Mandalay Resources Corporation Investor Presentation February 2014

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Mandalay Resources Corporation Investor Presentation February 2014

  1. 1. FEB 2014 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, 2012 and 2013 and has supervised the preparation of this presentation. He has also visited the Challacollo project in 2013 and 2014. 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 Q4 2013 Operational Performance Q4, 2013 Saleable Silver oz produced Q4, 2012 878,542 12,117 Saleable Antimony t produced 10,927 805 Saleable Gold oz produced 895,222 785 Mandalay Q4 2013 Financial Performance Q4, 2013 Q4, 2012 Net Cash/All-in Cost/oz Ag at Cerro Bayo, USD 6.74 / 11.51 5.17 / 10.71 Net Cash/All-in Cost/oz Au Eq. at Costerfield, USD 850 / 1,085 943 / 1,153 13.9 28.8 4.4 22.4 33.5 17.3 EBITDA, USD million Net Income, USD million Cash and cash equiv. at end of period, USD million* *Cash position of US$27.7 prior to purchase of Challacollo mining project in February 2014. 5
  6. 6. Management and Board of Directors Senior Management Brad Mills, CEO and Executive Director Former CEO Lonmin plc, over 30 years of experience in Copper, Gold, PGMs Sanjay Swarup, CFO and Executive Director Former Lonmin plc, over 20 years of industry experience Mark Sander, President 28 years of experience in exploration, strategy and operating improvements Dominic Duffy, COO Mining Engineer with extensive technical and operational management experience Belinda Labatte, Corporate Secretary Over 10 years of experience in capital markets and investment banking Board of Directors Braam Jonker, Chairman Peter R. Jones, Independent Director Tony Griffin, Independent Director 6 Robert Doyle, Independent Director
  7. 7. Strategy: Rapid Value Generation and Returns Entry Strategy: Acquire high-quality assets at a low cost relative to ultimate value Focus and Results Increase Revenues ($US MM) Apply management’s extensive operational and exploration expertise to turn around, grow and/or develop the assets 171.8 166.9 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 2013 Generate Cash (EBITDA - $US MM**) 79.9 32.0 -1.0 Early cash flow to fund exploration, growth and operational improvements 2009 2010 Dividend Payouts ($CAD MM) Building critical mass through acquisition 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 67.7 1.7 2011 2012 $10.9 $3.2 2012 A **The Company defines EBITDA as earnings before interest, taxes and non cash charges/ (income). EBITDA is presented because the Company believes it is a useful indicator of relative operating performance. EBITDA should not be considered by an investor as an alternative to net income or cash flow as determined in accordance with IFRS. ***Annual cash dividend paid quarterly, based on 6% of the Company’s trailing quarter’s gross revenue and the future cash requirements of the Company. 7 2013 A 2013
