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Mandalay Resources November IR Presentation


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Mandalay Resources is a Canadian-based natural resource company with producing assets in Australia and Sweden, and 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 generate near-term cash flow.

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Mandalay Resources November IR Presentation

  2. 2. 2 This presentation contains "forward-looking statements" within the meaning of applicable securities laws, including statements relating to life of mine production plans, exploration plans and the growth and strategy of Mandalay. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things: exploration results or production results not meeting management’s expectations; capital, production and operating cost results not meeting current plans; 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. 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 28, 2019, its short form base shelf prospectus dated February 12, 2018, and prospectus supplement dated February 12, 2019, copies of which are available under Mandalay’s profile at 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. Quality Control and Assurance Quality control and assurance programs are implemented in line with the standards of National Instrument 43-101. The exploration programs at Mandalay’s properties are supervised by Chris Gregory (Member, Australian Institute of Geoscientists, VP of Operational Geology for Mandalay and a “Qualified Person” as defined under National Instrument 43-101. Mr. Gregory regularly visits Mandalay’s properties, and supervises the collection and interpretation of scientific and technical information contained in this presentation. Dominic Duffy, President and CEO of Mandalay, has visited Costerfield, Cerro Bayo, Challacollo, and Björkdal and has supervised the preparation of this presentation. All currency references in US$ unless otherwise indicated. Forward-looking Statements
  3. 3. MANDALAY PORTFOLIO AT A GLANCE 3 Costerfield: Major Production Uplift From High-Grade Youle Lode • High-grade Youle lode added to Reserves • Production from Youle from Q4 2019 • Continual uplift in Youle production over the next 12 – 18 months • 2019E production(1): 23,000 – 28,000 AuEq oz • 2019E cash costs: $1,300 – $1,450/oz • Excellent high-grade exploration potential Björkdal: Ramping-up Underground Production • 2019E production: 50,000 – 56,000 Au oz • 2019E cash costs: $800 – $950/oz • Exploration breakthrough of Aurora zone opening significant exploration potential TWO PRODUCING ASSETS WITH ORGANIC GROWTH POTENTIAL AND EXPLORATION UPSIDE Non-Core Properties • Cerro Bayo (care and maintenance) o Non-binding HOA signed with Equus Mining • Challacollo (feasibility-stage project) o Non-binding LOI signed with Aftermath Silver 1. Assumes metal prices of: Au $1,396/oz and Sb $6,682/t
  4. 4. 4 TRANSITION, GROWTH, AND REJUVENATION SIGNIFICANT ORGANIC PRODUCTION GROWTH POTENTIAL 2019 – 2021 23,000 - 28,000 55,000 - 68,000 76,000 - 97,000 50,000 - 56,000 53,000 - 59,000 55,000 - 65,000 2019E 2020E 2021E Production Guidance Costerfield Björkdal • Costerfield: significant production increases from bringing high-grade Youle vein online • Björkdal: ramping up underground production with higher-grade Aurora zone material 2019E(1) 2020E(2) 2021E(2) Björkdal Gold produced (oz) 50,000 – 56,000 53,000 – 59,000 55,000 – 65,000 Costerfield Gold produced (oz) 13,000 – 17,000 40,000 – 49,000 60,000 – 75,000 Antimony produced (t) 2,000 – 2,300 2,200 –2,800 2,400 – 3,300 Consolidated AuEq(1) produced (oz) 72,000 – 84,000 108,000 – 127,000 131,000 – 162,000 ~1.9x 1. Revised 2019 guidance. Please see October 17, 2019 for details. Assumes metal prices of: Au $1,396/oz, Sb $6,682/t based off weighed average metal prices for 2019 2. 2020 and 2021 assumes metal prices of: Au $1,200/oz, Sb $8,200/t based off metal prices used in January 16, 2019 press release indicating 2019 – 2021 guidance
  5. 5. 5 COSTS IMPROVEMENTS AND STABLE CAPEX PRODUCTION UPLIFT EXPECTED TO IMPROVE UNIT COST PERFORMANCE Y-O-Y $851 $1,148$1,175 $1,537 YE 2017A YE 2018A YE 2019E Cash Costs All-in-Costs 2019E: $975 – $1,125 2019E: $1,325 – $1,500 Björkdal 2019E Costerfield 2019E Consolidated 2019E Cash cost per AuEq $800 – $950 $1,300 – $1,450 $975 – $1,125 All-in Cost per AuEq $1,030 – $1,180 $1,700 – $1,850 $1,325 – $1,500 Capital Expenditures ($M)(1) $18 – $20 $21 – $23 $39 – $43 $26.0 $27.9 $11.0 $22.4 YE 2017A YE 2018A YE 2019E Björkdal CAPEX Costerfield CAPEX Consolidated Costs and CAPEX Spend 2019E: $39M – $43M 1. Capital expenditures includes exploration at Björkdal and Costerfield; consolidated cost guidance includes expected Corporate G&A 2. Cash cost and all-in cost are non-IFRS measures. 3. Assumes metal prices of: Au $1,396/oz, Sb $6,682/t 3. Consolidated costs per Au Eq. oz includes corporate overhead spending and total care and maintenance costs at Cerro Bayo.
