Good afternoon, ladies and gentlemen, and welcome to the B2Gold Corporation's Fourth Quarter and Full Year 2018 Financial Results Conference Call. I'd now like to turn the call over to Mr. Clive Johnson, President and CEO. You may proceed. Mr.
Johnson.
Thank you, operator. Welcome everyone. Thanks for joining us to talk about the year end results for 2018, in the 4th quarter. We had a trend this year in 2018 and a little disappointing today to see some of the comments and focus on the fourth quarter. We We did extremely well on the year and then beat very well for three quarters.
So then, the 4th quarter probably shouldn't have been a complete surprise, perhaps maybe we have to do things like update models every once in a while to get accuracy. At the end of the day, let's talk about deposits. We will talk about the fourth quarter as well. But in terms of looking at our 2018, we've had a great couple of months here start 'nineteen in terms of performance, but also in terms of marketing, talking to a lot of our shareholders at Endava And BMO and PDAC. And I think, and we have a tremendous board of directors meeting yesterday where I can say that a lot of our shoulders are very happy with the performance of the company in 2018 as is our Board of Directors.
They seem able to see the forest, not just one tree. When you look at 'eighteen and see what we actually accomplished in that year, was really quite transformative road remarkable year. And I guess it's worth reminding people, where we use words like mis in the analyst headlines that triggers algorithms, which is disservice to both your clients, the company and the shareholders. So in 2018, a few of the things we did was increase our gold production by 51% to 950,000 ounces. We almost doubled revenue did double revenue $1,200,000,000 in 20.18, and we almost tripled our cash from operations $155,000,000 in 20.17 to $450,000,000 in 2018.
We also repaid $220,000,000 of debt, bringing our debt down to $480,000,000, which gives us one of the lowest debt to EBITDA ratios in the mining space. And we also, because we continue to drill Fekola while we're building it, a bit unusual in our space. We were able to come up with a new resource in October that dramatically increased the size of the Fekola resource the 5,700,000 ounces indicated and 1,300,000 ounces of inferred open and that's still going. We'll talk about 2019 in a little bit. Also because of the way we fast track things here, we were able to also complete an internal initial Fekola expansion study by the end of the year, which we are now optimizing with the release by the end of this month.
And, but it looks like it has very robust economics and much a no brainer, then we'll go ahead and expand. So we'll be talking about that. So overall, a tremendous year, and it was nice to see you starting to get reflected in the marketplace a bit in the fourth quarter as we And then to the first quarter, as we've outperformed the gold index and many of our competitors. So I think I'll leave it there. We're going to pass it on to Mike to give you a little more detail in some of the the financial, some of our numbers, he will talk about the fourth quarter and, and also the year.
And then we're going to talk a little bit about operations also, we'll talk about what we're doing in 2019 and our strategy beyond that.
So I'm going to take a walk through, I guess, the quarterly and year to date statements that are attached to the back of the press release so Firstly, just touching revenues for the 4th quarter, $272,000,000, almost $100,000,000 higher than prior year quarter. And of course, that is mainly due to having Fekola on and running full steam with commercial production for a full quarter in Q4 2018. It came online, as you recall, commercial production started December last year. On production side, very close to budget consolidated basis, 232,000 ounces against the budget of 2.37. The same, it's really a thing for you that we saw in the 1st 3 quarters for coal and continue to bring it 105,000 ounces against the budget of our $91,000 or $91,000.
And Fekola continues to have higher throughput think Bill can talk to that a little bit later on. Higher recoveries 94% against the budget is under 93%. Slightly lower grade because we have, higher throughput going through the mill, we were sourcing some of that extra material over budget from lower rig stockpiles. So that's why we get slightly lower grade overall. But in total, Fekola just continues to outperform.
Ojikoto, 45,000 ounces, almost on budget of 47,000. Masbate 52,000 ounces, that 6000 higher than budget. And then Vadha, even though we mined out Colorado Maine at the end of Q3, we had some material in stock collar there. And we continue to see the benefit of that just more order than we originally anticipated and more oxide content, which improved our recoveries there. Then the offsetting those positives were, Libertad and Limon continued to underperform in the 4th quarter.
Libertad, the main reason in Q4 is that we didn't get into the Jabali Antenna open pit area as we budgeted. We have been chasing that permit for a while and pleased to say that we have made very positive developments there. We've been up to public consultation now. And that process is completed. And now we're confident that we'll see the permit, for Jabali Antenna coming being granted a time for us to bring it into the mine plan the second half of twenty nineteen, which is what we budgeted.
And Limon, Limon is 12,000 ounces against a budget of 15, so 3000 And the most continued impact is just a knock on effect from some of those blockades that were in the country earlier in the year. The impact of some of the supplies and getting the permits impact of Limon's production as it went into Q4. But by the end of the quarter, Limon's up and running as we anticipated. So it's sort of back to steady state. And again, I think, Billerdale can talk a little bit more about the impact of Limon Central.
On 2019 and beyond as we look forward. So if you take that and you translate it into cash costs, the consolidated cash costs for
the quarter were
$5.23, just almost exactly on budget of $5.19 per ounce. And same outperformance was Fekola $3.86 an ounce, almost $30 lower than budget, again, just due to that. A higher production in the period. Ojikoto $4.71 an ounce, which was a little above budget. And that's mainly due to higher than budgeted fuel and explosive tire costs in Q4.
Overall, when we talk Jakoto for the year, you'll see that we were right on track in terms of our guidance there, but slightly higher in Q4. And with that, $5.94 announced, that was almost $50 lower than budget. And it just continues to benefit from that higher production. And It had higher production with operating costs, which were pretty much flat compared to budget. So the benefit of that is lower cost per ounce.
