Mandalay Resources Corporation Announces Financial Results for the
First Quarter of 2019
Mandalay Resources Corporation ("Mandalay" or the "Company") (TSX:
MND, OTCQB: MNDJF) today announced its financial results for the
quarter ended March 31, 2019.
The Company’s condensed and consolidated interim
financial results for the quarter ended March 31, 2019, together
with its Management’s Discussion and Analysis (“MD&A”) 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.
For the first quarter of 2019, the Company
generated revenue of $29.9 million, adjusted EBITDA of $5.2 million
and a consolidated net loss of $1.3 million, or $0.00 loss per
share.
Commenting on the results, Dominic Duffy,
President and CEO of Mandalay, noted, “Mandalay’s financial and
operational performance in the first quarter of 2019 marks a
significant improvement over the past several quarters. On a
revenue, adjusted EBITDA, and adjusted net income basis, Mandalay’s
first quarter 2019 results are stronger than the three quarters
that preceded it. Mandalay’s financial results from the first
quarter of 2019 show that the Company is steadily turning around
its financial position. This improved performance comes as a result
of Mandalay working through, and overcoming, several operational
challenges that it faced in 2018.”
Mr. Duffy added, “The financial improvements
were largely attributable to Björkdal’s increased production
results. The Björkdal mine benefited from a full quarter of having
the new underground haulage fleet on site and produced 14,385
ounces of gold. Gold production from Björkdal in the first quarter
of 2019 exceeded our expectations and was the highest gold
production quarter since its record fourth quarter of 2017. We
expect the higher production rates at Björkdal to remain stable for
the remainder of 2019.”
Mr. Duffy continued, “At Costerfield, gold
equivalent production was lower compared to both the fourth quarter
of 2018 and the first quarter of 2018, which was the result of
lower gold and antimony grades mined and processed. We expect
production rates to remain constant at Costerfield until we begin
producing from the higher-grade Youle lode towards the end of 2019.
Development at Youle is proceeding well, and we continue to expect
that we will begin producing from Youle in the fourth quarter of
2019.”
Mr. Duffy concluded, “Mandalay also completed a
major financial transaction and significantly strengthened our cash
position and balance sheet in the first quarter of 2019 as we
completed a C$54 million financing (see Mandalay press releases
February 20 and March 29, 2019). This financing gives us a
considerably improved cash balance, and we ended the first quarter
of 2019 with $37.0 million in cash and cash equivalents compared to
$8.4 million at December 31, 2018 and $23.4 million at March 31,
2018. We intend to use the net proceeds of this financing to fund
working capital requirements, potential debt restructuring and a
cash reserve for our gold-exchangeable bonds, planned exploration
at high potential areas at both operations, and general corporate
purposes. We have recently commenced the planned exploration
activities at Costerfield and Björkdal and look forward to
providing an exploration update in due course.”
First Quarter 2019 Financial Summary
The following table summarizes the Company’s
financial results for the three months ended March 31, 2019;
December 31, 2018 and March 31, 2018:
|
Three monthsEnded March
31, 2019 |
Three monthsEnded
December 31, 2018 |
Three monthsEnded March
31, 2018 |
|
$’000 |
$’000 |
$’000 |
Revenue |
29,916 |
|
22,711 |
|
39,747 |
|
Cost of sales |
23,393 |
|
23,799 |
|
25,820 |
|
Adjusted EBITDA* |
5,247 |
|
(1,893 |
) |
12,134 |
|
Income from mine ops before depreciation, depletion |
6,523 |
|
(1,088 |
) |
13,927 |
|
Adjusted net loss before special items* |
(459 |
) |
(11,475 |
) |
939 |
|
Consolidated net loss |
(1,334 |
) |
(31,299 |
) |
(1,237 |
) |
Capital expenditure |
7,412 |
|
15,998 |
|
11,310 |
|
Total assets |
266,233 |
|
237,703 |
|
299,078 |
|
Total liabilities |
136,643 |
|
141,567 |
|
134,418 |
|
Adjusted net loss per share* |
(0.00 |
) |
(0.03 |
) |
(0.00 |
) |
Consolidated net loss per share |
(0.00 |
) |
(0.07 |
) |
(0.00 |
) |
*Adjusted EBITDA, adjusted net loss before
special items and adjusted net loss per share are non-IFRS
measures, defined at the end of this press release “Non-IFRS
Measures”.
