Mandalay Resources Corporation December 2013 Investor Presentation

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Mandalay Resources Corporation December 2013 Investor Presentation

  1. 1. DEC 2013 DELIVERING VALUE AND GROWTH
  2. 2. Forward-looking Statements This presentation contains "forward-looking statements" within the meaning of applicable securities laws, including statements relating to life of mine production plans and exploration plans and the growth and strategy of Mandalay. 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, that exploration results at Cerro Bayo, Costerfield, and La Quebrada may not meet management’s expectations, that Cerro Bayo and Costerfield capital, production and operating cost results may not meet current plans, that reclamation costs associated with Mandalay’s Furioso property may exceed current estimates, and 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. Although Mandalay has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forwardlooking 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. Quality Control and Assurance Quality control and assurance programs are implemented in line with the standards of National Instrument 43-101. The exploration program at Costerfield is supervised by Chris Gregory (Member, Australian Institute of Geoscientists accredited Chartered Professional (Mining)), General Manager of Australasian Business Development for Mandalay and a Qualified Person as defined under National Instrument 43-101. Mr. Gregory regularly visits Costerfield, supervises the collection and interpretation of scientific and technical information contained in this presentation.. The exploration programs on the Cerro Bayo and La Quebrada projects are supervised by Ronald Luethe (Member: American Institute of Professional Geologists and an Idaho Registered Professional Geologist), General Manager of Mandalay Chile Ltda. and a Qualified Person as defined under National Instrument 43-101. Mr. Luethe visits the Cerro Bayo and La Quebrada projects often, supervises the collection and interpretation of scientific and technical information contained in this presentation. Dr. Mark Sander (Member: AusIMM), President of Mandalay, has visited the Costerfield, Cerro Bayo, and La Quebrada projects several times during 2010, 2011 and 2012 and has supervised the preparation of this presentation. 2
  3. 3. Vision To create exceptional shareholder value through the acquisition of undervalued assets that can rapidly become cash generative, self fund exploration, establish and maintain high operating margins and return cash to shareholders within a planned period of time. Mandalay is committed to operating safely and in an environmentally responsible manner, while developing a high level of community and employee engagement. 3
  4. 4. Locations and Tradeflows 4
  5. 5. Mandalay in Today’s Market  Markedly lower metal prices  Producers must be responsive to large swings in metal prices  Focus on growth of sustainable cash margins and return of capital  Mandalay well positioned for profitability in this environment  Mandalay strategy robust: low total cost producer • Low acquisition cost of producing assets • Low sustaining and incremental expansion capex; no large, risky new project construction capex • Low risk, head frame exploration drilling for low discovery cost per ounce • Low overhead virtual organization • Operational improvements result in cash cost reductions year-over-year • With no overextension, no disruptive changes in plans with price declines  Healthy cash margins: EBITDA of $22.9 million in the third quarter of 2013  No impairment charges  Dividend predictable and sustainable – automatically adjusts with metal price at 6% gross revenue  Strong support for equity  NCIB program in place: 1,832,100 shares purchased as of September 30, 2013  Management and insiders own 53.76% of shares outstanding as of August 8, 2013 5