Libertad Limone, we're both over budget and that's a function of them, underperforming on the production side for the period. Then on the all in sustaining cost side, consolidated for the period of $8.14 against the budget of $7.52. And I think you've got to remember there that when we were under our we were pretty much on budget, sorry, consolidated basis for operating cash costs. And the remainder of that difference really is timing and CapEx. Some of the CapEx that we had incurred earlier in the year, we incurred in Q4.
And so when that all rolls through, We were slightly over budget for the quarter, but again, I'll talk to the year performance for the year and you'll see we anticipate our all in sustaining cost guidance. So that's the ops for the quarter. Just walking through statement of operations to highlight a few other things. G and A costs, for the quarter, we're about $2,000,000 or $2,500,000 higher than last year, not mainly salaries, just higher staff costs go organization, a little bit of bonus. And then just tie some additional bodies through the whole organization, especially with Fekola.
Not being online fully for the full year. We did have an impairment loss on $34,000,000 that we charged that we in the quarter of that relates to Nicaragua, Libertad. We did take a smaller impairment earlier in the year for Libertad. And with with the, once we completed the budgets for the year end and also we're able to assess the impact of that delay in getting into Jabali Antenna. We flowed that through an Indian mine plan and we took a further impairment of $34,000,000.
We've got just under $9,000,000 as well for some write offs of some exploration property related to both Nicaragua and Namibia. Further now, the income statement, just talk a little bit about realized gains and losses on derivatives. So we realized gains of just over $1,000,000. And that's fuel gains of $3,000,000 realized for the quarter. Offset by some Namibian go forward losses of $2,000,000.
Now those Namibian go forwards have all been delivered into now, so we won't be seeing those again. They relate an older version of our revolving credit facility. On the unrealized losses, we had $13,000,000 and that, that is mainly on fuel contract outstanding fuel contracts. Now that's really just a reversal of previous gains that we've booked. Those fuel contracts are are pretty flat overall.
And we're the current mark to market pretty close to the forward are the current pricing that we have in those contracts is pretty close to current forward price. So they're pretty flat overall, but some of the gains that we picked up over the course of the last 18 months reversed out of Q4 as fuel prices fall. The other thing I'd comment on in our taxes, current mainly current And just to remind, I know there was a little bit of confusion for some people as to the amount of taxes, what's in them and what the the cash payment timing of those taxes are. So firstly on the current income taxes, $20,000,000 for the period. Mainly Fekola, $11,000,000 in current income taxes for Fekola, but remember that we're also treating that priority dividend for Fekola as a tax because it's a payment that's due to government.
It's been and it's a right that's conveyed by law. So it's similar in nature to a tax, so that's how we account for it. So that's $3,000,000. And just for your models, just to remind you to build that into your tax expense as you look forward. And Masbate also had $3,000,000 current taxes material.
And remember, Masbate wasn't a tax holding until the middle of last year, but is now taxable. And then also Nicaragua, there's $1,000,000 of current taxes there, even though we didn't generate taxable income per se, in the countries during the quarter, there are alternate minimum taxes that must be paid. So there's always a small component of Nicaragua when current taxes. And I'd ask you as well, if you can ask questions later, but in the MD and A, we also laid out what the components with the tax charge are and what we are expected payment timing is for cash taxes. For 2019.
Remember that Fekola, it's our 1st full year commercial production for Fekola and most of those taxes are only accrued during the year, but won't be paid until the end of the first quarter start second quarter of 2019. In addition, we'll have to pay our 2019 cash tax installment. So we've laid it out in the MD and A. The accrued tax is the year end. 2018 were $67,000,000, most of which will get paid at the end of Q1, starting Q2.
In addition, our cash tax installments for 'nineteen above and beyond paying off those accruals will be about $65,000,000. So hopefully, that helps you with your models. And if you've got any questions, please ask them later. Overall, factoring some of those numbers and we came in with net income, net loss for the period of just under $50,000,000. Once you adjust out the significant, noncash items, adjusted earnings of $13,600,000 or 0 point 0 $1 per share adjusted EPS.
And I think consensus was $0.02 per share, but remind you that as I said Nicaragua underperformed in the quarter, so we saw some of that impact turnings. We had budgeted slightly higher cash cost per ounce for Q4 than for earlier in the year. So that would have impacted some people's view of earnings. And then just to remind you as well that those Fekola dividends priority dividends are included in taxes and had the income statement. They were $3,000,000 for the period.
Just to comment maybe on, performance year to date. 1st, on the revenue side, the reported revenues of just over 1 $2,000,000,000. We're almost double or reported revenues last year. I think Clive mentioned that already. On the ops side, I think we had great performance there.
950 1000 ounces. So 26,000 ounces higher, than our budget. And in came in above our original guidance of $910,000 to $950,000 and still at the high end of our reguided range of $920,000 to $960,000 ounces. The standout performance in Air Fekola, 4.39. Our original budget was 401.
We guided 4 to 4.10. So it came in almost 10% higher. Portjikoto 167,000 ounces came in right in the middle of its range or sort of mid to higher and if it's 16170 range that we've given. Mid-twenty 16,000 ounces, it just has to stand out years. We've talked about a number of times.
The trifecta of higher recoveries, higher grade and higher throughput. I just wanted to say trifecta before Bill said it, even though he made it up. M emphatic, we originally guided well below $200,000,000 and then we re guided between $2,000,000 $210,000,000. And we came in even above the high end of that re guidance, right? So Fekola is a standard operation for us.
