TORONTO, Nov. 5, 2015 (GLOBE NEWSWIRE) — Mandalay Resources Corporation (“Mandalay” or the “Company”) (TSX:MND) announced today revenue of $43.3 million, adjusted EBITDA of $11.5 million and net profit of $2.2 million, or $0.01 per share, for the third quarter of 2015. The Company’s unaudited consolidated financial results for the three months ended September 30, 2015, 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.
In accordance with the Company’s dividend policy, Mandalay’s Board of Directors declared a quarterly dividend of $2,596,898 (6% of the trailing quarter’s gross revenue), or $0.0063 per share (CDN$0.0083 per share), payable on November 26, 2015 to shareholders of record as of November 16, 2015.
Brad Mills, Chief Executive Officer of Mandalay, commented, “Costerfield delivered excellent low cash operating costs and all-in costs of $553 and $763 per gold equivalent oz (“Au Eq.”), respectively. Björkdal achieved cash costs of $934 per oz gold (“Au”) and all-in costs of $1,110 per oz Au. Bjorkdal’s higher cost performance in the quarter reflects the lower unit volumes produced primarily as a result of lower grades mined. Cerro Bayo delivered cash costs per ounce silver (“Ag”) net of Au credit of $8.31 and all-in costs of $15.18/oz. Cerro Bayo unit volumes and costs were impacted by the strike that occurred at the end of June and early July and the lower mine grades produced as we transition from the Fabiola and Dagny mines to the Delia SE and Coyita mines.
“Financially, the Company maintained strong operating margins despite lower prices with EBITDA margins for the three and nine months to September 30, 2015 of 27% and 36%, respectively, and net income margins for the same period of 5% and 13%, respectively. The Company’s balance sheet also remains solid with a current ratio of 4:1 (excluding the exchangeable loan from current liabilities).”
Mr. Mills continued, “For the final quarter of the year, we expect Costerfield to maintain its current cost and volume performance. Cerro Bayo grades are expected to improve as we begin production from the higher grade Delia SE vein. We expect Björkdal to start to produce better grade in the coming quarters due to operational improvements focused on improving the grade of underground mining.
“Based on our results to date, for the full year the Company expects to achieve saleable production of 105,000 – 110,000 ounces of gold (as announced on October 13, 2015 and relative to our previous guidance range of 101,000 to 116,000 of Au), 2.4 – 2.6 million ounces of silver production (relative to our previous guidance range of 2.7 to 3.1 million ounces of Ag) and 3,600 – 3,800 tonnes of antimony production (relative to our previous guidance range of 3,200 – 3,500 tonnes of Sb).”
Third Quarter Financial Highlights
The following table summarizes the Company’s financial results for the three and nine month periods ended September 30, 2015 and 2014:
|
Particulars |
Three months ended September 30, 2015 |
Three months ended September 30, 2014 |
Nine months ended September 30, 2015 |
Nine months ended September 30, 2014 |
| $’000 | $’000 | $’000 | $’000 | |
| Revenue | 43,282 | 34,676 | 150,854 | 117,656 |
| Adjusted EBITDA | 11,485 | 10,541 | 53,992 | 42,971 |
| Income from mine operations before depreciation and depletion | 14,336 | 13,493 | 59,999 | 49,724 |
| Net income | 2,180 | (692) | 19,737 | 9,988 |
| Total assets | 349,339 | 351,768 | 349,339 | 351,768 |
| Total liabilities | 132,904 | 136,357 | 132,904 | 136,357 |
| Earnings per share | $0.01 | $(0.00) | $0.05 | $0.03 |
Increases in revenue and adjusted EBITDA during the third quarter of 2015 relative to the same quarter in 2014 were principally due to larger volumes sold and better cost performance. Factors affecting sales volumes include the inclusion of Björkdal in this quarter and greater Au and Sb production at Costerfield, partially offset by lower Ag and Au production at Cerro Bayo due to expected lower-grade ore mined and processed in the period. The principal factors impacting cash costs included lower year-on-year quarterly operational country exchange rates (declines of AUD$ 22%, Chilean Peso 17% and SEK 22%) and 48% lower petroleum prices.