  6. 6. Mandalay Q3 2013 Financial Performance Q3, 2013 Net Cash/All-in Cost/oz Ag at Cerro Bayo, USD Q3, 2012 6.41 / 12.05 5.00 / 9.54 626 / 873 1,278 / 1,479 EBITDA, USD million 22.9 23.4 Net Income, USD million 10.9 9.0 Cash and cash equiv. at end of period, USD million 27.7 6.4 Net Cash/All-in Cost/oz Au Eq. at Costerfield, USD Mandalay Q3 2013 Operational Performance Q3, 2013 Q3, 2012 Saleable Silver oz produced 733,659 804,779 Saleable Gold oz produced 14,442 9,104 966 594 Saleable Antimony t produced 6
  7. 7. Management and Board of Directors Senior Management Brad Mills, CEO and Executive Director Former CEO Lonmin plc, over 30 years of experience in Copper, Gold, PGMs Sanjay Swarup, CFO and Executive Director Former Lonmin plc, over 20 years of industry experience Mark Sander, President 28 years of experience in exploration, strategy and operating improvements Dominic Duffy, COO Mining Engineer with extensive technical and operational management experience Belinda Labatte, Corporate Secretary Over 10 years of experience in capital markets and investment banking Board of Directors Braam Jonker, Chairman Peter R. Jones, Independent Director Tony Griffin, Independent Director 7 Robert Doyle, Independent Director
  8. 8. Strategy: Rapid Value Generation and Returns Entry Strategy:  Acquire high-quality assets at a low cost relative to ultimate value Focus and Results Increase Revenues ($US MM)  Apply management’s extensive operational and exploration expertise to turn around, grow and/or develop the assets 171.8 92.2  Focus on cash returns to shareholders and prudent use of leverage 0.3 Operationally, Mandalay is focused on:  High-margin projects where the Company can achieve rapid production ramp-ups from restarts, turn around situations or late-stage development 20.6 2009 2010 2011 2012 Generate Cash (EBITDA - $US MM**) 79.9 32.0 -1.0  Early cash flow to fund exploration, growth and operational improvements 1.7 2009  Building critical mass through acquisition 2010 Dividend Payouts ($CAD MM) Capital strategy: Reduce dilution and return cash to shareholders  Announced dividend policy, currently paying annualized dividend of 6% of gross revenue***  NCIB: Repurchasing up to 5% of the Company from operational cash flow over 1 year 2011 2012 $10.9 $3.2 2012 A **The Company defines EBITDA as earnings before interest, taxes and non cash charges/ (income). EBITDA is presented because the Company believes it is a useful indicator of relative operating performance. EBITDA should not be considered by an investor as an alternative to net income or cash flow as determined in accordance with IFRS. ***Annual cash dividend paid quarterly, based on 6% of the Company’s trailing quarter’s gross revenue and the future cash requirements of the Company. 8 2013 A
