Good day, ladies and gentlemen. Welcome to B2Gold's third quarter and year-to-date 2019 financial results conference call. I would now like to turn the call over to Mr. Clive Johnson, President and CEO. You may begin, Mr. Johnson.
Great. Thanks, operator. Welcome everyone to our call today to discuss the Q3 financial results of 2019 and the year to date. We had a very strong quarter and a very strong year to date. This was driven by our excellent operating performance from the three mines, Fekola, Masbate, and Otjikoto. I'm going to hand over the mic in a minute to talk about some of the detail of the quarter results. We also have our whole team here and on the phone to answer any questions and to give you a full update. Some of the highlights for me, I guess in the quarter was, in addition to the great performance, was we completed the transaction with Calibre that everyone's seen for approximately $120 million in cash and shares. We will own 30% of Calibre going forward. I think it's a very good transaction.
It's a win-win-win. It's good for our employees or former employees in Nicaragua who are now employed by Calibre. I think they have a very strong team, and they have a similar corporate culture to B2Gold, and I think they're going to be successful, and we're happy to be a 30% shareholder of Calibre. For us, the main driving force behind changing our ownership in the Nicaraguan assets was really about the size of mines that we're building these days, and it wasn't about politics and it wasn't any other reason. We liked the assets, and we actually turned them over in very good shape to Calibre. It was more about looking at our future and the kind of things we're looking to drive on with. Nicaragua was a huge success for B2Gold as our first producing assets and a great success for the Nicaraguan people and its government.
A very good legacy that we leave there in good hands. Other highlights for the quarter and the year to date, we have assumed the debt repayments of over $220 million as expected by the end of the year, with another $100 million of that $220 being paid back we expect in the fourth quarter. That'll bring us down to a total debt by the year-end of about $260 million, mostly being our revolving credit facility and then some equipment loans as well. That's a very low debt level, and it's one of the lowest debt to EBITDA ratios in the gold space today. Partly because of that and our really good profit performance, we've actually announced yesterday that we're paying our first dividend. That's a very important milestone for the company, and I believe for our shareholders.
The goal all along when we created B2Gold 11 years ago, what we aspired to was to become a successful, low-cost, responsible gold producer that could generate cash flow for two reasons. One is to continue to grow the company by building additional great projects and finding more gold. The other was ultimately to see if we could do that but at the same time, pay a dividend back to our shareholders. That's where we are with the start of this dividend. Obviously, it's something we'll look to grow over time, it's a good start. I think it puts us in the middle of the pack in terms of gold producer dividends. Once again, we're a growth company, so we want to make sure we maintain enough cash flow and access to cheap debt to be able to continue to do what we do.
Excuse me. That's finding gold and building very good gold mines and running them extremely well. Looking forward, the way forward is quite clear for us. We're expanding Fekola. That's going extremely well, and you've seen the great performance of Fekola in 2019 and before. That's on track to be approximately 600,000 ounces of gold production next year. That is due to, as we detailed in the news release, that's due in 2020. It's really driven by the fact that we have a larger mining fleet, and we're able to mine some higher grade during 2020, stockpiles some low grade, and then the actual increased throughput at the mill, the expansion will kick in in the third quarter of next year. Some people have wondered why the expansion is finished in the third quarter of next year.
Why is next year such a robust year? That's because of this ability to utilize the larger fleet for the first nine months of the year, and then the expansion kicks in as well. We're still very comfortable with our next five years averaging around 550,000 ounces a year from Fekola. Additionally to that, we'll continue to explore in the Fekola area. Fekola continues to be open to the north. We've had a successful campaign of infill drilling, infill drilling the 19% of the resource at Fekola that was in the inferred category. We'll have results of that by the end of the year, a new resource at Fekola. It also remains open to the north. We keep hitting it as we step out even further north. There's more work to be done to see how big Fekola gets ultimately.