And OG code continues to perform well, but we can't forget how well for a lower grade operation Masbatejmont over the last few years. And Libertad came in 81,000 ounces. So it was below our reguided range of $90,000 to $100,000. The reason they gave earlier And Limon came in just under 50,000 ounces. So really right at the low end of our reguided range of between 50,000 60,000 ounces for the year.
Cash costs consolidated basis, $4.95 an ounce, that's we based the low end. We guided $5.05 to $5.50. With the with the excellent cost performance at Feku and Ms. Batting and right in the middle of the range for Otjikoto, we more than offset any downside in Nicaragua to come in below the consolidated guide low end of our consolidated guidance range. Bucks an ounce.
Again, below what we got is maybe to $8.30, so well below that range, reflecting mainly the outperformance on the cash cost side and a little bit, all the time some timing differences, I think, with CapEx. The main one being at Libertad where we didn't incur as much CapEx on Jabali and China open pit. As we thought we would because of the permit delays. Just translating that, if you look at earnings, for the year. Oh, maybe I'll just touch on a couple of things from the 12 month P and L.
Again, G and A, it's about 12,000,000 higher. Than the prior year. Remember Fekola is in there now. G and A cluster Fekola, 4,000,000 But last year, all those Fekola G and A costs were capitalized when we were building the mine. Now that hits the P and L, We had some differences in salaries and bonus timing of about $3,000,000 in there.
Prior to the year, we also had some accrual reversals of about $2,000,000 that hit that account that don't hit it this year. And then there's about $3,000,000 in extra salaries across the group because we have we just have, more bodies in some places and then some salary differentials across our extended group. 5 mines and 4 countries. Moving down the income statement. Again, the taxes, $109,000,000, so most of that's Fekola 77,000,000 of 59 of that's current, 18 of that's priority dividends to remind you of that again.
Masbate was 18,000,000 and Libertad was 5,000,000. Overall, GAAP earnings of $45,000,000 $0.03 a share. When you take out those noncash items, 100 adjusted earnings of $162,000,000 or $0.16 a share, which is, which I think, write off consensus. So a logo. We previously reported about three quarters, and some of the analysts reported a mess on Q4.
Earnings per share adjusted, we did hit consensus for the year. I'd like to move on, Tom, a little bit about some of the items in the cash flow statement. So just to comment in the quarter, $74,000,000 for operating cash flows. That operating cash flows in the quarter impacted a little bit, as mentioned before, by slightly higher budgeted operating costs for Q4 than for the the prior 3 quarters of the year. Some underperformance on Nicaragua side that that generates much cash flows we expected from particularly from La Libertad.
And also to point out in Q4, we made a voluntary prepayment of our Fekola taxes of $20,000,000 And all of those taxes for Fekola, most of them weren't due until Q1 or Q2 of 2019, but we made a $20,000,000 prepayment because we've already generated the liability in country. And so at the request of revenue authority, if you made that made that payment. So that impacted operating cash flow for the quarter. For the year, operating cash flow was 4 $51,000,000. So almost triple what we reported in the prior year.
Matt, so on a per share basis for the quarter, it's 7 dollars a share for the 12 months $0.46 a share, which I think is, again, is right on consensus. On the financing side, couple of things to comment on in the queue. We did, on October 1st, we did repay the convertible notes that were outstanding at $258,000,000. That's really the main component of our debt reduction for the year. We started the year with total debt 700000000 including revolver, converts and various equipment loans and leases.
And we finished the year with approximately $480,000,000. So a reduction of $220,000,000 overall, most of which is reflected in that convert repayment. On the investing side, $60,000,000 for the quarter and 2.70 $3,000,000 for the year. And that's almost exactly on budget overall. We're about $3,000,000 under our total budget, including all CapEx and sites and exploration costs.
The main under the item where we were under on the budget was that we were under by just under $12,000,000 for La Libertad. Related to Jabali Antenna. And as we mentioned, we expect those costs to be incurred now in 2019 as we get the a different tenant to start mining there. Should also mention Gramalote project. They there's $6,000,000 expanded for the full year at Gramalote.
That was basically a whole budget, our share of a whole budget for 2018 as we continue to evaluate what we're going to do there. Now with subsequent developments by year end and Gramalote and new models being developed in early 2019. We haven't put anything other than a whole budget in 2019's budget at this point in time. But by the end of March or certainly end of the second quarter, we expect to be able to come up with potentially some revised economic model or our thoughts on what Gram Lodge might look like going forward with some new geological interpretation built into the model. And then you may see us increase our budget for for Gramalote in 2019 as I think we'll likely look to do some more drilling to further define the resource there.
A couple other comments on, on, looking forward on capital for 2019. We put our budget as results out earlier in January, but just to remind people what's not in that budget. So firstly, on the Fekola mine, We're waiting for the sort of initial results from our optimized Fekola expansion. Studying by the end of the quarter, first quarter of 2019, those expansion cons aren't built into the budget. We were waiting to see what we thought you were and the timing of them before we reflected those in our cash flows going forward.
We have already commented. We think the CapEx is somewhere sort of $50,000,000 or slightly less for the whole project, but not all of those would be incurred in 2019. And we do expect to make that expansion decision and move forward certainly by the end of first quarter into the second quarter of team. And so there should be some news flow of math really shortly. Then on Lamoan Mine, just to remind you as well, in the budget there, we did release the results of Limon Central expansion case, earlier in the year in 2018.
The total CapEx for Limon expansion to sort of optimize the development and process the new central discovery. It's $37,000,000, but we didn't commence to making that full expansion yet in the 2019 budget. What we did put in the budget was $2,000,000 for Limon to, to make some amendments to the current mill so they could process the slightly harder ore we expect from Centrel. So that is in the budget, but defer the $35,000,000 to expand the mill from 500,000 tons a year to 600,000 tons a year is not in current budget. So with that, Brian, just look at the cash at the end of the year.
