I Am Buying B2Gold For The First Time: A Giveaway Valuation

seekingalpha03-28

B2Gold's current undervaluation and future growth potential outweigh the risks of owning mining assets in politically unstable regions.Higher costs and lower production levels projected for 2024 are ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2422960198?lang=en_US&edition=fundamental","thumbnail":"","is_english":true,"pubTime":"2024-03-28 20:30","share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","id":"2422960198","market":"sh","top_or_hot":-1,"title":"I Am Buying B2Gold For The First Time: A Giveaway Valuation","media":"seekingalpha","content":"<div>\n<p>B2Gold's current undervaluation and future growth potential outweigh the risks of owning mining assets in politically unstable regions.Higher costs and lower production levels projected for 2024 are ...</p>\n\n<a href=\"https://seekingalpha.com/article/4680915-buying-b2gold-stock-first-time-undervalued\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>I Am Buying B2Gold For The First Time: A Giveaway Valuation</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nI Am Buying B2Gold For The First Time: A Giveaway Valuation\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-03-28 20:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4680915-buying-b2gold-stock-first-time-undervalued><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>B2Gold's current undervaluation and future growth potential outweigh the risks of owning mining assets in politically unstable regions.Higher costs and lower production levels projected for 2024 are ...</p>\n\n<a href=\"https://seekingalpha.com/article/4680915-buying-b2gold-stock-first-time-undervalued\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"HMY.AU","symbol_name":"HARMONEY CORP LTD","start_time":0,"source_url":"https://seekingalpha.com/article/4680915-buying-b2gold-stock-first-time-undervalued","article_id":"2422960198","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2422960198","pubTimestamp":1711629000,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"B2Gold's current undervaluation and future growth potential outweigh the risks of owning mining assets in politically unstable regions.Higher costs and lower production levels projected for 2024 are p","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"HMY.AU":"HARMONEY CORP LTD","GOLD.AU":"ETFS Physical Gold","LU1023059493.AUD":"Blackrock World Mining A2 AUD-H","EGO.AU":"Empire Oil","BTG":"B2Gold","GFI.AU":"Global Fortune Investment","BK4017":"黄金","AEM":"伊格尔矿业","CXBMF":"Calibre Mining Corp.","EGO":"埃氏金业","LU1223083913.SGD":"Schroder ISF Global Gold A Acc SGD-H","LU0055631609.USD":"贝莱德世界黄金基金A2","BK4532":"文艺复兴科技持仓","LU1223082196.USD":"施罗德环球黄金A Acc","LU0075056555.USD":"贝莱德世界矿业基金A2","BK4570":"地缘局势概念股","KGC":"金罗斯黄金","BK4585":"ETF&股票定投概念","AU":"AngloGold Ashanti Ltd ADS","LU1169590202.USD":"ALLSPRING (LUX)  U.S. SELECT EQUITY \"I\" (USD) ACC","GFI":"金田","LU0368265764.SGD":"Blackrock World Gold Fund A2 SGD-H","LU1169589451.USD":"ALLSPRING (LUX)  U.S. SELECT EQUITY \"A\" (USD) ACC","BK4522":"非洲概念","BK4533":"AQR资本管理(全球第二大对冲基金)","AGI":"Alamos Gold Inc","LU0496367417.USD":"富兰克林黄金和贵金属A（acc）","BK4210":"白银","LU0330918003.SGD":"Blackrock World Mining A2 SGD-H","PAAS":"泛美白银","BK4588":"碎股","NEM":"纽曼矿业","LU0266512127.USD":"摩根大通环球自然资源 A(acc)","BK7104":"黄金","LU0456854461.SGD":"JPMorgan Funds - Global Natural Resources A (acc) SGD","NEM.AU":"Newmont Corp","LU0498741890.SGD":"FTIF - Franklin Gold and Precious Metals A (acc) SGD","AGI.AU":"AINSWORTH GAME TECHNOLOGY LT","GOLD":"巴里克黄金","LU0498741114.HKD":"FRANKLIN GOLD & PRECIOUS METALS \"A\" (HKD) ACC","SG9999001143.SGD":"United Gold and General A Acc SGD","BK7054":"投资银行业与经纪业","TFPM":"Triple Flag Precious Metals","BK7078":"赌场与赌博","BK7093":"消费信贷","HMY":"哈莫尼黄金"},"translate_title":"我第一次购买B2Gold：免费估价","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"GOLD.AU":1,"TFPM":1,"PAAS":1,"NEM.AU":1,"NEM":1,"KGC":1,"HMY.AU":1,"HMY":1,"AEM":1,"GOLD":1,"GFI.AU":1,"GFI":1,"EGO.AU":1,"EGO":1,"CXBMF":1,"BTG":1,"AGI":1,"AGI.AU":1,"AU":1},"content_text":"B2Gold's current undervaluation and future growth potential outweigh the risks of owning mining assets in politically unstable regions.Higher costs and lower production levels projected for 2024 are problematic, but a big swing for better results is expected in 2025.A 6% dividend yield, lower than industry-average costs of production, alongside the potential for new gold discoveries should be supportive of the share quote.Technical buying momentum is starting to appear, as icing on the cake to make a purchase decision.   