  6. 6. 6 CAPITAL RAISED TO FACILITATE NEAR TERM GOALS CAD$54M MILLION FINANCING COMPLETED IN MARCH 2019 STRENGTHENS MANDALAY’S FINANCIAL POSITION AND ALLOWS THE COMPANY TO DE-RISK AND GROW THE BUSINESS Proposed Use of Net Proceeds $M Current outstanding liabilities 2.0 Exploration 4.0 Capital expenditures: Costerfield Youle development to mid-2019 5.0 Björkdal Tailings Storage Facility Lift 5.0 Björkdal Environmental Permit Bonding 3.0 General Corporate Purposes(1) 20.0 TOTAL 39.0 Cash position of $23.2M puts Mandalay in a strong position to achieve all Corporate objectives 1. USD$15M of these funds will initially be held in reserve to satisfy the Company’s obligations in respect of the Gold Bonds and may be released for other corporate purposes (i) to the extent that the principal outstanding amount of the Gold Bonds is less than US$15M at any time or (ii) with CE Mining’s prior consent. When and if these funds are released from the Gold Bond Reserve, they may be deployed for various corporate purposes including repayment of the Company’s other debt obligations, general working capital requirements (including to the extent necessary as a result of any ongoing negative cash flow from operations), and funding additional exploration activities and any unanticipated capital expenditure obligations.
  7. 7. 7 COSTERFIELD MINE Snapshot Land package 1,293 hectares Product Gold and Antimony Mining Method Long-hole stoping with cemented rock fill Life of Mine 3 years Processing Capacity 140,000 tonnes per annum 2018 Production 21,610 Au oz and 2,173 Sb t 2018 Cash Costs/ CAPEX $961 per oz / $22.4M P&P Reserves(1) 537,000 t @ 10.4 g/t Au, 3.2% Sb for 180,000 Au oz and 17,200 Sb t VICTORIA, AUSTRALIA 1. SRK Consulting (Australia), Effective December 1, 2018, documented in an independent NI 43-101 Technical Report filed February 6, 2019
  8. 8. 8 COSTERFIELD: THE PATH FORWARD DELIVERING ON PRODUCTION UPLIFT AND A FOCUSED EXPLORATION PROGRAM Deep Hole DrillingRamping up Youle Exploring High Potential Targets • Development and production from Youle top priority • Progress current deep hole drilling program to further test high-grade mineralization at Youle and Cuffley lodes • Drill several highly prospective targets from surface including: MacDonald and Brown, and Robinson
  9. 9. 9 THE YOULE LODE: DRIVING FUTURE SUCCESS MAJOR PRODUCTION INCREASES EXPECTED FROM YOULE RAMP UP MND mining 2009 – 2018 • Youle vein lies approximately 800 m north of the Brunswick Lode • Drilling has allowed for a high-grade reserve to be formed around Youle which is still open to the North and at depth • First access drive completed. Level development now commenced • Extensional exploration program initiated Mineral Reserves at Costerfield (as of Dec. 1, 2018) Category Tonnes (kt) Au Grade (g/t) Sb Grade (%) Cont. Au (koz) Cont. Sb (kt) Proven 76 8.4 4.0 20 3.1 Probable 461 10.8 3.1 160 14.2 P+P 537 10.4 3.2 180 17.2 Mineral Reserves at Youle (as of Dec. 1, 2018) Category Tonnes (kt) Au Grade (g/t) Sb Grade (%) Cont. Au (koz) Cont. Sb (kt) Proven - - - - - Probable 267 14.1 3.3 121.2 8.8 P+P 267 14.1 3.3 121.2 8.8 Source: SRK Consulting (Australia), Effective December 1, 2018, documented in an independent NI 43-101 Technical Report filed on February 6, 2019
  10. 10. 10 YOULE LONG SECTION DRILL INTERCEPTS ON YOULE DEMONSTRATING CONTINUITY OF HIGH-GRADE Currently known mineralized shoot: Approx. 600 m strike Approx. 200 m dip Youle face sample: 118 g/t Au and 55.3% Sb over a true width of 0.2 m High-grade continuous core defined by multiple intercepts over 50 g/t AuEq over 1.8 m minimum mining width
