Mandalay Resources Corporation ("Mandalay" or the "Company") (TSX:
MND, OTCQB: MNDJF) is pleased to announce its financial results for
the quarter ended June 30, 2021.
The Company’s condensed and consolidated interim
financial results for the quarter ended June 30, 2021, together
with its Management’s Discussion and Analysis (“MD&A”) for the
corresponding period, can be accessed under the Company’s profile
on www.sedar.com and on the Company’s website at
www.mandalayresources.com. All currency references in this press
release are in U.S. dollars except as otherwise indicated.
Second Quarter 2021
Highlights:
- Quarterly revenue of $51.4 million – second highest since Q2
2016;
- Adjusted EBITDA of $23.1 million;
- $12.7 million free cash flow and $26.6 million in net cash flow
from operating activities;
- Adjusted net income of $11.5 million ($0.13 or C$0.15 per
share);
- Consolidated net income of $4.8 million ($0.05 or C$0.06 per
share); and
- Quarter ending cash balance of $39.1 million.
Dominic Duffy, President and CEO of Mandalay,
commented:
“Mandalay Resources is pleased to deliver strong
financial results for the second quarter of 2021, as the Company
continues to execute against our operational strategy and is on
track to attain our 2021 production and cost guidance.
During the second quarter, the Company generated
$12.7 million in free cash flow and ended the quarter with a cash
balance of $39.1 million. As the Company continues to generate
strong free cash flow, the emerging strength of our balance sheet
significantly improves our abilities to fund near-term growth
opportunities. During this quarter, the Company also repaid $3.8
million towards our Syndicated Facility leaving $51.4 million
owing.”
Mr. Duffy continued, “During the quarter the
Company generated $51.4 million in consolidated revenue and $23.1
million in adjusted EBITDA, resulting in an EBITDA margin of 45%,
and a year to date adjusted EBITDA of $49.2 million. Mandalay
earned $11.5 million ($0.13 or C$0.15 per share) in adjusted net
income during the second quarter, marking our sixth consecutive
quarter of profitability.”
Mr. Duffy added, “Our consolidated cash and
all-in sustaining costs per saleable gold equivalent ounce during
the second quarter of 2021 were $960 and $1,342, respectively, an
increase as compared to the $851 and $1,230 during the same period
last year. The main reasons for this were due to foreign exchange
movements, with local currencies strengthening against the U.S.
dollar, a decrease in gold production at Björkdal for the quarter
due to lower grade stoping and increased infill exploration spend
at both sites.”
Mr. Duffy added, “Costerfield posted $23.4
million in revenue and $15.8 million in adjusted EBITDA at a cash
cost and all-in sustaining cost of $652 and $1,009 per oz gold
equivalent produced, respectively.
Exploration so far this year has been a huge
success for Mandalay due to the outstanding results at our newly
discovered high-grade Shepherd structure, which lies beneath our
Youle mine at Costerfield. With $4.3 million spent on exploration
year to date, we expect to exceed our 2021 guidance amount for
exploration spending. The additional capital invested aligns with
our growth strategy as the Company seeks to deliver further value
at Costerfield by extending its life of mine.”
Mr. Duffy continued, “Björkdal generated stable
production and sales resulting in $22.5 million and $6.5 million of
revenue and adjusted EBITDA, respectively, during the second
quarter of 2021. The underground mined tonnage ramp up continued as
we mined approximately 540,000 tonnes during the first half of
2021, an approximate 11% increase as compared to the same period
last year. We are on track to achieve our goal of 1.1 million
tonnes production from the underground.
Grade performance during this quarter was lower
than previous quarters mainly due to the amount of stope production
performed in lower grade areas of the mine. This, along with
negative exchange rate impacts, resulted in higher cash and all-in
sustaining costs of $1,338 and $1,766, respectively, for the
quarter. We expect to see a decrease to these higher unit costs in
the coming quarters as we ramp up production in the lower, higher
grade levels of Aurora.”
Mr. Duffy concluded, “For the rest of 2021, we
expect to improve on this level of operational and financial
performance, while building on our successful exploration
campaigns. At Costerfield, the program will continue with infill
drilling at Shepherd and progressing with deeper drilling at
Cuffley, Augusta and Shepherd. At Björkdal, we will be focused on
the Main, Central and Lake zones to the north east at depth and
extensions of the Aurora zone. At current metal prices and exchange
rates the Company is on schedule to be net debt free by year end
2021.”
