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Mandalay Resources Corporation Announces Financial Results for the Third Quarter of 2021

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Mandalay Resources Corporation Announces Financial Results for the Third Quarter of 2021

 

 

 

 

 

Mandalay Resources Corporation (TSX: MND) (OTCQB: MNDJF) is pleased to announce its financial results for the quarter ended September 30, 2021.

 

The Company’s condensed and consolidated interim financial results for the quarter ended September 30, 2021, 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 2021 Highlights:

 

  • Consolidated quarterly revenue of $52.6 million, second highest quarterly revenue since Q2 2016;
  • Adjusted EBITDA of $25.1 million;
  • Adjusted net income of $10.1 million ($0.11 or C$0.14 per share);
  • Consolidated net income of $9.3 million ($0.10 or C$0.13 per share); and
  • Costerfield cash cost of $546 per gold equivalent ounce produced, lowest since Q1 2016.

 

Dominic Duffy, President and CEO of Mandalay, commented:

 

“Mandalay Resources is pleased to have sustained the financial momentum generated during the first half of the year. We delivered another solid third quarter in 2021 – driven by strong adjusted EBITDA and profits. We are pleased with both sites’ strong execution against their operational strategy, positioning the Company to achieve the upper limits of our production guidance and attaining our cost guidance set for 2021.

 

“During this quarter, the Company generated $52.6 million in consolidated revenue and $25.1 million in adjusted EBITDA, resulting in an EBITDA margin of 48% and year-to-date adjusted EBITDA of $74.3 million. Mandalay earned $10.1 million or $0.11 per share in adjusted net income during the third quarter, marking our seventh consecutive quarter of profitability. Moreover, due to COVID-19 shipping delays, approximately $5.5 million in revenue was delayed from the third quarter and will be accounted for during our fourth quarter results.

 

“Our operational efficiency was further reflected by the declining consolidated cash and all-in sustaining costs per saleable gold equivalent ounce during this quarter to $825 and $1,135, respectively, from $826 and $1,262 during the same period last year.

 

“The Company generated solid net cash flows from operating activities of $8.2 million in the quarter. However, due to the aforementioned COVID-19 shipping restrictions, there were delays in the receipt of funds from Costerfield’s floatation concentrate, as well as sizable annual payments at Costerfield of $7.0 million in income tax and $2.7 million in royalties, which resulted in free cash flow of $1.3 million during the quarter.

 

“Also during the third quarter, the Company paid $5.0 million for reclamation costs at Lupin. Reclamation at Lupin will be ongoing and scheduled to be completed by the end of 2022. We are anticipating a release of $3.5 million during the fourth quarter through the progressive security reduction as part-compensation for work finalized over this year.

 

“Finally, the Company made another quarterly repayment of $3.8 million towards our Syndicated Facility, leaving $47.7 million owing. With quarter end closing cash of $29.8 million, our strong balance sheet gives the Company a significant amount of flexibility to explore exciting near-term growth opportunities and we anticipate significant growth in the cash position at year end 2021.

 

“With an approximate 30% increase in gold equivalent produced at Costerfield during Q3 2021 as compared to the same period last year, the site’s per gold equivalent ounce metrics improved significantly to a cash and all-in sustaining costs of $546 and $837 respectively, from $657 and $1,088. This improved production also resulted in Costerfield generating $27.0 million in revenue and $18.5 million in adjusted EBITDA during Q3 2021.

 

“Björkdal generated stable production and sales resulting in $20.5 million and $6.8 million of revenue and adjusted EBITDA, respectively, during the third quarter of 2021. The underground mined tonnage ramp up continued as we mined approximately 796,000 tonnes during the first nine months of 2021, an approximate 5% increase as compared to the same period last year.

