(Mandalay, 24.Feb.2023) — Mandalay Resources Corporation (TSX: MND) (OTCQB: MNDJF) announced its financial results for the fourth quarter and year ended December 31, 2022.
The company’s audited consolidated financial results for the year ended December 31, 2022, 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 2022 Highlights:
- Refinancing of existing debt facility and $15mn debt repayment of new Revolving Credit Facility, currently $20mn drawn down on this facility;
- Consolidated quarterly revenue of $41.4mn;
- $20.9mn in net cash flow from operating activities and $10.4mn in free cash flow1; and
- Consolidated quarterly adjusted EBITDA1 of $20.1mn.
Full-Year 2022 Highlights:
- Improved net cash position with $38.4mn of cash on hand and $24mn in total interest-bearing debt outstanding;
- Revenue of $191.7mn;
- $80mn in net cash flow from operating activities and $45mn in free cash flow1; and
- Consolidated adjusted EBITDA1 of $91.2mn.
Dominic Duffy, President and CEO of Mandalay, commented:
“Mandalay finished the year strongly and continued tracking towards our long-term growth and value creation objectives. We are pleased to have strengthened our balance sheet while improving our net cash position over the year. During the fourth quarter of 2022, Mandalay earned $41.4mn in revenue and $20.1mn in adjusted EBITDA1. The company generated $20.9mn in net cash flow from operating activities and $10.4mn in free cash flow1 leading to adjusted net income1 of $5.2mn ($0.06 or C$0.08 per share), marking our tenth consecutive quarter of profitability.
“For the full year of 2022, the company generated $191.7mn in revenue, which resulted in adjusted EBITDA1 of $91.2mn, a margin of 48%, and $45.0mn in free cash flow1. This compares to annual results for 2021 of adjusted EBITDA1 of $115mn, a margin of 50%, and $18.2mn in free cash flow1. Mandalay’s healthy results this quarter and for the full year 2022, is a reflection of the team’s hard work on controlling our costs in this tough economic environment. From a cash2 and all-in sustaining cost2 perspective, both per ounce cost metrics remained relatively in line during 2022 as compared to 2021. For the year 2022, on a consolidated basis our cash cost2 per ounce of saleable gold equivalent produced was $896, while our all-in sustaining cost2 was $1,207.
“Mandalay ended the year with $38.4mn in cash on hand and $24mn in total interest-bearing debt outstanding, leaving us in a net cash position of $14.4mn. This is a $33.5mn improvement over our net debt position of $19.1mn at the end of 2021. We also refinanced our previous credit facility with a new Revolving Credit Facility at lower interest rates in the fourth quarter, leaving us in a stronger and more flexible position to manage our cash going forward. The $15mn repayment against this debt at the end of the year means that the company has $20mn of debt outstanding, excluding lease and equipment debt. A gold price hedge extension was not required for this facility, and with the expiry of hedges we were required to put in place in connection with the prior Syndicated Facility in June 2023, should allow for increased cash flow in the second half of 2023 in the current higher gold price environment.
“Costerfield continued its strong financial performance in the fourth quarter of 2022, with $25.8mn in revenue and $18.1mn in adjusted EBITDA2. Our high-grade deposits are providing consistently strong margins with processed grades of 12.7 g/t gold and 2.6% antimony. Gold and antimony recovery rates also improved as compared to the previous quarter to 94.2% and 93.8%, respectively.
“Björkdal generated stable sales of $15.6mn and $3.3mn in revenue and adjusted EBITDA2, respectively, during the fourth quarter.
“During 2022, we also maintained our focus on strategically investing in our exploration programs at both sites with more than $10mn spent. With the company’s strengthening balance sheet year-over-year and the commitment towards exploration, we are anticipating an even stronger 2023. We look forward to building upon operational and financial success and improving returns to our shareholders as we look towards generating stronger cash flow.”