Liudmila Chernetska/iStock via Getty Images After avoiding B2Gold (NYSE:BTG) over the years, I have decided to buy a small position this past week. Despite a rather extensive list of operating risks to consider, the valuation argument has become quite compelling, especially looking forward to 2025-26 guidance and projections for much higher annual gold output on far lower mining costs per ounce. For me, upside potential is starting to outweigh downside risks for owning the stock. A final positive pushing me into the bull camp is technical buying momentum appears to be expanding in March. So, other investors, hedge funds, and brokers may be coming to the same investment conclusion. Let me explain my thinking. Company Background I have not been very excited about investing in B2Gold over the years for several reasons. For starters, mine life estimates have always been low. Today's rough 1-million ounce annual production level is backed by around 7 million ounces of likely mined reserves (5.4 million in proven reserves at producing mines + another 1.5 million in expected production from Back River in Canada), and perhaps another 3 million in likely convertible ounces from the measured & indicated category. Honestly, a 7 to 10-year companywide mine-life stat sits on the weaker end of the major miner scale. In terms of attractive alternatives, the big boyz of Newmont (NEM), Agnico Eagle (AEM), and Barrick (GOLD), run company mine-life estimates of 15-20 years (if not longer) on current production levels, a good double the duration of BTG. A second problem is running gold mines in far off regions of the world, with less-than-ideal political climates. A lineup of assets in Nicaragua [sold to Calibre Mining (OTCQX:CXBMF) for shares in 2020], Namibia, Mali, Philippines, and potentially Colombia soon, have kept me at a distance. Third-world nation mine ownership entails all kinds of extra risks vs. the safest political jurisdictions in Canada, the U.S., and Australia. Government taxes and regulations can change without warning, while ownership rights can be revoked or watered-down. In contrast, NEM, AEM, and GOLD, hold most of their assets in the safest countries to operate a gold mine. Company 2024 Fact Sheet - Asset Map In terms of price weakness in B2Gold's stock during the past 12 months, management has been lowering sales/income guidance for 2024 on much higher costs per ounce and lower production levels vs. 2023. Winding down its exposure to Nicaragua, on top of hiccups in output at other assets are to blame. An estimated 12% drop in ounces extracted combined with a 30% increase in AISC per ounce vs. last year have put incredible pressure on the stock quote, at least over the short term. Company 2024 Fact Sheet - Production Guidance  That's not all the bad news. Management is now saying they will spend an extra $450 million than expected years ago to get production up-and-running at its Canadian Back River assets by early 2025 (about a year from now). In total, BTG and predecessor companies will have spent about $1.5 billion developing this area (now 100% controlled by B2Gold) before meaningful ounces are pulled out of the ground. The initial plan is to mine 300,000 ounces over 5 years, for 1.5 million in total. So, we are talking about $1000 per ounce in development costs, assuming no new mineralization is upgraded to the economic reserve category. The good news is plenty of exploration potential exists to double and triple the mining life of Back River in coming years. Seeking Alpha analyst Taylor Dart does an excellent job of breaking down the upside exploration potential here. March 2024 Investor Presentation - B2GoldB2Gold - Back River, Estimated Gold Resources of 9.2 Million Ounces In terms of reserves and resources, BTG does own a bunch of gold in the ground, that may someday be mined. Using a lower than industry-standard US$1500 oz. cutoff for economic proven reserves, and $1800 for indicated and inferred resources, the company does deserve to be considered in the grouping of major miners globally. B2Gold