Good morning or afternoon, ladies and gentlemen. Welcome to B2Gold's second quarter and first half 2020 financial results conference call. I would now like to turn the call over to Mr. Clive Johnson, President and CEO. You may proceed, Mr. Johnson.
Thank you, operator, and thank you all for listening in. We've got the B2Gold executive team, either here in Vancouver in the boardroom or on the phone. We're here to talk about the second quarter results for the financial results for 2020 and for the first half of the year. Obviously, another very strong quarter for us. We had records for gold revenue and operating cash flow, quarter records, and we had a good beat for budget on our operating cash cost per ounce and our all-in sustaining costs per ounce. We are announcing as well that we are doubling our dividend again from $0.02- $0.04 a share. That reflects the remarkably strong financial position we find ourselves in.
Obviously, gold prices help. We're in a very strong position, and we're announcing that we intend to fully repay our revolving corporate facility in the third quarter of the year. We're in a net positive cash position today. It's a great place to be given our remarkable projected flows from cash operations this year, we felt it was very appropriate to increase the dividend to $0.04 a share. Before I hand it over to Mike Cinnamond to give you a rundown on the financial results, then we'll have a quick update on the Fekola expansion, then we'll open it up for any questions that you have. I'll just talk a little bit about COVID. We've done extremely well as the financial results and the operating results suggest over the last couple of quarters, despite COVID.
I think there's a couple of reasons for that. I think the first one is experience. One of the things about our group that's quite extraordinary is the amount of experience we've had on this industry, not only in the industry, but working together through the Bema years and into the B2Gold years. When you do that internationally, you learn a lot, and you learn a lot about things like logistics and moving people, and we've faced a lot of challenges over the years. We welcome a good challenge, and we took COVID on very early and took it very seriously very early. I think the experience of our team and the experience of our people on site really came to the forefront in terms of our ability to adjust, to manage, and problem solve during COVID.
The other thing that's key, I think, is the culture. We talk a lot about endeavoring to treat people with fairness, respect, and transparency the way we run our business. I think the fact that we've done so well is partly because of the mutual trust that we've developed with both our employees, our unions, and our non-union employees, and also the governments in the countries in which we work in. I do think when you treat people with fairness, respect, and transparency, I think when you run into a time of crisis, I think that can really pay off because our employees and the governments we work with, they trust us. I think they know we're looking out for their best interests.
We all had something in common, the employees, the governments, and ourselves, the company, which was to continue to keep mining if we could do it safely during COVID and to take the various necessary steps in each of the different countries. They all had different challenges generally, but also in COVID, they all had different challenges. I think that that ability to work so early on with government and with our employees towards a common goal of safely mining was a really important part of the success here. Obviously, we've made significant donations to help with COVID in the countries that we're in, including here in Vancouver as well. I think that common trust has been a really important part in our ability to deal with it.
We hear a lot of people talk about political risk. We're in some countries where traditionally, sometimes other people may have feared to tread. At the end of the day, we want to be in countries that want us. We don't mind being in countries that need us. The countries we're in, they don't have a big safety net like some Western countries. To continue the gold revenue was hugely important in these countries, and to continue the jobs was hugely important. The governments were very open to listening to how we could work together with them and our employees to run it safely. I think that there will be some positives that come out of the next, in the future when people look back on COVID.
I think one of the positives is going to be governments looking back and saying, "Which industries were good to have in your country at the time of COVID?" I think the mining industry is going to be one of those industries that looks really good. Perhaps it'll even mean that there'll be more countries in the future more open to mining because of the fact that we could do it these days so responsibly, and not just us, many others in the sector as well. We can answer specific questions if you have them on our treatment or our dealing with the COVID pandemic. I just wanted to touch on some of the bigger picture reasons why I think we continue to succeed in a challenging environment.
With that, I'm going to pass it over to Mike Cinnamond to give you a rundown on the financial results. Then, as I said, Bill will give us a quick update on the Fekola expansion, which is going extremely well, and then we'll open it up for questions. Over to you, Mike.
Thank s, Clive. Start with the earnings statement. Revenue first, $442 million, a quarterly record for B2 on sales of 257,000 oz at an average realized price in the quarter of $1,719 per ounce. It's remarkable to say today we've sold some gold north of $2,050 per ounce. It's quite amazing the gold price.
It's hard to say.
It's hard to even say that number. Also to comment on the sales side, we actually sold 17,000 oz or close to 17,000 oz more than we produced. That was mainly due to the drawdown of some Fekola gold we had at the end of Q1. If you recall, the end of Q1 is just when the impact of the pandemic was first being felt at a number of the sites, most significantly with the timing of charters and commercial flights in and out. We had a little bit of gold built up at the end of the quarter, but we were able to sell that down in the current quarter and into higher gold prices. Moving on now to the production side. From the production from our continuing operations, our three operating mines was 240,000 oz.
