EX-99.1 2 exhibit991-93017.htm EXHIBIT 99.1 Exhibit







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B2GOLD CORP.
Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2017
(Unaudited)



B2GOLD CORP.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30
(Expressed in thousands of United States dollars, except per share amounts)
(Unaudited)
 

 
 
For the three
months ended
Sept. 30, 2017


For the three
months ended
Sept. 30, 2016


For the nine
months ended
Sept. 30, 2017


For the nine
months ended
Sept. 30, 2016

 
 
 
 
 
 
 
 
 
Gold revenue
 
$
154,109

 
$
193,049

 
$
464,687

 
$
502,104

 
 
 
 
 
 
 
 
 
Cost of sales
 
 

 
 

 
 

 
 

   Production costs
 
(72,777
)
 
(69,942
)
 
(220,622
)
 
(197,732
)
   Depreciation and depletion
 
(37,551
)
 
(44,234
)
 
(118,946
)
 
(117,485
)
   Royalties and production taxes
 
(6,539
)
 
(7,840
)
 
(17,954
)
 
(19,261
)
Total cost of sales
 
(116,867
)
 
(122,016
)
 
(357,522
)
 
(334,478
)
 
 
 
 
 
 
 
 
 
Gross profit
 
37,242

 
71,033

 
107,165

 
167,626

 
 
 
 
 
 
 
 
 
General and administrative
 
(8,485
)
 
(8,137
)
 
(25,229
)
 
(23,799
)
Share-based payments (Note 9)
 
(3,938
)
 
(3,963
)
 
(13,252
)
 
(11,435
)
Gain on sale of Lynn Lake royalty (Note 6)
 
—

 
—

 
6,593

 
—

Write-down of mineral property interests (Note 6)
 
(2,046
)
 
(9,749
)
 
(3,485
)
 
(13,616
)
Provision for non-recoverable input taxes
 
208

 
(479
)
 
(1,340
)
 
(1,508
)
Foreign exchange losses
 
(1,472
)
 
(105
)
 
(2,880
)
 
(1,890
)
Other
 
(259
)
 
(714
)
 
(1,543
)
 
(4,298
)
Operating income
 
21,250

 
47,886

 
66,029

 
111,080

 
 
 
 
 
 
 
 
 
Unrealized gain (loss) on fair value of convertible notes (Note 8)
 
8,046

 
(9,276
)
 
(3,932
)
 
(52,669
)
Community relations
 
(1,658
)
 
(677
)
 
(4,329
)
 
(2,522
)
Interest and financing expense
 
(2,140
)
 
(2,293
)
 
(7,411
)
 
(8,225
)
Realized losses on derivative instruments
 
(1,344
)
 
(3,264
)
 
(2,684
)
 
(12,511
)
Unrealized gains (losses) on derivative instruments
 
2,454

 
12,532

 
(16
)
 
2,432

Write-down of long-term investments (Note 5)
 
(157
)
 
(3
)
 
(1,613
)
 
(185
)
Other
 
(1,230
)
 
(83
)
 
(1,421
)
 
(1,408
)
Income before taxes
 
25,221

 
44,822

 
44,623

 
35,992

 
 
 
 
 
 
 
 
 
Current income tax, withholding and other taxes expense (Note 14)
 
(6,975
)
 
(6,664
)
 
(14,233
)
 
(14,999
)
Deferred income tax (expense) recovery (Note 14)
 
(5,853
)
 
(2,480
)
 
(3,290
)
 
9,530

Net income for the period
 
$
12,393

 
$
35,678

 
$
27,100

 
$
30,523

 
 
 
 
 
 
 
 
 
Attributable to:
 
 

 
 

 
 

 
 

   Shareholders of the Company
 
$
11,443

 
$
34,923

 
$
26,973

 
$
32,910

   Non-controlling interests
 
950

 
755

 
127

 
(2,387
)
Net income for the period
 
$
12,393

 
$
35,678

 
$
27,100

 
$
30,523

 
 
 
 
 
 
 
 
 
Earnings per share
(attributable to shareholders of the Company) (Note 9)
 
 
 
 
 
 
 
 
   Basic
 
$
0.01

 
$
0.04

 
$
0.03

 
$
0.04

   Diluted
 
$ 0.00

 
$
0.04

 
$
0.03

 
$
0.03

 
 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding
(in thousands) (Note 9)
 
 
 
 
 
 
 
 
   Basic
 
978,680

 
948,305

 
975,246

 
935,276

   Diluted
 
1,058,345

 
970,994

 
990,946

 
947,707



See accompanying notes to condensed interim consolidated financial statements.

B2GOLD CORP.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30
(Expressed in thousands of United States dollars)
(Unaudited)
 


 
 
For the three
months ended
Sept. 30, 2017


For the three
months ended
Sept. 30, 2016


For the nine
months ended
Sept. 30, 2017


For the nine
months ended
Sept. 30, 2016

 
 
 
 
 
 
 
 
 
Net income for the period
 
$
12,393

 
$
35,678

 
$
27,100

 
$
30,523

 
 
 
 
 
 
 
 
 
Other comprehensive (loss) income
 
 

 
 

 
 

 
 

Items that may be reclassified subsequently to net income:
 
 
 
 
 
 
 
 
Unrealized (loss) gain on investments, net of deferred tax expense (Note 5)
 
(94
)
 
153

 
465

 
3,645

Other comprehensive (loss) income for the period
 
(94
)
 
153

 
465

 
3,645

Total comprehensive income for the period
 
$
12,299

 
$
35,831

 
$
27,565

 
$
34,168

 
 
 
 
 
 
 
 
 
Total other comprehensive (loss) income attributable to:
 
 
 
 
 
 
 
 
   Shareholders of the Company
 
$
(94
)
 
$
153

 
$
465

 
$
3,645

   Non-controlling interests
 
—

 
—

 
—

 
—

 
 
$
(94
)
 
$
153

 
$
465

 
$
3,645

 
 
 
 
 
 
 
 
 
Total comprehensive income (loss) attributable to:
 
 
 
 
 
 
 
 
   Shareholders of the Company
 
$
11,349

 
$
35,076

 
$
27,438

 
$
36,555

   Non-controlling interests
 
950

 
755

 
127

 
(2,387
)
 
 
$
12,299

 
$
35,831

 
$
27,565

 
$
34,168



See accompanying notes to condensed interim consolidated financial statements.

B2GOLD CORP.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30
(Expressed in thousands of United States dollars)
(Unaudited)
 

 
 
For the three
months ended
Sept. 30, 2017

 
For the three
months ended
Sept. 30, 2016

 
For the nine
months ended
Sept. 30, 2017

 
For the nine
months ended
Sept. 30, 2016

Operating activities
 
 

 
 

 
 

 
 

Net income for the period
 
$
12,393

 
$
35,678

 
$
27,100

 
$
30,523

Mine restoration provisions settled
 
(231
)
 
(24
)
 
(255
)
 
(122
)
Non-cash charges, net (Note 15)
 
27,377

 
57,434

 
101,378

 
190,044

Changes in non-cash working capital (Note 15)
 
2,511

 
(6,879
)
 
(22,814
)
 
(10,601
)
Proceeds from prepaid sales (Note 10)
 
—

 
—

 
30,000

 
120,000

Changes in long-term value added tax receivables
 
(278
)
 
4,107

 
(6,015
)
 
(371
)
Cash provided by operating activities
 
41,772

 
90,316

 
129,394

 
329,473

 
 
 
 
 
 
 
 
 
Financing activities
 
 

 
 

 
 

 
 

Credit facility, drawdowns net of transaction costs (Note 8)
 
70,699

 
—

 
120,341

 
50,000

Repayment of credit facility (Note 8)
 
—

 
(25,000
)
 
—

 
(125,000
)
Otjikoto equipment loan facility, drawdowns net of transaction costs (Note 8)
 
6,085

 
—

 
6,085

 
11,043

Repayment of Otjikoto equipment loan facility (Note 8)
 
(2,579
)
 
—

 
(7,117
)
 
(3,823
)
Fekola equipment loan facility, drawdowns net of transaction costs (Note 8)
 
—

 
—

 
37,132

 
—

Repayment of Fekola equipment loan facility (Note 8)
 
—

 
—

 
(1,997
)
 
—

Masbate equipment loan facility, drawdowns net of transaction costs (Note 8)
 
8,114

 
—

 
8,114

 
—

Repayment of Nicaraguan equipment loans
 
(416
)
 
(423
)
 
(1,135
)
 
(1,355
)
Interest and commitment fees paid
 
(1,485
)
 