Website - Proven Reserves, 2023B2Gold Website - Indicated Resources, 2023B2Gold Website - Inferred Resources, 2023 Combined with the 9+ million ounces discovered so far on Back River properties, 30 million ounces in total gold resources under the proven, measured, and inferred categories is well worth owning at a current market capitalization of $3.3 billion (at $2.50 per share). Even better news is the company's enterprise value sits at about the same level, after we balance limited debts of $152 million vs. cash holdings of $306 million at the end of December 2023. For sure, a stronger-than-average balance sheet helps to support the undervaluation story. Bargain Valuation Developing The summary operating setup is 2024 will be less of a hit than 2023, while 2025 could be more of a home-run swing for B2Gold investors. The investment angle is you want to get into the stock, before Wall Street realizes the production upturn has arrived. Below are analyst consensus estimates for 2024-26, which include tepid predictions for gold price changes. Remember, if gold prices gallop higher from today's all-time highs, all of these estimates will prove on the low side. sa The main bullish logic to buy B2Gold today is its valuation on probable 2025 and later results is insanely low. If management guidance proves spot on for production and mining costs (the company has a decent long-term track record of beating expectations), shares are clearly the cheapest out of the major gold miner space. The debate you have to undertake is whether or not the bargain valuation is a function of inferior asset locations and shorter mine life than the alternatives. Earnings Using forward 1-year 2025 estimates, B2Gold is approaching a 10-year low valuation on income generation, with a 6.3x P/E multiple.   ad And, compared to the largest publicly-traded in America gold miners by equity capitalization, B2Gold is the least expensive by far, with a ratio less than half the 15x median average on forward expected earnings. My comparative sort group includes Newmont, Barrick, Agnico Eagle, Pan American Silver (PAAS), Kinross (KGC), AngloGold Ashanti (AU), Gold Fields (GFI), Harmony Gold (HMY), Alamos Gold (AGI), Eldorado Gold (EGO), and Triple Flag (TFPM).   pe Sales The sales valuation is equally compelling with a forward ratio of 1.36x, getting close to the low 2016 print. Again, this a good distance from the 2x median average from the largest gold miners, looking at 2025 estimates.   sa  s Enterprise Valuation As I mentioned, B2Gold runs a very tight ship financially, using little debt, while holding substantial cash in the bank. In terms of cash, receivables and inventory, the company held $710 million in current assets at the end of December, plus another $220 in easily-sold investments like its ownership stake in Calibre Mining. This is matched against $965 million in total liabilities, which is nearly an equal amount vs. total liquid assets. The end result of a liquid balance sheet is the enterprise value calculation of $3.15 billion is even lower than its equity market cap of $3.3 billion. So, EV to EBITDA ratios are incredibly low, in the 4x to 5x range. On a forward-looking basis, BTG's 3.9x ratio is a distance underneath the major mining peer group median average of 6x.   eb  eb 2 Plus, EV to sales numbers are very attractive for new investment, clearly sitting at decade lows of 1.7x trailing results or 1.36x forward estimates. The forward ratio is a 45% discount to the group median average of 2.3x.   rev  e1 Dividend Yield Despite a weaker 2024 for expected business results, management has stated BTG will keep the dividend, supported by its large cash holdings and forecast for a dramatic increase in earnings by 2025. The current 6.36% yield is tops vs. the major gold miner names, with a 2.3% median average.   d Book Value I know it's a little old fashioned, but a profitable company selling below book value used to be the definition of \"undervalued\" before the mid-1980s. Looking at this stat, BTG is the cheapest since 2016 (selling at 0.86x BV) and stands in a financially conservative/flexible accounting asset setup vs. peers. The majors are averaging 1.4x book value today.   