8,000 oz ahead of budget, led mainly by Fekola and Otjikoto, with Masbate broadly in line. If you add in our share of equity investments, which are basically our share of Calibre ounces, they report our share was 2,000 oz for a total of 242,000 oz of production reported in the quarter. Fekola was the main component of 147,000 oz, 6,000 oz ahead of budget, and it continues its very strong operational performance. Process throughput and recoveries were better than budget and the head grade was in line with budget. I think Bill's going to give a rundown on how the expansion of Fekola is going after this presentation.
Suffice to say, it's going well. We've seen the benefit of getting that fleet, expansion fleet up and running early in the year and seeing the benefit that has in the stockpiling strategy and also in our ability to mine tons and mill throughput. Masbate, 49,000 oz, pretty much straight on line with budget. That's even despite being limited by a reduced workforce due to COVID-19. We had a reduced workforce through half of the second quarter before it came back up on pretty much full strength by mid-May and in line with budget. During the second quarter, processing was generally on budget. Mill feed grade was 0.94 g per ton, slightly lower than budget, and then recoveries were higher than budget. Recoveries were higher due to mining more oxide than we had planned or modeled.
Grade was slightly lower, mainly due to the fact that we're into Montana now and due to prior artisanal mining activity at Montana at the surface level, grade was slightly lower than we planned. We expect that impact to disappear as we move slightly deeper into Montana and into the harder ores there. Otjikoto, 43,000 oz, 1,000 oz ahead of budget. Otjikoto just continues to tick along, another solid quarter. Process tons and recoveries were slightly better than budget but pretty much in line. As a reminder, too, it's higher than last year just because we're into the higher-grade ore from Wolfshag pit this year. Looking at what that does on the cost side.
Cash cost for the quarter is $390 per ounce, $42 per ounce less than budget for our continuing operations, our three mines. Driven by strong operating performance at all sites. At Fekola, $300 an ounce, just $6 an ounce, slightly higher than budget, pretty much on budget. The in-line cash costs were a function of higher production, as I just described. Total production costs, which were broadly in line with budget, slightly higher than anticipated at COVID costs. We had about $4 million worth of COVID-related costs, mainly payroll related and some transportation. In Q2, approximately $30 an ounce. Putting all that together with the higher production and slightly higher COVID costs, we came in pretty much in line with budget on the cash cost site at Fekola. Masbate $610 an ounce, $91 less than budget.
That's a function of a number of factors. As I said before, we were on budget in terms of production, but we had lower than budgeted mining and processing costs. Mine tonnage was lower than budget, and we had less waste stripping than we budgeted. Also average fuel prices for the fleet were a lot lower due to lower unit fuel costs and also shorter haulage distances. Then processing costs in the quarter were lower than budget due to lower HFO prices. I'll comment on fuel generally at the end once I've talked about Otjikoto. Otjikoto $421 an ounce, NAD 64 an ounce less than budget. As I said, just strong performance all around. Slightly higher than budgeted ounces, lower fuel costs, and weaker than budgeted in the NAD.
We saw the benefit of that in the Namibian FX running through to the bottom line in terms of costs. Overall on fuel, we did see significant declines against budget at both Masbate and Otjikoto. At Fekola, a slightly different story. Diesel was lower than budget, slightly lower, but HFO was at or just slightly above budget. Just a reminder, as we put out in Q1, it's really due to the fact that in West Africa, in that collection of West African states, the fuel prices are set one month in advance by the government, and so they don't float directly with what you see happen in the underlying oil pricing in the world. Generally what we've seen is that the fuel prices have remained relatively static.
They did come down a little bit in Q2, but we're pretty much on budget overall in Mali on fuel, but significantly under in the other two operations. If you added the impact of just the very small production that we had from our pickup from Calibre in the quarter, the total cash costs for all operations were $390, $42 less than budget. Moving to all-in sustaining costs. From our operations, $714 an ounce. That's $93 per ounce consolidated, less than budget, mainly driven by Otjikoto being significantly under budget. Otjikoto is really a function of those lower cash costs, as we talked about, but also lower CapEx. They did see approximately, I think, $4 million lower pre-strip cost than they contest in figures in the quarter, and some other sustaining capital expenditures were below budget by approximately $8 million.
Just about half of that due to timing, and half of it we don't expect to be incurred through the balance of the year. If you add in Calibre to results, our total all-in sustaining costs were $712 an ounce, $107 less than budget. Maybe, too, a comment on the impact for the year to date. I think what you'll see is those results we reported in terms of cash costs and all-in costs, they're almost exactly mirrored in the six-month numbers as well. What it's really saying is that we've had two very good, solid, consistent quarters, which is even more remarkable when you think about how much COVID impacted the second quarter versus the first quarter.
COVID, we started to see it start to hit operations in March, but we still managed to come all the way through the second quarter and still stay on the same track with very comparable results to the first quarter. Okay. Going to comment now a little bit on the income statement. Just a few comments to highlight there, or further down the income statement. On the G&A side, we did see lower G&A costs than the prior year by about $3 million. The majority of that is due to reduced travel, obviously, with COVID being in place. We've got a moratorium on all other than essential business travel. Also lower consulting fees, again, as a result of less activity. Also, in the income statement, you'll see $3.7 million share of income of associates. That's our pickup from our share of Calibre in the period.
