Mandalay Resources Corporation ("Mandalay" or the "Company") (TSX:
MND, OTCQB: MNDJF) is pleased to announce its financial results for
the quarter and year ended December 31, 2021.
The Company’s audited consolidated financial
results for the year ended December 31, 2021, 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 2021
Highlights:
- Consolidated quarterly revenue of $72.9 million, highest ever
quarterly result;
- Adjusted EBITDA1 of $40.6 million, highest ever quarterly
result; and
- Consolidated net income of $15.3 million ($0.17 or C$0.21 per
share).
Full-Year 2021 Highlights:
- Record revenue of $229.4
million;
- Record adjusted EBITDA1 of $115.0
million;
- Consolidated net income of $54.9
million ($0.60 or C$0.75 per share);
- $18.2 million in free cash flow1
and $62.0 million in net cash flows from operating activities;
and
- $30.7 million in cash on hand at
the end of December 2021, $47.2 million in cash on hand at the end
of the January 2022.
Dominic Duffy, President and CEO of Mandalay,
commented:
“Mandalay’s strong results this quarter and for
the full-year 2021 provides further evidence of the successful
execution of our strategy. We achieved significant financial
milestones in 2021 including a 28% year-over-year growth in revenue
for a record $229.4 million by year-end, resulting in over $18
million in free cash flow. The Company is now in an excellent
financial position with a strong balance sheet, and I would like to
thank all of our employees and contractors for their continued
commitment in making Mandalay a leading junior gold producer.
“The main driver behind this is Costerfield’s
continued operational strength, making it a lynchpin to Mandalay’s
success today and going forward given its growing Mineral Reserves
and Resources as indicated in our February 16, 2022, press release.
Costerfield generated $33.0 million in quarterly adjusted EBITDA1
and $17.8 million in net income, bringing the site’s year-end
totals to $88.9 million and $47.8 million, respectively. While at
Björkdal, its continued production improvements over the second
half of the year sets the operation up for a much-improved 2022,
while also investing in what is proving up to be a very successful
exploration program. The site generated $85.3 million, $27.9
million and $4.9 million in revenue, adjusted EBITDA1 and net
income, respectively, in 2021.
“In 2021, the Company also generated a
consolidated $115.0 million in adjusted EBITDA1 for a margin of 50%
– another Company record. We earned $22.0 million (C$0.30 per
share) in adjusted net income and $15.3 million (C$0.21 per share)
in net income during the fourth quarter, marking our eighth
consecutive quarter of profitability. For the full-year, the
Company generated $49.2 million (C$0.67 per share) in consolidated
adjusted net income and $54.9 million (C$0.75 per share) in net
income.
“Mandalay ended 2021 with a cash balance of
$30.7 million, a slight increase as compared to the third quarter
of 2021, however, this does not consider approximately $15 million
in cash normally scheduled to be received in December but was
pushed into January 2022 due to the ongoing global logistic
challenges. As a result, at the end of January 2022, Mandalay had a
cash balance of $47.2 million. Moreover, during the first half of
2022, Mandalay anticipates the release of a minimum of C$3.0
million as part-compensation for worked finalized at Lupin during
2021. During 2021, the Company repaid $15.1 million towards its
Syndicated Facility, leaving $43.9 million owing.
“Our consolidated cash cost for 2021 was $873
per saleable gold equivalent ounce produced; a 4% increase compared
to the $843 for full-year 2020. This increase was mainly associated
with the startup costs of the processing facility at Cerro Bayo and
the higher operating expenses at Björkdal. While our all-in
sustaining cost per saleable gold equivalent ounce produced
declined 3% year-over-year to $1,212.
“2021 was a statement year for Mandalay, we’ve
now demonstrated 24 months of operational execution and look to
carry this momentum throughout 2022 by obtaining higher production
numbers and better cash flows, which ultimately should lead to
better shareholder returns.”
____________________________
1 Adjusted EBITDA and free cash flow are not
standardized financial measures under IFRS and might not be
comparable to similar financial measures disclosed by other
issuers. Refer to “Non-IFRS Measures” at the end of this press
release for further information.
