Mandalay Resources Corporation ("Mandalay" or the "Company") (TSX:
MND, OTCQB: MNDJF) today announced its financial results for the
quarter ended June 30, 2020.
The Company’s unaudited condensed and
consolidated interim financial results for the quarter ended June
30, 2020, 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.
For the second quarter of 2020, the Company
generated revenue of $42.3 million, adjusted EBITDA of $21.3
million, and adjusted net income of $7.6 million, or $0.08 income
per share.
Commenting on the results, Dominic Duffy,
President and CEO of Mandalay, noted, “Mandalay’s strong second
quarter financial performance was driven by another all-time record
in quarterly adjusted EBITDA at Costerfield of $15.4 million,
surpassing the $13.9 million set last quarter. The Company’s
excellent consolidated financial performance was the result of
another excellent operational quarter at Costerfield and improving
production from Björkdal, coupled with a rise in gold prices. This
helped generate a consolidated $21.3 million in adjusted EBITDA
during the quarter, bringing the year to date total to $42.2
million – more than four times the amount of $9.4 million recorded
during the first half of 2019. Our consolidated cash costs for the
quarter were $904 per saleable gold equivalent ounce produced as
compared to the previous year quarter result of $1,130. This
improved performance led to a $0.08 adjusted net income per share
for the quarter, the highest level since the second quarter of
2016, versus an adjusted net loss per share of $0.04 in the second
quarter of 2019.”
Mr. Duffy added, “At Costerfield, the second
quarter of 2020 saw another quarter of high production with
averaged processed grades of 11.2 g/t gold and 4.2% antimony. The
grades were slightly lower than in the previous quarter due to the
development drives in Youle continuing further than we had expected
moving into lower grade economic extremities of the ore body. That
said, the high production rate coupled with the higher gold prices
resulted in a record quarterly revenue of $22.9 million, a 12%
improvement relative to the previous quarter, and an adjusted
EBITDA margin of 67% during the quarter. Going forward, we expect
these grades to remain constant for the third quarter and begin to
lift going into the fourth quarter and 2021 as stoping is ramped up
in the Youle vein.”
Mr. Duffy continued, “Björkdal delivered another
steady quarter of gold production with 11,250 ounces, an
improvement from the previous quarter, which led to $19.5 million
in revenue and $7.2 million in adjusted EBITDA for the second
quarter of 2020. With May and June being the best two production
months of the year to June, we expect Björkdal to improve
operationally and financially in the coming quarters as we develop
the higher-grade lower levels of Aurora and benefit from the
improved haulage rates we are now obtaining from the underground
workings.”
Mr. Duffy continued, “The Company’s cash
position of $20.9 million at the end of the second quarter was
similar to the end of the first quarter, however during the second
quarter we had to outlay approximately $5.0 million in net
refinancing costs after drawdown from the syndication as part of
the final repayment of the Gold Bonds. Also, the second quarter end
cash balance excluded a $3.4 million receipt relating to a delayed
shipment at Costerfield, received at the start of July, which would
usually have been received in the June month. We do not foresee any
delays in these shipments going forward.”
Mr. Duffy concluded, “We are excited about the
results obtained over the first half of 2020, demonstrating a
significant improvement in Mandalay’s overall performance and
continue to be excited about the future growth still to come for
this Company. The stable financial position of the Company now
allows for continued exploration as we look to continue growing the
Company organically.”
Second Quarter 2020 Financial SummaryThe
following table summarizes the Company’s financial results for the
three months and six months ended June 30, 2020 and 2019:
|
Three monthsended June
30, 2020 |
Three monthsended June
30, 2019 |
Six monthsended June
30, 2020 |
Six monthsended June
30, 2019 |
|
$’000 |
$’000 |
$’000 |
$’000 |
Revenue |
42,335 |
|
26,344 |
|
83,901 |
|
56,260 |
|
Cost of sales |
19,734 |
|
20,751 |
|
38,566 |
|
44,145 |
|
Adjusted EBITDA (1) |
21,271 |
|
4,105 |
|
42,174 |
|
9,352 |
|
Income from mine ops before depreciation, depletion |
22,601 |
|
5,593 |
|
45,335 |
|
12,115 |
|
Adjusted net income (loss) (1) |
7,632 |
|
(3,926) |
|
12,818 |
|
(4,385) |
|
Consolidated net loss |
(3,014) |
|
(9,750) |
|
(7,546) |
|
(11,085) |
|
Capital expenditure |
(10,566) |
|
(10,238) |
|
(20,603) |
|
(17,650) |
|
Total assets |
260,298 |
|
255,506 |
|
260,298 |
|
255,506 |
|
Total liabilities |
156,523 |
|
135,609 |
|
156,523 |
|
135,609 |
|
Adjusted net income (loss) per share (1) |
0.08 |
|
(0.04) |
|
0.14 |
|
(0.06) |
|
Consolidated net loss per share (2) |
(0.03) |
|
(0.11) |
|
(0.08) |
|
(0.16) |
|
1Adjusted EBITDA, adjusted net income (loss)
before special items and adjusted net income (loss) per share are
non-IFRS measures, defined at the end of this press release
“Non-IFRS Measures”.2As a result of share consolidation on July 2,
2019, the Company has restated its number of common shares and the
income (loss) per share for all periods presented.