  8. 8. Capital Structure and Ownership Millions (Except Share Price Information) Capital Structure as at February 13, 2014 Share price (Feb. 13, 2014 - close) (CAD$) 0.90/shr Shares Outstanding 334.7 Options(1) 16.1 Warrants(2) 21.0 Fully Diluted Shares Outstanding 371.8 Market Capitalization (CAD$) 310.3 Cash and Cash Equivalents (CAD$) (as of Sept. 30, 2013)(3) 33.5 0 Total Debt (CAD$) (as of Sept. 30, 2013)(3) Total Enterprise Value (CAD$) 276.8 Major Shareholders(4) Holders % Shares (Million) West Face Capital 40.9% 136.9 Plinian + Management 10.7% 35.8 Sprott Asset Management 10.0% 33.5 Silver Standard 3.6% 12.0 Arcourt (Byrne) 3.5% 11.7 Baker Steel 3.3% 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 8 (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
  9. 9. Management Track Record: Execution, Value Creation Index (August 3, 2009 = 100) 500 Mandalay Resources 450 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: 237% (total return) Peers: 130% Silver: 43% Gold: 36% TSX Composite: 27% TSX Mining: -11% 250 200 150 100 50 Company History and Milestones 2009 Q4 2010 2011 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 silvergold 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 • Acquired Challacollo *Peer group includes: Coeur Mining, Endeavour Silver, First Majestic Mines, Fortuna Silver, and Primero Mining Share prices as at February 13, 2014 9 2012 2013
  10. 10. Cerro Bayo Silver-Gold Mine Land package 23,096 hectares Ownership 100% 2013 silver production 3,145,537 oz 2013 gold production 21,482 oz 2014E silver production 3.0 – 3.2 Moz 2014E gold production Current throughput / Goal P&P Reserves 23,000 – 27,000 oz approx. 1,200 tpd / 1,400 tpd (end Q1 2014) 2.5 Mt @ 224 g/t Ag; 2.2 g/t Au Plant recoveries (FY 2013) Ag: 90.9%, Au: 87.8% 2013A Cash costs/oz Ag net Au credits / 2014E $6.84 / $6 – $8 2014 Planned Exploration Budget $3 – 4 million 10
  11. 11. 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 Q2‐12 Q4‐12 120,000 100,000 $0 Processing Rate and Unit Cost Q2‐ 2013 Q4‐ 2013 $70 $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 Q2‐12 1,000,000 Q2‐13 Q4‐12 Cost/ t Processed 800,000 $20 $15 600,000 $10 400,000 $5 200,000 0 $0 Q4‐10 Q2‐11 Q4‐11 Q2‐12 Q4‐12 Q2‐13 Q4‐13 Ag oz 11 q4‐13 Cost/ oz Ag net Au 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
  12. 12. 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 12
  13. 13. Emerging Extensions and New Veins Under Laguna Verde LAGUNA VERDE Veins with Reserves Surface Trace Veins with Reserves Underground Trace Target Extensions Under Laguna Verde Reported Drill Intercepts
  14. 14. Cerro Bayo M&I Resource Growth Net of Depletion Cerro Bayo Resources (1) Measured Resources Indicated Resources M&I Resources Inferred Resources Resource (t) 411,000 1,633,000 2,044,000 433,000 Ag Grade (g/t) 423 308 331 400 Au Ag Au Grade (cont. oz) (cont. oz) (g/t) 5,596,000 3.6 48,000 16,172,000 3.2 167,000 21,768,000 3.3 214,000 5,580,000 3.3 46,000 Cerro Bayo Reserves (1) Ag Au Au Ag Grade Grade (cont. (cont. oz) (g/t) (g/t) oz) 516,000 283 4,705,000 2.5 41,000 1,967,000 209 13,197,000 2.1 134,000 2,483,000 224 17,901,000 2.2 174,000 Ore (t) Proven Reserves Probable Reserves P&P Reserves Cerro Bayo M+I Resource Additions vs Depletion (Ag Ozs) 35,000,000 30,000,000 OZS Ag 25,000,000 2.4 X Net Add 20,000,000 15,000,000 10,000,000 5,000,000 0 2010 2011 2012 2013 END OF YEAR MEASURED PLUS INDICATED RESOURCES CUMULATIVE DEPLETION Dagny Fabiola Delia NW Delia SE Marcela Sur Yasna Coyita Dalila Bianca Trinidad Raul 1 Source: Cerro Bayo - Roscoe Postle Associates, Feb. 2014, documented in an independent NI 43-101 report to be filed within 45 days of Feb.13, 2014 14