(2,301
)
 
(11,033
)
 
(12,101
)
Common shares issued for cash on exercise of stock options (Note 9)
 
1,869

 
30,234

 
25,068

 
37,029

Common shares issued under At-The-Market offering, net of issuance costs (Note 9)
 
—

 
24,963

 
—

 
24,963

Restricted cash movement
 
(849
)
 
(203
)
 
(6,948
)
 
(1,372
)
Cash provided (used) by financing activities
 
81,438

 
27,270

 
168,510

 
(20,616
)
 
 
 
 
 
 
 
 
 
Investing activities
 
 

 
 

 
 

 
 

Expenditures on mining interests:
 
 

 
 

 
 

 
 

Otjikoto Mine, development and sustaining capital
 
(20,881
)
 
(7,523
)
 
(36,088
)
 
(33,849
)
Masbate Mine, development and sustaining capital
 
(6,114
)
 
(4,911
)
 
(36,480
)
 
(22,261
)
Libertad Mine, development and sustaining capital
 
(5,868
)
 
(2,287
)
 
(18,137
)
 
(13,987
)
Limon Mine, development and sustaining capital
 
(4,541
)
 
(2,328
)
 
(10,976
)
 
(5,289
)
Fekola Project, development
 
(65,318
)
 
(64,180
)
 
(208,109
)
 
(161,619
)
Gramalote Project, prefeasibility and exploration
 
(3,512
)
 
(1,990
)
 
(8,692
)
 
(4,806
)
Other exploration and development (Note 15)
 
(14,942
)
 
(10,539
)
 
(40,615
)
 
(23,372
)
Cash proceeds from sale of Lynn Lake royalty, net of transaction costs (Note 6)
 
—

 
—

 
6,593

 
—

Purchase of non-controlling interest
 
—

 
—

 
—

 
(6,000
)
Other
 
(84
)
 
168

 
(201
)
 
807

Cash used by investing activities
 
(121,260
)
 
(93,590
)
 
(352,705
)
 
(270,376
)
 
 
 
 
 
 
 
 
 
Increase (decrease) in cash and cash equivalents
 
1,950

 
23,996

 
(54,801
)
 
38,481

 
 
 
 
 
 
 
 
 
Effect of exchange rate changes on cash and cash equivalents
 
(434
)
 
(40
)
 
(161
)
 
134

Cash and cash equivalents, beginning of period
 
88,193

 
99,802

 
144,671

 
85,143

Cash and cash equivalents, end of period
 
$
89,709

 
$
123,758

 
$
89,709

 
$
123,758

 
 
 
 
 
 
 
 
 
Supplementary cash flow information (Note 15)


See accompanying notes to condensed interim consolidated financial statements.

B2GOLD CORP.
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
(Expressed in thousands of United States dollars)
(Unaudited)
 

 
 
As at September 30, 2017

 
As at December 31, 2016

Assets
 
 
 
 
Current
 
 
 
 
Cash and cash equivalents
 
$
89,709

 
$
144,671

Accounts receivable, prepaids and other
 
14,563

 
10,723

Value-added and other tax receivables
 
19,925

 
16,984

Inventories (Note 4)
 
118,088

 
104,691

 
 
242,285

 
277,069

Long-term investments (Note 5)
 
8,950

 
10,028

Value-added tax receivables
 
22,698

 
18,024

Mining interests (Notes 6 and Note 18 - Schedules)
 
 
 
 
Owned by subsidiaries
 
2,208,960

 
1,950,356

Investments in joint ventures
 
61,671

 
53,724

Other assets (Note 7)
 
34,635

 
26,934

 
 
$
2,579,199

 
$
2,336,135

Liabilities
 
 
 
 
Current
 
 
 
 
Accounts payable and accrued liabilities
 
$
93,433

 
$
81,722

Current taxes payable
 
11,724

 
13,180

Current portion of long-term debt (Note 8)
 
27,287

 
13,935

Current portion of derivative instruments at fair value (Note 12)
 
7,682

 
3,466

Current portion of prepaid sales (Note 10)
 
60,000

 
57,450

Other current liabilities
 
6,961

 
6,288

 
 
207,087

 
176,041

Derivative instruments at fair value (Note 12)
 
2,348

 
6,439

Long-term debt (Note 8)
 
634,418

 
472,845

Prepaid sales (Note 10)
 
45,000

 
62,550

Mine restoration provisions
 
82,305

 
81,162

Deferred income taxes
 
77,432

 
74,072

Employee benefits obligation
 
7,702

 
7,860

Other long-term liabilities
 
423

 
602

 
 
1,056,715

 
881,571

Equity
 
 
 
 
Shareholders’ equity
 
 
 
 
Share capital (Note 9)
 
 
 
 
Issued: 979,174,457 common shares (Dec 31, 2016 – 964,892,433)
 
2,192,696

 
2,151,993

Contributed surplus
 
55,843

 
56,191

Accumulated other comprehensive loss
 
(94,970
)
 
(95,435
)
Deficit
 
(640,787
)
 
(667,760
)
 
 
1,512,782

 
1,444,989

Non-controlling interests
 
9,702

 
9,575

 
 
1,522,484

 
1,454,564

 
 
$
2,579,199

 
$
2,336,135

 
 
 
 
 
Commitments (Note 17)
 
 
 
 
Approved by the Board
"Clive T. Johnson"
Director
 
"Robert J. Gayton"
Director


See accompanying notes to condensed interim consolidated financial statements.

B2GOLD CORP.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30
(Expressed in thousands of United States dollars)
(Unaudited)
 


 
2017
 
Shares
(‘000’s)

 
Share
capital

Contributed 
surplus

Accumulated
other 
comprehensive
loss

Deficit

Non-
controlling 
interests

Total
equity

 
 
 
 
 
 
 
 
 
Balance at December 31, 2016
964,892

 
$
2,151,993

$
56,191

$
(95,435
)
$
(667,760
)
$
9,575

$
1,454,564

 
 
 
 
 
 
 
 
 
Net income for the period
—

 
—

—

—

26,973

127

27,100

Unrealized gain on investments, net of deferred tax expense (Note 5)
—

 
—

—

465

—

—

465

Shares issued on exercise of stock options (Note 9)
12,522

 
24,269

—

—

—

—

24,269

Shares issued on vesting of RSUs
1,760

 
3,584

(3,584
)
—

—

—

—

Share-based payments (Note 9)
—

 
—

16,086

—

—

—

16,086

Transfer to share capital on exercise of stock options
—

 
12,850

(12,850
)
—

—

—

—

 
 
 
 
 
 
 
 
 
Balance at September 30, 2017
979,174

 
$
2,192,696

$
55,843

$
(94,970
)
$
(640,787
)
$
9,702

$
1,522,484



 
2016
 
Shares
(‘000’s)

 
Share
capital

Contributed 
surplus

Accumulated
other 
comprehensive
loss

Deficit

Non-
controlling 
interests

Total
equity

 
 
 
 
 
 
 
 
 
Balance at December 31, 2015
927,073

 
$
2,036,778

$
70,051

$
(96,254
)
$
(706,891
)
$
8,855

$
1,312,539

 
 
 
 
 
 
 
 
 
Net income (loss) for the period
—

 
—

—

—

32,910

(2,387
)
30,523

Unrealized gain on investments, net of deferred tax expense

—

 
—

—

3,645

—

—

3,645

Shares issued on exercise of stock options

17,923

 
37,029

—

—

—

—

37,029

Shares issued on vesting of RSUs
2,534

 
4,984

(4,984
)
—

—

—

—

Shares issued for mineral property interests
616

 
1,716

—

—

—

—

1,716

Shares issued from incentive trust (Note 9)
—

 
16

—

—

—

—

16

Shares issued under At-The-Market offering (Note 9)
7,597

 
24,699

—

—

—

—

24,699

Share-based payments (Note 9)
—

 
—

12,331

—

—

—

12,331

Transfer to share capital on exercise of stock options and incentive plan shares
—

 
21,665

(21,665
)
—

—

—

—

 
 
 
 
 
 
 
 
 
Balance at September 30, 2016
955,743

 
$
2,126,887

$
55,733

$
(92,609
)
$
(673,981
)
$
6,468

$
1,422,498



See accompanying notes to condensed interim consolidated financial statements.