  9. 9. Capital Structure and Ownership Millions (Except Share Price Information) Capital Structure as at November 25, 2013 Share price (Nov. 25, 2013 - close) (CAD$) 0.79/shr Shares Outstanding 323.3 Options(1) 16.2 Warrants(2) 21.0 Fully Diluted Shares Outstanding 360.5 Market Capitalization (CAD$) 255.4 Cash and Cash Equivalents (CAD$) (as of September 30, 2013)(3) 27.7 Total Debt (CAD$) (as of September 30, 2013)(3) 0 Total Enterprise Value (CAD$) 227.7 Major Shareholders(4) Holders % Shares (Million) West Face Capital 42.3% 136.9 Plinian + Management 11.0% 35.8 Sprott Asset Management 10.4% 33.5 Arcourt (Byrne) 3.6% 11.7 Baker Steel 3.4% 11.1 (1) Exercise price: C$0.255 - C$0.83; Expiry date: Dec 7, 2014 - Mar 18, 2018 price: C$0.31 - C$0.465; Expiry date: Nov 30, 2014 (3) Assuming US$ 1 = C$ 1.0421 9 (4) As of November 5, 2013, the directors and executive officers of the Corporation, as a group, beneficially owned, or controlled or directed, directly or indirectly, approximately 173,783,259 Common Shares, representing approximately 53.76% of the outstanding Common Shares (2) Exercise
  10. 10. Management Track Record: Execution, Value Creation Index (August 3, 2009 = 100) 500 450 Mandalay Resources Peers* Gold Silver S&P/TSX Composite Index S&P/TSX Global Mining Index 400 350 300 Q4 2009 - New Management Team (Mills, Sander & Swarup) Mandalay: 196% (total return) Peers: 80% Silver: 39% Gold: 30% TSX Composite: 22% TSX Mining: -21% 250 200 150 100 50 Company History and Milestones 2009 Q4 2010 2011 2012 2013 Financial/ Corporate • Acquired Costerfield goldantimony mine for Mandalay stock • Listed on TSX main board from TSX-V • Raised $23 million for purchase and restart of Cerro Bayo silver-gold mine • Announced Normal Course Issuer Bid (“NCIB”) to buy back 5% of Company’s shares • Completed Substantial Issuer Bid; reduced FD share count by 8% • Completed and Renewed NCIB • Paid $3.2 million in dividends • Extended credit facility by $10 million • NCIB renewed • Paying $10.9 million in dividends (2013 est.) Operational • Began Production at Costerfield (Dec 2009) • Began production at Cerro Bayo (Sept 2010) • Began milling & shipping at Cerro Bayo (Jan 2011) • Increased production at both projects • Doubled silver reserves, boosted gold reserves 85% • Reached design production at both operations • Extended Costerfield mine life to 4 years • Began ramp up at Cerro Bayo to 1,400 tpd *Peer group includes: Coeur Mining, Endeavour Silver, First Majestic Mines, Fortuna Silver, and Primero Mining Share prices as at November 25, 2013 10
  11. 11. Cerro Bayo Silver-Gold Mine Land package 23,096 hectares Ownership 100% 2012 silver production 2,911,595 oz 2012 gold production 2013E / 2014E silver production 2013E / 2014E gold production Current throughput / Goal P&P Reserves 17,089 oz 2.8 – 3.1 Moz / 3.0 – 3.2 Moz 18,000 – 21,000 oz / 23,000 – 27,000 oz approx. 1,200 tpd / 1,400 tpd (end Q1 2014) 2.3 Mt @ 241 g/t Ag; 2.2 g/t Au Current recoveries (Q3 2013) Ag: 91.06%, Au: 88.64% $4 – $6 / $6 – $8 2013E Cash costs/oz Ag net Au credits / 2014E 2013 Planned Exploration Metres 60,000 Budget $6-7 million 11
  12. 12. Cerro Bayo Operating Performance 100,000 $60 $50 80,000 $40 60,000 USD/ Tonne $70 $30 40,000 $20 20,000 $10 Q4-11 Cost/ t Mined Processing $0 and Unit Cost Rate Q2-12 120,000 Q4-12 Q2-2013 $70 100,000 $60 $50 80,000 $40 60,000 $30 40,000 $20 20,000 $10 Saleable Silver Produced & Unit Cost $0 0 Q4-10 t Processed Q2-11 Q4-11 Cost/ t Processed 1,000,000 Q2-12 Q4-12 800,000 $15 600,000 $10 400,000 $5 200,000 0 $0 Q4-10 Ag oz 12 $20 Q2-13 Q2-11 Q4-11 Cost/ oz Ag net Au Q2-12 Q4-12 Q2-13 USD/ oz Ag Net Byproduct t Mined Q2-11 Ounces Silver Per Quarter Q4-10 USD/ Tonne 0 Tonnes Per Quarter Tonnes Per Quarter Mining Rate and Unit Cost 120,000
