B2Gold Corp (BTG) 2011 Q4 法說會逐字稿

Good morning, ladies and gentlemen. Welcome to the B2Gold Fourth Quarter and Year End Financial Results Conference Call. I would now like the to turn the meeting over to Mr. Clive Johnson, President and CEO. Please go ahead, Mr. Johnson.

Thank you. Good morning. We're here today to talk about the fourth-quarter results and the year-end results for 2011, and I'm going to pass over to Mark Corra shortly to talk about those results. I'm in Vancouver, and we have Mark Corra with me, Roger Shea, George Johnson, Tom Garagan, Ian McLain. In terms of an overview before we get to the numbers, obviously we had another very good quarter and very good year in 2011, and continuing to deliver from our operating mines. Great team is doing a great job in Nicaragua and we see the first quarter this year looking like things are going well, as well.

We're going to talk a little bit today about our growth projects going forward. As many of you are aware we have a number of projects in the pipeline. The Jabali deposits we're going to come out with new resource on Jabali, which is getting larger than the 0.5 million ounce resource that we released last year. The importance of that is that it's going to be a higher grade, and that will enable us to increase gold production rapidly starting later this year at La Libertad by mining and trucking higher grade material from Jabali. So projecting an increase in gold production over the next couple years at La Libertad from 100,000 to 135,000 ounces a year, near year, ultimately 250,000 ounces. That's only taking 30% of the feed from Jab ali. Now that it's getting larger we'll be looking at can we get more feed faster from Jabali, which is significantly higher grade than what we're currently mining. Those are obviously very valuable that are higher grade ore via the mill.

In addition to that, Otjikoto, things are going very well there. We've really hit the ground running in Namibia, and are spending what, $43 million this year. What we're doing with that is we're doing rapidly working on a feasibility study, it will come out later in the year. We'll probably come out with a preliminary (inaudible) assessment around mid-year, talking about B2Gold's view of the economics and the parameters (inaudible). At this point in time, we're assuming we're going to start production early 2015, and we're going to be producing about 100,000 ounces a year. Great project, great location, great country.

We really like what we're seeing from the economic parameters point of view. In the news release it talks about a $140 million of capital for Otjikoto, and that's a pretty reasonable estimate to date, and we believe we can move forward with financing and everything we're doing from -- largely from, if not completely from -- existing cash of $100 million in cash from operations. We're looking at about $140 million cash flow operations from mining operations this year, and that's increasing to about $170 million next year and $200 million the following year. That's based on $1,550 per ounce gold price. So we can fund a lot of our development going forward.

Also after Otjikoto in the pipeline is Gramalote, which we're going to hear a bit about. Quick update, Gramalote is we are working very hard on a good joint venture with AngloGold Ashanti, spending $38 million this year, working towards a feasibility study that is scheduled to come out in June, and we're looking at a new resource coming out. There was some talk that Anglo was going to release it by the end of this week and we'll be looking to release it when we receive the audit, independent audit that Anglo's having done or has had done of the feasibility -- sorry, of the resource at Gramalote, and we're expecting that at any time. We're looking at new resources in the next -- in terms of analysis next week from Otjikoto, Jabali, both of them getting larger, and also similarly with Gramalote, releasing that to bit up to what Anglo gives us in the audit. Over the next two weeks we're looking at releasing that.

Finally, I know a lot of you are interested in the next round of results from our Primavera project, with a joint venture with Calibre, and we'll be looking at to release around about Hole 10 right now, Tom will speak to that, but we're looking at releasing more results there sometime during April. So we're on track to continue our dramatic growth in production and also pursuing a variety of acquisition opportunities. As you are all aware our shares have done well compared to the sector. I think for obvious reasons, we're performing and we're always looking for opportunities that we can continue to grow the Company. We're looking at a more than tripling our gold production in the next four years from the existing assets that I've spoken to. Obviously, Tom and his guys have a very large exploration budget, which is always preferred, one of the better ways to grow is through the drill bit as well. With that overview, I'll pass it over to Mark to give you the very positive details of our results.

Thank you, Clive. As Clive mentioned, B2 is continuing to perform very well, and we had record fourth quarter, both on earnings, production, net income, and revenues. The revenue number for the fourth quarter was $66.9 million, by far the highest revenue quarterly number we've had. It's about $12 million higher than our previous record number. That was based on 39,557 ounces of gold sold, an average price of $1,691 which is slightly higher than the spot price for the quarter. On a year-to-date basis, our revenue reached $225 million, spot price was -- the average price realized was just under the average spot price of $1,571. We sold 144,000 ounces compared to 2010, when we sold 101,000 ounces, an average price of $1,261.