Of course, the Anaconda area, 20 kilometers north of Fekola, has yielded some very exciting results recently. We have a large saprolite, a pretty good saprolite resource over 5 kilometers by 1 kilometer there. That's approximately 1 million ounces so far and heading larger as it gets bigger. More importantly perhaps, significantly, we're starting to hit what we hope to see below the saprolite, and that is some really good Fekola type grades in the sulfides below. We're quite excited, and Tom and his team are quite excited about that. It's early, but it's a great success, and we're going to do a lot of drilling there to see if we have another Fekola type deposit. In addition to that, we're going to look to Gramalote to become an important part of our world again. As everyone knows, AngloGold Ashanti been the operator for several years.
We reached an agreement with AGA during the quarter whereby we would become the manager of the joint venture, and we're looking to drive that project forward very quickly. As some people will remember, we were actually diluting out of our interest a couple of years ago. We didn't like the looks of Gramalote, and we had other priorities, frankly. Some recent new geological modeling for Gramalote has suddenly really changed the potential economics of the project to make it potentially quite robust. The main risk now at Gramalote, as we see it, is the infill drilling. There's a significant portion of the resource that is in the inferred category and drilling has now commenced or will commence any day to hopefully turn all of that inferred into indicated.
It's quite a homogeneous ore body, so we're not expecting too many surprises with infill drilling, but obviously it's one of the things you need to do. Other than that, we've got a tremendous amount of good work done by Anglo over the years of metallurgy, of engineering work to be done. There's not a lot left to be done once we infill drill it to move to a final feasibility study by the end of next year. We have a budget between the two companies of approximately $40 million to achieve that. Gramalote is certainly becoming a potentially good project for us when we look to build our next mine. We've got some work to do on the infill drilling, but we like the looks of it. Frankly, it's $1,300 gold.
If the infill drilling pans out, then the rest of the detail of the feasibility is what we hope it to be. Lots of news coming out of Gramalote over the next year. Clearly the focus on our strategy going forward is what it's been for a long time. That is to grow this company from existing assets, Gramalote being a primary one, obviously the expansion of Fekola, and also exploration of Fekola and elsewhere. Continue to grow by developing our existing assets and by exploration worldwide, looking to do joint ventures or on our own, looking for large low-cost deposits, some of them in joint venture with long struggling, suffering junior exploration companies. We're on the lookout for opportunities where we can spend money in the ground to earn a majority interest.
That's an overview from me, I guess I'm going to pass on to Mike. I would just ask our analyst friends on the line, this is probably not the forum to get into detailed questions about rock types or strip ratios or mining cost per ton. If you want to ask those detailed questions, I would definitely invite you to send an email to Ian and he'll forward it to whoever is the right one to answer those detailed questions. With that, I'm going to pass it over to Mike to give you an overview of the financial results.
Okay, thanks, Clive. Great quarter, so happy to present results. Just before I do, just to remind everyone what the basis of presentation of these financials is consistent with the second quarter. Nicaraguan results in the financial statements are presented in the income statement as a one-line item, income loss from discontinued operations. In the balance sheet, just as one line item in the asset section and the payable section. When I discuss the results, I'm going to discuss it as presented, and then I'm also going to mention what it was if you included Nicaragua as well. Firstly, starting with the revenue line, it's $311 million for the quarter, and the revenue increase was mainly driven by a 23% increase in the realized gold price, but offset by a 10% decrease in ounces sold.
Overall, if you include Nicaragua in there, it was $382 million versus the prior year quarter of $324 million. Basically all operations were at or above budget in terms of production and in terms of sales. Turning to production. Production from continuing ops was 213,000 ounces, so that's Fekola, Masbate, and Otjikoto. If you include the production from Nicaragua of 45,000, the total production for the quarter was 258,000 ounces, which compares very well with the budget of 242,000 ounces. It's a quarterly record for Q3, and we already had a quarterly record production for Q2, so the good news continues. Just breaking that down and talking a little bit about the individual components of it. Fekola was 112,000 ounces for the quarter against a budget of 108, so 4,000 ounces ahead.
It's really the same story that we talked about in the first two quarters of the year. Fekola continues to demonstrate higher sustained processing without reduced recoveries, it's benefiting from a trend of more oxide, softer material, and finer than budgeted size, coming from the primary crusher. Because we're able to put more material through the mill, we've actually been drawing down on some of the low-grade stockpiles. What you've seen is the grade has dropped a little bit, but there's an increase in production because there's a lot more volume going through the mill. Masbate was 52,000 ounces against a budget of 49, 3,000 ounces ahead. Again, same story as the first two quarters.
