BUILDING VALUE ACROSS THE CYCLE NOV TSX // MND

Transcription

1 BUILDING VALUE ACROSS THE CYCLE NOV 215 TSX // MND

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 31, 215 and in its final prospectus dated September 2, 214, 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 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 The exploration programs at Costerfield and Bjorkdal 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 Bjorkdal, 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. Dr. Mark Sander (Member: AusIMM), President of Mandalay, has visited the Costerfield, Cerro Bayo, Challacollo, and Björkdal and has supervised the preparation of this presentation. All currency references in US$ unless otherwise indicated 2

3 A Values-Based and Value-Focused Company Profitable and Dividend-Paying (5.1% yield)* We 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 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 or stakeholders, and co-ordinated across the Company for maximum effect * Current annualized dividend yield based on $.8 share price (Oct. 19, 215) 3

4 Delivering Value at Mandalay Costerfield, Australia Gold & Antimony Cerro Bayo, Chile Silver & Gold TIMELINE Challacollo, Chile Silver & Gold Björkdal, Sweden Gold Revenue, EBITDA (1) & Dividends (2) 215 Quarterly Financial Measures Revenue EBITDA Dividends US$ MM 1 5 $56.8 $5.2 $24.3 $18.2 $4. $3.4 $3. Q1-215 Q2-215 Q3-215 Q4-215 (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. (2) 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 4

5 Investing in Mandalay Shareholder Return, Trading Volume, Ownership and Coverage Investment Value $35, 2 Volume Total Return $3, $25, 15 $2, $15, $21,6 1 $1, 5 $5, $ 3-Sep-9 3-Sep-1 3-Sep-11 3-Sep-12 3-Sep-13 3-Sep-14 3-Sep-15 Volume (millions) Volume 3-day Average Daily Volume 216,767 6-day Average Daily Volume 244,975 A $1, investment made in Mandalay on September 3, 29 would be worth $21,6 (1) today Major Shareholders (2) Holders % Shares (Million) West Face Capital GMT Capital Sentry Investments Plinian + Management Vertex One Asset Management Large Holders Other Holders TOTAL Analyst Coverage Firm BMO Desjardins GMP (London) Haywood Raymond James Analyst Brian Quast Mike Parkin Brock Salier Ben Asuncion Chris Thompson Source: Yahoo Finance 1. Index start date: September 3, 29 share price at $.42. Index end date: October 29, 215 at $.8. Includes share price appreciation and all dividends paid. 2. Total shares owned by directors directly = 11.6M (2.83%) 5

6 Growing Production and Reserves Oz Au Eq. Annual Production 3, 25, 2, 15, 1, 5, Reserves Production 15, ,796 52,175 63, , 17, ,5 126,98 1,123, ,81 167, 185, E E 1,2, 1,, 8, 6, 4, 2, Oz Au Eq. Year-End Reserves Bjorkdal M&I Resource Additions & Depletion (Au oz) 6 Cerro Bayo M&I Resource Additions & Depletion (Ag oz) Costerfield M&I Resource Additions & Depletion (Au Eq oz) Challacollo M&I Resource Additions & Depletion (Ag oz) 6

7 Capital Structure As at Oct 29, 215 Millions (Except Share Price Information) Share price (Oct 29, close) (C$).8/shr Shares Outstanding 41.4 Options (1) 19.5 Fully Diluted Shares Outstanding Market Capitalization (C$) Cash and Cash Equivalents (US$) 52.3 Gold Loan Debt (US$) 54.3 Other Debt (US$) 3.1 Total Enterprise Value (US$) Current Assets (US$) Current Liabilities (US$) 82.4 Financials (as at end-q2, 215) Millions (Except Ratios) Working Capital (US$) 29.2 Current Ratio 1.35 Debt to Equity Ratio 1:4 EBITDA (last 12 months)/ Net Debt (LT Debt and borrowings) 1.3:1 Exercise Price: C$.33 C$1.13 Mar 11, Mar 24, 22 (1) Using exchange rate of 1 CAD =.7538 USD 7

