September 2020 Corporate Presentation
- 2. 2 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 presentation can be found under the heading “Risk Factors” in Mandalay’s annual information form dated March 30, 2020, a copy of which is available under Mandalay’s profile at www.sedar.com. 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 programs at Mandalay’s properties are supervised by Chris Davis, Vice President of Operational Geology and Exploration at Mandalay Resources, is a Charted Professional of the Australian Institute of Mining and Metallurgy (MAusIMM CP(Geo)), and a Qualified Person as defined by NI 43-101. He has reviewed and approved the technical and scientific information provided in this presentation. Mr. Davis regularly visits Mandalay’s properties, and supervises the collection and interpretation of scientific and technical information contained in this presentation. Mr. Davis has visited Costerfield and Björkdal and has supervised the preparation of this presentation. All currency references in US$ unless otherwise indicated. Forward-looking Statements
- 3. MANDALAY PORTFOLIO AT A GLANCE 3 Costerfield: Major Production Uplift From High-Grade Youle Vein • Production initiated high-grade Youle vein • Continual uplift in production over the next 12 months • H1 2020 production: 28,429 AuEq oz – 20,973 Au oz and 2,054 Sb t • H1 2020 cash costs and AISC: $604 per AuEq oz and $935 per AuEq oz • Excellent high-grade exploration potential Björkdal: Ramping-up Underground Production • H1 2020 production: 22,000 Au oz • H1 2020 cash costs and AISC: $1,065 per Au oz and $1,490 per Au oz • Exploration breakthrough of Aurora zone opening significant production and exploration potential TWO PRODUCING ASSETS WITH ORGANIC GROWTH POTENTIAL AND EXPLORATION UPSIDE Non-Core Properties • Cerro Bayo (care and maintenance) o Definitive option agreement signed with Equus Mining • Challacollo (feasibility-stage project) o Definitive sale agreement signed with Aftermath Silver 1. Assumes metal prices of Au $1,478/oz, Sb $5,931/t Consolidated H1 2020 Performance • H1 2020 production: 50,429 AuEq oz • H1 2020 cash costs and AISC: $867 per AuEq oz and $1,244 per AuEq oz
- 4. SIGNIFICANT IMPROVEMENTS IN 2020 4 ESTABLISHING SUSTAINABLE CASHFLOWS TO FUND ORGANIC GROWTH OPPORTUNITIES 1. Adjusted EBITDA is a non-IFRS performance measures and does not include intercompany transfer pricing recharge costs. Please refer to the Company’s financial statements for further details $- $5,000 $10,000 $15,000 $20,000 $25,000 Q3 Q4 Q1 Q2 2019 2020 USD$('000) Adjusted EBITDA(1) Costerfield Björkdal Consolidated $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 0 5,000 10,000 15,000 20,000 25,000 30,000 Q3 Q4 Q1 Q2 2020 USD$/oz ProductionAuEqoz Production and Cash Costs Performance Costerfield Production Björkdal Production Costerfield Cash Cost Björkdal Cash Cost All-time record in quarterly adjusted EBITDA at Costerfield
- 5. 5 COVID-19 PANDEMIC AND MANAGEMENT CONTROLS SAFE PRODUCTION AND SAFE WORKING CONDITIONS Priority remains the health and safety of our employees, contractors and the communities in which we operate. Our management teams have taken comprehensive measures to reinforce safe work procedures and business continuity plans are in place with site-specific contingency considerations, should they be needed. Mandalay will continue monitoring information from governments and health organizations. The following protocols are in place at our operations: • Surveyed workforce to identify at high-risk employees; • Established clear policies for any workers displaying signs of illness. Employees or contractors cannot come to work if displaying any symptoms; • Intermittent on-site temperature checks; • Where possible, employees to work from home, and flexible work arrangements are in place to reduce contact between persons and maintain social distancing guidelines; • Sites have reviewed hygiene and sanitization protocols and increased frequency in cleaning of common and high-traffic zones. Additional hand washing stations installed; • Implementing risk management processes for crew shift changes to ensure social distancing protocols and reduction in movement of employees between crews; and • Restricting visitors to essential visitors only.