We continue to have higher than planned grade ore tonnage coming from Main Vein, including some ore tons that were taken from backfill areas that we hadn't originally budgeted or built into the models, which show higher grades. Just a comment on Masbate. We have noted in the press release that bringing Montana into the existing MPSA, that our mining license and permit continues to move along well. We're now predicting that it'll likely happen late Q4 or early 2020. Overall for Masbate, because of the outperformance to date and our ability to keep mining from Main Vein, we think Masbate is going to come in at the high end of our guidance range of 200,000-210,000 ounces. Otjikoto for the quarter was 49,000 ounces against a budget of 47,000, so just slightly ahead. Once again, same story as earlier in the year.
Otjikoto is continuing to benefit from higher than expected ore grade tonnage from phase 2 of the Wolfshag pit. I'm going to talk about cash costs now. I'm going to talk about those on the basis of ounces produced. In the MD&A, we presented it on the basis of ounces sold as well as ounces produced. In this case, I'm going to talk about it based on ounces produced. On a consolidated basis, the cash cost were $507 an ounce against a budget of $543, so a favorable cost saving variance of $36 an ounce. If you break that down, the total from the continuing operations was $443 an ounce against a budget of $419. Once you add in Nicaragua, that $443 bumps up to $507 an ounce.
Going forward, we're going to see an improvement in the overall cash cost per ounce, because the remaining operations have a better cash cost profile than those in Nicaragua, which we now disposed of. Just going to touch on the individual components of those cash costs. Fekola, $383 an ounce against a budget of $394. Slightly below, but as I mentioned earlier, Fekola really is moving along. We've got slightly lower grades because we're producing some of the material from low-grade stockpiles. Overall, we've managed to maintain the same cost profile, but more ounces, so that certainly added to profitability. Masbate, $622 an ounce against a budget of $673. Masbate seen cost savings kind of across the board.
There are a number of areas where those savings are being noted and they include drilling and blasting costs, including taking material from the backfill locations are lower than we thought because we need less drilling and blasting. Loading and hauling costs have been lower and there are fewer total tons of waste moved than budgeted because we've been focused on maintaining. All of those have benefited Masbate's cost profile overall. In fact, the most significant cost reduction in the period, though, is Otjikoto. Actual costs there were $394 an ounce against a budget of $519, so a saving of about $125 an ounce. Again, there were a number of factors, in fact, that contributed to those lower cost profiles, lower than budgeted fuel and reagent costs, higher than budgeted gold production, and also a weaker Namibian dollar.
Namibian dollar contributed probably $2 million in the year to date in terms of FX to the profitability of Otjikoto. Overall, Nicaragua, the total for the Nicaraguan operations were $810 an ounce against a budget of $832. Nicaragua kind of was on budget. We had fairly good production, I think, from both the undergrounds at Limon, and Libertad benefited from higher than budgeted ore production at all of its mining areas, including heavily underground. Finally, a comment on the all-in sustaining costs for the quarter. The total on a consolidated basis, $807 an ounce against budget of $804, almost right on budget. If you break that down, the total from continuing operations was $755 against a budget of $765. Nicaraguan all-in sustaining costs were just over $1,000, which is pretty much on budget.
One thing to comment there was there's a fairly significant consolidated cost statement on the cash cost, $36 an ounce, but we don't see that repeated in the all-in. All-ins are pretty much on budget. The main reason for that is the higher gold price. Because royalties flow into that all-in sustaining costs calculation, we had higher gold sales and revenues, as we mentioned earlier, and with those higher revenues came higher royalties, and those flowed through the all-in sustaining costs number. All in all, pretty much right on budget. There is some CapEx in there that was deferred in earlier periods that flowed through this quarter. For the forecast year, we've probably got somewhere between $7 million and $10 million of total CapEx, mainly related to first stripping of several of the operations that we don't expect will flow through into the fourth quarter.
