B2Gold and Rio Alto both beat Q4 guidance and delivered strong 2013 production numbers (Photo: Andrew Caballero-Reynolds/Bloomberg News)
This morning two high-growth mid-tier gold producers, B2Gold (BTO:TSX) and Rio Alto (RIO:TSX) announced strong fourth quarter and 2013 production numbers. The performance in the fourth quarter of these two companies shows the strength of this tier of gold company, even in todays environment. They are producing at record levels and have been able to maneuver more easily and adapt to the changing investor sentiment of investment returns versus big ounce production. The smart mid-tiers have used 2013 to optimize current production and new development projects in order to secure high return growth.
B2Gold met expectations in their full-year 2013 guidance, producing 366,313 ounces of gold over the year (representing an increase of 132% over 2012). B2Gold produced record quarterly production in Q4, producing 105,577 ounces over the 3 month period. The company didn’t provide cash costs, but they estimate them to be on the low end of the $675-$690 per ounce guidance.
The company provided 2014 guidance of 395,000-420,000 ounces of gold over the year at a decreased cash cost forecast of $667-$695 per ounce. B2Gold believes the plan to expand Ojikoto to 3Mtpa is a good one given they are in a strong financial position to grow. They expect to spend $15 million to increase throughput there. This is expected to increase production from 140,000 ounces to 170,000 ounces by the end of 2015. The company has $240 million in cash and $100 million of a $150 million facility undrawn.
Here’s the 12-month B2Gold chart:
BTO data by YCharts
Rio Alto provided the market with a similar release, announcing record quarterly gold production in the third quarter of 70,551 ounces. They beat their 2013 production guidance of 190,000-210,000 ounces of gold and produced 214,742 ounces over the year. The company continues to mine and process more tonnes at a higher grade. No cash cost estimates were provided for 2013.
Over 2014, the company expects to produce in line with last year at between 190,000 to 210,000 ounces of gold. They are targeting cash costs of $629-$695 per ounce and fully-loaded all-in cash costs of $990-$1,094 per ounce. Rio’s management team expects to spend $34.5 million in sustaining capital at their La Arena Phase 1 oxide gold mine and another $26 million in capital to be spent on their Phase 2 expansion. This $26 million includes a feasibility study, power line and substation and surface rights acquisitions.
Here’s the 12-month Rio Alto chart:
RIO data by YCharts
Strong operating performances by these mid-tier companies offer investors shelter from the storm in the gold sector. It is these types of environments, when resource assets are on sale, that the most successful gold companies are built. Without acquiring anyone else, B2Gold is already slated to grow production by nearly 70% over the next few years.
We are awaiting another mid-tier gold with low cost growth, Endeavour Mining (EDV:TSX) which should be releasing 2013 results as well as 2014 guidance in the near-term. Their previous guidance was targeting 33% production growth this year alone, from 300,000 ounces to over 400,000 ounces in 2014.
Read: B2Gold Achieves Record 4th Quarter and Full-Year Gold Production in 2013. Operational Results Continue to Deliver on Guidance and 2014 Outlook Provides Continued Production Growth
Read: Rio Alto Produces a Record 214,742 Ounces of Gold in 2013
Related: Endeavour Mining: 2013 Results, 2014 Guidance, Agbao Mine Commissioning Coming Up