We had $102,000,000 in the bank. And $400,000,000 drawn on a revolving credit facility. So that leaves us with a further $100,000,000 liquidity on the current revolver plus $100,000,000 in the accordion feature that hasn't currently been taken up yet. So we think we're in good shape liquidity wise. And cash flow wise.
I would comment as well that as we move to the Q1, we budgeted, a $1200 an ounce for revenues for budget purposes for 2019. And we've already seen in this quarter that our realized gold price sales that we have made over $1300 an ounce. So we're already ahead on where we thought we'd be on the cash side, $50,000,000 plus, I would say. So that's positive and helps liquidity. And so the goal going into 2019 with this positive generation of cash flow would be I guess the balance, repayments the revolver, which I think the intention is to do, continue to pay that down as we did or pay down debt as we did in 'eighteen and balance that with whatever expansion needs that we think we have.
They just mentioned, we have potential additional costs that we may want to fund for Fekola expansion. Potentially for Limone and also see what we might want for 2019 for Gramalote. And finally, just to remind you what our guidance was. For 2019 on a production basis of 935,000 dollars, 975,000 ounces. So very close to, I think, where we came in this year.
Then on the operating side, cash costs were $520,000,000 to $560,000,000. And slightly higher than our range, marginally higher than our range for 2018, and that's really due to slightly higher fuel prices than the budget and slightly higher labor costs at a couple of locations. Then on the all in cost side, we give a range for 2019 of between $8.35 to $8.75 an ounce. And when comparing that to the range of $7.80 to $8.30 that we had for 2018, it's probably 2 2 main differences. 1 is the slightly higher cash costs, which I just mentioned.
And the second one is just the difference in treatment of all in sustaining costs. So the World Gold Council put out some new guidelines just before the year end. Really clarifying the sort of broader guideline guidance that they had before on how to view our determine why it's sustaining capital versus non sustaining capital. And the main item that impacted us was the new guidance that they had in first trip. Previously, if we were stripping an ore body and there were no losses coming from that ore body into the current year's production, we'd have treated that as non sustaining.
However, the new guidance now lays out that if you want to treat it as non sustaining, firstly, the strip has to take more than a year to complete. And secondly, that strip has to benefit at least 5 years of future production. So in our case, the main area where we were impacted was Otjikoto. At the Otjikoto mine, we're currently prescripting the Wolfshag pit for Phases 2 and Phase 3 of Wolfshag production. Now that will benefit, we think, between 2 3 years into the future, but it doesn't benefit Pfizer.
So under the new guidance, which we'll adopt effective January 1, 2019. We can't what we should we don't treat that as nonsustaining. So that had an impact of about $35 an ounce overall on our total all in sustaining guidance. So if you sort of adjusted the guidance for that, we'd be in a very similar range. So the guidance we gave last year for all in sustaining costs.
So I think with that, those are the main financial and operating items I wanted to highlight.
Sure. Thanks Mike. We're going to turn over the building to give us a update on just more operationally how we're, we've started off the year quite well. Talk about that. And then, Tom, to talk a little bit about the expiration but specifically for Fekola, what our plans are there.
I'll talk about 2019 as well before you So, Bill, for this.
Yes, sure. Thanks, Clive. I just want I'll just run through the operations real quick. Obviously, on the last call, we went into a bit more detail on the operational side. Starting with Fekola, I just want everyone to remember that we've been operating now for basically 5 quarters, 1 quarter of
commercial production and then 4 quarters of operation.
At which time, over that period, we've put up an additional 90,000 ounces versus what we've had in our budget. We have continued to outperform on the mill side We've continued to outperform on recovery versus what we'd originally discussed. And we see that already happening in January. As of as through February, we're already up approximately 10,000 ounces at Fekola, and that's primarily related to throughput.
At Otjikoto, I think in
the press release, we talked about the fact that right at the end of the year, we had 2 high grade blocks that we didn't get to. We got to 1 and didn't get to the second one, but we did end up, as Mike said, above the midpoint of our guidance. In those that high grade block we've already seen come through in January. So at Otjikoto through February, we're up more than 2400 ounces. That's related to the higher grade block.
And basically throughput recovery remains as projected. Masbate everyone's aware that we expanded the mill that was commissioned early in 2019. We're currently running at the design throughput or higher at 8,000,000 tons per annum. Where we have seen, that expansion operates beautifully. We have seen higher grade and higher recoveries coming out of the Moss Bakken mine.
And so as of the end of February, were up approximately 4000 ounces. In Nicaragua at Libertad Mike has already discussed the fact that we have, in fact, now
gone through public consultation for
the Jabali Antenna zone And so while in January, we were down slightly, we're starting to catch up. The throughput remains very good and the grade is for February basically on track. So we see we're moving in the right direction there in the second half of the year, with Jabali Antenna, we don't see any issues. Lamon, the Limon mine, with Limon Central coming on right at the end of last year, we're in a pre strip mode right now for Limon Central, but we are pulling some ounces out of some small pits there. We basically remain on budget at this point, slightly under budget, but materially on budget for that project, with both throughput, grades and recoveries.
So those are the 5 major operations on it.
Okay, thanks Bill. Tom, can you talk a little bit about, I don't know, are very interested in the exploration and understandably so particularly with us and what we've been doing, not just in Fekola and other places. But maybe you could talk a little bit about 2019 Fekola expiration budget. I mentioned before that the dramatic increase in the resource, and then Tom could talk about how we're gonna what's happening and in filling that and also where else we're going to be drilling a Wyatt for Coca Cola Property.
