Good day, ladies and gentlemen. Welcome to B2Gold's 3rd Quarter and Year to date 2019 Financial Results Conference Call. I would now like to turn the call over to Mr. Clive Johnson, President and CEO. You may begin Mr.
Johnson.
Great. Thanks, operator. Welcome everyone to our call today to discuss the Q3 financial results for 2019 and the year to date. We had a very strong quarter and a very strong year to date, and this was driven by our excellent operating performance from the 3 mines of the Colomab study in Otjikoto. We're going to talk, I'm going to hand over Mike in a minute to talk about some of the detail on of the quarter results.
And we also have our whole team here and on the phone to answer any questions and to give you a full update. We also in the quarter, some of the highlights from me, I guess, in the quarter was, in addition to the great performance, was we completed the transaction with Caliber seen for approximately $120,000,000 in cash and shares, and we enrolled 30 percent of Canalable going forward. I think it's a very good transaction that good for it's a win win win. It's good for our employees, our former employees in Nicaragua who are now employed by Calibera. I think they have a very strong team and they have similar corporate culture to Beach Gold.
And I think they're going to be successful and we're happy to be a 30% shareholder, caliber. Perez, it wasn't, the main driving force behind, changing our ownership, and then the carbon assets was really about the size of mines that we're building these days. And, it wasn't about politics and it wasn't any other reason we liked the assets and we actually turned them over in very good shape to to Caliber. So it was more about looking at our future and the kind of things we're looking to drive on with, Nicaragua was a huge success for B2Gold. As our first producing assets and a great success for the Nicaragua people and its government.
So a very good legacy that we believe there in good hands. On our highlights for the quarter and the year to date, we've, have assumed good debt repayments of over $220,000,000 expected by by the end of the year with another $100,000,000 of about $220,000,000 being paid back, we expect in the fourth quarter. And that will bring us down to a total debt by the year end of $260,000,000 U. S. Mostly being our revolving credit facility and then some equipment loans as well.
So that's a very low debt level, and it's one of the lowest debt to EBITDA ratios in the gold space today. And partly because of that and our really good performance, we've actually announced yesterday that we're paying our per student. And that's a very important milestone for the company. I believe our shareholders. The goal along when we created the Beach Gold 11 years ago, what we aspire to is to become a successful low cost responsible gold producer, that could generate cash flow for 2 reasons.
1 is to continue to grow the company by building additional great projects and finding more gold. But the other was ultimately to see if we can do that, but at the same time, pay a dividend back to our shareholders. And that's where we are with the start of this dividend. And obviously, it's something we'll look to grow over time. And so it's a good start.
I think it puts us in the middle of a pack in terms of gold producer dividends. But once again, we're a group company. So we want to make sure we maintain enough cash flow and access to cheap debt be able to continue to do what we do, excuse me, less building, building fine gold and building radio coal lines and running them really well. So looking forward, the way forward is quite clear for us. We're expanding Fekola That's going well extremely well and we've seen a great performance of Fekola in 2019.
And before, so that's on track to be approximately 600,000 ounces of oil production next year. And that is Q2. As we detailed in the news release, that's due in 2020. It's really driven by the fact that we have a larger mining fleet and we're able to mine some higher grade in 2020, stockpiles and low grade. And then the actual, increased throughput at the mill, the expansion will kick in in the third quarter of next year.
So some people wondered as to why the expansion is finished in the third quarter of next year. Why is next year such a robust year? That's because of this ability you utilize the larger fleet for the 1st 9 months of the year and then the expansion kicks in as well. So we're still very comfortable with our next 5 years average around 550,000 ounces a year from Fekola. Additionally, that will continue to explore the Fekola area.
Fekola continues to be open to the north got a successful campaign of infill drilling infill drilling the 19% of the resource at Fekola that was in the inferred category. So we'll have results, right by the end of the year, any resource at the core, but it also remains open to the north. We keep hitting it as we step out even further north. So there's more work to be done to see how paper Fekola gets ultimately. And of course, the Anaconda area, 20 kilometers, in order for Fekola as you look at some very exciting results recently.
We have a large separately, a pretty good sized separate resource over 5 kilometers by 1 kilometers there. That's approximately 1,000,000 ounces so far and heading to, hitting larger as it gets bigger. But more importantly, perhaps, significantly starting to hit what we hope to see below, the saprolite and that is some really good Fekola type grades in the sulfide. Below. So we're quite excited, our autonomous team are quite excited about that.
