TORONTO, 2017-11-08 23:59 CET (GLOBE NEWSWIRE) --
Mandalay Resources Corporation ("Mandalay" or the "Company") (TSX:MND) today
announced revenue of $35.4 million, adjusted EBITDA of $10.7 million and
consolidated net loss of $7.2 million, or $0.02 loss per share, for the third
quarter of 2017.
The Company's condensed and consolidated interim financial results for the
quarter ended September 30, 2017, 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.
Commenting on the quarterly results, Dr. Mark Sander, President and CEO of
Mandalay, noted, "Björkdal continues to emerge as a long-lived anchor operation
for Mandalay. For the last two quarters, the mine has produced at an annualized
rate of approximately 60,000 ounces of gold at an average cash cost of $845/oz
owing to the combined impacts of our grade control and mine debottlenecking
programs. We are pleased that the grade control program continues to function
well and that the debottlenecking actions we took in the open pit and
underground mines at the end of the first quarter continue to perform as
planned. We expect this strong performance from Björkdal to continue for the
rest of the year as these programs strengthen with experience, and we expect to
deliver a Mineral Resources and Reserves update by the end of 2017."
Dr. Sander continued, "Costerfield delivered dependable performance in the
third quarter of 2017, producing 12,586 gold equivalent ounces at a sound cash
cost of $736 per ounce and all-in cost of $1,068 per ounce. We expect
performance at these levels to continue for the balance of the year. As well,
we passed a major milestone at Costerfield with commitment of capital to
develop the Brunswick lode. This project will extend the reserve life of the
operation by approximately a year; the impacts on Mineral Resources and
Reserves will be announced in a Mineral Resources and Reserves update in the
first quarter of next year."
"Mandalay's financial performance in the third quarter of 2017 was negatively
affected by the operating suspension at Cerro Bayo in response to the June 9,
2017 flooding of the Delia NW mine. Operations at Cerro Bayo remain suspended
and under force majeure; as a consequence, there was no production at Cerro
Bayo during the quarter. On September 29, 2017, the mine was moved to care and
maintenance in order to conserve cash pending completion of the investigation
of the root cause of the flooding and the risk assessment of restarting mining
in the vicinity of Laguna Verde (both expected to be completed in the fourth
quarter of 2017) as well as the granting of all permits needed to execute the
Life of Mine plan. We expect ongoing care and maintenance costs to decline to a
rate of approximately $1.5 million per quarter going forward."
Dr. Sander concluded, "With our two operating mines performing well in the
third quarter, we are maintaining our revised guidance for the full year 2017
of 114,000-128,000 ounces of gold equivalent at average cash cost of $925-$975
per ounce, as stated in our press release on August 10, 2017. We expect to
issue production and cost guidance for 2018 with our full-year production and
sales report in mid-January, 2018. Considering the $40 million revolving credit
facility announced in July, 2017, Mandalay's balance sheet is strong and the
Company is well-funded to maintain its capital investment program in its
existing mines, maintain working capital, and execute its strategy."
Third Quarter 2017 Financial Highlights
The following table summarizes the Company's financial results for the three
and nine months ended September 30, 2017 and 2016:
Three months Three Nine months Nine
Ended months Ended month
September Ended September Ended
30, 2017 September 30, September
30, 2017 30,
2016 2016
$'000 $'000 $'000 $'000
Revenue 35,407 48,544 124,90 153,15
4 2
Cost of Sales 22,403 31,389 84,421 92,742
Adjusted EBITDA* 10,650 13,797 34,192 53,186
Income from mine operations 13,004 17,155 40,483 60,410
before depreciation and
depletion
Adjusted net (loss) income (1,673 ) 1,110 (10,95 ) 7,239
before special items* 4
Consolidated net (loss) income (7,181 ) 549 (19,63 ) 5,309
4
Cash capex 9,890 10,369 34,980 34,898
Total assets 331,24 384,87 331,24 384,87
1 5 1 5
Total liabilities 141,85 145,73 141,85 145,73
9 4 9 4
Adjusted net (loss) income per $ (0.00 ) $ 0.00 $ (0.02 ) $ 0.02
share*
Consolidated net (loss) income $ (0.02 ) $ 0.00 $ (0.04 ) $ 0.01
per share
* Adjusted EBITDA, adjusted net income before special items and adjusted net
(loss) income per share are non-IFRS measures. See "Non-IFRS Measures" at the
end of this press release.
During the third quarter of 2017, Mandalay sold 23% fewer ounces of gold
equivalent versus the third quarter of 2016. At the same time, average
antimony prices rose 14% quarter-over-quarter, while average gold and silver
prices decreased by 4% and 14% respectively. The net effect is that Mandalay's
revenue of $35.4 million in the third quarter of 2017 was $13.1 million lower
than in the third quarter of 2016.
Total cost of sales across the Company was lower in the third quarter of 2017
than in the third quarter of 2016. Other than the $8.3 million decline due to
nil production at Cerro Bayo, cost of sales decreased at Costerfield (by $0.5
million) and Björkdal (by $0.2 million). Consolidated administrative costs
decreased by $1.0 million.