Fourth Quarter and Full-Year 2021 Financial
Summary
The following table summarizes the Company’s
financial results for the three months and year ended December 31,
2021, and 2020:
|
Three
months ended December
31, 2021 |
Three
months ended December
31, 2020 |
Year ended December
31, 2021 |
Year ended December
31, 2020 |
$’000 |
$’000 |
$’000 |
$’000 |
Revenue |
72,904 |
45,320 |
229,396 |
178,974 |
Cost of sales |
30,609 |
18,798 |
108,853 |
78,782 |
Adjusted EBITDA (1) |
40,648 |
25,346 |
114,960 |
94,247 |
Income from mine ops before depreciation, depletion |
42,295 |
26,522 |
120,543 |
100,192 |
Adjusted net income (1) |
21,992 |
12,065 |
49,203 |
34,704 |
Consolidated net income |
15,334 |
14,722 |
54,879 |
9,309 |
Capital expenditure |
12,250 |
14,194 |
50,303 |
46,878 |
Total assets |
317,843 |
301,284 |
317,843 |
301,284 |
Total liabilities |
141,156 |
165,505 |
141,156 |
165,505 |
Adjusted net income per share (1) |
0.24 |
0.13 |
0.54 |
0.38 |
Consolidated net income per share |
0.17 |
0.16 |
0.60 |
0.10 |
- Adjusted EBITDA, adjusted net
income and adjusted net income per share are non-IFRS measures,
defined at the end of this press release “Non-IFRS Measures”.
In the fourth quarter of 2021, Mandalay
generated consolidated revenue of $72.9 million, 61% higher than in
the fourth quarter of 2020. This increase is attributable to
Mandalay selling 14,162 more gold equivalent ounces combined in the
fourth quarter of 2021 compared to the fourth quarter of 2020. The
Company’s realized gold price in the fourth quarter of 2021 flat
year-over-year, and the realized price of antimony increased by
254% compared to the fourth quarter of 2020.
Consolidated cash cost per ounce of $836 was lower in the fourth
quarter of 2021 compared to $929 in the fourth quarter of 2020.
Cost of sales during the fourth quarter of 2021 versus the fourth
quarter of 2020 were $9.9 million higher at Costerfield due to
higher production. Consolidated general and administrative costs
were $0.5 million higher as compared to the prior year quarter.
Mandalay generated adjusted EBITDA of $40.6
million in the fourth quarter of 2021, 60% higher compared to the
Company’s adjusted EBITDA of $25.3 million in the year ago quarter.
Adjusted net income was $22.0 million in the fourth quarter of
2021, which excludes the $4.1 million fair value loss related to
the gold hedges associated with the Syndicated Facility, $7.1
million gain on sale of subsidiary, $6.7 million loss on revision
of reclamation liability and $0.7 million fair value loss related
to mark to market adjustment, compared to an adjusted net income of
$12.1 million in the fourth quarter of 2020. Consolidated net
income was $15.3 million for the fourth quarter of 2021, versus
$14.7 million in the fourth quarter of 2020. Mandalay ended the
fourth quarter of 2021 with $30.7 million in cash and cash
equivalents.
Fourth Quarter and Full-Year 2021 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, 2021 and 2020:
|
Three
months ended December
31, 2021 |
Three months ended December 31,
2020 |
Year ended December
31, 2021 |
Year ended December
31, 2020 |
$’000 |
$’000 |
$’000 |
$’000 |
Costerfield |
Gold produced (oz) |
13,397 |
12,236 |
47,753 |
44,958 |
Antimony produced (t) |
830 |
858 |
3,380 |
3,903 |
Gold equivalent produced (oz) |
19,507 |
15,099 |
68,729 |
58,148 |
Cash cost (1) per oz gold eq. produced ($) |
557 |
668 |
593 |
634 |
All-in sustaining cost (1) per oz gold eq. prod. ($) |
731 |
1,077 |
866 |
1,010 |
Capital development |
1,415 |
3,599 |
10,426 |
14,231 |
Property, plant and equipment purchases |
723 |
1,886 |
4,302 |
4,951 |
Capitalized exploration |
1,597 |
937 |
5,940 |
4,245 |
Björkdal |
Gold produced (oz) |
11,190 |
12,252 |
45,236 |
45,296 |
Cash cost (1) per oz gold produced ($) |
1,227 |
1,251 |
1,233 |
1,112 |
All-in sustaining cost (1) per oz gold produced ($) |
1,700 |
1,616 |
1,609 |
1,435 |
Capital development |
2,803 |
2,337 |
10,015 |
9,341 |
Property, plant and equipment purchases |
4,512 |
4,832 |
16,095 |
12,025 |
Capitalized exploration |
753 |
586 |
2,376 |
1,929 |
Cerro Bayo |
Gold produced (oz) |
1,009 |
- |
5,303 |
- |
Silver produced (oz) |
50,556 |
- |
266,596 |
- |
Gold equivalent produced (oz) |
1,666 |
- |
9,037 |
- |
Cash cost (1) per oz gold eq. produced ($) |
1,476 |
- |
1,199 |
- |
All-in sustaining cost (1) per oz gold eq. prod. ($) |
1,604 |
- |
1,246 |
- |
Consolidated |
Gold equivalent produced (oz) |
32,362 |
27,351 |
123,002 |
103,444 |
Cash cost(1) per oz gold eq. produced ($) |
836 |
929 |
873 |
843 |
All-in sustaining cost (1) per oz gold eq. prod. ($) |
1,162 |
1,350 |
1,212 |
1,254 |
Capital development |
4,218 |
5,936 |
20,441 |
23,572 |
Property, plant and equipment purchases |
5,449 |
6,718 |
20,825 |
16,976 |
Capitalized exploration (2) |
2,583 |
1,540 |
9,037 |
6,330 |
- 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.
