll take some additional steps. The priority of BechGold has always been for our 6,700 employees has always been the safety of our people, including transportation. We do have a top safety record on site, or one of the better track records in our industry, and we're proud of that, and we consider that safety is parity. In terms of talking about 2024, I'm going to hand off here shortly to Mike, who said our Chief Financial Officer is going to run through and give you a quick high-level overview because the news is quite extensive. We'll talk about the record gold production in 2024. We talk about this as the eighth year in a row that the company has met or beaten its expectations under our guidance, which is, I think, a tremendous track record that we intend to keep going into 2024 and beyond. 2024, as Michael talked about 22 results, just to touch on 2024. We've seen it for quite a while now. This is a transitional year with the construction of the goose plant and also with some various capital expenditures that we have at Fekola; for example, we're building another new tailings bond. We're building our extension to the solar plant. We have a bit lower production for this year because we didn't get the permits from the government, the expertise from the government of Mali, or the time to produce the additional 80,000 to 100,000 ounces we were hoping to produce in 2024 as we start trucking ore from what we call a complex in the North Anaconda area, down the Fekola mill. So we're working with the government. We're hoping to get clarity from the government quite soon and move on to starting to truck that ore later this year, but we haven't put it in '24, which stood in 2025, which could add 800,000 ounces to the annual coal production, significantly above that, of course, to the benefit of the overall. So we've had some positive meetings, and we think we're closely understanding the implication of the 2023 mine code, which cola is grown after the cost of 12 comes or is very important, but the regional projects are subject to the new code because those are exploration licenses rigorous. So going into 2020, we are in an externally strong financial position that we were in at the end of the year. And subsequent to the year, I believe we completed a prepayment of gold revenue financing, which is an excellent way to further strengthen our financial position given the large capital expenditures that we have this year from some of the things I talked about, but also obviously reduce construction as well. So that financing was excellent, around 3% of the cost of capital, and it is a copro of any of our gold mines. And I repeat about pad back in 2025 and 2026, and it represents about 11% of our gold production during those years, and it was done around the 2020 price of gold. So I think a very effective financing, and you've seen us do it before back in the day, when I think it was 2014 when we pioneered this from the financing from the industry, which has subsequently been done by numerous companies, but it is an excellent way to maintain a very strong balance sheet. And when you have significant capital expenditures coming, it is cheap for financing, and exposed is very little of our gold in terms of the small percentage of production locking those years. So in 2025, we're looking to bounce back to another very strong year because we've finished some of the things we're doing at Fekola, et cetera, boosted the schedule, and started production in the first quarter of 2025. And we should set record gold production again in 2025, who's coming on, and then better production, more with trucking ore and better grade in Fekola getting into 2025, and much less capital expenditures across the board. So I think with that, I'll pass it over to Mike to give you an overview of 2023. Dana had a very strong year for the company. And after Mike's this thing, Bill, who's up at Goose, is going to give you cue updates to sort of store independent teles connection, and then we're going to open up for questions. So with that, over to you, Mike.

[Michael Cinnamond, executive]

