Mandalay Resources Corporation (TSX: MND) (OTCQB: MNDJF) is pleased to announce its financial results for the fourth quarter and full-year ended December 31, 2020.
The Company’s consolidated financial results for the year ended December 31, 2020, 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 2020 Highlights:
Full-Year 2020 Highlights:
Dominic Duffy, President and CEO of Mandalay, commented:
“Mandalay’s fourth quarter 2020 capped off a tremendous year, one in which the Company demonstrated four consecutive quarters of dramatically improved operational and financial performance. These strong results demonstrate the sustainability of the Company’s turnaround.”
Mr. Duffy continued, “In 2020 the Company generated $179.0 million in revenue and a record $94.2 million in adjusted EBITDA for a margin of 53% – also a record. We earned $12.1 million (CAD$0.17 per share) in adjusted net income during the fourth quarter, marking our fourth consecutive quarter of profitability. For the full-year, the Company generated $34.7 million (CAD$0.51 per share) in adjusted net income – representing approximately 25% of our market capitalization as at December 31, 2020.
“Our consolidated cash cost for 2020 was $843 per saleable gold equivalent ounce produced; a 21% improvement as compared to the $1,066 for full-year 2019. These results were underpinned by Costerfield’s remarkable performance, which generated $20.0 million in quarterly adjusted EBITDA, bringing the site’s year-to-date total to $68.1 million.”
Mr. Duffy added, “Costerfield’s operational and financial improvements are a direct result of the high-grade Youle deposit becoming the primary source of ore feed throughout 2020. Processed gold grades averaged 11.6 g/t gold and 4.3% antimony for the full-year 2020, a significant increase over the 2019 full-year average of 5.1 g/t gold and 2.5% antimony. We expect to see continued high gold grades at Costerfield over the course of 2021. This was done while also increasing the Mineral Reserves and mine life of the operation with the ramped-up exploration program carried out over 2020.”
“Björkdal maintained stable production and sales, generating $81.5 million and $32.0 million in revenue and adjusted EBITDA, respectively, in 2020. The increase in revenue year-over-year was aided by stronger realized gold prices. We expect Björkdal to build upon its fourth quarter production success – the highest quarterly amount in 2020 – of 12,252 gold ounces as underground tonnages continue to rise as ore from Aurora’s higher-grade lower levels comes online.”
Mr. Duffy continued, “Mandalay ended 2020 with a cash balance of $34.2 million which was slightly higher than that at the end of the third quarter. This 2020 ending cash balance does not include a $5.0 million payment relating to a delayed shipment at Costerfield. This payment would normally have been received in December but was received at the start of January 2021. The Company also repaid $6.0 million of its senior credit facility prior to the end of 2020, leaving $59.0 million owing. By year-end we also paid $4.9 million towards our hedging programs, however, mainly driven by the recent strengthening of the Australian dollar relative to the U.S. dollar, we anticipate receiving proceeds from the Australian dollar gold forward contracts in the near-term. Ultimately, we remain on track to meeting our goal of having our cash exceed our debt in 2021.”
Mr. Duffy concluded, “2020 was a transformative year for the Company. Our results demonstrate the continued commitment of our employees and contractors to execute on our strategic initiatives and the underlying long-term value and cash-generating potential at both sites. This hard work has translated into strong financial performance and increased shareholder value. Looking ahead, we expect continued strong free cash flow generation, which will set the Company up for an exciting 2021 year and beyond.”
Fourth Quarter and Full-Year 2020 Financial Summary
The following table summarizes the Company’s financial results for the three months and year ended December 31, 2020 and 2019:
Dec 31, 2020
Dec 31, 2019
Dec 31, 2020
Dec 31, 2019
|Cost of sales||18,798||17,034||78,782||83,623|
|Adjusted EBITDA (1)||25,346||4,732||94,247||18,804|
|Income from mine ops before depreciation, depletion||26,522||5,703||100,192||24,172|
|Adjusted net income (loss) (1)||12,065||(4,223||)||34,704||(10,403||)|
|Consolidated net income (loss)||14,722||(5,328||)||9,309||(18,649||)|
|Adjusted net income (loss) per share (1)||0.13||(0.05||)||0.38||(0.13||)|
|Consolidated net income (loss) per share||0.16||(0.07||)||0.10||(0.23||)|
In the fourth quarter of 2020, Mandalay generated consolidated revenue of $45.3 million, 99% higher than in the fourth quarter of 2019. This increase is attributable to Mandalay selling 8,514 more gold equivalent ounces in the fourth quarter of 2020 compared to the fourth quarter of 2019. The Company’s realized gold price in the fourth quarter of 2020 also increased by 32% compared to the fourth quarter of 2019, and the realized price of antimony was flat year-over-year.
