Mandalay Resources Corporation ("Mandalay" or the "Company") (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 (“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.
Fourth Quarter 2020
Highlights:
- Revenue of $45.3 million;
- Adjusted EBITDA of $25.3 million,
third-highest quarterly result in Company history;
- Consolidated net income of $14.7
million, or $0.16 per share; and
- Adjusted net income of $12.1
million, or $0.13 per share.
Full-Year 2020 Highlights:
- Revenue of $179.0 million, highest
full-year result since 2016;
- Record adjusted EBITDA of $94.2
million;
- Record adjusted net income of $34.7
million, or $0.38 per share;
- Consolidated net income of $9.3
million, or $0.10 per share;
- $25.3 million in free cash flow and
$72.2 million in net cash flows from operating activities; and
- Consolidated cash cost of $843 per
Au Eq. oz produced, a 21% year-over-year improvement.
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:
|
Three monthsendedDec 31,
2020 |
Three monthsendedDec 31,
2019 |
Year endedDec 31,
2020 |
YearendedDec 31,
2019 |
|
$’000 |
$’000 |
$’000 |
$’000 |
Revenue |
45,320 |
|
22,737 |
|
178,974 |
|
107,795 |
|
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 |
) |
Capital expenditure |
14,194 |
|
10,225 |
|
46,878 |
|
37,969 |
|
Total assets |
301,284 |
|
258,592 |
|
301,284 |
|
258,592 |
|
Total liabilities |
165,505 |
|
146,840 |
|
165,505 |
|
146,840 |
|
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 |
) |
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 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:
|
Three monthsended Dec 31,
2020 |
Three monthsended Dec 31,
2019 |
Yearended Dec 31,
2020 |
Yearended Dec 31,
2019 |
$’000 |
$’000 |
$’000 |
$’000 |
Björkdal |
Gold produced (oz) |
12,252 |
|
10,990 |
|
45,296 |
|
51,498 |
|
Cash cost (1) per oz gold produced ($) |
1,251 |
|
1,071 |
|
1,112 |
|
945 |
|
All-in sustaining cost (1) per oz gold produced ($) |
1,616 |
|
1,416 |
|
1,435 |
|
1,203 |
|
Capital development |
2,337 |
|
1,441 |
|
9,341 |
|
6,939 |
|
Property, plant and equipment purchases |
4,832 |
|
3,408 |
|
12,025 |
|
10,162 |
|
Capitalized exploration |
586 |
|
768 |
|
1,929 |
|
1,472 |
|
Costerfield |
Gold produced (oz) |
12,236 |
|
4,749 |
|
44,958 |
|
15,258 |
|
Antimony produced (t) |
858 |
|
684 |
|
3,903 |
|
2,032 |
|
Gold equivalent produced (oz) |
15,099 |
|
7,604 |
|
58,148 |
|
25,161 |
|
Cash cost (1) per oz gold eq. produced ($) |
668 |
|
1,083 |
|
634 |
|
1,313 |
|
All-in sustaining cost (1) per oz gold eq. produced ($) |
1,077 |
|
1,640 |
|
1,010 |
|
2,024 |
|
Capital development |
3,599 |
|
3,776 |
|
14,231 |
|
13,967 |
|
Property, plant and equipment purchases |
1,886 |
|
349 |
|
4,951 |
|
3,422 |
|
Capitalized exploration |
937 |
|
461 |
|
4,245 |
|
1,776 |
|
Consolidated |
Gold equivalent produced (oz) |
27,351 |
|
18,594 |
|
103,444 |
|
76,659 |
|
Cash cost* per oz gold eq. produced ($) |
929 |
|
1,076 |
|
843 |
|
1,066 |
|
All-in sustaining cost (1) per oz gold eq. produced ($) |
1,350 |
|
1,568 |
|
1,254 |
|
1,549 |
|
Capital development |
5,936 |
|
5,217 |
|
23,572 |
|
20,906 |
|
Property, plant and equipment purchases |
6,718 |
|
3,757 |
|
16,976 |
|
13,584 |
|
Capitalized exploration (2) |
1,540 |
|
1,251 |
|
6,330 |
|
3,479 |
|
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.
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 (“Equus”) 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.
Challacollo, Chile
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.
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.
Conference Call
Mandalay’s management will be hosting a
conference call for investors and analysts on February 26, 2021 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: |
13716917 |
A replay of the conference call will be
available until 11:59 PM (Toronto time), March
12, 2021 and can be accessed using the following dial-in
number:
Encore Toll Free Dial-in Number: |
(877) 660-6853 |
Encore ID: |
13716917 |
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.
Forward-Looking Statements
This news release contains "forward-looking
statements" within the meaning of applicable securities laws,
including statements regarding the Company’s anticipated
performance in 2021. 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 30, 2020, a copy of
which is 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, free cash flow, cash cost per
saleable ounce of gold equivalent produced and all-in sustaining
cost 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 and free cash
flow as measures 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 administration costs, and before
interest, taxes, non-cash charges/(income), intercompany charges
and finance costs. The Company defines adjusted net income as net
income before special items. Special items are items of income and
expense that are presented separately due to their nature and, in
some cases, expected infrequency of the events giving rise to them.
A reconciliation between adjusted EBITDA and adjusted net income,
on the one hand, and consolidated net income, on the other hand, is
included in the MD&A.
The Company defines free cash flow as a measure
of the Corporation’s ability to generate and manage liquidity. It
is calculated starting with the net cash flows from operating
activities (as per IFRS) and then subtracting capital expenditures
and lease payments. Refer to Section 1.2 of MD&A for a
reconciliation between free cash flow and net cash flows from
operating activities.
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
sustaining costs include total cash operating costs, sustaining
mining capital, royalty expense, accretion and depletion.
Sustaining capital reflects the capital required to maintain each
site’s current level of operations. The sites the all-in sustaining
cost per ounce of saleable gold equivalent in a period equals the
all-in sustaining cost divided by the saleable equivalent gold
ounces produced in the period.
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. Site all-in sustaining costs include
total cash operating costs, sustaining mining capital, royalty
expense, accretion and depletion. Sustaining capital reflects the
capital required to maintain each site’s current level of
operations. The sites the all-in sustaining cost per ounce of
saleable gold equivalent in a period equals the all-in sustaining
cost divided by the saleable equivalent gold ounces produced in the
period.
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. Consolidated cash
cost excludes royalty and corporate level general and
administrative expenses. This definition was updated in the third
quarter of 2020 to exclude corporate general and administrative
expenses to better align with industry standard. All-in sustaining
cost per saleable ounce gold equivalent in the period equals the
sum of cash costs associated with the production of gold equivalent
ounces at all operating sites in the period plus corporate overhead
expense in the period plus sustaining mining capital, royalty
expense, accretion, depletion, depreciation and amortization,
divided by the total saleable gold equivalent ounces produced in
the period. A reconciliation between cost of sales and cash costs,
and also cash cost to all-in sustaining costs are included in the
MD&A.
For Further Information:
Dominic DuffyPresident and Chief Executive
Officer
Edison NguyenManager, Analytics and Investor
Relations
Contact:(647) 260-1566
Mandalay Resources (TSX:MND)
Historical Stock Chart
From Apr 2024 to May 2024
Mandalay Resources (TSX:MND)
Historical Stock Chart
From May 2023 to May 2024