Mandalay Resources Corporation (TSX: MND) (OTCQB: MNDJF) is pleased to announce its financial results for the quarter ended June 30, 2022.
The Company’s condensed and consolidated interim financial results for the quarter ended June 30, 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.
Second Quarter 2022 Highlights:
Dominic Duffy, President and CEO of Mandalay, commented:
“Mandalay is pleased with another steady financial quarter in which we generated $7.5 million in free cash flow allowing the Company to further strengthen its balance sheet with an improved net cash position as compared to Q1 2022. We did this in a quarter that had several operational issues resulting in lower than expected production, exhibiting the stability of our financial performance. With forecast production improvements over the remainder of the year, we expect an even stronger cash position by the start of 2023. Reaching a net debt free position was one of the major goals of the Company at the onset of our turnaround over three years ago and I am pleased that we have achieved and exceeded that this year.
“During the quarter the Company generated $50.1 million in revenue and $20.3 million in adjusted EBITDA – a margin of 41%. Mandalay earned $16.1 million in net cash flow from operating activities leading to adjusted net income of $5.4 million ($0.06 or C$0.07 per share) during the second quarter.
“Our consolidated cash and all-in sustaining costs per saleable gold equivalent ounce during Q2 2022 was $1,020 and $1,399, respectively, an increase of 6% and 4% as compared to the $960 and $1,342 during the same period last year. The main driver behind this was the decrease in production rates at Björkdal due to lower throughput levels, feed grades and recoveries at the processing plant.
1 Adjusted EBITDA, adjusted net income 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.
“Costerfield continued its remarkable performance with $32.4 million in revenue and $19.2 million in adjusted EBITDA. This ongoing operating margin performance reflects the continuous high-grade feed and the relatively fixed cost nature of the operation. During Q2 2022, Costerfield processed grades of 11.0 g/t gold and 2.6% antimony and also improved its gold recovery rate of 93.0% against the 92.6% achieved during Q1 2021.
“Björkdal generated stable production and sales with $17.7 million and $2.4 million in revenue and adjusted EBITDA, respectively, in Q2 2022. The underground ramp up continued as we mined approximately 276,000 tonnes; on pace to exceed our 2021 result of 1.1 million tonnes from the underground. For Q3 2022, mining activities will focus on areas of high confidence as we look to lift the grade during the second half of the year.
“The first half of year demonstrated the ongoing strength of our operations and how the Company is well-positioned to build upon its sound financial state. Mandalay is maintaining its 2022 production and cost guidance and looks forward to sustainably generating value for all of our stakeholders.”
Second Quarter 2022 Financial Summary
The following table summarizes the Company’s financial results for the three months and six months ended June 30, 2022, and 2021:
|Cost of sales||28,526||27,135||50,242||52,549|
|Adjusted EBITDA (1)||20,329||23,135||51,634||49,197|
|Income from mine ops before depreciation, depletion||21,590||24,217||54,028||51,376|
|Adjusted net income (1)||5,370||11,475||19,257||17,121|
|Consolidated net income||2,703||4,790||13,188||30,290|
|Adjusted net income per share (1)||0.06||0.13||0.21||0.19|
|Consolidated net income per share||0.03||0.05||0.14||0.33|
In Q2 2022, Mandalay generated consolidated revenue of $50.1 million, 2% lower than in the second quarter of 2021. This decrease was mainly due to lower ounces sold at Björkdal and Cerro Bayo’s production in last year’s quarter. The Company’s realized gold price in the second quarter of 2022 increased by 6% compared to the second quarter of 2021, and the realized price of antimony increased by 13%. In Q2 2022, Mandalay sold 1,334 fewer gold equivalent ounces than in Q2 2021.
Consolidated cash cost per ounce of $1,020 was higher in the second quarter of 2022 compared to $960 in the second quarter of 2021. Cost of sales during the second quarter of 2022 versus the second quarter of 2021 were $5.7 million higher at Costerfield and $0.7 million lower at Björkdal. Consolidated general and administrative costs were $0.2 million higher compared to the prior year quarter.
Mandalay generated adjusted EBITDA of $20.3 million in the second quarter of 2022, 12% lower compared to the Company’s adjusted EBITDA of $23.1 million in the year ago quarter. Adjusted net income was $5.4 million in the second quarter of 2022, which excludes the $4.4 million of unrealized gain on financial instruments and $7.1 million of revision of reclamation liability, compared to an adjusted net income of $11.5 million in the second quarter of 2021. Consolidated net income was $2.7 million for the second quarter of 2022, versus $4.8 million in the second quarter of 2021. Mandalay ended the second quarter of 2022 with $47.9 million in cash and cash equivalents.
Second Quarter Operational Summary
The table below summarizes the Company’s operations, capital expenditures and operational unit costs for the three months and six months ended June 30, 2022, and 2021:
|Gold produced (oz)||11,079||9,959||23,276||21,041|
|Antimony produced (t)||523||858||1,206||1,690|
|Gold equivalent produced (oz)||14,989||14,818||32,236||30,276|
|Cash cost(1) per oz gold eq. produced ($)||646||652||608||646|
|All-in sustaining cost(1) per oz gold eq. produced ($)||916||1,009||840||972|
|Property, plant and equipment purchases||2,216||1,029||4,028||1,930|
|Gold produced (oz)||8,316||10,941||20,700||22,796|
|Cash cost(1) per oz gold produced ($)||1,696||1,338||1,391||1,259|
|All-in sustaining cost(1) per oz gold produced ($)||2,120||1,766||1,729||1,647|
|Property, plant and equipment purchases||2,878||4,277||4,769||8,122|
|Gold produced (oz)||–||1,807||–||2,531|
|Silver produced (oz)||–||87,062||–||130,761|
|Gold equivalent produced (oz)||–||3,084||–||4,447|
|Cash cost(1) per oz gold eq. produced ($)||–||1,097||–||1,066|
|Gold equivalent produced (oz)||23,305||28,843||52,936||57,519|
|Cash cost(1) per oz gold eq. produced ($)||1,020||960||914||922|
|All-in sustaining cost(1) per oz gold eq. produced ($)||1,399||1,342||1,232||1,284|
|Property, plant and equipment purchases||5,094||5,306||8,797||10,052|
Costerfield gold-antimony mine, Victoria, Australia
Costerfield produced 11,079 ounces of gold and 523 tonnes of antimony for 14,989 gold equivalent ounces in the second quarter of 2022. Cash and all-in sustaining costs at Costerfield of $646/oz and $916/oz, respectively, compared to cash and all-in sustaining costs of $652/oz and $1,009/oz, respectively, in the second quarter of 2021.
Björkdal gold mine, Skellefteå, Sweden
Björkdal produced 8,316 ounces of gold in the second quarter of 2022 with cash and all-in sustaining costs of $1,696/oz and $2,120/oz, respectively, compared to cash and all-in sustaining costs of $1,338/oz and $1,766/oz, respectively, in the second quarter of 2021.
Lupin, Nunavut, Canada
Care and maintenance spending at Lupin was less than $0.1 million during the second quarter of 2022, which was similar to the second quarter of 2021. Reclamation spending was $3.3 million during the second quarter of 2022 compared to $0.8 million during the second 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.
On April 19, 2021, Aftermath Silver Ltd. 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 second 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 Company completed the sale of Challacollo to Aftermath on August 10, 2022.
La Quebrada, Chile
No work was carried out on the La Quebrada development property during Q2 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 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.
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We acknowledge the [financial] support of the Government of Canada.