Mandalay Resources Corporation ("Mandalay" or the "Company") (TSX:
MND, OTCQB: MNDJF) is pleased to announce its financial results for
the quarter ended June 30, 2022.
The Company’s condensed and consolidated interim
financial results for the quarter ended June 30, 2022, 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 2022
Highlights:
- Strengthened balance sheet – an improved net cash position with
$47.9 million of cash on hand and $41.5 million in total
interest-bearing debt outstanding;
- Consolidated quarterly revenue of $50.1 million;
- $16.1 million in net cash flow from operating activities and
$7.5 million free cash flow1;
- Consolidated quarterly adjusted EBITDA1 of $20.3 million;
- Adjusted net income1 of $5.4 million ($0.06 or C$0.07 per
share); and
- Consolidated net income of $2.7 million ($0.03 or C$0.04 per
share).
Dominic Duffy, President and CEO of Mandalay,
commented:
“Mandalay is pleased with another steady
financial quarter in which we generated $7.5 million in free cash
flow allowing the Company to further strengthen its balance sheet
with an improved net cash position as compared to Q1 2022. We did
this in a quarter that had several operational issues resulting in
lower than expected production, exhibiting the stability of our
financial performance. With forecast production improvements over
the remainder of the year, we expect an even stronger cash position
by the start of 2023. Reaching a net debt free position was one of
the major goals of the Company at the onset of our turnaround over
three years ago and I am pleased that we have achieved and exceeded
that this year.
“During the quarter the Company generated $50.1
million in revenue and $20.3 million in adjusted EBITDA – a margin
of 41%. Mandalay earned $16.1 million in net cash flow from
operating activities leading to adjusted net income of $5.4 million
($0.06 or C$0.07 per share) during the second quarter.
“Our consolidated cash and all-in sustaining
costs per saleable gold equivalent ounce during Q2 2022 was $1,020
and $1,399, respectively, an increase of 6% and 4% as compared to
the $960 and $1,342 during the same period last year. The main
driver behind this was the decrease in production rates at Björkdal
due to lower throughput levels, feed grades and recoveries at the
processing plant.
_________________________________
1 Adjusted EBITDA, adjusted net income and free
cash flow are not standardized financial measures under IFRS and
might not be comparable to similar financial measures disclosed by
other issuers. Refer to “Non-IFRS Measures” at the end of this
press release for further information.
“Costerfield continued its remarkable
performance with $32.4 million in revenue and $19.2 million in
adjusted EBITDA. This ongoing operating margin performance reflects
the continuous high-grade feed and the relatively fixed cost nature
of the operation. During Q2 2022, Costerfield processed grades of
11.0 g/t gold and 2.6% antimony and also improved its gold recovery
rate of 93.0% against the 92.6% achieved during Q1 2021.
“Björkdal generated stable production and sales
with $17.7 million and $2.4 million in revenue and adjusted EBITDA,
respectively, in Q2 2022. The underground ramp up continued as we
mined approximately 276,000 tonnes; on pace to exceed our 2021
result of 1.1 million tonnes from the underground. For Q3 2022,
mining activities will focus on areas of high confidence as we look
to lift the grade during the second half of the year.
“The first half of year demonstrated the ongoing
strength of our operations and how the Company is well-positioned
to build upon its sound financial state. Mandalay is maintaining
its 2022 production and cost guidance and looks forward to
sustainably generating value for all of our stakeholders.”
