Forward-looking Statements

Transcription

1 1 SEPT 217 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, 217 and in its final prospectus dated July 18, 216, 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 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. Dr. Mark Sander (Member: AusIMM), President and CEO 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 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 3

4 Designed for Value: How We are Different Acquire only when we see possibility of an immediately accretive transaction with strong value uplift in 3-5 years Target cash cost of production: 5% of reversion to mean metal price 1% ownership; no private royalties, no streams Flat, virtual, low-cost organizational structure; local GM accountability Direct relationships and sales contracts with customers Return cash to shareholders when possible No hedging of metal prices Stingy with equity Reasonably levered (PRODUCTION SUSPENDED) 4

5 Results: Consistent Performance Across the Price Cycle 29 Costerfield, Australia Gold & Antimony 21 Cerro Bayo, Chile Silver & Gold Mandalay Acquisition Timeline No acquisition Optimize operations Pay down debt Exchange warrants Begin dividends 214 Challacollo, Chile Silver & Gold Mandalay Financial Performance Björkdal, Sweden Gold US$ MM ,67 1,57 1, , ,16 1,248 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. 5

6 Based on Matched Production and Reserves Growth Oz Au Eq. Annual Production 3, 1,123, 1,54, 1,24, 1,2, 25, 1,, 772, 2, 633, 8, 15, 52, 6, 154,81 166, ,497 1, 254, 126,98 4, 114,-128, 17,941 5, 2, 15,854 63, E Oz Au Eq. Year-End Reserves With Continuing Capital and Overhead Spending Discipline Capex spending per oz A u Eq. $/oz Mandalay capital spending at operating mines (excluding exploration) Cap ex sp endin g ($ m ) Ov erh ead sp en d in g p er Au E q. $/o z Mandalay corporate overhead spending Acquisition O v erh ead sp en d in g ($ m ) 6

7 And Adding Reserves Cost-effectively 3 Mandalay cost of acquiring and discovering reserves US$/oz Au Eq. P&P Added Cerro Bayo Median for all Au sector acquisitions = $254/oz Au Eq. (1) Björkdal Acquisition + Exploration adds at cumulative average $79/oz Au Eq. (for developed & producing reserves) Cumulative Cost per oz Au Eq. Acquired or Discovered Cost Per oz Au Eq. Discovered in yr Cost Per oz Au Eq. Acquired in yr 216 metal price assumptions: $1,22/oz Au, $16.87/oz Ag and $6,82/t Sb 1. Source: BMO 7

8 Creating and Delivering Value for Shareholders Since 29, Mandalay has returned cash to shareholders via: Warrant redemptions Share buybacks Dividends $14,, $12,, $1,, $8,, $6,, $4,, $2,, $ Dividends Paid (USD)* Record Dividends Dividend Suspended 6% of revenues (dividend contribution) Total Return vs. Peers and Seniors through Sept. 19, 217 $1, Mandalay (1) Peer Index (2) Gold Senior (3) 25. A $1, investment on Sept. 24, 29 would be worth on Sept. 19, 217 (1-4): Investment Value $8, $6, $4, $2, Volume (millions) Mandalay: $23,373 Peer Index: $12,894 Gold Seniors: $7,645 $ Sep-9 Sep-1 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16. *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 (1) Adjusted for reinvested dividends. Assumes investment in Mandalay made as part of private placement announced on 24-Sep-9 to fund acquisition of Costerfield and accounts for warrant exchange offer of.47 shares per warrant. (2) Peer Index: Alacer, Argonaut, Dundee PM, Kirkland Lake, 8Klondex, Perseus, Primero, Richmont. (3) Gold Seniors: Agnico Eagle, AngloGold, Barrick, Goldcorp, Gold Fields, Kinross, Newcrest, Newmont, Polyus, Randgold. (4) End date as at Sept 19, 217.

