B2Gold Corp. (NYSEMKT:BTG)
Q2 2016 Earnings Conference Call
August 04, 2016, 01:00 PM ET
Clive Johnson - President and CEO
Mike Cinnamond - CFO
Bill Lytle - VP, Africa
John Rajala - VP, Metallurgy
Tom Garagan - SVP, Exploration
Dale Craig - VP, Operations
Brian Scott - VP, Geology and Technical Services
Dennis Stansbury - SVP, Engineering and Project Evaluations
Rahul Paul - Canaccord Genuity
Michael Gray - Macquarie
Ovais Habib - Scotia Bank
Jeff Killeen - CIBC
Chris Thompson - Raymond James
Geordie Mark - Haywood Securities
Steve Emerson - Emerson Investment
Good day, ladies and gentlemen. Welcome to the B2Gold 2016 Q2 Conference Call.
I would now like to turn the meeting over to Mr. Clive Johnson, President and CEO. Please go ahead sir.
Thank you, John. Welcome to our conference call to discuss the second quarter 2016 results and also give you a update from the management team on a lot of different topics that we covered in the new release but also your answer all of your questions.
We had a reasonably good second quarter. We were quite happy with the way things were done and I'm going to turn it over to Mike Cinnamond. And actually before I will say who is in the room here regarding unusual executives in the opposite suite. So, we've got [Indiscernible] Dennis Stansbury, we've got Hugh MacKinnon, John Rajala, Brian Scott, myself, Tom Garagan, Mike Cinnamond, Ed Bartz, Dale Craig, and Ian MacLean is here as well and John Lytle is on the phone from -- Bill -- sorry about that, Bill Lytle from Africa -- looking at I guess anyway.
So, with that I'm going to pass it over to Mike and give you a quick run through. We're going to try and keep it brief. We'll do the financial run through and then we're going to talk about our update from Bill Lytle on [Indiscernible] and John Rajala and then we're going to open it up [Indiscernible] some explanation on what's in the release and then we'll open up for your questions.
Over to you Mike.
Hey, thanks Clive. So, for the quarter, we had -- I'm going to say record a lot here as we go through, so first thing on the revenue side, record revenue for 165 million on sales of 131,000 ounces at realized gold price of $1,260. Those record sales are a function of record production and again, for the quarter, record production of 135,000 ounces and 6,000 ounces more than budget and 13,000 ounces higher than last year. And the key component that is the standard performance of this [Indiscernible] that is referring also -- for the year-to-date so far including the second quarter.
So, just look at the individual mine components, and while we had production of 57,000 ounces and its up due to higher grade from maintaining and greater throughput in recoveries due to the higher budget component of the Colorado Main Vein pit. So, -- and we think that's similar for the higher grade and outside mines from those mines areas are going to continue through Q3.
Year-to-date, Masbate had 110,000 ounces production ahead of budget and we think it's now going to meet or exceed the high end of our guidance range of 175,000 to 185,000 ounces.
Also on the process plant side, the upgrade went well, it's been done in two phases. Phase one will be new tanks gone in and this will be operational by the end of second quarter, we expect they are completed by the end of the third quarter.
Otjikoto, gold production in Otjikoto overall was 36,000 ounces, very close to budget, so likely unaffected by the April pit wall failure that we reported previously and it can ramped until we completed. We're now back in the Otjikoto pit and any -- in terms of operating in Q2, any [Indiscernible] that we did expect to come from the Otjikoto that we supplemented from high grades pit.
Overall, Otjikoto -- with Otjikoto pit access, we established guidance for the year, Otjikoto remains 160,000 ounces to 170,000 ounces and it's weighted for the second half of the year compared to the first because of the higher grade we expect coming out of quarters ahead.
A new mine plant including Wolfshag expected by the end of fourth quarter of this year and we're also up -- we're also working on the Wolfshag underground study which we expect to have available later in 2017.
Overall, Otjikoto for the half year was 72,000 ounces, which is right in line with budget too.
La Libertad was slightly below budget, just -- again due to delay in access in Jabali Antenna, which we do expect -- by fourth quarter. Year-to-date 60,000 ounces which is slightly ahead of budget.
Overall, we think La Libertad is going to be this budget -- guidance of 125,000 to 135,000 ounces, again with production weighted for the second half of the year due to the higher grades that we expect to mine Jabali Antenna when we exit the area.
El Limon, slightly below budget in the second quarter due to the timing of five year change which we originally intended to in Q1, but we changed in the Q2. We have -- now got access at El Limon to the higher grades underground areas and with that, we think production there is going to be weighted again in the second half of the year based on grades. So, guidance for Limon for the full year is still 50,000 to 60,000 ounces.
Totaled invested -- year-to-date production is record 263,000 ounces which is 14,000 ounces ahead of budget and we fully expect to meet our guidance range of 510,000 to 550,000 ounces.
So, when you factor in that record production for the quarter and year-to-date, we also have record cash and all-in saving cost. Consolidated cash cost for the quarter were $494 an ounce, significant improvement against budget of almost $90 and prior year of $183, so it has really come down a lot, and that's driven by A, the record production and also fuel cost savings at all sites.
Masbate had record low of $396 an ounce, which is almost exactly half of what it was last year in same quarter of $782, so a huge improvement of Masbate. And Otjikoto was actually even better than that, it was $386 an ounce which is $63 below budget.
So, in addition to the [Indiscernible] in addition to the fuel cost savings we experienced there. They also advantaged from a weaker Namibian dollar, which was about 10% weaker than we had budgeted.
Libertad came in at $717 an ounce, which close to budget, and Limon slightly above budget at $733 an ounce due to the mill downtime that I discussed earlier.
Overall, year-to-date cash costs are also record low $490,000 an ounces, -- which is low $500,000, which is $93 less than budget. The year-to-date performance is basically driven by the same factors that has impacted the current quarter. So, the matter of the fact is we expect to come in at the low end of our guidance range of cash cost if $560 to $595 an ounce.
All-in sustaining cost, similar story, consolidated all-in sustaining cost for the quarter were $731 an ounce, that's over $300 less than last year and over $200 less than budget. So, they are driven by the same factors of the cash operating cost plus some differences in the timing of CapEx, particularly stripping some underground development. Now, some of those timing differences will reverse in the second half of the year, but we do expect there will be somewhat wider [ph], but differences will push into next year.
Overall, year-to-date, all-in sustaining cost were $801 an ounce which is $235 less than budget. And again we fully expected coming at the low end of our guidance range of $895 to $925 for the year.
