Intrinsic value of B2Gold Corp. - BTO

Previous Close

$3.27

  Intrinsic Value

$0.50

stock screener

  Rating & Target

str. sell

-85%

  Value-price divergence*

0%

Previous close

$3.27

 
Intrinsic value

$0.50

 
Up/down potential

-85%

 
Rating

str. sell

 
Value-price divergence*

0%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of BTO stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 3.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  23.40
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  923
  941
  963
  988
  1,016
  1,046
  1,080
  1,117
  1,157
  1,200
  1,246
  1,295
  1,348
  1,404
  1,463
  1,526
  1,593
  1,664
  1,739
  1,818
  1,901
  1,989
  2,082
  2,180
  2,284
  2,392
  2,507
  2,627
  2,754
  2,887
  3,028
Variable operating expenses, $m
 
  1,118
  1,143
  1,173
  1,206
  1,242
  1,282
  1,326
  1,373
  1,424
  1,479
  1,537
  1,600
  1,666
  1,737
  1,812
  1,891
  1,975
  2,064
  2,158
  2,257
  2,361
  2,472
  2,588
  2,711
  2,840
  2,976
  3,119
  3,269
  3,427
  3,594
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  743
  1,118
  1,143
  1,173
  1,206
  1,242
  1,282
  1,326
  1,373
  1,424
  1,479
  1,537
  1,600
  1,666
  1,737
  1,812
  1,891
  1,975
  2,064
  2,158
  2,257
  2,361
  2,472
  2,588
  2,711
  2,840
  2,976
  3,119
  3,269
  3,427
  3,594
Operating income, $m
  180
  -176
  -180
  -185
  -190
  -196
  -202
  -209
  -216
  -224
  -233
  -242
  -252
  -262
  -274
  -285
  -298
  -311
  -325
  -340
  -356
  -372
  -389
  -408
  -427
  -447
  -469
  -491
  -515
  -540
  -566
EBITDA, $m
  413
  61
  62
  64
  65
  67
  70
  72
  74
  77
  80
  83
  87
  90
  94
  98
  103
  107
  112
  117
  122
  128
  134
  140
  147
  154
  161
  169
  177
  186
  195
Interest expense (income), $m
  0
  22
  23
  24
  25
  26
  28
  29
  31
  33
  35
  37
  39
  41
  44
  47
  49
  52
  56
  59
  62
  66
  70
  74
  79
  83
  88
  93
  99
  104
  110
Earnings before tax, $m
  93
  -198
  -203
  -209
  -215
  -222
  -230
  -238
  -247
  -257
  -268
  -279
  -291
  -304
  -317
  -332
  -347
  -364
  -381
  -399
  -418
  -438
  -460
  -482
  -506
  -531
  -557
  -585
  -614
  -644
  -677
Tax expense, $m
  41
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  53
  -198
  -203
  -209
  -215
  -222
  -230
  -238
  -247
  -257
  -268
  -279
  -291
  -304
  -317
  -332
  -347
  -364
  -381
  -399
  -418
  -438
  -460
  -482
  -506
  -531
  -557
  -585
  -614
  -644
  -677