  13. 13. Cerro Bayo District: Target-rich Land Package Brillantes Brillantes Esperanza NI43-101 Reserve-Resource veins  2013 Infill and Step-Out Drilling 2012 New infill from 2011 Blue Sky successes 2013 Scheduled Blue Sky drill targets Laguna Verde 2013- Field work to prep for 2014 drilling Coigues Sb Anomaly Sb Anomaly Chatito Roadside Cerro Bayo Lucia Marcela Roadside High level, MadreAquila-Meseta Guanaco Aquila Sinter Hill Cerro Viento Cerro Viento 13
  14. 14. Cerro Bayo: Laguna Verde Area Carola DALILA DAGNY Trinidad Tailings Mill DELIA NW Orieta FABIOLA YASNA BIANCA COYITA Gabriela LAGUNA VERDE DELIA SE. Producing Mine or Planned Mine 2013 Infill/Extensional Drilling 14 Exploration Vein
  15. 15. Dagny vein completely delimited under the lake Coyita vein extends under the lake to limit of drilling 15
  16. 16. Fabiola vein planned drilling under the lake Yasna vein planned drilling under the lake 16
  17. 17. Cerro Bayo M&I resource growth net of depletion 45,000,000 40,000,000 35,000,000 Ozs Ag 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 0 2010 CUMULATIVE DEPLETION Delia NW Yasna Bianca 2011 Dagny Delia SE Coyita 17 2012 Fabiola Marcela Sur Dalila
  18. 18. Costerfield Gold-Antimony Mine: Overview Land package 1,293 hectares Ownership 100% 2012 gold production 18,036 oz 2012 antimony production 2013E gold production / 2014E 2013E antimony production / 2014E 2,481 t 20,000 – 25,000 oz / 37,000 – 43,000 oz 2,800 – 3,000 t / 3,000 – 3,300 t Current throughput / 2014E P&P Reserves 340 tpd / 400 tpd 178,000 tonnes @ 8.9 g/t Au; 4.1% Sb Current recoveries (Q3 2013) 2013E Cash cost/oz Au Eq. (US$) / 2014E Au: 90.17%, Sb: 95.58% $950 – $1,000 / $675 – $775 2013 Planned Exploration Metres ~13,000 Budget $3.5 million 18
  19. 19. Costerfield Operating Performance $300 AUD/ Tonne $400 Processing Rate and Unit Cost $100 35,000 $0 $120 $100 30,000 Q4-09 Q2-10 Q4-10 Q2-11 Q4-11 Q2-12 Q4-12 Q2-13 (Dec. 25,000 only) 20,000 t Mined Cost/ t Mined 15,000 $80 $60 $40 10,000 Au Equivalent Production and Cost $20 18,000 16,000 0 $0 14,000 Q4-09 Q2-10 Q4-10 Q2-11 Q4-11 Q2-12 Q4-12 Q2-13 12,000 (Dec. only) 10,000 8,000 t Processed Cost/ t Processed 6,000 4,000 2,000 0 Q4-09 Q2-10 Q4-10 Q2-11 Q4-11 Q2-12 Q4-12 Q2-13 (Dec. only) Ounces Per Quarter 5,000 Oz Au Eq. 19 Cost/ Au Eq. Oz $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 USD/ Oz Au Eq. 40,000 AUD/ Tonne $200 Tonnes Per Quarter Tonnes Per Quarter Mining Rate and Unit Cost 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0
  20. 20. Cuffley PEA – Development and Mining Plan  Subparallel and adjacent to N-lode  Same mining technique as N-lode • • • Long hole stoping 10 m lifts CRF backfill Better ground conditions  Well-known productivities and costs Cuffley Lode N-lode E-lode W-lode 20
  21. 21. Cuffley PEA Basis – Extended Mine Life at High Current Production and Low Current Cost Performance  Expanded resources in Cuffley and N-lode (see appendix for continued exploration potential)  PEA mine life through Q2 2017 at current production rate and costs: 10,000 to 12,000 tpm  Proportion of gravity gold continues as per experience in N-lode and projected in Cuffley  Current plant performance and costs  Current smelting agreement  Metal prices and exchange rates conform to new realities 21
  22. 22. Cuffley PEA Financial Results  >50,000 oz Au Eq. /yr avg.  $766/oz Au Eq. cash cost  $898/oz Au Eq. P&L cost  Nearly self-funding  $67 million NPV Oz Eq 22
  23. 23. Costerfield M&I Resource Growth Net Depletion 600 Au Eq Oz (000's) 500 10-Sep-2013 400 300 200 100 0 2005 CUFFLEY 2006 2007 2008 AUGUSTA 2009 Depletion 23 2010 2011 2012 Yearly Depletion 2013 201
  24. 24. Costerfield – Long Section 24
