Mandalay Resources Corporation ("Mandalay" or the "Company") (TSX:
MND, OTCQB: MNDJF) is pleased to announce its financial results for
the quarter ended September 30, 2021.
The Company’s condensed and consolidated interim
financial results for the quarter ended September 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.
Third Quarter 2021
Highlights:
- Consolidated quarterly revenue of $52.6 million, second highest
quarterly revenue since Q2 2016;
- Adjusted EBITDA of $25.1 million;
- Adjusted net income of $10.1 million ($0.11 or C$0.14 per
share);
- Consolidated net income of $9.3 million ($0.10 or C$0.13 per
share); and
- Costerfield cash cost of $546 per gold equivalent ounce
produced, lowest since Q1 2016.
Dominic Duffy, President and CEO of Mandalay,
commented:
“Mandalay Resources is pleased to have sustained
the financial momentum generated during the first half of the year.
We delivered another solid third quarter in 2021 – driven by strong
adjusted EBITDA and profits. We are pleased with both sites’ strong
execution against their operational strategy, positioning the
Company to achieve the upper limits of our production guidance and
attaining our cost guidance set for 2021.
“During this quarter, the Company generated
$52.6 million in consolidated revenue and $25.1 million in adjusted
EBITDA, resulting in an EBITDA margin of 48% and year-to-date
adjusted EBITDA of $74.3 million. Mandalay earned $10.1 million or
$0.11 per share in adjusted net income during the third quarter,
marking our seventh consecutive quarter of profitability. Moreover,
due to COVID-19 shipping delays, approximately $5.5 million in
revenue was delayed from the third quarter and will be accounted
for during our fourth quarter results.
“Our operational efficiency was further
reflected by the declining consolidated cash and all-in sustaining
costs per saleable gold equivalent ounce during this quarter to
$825 and $1,135, respectively, from $826 and $1,262 during the same
period last year.
“The Company generated solid net cash flows from
operating activities of $8.2 million in the quarter. However, due
to the aforementioned COVID-19 shipping restrictions, there were
delays in the receipt of funds from Costerfield’s floatation
concentrate, as well as sizable annual payments at Costerfield of
$7.0 million in income tax and $2.7 million in royalties, which
resulted in free cash flow of $1.3 million during the quarter.
“Also during the third quarter, the Company paid
$5.0 million for reclamation costs at Lupin. Reclamation at Lupin
will be ongoing and scheduled to be completed by the end of 2022.
We are anticipating a release of $3.5 million during the fourth
quarter through the progressive security reduction as
part-compensation for work finalized over this year.
“Finally, the Company made another quarterly
repayment of $3.8 million towards our Syndicated Facility, leaving
$47.7 million owing. With quarter end closing cash of $29.8
million, our strong balance sheet gives the Company a significant
amount of flexibility to explore exciting near-term growth
opportunities and we anticipate significant growth in the cash
position at year end 2021.
“With an approximate 30% increase in gold
equivalent produced at Costerfield during Q3 2021 as compared to
the same period last year, the site’s per gold equivalent ounce
metrics improved significantly to a cash and all-in sustaining
costs of $546 and $837 respectively, from $657 and $1,088. This
improved production also resulted in Costerfield generating $27.0
million in revenue and $18.5 million in adjusted EBITDA during Q3
2021.
“Björkdal generated stable production and sales
resulting in $20.5 million and $6.8 million of revenue and adjusted
EBITDA, respectively, during the third quarter of 2021. The
underground mined tonnage ramp up continued as we mined
approximately 796,000 tonnes during the first nine months of 2021,
an approximate 5% increase as compared to the same period last
year.
“Grade performance at Björkdal during this
quarter was lower than previous quarters mainly due to excessive
dilution in key stopes. Dilution control measures have been on
going and we saw positive results in September. We anticipate
further grade improvements for the rest of 2021 and beyond as
dilution control measures continue to be implemented. September
results displayed strong improvement as feed grade into the
processing plant averaged 1.5 g/t gold – our highest monthly grade
this year. However, lower than average grade for the full quarter,
coupled with negative exchange rate movements, resulted in higher
cash and all-in sustaining costs of $1,186 and $1,440,
respectively, for the quarter.