Second Quarter 2022 Financial Summary
The following table summarizes the Company’s
financial results for the three months and six months ended June
30, 2022, and 2021:
|
Three
months ended June
30, 2022 |
Three
months ended June
30, 2021 |
Six
months ended June
30, 2022 |
Six
months ended June
30, 2021 |
$’000 |
$’000 |
$’000 |
$’000 |
Revenue |
50,116 |
51,352 |
104,270 |
103,925 |
Cost of sales |
28,526 |
27,135 |
50,242 |
52,549 |
Adjusted EBITDA (1) |
20,329 |
23,135 |
51,634 |
49,197 |
Income from mine ops before depreciation, depletion |
21,590 |
24,217 |
54,028 |
51,376 |
Adjusted net income (1) |
5,370 |
11,475 |
19,257 |
17,121 |
Consolidated net income |
2,703 |
4,790 |
13,188 |
30,290 |
Capital expenditure |
10,932 |
13,578 |
20,562 |
25,604 |
Total assets |
306,138 |
310,841 |
306,138 |
310,841 |
Total liabilities |
131,528 |
151,852 |
131,528 |
151,852 |
Adjusted net income per share (1) |
0.06 |
0.13 |
0.21 |
0.19 |
Consolidated net income per share |
0.03 |
0.05 |
0.14 |
0.33 |
- Adjusted EBITDA, adjusted net
income and adjusted net income per share are non-IFRS measures,
defined at the end of this press release “Non-IFRS Measures”.
In Q2 2022, Mandalay generated consolidated
revenue of $50.1 million, 2% lower than in the second quarter of
2021. This decrease was mainly due to lower ounces sold at Björkdal
and Cerro Bayo’s production in last year’s quarter. The Company’s
realized gold price in the second quarter of 2022 increased by 6%
compared to the second quarter of 2021, and the realized price of
antimony increased by 13%. In Q2 2022, Mandalay sold 1,334 fewer
gold equivalent ounces than in Q2 2021.
Consolidated cash cost per ounce of $1,020 was
higher in the second quarter of 2022 compared to $960 in the second
quarter of 2021. Cost of sales during the second quarter of 2022
versus the second quarter of 2021 were $5.7 million higher at
Costerfield and $0.7 million lower at Björkdal. Consolidated
general and administrative costs were $0.2 million higher compared
to the prior year quarter.
Mandalay generated adjusted EBITDA of $20.3
million in the second quarter of 2022, 12% lower compared to the
Company’s adjusted EBITDA of $23.1 million in the year ago quarter.
Adjusted net income was $5.4 million in the second quarter of 2022,
which excludes the $4.4 million of unrealized gain on financial
instruments and $7.1 million of revision of reclamation liability,
compared to an adjusted net income of $11.5 million in the second
quarter of 2021. Consolidated net income was $2.7 million for the
second quarter of 2022, versus $4.8 million in the second quarter
of 2021. Mandalay ended the second quarter of 2022 with $47.9
million in cash and cash equivalents.
Second Quarter 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, 2022, and 2021:
|
Three
months ended June 30,
2022 |
Three
months ended June 30,
2021 |
Six
months ended June 30,
2022 |
Six
months ended June 30,
2021 |
$’000 |
$’000 |
$’000 |
$’000 |
Costerfield |
|
Gold produced (oz) |
11,079 |
9,959 |
23,276 |
21,041 |
Antimony produced (t) |
523 |
858 |
1,206 |
1,690 |
Gold equivalent produced (oz) |
14,989 |
14,818 |
32,236 |
30,276 |
Cash cost(1) per oz gold eq. produced ($) |
646 |
652 |
608 |
646 |
All-in sustaining cost(1) per oz gold eq. produced ($) |
916 |
1,009 |
840 |
972 |
Capital development |
892 |
3,108 |
1,638 |
6,086 |
Property, plant and equipment purchases |
2,216 |
1,029 |
4,028 |
1,930 |
Capitalized exploration |
1,487 |
1,583 |
3,174 |
2,807 |
Björkdal |
|
Gold produced (oz) |
8,316 |
10,941 |
20,700 |
22,796 |
Cash cost(1) per oz gold produced ($) |
1,696 |
1,338 |
1,391 |
1,259 |
All-in sustaining cost(1) per oz gold produced ($) |
2,120 |
1,766 |
1,729 |
1,647 |
Capital development |
2,361 |
2,727 |
4,822 |
5,120 |
Property, plant and equipment purchases |
2,878 |
4,277 |
4,769 |
8,122 |
Capitalized exploration |
1,066 |
601 |
1,821 |
1,058 |
Cerro Bayo |
|
Gold produced (oz) |
- |
1,807 |
- |
2,531 |
Silver produced (oz) |
- |
87,062 |