It's early, but it's a great success. And we're going to do a lot of drilling there to see if we have another Fekola type deposit. In addition to that, we're going to look to Gramalote's become an important part of our world again. As Edward knows, Edwigola Shadi has been the operator for several years. We've reached an agreement with ATH during the quarter, whereby we would become the manager of joint venture, and we're looking to drive that project forward very quickly.
As some people will remember, we were actually diluting out of our interest couple of years ago, we didn't like the looks of Gramalote and we had other priorities, frankly. Some recent new geological modeling, for Gramalote is suddenly really change the potential economics of the project to make it potentially quite robust. The main, the main risk now in Philadelphia as we see it is is, the infill drilling. There's a significant portion of the resource that is in the inferred category, and drilling has now commenced or will commence any day. To turn to hopefully turn all of that inferred into indicated.
It's quite a homogeneous ore body, so we're not expecting too many surprises with infill drilling, but obviously it's one of the engineers do. Other than that, we've got a tremendous amount of good work done by Anglo over the years, the metallurgy engineering work be done. There's not a lot left to be done once we infill drill out to move to a final feasibility study by the end of next year, but we have a budget between the two companies of approximately $40,000,000 to achieve that. Grammarality is certainly becoming potentially a good project for us when we look to build our next mine. We've got some work to do on the infill drilling, but we like the looks of it frankly, it's $1300 roll.
If the infill drilling pans out under the rest of the detail of the feasibility is what we hope to be. So lots of news coming out of Gramalote, over the next year. So clearly the focus on our strategy going forward is what it's been for a long time, that is to grow this company from existing assets for Gramalote being a primary one, obviously, the expansion of Fekola and also exploration of Fekola and elsewhere. So continue to grow developing our existing assets and by expiration worldwide looking to do joint ventures or on our own, finding, looking for large low cost deposits some of them in joint venture with a long struggling, suffering junior expression companies. So we're on the lookout for opportunities where we can spend money in the ground to earn majority answers.
So that's an overview for me. I guess, I'm going to pass on to Mike. I would just ask the, our analyst friends on the line. This is probably not the forum to get into detailed questions about rock types. Or strip ratios or mining cost per ton.
If you want to ask those detailed questions, I would definitely invite you to send an email to Ian and he'll forward it to whoever is the right one to answer those detailed questions. So with that, I'm going to pass it over to Mike to give you, an overview of the financial results.
Okay. Thanks Clive. Great quarter. So happy to present results. Just before I do, just to remind everyone what the basis of presentation in these financials is consistent with the second quarter.
Nicaragua, results in the financial statements are presented as a, in the income statement, a one line item. Come off from discontinued operations and in the balance sheet, just as one line item in the asset section and the payable section. But when I discuss the results, I'm going to discuss it as presented, and I'm also going to mention what it was, if you included Nicaragua as well. So firstly, starting with the revenue line at $311,000,000, for the year, for the the quarter. And the revenue increase was mainly driven by a 23% increase in realized gold price, but offset by percent decrease in ounces sold.
Overall, if you include Nicaragua, there was $382,000,000 versus the prior year quarter of 324,000,000 And basically all operations were at or both by type to both budget in terms of production and in terms of sales. Then turning to production. Production from continuing ops was 213,000 ounces. So that's Fekola. Mespadio and Otjikoto.
And if you include the production from Nicaragua, 45,000, the total production for the quarter was 258,000 ounces, which, compares very well with budget of 242,000 ounces. It's a quarterly record for Q3, and we already had a quarterly record production for Q2. So the good news continues. Just breaking that down and talking a little bit about the individual components of it. Fekola was 112,000 notes for the quarter.
Against a budget of 108 to 4000 ounces ahead. And it's really the same story that we talked about in the 1st 2 quarters of the year. Fekola continues to demonstrate a higher sustained processing without reduced recoveries. And it's benefiting from a trend of more oxide, softer material, and finer the budgeted site, coming from the primary crusher. Because we're able to put more material through the mill, we've actually been drawing down some of the low grade stockpiles.
