TSX:MND OTCQB:MNDJF FEB 2019 POSITIONING MANDALAY FOR A RENEWED FUTURE

Transcription

1 TSX:MND OTCQB:MNDJF FEB 2019 POSITIONING MANDALAY FOR A RENEWED FUTURE

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, its short form base shelf prospectus dated February 12, 2018, and prospectus supplement dated February 12, 2019, 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 Producing assets with organic growth profile and exploration upside Costerfield: Over 100% production increase planned by 2021 High-grade Youle lode added to Reserves Production from Youle expected 2H production (AuEq): 35,849 oz 2019E production (AuEq): 41,000-51,000 oz 2019E cash costs: $790-$920/oz Excellent high-grade exploration potential Björkdal: Ramping-up Production 2018 production: 45,719 oz gold 2019E production: 50,000-56,000 oz gold 2019E cash costs: $800-$950/oz Current mine life: 10+ years Most prospective exploration potential since Mandalay ownership Chilean Properties Cerro Bayo (production suspended) Currently in permitting for restart Challacollo Feasibility-stage project Non-binding LOI signed with Aftermath Silver Costerfield grew P&P Reserves and is bringing Youle vein into operation Björkdal focused on higher-margin ounces 3 (ON CARE AND MAINTENANCE, CURRENTLY PERMITTING RESTART)

4 2019: Transition, Growth, and Rejuvenation Guidance shows expected year-over-year production and cost improvements 2019E Guidance Gold 73,000 86,000 oz Antimony 2,600-3,100 t Total Gold Equivalent 91, ,000 oz Cash Cost Per oz Gold Equivalent $850-$980 AIC Per oz Gold Equivalent $1,130-$1, Performance (w/ 2018 guidance for costs) Gold 67,329 oz Antimony 2,173 t Total Gold Equivalent 81,568 oz Cash Cost Per oz Gold Equivalent $1,060-$1,100 AIC Per oz Gold Equivalent $1,450-$1,510 Björkdal Costerfield Consolidated Oz Au Eq., 000* 50,000-56,000 41,000-51,000 91, ,000 Cash cost, $/oz Au Eq All-in Cost, $/oz Au Eq 1,030-1,180 1,050-1,180 1,130-1,280 CAPEX, $/million** *2019E Au Eq assumes metal prices: Au $1,200/oz and Sb $8,200/t 4 **CAPEX includes exploration at Björkdal and Costerfield; consolidated cost guidance includes expected Corporate G&A

5 Significant Organic Production Growth Costerfield 81,568 Mandalay Production Guidance (in gold equivalent ounces, range midpoints graphed) Bjorkdal 91, , , , , , E 2020E 2021E Major production increase expected from bringing Youle vein on-line (expected H2-2019) Björkdal to ramp-up underground production; production increases expected due to mining wider, higher-grade Aurora zone and highergrade skarn 2019E 2020E 2021E Björkdal Gold produced (oz) 50,000-56,000 53,000-59,000 55,000-65,000 Costerfield Gold produced (oz) 23,000-30,000 40,000-49,000 60,000-75,000 Antimony produced (t) 2,600-3,100 2,200-2,800 2,400-3,300 Consolidated Gold eq* produced (oz) 91, , , , , ,000 *Assumes metal prices of: Au $1,200/oz, Sb $8,200/t. 5