 

“Grade performance at Björkdal during this quarter was lower than previous quarters mainly due to excessive dilution in key stopes. Dilution control measures have been on going and we saw positive results in September. We anticipate further grade improvements for the rest of 2021 and beyond as dilution control measures continue to be implemented. September results displayed strong improvement as feed grade into the processing plant averaged 1.5 g/t gold – our highest monthly grade this year. However, lower than average grade for the full quarter, coupled with negative exchange rate movements, resulted in higher cash and all-in sustaining costs of $1,186 and $1,440, respectively, for the quarter.

 

Mr. Duffy concluded, “For the remainder of 2021, we are expecting to see our cash position grow significantly with the normalization in our payment obligations. We are pleased with the steps taken to strengthen our balance sheet, which will further improve with the upcoming sale of Cerro Bayo in the fourth quarter, and adding financial flexibility and look to continue with the Company’s growth through the final quarter of 2021 and into 2022.”

 

Third Quarter 2021 Financial Summary

 

The following table summarizes the Company’s financial results for the three months and nine months ended September 30, 2021, and 2020:

 

  Three months ended
September 30, 2021
Three months ended
September 30, 2020
Nine months ended
September 30, 2021
Nine months ended
September 30, 2020
$’000 $’000 $’000 $’000
Revenue 52,567 49,753 156,492 133,654
Cost of sales 25,695 21,418 78,244 59,984
Adjusted EBITDA (1) 25,115 26,727 74,312 68,901
Income from mine ops before depreciation, depletion 26,872 28,335 78,248 73,670
Adjusted net income (1) 10,090 9,823 27,211 22,640
Consolidated net income (loss) 9,255 635 39,545 (5,413)
Capital expenditure 12,449 12,083 38,053 32,684
Total assets 301,269 283,379 301,269 283,379
Total liabilities 136,561 173,281 136,561 173,281
Adjusted net income per share (1) 0.11 0.11 0.30 0.25
Consolidated net income (loss) per share 0.10 0.01 0.43 (0.06)
  1. Adjusted EBITDA, adjusted net income (loss) and adjusted net income (loss) per share are non-IFRS measures, defined at the end of this press release “Non-IFRS Measures”.

 

In the third quarter of 2021, Mandalay generated consolidated revenue of $52.6 million, 6% higher than in the third quarter of 2020. This increase is attributable to Mandalay selling 3,508 more gold equivalent ounces combined in the third quarter of 2021 compared to the third quarter of 2020. The Company’s realized gold price in the third quarter of 2021 decreased by 4% compared to the third quarter of 2020, and the realized price of antimony increased by 84%.

Consolidated cash cost per ounce of $825 was slightly lower in the third quarter of 2021 compared to $826 in the third quarter of 2020. Cost of sales during the third quarter of 2021 versus the third quarter of 2020 were $0.7 million lower at Costerfield and $1.5 million higher at Björkdal. Consolidated general and administrative costs were $0.2 million lower as compared to the prior year quarter.

 

Mandalay generated adjusted EBITDA of $25.1 million in the third quarter of 2021, 6% lower compared to the Company’s adjusted EBITDA of $26.7 million in the year ago quarter. Adjusted net income was $10.1 million in the third quarter of 2021, which excludes the $0.6 million fair value loss related to the gold hedges associated with the Syndicated Facility and $0.2 million fair value loss related to mark to market adjustment, compared to an adjusted net income of $9.8 million in the third quarter of 2020. Consolidated net income was $9.3 million for the third quarter of 2021, versus $0.6 million in the third quarter of 2020. Mandalay ended the third quarter of 2021 with $29.8 million in cash and cash equivalents.