You may see those as absolute savings for the year against budget. Just going to comment on a couple other items in the income statement. One's on the interest line. You see $7 million there for the current quarter, very similar to the prior quarter. We did repay $100 million year to date on the revolver. As Clive mentioned, we expect to pay another $100 million in Q4. What that'll mean, when you look at that, because we paid some debt down, you might expect to see a greater drop than that, but it was really just to do with the timing. We paid $75 million of it in Q3 off later in the quarter. You will start to see interest savings as we move forward now. I also comment on the tax side.
On the current income taxes, just because some of you frequently have questions on that, $34 million for the quarter, majority of that's Fekola, $28 million. 22 of it's income tax and $6 million of it's the priority dividend, which we also account for as a tax. One thing for your models, we had disclosed that we expected cash tax payments for the year to be $120 million for the year. We bumped that by $10 million in this quarter. That's due to Otjikoto. The higher gold prices and the higher net income generated in Namibia because of those higher gold prices, has now meant that Otjikoto is now more taxable than we thought it would be. We've added and guided you that there's another $10 million that we think you should put in your models for Q4 for total tax payments and mainly related to Otjikoto.
A couple of comments overall now on the overall results as we look forward and for the quarter. Firstly, for the quarter, the attributable net income was $66 million. Sorry, $55 million attributable, $66 million overall. Basic EPS, including discontinued operations, was $0.05 a share. Adjusted EPS off adjusted net income attributable of $89 million was $0.09 a share. Cash flow from operations was $168 million or $0.16 a share. In terms of overall guidance for the year and looking forward, we did change the mix of our overall production guidance range, but we didn't change the consolidated range overall. I think that's significant too, because With the disposal of Nicaragua in the middle of October, we don't have the benefit of 100% of that production going forward, but we still think we'll come in somewhere around the mid-range for consolidated guidance.
What we did change was Fekola. We originally had a guidance range of 420,000 to 430,000 ounces. We bumped that up to 445,000 to 455,000, just based on the outperformance of Fekola year to date. You'll see from that, and the results already reported, that due to the strong first half that we had there, that production from Fekola is no longer weighted half one versus half two. It's pretty consistent on the way through. Masbate, we're still guiding 200,000 to 210,000 ounces, like I mentioned, we expect that to come in at the high end of that guidance range as it is. Otjikoto, still guiding 165,000 to 175,000 ounces. Otjikoto was weighted to the second half in the budget and remains so.
In H1, we reported 70,000 ounces, and we think we'll be somewhere in the middle of the 165,000-175,000 ounce range for the whole year. Where we guided down was on El Limon and Libertad, and that's because we guided down on the basis that we're only going to pick up our share of their production going forward, that we would report is only 30%. Taking into account the production that we did have up to October 15th, where we own those operations and the 30% share that attributes to us going forward, we now think El Limon's guidance range is between 50,000-55,000 ounces, and Libertad's between 75,000-80,000 ounces. When you put all those together, the total consolidated range is still 935,000-975,000. Like I said, we think we're going to come in somewhere in that mid-range.
On the cash cost guidance range, Fekola for the year, we still expect to be in the range. For Masbate and Otjikoto, we expect to be at or below the low end of the range. Same story for those operations on the all-in sustaining costs side. When you look at the consolidated range that we gave, cash costs for $520 to $560, we think we're going to come in at or below the low end, as you will have seen the positive results year to date for those. On the all-in sustaining costs guidance range, $835 to $875, we think we'll come in there somewhere in the range. A couple of general comments on the operations and again, a couple of comments for your models. Fekola, the expansion started in 2019, well underway. We expect it to be completed certainly by the end of Q3 2020.
Detailed engineering, we expect to be done early to mid-November. We did guide before the plant expansion cost itself, we expect to be $50 million in total, $25 million split between this year and next year. We still expect that split is accurate. The fleet upgrade of $86 million, the larger fleet, we originally thought that we'd probably have about $25 million of that in the current year, 2019. We now think because of accelerated purchasing and what we're doing there to get things moving, that the $86 million split will now be split $36 million for the balance of 2019 and $50 million in 2020. The solar plant, again, well underway there with the plant to get that built. The total cost, as we disclosed before, is $38 million.