The marked improvement in revenue obviously is from the higher gold price, but also it was our first full year of production at La Libertad, so that helped considerably. Also, improvements at the Limon Mine that had been made over the past year -- past 1.5 years, really -- have really helped that project or that mine improve a lot. Their throughput now is going to be about 1100 tons a day, up from about 900 tons a day, when we first took the operation over. That comes from a lot of automation that's been done and recoveries have also increased there, so Limon also has contributed to the improved results.

On our cash cost basis we came in on a year-to-date just below our original projections. We had projected a cash cost of $540 to $560, and we came in at combined cash cost of $527. For the quarter, our cash costs were $542 on production of 38,800 ounces, slightly above our budget estimate and slightly higher than last year when our cash costs in the fourth quarter were $535 on 36,800 ounces produced. Depreciation depletion, if you look, it has increased a fair bit from last year. Most of that of course is because of the higher production numbers. Also, though, on a per ounce basis we've seen our depreciation costs increasing. We do think, though, that in 2012 once the Jabali resource is brought into reserves, that will increase our reserve base, which should then bring that per ounce number down. That's going to be a benefit of Jabali coming in, as well as the increased production, as Clive mentioned.

Royalties and production taxes, Nicaragua does have a 3% royalty tax on production, a very reasonable rate, we feel. We also have 2% that we pay to MISA, which is a group of former miners in the country at La Libertad, and 3% royalty to Royal Gold at Limon. That left us with a gross profit for the quarter of $34.3 million, more than a 50% increase from the $20.8 million last year. On a year-to-date basis, it's almost triple what we had last year, $42.8 million, as our gross profit was up to $111 million.

G&A in the quarter in the fourth quarter was fair bit higher than 2010, and there are a lot of one-off items that are in there, like consulting fees and that, that have gone into the fourth quarter, and we probably won't see that repeated in the future. We also, the Managua office moved into new facilities, the one they were in was quite run down, and there were some accruals for salary and bonuses as well in that quarter. We've also staffed up compared to last year's fourth quarter. On the year-to-date basis, G&A costs are up about $3.6 million. Again, that's mostly made up of the increased staff and salary bonuses, as in 2010 we didn't pay any bonuses.

That left us with operating earnings for the quarter of $28 million, and on a year-to-date basis of $85 million, compared to $46 million in 2010. The other thing I want to point out is in our community relations, we spent $2.3 million in the fourth quarter. Most of that was in Nicaragua and included a $750,000 donation to a flood relief program. We make it a priority really to help out the countries we operate in, in whatever way we can, and that was certainly something that we will continue in the future.

If you look, net income came in at $20.8 million, or $0.06 a share, an excellent quarter compared to $4.3 million, or $0.01 last year. On a year-to-date basis, net income was $56.3 million, more than double the $20 million from the previous year. On an adjusted net income basis, which we exclude some non-cash items like deferred taxes and share-based payments, our earnings for the year were $80.5 million, or $0.24 a share, compared to $16.7 million, or $0.05 a share, last year, so more than a four-fold increase in adjusted net earnings. Just a brief comment on deferred income taxes. We were able to take advantage of loss carry-forwards in 2011, which reduced our current tax bill by about $11 million. We could see that changes next year where we'll have more current taxes that we'll be paying down to Nicaragua.

If you turn to the consolidated statement of cash flows, again, very strong cash flows for the quarter. It was a record cash flow number of $35.4 million, or $0.10 a share, compared to $22 million or $0.07 a share last year. On a year-to-date basis, for the full year 2011, we had cash flow of $109 million, or $0.32 a share, compared to $36.8 million, or $0.12 a share last year. So again, showing the dramatic growth that B2 has had and will continue, as Clive pointed out.

Under financing activities, we had about $5.9 million in common shares issued this year, $5.9 million worth of common shares issued this year. Most of that related to stock options to our employees and I think they're well-rewarded for the great work they've been doing, also included about $2 million in warrants. The number in 2010, the comparable number, $57 million, that relates to the last equity financing we did in February 2010, quite a while ago, and that was $29.2 million, and we also had a lot of warrants exercised totaling $24 million. That related both to the Central Sun acquisition and also warrants that we had done on our credit facility that -- I should mention, we do have a credit facility with Macquarie, a revolving credit facility of $25 million. That was just renewed, actually recently, and it expires in December 31, 2013. We may look at increasing that credit facility, just to have a bigger war chest for whatever future things we may do.

