Shares of B2Gold [stock_market_widget type="inline" template="generic" color="default" assets="BTO" markup="(TSE: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] have risen nearly 33% over the past three months thanks to recovering gold prices and the company’s solid production growth, and it looks like the momentum won’t be dying out anytime soon. The Vancouver, British Columbia-based company has provided a decent outlook for 2019 along with its fiscal fourth-quarter results that were released recently. Let’s take a closer look.
Closing 2018 on a High
Though B2Gold’s top and bottom lines were slightly below expectations in the fourth quarter of 2018, there was substantial growth on both fronts on a year-over-year basis. The company’s revenue of $272 million was up 56% year over year, while its adjusted net income increased from $6 million a year ago to $14 million last quarter.
On a full-year basis, B2Gold’s revenue nearly doubled to $1.23 billion as compared to 2017 levels. Such an impressive increase in the company’s top line was the result of a substantial jump in B2Gold’s output. The company delivered 231,687 ounces of gold production for the fourth quarter and managed to sell 221,307 ounces of the yellow metal at an average price of $1,230 an ounce. That compares favourably to last year’s sales of 137,695 ounces of gold, though B2Gold enjoyed higher gold prices of $1,264 an ounce during that period.
For the full year, B2Gold’s consolidated gold sales came in at 970,409 ounces at an average realized price of $1,262 an ounce, a big jump over last year’s sales of 510,966 ounces that were delivered at an average price of $1,264 an ounce. The company’s full-year gold production came in at 953,504 ounces.
Higher Gold Prices Will Be a Catalyst
According to the latest guidance, B2Gold expects to produce between 935,000 ounces and 975,000 ounces of gold this year. The mid-point of that guidance range suggests that its output will remain flat in fiscal 2019.
The company’s cash operating costs are expected in the range of $520-$560 per ounce, while all-in sustaining costs will be in the range of $835-$875 an ounce. For comparison, B2Gold’s all-in sustaining costs came in at $758 per ounce in 2018, which was below the lower end of its guidance range. But it is clear that the company’s costs are expected to rise in the double digits this year.
Not surprisingly, analysts expect B2Gold’s top and bottom lines to remain flat this year thanks to no production growth and higher costs. But there’s one catalyst that could help the company deliver better-than-expected results.
Gold is currently trading at a spot price of nearly $1,310 an ounce. The yellow metal has hovered above the $1,300-mark for most of the year, a level that it could sustain for the remainder of 2019. In fact, Bank of America Merrill Lynch believes that gold prices could average $1,350 an ounce this year, stating that the budget deficit of the U.S. government could turn out to be a tailwind for the precious metal.
If that’s indeed the case, gold prices could average nearly 7% higher than B2Gold’s realized price last year. Additionally, the company was able to keep its costs below the guidance range last year, and a repeat of the same performance in 2019 could help it improve the bottom line. As such, B2Gold investors should continue holding the stock as it has the potential for more upside.