So what you've seen is the grade has dropped a little bit, but there's an increase in production there's a lot more volume going through the mill. Ms. Vady was 52,000 ounces against the budget of 49,000, so 3000 ounces ahead. And again, same story as the first two quarters. We continue to have higher than planned grade ore tonnage coming from main vein, including some or tons that were taken from backfill areas that we hadn't originally budgeted or built into the models, which show higher grade.
So just to comment on the fact, we had we have noted in the press release that Montana and bringing Montana into the existing MPSA Our mining license improvement continues to move along well. We're now predicting that it likely happened late Q4 or early 2020. But overall, for Masbate, because of the outperformance to date and our ability to keep in mind for main vein, we think Masbate is going to come in at the high end of our guidance range of 200,000 to 210,000 ounces. Otjikoto for the quarter was 49,000 ounces against the budget of 47 slightly ahead. And once again, same story, as earlier in the year, Otjikoto is continuing to benefit from higher than expected or greater tonnage from phase 2 of the Wolfshag Pit.
I'm going to talk about cash costs. I'm going to talk about those on the basis of ounces produced. In the MD and A, we presented it on the basis of is sold as well as ounces produced, but in this case, I'm going to talk about it based on ounces produced. So on a consolidated basis, the cash costs were $5.07 an ounce against the budget of $5.43, so a favorable cost saving variance of $36 an ounce. If you break that down, the total from the continuing operations was $4.43 announced against the budget of 4.19 And once you add in Nicaragua, then that $4.43 bumps up to $5.07 an ounce.
So you can see that, Going forward, we're going to see an improvement in the overall cash cost per ounce because the remaining operations are a better cash cost profile than those at Nicaragua. We now disclosed that. I'm just going to touch on the individual components of those cash costs of Fekola. $383 in escapons of buzz in 3.94. So slightly below, but as I mentioned earlier, Fekola really is moving along.
So we've got slightly lower grades as we're producing from some of the material from lower grade stockpiles. But overall, we've managed to maintain the same cost price profile, but more ounces. So that certainly added to profitability. Masati, $6.22 an ounce against the budget of $6.73. And Masati seem cost savings come across the board, there are number of areas where those savings have been, noted and they include like drilling and blasting costs including taking material from the backfill locations are lower.
And we thought that we need less drilling and blasting, loading and hauling, costs are being lower and then there are fewer total tons of waste moving budgeted because we've been focused on maintaining. So all of those have benefited from Medvedi's cost structure overall. That's the most significant, cost reduction in the period though is though Dakota. Actual costs there were 3 $94 per ounce against the budget of 5.19. So it's saving about $125 an ounce.
And again, there were a number of factors in fact that that contributed to those lower cost profiles, but lower than budgeted fuel and reagent costs, higher than budgeted production and also a weaker Namibian dollar. Namibian dollar was, contributed probably $2,000,000 in the year to date in terms of FX to the profitability of Otjikoto. So overall, Nicaragua, where the total for the Nicaragua out when operations were $8.10 against a budget of $8.32. That growth was kind of was on budget. We had, better than have fairly good production, I think, from both the undergrounds at La Mona and Libertad benefited from higher than budgeted.
For production at all, all of it mining areas, including heavily underground. Finally, a comment on the all in sustaining costs. For the quarter. The total on a consolidated basis $8.07 an ounce against budget of $8.04, so almost right on budget. If you break that down, total from continuing operations was $7.55 against the budget of $7.65.
And then Nicaragua, all in sustaining costs were just over $1000, which is pretty much on budget. So one thing to comment there was that there's a fairly significant, consolidated cost statement on the cash cost 36 dollars announced, but we don't see that repeated in the all in. All ends are pretty much on budget. And the main reason for that is the higher gold price, because royalties flow into that all in, sustaining cost calculation. We had, higher gold sales and revenues, as we mentioned earlier, and with those higher revenues, given higher royalties and those flowed through the all in sustaining cost number.
But all, pretty much weigh on budget. There is some CapEx in there that was deferred. In earlier periods that flow through this quarter. For the forecast year, we probably got somewhere between $7,000,000 $10,000,000 of total CapEx mainly related to FERC strip into several of the operations, but we don't expect will flow through into the fourth quarter. So you may see those as absolute savings for the year.