6 Solid Financial Footing to Address Liquidity and Growth C$54 million financing will strengthen Mandalay s financial position and allow the Company to de-risk and grow the business Two components: US$8 million bridge loan with CE Mining III for current outstanding liabilities Funds received C$43 million public offering Shareholder vote March 29, 2019 Net proceeds are intended to fund working capital requirements, debt restructuring, exploration at high potential areas at both mines, and general corporate purposes Proposed Use of Net Proceeds (US$M, numbers rounded) Current outstanding liabilities 2 Exploration 4 Capital expenditures: Costerfield Youle development to mid Björkdal Tailings Storage Facility Lift 5 Björkdal Environmental Permit Bonding 3 General Corporate Purposes (1) 20 TOTAL (2) 39 Notes: (1) US$15M of these funds will initially be held in reserve to satisfy the Company s obligations in respect of the Gold Bonds and may be released for other corporate purposes (i) to the extent that the principal outstanding amount of the Gold Bonds is less than US$15M at any time or (ii) with CE Mining s prior consent. When and if these funds are released from the Gold Bond Reserve, they may be deployed for various corporate purposes including repayment of the Company s other debt obligations, general working capital requirements (including to the extent necessary as a result of any ongoing negative cash flow from operations), and funding additional exploration activities and any unanticipated capital expenditure obligations. (2) Assumes that all of the Common Shares delivered to holders of Subscription Receipts upon the satisfaction of the Escrow Release Conditions will be treasury shares issued by the Company. 6

7 Objectives for 2019 Grow Production Costerfield Bring high-grade Youle lode into production (expected in latter half of 2019) Ramp-up production stoping from Brunswick lode Björkdal Increase volume of high-grade UG feed Increasing development rate in Aurora for near-term stoping Exploration Costerfield Expand known Youle Mineral Reserve Continue regional exploration program on known targets to find additional Youle-like deposits/deep hole drilling Björkdal Surface drilling above Aurora Continue to expand Aurora discovery Continue investigation into high-grade skarn bodies throughout the property Maximize Value of Portfolio Maximize value of non-core assets and mitigate financial risks: Lupin (total bond reductions received so far: C$8M) La Quebrada Explore options: Challacollo (LOI signed), Cerro Bayo 7

8 Costerfield: Major Production Increases Planned Land package 1,293 hectares Ownership 100% P&P Reserves (1) 537, g/t Au; 2.9% Sb for 154,000 oz Au and 15,500 t Sb 2018 Production 35,849 oz Au Eq. (21,610 oz Au, 2,173 t Sb) 2019E Production 41,000-51,000 oz Au Eq. (23,000 30,000 oz Au, 2,600 3,100 t Sb) Keys to 2019: Accelerating development to Youle top priority for operation (expected 2 nd half of 2019) Increase production rate from Brunswick lode Increased interest in Victorian gold mining due to recent exploration discoveries Exploration to incorporate several highly prospective exploration targets Costerfield Gold Eq. Production (oz) 35,849 Costerfield Production Expected to More than Double by 2021E 41,000-51,000 55,000-68,000 76, , E 2020E 2021E (1) Source: SRK Consulting (Australia), Effective December 1, 2018, documented in an independent NI Technical Report filed February 6,

9 The Youle Lode: Driving Future Success Youle vein lies approximately 800 m north of Brunswick Lode Drill intercepts on Youle have demonstrated continuity of high-grade along strike and down dip Infill and extension drilling added Youle to 2018 year-end Reserves Development to Youle vein initiated Q3, 2018, on schedule Mineral Reserves at Costerfield (as of Dec. 1, 2018) Category Tonnes (kt) Au Grade (g/t) Sb Grade (%) Cont. Au (koz) Cont. Sb (kt) Proven Probable Proven + Probable Mineral Reserves at Youle (Costerfield) (as of Dec. 1, 2018) Category Tonnes (kt) Au Grade (g/t) Sb Grade (%) Cont. Au (koz) Cont. Sb (kt) Proven MND mining Probable Proven + Probable (1) Source: SRK Consulting (Australia), Effective December 1, 2018, documented in an independent NI Technical Report filed on February 6,

10 Youle Long Section Currently known mineralized shoot Approx. 600 m strike Approx. 200 m dip High-grade continuous core defined by multiple intercepts Multiple intercepts over 50 g/t AuEq over 1.8 m minimum mining width Youle drilling highlights (up to Nov/18) Hole True Width (m) Gold (g/t) 10 BC Sb (%) AuEq (g/t) over min. 1.8 m mining width BC BC036W BC BC021A

