NOV 2017 TSX:MND A VALUE-FOCUSED PRODUCER WITH A PROVEN STRATEGY FOR SUCCESS 1

Transcription

1 NOV 217 TSX:MND A VALUE-FOCUSED PRODUCER WITH A PROVEN STRATEGY FOR SUCCESS 1

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: A Proven Strategy Mandalay acquires undervalued mines in accretive transactions; turns them around to crystallize increased value in the market; returns cash to shareholders 1. Acquire producing or near-term, cash-flowing mines at a discount to value we will create Remedy history of underinvestment in sustaining capital that limits current performance (e.g. underground development, stripping, maintenance) Introduce major improvements in mining methods Modernize plant and operating practices to increase throughput & recovery Institute operating cost reductions and productivity improvements Leverage commercial savvy and direct smelter relationships to improve treatment costs Identify and develop unrecognized or underinvested exploration potential to support expanded production and/or mine life extension 2. Reinvest near-term, growing cash flow to fund turnaround plan 3. Return cash to shareholders wherever possible 4. Repeat 5. Divest mature, optimized mines to parties who can create more value than we see Mandalay has acquired three mines at discount and turned around all three in seven years; looking for more 4

5 Organized to Deliver Maximum Shareholder Value Acquire only when we see possibility of an accretive transaction with strong value uplift in 3-5 years Target cash cost of production: 5% of reversion to mean metal price Flat, virtual, low-cost organizational structure; local GM accountability Direct relationships and sales contracts with customers 1% ownership; no private royalties, no streams Return cash to shareholders when possible No hedging of metal prices Stingy with equity Reasonably levered 5

6 The Mandalay Portfolio Targeting Company-wide production of koz AuEq in 217 Björkdal: An Emerging Anchor Asset 217E production: 52-58koz gold 217E cash costs: $86-$91/oz Current mine life: 1 years Reserve replacement ratio: 12.9 Costerfield: Dependable Performance 217E production (AuEq): 46-54koz 217E cash costs: $71-$78/oz Current mine life: 4 years Reserve replacement ratio (3-yr Avg): 1.39 Chilean Properties Cerro Bayo (production suspended) Mine life upon restart: 3-4 yrs Challacollo Feasibility-stage project Targeting production of approx. 4 Moz Ag for a 1-year mine life (PRODUCTION SUSPENDED) Björkdal targeting long term production of 7koz with a mine life of 15 $75/oz cash costs Costerfield steadily replacing P&P Reserves and extending mine life 6

7 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. 7

8 Mandalay s Strategy in Action: Matched Production and Reserves Growth Oz Au Eq. Annual Production 3, 25, 2, 15, 1, 5, Capex spending per oz Au Eq. $/oz 254, 52, 15,854 63, , 17, , 126,98 1,123, 154,81 1,54, 1,24, 166, ,-128, With Continuing Capital and Overhead Spending Discipline , E Mandalay capital spending at operating mines (excluding exploration) Capex spending ($ m) Overhead spending per Au Eq. $/oz Mandalay corporate overhead spending Acquisition ,2, 1,, 8, 6, 4, 2, Overhead spending ($ m) Oz Au Eq. Year-End Reserves 8

9 Adding Reserves Cost-effectively US$/oz Au Eq. P&P Added Mandalay cost of acquiring and discovering reserves Cerro Bayo Median for all Au sector acquisitions = $226/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 9

10 Strong Balance Sheet as of Sept 3, 217 Mandalay is well-capitalized to fund its capital plans and growth Share price (Nov. 8, close) (C$) Millions (Except Share Price Info) $.315/shr Shares Outstanding Stock Options (1) 21.1 RSUs.7 Fully Diluted Shares Outstanding Market Capitalization (C$) $142.2 Cash and Cash Equivalents (US$) (3) $24.8 Total Interest-Bearing Debt (US$) (3) $39.6 Total Enterprise Value (US$) (2,3) $127.1 Mandalay secured US$4 million revolving credit facility July 25, 217 US$25 million undrawn as of September 3, Exercise Price: C$.6 C$1.13 expiry dates ranging from Mar 18, 218 Jun 3, Market Capitalization converted to US$ using exchange rate of 1 CAD =.79 USD (Nov. 8, 217) 3. Cash and Cash Equivalents and Interest-Bearing Debt as at end of Q3-217 (Sept 3, 217) 1