9 Broader Ownership and Higher Liquidity Over Time Volume 3-day Average Daily Volume 859,264 1-day Average Daily Volume 1,76,243 Major Shareholders (1) Holders Shares (Million) Shares (Percentage) GMT Capital 72.6 Ruffer LLP 56.5 CI Investments % 12.5% 1.2% 7.% AzValor 31.8 Plinian + Management + Directors % Large Holders (Top-5) Other Holders % TOTAL Analyst Coverage Firm Analyst BMO Brian Quast Raymond James Chris Thompson Scotia Trevor Turnbull Average Daily Volume across all trading platforms (as of September 19, 217) 1. Known ownership positions are estimates - as at September 18, Ownerships and percentages rounded to one decimal place. 9

10 Strong Balance Sheet as of June 3, 217 Share price (Sept 2, close) (C$) Millions (Except Share Price Info) $.34/shr Shares Outstanding Stock Options (1) 21.3 RSUs.7 Fully Diluted Shares Outstanding Market Capitalization (C$) $153.4 Cash and Cash Equivalents (US$) (3) $18.4 Total Interest-Bearing Debt (US$) (3) $29.6 Total Enterprise Value (US$) (2,3) $135.7 Mandalay repaid US$3 million in debt on May 26, 217 Mandalay secured US$4 million revolving credit facility July 25, Exercise Price: C$.6 C$1.13 expiry dates ranging from Mar 18, 218 Jun 3, Market Capitalization converted to US$ using exchange rate of 1 CAD =.81 USD (Sept 2, 217) 3. Cash and Cash Equivalents and Interest-Bearing Debt as at end of Q2-217 (Jun 3, 217) 1

11 Cerro Bayo Silver-Gold Mine: Optimizing the Future Land package 23,16 hectares Ownership 1% P&P Reserves (1) 979, 282 g/t Ag; 2.29 g/t Au 216 Production 13,792 oz Au, 1,731,31 oz Ag Project Status: Inundation event at Delia NW mine on June 9, 217 Production suspended pending risk assessment (2-4 mo.) for restart Independent root cause investigation report ongoing Risk assessment on restart of Laguna Verde mines due late Oct. No significant loss of reserves or Life of Mine production in long-term Restart depends on receipt of the eight permits required for the LOM, some of which have been in progress for many months Inundation Target BRANCA MARCELA & RAUL VEINS (1 KM BEHIND VIEWPOINT) (1) Source: Roscoe Postle Associates, Effective December 31, 216, documented in an independent NI Technical Report filed March 31,

12 Cerro Bayo Operating Performance Tonnes Per Quarter 15, 1, 5, Mining Rate and Unit Cost Q4-1 Q2-11 Q4-11 Q2-12 Q4-12 Q2-13 Q4-13 Q2-14 Q4-14 Q2-15 Q4-15 Q2-16 Q4-16 Q2-17 t Mined Cost/ t Mined $1 $5 $ $/ Tonne Cerro Bayo Operational Improvements: Record High Rate Record Low Cost Shifted the mining method from shrinkage stoping to completely mechanized blast hole open stoping; Tonnes Per Quarter Oz Ag/Quarter 15, 1, 5, Processing Rate and Unit Cost Q4-1 Q2-11 Q4-11 Q2-12 Q4-12 Q2-13 Q4-13 Q2-14 Q4-14 Q2-15 Q4-15 Q2-16 Q4-16 Q2-17 t Processed Cost/ t Processed 1,5, Saleable Silver Produced & Unit Cost 1,, 5, Q4-1 Q2-11 Q4-11 Q2-12 Q4-12 Q2-13 Q4-13 Q2-14 Q4-14 Q2-15 Q4-15 Q2-16 Q4-16 Q2-17 Ag oz Cost/ oz Ag net Au $5 $ $5 $ $/ Tonne $2 $15 $1 $/ oz Ag Net Byproduct 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 4 years at 1,4 tpd while mining continuously for 6 years Production suspended pending risk assessment (2-4 mo.) for restart 12

13 Björkdal Gold Mine: Investment Thesis Demonstrated Land package 12,949 hectares Ownership 1% P&P Reserves (1) 1,6, 1.68 g/t Au for 574 koz 216 Production 48,143 oz Au Key for 217: Grade control working properly and debottlenecking mine operations has increased rate of delivery of high-grade ore Phase 1 of low-grade ore sorting program (crushing and screening) implemented with 5% grade upgrade; design and detailed engineering for Phase 2 complete Flotation expansion project completed on time and on budget, performing as planned (1.7% recovery increase) Continued exploration success (1) Source: Roscoe Postle Associates, Effective September 3, 216, documented in an independent NI Technical Report filed Jan. 27,