Second Quarter 2021 Financial Summary
The following table summarizes the Company’s
financial results for the three months and six months ended June
30, 2021, and 2020:
|
Three monthsendedJune
30,2021 |
Three monthsendedJune
30,2020 |
Six monthsendedJune
30,2021 |
Six monthsendedJune
30,2020 |
$’000 |
$’000 |
$’000 |
$’000 |
Revenue |
51,352 |
42,335 |
103,925 |
83,901 |
Cost of sales |
27,135 |
19,734 |
52,549 |
38,566 |
Adjusted EBITDA (1) |
23,135 |
21,271 |
49,197 |
42,174 |
Income from mine ops before depreciation, depletion |
24,217 |
22,601 |
51,376 |
45,335 |
Adjusted net income (1) |
11,475 |
7,632 |
17,121 |
12,818 |
Consolidated net income (loss) |
4,790 |
(2,439) |
30,290 |
(6,047) |
Capital expenditure |
13,578 |
10,566 |
25,604 |
20,603 |
Total assets |
310,841 |
260,298 |
310,841 |
260,298 |
Total liabilities |
151,852 |
155,024 |
151,852 |
155,024 |
Adjusted net income per share (1) |
0.13 |
0.08 |
0.19 |
0.14 |
Consolidated net income (loss) per share |
0.05 |
(0.03) |
0.33 |
(0.07) |
- Adjusted EBITDA, adjusted net
income (loss) and adjusted net income (loss) per share are non-IFRS
measures, defined at the end of this press release “Non-IFRS
Measures”.
In the second quarter of 2021, Mandalay
generated consolidated revenue of $51.4 million, 21% higher than in
the second quarter of 2021. This increase is attributable to
Mandalay selling 3,199 more gold equivalent ounces combined with
higher realized prices in the second quarter of 2021 compared to
the second quarter of 2020. The Company’s realized gold price in
the second quarter of 2021 increased by 5% compared to the second
quarter of 2020, and the realized price of antimony increased by
120%. Consolidated cash cost per ounce of $960
increased by 13% in the second quarter of 2021 compared to the
second quarter of 2020, mainly due to higher costs of production.
Cost of sales during the second quarter of 2021 versus the second
quarter of 2020 were almost same at Costerfield and $3.7 million
higher at Björkdal. Consolidated general and administrative costs
were $0.2 million lower as compared to the prior year quarter.
Mandalay generated adjusted EBITDA of $23.1
million in the second quarter of 2021, 9% higher compared to the
Company’s adjusted EBITDA of $21.3 million in the year ago quarter.
Adjusted net income was $11.5 million in the second quarter of
2021, which excludes the $6.3 million fair value loss related to
the gold hedges associated with the Syndicated Facility and $0.4
million fair value loss related to mark to market adjustment,
compared to an adjusted net income of $7.6 million in the second
quarter of 2020. Consolidated net income was $4.8 million for the
second quarter of 2021, versus a net loss of $2.4 million in the
second quarter of 2020. Mandalay ended the second quarter of 2021
with $39.1 million in cash and cash equivalents.