Okay. Thanks, Clive. So I'm going to start with the quarterly results. Revenue for the quarter was $512 million. We averaged just under $2,000 an ounce in 1993. So thank you, gold price. It's a good quarter and a good year for the gold price. I think for the full year, we came in at $1.9 billion at an average price of $1,946 an ounce, which, when you think about the fact that we budgeted at $1,700 an ounce, is a good result. Production-wise, for the quarter, gold produced from our operating mines was $271,000, and then $289,000 if you include our share of caliber. I think production played out like we bought for Q4, but the big winner was for coal, 143,000 ounces versus 109,000, and that's really -- as expected, we had some changes in timing there between Q3 and Q4, just for some delays at the end of Q3, getting to Fekola's Phase 6, but we got in there in Q4. We got the grade we're expecting, kind of like we did the year before, and Fekola was budgeted significantly by almost 35,000 ounces. And then, if you look at -- shut out to for the quarter, I think, for Ojakoto, 81,000 ounces, just a couple of thousand ounces higher than budget, but that's actually a quarterly rockword for Otjikoto. And it just reflects the fact that we guide good grades, both in the scope and the Wolfshag underground mine. Then looking at the full-year picture, again, kind of how we guided it, I think, at Q3. Total, including our share caliber, is 161,000 ounces, which is in the upper half of our guidance range. And I would say again that, on a consolidated basis, this is a record annual production level for B2Gold. We talk a little bit now about what that means on the cost side. Again, not spending too much time on this because I think really these results ruled out what we saw through the year, what we guided in Q3, and what we expect. So in the quarter, the big winners on the cash cost side were for colon Masbate. Fekola, with that additional production that came through and was built to sell it, was $605 an ounce, which is quite a bit under budget, and Masbate was $910 an ounce, which is $71 under budget. And overall, we came in for all of the operations; we came in $633 net, which was $20 under budget, continuing to benefit, I think, from lower fuel prices against budget that we saw, and then production beat every mine slightly for the year. And when you look at the all-in sustaining cost side, it kind of mirrors what we're saying there for all operations, including nonserver, at $1,257 an ounce. -- for the quarter, which was slightly above budget, but when -- and it's really a function of 2 things. You've got the beat that we had on the cash cost side, and then you got some CapEx that we were catching up on from prior quarters, particularly in Mali, where we had pretty significant CapEx year-sustaining capital to get us ready to start moving into '24 and beyond. So on the cost side, I'd say, overall, when you look at the total year-to-year cash cost, $654 per ounce, that's below our original guidance range for the full year, $67 million, so a good result. Again, as we said, we thought we came out in Q4 at the end of Q3. And then all-in sustaining costs for the year are just $1,201 an ounce, and that's right at the low end of our consolidated guidance range of $1.95 to $12.35 per ounce. So really more of the same as we saw as we went through the year and very solid results from the operations. Comments on a couple of other operations where they are. And a couple of things to comment on before we get into other results. So at Fekola Regional, as Clive mentioned, we're still waiting to get licenses there. But I would say that we had 18,000 ounces in there as part of regional production in the current year's budget for '23. And even though we weren't able to get access to that, the performance of the coal event overall for the Fekola complex, we still map our guidance range for Fekola overall. And we have continued to work on regional projects throughout the year. We have got most of the mining infrastructure, the roads, the warehouses, and the shops built through the course of '23, and we're just finishing that in the first quarter of '24. So we're really well positioned, I think, in terms of any trucking scenarios there for regional; we're just waiting now to receive a mining license. Granolas, as you know, in the year, we purchased Anglo's other 50% of the Grand Lotto project. So we own 100% now, and we're working on an updated PEA for that that we expect to have by the second quarter of 2024. -- thinking about a smaller-scale operation with potentially smaller met and better recovery and cost profile, a smaller CapEx upfront. Bill is going to give us a good project update, so I won't fill in on that right now. But just to highlight Bojdogain, Otjikoto is coming near the end of open pit mine life that is scheduled to ramp down in 2025, but we did put out a news release in January, just highlighting that we did have very positive exploration drill results from the antelope deposit that we're looking at now. And we think that with further drilling, it has the potential to be developed as an underground mining operation, which could help us change the mix of the Millfield as we move into the stockpile phase of Otjikoto. We will hopefully have a higher grade from an underground deposit at Antelope if that comes through. Okay. Now I'm just going to talk a little bit about some of the other results for the period. So on the earnings side, net income for shareholders for the quarter was $113 million as a result of an impairment charge of $0.09 per share. Year-to-date, or $0.01 per share. And adjusted net income, once we remove the impact of any significant nonrecurring noncash items, is $90 million for the quarter, $0.07 per share, or $346 million, $0.28 per share for the full year. In conjunction with that and really reflecting how well the operations performed on the cash flow side, we had $714 million operating cash flow