Sep. 29, 2020 1:52 PM ET|6 comments | About: B2Gold Corp. (BTG), Includes: GOLD
Investor Trip
Deep Value, Contrarian, Momentum, Long/Short Equity
(387 followers)
Summary
B2Gold continues to profit from rising gold prices and has a rock-solid balance sheet.
The company has repaid the majority of its revolving credit loan and is almost 100% debt free.
Higher gold prices could translate into future dividend increases and a lot of additional income for dividend growth investors.
B2Gold (BTG) is a Canadian gold mining company that operates gold mines in Mali, Namibia, and the Philippines.
Many investors have taken a keen interest in gold stocks after Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) reported a brand new equity stake in Barrick Gold (GOLD).
Whenever Warren Buffett makes a move, people watch and study his reasons for doing so.
https://seekingalpha.com/article/4376869-b2gold-buy-now-because-gold-prices-will-go-higher?utm_source=feed_articles_macro_view_all&utm_medium=referral
(Source: CNBC.com)
Of course, Warren Buffett doesn't act alone at this stage of his investment career and his proteges, Todd Combs and Ted Weschler, could be behind the newly acquired stake.
What we do know is that gold has been considered real money for thousands of years and cannot be printed by world governments.
JPMorgan said it best with his infamous quote:
Gold is money and everything else is credit.
JP Morgan Gold quote
(Source: Steemit.com)
As governments continue to print an endless supply of currency to ease the blow dealt by the COVID-19 pandemic, gold looks like an attractive investment class.
While I always advocate owning gold as a physical asset, I am also interested in undervalued gold stocks with rising dividends as another hedge against the declining U.S. dollar.
B2Gold fits this bill perfectly and I'll discuss the pros and cons of buying B2Gold stock during the current economic climate.
B2Gold Reported Quarterly Records for Gold Revenue
A high price for Gold helped B2Gold reach record gold revenue for Q2 2020 as noted in their latest Q2 2020 earnings release.
Gold revenue hit $442 million and increased 65% YoY when compared to Q2 2019.
Net income reached $124 million or 12 cents per share. B2Gold is highly profitable and should continue to rake in profits as gold prices remain high.
The Fekola mine in Mali generated the majority of the company's results and hit 147,424 ounces of gold production in the most recent Q2 2020.
(Source: B2Gold.com)
The company reported a healthy relationship with the Mali government since B2Gold has become an important partner in assisting Mali with the unique challenges created by COVID-19.
B2Gold management is planning a further expansion of the Fekola Mine and these additions will be completed by the end of Q3 2020.
Record revenue helped improve B2Gold's cash flows and the company has reached a net positive cash position, which helped B2Gold increase its dividend as well.
Rising Dividends Mean More Passive Income for Investors
B2Gold management doubled the quarterly dividend to 4 cents per quarter, which shows just how confident management is in higher gold prices and increased annual gold production in the future.
If you've been following my articles on Seeking Alpha, then you know how much I encourage investors to seek out companies that pay rising dividends.
When management increases the dividend payout, I think it's one of the most positive signals that the business is doing extremely well.
Rising dividends translate to more quarterly payouts, which compound greatly over time.
Potential Risks Include a COVID-19 Second Wave and Problems from Local governments
The COVID-19 pandemic halted gold mining production while the world began to fight the global health crisis.
Many healthy organizations talk about the second wave effect that may cause B2Gold to shut down its production in the future.
If gold production halts, then investors are left holding a stock that bleeds through cash without generating any revenue.
Geopolitical risks also create problems for gold mining companies that must adhere to local government laws while appeasing shareholders at the same time.
It's a difficult balancing act that improves gradually as companies open up more mining locations.
Right now, the Fekola mine in Mali represents a majority of the gold production, thus creating risks if production gets shut down.
B2Gold Fekola Mine in Mali
Fekola Mine in Mali (Source: Mining.com)
Strong Cash Position and Access to Revolving Credit Means B2Gold is Financially Secure
In times like this, I think investors should focus on companies with rock-solid balance sheets.
A large cash position is absolutely crucial to survival since many businesses are on the brink of bankruptcy as we speak.
B2Gold has $628 million in cash and another $50 million in revolving credit to provide emergency liquidity for its operations.
The company has repaid the majority of its revolving credit line and should be 100% debt-free by the end of September 2020.
Conclusion
I want to bring the spotlight on B2Gold because I believe this is an amazingly well-run company that falls under the radar in the gold mining stock community.