Mr. Duffy concluded, “For the remainder of 2021,
we are expecting to see our cash position grow significantly with
the normalization in our payment obligations. We are pleased with
the steps taken to strengthen our balance sheet, which will further
improve with the upcoming sale of Cerro Bayo in the fourth quarter,
and adding financial flexibility and look to continue with the
Company’s growth through the final quarter of 2021 and into 2022.”
Third Quarter 2021 Financial Summary
The following table summarizes the Company’s
financial results for the three months and nine months ended
September 30, 2021, and 2020:
|
Three
months endedSeptember
30, 2021 |
Three
months endedSeptember
30, 2020 |
Nine
months endedSeptember
30, 2021 |
Nine
months endedSeptember
30, 2020 |
$’000 |
$’000 |
$’000 |
$’000 |
Revenue |
52,567 |
49,753 |
156,492 |
133,654 |
Cost of sales |
25,695 |
21,418 |
78,244 |
59,984 |
Adjusted EBITDA (1) |
25,115 |
26,727 |
74,312 |
68,901 |
Income from mine ops before depreciation, depletion |
26,872 |
28,335 |
78,248 |
73,670 |
Adjusted net income (1) |
10,090 |
9,823 |
27,211 |
22,640 |
Consolidated net income (loss) |
9,255 |
635 |
39,545 |
(5,413) |
Capital expenditure |
12,449 |
12,083 |
38,053 |
32,684 |
Total assets |
301,269 |
283,379 |
301,269 |
283,379 |
Total liabilities |
136,561 |
173,281 |
136,561 |
173,281 |
Adjusted net income per share (1) |
0.11 |
0.11 |
0.30 |
0.25 |
Consolidated net income (loss) per share |
0.10 |
0.01 |
0.43 |
(0.06) |
- 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 third quarter of 2021, Mandalay generated
consolidated revenue of $52.6 million, 6% higher than in the third
quarter of 2020. This increase is attributable to Mandalay selling
3,508 more gold equivalent ounces combined in the third quarter of
2021 compared to the third quarter of 2020. The Company’s realized
gold price in the third quarter of 2021 decreased by 4% compared to
the third quarter of 2020, and the realized price of antimony
increased by 84%. Consolidated cash cost per ounce of
$825 was slightly lower in the third quarter of 2021 compared to
$826 in the third quarter of 2020. Cost of sales during the third
quarter of 2021 versus the third quarter of 2020 were $0.7 million
lower at Costerfield and $1.5 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 $25.1
million in the third quarter of 2021, 6% lower compared to the
Company’s adjusted EBITDA of $26.7 million in the year ago quarter.
Adjusted net income was $10.1 million in the third quarter of 2021,
which excludes the $0.6 million fair value loss related to the gold
hedges associated with the Syndicated Facility and $0.2 million
fair value loss related to mark to market adjustment, compared to
an adjusted net income of $9.8 million in the third quarter of
2020. Consolidated net income was $9.3 million for the third
quarter of 2021, versus $0.6 million in the third quarter of 2020.
Mandalay ended the third quarter of 2021 with $29.8 million in cash
and cash equivalents.