- 6. 6 2020 PRODUCTION AND COST GUIDANCE SIGNIFICANT ORGANIC PRODUCTION GROWTH AT COSTERFIELD • Costerfield: High-grade Youle vein continuing to ramp-up production through 2020, leading into further increased production in 2021 • Björkdal: Steady ramp-up from the Aurora zone as more levels are developed and stoping is increased 1. Assumes metal prices of: $1,478/oz, Sb $5,931/t. Consolidated costs per Au Eq. oz includes corporate overhead spending and total care and maintenance costs at Cerro Bayo 2. Cash and all-in sustaining costs are a non-IFRS measure 3. Consolidated all-in sustaining cost guidance includes expected corporate overhead spending and care and maintenance costs 4. Capital expenditures includes exploration at Björkdal and Costerfield; consolidated cost guidance includes expected Corporate G&A Costerfield Björkdal Consolidated Production Gold (oz) 32,000 – 38,000 51,000 – 57,000 83,000 – 95,000 Antimony (t) 3,000 – 3,500 - 3,000 – 3,500 Gold Equivalent (oz)(1) 44,000 – 52,000 51,000 – 57,000 95,000 – 109,000 Cash Costs ($USD/oz)(2) $725 – $875 $750 – $900 $765 – $915 All-in sustaining Costs ($USD/oz)(2,3) $1,010 – $1,220 $1,110 – $1,340 $1,090 – $1,360 Capital Expenditures ($M)(4) $17M – $21M $22M – $27M $39M – $48M
- 7. 7 STRONGER BALANCE SHEET VIA SYNDICATED US$65M CREDIT FACILITY PROVIDING SHORT TERM FINANCIAL FLEXIBILITY AND LONG TERM BALANCE SHEET MANAGEMENT Three Year Term • Entered into a Syndicated Facility with HSBC Bank Canada and Macquarie Bank Limited on March 16, 2020 • Use of proceeds: repaying the pre-existing HSBC Revolver Facility, repurchasing or redeeming Gold Bonds, general corporate and working capital purposes Hedging Programs • Commencing in July 2020, a total of 150,000 ounces of saleable gold or 50,000 ounces per year for three years is hedged: o A zero-cost collar hedge for 75,000 ounces of saleable gold with a floor price of US$1,550 per ounce and a ceiling of US$1,617 per ounce; and o Australian dollar gold forward contract for the remaining 75,000 ounces of salable gold at AU$2,390 per ounce Gold Bonds for Cancellation • Entered into a bond purchase agreement with a holder of a significant portion of the outstanding Gold Bonds to which Mandalay has purchased for cancellation • As a result of the above, under the agreements relating to the Gold Bonds, Mandalay has exercised its rights and redeemed all remaining Gold Bonds
- 8. 8 COSTERFIELD MINE Snapshot Land package 1,293 hectares Product Gold and Antimony Mining Method Long-hole stoping with cemented rock fill Life of Mine 3 - 4 years Processing Capacity 140,000 tonnes per annum Q1 2020 Production/ Q2 2020 Production 10,620 Au oz & 1,108 Sb t/ 10,353 Au oz & 946 Sb t 2019 Production 15,258 Au oz & 2,032 Sb t Q1 2020 Cash Cost/ AISC $577 per AuEq. Oz/ $854 per AuEq. Oz Q2 2020 Cash Cost/ AISC $662 per AuEq. Oz/ $1,025 per AuEq. Oz P&P Reserves(1) 474,000 t @ 13.4 g/t Au, 3.8% Sb for 204,000 Au oz and 17,800 Sb t VICTORIA, AUSTRALIA 1. SRK Consulting (Australia), Effective December 31, 2019, documented in an independent NI 43-101 Technical Report filed on March 30, 2020
- 9. 9 COSTERFIELD: THE PATH FORWARD DELIVERING ON PRODUCTION UPLIFT AND A FOCUSED EXPLORATION PROGRAM Deep Hole DrillingRamping up Youle Exploring High Potential Targets • Development and production from Youle top priority to significantly increase processed grade • First programmed holes completed under Youle vein • Program has recommenced with the second hole targeting underneath Cuffley/Augusta veining • Drill several highly prospective targets from surface including: Extension of Youle, the Damper Gully, True Blue, and Brown’s & Robinson’s areas Please view our June 2020 Exploration video
