Metals and Mining -- Precious Metals and Minerals
2013 EXPLORATION AND DEVELOPMENT
We maintain our BUY rating on B2Gold following the release of 2012
exploration results and the 2013 exploration/development budget. B2Gold is
a Canaccord Genuity Focus List pick based on one of the best production
growth profiles in the sector, with expected production growth from 158 koz
in 2012 to 550 koz in 2015 (and potentially to 750 koz by 2017 if Gramalote
is advanced to production). Growth to the +500 koz intermediate producer
category by 2015 is largely permitted and fully funded, leading to a relatively
low development risk profile. Encouraging results from the 2012 program at
most of its mines/projects highlight the significant exploration optionality in
the company’s project pipeline. The company’s strong balance sheet/cash
flow profile facilitates a significant 97,000 m (at least) drill program in 2013
($35.9 million Phase I budget). With a proven exploration team leading the
efforts, we see the potential for strong news flow that could help unlock
further value from what we consider to be a very attractive asset portfolio.
? La Libertad - $16.9 million in Jabali development plus $4.7 million on
infill drilling at Jabali, and resource drilling and exploration at La
Libertad. An updated, potentially increased Jabali resource estimate is
expected in Q1/13, based on results from 2012 drilling.
? Limon - $5.74 million to develop preliminary mine plans at Pozo 4-5,
and drill test several targets with a goal to extending mine life and
increasing grades to the mill.
? Masbate - $11.0 million, 8 drill rig reserve/resource and exploration
program is underway focused on a number of attractive targets.
? Otjikoto - $134.4 million development budget in 2013 plus $8 million
exploration budget with a key focus being to define an initial resource at
the new high-grade Wolfshag zone discovery.
Our 12-month target price remains unchanged at C$6.00 based on 1.15x our
5%/peak NAVPS estimate of US$5.15 assuming US$/C$ parity.