Just to comment on other, Clive sort of alluded on it, there's $3.8 million in other expenses in the P&L. The majority of that, $3 million, is our COVID donations that we made during the quarter. Pretty much donations at all sites, and including in Canada. The other item I'd comment on the P&L is on the taxes. We're fully taxable at all sites now. Any accelerated capital deductions have been used up at all sites, so we're fully taxable. $82 million corporate income tax expense for the period. We've also given some guidance on what we think our cash taxes will actually have to pay, and the period are close to $180 million now, and those were guided at $1,700 gold. It'll be slightly north of $200 million if we stay at these kind of gold prices that we're seeing right now.
Also a reminder that that doesn't really reflect any increase from Fekola taxes. Fekola taxes are paid almost one year in arrears. We're paying taxes this year for Fekola based on last year's installments, and then we'll true it up early next year. When you move down into earnings, net income for the period, $138 million. Our share attributable to shareholders of that is $124 million, or $0.12 per share GAAP EPS. Once you take into account some of the significant non-cash items in there, such as derivative gains and deferred tax credits, our adjusted EPS for the period was $0.11 per share. Now I'm going to talk a little bit about the cash flow. Again, Clive mentioned it's a record number for us in the operating cash flow side, $238 million.
Year to date, it's also $454 million operating cash flow, again, a record. For the quarter, the cash flow is $238 million, translated to $0.23 per share. Maybe as well, we usually give a little bit of guidance as what we think it looks like at higher gold prices. At $1,900 gold, we're expecting we'll see operating cash flows north of $900 million. Obviously, right now, we're even above that in terms of gold price. Great place to be, and lots of free cash flow being generated. With that, I guess moving on the financing section, you'll see the $250 million in the Q that we drew as a precautionary measure on our revolving credit facility. Our plan now is to repay that. In fact, repay the whole drawn balance of the revolver in this third quarter.
We're very comfortable with how the operations are running, the impact of COVID at our sites. Every site has been impacted, including Canada. However, we've managed to maintain our operations, and actually they're prospering, as you can see from the results. Strong cash flow coming from each of the ops. Given that and the higher gold prices that we're seeing, we think it's the right decision to repay that revolver. That'll be $425 million in total that we've currently drawn in the revolver will be repaid this Q. A couple of other things to mention, the cash flow statement. You'll see in there that interest expense is a lot lower than it was in the prior year. That's just we started the year with a lower revolver balance. We've been paying that down ever since we got Fekola up and fully run.
At the point now in this quarter where we've repaid all that revolver debt, it's kind of like we got to the end of the second part of our strategy overall for Fekola, which was to build it using cash flow and debt and no equity. It's kind of a milestone for us on the financing side to be able to repay that revolver. You'll also note there was no dividend paid in cash in the second quarter. It was declared, it was subsequently paid just early in July. That's just a function of the timing of the AGM and when we were able to pay that dividend. As Clive announced, if you look at how our dividend has moved, we declared our maiden, our first dividend in Q4 of 2019. It was $0.01 per share.
We doubled that for the second quarter to $0.02, and now it's up to $0.04 per share. That $0.04 per share on an annual basis, $0.16 per share translates to somewhere just up of $170 million per year in cash flow. Right now, it's about a 2.2%, 2.3% dividend yield, which I believe puts us right at the high end, if not at the top of our peer group. Now to talk a little bit about investing activities. We spent $70 million in the Q and $182 million on CapEx year to date, we're about $38 million lower than where we budgeted to be at this point. Of that $38 million, a lot of it is timing, but I would say maybe $16 million of it is not likely to be incurred in the second half.
At Otjikoto, we got stripping savings of about $4 million, which we think are permanent and locked in. We've also got costs related to the Wolfshag underground development and the installation of a power line that connects us to the national grid in total of $8 million, which we think are now going to be incurred earlier in 2021 rather than 2020. I should highlight, we don't think that's going to change the scheduled timing of getting the underground up and running. When we expect, I think Bill's going to comment on that a little bit after this, basically it's just a timing of the cash flow. We also saw savings of about $4 million on the Fekola tailings facility, the $4 million that's less than we budgeted. That's completed, we don't expect that to be incurred as a result.
In terms of the balance of that $38 million, we're still forecasting to be spent the rest of the year, but there certainly is some softness or sensitivity around the timing of some things like the Fekola solar plant when we reengage there and get that up and running. Exploration is down against budget so far just because our ability to access sites across our different operations. We are still planning to incur that during the year, but obviously that will depend on that site access. Gramalote, again timing of finishing the exploration there and getting the new model in place means that right now we're behind the budget, but we are forecasting to spend that through the balance of the year.
All in all, we end the period with $628 million. Again, as Clive said, that put us in a net cash position of somewhere just south of $160 million when you take into account our debt. We're well-placed to repay the debt and also as I mentioned on how we see the cash flows unwind for the balance of the year, we expect to be in a strong cash position when we get to year-end. That pretty much winds up what I was going to mention in the results. A couple of just project-related things that we'll highlight as they sort of tie into discussing CapEx. At Fekola, as I said, Bill's going to talk about the expansion and where we are in the solar project.
