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With two of the biggest takeovers in the Canadian gold sector in a decade unveiled in the past few months, attention has turned to who might be next. Some analysts think it could be B2Gold Corp.

The Vancouver-based gold miner has posted sharply higher production and earnings in a sector where many companies have stumbled in pursuit of growth. In a little over a decade, the company has turned itself from a tiny explorer to close to a million-ounce-a-year producer. B2Gold has done that primarily by making smart acquisitions and building its own mines, a rarity in an industry that typically outsources construction to an external engineering firm.

“The team has demonstrated a keen eye for identifying attractive assets and then a steady hand at developing and operating the mines,” John Bridges, analyst with JP Morgan, wrote in a recent note to clients.

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In 2014, B2Gold bought what is now considered its marquee asset, the Fekola development project in Mali for US$550-million. The company spent US$450-million on construction and another US$50-million exploring for more gold on site. In 2018, during its first full year in production, Fekola produced 439,000 ounces of gold at an all-in sustaining cost (AISC) of around US$600 an ounce. With bullion trading just under US$1,300 an ounce, Fekola is plenty profitable.

“Fekola is a rare asset,” said analyst Michael Gray with Macquarie Capital Markets Canada Ltd.

With its long reserve life, low cost and production trending towards 500,000 ounces a year, he classifies it as a “super tier one asset," one that would be attractive to any senior gold producers operating in West Africa.

Kinross Gold Corp. is a possible candidate to buy B2Gold, said PI Financial analyst Chris Thompson. Toronto-based Kinross already gets about 20 per cent of its production from West Africa and the management teams of both companies are well acquainted. In 2006, Clive Johnson, B2Gold’s founder and chief executive officer, sold his previous company, Bema Gold Corp., to Kinross for US$3.1-billion.

According to Mr. Thompson, another plausible buyer for B2Gold is Barrick Gold Corp. Thanks to its recent US$6-billion acquisition of Randgold Resources Ltd., Barrick also has heavy exposure to West Africa, including two mines in Mali. In fact, Barrick’s new chief executive officer Mark Bristow knows B2Gold′s Fekoka mine well, having almost bought it once as Randgold’s chief.

“We did look at [Fekola] when it was up for sale,” said Mr. Bristow in a recent interview. “We were a competitor against B2Gold. They outbid us.”

Is it too soon for Barrick to do another big acquisition?

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“This might well be a good time even for a company like the new Barrick to make another acquisition,” Mr. Thompson said. “The sector needs consolidation. There are too many players.”

In an interview in December, B2Gold′s Mr. Johnson said he has no intention of letting the company go for a song. Unlike long-struggling Goldcorp Inc. which recently agreed to an acquisition by Colorado’s Newmont Mining Corp for a slim 17 per cent premium with its stock near a historic low, B2Gold has no reason to cash out on the cheap.

A sale of the company would have to be at a premium, Mr. Johnson said, and he isn’t convinced that can happen much more in the gold industry, with Barrick breaking the mould with its no-premium acquisition of Randgold.

“Is one of the big guys going to come along now in this environment and pay a very large premium? I mean of course I think we’re worth it,” Mr. Johnson said. But, “I don’t think you’re going to see many big companies step up."

One other scenario Mr. Thompson sees that would not necessitate a large premium would be B2Gold combining with Endeavour Mining Corp. in a merger of equals transaction. TSX-listed Endeavour is an intermediate mining company with operations in Côte d’Ivoire and Burkina Faso, and a development project in Mali. Its market capitalization is $2.2-billion compared with B2Gold′s $3.7-billion.

While B2Gold has outperformed many of its peers, it has one glaring weakness in its portfolio: its high-cost and politically unstable Nicaraguan operations. Last year, B2Gold cut its production forecast and increased cost estimates for its La Libertad mine in the country citing national political unrest. Operations at its other Nicaraguan mine, El Limon, were also hampered by illegal road blockades in 2018.

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Mr. Johnson said he will evaluate the best course of action for the Nicaraguan operations over the next couple of months, weighing factors such as the political environment.

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