Second Quarter 2021 Operational Summary
The table below summarizes the Company’s
operations, capital expenditures and operational unit costs for the
three months and six months ended June 30, 2021 and 2020:
|
Three monthsended June
30, 2021 |
Three monthsended June 30,
2020 |
Six monthsended June 30,
2021 |
Six monthsended June 30,
2020 |
$’000 |
$’000 |
$’000 |
$’000 |
Costerfield |
Gold produced (oz) |
9,959 |
10,353 |
21,041 |
20,973 |
Antimony produced (t) |
858 |
946 |
1,690 |
2,054 |
Gold equivalent produced (oz) |
14,818 |
13,502 |
30,276 |
28,429 |
Cash cost (1) per oz gold eq. produced ($) |
652 |
662 |
646 |
604 |
All-in sustaining cost (1) per oz gold eq. produced ($) |
1,009 |
1,025 |
972 |
935 |
Capital development |
3,108 |
3,481 |
6,086 |
6,677 |
Property, plant and equipment purchases |
1,029 |
716 |
1,930 |
1,497 |
Capitalized exploration |
1,583 |
1,335 |
2,807 |
2,067 |
Björkdal |
Gold produced (oz) |
10,941 |
11,250 |
22,796 |
22,000 |
Cash cost (1) per oz gold produced ($) |
1,338 |
1,078 |
1,259 |
1,065 |
All-in sustaining cost (1) per oz gold produced ($) |
1,766 |
1,352 |
1,647 |
1,383 |
Capital development |
2,727 |
2,268 |
5,120 |
4,479 |
Property, plant and equipment purchases |
4,277 |
2,452 |
8,122 |
4,779 |
Capitalized exploration |
601 |
338 |
1,058 |
984 |
Cerro Bayo |
Gold produced (oz) |
1,807 |
- |
2,531 |
- |
Silver produced (oz) |
87,062 |
- |
130,761 |
- |
Gold equivalent produced (oz) |
3,084 |
- |
4,447 |
- |
Cash cost (1) per oz gold eq. produced ($) |
1,097 |
- |
1,066 |
- |
All-in sustaining cost (1) per oz gold eq. produced ($) |
1,110 |
- |
1,075 |
- |
Consolidated |
Gold equivalent produced (oz) |
28,843 |
24,752 |
57,519 |
50,429 |
Cash cost* per oz gold eq. produced ($) |
960 |
851 |
922 |
805 |
All-in sustaining cost (1) per oz gold eq. produced ($) |
1,342 |
1,230 |
1,284 |
1,244 |
Capital development |
5,835 |
5,749 |
11,206 |
11,156 |
Property, plant and equipment purchases |
5,306 |
3,168 |
10,052 |
6,276 |
Capitalized exploration (2) |
2,437 |
1,649 |
4,346 |
3,171 |
- Cash cost and all-in sustaining
cost are non-IFRS measures. See “Non-IFRS Measures” at the end of
this press release.
- Includes capitalized exploration
relating to other non-core assets.
Costerfield gold-antimony mine, Victoria, Australia
Costerfield produced 9,959 ounces of gold and
858 tonnes of antimony for 14,818 gold equivalent ounces in the
second quarter of 2021. Cash and all-in sustaining costs at
Costerfield of $652/oz and $1,009/oz, respectively, compared to
cash and all-in sustaining costs of $662/oz and $1,025/oz,
respectively, in the second quarter of 2020.
Björkdal gold mine, Skellefteå, Sweden
Björkdal produced 10,941 ounces of gold in the
second quarter of 2021 with cash and all-in sustaining costs of
$1,338/oz and $1,766/oz, respectively, compared to cash and all-in
sustaining costs of $1,078/oz and $1,352/oz, respectively, in the
second quarter of 2020.
Cerro Bayo silver-gold mine, Patagonia,
Chile
In the second quarter of 2021, the Company spent
nil on care and maintenance expenses at Cerro Bayo, compared to
$0.5 million in the second quarter of 2020. Cerro Bayo is currently
subject to a binding option agreement between the Company and Equus
Mining (“Equus”) pursuant to which Equus has an option to acquire
Cerro Bayo. For further information see the Company’s October 8,
2019, press release.
During the second quarter of 2021, Cerro Bayo
produced 1,807 ounces of gold and 87,062 ounces of silver for 3,084
gold equivalent ounces in the second quarter of 2021 at a cash cost
of $1,097/oz.
Lupin, Nunavut, Canada
Care and maintenance spending at Lupin was less
than $0.1 million during the second quarter of 2021, which was the
same as in the second quarter of 2020. Reclamation spending at
Lupin was $0.8 million during the second quarter of 2021 compared
to $5.1 million during the second quarter of 2020. The full closure
of Lupin will continue in the 2021 season funded by ongoing
progressive security reductions held by CIRNA.
Challacollo, Chile
On April 19, 2021, Aftermath Silver Ltd.
(“Aftermath Silver”) paid C$1.5 million in cash and issued
2,054,794 common shares at fair value of C$0.73 per share to the
Company on May 05, 2021, in satisfaction of a purchase price
instalment. As at June 30, 2021, the Company is holding this asset
as held for sale. Further information regarding the definitive
agreement signed with Aftermath Silver for the sale of Challacollo
can be found in the Company’s November 12, 2019, press release.