Otjikoto, things are going well. The Wolfshag underground, as a reminder, the total project is estimated to be about $57 million. Like I said, we are going to see some of the costs of the $18 million that we scheduled for this year pushed out into next year. Overall, the project's on schedule. On Gramalote, maybe to highlight, we took over as manager of Gramalote, effective the start of this year. Part of the commitment in order to do that and maintain it was to spend a sole fund in Gramalote for $13.9 million. $10.9 million of that was to get us back to a 50/50 interest in the project with our partner AGA. That was funded before the end of June.
The further $3 million was to a commitment so that we would remain as manager thereafter, and I can confirm that has now been funded. All of the sole funding at Gramalote of $13.9 million has been incurred, and the feasibility for the project is still expected to be available by the end of the first quarter 2020. With that, I'll wrap up the financial side of the presentation.
Okay, thanks, Mike. Before I pass it over to Bill, I'll just maybe talk a little bit about strategy, where we are and where we see ourselves going forward. We're feeling pretty good about our long-term strategy, to say the least, over the last 12 years. That strategy was to continue to look to grow production through accretive acquisitions and exploration, irrespective of the market at the time, the gold prices at the time or the sentiment in the market. We look back now and we're very pleased with the fact that we stayed with that strategy, and it was quite contrarian at times. When you look back at the mines we built and the things we did over the last 12 years, it was often done at times when growth was out of favor.
It speaks to the fact that where we sit today, because we persevered with that long-term strategy, and we're one of the few companies to be building gold mines over the last number of years. That's one of the reasons why we find ourselves in such a fortunate position, but it also gives us the benefit or the luxury of being quite ambivalent about M&A. We don't see a lot of great projects out there that we like, and we don't see a lot of good projects out there that we like at the price they're at today, frankly. At the end of the day, we are going to be very focused on continuing to grow from our pipeline. Gramalote feasibility study in the first quarter of next year. I still think a lot of people aren't understanding Gramalote yet. I think that'll come with time.
It's a very good project. It's got lots of great attributes to it. We like it a lot. We've obviously seen a change in leadership at AGA recently, which I'm frankly sorry to see. We've had a good working relationship with Kelvin and a great relationship working with the AGA team that we've combined with at Gramalote. We look forward to continuing that strong relationship. As you go through feasibility next year, we clearly think we're going to end up with a project that's clearly financiable and economic in today's gold environment. We like it quite a bit at $1,350 gold. What I would hope to see is in the second quarter of next year, moving towards a development decision on Gramalote.
Just so everyone's aware, it is a 50/50 joint venture, but neither party can stand in the way of the project going forward, which I think should be the implication of a 50/50 JV. In other words, if we come up with a positive feasibility study in the first quarter of next year and AGA decided that they did not want to fund their 50% of the estimated $900 million of capital, then we have written into our agreement the opportunity to purchase their interest at a fair market value based on the feasibility study economics. That goes both ways. If they came up with a development plan and we didn't want to go ahead, a similar thing applied. They also have the option to go down to 30% instead of 50%.
We think this project, unless something really surprises us in the near term, will be a mine that should be built. The risk factor right now is the infill drilling, which is going very well. The results are not surprising to us, are very good. It's a pretty homogeneous ore body. We're infill drilling it. That'll be done very shortly and completed, and then we'll have a new resource out, and that'll all come together with all the hard work and all the detail work that was done, a lot of good work by AGA over the years in engineering and a lot of work we've done since then as well, metallurgy, et cetera. This is a very advanced project. The one thing that was lagging behind was the drill spacing, so we're improving that now.
The potential for Gramalote is 400,000 oz or a little over that a year out of the gate, with the most recent projected all-in sustaining cost of around $650 an ounce based on the economics that we put out on the preliminary economic assessment. An attractive project. There aren't many of those in the world today. I'm confident we're going to see that get over the next steps towards development and get developed ultimately. Kiaka in Burkina Faso becomes a little more interesting on these kind of gold prices, for sure. We're looking at Dennis is doing some good work on our engineering side, looking at some different sources of power for Burkina Faso. We've learned a lot about solar, of course, between Namibia and Mali, that's interesting, and there's natural gas and other potential sources.
That looks like those things might improve the project, and of course, gold price helps a lot. We'll be looking at the next few months a little harder for Kiaka, rewriting a new geological model, redoing detailed mine planning, and coming out ultimately with a new feasibility study. It's a project that whether it's ourselves or whether it's in partnership with someone else, we're going to look at various ways over the next number of months here to unlock the value of the Kiaka deposit, which is 4 million ounces resources there. It's a pretty solid project, so a good ore body. We'll see where that goes as well. In addition, of course, exploration. We have one of the most successful gold exploration teams in the world. We'll continue exploration around the sites. We've got great results coming out of Cardinal, immediately west of Fekola.