Mandalay generated $10.7 million in adjusted EBITDA in the current quarter,
$1.4 million lower than in the previous quarter, and $3.1 million lower than
the third quarter of 2016. This led to a consolidated net loss of $7.2 million
in the third quarter of 2017 versus a loss of $10.1 million in the second
quarter of 2017, which was impacted by the expenses of search efforts related
to the flooding incident at Cerro Bayo and accrual of estimated future costs
stemming from the event.
Mandalay ended the third quarter of 2017 with $24.8 million in cash and cash
equivalents; $15 million has been drawn on the revolving credit facility.
Third Quarter Operational Highlights
The table below summarizes the Company's capital expenditures and operational
unit costs for the three and nine months ended September 30, 2017 and 2016:
Three Three Nine Nine
months months months months
ended ended ended ended
September September September September
30, 2017 30, 2016 30, 2017 30, 2016
$'000 $'000 $'000 $'000
Costerfi
eld
Gold produced (oz) 7,370 9,102 24,290 33,787
Antimony produced (t) 804 844 2,310 2,806
Gold equivalent produced 12,586 13,684 39,777 47,673
(oz)
Cash cost* per oz gold $ 736 $ 755 $ 699 $ 588
equivalent produced
All-in cost* per oz gold $ 1,068 $ 1,064 $ 1,019 $ 845
equivalent produced
Underground capital devel. 9 Nil 1,884 Nil
& open pit prestrip
Capital purchases 1,065 779 3,545 2,374
Capital exploration 847 1,429 3,233 3,541
Cerro
Bayo
Silver produced (oz) - 388,13 794,53 1,365,
9 3 817
Gold produced (oz) - 2,831 5,909 10,985
Cash cost* per oz silver - $ 15.18 $ 13.50 $ 10.95
net byproduct credit
All-in cost* per oz silver - $ 25.70 $ 25.22 $ 20.08
net byproduct credit
Underground capital devel. 340 2,342 5,971 6,245
& open pit prestrip
Capital purchases 121 574 1,475 3,032
Capital exploration 125 972 872 2,278
Björkda
l
Gold produced (oz) 13,233 12,376 39,993 37,210
Cash cost* per oz gold $ 871 $ 897 $ 926 $ 896
produced
All-in cost* per oz gold $ 1,199 $ 1,135 1,213 1,138
produced
Underground capital devel. 4,018 2,564 5,860 7,468
& open pit prestrip
Capital purchases 2,684 174 3,050 2,917
Capital exploration 561 1,530 1,082 3,032
Consolid
ated
Gold equivalent produced 25,819 34,586 96,791 114,20
(oz) 4
Average cash cost* per oz $ 907 $ 970 $ 912 $ 843
gold equivalent
Average all-in cost* per $ 1,301 $ 1,266 $ 1,258 $ 1,135
oz gold equivalent
Underground capital devel. 4,916 4,978 19,155 17,292
& open pit prestrip
Capital purchases 3,887 1,563 10,812 8,519
Capital exploration 1,086 3,828 5,013 9,087
*Cash cost and all-in cost are non-IFRS measures. See "Non-IFRS Measures" at the
end of this press release.
Björkdal gold mine, Sweden
Björkdal delivered its second-best production quarter since being acquired by
Mandalay, trailing only the second quarter of 2017. The mine continued to
deliver both high rates of stoping, which generates the highest-grade ore, and
high rates of open pit production. As a result, both mine produced and mill
head grade has averaged approximately 1.5 g/t for the year to date, much higher
than the previous year. Key operational milestones include commissioning the
flotation plant on time and budget. While recoveries were slightly depressed
during the commissioning period, the plant is now operating in steady state,
with recovery improvements matching or exceeding the expected 1.7%. Meanwhile,
land acquisition and permitting for the tailings expansion project proceeds on
track. Exploration is winding up for the year, and the Company expects to
deliver its updated Mineral Resources and Reserves estimate by the end of the
year.
Costerfield gold-antimony mine, Victoria, Australia
Costerfield continued its dependable performance, in which well-controlled
costs and a consistently full plant deliver production directly related to the
grade of mill feed in the period, and cash costs per ounce that are inversely
related. Costerfield's production of 12,586 ounces gold equivalent in the third
quarter of 2017 was less than in the second quarter of 2017 due to lower
grades. Lower production in the third quarter of 2017 compared to the third
quarter of 2016 was expected, as a year ago Mandalay was mining in the heart of
the highest-grade portion of the Cuffley lode and currently is mining
lower-grade parts of the deposit. After the end of the third quarter, Mandalay
committed to develop the Brunswick lode, which is expected to result in reserve
additions and an extended mine life for the operation. Details will be released
in the next Mineral Resources and Reserves update for the mine, expected in
February, 2018.