11 Exciting District Potential Radiometric Data (K/Th) King Cobra North KN DC Damper Creek TB MD Youle BR MacDonald s Reef True Blue Potential Endowment 2 Mineralized and Underexplored corridors 5Moz AuEq Potential Current/Historical Endowment Youle Brown s Diggings Robinson s Reef Brunswick Cuffley Augusta 11 Margaret

12 Deep Drilling at Costerfield: Fosterville Comparison Fosterville and Costerfield are fundamentally similar in mineral source, fluid composition, fluid transportation system and fluid trap environment Fosterville Deposits Costerfield Deposits Fosterville 30 km Costerfield Could there be Fosterville style gold at Costerfield? Yes Key similarities in the upper Costerfield system that Mandalay has mined A litho-geochemical (carbonaceous shales) environment exists, at depth, that is similar to the Fosterville high nugget (Swan zone) environment; this environment also sits at a similar depth below surface to the Swan zone Mandalay has intercepted this zone in the Sub KC Drilling with 2 of 4 intercepts returning high gold grades supporting the analogy 12

13 Where to Target a Fosterville-like Environment The success of Fosterville now changes again our stance on the viability of this area The Orange unit signifies a Carbon-rich turbidite package similar to that which separates the refractory and nuggetty gold within Fosterville We have intercepted the mineralized corridor under this unit with good results 4 proposed 1,200 m holes from surface will aid in providing information on the potential and targets in this environment CSK007 1,361 g/t Au CSK g/t Au (Deepest hole and intercept in the district) CSK007 and CSK012 Resource outlines Fosterville Swan zone starting at 950m below surface Proposed Targets 13

14 Shallow Drilling at Costerfield: Target Generation Brown s Diggings 17.6 g/t Au over 6m Robinson s Reef 2 km strike length Brown s Shaft 1880 s Average grade of ore = 18g/t Au Augusta Mine Robinson s Shaft 1899 Shaft depth only 50m Grade range of g/t in quartz

15 Björkdal: Ramping-up with Focus on Profitability 2019 Focus at Björkdal: Increase the percentage of production from underground Focus on higher production from wider, higher-grade Aurora zone to increase profitability Gain better understanding of high-grade skarn mineralization, which was previously not explored or exploited Björkdal Gold Production (ounces) 44,039 Björkdal Gold Production Expected to Rise 2019E-2021E (midpoints of guidance graphed) 48,143 62,018 45,719 50,000-56,000 55,000-65,000 53,000-59, E 2020E 2021E Land package P&P Reserves (1) 12,949 hectares 11,384, g/t Au for 580,000oz (1) Source: Roscoe Postle Associates, Effective December 31, 2018, documented in an independent NI Technical Report to be filed within 45 days of February 21,

16 Björkdal Exploration Strategy Paying Off New discovery of Aurora zone provides the potential to mine high-tonnage and higher-grades at lower costs Aurora zone significantly wider and consistently higher-grade than current mill feed 250 m horizontally 150 m vertically Mineralization open in all directions Aurora zone readily accessible, two levels currently being developed Large step-out drilling occurring below and above currently known mineralization to expand zone Preliminary processing results show no challenges for gold recoveries Aurora Zone Drill Highlights (Announced Nov. 14, 2018) Hole True Width (m) Gold (g/t) DOD DOD MU DOD MU (diluted to 3m)

17 Aurora Zone: Long Section & Preliminary Reserve Preliminary Mineral Resource and Reserve added for Aurora in Feb 2019 (1) 17 Proven Reserves Added: 2.34 g/t Au (69,000 oz Au) Indicated Resources Added: 3.16 g/t Au (78,000 oz Au) Inferred Resources Added: 3.37 g/t Au (22,000 oz Au) Mandalay expects that Aurora will contribute additional Mineral Reserves and Resources in exploration focus: o o o o Extensional drilling up and down dip as well as to the east Drilling from surface to test up dip extension to the Aurora structure, Zones surrounding Aurora Skarn drilling (1) Source: Roscoe Postle Associates, Effective December 31, 2018, documented in an independent NI Technical Report to be filed within 45 days of February 21, 2019