We've, of course, got the Snakes-Anaconda area to the north, where we'll get back to drilling that 20 km north of Fekola. We've got some really good results there. Very encouraging, both in the near surface material separately but also beneath that in the sulfide. Some pretty exciting opportunities there. We'll be hitting that hard with drilling again as soon as we wrap up at Cardinal. Other drilling, looking around the world for world-class deposits in interesting places. In terms of M&A, we will keep looking, as I mentioned, but we find ourselves in a fortunate position of being quite active, but we don't feel we need to do a major acquisition by any means.
I think you're going to see more M&A, and hopefully we're not going to get back into the silly season that we saw about 10 years ago from now with people overpaying for marginal assets with a higher gold price. We'll see. At the end of the day, we've never played that game, and we don't need to start playing that game now. A couple other points before I pass it along to Bill. I do want to give a shout-out. I talked about how we've done with COVID. I want to give a shout-out to all of our employees, 4,200 employees, and just the incredible work that's gone on with people working extra hours, difficult circumstances, to keep these mines running and running well. Great morale throughout the company. That's really rewarding.
As I mentioned earlier, we like to think that speaks to the culture of the company. We've got a great, incredible group of employees that have done a great job from top to bottom. What you'll see from us over the next number of months is more drill results, more exploration results coming out of Cardinal, and also out of moving further drilling at other locations, including in the Anaconda region as well. Final mention, we officially launched the Rhino Gold Bar initiative through Kitco. If you want to buy a Rhino Gold Bar to help save the black rhino in Namibia, the beautiful bars are for sale on Kitco, or you can go to our website. Basically, it's our way of donating 1,000 oz of gold towards helping save an endangered species in Namibia. It's very creative conservation and philanthropy.
It's been very well received worldwide. It's really important today. With COVID, we're seeing many effects. One of the effects you see in Africa is the devastation of the tourist industry. Part of the tourist industry in Africa is what helps protect endangered species. This contribution will go to helping the communities that help to monitor and save the rhinos from poaching activity. It's a great initiative. We're proud to be involved with it, and it's a new approach, which is garnering a lot of attention. That gives us some additional ideas for how we can give back into the future as a responsible gold producer. With that, I'll hand it over to Bill to give us a quick update on the Fekola expansion.
Yeah. Thanks, Clive. I won't really go too much in production seeing that the other person did a great job of putting it out. There is one thing, actually, which you haven't asked me to talk about, but I do want to state it. We've had a continued amazing run on the safety side, right? Even with the background of COVID-19 and people working long shifts, we had a quarter with zero lost time accidents at our operations for the entire year, that gives us one across all three operations. We're seeing certainly our best statistics ever, which once again reflects on what Clive was talking about the culture and the dedication of our employees, but it also shows us as an industry leader in some of the things we're doing, for sure. With that, I'll turn my attention to Fekola.
As we talked after last quarter, there's really four phases of the expansion. I'll just quickly go through them. On the mining side, as Mike pointed out, we continue to be ahead of our development schedule. The plan was really to double our mining production rate. We got the first two tranches of equipment in ahead of schedule. Great job commissioning them under COVID. Those are in operation and working fabulous. We've got another tranche coming in before the end of the year. We don't see any issues with that. It looks like it's on schedule. The team is ready to commission. On the mining side, ahead of schedule. On the milling side, we had previously announced that we would be ready to bring that thing into production full scale at the end of Q3.
It looks like we will be at or ahead of that schedule at this time. We are now in the final phases of getting our commissioning team in, so we're more than 80% done with all of our tie-ins, and the commissioning team has arrived on site. They've gone through the mandatory quarantining. They're just coming out of quarantine now and getting ready. Our plan is the middle of August, really to spin those guys up, and certainly by the end of August, we think we're going to be in pretty good shape to start commissioning and implementing that expansion. We see the end of Q3 as a very real, doable target and maybe even a little bit earlier if we can get a little bit of luck. Then the third part is the tailings facility.
We did a double lift. That's not primarily to make sure that we could handle the expansion tons in the tailings facility. We actually looked at the historical productivity out of the mill. We're concerned that maybe we might get caught outside if, in fact, the mill runs better than even advertised. We want to make sure we have additional capacity. We did a double lift on that, which takes us into 2023 and 2022, beginning of 2023. That was completed ahead of schedule, commissioned before the rainy season. That's fully operational at this point. The last one is the solar plant. This is the solar plant team. If you remember, we went to an island-type configuration at Fekola, where we basically brought all of our employees on site to protect the site and the populations against any spread of COVID-19.
In order to do that, we had to free up additional beds. The solar group agreed that some of the production teams probably had higher priorities. They stepped off of site. We took them out. The project has continued to go forward. We've continued to receive all the materials. We've continued to put the batteries in place. We've continued to work on the design, make sure that that's all finalized, the detailed engineering. I'm happy to say that as soon as the mill commissioning team is done and leaves site, we've got them cued up like a hockey team. They're sitting on the board ready to come in. We're talking really mid to late September, those guys are going to be ready to go.