for the period, or, sorry, for the full year, including $205 million for Q4. And for the full year, cash flow from operations per share was $0.58. So again, very good performance by the sites and getting that done. We found some good uses for it throughout the year. If you recall, some of the things we spent money on had dividends. So we've got our $0.04 per share USD per quarter dividend. That turned in the $186 million dividend payment for the full year. And remember, too, that as part of the Back River acquisition, there were certain financing obligations that we thought of because we believed in the future upside of that project that we wanted to buy out at inception. So that cost was just under $112 million in the second quarter. And then on the investing side, a total for the full year of $845 million, which really reflects significant capital investment in Fekola as we continue to advance projects like the TSF and the Fekola underground. Fekola Solar Phase 2, and then, of course, goes to those projects as we came into that. And we've been working hard on that and delegates an update there. We did finish the year with $306 million in cash in the bank. And that included drawing down on the line for $150 million in Q4, just in advance of some of the anticipated later Q4 expenses or early Q1 expenses. As Clive mentioned, we did do prepaid financing early in Q1. So with that, we used a portion of that $500 million in prepaid financing to pay down the outstanding balance on the line, just a little later in January, early in February. So where we sit today, we've got the full $700 million line available. And we're encashing the bank from the results of the prepaid times on as we look through the first couple of quarters of development and continue construction at various sites. One thing I will highlight is the most significant transaction that impacted Q4. So we did have an impairment for the Fekola complex of just over $200 million; maybe a couple of comments on that. As we've mentioned throughout the year, there was a new 2020 modeling mining code that was enacted later in '23 in the country. However, it was put into law, but there's a company and draft implementation decree, which is currently out for industry comment. We provided feedback along with the other big moly mining houses. It's not enacted yet, and exactly how some elements of the new code will be played remains outstanding; it could be subject to change, but we are where we are at this point in time. With that mining code out there, what it did prompt us to do was examined later in the fourth quarter. What were our plans for the Fekola regional licenses? As we discussed previously, we thought about whether there's a second mill, an oxide-only mill at Fekola Regional, or whether we should look at a trucking scenario. As I mentioned, we already have that broad infrastructure bill. So should we look at a trucking scenario for the Fekola? And I think, given the uncertainties about the new code and what we saw in there, it's not as attractive for things like the tax and royalty regime and some new funds that we've built in there. We did a comparative analysis, and we decided that for now, certainly, trucking a board from Fekola Region to Fekola Mill is the optimal scenario. In that trucking scenario, we see that it is optimal because it really eliminates any significant mill CapEx exposure if we wanted to build a mill, while at the same time providing close to the same cash flows from just trucking it down there and less capital upfront. So in looking at having done that trade-off and that analysis, That also prompted us to update our current high-level Fekola Mine in Fekola Regional and mine plan; we owe production profiles to those. I'd highlight again that these are point-in-time estimates of the best estimates we have right now. It doesn't take into account future changes in variables, finalization of the 2023 code, production changes, cost changes, or further exploration success. But there are still lots of plans to drill there and further define the oxide and, more importantly, perhaps, the sulfides below those oxides to see how they can benefit both coal regional production and Fekola production per se. But by looking at those new mine plans, they triggered an impairment review process. And key to highlight here, I think, is that those bulk mine plans assumed that we would process ore from both regional and Fekola at the Fekola mill. We had to look at them together. And for accounting purposes, they are treated as one combined cash flow-generating unit. So Fekola is the combination of the two. So we looked at that, looked at the plans, and the most significant impact there is that the new regional licenses are all under the 2023 code. So they have to bear the sort of regime that's under that current code as we know it, which includes higher taxes and royalties. And overall, this resulted in a noncash and amortization charge of just over $200 million for the combined Fekola complex cash-generating unit. And like all impairment assessments, we made our best estimates of a number of variables. If you look at gold prices, appropriate discount rates for the country, and the impact of the 2023 code on -- and obviously, for regional, we looked at that, that was fully impacted by the '23 code, and for Fekola Mine, we assume that all stabilized factors under the 2012 code are still stabilized. So that's our scenario. I can speak for each company in Mali because everyone has a slightly different scenario and where they are in their project, like the new projects. For us, the most significant issue here is that we have new projects that we know would be pulled in under the new code. So I think that's—those are the main items you want to highlight. I mean, if anyone has any questions, I'd be happy to answer them. Sorry, if you want to, yes, we'll go first up, and then we'll open it up for the questions. So, Bill, do we have you on the line?