B2GOLD CORP.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2017
(All tabular amounts are in thousands of United States dollars unless otherwise stated)
(Unaudited)
 


1
Nature of operations

B2Gold Corp. is a Vancouver-based gold producer with five operating mines (one in Namibia, one in the Philippines, two in Nicaragua and a fifth mine in Mali which entered into the commissioning and testing phase in September 2017 and announced its first gold pour on October 7, 2017). In addition, the Company has a portfolio of other evaluation and exploration projects in Mali, Burkina Faso, Colombia, Nicaragua, Namibia and Finland.

The Company currently operates the Fekola Mine in Mali, the Otjikoto Mine in Namibia, the Masbate Mine in the Philippines and La Libertad and El Limon mines in Nicaragua. The Company presently has an 81% interest in the Kiaka Project in Burkina Faso and a 49% interest in the Gramalote Project in Colombia.

B2Gold is a public company which is listed on the Toronto Stock Exchange under the symbol “BTO”, the NYSE MKT LLC under the symbol “BTG” and the Namibian Stock Exchange under the symbol “B2G”. B2Gold’s head office is located at Suite 3100, Three Bentall Centre, 595 Burrard Street, Vancouver, British Columbia, V7X 1J1.

2
Basis of preparation
    
These condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting of International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). These condensed interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2016, which have been prepared in accordance with IFRS as issued by the IASB.

These condensed interim consolidated financial statements follow the same accounting policies and methods of application as the most recent audited consolidated financial statements of the Company.

These condensed consolidated interim financial statements were authorized for issue by the Board of Directors on November 7, 2017.

Accounting standards and amendments issued but not yet adopted

IFRS 15 - Revenue from contracts with customers

The IASB has issued IFRS 15, Revenue from Contracts with Customers, which is effective for annual periods commencing on or after January 1, 2018. This new standard establishes a new control-based revenue recognition model which could change the timing of revenue recognition. The Company has evaluated the effect the standard will have on its sales recorded in its consolidated financial statements and expects that there will be no material impact to the timing or amounts of revenue recognized in its statement of operations.

IFRS 9 - Financial Instruments

The final version of IFRS 9, Financial Instruments, was issued in July 2014 to replace IAS 39, Financial Instruments: Recognition and Measurement. IFRS 9 has two measurement categories for financial assets: amortized cost and fair value. In addition, this new standard amends some of the requirements of IFRS 7, Financial Instruments: Disclosures, including added disclosures about investments in equity instruments measured at fair value in OCI and guidance on financial liabilities and derecognition of financial instruments. The standard is effective for annual periods beginning on or after January 1, 2018, with early adoption permitted. The Company is currently evaluating the effect the standard will have on its consolidated financial statements. From a preliminary review of the Company’s financial instruments, the Company expects the accounting for its convertible senior subordinated notes will change. Under IFRS 9, the fair value change of the convertible senior subordinated notes relating to the change in the Company’s credit risk will be recorded through other comprehensive income.

1
B2GOLD CORP.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2017
(All tabular amounts are in thousands of United States dollars unless otherwise stated)
(Unaudited)
 

IFRS 16 - Leases

The IASB has issued IFRS 16, Leases, which is effective for annual periods commencing on or after January 1, 2019. This new standard eliminates the classification of leases as either operating leases or finance leases and introduces a single lessee accounting model which requires the lessee to recognize assets and liabilities for all leases with a term of longer than 12 months. Early adoption is permitted provided IFRS 15 has already been adopted or is applied from the same date. The Company is currently evaluating the effect the standard will have on its consolidated financial statements.

3
Significant accounting judgements and estimates

Impairment of long-lived assets

Long-lived assets are tested for impairment, or reversal of a previous impairment, if there is an indicator of impairment or a subsequent reversal. Calculating the estimated recoverable amount of cash generating units for long-lived asset requires management to make estimates and assumptions with respect to future production levels, mill recoveries, operating and capital costs in its life-of-mine plans, future metal prices, foreign exchange rates, and discount rates. Changes in any of the assumptions or estimates used in determining the recoverable amount could impact the analysis. Such changes could be material.

Ore reserve and resource estimates

Ore reserves are estimates of the amount of ore that can be economically and legally extracted from the Company’s mining properties. The Company estimates its ore reserves and mineral resources based on information compiled by appropriately qualified persons relating to the geological data on the size, depth and shape of the ore body, and requires complex geological judgments to interpret the data. The estimation of recoverable reserves is based upon factors such as estimates of foreign exchange rates, commodity prices, future capital requirements, metallurgical recoveries, permitting and production costs along with geological assumptions and judgments made in estimating the size, and grade of the ore body. Changes in the reserve or resource estimates may impact the carrying value of mining interests, mine restoration provisions, recognition of deferred tax assets and depreciation and amortization charges.

4
Inventories
 
 
September 30, 2017

 
December 31, 2016

 
 
$

 
$

 
 
 
 
 
Gold and silver bullion
 
29,780

 
21,220

In-process inventory
 
8,257

 
8,365

Ore stock-pile inventory
 
18,579

 
15,874

Materials and supplies
 
61,472

 
59,232

 
 
118,088

 
104,691


5
Long-term investments
 
September 30, 2017
 
December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
Cost
$

Total Impairment
$

AOCI
$

Fair Value
$

 
Cost
$ 

Total Impairment
$

AOCI
$

Fair Value
$

 
 
 
 
 
 
 
 
 
 
Available for sale investments:
 
 
 
 
 
 
 
Calibre Mining Corp.
7,844

(4,330
)
2,488

6,002

 
7,844

(4,330
)
2,059

5,573

RTG Mining Inc.
13,400

(12,095
)
—

1,305

 
13,400

(10,977
)
—

2,423

St. Augustine Gold & Copper Ltd.

20,193

(18,658
)
104

1,639

 
20,193

(18,163
)
—

2,030

Goldstone Resources Ltd.
20

(18
)
2

4

 
20

(18
)
—

2

Balance, end of period
41,457

(35,101
)
2,594

8,950

 
41,457

(33,488
)
2,059

10,028


2
B2GOLD CORP.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2017
(All tabular amounts are in thousands of United States dollars unless otherwise stated)
(Unaudited)
 


6
Mining interests
 
 
September 30, 2017

 
December 31, 2016

 
 
$

 
$

Property, plant and equipment (depletable)
 
 
 
 
Otjikoto Mine, Namibia
 
 
 
 
Cost
 
517,882

 
481,378

Accumulated depreciation and depletion
 
(144,519
)
 
(95,698
)
 
 
373,363

 
385,680

Masbate Mine, Philippines
 
 
 
 
Cost, net of impairment
 
561,206

 
517,457

Accumulated depreciation and depletion
 
(192,775
)
 
(165,224
)
 
 
368,431

 
352,233

Libertad Mine, Nicaragua
 
 
 
 
Cost, net of impairment
 
324,289

 
300,816

Accumulated depreciation and depletion
 
(258,747
)
 
(226,488
)
 
 
65,542

 
74,328

Limon Mine, Nicaragua
 
 
 
 
Cost, net of impairment
 
166,126

 
151,186

Accumulated depreciation and depletion
 
(121,635
)
 
(107,255
)
 
 
44,491

 
43,931

 
 
 
 
 
Masbate undeveloped mineral interests, net of impairment (non-depletable)
 
60,880

 
60,880

 
 
 
 
 
Mine under construction (non-depletable)
 
 
 
 
Fekola, Mali
 
1,152,703

 
908,855

 
 
 
 
 
Exploration and evaluation properties (non-depletable)
 
 
 
 
Fekola Regional, Mali
 
15,216

 
9,326

Kiaka, Burkina Faso
 
68,751

 
64,907

Toega, Burkina Faso
 
9,089

 
4,819

Mocoa, Colombia
 
29,016

 
29,004

Other
 
20,859

 
15,906

 
 
142,931

 
123,962

Corporate & other
 
 
 
 
Office, furniture and equipment, net
 
619

 
487

 
 
2,208,960

 
1,950,356

Investments in joint ventures (accounted for using the equity method)
 
 
 
 
Gramalote, Colombia, net of impairment
 
61,671

 
53,724

 
 
2,270,631

 
2,004,080

Sale of Lynn Lake Royalty
On June 7, 2017, the Company completed the sale of all of its rights, title and interest to a 2% net smelter returns royalty (“NSR”), covering Alamos Gold Inc.’s Lynn Lake properties in Manitoba for Cdn. $9 million in cash upon closing and a further contingent payment of up to Cdn. $6 million due 24 months after the property enters commercial production.

