Date post: | 21-Oct-2014 |
Category: |
Investor Relations |
View: | 1,548 times |
Download: | 0 times |
DELIVERING VALUE AND GROWTH
September 2013
TSX: MND www.mandalayresources.com
2
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 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 43-101.
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 43-101. 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 43-101. 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.
Forward-looking Statements
2
3
Vision
3
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.
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, 2013
Mandalay Second Quarter 2013 Performance
Q2, 2013 Q2, 2012
Saleable Silver oz produced 921,895 814,970
Saleable Gold oz produced 13,046 9,215
Saleable Antimony t produced 738 612
Net Cash/All-in Cost/oz Ag at Cerro Bayo, USD 6.12 / 11.54 4.12 / 8.11
Net Cash/All-in Cost/oz Au Eq. at Costerfield, USD 934 / 1,178 1,052 / 1,197
EBITDA, USD million 11.0 21.6
Net Income, USD million 3.1 19.2
Cash and cash equiv. at end of period, USD million 23.9 11.2
6
7
Management and Board of Directors
7
Senior Management
Board of Directors
Brad Mills, CEO and
Executive Director
Former CEO Lonmin
plc, over 30 years of
experience in Copper,
Gold, PGMs
Mark Sander, President
28 years of experience in
exploration, strategy and
operating improvements
Sanjay Swarup, CFO
and Executive Director
Former Lonmin plc, over
20 years of industry
experience
Belinda Labatte,
Corporate Secretary
Over 10 years of
experience in capital
markets and investment
banking
Braam Jonker,
Chairman
Peter R. Jones,
Independent Director
Tony Griffin,
Independent Director
Robert Doyle,
Independent Director
Dominic Duffy, COO
Mining Engineer with
extensive technical and
operational management
experience
**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: 2.8-3.1MM oz Ag, 38,000-46,000 oz Au, 2,800-3,000 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 Q4 2013 is C$ 2.23 million
8
Strategy: Rapid Value Generation and Returns
8
0.3 20.6
92.2
171.8
2009 2010 2011 2012
Increase Revenues ($US MM)
-1.0 1.7
32.0
79.9
2009 2010 2011 2012
Generate Cash (EBITDA - $US MM**)
Focus and Results 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
2012 A 2013 E
$3.2
Dividend Payouts ($CAD MM*****)
$10.2
9
Capital Structure and Ownership
9
Major Shareholders(4)
Holders % Shares (Million)
West Face Capital 42.3% 136.9
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$0.255 - C$0.83; Expiry date: Dec 7, 2014 - Mar 18, 2018 (2) Exercise price: C$0.31 - C$0.465; Expiry date: Nov 30, 2014 (3) Assuming US$ 1 = C$ 1.0233 (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
Capital Structure as at September 16, 2013 Millions
(Except Share Price Information)
Share price (Last close) (CAD$) 0.80/shr
Shares Outstanding 323.9
Options(1) 16.2
Warrants(2) 21.0
Fully Diluted Shares Outstanding 361.1
Market Capitalization (CAD$) 259.1
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$) 234.6
10
Management Track Record: Execution, Value Creation
10
Company History and Milestones
2009 Q4 2010 2011 2012 2013
Financial/
Corporate
• Acquired
Costerfield gold-
antimony 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
50
100
150
200
250
300
350
400
450
500
Ind
ex (
Au
gu
st
3, 2009 =
100)
Mandalay Resources Peers* Gold Silver S&P/TSX Composite Index S&P/TSX Global Mining Index
Mandalay: 188%
(total return)
Silver: 52%
Gold: 38%
TSX Composite: 16%
Peers: -0.1%
TSX Mining: -19%
• *Peer group includes: Endeavour Silver, Silver Standard, Fortuna Silver, and Aurcana
• Share prices as at September 17, 2013
Q4 2009 - New Management Team
(Mills, Sander, Swarup)
11
Cerro Bayo Silver-Gold Mine
11
Land package 23,096 hectares
Ownership 100%
2012 silver production 2,911,595 oz
2012 gold production 17,089 oz
2013E silver production 2.8 – 3.1 million oz
2013E gold production 18,000 – 21,000 oz
Current throughput approx. 1,200 tpd
P&P Reserves 2.3 Mt @ 241 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 – $6
2013 Planned Exploration
Metres 60,000
Budget $6-7 million
Cerro Bayo Operating Performance
12
$0
$10
$20
$30
$40
$50
$60
$70
0
20,000
40,000
60,000
80,000
100,000
120,000
