TSX: MND DELIVERING VALUE AND GROWTH

Transcription

1 TSX: MND DELIVERING VALUE AND GROWTH September 2013

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 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 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 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 and 2012 and has supervised the preparation of this presentation. 2

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 Locations and Tradeflows 4

5 Mandalay in Today s Market Markedly lower metal prices Producers must be responsive to large swings in metal prices Focus on growth of sustainable cash margins and return of capital Mandalay well positioned for profitability in this environment Mandalay strategy robust: low total cost producer Low acquisition cost of producing assets Low sustaining and incremental expansion capex; no large, risky new project construction capex Low risk, head frame exploration drilling for low discovery cost per ounce Low overhead virtual organization Operational improvements result in cash cost reductions year-over-year With no overextension, no disruptive changes in plans with price declines Healthy cash margins: EBITDA of $11 million in the second quarter of 2013 No impairment charges Dividend predictable and sustainable automatically adjusts with metal price at 6% gross revenue Strong support for equity NCIB program in place: 1,378,600 shares purchased year-to-date Management and insiders own 53.66% of shares outstanding as of August 8,

6 Mandalay Second Quarter 2013 Performance Q2, 2013 Q2, 2012 Saleable Silver oz produced 921, ,970 Saleable Gold oz produced 13,046 9,215 Saleable Antimony t produced Net Cash/All-in Cost/oz Ag at Cerro Bayo, USD 6.12 / / 8.11 Net Cash/All-in Cost/oz Au Eq. at Costerfield, USD 934 / 1,178 1,052 / 1,197 EBITDA, USD million Net Income, USD million Cash and cash equiv. at end of period, USD million

7 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 Robert Doyle, Independent Director 7

8 Strategy: Rapid Value Generation and Returns Entry Strategy: Acquire high-quality assets at a low cost relative to ultimate value Apply management s extensive operational and exploration expertise to turn around, grow and/or develop the assets Focus on cash returns to shareholders and prudent use of leverage 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 Early cash flow to fund exploration, growth and operational improvements 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 Increase Revenues ($US MM) Generate Cash (EBITDA - $US MM**) Focus and Results Dividend Payouts ($CAD MM*****) $10.2 $ A 2013 E **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. ***See AuEq Calculation in Appendix. Estimated 2013 Production: MM oz Ag, 38,000-46,000 oz Au, 2,800-3,000 8 t Sb. ****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. *****2013E Assumes dividend payable in Q is C$ 2.23 million

9 Capital Structure and Ownership Capital Structure as at September 16, 2013 Millions (Except Share Price Information) Share price (Last close) (CAD$) 0.80/shr Shares Outstanding Options (1) 16.2 Warrants (2) 21.0 Fully Diluted Shares Outstanding Market Capitalization (CAD$) Cash and Cash Equivalents (CAD$) (as of June 30, 2013) (3) 24.5 Total Debt (CAD$) (as of June 30, 2013) (3) 0 Total Enterprise Value (US$) Major Shareholders (4) Holders % Shares (Million) West Face Capital 42.3% Plinian + Management 11.0% 35.8 Sprott Asset Management 10.4% 33.5 Arcourt (Byrne) 3.6% 11.7 Baker Steel 2.7% 8.6 (1) Exercise price: C$ C$0.83; Expiry date: Dec 7, Mar 18, 2018 (2) Exercise price: C$ C$0.465; Expiry date: Nov 30, 2014 (3) Assuming US$ 1 = C$ (4) As of August 8, 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 53.66% of the outstanding Common Shares 9

10 Index (August 3, 2009 = 100) Management Track Record: Execution, Value Creation Mandalay Resources Peers* Gold Silver S&P/TSX Composite Index S&P/TSX Global Mining Index Q New Management Team (Mills, Sander, Swarup) Mandalay: 188% (total return) Silver: 52% Gold: 38% TSX Composite: 16% Peers: -0.1% TSX Mining: -19% Company History and Milestones 2009 Q 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 silver-gold 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 $10.2 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 *Peer group includes: Endeavour Silver, Silver Standard, Fortuna Silver, and Aurcana Share prices as at September 17,

11 Cerro Bayo Silver-Gold Mine Land package 23,096 hectares Ownership 100% 2012 silver production 2,911,595 oz 2012 gold production 17,089 oz 2013E silver production 2013E gold production Current throughput P&P Reserves million oz 18,000 21,000 oz approx. 1,200 tpd g/t Ag; 2.2 g/t Au Current recoveries (Q2 2013) Ag: 89.12%, Au: 91.41% 2013E cash costs/oz Ag, net of Au credits $4 $ Planned Exploration Metres 60,000 Budget $6-7 million 11