In the first quarter of 2019, Mandalay sold
6,144 fewer gold equivalent ounces than in the first quarter of
2018. In the same period the Company’s realized gold price declined
4% quarter-over-quarter, while the realized price of antimony
declined by 14%. The net effect is that Mandalay’s revenue of $29.9
million in the first quarter of 2019 was $9.8 million lower than in
the first quarter of 2018.
Cash cost per ounce in the first quarter of 2019
was broadly in line compared to the prior year quarter. Cost of
sales during the first quarter of 2019 versus the first quarter of
2018 were $1.4 million lower at Costerfield and $1.0 million lower
at Björkdal. Consolidated general and administrative costs
decreased by $0.5 million across the Company.
Mandalay generated adjusted EBITDA of $5.2
million in the first quarter of 2019, versus adjusted EBITDA of
$12.1 million in the first quarter of 2018. This led to a
consolidated net loss of $1.3 million for the first quarter of
2019, versus a loss of $1.2 million in the first quarter of
2018.
Mandalay ended the first quarter of 2019 with
$37.0 million in cash and cash equivalents and subsequently
received an additional C$3.2 million on April 18, 2019 as a result
of a reduction in the Lupin reclamation bond requirements.
First Quarter 2019 Operational Summary
The table below summarizes the Company’s capital
expenditures and operational unit costs for the three months ended
March 31, 2019 and 2018 and three months ended December 31,
2018:
|
|
Three monthsended March 31,
2019 |
Three monthsended December 31,
2018 |
Three monthsended March 31,
2018 |
$’000 |
$’000 |
$’000 |
Björkdal |
|
|
|
|
|
Gold produced (oz) |
|
14,385 |
|
10,482 |
|
12,716 |
|
Cash cost* per oz gold produced |
$ |
921 |
$ |
1,497 |
$ |
1,094 |
|
All-in cost* per oz gold produced |
$ |
1,202 |
$ |
1,794 |
$ |
1,387 |
|
Capital development |
|
1,715 |
|
2,229 |
|
2,934 |
|
Property, plant and equipment purchases |
|
958 |
|
7,906 |
|
2,975 |
|
Capitalized exploration |
|
105 |
|
266 |
|
305 |
Costerfield |
|
|
|
|
|
Gold produced (oz) |
|
4,105 |
|
4,948 |
|
6,587 |
|
Antimony produced (t) |
|
575 |
|
560 |
|
605 |
|
Gold equivalent produced (oz) |
|
7,555 |
|
8,691 |
|
10,456 |
|
Cash cost* per oz gold eq. produced |
$ |
1,081 |
$ |
962 |
$ |
869 |
|
All-in cost* per oz gold eq. produced |
$ |
1,493 |
$ |
1,391 |
$ |
1,326 |
|
Capital development |
|
3,142 |
|
2,478 |
|
2,116 |
|
Property, plant and equipment purchases |
|
1,240 |
|
1,498 |
|
1,634 |
|
Capitalized exploration |
|
70 |
|
1,141 |
|
1,070 |
Consolidated |
|
|
|
|
|
Gold equivalent produced (oz) |
|
21,940 |
|
19,173 |
|
23,172 |
|
Cash cost* per oz gold eq. |
$ |
1,072 |
$ |
1,311 |
$ |
1,060 |
|
All-in cost* per oz gold eq. |
$ |
1,412 |
$ |
1,709 |
$ |
1,463 |
|
Capital development |
|
4,857 |
|
4,708 |
|
5,050 |
|
Property, plant and equipment purchases |
|
2,198 |
|
9,404 |
|
4,609 |
|
Capitalized exploration** |
|
357 |
|
1,886 |
|
1,651 |
*Cash cost and all-in cost are non-IFRS
measures. See “Non-IFRS Measures” at the end of this press
release.**Includes capitalized exploration costs relating to other
non-core assets.