Turning to the operating results, comment in a couple other answers at this impact on earnings, so very strong gross profit driven by little good operating results. I would highlight that one very significant non-cash item hit the income statement during the quarter which was $37 million mark-to-market negative impact due to the way that we [Indiscernible]. We recorded a volume mark-to-market in the income statement. As the share price goes up, this volume of convertible note goes up and picks ahead of the P&L.
On the bottom-line for the quarter, we announced loss of $11.8 million, but if you take up the non-cash items, most significantly, convertible notes mark-to-market, we had adjusted earnings of $29 million or $0.03 a share. And year-to-date, we had a loss of $5 million overall, but again, if you take the non-cash items, we had adjusted earnings of $48 million or $0.29 a share.
Comment a little bit on the cash flow statement. Again, record operator cash flow for the quarter of $67 million, to almost double what was last year and that equates to both $0.07 a share.
Year-to-date, our operating cash flow is $239 million and that includes $120 million from the proceeds from the prepaid cells that we put in place in the first quarter.
For the quarter, this time around, we didn’t draw anything in the revolver. We generated cash flow from operating activities to fund all of our operations and investing activities. Investing activities for the quarter totaled $82 million. Most significant component of that was what we did Fekola. So, year-to-date in Fekola, we spent $97 million -- we spent $50 million in the current quarter.
And that project is currently right on budget. We started $226 million versus the budget of $221 million for the project state and the small difference of $5 million, but that just relates to timing of equipment purchases and overall we're on budget and on schedule to get Fekola up and running for the fourth quarter of 2017.
We also comment Fekola; we announced part of the press release that we just recently approved $18 million to accelerate the expansion of Fekola to take us from a 4 million ton per annum operation to 5 million ton. But we're going to do that in conjunction with the construction of our mines with a view that the expansion which will -- which is relatively low capital, its only $18 [ph] million and it really puts in with the pedal pressure and another generator and that's going to get us to a point where all of that will be online when the mines we mentioned -- which we expect in fourth quarter of 2017.
Other things on the CapEx side, I comment on exploration wells, we've been visiting West Africa and we recently approved over the course of the year-to-date. Additional exploration dollars to pursue what we viewed as great opportunities in West Africa and Fekola, $4.5 million in Fekola and surrounding ground. And then in Kiaka we also approved another $3 year-to-date to pursue exploration in Burkina.
We've also approved $7.5 million projected update to feasibility studies there which we expect to bring online as a result by mid-2017.
Overall, cash flow, we finished the quarter with $99 million -- just shy of $100 million in the bank and with $175 million left undrawn on the revolving credit facilities. So, a lot of good liquidity capacity there. And we fully expected that we're funded to get Fekola belts and continue our operations up and running by the end of 2017.
So, I think that were the main items that relates to highlight there from the results. We’re happy to take any questions now or later.
We believe the questions to -- until the end. So, Bill -- John, can you give us a run through on Fekola just really bringing them on up-to-date division pretty -- all that information, but why don't you just update from slides and maybe talk about the expansion a little bit that we just recently had approved.
Okay. So, do you hear me Clive?
Okay. So, as Mike said we do remain on time and on budget for our fourth quarter 2017 startup. As I'm sure everyone is aware that the concept up to this date are up until kind of the end of the first quarter 2016 really was to get up out of the dirt, make sure that we had enough working phases to work through the rain, which has just started.
So, the earthworks is ahead of schedule. All of the material earthworks which had to be done before the rain were completed on time. In addition to that we've done a couple of extra things, things like -- there's a big diversion ditch which goes around the pit, which is not due to be started until after the rainy season because we continue to work when it's not raining, we're getting ahead even on that.
We started -- we opened up the pit last quarter to use material -- use some of the waste material for the ROM pad, so we pulled about 200,000 cubic meters out of the pit ahead of schedule.
And as I said, we've opened up a lot of phases for concrete work. So, the concrete work has started its going very, very well. On the primary crusher, we're over 60% complete, that's at the end of June, so we're significantly ahead of that as well.
The mills more than 57% complete at the end of June. Steel has begun to arrive at site that which is standalone things like washbasin and stuff like that, we started to stand up. The lease tanks and the CIP tanks, all of the lease tanks have been stood up and the CIP tanks more than halfway done.
At the beginning of the last quarter, we've been about 50% -- we finished about 50% of the permanent camp construction. We are now materially complete with that. We're still working on some of the VIP rooms and ancillary facilities like the gymnasium, but we have fully moved into that.
We started construction on the final -- the ultimate powerhouse 47 megawatts, so the contractors on site is set up his own camp. They are pouring foundations and we're planning on commission there at the end of the second quarter next year.
So, overall, the project more than 25% complete and we are ahead of schedule, slightly had schedule. Detailed engineering for the original scope is materially complete now. More than 50% of all our material has been procured and is on the ocean.
The next major items we have to complete is the tailings facility, we're going to start that right after the rainy season. So, if you remember we'd actually materially completed the downstream dam, enroll it to get to the rainy season.
As soon the rainy season is done, we'll go ahead and reroll that to get rid of any erosion issues, start with geotextile and put down HDPE liner. Our plan is to start that on or around 15th of October.
And I guess maybe the last thing to talk about its not -- its part of our permit B2Gold committed to looking at potentially relocating the villages of Fadougou, which sits about 700 meters from our pit.
As I said, our permit does not require us to move it, but we work with the community, they like the idea, the government likes the idea. We had in our budget, so we've now come basically to terms with the community on what we're going to do as far as where we're going to move them, what we're going to provide. We're now waiting for the government to allocate land for that relocation, but the project continues on unabated. So, basically everything remains within the overall budget.
Regarding the expansion of 5 million tons it's probably better that John talks a little bit about it. Seems it kind of his baby, so it's all yours John.
So, yes as Mike mentioned, we received Board approval to expand the Fekola process 4 million to 5 million ton per annum. Our engineer like [Indiscernible] completed a detailed capital cost estimate for that and it came on as $18 million. The major components of the expansion are an additional liege tank, second pedal pressure and another generator. Rest of the plant is already been designed for the increase in throughput which is 0.5%. So, in the complete dollar event, with the current construction and as the expanded plant operational in fourth quarter of 2017. That's it.
Thanks guys. Both again will come back for questions on any topic you want to ask after we finish up update on exploration and few others few things. Tom you want to talk little bit about some of the [Indiscernible] on the exploration results recently and I think in the next month or so you're thinking month and a half to come up with meaningful -- Tom, do you want to just tell us where we're there and what's significance of some of these things we've been doing could be.
So, just -- thanks Clive, just pass on continuation the couple of new release we had recent exploration. We've increased -- or recently increased our exploration budget now for the all of properties up to about $38 million.