[Unknown Executive]

Okay. So this is reporting in from the North. I'm actually at the Gro side right now in anticipation of the winter road opening up. And so I am happy to say that the two sides are pointing; they can see the stacks of each other's equipment. So we anticipate that pending good weather for the next 48 hours, the road will not be fully opened up. But it was certainly the first lighter low to come down the road. So what we're doing now is we're in the process of loading on the MLA side, ready to go. And so we can anticipate certainly this weekend that we will be seeing on the road everyone remembers that's in a good space. We've got double the number of trucks that we've had since last year and double the capacity. So we think we're really good at winter road equipment. Additionally, here, the mill rights are in the mill installing the mill. We've always had 3 to 4 months. Most of the buildings are now completely putting in generators underground. The open pit is operating. The underground is looking good. Phase 2 of the camp is getting ready to go. So that will be some of the first pieces of equipment that come down the road. the Phase II camp, which will allow us to get to 500 beds. Just on cost, I don't have the latest numbers, but what I will tell you is, if you remember, we pretty much derisked the project because we've ordered all of the stuff, obviously, which is coming down the 24 Road. We're in the process of shipping stock, which is basically a budget; we'll take it in January. And we anticipate not seeing any material scope or budget. I don't know, Clive, if there's anything else you want me to talk about.

[Clive Johnson, executive]

I guess maybe just highlight, I think you just did, but the fact that we've spent a lot of capital in order to buy a lot of equipment for the next 1.5 years. So we've actually derisked the project because it doesn't make much money. We spent on the estimated capital cost for Goose that we've spent. Well, cash spent to the end of the year was approximately $75 million for Goose CapEx in total, including Sabina's share of what they spent and what we spent post-acquisition. And what do we have left to spend this in a recent referendum? Well, we've got -- we've given the budget estimates for CapEx for $150 million for the main project plus the funding for the development of the Open Underground, as well as some of the working capital funding that we think we did. So Bill, I guess just to remind people about the schedule of the ice road starting here shortly, but how many weeks we have and we think we have on that I show, and when do we think it will wrap up, and we'll have utilized in the max.

[Unknown Executive]

So some of the numbers, we've always talked about kind of a macro amount of 3,000 containers, and we've actually got down to 200 contained. That includes just Brett, as I said, will be open up, and there will be open this weekend. And we have April or the first week of May; assume that we're running 50 trucks or 48 trucks. What you're going to see is that we've got more than double the capacity to bring the load down the road. So I think it is very good in terms of what it brings.

[Clive Johnson, executive]

Can you break it up a bit, Bill? But thanks for that. Just another couple of things that, to remind you, we still have, obviously, as a company, one of our priorities, and one of our great strengths is also exploration and our exploration success, not only in finding more gold around our existing operations mines or acquisitions we've made, but also in making additional discoveries as a group and as a company over a long period of time. So we have an aggressive exploration program. We have an in-and-out this year. If there's a question about exploration, We are pulling back on exploration in Mali. I like the mention that we are far from realizing the ultimate value of the Fekola complex. The loss of targets means lots of results we hit that are open. We aren't drilling, frankly. We've cut back to maintain there because we don't yet understand the full implications of the 2023 code and understand whether it might be an option to build a second or other or, et cetera. But trucking looks like the option for pursuing that, as we said, and hopefully we'll be able to start that sometime later this year. But for the exploration, why don't you go out and drill off lots more additional ounces? When it's not clear whether they're economic, i.e., the second bill potential. So—but we will get back to that. If we forget where we want to get to the government, I'm understanding that the 2023 cover is going to be very detrimental to the future. We'll go by the industry in Maui because we will make it from being a very attractive company for investment over many decades, making it one of the less attractive companies. We have choices about where we spend our money. Gramalote, for example, if we get a good result in the study in the middle of the year, that could be a good project with 100% by B2Gold. So exploration remains a priority for goose exploration. I haven't seen Talanian Andy, these guys as extended about an exploration upside, maybe since Kuposome of the days at Fekola. But we have numerous targets and a big budget there. And we always knew about the acquisition. We don't pay for ounces that might be there in our acquisitions, but then we think there's going to be a lot. We've already had one very good result by joining the deepest hole ever drilled in the wet, and that was a really good result. I think it was 20 meters at 18 grams underneath to 100 meets before wide open, and there's many other zones as well. So I think with that, we'll open it up to questions. [Audio Gap]. I can still hear you.