a  b Really, it's no surprise B2Gold sports the only \"A+\" Quant Valuation Grade from Seeking Alpha's proprietary computer sorting system, out of the major gold miner group. Seeking Alpha Table - B2Gold, Valuation Grade, March 25th, 2024 Buying Momentum Appearing? Sure, the underlying valuation setup is attractive. But, a subtle shift in trading momentum has me just as excited about share trading prospects over the next couple of months. Basically, a combination of low 14-day Average Directional Index readings (highlighting a lower-volatility balance of share supply/demand) and a jump in the 20-day Chaikin Money Flow indicator in March could signal buyers are getting the upper hand. Specifically, I have boxed in green the last two instances of the ADX scoring under 17 in conjunction with several weeks of positive CMF readings, each taking place with price fluctuating below its 50-day moving average. As you can see on the chart, both proved opportune times to acquire a position, just before multi-month moves up in price. Another bullish development is the Negative Volume Index bottomed all the way back in November (red arrow), despite another -20% decline in the share quote. To me, this is a telling sign of limited overhead supply. When buyers are quietly outnumbering sellers on lower volume days, good things can eventually happen to price. At the very least, we can say the price drop has more to do with bad news put out by the company than heavy selling without much excuse. 20 Final Thoughts For a bottom-line decision, I believe the valuation and growth story now outweighs the risks of owning far-flung mining assets around the world, with limited mine timelines of operation. In the end, the building technical momentum of late to the upside may be flashing better days are approaching for shareholders. Price to \"trailing\" cash flow numbers of 4.3x are a testament to both low-cost mining operations and a price tag slashed to discount sale levels. With a median group average of 8x, and even stronger cash flow per share coming in 2025, it's getting very hard to argue against B2Gold ownership right now.   cf It is entirely possible 2025's gross margins will be leading the major miner group, if management guidance proves correct in 12-18 months. Last year's 40% gross margin was already a distance above the 28% median average.   m In a sense, investors purchasing shares are betting a streak of rotten luck is due to turn for the better. Who knows? Maybe gold will really start to move to the upside in 2024, allowing next year's projected jump in BTG production (alongside a slide in mining costs per ounce) to push the stock into a double or triple in price. Don't say it cannot happen. What are the downside risks? Outside of foreign government interventions to steal away one of B2Gold's productive assets, the main risk is management expectations turn out to be overly optimistic. Any downgrade to 2025-26 forecasts could make oversized gains in the stock next to impossible. Additional important risks to consider relate to a slide in gold prices (the opposite of my current forecast of US$2500 to $3000 gold into late 2024 and early 2025), or a stock market crash in pricing overall (which is possible in today's AI and Big Tech bubble valuation world). Either could keep pressure on the BTG share quote, at least for a spell. Otherwise, I am looking for BTG to rebound above $3 soon (based on the technical formation), to possibly a quote near $4 by the end of the year on improving gold pricing. Such would be good for +20% to +65% in total returns including the high dividend payout. In addition, targets of $5 to $6 by the middle of 2025 are within reach, assuming gold prices climb another 15% to 25% over the next 12 months and BTG's valuation rises closer to peer group averages. This bullish scenario would deliver total returns of +100% to +140% for savvy investors today, within a 12 to 18-month holding window. I rate shares a Buy, and own a small B2Gold position in my portfolio. The downside risk appears to be minimal and short-term in nature, while the longer-term reward of a rebound in sales and earnings should appeal to Wall Street number crunchers sooner or later.  Thanks for reading. Please consider this article a first step in your due diligence process. Consulting with a registered and experienced investment advisor is recommended before making any trade.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2422960198"}