The bulk of the exploration on the other part, -- I'm going to talk about West Africa separately, but the other part is around the mines and many mine site exploration where drilling from the mines, geotechnical work, or any drilling to fix up small areas and our models that are open.
However, we're looking joining new targets that match -- had in all quarter at the same time.
Onto Fekola, we currently budget for around 100,000 meters of drilling. We're halfway through that program. The bulk of that program has been on the [Indiscernible] facility going forward.
We drilled about 1,200 holes; we're still waiting for assays for around 400 holes. Our organization remains open both north and south of that structure -- a lot of always, we're thinking sitting above the structure. The plan is to once we got all these results in, they are taking a bit of break rate now with the rainy season, we hopefully get the results back by the end of the rainy season. Once those results are in, we'll then determine whether we're in a point to do resource, or whether we're too far open to not do resource. So, it's really hard to say at this time, when our results will be completed for this target.
And what's important about this target is that it's around five kilometers long right now. The profitability is somewhat variable in place, but reasonably continuous. And certainly had a lower cutoff rate, it's very continuous.
We're looking at this -- the original file was this is going to be supplement to the Fekola plant and certainly, studies were -- if you look at this supplement to the Fekola plant, however, it hinges [ph] the size now that we're now looking at this -- maybe it's not a supplement to the Fekola plant, but it could end up being a standalone.
Now, that's going to come out -- again, remaining results done, put together resource and the engineers will work the magic and will come up with a feasibility study. Just -- as Clive says, we're now looking at this as may not just have to be a difficult, but some things happening.
Again, further results come back in September and then we hope to have -- if it doesn’t get too much bigger, we hope to have resource done by year end. If it does get bigger, sorry guys, maybe later.
Onto the total target near Kiaka, we've increased our budget in two-folds, initially by $1 million and now by additional $2 million based on recent results that came out with the news release. We're now drilling 31,000 meters of our [Indiscernible] on that made target. We've now offered program in that area. We're going to hopefully get some -- start looking on some of the environmental needs of it.
And again like the satellite target that Anaconda we hope to have a resource on by year end. However, results have been this thing still remains open and again it's all dependent on when we actually quite the resource. And that’s it for me.
Okay, great, Tom. And I want to get any other questions those other things we'll just few minutes, just perhaps update on a few other things. The Gramalote project as we announced some time ago, we're in a process of looking to sell our 49% interest in that intriguing deposited in Columbia that has permit now and then goes lot of the work, albeit a bit slower than we may do it, but a lot of work over the last couple of years and I think -- from what they are showing us they are potentially significantly improving the economics from where they have been before.
So, we think about the data room and we have several companies especially interested in getting -- signing up geology payments, we're getting into the data room, obviously cross-reference something like this, this year versus last year have significantly improved this rate, development projects in the world, but acquires over the last couple of years and starting to realize and we will see what the interest in Gramalote is.
Obviously, a lot of people think why [Indiscernible] just acquired less interest in question. At the end of the day, until recently maybe it's changed, the probably the strong financial positions to do that, but the market has changed quite a bit.
So, we'll see at the end of the day, there's sense of urgency here. We've approved our 49% or $14 million budget for 2016 at Gramalote to continue to advance the project to more feasibility work with them. They have got some interesting results.
And making [Indiscernible] are maintain that sector, so we're saying sometimes as we goes on here, we're motivated seller, but we'll lead the seller. So, we also control the budget, so I think people realize that’s an usual deal with 49%, we have 50% say in their budgets and programs for every year -- agreement go ahead and that’s costs us -- saved us the and obviously then we're putting a lot of money over the last several years as we pushed back on some of the excesses in the budget. So, that’s not -- maybe that's something [Indiscernible].
So, at the end of the day, if anybody wants to buy, they are interest in purchasing Columbia, free country, they've become much more for mining recently, the President of Ministry of Mines are very prominent and [Indiscernible] highest levels of annual and they have some great meetings and we do have a permit.
So, Gramalote sits in the best cost of place to build the purchase of gold mine in Columbia with a lack of high altitude and relatively lightly [Indiscernible] for that country.
So, we like it. We -- bottom-line is that we're not continuing with the joint venture as we just want to control our destiny. We think our shareholders want us to do the same. Bigger companies are going to take longer and sometimes, they can be over budget on things like building mines. We're faster in my opinion; we're experienced, we're better in building mines. We want to build mines. And now we'll continue to control our destiny by doing that.
So, at the end of the day, I'm not negative on the country oil project just doesn’t fit our strategy going forward.
Just talk a little bit about strategy and looking -- going forward. We were very pleased with our strategy that we established really back in the days -- two days we just trying -- we told our job is just creating and looking to build more significant mine and we got [Indiscernible] really to growing the company through accretive acquisitions and exploration with respect of the gold price.
And that’s something if you look at that as a long-term goal, that’s one of the reasons keys to our successes. We don’t go selecting 1,100; we don't freak out, and hunker down and say well, we're not doing acquisitions. If you find the right ones that's the time you do it.
A great example of how this controlling strategy works so well with several examples. People remember back we had a [Indiscernible] days, we looked mine in Russia proposed $260 an ounce, a lot of mines been build that.
That basically led to couple than the rest of unit's history. At the end of the day what we've been able to do is take that same strategy and increase and continue to add expertise to our management team to be able to do this again.
And if you look at our history of acquisitions, they have been accretive -- very accretive and we'll come out with inflation matter [Indiscernible]. We need start looking at companies that have the elusive return on investments in the gold space. So, talk about it a lot.
So, we did the right things over the last couple of years which is building our client Fekola. Fekola, I believe, we had no competition. If you look at some of the deals we have done recently in Canada and elsewhere, at similar prices, so we can for Fekola 0.5 billion, I'm little surprised that just shows lack of projects.
We think that Fekola for what we're paying was highly accretive for what was there then -- what we announced is clearly seeing that this thing can get bigger as well.
So, doing acquisitions without result is a big thing to do and do it right and I think we really set ourselves potential additional growth. Tom mentioned the expansion of Fekola, we talked about the potential in this new [Indiscernible] and then, of course, in Kiaka and the new discovery Toega at Kiaka.
So, those are really [Indiscernible] $63 million with our share and it was 5 million ounce deposit that needed help from a gold price or from exploration, but we acquired it because it was such a low entry point and we had confidence that one day gold price could go higher, but also we would like the exploration upside.
So, Tom, and Brian and his teams have now done their thing and we're seeing a very exciting bunch of -- higher grade, twice the range of our position we see at Kiaka. So that can either be something that we put together in Kiaka a feasibility study that we're doing right now. We're trying to figure out how big trophy is as Tom said, and it could be a standalone and looking at holes wells potentially.
