MAY 2018 TSX:MND ANNUAL GENERAL MEETING 2018

Transcription

1 MAY 218 TSX:MND ANNUAL GENERAL MEETING 218 1

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, 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, 218 and in its short form base shelf prospectus dated February 12, 218, 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 The exploration programs at Costerfield and Björkdal 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 Mr. Gregory regularly visits Costerfield and Björkdal, and supervises the collection and interpretation of scientific and technical information contained in this presentation. The exploration programs at the Cerro Bayo and Challacollo projects are supervised by Scott Manske, Chief Cordilleran Geologist of Mandalay Resources, and an Oregon registered Professional Geologist. A Qualified Person as defined by NI 43-11, he has reviewed and approved the technical and scientific information on these projects contained in the 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. 2

3 The Mandalay Portfolio Today Well-run, producing assets with exploration upside Björkdal: 217 Breakthrough Year 217 production: 62,28 oz gold 217 cash costs: $816/oz Current mine life: 1 years Costerfield: 217 Dependable Performance, Mine life extension at Brunswick lode 217 production (AuEq): 52,137 oz 217 cash costs: $71/oz Current mine life: 4 years Chilean Properties Cerro Bayo (production suspended) Restart currently in permitting Challacollo Feasibility-stage project Targeting production of approx. 4 Moz Ag for a 1-year mine life (ON CARE AND MAINTENANCE, CURRENTLY PERMITTING RESTART) Björkdal targeting long-term production of 7+koz with a mine life of 15 $75/oz cash costs Costerfield self-funding to replace P&P Reserves and extend mine life 3

4 Strong Buying Opportunity Relative to Peers Mandalay is currently undervalued among its peers on the following basis: Market cap/au Eq production P/NAV and EV/EBITDA multiples EV/P&P AuEq oz reserves $6,. $5,. $4,. $3,. $2,. $1,. $. Market Cap/Au Eq Production oz ($/AuEq oz) 1.x.8x.6x.4x.2x.x.3x.5x P/NAV Multiple (Spot 5%).6x.6x.6x.7x.7x.8x.8x.9x $7. $6. $5. $4. $3. $2. $1. $. EV/P&P Reserves ($/AuEq oz) 35.x 3.x 25.x 2.x 15.x 1.x 5.x.x.5x EV/EBITDA Multiple 2.1x 3.x 3.3x 3.4x 4.8x 5.8x 5.9x 12.4x 3.x Source: BMO Gold Pages, April 27, 218. Share prices as of May 3,

5 Key Objectives for 218 Deliver Strong Results Stable production from current assets, strong cost management and budget control expected to result in growing positive cash flow from operations Produce koz AuEq from Björkdal and Costerfield operations at consolidated cash costs between $835-$91/oz AuEq., and AIC between $1,155-$1,28/oz AuEq. Grow Portfolio through M&A Increase critical mass with producing asset Grow cash flow & mitigate overall Company risk profile and leverage Acquire asset at a discount to value with an achievable turnaround/integration plan Acquire only when we see an opportunity that is accretive to shareholders Grow Reserves & Mine Life Build on continuing exploration success at Björkdal, with focus on increasing average grade and open pit life Continue building on encouraging highgrade results at Youle as potential next ore shoot Total exploration budget: $6.4 million Maximize Value of Portfolio Maximize value of non-core assets and mitigate financial risks: Lupin, La Quebrada Explore options: Challacollo, Cerro Bayo 5

6 218 Operational Guidance Mandalay expects to grow cash flow year-over-year in 218 from production at its Björkdal and Costerfield mines Gold Antimony Total Gold Equivalent AIC Per oz Gold Equivalent 83, 93, oz 2,8 3,2 t 11, 113, oz $1,155 $1,28 Björkdal Costerfield Consolidated Oz Au Eq., * Cash cost, $/oz Au Eq** All-in Cost, $/oz Au Eq** 1,6-1,21 1,15-1,25 1,155-1,28 CAPEX, $/million** *218E Au Eq assumes full-year 218 metal prices: Au $1,36/oz and Sb $8,361/t 6 **CAPEX includes exploration at Björkdal and Costerfield, consolidated cost guidance includes $ million/yr expected for Corporate G&A