Against budget. I'm just going to comment a couple other items in the income statement once on the interest line is $27,000,000 there for the current quarter, very similar to the prior quarter. And We did repay $100,000,000 year to date on the revolver, and as Clive mentioned, we expect to pay another $100,000,000 in Q4 What that'll mean?
When you look
at that, because we've created some depth and you might expect see a greater drop than that, but it was really just to do with the timing. We paid $75,000,000 of it in Q3 off later in the quarter. So you will start to see cost, interest savings we move forward now. Also a comment on the tax side, on the current income taxes, just some of you frequently have questions. So that's $34,000,000 for the quarter.
Majority of that's Fekola, $28,000,000, $22,000,000 of its income tax and $6,000,000 of its the priority dividend, which we also account for. As a tax. One thing for your models, we had disclosed was that we were going to pay, we expected cash tax payments for the year to be $120,000,000 for the year. We bumped that by $10,000,000 in this quarter, and that's due to, Otjikoto. There's the higher gold prices and the higher net income generated in Namibia, of those higher gold prices has now meant that our order code was now more taxable than we thought it would be.
So we've added on guide you that there's another $10,000,000 that we think should put in your models for Q4 for total tax payments and mainly related to Otjikoto. A couple of comments overall now on the overall results, as we look forward. So and for the quarter, so firstly for the quarter, attributable net income was $66,000,000, sorry, $55,000,000 attributable $66,000,000 overall. Basic EPS including discontinued operations was, $0.05 a share. Adjusted EPS of adjusted net income attributable of $89,000,000 with $0.09 a share.
And then cash flow from operations was $168,000,000 or $0.16 a share. In terms of overall guidance, for the year and looking forward, we had we did change the mix of our overall production guidance range, but we didn't change the consolidated range overall. And I think that's significant too, because we with the disposal of Nicaragua in the middle of October. We don't have the benefit of 100% of that production going forward, but we still think we'll come in somewhere around the mid range for consolidated guidance. What we did change was Fekola.
We moved it. We originally had a guidance range of 420,000 to 430,000 ounces. We bumped that up to $445,000,000 to $455,000,000 just based on the performance of, Fekola year to date. And you'll see from that, and the results are already reported that due to the strong first half that we had there, That's that production from Fekola is no longer weighted half 1 versus half 2 is pretty consistent on the way through. Masati, we're still guiding 210,000 ounces.
But like I mentioned, we expect that to come in at the high end of that guidance range as it is. Ojikoto still guiding 165,000 to 175,000 ounces. That Ojikoto was weighted to 1st to the second half in the budget and remains. So half 1, we reported 70,000 ounces and we think will be somewhere in the middle of the 165,000 to 175,000 metric for the whole year. Where we guided down was on Limon and Libertad.
And that's because we're we're guided down on the basis that we're only going to pick up our share of their production going forward. That we would report is only 30%. So taking into account the production that we did have up to October 15th where we owned those operations and and the sort of 30% share that attributes us going forward. We now think Limon's guidance range is between 50,000 to 55,000 ounces. And have attached between 75,000 to 80,000 ounces.
But when you put all those together, the total consolidated range is still 935,000 to 975. And like I said, We think we're going to come in somewhere in that mid range. On the cash cost guidance range, Fekola, for the year, we still expect to be in the range. From his body, you know, Jacoba, we expect to be at or below the low end of the range. Same story for those operations on the all in sustaining cost side.
When you look at the consolidated range that we gave, so cash costs are $520,000,000 to $560,000,000, we think we're going to command at or below the low end because you will have seen the positive results year to date. For those. And then on the all in sustaining path to guidance range, 835 to 875, we think we'll come in there somewhere in the range. Couple of general comments on the operations and gained a couple of comments for your models. So Fekola, the expansion started in 2019 well underway.
We expect it to be completed certainly by the end of Q3, twenty twenty. Detailed engineering, we expect to be done early to mid November. And now we did guide before the plant expansion cost. So we expect to be $50,000,000 in total $25,000,000 split between this year and next year. We still expect that split is accurate.
On the fleet upgrade of $86,000,000, the larger fleet, we originally I thought that we'd probably have about $25,000,000 of that in the current year 2019. We now think because of accelerated purchasing and what we're doing there. Get things moving, that the $86,000,000 split will now be split $36,000,000 for the balance of $201,950,000,000 in 20.20. And also in the solar plant, again, well underway there with plants to get that built. The total cost as we disclosed before it's $38,000,000.