And it's undrawn.

That's undrawn, yes, thank you, Clive. Under investing activities, you'll see the first line there includes $17.8 million that we've got in cash from the Auryx Gold transaction. That's been taken -- added into our cash balance. That was the net amount that they had. On expenditures for the year, we had -- for the quarter we had capital expenditures of about $13.3 million at all the mine operations combined. Exploration -- it was just under $6 million, and for Gramalote, which is we're looking at as a development project as they are in pre-feasibility, was $4.6 million for the quarter.

On a year-to-date -- or for the year, we spent $56.7 million on all our capital projects. In that, we basically the mines were about on budget on their capital projects. Jabali was quite a bit under budget. We had budgeted $15 million in expenditures for 2011 and they came in at $7.8 million. That's why in 2012 we have capital budget of Jabali of $23 million, which is higher than what we originally thought because of the carry-over from 2011. Gramalote was also under budget by about $4 million. Total exploration spend capitalized was $22.4 million. That left us at the end of the year with over $100 million in cash, and in an excellent position to continue to move forward our development projects and to continue to aggressively do exploration programs as well. As Clive mentioned, we hope to continue to grow through the drill bit.

On a consolidated balance sheet, you'll notice that the value added and other tax receivables has gone up a fair bit to $14.2 million. We will be able to use a lot of that to apply against current taxes payable in the future. If you look at the liabilities, we do have current taxes at the end of 2011 of $6.2 million, most of that will be paid in the first quarter and we'll be applying our -- that receivables against that payable. Accounts payable has also increased substantially from 2010, from $10.6 million at the end of 2010 to $22.6 million at the end of 2011. A lot of that has to do with the Auryx acquisition, about $6 million of those payables relate to Auryx, which was -- we had -- they acquired all the surface rights of where the operation is, and there was a final property payment of $3.9 million that was due and paid in March, and so that was a year-end accrual. We should see the AP go down by the end of the first quarter. We also had about $2.2 million in there relating directly to the Auryx purchase for consulting fees and things like that. There were other payables from drilling invoices outstanding in that.

The last number I'd like to point out is at the bottom of the balance sheet. It's retained earnings, and we actually now have retained earnings in B2Gold, which I think is unusual for a lot of gold companies. Our total retained earnings is now $13.6 million, compared to a deficit at the beginning of 2010 of $62.7 million. You can see how much -- the dramatic earnings growth we've had and which we expect to continue. I'll pass it over to George now, who will get into a bit of the details on the projects themselves.

Thanks, Mark. For Libertad, they had a very good fourth quarter there, milling 500,726 tons, versus 512,000 budget. The ore grade was 1.77 grams per ton, which is better than the planned grade of 1.62 grams per ton. Mill recovery was excellent, with averaging 92%, and exceeding our planned recovery of 87%. Gold production was 26,158 ounces at a cash cost of $479 per ounce, versus budget of 23,179 ounces at a cash cost of $437 per ounce. The cost variance of $42 per ounce was due primarily to increased labor costs in the fourth quarter from budget, diesel fuel cost escalation, some contractor equipment costs relating to ore handling at the mill, and mill re-agents and electrical power were all up.

CapEx for the quarter was $8.4 million, including $3.4 million for the Jabali project development and $2.9 million for deferred stripping. The remaining expenditures were for continued upgrades in the plant, such as automatic samplers and general automation in the plant, electrical substation upgrade and commencement of construction in the new warehouse building. For the year, Libertad produced 99,567 ounces at a cash cost of $460 per ounce, slightly better than the high end of our guidance for 2011. For 2012, Libertad is projected to produce about 102,000 to 110,000 ounces of gold at a cash cost of $550 to $575 per ounce. Cash costs per ounce increases as compared to 2011 due to more waste being expensed for development of the high-grade Santa Maria pit, which has a higher strip ratio than the average of our other pits. CapEx for 2012 is budgeted to be $25.6 million, with the majority being for pre-stripping the Santa Maria pit and tailings pond expansion. We don't expect to need a tailings pond expansion in the year 2013.