7 Björkdal: Self-Generating Anchor Asset Land package 7 12,949 hectares Ownership 1% P&P Reserves (1) 11,43, 1.6 g/t Au for 587, oz 217 Production 62,28 oz $816/oz 218E Production Key accomplishments: Grade control working properly Debottlenecking mine operations has increased rate of delivery of high-grade ore Flotation expansion project completed on time and on budget, performing as planned (1.7% recovery increase) Continued exploration success and mine life extension Permitting on track for new tailings and processing rate expansion (1) Source: Roscoe Postle Associates, Effective December 31, 217, documented in an independent NI Technical Report filed March 29, , 63, oz Au

8 Björkdal: Breakthrough Year in 217 Tonnes Per Quarter Tonnes Per Quarter Ounces Gold Per Quarter 4, 3, 2, 1, 4, 3, 2, 1, 25, 2, 15, 1, 5, Au oz Mining Rate and Unit Cost Q4 14 Q2 15 Q4 15 Q2 16 Q4 16 Q2 17 Q4 17 t Mined Cost/ t Mined Processing Rate and Unit Cost Q4 14 Q2 15 Q4 15 Q2 16 Q4 16 Q2 17 Q4 17 t Processed Cost/ t Processed Saleable Gold Produced and Unit Cost $1,25 Q4 14 Q2 15 Q4 15 Q2 16 Q4 16 Q2 17 Q4 17 Cost/ oz Au $35 $3 $25 $2 $15 $1 $5 $ $1 $8 $6 $4 $2 $ $75 $25 $25 $/ Tonne $/ Tonne $/ oz Au Björkdal keys to turnaround: Record High Rate Record Low Cost Introduced best practice mapping, drilling, sampling, and modelling of high nugget-effect gold deposits Produced a more refined resource model to support more selective underground & open pit mining techniques Established a local assay lab for faster grade control turnaround Increased grade of mill feed through more selective underground and open pit mining at an increasing rate (making up for discarding waste) Flotation expansion completed on time and on budget Pilot test and detailed engineering for optical ore sorting 8

9 Costerfield: Dependable Performance with Upside Land package 1,293 hectares Ownership 1% P&P Reserves (1) 622, 6.1 g/t Au; 2.8% Sb for 122, oz Au and 17,2 t Sb 217 Production 31,512 oz Au, 3,115 t Sb (52,137 oz Au $71 oz Au Eq.) 218E Production 27, 3, oz Au, 2,8 3,2 t Sb Key achievements: May 217: Completed capital development to access near-mine shoots September 217: Positive initial results of low-cost aquifer injection test (reduced water handling costs) November 217: Approved and initiated Brunswick development and mine life extension EOY 217: End of year 217 Mineral Resource and Reserves update reflecting new Brunswick reserves Drill intercepts in Costerfield Deeps & Kendall lodes reveal potential next high-grade shoots to be converted (1) Source: SRK Consulting (Australia), Effective December 31, 217, documented in an independent NI Technical Report filed March 29, 218 9