And the economics for it, Kiaka we found an exploring mine. So, if you look at our growth profile, we only put part of it in our slides. If you start looking it for the years and you believe as we do that Kiaka has got a good shot to be next line and the sample zone could be standalone, then our production continue to increase from that, we'd be on Fekola by another 300,000 and 400,000 ounces as potential.
So, that’s something do a lot of work with subject to economic review and all the second -- but that’s where we see ourselves likely going. Because of that we're not really looking to acquire any production right now, for sure, and we're not looking to acquire with all the budget. This is -- we were mining this stuff when it was a biased market. But I think that has changed, today and we're seeing that as something scrambling around to catch to us and do some quality acquisitions.
So, very comfortable, we see that the space as [Indiscernible] reflect the value that we have built in the company and as -- every day that goes by, we do this Fekola construction and drill more holes to change the value of our other significant assets.
So, I think I'll leave it there and open it up to any questions on any comment you like.
Thank you. [Operator Instructions]
Our first question is from Rahul Paul from Canaccord Genuity. Please go ahead.
Hi, everyone. Congratulations on another great quarter. It's nice to see the increased production forecast at 2018 just wondering if you could break out the expected contribution by asset?
Okay. Mike just flip through--
Sorry, what are we looking at -- sort of breakdown.
Yeah, the expected production breakdown by assets for 2018?
Okay. So, 180,000 for delivered, 70,000 through Limon, [Indiscernible], and Limon 70,000; Masbate is 180,000; Otjikoto is 150,000; Fekola is 351,000.
Thanks Mike. And then on your cash cost cards at Otjikoto and Masbate have been tracking much lower than expected. I'm wondering if could give me the cost breakdown for Q2 mining, milling, and G&A?
Now I know that cost tied FX and price of fuel, but if I were to assume prevailing FX and oil prices, is that something that we should assume going forward for Otjikoto and Masbate?
Yes, price will pick up.
I have to ask again.
Sorry, you broke up there.
Okay. No, I'm looking at your cash cost at Otjikoto and Masbate, they have been tracking a lot lower than expected. Couple of things, I'm wondering if could give me the cost per tons breakdown for Q2 of those assets mining, milling, and G&A and also wondering is that something that you think is sustainable going forward?
Yes. Hi, Rahul I can provide for Masbate cost adjustment in the quarter, mining 303, processing just over $7, G&A 358. All of those reflect the decrease in costs of mining about 7% decrease in cost, processing 18%, and G&A 15%.
G&A I would say was level off and in fact keep some expenditures that come out of the second quarter really past the third quarter. Processing, we've seen a decrease in our energy cost totaling to 25% of our total cost. And that’s a positive -- that’s a combination of lower energy use and lower HFO pricing. So, that will be dependent on primarily on HFO pricing. We do see under savings in [Indiscernible] as well and improved throughput as we process by large side.
Mining cost, partly dependent on fuel cost. However, we've seen savings in this past $0.25 million in that range on our equipment operating cost. We've seen some real positive with improvements of our dump destinations and [Indiscernible], we've seen some efficiency in our fleet.
And then also maybe just comment on the Otjikoto site, we have the benefit of weaker Namibian dollars, weaker rand and we have hesitated and I think so far that seems to be continuing so we probably see some continued benefits there.
Okay. Thanks. And just one clarification -- maybe a follow-up on the unit cost breakdown later at Otjikoto, I understand you used a bit of stockpile material for Q2. From an accounting standpoint were the cost associated with the stockpile higher or lower than the cost what you are mining right now including any associated stripping?
I tried to come prepared, but I think we'll have to get back on that one.
Okay. I'll follow-up. Thanks that’s all that I had.
Okay. Thanks Rahul.
Thank you. The next is from Michael Gray from Macquarie. Please go ahead.
Yeah. Good morning. On the expansion of Fekola plant subject to other satellite discoveries maybe near Fekola what’s the opportunity to expand it every further do you say 6 million or 7 million tons per annum, is the room footprint-wise forward and if so, can you give us an idea what capital cost would it be to go beyond that?
Well, [Indiscernible] but anyway go ahead John, you want to please step it out.
Yes. Michael we haven't looked at it yet, but as resource grows, I just we just start looking into that, but we have not looked at expanding above 5 million ton per annum.
I think we can say the provider also we're looking at -- can be a much simple plant, may be it require a little crushing and grinding things of that nature, so we may watch through the different facility.
So, what we know the footprint today is pretty open side--
Yes. We did allow the stare for second mill.
Okay. Well maybe just moving on to Tom and being very bullish on Anaconda matter with 5 kilometer footprint, did I get it right that the 400 air-cooled holes to come in assay-wise and that there would not be a resource by year end if it was still open and that there would be a resource if you did close it off?
I think we close it off with these results of the assays probably in a timely manner so it is that we will have resource by year end, but we don’t close it off -- no I can’t make any promises on when would be close.
Okay, fair enough. And last question is the standalone mill option as you alluded to; is it more ore typing or more sap light or is it partly distance or a combination of both thinking of the standalone potential?
In terms of standalone potential it has been answered by Dennis in terms of engineering, but from a resource point of view it gets to a point where its getting large enough where if we wanted to look at this as a slightly different process I mean we're talking about dirt here.
Little bit of claim shown in place. And I'm not the [Indiscernible] but I'm sure John would rather not have that flood in the mill and if we had a separate operation that would be specific to that I think that’s why we're looking at. I think it really comes down to the size of it.
Yes. The size is the key thing I mean we're looking at some just what if scenarios and all of the sudden, you can have a plant that's producing similar tons to Fekola. I mean its -- just how big does this thing get is really going to be where the key indicators. Initially, we thought we have a little bit of [Indiscernible] that we could add to the feed, that’s now gone way passed out and how far will it go, will really drive a lot what that [Indiscernible].
Okay. Thanks very much guys.
We can still blend it, Mike. You could still -- potential work we've got and I'm not sure what the ratio -- what ratio we're thinking of.
Maybe 10% to 20%, anywhere dependent on time of the year during the rainy season, less pricing more.
So, there is really a spectrum of outcomes and you got to get the resource done?
Yes, that’s what it comes down to. Well, you got -- part of this resource that we're doing is we're doing a lot more dilutive right now. We collect a lot more samples. There are going to be other way to the lab shortly. So, I think we are looking at this now as it is potentially second.
Okay. Thanks very much.
Now, just a clarification. So, there's -- I'll answer question, but could we have resources based on drilling somewhat of a [Indiscernible] in the year end and then it could be very open.
Yes, we could do that. If we have sort of pressure from the engineering side, the study, yes, we can do is [Indiscernible].
But there are various alternatives.