[Operator]

So thank you. We will now begin the analyst question-and-answer session. [Operator Instructions]. The first question comes from Wayne Lam of RBC.

[Wayne Lam, analyst]

Just a question on the sequencing of mining activity at the river. I was just wondering if you might be able to provide a bit more detail on the increased spend there and the rationale in terms of the resequencing of upfront mining activity.

[Unknown Executive]

Yes, thank you for that question. Basically, there are a couple of things that we've done here. One is really focusing on the echo pit. That's going to be the first tailings facility. So that's something that we want to move forward and focus on. But really of more interest are underground mining and environmental What we've done is looked at the development and the size of the resource and realized that by going with long-hole stopping, not only on a mining method basis but also on a material flow basis, we can upsize the mining equipment. So going from 30 ton trucks to 50 ton trucks and then also increasing the size of the scoops—so much of the capital that you're seeing there is a larger mining fleet and physically larger equipment to start with—and that's going to allow us to increase the mining rates from underground and also reduce the mining costs.

[Wayne Lam, analyst]

Okay. Great. And then I was just curious about the upcoming life update there. You guys have previously kind of soft-guided higher costs with the update closer to $1,000 per ounce of ASIC. Just wondering, given how things have evolved on the CapEx side over the past few months, have you seen any additional pressures where that could actually end up higher in the update relative to that prior target?

[Unknown Executive]

So we don't have the detailed cost analysis yet for the OpEx. There are some fuel costs that have gone up and some maintenance costs. So there will probably be some normal inflationary increases there. But like I said, we're offsetting these with a higher production rate. So in the end, we don't have the final numbers yet, but I think it would be fair to assume some inflationary impact.

[Wayne Lam, analyst]

Okay. Great. And then maybe just one last one for me on the security front in Mali. It seems as though the historic issues have been much further east of the operations at Fekola. I'm just wondering if you've kind of seen some of that activity start to shift further west. And then, with the most recent incident, how are you guys kind of reconsidering your operations in terms of transporting personnel to the site?

[Unknown Executive]

Yes, we're always transparent and happy to be sold, but I think it's really important to understand where we're in an investigation with the government to understand the motivation of the attack, understand how the attackers work, and really review the process. We did have additional safety measures by having that vehicle out in front and a couple of deals in the back of the three. So it's just too early to talk about that. It would be inappropriate for us to try to predict what we're going to do. We need to get with the government as we are, understand more about the attack, and then talk about the measures. And there are a few alternatives, but one measure we can take to further improve security and the curve to go to continue to improve security on their national highway, okay? This is the National Highway for Mali. So the safety of their citizens is just a priority for the government as well. So we have 3,000 Malian employees at the mine, and their safety is our top priority. And I think it's—I believe—I know it's a priority for the government, and they've taken steps along with us to improve safety. So that's really all we can say on top of that for now when we go to report more when we have finished our investigation.

[Unknown Executive]

Can I just add to that? I mean, certainly, everything is ongoing right now. To tell you the truth, not only with the government but also with the employees, because they're ultimately the ones that really have to do the travel, and they've been a very willing partner, and this situation needs to be handled, but it is kind of a [Technical Difficulty]

[Clive Johnson, executive]

yes. I wouldn't just meet your inflator on the question asked before about those costs because I don't want to make sure we get that right. Can you talk a little bit about where we are in terms of the last estimates we put out or when we discussed the estimates about all sustaining costs at Goa? I think we've built in quite a lot of inflationary factors; would that be fair to say?