The Lynn Lake royalty had been acquired by B2Gold in connection with the acquisition of Central Sun Mining Inc. (“Central Sun”) in March 2009. For accounting purposes, no value of the total purchase price relating to the business combination with Central Sun had been allocated to the NSR, based upon an evaluation of the likely cash flows arising from the NSR. In the period since the original accounting for the business combination the Company previously determined that the NSR did not fulfill the threshold for recognition as an asset as it did not have sufficient assurance over the likelihood of future cash flows from the NSR to record an asset, consistent with the original business combination accounting. As a result, in the second quarter of 2017, the Company recorded a $6.6 million pre-tax gain on disposal of the NSR, net of related

3
B2GOLD CORP.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2017
(All tabular amounts are in thousands of United States dollars unless otherwise stated)
(Unaudited)
 

transaction costs of $0.1 million. No amount was recorded with respect to the contingent consideration due upon the commencement of commercial production.
Masbate
As reported by the Company on February 2, 2017, the Department of Natural Resources (the "DENR") announced further results of its mining audits of metallic mines in the Philippines and the Masbate Mine was not among the mines announced to be suspended or closed. The Company believes that it continues to be in compliance with Philippine’s laws and regulations.
Fekola
Fekola non-controlling interest
In 2016, pursuant to applicable mining law, the Company formed a new 100% owned subsidiary company, Fekola SA, which now holds the Company’s interest in the Fekola Project. Upon signing of a shareholder’s agreement between the Company and the State of Mali (the “Fekola Shareholder Agreement”), the Company will contribute a 10% free carried interest in Fekola SA to the State of Mali. The State of Mali also has the option to purchase an additional 10% of Fekola SA which it has confirmed its intent to exercise. The Company has signed a mining convention in the form required under the 2012 Mining Code (the “Fekola Convention”) that relates to, among other things, the ownership, permitting, reclamation bond requirements, development, operation and taxation applicable to the Fekola Project with the State of Mali. The Company recently finalized certain additional agreements with the State of Mali including the Fekola Shareholders Agreement and an amendment to the Fekola Mining convention to address and clarify certain issues under the 2012 Mining Code. The Fekola Mining Convention, as amended, will govern the procedural and economic parameters pursuant to which the Company will operate the Fekola Project.
Calibre
During the quarter ended September 30, 2016, the Company made the decision to restructure its 51% interest in a joint operation in Nicaragua with Calibre Mining Corp. As a result, the property has been written down to its estimated fair value of $3.2 million and write-offs totalling $8.5 million were recognized in net income during the quarter.

Chile

During the nine months to September 30, 2016, the Company elected not to continue with the Pampa Paciencia and Cerro Barco projects in Chile. As a result, the company wrote-off expenditures totalling $3.7 million related to these projects during the period.

Quebradona

During the quarter ended September 30, 2016, the Company determined that the carrying value of the Quebradona Property in Colombia was no longer recoverable. The book value of $1.2 million was recognised as a write-down during the period.



7
Other assets
 
 
September 30, 2017

 
December 31, 2016

 
 
$

 
$

 
 
 
 
 
Loan receivable, including accrued interest
 
7,720

 
7,181

Debt service reserve accounts (Note 8)
 
10,859

 
5,235

Reclamation deposits
 
2,204

 
2,177

Low-grade stockpile
 
9,858

 
6,909

Derivative instruments at fair value
 
1,453

 
1,585

Other
 
2,541

 
3,847

 
 
34,635

 
26,934



4
B2GOLD CORP.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2017
(All tabular amounts are in thousands of United States dollars unless otherwise stated)
(Unaudited)
 

8
Long-term debt
 
 
September 30, 2017

 
December 31, 2016

 
 
$

 
$

Convertible senior subordinated notes:
 
 
 
 
Principal amount
 
258,750

 
258,750

Fair value adjustment
 
13,711

 
4,043

 
 
272,461

 
262,793

Revolving corporate credit facility:
 
 
 
 
Principal amount
 
325,000

 
200,000

Less: unamortized transaction costs
 
(6,272
)
 
(3,047
)
 
 
318,728

 
196,953

Equipment loans/finance lease obligations:
 
 
 
 
Fekola equipment loan facility (net of unamortized transaction costs)
 
37,259

 
—

Otjikoto equipment loan facility (net of unamortized transaction costs)
 
23,378

 
24,134

Masbate equipment loan facility (net of unamortized transaction costs)
 
8,115

 
—

Nicaraguan equipment loans
 
1,764

 
2,900

 
 
70,516

 
27,034

 
 
 
 
 
 
 
661,705

 
486,780

 
 
 
 
 
Less: current portion
 
(27,287
)
 
(13,935
)
 
 
634,418

 
472,845


Convertible senior subordinated notes
As at September 30, 2017, the fair value of the convertible senior subordinated notes (“convertible notes”) was $272.5 million. The gain (loss) on fair value of convertible notes recorded in the statement of operations for the three and nine months ended September 30, 2017 was $8.0 million and $(3.9) million, respectively (2016 – loss of $(9.3) million and $(52.7) million, respectively). The change in fair value of the notes recognized in the statement of operations for the three and nine months ended September 30, 2017 is stated after reducing it by $3.4 million and $9.9 million, respectively (2016 – $2.1 million and $4.6 million, respectively) for interest expense which was attributable to eligible expenditures on the Fekola property and capitalized to the carrying amount of the property.
Revolving corporate credit facility

On May 8, 2017, Canadian Imperial Bank of Commerce joined the Company’s revolving credit facility (“existing RCF”) Bank Lending Syndicate and the aggregate amount of the existing RCF increased from $350 million to $425 million. On July 7, 2017, the Company entered into an amended and restated credit agreement with its syndicate of international banks ("amended RCF") for an aggregate amount of $500 million, representing a $75 million increase from the principal amount of $425 million under its existing RCF. The amended RCF also allows for an accordion feature whereby upon receipt of additional binding commitments, the facility may be increased to $600 million any time prior to the maturity date.

The amended RCF bears interest on a sliding scale of between LIBOR plus 2.25% to 3.25% based on the Company’s consolidated net leverage ratio. Commitment fees for the undrawn portion of the facility are also on a similar sliding scale basis of between 0.50% and 0.925%. The term of the amended RCF is four years, maturing on July 7, 2021. From January 1, 2018, to October 1, 2018, for such time as the indebtedness outstanding under the Company's existing convertible notes is greater than $100 million, then the sliding scale interest will temporarily increase to a sliding scale range of between LIBOR plus 2.50% to 4.00%. The increase in the sliding scale rate will cease upon the earlier of (1) reduction of outstanding indebtedness under the Company's convertible notes to $100 million or less, and (2) maturity of the convertible notes on October 1, 2018.

As at September 30, 2017, the Company had drawn down $325 million under the $500 million amended RCF, leaving an undrawn and available balance under the facility of $175 million.

For three and nine months ended September 30, 2017, the interest and financing expense relating to the RCF recognized in the statement of operations was reduced by $2.9 million and $6.0 million, respectively (2016 – $1.0 million and $2.4

5
B2GOLD CORP.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2017
(All tabular amounts are in thousands of United States dollars unless otherwise stated)
(Unaudited)
 

million, respectively), which was attributable to eligible expenditures on the Fekola property and capitalized to the carrying amount of the property.

The Company has provided security on the amended RCF in the form of a general security interest over the Company’s assets and pledges creating a charge over the shares of certain of the Company’s direct and indirect subsidiaries. In connection with the existing RCF, the Company must also maintain certain net tangible worth and ratios for leverage and interest coverage. As at September 30, 2017, the Company was in compliance with these debt covenants.

Subsequent to September 30, 2017, the Company drew down an additional $25 million under the amended RCF leaving an undrawn and available balance under the amended RCF of $150 million.
Fekola equipment loan facility
During the three and nine months ended September 30, 2017, the Company drew down Euro nil and Euro 35.0 million, respectively ($nil and $37.4 million equivalent, respectively) under the facility. As at September 30, 2017, Euro 36.4 million ($43.0 million equivalent) was available for future drawdowns. Subsequent to September 30, 2017, the Company has drawn down an additional Euro 8.0 million ($9.4 million equivalent) under the Fekola equipment facility leaving an undrawn and available balance of Euro 28.4 million ($33.2 million equivalent).

The Company is required to maintain a deposit in a debt service reserve account (“DSRA”) equal at all times to the total of the principal, interest and other payments that become payable over the next six month period. At September 30, 2017, the balance in the DSRA was Euro 4.6 million ($5.4 million equivalent, see Note 7).