Fourth Quarter and Full-Year 2022 Financial Summary
The following table summarizes the company’s consolidated financial results for the three months and years ended December 31, 2022, and 2021:
| Three monthsendedDecember 31,2022 | Three monthsendedDecember 31,2021 | YearendedDecember 31,2022 | YearendedDecember 31,2021 | |
| $’000 | $’000 | $’000 | $’000 | |
| Revenue | 41,381 | 72,904 | 191,699 | 229,396 |
| Cost of sales | 19,972 | 30,609 | 94,904 | 108,853 |
| Adjusted EBITDA (1) | 20,137 | 40,648 | 91,179 | 114,960 |
| Income from mine ops before depreciation and depletion(1) | 21,409 | 42,295 | 96,795 | 120,543 |
| Adjusted net income (1) | 5,202 | 21,992 | 26,971 | 49,203 |
| Consolidated net income | 1,043 | 15,334 | 23,506 | 54,879 |
| Capital expenditure | 11,028 | 12,250 | 40,686 | 50,303 |
| Total assets | 282,224 | 317,843 | 282,224 | 317,843 |
| Total liabilities | 98,070 | 141,156 | 98,070 | 141,156 |
| Adjusted net income per share (1) | 0.06 | 0.24 | 0.29 | 0.54 |
| Consolidated net income per share | 0.01 | 0.17 | 0.26 | 0.60 |
| 1. Income from mine operations before depreciation & depletion, Adjusted EBITDA, adjusted net income and adjusted net income per share 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. |
In Q4 2022, Mandalay generated consolidated revenue of $41.4mn, 43% lower than the $72.9mn in the fourth quarter of 2021. The gold equivalent ounces sold in Q4 2021 was exceptionally higher than average because of the level of concentrate sold at Costerfield during Q4 2021 due to the delay of shipments during Q3 2021. Adding to the difference was the absence of any revenue from Cerro Bayo in the current quarter compared to $2.2mn in Q4 2021. The company’s realized gold price in the fourth quarter of 2022 decreased by 9% compared to the fourth quarter of 2021, and the realized price of antimony decreased by 22%. In Q4 2022, Mandalay sold 14,422 fewer gold equivalent ounces than in Q4 2021.
Consolidated cash cost3 per ounce of $909 was higher in the fourth quarter of 2022 compared to $836 in the fourth quarter of 2021. Cost of sales during the fourth quarter of 2022 versus the fourth quarter of 2021 were $8.4mn lower at Costerfield and $0.3mn lower at Björkdal. Consolidated general and administrative costs were $0.4mn lower compared to the prior year quarter.
Mandalay generated adjusted EBITDA3 of $20.1mn in the fourth quarter of 2022, 50% lower than adjusted EBITDA3 of $40.6mn in the fourth quarter of 2021, decrease in adjusted EBITDA3 was due to lower revenue in the current quarter. Adjusted net income3 was $5.2mn in the fourth quarter of 2022, which excludes a $0.7mn unrealized loss on financial instruments and $2.8mn of revision of reclamation liability and $0.7mn of write down of assets, compared to an adjusted net income3 of $22mn in the fourth quarter of 2021.
Consolidated net income was $1mn for the fourth quarter of 2022, versus $15.3mn in the fourth quarter of 2021. Mandalay ended the fourth quarter of 2022 with $38.4mn in cash and cash equivalents.
Fourth Quarter and Full-Year 2022 Operational Summary
The table below summarizes the company’s operations, capital expenditures and operational unit costs for the three months and years ended December 31, 2022, and 2021:
| Three monthsendedDecember 31, 2022 | Three monthsendedDecember 31, 2021 | YearendedDecember 31, 2022 | YearendedDecember 31, 2021 | |
| $’000 | $’000 | $’000 | $’000 | |
| Costerfield | ||||
| Gold produced (oz) | 12,085 | 13,397 | 47,887 | 47,753 |
| Antimony produced (t) | 504 | 830 | 2,292 | 3,380 |
| Gold equivalent produced (oz) | 15,427 | 19,507 | 64,659 | 68,729 |
| Cash cost (1) per oz gold eq. produced ($) | 608 | 557 | 624 | 593 |
| All-in sustaining cost (1) per oz gold eq. produced ($) | 800 | 731 | 830 | 866 |
| Capital development | 678 | 1,415 | 3,521 | 10,426 |
| Property, plant and equipment purchases | 1,584 | 723 | 6,697 | 4,302 |
| Capitalized exploration | 1,747 | 1,597 | 6,421 | 5,940 |
| Björkdal | ||||
| Gold produced (oz) | 10,256 | 11,190 | 41,247 | 45,236 |
| Cash cost (1) per oz gold produced ($) | 1,362 | 1,227 | 1,321 | 1,233 |
| All-in sustaining cost (1) per oz gold produced ($) | 1,774 | 1,700 | 1,656 | 1,609 |
| Capital development | 2,570 | 2,803 | 8,748 | 10,015 |
| Property, plant and equipment purchases | 3,335 | 4,512 | 11,100 | 16,095 |
| Capitalized exploration | 1,114 | 753 | 3,885 | 2,376 |