  25. 25. La Quebrada Copper-Silver Project: Overview Land package 7,418 hectares Ownership Location 100% 45 km NW of La Serena Mineralization Elevation M&I Resource Cu-Ag mantos 1,000 – 1,500 metres ASL 34.8 Mt @ 10 g/t Ag, 0.6% Cu 25
  26. 26. La Quebrada La Quebrada Total Resources(1) Rock (t) Measured Ag Grade (g/t) Ag (cont. oz) Cu Grade (%) Cu (cont. lb) 0 0 0 0 0 Indicated 34,800,000 10 11,188,272 0.6% 459,360,000 Measured & Indicated 34,800,000 10 11,188,272 0.6% 459,360,000 1,000,000 11 353,652 0.6% 13,200,000 Inferred Next steps:  Drilling for modest expansion of Casa de Piedra  District exploration – new concepts Tugal Pit  Basic engineering studies  Conversation for district consolidation (1) La Quebrada Independent Technical Report filed 16-Aug-2012. 26
  27. 27. Discovery-fuelled Organic Growth – 2013E & 2014E Significant M&I Resource Growth (1,2,3) Ag (cont. oz) 40,000,000 30,000,000 Au (cont. oz) 600,000 Sb (cont. t) 30,000 600 400,000 20,000 400 200,000 10,000 Cu (cont. lbs MM) 200 20,000,000 10,000,000 0 0 2010 2011 2012 0 0 2010 2011 2012 2013 2010 2011 2012 2010 2013 2011 Costerfield Budget and Production (2014E) Antimony (Sb) Capital Expenditure (PP&E) $4-$5 million $11-$12 million $13-$14 million Capital Development Capitalized Exploration 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2,800 – 3,000 $4-$5 million $6-$7 million $8-$9 million Capital Development Capitalized Exploration 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 37,000– 43,000 50,000 40,000 20,000– 25,000 30,000 1,576 18,036 20,000 10,000 6,678 0 2012 2013E 2014E 2011 Silver (oz) (2014E) Capital Expenditure (PP&E) 3,000 – 3,300 2,481 2011 Cerro Bayo Budget and Production Gold (oz) 2.9 million 2012 2013E 2014E Gold (oz) 2.8 - 3.1 million 3.0 - 3.2 million 23,000– 27,000 30,000 25,000 20,000 1.3 million 15,000 17,089 18,00021,000 12,244 10,000 5,000 0 2011 2012 2013E 2014E 1 Source: Roscoe Postle Associates, March 2013, documented in an independent NI 43-101 report filed March 28, 2013 Source for Dalila vein: Internal Company Report, prepared under the supervision of Qualified Person Ron Luethe 2 Source: SRK Consulting (Australia), March 2013, documented in an independent NI 27 43-101 report filed March 28, 2013 3 Source: La Quebrada Independent Technical Report, filed Aug 16, 2012. Average guidance range graphed for 2013E and 2014E 2011 2012 2013E 2014E 2012
  28. 28. Peer Comparison: Production, Cost, Financials 9M 2013A Production Ag (oz) Mandalay Resources Au (oz) 9M 2013A Financials Other Ag Eq (oz) (Au + Ag) Revenue (US$MM) EBITDA (US$MM) EBITDA Margin (%) 2,266,995 38,123 2,500 t Sb 4,347,150 127.8 53.8 42.1 12,671,584 181,438 - 22,571,624 577.2 145.9 25.3 Endeavour Silver 4,881,435 57,894 - 8,040,381 208.9 69.9 33.5 First Majestic Mines 7,894,867 - - 7,894,867 192.3 78.3 40.7 Fortuna Silver 3,171,139 14,191 16,300 t Pb+Zn 3,945,461 101.0 29.4 29.1 Primero Mining 4,450,000 82,886 - 9,002,618 152.6 71.2 46.7 Coeur Mining P+P Reserves Ag (oz) Mandalay Resources Au (oz) Market Comparables Other Reserve Grade Ag Eq (g/t) (Au + Ag) Market Capitalization FD (CAD$MM) EPS 9M Dividend Paid/Share 18,250,000 214,000 7,200t Sb 361 285.2 $0.07 $0.02429 261,528,000 2,286,000 - 51 1,149.1 ($0.67) $0 Endeavour Silver 23,057,200 222,300 - 253 434.3 $0.26 $0 First Majestic Mines 90,800,000 0 - 161 1,264.7 $0.37 $0 Fortuna Silver 42,700,000 266,100 - 216 479.4 ($0.03) $0 Primero Mining 39,377,000 660,000 - 513 803.3 $0.31 $0 Coeur Mining Source: Company reports and Bloomberg Market capitalization as at November 25, 2013 28 Ag Eq oz converted at 55/1 Au/Ag. Metal prices: Ag price of $28.92 and Au price of $1,578
