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Mandalay Resources Corporation Announces Financial Results for the Third Quarter 2022

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Mandalay Resources Corporation Announces Financial Results for the Third Quarter 2022

 

 

 

 

 

Mandalay Resources Corporation (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 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 months
ended
September 30,
2022
Three months
ended
September 30,
2021
Nine months
ended
September 30,
2022
Nine months
ended
September 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
  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 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 months
ended
September 30, 2022
Three months
ended
September 30, 2021
Nine months
ended
September 30, 2022
Nine months
ended
September 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
  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 12,526 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. 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.

 

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 November 10, 2022

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