B2Gold Corp. (NYSEAMERICAN:BTG, TSE:BTO) saw its shares continue their upward trajectory in premarket trading on Monday, following a historic surge on Friday. The stock was up 0.8% to $5.07, building on a 23% jump that lifted its weekly gain to 34.1%. The rally was fueled by Mali's long-awaited issuance of the Menankoto mining permit, which paves the way for the Fekola Regional project.
The permit, granted on Friday, allows B2Gold to proceed with pre-stripping activities and finalize tolling agreements at Fekola Regional. Management projects annual production of over 150,000 ounces from 2028 through the mid-2030s. B2Gold will hold a 65% stake in the new operation, while the existing Fekola Mine remains 80% owned by the company.
Investors appear to be focusing on the long-term potential of this expansion rather than the company's second-quarter cash flow, which showed a negative free cash flow of $258 million. This optimism was reflected in the stock's performance, which significantly outpaced the broader gold sector. An initial analysis suggests that B2Gold shares saw an excess return of approximately $0.65 per share, or about $860 million in total, compared to the GDX benchmark's 7.11% gain on Thursday's close.
The market's reaction underscores a shift in sentiment toward the company's growth prospects. "This permit secures the future of the operation well into the late 2030s," said CEO Mike Cinnamond, highlighting the strategic importance of the Menankoto license.
However, the company's financials for the second quarter painted a mixed picture. Gold revenue increased 14% to $789.4 million, driven by a 14.5% rise in realized gold prices to $3,767 per ounce. But production fell 11.2% to 203,648 ounces, and all-in sustaining costs surged 55.1% to $2,356 per ounce. Adjusted earnings per share dropped 75% to $0.03, while free cash flow swung to a negative $257.5 million from a positive $12 million a year earlier.
The negative cash flow was attributed to several factors, including higher taxes, prepay deliveries, and increased production costs. Realized losses of $71 million from gold collars also weighed on results. However, management noted that all scheduled gold-prepay shipments were completed by June 30, and they expect spot sales to boost free cash flow in the second half of the year.
Liquidity remains robust, with $287 million in cash and an undrawn $800 million revolving credit facility at the end of the quarter. The company has since drawn $95 million primarily to fund its annual Goose fuel requirements.
Looking ahead, B2Gold updated its 2026 production guidance, narrowing the consolidated range to 820,000–920,000 ounces from 820,000–970,000 ounces, reflecting a 25,000-ounce reduction at the midpoint. The Fekola Complex saw its outlook cut to 390,000–420,000 ounces due to the delayed permit, while Goose and Otjikoto saw modest increases. The company also improved its all-in sustaining cost guidance to $2,370–$2,550 per ounce.
The immediate challenge remains the Goose project, where Q2 all-in sustaining costs were $6,390 per ounce sold. Management aims to reach daily throughput of 3,200 tonnes by the end of the quarter, with a goal of 4,000 tonnes by mid-2027.
Analysts have responded positively to the news. ATB Cormark upgraded the stock to Outperform with a C$11.00 target, while Scotiabank's Ovais Habib raised his rating to Outperform with a C$10.00 target. The consensus among 13 analysts is an Outperform rating with a US$6.08 target, implying 20.5% upside.
As markets open this week, investors will be watching to see if the permit-driven rally can sustain. Key risks include gold price volatility, tolling economics, and the progress of Goose repairs. With the stock having surged on Friday, any delays could test investor patience.