  29. 29. Mandalay Compares Favourably to its Peers Mandalay Resources 600 $25 50% 45% Coeur Mining 500 Endeavour Silver 400 35% 300 25% Fortuna Silver $10 20% 200 15% $5 10% 100  Second highest grade reserves (Ag Eq oz) $15 30% First Majestic Mines Primero Mining $20 40% 5% 0 P+P Reserve Grade Fully Diluted Ag Eq (g/t) $0 0% Fully Loaded 9M 2013 Cash Cost/Ag Eq oz 9M 2013 EBITDA Margin  Second highest EBITDA margin $120 $14 $0.030  Lowest fully loaded cost (Ag Eq oz) $100 $12 $0.025  Second lowest market cap per estimated annual production of Ag Eq oz  Third lowest market cap per P+P reserves oz  Highest dividend paid per share $10 $80 $0.020 $8 $60 $0.015 $6 $40 $0.010 $4 $20 $0.005 $2 $0 $0.000 $0 Market Cap per 2013E Ag Eq Production (oz) Market capitalization as at November 25, 2013 Ag Eq oz converted at 55/1 Au/Ag Metal prices: Ag price of $28.92 and Au price of $1,578 29 Market Cap per P+P Reserves (Ag Eq oz) 9M 2013 Dividend Paid per Share
  30. 30. Highlights and Catalysts Cerro Bayo  Ramp up to 1,400 tpd on track for Q1 2014  5 owned rigs drilling now – resource and reserve update in Q1 2014 Costerfield  Currently at 340 tpd, exceeding design production rate of 250 tpd, significant cost reduction  Increased metal production from higher grade ore and higher throughput  Cuffley lode development proceeding • First development ore expected Q4 2013 • Growing resources at Cuffley lode and Augusta extensions with 3 rigs • Resource and reserve update in Q1 2014 (converting Cuffley M&I to P&P)  Continuing district exploration for longer mine life La Quebrada  Infill drilling completed; indicated NI 43-101 Resource filed August 2012  Metallurgical and engineering studies  District consolidation 30
  31. 31. Investment Proposition  Execution-focused management with track record of operational and exploration success, growth and value generation  High-quality, cash flowing asset portfolio with major exploration upside  Strong balance sheet, self-funding projects, zero net debt  Rapid increase in production and margins through low-capex organic growth and operational efficiencies  Returning cash to shareholders and reducing dilution wherever possible  Company paying annual dividend equal to 6% of the Company’s trailing quarter’s gross revenue  Continued growth through further acquisitions 31
  32. 32. DEC 2013 DELIVERING VALUE AND GROWTH For more information, please contact: Greg DiTomaso Tel: 647.260.1566 Email: g.ditomaso@mandalayresources.com Company Website: www.mandalayresources.com Twitter: @MandalayAuAg
  33. 33. Mandalay Reserves Cerro Bayo Reserves (1) Proven Reserves Ore Ag Grade Ag Au Grade Au (t) (g/t) (cont. oz) (g/t) (cont. oz) 420,000 356 4,803,000 2.2 30,000 Probable Reserves 1,934,000 216 13,447,000 2.1 133,000 P&P Reserves 2,354,000 241 18,250,000 2.2 163,000 Costerfield Reserves (2) Proven Reserves Ore Sb Grade (t) (%) 48,000 6.5 Sb Au Grade Au (cont. t) (g/t) (cont. oz) 3,100 11.0 17,000 Probable Reserves 130,000 3.2 4,100 8.1 34,000 P&P Reserves 178,000 4.1 7,200 8.9 51,000 TOTAL RESERVES: 31-December-2012 Mandalay Proven Reserves Ag (cont. oz) Au (cont. oz) Sb (cont. t) 4,803,000 47,000 3,100 Mandalay Probable Reserves 13,447,000 167,000 4,100 Mandalay P&P Reserves 18,250,000 214,000 7,200 1 Source: Roscoe Postle Associates, March 2013, documented in an independent NI 43-101 report filed March 28, 2013 2 Source: SRK Consulting (Australia), March 2013, documented in an independent NI 43-101 report filed March 28, 2013 33 Numbers may differ slightly from Source documents due to rounding
