Improved Commodity Price, lower Cash-Cost to Drive Profitability: B2Gold Corp. (TSX: BTO) is a low-cost gold producing company and operates through three gold mines and several exploration and development projects globally. The BTO stock stood resilient in the recent past and currently trading above its 200-day simple moving average (SMA) of CAD 5.05. Notably, B2Gold drew US$ 250 million through its Revolving Credit Facility in early April 2020 in order to support its working capital needs, on the weak macro backdrop and shutdown of production facilities.

The Group has proposed for an increased quarterly dividend of US$ 0.02 per share, higher than US$ 0.01 in the previous quarter. However, the above dividend amount is subjected to Shareholder’s approval. 

Outlook:  The company expects to produce 1,000,000 to 1,055,000 ounces of gold in FY20. Cash operating costs are estimated within US$415 to $455 per ounce while all-in sustaining costs are projected in between US$780 to US$820 per ounce.

Q1FY20 Financial Highlights: For the period ended March 31, 2020, BTO posted a stellar set of numbers, wherein the Group reported total revenue of US$ 380.29 million, as compared US$ 263.98 million in pcp. The increase was driven by higher average realized gold price of US$ 1,588/ ounce, as compared to US$ 1,312/ ounce in Q1FY19. Operating income soared to US$179.42 million, as compared to US$74.14 million in the previous corresponding period, thanks to lower production costs, general and administrative costs, share-based payments, while higher depreciation and depletion, community relations expenses remained a drag. Net income from continuing operations grew to US$ 83 million, as compared to US$35.24 million in the pcp. Capital expenditure for the first quarter stood at US$ 112.68 million, significantly higher than US$ 58.5 million in the previous corresponding period. The Company exited the quarter with cash and cash equivalents of US$ 207.94 million. 

Q1FY20 Income Statement Highlights (Source: Company Reports)

Stock Recommendation: The stock BTO generated a stellar return of ~116% in the last one year amidst sharp correction in the broader market. The Company reported impressive performance, with better than expected gold production. The Company managed to report lower cash costs during the Q1FY20, which further supported the margins and cash flow. Notably, investors are turning towards gold as an investment option amid volatility and uncertainty, which is likely to drive prices higher. BTO’s performance is closely linked to the commodity prices of gold and continues to reap the benefits of increased realization in prices. Hence, we recommend a ‘Hold’ on the stock at the closing price of CAD 7.61, as on May 05, 2020.

BTO Daily Price Chart (Source: Thomson Reuters)

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