8 Operational Locations: Mining-friendly Jurisdictions Metal Gold Ownership 1% YTD Production P&P Reserves (1) 33,574 oz g/t Au (432, oz Au) Metal Silver, Gold Ownership 1% YTD Production P&P Reserves (1) 1,82,741 oz Ag 15,671 oz Au g/t Ag; 2.13 g/t Au Metal Gold, Antimony Ownership 1% YTD Production P&P Reserves (1) 3,99 oz Au 2,775 t Sb 43, 8.1 g/t Au; 3.6% Sb 215E Guidance Production and Costs Björkdal (Au) Production Cerro Bayo (Au + Ag) Production Costerfield (Au + Sb) Production 46, 52, oz Moz Ag + 23, 27, oz Au 32, 37, oz Au + 3,2 3,5 t Sb Total Forecast Production (Au Eq) 167, 185, Björkdal 215E cash cost/oz Au $85 - $95 Björkdal 215E Capex $1 - $12 million Cerro Bayo 215E cash cost/oz Ag (net Au credits) $6. - $8. Cerro Bayo 215E Capex $12 $14 million Costerfield 215E cash cost/oz Au Eq $625 - $75 Costerfield 215E Capex $16 - $18 s in the Appendix (1) Cash costs are silver net of gold credits (2) Cash costs are in gold equivalent 8

9 Mandalay Performance Operational Performance Q3, 215 Q3, 214 9M 215 9M 214 Saleable Silver oz produced 632, ,379 1,82,741 2,38,33 Saleable Gold oz produced 25,996 18,99 8,154 46,264 Saleable Antimony t produced 964 1, 2,775 2,713 Financial Performance Q2, 215 Q2, 214 HY 215 HY 214 Net Cash/All-in cost/oz Ag at Cerro Bayo, $ 7.61 / / / / Net Cash/All-in cost/oz Au Eq. at Costerfield, $ 578 / / 1, / / 1,162 Net Cash/All-in cost/oz Au Eq. at 884 / 1,35 - (1) 84 / (1) Björkdal, $ (1) EBITDA, $ million Net Income, $ million Cash and cash equiv., $ million (1) Björkdal Acquired September 1, 214 Site all-in costs include total cash operating costs, royalty expense, depletion, depreciation, accretion and write-off of exploration and evaluation. 9

10 Björkdal Gold Mine: Overview Land package 6,862 hectares Ownership Number of Employees(1) 1% 145 direct, 65 contractors: 21 total Current throughput 3,5 tpd Plant recoveries (YTD 215) Au: 89% 215 Planned Exploration Budget 1 As $3 million at year-end 214, filed in Company s Annual Information Form 1

11 Björkdal Operating Performance and Improvements 36, Mining Rate and Unit Cost $22 Björkdal 215 Operational Improvements: Tonnes Per Quarter 34, 32, 3, 28, t Mined 34, Q4 14 Q1 15 Q2 15 Cost/ t Mined Processing Rate and Unit Cost $2 $18 $16 $14 $2 $/ Tonne Introduced best practice mapping, drilling, sampling, and modelling of high nuggeteffect gold deposits Produced a more refined resource model to support more selective underground & open pit mining techniques Tonnes Per Quarter Ounces Gold Per Quarter 33, 32, 31, t Processed Q4 14 Q1 15 Cost/ t Processed Q2 15 Saleable Gold Produced and Unit Cost 12,5 12, 11,5 11, Q4 14 Q1 15 Q2 15 Au oz Cost/ oz Au $1 $ $95 $9 $85 $8 $75 $7 $/ Tonne $/ oz Au Establishing a local assay lab for faster grade control turnaround 216 Planned Improvements: Increasing grade of mill feed through more selective underground and open pit mining 11

12 Exploration 216 Regional Program Storheden Björkdal Underground Björkdal Open Pit Nylunds Rönnberget 12

13 Cerro Bayo Silver-Gold Mine Land package 23,16 hectares Ownership Number of Employees(1) 1% 429 direct, 12 contractors: 549 total Current throughput 1,4 tpd Plant recoveries (YTD 215) Ag: 9%, Au: 86.21% 215 Planned Exploration Budget 1 As $3 million at year-end 214, filed in Company s Annual Information Form 13