11 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 Nov. 8, Ownerships and percentages rounded to one decimal place. 11

12 Creating & Delivering Superior Value for Shareholders Investment Value Total Return vs. Peers and Seniors through Nov. 9, 217 $1, $8, $6, $4, $2, Volume (millions) Since 29, Mandalay has returned cash to shareholders via: Warrant redemptions Share buybacks Dividends* A $1, investment on Sept. 24, 29 would be worth on Nov. 9, 217 (1-4): $ Mandalay (1) Peer Index (2) Gold Senior (3). Mandalay: $2,582 Peer Index: $11,756 Gold Seniors: $7,462 Despite 217 share price decline due to Cerro Bayo issues, Mandalay has delivered almost 2X value of Peers & almost 3X value of Gold Seniors since founding *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, 12 Klondex, Perseus, Primero, Richmont. (3) Gold Seniors: Agnico Eagle, AngloGold, Barrick, Goldcorp, Gold Fields, Kinross, Newcrest, Newmont, Polyus, Randgold. (4) End date as at Nov 9, 217.

13 Looking Ahead: Value Drivers Costerfield: 217 Reserves update including Brunswick (due in Feb) Costerfield: Brunswick capital development complete (Oct) Björkdal: Flotation expansion successful Björkdal: Q4 3rd straight strong production quarter commit to ore sorting program (due in Jan) Costerfield: First ore from Brunswick (March) Björkdal: Commission ore sorting Costerfield: Commitment to develop & mine Brunswick Björkdal: Reserves growth & mine life extension expected in EOY 217 update (due in Jan) Potential Cerro Bayo restart is permit driven; estimated end

14 Björkdal: Emerging Anchor Asset Land package 12,949 hectares Ownership 1% P&P Reserves (1) 1,6, 1.68 g/t Au for 574, oz 216 Production 48,143 oz Au 217E Production 52, 58, oz Au Key accomplishments in 217: Grade control working properly and debottlenecking mine operations has increased rate of delivery of highgrade ore Producing at rate of approximately 6koz/yr in Q2 and Q3, continuing into Q4 Phase 1 of low-grade ore sorting program (crushing and screening) implemented in January 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 and mine life extension (1) Source: Roscoe Postle Associates, Effective September 3, 216, documented in an independent NI Technical Report filed Jan. 27,

15 Björkdal: Turnaround evident since Q1, 217 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 Q2 15 Q4 15 Q2 16 Q4 16 Q2 17 t Mined 2, 15, 1, Cost/ t Mined Processing Rate and Unit Cost Q4 14 Q2 15 Q4 15 Q2 16 Q4 16 Q2 17 t Processed 5, Au oz Cost/ t Processed Saleable Gold Produced and Unit Cost Q4 14 Q2 15 Q4 15 Q2 16 Q4 16 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 keys to turnaround: 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 15

16 Tonnes processed Björkdal Debottlenecking: Lifted Mill Output Consistently-delivered higher-grade ore results in demonstrated higher production 3, 25, 2, 15, 1, 5, Björkdal plant throughput tonnes Consistent tonnes processed each week Grade (g/t Au) - Throughput - tonnes Throughput - grade Saleable Au Produced (oz) 2,5 2, 1,5 1, 5 Björkdal plant throughput ounces Flotation expansion commissioned in early July now delivering +1.7% recovery improvement Au Recovery (%) - 75 Throughput Output - Saleable - Saleable ounces ounces Au Throughput - Recovery 16

17 Björkdal: Recent Open Pit & Underground Intercepts Extending Open Pit Mineralization to North Extending Underground Mineralization to North East Infilling Underground Mineralization to North Together with H2 216 results, Mandalay expects significant addition of Mineral Resources and Reserves in 217 update Infilling Underground Mineralization to East 17