  15. 15. Costerfield Gold-Antimony Mine: Overview Land package 1,293 hectares Ownership 100% 2013 gold production 28,758 oz 2013 antimony production 3,275 t 2014E gold production 37,000 – 43,000 oz 2014E antimony production 3,000 – 3,300 t Current throughput / 2014E 400 tpd / 400 tpd P&P Reserves 420,000 tonnes @ 9.2 g/t Au; 3.6% Sb Plant recoveries (FY 2013) Au: 89.98%, Sb: 95.37% 2013A Cash cost/oz Au Eq. (US$) / 2014E $819/ $675 – $775 2014 Planned Exploration Budget $4 – 5 million 15
  16. 16. Costerfield Operating Performance $300 AUD/ Tonne $400 Processing Rate and Unit Cost $100 35,000 $0 $100 30,000 Q4‐09 Q2‐10 Q4‐10 Q2‐11 Q4‐11 Q2‐12 Q4‐12 Q2‐13 Q4‐13 (Dec.  25,000 only) 20,000 t Mined Cost/ t Mined 15,000 $80 $60 $40 10,000 0 Q4‐09 (Dec.  only) t Processed Au Equivalent Production and Cost $20 18,000 16,000 $0 14,000 Q2‐10 Q4‐10 Q2‐11 Q4‐11 Q2‐12 Q4‐12 Q2‐13 Q4‐13 12,000 10,000 8,000 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 Q4‐13 (Dec.  only) Ounces Per Quarter 5,000 $120 Oz Au Eq. 16 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
  17. 17. Cuffley Mine Plan Cuffley Lode N-lode E-lode W-lode Subparallel and adjacent to N-lode Same mining technique as N-lode • Long hole stoping 10 m lifts • CRF backfill 17
  18. 18. Costerfield M&I Resource Growth Net of Depletion Costerfield Resources (1) Categories Measured Sb Au Resource Sb Au Grade Grade (t) (cont. t) (cont. oz) (%) (g/t) 191,000 4.3% 8,000 8.4 51,000 Costerfield Reserves (1) Categories Proven Indicated M&I 605,000 796,000 3.7% 4.1% 22,000 32,000 9.6 9.3 187,000 Probable 238,000 P&P Inferred 569,000 3.8% 22,000 7.4 Sb Au Sb Au Grade Grade (cont. t) (cont. oz) (%) (g/t) 71,000 4.4% 3,000 8.3 20,000 Ore (t) 135,000 350,000 420,000 3.4% 3.6% 12,000 15,000 9.4 9.2 106,000 126,000 Costerfield M+I Resource Additions vs Depletion (AuEq Ozs) 1,000,000 900,000 800,000 3.8 X Net Add OZ AuEq. 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 2009 2010 2011 2012 2013 END OF YEAR MEASURED PLUS INDICATED RESOURCES CUMULATIVE DEPLETION Augusta Brunswick Cuffley 1 Source: Costerfield - SRK Consulting (Australia), Feb. 2014, documented in an independent NI 43-101 report to be filed within 45 days of Feb. 13, 2014 18
  19. 19. Costerfield – Long Section 19
  20. 20. Challacollo Silver-Gold Project: Overview Land package 4,000 hectares Ownership 100% Location 130 km SE of Iquique, Chile Mineralization Epithermal, oxidized Ag-Au Elevation approx. 1,500 metres ASL Resource Indicated: 1 mt @ 242 g/t Ag; Inferred: 4 mt @193 g/t Ag 20
  21. 21. Challacollo Development Plan Plan funded from cash flow • 12 mo Feasibility Study: $7 – $8 million Environmental, community, cultural baselines for permitting Drill 8,000 m for infilling existing Inferred Resource and extensions Resource update Metallurgical testing– crushing, grinding, agitation leach Mine design, plant design Capital and operating costing Financial case and conversion to reserves • Permitting Submission of EIA Q1, 2015 Receipt of permits– goal EOY 2015 • Build 12 months build (est.) in 2016 • Production First production – Goal: Q1 2017 21
