Is B2Gold Still Undervalued Despite Its Strong Share Price Rally?

The recent 51% surge in B2Gold's (TSX:BTO) share price has sparked debate about whether the stock remains undervalued. While the rally reflects optimism over gold prices and operational improvements, a closer look at valuation metrics, discounted cash flow (DCF) analysis, and risk-adjusted upside suggests the company is still significantly undervalued-despite its recent gains.

Valuation Metrics: A Mixed Picture

B2Gold's Q3 2025 financial report reveals a P/E ratio of -13.18, a P/B ratio of 1.75, and an EV/EBITDA ratio of 3.15. The negative P/E ratio underscores ongoing losses, but the low P/B and EV/EBITDA ratios suggest the stock trades at a discount to its book value and earnings power. These metrics highlight a paradox: while the company's profitability remains challenged, its asset base and operational resilience justify a reevaluation of its intrinsic worth.

DCF Analysis: A Case for Significant Undervaluation

Discounted cash flow models provide a compelling argument for undervaluation. Using a two-stage Free Cash Flow to Equity (FCFE) approach, analysts project B2Gold's intrinsic value to range between $44.26 and $66.53 per share. At the current price of $6.47 CAD (as of November 2025), the stock appears to trade at an 85.5% to 89.2% discount to its estimated fair value.

The DCF analysis hinges on projected free cash flow (FCF) recovery. While B2Gold reported negative FCF of $248 million in the latest twelve months, analysts anticipate a sharp turnaround, with FCF reaching $1.86 billion by 2029 and $3.1 billion by 2035. These forecasts assume a 4% terminal growth rate-a conservative assumption aligned with long-term inflation expectations-and a discount rate of approximately 11%, reflecting the company's operational and geopolitical risks.

Fair Value Estimates and Risk-Adjusted Upside

Beyond DCF, other valuation models reinforce the case for undervaluation. Alpha Spread's analysis estimates a fair value of 16.38 CAD per share, implying a 60% undervaluation according to Alpha Spread, while Simply Wall St's $44.26 intrinsic value suggests an 85.5% discount as reported by Webull. Even more conservative estimates, such as $7.07 and $8.60 per share, indicate the stock is either slightly undervalued or trading at a 24.6% discount according to Yahoo Finance.

However, upside potential must be weighed against risks. B2Gold's operations in politically sensitive regions, particularly Mali (which accounts for 51.6% of its H1 2025 gold revenue), expose it to regulatory and geopolitical volatility. Additionally, the Goose Mine in Nunavut, a key growth project, faces production delays and revised guidance. Despite these challenges, the company's $367 million in cash reserves and strong Q3 2025 performance-254,369 ounces of gold produced at all-in sustaining costs of $1,479 per ounce- underscore its operational resilience.

Probability of Financial Distress and Risk Mitigation

B2Gold's probability of financial distress is currently under 14%, a low figure that suggests the company is unlikely to face insolvency. This stability, combined with its strong cash position, provides a buffer against short-term risks. However, investors must remain cautious about long-term geopolitical tensions and regulatory hurdles, which could delay capital expenditures or disrupt production.

Conclusion: A Compelling Case for Undervaluation

Despite its 51% share price rally, B2Gold remains significantly undervalued when assessed through DCF analysis, fair value estimates, and risk-adjusted metrics. The company's projected FCF recovery, strong operational performance, and low probability of financial distress justify a higher valuation. While geopolitical and regulatory risks persist, they appear to be priced into the stock, offering a margin of safety for investors willing to navigate the uncertainties. For those with a long-term horizon, B2Gold presents an attractive opportunity to capitalize on its turnaround potential.