Q4-10 Q2-11 Q4-11 Q2-12 Q4-12 Q2-2013
USD
/ To
nn
e
Ton
nes
Per
Qu
arte
r
Mining Rate and Unit Cost
t Mined Cost/ t Mined
$0
$10
$20
$30
$40
$50
$60
$70
0
20,000
40,000
60,000
80,000
100,000
120,000
Q4-10 Q2-11 Q4-11 Q2-12 Q4-12 Q2-13
USD
/ To
nn
e
Ton
ne
s P
er
Qu
arte
r
Processing Rate and Unit Cost
t Processed Cost/ t Processed
$0
$5
$10
$15
$20
0
200,000
400,000
600,000
800,000
1,000,000
Q4-10 Q2-11 Q4-11 Q2-12 Q4-12 Q2-13 USD
/ o
z A
g N
et
Byp
rod
uct
Ou
nce
s Si
lve
r P
er
Qu
arte
r
Saleable Silver Produced & Unit Cost
Ag oz Cost/ oz Ag net Au
13
Cerro Bayo District: Target-rich Land Package
NI43-101 Reserve-Resource veins
2013 Infill and Step-Out Drilling
2012 New infill from 2011 Blue Sky successes
2013 Scheduled Blue Sky drill targets
2013- Field work to prep for 2014 drilling
Lucia
Chatito Sb Anomaly
Roadside
Brillantes
Cerro
Viento
Aquila
Sinter Hill
Laguna Verde
High level, Madre-
Aquila-Meseta
Cerro Bayo
Guanaco
Esperanza
Sb Anomaly
Marcela Roadside
Cerro
Viento
Brillantes
Coigues
14
Cerro Bayo: Laguna Verde Area
Tailings Mill
LAGUNA VERDE
DELIA NW
FABIOLA DAGNY COYITA
DALILA
YASNA
Producing Mine or Planned Mine 2013 Infill/Extensional Drilling Exploration Vein
BIANCA
Trinidad
DELIA SE.
Gabriela Orieta
Carola
15
Dagny vein completely delimited under the lake
Coyita vein extends under the lake to limit of drilling
16
Fabiola vein planned drilling under the lake
Yasna vein planned drilling under the lake
Cerro Bayo M&I resource growth net of depletion
17
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
45,000,000
2010 2011 2012 2013 2014
Ozs
Ag
CUMULATIVE DEPLETION Dagny Fabiola
Delia NW Delia SE Marcela Sur
Yasna Coyita Dalila
Bianca
18
Costerfield Gold-Antimony Mine: Overview
18
2013 Planned Exploration
Metres ~13,000
Budget $3.5 million
Land package 1,293 hectares
Ownership 100%
2012 gold production 18,036 oz
2012 antimony production 2,481 t
2013E gold production 20,000 – 25,000 oz
2013E antimony production 2,800 – 3,000 t
Current throughput 340 tpd
P&P Reserves 178,000 tonnes @ 8.9 g/t Au; 4.1% Sb
Current recoveries (Q2 2013) Au: 89.7%, Sb: 95.7%
2013E Cash cost/ oz Au Equiv. (US$) $950 – $1,000
19
Costerfield Operating Performance
19
$0
$100
$200
$300
$400
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
Q4-09(Dec.only)
Q2-10 Q4-10 Q2-11 Q4-11 Q2-12 Q4-12 Q2-13
AU
D/
Ton
ne
Ton
ne
s P
er
Qu
arte
r
Mining Rate and Unit Cost
t Mined Cost/ t Mined
$0
$20
$40
$60
$80
$100
$120
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Q4-09(Dec.only)
Q2-10 Q4-10 Q2-11 Q4-11 Q2-12 Q4-12 Q2-13
AU
D/
Ton
ne
Ton
ne
s P
er
Qu
arte
r
Processing Rate and Unit Cost
t Processed Cost/ t Processed
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Q4-09(Dec.only)
Q2-10 Q4-10 Q2-11 Q4-11 Q2-12 Q4-12 Q2-13
USD
/ O
z A
u E
q.
Ou
nce
s P
er
Qu
arte
r
Au Equivalent Production and Cost
Oz Au Eq. Cost/ Au Eq. Oz
Cuffley PEA – Development and Mining Plan
20
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
Cuffley PEA Basis – Extended Mine Life at High Current Production and Low Current Cost Performance
21
Expanded resources in Cuffley
and N-lode (see appendix for
continued exploration potential)
PEA mine life through Q2 2017
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
22
Cuffley PEA Financial Results
22
Oz Eq
>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
23
Costerfield M&I Resource Growth Net Depletion
0
100
200
300
400
500
600
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Au E
q O
z (
000's
)
CUFFLEY AUGUSTA Depletion Yearly Depletion
10-Sep-2013
24
Costerfield – Long Section
25
La Quebrada Copper-Silver Project: Overview
25
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 34.8 Mt @ 10 g/t Ag, 0.6% Cu
26
La Quebrada
26
Next steps:
Drilling for modest
expansion of
Casa de Piedra
District
exploration – new
concepts
Basic engineering
studies
Conversation for
district
consolidation
La Quebrada Total Resources(1)
Rock (t) Ag Grade (g/t) Ag (cont. oz) Cu Grade (%) Cu (cont. lb)
Measured 0 0 0 0 0
Indicated 34,800,000 10 11,188,272 0.6% 459,360,000
Measured & Indicated 34,800,000 10 11,188,272 0.6% 459,360,000
Inferred 1,000,000 11 353,652 0.6% 13,200,000
(1) La Quebrada Independent Technical Report filed 16-Aug-2012.