In the second quarter of 2020, Mandalay sold
4,922 more gold equivalent ounces than in the second quarter of
2019. The Company’s realized gold price increased by 30% as
compared to the second quarter of 2019 and the realized price of
antimony decreased by 15%. The net effect is that Mandalay’s
revenue of $42.3 million in the second quarter of 2020 was 61%
above the second quarter of 2019.
Cash cost per ounce of $904 decreased by 20% in
the second quarter of 2020 compared to the prior year quarter,
mainly due higher production and lower cost of sales. Cost of sales
during the second quarter of 2020 versus the second quarter of 2019
were $1.7 million lower at Costerfield and $0.7 million higher at
Björkdal. Consolidated general and administrative costs were $0.2
million higher as compared to the prior year quarter.
Mandalay generated adjusted EBITDA of $21.3
million in the second quarter of 2020, versus adjusted EBITDA of
$4.1 million in the second quarter of 2019. Adjusted net income was
$7.6 million in the second quarter of 2020, which excludes the
$15.9 million fair value loss related to the gold hedges associated
with the Syndicated Facility, $5.8 million gain for reversal of
reclamation liability at Cerro Bayo and $0.5 million in care and
maintenance costs, versus an adjusted net loss of $3.9 million in
the second quarter of 2019. Consolidated net loss was $3.0 million
for the second quarter of 2020, versus a loss of $9.8 million in
the second quarter of 2019.
Mandalay ended the second quarter of 2020 with
$20.9 million in cash and cash equivalents.
Second Quarter 2020 Operational SummaryThe
table below summarizes the Company’s capital expenditures and
operational unit costs for the three months and six months ended
June 30, 2020 and 2019:
|
|
Three monthsended June 30,
2020 |
Three monthsended June 30,
2019 |
Six monthsended June 30,
2020 |
Six monthsended June 30,
2019 |
$’000 |
$’000 |
$’000 |
$’000 |
Björkdal |
|
|
|
|
|
|
Gold produced (oz) |
11,250 |
14,243 |
22,000 |
28,628 |
|
Cash cost (1) per oz gold produced ($) |
1,078 |
818 |
1,065 |
870 |
|
All-in sustaining cost (1) per oz gold produced ($) |
1,500 |
1,168 |
1,490 |
1,138 |
|
Capital development |
2,268 |
2,110 |
4,479 |
3,838 |
|
Property, plant and equipment purchases |
2,452 |
2,842 |
4,779 |
3,788 |
|
Capitalized exploration |
338 |
189 |
984 |
294 |
Costerfield |
|
|
|
|
|
|
Gold produced (oz) |
10,353 |
3,301 |
20,973 |
7,406 |
|
Antimony produced (t) |
946 |
371 |
2,054 |
946 |
|
Gold equivalent produced (oz) |
13,502 |
5,257 |
28,429 |
12,812 |
|
Cash cost (1) per oz gold eq. produced ($) |
662 |
1,541 |
604 |
1,270 |
|
All-in sustaining cost (1) per oz gold eq. produced ($) |
1,025 |
2,441 |
935 |
1,996 |
|
Capital development |
3,481 |
3,314 |
6,677 |
6,455 |
|
Property, plant and equipment purchases |
716 |
1,312 |
1,497 |
2,552 |
|
Capitalized exploration |
1,335 |
459 |
2,067 |
529 |
Consolidated |
|
|
|
|
|
|
Gold equivalent produced (oz) |
24,752 |
19,500 |
50,429 |
41,440 |
|
Cash cost* per oz gold eq. produced ($) |
904 |
1,130 |
867 |
1,100 |
|
All-in sustaining cost (1) per oz gold eq. produced ($) |
1,298 |
1,632 |
1,244 |
1,513 |
|
Capital development |
5,749 |
5,424 |
11,156 |
10,293 |
|
Property, plant and equipment purchases |
3,168 |
4,154 |
6,276 |
6,340 |
|
Capitalized exploration (2) |
1,649 |
660 |
3,171 |
1,017 |
1Cash cost and all-in sustaining cost are
non-IFRS measures. See “Non-IFRS Measures” at the end of this press
release.2Includes capitalized exploration relating to other
non-core assets.