  22. 22. 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. 22
  23. 23. Discovery-fuelled Organic Growth – 2013E & 2014E Significant M&I Resource Growth (1,2,3,4) Ag (cont. oz) 60,000,000 Au (cont. oz) 600,000 Cu (cont. lbs MM) 600 30,000 400,000 40,000,000 Sb (cont. t) 40,000 400 20,000 200,000 20,000,000 0 0 2010 2011 2012 2013 200 10,000 0 0 2010 2011 2012 2013 2010 2011 2012 2010 2013 2011 2012 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 3,275 $3-$4 million $6-$7 million $8-$9 million Capital Development Capitalized Exploration 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 37,000– 43,000 50,000 40,000 28,758 30,000 1,576 18,036 20,000 10,000 6,678 0 2012 2013 2014E 2011 Silver (oz) (2014E) Capital Expenditure (PP&E) 3,000 – 3,300 2,481 2011 Cerro Bayo Budget and Production Gold (oz) 2012 2013 2014E Gold (oz) 3.1 million 2.9 million 3.0 - 3.2 million 23,000– 27,000 30,000 25,000 21,482 20,000 1.3 million 15,000 17,089 12,244 10,000 5,000 0 2011 2012 2013 2014E 2011 2012 1 Source: Cerro Bayo - Roscoe Postle Associates, Feb. 2014, documented in an independent NI 43-101 report to be filed within 45 days of Feb. 13, 2014 2 Source: Costerfield - SRK Consulting (Australia), Feb 2014, documented in an independent NI 43-101 report to be filed within 45 days of Feb. 13, 2014 30 3 Source: Challacollo – Roscoe Postle Associates, Dec. 20, 2013, in a report filed Feb. 7, 2014 4 Source: La Quebrada – Independent Technical Report filed 16-Aug-2012. 2014E midpoints graphed. 2013 2014E 2013
  24. 24. Peer Comparison: Production, Cost, Financials 2013A Production Ag (oz) Mandalay Resources Au (oz) 9M 2013A Financials Other Ag Eq (oz) (Au + Ag) Revenue (US$MM) EBITDA (US$MM) EBITDA Margin (%) 3,145,537 50,240 3,275 t Sb 5,886,848 127.8 53.8 42.1 17,012,000 262,217 - 31,319,691 577.2 145.9 25.3 6,813,069 75,578 - 10,936,931 208.9 69.9 33.5 10,641,465 10,040 16,000 t Pb+Zn 11,189,291 192.3 78.3 40.7 Fortuna Silver 4,631,264 21,242 19,000 t Pb+Zn 5,790,319 101.0 29.4 29.1 Primero Mining 6,050,000 111,983 - 12,160,276 152.6 71.2 46.7 Coeur Mining Endeavour Silver First Majestic Mines P+P Reserves Ag (oz) Mandalay Resources Au (oz) Market Comparables Other Reserve Grade Ag Eq (g/t) (Au + Ag) Market Capitalization FD (CAD$MM) EPS Last 12M Dividend Paid/Share 18,250,000 214,000 7,200t Sb 361 334.6 $0.07 $0.03429 261,528,000 2,286,000 - 51 1,197.3 ($0.67) $0 Endeavour Silver 23,057,200 222,300 - 253 601.9 $0.26 $0 First Majestic Mines 90,800,000 0 - 161 1,557.9 $0.37 $0 Fortuna Silver 42,700,000 266,100 - 216 640.3 ($0.03) $0 Primero Mining 39,377,000 660,000 - 513 1,015.0 $0.31 $0 Coeur Mining Source: Company reports and Bloomberg Market capitalization as at February 13, 2014 24 Ag Eq oz converted at 55/1 Au/Ag. Metal prices: Ag price of $28.92 and Au price of $1,578
