Mandalay Resources Corporation (“Mandalay” or the “Company”) (TSX:
MND, OTCQB: MNDJF) is pleased to announce its financial results for
the quarter ended March 31, 2022.
The Company’s condensed and consolidated interim
financial results for the quarter ended March 31, 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.
First Quarter 2022
Highlights:
- Net debt free, with $50.4 million of cash on hand and $45.7
million in total interest-bearing debt outstanding;
- Quarterly revenue of $54.2 million, second highest since Q2
2016;
- $28.0 million free cash flow1 and $35.5 million in net cash
flow from operating activities;
- Quarterly adjusted EBITDA1 of $31.3 million, second highest in
Company’s history;
- Adjusted net income1 of $13.9 million ($0.15 or C$0.19 per
share); and
- Consolidated net income of $10.5 million ($0.11 or C$0.14 per
share).
Dominic Duffy, President and CEO of Mandalay,
commented:
“Mandalay is pleased with our Q1 2022 financial
results and particularly in reaching a net debt free position with
$50.4 million of cash on hand and $45.7 million in total debt
remaining. Reaching a net debt free position has been one of the
major goals of the Company and it is a credit to the Mandalay team
the degree to which the Company has been turned around over the
past three years.
“Our consolidated cash and all-in sustaining
costs per saleable gold equivalent ounce during Q1 2022 was $831
and $1,110, respectively, a decrease of 6% and 8% as compared to
the $883 and $1,212 during the same period last year.
“The above translated into a very healthy
quarter as we generated $54.2 million in revenue and $31.3 million
in adjusted EBITDA – a margin of 58%. Mandalay earned $13.9 million
in adjusted net income ($0.15 or C$0.19 per share) during the first
quarter and free cash flow of $28.0 million.
“Costerfield continued with its remarkable
performance as it posted $30.4 million in revenue and $22.9 million
in adjusted EBITDA. This strong mine operating margin reflects the
constant high-grade feed of 13.5 g/t gold and 3.6% antimony from
Youle and the continued relatively fixed cost nature of our
operation. The processing plant recorded a gold recovery rate of
93.8% – its sixth quarter-over-quarter improvement as we continue
to see the improvements related to the CavTube flotation
commissioned in early 2021.
“Björkdal generated stable production and sales
with $23.7 million and $9.4 million in revenue and adjusted EBITDA,
respectively, in Q1 2022. The underground ramp up continued as we
mined approximately 316,000 tonnes; on pace to exceed our 2021
result of 1.1 million tonnes from the underground. The processed
head grade for the quarter was 1.4 g/t gold. In the second half of
2022, we expect grades to increase as we mine the higher-grade
areas within the Aurora zone and continue to focus on dilution
control.
“During this quarter, the Company also repaid
$3.8 million towards our senior credit facility leaving $40.1
million owing.
“Mandalay is tracking well to attain its 2022
production and cost guidance and is pleased to build on our track
record of operational and financial success.”
First Quarter 2022 Financial Summary
The following table summarizes the Company’s
financial results for the three months ended March 31, 2022,
December 31, 2021 and March 31, 2021:
|
Three monthsendedMarch
31,2022 |
Three monthsendedDecember
31,2021 |
Three monthsendedMarch
31,2021 |
$’000 |
$’000 |
$’000 |
Revenue |
54,154 |
72,904 |
52,573 |
Cost of sales |
21,716 |
30,609 |
25,414 |
Adjusted EBITDA (1) |
31,305 |
40,648 |
26,062 |
Income from mine ops before depreciation, depletion |
32,438 |
42,295 |
27,159 |
Adjusted net income (1) |
13,887 |
21,992 |
5,646 |
Consolidated net income |
10,485 |
15,334 |
25,500 |
Capital expenditure |
9,630 |
12,250 |
12,028 |
Total assets |
324,600 |
317,843 |
297,219 |
Total liabilities |
138,776 |
141,156 |
143,434 |
Adjusted net income per share (1) |
0.15 |
0.24 |
0.06 |
Consolidated net income per share |
0.11 |
0.17 |
0.28 |
- 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 Q1 2022, Mandalay generated consolidated
revenue of $54.2 million, 3% higher than in the first quarter of
2021. This increase was due to higher realized gold and antimony
prices. The Company’s realized gold price in the first quarter of
2022 increased by 9% compared to the first quarter of 2021, and the
realized price of antimony increased by 50%. In Q1 2022, Mandalay
sold 1,433 fewer gold equivalent ounces than in Q1 2021.
Consolidated cash cost per ounce of $831 was
lower in the first quarter of 2022 compared to $883 in the first
quarter of 2021. Cost of sales during the first quarter of 2022
versus the first quarter of 2021 were $2.8 million lower at
Costerfield and $0.8 million lower at Björkdal. Consolidated
general and administrative costs were broadly in line between the
quarters.
