There were various rumours circulating at the recent 2022 Precious Metals Summit in Beaver Creek in Colorado about the future of the industry leader, as well as the company being an acquisition target.
"Am I going to retire? Not at all. I've still got the passion I've had for years in this industry, to continue to do what the shareholders would like us to do, to grow the company. I'm very motivated to continue this remarkable growth we have had. If the company was going to settle as a 1 million ounce a year producer I might consider stepping-down but that is not the case as we have a lot of growth ahead of us," said Johnson.
Johnson was his effervescent self as the Gold Forum got underway Sunday and was looking forward to the meeting of the World Gold Council during the afternoon, and made his customary rapid-fire comments about the opportunities B2Gold has in Mali, Finland and elsewhere.
At Fekola in Mali, the company is looking at building a second mill to process oxide material as part of a plan which could ultimately elevate B2Gold's production in the country from around 600,000oz this year towards 1Moz/y.
The Cardinal discovery adjacent to Fekola is expected to add 50,000-60,000oz/y of feed to the Fekola mill while 25km to the north, the Anaconda area has 1.7Moz of oxide material in saprolite and an exploration target of 3Moz. The Dandoko discovery to the east also has considerable saprolite potential.
"Do we truck it all to Fekola or build a second, simpler mill? We will have a study ready on this at the end of the year. This could be about 4Mpty, cost about $250 million as it wouldn't need a sulphide circuit, and produce about 200,000oz/y. We expanded Fekola twice for $65 million from 4Mtpy to 9Mtpy because we had a vision of what it could be and oversized the crushing circuit," said Johnson.
B2Gold has a history of organic exploration success which has fed its project pipeline for years without the need for the company to acquire other companies. With a dire market for junior gold equities and difficult financing conditions, B2Gold is looking to deploy cash into junior explorers, to take equity positions while helping them advance their exploration goals.
"This could ultimately result in undertaking friendly takeovers with companies who either cannot get financing on reasonable terms or do not have a technical team to build a mine. We are looking at investing in juniors and having way to a joint venture if they look for a partner down the road. We are looking at about $10 million a year," said Johnson.
Johnson continues to rail against what he sees as entrenched management teams who put their interests before those of shareholders and get in the way of deal-making. "There should be a lot more M&A. The reason why it is so challenging today, when the markets suggest we need more M&A and the institutionals want it, but it's hard to do as you need a willing dance partner," said Johnson.
Johnson does not see himself as "entrenched" for any possible incoming M&A activity targeting B2Gold. "Our directors and management are very committed to growing the company wherever makes sense. It is our fiduciary duty and our culture as well. I have spoken out against entrenched management and entrenched boards of directors in the past, and we have shown in the past with Bema Gold that we will step aside," he said.
Market darling?
B2Gold is a company with a history of delivering project developments on time and on budget, accretive acquisitions, a sector leading all-in sustaining cost, exploration success, a strong balance sheet with no debt and a consistent dividend payout. Yet, the company has struggled to gain traction in the market despite its shareholders turning out in force to support the mandate given to management.
"At our AGM in June, we had 80% of our shares voted, which is unheard of as normally it is around 40% for a lot of public companies. This tells you our shoulders are paying attention and they are voting for us to continue to run this very responsible, very profitable, gold company," said Johnson.
Johnson believes the company has been hit in the past with political risk perceptions such as the coup in Mali. "There was a knee-jerk reaction as a coup sounds bad, but it was not a violent coup. The population very much supported it as it was unhappy with the government, while the [administration of the country] kept operating as usual. I respect the fact that institutional investors don't have the time to dig deep on all these issues," he said.
B2Gold obtained a better market reaction from recently standing-down from building the Gramalote project in Antioquia, Colombia. With a feasibility study due in early 2023, the company is is likely to favour transacting it rather than sitting on it and waiting for a higher gold price to improve its economics.
"The majority market response was that this was the right decision given the inflationary environment and difficult markets. Every acquisition we have done from Nicaragua to the Philippines to Namibia showed fiscal responsibility and discipline so there wasn't a lot of agonising for us because our team did the work and the results were not what we had potentially hoped for. [Joint venture partner] AngloGold Ashanti has expressed an interest in looking at all the options, and from our perspective, we are not in the habit of holding onto things until gold goes higher. In Burkina Faso, West African Mining had a vision to build a smaller mine and we did a deal [in 2021] because people in the countries rightfully want to see their projects developed and so we did a smart deal with a company that wants to go ahead with it," said Johnson.
