B2Gold Corp T.BTO

RE:RE:2024 Q1 Highlights...

[Galvanizer]

B2Gold’s Revolving credit facility (RCF) bears interest on a sliding scale based on the Secured Overnight Financing Rate (“SOFR”) plus term credit spread adjustment in addition to a sliding scale premium between 2.00% to 2.50%. Commitment fees for the undrawn portion of the facility are also on a sliding scale basis between 0.450% and 0.563%. The term of the RCF is four years, maturing on December 16, 2025. Unamortized transaction costs on the RCF of $7 million are being amortized over the remainder of the facility term.

At March 31, 2024, the Company had available the full undrawn capacity of $700 million.

As of today, the SOFR is 5.31%.

On January 23, 2024, the Company entered into a series of prepaid gold sales with a number of its RCF syndicate banks.  During the three months ended March 31, 2024, the Company recognized interest charge of $8 million relating to the financing component contained in the prepaid gold sales. 

B2Gold pays a RCF standby charge between 0.45% and 0.563% on the $700M.

B2Gold will pay 5.31% PLUS ‘term credit spread adjustment’ (no details available) PLUS a sliding scale premium between 2.0% to 2.5% on any RCF borrowings.

The “recognized interest charge” on the prepaid gold sales is $8M from January 23, 2024 to March 31, 2024 – that is an 8.5% annualized rate.

The 264,768 prepaid gold sale ounces will be recorded as revenue on a monthly basis from July 2025 to June 2026 at the $1,888 per gold ounce (gold is currently trading at $2,313 – a loss of $425 per ounce).

Not so great financing arrangements all around…

Maxmoe wrote: Using prepaid gold sales is a proven advantageous way of raising the risk capital to build a new mine. Standard debt terms would have been far more expensive. Like 10% plus coupon interest, covenants restricting/strangling the company like a loan shark, and a heap of "participation" warrants to the debt holders. No thanks. They may give up a few $100 of upside, but they eliminate the downside. Missing out on only a small portion of foregone bonanza profits is an option only gold miners enjoy. Go for it.