B2Gold Corp.
BTG Details
B2Gold Corp, Inc (NASDAQ: BTG) is a Canada-based gold mining company with three gold mines and various exploration projects in Mali, Nicaragua, the Philippines, and Burkina Faso. The company’s operating segments include its mining operations, namely Fekola, Masbate, and Otjikoto, and other development and mineral properties. It generates maximum revenue from the Fekola mine segment. As of 14th April 2021, the company’s market capitalization stood at USD 4.93 Billion.
Solid FY20 Results: The company reported 55% growth in topline to USD 1.79 billion in FY20 as compared to that of USD 1.16 billion in FY19. The was due to a 27% increase in the average realized gold prices and 22% to the increase in gold volumes sold. The company sold 1,006,455 oz of gold at an average price of USD 1,777 /oz in FY20 as compared to 827,000 oz of gold at an average price of USD 1,397 /oz in FY19. The net income grew by 112% to USD 672 million in FY20 as compared to USD 316 million in FY19.
Key Risks: The total gold production of the company was 1,040,737 oz in FY20, out of which Fekola mine production stood at 622,518 oz or 59.81% of the total production. This exposes it to significant mine concentration risk. Any adverse event related to the Fekola mine can have a material impact on the operating and financial health of the company.
BTG Gold Production by Mine in Q4FY20 & FY20 (Source: Company Presentation)
Outlook: BTG is planning an aggressive exploration in 2021 with a budget of approximately USD 66 million, including a record USD 25million allocated to high-quality targets for the company’s ongoing grassroots exploration programs. The company has guided for total gold production of 970,000- 1,030,000 oz for FY21 as compared to 995,258 oz produced in FY20. The average gold production for 2020-2024 is forecasted to be 950,000 with all-in sustaining costs (AISC) averaging USD 825 per ounce.
Valuation: EV/EBITDA Multiple Based Relative Valuation (Source: Refinitiv, Thomson Reuters)
Stock Recommendation: BTG has corrected 10% in the past three months and is currently inclined towards the lower end of its 52 weeks’ range of USD 4.16 to USD 7.55. The stock is currently trading below 200 DMA. We have valued the stock using the EV/EBITDA multiple based relative valuation method and arrived at a target price of USD 5.65. Considering the correction over the past three months, current trading levels, and decent fundamentals we recommend a “BUY” rating on the stock at the closing price of USD 4.68 as of 14th April 2021.
Yamana Gold Inc.
AUY Details
Yamana Gold Inc (NYSE: AUY) is a Canada-based gold and silver metal producing company. It is engaged in precious metals mining and allied activities, including exploration, extraction, processing, and reclamation. They operate 5 mines namely, Canadian Malartic (50% interest), Jacobina (Brazil), El Peñón (Chile), Cerro Moro (Argentina) and Minera Florida (Chile). The company generates maximum revenue from the Canadian Malartic mine, which is in 50% partnership with Eagles Mines Limited (AGNICO). As of 14th April 2021, the company’s market capitalization stood at USD 4.38 Billion.
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