Mandalay Resources Corporation ("Mandalay" or the "Company") (TSX:
MND, OTCQB: MNDJF) is pleased to announce its financial results for
the third quarter ended September 30, 2022.
The Company’s condensed and consolidated interim
financial results for the quarter ended September 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.
Third Quarter 2022
Highlights:
- Strong balance sheet with a sustained net cash position, $42.6
million of cash on hand and $36.7 million in total interest-bearing
debt outstanding;
- Consolidated quarterly revenue of $46.0 million;
- $7.5 million in net cash flow from operating activities;
- Consolidated quarterly adjusted EBITDA1 of $19.4 million;
- Adjusted net income1 of $2.5 million ($0.03 or C$0.04 per
share); and
- Consolidated net income of $9.3 million ($0.10 or C$0.13 per
share).
Dominic Duffy, President and CEO of Mandalay,
commented:
“Mandalay delivered healthy financial results
during the third quarter of 2022 as it earned $46.0 million in
revenue and $19.4 million in adjusted EBITDA1 – a margin of 42%.
The Company generated $7.5 million in net cash flow from operating
activities leading to adjusted net income1 of $2.5 million ($0.03
or C$0.04 per share). This marks our ninth consecutive quarter of
profitability and was achieved despite net cash flow being impacted
by Costerfield’s final 2021 tax payment of $11.5 million during the
quarter.
“The Company has worked hard on controlling our
costs while maintaining our focus of strategically investing in
exploration programs at both sites to best capitalize on long-term
growth opportunities. From a cash and all-in sustaining cost
perspective, both per ounce cost metrics remained relatively in
line as compared to the same period last year. For the third
quarter of 2022, on a consolidated basis our cash cost1 per ounce
of saleable gold equivalent produced was $846, while our all-in
sustaining cost1 was $1,111. Year to date, we have been able to
invest more than $7.0 million in our exploration programs and are
on pace to record our highest ever annual exploration expenditure
amount.
“We are pleased to be able to continue momentum
in achieving our long-term growth and value-creation objectives and
in parallel, strengthening our balance sheet while sustaining our
net cash position. As of the end of the third quarter of 2022, the
Company had $42.6 million of cash on hand and $36.7 million in
total interest-bearing debt outstanding. Year to date, Mandalay has
generated $34.6 million in free cash flow2 and we expect our net
cash position to grow by year end as we maintain our operational
and capital cost controls.
“Costerfield continued its strong performance
with $28.2 million in revenue and $15.3 million in adjusted
EBITDA2. During the third quarter of 2022, Costerfield processed
grades of 11.9 g/t gold and 2.7% antimony and also improved its
gold and antimony recovery rates as compared to the previous
quarter to 94.3% and 93.2%, respectively. This ongoing performance
is providing consistently strong margins owing to the quality of
the Youle and Shepherd deposits.
“Björkdal generated stable sales of $17.9
million and $6.0 million in revenue and adjusted EBITDA2,
respectively, during the third quarter, which was broadly in line
with the previous quarter’s figures. For the remainder of the year,
we expect production to increase as a result of improved grades as
we continue mining the lower levels of Aurora and initiate
development in several higher-grade areas of the Eastern Central
zone.
“For the first nine months of the year, Mandalay
has been able to build upon its track record of success over the
past two years and demonstrate the strength of our operations. The
Company is well-positioned to build upon its sound financial state
and looks forward to generating stronger positive free cash
flow.”
Third Quarter 2022 Financial Summary
The following table summarizes the Company’s
financial results for the three months and nine months ended
September 30, 2022, and 2021:
|
Three
monthsendedSeptember
30,2022 |
Three
monthsendedSeptember
30,2021 |
Nine monthsendedSeptember
30,2022 |
Nine monthsendedSeptember
30,2021 |
$’000 |
$’000 |
$’000 |
$’000 |
Revenue |
46,048 |
52,567 |
150,318 |
156,492 |
Cost of sales |
24,690 |
25,695 |
74,932 |
78,244 |
Adjusted EBITDA(1) |
19,408 |
25,115 |
71,042 |
74,312 |
Income from mine ops before depreciation, depletion |
21,358 |
26,872 |
75,386 |
78,248 |
Adjusted net income(1) |
2,512 |
10,090 |
21,769 |
27,211 |
Consolidated net income |
9,275 |
9,255 |
22,463 |
39,545 |
Capital expenditure |
9,094 |
12,449 |
29,658 |
38,053 |
Total assets |
278,359 |
301,269 |
278,359 |
301,269 |
Total liabilities |
105,038 |
136,561 |
105,038 |
136,561 |
Adjusted net income per share(1) |
0.03 |
0.11 |
0.24 |
0.30 |
Consolidated net income per share |
0.10 |
0.10 |
0.24 |
0.43 |
- 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 Q3 2022, Mandalay generated consolidated
revenue of $46.0 million, 13% lower than the $52.6 million in the
third quarter of 2021. This decrease was mainly due lower ounces
sold at Björkdal and the absence of revenue from Cerro Bayo. The
Company’s realized gold price in the third quarter of 2022
decreased by 6% compared to the third quarter of 2021, and the
realized price of antimony increased by 30%. In Q3 2022, Mandalay
sold 2,958 fewer gold equivalent ounces than in Q3 2021.
Consolidated cash cost3 per ounce of $846 was
higher in the third quarter of 2022 compared to $825 in the third
quarter of 2021. Cost of sales during the third quarter of 2022
versus the third quarter of 2021 were $4.4 million higher at
Costerfield and $1.9 million lower at Björkdal. Consolidated
general and administrative costs were $0.2 million higher compared
to the prior year quarter.