For Jabali development, we have a budget of $23.9 million for 2012, with almost $10 million to construct the new hall road from Jabali to the Libertad mill, and an additional $8 million to obtain land rights away and obtain the surface for the mining and hauling of ore to the Libertad mill. In April, we'll submit our -- an EIA for the central pit, and we expect to have the mining permit by August of 2012 for the central.

I'm going to move on to El Limon now. El Limon had an excellent fourth quarter, with the mill throughput of. 100,888 tons versus a budget of 97,821 tons. The ore grade was on budget at 4.3 grams. Mill recovery was excellent, 98.8% versus a budget of 88.8%. Gold production for the fourth quarter was 12,650 ounces, at a cash cost of $672 per ounce, versus our budget of 12,106 ounces at a cash cost of $698 per ounce. Favorable production and cost variances were due to exceeding tonnage and our recovery estimates. For the year, El Limon recorded its most successful year in the last seven. Gold production was 45,037 ounces at a cash cost of $678 per ounce, versus a budget of 45,951 ounces at a cash cost of $769 per ounce. Both are within our guidance for 2011.

Guidance for 2012 is 48,000 to 50,000 ounces produced at a cash cost between $700 and $725 per ounce. During 2012 Limon is budgeted to process 408,000 tons at an average grade of 4.24 grams per ton. Capital expenditures in 2012 will l be approximately $19 million at Limon, with the majority of the capital to fund the underground development at Santa Poncha, and a lift on the tailings pond that should be sufficient for the next five years. That's all I have for Limon.

I'm going to move on to Otjikoto and give a brief update on our project there. I'd like to announce that Bill Lytle has been promoted to the position of Country Manager for Namibia, and he will head up our efforts in Namibia. We have an aggressive program for 2012 to complete the feasibility study in the fourth quarter and concurrently commence planning for mine construction. We have also -- to do that feasibility we have just recently contracted engineering firm BRA from out of Johannesburg to help us with that.

The 2012 budget is $34.6 million, which includes the study work. We'll make down payments on long lead time equipment and get started with surface work at the site, and make final payments for the surface. We plan to submit an application for our mining permit by July, and to receive the permit in -- the mining permit in the fourth quarter. Based on our current assumptions, we expect to be in production by the first quarter of 2015. Thank you, that's all I have.

Thanks, George. Over to you, Tom.

Okay. Hello, everybody. Just start off with the Gramalote project in Colombia. As we've summarized in the news release, we're part way through a $37 million budget for 2012. This budget includes a pre-feasibility study that's scheduled to be completed in June, and the commencement of a final feasibility study starting after June. The project covers -- the current project covers 21,000 meters, or 22,000 meters of diamond drilling, mainly for infill drilling and infill drilling -- completing the infill drilling on Gramalote, and completing the infill drilling on the Trinidad deposit, and some of the other targets that have been generated in the past couple years.

We're scheduled to release a new resource for the Gramalote project shortly. Unfortunately, I can't be more precise. The resource is completed, but Anglo is completing a third-party audit. Until the third-party audit is completed, we're unable to release that resource. However, that audit is expected over the next few days, let alone weeks. So once that has been released to us, we will be releasing the resource for Gramalote, new resource for Gramalote.

On to the other exploration development projects. At Libertad, we're part way through a 17,000-meter diamond drill project. The initial part of that project, which is ongoing right now, is to complete the infill drilling of the Jabali project. The central target has been completed largely to indicated. Most of Ventana has now been completed to an indicated resource. The remaining part of the year, the drilling will be focused on other targets on the project, and the expansion of Jabali to the west. The project have re-deposit remains open to this date. A resource will be released within the next two weeks on Jabali, possibly even next week. It will include all the drilling completed last year. Ventana, largely inferred but some indicated, and the central zone almost completely indicated.

On to the Limon project. We're drilling 14,000 meters right now for $4.5 million. The drilling is focusing largely on near-mine targets, i.e, both open pit and underground targets that are nearby the current development. Later in the year we'll be focusing on two new veins, or targets that we found in the last year. This project, the sort of mine-related drilling will be completed probably in August, and the anticipation will continue beyond that.

On Otjikoto, the total budget, as Clive says, over $40 million. Of that, within that budget is 16,000 meters of drilling, largely related to feasibility drilling. That's ongoing right now with five drills. We're doing met work, met drilling, geo tech, condemnation, and completing the infill drilling that wasn't completed last year. Once this project is done, we had hoped for it to be March, but it will be March or April, There will be a short break while all the geological aspects of the feasibility study are completed, i.e., the modeling. Once that's completed, we plan to go back and do an aggressive exploration project, calling out some of the targets that have been defined by earlier drilling and a new mag survey that was completed very recently.