  25. 25. Mandalay Compares Favourably to its Peers 600 Coeur Mining 45% 500 Fortuna Silver 35% 400 300 25% 15% Second lowest market cap per estimated annual production of Ag Eq oz Second lowest market cap per P+P reserves oz Highest dividend paid per share $5 10% 100 Lowest fully loaded cost (Ag Eq oz) $10 20% 200 Second highest EBITDA margin $15 30% Primero Mining Second highest grade reserves (Ag Eq oz) $20 40% Endeavour Silver First Majestic Mines $25 50% Mandalay Resources 5% 0 P+P Reserve Grade Fully Diluted Ag Eq (g/t) $120 $0 0% Fully Loaded 9M 2013 Cash Cost/Ag Eq oz 9M 2013 EBITDA Margin $18 $0.040 $16 $100 $14 $80 $0.030 $12 $10 $60 $0.020 $8 $40 $6 $0.010 $4 $20 $2 $0 $0 Market Cap per 2014E Ag Eq Production (oz) Market capitalization as at February 13, 2014 Ag Eq oz converted at 55/1 Au/Ag Metal prices: Ag price of $28.92 and Au price of $1,578 25 $0.000 Market Cap per P+P Reserves (Ag Eq oz) Last 12M Dividend Paid per Share
  26. 26. Investment Proposition Execution-focused management with track record of acquisition, operational and exploration success, growth and value generation High-quality, cash flowing asset portfolio with major exploration upside and full project pipeline Strong balance sheet, self-funding Challacollo development, zero net debt Rapid increase in production and margins through low-capex organic growth and operational efficiencies Returning cash to shareholders and reducing dilution – share buyback program in place Company paying sustainable dividend annualized at approximately 5% Continued growth through further acquisitions 26
  27. 27. FEB 2014 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
  28. 28. Mandalay Reserves Cerro Bayo Reserves (1) Proven Reserves Ore Ag Grade Ag Au Grade Au (t) (g/t) (cont. oz) (g/t) (cont. oz) 516,000 283 4,705,000 2.5 41,000 Probable Reserves 1,967,000 209 13,197,000 2.1 134,000 P&P Reserves 2,483,000 224 17,901,000 2.2 174,000 Costerfield Reserves (2) Proven Reserves Ore (t) Sb Grade (%) Sb Au Grade Au (cont. t) (g/t) (cont. oz) 3,000 8.3 20,000 71,000 4.4 Probable Reserves 350,000 3.4 12,000 9.4 106,000 P&P Reserves 420,000 3.6 15,000 9.2 126,000 TOTAL RESERVES: 31-December-2013 Mandalay Proven Reserves Ag (cont. oz) Au (cont. oz) Sb (cont. t) 4,705,000 61,000 3,000 Mandalay Probable Reserves 13,197,000 240,000 12,000 Mandalay P&P Reserves 17,902,000 301,000 15,000 1 Source: Roscoe Postle Associates, Feb. 2014 documented in an independent NI 43-101 report to be filed within 45 days of Feb. 13, 2014 2 Source: SRK Consulting (Australia), Feb 2014, documented in an independent NI 43-101 report to be filed within 45 days of Feb. 13, 2014 28 Numbers may differ slightly from Source documents due to rounding
  29. 29. Mandalay Resources Cerro Bayo Resources (1) Measured Resources Indicated Resources M&I Resources Inferred Resources Challacollo Resources (3) Measured Resources Indicated Resources M&I Resources Inferred Resources Costerfield Resources (2) Measured Resources Indicated Resources M&I Resources Inferred Resources La Quebrada Resources (4) Measured Resources Indicated Resources M&I Resources Inferred Resources TOTAL RESOURCES Measured Resources Indicated Resources M&I Resources Inferred