With gold prices trading near all-time highs, it makes sense to add quality mining stocks to your equity portfolio in 2024. Historically, gold and interest rates have an inverse relationship. As investors expect federal banks to lower interest rates in the second half of 2024, gold prices should move higher.
Moreover, the yellow metal thrives during periods of volatility. In the near term, the global economy is expected to wrestle with headwinds such as sluggish consumer spending, geopolitical tensions, and tepid GDP growth, all of which might drive gold prices higher.
One small-cap gold mining stock you should watch closely is B2Gold (TSX: BTO). Valued at $4.4 billion by market cap, BTO stock is down 65% from all-time highs, allowing you to go bottom fishing and buy the dip. The pullback in share prices has also meant the gold mining stock offers you a tasty dividend yield of over 6%.
An overview of B2Gold stock
B2Gold is a gold producer which operates three mines in Mali, the Philippines, and Namibia. It also has a 25% interest in Calibre Mining and a 19% interest in BeMetals Corp in addition to other exploration assets in Mali, Uzbekistan, and Finland.
In the fourth quarter (Q4) of 2023, B2Gold reported higher than anticipated gold production of 288,665 ounces, which includes 18,054 ounces of attributable production from Calibre Mining. Its total gold production for 2023 stood at 1.06 million ounces, which was at the higher end of the company’s guidance. It was also the eighth consecutive year where B2Gold met or exceeded annual production guidance.
B2Gold’s consolidated sales in Q4 totalled US$512 million at an average realized gold price of US$1,933. In 2023, it sold 944,060 ounces of gold at an average price of US$1,946 per ounce, resulting in sales of US$1,934.
What does B2Gold expect in 2024?
In 2024, B2Gold forecasts to produce between 860,000 and 940,000 ounces of the precious metal. This includes roughly 40,000 to 50,000 ounces of production from Calibre Mines. The decrease in gold production is attributed to lower production at the Fekola Complex in Mali, which would delay around 90,000 ounces of gold production this year.
However, B2Gold emphasized gold production would increase to record levels in 2024 as production from the Fekola Regional mine will begin in the next 12 months.
The gold mining company currently pays shareholders an annual dividend of US$0.16 per share, translating to a forward yield of 6.3%. Moreover, these payouts have more than tripled in the last four years, enhancing the yield over time.
B2Gold reported an operating cash flow of US$191 million in Q3 and spent US$83 million on capital expenditures, indicating a free cash flow of US$108 million. Comparatively, it paid shareholders US$45 million in total dividends in Q3, which means its payout ratio is less than 50%, which is easily sustainable even if gold prices move lower.
What is the target price for B2Gold stock?
B2Gold is focused on maintaining a strong cash position and continues to support its dividend payment by investing in organic growth and accretive acquisitions. Priced at 8.3 times forward earnings, B2Gold is quite cheap and trades at a discount of 80% to consensus price target estimates.