  34. 34. Mandalay Resources Cerro Bayo Resources (1) Measured Resources Indicated Resources M&I Resources Inferred Resources Costerfield Resources (2) Measured Resources Indicated Resources M&I Resources Inferred Resources La Quebrada Resources (3) Measured Resources Indicated Resources M&I Resources Inferred Resources TOTAL RESOURCES Measured Resources Indicated Resources M&I Resources Inferred Resources Resource (t) 327,000 1,562,000 1,889,000 452,000 Ag Grade (g/t) 525 334 367 201 Resource (t) Sb Grade (%) 184,000 534,000 718,000 680,000 Resource (t) Ag (cont. oz) 5,521,000 16,754,000 22,275,000 2,922,000 Sb (cont. t) 4.3% 3.7% 3.9% 2.6% Cu Grade (%) 0 34,800,000 34,800,000 1,000,000 0 0.6% 0.6% 0.6% Ag (cont. oz) 5,521,000 27,954,000 33,475,000 3,276,000 Au (cont. oz) 75,000 350,000 425,000 175,000 8,000 20,000 28,000 18,000 Cu (cont. lb) Au Grade (g/t) 3.2 3.2 3.2 2.4 Au Grade (g/t) Sb (cont. t) 8,000 20,000 28,000 18,000 1 Source: Roscoe Postle Associates, March 2013, documented in an independent NI 43-101 report filed March 28, 2013 2 Source: SRK Consulting (Australia), September 10, 2013, documented in an independent NI 43-101 report filed October 20, 2013 34 3 Source: La Quebrada Independent Technical Report filed Aug 16, 2012. Numbers may not add due to rounding Au (cont. oz) 7.1 11.1 10.1 6.4 Ag Grade (g/t) 0 459,360,000 459,360,000 13,200,000 Au (cont. oz) 33,000 160,000 194,000 35,000 42,000 190,000 232,000 140,000 Ag (cont. oz) 0 10 10 11 Cu (cont. lb) 0 459,360,000 459,360,000 13,200,000 0 11,200,000 11,200,000 354,000
  35. 35. Safety, Health, Environment and Community Safety & Health Environment & Community Employees ACTIONS • • • • • Spending on S&H (including safety training) tripled in last two years Focus on line management safety leadership, systems and behaviours Improved S&H safety processes & compliance Implementation of DuPont safety system in 2013 at both operations Extensive training and equipping of mine rescue team at Cerro Bayo • • • • • • Spent over 200% more in 2012 on environment & community projects as compared to 2011 Commitment to local purchases & payrolls Development of new water & mine waste solutions at Costerfield Closure works completion at Furioso Mine Site Supplying various workshops for local community at Cerro Bayo University scholarships for local school leavers at Cerro Bayo • More prosperous local communities Reduced impacted land area Zero incidences of unpermitted discharge at both operations • • • • Employee selection process improved Focus on local hires including management positions Increased hours of training in 2012 by +80% as compared to 2011 High level executive coaching for leadership team RESULTS • • • Consolidated lost time injury frequency rate approximately halved Improved return to work performance Maintained high levels of attendance at mine sites • • • • • • 35 3 year collective contract signed with Cerro Bayo union in 2012 Increased presence of local hires among workforce and supervisors Reduced employee turnover at mine sites More productive employees, leading to lower unit costs