Mandalay generated adjusted EBITDA of $31.3
million in the first quarter of 2022, 20% higher compared to the
Company’s adjusted EBITDA of $26.1 million in the year ago quarter.
Adjusted net income was $13.9 million in the first quarter of 2022,
which excludes the $3.4 million fair value loss related to the
unrealized loss on financial instruments, compared to an adjusted
net income of $5.6 million in the first quarter of 2021.
Consolidated net income was $10.5 million for the first quarter of
2022, versus $25.5 million in the first quarter of 2021. Mandalay
ended the first quarter of 2022 with $50.4 million in cash and cash
equivalents.
First Quarter Operational Summary
The table below summarizes the Company’s
operations, capital expenditures and operational unit costs for the
three months ended March 31, 2022, December 31, 2021 and March 31,
2021:
|
Three monthsended March
31, 2022 |
Three monthsended December 31,
2021 |
Three monthsended March
31, 2021 |
$’000 |
$’000 |
$’000 |
Costerfield |
Gold produced (oz) |
12,197 |
13,397 |
11,082 |
Antimony produced (t) |
683 |
830 |
832 |
Gold equivalent produced (oz) |
17,247 |
19,507 |
15,458 |
Cash cost (1) per oz gold eq. produced ($) |
576 |
557 |
640 |
All-in sustaining cost (1) per oz gold eq. produced ($) |
775 |
731 |
937 |
Capital development |
746 |
1,415 |
2,978 |
Property, plant and equipment purchases |
1,812 |
723 |
901 |
Capitalized exploration |
1,687 |
1,597 |
1,225 |
Björkdal |
Gold produced (oz) |
12,384 |
11,190 |
11,855 |
Cash cost (1) per oz gold produced ($) |
1,186 |
1,227 |
1,187 |
All-in sustaining cost (1) per oz gold produced ($) |
1,491 |
1,700 |
1,533 |
Capital development |
2,460 |
2,803 |
2,394 |
Property, plant and equipment purchases |
1,890 |
4,512 |
3,845 |
Capitalized exploration |
755 |
753 |
457 |
Cerro Bayo |
Gold produced (oz) |
- |
1,009 |
724 |
Silver produced (oz) |
- |
50,556 |
43,669 |
Gold equivalent produced (oz) |
- |
1,666 |
1,363 |
Cash cost (1) per oz gold eq. produced ($) |
- |
1,476 |
995 |
Consolidated |
Gold equivalent produced (oz) |
29,631 |
32,362 |
28,676 |
Cash cost (1) per oz gold eq. produced ($) |
831 |
836 |
883 |
All-in sustaining cost (1) per oz gold eq. produced ($) |
1,110 |
1,162 |
1,212 |
Capital development |
3,206 |
4,218 |
5,372 |
Property, plant and equipment purchases |
3,702 |
5,449 |
4,746 |
Capitalized exploration (2) |
2,722 |
2,583 |
1,910 |
- 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 12,197 ounces of gold and
683 tonnes of antimony for 17,247 gold equivalent ounces in the
first quarter of 2022. Cash and all-in sustaining costs at
Costerfield of $576/oz and $775/oz, respectively, compared to cash
and all-in sustaining costs of $640/oz and $937/oz, respectively,
in the first quarter of 2021.
Björkdal gold mine, Skellefteå, Sweden
Björkdal produced 12,384 ounces of gold in the
first quarter of 2022 with cash and all-in sustaining costs of
$1,186/oz and $1,491/oz, respectively, compared to cash and all-in
sustaining costs of $1,187/oz and $1,533/oz, respectively, in the
first quarter of 2021.
Lupin, Nunavut, Canada
Care and maintenance spending at Lupin was less
than $0.1 million during the first quarter of 2022, which was the
same as in the first quarter of 2021. Reclamation spending at Lupin
was $0.2 million during the first quarter of 2022 which was same in
the first 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 first 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 sale of Challacollo to Aftermath was
originally scheduled to be completed on April 30, 2022. Closing is
now anticipated to occur during the second quarter of 2022.
La Quebrada, Chile
No work was carried out on the La Quebrada
development property during Q1 2022.
COVID-19
The 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 operations occur or its 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 May 12, 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): |
877 412 4895 |
Participant Number: |
312 281 1211 |
Conference ID: |
13729994 |
A replay of the conference call will be
available until 11:59 PM (Toronto time), May 26,
2022, and can be accessed using the following dial-in
number:
Encore Toll Free Dial-in Number: |
877 660 6853 |
Encore ID: |
13729994 |
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
Officer
Edison NguyenDirection, Business Valuations and
Investor Relations
Contact:(647) 260-1566 ext. 1
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.
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