We think that within six months, and once again, that may be a bit conservative, we might be able to beat that a little bit, that solar plant will be up and operational. Just remember, the solar plant is not needed for the expansion. It's just an additional cost-saving measure that we see over the life of the mine. We see no issues with getting that up and operational in Q1 2021. Mike mentioned, I'll just quickly talk about the Otjikoto underground. The Otjikoto underground, as he indicated, is on schedule. Once again, that contract was awarded on schedule. We brought in the contractor. The portal development will be done by contractor, and at that time, we'll make a decision on whether we want to continue with the contractor or we want to take it over ourselves. That contractor is in country.
They've gone through quarantining now. They're in the process of hiring all their managers and getting their team ready to go. We see that project as completely doable on the existing schedule. No issues there whatsoever. With that, Clive, I'll turn it back over to you.
Okay, thanks, Bill. I think with that, operator, we'll open it up for any questions.
To ask a question, you will need to press star one on your telephone. To withdraw your question, please press the pound key. Please stand by while we compile the Q&A roster. Your first question comes from Ovais Habib of Scotiabank. Your line is open.
Thanks, operator. Hi, Clive and B2Gold team.
Hi, Ovais.
Congrats on a great quarter, and thanks for taking my questions.
Sure, thanks.
My first question, again, it's really great to see that B2Gold's in a net cash position, and you're also looking to pay off the RCF by the end of Q3. On top of that, your dividend has been increased as well. The question is, how are you looking at allocating the strong free cash flow going into 2021, especially if current gold prices persist? Is it more higher dividends? Are you looking at construction of Gramalote, Anaconda, exploration? Can you give us a little bit color on capital allocation, please?
Yeah, I can tell you the kind of things we're going to consider. We can't really talk too much in detail about it yet till we get to the decision point. Obviously, the dividend, when you bump up a dividend like that, it's with a view that you're going to maintain it, obviously. I think you can sort of infer that from what we're doing this quarter. On the capital side, the big decision points that are coming up.
The first one is Gramalote. With the feasibility by the end of March, we'll know what we think we'd need for Gramalote and whether we want to go ahead. The indicators to go ahead, as Clive said, are good. We're looking at Kiaka as well now. It's having a revisit of that and what that might look like and what we might want to do there. Also, with the drill programs that are ongoing at Fekola for the Snakes and the Cardinal zones, we're starting to turn our attention to, based on the positive results there, what that might look like in the future as well, and thinking about what capital allocations may be. Those are really the primary things, Ovais, I think I would say, as for the plans.
I think just to add to that, you've seen a lot of companies that are doing a dividend based on a percentage of free cash flow. We haven't gotten there yet, and it's just, right now, as Mike said, we're at a time of understanding soon our capital requirements going forward. When you look at Gramalote, if gold prices stay anywhere near where they are, we're going to generate well over $2 billion in cash from operations over the next 2.5 years or so while you'd be building Gramalote. You can clearly do it from cash flow. There's nothing to say you wouldn't take on a little bit of project debt along the way with that as well, because it's out there and it's going to be extremely cheap.
That's why we haven't defined it as a percentage of free cash flow yet, because we're in a stage of understanding what our cash requirements are going to be in terms of capital, et cetera. For exploration, you can probably assume we're going to continue to spend somewhere around $50 million a year, I think.
Okay.
We can go more detail on what we see in terms of sustaining capital going forward. If you want to get into that detail, we will set up a call.
Sounds good. Just changing gears a little bit then, and my next question is for Bill. In regards to the Fekola expansion, the expansion was supposed to increase throughput by approximately 1.5 million tons per annum. In 2019, the mill was already running at over 7 million tons per annum without the expansion. Could you see Fekola achieving approximately 8 million-8.5 million tons per annum instead of 7.5 million? If that's the case, is this rate sustainable, and how do you see the mill ramping up once it's completed at the end of Q3?
Yeah. I'll answer it, and then John can yell at me afterwards. If you remember, we always said it was going to be 1.5 million plus what we think it could do when it became fully productionized. John and I have had a lot of discussions on this with hard ore, soft ore. The other thing which is of real interest, which he keeps bringing up, is that when you're running these things so hard, if you're running up at the top end, then you really risk the additional maintenance costs and everything else that goes with that.
What we can say is that we're very comfortable with the seven and a half, and probably above that a little bit, but I don't think, until we get it commissioned and really see what this thing can do, that we're comfortable saying that we're above eight or eight and a half. I think the 1.5 million, plus what it was originally designed at, is what we're comfortable saying, and maybe a little conservative. I don't know, John, if you want to add to that.
Well, I agree with everything you said there, Bill. Yeah, it was designed for 7.5 million tons a year on hard ore. With soft ore, we will be able to achieve a higher production rate, but that'll depend on the mill feed blend coming from the mine. After we run it for a while, we'll have a much better idea of what the ultimate throughput can be on softer feed blends.
The other thing, I think, just comes in, one of the reasons we're extensively drilling Cardinal now is because Cardinal has the potential to bring in some additional ore, and it's very close, 500 m or thereabouts away from Fekola. Some of that's going to be softer ore. If that continues to pan out, that could have an impact on production, or that could be positive upside throughput. Bill, fair to say that?