10 Costerfield: Continuous Improvement Tonnes Per Quarter Tonnes Per Quarter Ounces Per Quarter 6, 4, 2, 6, 4, 2, Mining Rate and Unit Cost Q4 9 Q4 1 Q4 11 Q4 12 Q4 13 Q4 14 Q4 15 Q4 16 Q4 17 (Dec. only) t Mined Cost/ t Mined 2, 15, 1, 5, Q4 9 (Dec. only) Processing Rate and Unit Cost Q4 1 Q4 11 Q4 12 Q4 13 Q4 14 Q4 15 Q4 16 Q4 17 t Processed Cost/ t Processed Au Equivalent Production and Unit Cost Q4 9 Q4 1 Q4 11 Q4 12 Q4 13 Q4 14 Q4 15 Q4 16 Q4 17 (Dec. only) Oz Au Eq. Cost/ Au Eq. Oz $ $4 $3 $2 $1 $ $15 $1 $5 $ $3, $2, $1, USD/ Tonne USD/ Tonne USD/ Oz Au Eq. Costerfield keys to turnaround: Record High Rate Record Low Cost Improved mine output/mill throughput from 17 tpd to 45 tpd (capped by grid power and site grinding capacity) Changed mining method from cut-and-fill to blast-hole stoping with cemented rock fill (greater production, lower unit costs) Increased sub-level spacing from 5 to 1 m Introduced contract capital development for faster and lower cost results Replaced mechanized mining fleet Introduced mobile crusher to decrease particle size of mill feed (better recoveries, higher throughput) Grew mine life from zero reserves to roughly 3-4 years while mining continuously for 7 years discovered Cuffley and N-lode 1

11 Brunswick: Committed and On-Track for Extended Life Brunswick access Committed Brunswick mine At Brunswick Shaft; Now completing infrastructure Completed development Ventilation shaft location Planned development Brunswick Development and Mining Timeline Milestone Expected Completion Mobilize capital development contractor Completed November 217 Reach bottom of Brunswick shaft At shaft bottom in early May 218 Begin operating development June 218 Complete capital development October

12 Emerging Youle Vein Historic Costerfield mine lies approximately several hundred metres to one km north of Brunswick Lode, currently being developed by Mandalay o New drill intercepts on Youle (Costerfield Deeps) are from surface drill collars, angled under the historic Costerfield workings Mandalay is developing access to the Brunswick Lode as of April 3, 218, anticipating first ore production in the second quarter of 218 Mandalay has been mining in the Cuffley, N, E, and W Lodes from MND mining

13 Plan View and Long Section of Drill Intercepts Under the Historic Costerfield Mine Emerging Youle Vein PLAN VIEW LONG SECTION 6 m 2 m 6 m Mineralized shoot o Approx. 6 m strike o Approx. 2 m dip High-grade core defined by 6 intercepts o 4 m x 15 m o 5-1 m spacing o >1.5 g/t Au Eq over 1.8 m minimum mining width o Surrounded by up to 1 m of high grade, but thinner intercepts that dilute to g/t Au Eq over 1.8 m min. width Working on accelerated development & permitting scenarios to get high grade to mill ASAP 13 13

14 Cerro Bayo Silver-Gold Mine: Pathway to Restart 7 permits needed for restart and LOM Land package 23,16 hectares Ownership 1% P&P Reserves(1) 856, 284 g/t Ag; 2.34 g/t Au 216 Production 13,792 oz Au, 1,731,31 oz Ag Project Status: Production suspended pending full permitting Target BRANCA MARCELA & RAUL VEINS (1 KM BEHIND VIEWPOINT) (1) Source: Current Mineral Reserves number depleted for 217 production and Reserves sterilized by inundation at Delia NW. Depletion taken from Reserve position contained in NI Technical Report prepared by Roscoe Postle Associates, Effective December 31, 216 filed on SEDAR March 31,

15 Challacollo Silver-Gold Project Land package 2,378 hectares Ownership 1% Location Indicated Resource 13 km SE of Iquique, Chile 4.7 MM 2 g/t Ag for 3 MM oz Ag Elevation Approx. 1,5 ASL Key Objectives and Accomplishments: May 217: Water sufficient to support eventual operation discovered Perfection of water rights and permitting for further exploration drilling in process Option to optimize project for lower CAPEX and more resource 15

16 Adjusting the Portfolio in 218 Completing sale of non-core assets Ulu, Nunavut: Option agreement signed; received 1 st two payments Norrliden: Earn-in JV with MRH Metals; exploration ongoing Lupin, Nunavut Undergoing reclamation with submission of final closure plan Recommended $4.2 million reduction in Reclamation Deposit Approval and cash back expected in Q2 Sale alternative La Quebrada, Chile Active process ongoing Exploring options for development/restart assets Cerro Bayo Challacollo 16

