B2Gold Stock Faces an Uncertain Future

B2Gold is having an indifferent year so far on the stock market, and the company’s latest results didn’t do much to boost investor enthusiasm. The company beat Wall Street’s revenue and earnings estimates, but the results were weak in general as the top line was down in the double digits on a year- over-year basis.

Let’s see what’s going wrong at B2Gold and if it is capable of staging a comeback.

A Closer Look at the Results

B2Gold produced 230,859 ounces of gold during the first quarter of 2019, down from the prior year period’s production of 239,684 ounces. However, the company claims that this output was 6% better than what it had originally budgeted for the quarter.

Thanks to the lower production and the lower number of ounces that B2Gold was able to put on sale during the quarter, its revenue dropped to $302 million from $344 million in the prior-year period. But this wasn’t the only problem B2Gold had to face during the quarter.

The company’s consolidated cash operating costs for the first quarter came in at $545 per ounce, up from the year-ago period’s figure of $481 an ounce. As a result of higher operating costs, the company’s all-in sustaining costs also increased to $848 an ounce from $750 an ounce last year.

Thanks to higher costs and lower production, B2Gold’s net income fell to $27 million, or $0.02 per share, as compared to $57 million in the prior-year period.

In all, it was a bad quarter for B2Gold even though the company’s press release claims that it delivered strong results.

What to Expect Going Forward?

Despite its bad results, B2Gold management put up a strong face last quarter, saying that the company’s mines delivered stronger-than-expected results.

B2Gold believes that its output will pick up the pace in the second half of the year to a range of 499,000 to 519,000 ounces. By comparison, the first-half gold output is expected to range between 436,000 and 456,000 ounces of gold. In all, the company forecasts that its total 2019 production will fall between 935,000 and 975,000 ounces.

The mid-point of that guidance is almost in line with 2018’s total production of 953,504 ounces of gold, so there won’t be much top-line upside this year until and unless gold prices improve significantly.

Don’t be surprised to see investors ditching B2Gold stock for another gold company that’s capable of delivering growth.

However, B2Gold expects its consolidated cash costs to remain low in 2019, falling in a range of $520 an ounce to $560 an ounce, while all-in sustaining costs are expected between $835 an ounce and $875 an ounce.

Again, B2Gold had a much lower cost base last year. Its consolidated cash operating cost was $495 an ounce, while all-in sustaining costs came in at $758 an ounce. The higher cost profile and a flat production would weigh on B2Gold for the remainder of the year, so don’t be surprised to see investors ditching B2Gold stock for another gold company that’s capable of delivering growth.

In the end, don’t be surprised to see B2Gold stock fall further after its weak start to the year because of the several challenges that it faces.

The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

Harsh Singh Chauhan
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.

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