Björkdal gold mine, Sweden
Björkdal produced 14,385 ounces of gold in the
first quarter of 2019 with per ounce cash and all-in costs of $921
and $1,202, respectively, compared to cash and all-in costs of
$1,497 and $1,794, respectively, in the fourth quarter of 2018, and
cash and all-in costs of $1,094 and $1,387, respectively, in the
first quarter of 2018.
Costerfield gold-antimony mine, Victoria, Australia
Costerfield produced 4,105 ounces of gold and
575 tonnes of antimony for 7,555 gold equivalent ounces in the
first quarter of 2019. Due to the lower gold equivalent ounces
produced, per ounce cash and all-in costs at Costerfield rose to
$1,081 and $1,493, respectively, compared to cash and all-in costs
of $962 and $1,391, respectively, in the fourth quarter of 2018,
and cash and all-in costs of $869 and $1,326, respectively, in the
first quarter of 2018.
Cerro Bayo silver-gold mine, Patagonia,
Chile
No production occurred at Cerro Bayo in the
first quarter of 2019 and it remained on care and maintenance
through the period. In the first quarter of 2019, the Company spent
$0.9 million on care and maintenance expenses at Cerro Bayo
compared to $2.2 million in the first quarter of 2018.
Challacollo, Chile
On August 1, 2018, the Company announced that it
had entered into a non-binding letter of intent with Aftermath
Silver Ltd., pursuant to which Aftermath Silver would acquire
Minera Mandalay Challacollo Limitada, a wholly-owned subsidiary of
the Company which owns the Challacollo project, in exchange for
total consideration of C$11.6 million (see Mandalay August 1, 2018
press release for more detail).
In addition, on November 28, 2018 the Company
signed a binding agreement with a third party for the acquisition
of certain easement properties which comprise part of the
Challacollo property. Total consideration is expected to be $2.0
million net of payments due to the holders of royalties and other
encumbrances on these concessions.
La Quebrada
The La Quebrada copper-silver project in central
Chile remained held for sale throughout the period. Spending at La
Quebrada was less than $0.1 million during the first quarter of
2019.
Lupin and Ulu
Care and maintenance spending at Lupin and Ulu
was less than $0.1 million during the first quarter of 2019
compared to less than $0.1 million in the prior year quarter.
Reclamation spending at Lupin and Ulu was $0.7 million during the
first quarter of 2019 compared to $0.3 million in the prior year
quarter.
On December 21, 2018, the Nunavut Water Board
reached a decision to recommend that the Letter of Credit that has
been posted by Mandalay as security for its reclamation obligations
in respect of the Lupin mine be reduced by C$3.2 million. On
January 28, 2019, this recommendation was approved by the Minister
of Indigenous and Northern Affairs and the Company received these
funds on April 18, 2019. After this approval, the total bond
outstanding is C$26.1 million. Mandalay has successfully received
bond reductions of approximately C$8 million since the start of its
final closure process.
Conference Call
Mandalay’s management will be hosting a
conference call for investors and analysts on May 15, 2019 at 8:00
am (Toronto time).
Analysts and interested investors are invited to
participate using the following dial-in numbers:
Participant Number: |
(201) 689-8341 |
Participant Number (Toll free):
|
(877) 407-8289 |
Conference ID: |
13690795 |
A replay of the conference call will be
available until 11:59 pm (Toronto time), May
29, 2019 and can be accessed using the following dial-in
number:
Encore Toll Free Dial-in
Number: |
(877) 660-6853 |
Encore ID: |
13690795 |
For Further Information:
Dominic Duffy President and Chief Executive
Officer Greg DiTomasoDirector of Investor Relations Contact:
1.647.260.1566
About Mandalay Resources Corporation:
Mandalay Resources is a Canadian-based natural
resource company with producing assets in Australia and Sweden, and
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
generate near-term cash flow.