Tugal Pit
27
Discovery-fuelled Organic Growth
27
$9-10 million
$10-12 million
$6-7 million
Capital Expenditure(PP&E)
Capital Development
Capitalized Exploration
1.3 million
2.9 million
2.8 - 3.1 million
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
2011 2012 2013E
Silver (oz)
12,244
17,089
18,000- 21,000
0
5,000
10,000
15,000
20,000
25,000
2011 2012 2013E
Gold (oz)
6,678
18,036
20,000– 25,000
0
5,000
10,000
15,000
20,000
25,000
2011 2012 2013E
Gold (oz)
0
200
400
600
2010 2011 2012
Cu (cont. lbs MM)
Significant M&I Resource Growth (1,2,3)
1 Source: Roscoe Postle Associates, March 2013, documented in an independent NI 43-101 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 43-101 report filed March 28, 2013
3 Source: La Quebrada Independent Technical Report, filed Aug 16, 2012.
Average guidance range graphed for 2013E
Costerfield Budget and Production (2013E)
Cerro Bayo Budget and Production (2013E)
$7-8 million
$4.5-5.5 million
$3.5-4.5 million
Capital Expenditure(PP&E)
Capital Development
Capitalized Exploration
1,576
2,481
2,800 – 3,000
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2011 2012 2013E
Antimony (Sb)
0
10,000,000
20,000,000
30,000,000
40,000,000
2010 2011 2012
Ag (cont. oz)
0
100,000
200,000
300,000
400,000
2010 2011 2012
Au (cont. oz)
0
10,000
20,000
30,000
2010 2011 2012
Sb (cont. t)
28
Peer Comparison
28
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 $1,578.00
2012 Production 2012 Financials
Ag
(oz)
Au
(oz)
Other Ag Eq.
(Au + Ag) (oz)
Revenue
(US$MM)
EBITDA
(US$MM)
EBITDA Margin
(%)
Mandalay Resources 2,911,595 35,125 2,481 t Sb 4,828,166 171.8 79.9 46.5
Endeavour Silver 4,485,426 38,687 - 6,595,355 208.1 89.8 43.2
Silver Standard 8,350,000 0 5,600 t Zn 8,350,000 241.1 54.6 22.6
Fortuna Silver 3,987,757 20,699 20,100 t Pb+Zn 5,117,183 161.0 70.7 43.9
Aurcana 1,388,664 0 7,000 t Cu+Pb+Zn 1,388,664 45.9 14.3 31.2
1H 2013A Production 1H 2013A Financials
Ag
(oz)
Au
(oz)
Other Ag Eq.