18 Emerging High-Grade Skarn Intercepts at Björkdal Multiple continuous bodies of skarn Smaller shoots of high-grade within skarn bodies A few tonnes of high-grade skarn mined & processed in Q2 with high reconciled grades Metallurgical testing of different skarn bodies yields specific processing regimens for each Re-logging and assaying 1,2 m of skarn intercepts drilled and ignored by previous owners Located in storage Re logged and sampled Assays received 18

19 Costerfield: Dependable Performance and Extended Life 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 217E Production Key achievements in 217: 3, 35, oz Au, 3,2 3,7 t Sb May 217: Completed capital development to access near-mine shoots July 217: Completed tailings lift construction for current LOM tailings September 217: Positive initial results of low-cost aquifer injection test (reduced water handling costs) November 217: Approved Brunswick development and mine life extension EOY 217: Expected end of year 217 Mineral Resource and Reserves update reflecting new Brunswick reserves (expected release Feb. 218) Drill intercepts in Costerfield Deeps & Kendall lodes reveal potential next high-grade shoots to be converted (1) Source: SRK Consulting (Australia), Effective December 31, 216, documented in an independent NI Technical Report filed March 31,

20 Costerfield: Turnaround and 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 keys to turnaround: 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 2

21 Brunswick Development and Mine Life Extension Brunswick Development and Mining Timeline Milestone Expected Completion Mobilize capital development contractor Completed November 217 Begin on-vein development March 218 Begin stoping June 218 Complete capital development October 218 End of currently approved life July 22 21

22 Emerging Next Lodes: Costerfield Deeps & Kendall Around and beneath largest historical gold mine in district Structurally exactly analogous to Cuffley discovery beneath Allison lode across flat fault Very high gold and antimony grades Possible 4-5 m by 3-4 m shoot(s) Only 5 m from Brunswick underground infrastructure by this time next year 22

23 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 at Delia NW mine on June 9, 217 Production suspended pending risk assessment for restart Independent root cause investigation report ongoing Risk assessment on restart of Laguna Verde mines due Dec 17 No significant loss of Reserves or LOM production in long-term Restart timing depends on receipt of multiple permits required for the LOM, some of which have been in progress for many months Target MARCELA & RAUL VEINS (1 KM BEHIND VIEWPOINT) BRANCA (1) Source: Roscoe Postle Associates, Effective December 31, 216, documented in an independent NI Technical Report filed March 31,

24 Cerro Bayo: Restart, Turnaround, Strong CF, then Flood 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 keys to turnaround: 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 $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 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 $ $/ 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 4 years while mining continuously for 6 years Production suspended pending risk assessment (2-4 mo.) and subsequent permitting for restart 24

25 Cerro Bayo: Existing Reserves and New Targets Focus on exploration to add value to restart scenarios Most of existing reserves under Laguna Verde Marcela and Raul veins in the old Cerro Bayo sector New interest in Meseta and Sinter Hill areas due to positive drill results announced by Equus to south of National Park 25

26 Cerro Bayo: Prospective Targets at Meseta-Sinter Hill Sinter Hill -- silicified and brecciated volcanics with abundant, coarse barite Possible zone of significant fluid upflow steam heated Potential for Au mineralization below Meseta veins typical CBstyle qtz-adularia-ag- Au>Base Metal veins Equus reports Ag-Base metal veins with intermediate argillic alteration some 5 km south 26

27 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 and further exploration drilling in process Option to optimize project for lower CAPEX 27

28 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 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 Maintain good Björkdal performance; further upside includes optical ore sorting, extended mine life with exploration, possibility of significant higher-grade skarn Extend Costerfield life with Brunswick lode development and beyond with further exploration Restart Cerro Bayo with optimized, risk-assessed plan Optimize Challacollo feasibility with lower capital and operating costs Mining projects focused on safer, more mechanized 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 28

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