Mandalay generated adjusted EBITDA3 of $19.4
million in the third quarter of 2022, 23% lower compared to the
Company’s adjusted EBITDA3 of $25.1 million in the year ago
quarter. Adjusted net income3 was $2.5 million in the third quarter
of 2022, which excludes the $4.9 million of unrealized gain on
financial instruments and $1.8 million of gain on sale of
subsidiary, compared to an adjusted net income3 of $10.1 million in
the third quarter of 2021. During the quarter, the Company also
paid Costerfield’s final 2021 tax payment of $11.5 million. This
was a one-off large tax payment as the Company only commenced
paying tax instalments part-way through the 2021 year.
Consolidated net income was $9.3 million for the
third quarter of 2022, which was similar to comparative period in
2021. Mandalay ended the third quarter of 2022 with $42.6 million
in cash and cash equivalents.
Third Quarter 2022 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, 2022, and
2021:
|
Three
monthsendedSeptember 30,
2022 |
Three
monthsendedSeptember 30,
2021 |
Nine monthsendedSeptember
30, 2022 |
Nine monthsendedSeptember
30, 2021 |
$’000 |
$’000 |
$’000 |
$’000 |
Costerfield |
|
Gold produced (oz) |
12,526 |
13,315 |
35,802 |
34,356 |
Antimony produced (t) |
582 |
860 |
1,788 |
2,550 |
Gold equivalent produced (oz) |
16,996 |
18,946 |
49,232 |
49,222 |
Cash cost (1) per oz gold eq. produced ($) |
669 |
546 |
629 |
608 |
All-in sustaining cost (1) per oz gold eq. produced
($) |
838 |
837 |
840 |
920 |
Capital development |
1,205 |
2,925 |
2,843 |
9,011 |
Property, plant and equipment purchases |
1,085 |
1,648 |
5,113 |
3,578 |
Capitalized exploration |
1,500 |
1,536 |
4,673 |
4,343 |
Björkdal |
|
Gold produced (oz) |
10,291 |
11,250 |
30,991 |
34,046 |
Cash cost (1) per oz gold produced ($) |
1,139 |
1,186 |
1,308 |
1,235 |
All-in sustaining cost (1) per oz gold produced ($) |
1,362 |
1,440 |
1,617 |
1,578 |
Capital development |
1,357 |
2,092 |
6,178 |
7,212 |
Property, plant and equipment purchases |
2,997 |
3,461 |
7,765 |
11,583 |
Capitalized exploration |
950 |
566 |
2,771 |
1,624 |
Cerro Bayo |
|
Gold produced (oz) |
- |
1,763 |
- |
4,294 |
Silver produced (oz) |
- |
85,279 |
- |
216,040 |
Gold equivalent produced (oz) |
- |
2,925 |
- |
7,372 |
Cash cost (1) per oz gold eq. produced ($) |
- |
1,243 |
- |
1,136 |
All-in sustaining cost (1) per oz gold eq. produced
($) |
- |
1,303 |
- |
1,165 |
Consolidated |
|
Gold equivalent produced (oz) |
27,287 |
33,121 |
80,223 |
90,640 |
Cash cost (1) per oz gold eq. produced ($) |
846 |
825 |
891 |
886 |
All-in sustaining cost (1) per oz gold eq. produced
($) |
1,111 |
1,135 |
1,194 |
1,230 |
Capital development |
2,562 |
5,017 |
9,021 |
16,223 |
Property, plant and equipment purchases |
4,082 |
5,109 |
12,878 |
15,161 |
Capitalized exploration(2) |
2,450 |
2,323 |
7,759 |
6,669 |
- 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 12,526 ounces of gold and
582 tonnes of antimony for 16,996 gold equivalent ounces in the
third quarter of 2022. Cash and all-in sustaining costs at
Costerfield of $669/oz and $838/oz, respectively, compared to cash
and all-in sustaining costs of $546/oz and $837/oz, respectively,
in the third quarter of 2021.
Björkdal gold mine, Skellefteå, Sweden
Björkdal produced 10,291 ounces of gold in the
third quarter of 2022 with cash and all-in sustaining costs of
$1,139/oz and $1,362/oz, respectively, compared to cash and all-in
sustaining costs of $1,186/oz and $1,440/oz, respectively, in the
third quarter of
2021.
Lupin, Nunavut, Canada
Care and maintenance spending at Lupin was less
than $0.1 million during the third quarter of 2022, compared to
$0.2 million in the third quarter of 2021. Reclamation spending was
$1.2 million during the third quarter of 2022 compared to $5.0
million during the third 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”) 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 at an average price of C$0.57 per share.
On August 10, 2022, the Company completed the
sale of Challacollo to Aftermath and received an additional
purchase price instalment of C$1.0 million in cash and 6,122,448
Aftermath shares with a fair value of C$0.245 per share and will
receive a final payment of C$0.5 million plus interest in cash on
or before December 31, 2022. The Company is also entitled to
receive a 3% net smelter returns royalty on production at
Challacollo, capped at US$3.0 million as part of the consideration.
The Company recognized a gain of US$1.8 million related to sale of
Challacollo.
La Quebrada, Chile
No work was carried out on the La Quebrada
development property during Q3 2022.
Conference Call
Mandalay’s management will be hosting a
conference call for investors and analysts on November 10, 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: |
13734270 |
|
|
A replay of the conference call will be
available until 11:59 PM (Toronto time), November
24, 2022, and can be accessed using the following dial-in
number:
Encore Toll Free Dial-in Number: |
877 660 6853 |
Encore ID: |
13734270 |
|
|
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
_________________1 Adjusted EBITDA, adjusted net
income and cash and all-in sustaining costs 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.2 Adjusted EBITDA 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.3 Adjusted EBITDA, adjusted net
income and cash cost 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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