The only issue with that is the way it's been drilled some of the later drilling in some of -- in the middle area and some of the size upgraded in the middle area and now with [Indiscernible].
Okay. Sure. [Indiscernible] I guess know we would do as long as when.
I just want to add Mike, just on that what's really interesting about this, we haven't talked about it, but this soon will be more self-structured that Anaconda sits on. We're starting to do a fair bit of exploration [Indiscernible] structure.
So, and potentially be in the source structure of this zone. That doesn’t mean the whole zone could have been mineralized, but it does mean five kilometers worth of it a structure has provided sufficient goals we created sample and resource.
Now, we think it's difficult -- why are we dipping, which is supply of this thing is spread out we have and [Indiscernible] but it’s a really, really good target to find further mineralization along the sort of hard rock and coast now and I think long range that’s where the real optimism is.
Thank you. The next question is from Ovais Habib from Scotia Bank. Please go ahead.
Hi everyone. Thanks for taking my call and congrats on the great quarter. Just couple of questions has been answered, but just starting off at Otjikoto. You guys were processing medium grade stockpile I believe in Q2. And now with the mill ramp -- with the ramp complete, I believe you started mining the open pit site. What are you expecting in terms of grades for the second half of 2016?
That’s you, Bill.
Yes. I'm just trying to open up my files here. Let me look here a second. Yes, I don’t have here. I might have to get back on that.
Sure. In terms of -- just moving on in terms to moly, can you guys give us any update on how the negotiations are coming along in terms of the ownership structure there?
Mike you want to handle?
Yes. I think they are progressing well. We had another change there in the Minister of Mine, fairly recently so that's sort of related to kind of get some of this all, but I think things are moving along well, probably wish and wait for the second 10% where borrow on that discussions with them.
So we looked to wrap that up relatively soon. There is shareholders agreement that we are putting in place with them in terms of how the company the will operate the own and other parties will interact with me. So it's almost complete as well. And we've started this sort of more detail discussions with them in terms of their mining convention with the view that we will have all of these things we hope wrapped up by the end of the year.
I would say overall our relationship with government are very strong in Mali – where we operate but they are very strong the coal mining as you guys know sort of important thing for Mali. This is a big project that becomes bigger and bigger. We're building a bigger to start now 5 million a tons a year.
The government is right on board in fact they are upside outside of the last few days that they would grow with the progress. But don't forget we are doing things like such a moving a village, thereby village which is quite permit, but we just seem to be the right thing to do and to start good relationship with the local people. So they are very happy with that.
And they got – that's very important to support at the federal levels the local opportunities we've done our normal thing which really be transparent and cooperative in the finding that how we can make this a win-win situation.
So, we are very on a good with the government and we see that very – pretty happy with what we are doing and the rate we are doing at it will be the most modern coal mine in Mali and we are pretty blown away by what we are seeing down there.
Sounds good. That's great. Just a last question from my end –
Yeah, let me just jump back in your – jump back in I just opened up, I guess the three months rolling average here we are talking about for third quarter 1.76 gram per tons mill.
1.76. And what was the process grade for Q2, if you can remind me? It's about 1.2 I believe?
Yeah, something like that. But remember lot of that came from the medium high grade stock well.
That’s right. That’s right. So, significant improver in Q3 there?
Okay. Just jumping on to Libertad you’ve started mining from the underground at Mojon, and Dale I guess this question is for you, what kind of grade in tons are you kind of looking at from the underground? And is this enough to kind of compensate for the material from Jabali Antenna at least in the near-term?
That’s a good question. In our forecast, we're looking at around 5 grams per ton in the developments that we have to-date is been closer to 3 grams per ton. We've not adapt as forward as that on our underground as we would like when we've address back with the contractor and we will move forward.
We see overall about 50,000 ton increasing coming out of Mojon in our forecast running through to the end of 2016, remainder of the material that does not come from Jabali Antenna comes haulage trucks.
So with those two sources we can compensate for any push back that we've put into our forecast for Jabali Antenna.
And assuming if you do get the permits let say by the end of Q3 I mean, how far can you get Jabali Antenna in the mill?
They come into production very quickly remember this was the -- those are pits that surface is ready to go well in terms of some work getting organized has been historic small minor work in the upper couple of benches on that, that will come into production very quickly after we achieve permits.
Excellent. Thanks guys. That's it. That’s it for me.
Just to add a little bit, we’ve just got little bit about we made some good progress on the permit and we own relocation.
Yeah, sure. Ken -- Clive. But we're very happy with the relocation program and in fact we’ve received words for the relocation program that we’ve achieved there that’s been a big success that we've done in the last couple of weeks recent development with some of the more reluctant stakeholders finally through the table and we are talking and we are negotiating and we are at the point that we can use -- the assistance of the government close off those negotiation we want to move past those social issues before we move to achieving permit. Permit we follow that process fairly quick that process itself is little difficult to forecast. We are dealing with people and the social issues.
That’s great guys. Thanks. That’s it for me.
Thank you. The next question is from Jeff Killeen from CIBC. Please go ahead.
Hi. Thanks for your time everyone. Maybe I start Libertad just on this mining heavily Vein pit and little bit harder you know how much if any are you sacrificing the future in order to make up this difference for Jabali Antenna coming a little bit later?
It's a matter of really on which pocket we've pull from our rates coming from Jabali Antenna will be fairly elastic. So I don't see in the large scheme of things much impact to be honest. But I think there is various I can comment on that, I would add that we do have plans. We will initiate at September or add to the underground in Jabali Antenna looking to get into production likely early 2018.
Okay. Thanks. And then looking at Mojon from somewhat similar angel I guess you've had some really good numbers here in the second quarter and the first quarter, and you are projecting that you are going to have similar type of grade in the oxide in the third quarter. So wondering are these positive variances surprises that the rocks are giving you is it -- you just selected to shift the mine plan a little bit to focus on the oxide of a little bit more just wondering what you can comment there?
Yeah. The real short answer is that our mining places are as planned from our budget. So the changes that we see are combination of better grades slightly lower tonnage remains and we are material falling into oxide site category from transition category in Colorado Pit.
Now with some local grade control we've added certain amount of tonnage that fall other side of the mile, but really the story here is that shift of transition material to oxide material and that falls into our high grade category.
So that more tons from the same advanced going into the mill from Colorado Pit and slightly lower than better grade from Main Vein. That combination which provides the higher percentage oxide does some great things for our throughput and great things for our recovery.
Okay, great. And then thinking about going more quarter ahead since you have enough grade control drilling to give you sense of what Q4 is going to look like or is that still not quite complete yet that’s why we are really just saying still expecting these type of numbers in Q3, but not prepared not go far as Q4 yet?