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  195
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  3,156
  3,018
  3,087
  3,166
  3,255
  3,354
  3,462
  3,580
  3,708
  3,845
  3,993
  4,151
  4,319
  4,499
  4,689
  4,892
  5,106
  5,333
  5,573
  5,826
  6,094
  6,376
  6,674
  6,988
  7,319
  7,668
  8,035
  8,421
  8,827
  9,255
  9,704
Adjusted assets (=assets-cash), $m
  2,961
  3,018
  3,087
  3,166
  3,255
  3,354
  3,462
  3,580
  3,708
  3,845
  3,993
  4,151
  4,319
  4,499
  4,689
  4,892
  5,106
  5,333
  5,573
  5,826
  6,094
  6,376
  6,674
  6,988
  7,319
  7,668
  8,035
  8,421
  8,827
  9,255
  9,704
Revenue / Adjusted assets
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
  0.312
Average production assets, $m
  2,228
  2,272
  2,324
  2,384
  2,451
  2,525
  2,607
  2,695
  2,791
  2,895
  3,006
  3,125
  3,252
  3,387
  3,530
  3,683
  3,844
  4,015
  4,195
  4,386
  4,588
  4,801
  5,025
  5,261
  5,510
  5,773
  6,049
  6,340
  6,645
  6,967
  7,306
Working capital, $m
  136
  -40
  -41
  -42
  -44
  -45
  -46
  -48
  -50
  -52
  -54
  -56
  -58
  -60
  -63
  -66
  -69
  -72
  -75
  -78
  -82
  -86
  -90
  -94
  -98
  -103
  -108
  -113
  -118
  -124
  -130
Total debt, $m
  658
  661
  689
  720
  756
  796
  839
  886
  937
  992
  1,051
  1,114
  1,182
  1,253
  1,330
  1,411
  1,496
  1,587
  1,683
  1,785
  1,892
  2,005
  2,124
  2,249
  2,382
  2,521
  2,668
  2,822
  2,985
  3,156
  3,336
Total liabilities, $m
  1,204
  1,207
  1,235
  1,266
  1,302
  1,342
  1,385
  1,432
  1,483
  1,538
  1,597
  1,660
  1,728
  1,799
  1,876
  1,957
  2,042
  2,133
  2,229
  2,331
  2,438
  2,551
  2,670
  2,795
  2,928
  3,067
  3,214
  3,368
  3,531
  3,702
  3,882
Total equity, $m
  1,952
  1,811
  1,852
  1,900
  1,953
  2,012
  2,077
  2,148
  2,225
  2,307
  2,396
  2,490
  2,592
  2,699
  2,814
  2,935
  3,064
  3,200
  3,344
  3,496
  3,656
  3,826
  4,005
  4,193
  4,392
  4,601
  4,821
  5,052
  5,296
  5,553
  5,822
Total liabilities and equity, $m
  3,156
  3,018
  3,087
  3,166
  3,255
  3,354
  3,462
  3,580
  3,708
  3,845
  3,993
  4,150
  4,320
  4,498
  4,690
  4,892
  5,106
  5,333
  5,573
  5,827
  6,094
  6,377
  6,675
  6,988
  7,320
  7,668
  8,035
  8,420
  8,827
  9,255
  9,704
Debt-to-equity ratio
  0.337
  0.370
  0.370
  0.380
  0.390
  0.400
  0.400
  0.410
  0.420
  0.430
  0.440
  0.450
  0.460
  0.460
  0.470
  0.480
  0.490
  0.500
  0.500
  0.510
  0.520
  0.520
  0.530
  0.540
  0.540
  0.550
  0.550
  0.560
  0.560
  0.570
  0.570
Adjusted equity ratio
  0.593
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  53
  -198
  -203
  -209
  -215
  -222
  -230
  -238
  -247
  -257
  -268
  -279
  -291
  -304
  -317
  -332
  -347
  -364
  -381
  -399
  -418
  -438
  -460
  -482
  -506
  -531
  -557
  -585
  -614
  -644
  -677
Depreciation, amort., depletion, $m
  233
  237
  242
  248
  255
  263
  272
  281
  291
  302
  313
  326
  339
  353
  368
  384
  400
  418
  437
  457
  478
  500
  523
  548
  574
  601
  630
  660
  692
  726
  761
Funds from operations, $m
  729
  38
  39
  39
  40
  41
  42
  43
  43
  44
  45
  47
  48
  49
  50
  52
  53
  55
  56
  58
  60
  62
  64
  66
  68
  71
  73
  76
  78
  81
  84
Change in working capital, $m
  173
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
Cash from operations, $m
  556
  39
  40
  41
  41
  42
  43
  44
  45
  46
  47
  49
  50
  51
  53
  54
  56
  58
  60
  61
  63
  66
  68
  70
  73
  75
  78
  81
  84
  87
  90
Maintenance CAPEX, $m
  0
  -232
  -237
  -242
  -248
  -255
  -263
  -272
  -281
  -291
  -302
  -313
  -326
  -339
  -353
  -368
  -384
  -400
  -418
  -437
  -457
  -478
  -500
  -523
  -548
  -574
  -601
  -630
  -660
  -692
  -726
New CAPEX, $m
  -524
  -44
  -52
  -60
  -67
  -74
  -82
  -89
  -96
  -104
  -111
  -119
  -127
  -135
  -144
  -152
  -161
  -171
  -181
  -191
  -202
  -213
  -224
  -236
  -249
  -262
  -276
  -291
  -306
  -322
  -339
Cash from investing activities, $m
  -529
  -276
  -289
  -302
  -315
  -329
  -345
  -361
  -377
  -395
  -413
  -432
  -453
  -474
  -497
  -520
  -545
  -571
  -599
  -628
  -659
  -691
  -724
  -759
  -797
  -836
  -877
  -921
  -966
  -1,014
  -1,065
Free cash flow, $m
  27
  -237
  -249
  -261
  -274
  -287
  -301
  -316
  -332
  -348
  -365
  -383
  -402
  -422
  -443
  -466
  -489
  -514
  -539
  -566
  -595
  -625
  -656
  -690
  -724
  -761
  -800
  -840
  -882
  -927
  -974
Issuance/(repayment) of debt, $m
  -33
  22
  28
  32
  36
  39
  43
  47
  51
  55
  59
  63
  67
  72
  76
  81
  86
  91
  96
  101
  107
  113
  119
  126
  132
  139
  147
  154
  163
  171
  180
Issuance/(repurchase) of shares, $m
  114
  233
  245
  256
  269
  281
  295
  309
  324
  340
  356
  374
  392
  411
  432
  453
  476
  500
  525
  551
  579
  608
  638
  670
  704
  740
  777
  816
  858
  901
  946
Cash from financing (excl. dividends), $m  
  55
  255
  273
  288
  305
  320
  338
  356
  375
  395
  415
  437
  459
  483
  508
  534
  562
  591
  621
  652
  686
  721
  757
  796
  836
  879
  924
  970
  1,021
  1,072
  1,126
Total cash flow (excl. dividends), $m
  80
  18
  24
  27
  30
  33
  37
  40
  43
  47
  50
  54
  57
  61
  65
  69
  73
  77
  81
  86
  91
  96
  101
  106
  112
  118
  124
  131
  138
  145
  152
Retained Cash Flow (-), $m
  -191
  -233
  -245
  -256
  -269
  -281
  -295
  -309
  -324
  -340
  -356
  -374
  -392
  -411
  -432
  -453
  -476
  -500
  -525
  -551
  -579
  -608
  -638
  -670
  -704
  -740
  -777
  -816
  -858
  -901
  -946
Prev. year cash balance distribution, $m
 
