Mandalay Resources Corporation (TSX: MND) (OTCQB: MNDJF) is pleased to announce its financial results for the fourth quarter and year ended December 31, 2022.

The Company’s audited consolidated financial results for the year ended December 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.

Fourth Quarter 2022 Highlights:

• Refinancing of existing debt facility and $15.0 million debt repayment of new Revolving Credit Facility, currently $20.0 million drawn down on this facility;
• Consolidated quarterly revenue of $41.4 million;
• $20.9 million in net cash flow from operating activities and $10.4 million in free cash flow¹; and
• Consolidated quarterly adjusted EBITDA¹ of $20.1 million.

Full-Year 2022 Highlights:

• Improved net cash position with $38.4 million of cash on hand and $24.0 million in total interest-bearing debt outstanding;
• Revenue of $191.7 million;
• $80.0 million in net cash flow from operating activities and $45.0 million in free cash flow¹; and
• Consolidated adjusted EBITDA1 of $91.2 million.

Dominic Duffy, President and CEO of Mandalay, commented:

“Mandalay finished the year strongly and continued tracking towards our long-term growth and value creation objectives. We are pleased to have strengthened our balance sheet while improving our net cash position over the year. During the fourth quarter of 2022, Mandalay earned $41.4 million in revenue and $20.1 million in adjusted EBITDA¹. The Company generated $20.9 million in net cash flow from operating activities and $10.4 million in free cash flow¹ leading to adjusted net income¹ of $5.2 million ($0.06 or C$0.08 per share), marking our tenth consecutive quarter of profitability.

“For the full year of 2022, the Company generated $191.7 million in revenue, which resulted in adjusted EBITDA¹ of $91.2 million, a margin of 48%, and $45.0 million in free cash flow¹. This compares to annual results for 2021 of adjusted EBITDA¹ of $115.0 million, a margin of 50%, and $18.2 million in free cash flow1. Mandalay’s healthy results this quarter and for the full year 2022, is a reflection of the team’s hard work on controlling our costs in this tough economic environment. From a cash² and all-in sustaining cost2 perspective, both per ounce cost metrics remained relatively in line during 2022 as compared to 2021. For the year 2022, on a consolidated basis our cash cost2 per ounce of saleable gold equivalent produced was $896, while our all-in sustaining cost² was $1,207.

“Mandalay ended the year with $38.4 million in cash on hand and $24.0 million in total interest-bearing debt outstanding, leaving us in a net cash position of $14.4 million. This is a $33.5 million improvement over our net debt position of $19.1 million at the end of 2021. We also refinanced our previous credit facility with a new Revolving Credit Facility at lower interest rates in the fourth quarter, leaving us in a stronger and more flexible position to manage our cash going forward. The $15.0 million repayment against this debt at the end of the year means that the Company has $20.0 million of debt outstanding, excluding lease and equipment debt. A gold price hedge extension was not required for this facility, and with the expiry of hedges we were required to put in place in connection with the prior Syndicated Facility in June 2023, should allow for increased cash flow in the second half of 2023 in the current higher gold price environment.

“Costerfield continued its strong financial performance in the fourth quarter of 2022, with $25.8 million in revenue and $18.1 million in adjusted EBITDA². Our high-grade deposits are providing consistently strong margins with processed grades of 12.7 g/t gold and 2.6% antimony. Gold and antimony recovery rates also improved as compared to the previous quarter to 94.2% and 93.8%, respectively.

“Björkdal generated stable sales of $15.6 million and $3.3 million in revenue and adjusted EBITDA², respectively, during the fourth quarter.

“During 2022, we also maintained our focus on strategically investing in our exploration programs at both sites with more than $10.0 million spent. With the Company’s strengthening balance sheet year-over-year and the commitment towards exploration, we are anticipating an even stronger 2023. We look forward to building upon operational and financial success and improving returns to our shareholders as we look towards generating stronger cash flow.”