We've always had great control drilling provides us with about two months of advanced dollars. So that's why we talked about what we can anticipate in the third quarter. That being said, that allow us to look carefully at our mine plan and looked off from cost looking to send more material directly to – more oxide material directly to the plants and perhaps look at what we can do if we get ahead in our prescript sell-through.
That means that optimization that we do in our mine planning that will do some good things for us both in terms of cost and getting ahead in our mine plants when we look through the next 18 months scope.
Okay, great. And then maybe lastly on cost posting some really good numbers here last few quarters, sound like Q3 is going to be another good quarter, some of those inputs like oil unlikely to make a huge change for the rest of the year. So, just wondering how – when would -- it seems like you would be prepared almost today to potentially think about lowering your guidance. So, just wondering, if you can talk about what cost may go back up for the remainder of the year that keeps the apprehension from helping your guidance yet?
Well, if we look at HFO our budget caries $0.34 per liter against an actual $0.25 per liter, I talked about that component is moving downscaling in our cost structure for the mill. Diesel fuel from $0.50 per liter down to $0.37 per liter those were the two big sensitivities on our input for consumables that could change that's our market changes.
Okay. Very well. And apologizes I do have one more question, on the Fekola just to clarify so this increase from 4 million tons to 5 million tons it doesn't sound now like it’s a that decision was made by the satellite staff relates on being a contributor so is it more you just realize that this is a positive decision to get a higher output and not necessarily a negative from a valuation standpoint or what was the real driver behind taking that upside from this throughput?
Well, I think it was – look corporately the decision was – we've learned a lot of much, we’ve a lot in this industry about when you have exploration potential and you stop exploring and you goes through many success sometime three to five years later many companies have been kicking their asses – but I feel a little bigger mill. So it expansion can be very expensive when you want to do that to build a full facility.
So, in the quarter we did and John and the guys worked in there have good capacity increases 25% meaning that things are still at 25% more in many areas of the mine. Because otherwise if you think about Fekola doesn't make sense you spend more 450 million moving something and then you can do a 25% increase in throughput for reaching there, while the reason that is possible because of the we decided that we because of expiration upside that will be some Fekola both underground at Fekola and also these news along state
We said let's build it with that capacity so we don’t regret it three, five years from now and that's what we do. And I think that's part of maybe would need a lot of different with our companies, we reported that very success, we great expectation with that and we have insight of the fact that what something could become. So that’s that balance. So because we need the trucks and pressure and all the other things we are seized 5 million tons.
We knew that for smaller than identify that about 18 million we could the double crushers for generator – to take into that 5 million. So this is always in our plan. We haven’t thought we might do it in the first year given the expiration that you have so far, and the way things are going into inspection we decided that to go board and get approval for it, which we now have. So we expect to come out and again ramp up out of 5 million tons.
Okay, great. Thanks very much for your time.
Jeff, just one follow-up comments when we talk about cost we would also should touch on CapEx most of our significant equipment for the mine has been purchased as of this date so CapEx are not schedule follows land purchases slightly behind and our new upgrade were in a great shape and doing better than much but still some significant work to do in our upgrade through the end of the year as we indicated in our outlook.
Great. Thank you very much.
Thank you. The next question is from Chris Thompson from Raymond James. Please go ahead.
Hi. Good morning, guys. Congratulations on a great quarter. Number of my questions have already been answered, but I will start off with a couple for Masbate. I understand obviously there is, you guys have wrapping up some plant improvement. Can you give us a sense of this sort of recoveries that you are hoping to obtain the improvement in recoveries on the back of these improvements at Masbate?
Yeah. While we just started off as a leach certain expansion as of June 30th but that results was not encouraging but it's too early to determine exactly what kind of improvement we're going to get, so under evaluation.
Those looking good.
That is looking good, yes.
Okay. Perfect. I guess just on Masbate as well just remind us again if you would when are you going to start paying tax at Masbate, when does the tax holiday finish there?
We recently got the update one extra year and that take us through in fact – expire in the middle of – in the middle of 2017, so the end of June 2017 that's when we tax holiday will be done.
Great. Thanks for that. Just moving onto Libertad, I guess this for you Dale, a sense of the stock piled spent ore remaining as far as tons in grade if you would?
That’s one I don't have, Brian I don’t know if you have any comment on that. I will have to get back to you on that Chris.
On reserve side, we’ve got about 1 million tons at the end of the 2015 for about 32,000 ounces at a grade of 0.94 and that's on the reserve side and on the resource side there is a probably about another probably 10,000 to 20,000 ounces as lower grade, probably in the 0.5 to 0.6 range.
Okay, great. Thanks, Brian. And then I guess, nobody is talking about the moment Limon. This is sort of strategic question more than anything else, I mean 50,000 ounces a year I mean what's strategic important do you I guess depend on Limon at the moment? I mean before you consider maybe selling it.
I think corporately we’ve always look at our alternatives we think that we ran out that based on our most recent mine plan. It has what we see a five years mine life. You remember that back in the days before we own in 2,000 where it actually first started 1,000 ounces a year because of better grades, we still see exploration upside is there are other results in the areas some – invitation.
Talking that just that’s – that we own so we – working well, it's working better there is a lot of improvement there, there is been improvement back to the good relationships with local people it's critical for the town.
And I guess at this point of time we are happy to put the player they obviously do that on the production areas. But timing just couple of basis, this going to be a happen and in high grade system but there is a something target.
We are drilling on a – other target in the areas in which is getting same grade we will come out with that the exploration update but it is indicative of typical of this area I know it's had two to five year with reserves for really long-time and there's been time where its produced a 100,000 ouches a year there is been times it was a small and it was running 20 gram material to the mill.
So if you know get on the new Vein system then there is reasonable potential to up the grade. So yes, it’s a 50,000 ouches year a producer we just target the one Main Vein with the greatest and then all of sudden that 50,000 ouches goes up to something that is more significant to us. I guess, I know it's not an actual answer but it's due to -- based on results you've seen today.
Great. I mean that's –
Its big company that you are talking about it.
All right. Thanks guys. Thanks.
Thank you. The next question is from Geordie Mark from Haywood Securities. Please go ahead.
Yeah. Good morning and good evening. Very good quarters, guys. Just a few bit of housekeeping, in terms of Masbate, are you looking for production rates through the mill to the continue at the current rate I guess you've been putting through at the moment, just looking at obviously the guidance there for the year and given that we are half way through looks a little conservative I would say. So, yeah, so you are still looking for throughput rates to be holding around this level?