Yeah, no, it's actually a fun exercise, what you bring up, Clive. We're not only looking at Cardinal, but can we now realize the Anaconda area, that saprolite, and bring it down and put it through the mill? Is there hard sources there that we can bring down and add through the mill? All those studies are going on right now, Ovais. Certainly, I think we all acknowledge that the mill has absolutely outperformed what the design has been for, and we see that there is the potential, if everything goes according to plan, that that could continue into the future.
John, in terms of the ramp-up, do you see that taking a quarter, or is that a longer ramp-up?
No. Certainly, in our budget, by the end of September, we're going to be up and operational. John, am I out of line saying that? Certainly, by the end of September, it'll be at full production.
No. Yeah, I agree with that, Bill. We'll be ramped up to design throughput by the end of September. I was just going to add that, yes, if we do blend in saprolite in the mill feed, we will be able to achieve higher than the 7.5 million ton per annum throughput.
All right. Sounds good. That's it for me. Appreciate it.
Thanks, Ovais.
Your next question comes from Josh Wolfson of RBC Capital Markets. Your line is open.
Thanks. Continuing the theme on the Fekola questions, for the third quarter, should we expect a steady state production over the duration of the quarter, or is there going to be any sort of commissioning-related downtime we should expect?
We have 10 days put in for all final tie-ins, but we are expecting a full production for the quarter. That's all factored into the budget and the way we're running right now. That kind of four quarters evenly spread out, I think it's actually slightly less, but it's within the margin of error of what we've been doing.
Got it. Okay. For this Fekola mine license, I guess, which is slightly adjusted for the solar project, and also looking at where gold prices are today, when do you expect capital to have been repaid and the dividends start to be paid from that asset on a steady state ongoing basis?
Oh, you're asking when the initial investment, the loans that we put in to build the mine?
Yeah.
Will have been paid off?
Yeah.
I think now at these gold prices, you're looking within the next two years, the initial investment will have been recouped.
Okay, thank you. Last question on the commentary for Gramalote, in looking at what looks to be an optimistic outlook for that project, is there anything else within the portfolio today which could potentially come up as a higher priority opportunity? Or is it safe to say that that would be the number one project? I ask just because the commentary on Kiaka was, I guess, more constructive in the current environment than then, potentially if there's been more work done for Anaconda, could that be the case, or is that not the case for maybe a mid-2021 timeline for Gramalote's decision?
Yeah, it's hard to imagine anything bumping Gramalote out of the queue because, one, the advanced stage that it's at, there's a permit in hand, we're closing in on the final feasibility, as we said. Also, as we said, we like the looks of that at $1,350 gold, we thought it had a good shot. I can't see anything bumping it out of the queue. Kiaka, not as robust a project as we see it today, has potential to get better, as we said, with some of the things we're doing, the power costs, et cetera. I don't think Kiaka will likely bump it out of the queue. We've always said one of our keys to our success is our focus and our accountability and our doing things ourselves. We're not going to suddenly start building two significant gold mines at the same time.
Therefore, if Kiaka is a go, as it looks interesting after this next round of a number of months of updating it, that we might very well look to partner with a responsible industry partner to advance it as one alternative. The other alternative would be to sell it as an asset. The government of Burkina Faso is going to expect a project like that to get developed, and they have a right to. In my opinion, if it's economic, somebody should build it. I don't see it bumping, time-wise, and also quality-wise, I don't see it bumping Gramalote out of the queue. Anaconda, definitely, we're really intrigued by the potential for Fekola sulphide zone there and the sulphides, so we'll be inevitably drilling.
Once again, there may be a situation where some ore is being trucked from Anaconda area, potentially, down to the mill, some of the saprolite material. I think to actually look at building another major facility, if we're successful in finding another multi-million-ounce deposit, let's say, at Anaconda, that would be come after Gramalote is my expectation in terms of if we were to build another major mill and maybe share the solar power plant, et cetera.
Thanks. Those are all my questions. Appreciate the upgrade on the conference call service this quarter.
Okay, thanks.
Your next question comes from Geordie Mark of Haywood Securities. Your line is open.
Yeah, good morning, guys. Thanks for taking the call. Yeah, nice jump in the dividend there. Loved it. I'll just continue on the theme with Josh and Ovais there. On Fekola for mining, can you remind me of what your stockpiling strategy or your cutoff is that you're implementing there versus what the reserves are quoted at? I guess that's 0.8 g or something. Where the resources are quoted at for cutoffs, and if you see any sort of wiggle room in terms of looking at modifying stockpiling strategies to accommodate where your cost structure is and also where the gold price is moving.
Yeah. For me, Randy's just come from site, so he's probably the most appropriate to Randy, if you want to comment on that?
Randy on?