Net income is inclusive of a non-cash, non-operating loss of $29,000 related to marketable securities, a gain of $667,000 for the derivative portion of the five-year exchangeable loan, a loss of $200,000 related to a crude oil call option and deferred tax expense of $0.9 million. Excluding these items, the gain after tax from underlying operations for the third quarter of 2015 was $2.6 million. By comparison, in the third quarter of 2014 the Company’s net loss of $0.7 million ($0.00 per share) was inclusive of non-cash, non-operating gain of $72,000 relating to a mark-to-market adjustment of financing warrants, a loss of $38,000 related to marketable securities and an AUD/USD currency option and deferred tax income of $144,000. Excluding these items, the loss after tax from underlying operations in the third quarter of 2014 was $0.9 million.
On August 27, 2015, Mandalay paid a quarterly dividend in the aggregate amount of $3 million (CDN$ 0.0098 per share).
Production, Cost and Capital Expenditure Guidance for 2016
Mandalay offers the following production, cost, and capital expenditure guidance for 2016.
| Categories | Total | Cerro Bayo | Costerfield | Björkdal | |
| Saleable Ag produced | oz million | 2.9-3.3 | 2.9-3.3 | ||
| Saleable Au produced | oz ‘000 | 100-115 | 24-30 | 26-30 | 50-55 |
| Saleable Sb produced | t ‘000 | 3.0 to 3.5 | 3.0 to 3.5 | ||
| Total Saleable Au Eq produced | Au Eq. oz ‘000 | 165-180 | |||
| Total Cash Cost* | $/ Au Eq. oz | 690-810 | 600-720 | 650-770 | 850-970 |
| Capital expenditure | USD million | 31-37 | 13-15 | 2-3 | 16-19 |
| Exploration | USD million | 7 | 2 | 2 | 3 |
| *assumes Au $1,202/oz, Ag $16.87/oz, Sb $6,820/t | |||||
Third Quarter 2015 Operational Highlights
Costerfield gold-antimony mine, Victoria, Australia
In the third quarter of 2015, Costerfield had saleable Au production of 10,930 oz versus 9,563 oz in the previous quarter and 9,454 oz in the third quarter of 2014. Saleable Sb production for the third quarter of 2015 was 964 t versus 842 t in the previous quarter and 1,000 t in the third quarter of 2015. Increased gold production in the current quarter compared to the corresponding quarter of the previous year was mainly due to increased mine output and higher gold grades.
Cash cost per Au Eq. oz produced in the third quarter of 2015 was $553 versus $747 in the third quarter of 2014. The site all-in cost per Au Eq. oz produced in the third quarter of 2015 was $763, versus $1,047 in the third quarter of 2014.
Cerro Bayo silver-gold mine, Patagonia, Chile
During the third quarter of 2015, the Cerro Bayo mine produced 632,498 Ag and 5,305 oz Au versus 597,489 Ag and 5,361 oz Au in the previous quarter and 823,379 oz Ag and 6,445 oz Au in the third quarter of 2014. Lower production in the current quarter is primarily the result of planned lower mine grades produced in the period as we near the end of mining in the Fabiola vein and transition to the Delia SE mine.
Cash cost per oz Ag produced net of Au by-product was $8.31 during the third quarter of 2015, higher than the $6.26 in the third quarter of 2014. Site all-in costs were $15.18/oz versus $12.23/oz in the previous year.
Björkdal gold mine, Sweden
In the third quarter of 2015, Björkdal produced 9,761 oz Au versus 11,494 oz produced in the prior quarter and 3,091 oz Au in the third quarter of 2014 (third quarter 2014 comparative amounts cover the period September 9, 2014 (the date on which Mandalay acquired Björkdal) to September 30, 2014). Production declined slightly from the second quarter to the third quarter as head grades declined from 1.30 to 1.07 g/t Au. We expect significant improvements in underground head grades at Björkdal as the new assay lab is commissioned, which will allow real time grade control and rejection of waste and low grade material prior to milling. Further grade improvements are expected from better stope designs and reductions in dilution as our knowledge of gold distribution in the Björkdal system improves.
Cash cost per gold equivalent ounce produced in the third quarter of 2015 was $934, higher than the $706 in the third quarter of 2014 primarily due to the lower volumes produced. The site all-in cost per Au Eq. oz produced in the third quarter of 2015 was $1,110 versus $852/oz in the previous year.