Yeah. Simply doubling our throughput sort something 6.9 ranges forecast our budget for 6.7 million tons in this year. The answer depends partly the amount of harder material that would be coming through the plant in the back half of the year, right now is fair to say, you are looking at third quarter where we originally looked at about 22% oxide component that oxide will get up more around 33% or a higher than that.
If that's the case then we can anticipate our throughput will continue through the year, at least attempts on how we want to finalize our management with forecast through the back half of 2016.
If I can say something some of the differences due to grade positive reconciliation on grade to the model which we can only predict two months based on grade control growing but the other one is based on positive reconciliation on recovery as it relates to oxide state.
Now that’s not as easy to sit there and predict based on grade control drillings. The reason being is reason we are seeing different recoveries offsite state relative to our model is that there is more oxidation down the actual Vein zone compared to what we predicted on the model but you can't see that well in the grade control drilling because you get a fair bit of sulfides in the wall mark some of the those Vein’s.
So it's hard to predict from grade control mill you are actually offsite state you actually get it through the mill. So I think it would be we've got to careful when we are going to predict this oxidize stage is going to continue based on the grade control.
Thank you. Great. Thanks. Also maybe just follow-on for Otjikoto, similar question I guess in terms of obviously the mills is been performing very well both exceeding capacity are you expecting that to continue now that you coming to Phase 2 material you only had a Phase 1 I guess in November and what is coming on stream in Q4. Maybe expecting to the levels to sort of taper off the year or what’s your sort of prediction given that you’ve got pretty good grade profile coming through Q3?
We’re expecting similar levels of throughput as we go forward.
Okay, great. And do you expect same sort of level of recoveries coming through there. Obviously, plant been going pretty well, do you expect with increase in grades, tail grades at least or do you expect that sort of stay flat?
We expect it to maintain about 98% gold recovery, maybe pointing higher if the grade improves.
Okay, brilliant. And maybe just one final one over to Tom. I have missed some of it I think -- do you think that Anaconda fresh out, you have got enough of resource now with the drilling to be sufficient for satellite feed or are you there that critical mass so that base option or where are you I guess?
We're pretty down close, so the reason we shifted over from being afraid to mine to something that we're not evaluating as a standalone is because we rest -- we think we recycle at that point certainly from an engineering side, people think we're recycling the portfolio.
But it's based on what we would probably improve resource, we're doing a fair bit of drilling to bring natural point where we can actually drill proper mine plan, to take control on what the grade throughput is going to be. But and simply as yes, we think we are at a critical point already to standalone and Dennis do you want to comment further.
Yes. The other thing looking at the grades and holes, it's going to be a low cost operation if its standalone. It's going to be low cost material going through the coal plant also. It's getting pretty much a free ride through the threshold grinding circuits because it’s such a fine material to begin with.
But with the cost being extremely low, that it would be -- if it were standalone, it would be extremely low power consumer which is a huge cost for us at Fekola, things of that nature. So, the cut off grades can go down to some very low levels and when you do that, then you can mine this thing in huge blocks.
Extremely continuous when you take that cut out rate down and it's [Indiscernible] out there, this is what it is, it's going to be kind of a mucky mess in the rainy season, there's no doubt about it. And it just simplifies the ore control and it just makes it a much easier animal to mine if we take the cut out grade rates up and try to get a higher grade feed into Fekola, then our ore controls become much more important.
We're going to be trying to block out smaller zones, things of that nature. It's still continuous, higher grade, but it's tremendously continuous at lower grade and that’s part of the [Indiscernible] also. So, we have lot work to do but it's very encouraging.
Brilliant. Thank you very much.
Thank you. The next question is from Steve Emerson from Emerson Investment. Please go ahead.
Congratulations on a great quarter and we're obviously all excited about the possibilities for Anaconda. I thought I heard in the news that Masbate possibly could have country-wide much tighter environmental restrictions. Please correct me if I'm wrong and what would be the impact true or expense et cetera?
Fair question. Dale you want to have a crack at that?
Yes sure. So, the first I would notice is that the Philippines -- I haven’t heard that the environmental regulations would be revised. What I do know is that the existing environmental regulations would be enforced and we're whole heartedly in agreement with that.
And from our perspective we're compliance with Philippine Mining Law, we're certainly compliant with Philippine Environmental Law and we welcome anybody to come see.
And just maybe a further comment to that. We're -- as Dale said, we're in compliance -- understanding everything we've done from a perspective [Indiscernible] getting this recent audit done recently given as our approvals.
I think it's also to point out that President and his spokespeople are going to say and since he was elected that they not approach to point us on mining, they want to see mining to the standards that we do thinks in Canada and Australia. And from our perspective, we're fully compliant with the kind of standards that we have internationally and we would have in all of our [Indiscernible] including the Canadian and Australia mines.
So, we're pretty confident that the [Indiscernible] about 85% economy and these are good jobs, great safety record, the government is happy with what we're doing and we comply with all the of regulations.
So, you are saying that if you have to go to Canadian standards or the possibly new Philippine standards, you meet these or could meet them with very minor capital and expense per ounce?
Yes, Steve we're already there. Our water emission standards would easily meet Canadian standards, not an issue what so ever.
Okay. Thank you very much.
Thank you. The next question is from David [Indiscernible] from Macquarie. Please go ahead. Mr. [Indiscernible] has removed his question. The next question is from Greg [Indiscernible], Private Investor. Please go ahead.
Yes. I want to start with a compliment I think I'm a Private Investor and owned a company for about two and a half years and I think its world-class as far as the way its run assets, but if feel my perception is that the marketplace isn’t valuing the whole growth part of the company and isn’t recognizing it maybe as a world-class asset.
And could you speak to what you may or may not be doing in the promotional area? I look out in the West Coast of North America and I don’t feel like B2 is being promoted, at least from my perception, like I see other company of lesser quality being promoted and people are all excited about, could you speak to that?
I agree with your first point that you made on -- we are not getting full credit yet, we're getting some now, but not full credit for our growth. That’s the best -- when going producing in the world and we starting adding on other things that we talked about today. It's really -- it's already dramatic story with Fekola and potentially becomes even more growth on top of that.
I think that important thing we realized there is how difficult the market has been. In December, we do a lot of marketing, we're at all major conferences, we do marketing trips independent of the conferences, we're very transparent. I think the 17 analysts that covers and I think that majority of the analysts' feedback to me and others is we're one of the most transparent companies.
So, we really believe that we should -- our story should be out there. We're looking right now at an initial campaign to get the story, put on there. And I think just to finish the point on value per growth, we -- it was made in [Indiscernible], in December, people were saying well, we think guys; we can probably do it, because you've done it before to grow the company. So, we're not tell you, but we just aren’t paying for growth at all. We want free cash flow, that's all we want. That was December last year.