- |
130,761 |
Gold equivalent produced (oz) |
- |
3,084 |
- |
4,447 |
Cash cost(1) per oz gold eq. produced ($) |
- |
1,097 |
- |
1,066 |
Consolidated |
|
Gold equivalent produced (oz) |
23,305 |
28,843 |
52,936 |
57,519 |
Cash cost(1) per oz gold eq. produced ($) |
1,020 |
960 |
914 |
922 |
All-in sustaining cost(1) per oz gold eq. produced ($) |
1,399 |
1,342 |
1,232 |
1,284 |
Capital development |
3,253 |
5,835 |
6,460 |
11,206 |
Property, plant and equipment purchases |
5,094 |
5,306 |
8,797 |
10,052 |
Capitalized exploration(2) |
2,585 |
2,437 |
5,305 |
4,346 |
- 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 11,079 ounces of gold and
523 tonnes of antimony for 14,989 gold equivalent ounces in the
second quarter of 2022. Cash and all-in sustaining costs at
Costerfield of $646/oz and $916/oz, respectively, compared to cash
and all-in sustaining costs of $652/oz and $1,009/oz, respectively,
in the second quarter of 2021.
Björkdal gold mine, Skellefteå, Sweden
Björkdal produced 8,316 ounces of gold in the
second quarter of 2022 with cash and all-in sustaining costs of
$1,696/oz and $2,120/oz, respectively, compared to cash and all-in
sustaining costs of $1,338/oz and $1,766/oz, respectively, in the
second quarter of
2021.
Lupin, Nunavut, Canada
Care and maintenance spending at Lupin was less
than $0.1 million during the second quarter of 2022, which was
similar to the second quarter of 2021. Reclamation spending was
$3.3 million during the second quarter of 2022 compared to $0.8
million during the second quarter of 2021. Lupin is currently in
the process of final closure and reclamation activities mainly
funded by progressive security reductions held by the Crown
Indigenous Relations and Northern Affairs Canada.
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. For the year ended December 31, 2021, Mandalay sold
678,794 shares of Aftermath Silver at an average price of C$0.57
per share. The Company did not sell any shares in the second
quarter of 2022. 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.
The Company completed the sale of Challacollo to
Aftermath on August 10, 2022.
La Quebrada, Chile
No work was carried out on the La Quebrada
development property during Q2 2022.
Conference Call
Mandalay’s management will be hosting a
conference call for investors and analysts on August 11, 2022, 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 |
Conference ID: |
13731674 |
A replay of the conference call will be
available until 11:59 PM (Toronto time), August 25,
2022, and can be accessed using the following dial-in
number:
Encore Toll Free Dial-in Number: |
877 660 6853 |
Encore ID: |
13731674 |
About Mandalay Resources Corporation:
Mandalay Resources is a Canadian-based natural
resource company with producing assets in Australia (Costerfield
gold-antimony mine) and Sweden (Björkdal gold mine). The Company is
focused on growing its production and reducing costs to generate
significant positive cashflow. Mandalay is committed to operating
safely and in an environmentally responsible manner, while
developing a high level of community and employee engagement.
Mandalay’s mission is to create shareholder
value through the profitable operation and continuing the regional
exploration program, at both its Costerfield and Björkdal mines.
Currently, the Company’s main objectives are to continue mining the
high-grade Youle vein at Costerfield, bring online the deeper
Shepherd veins, both of which will continue to supply high-grade
ore to the processing plant, and to extend Youle Mineral Reserves.
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.
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 2022. 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, 2022, 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 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 NguyenDirection, Business Valuations and Investor
RelationsContact: (647) 260-1566 ext. 1
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