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Mandalay Resources April 2019 Investor Presentation

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Mandalay Resources April 2019 Investor Presentation

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Mandalay Resources April 2019 Investor Presentation

  1. 1. APR 2019 TSX:MND OTCQB:MNDJF POSITIONING MANDALAY FORARENEWED FUTURE
  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 29, 2018, 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 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. 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. The Mandalay Portfolio Today 3 Producing assets with organic growth profile and exploration upside • Costerfield grew P&P Reserves and is bringing Youle vein into operation • Björkdal focused on higher-margin ounces Chilean Properties • Cerro Bayo (production suspended) • Currently in permitting for restart • Challacollo • Feasibility-stage project • Non-binding LOI signed with Aftermath Silver Costerfield: Over 100% production increase planned by 2021 • High-grade Youle lode added to Reserves • Production from Youle expected 2H-2019 • 2018 production (AuEq): 35,849 oz • 2019E production (AuEq): 41,000-51,000 oz • 2019E cash costs: $790-$920/oz • Excellent high-grade exploration potential (ON CARE AND MAINTENANCE, CURRENTLY PERMITTING RESTART) Björkdal: Ramping-up Production • 2018 production: 45,719 oz gold • 2019E production: 50,000-56,000 oz gold • 2019E cash costs: $800-$950/oz • Current mine life: 10+ years • Most prospective exploration potential since Mandalay ownership
  4. 4. 2019: Transition, Growth, and Rejuvenation 4 Björkdal Costerfield Consolidated Oz Au Eq., ‘000* 50,000-56,000 41,000-51,000 91,000-107,000 Cash cost, $/oz Au Eq 800-950 790-920 850-980 All-in Cost, $/oz Au Eq 1,030-1,180 1,050-1,180 1,130-1,280 CAPEX, $/million** 18-22 21-25 39-47 *2019E Au Eq assumes metal prices: Au $1,200/oz and Sb $8,200/t **CAPEX includes exploration at Björkdal and Costerfield; consolidated cost guidance includes expected Corporate G&A Gold 73,000–86,000 oz Total Gold Equivalent 91,000-107,000 oz AIC Per oz Gold Equivalent $1,130-$1,280 Guidance shows expected year-over-year production and cost improvements Cash Cost Per oz Gold Equivalent $850-$980 2019E Guidance Antimony 2,600-3,100 t Gold 67,329 oz Antimony 2,173 t Total Gold Equivalent 81,568 oz AIC Per oz Gold Equivalent $1,537 Cash Cost Per oz Gold Equivalent $1,148 2018 Performance
  5. 5. Significant Organic Production Growth 2019-2021 5 81,568 91,000 -107,000 108,000-127,000 131,000-162,000 2018 2019E 2020E 2021E Mandalay Production Guidance 2019-2021 (in gold equivalent ounces, range midpoints graphed) Costerfield Bjorkdal 2019E 2020E 2021E Björkdal Gold produced (oz) 50,000-56,000 53,000-59,000 55,000-65,000 Costerfield Gold produced (oz) 23,000-30,000 40,000-49,000 60,000-75,000 Antimony produced (t) 2,600-3,100 2,200-2,800 2,400-3,300 Consolidated Gold eq* produced (oz) 91,000-107,000 108,000-127,000 131,000-162,000 *Assumes metal prices of: Au $1,200/oz, Sb $8,200/t.  Major production increase expected from bringing Youle vein on-line (expected H2-2019)  Björkdal to ramp-up underground production; production increases expected due to mining wider, higher-grade Aurora zone and higher- grade skarn