Previously, we thought we'd incur 20 of that in this year in 2018 next year. Now we think we'll incur 2017 in 2019 and the balance of 21. 2020. So again, just for you to update your models. Clive mentioned Gramalote and where we're going there.
And for the purpose of gaining your models and what you've built in there, we've agreed with AGA that we'll have a remaining budget of approximately $6,000,000 for the fourth quarter of 2019 and then up to $40,000,000 for 2020 to get us hopefully to that feasibility stage, study stage by the end of 2020. Because we've agreed to fund the first $13,900,000 of that, first, A, to earn our way back to fifty-fifty joint venture interest and B, to become manager. Our split of that 6+40. So a total of 46,000,000 will be 6,000,000 for the balance of 20.19 and approximately 24,000,000 for 20 if you want to put that in your model. Just finally a couple of comments on the cash flow statement.
As I mentioned, Cash from operating activities of $168,000,000 for the quarter, including cash flows from Nicaragua. Year to date, it's just under 350,000,000 operating cash flows. Assuming $1500 per ounce, gold price for the, for Q4 and we've seen that pretty much all the way through so far. We think we're tracking right on that $500,000,000 of operating cash flow that we previously disclosed. For the year.
In the financing side, we have paid back in total $100,000,000 on the revolver 75 of it so far. In this quarter. And in Q4, because of the weighting of some of that production we talked Otjikoto and the strong cash flowing from all the operation, we think we'll be able to repay another $100,000,000 in Q4. And as Clive mentioned, the total debt reduction, including paying down some of the capital leases and equipment loans. It will as estimated to drop from $480,000,000 at the start of the year to $260,000,000 at year end.
And the way things are going, especially with the Fekola expansion coming online, and certainly the larger fleet, starting to see the impact of that and mining earlier in the year and then the expansion coming fully online at the mill. Later in the year. Strong cash was there. We think, we think, if we want to be, we could certainly be debt free on the revolver side by probably Q3. Just after the second half of next year or just after 1st half of next year, sorry.
On the investing side, we sent $205,000,000 year to date $73,000,000 in the quarter. And like I mentioned, there is some there may be some timing differences from the CapEx year to date, but terms of CapEx, it's likely didn't was budgeted, but it's not likely to be incurred. It's probably somewhere in the region of $5,000,000 to $10,000,000 for the full year. Maybe we'll get an update on that when we report Q4. Also, we'll see cash inflows in the fourth quarter of $43,000,000 in total for the 1st part of our payment related to the sale of Nicaragua, there's a $40,000,000 cash payment as part of consideration.
And then there's also the first part of a working capital, cash adjustment of $13,000,000, so a total of $53,000,000. That we'll see flow in, in Q4 and in cash related to the Nicaragua. We finished the quarter with $146,000,000 in cash. Now that excluded $18,000,000 of the Nicaragua, cash, just because of the way we have to report it. But in reality, in the early in fourth quarter, we pulled up the majority of that cash back up into D2.
So because of what's cash that was generated under our ownership, And, I guess, final point to note on the cash flow side, what we'll see, I think, and you'll see it probably in early to mid December. In Q4 will be the payment of the dividend of approximately US10 $1,000,000, reflecting our 1st quarterly dividend of $1 per share. So I think those are the main items I wanted to highlight in terms of the results. The cash flows year to date and how we see the year panning out.
Okay. Thanks, Mike. I think we'll open up to questions now.
Certainly.
Again, that
is
Your first question comes from the line of Geordie Mark with Haywood Securities. Your line is open.
Yes, you there, guys. You had nice work on the quarter. You could see dividend coming out. That's great. And perhaps in line with who was saying Clive, and we'll leave them in the news for later and maybe as a segue from your comments on Focusing on assets of scale.
Just looking at Gramalote, what sort of makes sense there for yourselves and your partners in terms of relative scale of, production on a gold, gold product basis and asset life. For that asset, do you think? Are you able to make any comments on that to give an idea of what you're thinking or?