  11. 11. 11 TARGETING A POTENTIALLY HIGH-GRADE ENVIRONMENT DEEP HOLE DRILLING PROGRAM TO TEST FOR HIGH-GRADE MINERALIZATION 11 Resource outlines CSK007 and CSK012 Proposed Targets CSK007: 0.08 m @ 1,361 g/t Au and CSK012: 0.18m @ 259 g/t Au (Deepest hole and intercept in the district) 2014: • Previously intersected a high-grade mineralized vein with two deep holes drilled under Cuffley lode 2019: • Begin deep hole program with first deep hole under Youle lode (completed) with wedge hole aiming for specific target 2020: • Second deep hole under Cuffley lode
  12. 12. 12 DEEP DRILLING AT COSTERFIELD FOSTERVILLE AND COSTERFIELD ARE FUNDAMENTALLY SIMILAR IN MINERAL SOURCE, FLUID COMPOSITION, FLUID TRANSPORTATION SYSTEM AND FLUID TRAP ENVIRONMENT Fosterville Costerfield 30 km Fosterville Deposits Costerfield Deposits Could there be similar style gold mineralisation at Costerfield? • Key similarities in the upper Costerfield system that Mandalay has mined • A litho-geochemical (carbonaceous shales) environment exists, at depth, that is similar to the Fosterville high grade (Swan zone) environment • Mandalay has intercepted mineralisation in the sub King Cobra drilling with 2 of 4 historical intercepts returning high gold grades supporting the analogy
  13. 13. 13 DEEP DRILLING AT COSTERFIELD DRILLING PROGRAM ADVANCING STRATIGRAPHY KNOWLEDGE OF THE COSTERFIELD DISTRICT • First deep drill hole: CD001 completed at 1,700 m • New interpretation of the folding suggests a likely structural setting exists for a Costerfield size deposit below Youle and above the fault • Thick quartz blow between 1,583 m – 1,595 m: o This wide interval of quartz contained minor pyrite mineralization and zones of sericite-chlorite alteration • Next hole program: CD001W1, has commenced wedging off CD001 at a depth of 400 m to investigate the 1,015 m fault, and the environment immediately below 1,545 m 1,580 m Quartz Blow 1,595 m
  14. 14. 14 Radiometric Data (K/Th) TB DC KN BR MD True Blue Damper Creek Brown’s Diggings Robinson’s Reef MacDonald’s Reef King Cobra North Current/Historical Endowment Potential Endowment • 2 Mineralized and Underexplored corridors Youle Brunswick Cuffley Augusta Margaret EXCITING DISTRICT POTENTIAL Youle
  15. 15. 15 BJÖRKDAL MINE Snapshot Land package 12,949 hectares Product Gold Mining Method Longhole open stoping Life of Mine 10+ years Processing Capacity 1.3M tonnes per annum 2018 Production 45,719 Au oz 2018 Cash Costs/ CAPEX $1,159 per oz / $27.9M P&P Reserves(1) 11,384,000 t @ 1.58 g/t Au for 580,000 Au oz SKELLEFTEA, SWEDEN 1. Roscoe Postle Associates, Effective December 31, 2018, documented in an independent NI 43-101 Technical Report filed March 28, 2019
  16. 16. 16 BJÖRKDAL: THE PATH FORWARD RAMPING UP UNDERGROUND PRODUCTION AND DELINEATING THE AURORA ZONE Mining selectivityRamping up Underground and Stockpile Production Exploring High Potential Targets • Ramp up underground tonnage to 1M • Supplement open pit ore with higher-cash margin stockpile ore • Increase Aurora’s contribution to overall mill feed o Increase development at Aurora for stoping • Increasing skarn production • Improve understanding of the Aurora zone. Currently open to extension laterally and horizontally • Test extension of the Lake Zone skarn deposit