  6. 6. Solid Financial Footing to Address Liquidity and Growth C$54 million financing will strengthen Mandalay’s financial position and allow the Company to de-risk and grow the business 6 Proposed Use of Net Proceeds (US$M, numbers rounded) Current outstanding liabilities 2 Exploration 4 Capital expenditures: Costerfield Youle development to mid-2019 5 Björkdal Tailings Storage Facility Lift 5 Björkdal Environmental Permit Bonding 3 General Corporate Purposes(1) 20 TOTAL 39 Two components:  US$8 million bridge loan with CE Mining III for current outstanding liabilities – Funds received  C$43 million public offering – Funds received  Net proceeds are intended to fund working capital requirements, debt restructuring, exploration at high potential areas at both mines, and general corporate purposes Notes: (1) US$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. Grow Production  Costerfield • Bring high-grade Youle lode into production (expected in latter half of 2019) • Ramp-up production stoping from Brunswick lode  Björkdal • Increase volume of high-grade UG feed • Increasing development rate in Aurora for near-term stoping Objectives for 2019 7 Exploration  Costerfield • Expand known Youle Mineral Reserve • Continue regional exploration program on known targets to find additional Youle-like deposits/deep hole drilling  Björkdal • Surface drilling above Aurora • Continue to expand Aurora discovery • Continue investigation into high-grade skarn bodies throughout the property  Maximize value of non-core assets and mitigate financial risks: • Lupin (total bond reductions received so far: C$8M) • La Quebrada  Explore options: • Challacollo (LOI signed), • Cerro Bayo Maximize Value of Portfolio
  8. 8. 8 Costerfield: Major Production Increases Planned Land package 1,293 hectares Ownership 100% P&P Reserves(1) 537,000 t @ 10.4 g/t Au; 3.2% Sb for 180,000 oz Au and 17,200 t Sb 2018 Production 35,849 oz Au Eq. (21,610 oz Au, 2,173 t Sb) 2019E Production 41,000-51,000 oz Au Eq. (23,000 – 30,000 oz Au, 2,600 – 3,100 t Sb) Keys to 2019:  Accelerating development to Youle top priority for operation (expected 2nd half of 2019)  Increase production rate from Brunswick lode (1) Source: SRK Consulting (Australia), Effective December 1, 2018, documented in an independent NI 43-101 Technical Report filed February 6, 2019 35,849 41,000-51,000 55,000-68,000 76,000-100,000 2018 2019E 2020E 2021E CosterfieldGoldEq.Production(oz) Costerfield Production Expected to More than Double by 2021E Increased interest in Victorian gold mining due to recent exploration discoveries  Exploration to incorporate several highly prospective exploration targets
  9. 9. 9 The Youle Lode: Driving Future Success  Youle vein lies approximately 800 m north of Brunswick Lode • Drill intercepts on Youle have demonstrated continuity of high-grade along strike and down dip  Infill and extension drilling added Youle to 2018 year-end Reserves  Development to Youle vein initiated Q3, 2018, on schedule MND mining 2009-2018 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 Proven + Probable 537 10.4 3.2 180 17.2 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 - - - - - Probable 267 14.1 3.3 121.2 8.8 Proven + Probable 267 14.1 3.3 121.2 8.8 Mineral Reserves at Youle (Costerfield) (as of Dec. 1, 2018) (1) 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  Currently known mineralized shoot • Approx. 600 m strike • Approx. 200 m dip  High-grade continuous core defined by multiple intercepts • Multiple intercepts over 50 g/t AuEq over 1.8 m minimum mining width Hole True Width (m) Gold (g/t) Sb (%) AuEq (g/t) over min. 1.8 m mining width BC047 1.4 152.0 18.1 142.7 BC036W1 1.65 93.9 31.1 136.4 BC032 0.66 338.8 14.4 133.1 BC021A 0.58 272.1 13.3 94.7 BC011 3.5 14.7 10.9 65.9 Youle drilling highlights (up to Nov/18)
  11. 11. 11 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
  12. 12. 12 Could there be Fosterville style gold at Costerfield? – Yes  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 nugget (Swan zone) environment; this environment also sits at a similar depth below surface to the Swan zone  Mandalay has intercepted this zone in the Sub KC Drilling with 2 of 4 intercepts returning high gold grades supporting the analogy Deep Drilling at Costerfield: Fosterville Comparison Fosterville Deposits Costerfield Deposits Fosterville Costerfield 30 km Fosterville and Costerfield are fundamentally similar in mineral source, fluid composition, fluid transportation system and fluid trap environment