Yes, we're doing now. We're working on an updated PEA, which we would hope to have done by early Thanks very next year. But I think the most recent, economic runs that have been done, I've been looking at something, starting out at Gramalote Ridge and we're talking about somewhere starting out of somewhere around 400,000 ounces a year. And for drilling pans out and the other economic stay similar to what they've been in the past, in terms of mining costs and all those things where there's been a lot of work done. It has the potential to be a pretty low cost producer with pretty robust economics, a $1500 cold.
So, the mine life I'll be talking about, that's going to be in terms of the to Folio My Life. I think we were talking about officially most, some of the most recent numbers have run. But I think, Geordie, a lot of the details are going to come in on a successful week and that's something that we would, like to share with our publicly, to indicate why we like it, so much more than we liked it a couple of years ago. Big driving force has been the the new geologic modeling that's been done, that has shown us significantly better project than Most strip ratio, grade logistics, grade metallurgy. Those are some of the keys to a low grade ore body.
And we've got all of those So we're going to we'll be, getting really stuck into it now. And as I said, the key driving force will be the infill drilling. But, so far we look to look at it a lot more to be done, but not that much actually it's mainly influenced on.
Okay. Thanks, mate. Maybe I'll just just one point on moving across to Fekola. Just obviously some language on the solar plant there. The thing about, obviously, full year payback there, is there a particular cost benefit on the scale of that production, on the scale of that capacity at 30 megawatts.
And on that basis, given the collective capacity of, I guess, fuel plus solar, if Anaconda was to make
hay, ultimately, would you draw from the
same plant, or
would do something separate. I'll leave it there. Thanks.
Well, yes, I mean, Dennis, I think Dennis on the line, he could talk a little bit more to the solar, but I think the concept would be that an economy becomes something that becomes mineable, which we're seeing the just separating the load continues to expand. So we're kind of keen on that as you thought it was a standalone But then definitely you'd be looking to perhaps share power to some extent, you'd be looking at perhaps expanding the solar plant. Those types of things are our options. I'll let Dennis answer the other question about the solar NRC on?
Yes, Clive. Yes, the solar plant is going to provide about when we when the expansions up and we're running at that higher rate provides about 18% of the power drops the process operating costs by a little over 7%. And it does provide additional, it lets us do maintenance during the day on the units, things like that. So We can draw more power from the plant simply because of the maintenance schedule. We don't need the plus 2 scenario that we have in the power plant.
We can almost go to a one scenario because of the daytime maintenance that the solar plant creates and the solar plant is being built to where it could actually be expanded without too much trouble also. Hope that helps.
Lawson Winder with Bank of America. Your line is open.
Hi, good morning guys. I think I'd like to also just echo those comments that I commend you on introducing the dividend and particularly at a competitive yield. And then Clive definitely agree with your comments that I think this is a milestone for B2Gold. So with that said, question on Gramalote, So Clive, I mean, you mentioned that obviously one of the big sort of challenges or next big steps here is getting the infill drilling done. Makes a lot of sense.
But just looking beyond that, assuming the geological model checks out in full drilling confirms everything you'd hoped, what do you see as the biggest challenge to getting Gramalote they built?
Well, our permitting is always, one of the challenges in our business would be we do have an environmental impact assessment already accepted with the government. So there's various steps to go along the way to continue to Perming process. But we're in the Anvilkia, which is definitely one of the best places to be in Columbia. In terms of, pro mining, there's, But if you were to fly over a Columbia helicopter and you know nothing about mining and someone asked you to pick the best spot in the country to build the 1st large of the gold mine, pick Gramalote. It's, it's gently low in heels.
It's not high altitude. It's not steep terrain. There's not a lot of local crops of tatation, Anglo has done an excellent, Anglo has done an excellent job working with the local people, and working with the Chisel miners and the local population. So very popular there, and we've got a lot of clinical data. In taking over as operator, we're going to inherit a lot of the people VGA people that are working so hard, they're on permitting and all the other social issues, they're going to stay where they are.
They're going to be managed by be told, but and also AGA will have a strong presence as part of the management committee. So I think we think we're in really good shape there. And frankly, because then AGAAs is a big company and they probably, they do things methodically and they a little more money than we would sometimes do a little more work than we would sometimes on things like metallurgy and engineering, etcetera. It's a little risk reward thing. We benefit from that after many years and the fact that there was a lot of good work done by AGA in terms of the metallurgy in terms of engineering.