| Cerro Bayo | ||||
| Gold produced (oz) | – | 1,009 | – | 5,303 |
| Silver produced (oz) | – | 50,556 | – | 266,596 |
| Gold equivalent produced (oz) | – | 1,665 | – | 9,037 |
| Cash cost (1) per oz gold eq. produced ($) | – | 1,476 | – | 1,199 |
| All-in sustaining cost (1) per oz gold eq.produced ($) | – | 1,604 | – | 1,246 |
| Consolidated | ||||
| Gold equivalent produced (oz) | 25,683 | 32,362 | 105,906 | 123,002 |
| Cash cost (1) per oz gold eq. produced ($) | 909 | 836 | 896 | 873 |
| All-in sustaining cost (1) per oz gold eq. produced ($) | 1,246 | 1,162 | 1,207 | 1,212 |
| Capital development | 3,248 | 4,218 | 12,269 | 20,441 |
| Property, plant and equipment purchases | 4,919 | 5,449 | 17,797 | 20,825 |
| Capitalized exploration (2) | 2,861 | 2,583 | 10,620 | 9,037 |
| 1. Cash cost and all-in sustaining cost 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. |
| 2. Includes capitalized exploration relating to other non-core assets. |
Costerfield gold-antimony mine, Victoria, Australia
Costerfield produced 12,085 ounces of gold and 504 tonnes of antimony for 15,427 gold equivalent ounces in the fourth quarter of 2022. Cash and all-in sustaining costs at Costerfield of $608/oz and $800/oz, respectively, compared to cash and all-in sustaining costs of $557/oz and $731/oz, respectively, in the fourth quarter of 2021.
Björkdal gold mine, Skellefteå, Sweden
Björkdal produced 10,256 ounces of gold in the fourth quarter of 2022 with cash and all-in sustaining costs of $1,362/oz and $1,774/oz, respectively, compared to cash and all-in sustaining costs of $1,227/oz and $1,700/oz, respectively, in the fourth quarter of 2021.
Lupin, Nunavut, Canada
Care and maintenance spending at Lupin was less than $0.1mn during the fourth quarter of 2022, compared to $0.1mn in the fourth quarter of 2021. Reclamation spending at Lupin was $7.4mn during 2022 compared to $6.1mn during 2021. Lupin is currently in the process of final closure and reclamation activities mainly funded by progressive security reductions held by the Crown Indigenous Relations and Northern Affairs Canada.
Challacollo, Chile
On April 19, 2021, Aftermath Silver Ltd. paid C$1.5mn in cash and on May 5, 2021, issued 2,054,794 common shares at fair value of C$0.73 per share to the company, in satisfaction of a purchase price instalment. For the year ended December 31, 2021, Mandalay sold 678,794 shares of Aftermath at an average price of C$0.57 per share.
On August 10, 2022, the company completed the sale of Challacollo to Aftermath and received an additional purchase price instalment of C$1.0mn in cash and 6,122,448 Aftermath shares with a fair value of C$0.245 per share. On November 24, 2022, the company received a final payment of C$0.5mn plus interest of C$17,000 in cash. The company also received a 3% net smelter returns royalty on production at Challacollo, capped at $3mn as part of the consideration. The company recognized a gain of $1.8mn related to sale of Challacollo. During the year ended December 31, 2022, the company sold 1,376,000 shares at an average of C$0.31 per share.
La Quebrada, Chile
No work was carried out on the La Quebrada development property during Q4 2022.
Conference Call
Mandalay’s management will be hosting a conference call for investors and analysts on February 24, 2023, at 8:00 AM (Toronto time).
Analysts and interested investors are recommended to join the conference call by registering your name and phone number at the following URL to receive an instant automated call on your phone, to avoid any wait time to talk to an operator: https://emportal.ink/3IDAMEp
Alternatively, you may join by using the following dial-in numbers and talking to an operator:
| Participant Number (Toll free): | 888-664-6383 |
| Participant Number (Local): | 416-764-8650 |
| Conference ID: | 92453217 |
A replay of the conference call will be available until 11:59 PM (Toronto time), March 03, 2023, and can be accessed using the following dial-in numbers:
| Encore Number (Toll free): | 888-390-0541 |
| Encore Number (Local): | 416-764-8677 |
| Encore Replay Code: | 453217 |
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 the deeper Shepherd veins into production, both of which are expected to continue to supply high-grade ore to the processing plant, and to extend Youle’s 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.
____________________