For the sort on non-mine-related or non-development-related exploration projects, let's start with Calibre. As everybody is well aware, it's an exciting discovery that was made late last year. We are in the midst of or near the completion of a 2,000-meter diamond drill project. The purpose of that project was to take the discovery and try and understand better the dimensions or size potential of the initial area. That project -- that drilling program will be completed, as I said, shortly. Results of that is really the first six or seven holes that will be released in the next few weeks.

On to the Radius joint venture. Trebol has a budget this year of $4 million, largely related to Trebol, a little bit of San Jose and Pavon. That's a drill program that is ongoing right now on the newly discovered eastern zone. We feel strongly that if the east zone gets to a size that we think it can, then we'll be looking at a very aggressive project later in the year as it looks towards going towards a resource development project.

On to Cebollati. We're in the process of re-evaluating the drilling from last year. What I mean by that is we're doing two very large cleared-off stripped areas to get a better understanding of the geology. The drilling that we completed last year was quite a few good results, but also there was areas that we drilled that we didn't understand the geology of the drilling relative to the geology of the trenching. So there's a re-evaluation of the geology right now. We're stripping two areas, 50 by 20 meters. Once that's completed, we plan to go back with a 4,000-meter diamond drill project to start later this year. That's it for exploration.

Just a couple points before we open up for questions. Just to summarize all of that, obviously everyone's interested in news flow. The next milestones for us coming up are the announcement on three projects of new resource in the case of Jabali and Otjikoto we're looking at releasing that next week, and possibly next week or the week after for Gramalote, as well. As everyone knows publicly, I think all those pre-resources are growing. Tom, when are we going to get our corporate update on reserves and resources? Our half is going to go out on Friday. So lots of detailed information in that

Just to recap our growth story, as you've heard we have a famous bar chart out there called the Projected Production Growth, which many of you have seen over the last while, and basically it speaks to our projected growth from 145,000 ounces in 2011 to 300,000 ounces in 2015. We're bringing on higher grade at Jabali and also commencing production at Otjikoto. Then the final on our bar chart to date, barring any further exploration successes and/or acquisitions, we see ourselves from existing projects with Gramalote going to the quarter, 50,000 ounces potentially, or 0.5 million ounces as a Company.

I think one of the key things to point out there is the remarkable financial position we are in and will be in going forward. We've heard about a lot of big budgets this year for very good reasons, such as development projects, feasibility studies and exploration. We started the year this year with $100 million in the bank, and we're projecting with all of our capital requirements at the mines, with all of our development expenditures and exploration expenditures and corporate expenditures, we expect to end the year in a very strong cash position, partly because of the $140 million we're projecting in cash from operations. All of the numbers I'm talking about are assuming a $1,550 gold price. So $140 million cash from mining operations 2012, and 2013 it grows to $175 million, and in 2014 to $200 million. Mark's working on a number for 2015 that will come out shortly. It should be larger with Otjikoto.

The bottom line is we're able to realize that growth with little or no external financing. That's pretty remarkable. So 145,000 ounces a year to 300,000 ounces a year, which can largely or completely be self- financed, if we choose to go that route. We don't need to dilute our shareholders a lot or at all, perhaps, and we have lots of offers to finance through debt facilities, et cetera. Obviously Gramalote is -- looks like it's going to be a whole another scale. We'll know the details soon, with the resource out, shortly.

Anglo and ourselves are contemplating building a larger mine than we had envisaged before. We're talking 250,000 ounces a year. Anglo is publicly talking now about the potential, subject to pre and final feasibility study, to build a mine that could produce 350,000 to 400,000-ounces a year, 49% of that to our account. That's probably going to be something of a plus-$1-billion capital cost. We feel by that time we will be in a very strong cash from mining operations position, and obviously we'll look at some form of financing, the back of Anglo financing 51% of the project. It is a very solid joint venture.

As most people know, we're not always fans of having joint ventures with big companies, but Anglo's been very professional, very good, it's a very -- two very capable technical companies that have mutual respect, and we're working very closely together, and I must say that Anglo's been a very good partner. They're a great motivated partner, because they obviously have another mine -- a project that you might have heard of in Colombia, and they obviously -- or Colombia's a big part of their growth and the first project there is Gramalote in partnership with ourselves.