17 Strong Balance Sheet as of March 31, 218 Mandalay is fully funded to execute its capital plans and growth Share price (May 3, close) (C$) Millions (Except Share Price Info) $.23/shr Shares Outstanding Stock Options (1) 22.7 RSUs.7 Fully Diluted Shares Outstanding 475. Market Capitalization (C$) $13.8 Cash and Cash Equivalents (US$) (3) $23.4 Total Interest-Bearing Debt (US$) (3) $44.2 Total Enterprise Value (US$) (2,3) $11.8 Mandalay secured US$4 million revolving credit facility July 25, 217 US$25 million undrawn as of March 31, Exercise Price: C$.6 C$1.13 expiry dates ranging from Mar 18, 218 Jun 3, Market Capitalization converted to US$ using exchange rate of 1 CAD =.78 USD (May 4, 218) 3. Cash and Cash Equivalents and Interest-Bearing Debt as at end of Q1-218 (March 31, 218) 17

18 Strong Sponsorship and Broader Ownership Over Time Volume 3-day Average Daily Volume 691,675 1-day Average Daily Volume 597,451 Major Shareholders (1) Holders Shares (Million) Shares (Percentage) GMT Capital 73.1 Ruffer LLP % 8.7% CI Cambridge % 7.9% AzValor 35.8 Plinian + Management + Directors % Large Holders (Top-5) 239. Other Holders % TOTAL Analyst Coverage BMO Scotia Brian Quast Trevor Turnbull Average Daily Volume across all trading platforms (as of May 4, 218) 1. Known ownership positions are estimates - as at May 4, 218 Ownerships and percentages rounded to one decimal place. 18

19 TSX:MND For more information, please contact: Greg DiTomaso Director, Investor Relations Tel: Company Website:

20 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 2

21 Results: Consistent Performance Across the Price Cycle Mandalay Timeline Costerfield, Australia Gold & Antimony Cerro Bayo, Chile Silver & Gold No acquisition Optimize operations Pay down debt Exchange warrants Begin dividends Challacollo, Chile Silver & Gold Björkdal, Sweden Gold Cerro Bayo Inundation, C&M & re-permitting Mandalay Financial Performance US$ MM ,67 1, , , ,16 1,248 1,251 1, ,8 1,6 1,4 1,2 1, Gold Price (US$) -5 Revenue EBITDA Cash from Operations Gold Price 1. The Company defines EBITDA as earnings before interest, taxes and non cash charges/ (income). EBITDA should not be considered by an investor as an alternative to net income or cash flow as determined in accordance with IFRS EBITDA figures reflect adjusted EBITDA, please see the Company s Management s Discussion and Analysis. 21

22 Mandalay s Strategy in Action: Matched Production and Reserves Oz Au Eq. Annual Production 3, 25, 2, 15, 1, 5, 1,123, 1,54, 1,24, 1,12, 772, 633, 52, 254, 154,81 166, , , ,98 17,941 11, 113, 15,854 63, E 1,2, 1,, 8, 6, 4, 2, Oz Au Eq. Year-End Reserves With Continuing Capital and Overhead Spending Discipline Capex spending ( $/oz Au Eq.) Mandalay Capital Spending at Operating Mines (excl. Exploration) Capex spending ($M) Overhead spending ($/oz Au Eq.) Mandalay Corporate Overhead Spending Overhead spending ($M) 22

23 Adding Reserves Cost-effectively US$/oz Au Eq. P&P Added Mandalay cost of acquiring and discovering reserves Cerro Bayo Cumulative Cost per oz Au Eq. Acquired or Discovered Median for all Au sector acquisitions = $226/oz Au Eq. (1) Björkdal Acquisition + Exploration adds at cumulative average $75/oz Au Eq. (for developed & producing reserves) Cost Per oz Au Eq. Discovered in yr Cost Per oz Au Eq. Acquired in yr 217 metal price assumptions: $1,22/oz Au, $16.87/oz Ag and $6,82/t Sb 1. Source: BMO 23