(Au + Ag) (oz)
Revenue
(US$MM)
EBITDA
(US$MM)
EBITDA Margin
(%)
Mandalay Resources 1,533,336 23,681 1,504 t Sb 2,825,474 77.5 30.8 39.7
Endeavour Silver 3,025,590 34,946 - 4,932,395 141.1 47.6 33.7
Silver Standard 3,907,000 - 4,042 t Zn 3,907,000 81.7 (199.9) -
Fortuna Silver 2,066,225 9,675 9,682 t Pb+Zn 2,594,135 70.8 21.8 30.8
Aurcana 661,764 - 4,636 t Cu+Pb+Zn 661,764 24.1 4.0 16.5
29
Mandalay Compares Favourably to its Peers
29
0
50
100
150
200
250
300
350
400
P+P Reserve GradeFully Diluted Ag Eq (g/t)
Mandalay
Endeavour
Silver Standard
Fortuna
Aurcana
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
EBITDA Margin (at $21/oz Ag)
$0
$2
$4
$6
$8
$10
$12
$14
$16
Fully Loaded 1H 2013Cash Cost/Ag Eq oz
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
Market Cap per 2013EAg Eq Production (oz)
0
5
10
15
20
25
30
TEV/EBITDA Multiple($21/oz Ag)
$0
$2
$4
$6
$8
$10
$12
$14
Market Cap per P+PReserves (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 $1,578.00
Highest grade reserves
(Ag Eq oz)
Highest EBITDA
margin
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
30
Highlights and Catalysts
30
Cerro Bayo
Ramp up to 1,400 tpd on track for Q1 2014
5 owned rigs drilling now – resource and reserve update in Q1 2014
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 Q4 2013
• Growing resources at Cuffley lode and Augusta extensions with 3 rigs
• Resource and reserve update in Q1 2014 (converting Cuffley M&I to P&P)
Continuing district exploration for longer mine life
La Quebrada
Infill drilling completed; indicated NI 43-101 Resource filed August 2012
Metallurgical and engineering studies
District consolidation
31
Summary
31
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
Appendices
32
TSX: MND
For more information, please contact:
Greg DiTomaso
Tel: 647.260.1566
Email: [email protected]
Company Website: www.mandalayresources.com
Twitter: @MandalayAuAg
33
Mandalay Reserves
33
Cerro Bayo Reserves (1) Ore
(t)
Ag Grade
(g/t)
Ag
(cont. oz)
Au Grade
(g/t)
Au
(cont. oz)
Proven Reserves 420,000 356 4,803,000 2.2 30,000
Probable Reserves 1,934,000 216 13,447,000 2.1 133,000
P&P Reserves 2,354,000 241 18,250,000 2.2 163,000
Costerfield Reserves (2) Ore
(t)
Sb Grade
(%)
Sb
(cont. t)
Au Grade
(g/t)
Au
(cont. oz)
Proven Reserves 48,000 6.5 3,100 11.0 17,000
Probable Reserves 130,000 3.2 4,100 8.1 34,000
P&P Reserves 178,000 4.1 7,200 8.9 51,000
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 13,447,000 167,000 4,100
Mandalay P&P Reserves 18,250,000 214,000 7,200
Numbers may differ slightly from Source documents due to rounding
1 Source: Roscoe Postle Associates, March 2013, documented in an independent NI 43-101 report filed March 28, 2013
2 Source: SRK Consulting (Australia), March 2013, documented in an independent NI 43-101 report filed March 28, 2013
34
Mandalay Resources
34 3 Source: La Quebrada Independent Technical Report filed Aug 16, 2012.
Numbers may not add due to rounding
Cerro Bayo Resources (1) Resource
(t)
Ag Grade
(g/t)
Ag
(cont. oz)
Au Grade
(g/t)
Au
(cont. oz)
Measured Resources 327,000 525 5,521,000 3.2 33,000
Indicated Resources 1,562,000 334 16,754,000 3.2 160,000
M&I Resources 1,889,000 367 22,275,000 3.2 194,000
Inferred Resources 452,000 201 2,922,000 2.4 35,000
Costerfield Resources (2) Resource
(t) Sb Grade
(%)
Sb
(cont. t)
Au Grade
(g/t)
Au
(cont. oz)
Measured Resources 184,000 4.3% 8,000 7.1 42,000
Indicated Resources 534,000 3.7% 20,000 11.1 190,000
M&I Resources 718,000 3.9% 28,000 10.1 232,000
Inferred Resources 680,000 2.6% 18,000 6.4 140,000
La Quebrada Resources (3) Resource
(t) Cu Grade
(%)
Cu
(cont. lb)
Ag Grade
(g/t)
Ag
(cont. oz)
Measured Resources 0 0 0 0 0
Indicated Resources 34,800,000 0.6% 459,360,000 10 11,200,000
M&I Resources 34,800,000 0.6% 459,360,000 10 11,200,000
Inferred Resources 1,000,000 0.6% 13,200,000 11 354,000
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 27,954,000 350,000 20,000 459,360,000
M&I Resources 33,475,000 425,000 28,000 459,360,000
Inferred Resources 3,276,000 175,000 18,000 13,200,000
1 Source: Roscoe Postle Associates, March 2013, documented in an independent NI 43-101 report filed March 28, 2013
2 Source: SRK Consulting (Australia), September 10, 2013, documented in an independent NI 43-101 report to be filed within 45 days of September 10, 2013
35
Safety, Health, Environment and Community
35
Safety & Health Environment & Community Employees
ACTIONS
• 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
Metal Price Update
36
37
Cuffley decline
progress to
July 31, 2013
Intercepts extending
limits of mineralization
10 m levels with good
grades extending out
into inferred and
undrilled areas
38
Cuffley decline
progress to
July 31, 2013
New intercepts confirm
mineralization between
unnamed flat fault and
King Cobra fault; not
yet inferred
Enlarged volume of
Indicated Resource
Antimony Facts
39
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
Gold Equivalent Ounces Calculation
40
***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 www.metalbulletin.com. 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 $1,578.00