Otjikoto equipment loan facility
On May 30, 2017, the term over which loans may be advanced under the facility was extended to June 30, 2018 and an additional $6.2 million was made available for drawdown. During the three months ended September 30, 2017, the Company drew down the full $6.2 million available under the facility.
Masbate equipment loan facility

On June 1, 2017, the Company entered into a $17.8 million term equipment facility (the "Equipment Facility") with Caterpillar Financial Services Philippines Inc. The aggregate principal amount is available to the Company’s Philippines subsidiaries to finance or refinance the mining fleet and other mining equipment at the Company's Masbate Mine. The Equipment Facility is available for a period that ends on the earlier of the day when the Equipment Facility is fully drawn and December 31, 2018. The Equipment Facility may be drawn in installments of not less than $0.5 million, and each such installment shall be treated as a separate equipment loan.

During the three and nine months ended September 30, 2017, the Company made an initial drawdown of $8.7 million under the facility. As at September 30, 2017, $9.1 million was available for future drawdowns. Subsequent to September 30, 2017, the Company has drawn down an additional $2.4 million under the Masbate equipment facility leaving an undrawn and available balance of $6.7 million.

Each equipment loan is repayable in 20 equal quarterly installments. The final repayment date shall be five years from the first disbursement under each equipment loan. The interest rate on each loan is a rate per annum equal to LIBOR plus a margin of 3.85%. A commitment fee of 1.15% per annum on the undrawn balance of each tranche is also due, each payable quarterly. The Company has guaranteed the Equipment Facilities and security is given over the equipment of the Borrower which has been financed by the Equipment Facilities.

9
Share capital

The Company’s authorized share capital consists of an unlimited number of common shares and an unlimited number of preferred shares. As at September 30, 2017, the Company had 979,174,457 common shares outstanding, including 1,705,000 common shares being held in trust under the Company’s Incentive Plan. No preferred shares were outstanding.

During the three months ended September 30, 2017, the Company granted 0.1 million stock options to employees. These options have a weighted average exercise price of C$3.27, have a term of five years and vest over a period of up to three years. The fair value was calculated using the Black-Scholes option pricing model based on a risk-free annual interest rate of 1.26%, an expected life of 3.2 years, an expected volatility of 62%, and a dividend yield rate of nil.

6
B2GOLD CORP.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2017
(All tabular amounts are in thousands of United States dollars unless otherwise stated)
(Unaudited)
 


During the nine months ended September 30, 2017, the Company granted 23.0 million stock options to employees. These options have a weighted average exercise price of C$3.65, have a term of five years and vest over a period of up to three years. The fair value was calculated using the Black-Scholes option pricing model based on a risk-free annual interest rate of 0.89%, an expected life of 3.2 years, an expected volatility of 61%, and a dividend yield rate of nil. The total number of stock options outstanding at September 30, 2017 was 58.7 million.

A summary of changes to stock options outstanding:
 
 
Number of outstanding options
('000's)

 
Weighted-average exercise price
(in Cdn. $)

 
 
 
 
 
Outstanding at December 31, 2016
 
50,062

 
2.24

Granted
 
22,968

 
3.65

Exercised
 
(12,522
)
 
2.57

Forfeited or expired
 
(1,825
)
 
3.20

Outstanding at September 30, 2017
 
58,683

 
2.69

For the three and nine months ended September 30, 2017, share-based payments expense, relating to the vesting of stock options, was $3.3 million and $10.2 million, respectively (2016 - $1.4 million and $6.1 million, respectively), net of $0.9 million and $2.6 million, respectively (2016 - $0.2 million and $0.8 million, respectively) capitalized to mining interests.
For the three and nine months ended September 30, 2017, the Company issued 1.0 million and 12.5 million shares, respectively, for proceeds of $1.9 million and $24.3 million, respectively, from the exercise of stock options.
During the three and nine months ended September 30, 2017, the Company granted 0.2 million and 1.8 million RSUs, respectively to employees. The total number of RSUs outstanding at September 30, 2017 was 1.3 million.
For the three and nine months ended September 30, 2017, share-based payments expense, relating to the vesting of RSUs, was $0.6 million and $3.0 million, respectively (2016 - $0.4 million and $3.2 million, respectively), net of $0.2 million and $0.2 million, respectively (2016 - $nil and $0.1 million, respectively) capitalized to mining interests.
During the the nine months ended September 30, 2016, 1 million common shares were awarded from the trust under the Incentive Plan. In connection with the award, the Company recorded a share-based payments expense of $2.2 million (the market value of the shares on the date of the award).
During the quarter ended September 30, 2016, the Company issued 7.6 million shares at an average price of $3.50 for gross proceeds of $26.6 million (net proceeds of $24.7 million after deducting costs associated with the issuance) under the Company's At-The-Market offering.
Earnings per share
For the three months ended September 30, 2017, potential share issuances arising from any future conversion of the convertible notes are included in the calculation of diluted weighted average shares outstanding and their impact removed from diluted net income attributable to shareholders of the Company as these securities are dilutive. For the nine months ended September 30, 2017, there is no adjustment required as these securities are anti-dilutive for that period.
The following is the calculation of diluted net income attributable to shareholders of the Company for the period:
 
 
For the three
months ended
Sept. 30, 2017


For the three
months ended
Sept. 30, 2016


For the nine
months ended
Sept. 30, 2017


For the nine
months ended
Sept. 30, 2016

 
 
 
 
 
 
 
 
 
Net income for the period attributable to shareholders of the company
 
$
11,443

 
$
34,923

 
$
26,973

 
$
32,910

Dilutive impact of gain on fair value of convertible notes
 
$
(8,046
)
 
$
—

 
$
—

 
$
—

Diluted net income for the period
 
$
3,397

 
$
34,923

 
$
26,973

 
$
32,910


7
B2GOLD CORP.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2017
(All tabular amounts are in thousands of United States dollars unless otherwise stated)
(Unaudited)
 

The following is the calculation of diluted weighted average number of common shares outstanding for the period:
 
 
For the three
months ended
Sept. 30, 2017


For the three
months ended
Sept. 30, 2016


For the nine
months ended
Sept. 30, 2017


For the nine
months ended
Sept. 30, 2016

 
 
 
 
 
 
 
 
 
Basic weighted average number of common shares outstanding (in thousands)
 
978,680

 
948,305

 
975,246

 
935,276

 
 
 
 
 
 
 
 
 
Effect of dilutive securities
 
 
 
 
 
 
 
 
Convertible notes
 
65,798

 
—

 
—

 
—

Stock options
 
13,509

 
21,792

 
15,268

 
11,689

Restricted share units
 
358

 
897

 
432

 
742

Diluted weighted average number of common shares outstanding (in thousands)
 
1,058,345

 
970,994

 
990,946

 
947,707

The following is the basic and diluted earnings per share:
 
 
For the three
months ended
Sept. 30, 2017

 
For the three
months ended
Sept. 30, 2016

 
For the nine
months ended
Sept. 30, 2017

 
For the nine
months ended
Sept. 30, 2016

 
 
 
 
 
 
 
 
 
Earnings per share (attributable to shareholders of the Company)
 
 
 
 
 
 
 
 
Basic
 
$
0.01

 
$
0.04

 
$
0.03

 
$
0.04

Diluted
 
$ 0.00

 
$
0.04

 
$
0.03

 
$
0.03


10
Prepaid Sales

In March 2016, the Company entered into Prepaid Sales transactions totalling $120 million, for the delivery of 103,266 ounces, with its RCF Bank Syndicate. The Prepaid Sales, in the form of metal sales forward contracts, allow the Company to deliver pre-determined volumes of gold on agreed future delivery dates in exchange for an upfront cash pre-payment. The full amount of the proceeds was recorded as Prepaid Sales on the balance sheet at the time of the transaction. Settlement is in the form of physical deliveries of unallocated gold from any of the Company’s mines.

During the three and nine months ended September 30, 2017, the Company delivered 12,908 and 38,724 ounces, respectively, into contracts valued at $15.0 million and $45.0 million, respectively. As the Company physically delivers ounces into the contracts, the portion of the Prepaid Sales relating to the delivered ounces was recognized as gold revenue in the statement of operations.

The Company did not enter into any new contracts for the 3 months ended September 30, 2017. During the nine months ended September 30, 2017, the Company entered into new contracts for 25,282 ounces valued at $30.0 million.

As at September 30, 2017, the Company had $105 million of outstanding contracts for the delivery of 89,824 ounces with 12,909 ounces to be delivered during 2017, 51,633 ounces during 2018 and 25,282 ounces during 2019.