  13. 13. 13 Where to Target a Fosterville-like Environment  The success of Fosterville now changes again our stance on the viability of this area  The Orange unit signifies a Carbon-rich turbidite package similar to that which separates the refractory and nuggetty gold within Fosterville  We have intercepted the mineralized corridor under this unit with good results  4 proposed 1,200 m holes from surface will aid in providing information on the potential and targets in this environment CSK007 – 0.08m @ 1,361 g/t Au CSK012 – 0.18m @ 259 g/t Au (Deepest hole and intercept in the district) Fosterville Swan zone  starting at  950m below  surface Fosterville Swan zone  starting at  950m below  surface Resource outlines CSK007 and CSK012 Proposed Targets
  14. 14. Robinson’s Shaft 1899 – Shaft depth only 50m Grade range of 60 – 100g/t in quartz Brown’s Shaft 1880’s Average grade of ore = 18g/t Au 17.6 g/t Au over 6m Brown’s Diggings Robinson’s Reef Augusta Mine 2 km strike length Shallow Drilling at Costerfield: Target Generation
  15. 15. 15 Björkdal: Ramping-up with Focus on Profitability Land package 12,949 hectares P&P Reserves(1) 11,384,000 t @ 1.58 g/t Au for 580,000oz (1) Source: Roscoe Postle Associates, Effective December 31, 2018, documented in an independent NI 43-101 Technical Report filed March 28, 2019 44,039 48,143 62,018 45,719 50,000-56,000 53,000-59,000 55,000-65,000 2015 2016 2017 2018 2019E 2020E 2021E BjörkdalGoldProduction(ounces) Björkdal Gold Production Expected to Rise 2019E-2021E (midpoints of guidance graphed) 2019 Focus at Björkdal:  Increase the percentage of production from underground  Focus on higher production from wider, higher-grade Aurora zone to increase profitability  Gain better understanding of high-grade skarn mineralization, which was previously not explored or exploited
  16. 16. Björkdal Exploration Strategy Paying Off New discovery of Aurora zone provides the potential to mine high-tonnage and higher-grades at lower costs 16  Aurora zone significantly wider and consistently higher-grade than current mill feed • 250 m horizontally • 150 m vertically  Mineralization open in all directions  Aurora zone readily accessible, two levels currently being developed  Large step-out drilling occurring below and above currently known mineralization to expand zone  Preliminary processing results show no challenges for gold recoveries Hole True Width (m) Gold (g/t) DOD2018-123 11.46 4.97 DOD2018-062 8.64 7.1 MU8-037 4.29 9.21 DOD2018-169 4.9 9.04 MU8-041 2.63 (diluted to 3m) 10.97 Aurora Zone Drill Highlights (Announced Nov. 14, 2018)
  17. 17. Aurora Zone: Long Section & Preliminary Reserve 17  Proven Reserves Added: 920kt @ 2.34 g/t Au (69,000 oz Au)  Indicated Resources Added: 765kt @ 3.16 g/t Au (78,000 oz Au)  Inferred Resources Added: 206kt @ 3.37 g/t Au (22,000 oz Au)  Mandalay expects that Aurora will contribute additional Mineral Reserves and Resources in 2019  2019 exploration focus: o Extensional drilling up and down dip as well as to the east o Drilling from surface to test up dip extension to the Aurora structure, o Zones surrounding Aurora o Skarn drilling Preliminary Mineral Resource and Reserve added for Aurora in Feb 2019(1) (1) Source: Roscoe Postle Associates, Effective December 31, 2018, documented in an independent NI 43-101 Technical Report filed March 28, 2019
  18. 18. 18 Exploration Breakthrough: Mineralization Above Marble Lake Zone North Lake Zone Central Zone West Pit Historically, marble has been considered to constrain the mineralization at Björkdal. Recent drilling has shown vein continuation above the marble contact The pink horizon represents a large area containing little to no drilling, therefore representing a large prospective area for further investigation. Mineralization extending hundreds of metres beyond area previously thought to be constrained
