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:
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:
|Cost of sales||24,690||25,695||74,932||78,244|
|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|
|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|
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 $42.6 million in cash and cash equivalents.
Third Quarter 2022 Operational Summary
The table below summarizes the Company’s operations, capital expenditures and operational unit costs for the three months and nine months ended September 30, 2022, and 2021:
September 30, 2022
September 30, 2021
September 30, 2022
September 30, 2021
|Gold produced (oz)||12,526||13,315||35,802||34,356|
|Antimony produced (t)||582||860||1,788||2,550|
|Gold equivalent produced (oz)||16,996||18,946||49,232||49,222|
|Cash cost (1) per oz gold eq. produced ($)||669||546||629||608|
|All-in sustaining cost (1) per oz gold eq. produced ($)||838||837||840||920|
|Property, plant and equipment purchases||1,085||1,648||5,113||3,578|
|Gold produced (oz)||10,291||11,250||30,991||34,046|
|Cash cost (1) per oz gold produced ($)||1,139||1,186||1,308||1,235|
|All-in sustaining cost (1) per oz gold produced ($)||1,362||1,440||1,617||1,578|
|Property, plant and equipment purchases||2,997||3,461||7,765||11,583|
|Gold produced (oz)||–||1,763||–||4,294|
|Silver produced (oz)||–||85,279||–||216,040|
|Gold equivalent produced (oz)||–||2,925||–||7,372|
|Cash cost (1) per oz gold eq. produced ($)||–||1,243||–||1,136|
|All-in sustaining cost (1) per oz gold eq. produced ($)||–||1,303||–||1,165|
|Gold equivalent produced (oz)||27,287||33,121||80,223||90,640|
|Cash cost (1) per oz gold eq. produced ($)||846||825||891||886|
|All-in sustaining cost (1) per oz gold eq. produced ($)||1,111||1,135||1,194||1,230|
|Property, plant and equipment purchases||4,082||5,109||12,878||15,161|
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.
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.
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We acknowledge the [financial] support of the Government of Canada.