  36. 36. Target- Operating Plan Sb-Price Market USD 9,000 Actual Sb-Price Market USD 36 Target- Operating Plan Cu-Price LME USD Actual Cu-Price LME USD 04/Nov/13 29/Oct/13 23/Oct/13 17/Oct/13 11/Oct/13 05/Oct/13 29/Sep/13 Target- Operating Plan Ag-Price LME USD 23/Sep/13 17/Sep/13 11/Sep/13 05/Sep/13 30/Aug/13 24/Aug/13 18/Aug/13 12/Aug/13 10,000 06/Aug/13 ANTIMONY PRICE - DAILY ROTTERDAM WAREHOUSE 31/Jul/13 11,000 04/Nov/13 29/Oct/13 23/Oct/13 17/Oct/13 11/Oct/13 05/Oct/13 29/Sep/13 23/Sep/13 17/Sep/13 11/Sep/13 05/Sep/13 30/Aug/13 24/Aug/13 18/Aug/13 12/Aug/13 06/Aug/13 31/Jul/13 25/Jul/13 19/Jul/13 13/Jul/13 07/Jul/13 01/Jul/13 Ag price USD/oz GOLD PRICE - DAILY SPOT LME 25/Jul/13 12,000 19/Jul/13 Actual Au-Price LME USD 13/Jul/13 14,000 07/Jul/13 13,000 CU price USD/lb 04/Nov/13 29/Oct/13 23/Oct/13 17/Oct/13 11/Oct/13 05/Oct/13 29/Sep/13 23/Sep/13 17/Sep/13 11/Sep/13 05/Sep/13 30/Aug/13 24/Aug/13 18/Aug/13 12/Aug/13 06/Aug/13 31/Jul/13 25/Jul/13 19/Jul/13 13/Jul/13 07/Jul/13 01/Jul/13 Au price USD/oz 1,800 1,700 1,600 1,500 1,400 1,300 1,200 1,100 1,000 01/Jul/13 04/Nov/13 29/Oct/13 23/Oct/13 17/Oct/13 11/Oct/13 05/Oct/13 29/Sep/13 Target- Operating Plan Au-Price LME USD 23/Sep/13 17/Sep/13 11/Sep/13 05/Sep/13 30/Aug/13 24/Aug/13 18/Aug/13 12/Aug/13 06/Aug/13 31/Jul/13 25/Jul/13 19/Jul/13 13/Jul/13 07/Jul/13 01/Jul/13 Sb price USD/t Metal Price Update SILVER PRICE - DAILY SPOT LME 40.00 35.00 30.00 25.00 20.00 15.00 Actual Ag-Price LME USD COPPER PRICE - DAILY SPOT LME 3.70 3.50 3.30 3.10 2.90 2.70
  37. 37. 10 m levels with good grades extending out into inferred and undrilled areas Intercepts extending limits of mineralization Cuffley decline progress to July 31, 2013 37
  38. 38. Cuffley decline progress to July 31, 2013 Enlarged volume of Indicated Resource New intercepts confirm mineralization between unnamed flat fault and King Cobra fault; not yet inferred 38
  39. 39. Antimony Facts  140,000 t/y global market • Sold either as metal ingots or various grades of antimony oxides and trioxides • Primary use as fire retardant in fabrics and plastics (trioxides) • Relatively minor uses in electronics, with possible new uses in development, e.g. in batteries • Ingredient of lead alloys as hardener (antimony metal) • Consumption growth in line with global GDP growth  Market dominated and prices set by China • Declining Chinese mine production as reserves depleted and environmental controls strengthened, closing marginal mines • Chinese beginning to invest in mines outside China • Two dominant Chinese smelters, only one of which recovers Au 39
  40. 40. Gold Equivalent Ounces Calculation ***Au Eq. oz produced is calculated by multiplying the saleable quantities of Au, Ag, and Sb in the period by the respective average market prices of the commodities in the period, adding the three amounts to get a “total contained value based on market price”, and then dividing that total contained value by the average market price of Au in the period. Average Au price in the period is the average of the monthly LME PM fix, average Sb price is the average of the monthly high and low Rotterdam warehouse prices, and average Ag price is the average of the monthly London Broker’s silver spot price, all reported in www.metalbulletin.com. The monthly commodity prices are calculated as the average of the daily prices, with holiday and weekend day prices carried forward from the last business day. Au Eg. oz for each of the low range and high range guidance is calculated by multiplying (i) total Au oz by an assumed US$1,600/oz Au price, (ii) total Ag oz by an assumed US$32.00/oz Ag price and (iii) total Sb tonnes times an assumed US$12,000/t Sb price, then, in each case, dividing by the assumed US$1,600/oz Au price. Silver Equivalent Ounces Calculation Ag Eq oz converted at 54/1 Au/Ag at metal prices: Ag price of $28.92 and Au price of $1,578.00 40

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