Previously, we thought we'd incur $20 million of that in this year, and $18 million next year. Now we think we'll incur $17 million in 2019 and the balance of $21 million in 2020. Again, just for you to update your models. Clive mentioned Gramalote and where we're going there. For the purpose, again, of your models and what you've built in there, we've agreed with AGA that we'll have a remaining budget of approximately $6 million for the fourth quarter of 2019 and then of up to $40 million for 2020 to get us hopefully to that feasibility study stage by the end of 2020.
We've agreed to fund the first $13.9 million of that, first A, to earn our way back to a 50/50 joint venture interest, and B, to become manager, our split of that 6 plus 40, so a total of $46 million, will be $6 million for the balance of 2019 and approximately $24 million for 2020. If you want to put that in your models. Finally, a couple of comments on the cash flow statement. As I mentioned, cash from operating activity is $168 million for the quarter, including the cash flows from Nicaragua. Year to date, it's just under $350 million operating cash flows. Assuming $1,500 per ounce gold price for Q4, and we've seen that pretty much all the way through so far, we think we're tracking right on that $500 million of operating cash flow that we previously disclosed for the year.
On the financing side, we have paid back in total $100 million on the revolver, $75 million of it so far in this quarter. In Q4, because of the weighting of some of that production we talked about with Otjikoto and the strong cash flowing from all the operations, we think we'll be able to repay another $100 million in Q4. As Clive mentioned, the total debt reduction, including paying down some of the capital leases and equipment loans, is estimated to drop from $480 million at the start of the year to $260 million at year-end.
The way things are going, especially with the Fekola expansion coming online, and certainly the larger fleet, starting to see the impact of that and mining earlier in the year and then the expansion coming fully online at the mill later in the year with strong cash flows there, we think if we want to be, we could certainly be debt-free on the revolver side by probably Q3, just after the first half of next year. On the investing side, we spent $205 million year-to-date, $73 million in the quarter. Like I mentioned, there may be some timing differences from the CapEx year-to-date, but in terms of both CapEx, it was budgeted, but it's not likely to be incurred. It's probably somewhere in the region of $5 million-$10 million for the full year. Maybe we'll give an update on that when we report Q4.
We'll see cash inflows in the fourth quarter of $53 million in total for the first part of our payment related to the sale of Nicaragua. There's a $40 million cash payment as part of consideration, and then there's also the first part of a working capital cash adjustment of $13 million. A total of $53 million that we'll see flow in in Q4 in cash related to the Nicaraguan disposal. We finished the quarter with $146 million in cash. That excluded $18 million of the Nicaraguan cash just because of the way we have to report it. In reality, early in the fourth quarter, we pulled up the majority of that cash back up into B2 because it was cash that was generated under our ownership.
I guess final point to note on the cash flow side, what we'll see, I think, you'll see it probably in early to mid-December in Q4, will be the payment of the dividend of approximately $10 million, reflecting our first quarterly dividend of $0.01 per share. I think those are the main items I wanted to highlight in terms of the results and the cash flows year to date and how we see the year panning out.
Okay. Thanks, Mike. I think we'll open it up to questions now.
Certainly. At this time, if you'd like to ask a question, please press star one on your telephone keypad. We'll pause for a moment to compile the Q&A roster.
Scared to ask a question.
Again, that is star one on your telephone keypad to ask a question. Your first question comes from the line of Geordie Mark with Haywood Securities. Your line is open.
Yeah, hey guys. Yeah, nice work on the quarter. Good to see a dividend coming out. That's great. Perhaps in line with what you were saying, Clive, we'll leave the minutia for later, and maybe as a segue from your comments on focusing on assets of scale. Just looking at Gramalote, what sort of makes sense there for yourselves and your partners in terms of relative scale of production on a gold product basis and asset life for that asset, do you think? Are you able to make any comments on that to give an idea of what you're thinking?
Yeah, we're working on an updated PEA, which we would hope to have done by early next year. I think the most recent economic runs that have been done have been looking at something starting out at Gramalote Ridge, and we're talking about somewhere starting out somewhere around 400,000 ounces a year. If the infill drilling pans out and the other economics stay similar to what they've been in the past in terms of mining costs and all those things where there's been a lot of work done, then it has the potential to be a pretty low-cost producer with pretty robust economics at $1,500 gold. The mine life, what are we talking about, guys?