La Quebrada, Chile
No work was carried out on the La Quebrada
development property during Q2 2021.
COVID-19
The coronavirus (“COVID-19”) pandemic is present
in all countries in which the Company operates, with cases being
reported in Canada, Australia, Sweden and Chile. At this time, the
Company has activated business continuity practices across all
sites. Management will continue to monitor developments across all
jurisdictions and will adjust its planning as necessary.
The Company is not able to estimate the duration
of the pandemic and potential impact on its business if disruptions
or delays in our operations occur or our ability to transfer our
products to market. In addition, a severe prolonged economic
downturn could result in a variety of risks to the business,
including a decreased ability to raise additional capital when
needed on acceptable terms, if at all. As the situation continues
to evolve, the Company will continue to closely monitor operating
conditions in the countries we operate and respond accordingly.
More details are included in the press release dated March 20,
2020, and on the Company’s website.
Conference Call
Mandalay’s management will be hosting a
conference call for investors and analysts on August 12, 2021, at
8:00 AM (Toronto time).
Analysts and interested investors are invited to
participate using the following dial-in numbers:
Participant Number (Toll free): |
(877) 407-8289 |
Participant Number: |
(201) 689-8341 |
Conference ID: |
13722369 |
A replay of the conference call will be
available until 11:59 PM (Toronto time), August 26,
2021, and can be accessed using the following dial-in
number:
Encore Toll Free Dial-in Number: |
(877) 660-6853 |
Encore ID: |
13722369 |
About Mandalay Resources Corporation:
Mandalay Resources is a Canadian-based natural
resource company with producing assets in Australia (Costerfield
gold-antimony mine), Sweden (Björkdal gold mine) and Chile (Cerro
Bayo gold-silver mine). The Company is focused on growing its
production and reducing costs to generate significant positive
cashflow.
Mandalay’s mission is to create shareholder value through the
profitable operation of both its Costerfield and Björkdal mines.
Currently, the Company’s main objective is to continue mining the
high-grade Youle vein at Costerfield, which continues to supply
high-grade ore, and to extend Youle’s Mineral Reserves at depth and
to the south, as well as continuing the regional exploration
program. At Björkdal, the Company will aim to increase production
from the Aurora zone and other higher-grade areas in the coming
years, in order to maximize profit margins from the mine and
continue exploration in near mine and regional.
Forward-Looking Statements
This news release contains "forward-looking
statements" within the meaning of applicable securities laws,
including statements regarding the Company’s anticipated
performance in 2021. Readers are cautioned not to place undue
reliance on forward-looking statements. Actual results and
developments may differ materially from those contemplated by these
statements depending on, among other things, changes in commodity
prices and general market and economic conditions. The factors
identified above are not intended to represent a complete list of
the factors that could affect Mandalay. A description of additional
risks that could result in actual results and developments
differing from those contemplated by forward-looking statements in
this news release can be found under the heading “Risk Factors” in
Mandalay’s annual information form dated March 31, 2021, a copy of
which is available under Mandalay’s profile at www.sedar.com. In
addition, there can be no assurance that any inferred resources
that are discovered as a result of additional drilling will ever be
upgraded to proven or probable reserves. Although Mandalay has
attempted to identify important factors that could cause actual
actions, events or results to differ materially from those
described in forward-looking statements, there may be other factors
that cause actions, events or results not to be as anticipated,
estimated or intended. There can be no assurance that
forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not
place undue reliance on forward-looking statements.
Non-IFRS Measures
This news release may contain references to
adjusted EBITDA, adjusted net income, free cash flow, cash cost per
saleable ounce of gold equivalent produced and all-in sustaining
cost all of which are non-IFRS measures and do not have
standardized meanings under IFRS. Therefore, these measures may not
be comparable to similar measures presented by other issuers.
Management uses adjusted EBITDA and free cash
flow as measures of operating performance to assist in assessing
the Company’s ability to generate liquidity through operating cash
flow to fund future working capital needs and to fund future
capital expenditures, as well as to assist in comparing financial
performance from period to period on a consistent basis. Management
uses adjusted net income in order to facilitate an understanding of
the Company’s financial performance prior to the impact of
non-recurring or special items. The Company believes that these
measures are used by and are useful to investors and other users of
the Company’s financial statements in evaluating the Company’s
operating and cash performance because they allow for analysis of
its financial results without regard to special, non-cash and other
non-core items, which can vary substantially from company to
company and over different periods.