11
Gold commitments

As at September 30, 2017, the following gold forward contracts with respect to the Otjikoto Mine were outstanding. These contracts were excluded from the scope of IAS 39 and accounted for as executory contracts because they were entered into and continue to be held for the purpose of delivery in accordance with the Company’s expected production schedule. No fair value gains and losses on these commodity contracts are recorded in the financial statements.
 
 
2017

 
2018

 
Total

Gold forward contracts:
 
 
 
 
 
 
Ounces
 
2,250

 
7,500

 
9,750

Average price per ounce (rand)
 
16,020

 
16,020

 
16,020


8
B2GOLD CORP.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2017
(All tabular amounts are in thousands of United States dollars unless otherwise stated)
(Unaudited)
 


12
Derivative Financial instruments

Gold forwards

As at September 30, 2017, the following gold forward contracts which are recorded at fair value through the statement of operations with respect to the Otjikoto Mine were outstanding (by maturity dates):
 
 
2017
 
2018
 
Total
Gold forward contracts:
 
 
 
 
 
 
Ounces
 
8,979

 
35,916

 
44,895

Average price per ounce (rand)
 
15,044

 
15,044

 
15,044

The unrealized fair value of these contracts at September 30, 2017 was $(10.0) million.
Forward contracts – fuel oil, gas oil, diesel
During the nine months ended September 30, 2017, the Company entered into additional series of forward contracts for the purchase of 37,246,000 litres of fuel oil, 21,576,000 litres of gas oil and 1,079,000 litres of diesel with settlements scheduled between February 2018 and January 2020. These derivative instruments were not designated as hedges by the Company and are being recorded at their fair value at the end of each reporting period with changes in fair value recorded in the statement of operations.
The following is a summary, by maturity dates, of the Company’s forward contracts outstanding as at September 30, 2017:
 
 
2017

 
2018

 
2019

 
2020

 
Total

Forward – fuel oil:
 
 
 
 
 
 
 
 
 
 
Litres (thousands)
 
7,244

 
39,482

 
22,662

 
777

 
70,165

Average strike price
 
$
0.29

 
$
0.30

 
$
0.29

 
$
0.28

 
$
0.30

 
 
 
 
 
 
 
 
 
 
 
Forward – gas oil:
 
 
 
 
 
 
 
 
 
 
Litres (thousands)
 
4,330

 
18,459

 
12,908

 
445

 
36,142

Average strike price
 
$
0.41

 
$
0.40

 
$
0.40

 
$
0.39

 
$
0.40

 
 
 
 
 
 
 
 
 
 
 
Forward – diesel:
 
 
 
 
 
 
 
 
 
 
Litres (thousand)
 
2,029

 
3,910

 
1,399

 
47

 
7,385

Average strike price
 
$
0.41

 
$
0.41

 
$
0.43

 
$
0.41

 
$
0.41

The unrealized fair value of these contracts at September 30, 2017 was $3.0 million.
Interest Rate Swaps

During the year ended December 31, 2016, the Company entered into a series of interest swaps with a notional amount of $100 million with settlements scheduled between September 2016 and May 2019. Under these contracts, the Company receives a floating rate equal to the 3 month United States dollar LIBOR rate and pays a fixed rate of 1.04%. These derivative instruments were not designated as hedges by the Company and are being recorded at their fair value at the end of each reporting period with changes in fair value recorded in the statement of operations. The unrealized fair value of these contracts at September 30, 2017 was $1.0 million.



9
B2GOLD CORP.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2017
(All tabular amounts are in thousands of United States dollars unless otherwise stated)
(Unaudited)
 

13
Financial Instruments

As at September 30, 2017, the Company’s financial assets and liabilities that are measured and recognized at fair value on a recurring basis are categorized as follows:

 
 
As at September 30, 2017
 
 
As at December 31, 2016
 
 
 
Level 1

 
Level 2

 
Level 1

 
Level 2

 
 
$

 
$

 
$

 
$

 
 
 
 
 
 
 
 
 
Long-term investments (Note 5)
 
8,950

 
—

 
10,028

 
—

Convertible senior subordinated notes (Note 8)
 
—

 
(272,461
)
 
—

 
(262,793
)
Gold forward contracts (Note 12)
 
—

 
(10,029
)
 
—

 
(10,017
)
Fuel derivative contracts (Note 12)
 
—

 
2,991

 
—

 
2,760

Interest rate swaps (Note 12)
 
—

 
999

 
—

 
1,122

Gold collar contracts
 
—

 
—

 
—

 
112


The fair value of the Company’s long-term investments and convertible senior subordinated notes were determined using market quotes from an active market for each investment.
The fair value of the fuel derivative contracts and gold derivative contracts was determined using prevailing market rates for instruments with similar characteristics.
The fair value of the Company's other financial instruments approximate their carrying value.

10
B2GOLD CORP.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2017
(All tabular amounts are in thousands of United States dollars unless otherwise stated)
(Unaudited)
 

14    Income and other taxes

Income tax expense differs from the amount that would result from applying the Canadian federal and provincial income tax rates to earnings from operations before taxes. These differences result from the following items:
 
 
For the three
months ended
Sept. 30, 2017

 
For the three
months ended
Sept. 30, 2016

 
For the nine
months ended
Sept. 30, 2017

 
For the nine
months ended
Sept. 30, 2016

 
 
$

 
$

 
$

 
$

 
 
 
 
 
 
 
 
 
Consolidated income before income taxes
 
25,221

 
44,822

 
44,623

 
35,992

Canadian federal and provincial income tax rates
 
26.00
%
 
26.00
%
 
26.00
%
 
26.00
%
Income tax expense at statutory rates
 
6,557

 
11,654

 
11,602

 
9,358

 
 
 
 
 
 
 
 
 
Increase (decrease) attributable to:
 
 
 
 
 
 
 
 
Effects of different foreign statutory tax rates and tax holidays
 
1,119

 
(11,397
)
 
(16,304
)
 
(30,557
)
Non-deductible expenditures
 
3,969

 
1,992

 
9,541

 
5,869

Losses for which no tax benefit has been recorded
 
(213
)
 
5,973

 
11,844

 
21,153

Withholding tax and minimum tax
 
1,227

 
2,690

 
7,355

 
6,108

Change due to foreign exchange
 
205

 
(3,234
)
 
(5,557
)
 
(3,607
)
Change in accruals for tax audits
 
5

 
1,000

 
(647
)
 
1,000

Amounts over provided in prior years
 
(545
)
 
—

 
(545
)
 
—

Tax benefit of tax holiday extension
 
—

 
527

 
—

 
(3,876
)
Changes in estimates of deferred tax assets
 
(13
)
 
—

 
25

 
—

Non-deductible portion of losses (gains)
 
517

 
(61
)
 
209

 
21

Income tax expense
 
12,828

 
9,144

 
17,523

 
5,469

 
 
 
 
 
 
 
 
 
Current income tax, withholding and other taxes
 
6,975

 
6,664

 
14,233

 
14,999

Deferred income tax expense (recovery)
 
5,853

 
2,480

 
3,290

 
(9,530
)
Income tax expense
 
12,828

 
9,144

 
17,523

 
5,469



11
B2GOLD CORP.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2017
(All tabular amounts are in thousands of United States dollars unless otherwise stated)
(Unaudited)
 

15
Supplementary cash flow information

Supplementary disclosure of cash flow information is provided in the table below:

Non-cash charges (credits):
 
 
For the three
months ended
Sept. 30, 2017

 
For the three
months ended
Sept. 30, 2016

 
For the nine
months ended
Sept. 30, 2017

 
For the nine
months ended
Sept. 30, 2016

 
 
$

 
$

 
$

 
$

 
 
 
 
 
 
 
 
 
Depreciation and depletion
 
37,551

 
44,234

 
118,946

 
117,485

Delivery into prepaid sales (Note 10)
 
(15,000
)
 
—

 
(45,000
)
 
—

Unrealized (gain) loss on fair value of convertible notes (Note 8)
 
(8,046
)
 
9,276

 
3,932

 
52,669

Share-based payments (Note 9)
 
3,938

 
3,963

 
13,252

 
11,435

Gain on sale of Lynn Lake royalty (Note 6)
 
—

 
—

 
(6,593
)
 
—

Unrealized (gains) losses on derivative instruments
 
(2,454
)
 
(12,532
)
 
16

 
(2,432
)
Write-down of mineral property interests (Note 6)
 
2,046

 
9,749

 
3,485

 
13,616

Write-down of long-term investments (Note 5)
 
157

 
3

 
1,613

 
185

Accretion of mine restoration provisions
 
461

 
249

 
1,398

 
878

Provision for non-recoverable input taxes
 
(208
)
 