  17. 17. 17 AURORA ZONE STEERING UNDERGROUND RAMP UP AURORA ZONE PROVIDES THE POTENTIAL TO MINE HIGH-TONNAGE AND HIGHER-GRADES MORE COST EFFECTIVELY • Aurora zone significantly wider and consistently higher-grade than current mill feed • Currently known mineralization over 300 m horizontally and 300 m vertically • Aurora zone readily accessible; five levels currently being developed • Large step-out drilling occurring below and East and West of currently known mineralization • Preliminary processing results show no challenges for gold recoveries
  18. 18. 18 UNCONSTRAINED ABOVE THE MARBLE MINERALIZATION EXTENDING HUNDREDS OF METRES ABOVE THE MARBLE CONTACT Marble contact Unexplored and an area of focus for the exploroation program Mineralized zone: historically, thought to be constrained by marble
  19. 19. 19 AURORA ZONE & PRELIMINARY RESERVES MINERALIZATION OPEN IN ALL DIRECTIONS • Underground drilling campaign focused on extending existing Aurora zone • Drill results demonstrated potential for Aurora to extend both up and down dip along strike in both directions • Seeking continuity of higher-grade mineralization at depth via drilling of deeper holes • Upper holes will be drilled from surface in later 2019 or early 2020 Preliminary Mineral Resource and Reserve added for Aurora in Feb 2019(1) • Probable Reserves added: 920kt @ 2.34 g/t Au for 69,000 Au oz • Indicated Resources(2) added: 765kt @ 3.16 g/t Au for 78,000 Au oz • Inferred Resources added: 206kt @ 3.37 g/t Au 22,000 Au oz (1) Source: Roscoe Postle Associates, Effective December 31, 2018, documented in an independent NI 43-101 Technical Report filed March 28, 2019 (2) Mineral Resources are inclusive of Mineral Reserves
  20. 20. 20 NEWLY DISCOVERED LAKE ZONE SKARN DEPOSIT CONTINUITY OF SKARN TO THE NORTH AND AT DEPTH • Seven diamond holes drilled helping to define the down dip extension of the mineralized body • Extension of skarn body down dip confirmed by recent drill results
  21. 21. 21 NON-CORE PROPERTIES: CHILEAN ASSETS REALIZING VALUE FROM NON-CORE ASSETS Cerro Bayo Silver-Gold Mine • Operations remain on care and maintenance • Executed Option to purchase agreement with Equus Mining (Oct 2019) for 36 month period starting from earlier date of when Equus receives all permits and approvals to drill and 6 months from signing Land package 23,106 hectares Ownership 100% P&P Reserves(1) 856,000 t @ 284 g/t Ag for 7.8M Ag and 2.34 g/t Au for 64,000 Au oz 2016 Production 13,792 oz Au, 1,731,031 oz Ag Challacollo Silver-Gold Project • Signed non binding LOI with Aftermath Silver for sale of project, total consideration of CAD$10.5M • Aftermath Silver’s management team has significant industry experience and complementary skillsets that Mandalay believes are necessary to create additional value for a development project such as Challacollo Land package 20,378 hectares Ownership 100% Location 130 km SE of Iquique, Northern Chile Indicated Resource 4.7 Mt @ 200 g/t Ag for 30M Ag oz and 0.32 g/t Au for 48,000 oz (1) Source: Current Mineral Reserves number depleted for 2017 production and Reserves sterilized by inundation at Delia NW. Depletion taken from Reserve position contained in NI 43-101 Technical Report prepared by Roscoe Postle Associates, Effective December 31, 2016 filed on SEDAR March 31, 2017