- 10. 10 THE YOULE LODE: DRIVING FUTURE SUCCESS MAJOR PRODUCTION INCREASES EXPECTED FROM YOULE RAMP UP • Youle vein lies within the North-South trend also containing August and Cuffley veins • Drilling has allowed for a high-grade reserve to be formed around Youle which is still open to the North and at depth • Currently developing on multiple levels with first stoping commenced in late June 2020 • Extensional exploration 2020 has intercepted high grade veining to the North of the current mine design Mineral Reserves at Costerfield (as of Dec. 31, 2019) Category Tonnes (kt) Au Grade (g/t) Sb Grade (%) Cont. Au (koz) Cont. Sb (kt) Proven 114 9.5 4.8 35 5.4 Probable 360 14.6 3.4 169 12.4 P+P 474 13.4 3.8 204 17.8 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 76 8.4 4.0 20 3.1 Probable 461 10.8 3.1 160 14.2 P+P 537 10.4 3.2 180 17.2 Sources: 2018 Reserves: SRK Consulting (Australia), Effective December 1, 2018, documented in an independent NI 43-101 Technical Report filed on February 6, 2019. 2019 Reserves SRK Consulting (Australia), Effective December 31, 2019, documented in an independent NI 43-101 Technical Report filed on March 30, 2020 Area mined: 2009 - 2018 Areas currently mining Youle
- 11. 11 YOULE LONG SECTION DRILL INTERCEPTS ON YOULE DEMONSTRATING CONTINUITY OF HIGH-GRADE Currently known mineralized shoot: Approx. 600 m strike Approx. 250 m down dip High-grade continuous core defined by multiple intercepts over 50 g/t AuEq over 1.8 m minimum mining width The high-grade Youle ore body extends to the north with substantial grades intercepted: • 21.7 g/t gold and 1.7% antimony over a true width of 1.23 m in BC099; and • 44.3 g/t gold and 26.3% antimony over a true width of 1.07 m in BC100
- 12. 12 DEEP DRILLING AT COSTERFIELD FOSTERVILLE AND COSTERFIELD ARE FUNDAMENTALLY SIMILAR IN MINERAL SOURCE, FLUID COMPOSITION, FLUID TRANSPORTATION SYSTEM AND FLUID TRAP ENVIRONMENT Fosterville Costerfield 30 km Fosterville Deposits Costerfield Deposits Could there be similar style gold mineralisation at Costerfield? • 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-grade (Swan zone) environment • Mandalay has intercepted mineralisation in the sub King Cobra drilling with 2 of 4 historical intercepts returning high gold grades supporting the analogy
- 13. 13 TARGETING A POTENTIALLY HIGH-GRADE ENVIRONMENT DEEP HOLE DRILLING PROGRAM TO TEST FOR HIGH-GRADE MINERALIZATION AT DEPTH 2014: • Previously intersected a high- grade mineralized vein with two deep holes drilled under Cuffley vein 2019: • Began deep hole program with first deep hole under Youle vein (completed) 2020: • Second deep hole under Cuffley/Augusta vein commenced in late March 2020 CSK007: 0.08 m @ 1,361 g/t Au and CSK012: 0.19m @ 345 g/t Au
- 14. 14 DEEP DRILLING AT COSTERFIELD DRILLING PROGRAM ADVANCING STRATIGRAPHY KNOWLEDGE OF THE COSTERFIELD DISTRICT • First deep drill hole: CD001 completed at 1,700 m with a wedge hole (CD001W1) covering ground above the initial hole targeting an inferred anticline to the east. • The predicted anticline was found to be in a truncated state exhibiting pervasive alteration and some quartz stockwork veining. • Whilst interpreted to be the feeder zone for fluids enriching Youle veining, the altered zone was not itself enriched. • This information has been incorporated into the deeps targeting geological model for definition of the next hole. • CD002 commenced in March 2020 targeting the same fluid corridor under Cuffley. 972 m 1,007 m Strong Alteration and Stockwork Veining 1,023 m CD001W1 King Cobra Fault Alteration Zone
- 15. 15 COSTERFIELD REGIONAL TESTING EARLY SUCCESS OF THE BROWN’S PROSPECT DRILLING PROGRAM Brown’s drilling program still underway: • Two out of five holes completed (total of 623 m has been drilled of the 1,200 m program) • First drill hole intercepted 14.51 g/t Au, over 1.27 m (true width) in diamond drill hole BWN001 • BWN001 & BWN002 were drilled below the historic Felix Brown mine • Indications suggest that current intercepts are high in the system