12 Ounces Silver Per Quarter USD/ oz Ag Net Byproduct Tonnes Per Quarter USD/ Tonne Tonnes Per Quarter USD/ Tonne Cerro Bayo Operating Performance 120, ,000 80,000 60,000 40,000 20,000 0 Mining Rate and Unit Cost $70 $60 $50 $40 $30 $20 $10 $0 Q4-10 Q2-11 Q ,000 Q2-12 Q4-12 Q t Mined Cost/ t Mined 100,000 80,000 60,000 40,000 20,000 0 Processing Rate and Unit Cost Q4-10 Q2-11 Q4-11 Q2-12 1,000,000 Q4-12 Q2-13 t Processed Cost/ t Processed 800, , , ,000 $70 $60 $50 $40 $30 $20 $10 Saleable Silver Produced & Unit Cost $0 $20 $15 $10 $5 0 Ag oz Q4-10 Q2-11 Q4-11 Q2-12 Q4-12 Q2-13 Cost/ oz Ag net Au $0 12

13 Cerro Bayo District: Target-rich Land Package Brillantes Brillantes Esperanza NI 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 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 13

14 Cerro Bayo: Laguna Verde Area Carola Tailings Trinidad Mill DELIA NW Orieta DAGNY BIANCA DALILA FABIOLA YASNA COYITA Gabriela LAGUNA VERDE DELIA SE. Producing Mine or Planned Mine 2013 Infill/Extensional Drilling Exploration Vein 14

15 Dagny vein completely delimited under the lake Coyita vein extends under the lake to limit of drilling 15

16 Fabiola vein planned drilling under the lake Yasna vein planned drilling under the lake 16

17 Ozs Ag 17 Cerro Bayo M&I resource growth net of depletion 45,000,000 40,000,000 35,000,000 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000, CUMULATIVE DEPLETION Dagny Fabiola Delia NW Delia SE Marcela Sur Yasna Coyita Dalila Bianca

18 Costerfield Gold-Antimony Mine: Overview Land package 1,293 hectares Ownership 100% 2012 gold production 18,036 oz 2012 antimony production 2,481 t 2013E gold production 2013E antimony production Current throughput P&P Reserves 20,000 25,000 oz 2,800 3,000 t 340 tpd 178, g/t Au; 4.1% Sb Current recoveries (Q2 2013) Au: 89.7%, Sb: 95.7% 2013E Cash cost/ oz Au Equiv. (US$) $950 $1, Planned Exploration Metres ~13,000 Budget $3.5 million 18

19 Ounces Per Quarter USD/ Oz Au Eq. Tonnes Per Quarter AUD/ Tonne Tonnes Per Quarter AUD/ Tonne Costerfield Operating Performance 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Q4-09 (Dec. only) t Mined Mining Rate and Unit Cost Q2-10 Q4-10 Q ,000Q4-11 Q2-12 Q4-12 Q2-13 Cost/ t Mined 35,000 30,000 20,000 15,000 10,000 5,000 0 Q4-09 (Dec. only) t Processed $400 $300 $200 Processing $100 Rate and Unit Cost $0 12,000 Q2-10 Q4-10 Q2-11 Q ,000 Q2-12 Q4-12 Q2-13 Cost/ t Processed 14,000 8,000 6,000 4,000 2,000 0 Oz Au Eq. Q4-09 (Dec. only) $120 $100 $80 $60 $40 Au Equivalent Production and Cost $20 $0 Q2-10 Q4-10 Q2-11 Q4-11 Q2-12 Q4-12 Q2-13 Cost/ Au Eq. Oz $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 19

20 Cuffley PEA Development and Mining Plan Subparallel and adjacent to N-lode Same mining technique as N-lode Long hole stoping 10 m lifts CRF backfill Better ground conditions Well-known productivities and costs Cuffley Lode N-lode W-lode E-lode 20

21 Cuffley PEA Basis Extended Mine Life at High Current Production and Low Current Cost Performance Expanded resources in Cuffley and N-lode (see appendix for continued exploration potential) PEA mine life through Q at current production rate and costs: 10,000 to 12,000 tpm Proportion of gravity gold continues as per experience in N-lode and projected in Cuffley Current plant performance and costs Current smelting agreement Metal prices and exchange rates conform to new realities 21

22 Cuffley PEA Financial Results >50,000 oz Au Eq. /yr avg. $766/oz Au Eq. cash cost $898/oz Au Eq. P&L cost Nearly self-funding $67 million NPV Oz Eq 22

