Metals and Mining -- Precious Metals and Minerals

ENHANCED GROWTH PROFILE FROM A

MATERIALLY DE-RISKED PORTFOLIO

Investment recommendation

We reiterate our BUY rating on B2Gold which remains a Canaccord Genuity

Focus List pick. Following the close of the CGA Mining acquisition, we expect

significant rerating from an enhanced growth pipeline, highlighted by production

growth by 158,000 oz in 2012 to approximately 540,000 oz by 2015 even without

incorporating any contribution from a potential expansion at Masbate (+50,000

oz/yr) or development of Gramalote (+150,000 oz). In our view, the Masbate mine

also provides geographic diversification to B2Gold’s portfolio while lowering new

mine development risk. In addition, the near-term cash flows from Masbate

should enhance the company’s balance sheet thus lowering overall financing risk

by leaving the company in a strong position to internally fund its growth pipeline.

We also expect that the market will continue to reward the company for

continued strong operational performance over the coming quarters as

production ramps up from the Santa Maria and Jabali veins at La Libertad.

Investment highlights

? Our valuation and forecasts have been updated to incorporate the CGA

Mining acquisition. We estimate that the acquisition is 8.4% accretive to our

5%/NAVPS (spot gold) estimate as well as substantially accretive to our cash

flow estimates over the next few years (500% accretive to 2014E FCF and

23% accretive to 2014 CFPS).

? We have also updated our modeled profile based on the recently released

positive Otjikoto Feasibility study which outlined a 12-year mine life with

annual gold production of 112,000 oz/year at operating cash costs of $689

per ounce (141,000 ounces at $525/oz in years 1 to 5). Following receipt of

approval from the board of directors, construction has commenced with a

$150 million loan facility secured.

? Our forecasts also reflect our revised commodity price forecasts summarized

in Figure 5.

Valuation

Our 12-month target price has been increased to C$6.00 (from C$5.00), based on

1.15x (previously1.1 x) our 5%/peak $1,850/oz Au NAVPS estimate of US$5.18

(previously US$4.55 at peak $1,750/oz Au), translated assuming US$/C$ parity.