- 16. EXCITING DISTRICT POTENTIAL Potential Endowment • Testing 2 Mineralized and Underexplored corridors Current/Historical Mining Corridor
- 17. 17 BJÖRKDAL MINE Snapshot Land package 12,949 hectares Product Gold Mining Method Longhole open stoping Life of Mine 10+ years Processing Capacity 1.3 million tonnes per annum Q1 2020 Production/ Q2 2020 Production 10,750 Au oz/ 11,250 Au oz 2019 Production 51,498 Au oz Q1 2020 Cash Cost/ AISC $1,052 per Au oz/ $1,479 per Au oz Q2 2020 Cash Cost/ AISC $1,078 per oz/ $1,500 per Au oz P&P Reserves(1) 11.1 mt @ 1.54 g/t Au for 548,000 Au oz SKELLEFTEÅ, SWEDEN 1. Roscoe Postle Associates, Effective December 31, 2019, documented in an independent NI 43-101 Technical Report filed on March 30, 2020
- 18. 18 BJÖRKDAL: THE PATH FORWARD RAMPING UP UNDERGROUND PRODUCTION AND DELINEATING THE AURORA ZONE Mining selectivityRamping up Underground and Stockpile Production Exploring High Potential Targets • Ramp-up underground tonnage in 2020 to 1Mtpa • Supplement underground material with stockpiled low-grade ore (approx. 0.64 g/t Au) for total processing capacity of 1.3Mtpa • Increase Aurora’s contribution to overall mill feed o Increase development at Aurora and stoping ramp-up over 2020 • Supplement feed with high- grade skarn production • Extend the mineralisation of Aurora zone. Currently open to extension laterally and horizontally, with focus on high-grade at depth • Test extension of the Lake Zone skarn deposit • Extension drilling to North of Aurora Please view our June 2020 Exploration video
- 19. 19 AURORA ZONE STEERING UNDERGROUND RAMP UP AURORA ZONE PROVIDES THE POTENTIAL TO MINE HIGH-TONNAGE AND HIGHER-GRADES MORE COST EFFECTIVELY • Aurora zone significantly wider and consistently higher-grade than current mill feed • Currently known mineralization over 500 m horizontally and 400 m vertically • Aurora zone readily accessible; six levels currently being developed • Large step-out drilling occurring below and East and West of currently known mineralization • Preliminary processing results show no challenges for gold recoveries • Stoping has been initiated on first level Aurora Zone and the Northern target test drilling in relation to mine development
- 20. 20 UNCONSTRAINED ABOVE THE MARBLE MINERALIZATION EXTENDING HUNDREDS OF METRES ABOVE THE MARBLE CONTACT Marble contact Unexplored and an area of focus for the exploration program Mineralized zone: historically thought to be constrained by marble
- 21. 21 AURORA ZONE & PRELIMINARY RESERVES MINERALIZATION OPEN IN ALL DIRECTIONS • Underground drilling campaign focused on extending existing Aurora zone • Drill results demonstrated potential for Aurora to extend both up and down dip along strike in both directions • High grade mineralization continuity has been confirmed at depth and to the east in early 2020 Preliminary Mineral Resource and Reserve added for Aurora in Feb 2019(1) • Probable Reserves added: 920kt @ 2.34 g/t Au for 69,000 Au oz • Indicated Resources(2) added: 765kt @ 3.16 g/t Au for 78,000 Au oz • Inferred Resources added: 206kt @ 3.37 g/t Au 22,000 Au oz (1) Source: Roscoe Postle Associates, Effective December 31, 2018, documented in an independent NI 43-101 Technical Report filed March 28, 2019 (2) Mineral Resources are inclusive of Mineral Reserves
