The terms and benefits of the deal are discussed
in a BMO Capital Markets report.
In a July 2 research note, BMO Capital Markets analyst Brian Quast
reported that B2Gold
Corp. (BTG:NYSE; BTO:TSX; B2G:NSX) agreed to sell its Nicaraguan assets
to Calibre Mining for $100 million and a roughly 31% equity interest in
Calibre. Closing of the deal is slated for October 2019.
The two gold mines being sold are El Limon and La Libertad, which together
contribute about 150,000 ounces per year, or approximately 15% of B2 Gold's
total production.
Per the agreement, Calibre Mining will pay, on closing, $40 million in
cash, 40 million Calibre common shares (valued at CA$0.60 per share) and a
$10 million convertible debenture. Calibre will pay another $10 million in
cash a year after the closing. With the transaction, B2Gold's interest in
Calibre will increase to about 31% from 11.9%.
BMO Capital considers the deal "positive" and the price
"fair," given it values the two mines together at CA$240 million,
CA$225 million for El Limon and CA$15 million for La Libertad, Quast wrote.
"With Nicaragua being a less traditional mining jurisdiction, and both
mines underperforming expectations of late, it was unlikely that any acquirer
was going to pay over net present value for either of these assets," he
added.
Quast highlighted that "the divestiture will allow B2Gold to better
focus on optimizing and growing its larger, lower-cost assets." It also
will result in a lower all-in sustaining cost for the miner, decreasing to
CA$665 per ounce from CA$683 per ounce.
BMO Capital has an Outperform rating and a CA$5.50 per share target price
on B2Gold, whose stock is currently trading at around CA$3.94 per share.
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Disclosures from BMO Capital Markets, B2Gold, July 2, 2019
IMPORTANT DISCLOSURES
Analyst's Certification
I, Brian Quast, hereby certify that the views expressed in this report
accurately reflect my personal views about the subject securities or issuers.
I also certify that no part of my compensation was, is, or will be, directly
or indirectly, related to the specific recommendations or views expressed in
this report.
Analysts who prepared this report are compensated based upon (among
other factors) the overall profitability of BMO Capital Markets and their
affiliates, which includes the overall profitability of investment banking
services. Compensation for research is based on effectiveness in generating
new ideas and in communication of ideas to clients, performance of
recommendations, accuracy of earnings estimates, and service to clients.
Analysts employed by BMO Nesbitt Burns Inc. and/or BMO Capital Markets
Limited are not registered as research analysts with FINRA. These analysts
may not be associated persons of BMO Capital Markets Corp. and therefore may
not be subject to the FINRA Rule 2241 restrictions on communications with a
subject company, public appearances and trading securities held by a research
analyst account.
Company Specific Disclosures
Disclosure 9B: BMO Capital Markets makes a market in B2Gold in United States.
iscussed in this report, please click here.