[Unknown Executive]

Absolutely, Clive. Marketing out there says 1,100. I guess I'm pretty broken up now that I'm getting tech new year? [Technical Difficulty]

[Clive Johnson, executive]

You broke up there, but I think you were talking about the fact that we recently discussed in our market that all sustaining costs are, we think, reflective, so we are projecting some additional inflation costs in that number. Let's move on to additional questions.

[Operator]

The next question comes from Ovais Habib of Scotiabank.

[Ovais Habib, analyst]

Live B2 Team. First of all, please also pass on Mike, and do so for the families of the diseases as well. On another note, congrats on a strong year, especially with cash costs coming in below your guidance for 2023. Since we are on Gol, I was going to start off by just asking in terms of how the underground at Goose is progressing as well as if you are doing any sort of drilling into the initial stopes that's expected to be mined out. So maybe we can start off there.

[Unknown Executive]

Yes. I'm sorry, I cut off at the beginning of that. Was this for Fekola or for Goose? Because Yes. So we have two options. The standing option, basically following what Sabina had, was to target the lower-income section. And then we're also working on the crown pillar section. That's our upside case, and that's really what we're driving for. We are on schedule there. Development has been continuing. We've had a couple of interruptions and normal operational interruptions throughout the winter, but we're absolutely on schedule and have no concerns about having those stockpiles ready for startup.

[Unknown Executive]

We're not drilling from underground yet, but in the Carmila area and the area that's going to be subject to mining, underground mining is well covered with existing resource drilling. And obviously, the focus of our drilling is moving forward, and we expect to start surface drilling towards the end of March or the beginning of April. There is an extension of the conversion of inferred to indicated on Ormat and at Lamar. And obviously, over 56% of our drilling will be focused on extensions of our existing resources and tackling numerous other targets that we've identified.

[Ovais Habib, analyst]

Perfect. And just moving on to Fekola and Fekola Regional. Clamae, you provided a good overview in terms of how great relationships are with the Malian government and how much they want to move these projects forward. I mean, the question here is, are you still in discussions with the Malian government, or has the Malian government gone back internally to figure out how to proceed with this new mining code?

[Clive Johnson, executive]

Yes. We had it about 6 or 7 weeks ago now. It's been a busy time, but we were down there in discussions with the government representatives, which may clear up our concerns about the 2023 code. As I know, the social matters there have done as well. But the ballast in the government's core now is that we did come up with a better understanding of certain issues, and we made some progress in our discussions. It was left to the government to go and come back with some ideas about some of the questions that we had asked. So I understand the government; I guess there's some material discussion going on between perhaps the ministries of mines and finance, et cetera. And we're waiting to hear back from them about the ultimate nature of the two records and the implementation of the code. So it's still a bit unknown where we hope that our arguments and discussions with the government about the real impact of certain aspects of the 2023 call and the negative impact on potential future investment, which is the reason why we unfortunately had to tell the end of the 2023 call, the second mill was off the table. And that seemed to—frankly, they wanted to know more about why that was. Trucking award, it looks like there's some good economics there because we've got a great material, starting off an oxide material to truck today material with no blasting, crushing, and the roads are already built. We're ready to go as soon as we get the authorization permit. So we think that we will find a way forward on that part of it, so we are waiting for the ultimate resolution, some things we discussed with the government, and the ultimate proposed implementation of the 2020 Street Code.

[Operator]

The next questions come from Anita Soni of CIBC Capital Markets.

[Anita Soni, analyst]

And I apologize if you addressed it in your beginning comments; I've been hopping from different calls. So I just really want to understand. I know you took a write-down at Fekola, and it says it's based on your impression of the mining code and that the mining code is subject to change. And I didn't find it in the release last night, but could you provide any color on what you do know about the proposed mining code at this stage?