  22. 22. 22 NON-CORE PROPERTIES: OTHERS REALIZING VALUE FROM NON-CORE ASSETS Canada: • Lupin, Nunavut: submission of final closure plan (“FCRP”) in process o CAD$8.5m in reduction in security achieved as a result of ongoing reclamation works during 2018-2019 o Current reclamation bond stands at CAD$26.1M, approximately enough for full closure of the project o Final closure will take place between 2019 and 2021 • Ulu, Nunavut: Amended agreement signed with Blue Star Gold Corp (July 2019) for the full transfer its interest in the Ulu property for total consideration of CAD$650k and assignment of its rights to the remediation security standing at approximately CAD$1.68m and all structures and property and equipment on site
  23. 23. CE Mining 25% GMT Capital 17% Ruffer LLP 17% AzValor 12% West Face 5% Others 24% 23 MARKET INFORMATION Capital Structure Share price (CAD$)(1) $0.80/shr Shares Outstanding (M) 91.0 Fully Diluted Shares Outstanding (M)(2) 93.1 Market Capitalization (CAD$M) $72.8 Cash and Cash Equivalents (USD$M)(4) $23.2 Total Interest-Bearing Debt (USD$M)(4) $63.1 Enterprise Value (US$M)(3,4) $94.5 Major Shareholders(5) Shares (M) CE Mining 23.2 GMT Capital 15.9 Ruffer LLP 15.3 AzValor 10.7 West Face 4.2 Large Holders (Top 5) 69.3 Other Holders 21.7 TOTAL 91.0 1. As at November 4, 2019 2. Includes: 0.3M RSU and 1.8M employee stock options with exercise prices of: CAD$1.10 – CAD$9.10 and expiry dates from Mar 24, 2020 – Jun 30, 2026. 3. Using exchange rate of CAD$1 = USD$0.75 4. Cash and Cash Equivalent and Total Interest-Bearing Debt numbers from Mandalay’s Financial Statements as of June 30, 2019 5. Ownership positions are estimates - as at Sep 13, 2019 Note: numbers may be rounded 10:1 share consolidation made effective July 2, 2019
  24. 24. 24 INVESTMENT HIGHLIGHTS COSTERFIELD: HIGH-GRADE YOULE LODE THE MAJOR GROWTH CATALYST BJÖRKDAL: RAMPING UP UNDERGROUND PRODUCTION, FOCUSING ON HIGHER-CASH MARGIN ORE High-Potential Exploration Upside Major Production Uplift / Stable operations Fully-Funded • Growing production from 81,568 oz gold equivalent in 2018 to 131 – 162,000 AuEq oz in 2021 o Costerfield: significant growth production expected via Youle lode • Björkdal: Focusing on profitability. Increasing underground production with higher-grade ore from Aurora zone • Continuing regional exploration programs on known targets; seeking repetition of mineralization Costerfield: • Deep hole drilling below Youle and Cuffley • Testing shallow targets around old-workings Bjorkdal: • Extensional drilling at Aurora • Defining mineralization and assessing economics of the Lake zone skarn deposit • Cash position of $23.2M affords Mandalay with the financial flexibility to continue funding our exploration programs and sets the Company up for future profitability and growth
  25. 25. 25 A VALUES-BASED AND VALUE-FOCUSED COMPANY Our employees live and work safely and experience the personal satisfaction that comes with high performance and recognition The communities in which we operate value our presence Our environmental impact is minimized and causes no permanent harm We have a large, diversified set of customers who are delighted with and compete for our products Our shareholders realize a superior total return on their investment and support our corporate values Our values are visibly demonstrated by strong local management, at the point of impact with our stakeholders, and coordinated across the Company for maximum effect WE ARE SUCCESSFUL WHEN:
  26. 26. Edison Nguyen 647 260 1566 Twitter: @MandalayAuAg TSX:MND OTCQB:MNDJF