A 16 P/E ratio shows B2Gold is reasonably priced and not too expensive. Anytime I find a good company with a P/E ratio under 20, I consider it fairly valued.
B2Gold stock trades just under $7 with a 2% dividend yield adjusted according to the latest dividend increase.
Gold will go higher as world governments issue more currency as a coping mechanism for a flawed financial system.
B2Gold is one of the beneficiaries of the global financial crisis and could pay major dividends (no pun intended) if management continues to increase the dividend over the long run.
Disclosure: I am/we are long BTG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Recent BTG News
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 09/13/2024 02:29:07 PM
- B2Gold Announces Goose Project Update; Project Construction and Development on Track for First Gold Production in Q2 2025; Total Construction and Mine Development Cash Expenditure Estimate Before First Gold Production Revised to Reflect Current Timeline • GlobeNewswire Inc. • 09/13/2024 12:40:40 AM
- B2Gold Reaches Agreement on Terms with Mali Government Relating to the Framework for the Fekola Complex; Approvals for Fekola Regional and Fekola Underground to be Expedited • GlobeNewswire Inc. • 09/11/2024 11:45:14 PM
- Sweetgreen Rises 22% on Raised Forecasts, Doximity Jumps 30%, Rocket Lab Soars 14% on 71% Revenue Growth, and More • IH Market News • 08/09/2024 09:48:54 AM
- B2Gold Reports Q2 2024 Results and Updated 2024 Guidance • GlobeNewswire Inc. • 08/08/2024 11:00:03 PM
- U.S. Index Futures Drop, Signaling Ongoing Market Volatility; Oil Prices Stall • IH Market News • 08/08/2024 09:55:44 AM
- B2Gold Second Quarter 2024 Financial Results – Conference Call Details • GlobeNewswire Inc. • 07/23/2024 11:00:49 PM
- B2Gold Announces Voting Results from its 2024 Annual General and Special Meeting • GlobeNewswire Inc. • 06/22/2024 12:00:04 AM
- B2Gold Announces Sale of C$139 Million of Calibre Mining Shares • GlobeNewswire Inc. • 06/21/2024 10:30:48 AM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 06/20/2024 03:55:19 PM
- B2Gold Announces Initial Inferred Mineral Resource Estimate for the Springbok Zone of the Antelope Deposit at the Otjikoto Mine in Namibia • GlobeNewswire Inc. • 06/20/2024 11:30:19 AM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 06/20/2024 11:00:13 AM
- B2Gold Announces Positive Preliminary Economic Assessment Results for the Gramalote Project; After-Tax NPV (5%) of $778 Million with an After-Tax IRR of 20.6% • GlobeNewswire Inc. • 06/19/2024 02:30:13 AM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 06/06/2024 03:31:40 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 06/06/2024 03:20:08 PM
- B2Gold 2024 Annual General and Special Meeting: Leading Independent Proxy Advisory Firms, Glass Lewis and ISS, Recommend Shareholders Vote FOR All Proposed Items • GlobeNewswire Inc. • 06/06/2024 12:00:56 PM
- B2Gold and Sandbox Royalties Partner to Create Versamet Royalties; B2Gold Receives $90 Million Equity Interest in Versamet • GlobeNewswire Inc. • 06/06/2024 11:00:37 AM
- B2Gold Releases its Eighth Annual Responsible Mining Report and its Third Annual Climate Strategy Report • GlobeNewswire Inc. • 06/03/2024 09:45:11 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 05/13/2024 08:30:55 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 05/08/2024 01:55:14 PM
- B2Gold Reports Q1 2024 Results; Cash Operating Costs and All-In Sustaining Costs Below 2024 Annual Guidance Ranges; Update on Goose Project Following Successful Completion of 2024 Winter Ice Road Campaign • GlobeNewswire Inc. • 05/07/2024 10:20:00 PM
- B2Gold First Quarter 2024 Financial Results – Conference Call Details • GlobeNewswire Inc. • 04/15/2024 09:30:01 PM
- B2Gold Files Form 40-F and Supporting Documentation • GlobeNewswire Inc. • 03/15/2024 02:00:42 AM
- B2Gold Reports Strong Q4 and Full Year 2023 Results; Achieved 2023 Total Gold Production and Consolidated Cost Guidance; Q1 2024 Dividend of US$0.04 per Share Declared • GlobeNewswire Inc. • 02/21/2024 10:59:19 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 02/16/2024 11:02:00 AM
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