14 Cerro Bayo Operating Performance and Improvements 15, Mining Rate and Unit Cost $1 Cerro Bayo Operational Improvements: Tonnes Per Quarter Tonnes Per Quarter 1, $5 5, $ Q4 1 Q2 11 Q4 11 Q2 12 Q4 12 q2 13 Q4 13 Q2 14 Q4 14 Q2 15 t Mined Cost/ t Mined 15, 1, Processing Rate and Unit Cost $5 5, $ Q4 1 Q2 11 Q4 11 Q2 12 Q4 12 Q2 13 Q4 13 Q2 14 Q4 14 Q2 15 t Processed Cost/ t Processed $/ Tonne $/ Tonne Shifted the mining method from shrinkage stoping to completely mechanized blast hole open stoping; Ramped up throughput from tpd 1,4 tpd from three mines Installed flotation automation system to maximize silver and gold recoveries Extended mine life from 3 years at 1,2 tpd to 5 years at 1,4 tpd while mining continuously for 4 years Oz Ag/Quarter 1,5, 1,, 5, Saleable Silver Produced & Unit Cost Q4 1 Q2 11 Q4 11 Q2 12 Q4 12 Q2 13 Q4 13 Q2 14 Q4 14 Q2 15 $2 $15 $1 $5 $ $/ oz Ag Net Byproduct Ag oz Cost/ oz Ag net Au 14

15 Emerging Extensions and New Veins Under Laguna Verde ¾ Slow drilling of long holes under lake ¾ Coyita and Yasna only partially infilled/extended in Moz added in reserves ¾ We expect at least as much again as we complete drilling YASNA COYITA Indicated YASNA COYITA 15

16 Target Generation 216 1a 1d 1b 1c 16 1e

17 Costerfield Gold-Antimony Mine: Overview Land package 1,293 hectares Ownership 1% Number of Employees (1) 163 direct, 64 contractors: 227 total Current throughput 42 tpd Plant recoveries (YTD 215) Au: 89.47%, Sb: 95.% 215 Planned Exploration Budget $1 million 1 As at year-end 214, filed in Company s Annual Information Form 17

18 Costerfield Operating Performance and Improvements Tonnes Per Quarter Tonnes Per Quarter Ounces Per Quarter 5, 4, 3, 2, 1, 5, 4, 3, 2, 1, 2, 15, 1, Mining Rate and Unit Cost Q4 9 Q4 1 Q4 11 Q4 12 Q4 13 Q4 14 (Dec. only) t Mined Cost/ t Mined Q4 9 Q4 1 Q4 11 Q4 12 Q4 13 Q4 14 (Dec. only) t Processed Cost/ t Processed 5, Q4 9 (Dec. only) Processing Rate and Unit Cost Au Equivalent Production and Cost Q4 1 Q4 11 Q4 12 Q4 13 Q4 14 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 Operational Improvements: Improved mill throughput from 17 tpd (end-29) to 42 tpd (mid-215) Changed mining method from cut-and-fill to blast-hole stoping with cemented rock fill (greater production, lower unit costs) Switched mining development team with contractors Increased sub-level spacing from 5 1 m 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 4 years while mining continuously for 6 years 18

19 Challacollo Silver-Gold Project: Overview Land package 2,378 hectares Ownership 1% Location 13 km SE of Iquique, Chile Mineralization Epithermal, oxidized Ag-Au Number of Employees (1) 6 direct: 6 total Elevation Approx. 1,5 ASL 1 As at year-end 214, filed in Company s Annual Information Form 19

20 Challacollo Development Timeline Current status Initial Mineral resource estimate complete Initial Mine plan complete Metallurgy complete 92-93% Ag recovery, 7% Au recovery Site layout, plant design complete Capital and operating cost estimates being refined Water well drilling currently identifying water source Environmental and cultural baselines ongoing Community consultations ongoing Initial Resource Complete Resource Expansion Testing Water Source Development CAPEX / OPEX Optimization Permitting Mine Construction 2

21 Challacollo Emerging Extensions and New Vein Targets Detailed Mapping Lucy Vein Mill site Vein 21

22 3% 25% 2% 15% 1% 5% Q3 29 Q4 29 Q1 21 Q2 21 Q3 21 Q4 21 Q1 211 Q2 211 Q3 211 Q4 211 Q1 212 Q2 212 Q3 212 Q4 212 Q1 213 Q2 213 Q3 213 Q4 213 Q1 214 Q2 214 Q3 214 Q4 214 Q1 215 Q2 215 Cumulative % Value Change Since Q3 29 Q % Compounded Cumulative Total Shareholder Return through Entire Bottom-to-Bottom Price Cycle Single mine ramp-up Two mine ramp-up CEO Appointed Costerfield Acquired SIB Warrant Redemption Dividend Initiated Challacollo Acquired $6 Million Gold Loan Björkdal Acquired West Face Secondary Offering Cerro Bayo Acquired MND LAG MND OUTPERFORM Mandalay Cumulative Returns 11 % Annual Compounded Rate of Return Gold Silver Source: MetalPrices.com for metal spot prices Index: September 3, 29 = 1. Mandalay share price: $.42 Graph updated quarterly, prices as at the last trading day of each respective quarter 22