Yeah, sure. The stockpiling strategy at Fekola is we've got a number of different stockpiles. Obviously, the high grades stockpile our ore down to 0.8 g per ton right now. We're also stockpiling much lower, down to 0.65 g per ton in a sub-economic pile that in today's gold prices is definitely more economic. We are currently looking there and at Otjikoto at the different cutoff grades and our stockpiling strategies. It's been hard to keep up with this quick increase in gold price, but that's what we're doing, and that's kind of the strategy right now. We're in pretty good shape at Fekola already in what we're stockpiling in our sub-economic.
Okay, thanks. Also, if we look at Cardinal, for instance, it's obviously pretty proximal to the existing pit. Can you give us an idea of the scale of work you've been doing there on the drilling, given what it could add and its proximity, et cetera?
Tom, you want to touch that?
Yeah, Geordie. Right now, Cardinal has got high mineralization over 800 m, and then down plunge, the strike length of it is 2 km long. We've drilled so far close to 26,000 m on it. Sorry, 21,000 m. Original plan was 20,000 m, and because of the drilling ongoing, we'll probably get close to 30,000, 35,000 m drilled on it this year. We've shifted our focus from Mamba right now to get Anaconda to a point that we can do some decent mine planning. Sorry, get Cardinal to do some decent mine planning. It remains open at depth and also a little bit to the south. It's sort of a developing situation, but it does have some size potential for sure.
If I can extend on that one. Thanks, mate. Is that the same type of Fekola mineralization, or is that a different style that you might have to do some more metallurgical work to see how it fits in?
We're doing some metallurgical test work right now, and I would suspect it's going to be very similar. It is slightly different, but they're just minor differences. I would suspect metallurgically, there won't be too much difference. I don't know, John, if you could add anything more with the results to date.
Yeah. All we received so far had assays on the samples that we're going to be testing. We'll know within the next week or two metallurgical results. As you say, Tom, we're expecting similar results. We will confirm that through the metallurgical test program.
Okay, great. Thank you. A quick question on Kiaka. Obviously, given the scale of the original sort of plan at 12 million tons per annum there, are you looking at a potential to do what you've done at Otjikoto, Fekola and Masbate in terms of potentially doing something smaller and ramping up over time? Or see where you go in your tradeoff balances on power availability and cost, et cetera?
I'd be a little troubled understanding it, Geordie, I think you're asking about is the Kiaka potential to start something smaller and grow it? Frankly, so far that's not something we've seen as a really viable alternative. It's kind of a very pretty consistent 1 g ore body. It's got good things about it. At the end of the day, we don't see a high-grade starter pit there. We acquired it for, I don't know, something like $25 million was the actual acquisition cost. When you go back to it and Volta , we always felt that it needed a better gold price, but we thought more exploration success. We had some exploration success at Toega, but it was too far away to help Kiaka. We did a deal on that, as you saw.
We don't see Kiaka. It's either going to be done as a large-scale, low-grade, open pit gold mine. From our view, we don't see a ramp-up option there.
Okay. Thank you.
Thanks, Geordie.
Your next question comes from Carey MacRury of Canaccord. Your line is open.
Hi, good morning, everyone. Maybe a bit early for this question, but just looking back to the feasibility on Fekola into 2021 then, given what you've learned there this year in terms of grade and how the plan's performing, and obviously you've got the expansion coming right around the corner. I think production was expected to dip into 2021, in that feasibility study. I'm just wondering what's the opportunity for flat production or even higher production in 2021?
The question is versus 2020, what's the production at Fekola?
Yeah, 2021 versus 2020. The original feasibility said it was going to dip from what the PEA said it was going to do.
Yeah. Well, certainly, I think we are going to have, if you want, I think we're going to have slightly less production in 2021. What you have to remember is we really have a bucket there, a pretty consistent bucket over five years where we're talking about 500,000 oz over those five years. Sorry, 550,000 oz over those five years. We're pretty consistent with that. Where they actually fit within that bucket, obviously, that depends on where we end up on our pay positions during the year. Can we prioritize and bring ounces forward? What I will tell you is that we're continually looking at the best ways to bring ounces forward. 550 over five years.
That doesn't include anything potentially from Cardinal or from Anaconda.
Yeah, that's actually a very valid point. One of the things we're looking at now is, as you know, we don't know how the mill's going to outperform. We are now making some wild swings of the fence to see, is there additional capacity there, and how would we fill that if there is? Whether it's from Cardinal or it's from Anaconda, or even maybe some of the northern zones, which I've yet to be really talk about too much.
How quickly could you bring those sort of ounces in? Is there any permitting requirements there, or is it pretty straightforward?
Yeah, it's straightforward. Remember, we own the license to the north as well. Most of the stuff we're talking about is in the Medinandi permit license, which is where the gold deposit's at. That stuff would be relatively easy, like the Cardinal area. If it is to the north, we would have to do some work with the government to get an agreement with them as far as how they're going to share in it, or are we going to toll it? All those things are The government's already come to us and said they're completely open to that, and they want us to develop that as quickly as possible.
Okay. Thank you, guys.
Great. Thanks. That's good.
There are no further questions at this time. I turn the call back over to Mr. Clive Johnson.
Okay, thanks, everyone, for your time, and thank you, operator. We will look forward to updating you again soon. Thanks, everyone.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.