Consolidated cash cost per ounce of $929 decreased by 14% in the fourth quarter of 2020 compared to the fourth quarter of 2019, mainly due to higher production. Cost of sales during the fourth quarter of 2020 versus the fourth quarter of 2019 were $1.1 million lower at Costerfield, offset by a $2.8 million increase at Björkdal. Consolidated general and administrative costs were $0.2 million higher as compared to the prior year quarter.
Mandalay generated adjusted EBITDA of $25.3 million in the fourth quarter of 2020, 436% higher compared to the Company’s adjusted EBITDA of $4.7 million in the year ago quarter. Adjusted net income was $12.1 million in the fourth quarter of 2020, which excludes the $10.8 million fair value gain related to the gold hedges associated with the Syndicated Facility, $1.6 million for the Lupin asset write down, $0.9 million in care and maintenance costs and a $5.6 million revisions to reclamation liabilities, compared to an adjusted net loss of $4.2 million in the fourth quarter of 2019. Consolidated net income was $14.7 million for the fourth quarter of 2020, versus a net loss of $5.3 million in the fourth quarter of 2019. Mandalay ended the fourth quarter of 2020 with $34.2 million in cash and cash equivalents.
Fourth Quarter and Full-Year 2020 Operational Summary
The table below summarizes the Company’s operations, capital expenditures and operational unit costs for the three months and year ended December 31, 2020 and 2019:
Dec 31, 2020
Dec 31, 2019
Dec 31, 2020
Dec 31, 2019
|Gold produced (oz)||12,252||10,990||45,296||51,498|
|Cash cost (1) per oz gold produced ($)||1,251||1,071||1,112||945|
|All-in sustaining cost (1) per oz gold produced ($)||1,616||1,416||1,435||1,203|
|Property, plant and equipment purchases||4,832||3,408||12,025||10,162|
|Gold produced (oz)||12,236||4,749||44,958||15,258|
|Antimony produced (t)||858||684||3,903||2,032|
|Gold equivalent produced (oz)||15,099||7,604||58,148||25,161|
|Cash cost (1) per oz gold eq. produced ($)||668||1,083||634||1,313|
|All-in sustaining cost (1) per oz gold eq. produced ($)||1,077||1,640||1,010||2,024|
|Property, plant and equipment purchases||1,886||349||4,951||3,422|
|Gold equivalent produced (oz)||27,351||18,594||103,444||76,659|
|Cash cost* per oz gold eq. produced ($)||929||1,076||843||1,066|
|All-in sustaining cost (1) per oz gold eq. produced ($)||1,350||1,568||1,254||1,549|
|Property, plant and equipment purchases||6,718||3,757||16,976||13,584|
|Capitalized exploration (2)||1,540||1,251||6,330||3,479|
Björkdal gold mine, Skellefteå, Sweden
Björkdal produced 12,252 ounces of gold in the fourth quarter of 2020 with cash and all-in sustaining costs of $1,251/oz and $1,616/oz, respectively, compared to cash and all-in sustaining costs of $1,071/oz and $1,416/oz, respectively, in the fourth quarter of 2019.
Costerfield gold-antimony mine, Victoria, Australia
Costerfield produced 12,236 ounces of gold and 858 tonnes of antimony for 15,099 gold equivalent ounces in the fourth quarter of 2020. Due to the higher gold equivalent ounces produced, cash and all-in sustaining costs at Costerfield decreased to $668/oz and $1,077/oz, respectively, compared to cash and all-in sustaining costs of $1,083/oz and $1,640/oz, respectively, in the fourth quarter of 2019.
Cerro Bayo silver-gold mine, Patagonia, Chile
In the fourth quarter of 2020, the Company spent $0.6 million on care and maintenance expenses at Cerro Bayo, which was the same as in the fourth quarter of 2019. Cerro Bayo is currently subject to a binding option agreement between the Company and Equus Mining pursuant to which Equus has an option to acquire Cerro Bayo. For further information see the Company’s October 8, 2019, press release.
During the first quarter of 2021, the Company is planning to restart the processing facility at Cerro Bayo to begin trial processing of waste dumps located at site containing silver and gold mineralization. During 2020, a sampling program was carried out to establish areas within the waste dumps that contain sufficiently-graded mineralization that could be processed profitably. The current plan is a three-month trial period that could be extended if the project is found to be economically profitable.
Lupin, Nunavut, Canada
Care and maintenance spending at Lupin was $0.1 million during the fourth quarter of 2020, which was the same as in the fourth quarter of 2019. Reclamation spending at Lupin was $4.7 million during the fourth quarter of 2020 as compared to $0.2 million in the fourth quarter of 2019. The full closure of Lupin will continue in the 2021 season funded by ongoing progressive security reductions held by CIRNA.
In the fourth quarter of 2020, Aftermath Silver Ltd. (“Aftermath Silver”) completed the second payment of CAD$1.0 million in accordance with the definitive agreement. 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 2020.
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 and Sweden, care and maintenance and development projects in Chile. The Company is focused on growing production at its gold and antimony operation in Australia, and gold production from its operation in Sweden to continue being a significant cash flow generating Company.
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