JUNE 2018 TSX:MND STRENGTHENING OPERATIONS FOR FUTURE GROWTH

Transcription

1 JUNE 2018 TSX:MND STRENGTHENING OPERATIONS FOR FUTURE GROWTH

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, 2018 and in its short form base shelf prospectus dated February 12, 2018, 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 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 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. 2

3 The Mandalay Portfolio Today Well-run, producing assets with exploration upside Björkdal: Breakthrough Asset 2018E production: koz gold 2018E cash costs: $820-$920/oz Current mine life: 10 years Costerfield: Strong Upside 2018E production (AuEq): koz 2018E cash costs: $720-$820/oz Current mine life: 4 years Excellent exploration upside with high-grade potential Chilean Properties Cerro Bayo (production suspended) Restart currently in permitting Challacollo Feasibility-stage project Targeting production of approx. 4 Moz Ag for a 10-year mine life (ON CARE AND MAINTENANCE, CURRENTLY PERMITTING RESTART) Björkdal targeting long-term production of 70+koz with a mine life of 15 $750/oz cash costs Costerfield self-funding to grow P&P Reserves 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, $0.00 Market Cap/Au Eq Production oz ($/AuEq oz) 1.0x 0.8x 0.6x 0.4x 0.2x 0.0x 0.3x 0.5x P/NAV Multiple (Spot 5%) 0.8x 0.8x 0.7x 0.7x 0.6x 0.6x 0.6x 0.9x $ $ $ $ $ $ $ $0.00 EV/P&P Reserves ($/AuEq oz) 35.0x 30.0x 25.0x 20.0x 15.0x 10.0x 5.0x 0.0x 0.5x EV/EBITDA Multiple 2.1x 3.0x 3.3x 3.4x 4.8x 5.8x 5.9x 12.4x 30.0x Source: BMO Gold Pages, April 27, Share prices as of May 3,

5 Key Objectives for 2018 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-$910/oz AuEq., and AIC between $1,155-$1,280/oz AuEq. Position MND for Future Growth Increase Company-wide cash flow Pay down debt Restructure more streamlined Corporate department Strengthen cost discipline across all operations Grow Reserves & Mine Life Build on continuing exploration success at Björkdal, with focus on high-grade areas Continue building on encouraging high-grade results at Youle as potential next ore shoot o Aim to add Youle to Reserves by end-2018 Maximize Value of Portfolio Maximize value of non-core assets and mitigate financial risks: Lupin, La Quebrada Explore options: Challacollo, Cerro Bayo 5

6 2018 Operational Guidance Mandalay expects to grow cash flow year-over-year in 2018 from production at its Björkdal and Costerfield mines Gold Antimony Total Gold Equivalent AIC Per oz Gold Equivalent 83,000 93,000 oz 2,800 3,200 t 101, ,000 oz $1,155 $1,280 Björkdal Costerfield Consolidated Oz Au Eq., 000* Cash cost, $/oz Au Eq** All-in Cost, $/oz Au Eq** 1,060-1,210 1,150-1,250 1,155-1,280 CAPEX, $/million** *2018E Au Eq assumes full-year 2018 metal prices: Au $1,306/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 12,949 hectares Ownership 100% P&P Reserves (1) 11,403, g/t Au for 587,000 oz 2017 Production 62,028 oz $816/oz 2018E Production 56,000 63,000 oz Au 70,000 Björkdal Gold Production Gold Production (ounces) 60,000 50,000 40,000 30,000 20,000 10, E (1) Source: Roscoe Postle Associates, Effective December 31, 2017, documented in an independent NI Technical Report filed March 29,

8 Björkdal Growth Plans 1: OPERATIONAL EXPLORATION FOCUS Focus exploration on higher-grade and wider mining areas for greater profitability 2: STRONGER OPERATIONAL CASH FLOW Generate improved cash flow to fund implementation of ore sorting plant 3: INCREASED PLANT CAPACITY Carry out studies for upgrading throughput in processing plant; ongoing TSF permitting would allow for a processing increase from 1.3 mt/yr 1.7 mt/yr 4: LOWER COSTS Cost reduction across the entire operation 8

