B2Gold Stock Is a Nice Bet at Current Levels

The gold price rally has been a tailwind for B2Gold [stock_market_widget type="inline" template="generic" color="default" assets="BTO.TO" markup="(TSX: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] stock, which has gained momentum in the past few months. The company’s results have been positive of late and they are all set to get better in the coming months thanks to recent developments announced by the company.

Let’s take a closer look at what’s going on at B2Gold and why it is on track to soar to new highs going forward.

B2Gold’s Production Should Get a Shot in the Arm

Earlier this month, B2Gold announced that it is increasing its stake in its joint venture with AngloGold Ashanti in Colombia’s Gramalote project to 50%. The new arrangement will also make B2Gold the manager of the project, and it will also invest nearly $14 million to increase its stake from the current level of 48.3%.

So, investors can expect a slight increase in B2Gold’s output from January next year when the arrangement comes into effect.

This is not the only positive development announced by B2Gold of late. The company followed up the AngloGold announcement with its exploration results at the Fekola mine in Mali. B2Gold said that it is witnessing positive drill results at the Mamba zone of the mine.

B2Gold is extending a high-grade mineralized zone at Mamba from 400 meters at present to over 1 kilometre. Moreover, it has discovered a new good grade zone beneath the existing zone at Mamba. Such developments have the potential to boost B2Gold’s financial performance in the future by increasing its gold output.

As it turns out, the Fekola mine is already performing ahead of expectations, and the addition of new resources over there has the potential to lead to higher output. The company pointed this out on the latest conference call:

It’s really driven similar considerations to previous quarters is outperformance by Fekola, with is 10,000 ounces ahead of budget; Masbate, which was 4,000 ounces ahead; and Otjikoto, which was 1,000 ounces ahead. On the Nicaraguan side, overall, they were 2,000 ounces ahead of budget.

What Should Investors Do?

With a forward price-to-earnings ratio of just 13, B2Gold looks like a good bet at current levels. That’s because the company’s financial performance has started improving on the back of higher gold prices and an increase in production.

This year, analysts expect the company’s top line to remain flat year over year. But in 2020, revenue growth is expected to be stronger at 14.4%. What’s more, B2Gold’s earnings are expected to increase to $0.21 per share in 2019, but next year, they are expected to jump more strongly to $0.33 per share.

Given the strong earnings growth that the company is expected to deliver in the future and the favourable gold pricing environment, it makes sense for investors to go long B2Gold at its current valuation since the stock looks primed for more upside.

Harsh Singh Chauhan has a wealth of experience evaluating publicly-traded companies across several verticals, including technology, oil and gas, retail, and consumer goods. His financial writing has been published across platforms such as The Motley Fool, TheStreet, and Seeking Alpha. Harsh's philosophy is to find great businesses for the long run based on company fundamentals and industry prospects. Address: 682 Indian Road, Toronto, Ontario, M6P 2C9. Phone: 416-721-8257.


Please enter your comment!
Please enter your name here