Ten.
10-year mine life, I think we were talking about on some of the most recent numbers we've run. I think, Geordie, a lot of the details are going to come in and out of the assessment. We feel that's something that we would like to share with our public to indicate why we like it so much more than we liked it a couple of years ago. The big driving force has been the new geological modeling that's been done that has shown a significantly better project and low strip ratio, great logistics, great metallurgy. Those are some of the keys to a low-grade ore body. We've got all of those. We'll be getting really stuck into it now. As I said, the key driving force will be the infill drilling. So far we like the looks of it a lot.
There's more work to be done, but not that much, actually. It's mainly infill drilling.
Okay, thanks, mate. Maybe just one point on moving across to Fekola. Just obviously some language on the solar plant there. Just thinking about, obviously, the four-year payback there, is there a particular cost benefit on the scale of that production, on the scale of that capacity at 30 MW? On that basis, given the collective capacity of, I guess, fuel plus solar, if Anaconda was to make hay ultimately, would you draw from the same plant, or would you do something separate? I'll leave it there. Thanks.
Yeah, I think Dennis is on the line. He could talk a bit more to the solar, but I think the concept would be if Anaconda becomes something that becomes mineable, which we're seeing just the saprolite continues to expand. We're kind of keen on that because if that was a standalone, but definitely you'd be looking to perhaps share power to some extent. You'd be looking at perhaps expanding the solar plant. Those types of things are options. I'll let Dennis answer the other questions about the solar. Dennis, are you on?
Yeah, Clive. The solar plant's going to provide about, when the expansion's up and we're running at the higher rate, it provides about 18% of the power. It drops the process operating cost by a little over 7%. It lets us do maintenance during the day on the units, things like that. We can draw more power from the plant, simply because of the maintenance schedule. We don't need the plus 2 scenario that we have in the power plant. We can almost go to a plus 1 scenario because of the daytime maintenance that the solar plant creates. The solar plant is being built to where it could actually be expanded, without too much trouble also. Hope that helps.
Okay. All right, great. Thank you.
Thanks, Geordie.
Lawson Winder with Bank of America, your line is open.
Hey, good morning, guys. I think I'd like to also just echo those comments that I commend you on introducing the dividend and particularly at a competitive yield. Clive, I definitely agree with your comments that I think this is a milestone for B2Gold. With that said, question on Gramalote. Clive, you mentioned that obviously one of the big challenges or next big steps here is getting the infill drilling done. That makes a lot of sense, just looking beyond that, assuming the geological model checks out, the infill drilling confirms everything you'd hope, what do you see as the biggest challenge to getting Gramalote built?
Well, permitting is always one of the challenges in our business. We do have an environmental impact assessment already accepted with the government. There's various steps to go along the way to continue the permitting process. We're in Antioquia, which is definitely one of the best places to be in Colombia in terms of pro-mining. If you were to fly over Colombia in a helicopter and you knew nothing about mining, and someone asked you to pick the best spot in the country to build the first large open pit gold mine, you'd pick Gramalote. It's gently rolling hills. It's not high altitude. It's not steep terrain. There's not a lot of local crops and vegetation.
AngloGold has done an excellent job working with the local people, and working with the chisel miners and the local population, so we're very popular there, and we give a lot of credit to AGA. In taking over as operator, we're going to inherit a lot of the people, the AGA people that have been working so hard there on permitting and all the other social issues. They're going to stay where they are, and they're going to be managed by B2Gold, and also AGA will have a strong presence as part of that management committee. I think we're in really good shape there. Frankly, because AGA is a big company and they do things methodically, and they spend a little more money than we would sometimes and do a little more work than we would sometimes on things like metallurgy and engineering, et cetera.
It's a little risk reward thing. We benefit from that after many years and the fact that there was a lot of good work done by AGA in terms of the metallurgy, in terms of engineering. There's not a lot of risk in this that we see in terms of those things. In terms of the ore body itself, Tom can speak to it more than I can, but it's a fairly homogeneous, low-grade ore body. We're really hopeful that the infill drilling is going to bring no negative surprises. We'll have the results of that starting to come out, I guess, in May, Tom?