23 Invest with Us: How We Will Deploy Your Capital Acquire new assets counter-cyclically only at a deep discount to value that we can deliver Base case returns at least 2x the investment Upside case 3-5x over 3-5 years based on specific testable hypotheses Keep portfolio evergreen exit assets that do not fit Execute focused operational improvement projects at each site Exploration project portfolio targeted on discovery of near-term reserves Mining projects focused on safer, more mechanised mining with higher extraction, lower dilution and reduced cost Metallurgical projects focused on higher recovery, higher availability, higher quality products with higher payables and reduced costs Commercial create more diverse customers paying better terms Apply relentless, disciplined financial management Low cash cost and overheads for high EBITDA margins Low DD&A for high P&L margins low acquisition cost, focused CAPEX & exploration Prudent, low-cost leverage to fund growth when needed Minimize shareholder dilution Return cash to shareholders: dividend = 6% trailing qtr. revenues Engage all stakeholders in a values-based and value-focused organization 23

24 BUILDING VALUE ACROSS THE CYCLE NOV 215 TSX // MND For more information, please contact: Greg DiTomaso Director, Investor Relations Tel: Company Website:

25 Management and Board of Directors Senior Management Brad Mills, CEO and Executive Director Former CEO Lonmin plc, over 3 years of experience in Copper, Gold, PGMs Board of Directors Sanjay Swarup, CFO and Executive Director Former Lonmin plc, over 2 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, Head of Stakeholder Engagement & Corporate Affairs Over 1 years of experience in capital markets Braam Jonker, Chairman Peter R. Jones, Independent Director Tony Griffin, Independent Director Robert Doyle, Independent Director 25

26 Mandalay Reserves Cerro Bayo Reserves (1) Ore (t) Ag Grade (g/t) Ag (cont. oz) Au Grade (g/t) Au (cont. oz) Proven Reserves 374, 29 2,513, , Probable Reserves 2,35, ,549, , P&P Reserves 2,49, 22 17,62, , Costerfield Reserves (2) Ore (t) Sb Grade (%) Sb (cont. t) Au Grade (g/t) Au (cont. oz) Proven Reserves 98, 4.5 4, , Probable Reserves 333, , , P&P Reserves 431, , , Björkdal Reserves (3) Ore (t) Au Grade (g/t) Au (cont. oz) Proven Probable 6,544, , Total 6,544, , TOTAL RESERVES 31-December-214 Ag (cont. oz) Au (cont. oz) Sb (cont. t) Mandalay Proven Reserves 2,513, 53, 4,4 Mandalay Probable Reserves 14,549, 656, 11,2 Total Mandalay P&P Reserves 17,62, 79, 15,6 1 Source: Cerro Bayo - Roscoe Postle Associates, Effective December 31, 214, documented in an independent NI Technical Report, Filed on March 31, Source: Costerfield - SRK Consulting (Australia), Effective December 31, 214, documented in an independent NI Technical Report Filed on March 31, Source: Björkdal Roscoe Postle Associates, Effective December 31, 214, documented in an independent NI Technical Report Filed on March 31, 215 Numbers may differ slightly from source documents due to rounding 26