Cerro Bayo silver-gold mine, Patagonia, Chile
No production occurred at Cerro Bayo in the third quarter. The mine reached
agreement with the two unions with which it was in negotiations when the
production suspension occurred, and after the required one month waiting
period, a reduction in workforce from approximately 400 to approximately 100
employees occurred at the end of the quarter in order to conserve Company cash
for a potential restart. Any restart will be contingent on the Company being
confident that flooding will not recur in the mines around Laguna Verde and the
receipt of all permits necessary to complete the Life of Mine plan. The
investigation of the event and risk assessment for resumption of mining around
the lake is nearing completion. The Company is engaged with Chilean regulators
to submit high-quality applications based on this work, respond to questions
with timely, high-quality answers and achieve rapid permitting outcomes.
Challacollo, Chile
Mandalay completed its water exploration program at Challacollo in the second
quarter of 2017, finding significant supply of groundwater in four of four
holes. The Company has applied for the surface rights to construct a permanent
water production well in a process that is expected to take several months.
La Quebrada
The La Quebrada copper-silver project in central Chile remained on care and
maintenance throughout the period. Spending on care and maintenance at La
Quebrada was less than $0.1 million during the third quarter of 2017.
Lupin and Ulu
The Lupin and Ulu gold projects in Nunavut, Canada were acquired with the Elgin
acquisition and are currently held for sale as non-core assets. On October 31,
2016, the Company entered into a definitive agreement for sale of both projects
to WPC Resources Inc. ("WPC"), but the transaction was not completed due to a
C$9.1 million increase in reclamation bonding requirements for the Lupin
project that was imposed shortly before the planned closing date. Subsequently,
and due to the bonding requirements, the Company and WPC entered into two
separate non-binding Letters of Intent regarding WPC's potential acquisition of
the two projects on terms that are substantially similar, in the aggregate, to
those contemplated by the prior definitive agreement.
Conference Call
Mandalay's management will be hosting a conference call for investors and
analysts on November 9, 2017 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: 13672556
A replay of the conference call will be available until 11:59 pm (Toronto
time), November 23, 2017 and can be accessed using the following dial-in
number:
Encore Toll Free Dial-in Number: (877) 660-6853
Encore ID: 13672556
For further information:
Mark Sander
President and Chief Executive Officer
Greg DiTomaso
Director of Investor Relations
Contact:
1.647.260.1566
About Mandalay Resources Corporation:
Mandalay Resources is a Canadian-based natural resource company with producing
assets in Australia, Chile and Sweden, and a development project in Chile. The
Company is focused on executing a roll-up strategy, creating critical mass by
aggregating advanced or in-production gold, copper, silver and antimony
projects in Australia, the Americas, and Europe to generate near-term cash flow
and shareholder value.
Forward-Looking Statements
This news release contains "forward-looking statements" within the meaning of
applicable securities laws, including guidance as to anticipated gold, silver,
and antimony production and production costs in the future and the potential
for a restart of operations at the Company's Cerro Bayo mine. 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, 2017, a copy of which is
available under Mandalay's profile at www.sedar.com. 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, site all-in cost per
saleable ounce of gold equivalent produced, site all-in cost per saleable ounce
of silver produced net of gold credits, all-in costs and cash capex, 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. For a reconciliation between adjusted
EBITDA and net income, please refer to page 17 of management's discussion and
analysis of the Company's financial statements for the third quarter of 2017.
The Company defines cash capex as cash spent on mining interests, property,
plant and equipment, and exploration as set out in the cash flow statement of
the financial statements.
The Company defines free cash flow as a measure of the Corporation's ability to
generate and manage liquidity. This term does not have a standard meaning and
is intended to provide the reader with additional information.
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 costs include total cash operating costs, royalty
expense, accretion, depletion, depreciation and amortization. The site all-in
cost is then divided by the saleable equivalent gold ounces produced to yield
the site all-in cost per saleable equivalent ounce produced.
For Cerro Bayo, the cash cost per saleable silver ounce produced net of gold
byproduct credit is calculated by deducting the gold credit (which equals
saleable ounces gold produced times the realized gold price in the period) from
the cash operating costs in the period and dividing the resultant number by the
saleable silver ounces produced in the period. The cash cost excludes royalty
expenses. The site all-in cost per saleable silver ounce produced net of gold
byproduct credit is calculated by adding royalty expenses, accretion,
depletion, depreciation, and amortization to the cash cost net of gold
byproduct credit, dividing the resultant number by the saleable silver ounces
produced in the period.
Also 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
costs include total cash operating costs, royalty expense, accretion,
depletion, depreciation and amortization. The site all-in cost is then divided
by the saleable equivalent gold ounces produced to yield the site all-in cost
per saleable equivalent ounce produced.
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. The site all-in cost is then divided by the saleable gold ounces
produced to yield the site all-in cost per saleable gold ounce produced.
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.Mandalay Resources Corporation: Mandalay Resources Corporation Announces Third Quarter Financial Results for 2017
© 2017 GlobeNewswire
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