Yeah.
Of next year. Yeah, we see it as a very advanced project, much more advanced than you would normally expect to be when a significant portion of it is actually inferred. The good news is it's advanced in permitting, it's advanced in the social issues. It's well advanced in all the other things that make up a final feasibility study, detailed engineering, et cetera. There'll be some more detailed engineering and some more work to be done on looking at the plant and stuff, but we're cautiously optimistic that this has potential to be a significant low-cost producer. That's one of the reasons why our focus is organic growth.
As I've said many times in these calls, and I'll say it again, you're not going to see any stupid M&A from us because why would we buy anything when you've got the kind of assets we have, Gramalote, the potential for additional ounces at Fekola, et cetera. We're going to see the course about it. Gramalote potentially becomes an important part. Another note on that, I guess, I think one of our reasons for our success with B2Gold is the strength of our executive team and our technical and all of the people that work for us. A tremendous amount of experience with Dale Craig, who's a Vice President of Global Production at B2Gold, has offered to go down and asked to go down and be the country manager in Colombia for B2Gold. I think that's a great move for Dale and for us.
I'm a bit jealous, actually. Nice place to work. At the end of the day, Dale came to us when we originally acquired the Nicaraguan assets. He was country manager in Nicaragua, then he was promoted to come to Vancouver, and he wanted to go to Colombia and have this experience. That's what I think is one of the keys to our success, is the bench strength, the ability to have this incredible team of people around the world that can slot into different projects and different opportunities as they come up. Of course, if we get to the point of building Gramalote, it will be our in-house construction team that's done such a fantastic job and is currently doing the expansion of Fekola. Yeah, we're cautiously optimistic that Gramalote is going to prove its shot to be a low-cost open pit gold mine.
I look forward to further updates on Gramalote. Thanks for those comments, Clive. Mike, maybe just a question for you on, or perhaps someone else, but I think this one's going towards Mike on Montana, the extension pit. You highlighted that the permits or the approvals rather, could be delayed into 2020. I'm just curious, how many approvals are needed and what are they? Finally, if there's any more slippage there, is there any risk to the guidance you guys have provided preliminarily for 2020 there with that 200,000-210,000 ounces?
Well, I think to answer the first part of your comments or your question, I think we've got one more final approval to go and then we'll have rolled. We're ready to go. Other than that, I think we're ready to go on Gramalote. That's why we think it'll either happen a bit later now in Q4 or early 2020. In terms of the guidance this year, like I said, we're going to hit guidance at the upper end. In terms of sensitivity to next year, yeah, if Gramalote's not in there might be a slight slippage, but it won't be very significant, certainly not in the scheme of B2 production overall. We're also going to look at that as part of budgeting, just to see what we would do if it didn't come in right at the start of 2020.
Right now, that's when we expect it.
As Mike said, it would have a minimal impact if it doesn't come in at all. I think it's important to point out that we're not looking for a new permit. It's a consolidation of the Montana permit that we already have. There's a lot of precedent in the Philippines for this having been done before. We're not doing anything that's outside the norm, and that we've gone through a bureaucratic process as we see in many countries. We're at the final stages and we anticipate getting that, the final approvals very shortly here.
Thank you. Mike, just actually one quick follow-up on your comments around Namibia. Certainly, the costs in Namibia this year have been remarkable, to say the least. You highlighted several factors that have contributed to that. Just assuming no change in FX from here, are there any sort of pressures that could work the other way going into 2020? Would you consider some of these cost savings sustainable? I mean, assuming no change to the FX. Thanks.
What we've budgeted, when we sort of reforecast for ourselves what we thought the costs look like at the end of the year, we've assumed that the Namibian cost will be on budget. We did have some cost savings through the year. Some of that's related to where we're mining and the ore we're mining. The FX rate, we'll probably budget somewhere around 14.5 to 15 for Namibia and the foreign exchange rate for 2020. I guess you can factor that into whatever you've got in your model, but I don't think we're planning that we have sustained cost savings that we've seen there this year. For next year, the budget will be pretty consistent with how we budgeted this year.