  176
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  -39
  -221
  -230
  -238
  -248
  -258
  -269
  -281
  -293
  -306
  -320
  -335
  -351
  -367
  -385
  -403
  -423
  -443
  -465
  -488
  -512
  -537
  -564
  -592
  -622
  -653
  -685
  -720
  -756
  -794
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  -38
  -203
  -200
  -196
  -192
  -187
  -182
  -175
  -168
  -161
  -152
  -143
  -133
  -123
  -113
  -102
  -92
  -82
  -72
  -62
  -53
  -45
  -37
  -30
  -24
  -19
  -15
  -11
  -8
  -6
Current shareholders' claim on cash, %
  100
  92.6
  85.5
  78.8
  72.5
  66.6
  61.2
  56.1
  51.3
  46.9
  42.9
  39.1
  35.7
  32.5
  29.6
  27.0
  24.5
  22.3
  20.3
  18.4
  16.7
  15.2
  13.8
  12.5
  11.3
  10.3
  9.3
  8.4
  7.6
  6.9
  6.3

B2Gold Corp. (B2Gold) is a Canada-based gold producer with approximately four operating mines and one mine under construction. The Company has a portfolio of other evaluation and exploration projects in various countries, including Mali, Colombia, Burkina Faso, Finland, Chile and Nicaragua. Its material mineral properties consist of three mines and one mine under construction: Otjikoto mine, an open pit gold mine located approximately 300 kilometers north of Windhoek, the capital of Namibia (Otjikoto Mine); Masbate mine, an open pit gold mine, located near the northern tip of the island of Masbate, over 360 kilometers south-east of Manila (Masbate Gold Project); La Libertad mine, an open pit gold mine located over 110 kilometers due east of Managua and 32 kilometers northeast of Juigalpa, Nicaragua (La Libertad Mine), and Fekola gold project, an open pit gold mine under construction located approximately 40 kilometers south of the city of Kenieba, Mali (Fekola Project).

FINANCIAL RATIOS  of  B2Gold Corp. (BTO)

Valuation Ratios
P/E Ratio 59.5
Price to Sales 3.4
Price to Book 1.6
Price to Tangible Book
Price to Cash Flow 5.7
Price to Free Cash Flow 98.6
Growth Rates
Sales Growth Rate 23.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 33.7%
Cap. Spend. - 3 Yr. Gr. Rate 3.7%
Financial Strength
Quick Ratio 10
Current Ratio 0
LT Debt to Equity 32.7%
Total Debt to Equity 33.7%
Interest Coverage 0
Management Effectiveness
Return On Assets 1.8%
Ret/ On Assets - 3 Yr. Avg. -11.8%
Return On Total Capital 2.1%
Ret/ On T. Cap. - 3 Yr. Avg. -13.7%
Return On Equity 2.9%
Return On Equity - 3 Yr. Avg. -16.8%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 30.8%
Gross Margin - 3 Yr. Avg. 22%
EBITDA Margin 35.3%
EBITDA Margin - 3 Yr. Avg. -32%
Operating Margin 19.5%
Oper. Margin - 3 Yr. Avg. -51.1%
Pre-Tax Margin 10.1%
Pre-Tax Margin - 3 Yr. Avg. -56.8%
Net Profit Margin 5.7%
Net Profit Margin - 3 Yr. Avg. -52.7%
Effective Tax Rate 44.1%
Eff/ Tax Rate - 3 Yr. Avg. 18.1%
Payout Ratio 0%

BTO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BTO stock intrinsic value calculation we used $923 million for the last fiscal year's total revenue generated by B2Gold Corp.. The default revenue input number comes from 2016 income statement of B2Gold Corp.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our BTO stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for BTO is calculated based on our internal credit rating of B2Gold Corp., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of B2Gold Corp..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of BTO stock the variable cost ratio is equal to 118.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for BTO stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for B2Gold Corp..

Corporate tax rate of 27% is the nominal tax rate for B2Gold Corp.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the BTO stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for BTO are equal to 241.3%.

Life of production assets of 9.6 years is the average useful life of capital assets used in B2Gold Corp. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for BTO is equal to -4.3%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1952 million for B2Gold Corp. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 974.922 million for B2Gold Corp. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of B2Gold Corp. at the current share price and the inputted number of shares is $3.2 billion.

RELATED COMPANIES Price Int.Val. Rating
IMG IAMGOLD Corpor 7.80 1.62  str.sell
NGD New Gold Inc. 4.56 1.22  str.sell
ELD Eldorado Gold 2.80 1.48  sell
Financial statements of BTO
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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