18 Exploration Breakthrough: Mineralization Above Marble Historically, marble has been considered to constrain the mineralization at Björkdal. Recent drilling has shown vein continuation above the marble contact West Pit Central Zone Lake Zone North The pink horizon represents a large area containing little to no drilling, therefore representing a large prospective area for further investigation. Lake Zone Mineralization extending hundreds of metres beyond area previously thought to be constrained 18

19 Chilean Assets: Cerro Bayo & Challacollo Cerro Bayo Silver-Gold Mine Land package 19 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 restart of operations Mandalay considering all alternatives to maximize value of asset Challacollo Silver-Gold Project Land package August 2018: Signed non-binding LOI with Aftermath Silver for sale of Challacollo Project for total consideration of C$11,625,000 Aftermath Silver s management team has significant industry experience and complementary skillsets that Mandalay believes are necessary to create additional value for a development project such as Challacollo (1) 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, ,378 hectares Ownership 100% Location Indicated Resource 130 km SE of Iquique, Northern Chile 4.7 MM 200 g/t Ag for 30 MM oz Ag

20 Adjusting the Mandalay Portfolio Realizing value from non-core assets Ulu, Nunavut: Option agreement signed; received both payments Norrliden: Exploring alternatives for sale Lupin, Nunavut Undergoing reclamation with submission of final closure plan o C$5.3 million cash reduction in Reclamation Deposit released to MND in Q o As of Jan 28, 2019 Mandalay received Minister sign off for a further C$3.2 million reduction in bonding and therefore the current reclamation bond stands at C$26.1 million La Quebrada, Chile Active process ongoing Exploring options for development/restart assets Challacollo o Executed non-binding LOI for sale of asset Cerro Bayo 20

21 Mandalay Current Capitalization as of Feb. 20, 2019 Share price (Feb 21, close) (C$) Millions (Except Share Price Info) $0.10.0/shr Shares Outstanding Stock Options (1) 20.7 RSUs 1.9 Fully Diluted Shares Outstanding Market Capitalization (C$) $45.2 Approximate Cash and Cash Equivalents (US$) (3) $16.2 Approximate Total Interest-Bearing Debt (US$) (3) $63.8 Total Enterprise Value (US$) (2,3) $81.9 Approximate cash balance amount does not include the approx. C$43 million gross proceeds from the Public Offering closed on February 20, 2019 funds are escrowed until the Company obtains the required shareholder and regulatory approvals. Fully diluted shares outstanding does not include shares issuable upon the exchange of the subscription receipts or conversion of bridge loan. 1. 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 = 0.76 USD (Feb. 22, 2019), numbers rounded. 3. Approximate Cash and Cash Equivalent number consists of cash at December 31, 2018 of $8.4 million plus $7.8 related to the net proceeds received from the Bridge Loan announced February 20, Approximate Total Interest-Bearing Debt number consists of principal amount outstanding of the Company s gold bonds of $24.1M, HSBC Revolving Credit Facility of $35M and $4.7M in Equipment Loans and Leases (figure from the Q financials). Cash and debt figures unaudited. 21

22 Strong Sponsorship and Broader Ownership Over Time Volume 30-day Average Daily Volume 432, day Average Daily Volume 575,232 Major Shareholders (1) Holders Shares (Million) Shares (Percentage) GMT Capital 73.1 Ruffer LLP % AzValor 59.3 FIL Ltd % Sentry Investments 21.4 Large Holders (Top-5) Other Holders % TOTAL % 5.6% 4.7% As of February 19, 2019, Management and directors collectively own or control 31.0 million shares (6.9% of the shares issued and outstanding) Average Daily Volume across all trading platforms (as of August 7, 2018) 1. Known ownership positions are estimates - as at February 19, 2019 Ownerships and percentages rounded to one decimal place. 22

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

24 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 24