Forward-Looking Statements
This news release contains "forward-looking
statements" within the meaning of applicable securities laws,
including statements regarding guidance as to anticipated gold and
antimony production and production costs in the future. Readers are
cautioned not to place undue reliance on forward-looking
statements. Actual results and developments may differ materially
from those contemplated by these statements depending on, among
other things, changes in commodity prices and general market and
economic conditions. The factors identified above are not intended
to represent a complete list of the factors that could affect
Mandalay. A description of additional risks that could result in
actual results and developments differing from those contemplated
by forward-looking statements in this news release can be found
under the heading “Risk Factors” in Mandalay’s annual information
form dated March 28, 2019 and Mandalay’s prospectus supplement
dated February 12, 2019, copies of which are available under
Mandalay’s profile at www.sedar.com. In addition, there can be no
assurance that any inferred resources that are discovered as a
result of additional drilling will ever be upgraded to proven or
probable reserves. Although Mandalay has attempted to identify
important factors that could cause actual actions, events or
results to differ materially from those described in
forward-looking statements, there may be other factors that cause
actions, events or results not to be as anticipated, estimated or
intended. There can be no assurance that forward-looking statements
will prove to be accurate, as actual results and future events
could differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on
forward-looking statements.
Non-IFRS Measures
This news release may contain references to
adjusted EBITDA, adjusted net income, cash and all-in cost per
saleable ounce of gold equivalent produced, all of which are
non-IFRS measures and do not have standardized meanings under IFRS.
Therefore, these measures may not be comparable to similar measures
presented by other issuers.
Management uses adjusted EBITDA as a measure of
operating performance to assist in assessing the Company’s ability
to generate liquidity through operating cash flow to fund future
working capital needs and to fund future capital expenditures, as
well as to assist in comparing financial performance from period to
period on a consistent basis. Management uses adjusted net income
in order to facilitate an understanding of the Company’s financial
performance prior to the impact of non-recurring or special items.
The Company believes that these measures are used by and are useful
to investors and other users of the Company’s financial statements
in evaluating the Company’s operating and cash performance because
they allow for analysis of its financial results without regard to
special, non-cash and other non-core items, which can vary
substantially from company to company and over different
periods.
The Company defines adjusted EBITDA as income
from mine operations, net of general and administrative costs, and
before interest, taxes, non-cash charges/(income), intercompany
charges and finance costs. A reconciliation between adjusted EBITDA
and net income is included in the MD&A.
For Costerfield, saleable equivalent gold ounces
produced is calculated by adding to saleable gold ounces produced,
the saleable antimony tonnes produced times the average antimony
price in the period divided by the average gold price in the
period. The total cash operating cost associated with the
production of these saleable equivalent ounces produced in the
period is then divided by the saleable equivalent gold ounces
produced to yield the cash cost per saleable equivalent ounce
produced. The cash cost excludes royalty expenses. Site all-in
costs include total cash operating costs, royalty expense,
accretion, depletion, depreciation and amortization. The site
all-in cost is then divided by the saleable equivalent gold ounces
produced to yield the site all-in cost per saleable equivalent
ounce produced.
For Björkdal, the total cash operating cost
associated with the production of saleable gold ounces produced in
the period is then divided by the saleable gold ounces produced to
yield the cash cost per saleable gold ounce produced. The cash cost
excludes royalty expenses. Site all-in costs include total cash
operating costs, royalty expense, accretion, depletion,
depreciation and amortization. The site all-in cost is then divided
by the saleable gold ounces produced to yield the site all-in cost
per saleable gold ounce produced.
For the Company as a whole, cash cost per
saleable gold equivalent ounce is calculated by summing the gold
equivalent ounces produced by each site and dividing the total by
the sum of cash operating costs at the sites plus corporate
overhead spending.
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