Absolutely. The plan for, Malia Fekola in general is to spend $17,500,000 in exploration will include about 46,000 meters of RC drilling and 28,000 meters of diamond drilling. There's also a significant amount of Aircore RAV Drilling going to be done this year. Also, the main focus of that exploration certainly for the first half of the year is to complete the infill drilling on the portion of the resource that we believe is going to be within a pit, as part of this expansion study that's going on right now. That drilling will be done sometime in June.
Additional targets that we will be working on in Fekola
for the back half of the
year will be the extension of Fekola's truck to the north. It remains open. If, you recall, I certainly talked to this about, to some people, our 1400 resource pit actually went to the edge of the data. So we actually don't know how big our resource pit could get, because it took basically everything that was in the source model. So the expiration will continue to the north.
In addition to that, if you were at the PDAC, you saw a long section that the the boys are developing a theory on some shoots that are just below the main Fekola shoot that surfaced to the south of the pit. Some of which is already within our resource and is in, mine plan for later in the life. So we'll be doing more drilling on these proposed shoots that are, just underneath the main Fekola shoot that surfaced to the south end of Fekola. In addition to that, immediately West Fekola pit late last year, we hit on 3 separate vein structures, not certainly not as big as Fekola, but of interest, given the rate beside the Fekola Pit, We had drill intersections of up to 24 meters of 2.5 grams, 10 meters of 4.8 grams in separate structures west of Fekola. So that's cardinal zone.
We'll be doing exploration work on that. And then our Anaconda or snake zones, we didn't do a lot of exploration drilling on that last year, largely because we were focused on the, expanding the resource to the Northland Fekola we'll get back at that fairly hard later in the year, to follow-up some sulfide hits that we have below the Fekola or sorry, the snake's, expanding the saprolite resource. And we just picked up a new license that adjoins the snakes to the north. And we'll be following that up with, exploration, mainly auger and air cord drilling to see if the saprolite resource and the underlying sulfide style mineralization extends to the north. So that'll be the plan for Fekola, but you can see from my discussion from the different targets.
There's a heck of a lot going on there outside the Fekola deposit and we're still very, very optimistic that the potential to expand resources at Fekola property or the Fekola property in region is very, very good.
Great. Thanks, Tom. So looking forward to what other milestones and things are going to happen in 2019. Obviously, we're going to continue to optimize our production. We've got all sites and we've got a good start to the year already.
We're going to focus on our pipeline. Internal growth. So as we've talked about quite a bit of the release and touched on today, we've already completed or that initial Fekola expansion study by the end of the year. And that was extremely positive, the initial view of the economics of veterinary robust. Will come up with details on that by the end of March and talking about the impact on production and, based on our conversations with our board yesterday, we're very confident we will make a decision to go ahead and expand Fekola starting at the end of March with expansion program that could probably take somewhere around 12 to 15 months.
In terms of Gramalote, there's been some interesting potential positives there. Late last year, AngloGold Ashanti, our joint venture partner came to us with some new modeling that they've done on their old, pre feasibility. Longer from some years ago. And they, seem to be coming up with some better grade potentially some better economics on the project. So we asked us to review that we have.
We ran our own model, which wasn't quite as rosy as theirs, but still quite interesting. And now we're applying some economics working well with AGA to try and come up with a model that everyone agrees. We've had a bit of a difference of you for some years because we thought there was more drilling required. On the resource to really understand Gramalote. They didn't share the same view.
So we now that the point now is over the next number of weeks is to with AGA. Let's see if we can come up with a model that everyone agrees and then decide what we want to do going forward. The next steps would be if we want to proceed to thought feasibility would be to do some in our view, some infill drilling to infill the 35% or whatever it is of the resource that is in the inferred category. Infill drill that. And also, there's very little engineering to be done.
There's minimal metallurgy be done to final feasibility study. We'll be discussing that with AGA and we'll be able to come out probably sometime in April with our view and probably announcing a preliminary economic assessment from our point of view they may announce a prefeasibility study because they're under a different jurisdiction of regulations and we are at the end of the day.
So we'll see.
Gramalote, these new economics that we've seen this very early, but they seem to be more encouraging than what we had before. So we'll keep posted on that. I'll talk about an exploration and our focus will be continue to be our maintain our financial discipline and look to, to repay debt. As we move along as we did extremely successfully in 2018. We had asked a lot recently about M and A.
Rather, so maybe I'll have a question on that, but I'll probably hit it. So just to give you our thoughts now about that. Clearly, we want to find out what's in our pipeline. Think that it'll be able to our shareholders to get out, the news that we're going to expand Fekola and also if we're going to move forward on something like Gramalote, So we're very focused over the next few months on what's in our pipeline. But I think the market's changed quite a bit with the Barrick Randgold deal.
0% premium and the 17% short lived premium from the Newmont Goldcorp deal. It seems that the goalpost changed that the big boys aren't going to do any of the 30% to 40% premium deals to compliment so much trouble over the last several years by overpaying for assets. Turned up to be inferior. At the end of the day, I think that there's a couple of positives for us out of all that. Frankly, we're very keen to keep running this company.
And I think the vast majority of our shareholders are happy with management. I don't think any big company is going to come and pay a 30% to 40% premium for anybody these days and I don't think they're going to pay that for Beach Gold. I think most of our children are very happy with management, so I don't think anybody offering a no premium offer reach a goal. And I can't imagine that would be of interest to our shareholders. We want to continue to grow this company and continue to do what we've done very well for for 10 years.