23 Au Eq Oz (000's) Costerfield M&I Resource Growth Net Depletion Sep CUFFLEY AUGUSTA Depletion Yearly Depletion 23

24 Costerfield Long Section 24

25 La Quebrada Copper-Silver Project: Overview Land package 7,418 hectares Ownership 100% Location 45 km NW of La Serena Mineralization Cu-Ag mantos Elevation 1,000 1,500 metres ASL M&I Resource g/t Ag, 0.6% Cu 25

26 La Quebrada Next steps: Drilling for modest expansion of Casa de Piedra La Quebrada Total Resources (1) Rock (t) Ag Grade (g/t) Ag (cont. oz) Cu Grade (%) Cu (cont. lb) Measured Indicated 34,800, ,188, % 459,360,000 Measured & Indicated 34,800, ,188, % 459,360,000 Inferred 1,000, , % 13,200,000 District exploration new concepts Tugal Pit Basic engineering studies Conversation for district consolidation (1) La Quebrada Independent Technical Report filed 16-Aug

27 Discovery-fuelled Organic Growth Significant M&I Resource Growth (1,2,3) 40,000,000 Ag (cont. oz) 400,000 Au (cont. oz) 30,000 Sb (cont. t) 600 Cu (cont. lbs MM) 30,000,000 20,000,000 10,000, , , ,000 20,000 10, Costerfield Budget and Production (2013E) $ million $ million $6-7 million $10-12 million $7-8 million Cerro Bayo Budget and Production (2013E) $9-10 million Capital Expenditure (PP&E) Capital Development Capitalized Exploration Capital Expenditure (PP&E) Capital Development Capitalized Exploration 3,500 3,000 2,500 2,000 1,500 1, ,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, ,000 0 Antimony (Sb) 1,576 Silver (oz) 1.3 million 2, million 2,800 3, E million E 25,000 20,000 15,000 10,000 5, ,000 20,000 15,000 10,000 5,000 0 Gold (oz) 6,678 12,244 18,036 Gold (oz) 17,089 20,000 25, E 18,000-21, E 1 Source: Roscoe Postle Associates, March 2013, documented in an independent NI report filed March 28, 2013 Source for Dalila vein: Internal Company Report, prepared under the supervision of Qualified Person Ron Luethe 2 Source: SRK Consulting (Australia), March 2013, documented in an independent NI report filed March 28, Source: La Quebrada Independent Technical Report, filed Aug 16, Average guidance range graphed for 2013E 27

28 Peer Comparison Ag (oz) Au (oz) 2012 Production 2012 Financials Other Ag Eq. (Au + Ag) (oz) Revenue (US$MM) EBITDA (US$MM) EBITDA Margin (%) Mandalay Resources 2,911,595 35,125 2,481 t Sb 4,828, Endeavour Silver 4,485,426 38,687-6,595, Silver Standard 8,350, ,600 t Zn 8,350, Fortuna Silver 3,987,757 20,699 20,100 t Pb+Zn 5,117, Aurcana 1,388, ,000 t Cu+Pb+Zn 1,388, Ag (oz) Au (oz) 1H 2013A Production Other Ag Eq. (Au + Ag) (oz) Revenue (US$MM) 1H 2013A Financials EBITDA (US$MM) EBITDA Margin (%) Mandalay Resources 1,533,336 23,681 1,504 t Sb 2,825, Endeavour Silver 3,025,590 34,946-4,932, Silver Standard 3,907,000-4,042 t Zn 3,907, (199.9) - Fortuna Silver 2,066,225 9,675 9,682 t Pb+Zn 2,594, Aurcana 661,764-4,636 t Cu+Pb+Zn 661, Source: Company reports and Bloomberg Ag Eq oz converted at 54/1 Au/Ag. Metal prices: Ag price of $28.92 and Au price of $1,

29 Mandalay Compares Favourably to its Peers Mandalay Endeavour Silver Standard Fortuna Aurcana Highest grade reserves (Ag Eq oz) Highest EBITDA margin $90 P+P Reserve Grade Fully Diluted Ag Eq (g/t) 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 30 EBITDA Margin (at $21/oz Ag) $16 $14 $12 $10 $8 $6 $4 $2 $0 $14 Fully Loaded 1H 2013 Cash Cost/Ag Eq oz Lowest fully loaded cost (Ag Eq oz) Second lowest market cap per estimated annual production of Ag eq. oz Lowest total enterprise value/ebitda multiple Third lowest market cap/p+p reserves oz $80 $70 $60 $50 $40 $30 $20 $10 $0 Market Cap per 2013E Ag Eq Production (oz) TEV/EBITDA Multiple ($21/oz Ag) $12 $10 $8 $6 $4 $2 $0 Market Cap per P+P Reserves (Ag Eq oz) Market capitalization as at September 17, 2013 Ag Eq oz converted at 54/1 Au/Ag Metal prices: Ag price of $28.92 and Au price of $1,

