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Mandalay Resources Corporation Announces Financial Results for the First Quarter 2022

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Mandalay Resources Corporation Announces Financial Results for the First Quarter 2022

 

 

 

 

 

Mandalay Resources Corporation (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 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 months
ended
March 31,
2022
Three months
ended
December 31,
2021
Three months
ended
March 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
  1. 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 months
ended
March 31, 2022
Three months
ended December 31, 2021
Three months
ended
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
  1. Cash cost and all-in sustaining cost are non-IFRS measures. See “Non-IFRS Measures” at the end of this press release.
  2. 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.

 

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.

 

Posted May 12, 2022

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