9 Costerfield: Dependable Performance with Upside Land package 1,293 hectares Ownership 100% P&P Reserves (1) 622, g/t Au; 2.8% Sb for 122,000 oz Au and 17,200 t Sb 2017 Production 31,512 oz Au, 3,115 t Sb (52,137 oz Au $701 oz Au Eq.) 2018E Production Opening up new possibilities with high-grade Youle discovery 27,000 30,000 oz Au, 2,800 3,200 t Sb Increased focus and spending on exploration at Costerfield due to extremely highgrade potential of Youle (1) Source: SRK Consulting (Australia), Effective December 31, 2017, documented in an independent NI Technical Report filed March 29,

10 Brunswick: Committed and On-Track for Extended Life Brunswick access Committed Brunswick mine At Brunswick Shaft; Now completing infrastructure Completed development Brunswick Development and Mining Timeline Milestone Mobilize capital development contractor Completed November 2017 Reach bottom of Brunswick shaft Completed May 2018 Begin operating development June 2018 Complete capital development October 2018 Ventilation shaft location Planned development 10

11 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 Development on track, anticipating first ore production from Brunswick: Q Mandalay has been mining in the Cuffley, N, E, and W Lodes from MND mining

12 Plan View and Long Section of Drill Intercepts Under the Historic Costerfield Mine Emerging Youle Vein Mineralized shoot o Approx. 600 m strike o Approx. 200 m dip High-grade core defined by 6 intercepts o 400 m x 150 m o m spacing o >10.5 g/t Au Eq over 1.8 m minimum mining width o Surrounded by up to 100 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 12

13 Cerro Bayo Silver-Gold Mine Land package 23,106 hectares Ownership 100% P&P Reserves(1) 856, g/t Ag; 2.34 g/t Au 2016 Production 13,792 oz Au, 1,731,031 oz Ag Operations remain on Care and Maintenance Permitting ongoing for full restart of operations Target BRANCA Mandalay considering all alternatives to maximize value of asset (1) MARCELA & RAUL VEINS (10 KM BEHIND VIEWPOINT) 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 Technical Report prepared by Roscoe Postle Associates, Effective December 31, 2016 filed on SEDAR March 31,

14 Challacollo Silver-Gold Project Land package Key Objectives and Accomplishments: May 2017: Water sufficient to support eventual operation discovered Transfer of water rights and permitting for further exploration drilling: in process 20,378 hectares Ownership 100% Location Indicated Resource Elevation 130 km SE of Iquique, Northern Chile 4.7 MM 200 g/t Ag for 30 MM oz Ag Approx. 1,500 ASL 14

15 Adjusting the Portfolio in 2018 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 15

16 Strong Balance Sheet as of March 31, 2018 Mandalay is fully funded to execute its capital plans and growth Share price (June 1, close) (C$) Millions (Except Share Price Info) $0.205/shr Shares Outstanding Stock Options (1) 22.7 RSUs 0.7 Fully Diluted Shares Outstanding Market Capitalization (C$) $92.6 Cash and Cash Equivalents (US$) (3) $23.4 Total Interest-Bearing Debt (US$) (3) $44.2 Total Enterprise Value (US$) (2,3) $92.4 Mandalay secured US$40 million revolving credit facility July 25, 2017 US$25 million undrawn as of March 31, Exercise Price: C$0.60 C$1.13 expiry dates ranging from Mar 18, 2018 Jun 30, Market Capitalization converted to US$ using exchange rate of 1 CAD = 0.77 USD (June 4, 2018) 3. Cash and Cash Equivalents and Interest-Bearing Debt as at end of Q (March 31, 2018) 16

17 Strong Sponsorship and Broader Ownership Over Time Volume 30-day Average Daily Volume 691, day Average Daily Volume 597,451 Major Shareholders (1) Holders Shares (Million) Shares (Percentage) GMT Capital % Ruffer LLP % CI Cambridge % 7.9% AzValor 35.8 Plinian + Management + Directors % Large Holders (Top-5) % Other Holders TOTAL Average Daily Volume across all trading platforms (as of May 4, 2018) 1. Known ownership positions are estimates - as at May 4, 2018 Ownerships and percentages rounded to one decimal place. 17

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

19 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 19

20 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 ,670 1, , , ,160 1,248 1,251 1, ,800 1,600 1,400 1,200 1, Gold Price (US$) -50 Revenue EBITDA Cash from Operations Gold Price 0 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. 20

21 Mandalay s Strategy in Action: Matched Production and Reserves Oz Au Eq. Annual Production 300, , , , ,000 50, ,123,000 1,054,000 1,024,000 1,012, , , , , , , , , , , , ,000 15,854 63, E 1,200,000 1,000, , , , ,000 0 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) 21