B2Gold Corp. BTG has entered into an agreement with AngloGold Ashanti AU to acquire its 50% stake in the Gramalote project. Following the completion of the deal, BTG will become the 100% owner of the project, which will boost its consolidated mineral resource base.
The Gramalote Project, located in the Department of Antioquia, Colombia has so far been advanced under a joint venture between B2Gold and AngloGold with each holding 50%.
While the Gramalote Project offered project benefits from a low strip ratio, low processing costs, and a favorable relationship with the local stakeholders, the feasibility study indicated that it failed to meet the investment threshold of each joint venture partner. BTG and AU had initiated a joint sales process for the project in the fourth quarter of 2022, but a buyer was not found.
According to BTG, the previous analysis of the project was done on a large scale to provide meaningful production growth to both companies. However, bringing it under a single owner would allow for the analysis of lower capital intensity and higher-return development opportunities for the project.
To this end, B2Gold plans to conduct a detailed review of the Gramalote Project, including the size, power supply, mining and processing options, tailings design, resettlement, potential construction sequencing, and other options to identify potential cost savings and develop a smaller scale project.
The project will add 2.11 million gold ounces to B2Gold’s Indicated Mineral Resources and 0.74 million gold ounces of Inferred Mineral Resources to its consolidated Mineral Resource base.
Under the terms of the agreement, BTG will pay $20 million to AngloGold upon the closing of the deal, along with further payments depending on the fulfillment of various milestones. It will make a payment of $10 million when it announces a construction decision at the Project. Another $10 million will be disbursed upon starting commercial production, contingent on commercial production beginning within five years of the closing of the transaction.
However, if commercial production does not start within five years, no payment will be made. B2Gold is also expected to pay $10 million on the first anniversary of commercial production and another $10 million on the second anniversary of commercial production.
The transaction is subject to South African Reserve Bank approval and the satisfaction of the customary closing conditions. B2Gold expects the deal to be completed in the fourth quarter of 2023.
Shares of the company have lost 5.6% in the past year against the industry‘s 24.1% growth.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
B2Gold currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the basic materials space are Carpenter Technology Corporation CRS and Hawkins, Inc. HWKN. CRS and HWKN each sport a Zacks Rank# 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The earnings estimate for Carpenter Technology’s current year is pegged at $3.48 per share, indicating year-over-year growth of 205%. CRS beat the Zacks Consensus Estimate in all the last four quarters, with the average earnings surprise being 10%. The company’s shares have rallied 77% in the past year.
Hawkins has an average trailing four-quarter earnings surprise of 25.5%. The Zacks Consensus Estimate for HWKN’s fiscal 2024 earnings is pegged at $3.40 per share. The consensus estimate for 2024 earnings has moved 38% north in the past 60 days. Its shares have gained 50% in the last year.
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