Additional news to come out of those during the year will be obviously a huge amount of exploration results and our strategy going forward will remain the same. That is really a combination of accretive acquisitions as we did in the case of Central Sun, or recently Auryx. We will leave it to others to pay for ounces that might be there. We do pre-deals based on the ounces that are there. If Tom's extraordinary team can continue to make these things larger, that's what turns a good deal into a great deal. As we've seen in the case of Nicaragua, we're probably going to see in the case of Otjikoto.

We are looking hard at our acquisition opportunities. We don't need a deal, which suggests we probably won't do a bad deal. We are keen to continue to grow, not only with what we have, which is a pretty dramatic growth profile, but if we could add other parts to that with companies or opportunities where people can not answer one of the two big questions today in the industry. Those questions are, how are you going to finance it and who is going to build it? We can answer both of those questions very readily. For others who can't answer those questions, that's a great opportunity to perhaps have their project become part of B2Gold's growth strategy going forward. We're looking at numerous exploration, excavation, and development production acquisition opportunities, but as everyone knows there aren't very many good projects out there, and we're particularly picky about what we do. That's a summary, and I'll turn it over for questions now.

Thank you. We'll now take questions from the telephone lines.

(Operator Instructions)

Michael Gray, Macquarie Capital

Good morning, everyone. Start out with some questions on La Libertad operation. Are the 92% recoveries locked in going forward? Are they in the 2012 budget, George?

We have for Libertad, 90.3% in the budget.

Okay. Has there been a contribution to better recoveries partly based on lower spent ore through the mill, or is that all incremental improvements?

Well yes, we have -- that's a fact, we have had less spent ore. We put in less of it because we had Jabali colluvium, which we mined and fed to the mill in the fourth quarter. That has much better recovery characteristics, plus 90%, than the spent ore does, which is below 80% recovery.

Can you give us the percentage of feed that was spent ore last year, and then what you're expecting for this year?

We had about 500,000 tons of spent ore, a little less than that, out of approximately 2 million tons to the mill, 1.9 million tons.

Okay, great.

This year we expect that to be less. I don't have that exact number right now.

No problem. Can you comment on the average grades of the colluvium that you've been feeding in.

It was 2.67 grams per ton, which was a little better, I think, than what we expected for that material.

Okay. That's good. The 10% higher cost based on the higher strip ratio, what is the strip ratio going to be for the operations for La Libertad, [St. Majone], Crimea, and Santa Maria?

That's a long question.

Sorry.

Libertad, we have a strip ratio of -- at Majone during 2012, 3.46; at Crimea, 7.5; spent ore of course is nothing; Santa Maria during 2012, 32.1.

Okay.

Yes, it is high grade. It's a high grade deposit. During -- we don't expect to get any ore tons. Yes, we do. About 190,000 ore tonnes there at about 1.9 grams.

A portion of the Santa Maria strip will be deferred a as pre-stripping.

Which is a short-term phenomenon.

Yes, for this year. Probably as George said, they'll be getting in the ore I think around the fourth quarter, George, in that pit or --?

Yes.

Okay. With the guidance, just a last question on La Libertad. With the guidance of 150,000 ounces by 2014, can you give a breakdown on percentage spent ore versus Jabali versus the existing pits?

No, I can't do that right now.

Okay, no problem. Last question on Otjikoto. The CapEx of $140 million, have you guys got a breakdown of where that would fall in terms of 2013 to 2014, proportions?

Not yet. We're -- as we mentioned earlier, we're ordering some long-term [lead mills] and things later on this year. I think what's going to come out of Jabali -- sorry, out of Otjikoto -- as you all know, it's relatively new to us, but we've done what we do which is hit the ground running. We're looking at coming out with a preliminary economic assessment sometime in the middle of the year, and that will have a lot more detail. We're encouraged by what we're seeing, I think we can say that in terms of the project and we'll come out with a larger resource next week. But in terms of the detailed capital, it's just too early.

Yes, okay.

We talked about around $140 million, without a fleet, and for right now we're pretty comfortable with that number. We don't have a detailed breakdown for you yet. We should have that by hopefully the new first pass of B2Gold preliminary economic assessment by sometime in the summer.

Okay, thanks. Great, guys.

Okay, thanks.

Chris Thompson, Haywood.