- Includes capitalized exploration
relating to other non-core assets.
Costerfield gold-antimony mine, Victoria, Australia
Costerfield produced 13,397 ounces of gold and
830 tonnes of antimony for 19,507 gold equivalent ounces in the
fourth quarter of 2021. Cash and all-in sustaining costs at
Costerfield of $557/oz and $731/oz, respectively, compared to cash
and all-in sustaining costs of $668/oz and $1,077/oz, respectively,
in the fourth quarter of 2020.
Björkdal gold mine, Skellefteå, Sweden
Björkdal produced 11,190 ounces of gold in the
fourth quarter of 2021 with cash and all-in sustaining costs of
$1,227/oz and $1,700/oz, respectively, compared to cash and all-in
sustaining costs of $1,251/oz and $1,616/oz, respectively, in the
fourth quarter of 2020.
Cerro Bayo silver-gold mine, Patagonia,
Chile
In the fourth quarter of 2021, the Company spent
nil on care and maintenance expenses at Cerro Bayo, compared to
$0.6 million in the fourth quarter of 2020. During the fourth
quarter of 2021, Cerro Bayo produced 1,009 ounces of gold and
50,556 ounces of silver for 1,666 gold equivalent ounces in the
fourth quarter of 2021 at a cash cost of $1,476/oz.
On December 1, 2021, the Company completed the
sale of its Cerro Bayo mine to Equus Mining Ltd. The Company
recognized a gain of $7.1 million from the sale.
Lupin, Nunavut, Canada
Care and maintenance spending at Lupin was $0.1
million during the fourth quarter of 2021, compared to $0.1 million
in the fourth quarter of 2020. Reclamation spending at Lupin was
$6.1 million during 2021 compared to $10.5 million during 2020. The
full closure of Lupin will continue in the 2022 season funded by
ongoing progressive security reductions held by the
Crown-Indigenous Relations and Northern Affairs Canada.
Challacollo, Chile
On April 19, 2021, Aftermath Silver Ltd.
(“Aftermath Silver”) 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 December 31, 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 Q4 2021.
Conference Call
Mandalay’s management will be hosting a
conference call for investors and analysts on February 25, 2022, at
8:00 AM (Toronto time).
Analysts and interested investors are invited to
participate using the following dial-in numbers:
Participant Number (Toll free): |
877 407 8289 |
Participant Number: |
201 689 8341 |
Conference ID: |
13727325 |
A replay of the conference call will be
available until 11:59 PM (Toronto time), March 11,
2022, and can be accessed using the following dial-in
number:
Encore Toll Free Dial-in Number: |
877 660 6853 |
Encore ID: |
13727325 |
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.
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 31, 2021, 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 site’s 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 Cerro Bayo, saleable equivalent gold ounces
produced is calculated by adding to saleable gold ounces produced,
the saleable silver ounces produced times the average silver 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
site’s 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 site’s 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 Duffy President and Chief Executive
OfficerEdison NguyenManager, Analytics and Investor
RelationsContact: (647) 260-1566 ext. 1
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