 

Third Quarter 2021 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, 2021 and 2020:

 

 

  Three months ended
September 30, 2021
Three months ended September 30, 2020 Nine months ended
September 30, 2021
Nine months ended
September 30, 2020
$’000 $’000 $’000 $’000
Costerfield
Gold produced (oz) 13,315 11,749 34,356 32,722
Antimony produced (t) 860 991 2,550 3,045
Gold equivalent produced (oz) 18,946 14,620 49,222 43,049
Cash cost (1) per oz gold eq. produced ($) 546 657 608 622
All-in sustaining cost (1) per oz gold eq. produced ($) 837 1,088 920 987
Capital development 2,925 3,956 9,011 10,632
Property, plant and equipment purchases 1,648 1,568 3,578 3,065
Capitalized exploration 1,536 1,241 4,343 3,308
Björkdal
Gold produced (oz) 11,250 11,044 34,046 33,044
Cash cost (1) per oz gold produced ($) 1,186 1,051 1,235 1,061
All-in sustaining cost (1) per oz gold produced ($) 1,440 1,337 1,578 1,368
Capital development 2,092 2,525 7,212 7,004
Property, plant and equipment purchases 3,461 2,414 11,583 7,193
Capitalized exploration 566 359 1,624 1,343

 

 

 

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) 33,121 25,664 90,640 76,093
Cash cost(1) per oz gold eq. produced ($) 825 826 886 812
All-in sustaining cost (1) per oz gold eq. produced ($) 1,135 1,262 1,230 1,219
Capital development 5,017 6,481 16,223 17,636
Property, plant and equipment purchases 5,109 3,982 15,161 10,258
Capitalized exploration (2) 2,323 1,620 6,669 4,790
  1. The Company has restated consolidated All-in sustaining costs to exclude care and maintenance expenses in the comparative periods. 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 13,315 ounces of gold and 860 tonnes of antimony for 18,946 gold equivalent ounces in the third quarter of 2021. Cash and all-in sustaining costs at Costerfield of $546/oz and $837/oz, respectively, compared to cash and all-in sustaining costs of $657/oz and $1,088/oz, respectively, in the third quarter of 2020.

 

Björkdal gold mine, Skellefteå, Sweden

 

Björkdal produced 11,250 ounces of gold in the third quarter of 2021 with cash and all-in sustaining costs of $1,186/oz and $1,440/oz, respectively, compared to cash and all-in sustaining costs of $1,051/oz and $1,337/oz, respectively, in the third quarter of 2020.

 

Cerro Bayo silver-gold mine, Patagonia, Chile

 

In the third quarter of 2021, the Company spent nil on care and maintenance expenses at Cerro Bayo, compared to $0.5 million in the third quarter of 2020. Cerro Bayo was subject to a binding option agreement between the Company and Equus Mining (“Equus”) pursuant to which Equus has exercised its option to acquire Cerro Bayo. For further information see the Company’s October 8, 2019 and October 12, 2021 press releases.

 

During the third quarter of 2021, Cerro Bayo produced 1,763 ounces of gold and 85,279 ounces of silver for 2,985 gold equivalent ounces in the third quarter of 2021 at a cash cost of $1,243/oz.

 

Lupin, Nunavut, Canada

 

Care and maintenance spending at Lupin was $0.2 million during the third quarter of 2021, compared to less than $0.1 million in the third quarter of 2020. Reclamation spending at Lupin was $5.0 million during the third quarter of 2021 compared to $0.5 million during the third quarter of 2020. The full closure of Lupin will continue in the 2021 season funded by ongoing progressive security reductions held by CIRNA.

 

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. As at September 30, 2021, the Company is holding these shares for sale. 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.

 

La Quebrada, Chile

 

No work was carried out on the La Quebrada development property during Q3 2021.

 

COVID-19

 

The coronavirus (“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 our operations occur or our 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), Sweden (Björkdal gold mine) and Chile (Cerro Bayo gold-silver mine). The Company is focused on growing its production and reducing costs to generate significant positive cashflow.

 

Mandalay’s mission is to create shareholder value through the profitable operation of both its Costerfield and Björkdal mines. Currently, the Company’s main objective is to continue mining the high-grade Youle vein at Costerfield, which continues to supply high-grade ore, and to extend Youle’s Mineral Reserves at depth and to the south, as well as continuing the regional exploration program. 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 and continue exploration in near mine and regional.

 

Posted November 10, 2021

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