In terms of looking at it the other way of M and A, what about us doing M and A? Well, I've said for 4 years that we weren't likely to do any major M and A we were getting credit for Fekola. We're getting some credit for Fekola yet. And as we said, let's see what's in the pipeline and expansion, etcetera. But if the same thing applies looking down, it's looking up where the big guys aren't going to be spending the big premiums anymore, then I don't think the shareholders of smaller companies than ours can expect the big premiums as well.
So suddenly, there may be opportunities out there over the next layer of the year or whatever. We'll always look for it to acquire something, with little or no premium because there may be shareholders of smaller companies that would like to have B2Gold shares. We'll be looking at that. Our rules of engagement have never changed in acquisitions. We'll never buy anything that needs a higher gold price and or exploration success to justify the purchase price.
And we've always sent the Chief Snaps and the ones you find, and we have an extraordinary track record with Tom and his team, and then we'll continue to focus on exploration. Both on our own and around our own mines and brownfields, but also greenfields on our own, but also greenfields in joint venture partnership with, with junior exploration companies who have assets we like. But we won't be the operator. Our team is that good. We want to spot the draw holes, but we think there's an interesting opportunities potentially in that regard as well.
So we'll keep an eye on M and A and we'll continue to be very disciplined in due diligence as we always are. There's nothing on the front burner at the moment. But I must say also that we did the heavy lifting here when very few were doing it, one of the very few global companies to grow over the last 5 years. So we don't feel with that and what we have in our pipeline, we don't feel any sense of urgency to go up and do a deal. I think this might become a buyer's market go through this year.
There are some assets that are going to come out clearly of Newmont and Barrick, that we'll look at them. But frankly speaking, there's other companies that need growth much more than we do we're not going to overpay and those companies aren't going to give away assets. So we'll see what's out there. But at the end of the day, we may end up looking down a little more than down looking at other opportunities in smaller companies than ours and see how those pan out. So, so that's really what most of what wanted to tell you, we'll answer some questions now.
We had a fantastic year in 2018, and thank you for those of you who supported us and those of you that got it. And we're very excited about 2019. So we'll open it up now for questions.
And your first question comes from Mike Sroba from Macquarie Capital. Mike, sorry, Mick, your line is open.
Good morning Clive and team. Just a couple of questions in terms of the financials going forward. You've successfully paid off a large portion of the debt in 2018. Are you able to give us an idea of what to to expect in a couple of years in terms of the magnitude of debt repayment?
Sure, Mike. Well, like, I guess, like I said before, we'll balance off the speed at which we pay off the facility with what we will self fund, I guess, for expansion activities, particularly at Fekola. So I think you've got to look at it like that. In terms of becoming debt free, if we wanted to, I guess, next couple of years, give or take, certainly in early 2021. I think we could be debt free if we chose to be.
But that's really a question of CTX, you want to be completely debt free or do you want to use those facilities to fund some other activities? So looking forward, we haven't got any numbers in there for like for coal expansion or for anything beyond the whole budget in Gramalote. So you've got to balance those off. But certainly, That's $1300 gold prices, very strong cash generation. We certainly have the ability to pay down that facility rapidly if we want to.
The focus is going to be, as Mike said, to continue to grow the company looking 1st and foremost at our pipeline of projects. In the longer term, what we aspire to be, is future is a company that's to take some of its cash flow and spends it on growth and some of the cash flow and ultimately pays a dividend to our shareholders. So that's the longer term view. For now, we think our shoulders are, we want to see us focused on what we've done pretty dramatically and very well for the last 10 years, which has grown profitable gold production.
Okay. Fantastic. Thank you. And just on the G and A, do you foresee similar total G and A going forward? Given the Malayan office and some of the additional costs that were incurred in late 4Q?
Yes, I think G And A for 2019 should be somewhere in the ballpark of 18 months, right? You'll see Fekola is already in there. In 2018. So it'll be in there in 2019. And then we have hired up a little bit in the latter part of 2018 in some areas.
So it might be slight increase on the salary side but generally speaking ballpark will be roughly in the same ballpark.
Okay, excellent. Okay, that's all for me. Thank you.
Thanks.
And your next question comes from Geordie Mark of Haywood Securities. Geordie, your line is open.
Thank you. Morning and, I guess, evening to those out there. Yeah, thanks Thanks for the update. Just maybe jumping the gun a little bit ahead of the optimized study coming out for Fekola I'm sort of talking the details that will come out soon. I'm just thinking about more holistically about timing of investment decisions, if if it comes out positive, which I'm sure it will, when you could hope to implement that expansion and expect the completion of expansion through to 7,500,000 tons per annum?
Well, the details kind of come out. I guess what we're looking at so far was spending, John, you may have said about what we're going to spend this year and next year if we in fact, if we decide to pull the trigger on the expansion that we've seen today? Yes, Clive. We're looking at spending about half the amount this year. So $24,000,000 to $25,000,000 year, $24,000,000 to $25,000,000 next year.
As far as the cash flow all lay, And, right now, the expected completion is in September of 2020, but we're trying to move that date up, if possible. As we tend to do, we're going to look at fast tracking that process, and a lot more detail will come out of this by the end of the month.
Okay, great. Thanks. And if I could add one more question there and stay close to home at Fekola and moving north. Up to Anaconda. I'm just thinking, obviously, you've got a program there for 14,000 meters of work around there.
Just thinking about what the scope of work is there in terms of infill versus expansion, what you're expecting footprint basis, how much you might expand it by? And what are the considerations on trade off studies for a standalone versus trucking that back down to Fekola to further increase production?
Are you talking about the step out on the saprolite resource or the footprint of the sulfide resource?