January, we were CAD0.80 because of perception -- how we diluted equity profit to mitigate the impact of the gold price [Indiscernible] 1,300 down to 1,100. It was that perception the short jumped on is very high volume stock. So, we sure it jumped on and thank God, we didn’t stay there for long. Good thing was that no one had the courage to launch a hostile takeover at that time. So, we're very happy about that for us and our shareholders.
So we then saw a dramatic change. The gold price showing some interest all of a sudden, people are going well, hang on a second. And there's a very few as you probably know that's lot of research shows that very few companies did what we did which to have the [Indiscernible] say we're here the gold mining company irrespective of the gold price at various times.
So, that’s been the success and that’s where I think senses great position for growth. We're -- the media is hard to -- we kept our active -- not of response, but active reaching out to the media, the Canadian media. Some troughs some trail, basically see they have their favorites and we're possibly pushing as the newest intermediate to becoming a significantly larger company.
So, we're on that and as I take your point and I think market change though, now we've always been marketing ourselves and times story, we're going to wrap that now, because now we think it's the time we haven't gone, who is actually growing the business here.
And we're in good shape, so I think we started to see the valuation, obviously, in my opinion, there is much more value in this company and some of the analysts are starting to -- it's also a fear factor with the analysts. It's all like it used to be in the old days where some of us would say I love this story back up the track, might as well as -- they just don’t do that anymore. Some of it for legal reason, some of it because of [indiscernible].
So, there is a real shift there as well. There's a lot of separatism where people don’t want to risk their job by saying these guys were also moved in. They're just going to keep doing this for years. So, I hope that answers your question.
Yes, for the most part. And I think as the CEO, the more you can get out and -- because you do a great job when I’m listening to these conference calls, really coming across is being truthful, but also coming across as your team is awesome.
I mean you have some awesome people. And I’ve noticed other companies sometimes try it out some of their other all-stars too who can explain, who do a good job when possible. Obviously, as a shareholder, I’d rather have the most important people doing their most important work, 99% of the time. But 1% of the time, it's sometimes nice to see the technical people who are making the magic happen in these far-off places, actually come out once in a while -- even if it’s a 10 minute clip on the internet and tell the story.
So, I’d just encourage you all to tell the story to as many people as possible, especially -- I’m just saying, I live on the West Coast in California and I haven’t bumped into you guys, but it could be my fault, I just haven’t connected with it. But there's a lot of money out in California. And I don’t think that they connect with Africa right now, like Africa investment for a North America, especially United States' investor seems a little more scary than maybe your typically Canadian grizzled better in investor. Could you just speak to that real quickly is there -- a problem with having great African assets?
Well, I think historically Canadians have been much more adventure somewhat aggressive in the gold mining states. So, we just practice by U.S. very entrepreneurial country.
But I think maybe -- I don’t know maybe its lack of incompatible, some of the places in the world, we rather see others built. We're always looking for places to go and this great deposit and then try to figure out if the land in Russia 2000 as we did or in Chile back in days when we were probably crazy for doing it.
So, I think there's culture dip in the mining states, not that many U.S. hold companies are ready -- are not that adventurous, especially the big guys like Newmont. So, I think we’re taking a different approach and history of B2 was born out of exploration, which is a lot -- we're so much we're together doing it back then and we transformed the companies into any unusual which is producing its graded acquisition and exploration.
But you’re right, I mean we have this in Russia, the [indiscernible] hammered when we announced that we're going acquire [indiscernible] deposit and finance to Russia and we’re going to finance and build as I said earlier when we built 264.
But that’s a great example of what we -- what drives us is to be open-minded and perhaps little bit more meanings travel a lot and lot of Canadian stuff and lot et cetera, et cetera. So, at the end of the day, it’s unusual, because we're supposed to be more sort of I don’t know -- less aggressive company perhaps, but obviously, your custom mining industry we're very good at it and we’re leaders at the moment.
So, you pointed out, Europe is -- really gets -- U.K and Europe really get Africa, but we've done some marketing there, and I think lot more to do there as they are the big players to get it.
They all recognize before we tried to pull and I would say that in the meetings it's like what's the best small project in Africa, means we're one of the best in the world and the best of [indiscernible]. So that was not coming towards America, it was not [indiscernible].
So, your point is great, we’ve got to go and tell Americans about Africa is today and why technology are very good for mining as they get it -- they know they need it and they get. So, Africa is going to be a [indiscernible].
Thank you. The next question is from David [indiscernible] from Macquarie. Please go ahead.
Yes, good morning, guys. Congrats on the solid second quarter. Sorry, I got disconnected earlier. On Fekola, what would the permitting process fee for Anaconda? And could you see feed process from their end in 2018?
No, 2018 possible--
No, we got to look through the whole of process and it’s a different tenement. So, we’re going have to go through the process and shareholder agreements, conventional with government, the whole permitting regime with them. We don’t have a resource and we haven’t done scoping study yet. These are very, very earlier stage thing. So, there is a lot of work to do. So, I would think that would be very, very preliminary, very early.
Right. Okay. And on the Masbate, in terms of onsite sulfide transition fee, can you provide some color on the feed mix budgeted for 2017?
No, I don’t have anything in front of me to provide that. I'll get back to you.
Okay. Yes sure. And on the 38% to 25% decline in energy cost at Masbate, what is the breakdown in savings from lower usage versus energy pricing?
I'll [indiscernible] to give you a breakdown, unless you look at it how it's done. No, I know that numbers out there, but I can get for you.
Consumption is there about 10% year-to-date.
That's a fair indicator then.
Okay, great. Thanks guys.
Thank you. This concludes the question-and-answer session. I’d like to turn the meeting back over to Mr. Clive Johnson. Please go ahead, sir.
Okay. Well, thanks everyone for all the good questions. And I hopefully we did answers and just a final comment when you talk about gains for the company, one with great ways to people to get to know obviously is the website, but if you go on the website, or if you go on YouTube and you search for B2Gold, you'll find some things on YouTube and one of them is called Gold in our Veins. And it’s a story of village cooperage in Namibia.
It’s a very well done documentary and really very education, telling about how gold mining happens, how it happens in Africa, and what we do in terms of the local -- do to the environment, but also it’s a great demonstration of the success we had there.
I recommend anybody watch that, I’d like to get in every high school, and then all in the world where people are -- science teachers some of them are still negative on mining. It’s a great example of how we're on the cutting-edge of mining and it’s also very entertaining for anyone to watch. So, it's called Gold in our Veins it’s a -- you can just get it by searching YouTube, B2Gold or by going -- connecting on our website with lots of additional information on other things and impacting it through our website as well.
So, thank you all very much for your time today.
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