  19. 19. 19 Chilean Assets: Cerro Bayo & Challacollo Land package 23,106 hectares Ownership 100% P&P Reserves(1) 856,000 t @ 284 g/t Ag; 2.34 g/t Au 2016 Production 13,792 oz Au, 1,731,031 oz Ag (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  Operations remain on Care and Maintenance  Permitting ongoing for restart of operations  Mandalay considering all alternatives to maximize value of asset Cerro Bayo Silver-Gold Mine Challacollo Silver-Gold Project  August 2018: Signed non-binding LOI with Aftermath Silver for sale of Challacollo Project for total consideration of C$11,625,000  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 MM t @ 200 g/t Ag for 30 MM oz Ag
  20. 20. Adjusting the Mandalay Portfolio 20  Realizing value from non-core assets • Ulu, Nunavut: Option agreement signed; received both payments • Norrliden: Exploring alternatives for sale • Lupin, Nunavut – Undergoing reclamation with submission of final closure plan o C$5.3 million cash reduction in Reclamation Deposit released to MND in Q3 2018 o As of Jan 28, 2019 Mandalay received Minister sign off for a further C$3.2 million reduction in bonding and therefore the current reclamation bond stands at C$26.1 million • La Quebrada, Chile – Active process ongoing  Exploring options for development/restart assets • Challacollo o Executed non-binding LOI for sale of asset • Cerro Bayo
  21. 21. 1. Exercise Price: C$0.60 – C$1.13 expiry dates ranging from Mar 18, 2018 – Jun 30, 2025. 2. Market Capitalization converted to US$ using exchange rate of 1 CAD = 0.75 USD (Mar. 28, 2019), numbers rounded. 3. Approximate Cash and Cash Equivalent number consists of cash at December 31, 2018 of $8.4 million plus the net proceeds received from the Financing announced on Feb. 11, 2019. Approximate Total Interest-Bearing Debt number consists of principal amount outstanding of the Company’s gold bonds of $24.1M, HSBC Revolving Credit Facility of $35M and $4.7M in Equipment Loans and Leases (figure from the Q4 2018 financials). Cash and debt figures unaudited. 21 Mandalay Current Capitalization as of Mar 29, 2019 Millions (Except Share Price Info) Share price (March 29, 2019 - close) (C$) $0.12/shr Shares Outstanding 910.4 Stock Options(1) 20.7 RSUs 1.9 Fully Diluted Shares Outstanding 933.0 Market Capitalization (C$) $109.2 Approximate Cash and Cash Equivalents (US$)(3) $46.8 Approximate Total Interest-Bearing Debt (US$)(3) $63.8 Total Enterprise Value (US$)(2,3) $99.0
  22. 22. 22 Major Shareholders(1) Holders Shares (Million) Shares (Percentage) CE Mining 232.4 Ruffer LLP 152.9 GMT Capital 139.2 AzValor 109.8 West Face 41.7 Large Holders (Top-5) 676.0 Other Holders 234.4 TOTAL 910.4 Strong Sponsorship and Support from Major Shareholders 1. Known ownership positions are estimates - as at April 1, 2019 – Ownerships and percentages rounded to one decimal place. 25.5% 16.8% 15.3% 4.6% 12.1%25.7%
  23. 23. For more information, please contact: Greg DiTomaso Director, Investor Relations Tel: 647.260.1566 Email: g.ditomaso@mandalayresources.com Company Website: www.mandalayresources.com Twitter: @MandalayAuAg For more information, please contact: Greg DiTomaso Director, Investor Relations Tel: 647.260.1566 Email: g.ditomaso@mandalayresources.com Company Website: www.mandalayresources.com Twitter: @MandalayAuAg TSX:MND OTCQB:MNDJF
  24. 24. 24 A Values-Based and Value-Focused Company WE ARE SUCCESSFUL WHEN: 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
  25. 25. 25 Youle Long Section
  26. 26. 26 Aurora Drilling

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