479

 
1,340

 
1,508

Deferred income tax expense (recovery) (Note 14)
 
5,853

 
2,480

 
3,290

 
(9,530
)
Other
 
3,079

 
(467
)
 
5,699

 
4,230

 
 
27,377

 
57,434

 
101,378

 
190,044


Changes in non-cash working capital:
 
 
For the three
months ended
Sept. 30, 2017


For the three
months ended
Sept. 30, 2016


For the nine
months ended
Sept. 30, 2017


For the nine
months ended
Sept. 30, 2016

 
 
$

 
$

 
$

 
$

 
 
 
 
 
 
 
 
 
Accounts receivable and prepaids
 
(1,273
)
 
803

 
(4,399
)
 
1,373

Value-added and other tax receivables
 
818

 
(324
)
 
(2,940
)
 
3,868

Inventories
 
(2,721
)
 
(11,292
)
 
(10,724
)
 
(21,112
)
Accounts payable and accrued liabilities
 
2,430

 
1,598

 
(171
)
 
7,121

Income and other taxes payables
 
3,257

 
2,336

 
(4,580
)
 
(1,851
)
 
 
2,511

 
(6,879
)
 
(22,814
)
 
(10,601
)


12
B2GOLD CORP.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2017
(All tabular amounts are in thousands of United States dollars unless otherwise stated)
(Unaudited)
 

Other exploration and development:
 
 
For the three
months ended
Sept. 30, 2017


For the three
months ended
Sept. 30, 2016


For the nine
months ended
Sept. 30, 2017


For the nine
months ended
Sept. 30, 2016

 
 
$

 
$

 
$

 
$

 
 
 
 
 
 
 
 
 
Masbate Mine, exploration
 
(1,169
)
 
(1,590
)
 
(3,979
)
 
(3,268
)
Libertad Mine, exploration
 
(1,996
)
 
(1,368
)
 
(5,465
)
 
(3,097
)
Limon Mine, exploration
 
(1,929
)
 
(1,122
)
 
(4,155
)
 
(2,489
)
Otjikoto Mine, exploration
 
(320
)
 
(696
)
 
(753
)
 
(1,346
)
Fekola Project, exploration
 
(2,475
)
 
(1,151
)
 
(6,215
)
 
(2,437
)
Kiaka Project, exploration
 
(1,685
)
 
(617
)
 
(3,639
)
 
(1,754
)
Fekola Regional, exploration
 
(2,306
)
 
(1,217
)
 
(5,890
)
 
(2,912
)
Toega Project, exploration
 
(1,127
)
 
(695
)
 
(4,270
)
 
(1,635
)
Other
 
(1,935
)
 
(2,083
)
 
(6,249
)
 
(4,434
)
 
 
(14,942
)
 
(10,539
)
 
(40,615
)
 
(23,372
)

Non-cash investing and financing activities:
 
 
For the three
months ended
Sept. 30, 2017

 
For the three
months ended
Sept. 30, 2016

 
For the nine
months ended
Sept. 30, 2017

 
For the nine
months ended
Sept. 30, 2016

 
 
$

 
$

 
$

 
$

 
 
 
 
 
 
 
 
 
Common shares issued for mineral interest
 
—

 
1,500

 
—

 
1,716

Share-based payments, capitalized to mineral property interests
 
1,086

 
254

 
2,834

 
895

Interest expense, capitalized to mineral property interests
 
6,299

 
3,050

 
15,952

 
6,954

Current liabilities relating to mineral property expenditures
 
2,100

 
8,096

 
12,005

 
1,488


A subsidiary of the Company, Kronk Resources Inc, has $1.1 million in cash and cash equivalents that is restricted for its own activities and not available for use by B2Gold.



13
B2GOLD CORP.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2017
(All tabular amounts are in thousands of United States dollars unless otherwise stated)
(Unaudited)
 

16
Segmented Information

The Company’s reportable operating segments include its mining operations and development projects, namely the Fekola, Otjikoto, Masbate, Libertad, and Limon mines, and the Kiaka and Gramalote projects. The “Other Mineral Properties” segment consists of the Company’s interests in mineral properties which are at various stages of exploration. The “Corporate and Other” segment includes corporate operations.

The Company’s segments are summarized in the following tables:
 
For the three months ended September 30, 2017
 
Otjikoto
Project

Masbate
Mine

Libertad
Mine

Limon
Mine

Fekola
Project

Kiaka
Project

Gramalote
Project

Other
Mineral
Properties

Corporate
& Other

Total

 
$
$
$
$
$
$
$
$
$
$
 
 
 
 
 
 
 
 
 
 
 
External gold revenue
64,522

56,492

16,721

1,374

—

—

—

—

15,000

154,109

Intersegment gold revenue
—

—

5,018

11,601

—

—

—

—

(16,619
)
—

Production costs
23,391

24,147

14,774

10,465

—

—

—

—

—

72,777

Depreciation & depletion
18,351

9,143

6,382

3,675

—

—

—

—

52

37,603

Net income (loss)
6,884

13,097

(3,880
)
(3,639
)
3,621

644

—

(1,255
)
(3,079
)
12,393

Capital expenditures
21,201

7,283

7,864

6,470

67,793

1,685

3,512

5,368

164

121,340

Total assets
479,270

525,428

102,436

67,577

1,159,842

69,045

61,671

75,395

38,535

2,579,199


 
For the three months ended September 30, 2016
 
Otjikoto
Project

Masbate
Mine

Libertad
Mine

Limon
Mine

Fekola
Project

Kiaka
Project

Gramalote
Project

Other
Mineral
Properties

Corporate
& Other

Total

 
$
$
$
$
$
$
$
$
$
$
 
 
 
 
 
 
 
 
 
 
 
Gold revenue
60,057

75,653

41,886

15,453

—

—

—

—

—

193,049

Production costs
15,830

24,416

21,725

7,971

—

—

—

—

—

69,942

Depreciation & depletion
14,181

11,547

14,475

4,031

—

—

—

—

51

44,285

Net income (loss)
25,149

30,208

3,172

51

1,457

274

—

(9,725
)
(14,908
)
35,678

Capital expenditures
8,219

6,502

3,655

3,450

65,330

617

1,990

3,977

25

93,765

Total assets
470,336

517,484

126,538

72,549

807,331

62,013

46,001

57,656

74,225

2,234,133



14
 
B2GOLD CORP.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2017
(All tabular amounts are in thousands of United States dollars unless otherwise stated)
(Unaudited)
 

 
For the nine months ended September 30, 2017
 
Otjikoto
Project

Masbate
Mine

Libertad
Mine

Limon
Mine

Fekola
Project

Kiaka
Project

Gramalote
Project

Other
Mineral
Properties

Corporate
& Other

Total

 
$
$
$
$
$
$
$
$
$
$
 
 
 
 
 
 
 
 
 
 
 
External gold revenue
167,169

184,413

65,377

2,728

—

—

—

—

45,000

464,687

Intersegment gold revenue
—

—

19,670

29,067

—

—

—

—

(48,737
)
—

Production costs
60,292

78,725

54,063

27,542

—

—

—

—

—

220,622

Depreciation & depletion
47,570

27,373

30,922

13,081

—

—

—

—

148

119,094

Net income (loss)
28,465

56,035

(11,943
)
(16,939
)
5,193

2,012

—

(1,267
)
(34,456
)
27,100

Capital expenditures
36,841

40,459

23,602

15,131

214,324

3,639

8,692

16,408

281

359,377

Total assets
479,270

525,428

102,436

67,577

1,159,842

69,045

61,671

75,395

38,535

2,579,199


 
For the nine months ended September 30, 2016
 
Otjikoto
Project

Masbate
Mine

Libertad
Mine

Limon
Mine

Fekola
Project

Kiaka
Project

Gramalote
Project

Other
Mineral
Properties

Corporate
& Other

Total

 
$
$
$
$
$
$
$
$
$
$
 
 
 
 
 
 
 
 
 
 
 
Gold revenue
146,476

199,502

115,097

41,029

—

—

—

—

—

502,104

Production costs
43,126

69,047

60,817

24,742

—

—

—

—

—

197,732

Depreciation & depletion
37,430

30,890

37,042

12,123

—

—

—

—

152

117,637

Net income (loss)
46,938

83,721

8,523

(3,896
)
1,371

94

—

(9,605
)
(96,623
)
30,523

Capital expenditures
35,196

25,530

17,084

7,778

164,056

1,754

4,806

8,980

(255
)
264,929

Total assets
470,336

517,484

126,538

72,549

807,331

62,013

46,001

57,656

74,225

2,234,133

The Company’s mining interests are located in the following geographical locations:
 