30 Highlights and Catalysts Cerro Bayo Ramp up to 1,400 tpd on track for Q owned rigs drilling now resource and reserve update in Q Costerfield Currently at 340 tpd, exceeding design production rate of 250 tpd, significant cost reduction Increased metal production from higher grade ore and higher throughput Cuffley lode development proceeding First development ore expected Q Growing resources at Cuffley lode and Augusta extensions with 3 rigs Resource and reserve update in Q (converting Cuffley M&I to P&P) Continuing district exploration for longer mine life La Quebrada Infill drilling completed; indicated NI Resource filed August 2012 Metallurgical and engineering studies District consolidation 30

31 Summary Execution-focused management with track record of operational and exploration success, growth and value generation High-quality, cash flowing asset portfolio with major exploration upside Strong balance sheet, self-funding projects, zero net debt Rapid increase in production and margins through low-capex organic growth and operational efficiencies Returning cash to shareholders and reducing dilution wherever possible Company paying annual dividend equal to 6% of the Company s trailing quarter s gross revenue Continued growth through further acquisitions 31

32 TSX: MND Appendices For more information, please contact: Greg DiTomaso Tel: Company Website: 32

33 Mandalay Reserves Cerro Bayo Reserves (1) Ore (t) Ag Grade (g/t) Ag (cont. oz) Au Grade (g/t) Au (cont. oz) Proven Reserves 420, ,803, ,000 Probable Reserves 1,934, ,447, ,000 P&P Reserves 2,354, ,250, ,000 Costerfield Reserves (2) Ore (t) Sb Grade (%) Sb (cont. t) Au Grade (g/t) Au (cont. oz) Proven Reserves 48, , ,000 Probable Reserves 130, , ,000 P&P Reserves 178, , ,000 TOTAL RESERVES: 31-December-2012 Ag (cont. oz) Au (cont. oz) Sb (cont. t) Mandalay Proven Reserves 4,803,000 47,000 3,100 Mandalay Probable Reserves 13,447, ,000 4,100 Mandalay P&P Reserves 18,250, ,000 7,200 1 Source: Roscoe Postle Associates, March 2013, documented in an independent NI report filed March 28, Source: SRK Consulting (Australia), March 2013, documented in an independent NI report filed March 28, 2013 Numbers may differ slightly from Source documents due to rounding 33

34 Mandalay Resources Cerro Bayo Resources (1) Resource (t) Ag Grade (g/t) Ag (cont. oz) Au Grade (g/t) 2 Source: SRK Consulting (Australia), September 10, 2013, documented in an independent NI report to be filed within 45 days of September 10, Source: La Quebrada Independent Technical Report filed Aug 16, Numbers may not add due to rounding Au (cont. oz) Measured Resources 327, ,521, ,000 Indicated Resources 1,562, ,754, ,000 M&I Resources 1,889, ,275, ,000 Inferred Resources 452, ,922, ,000 Costerfield Resources (2) Resource Sb Grade Sb Au Grade Au (t) (%) (cont. t) (g/t) (cont. oz) Measured Resources 184, % 8, ,000 Indicated Resources 534, % 20, ,000 M&I Resources 718, % 28, ,000 Inferred Resources 680, % 18, ,000 La Quebrada Resources (3) Resource Cu Grade Cu Ag Grade Ag (t) (%) (cont. lb) (g/t) (cont. oz) Measured Resources Indicated Resources 34,800, % 459,360, ,200,000 M&I Resources 34,800, % 459,360, ,200,000 Inferred Resources 1,000, % 13,200, ,000 TOTAL RESOURCES Ag (cont. oz) Au (cont. oz) Sb (cont. t) Cu (cont. lb) Measured Resources 5,521,000 75,000 8,000 0 Indicated Resources 27,954, ,000 20, ,360,000 M&I Resources 33,475, ,000 28, ,360,000 Inferred Resources 3,276, ,000 18,000 13,200,000 1 Source: Roscoe Postle Associates, March 2013, documented in an independent NI report filed March 28, 2013

35 Safety, Health, Environment and Community ACTIONS Safety & Health Environment & Community Employees 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 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 More prosperous local communities Reduced impacted land area Zero incidences of unpermitted discharge at both operations 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 35

36 Metal Price Update 36

37 10 m levels with good grades extending out into inferred and undrilled areas Intercepts extending limits of mineralization Cuffley decline progress to July 31,

38 Cuffley decline progress to July 31, 2013 Enlarged volume of Indicated Resource New intercepts confirm mineralization between unnamed flat fault and King Cobra fault; not yet inferred 38

39 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 39

40 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 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,