Fourth Quarter and Full-Year 2022 Financial Summary

The following table summarizes the Company’s consolidated financial results for the three months and years ended December 31, 2022, and 2021:

In Q4 2022, Mandalay generated consolidated revenue of $41.4 million, 43% lower than the $72.9 million in the fourth quarter of 2021. The gold equivalent ounces sold in Q4 2021 was exceptionally higher than average because of the level of concentrate sold at Costerfield during Q4 2021 due to the delay of shipments during Q3 2021. Adding to the difference was the absence of any revenue from Cerro Bayo in the current quarter compared to $2.2 million in Q4 2021. The Company’s realized gold price in the fourth quarter of 2022 decreased by 9% compared to the fourth quarter of 2021, and the realized price of antimony decreased by 22%. In Q4 2022, Mandalay sold 14,422 fewer gold equivalent ounces than in Q4 2021.

Consolidated cash cost³ per ounce of $909 was higher in the fourth quarter of 2022 compared to $836 in the fourth quarter of 2021. Cost of sales during the fourth quarter of 2022 versus the fourth quarter of 2021 were $8.4 million lower at Costerfield and $0.3 million lower at Björkdal. Consolidated general and administrative costs were $0.4 million lower compared to the prior year quarter.

Mandalay generated adjusted EBITDA³ of $20.1 million in the fourth quarter of 2022, 50% lower than adjusted EBITDA³ of $40.6 million in the fourth quarter of 2021, decrease in adjusted EBITDA³ was due to lower revenue in the current quarter. Adjusted net income³ was $5.2 million in the fourth quarter of 2022, which excludes a $0.7 million unrealized loss on financial instruments and $2.8 million of revision of reclamation liability and $0.7 million of write down of assets, compared to an adjusted net income³ of $22.0 million in the fourth quarter of 2021.

Consolidated net income was $1.0 million for the fourth quarter of 2022, versus $15.3 million in the fourth quarter of 2021. Mandalay ended the fourth quarter of 2022 with $38.4 million in cash and cash equivalents.

Fourth Quarter and Full-Year 2022 Operational Summary

The table below summarizes the Company’s operations, capital expenditures and operational unit costs for the three months and years ended December 31, 2022, and 2021:

Costerfield gold-antimony mine, Victoria, Australia

Costerfield produced 12,085 ounces of gold and 504 tonnes of antimony for 15,427 gold equivalent ounces in the fourth quarter of 2022. Cash and all-in sustaining costs at Costerfield of $608/oz and $800/oz, respectively, compared to cash and all-in sustaining costs of $557/oz and $731/oz, respectively, in the fourth quarter of 2021.

Björkdal gold mine, Skellefteå, Sweden

Björkdal produced 10,256 ounces of gold in the fourth quarter of 2022 with cash and all-in sustaining costs of $1,362/oz and $1,774/oz, respectively, compared to cash and all-in sustaining costs of $1,227/oz and $1,700/oz, respectively, in the fourth quarter of 2021.

Lupin, Nunavut, Canada

Care and maintenance spending at Lupin was less than $0.1 million during the fourth quarter of 2022, compared to $0.1 million in the fourth quarter of 2021. Reclamation spending at Lupin was $7.4 million during 2022 compared to $6.1 million during 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. paid C$1.5 million in cash and on May 5, 2021, issued 2,054,794 common shares at fair value of C$0.73 per share to the Company, 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. On November 24, 2022, the Company received a final payment of C$0.5 million plus interest of C$17,000 in cash. The Company also received a 3% net smelter returns royalty on production at Challacollo, capped at $3.0 million as part of the consideration. The Company recognized a gain of $1.8 million related to sale of Challacollo. During the year ended December 31, 2022, the Company sold 1,376,000 shares at an average of C$0.31 per share.

La Quebrada, Chile

No work was carried out on the La Quebrada development property during Q4 2022.

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 the deeper Shepherd veins into production, both of which are expected to continue to supply high-grade ore to the processing plant, and to extend Youle’s 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.