So there's not a lot of risk in terms of that we see in terms of those things. In terms of the ore body itself, and Tom can speak to the market, but it's a very homogeneous low grade ore body. So we're really hopeful that vehicle drilling is going to bring no negative surprises. We'll have the results of that starting to come out of this in May, Tom, May of next year. So, yeah, we see it as a very advanced project, much more advanced than you would normally expect to be when a significant portion is actually inferred.
So the good news is it's advanced and permitting, it's advanced and the social issues is well advanced and all the other things to make about our feasibility study. Detail engineering itself. There'll be some more detail engineering and some more work to be done on looking at the plant and stuff. But, we, we're, cautiously optimistic that this can, as potentially be a significant low cost producer. And that's one of the reasons why our focus is organic growth.
As I've said it many times in these calls, I'll say it again, you're not going to see any sleep in M and A from us because why would we buy anything when you've got the kind of assets we have Gramalote, the potential for additional ounces of Fekola, etcetera, etcetera. So we're going to see the course of Gramalote potentially becomes important part. Let me note on that. I guess one of our, I think one of our reasons for our success with me, Chip, owns the strength of our executive team and our technical and all of the people that work for us tremendous amount of experience. So it'll create as a vice president, level of production at B2Gold is offered to go down and ask to go down in country manager in Columbia for each of both.
And I think that's a great move for Dale and for us. I'm at the jealous actually. But nice place to work. But at the end of the day, Dale came to us when we originally acquired the Nicaragua asset. So he was country manager in Nicaragua, then he was promoted to come to Vancouver.
He wanted to go to Columbia and have this experience. So that's what I think is one of the key successes. There's the bench strength, the ability to to have this incredible group team of people around the world that can slot into different projects and different opportunities as they come up. And of course, if we get to the point of building, Validate will be our in house construction team has done such a fantastic job and is currently due to the expansion of Fekola. So, yes, we're, we're cautiously optimistic that Gramalote has been a real good shot to be a low cost of the goal.
I look forward to further updates on Gramalote. Thanks for those comments Clive. And then, Mike, maybe just a question for you on, or perhaps someone else, but I think this one's going towards Mike on Montana. The extension pit. You highlighted that the permits or the approvals rather could be delayed into 2020.
I'm just curious how many approvals are needed and what are they? And then finally, I mean, if there's any more slippage there, there any risk to the guidance you guys have provided preliminarily for 2020 there with that 200,000 to 210,000 ounces?
Well, I think the answer to the first part of your comments, are your questions. The I think we're right at the we've got 1 more final approval to go and then we'll have rolled. We think we're ready to go. Other than that, we think we're ready to go on Montana. So, That's why we think it'll either happen a bit later now in Q4 or early 2020.
In terms of, the guidance that you'd like to say, we're going to hit guidance on up the upper end. In terms of sensitivity to next year, yes, Montana is not in there. There might be a slight slippage, but it won't be very significant. Certainly, not in the scheme of V2 production overall. And, We're also going to look at that as part of budgeting, just to see what we would do if we didn't come in right at the start of 2020.
But right now, that's when we expected.
As Mike said, it would have a minimal impact if it doesn't come in at all. But I think it's important to point out that we're not looking for a new permit. It's a consolidation of, the Montana once had a permit that we already have, there's a lot of precedent in the Philippines from the setting they've done before. So we're not doing anything that's outside It's all said to Norma and then we bought through a bureaucratic process as we see in many countries. We're at the final, final stages of we don't anticipate, we anticipate getting that final approval is very shortly here.
Thank you. And then, Mike, just actually one quick follow-up on your comments around Namibia. Certainly, the costs at Namibia this year have been remarkable to say the least. You highlighted several factors that have contributed to that. Now just assuming no change in FX from here, Are there any sort of pressures that could work the other way going into 2020 or would you consider some of these cost savings sustainable, I mean, assuming no change to the FX?
Thanks.
Well, we budgeted a very important context. We budgeted our when we sort of re forecast for ourselves, what we thought the cost looked like at the end of the year, we've assumed that immuno cost will be on budget. So we did have some cost savings, through the year. Some of that's related to where we're mining and the ore we're mining. The FX rate will probably budget somewhere around $14,500,000,000 to $15,000,000 for Namibia and the foreign exchange rate for 2020.