Resources Resource (t) 411,000 1,633,000 2,044,000 433,000 Ag Grade (g/t) Resource (t) Au Grade (g/t) 1,030,000 1,030,000 3,900,000 Resource (t) 423 308 331 400 Sb Grade (%) 191,000 605,000 796,000 569,000 Resource (t) 0.4 0.4 0.3 Ag (cont. oz) 5,596,000 16,172,000 21,768,000 5,580,000 Au Grade (g/t) Ag Grade (g/t) Au (cont. oz) Ag (cont. oz) Au Grade (g/t) Au (cont. oz) Sb (cont. t) 4.3% 3.7% 4.1% 3.8% Cu Grade (%) 0 34,800,000 34,800,000 1,000,000 0 0.6% 0.6% 0.6% Ag (cont. oz) 5,596,000 35,372,000 40,968,000 30,280,000 Au (cont. oz) 99,000 367,000 465,000 221,000 242 242 193 3.6 3.2 3.3 3.3 13,000 13,000 40,000 8,000 22,000 32,000 22 ,000 Cu (cont. lb) 8.4 9.6 9.3 7.4 Ag Grade (g/t) 0 459,000,000 459,000,000 13,000,000 Sb (cont. t) 0 10 10 11 0 459,000,000 459,000,000 13,000,000 1 Source: Cerro Bayo - Roscoe Postle Associates, Feb. 2014 documented in an independent NI 43-101 report to be filed within 45 days of Feb. 13, 2014 2 Source: Costerfield - SRK Consulting (Australia), Feb 2014, documented in an independent NI 43-101 report to be filed within 45 days of Feb. 13, 2014 29 3 Source: Challacollo – Roscoe Postle Associates, Dec. 20, 2013, in a report filed February 7, 2014. 4 Source: La Quebrada – Independent Technical Report filed 16-Aug-2012. 8,000,000 8,000,000 24,300,000 51,000 187,000 238,000 135,000 Ag (cont. oz) Cu (cont. lb) 8,000 22,000 32,000 22,000 Au (cont. oz) 48,000 167,000 214,000 46,000 0 11,200,000 11,200,000 400,000
  30. 30. 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 • • • • • • 30 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
  31. 31. 9,000 2.70 Actual Sb‐Price Market USD 31 Actual Cu‐Price LME USD 23/Jan/14 29/Jan/14 04/Feb/14 04/Feb/14 30/Dec/13 24/Dec/13 18/Dec/13 12/Dec/13 06/Dec/13 30/Nov/13 24/Nov/13 18/Nov/13 12/Nov/13 06/Nov/13 31/Oct/13 25/Oct/13 19/Oct/13 13/Oct/13 07/Oct/13 29/Jan/14 2.90 17/Jan/14 3.10 23/Jan/14 3.30 11/Jan/14 3.50 17/Jan/14 3.70 05/Jan/14 COPPER PRICE ‐ DAILY SPOT LME 11/Jan/14 Actual Ag‐Price LME USD 05/Jan/14 30/Dec/13 24/Dec/13 18/Dec/13 12/Dec/13 06/Dec/13 30/Nov/13 24/Nov/13 18/Nov/13 Actual Au‐Price LME USD 12/Nov/13 06/Nov/13 31/Oct/13 10,000 25/Oct/13 11,000 01/Oct/13 Ag price USD/oz GOLD  PRICE ‐ DAILY  SPOT LME 19/Oct/13 12,000 13/Oct/13 ANTIMONY PRICE ‐ DAILY ROTTERDAM  WAREHOUSE 07/Oct/13 13,000 CU price USD/lb 04/Feb/14 29/Jan/14 23/Jan/14 17/Jan/14 11/Jan/14 05/Jan/14 30/Dec/13 24/Dec/13 18/Dec/13 12/Dec/13 06/Dec/13 30/Nov/13 24/Nov/13 18/Nov/13 12/Nov/13 06/Nov/13 31/Oct/13 25/Oct/13 19/Oct/13 13/Oct/13 07/Oct/13 01/Oct/13 15.00 01/Oct/13 04/Feb/14 29/Jan/14 23/Jan/14 17/Jan/14 11/Jan/14 05/Jan/14 30/Dec/13 24/Dec/13 18/Dec/13 12/Dec/13 06/Dec/13 30/Nov/13 24/Nov/13 18/Nov/13 12/Nov/13 06/Nov/13 31/Oct/13 25/Oct/13 19/Oct/13 14,000 13/Oct/13 07/Oct/13 Au price USD/oz 1,800 1,700 1,600 1,500 1,400 1,300 1,200 1,100 1,000 01/Oct/13 Sb price USD/t Metal Price Update SILVER  PRICE  ‐ DAILY  SPOT LME 40.00 35.00 30.00 25.00 20.00
  32. 32. 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 32
  33. 33. 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 33

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