27 Mandalay Resources Cerro Bayo Resources (1) Resource (t) Ag Grade (g/t) Ag (cont. oz) Au Grade (g/t) Au (cont. oz) Measured Resources 31, 316 3,143, , Indicated Resources 1,685, ,525, , M&I Resources 1,995, 322 2,668, , Inferred Resources 585, 218 4,112, , Challacollo Resources (3) Resource (t) Au Grade (g/t) Ag Grade (g/t) Au (cont. oz) Ag (cont. oz) Measured Resources Indicated Resources 4,7, , 3,2, M&I Resources 4,7, , 3,2, Inferred Resources 1,6, , 6,9, Costerfield Resources (2) Resource (t) Sb Grade (%) Sb (cont. t) Au Grade (g/t) Au (cont. oz) Measured Resources 213, 4.5% 9, , Indicated Resources 786, 3.3% 26, , M&I Resources 999, 3.6% 35, , Inferred Resources 519, 2.6% 13, , Björkdal Resources (4) Resource (t) Au Grade (g/t) Au (cont. oz) Measured Resources Indicated Resources 7,135, , M&I Resources 7,135, , Inferred Resources 1,2, , TOTAL RESOURCES Ag (cont. oz) Au (cont. oz) Sb (cont. t) Measured Resources 3,143, 96, 9,6 Indicated Resources 47,725, 1,39, 26,3 Total M&I Resources 5,868, 1,135, 35,9 Total Inferred Resources 11,3, 221, 13,7 1 Source: Cerro Bayo - Roscoe Postle Associates, Effective December 31, 214, documented in an independent NI Technical Report Filed on March 31, Source: Costerfield - SRK Consulting (Australia), Effective December 31, 214, documented in an independent NI Technical Report Filed on March 31, Source: Challacollo Roscoe Postle Associates, Effective December 31, 214, documented in an independent NI Technical Report Filed on March 31, Source: Björkdal Roscoe Postle Associates, Effective December 31, 214, documented in an independent NI Technical Report Filed on March 31,

28 MND (192% value change) outperformed through the entire bottom-to-bottom price cycle: Mandalay versus: 146 alternative investments In 21 different strategy categories Over the 24 quarters from Q3 29 to Q3 215 (period that Plinian has led Mandalay) Value metric is: For currencies, change in exchange rate with USD as listed in For metal prices, change in USD metal price per lb., oz., or t as listed in For mutual funds, change in share price plus dividends paid as listed in For companies, common shareholder equity value assuming market purchase of shares, excluding warrants and special dividends but including ordinary dividends and stock splits as listed in 1. All 6 Currencies (AUD, CAD, GBP, CLP, EU, CNY): 76 17% 2. All 3 Precious Metals (Au, Ag, Pt): % 3. All 4 Base Metals (Pb, Zn, Cu, Ni): 57 85% 4. All 6 Gold Mutual Funds: 55 71% 5. All 6 Resource/Basic Material Mutual Funds: % 6. All 6 Big Diversified Miners: 33 16% 7. All 6 Prospect Generator Companies: 4 169% 8. All 4 Royalty/Streaming Companies: % 9. All 3 Mega Gold Miners (>$US1 B market cap): 24 47% 1. All 9 Big Gold Miners (USD1-1B market cap): 1 183% of 9 Mid-Tier Gold Miners USD.5-1B market cap): 19 7,143% of 18 Junior Gold Miners (<USD5M market cap): % of 15 Gold Developers : 7 41% of 8 Big Silver Miners (>USD4M market cap): % 15. All 2 Mid Tier Silver Miners (USD2-4M market cap: 28 69% 16. All 5 Junior Silver Miners (<USD2M market cap): 14 58% 17. All 5 Silver Developers : 4 148% of 5 Big Copper Miners (>USD7B market cap): % of 1 Mid-Tier Base Metals (USD.25-1B market cap): 1 198% 2. All 7 Base Metals Developers : 1 65% 21. All 9 PGM Mineral and Developers : 1 154% 28

29 Strong Annual Production Growth 2, 16, 12, 8, 4, 15,854 Costerfield Production (215E) Cerro Bayo Production (215E) 4, 3, 2, 1, 3,5, 3,, 2,5, 2,, 1,5, 1,, 5, Total MND Production (AuEq oz) (1) 63,351 1,16 19,337 1,571 Silver (oz) 1,318,655 2,481 17,941 Antimony (Sb) 3,639 3, E 2,911,595 3,145,537 3,329, E 126,98 154, E 3,2 3,5 2,7, 3,1, 4, 3, 2, 1, 3, 25, 2, 15, 1, 5, 7,661 6, Gold (oz) Gold (oz) 12, , - 185, 18,36 17,89 28,758 35, E 27,6 21,482 32, 37, 23, 27, E Björkdal Production (215E) (1) Refer to notes on gold equivalent ounces in the Appendix 6, 5, 4, 3, 2, 1, Gold (oz) 14,549 46, - 52, E 29