 
September 30, 2017

 
December 31, 2016

 
 
$

 
$

Mining interests
 
 
 
 
 Mali
 
1,169,275

 
923,122

 Philippines
 
429,311

 
413,113

 Namibia
 
378,629

 
387,874

 Nicaragua
 
114,192

 
122,095

 Colombia
 
90,687

 
82,728

 Burkina Faso
 
81,793

 
72,422

 Finland
 
2,044

 
1,642

 Canada
 
619

 
487

 Other
 
957

 
597

 
 
2,267,507

 
2,004,080




15
 
B2GOLD CORP.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended September 30, 2017
(All tabular amounts are in thousands of United States dollars unless otherwise stated)
(Unaudited)
 

17
Commitments

As at September 30, 2017, the Company had the following commitments (in addition to those disclosed elsewhere in these financial statements):
•
For payments of $4.5 million for Fekola Project equipment and development costs, of which $3.5 million is expected to be incurred in 2017 and $1.0 million is expected to be incurred in 2018.
•
For payments of $12.1 million for mobile equipment at the Masbate Mine, $8.5 million of which is expected to be incurred in 2017 and $3.6 million of which is expected to be incurred in 2018.
•
For payments of $2.2 million for upgrades to the power plant at the Masbate Mine, all of which is expected to be incurred in 2017.
•
For payments of $3.5 million for construction of a Solar Plant at the Otjikoto Mine, $2.2 million of which is expected to be incurred in 2017 and $1.3 million of which is expected to be incurred in 2018.


16
B2GOLD CORP.
MINING INTERESTS SCHEDULE (NOTE 18)
For the nine months ended September 30, 2017
(All tabular amounts are in thousands of United States dollars)
(Unaudited)
 


 
Cost
 
Accumulated depreciation
 
Net carrying value
 
Balance at Dec. 31, 2016
Additions
Disposals/ write-offs
Reclass
Cumulative translation adjustment
Balance at Sept. 30, 2017
 
Balance at Dec. 31, 2016
Depreciation
Disposals/ write-offs
Balance at Sept. 30, 2017
 
As at Sept. 30, 2017
As at Dec. 31, 2016
 
$
$
$
$
$
$
 
$
$
$
$
 
$
$
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment (depletable)
 
 
 
 
 
 
 
 
   Otjikoto
481,378

36,500

(2,460
)
2,464

—

517,882

 
(95,698
)
(49,045
)
224

(144,519
)
 
373,363

385,680

   Masbate
517,457

43,749

—

—

—

561,206

 
(165,224
)
(27,551
)
—

(192,775
)
 
368,431

352,233

   Libertad
300,816

23,697

(224
)
—

—

324,289

 
(226,488
)
(32,322
)
63

(258,747
)
 
65,542

74,328

   Limon
151,186

15,834

(894
)
—

—

166,126

 
(107,255
)
(15,151
)
771

(121,635
)
 
44,491

43,931

 
1,450,837

119,780

(3,578
)
2,464

—

1,569,503

 
(594,665
)
(124,069
)
1,058

(717,676
)
 
851,827

856,172

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Undeveloped mineral interests

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Masbate
60,880

—

—

—

—

60,880

 
—

—

—

—

 
60,880

60,880

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mine under construction
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Fekola
908,855

243,848

—

—

—

1,152,703

 
—

—

—

—

 
1,152,703

908,855

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exploration & evaluation properties (non-depletable)
 
 
 
 
 
 
 
 
   Kiaka
64,907

3,844

—

—

—

68,751

 
—

—

—

—

 
68,751

64,907

   Mocoa
29,004

12

—

—

—

29,016

 
—

—

—

—

 
29,016

29,004

Fekola Regional
9,326

5,890

—

—

—

15,216

 
—

—

—

—

 
15,216

9,326

Toega
4,819

4,270

—

—

—

9,089

 
—

—

—

—

 
9,089

4,819

   Other
15,906

6,245

(1,292
)
—

—

20,859

 
—

—

—

—

 
20,859

15,906

 
123,962

20,261

(1,292
)
—

—

142,931

 
—

—

—

—

 
142,931

123,962

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Office, furniture & equipment
1,827

281

—

—

—

2,108

 
(1,340
)
(149
)
—

(1,489
)
 
619

487

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,546,361

384,170

(4,870
)
2,464

—

2,928,125

 
(596,005
)
(124,218
)
1,058

(719,165
)
 
2,208,960

1,950,356

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in joint ventures (accounted for using the equity method)
 
 
 
 
 
 
 
 
   Gramalote
53,724

7,947

—

—

—

61,671

 
—

—

—

—

 
61,671

53,724

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,600,085

392,117

(4,870
)
2,464

—

2,989,796

 
(596,005
)
(124,218
)
1,058

(719,165
)
 
2,270,631

2,004,080



17
 
B2GOLD CORP.
MINING INTERESTS SCHEDULE (NOTE 18)
For the year ended December 31, 2016
(All tabular amounts are in thousands of United States dollars)
(Unaudited)
 

 
Cost
 
Accumulated depreciation
 
Net carrying value
 
Balance at Dec. 31, 2015
Additions
Disposals/ write-offs
Reclass
Cumulative translation adjustment
Balance at Dec. 31, 2016
 
Balance at Dec. 31, 2015
Depreciation
Disposals/ write-offs
Balance at Dec. 31, 2016
 
As at Dec. 31, 2016
As at Dec. 31, 2015
 
$
$
$
$
$
$
 
$
$
$
$
 
$
$
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment (depletable)
 
 
 
 
 
 
 
 
   Otjikoto
437,591

45,880

(882
)
(1,211
)
—

481,378

 
(41,810
)
(54,270
)
382

(95,698
)
 
385,680

395,781

   Masbate
472,021

35,128

(1,494
)
11,802

—

517,457

 
(125,574
)
(40,519
)
869

(165,224
)
 
352,233

346,447

   Libertad
272,295

29,020

(499
)


—

300,816

 
(169,721
)
(57,001
)
234

(226,488
)
 
74,328

102,574

   Limon
140,791

10,480

(85
)


—

151,186

 
(87,197
)
(20,101
)
43

(107,255
)
 
43,931

53,594

 
1,322,698

120,508

(2,960
)
10,591

—

1,450,837

 
(424,302
)
(171,891
)
1,528

(594,665
)
 
856,172

898,396

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Undeveloped mineral interests

 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Masbate
72,682

—

—

(11,802
)
—

60,880

 
—

—

—

—

 
60,880

72,682

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mine under construction

 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Fekola
631,524

276,776

—

555

—

908,855

 
—

—

—

—

 
908,855

631,524

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exploration & evaluation properties (non-depletable)
 
 
 
 
 
 
 
 
   Kiaka
61,527

3,380

—

—

—

64,907

 
—

—

—

—

 
64,907

61,527

   Mocoa
28,717

287

—

—

—

29,004

 
—

—

—

—

 
29,004

28,717

   Calibre
11,252

514

(11,766
)
—

—

—

 
—

—

—

—

 
—

11,252

Fekola Regional
4,212

5,114

—

—

—

9,326

 
—

—

—

—

 
9,326

4,212

Toega
1,812

3,007

—

—

—

4,819

 
—

—

—

—

 
4,819

1,812

   Other
12,316

7,455

(3,865
)
—

—

15,906

 
—

—

—

—

 
15,906

12,316

 
119,836

19,757

(15,631
)
—

—

123,962

 
—

—

—

—

 
123,962

119,836

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Office, furniture & equipment
2,062

(235
)
—

—

—

1,827

 
(1,134
)
(206
)
—

(1,340
)
 
487

928

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,148,802

416,806

(18,591
)
(656
)
—

2,546,361

 
(425,436
)
(172,097
)
1,528

(596,005
)
 
1,950,356

1,723,366

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in joint ventures (accounted for using the equity method)
 
 
 
 
 
 
 
 
   Gramalote
41,193

12,531

—

—

—

53,724

 
—

—

—

—

 
53,724

41,193

   Quebradona
1,201

—

(1,201
)
—

—

—

 
—

—

—

—

 
—

1,201

 
42,394

12,531

(1,201
)
—

—

53,724

 
—

—

—

—

 
53,724

42,394

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,191,196

429,337

(19,792
)
(656
)
—

2,600,085

 
(425,436
)
(172,097
)
1,528

(596,005
)
 
2,004,080

1,765,760


18