[Clive Johnson, executive]

I really don't think we're going to go into details on that at the model. It's just in a state of flux right now. We're waiting to go balls to the government's court. We made our case. I understand other producers have made their case about the new company. So I think it's—I just wouldn't want to speculate right now. I think we have good conversations. I think the government better understands our issues and why we wouldn't build a second mill. If the 2023 cold remains as was initially proposed, But I think I don't really not feel comfortable getting in some detail. We're not going to negotiate our conference calls. So respectfully, we will come back to you on that as soon as we have clarification.

[Anita Soni, analyst]

Okay. No, I get -- and then, with respect to -- they are very encouraging on building the trucking option, it seems like. So was that part of -- like, is the trucking option separate in terms of what kind of write-down that you took, like, is the write-down really just related to the mill option? Is that the case?

[Clive Johnson, executive]

Yes. I kind of gave—I'm not sure when you came on. I gave an overview of how we had to look at it. But we have to look at the trucking option because it goes through a coal mill. It meant that when we looked at the results and the future cash flows, we used an impairment model for cola and did what we call the Fekola complex cash-generating unit. So it includes both the regional and the Fekola mine put together because it's coming through the Fekola mill. So we had to look at the combined cash flows. And then what had the biggest significant impact, being that the region was under the full 23 Coke fields and new operations? Yes, I think what we can tell you, Sean, clearly from our trip down there, is that the government reiterated their appreciation of B2Gold in respect for B2Gold as being what they call one of the top foreign investors in the country in terms of the way we approach the project, the way we dealt with the government and our employees, et cetera. So we seem to have a good rule, but we do have a very good relationship there. But I can tell you that the government made it very clear how keen they are on getting the trucking of the ore to happen. They really want it to happen. So they've got some steps to take before they can give us the next potation permit, and that includes finalizing the code. But they definitely need revenue. They understand that we're ready to go. They did agree that we could build the infrastructure even on an expectation license, so we could build the infrastructure, which concludes the roads. We're ready to go now because we built all the infrastructure necessary. So we're on the same page with the government. We want to start for more. They want us to do well as well. We need more detail on the code, and we need that exploitation of it, hopefully soon.

[Anita Soni, analyst]

Okay. And then my final question pertains to Goose and the $937 million that you ascribed to the transaction. So you've got $740 million in mineral interest that you outlined in there. And there was also the royalty obligation. Did you not cancel that royalty obligation? Like, should we be thinking about that being removed? Or is it still there? And then there's another royalty that you guys are collecting? And what are your intentions with that second royalty?

[Clive Johnson, executive]

The first one, we do have—there's a royalty day with Wheaton. Mike, do you want to sort out the repayment part? Yes, there's—I think there's maybe two things. We acquired the Hackett River royalty; that's an asset from our perspective, and we all look at that as part of the purchase price. And then the other part was that we inherited Wheaton's or the Sabinas gold stream obligation with Wheaton. And if you recall, when we did the acquisition, in addition to unwinding a couple of other things, we bought back the MAX that we could have had stream obligations. So we bought back 130... And in our own production rights. So it's small; it's a soft stream in our production world, and we're comfortable having a relationship with it. In terms of other royalties, we're not in the royalties business. And if we have the opportunity to realize that we can sell the royalties at reasonable levels, we are open to doing that for sure. Yes. And if you want a bit more detail on the stream, it is in the financial notes. If you look at No. 18, we kind of laid out the gold stream works and what we initially acquired and what we bought back. So if you need any more detail, note 18 pretty much gets you that information.

[Operator]

The next question comes from Don DeMarco of National Bank Financial.

[Don DeMarco, analyst]

I'll start the first question with Goose. The winter ice road is expected to finish up tomorrow. I am just interested in your comments on construction. Was it completed without incident? There are no concerns about temperature. Is there anything you would do differently next year?

[Clive Johnson, executive]

[Technical Difficulty] Peter; I know you were just there. Could you just talk about what we're learning from this construction and what, if anything, we would do differently next year? It seems like it's been a very good success in what we've done with 160 kilometers, I guess, some 58 so far, but not in the roads that we built.