14 Björkdal Operating Performance and Improvements Tonnes Per Quarter Tonnes Per Quarter Ounces Gold Per Quarter 4, 3, 2, 1, 4, 3, 2, 1, Mining Rate and Unit Cost Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 t Mined 2, 15, 1, Cost/ t Mined Processing Rate and Unit Cost Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 t Processed 5, Au oz Cost/ t Processed Saleable Gold Produced and Unit Cost Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Cost/ oz Au $35 $3 $25 $2 $15 $1 $5 $ $1 $8 $6 $4 $2 $ $/ Tonne $/ Tonne $1,5 $1, $5 $ $/ oz Au Björkdal Operational Improvements: 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) Implemented crushing and screening of lowgrade ore for 5% grade improvement Flotation expansion completed on time and on budget Pilot test and detailed engineering for optical ore sorting 14

15 Björkdal Debottlenecking: Lifted Mill Output Consistently-delivered higher-grade ore results in demonstrated higher production Tonnes processed 3, 25, 2, 15, 1, 5, - Björkdal plant throughput tonnes and grade Consistent tonnes processed each week g/t Au Processed Throughput - tonnes Throughput - grade Saleable Au oz produced 2,5 2, 1,5 1, 5 - Björkdal processing output and recovery saleable ounces (Before commissioning of flotation expansion in early July) Au recovery % Throughput Output - Saleable - Saleable ounces ounces Au Throughput - Recovery 15

16 Björkdal: Recent Open Pit & Underground Intercepts Extending Underground Mineralization to North East Extending Open Pit Mineralization to North Infilling Underground Mineralization to North Together with H2 216 results, expect significant addition of Mineral Resources and Reserves in Q4 update Infilling Underground Mineralization to East 16

17 Emerging High-Grade Skarn Intercepts at Björkdal Continuous volumes of skarn Smaller shoots of high-grade within skarn A few tonnes of high-grade skarn mined and processed in Q2 with both high reconciled grades and good recovery 17

18 Costerfield Gold-Antimony Mine: Turnaround Complete; Dependable Performance Land package 1,293 hectares Ownership 1% P&P Reserves (1) 619, 6.5 g/t Au; 2.8% Sb 216 Production 41,31 oz Au, 3,598 t Sb Key for 217: May 217 Completed the capital development to access near-mine shoots and support next few years of production July 217 Completed tailings lift construction for current LOM tailings September 217 Positive initial results of low-cost aquifer injection test End 217 Expected end of year 217 Mineral Reserve increases at Brunswick and further exploration upside (expected release Feb. 218) (1) Source: SRK Consulting (Australia), Effective December 31, 216, documented in an independent NI Technical Report filed March 31,

19 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 (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 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 (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 Operational Improvements: 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 4 years while mining continuously for 7 years discovered Cuffley and N-lode 19

20 Brunswick Resource Enlarged by Recent Drilling Ready for Mineral Resource and Reserve estimation in Q3/Q4 2

21 Emerging Costerfield Deeps High-Grade Shoot Emerging mineralized shoot below historic workings Very high-grade gold 6 to >1 g/t Au At least: 4 m on strike 1 m vertical Open 21

22 Challacollo Silver-Gold Project 217 Land package 2,378 hectares Ownership 1% Location 13 km SE of Iquique, Chile Indicated Resource Elevation 4.7 MM 2 g/t Ag for 3 MM oz Ag Approx. 1,5 ASL Key for 217: May 217 Water sufficient to support eventual operation discovered Permitting for production well in process Option to optimize project for lower CAPEX 22

23 Invest With Us: How We Will Deploy Your Capital 1. Acquire new assets counter-cyclically at discount to value Acquire only when we see possibility of an immediately accretive transaction with strong value uplift in 3-5 years Keep portfolio evergreen exit assets that do not fit 2. Execute focused operational improvement projects at each site Restart Cerro Bayo with optimized, risk-assessed plan Maintain good Björkdal performance; further upside includes complete commissioning of flotation expansion; add optical sorting; extend mine life with exploration Extend Costerfield life with Brunswick lode if prudent and beyond with further exploration Optimize Challacollo feasibility with lower capital and operating costs 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 more diverse customers paying better terms 3. 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 Compare all potential uses of cash to the benefits of returning cash to shareholders 4. Engage all stakeholders in a values-based and value-focused organization 23

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