No, I just saprolite at the moment because I think you've got an idea of continuity there at the moment. Yes.
Yes. No, we certainly the saprolite is open going north into the new license that we've picked up and it's actually wide open.
We
know that there's small minor activity up there. So we'll be following that to the north as far as size potential expansion, I have no idea yet, you know, we get some work on that. And then within the main snake areas in south, we picked up a new area of saprolite mineralization last year in the Boomslang area and we plan to follow that up. So those would be the main expansion areas of approxide resource.
And drilling below it.
And then, yeah, obviously, as I said, drilling below it.
Dennis, do you want to talk about that, what we're doing in terms of potentially at least looking at at weather stand alone makes any sense at the saprolative. That's part of today's question as well. Yes, we're updating study that we did earlier where
we've done some additional metallurgical work on it
to, what's the easiest to best way to process just the saprolite material ignoring the hard rock that's under it. So, we're doing a plant design on that right now, with We, our goal here is to reduce both capital costs and operating costs from what we had in a previous of that study, looking at the tailings disposal, getting those costs down, things like that. So we're doing that right now and we hope to have, some numbers out on that. Our goals have that kind of
wrapped up by the end of May.
Right. Okay. Do you think there's any trade offs to come back to Fekola for an expansion there or are you thinking more just a self standing satellite?
We'll look at, bringing some of that material to Fekola. We're going to look at all each costs, and we're going to look at, what's the cost of actually putting that thing through the Fekola Mill because saprolite goes through there pretty easy, actually. We can't get the blend too high at Fekola and start stuffing things up there too. So we have be careful with that. But we will look at that as a trade off to the standalone plant, and we'll look at those considerations.
Okay. Thank you very much. Thanks.
And your next question comes from Lawson Winder of Bank of America Merrill Lynch. Lawson. Your line is open.
Great. Thank you for taking the questions. Just first of all, Mike, thanks so much for the tax guidance for 2019 is very helpful. When you mentioned the corporate income tax installment payments totaling 65 $1,000,000, are those just income tax or does that also include the priority dividend and the ad valorem tax from El Limon?
No, just income taxes. I'm sorry, I'm the ad valorem, but not the priority dividend.
Oh, okay. Okay. Great. And then, with regards to the fully participating 10% I mean, right now obviously you guys have no need to pay a dividend to the Malian government at this point. The intercompany loan has to be paid off before that happens.
But one thing I wasn't clear on is that loan can also be used for the Malian government's share of CapEx. I'm wondering if you can provide any guidance around sort of when you think that loan might be paid off and then you would then start paying the fully participating dividend to the Malian government?
Well, yes, you're correct that the loan, the deal we have is that we get to recoup our capital investment. Before any payments are made or any dividends are due. In terms of, I didn't quite follow your question on it gives that loan convenience to pay the government share of CapEx. Look, we can self fund Fekola going forward. We can cover any required further capital to Fekola from Fekola's cash generation.
So that loan, the original capital loan that was put in construction purposes is being paid down. We did disclose in the MD and A, if you look on Page 14, at the end of December, we had approximately or $400,000,000 outstanding on those loans. Remember, those loans included the original loans being inherited with when we bought Pepion. It includes the capital to build Fekola. It includes the fleet costs.
It includes the early works. It includes Zubu relocation, all those things. So and an interest charge. So right at the end of 2018, there was about $400,000,000. So if you want to plug that into your model.
I guess you can figure out when you think that'll be paid down.
Okay. Does that $400,000,000 also in the $47,000,000 for the purchase of the additional 10% interest?
No, remember that, that additional 10% is a loan is a payable that's due to us B2Gold by the state of Mali, right? It's not an intercompany loan with Fekola.
Okay.
Right? It's due to the holder of Fekola. So that's over and above the 417.
Okay. Got you. Okay. That's very helpful. And then on Jabeli Antenna, I was just curious.
So I mean, now it looks like it should be going ahead in the second half of this year. And I'm just curious when you guys did the impairment, were you assuming a second half twenty nineteen startup of Habali Antenna or is this something now that could lead to a potential reversal in the future? I'm if you're able to speculate on that?
No, we don't need to speculate. I can tell you, it did include Jabali Antenna, from the second half of twenty nineteen. But remember, the impairment was based on the timing of the antenna coming in, right? Like, previous life of mine should assume that Antenna would be in much earlier. And that the benefit of those cash flows would have been recognized earlier.
So that had a positive NPV impact. With the delays in country and the delay in some development, particularly with antenna and with the delays in getting to the ore phase at Happily Underground, that had an NPE impact. So we are anticipating mining an antenna open pit underground, but the timing delayed caused by the unrest in the current 2018 year did have an impact on the NPP overall. Pavon, maybe a positive. I don't know.
Yes. Pavon, you know, with positive developments at Jabali Antenna, there's also now new engagement on Pavon. Historically, we had looked at Pavon potentially as being melty for Limon, but I think is probably equidistant to almost still comment a little more, between Limon or Libertad, so it could be a possible future source. The benefits of Fajon aren't built into the model because we don't have any indicator of what any potential permitting timeline might be.
Okay, gotcha. And then? Bill, do
you want to comment, sorry, on Malone?
No, very interesting development. The difference being that as we look at that property now, we're being in we've been around the community. We're a known neighbor We've been invited to participate in development in the community. So our orientation is completely different. You may recall, Pavon, we had on our plans, roughly 50,000 ounce pit to be mined.
The grades of goods, 5 grams, mine development only. And the thought was always that we would transport that to one
of our operations for process.
Okay. Any sort of timeline on that?
No. We will see how this proceeds.