[Unknown Executive]

That's right, Clive. So we made a couple of changes this year. We stated some equipment at midway points. We had some forward camps from both ends and also had more equipment. Adding more water trucks was one of the biggest changes that we made, and we also optimized some of the routes over a few of the lakes. Those work really well. And basically, the initial schedule was built on the road being opened on March 1 fairly conservatively. It looks like—well, we are going to beat that. So we'll have it open in a day or two. And so, first of all, I want to emphasize that the changes that we made last year have been very successful. As far as further changes, this year with El Nino, we had a little bit of a challenge getting started with the warmer temperatures. That's not really anything that we can control. Other than that, it's been a really nice construction season. So obviously, we'll go back. We'll compare notes during the warmer part of the summer and make the changes that we come up with. But all in all, we're very happy with how this has gone.

[Clive Johnson, executive]

Yes. And then maybe a little color there. I mean, at the end of the day, often people do the nitro starting from the ocean. In this case, Pathe, the ocean freezes last. So by moving the equipment last year to the middle of being able to start construction that way, we got well ahead of schedule. We will have a better schedule to do that. So -- and also some of the people involved here were involved in the fact that Copec in the Bema built 70 kilometers of ice roads to get everything from the northern part of Russia out of the Kupol site. So we have a lot of expertise in this. And as a law learned from last year and what I showed the successes and challenges that were faced by Sabine at the time, So I think the guys have done an excellent job, as we hope to see.

[Don DeMarco, analyst]

Okay. And then just a final question. A few weeks ago, you released some active on the Antelope Otjikoto. I think you could add maybe 50,000 ounces a year beyond 2026. What do you need to see in the scoping study that's pending 125 to confirm? And are there any other sort of high-priority targets on the site that you're interested in that could add additional extensions?

[Clive Johnson, executive]

Well, the study will give us an economic view of what we've tapped into so far, and I'll let Vic talk about the potential here. And we haven't gotten more assays back yet, but we're very encouraged by what we're really seeing.

[Unknown Executive]

Yes. So the results, or the initial resource that we'll put out, will be in the Springbok zone, which is one of several zones within the Antelope deposit. The spring opens about 3 kilometers, a stove-kilometer south of the Ocito pit. It lines up the lineman that lines up Springbok, and the Accor is running straight towards it. And we do have several hits between Springbok and the Artico that we'll obviously follow up on and are going to be following up on this year. So that potential is wide open, within 3 kilometers of strike. Obviously, that needs to be drilled out. So there's huge potential. There could be quite a few more antelopes out there.

[Don DeMarco, analyst]

Okay. It was great to hear. Thanks so much, Colin, and good luck in Q1. Thanks.

[Operator]

This concludes the question-and-answer session. I would like to turn the conference back over to Clive Johnson for any closing remarks.

[Clive Johnson, executive]

Thanks, operator. Thank you all for your questions and your attention today. Obviously, I guess, maybe the elephant in the room or the [ rhinithe ] room is the fact that there's the performance of the gold equities, including ours; we have a very strong price, and it looks like a pretty solid coal price. Those are the challenges we face. I think we've presented our case here about 2024 as a transitional year leading into getting back to some excellent years of very strong years in cash flow and an increase in production as we bring Gusan and to do some of the other things we were doing in 2024. So at the end of the day, after doing this for a long time, I've never seen the others who greet the disconnect between the govis and the gold equity. So somewhere on the way here. Someone is going to find some gold equities attractive. We'll continue to tell our story; we'll be at the bio conference with a tremendous amount of interest in having meetings at PDAC, et cetera. So we'll be out there talking to people about how B2Gold is going to continue to be a very successful gold producer, very strong financially and ESG, and continue to grow gold production as we did in 2025. So thank you all for your contribution, your questions, and your time. Thanks, operator.

[Operator]

This brings today's conference call to a close. You may disconnect your lines. Thank you for participating, and have a pleasant day.