Björkdal gold mine, Skellefteå, Sweden
Björkdal produced 11,250 ounces of gold in the
second quarter of 2020 with cash and all-in sustaining cost of
$1,078/oz and $1,500/oz, respectively, compared to cash and all-in
sustaining costs of $818/oz and $1,168/oz, respectively, in the
second quarter of 2019.
Costerfield gold-antimony mine, Victoria, Australia
Costerfield produced 10,353 ounces of gold and
946 tonnes of antimony for 13,502 gold equivalent ounces in the
second quarter of 2020. Due to the higher gold equivalent ounces
produced, cash and all-in sustaining costs at Costerfield decreased
to $662/oz and $1,025/oz, respectively, compared to cash and all-in
sustaining costs of $1,541/oz and $2,441/oz, respectively, in the
second quarter of 2019.
Cerro Bayo silver-gold mine, Patagonia,
Chile
In second quarter of 2020, the Company spent
$0.5 million on care and maintenance expenses at Cerro Bayo
compared to $0.8 million in the second quarter of 2019. 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.
Lupin, Nunavut, Canada
Care and maintenance spending at Lupin was less
than $0.1 million during the second quarter of 2020, which was the
same in the second quarter of 2019. Reclamation spending at Lupin
was $5.1 million during the second quarter of 2020 as compared to
$0.2 million in the second quarter of 2019. In January, Lupin Mines
Incorporated concluded its Public Hearing process for the Final
Closure and Reclamation Plan (“FCRP”) and this FCRP was
subsequently approved on February 28, 2020.
Challacollo, Chile
No key developments occurred during the second
quarter of 2020. For further information regarding the definitive
agreement signed with Aftermath Silver for the sale of Challacollo,
see the Company’s November 12, 2019 press release.
La Quebrada, Chile
The La Quebrada copper-silver project in Chile
remained held for sale throughout the period.
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. More
details are included in the press release dated March 20, 2020.
The Company currently expects this strong
operating performance seen in the second quarter to continue,
however, the COVID-19 pandemic creates uncertainties. At this time,
the Company is maintaining its existing 2020 production guidance
but will continue to closely monitor the situation in both
Australia and Sweden and will make adjustments, if necessary.
Conference Call
Mandalay’s management will be hosting a
conference call for investors and analysts on August 13, 2020 at
8:00 AM (Toronto time).
Analysts and interested investors are invited to
participate using the following dial-in numbers:
Participant Number: |
(201) 689-8341 |
Participant Number (Toll
free): |
(877) 407-8289 |
Conference ID: |
13708185 |
A replay of the conference call will be
available until 11:59 PM (Toronto time), August
27, 2020 and can be accessed using the following dial-in
number:
Encore Toll Free Dial-in Number: |
(877) 660-6853 |
Encore ID: |
13708185 |
For Further Information:
Dominic Duffy President and Chief Executive
Officer Edison NguyenManager, Analytics and Investor Relations
Contact:(647) 260-1566
About Mandalay Resources Corporation:
Mandalay Resources is a Canadian-based natural
resource company with producing assets in Australia and Sweden,
care and maintenance and development projects in Chile. The Company
is focused on growing production at its gold and antimony operation
in Australia, and gold production from its operation in Sweden to
generate near-term cash flow. 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 over the balance of 2020 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
30, 2020, 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, cash cost per saleable ounce
of gold equivalent produced, cash cost per saleable ounce of silver
produced net of gold credits 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 as a measure 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.
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 sites the 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 sites the 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 plus corporate
overhead spending. 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.
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