Is B2Gold a Hidden Gem on the TSX?

Let’s talk about what’s going on with B2Gold (TSX:BTO) stock and whether it’s worth investing in it today.

B2Gold is scaling down Otjikoto operations

The company just announced that it’s letting go of 300 employees in Namibia this year. That’s because their Otjikoto open pit mine, which has been a major part of their gold output since 2015, is winding down. The open pit is pretty much out of ore, and they’re shifting into stockpile processing and underground mining.

That may sound like bad news but the company has been slowly downscaling its operations at the mine for about two years now, so this doesn’t serve as a surprise. And it also means that this is effectively already priced into the stock’s valuation; it doesn’t make it any worse of a buy.

But it is bittersweet, however, because Otjikoto just had a record year. It pumped out nearly 200,000 ounces of gold, accounting for close to one quarter of B2Gold’s total production output. The mine also hit record level profits—thanks to soaring gold prices. This year, Otjikoto is still expected to produce up to 185,000 ounces, even with the scale-down in motion. And the underground portion could keep running until at least 2027, possibly longer if exploration pans out.

B2Gold isn’t just about Namibia, however, they’ve got producing mines in Mali and the Philippines, and they’re developing the Goose project in northern Canada, which is looking promising. They’re also active in Colombia, Finland, and other regions. So while Otjikoto is sunsetting, B2Gold is far from finished.

Outperforming the market on recession fears

The gold mining stock has been a hot buy this year. Year to date, as of Tuesday’s close, shares of B2Gold are up 30%. That’s an even better return than the SPDR Gold Shares (NYSE:GLD) ETF which trades on the NYSE — it’s up just 23% and that ETF is backed by gold.

Gold recently hit an all-time high of $3,245 USD per ounce. It has dipped from those highs of late but it’s still up big this year as investors have been growing concerned about the stock market due to the risk related to tariffs and trade wars involving the U.S. and China.

Top banks have been heightening their expectations for a possible recession this year due to these headwinds, and as a result, investors have been switching gears, moving money into safer options than stocks, such as gold. And that trend could continue as companies adjust their earnings expectations in the weeks and months ahead due to tariffs. If investor sentiment continues to sour, a full-blown bear market may take place.

B2Gold has been one of the best stocks in Canada this year in what has been a tough year for the markets. The S&P/TSX Composite is down 3% since the start of the year. While it may struggle if the market goes into a deeper tailspin this year, the rising value of gold could keep B2Gold stock from falling too far down.

Another reason you may want to consider for the stock is for its dividend, which yields 2.4%.

B2Gold isn’t a risk-free stock, however

B2Gold hasn’t been much of a growth stock over the years; its revenue has only risen from around $1.8 billion in 2021 to $1.9 billion this past year.

And over the past five years, the stock is actually down 28%, so this performance this year is by no means a typical one for B2Gold. It has been underperforming the SPDR Gold Shares ETF by a wide margin, and even the TSX for that matter, has done better.

The stock’s low valuation may be a big reason for its rally this year and with it now trading around its 52-week high, the big question is can it continue rallying. It may be running into resistance at its current levels as it has been around these highs in the past year, only to end up dropping lower afterwards.

B2Gold stock has been doing well but its numbers are going to look smaller in the future as it winds down operations in Namibia. While it has other exploration and development projections ongoing, that may not necessarily result in increased production down the road.

Should you buy B2Gold stock?

There’s some risk with the stock and while it may be involved in gold mining, that doesn’t mean it’s as safe as investing in gold. If that’s what you’re after, and you want a safe way to invest in gold, then you may be better off just investing in the SPDR Gold Shares ETF, which is backed by gold itself.

With a mining stock, you’re taking on much more risk. And while B2Gold has been doing well this year, my concern is that it’s hitting a high, possibly running into some resistance, and it may be due for a decline. It’s been a good buy – but now may be a time worth cashing out if you’ve been holding onto the stock. And while it may still look cheap based on its forward earnings multiple of less than 9, it’s not a stock I’d rush out to buy.