And so I guess you can factor that into, whatever you've got in your model. But I don't think we're planning that we have staying cost savings, that we've seen there this year. For next year, the budget will be pretty consistent with how we budgeted this year.
And then are you seeing any where I'm going with this? It's just on the labor side with the depreciation in the currency? Are you seeing any pressure on labor costs there?
Labor costs, we have a union agreement, collective bargaining agreement there. They think a little bit each year to reflect something a little over, I guess, inflation rate our foundry growth. We don't see any particular pressure on the labor costs next year, again. It'll be based on what your FX rig is assumed. Like I said, we'll probably budget somewhere between 14.5% to 15%.
Unfortunately, a lot of mines in the mid band shutdown over the last a number of years, various types of mine. So, these are pretty good jobs and these are well paid propane jobs. And we've got tremendous support from the government and recently had a successful negotiation with the unions again. So, there are, these are jobs that are very much, I think, in demand.
Okay. Thank you all. That's it for me.
Chris Thompson with PI Financial. Your line is open.
Lot of my questions have already been answered, but, just moving to Otjikoto quickly, nice to see the high grade from Wolfshag hitting the mill. When are we going to get a better idea of a life of mine plan for the mine here?
We'll just take that. Bill, Bill, I will just let you answer the Philippines. What's the take that off?
Well, I think there'll be for Wolfshag, what we've always been considering is when how big we think the open pit will be versus the underground. So we're still looking at that. It's probably a waning or sort of a thought that maybe going underground earlier might be the most profitable option, but that, that will be reflected in the mine plan and the new resource reserve and resources that are done. By the end of the year or for the AIF in Q1 next year. So in terms of understanding how that fits into Hawaiian Plan, I think that's what's going to be available.
Great. Thank you. And then just quickly finally, just want to make sure my facts are right. A new resource for Cola before the end of the year. Is that right?
Yes, that's right.
Perfect, guys. Congratulations. Thank you.
Thanks a lot. I appreciate it.
Michael Fairburne with Canaccord Genuity. Your line is open.
Hi guys. Thanks a lot for taking my question. And again, congrats on the great quarter. I've just got a couple of questions on Fekola, if I could. Starting with just the stockpile that you have there.
I know you guys continued to process some of the lower grade stockpile that you have available. Are you able to give any us any kind of a sense of how large that stockpile is and what kind of grade we're looking at there?
Ben, do you want?
Yes, I'm on yes, right now, we're, we've got a little great stock, followed about 3,500,000 tons, and that'll continue to grow. Grade of that is running just over a gram 1.1 gram a ton.
Okay. Thank you. And If I remember correctly in your mine plan, you should start to get into start mining some of that high grade core of the deposit. If that starts to come out in Q4, would that be stockpiled as well until 2020 or would that start to go through the mill, starting in Q4?
Yes. So we will have some stockpiles, of high grade at the end of the year. We estimate So some of it will go through the mill in the Q4, but a lot of it will be stockpiled as well, and be processed in the first quarter.
Okay, okay. Awesome. And one more if I could just on the shareholder loans that you guys have with the government of Malley. Are you able to give us any type of updates on where those sit or when you expect this to be fully repaid?
Yes, we can give a sort of indicator. Again, it's based on the gold price, right, and production levels. They haven't repaid them yet. They're not repayable. No agreed dividends are declarable until our construction loans, a repaid.
And once those are repaid, then the ordinary dividends that attribute to the 10% shareholding that the government in Valley had. Will be applied against repaying the loss of dividend. And as a guide, it varies depending on the gold price and as the mine plan changes. But I think broadly speaking, we're talking about 2022, 2023.
Okay. Awesome. Thanks a lot. That's it for me. And congrats again on the great quarter.
Thanks a lot. Appreciate it.
There are no further questions at this time. I would now like to turn the call back over to the presenters for closing remarks.
Okay. Well, thanks everyone for taking the time to, to dial in on the call. Thanks for your very good questions. Any further details on any topic, feel free to reach out, to Ian and he'll put you in touch with, the person most able to answer your questions. So, thanks again, and we look forward to talking to you soon.
This concludes B2Gold's 3rd quarter year to date 20 19 Financial Results Conference Call. We thank you for your participation. You may now disconnect.