The following table summarizes the Company’s capital expenditure and unit costs for the three months ended September 30, 2015 and September 30, 2014:
|
Three months ended September 30, 2015 |
Three months ended September 30, 2014 |
|
| $’000 | $’000 | |
| Capital development | 5,228 | 7,457 |
| Capital purchases | 3,357 | 2,463 |
| Capital exploration | 2,449 | 4,166 |
| Cerro Bayo: Cash cost per oz Ag produced net of Au byproduct credit | $8.31 | $6.26 |
| Cerro Bayo: Site all-in cost per oz Ag produced net of Au byproduct credit | $15.18 | $12.23 |
| Costerfield: Cash cost per oz Au equivalent produced | $553 | $747 |
| Costerfield: Site all-in cost per oz Au equivalent produced | $763 | $1,047 |
| Björkdal: Cash cost per oz Au equivalent produced | $934 | $706 |
| Björkdal: Site all-in cost per oz Au equivalent produced | $1,110 | $852 |
| Company Average Cash Cost per oz Au Eq. Oz | $783 | $739 |
| Company Average All-in Cost per oz Au Eq. Oz. | $1,032 | $1,009 |
Conference Call
Mandalay’s management will be hosting a conference call for investors and analysts on November 6, 2015 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: | 13622979 |
A replay of the conference call will be available until 23:59 pm (Toronto time), November 20, 2015 and can be accessed using the following dial-in number:
| Encore Toll Free Dial-in Number: | (877) 660-6853 |
| Encore ID: | 13622979 |
About Mandalay Resources Corporation:
Mandalay Resources is a Canadian-based natural resource company with producing assets in Australia, Chile and Sweden, and a development project in Chile. The Company is focused on executing a roll-up strategy, creating critical mass by aggregating advanced or in-production gold, copper, silver and antimony projects in Australia, the Americas, and Europe to generate near-term cash flow and shareholder value.
Forward-Looking Statements
This news release contains “forward-looking statements” within the meaning of applicable securities laws, including guidance as to anticipated gold, silver, 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 31, 2015 a copy of which is available under Mandalay’s profile at www.sedar.com. 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, cash cost per ounce of gold equivalent produced, cash cost per saleable ounce of silver produced net of gold credits, site all-in cost per ounce of gold equivalent produced, site all-in cost per saleable ounce of silver produced net of gold credits and all-in costs, which are all 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 measures of operating performance to assist in comparing the Company’s ability to generate liquidity through operating cash flow to fund future working capital needs and fund future capital expenditures and to assist in financial performance from period to period on a consistent basis. 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 our 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 earnings before interest, taxes, non-cash charges and finance costs. For a detailed reconciliation of net income to adjusted EBITDA, please refer to page 13 of management’s discussion and analysis of the Company’s financial statements for the third quarter of 2015.
Equivalent gold ounces produced is calculated by adding to gold ounces produced, the 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 equivalent ounces produced in the period is then divided by the equivalent gold ounces produced to yield the cash cost per equivalent ounce produced. The cash cost excludes royalty expenses. Values for 2014 have been re‐calculated accordingly. Site all-in costs include total cash operating costs, royalty expense, depletion, depreciation, accretion and write-off of exploration and evaluation. The site all-in cost is then divided by the equivalent gold ounces produced to yield the site all-in cost per equivalent ounce produced.
The cash cost per silver ounce produced net of gold byproduct credit is calculated by deducting the gold credit (which equals ounces gold produced times the realized gold price in the period) from the cash operating costs in the period and dividing the resultant number by the silver ounces produced in the period. The cash cost excludes royalty expenses. The site all-in cost per silver ounce produced net of gold byproduct credit is calculated by adding royalty expenses, depletion, depreciation, accretion and write-off of exploration and evaluation to the cash cost net of gold byproduct credit dividing the resultant number by the silver ounces produced in the period.
All-in costs per gold equivalent ounce includes total cash operating costs, royalty expense, depletion, depreciation, accretion, and write-off of exploration and evaluation. Equivalent gold ounces produced is calculated by adding to gold ounces produced, the antimony tonnes produced times the average antimony price in the period divided by the average gold price in the period. The cost is then divided by the equivalent gold ounces produced to yield the all-in cost per equivalent ounce produced.
CONTACT: Bradford Mills
Chief Executive Officer
Greg DiTomaso
Director of Investor Relations
1.647.260.1566