Okay. And then maybe just one last one for me, if I might, Clive, you mentioned, with any acquisition, B2Gold wants to be the operator. And so, I mean, that, to me, relates well to Gramalote where based on the current agreement, AGA is the current operator. And I'm just curious for Gramalote to go forward, I mean, is there any sort of impediment there? Given that B2Gold is not the current operator?
Well, I think there's going to be some Discussions, there's already been some preliminary discussions with Kelvin Jocinski, the new CEO of AGA. We've got a good relationship. And I think if this project looks like it's an economic interest, I'm sure that, we'll both companies would be keen to see it move forward. Kelvam said publicly that he's very impressed with our abilities to build minds. And, I think there will be some interest discussion around that.
My comment on operatorship was merely that was when I think everyone was talking about exploration. Also though, we do want to build our own mines and run our own mines as well. But I think if you have a with new economics and or a better gold price or whatever it is with Gramalote, got an asset of that size with a mining permit oriented in the hand in Colombia, I'm pretty sure between 2 sensible groups is going to be way in advance, but we'd be willing to build it. Our team is ready to build
Great. Thank you guys.
Your next question comes from Chris Thompson of PI Financial. Chris, your line is open.
I actually thought you did a great job in the 4th quarter. So just one quick question on Fekola. You've spoken about, I guess, low grade stockpile supplementing mill feed. Can you give us a sense of percentage of mill feed from mined ore versus low grade stockpiles as well as the grade of each?
Yes. What period are you talking about? Are you talking about
going forward? Talking about Q4?
Yeah, maybe just going forward, Phil?
I mean, that
you asked that question because we were just talking about it before the call.
It's going to be like fifty-fifty for Q1 and Q2. We have approximately 4,000,000 tons of of low to medium grade stockpiled left at an average grade of 1.77 grams. And so right now, we're we're hastily, beating down phase 4 to get into the high grade zones where we want to be in the second half of the year. I don't know if you remember we're actually weighted second half ounce wise because of that. Yes, great.
Perfect guys.
Thanks.
Thanks, Chris. Appreciate it.
And your next question comes from John Bridges of JP Morgan. John, your line is open.
Good morning, Clive. Everybody, congratulations on the results. I think I did have to say miss, but I didn't really mean that it was a bad miss. Just wondered with Gramalote. What's changed?
And then could you give us a little comment on the security situation around Gramalote?
Sure. Well, talk about what's changed. Well, we're not really sure yet what's changed, John. I think that, I mentioned that in November, those have seemed to have been a change in AGA. There was some personnel changes, perhaps it was a more receptive audience to hearing the ideas that maybe they had a lot of but they do hurt the grade a lot by trying to make it bigger.
And, we had some issues with their model for some time and felt it needed to be more drilling because the model can swing so much that told us that we need more data points. So we're drilling some, for some reason, some people at NAG believe that these were drilling, that's just changing now. So they came with a new model, which showed some improved potential approved economics, but they said, look, this is a work in progress. Can you guys check it? Can you run them out yourselves and let's get it independent to do it?
All very positive things from a joint venture partner. And we're working well with them. So I think we're closing in right now on coming up with some of the economics for the new models that we've run and they're doing the same thing. And we'll try to come together with one model or at least very close over the next month or so. So, what's changed is potentially better economics than we were seeing before.
And the economics were quite poor. They had a greater, like I saw 8.66 or something at one point a while ago making it bigger and the economic were not attractive to us. We actually took the decision to start diluting rather than spend money. We're not as big as they are. We don't just spend money and spend money and spend money.
Up years of time. So we took the decision to start diluting and then all of a sudden this new model comes out or potential new model that got our attention to say, okay, well, they're they seem to have had a change within AGA in terms of their approach to Gramalote. So it's more closely with them to try and understand it better. So we can't say today whether it's going to be something that's attractive low price, but I think we're going to have a lot better idea in a month or so. And if that's positive, then we'll be, we'll be suggesting that we go ahead and do some more drilling together and, and move probably move to a final feasibility study.
But all that's going to come out of what comes out of the next 6 weeks or so. And working with them. But we're working very well as a joint venture. And as I said, as I said earlier, I think Kelvin is keen on growing, growing AGA working on growing. So we've got a lot of work to do.
We definitely can't say it's a project for us yet, but it's definitely more interest. Security, yes, Dennis and we're more time there than I have. I mean, Granite is located in an excellent place to build a large open gold mine in Columbia. And as I said, we have a permit and a tremendous local government support as well. So Dennis can talk about security.
Thanks.
Yes. It's a mining district too.
And that's why the permitting there. I mean, the people want the mine, everything. In all the years, we've been there quite a while now, with as operator originally, and then now with Anglo as operator. And security has never been a major issue there. We do have, military contingent in the area, that helps secure that.
But it's always been a very, very stable area in that part of Columbia. So no issues really.
And you say the original grade was 0.6. So the new model is pointing to what? 0.8 to 1?
Too early to say, John, you know, we're looking at a bunch of different models and cases, etcetera. So I just don't want to we're not ready to answer that question yet, but there are some models some runs that are showing an improvement in grade and maybe some less ounces, but an improvement in grade, but we really great. Now once again, it's just too we're not prepared to we don't have a number for you yet in terms of where it's going to go, but we'll have a much better idea in the next 6 weeks or so.
Okay. Okay. Interesting. Well done guys. Thanks.
And welcome to the end of our Q and A session for today. So I'll turn the call back over to Mr. Clive Johnson for closing remarks.
Okay. Well, thank you all for joining us and thank you for
your interest in your support and your questions. Have a good day.
And this concludes today's conference call. You may now disconnect.