Third Quarter 2021 Operational Summary
The table below summarizes the Company’s
operations, capital expenditures and operational unit costs for the
three months and nine months ended September 30, 2021 and 2020:
|
Three months ended
September 30, 2021 |
Three months ended September 30,
2020 |
Nine months ended
September 30, 2021 |
Nine months ended
September 30, 2020 |
$’000 |
$’000 |
$’000 |
$’000 |
Costerfield |
Gold produced (oz) |
13,315 |
11,749 |
34,356 |
32,722 |
Antimony produced (t) |
860 |
991 |
2,550 |
3,045 |
Gold equivalent produced (oz) |
18,946 |
14,620 |
49,222 |
43,049 |
Cash cost (1) per oz gold eq. produced ($) |
546 |
657 |
608 |
622 |
All-in sustaining cost (1) per oz gold eq. produced ($) |
837 |
1,088 |
920 |
987 |
Capital development |
2,925 |
3,956 |
9,011 |
10,632 |
Property, plant and equipment purchases |
1,648 |
1,568 |
3,578 |
3,065 |
Capitalized exploration |
1,536 |
1,241 |
4,343 |
3,308 |
Björkdal |
Gold produced (oz) |
11,250 |
11,044 |
34,046 |
33,044 |
Cash cost (1) per oz gold produced ($) |
1,186 |
1,051 |
1,235 |
1,061 |
All-in sustaining cost (1) per oz gold produced ($) |
1,440 |
1,337 |
1,578 |
1,368 |
Capital development |
2,092 |
2,525 |
7,212 |
7,004 |
Property, plant and equipment purchases |
3,461 |
2,414 |
11,583 |
7,193 |
Capitalized exploration |
566 |
359 |
1,624 |
1,343 |
Cerro Bayo |
Gold produced (oz) |
1,763 |
- |
4,294 |
- |
Silver produced (oz) |
85,279 |
- |
216,040 |
- |
Gold equivalent produced (oz) |
2,925 |
- |
7,372 |
- |
Cash cost (1) per oz gold eq. produced ($) |
1,243 |
- |
1,136 |
- |
All-in sustaining cost (1) per oz gold eq. produced ($) |
1,303 |
- |
1,165 |
- |
Consolidated |
Gold equivalent produced (oz) |
33,121 |
25,664 |
90,640 |
76,093 |
Cash cost(1) per oz gold eq. produced ($) |
825 |
826 |
886 |
812 |
All-in sustaining cost (1) per oz gold eq. produced ($) |
1,135 |
1,262 |
1,230 |
1,219 |
Capital development |
5,017 |
6,481 |
16,223 |
17,636 |
Property, plant and equipment purchases |
5,109 |
3,982 |
15,161 |
10,258 |
Capitalized exploration (2) |
2,323 |
1,620 |
6,669 |
4,790 |
- The Company has restated
consolidated All-in sustaining costs to exclude care and
maintenance expenses in the comparative periods. 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 13,315 ounces of gold and
860 tonnes of antimony for 18,946 gold equivalent ounces in the
third quarter of 2021. Cash and all-in sustaining costs at
Costerfield of $546/oz and $837/oz, respectively, compared to cash
and all-in sustaining costs of $657/oz and $1,088/oz, respectively,
in the third quarter of 2020.
Björkdal gold mine, Skellefteå, Sweden
Björkdal produced 11,250 ounces of gold in the
third quarter of 2021 with cash and all-in sustaining costs of
$1,186/oz and $1,440/oz, respectively, compared to cash and all-in
sustaining costs of $1,051/oz and $1,337/oz, respectively, in the
third quarter of 2020.
Cerro Bayo silver-gold mine, Patagonia,
Chile
In the third quarter of 2021, the Company spent
nil on care and maintenance expenses at Cerro Bayo, compared to
$0.5 million in the third quarter of 2020. Cerro Bayo was subject
to a binding option agreement between the Company and Equus Mining
(“Equus”) pursuant to which Equus has exercised its option to
acquire Cerro Bayo. For further information see the Company’s
October 8, 2019 and October 12, 2021 press releases.
During the third quarter of 2021, Cerro Bayo
produced 1,763 ounces of gold and 85,279 ounces of silver for 2,985
gold equivalent ounces in the third quarter of 2021 at a cash cost
of $1,243/oz.
Lupin, Nunavut, Canada
Care and maintenance spending at Lupin was $0.2
million during the third quarter of 2021, compared to less than
$0.1 million in the third quarter of 2020. Reclamation spending at
Lupin was $5.0 million during the third quarter of 2021 compared to
$0.5 million during the third 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 5, 2021, in satisfaction of a purchase price
instalment. As at September 30, 2021, the Company is holding these
shares 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 Q3 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 November 10, 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): |
800 582 0984 |
Participant Number: |
212 231 2912 |
Conference ID: |
13724968 |
A replay of the conference call will be
available until 11:59 PM (Toronto time), November
24, 2021, and can be accessed using the following dial-in
number:
Encore Toll Free Dial-in Number: |
877 660 6853 |
Encore ID: |
13724968 |
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
Officer
Edison NguyenManager, Analytics and Investor
Relations
Contact: (647) 260-1566 ext. 1
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