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B2Gold to add significant production growth with acquisition of Sabina Gold & Silver, analysts say

Published 2023-02-14, 10:50 a/m
© Reuters B2Gold to add significant production growth with acquisition of Sabina Gold & Silver, analysts say
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Proactive Investors - Analysts at Stifel GMP and Canaccord Genuity (TSX:TSX:CF, LSE:CF) have both reiterated their ‘Buy’ rating for precious metals producer B2Gold Corp . (TSX:TSX:BTO) after the company announced it will be entering Canada with the acquisition of Sabina Gold and Silver Corp (TSX:SBB).

B2Gold announced on Monday that it would be acquiring Sabina in an all-share transaction for total consideration of C$1.1 billion, including Sabina’s fully permitted Goose Project which is located within the Back River gold district in Nunavut, Canada.

In a note to clients, Stifel’s analysts wrote that on first look, B2Gold’s entry to Canada with a quality, high-grade project would add significant production growth of about 30% within the next two years.

They noted an updated 2021 feasibility study for the Goose project envisions production of 223,000 ounces per year over a 15-year life of mine.

“We believe Back River checks off two important boxes: district scale with significant resources base and upside, and the ability to drive value through its mine builder execution team,” they wrote.

The analysts also noted B2Gold’s experience with developing projects in Arctic-weather projects with the construction of the Julietta and Kupol mines in Russia as B2Gold's predecessor company Bema Gold.

“We believe investors will question the Arctic location as a potential challenge to the build, but we feel the operational team has proven time and time again that it can execute,” they wrote.

Development expertise and strong balance sheet

Canaccord’s analysts also wrote that they viewed the acquisition as positive for B2Gold, reiterating their C$8 price target for the stock which is currently trading at about C$4.54.

“We maintain our ‘Buy’ rating and our target of C$8, which is predicated on a 50/50 blend of a 1.0x multiple applied to our forward-curve derived operating NAV less net debt and other corporate adjustments and a 6.0x multiple applied to 2023E EBITDA,” they wrote.

They noted that the deal included the acquisition of a sizeable project in a Tier 1 jurisdiction with a current resource base of about 9 million ounces with only 3.6 million ounces in the current mine plan and that B2Gold can bring its development expertise and strong balance sheet to execute the project.

It diversifies B2Gold’s production base by adding a fourth asset in four countries, the analysts also noted

Read more on Proactive Investors CA

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