Congratulations on a good quarter and a good year. Couple of questions, one theme is operating costs at current operations. Can you give me a sense of cost per ton milled, achieved, or realized for last year and what your sense is on where it's going as far as this year, potentially next year?

Yes, I can. Last year at Libertad our total cost per ton milled was $23.80.

All right.

Budget for 2012, I don't have that all added up, sorry. I can't do that. It's just a little bit higher than that, about a 10% increase overall. But I will let you know.

You can contact George directly for that.

No worries. Have you got anything for Limon now?

Yes, Limon total cost per ton was $71 per ton milled.

Okay, great.

I think one of the things to remember is that we had this luxury or opportunity with higher grade at Jabali to control any potential higher cost going forward and mitigate them with higher grade. Obviously, we think that on a per-ounce basis we have the potential to reduce our costs at Libertad with better-grade material from Jabali.

Optimization as far as recoveries, you guys seem to be doing a great job on that. Sort of feeds into that as well?

Yes.

Great. Thanks, guys. Congratulations.

Thank you.

Thank you.

(Operator Instructions)

Shawn Campbell, Macquarie.

Yes, just a quick follow-up question on Otjikoto. The CapEx of the $140 million without the fleet -- do you envision possibly owning your own fleet for that operation?

Mark?

Certainly, we're looking at that, and that's probably our (inaudible ) option, and we'd probably do like a capital lease on it.

We're thinking around $16 million?

No, the fleet is probably around $30 million to $35 million was the last estimate I saw. Again, that will be tightened up in the next six months as our guys get a chance to look at what they -- I think in the P it was around $32 million, but our guys will be looking at it and seeing what they think. It's probably in that ballpark.

Okay. Thank you.

Michael Gray, Macquarie Capital.

You have speed dial?

I just had to follow up with Tom. You mentioned some new targets at Limon, vein targets. Can you give any more color on that at all, in terms of the upside there?

Well, I can't give any color on upside because it hasn't been drilled yet, but one is to the east called San Antonio. Its surface footprint is similar to the surface footprint at Santa Pancha. There are two -- a combination of two areas to the southwest, at Plata Cruz, and again, like San Antonio has a surface footprint based on trenching, surface sampling and (inaudible) chemistry, but it hasn't been drilled yet, either.

Okay.

That's a good question, Mike, because as a lot of you are aware, Limon produced 90,000 ounces in the year 2000. (technical difficulty) significantly higher production than the 50,000 ounces that we're talking about for this year, and we're flat-lining that going forward. There is an opportunity, hopefully similar to La Libertad, where at Limon we can get back to the kind of grades 8, 9 grams that we're mining back in 2000, they would argue they ran out of high grade. We would argue that maybe they didn't know how to look for it. We'll be drilling a lot of -- Tom's guys have a lot of targets. It's amazing how you can have a mine in production since 1940 that's never been really professionally explored. There is some potential upside there, as well.

The budget, 91% recovery in the 1,100 tons per day, roughly -- is that kind of a long-term set of numbers we can start to use?

Yes, I think so.

Okay, great. Thanks, guys.

Thanks again.

Miles Glenn, TD.

Thanks for taking the call. I just had a quick question for you. Regarding Anglo's guidance on the scope of the project at Gramalote, I was just wondering if you guys basically agree with what they're guiding towards?

Of course.

Okay.

They might be listening. (laughter) Yes, we do. We obviously agree that it makes a ton of sense to lower the cut-off grade, which gives you a lower strip ratio and a much bigger resource. You'll see some of the resource increase is due to exploration, but the vast majority of it, frankly, is based on metallurgical breakthrough, which is that flotation works incredibly well on the ore. We've done a ton of testing, and you're looking at a plus-90% recoveries with flotation. All you have to do then is of course leach the gold-rich concentrate.

We agree with that idea. I think the pre-feasibility study will indicate the -- ultimately indicate the scale that it should be mined at. It is a very good, proactive joint venture, and really is joint, and that's sort of refreshing from our point of view. We have a partner who respects us as we respect them technically. We work very closely together with Dennis, who is heading up the charge there from our side and it's a refreshingly transparent joint venture.

Thanks a lot.

Thank you. There are no further questions at this time. I would like to turn the meeting back over to Mr. Johnson.

Okay. Well, thanks a lot for your time and we're going to have -- be talking to you going forward with lots of news and always feel free to separately call us for further detailed information, and thanks for joining us.

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