Where I'm going with this is just on the labor side with the depreciation in the currency, are you seeing any pressure on labor costs there?
Labor costs, we have a union agreement, collective bargaining agreement there. They go up a little bit each year just to reflect something a little over, I guess, inflation rate or standard growth. We don't see any particular pressure on the labor costs next year. Again, it'll be based on what your FX rate is assumed. Like I said, we'll probably budget somewhere between 14 and a half and 15.
Fortunately, a lot of mines in Namibia have shut down over the last number of years, various types of mines. These are pretty good jobs, and these are well-paying jobs, and we've got tremendous support from the government and recently had a successful negotiation with the unions again. These are jobs that are very much, I think, in demand.
Okay. Thank you all. That's it for me.
Okay. Thanks a lot. Thanks for your question.
Again, if you'd like to ask a question, please press *1 on your telephone keypad. Chris Thompson with PI Financial, your line is open.
Yeah, good morning, guys. Congratulations on a stellar quarter. A lot of my questions have already been answered, but just moving to Otjikoto quickly. Nice to see the high grade from Wolfshag hitting the mill. When are we going to get a better idea of life of mine plan for the mine here?
Who wants to take that? Bill Lytle just left here to head to the Philippines. Who wants to take that on?
I think there'll be, for Wolfshag, what we've always been considering is how big we think the open pit will be versus the underground. We're still looking at that. It's probably a weighing or sort of a thought that maybe going underground earlier might be the most profitable option, but that will be reflected in the mine plan and the new reserves and resources that are done by the end of the year or for the AIF in Q1 next year. In terms of understanding how that fits into a mine plan, I think that's when it's going to be available.
Great. Thank you. Just quickly, finally, just want to make sure my facts are right. The new resource for Fekola before the end of the year, is that right?
Yep, that's right.
Perfect. Guys, congratulations. Thank you.
Thanks a lot. Appreciate it.
Michael Fairbairn with Canaccord Genuity, your line is open.
Hi, guys. Thanks a lot for taking my question, and again, congrats on the great quarter. I've just got a couple questions on Fekola, if I could.
Sure.
Starting with just the stockpile that you have there. I know you guys continued to process some of the lower grade stockpile that you have available. Are you able to give us any kind of a sense of how large that stockpile is and what kind of grade we're looking at there?
Randy, are you on?
Yeah, I'm on. Yeah, right now we've got a low-grade stockpile of about 3.5 million tons, and that'll continue to grow. Grade of that is running just over a gram, 1.1 gram a ton.
Okay, thank you. If I remember correctly, in your mine plan, you should start to get into mining some of that high-grade core of the deposit. If that starts to come out in Q4, would that be stockpiled as well until 2020, or would that start to go through the mill, starting in Q4?
Yeah. We will have some stockpiles of high grade at the end of the year, we estimate. Some of it will go through the mill in Q4, but a lot of it will be stockpiled as well, and be processed in the first quarter.
Okay. Awesome. One more, if I could, just on the shareholder loans that you guys have with the government of Mali. Are you able to give us any type of updates on where those sit or when you expect them to be fully repaid?
Yeah. We can give a sort of indicator. Again, it's based on the gold prices, right, and production levels. They haven't repaid them yet. They're not repayable. No ordinary dividends are declarable until our construction loans are repaid.
Yeah.
Once those are repaid, then the ordinary dividends that attribute to the 10% shareholding that the government of Mali has will be applied against repaying the loans and dividend. As a guide, it varies depending on the gold price and as the mine plan changes. I think broadly speaking, we're talking about 2022, 2023.
Okay, awesome. Thanks a lot. That's it for me, and congrats again on the great quarter.
Thanks a lot. Appreciate it.
There are no further questions at this time. I would now like to turn the call back over to the presenters for closing remarks.
Okay. Well, thanks, everyone, for taking the time to dial in on the call, and thanks for your very good questions. Any further details on any topic, feel free to reach out to Ian and he'll put you in touch with the person most able to answer your question. Thanks again, and we look forward to talking to you soon.
This concludes B2Gold's third quarter and year-to-date 2019 financial results conference call. We thank you for your participation. You may now disconnect.