The Company defines adjusted EBITDA as income
from mine operations, net of administration costs, and before
interest, taxes, non-cash charges/(income), intercompany charges
and finance costs. The Company defines adjusted net income as net
income before special items. Special items are items of income and
expense that are presented separately due to their nature and, in
some cases, expected infrequency of the events giving rise to them.
A reconciliation between adjusted EBITDA and adjusted net income,
on the one hand, and consolidated net income, on the other hand, is
included in the MD&A.
The Company defines free cash flow as a measure
of the Corporation’s ability to generate and manage liquidity. It
is calculated starting with the net cash flows from operating
activities (as per IFRS) and then subtracting capital expenditures
and lease payments. Refer to Section 1.2 of MD&A for a
reconciliation between free cash flow and net cash flows from
operating activities.
For Costerfield, saleable equivalent gold ounces
produced is calculated by adding to saleable gold ounces produced,
the saleable antimony tonnes produced times the average antimony
price in the period divided by the average gold price in the
period. The total cash operating cost associated with the
production of these saleable equivalent ounces produced in the
period is then divided by the saleable equivalent gold ounces
produced to yield the cash cost per saleable equivalent ounce
produced. The cash cost excludes royalty expenses. Site all-in
sustaining costs include total cash operating costs, sustaining
mining capital, royalty expense, accretion and depletion.
Sustaining capital reflects the capital required to maintain each
site’s current level of operations. The site’s all-in sustaining
cost per ounce of saleable gold equivalent in a period equals the
all-in sustaining cost divided by the saleable equivalent gold
ounces produced in the period.
For Cerro Bayo, saleable equivalent gold ounces
produced is calculated by adding to saleable gold ounces produced,
the saleable silver ounces produced times the average silver price
in the period divided by the average gold price in the period. The
total cash operating cost associated with the production of these
saleable equivalent ounces produced in the period is then divided
by the saleable equivalent gold ounces produced to yield the cash
cost per saleable equivalent ounce produced. The cash cost excludes
royalty expenses. Site all-in sustaining costs include total cash
operating costs, sustaining mining capital, royalty expense,
accretion and depletion. Sustaining capital reflects the capital
required to maintain each site’s current level of operations. The
site’s all-in sustaining cost per ounce of saleable gold equivalent
in a period equals the all-in sustaining cost divided by the
saleable equivalent gold ounces produced in the period.
For Björkdal, the total cash operating cost
associated with the production of saleable gold ounces produced in
the period is then divided by the saleable gold ounces produced to
yield the cash cost per saleable gold ounce produced. The cash cost
excludes royalty expenses. Site all-in costs include total cash
operating costs, royalty expense, accretion, depletion,
depreciation and amortization. Site all-in sustaining costs include
total cash operating costs, sustaining mining capital, royalty
expense, accretion and depletion. Sustaining capital reflects the
capital required to maintain each site’s current level of
operations. The site’s all-in sustaining cost per ounce of saleable
gold equivalent in a period equals the all-in sustaining cost
divided by the saleable equivalent gold ounces produced in the
period.
For the Company as a whole, cash cost per
saleable gold equivalent ounce is calculated by summing the gold
equivalent ounces produced by each site and dividing the total by
the sum of cash operating costs at the sites. Consolidated cash
cost excludes royalty and corporate level general and
administrative expenses. This definition was updated in the third
quarter of 2020 to exclude corporate general and administrative
expenses to better align with industry standard. All-in sustaining
cost per saleable ounce gold equivalent in the period equals the
sum of cash costs associated with the production of gold equivalent
ounces at all operating sites in the period plus corporate overhead
expense in the period plus sustaining mining capital, royalty
expense, accretion, depletion, depreciation and amortization,
divided by the total saleable gold equivalent ounces produced in
the period. A reconciliation between cost of sales and cash costs,
and also cash cost to all-in sustaining costs are included in the
MD&A.
For Further Information:
Dominic Duffy President and Chief Executive
OfficerEdison NguyenManager, Analytics and Investor
RelationsContact: (647) 260-1566 ext. 1
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