- 22. 22 NON-CORE PROPERTIES: CHILEAN ASSETS REALIZING VALUE FROM NON-CORE ASSETS Cerro Bayo Silver-Gold Mine • Operations remain on care and maintenance • Executed option to purchase agreement with Equus Mining (Oct 2019) for 36- month period starting from earlier date of when Equus receives all permits and approvals for exploration drilling or 6 months from signing Land package 23,106 hectares Ownership 100% P&P Reserves(1) 856,000 t @ 284 g/t Ag for 7.8M Ag and 2.34 g/t Au for 64,000 Au oz 2016 Production 13,792 oz Au, 1,731,031 oz Ag Challacollo Silver-Gold Project • Signed definitive agreement with Aftermath Silver for sale of project, total consideration of CAD$10.5M (including a 3% royalty on concessions valued at CAD$3M) • Aftermath Silver’s management team has significant industry experience and complementary skillsets that Mandalay believes are necessary to create additional value for a development project such as Challacollo Land package 20,378 hectares Ownership 100% Location 130 km SE of Iquique, Northern Chile Indicated Resource 4.7 Mt @ 200 g/t Ag for 30M Ag oz and 0.32 g/t Au for 48,000 oz (1) Source: Current Mineral Reserves number depleted for 2017 production and Reserves sterilized by inundation at Delia NW. Depletion taken from Reserve position contained in NI 43-101 Technical Report prepared by Roscoe Postle Associates, Effective December 31, 2016 filed on SEDAR March 31, 2017
- 23. CE Mining 25% GMT Capital 20% Ruffer LLP 17% AzValor 11% West Face 5% Others 22% 23 MARKET INFORMATION Capital Structure Share price (CAD$)(1) $1.84/shr Shares Outstanding (M) 91.2 Fully Diluted Shares Outstanding (M)(2) 94.0 Market Capitalization (CAD$M) $167.8 Cash and Cash Equivalents (USD$M)(4) $20.9 Total Interest-Bearing Debt (USD$M)(4) $69.0 Enterprise Value (US$M)(3,4) $174.0 Major Shareholders(6) Shares (M) CE Mining 23.2 GMT Capital 18.0 Ruffer LLP 15.3 AzValor 10.5 West Face 4.2 Large Holders (Top 5) 71.2 Other Holders 19.9 TOTAL 91.1 1. As at Sept 09, 2020 2. Includes: 0.8M RSU and 1.97M employee stock options with exercise prices of: CAD$0.61 – CAD$9.10 and expiry dates from Mar 23, 2021 – Jun 30, 2027. 3. Using exchange rate of CAD$1 = USD$0.75 4. From Mandalay’s Financial Statements as of June 30, 2020 5. Ownership positions are estimates - as at Aug 2020 Note: numbers may be rounded Analyst Coverage BMO Capital Markets Brian Quast Mackie Research Capital Stuart McDougall
- 24. 24 INVESTMENT HIGHLIGHTS COSTERFIELD: HIGH-GRADE YOULE VEIN THE MAJOR GROWTH CATALYST BJÖRKDAL: RAMPING UP UNDERGROUND PRODUCTION, FOCUSING ON HIGHER-CASH MARGIN ORE High-Potential Exploration Upside Major Production Uplift / Stable operations Fully-Funded • Growing production from 81,568 oz gold equivalent in 2018 to 95 – 109,000 AuEq oz in 2020 • Costerfield: significant production growth expected via Youle vein • Björkdal: Focusing on profitability. Increasing underground production with higher-grade ore from Aurora zone • Continuing regional exploration programs on known targets; seeking repetition of mineralization Costerfield: • Deep hole drilling below Youle and Cuffley • Testing shallow targets around old-workings • Untested targets focus in 2020 Björkdal: • Extensional drilling at Aurora • Defining mineralization and assessing economics of the high-grade skarn deposit • Cash position of $20.9M as at Q2 2020 affords Mandalay with the financial flexibility to continue funding its exploration programs and sets the Company up for future profitability and growth
- 25. 25 A VALUES-BASED AND VALUE-FOCUSED COMPANY 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 WE ARE SUCCESSFUL WHEN:
- 26. 26 MANAGEMENT AND BOARD OF DIRECTORS SENIOR MANAGEMENT Dominic Duffy President, Chief Executive Officer & Director Nick Dwyer Chief Financial Officer Belinda Labatte Chief Development Officer Toni Streczynski Vice President, Processing & Metallurgy Chris Davis Vice President, Operational Geology & Exploration Bradford A. Mills Chairman Braam Jonker Lead Independent Director Rob Doyle Director Peter R. Jones Director Amy Freedman Director Terry Ackerman Director BOARD OF DIRECTORS
- 27. Edison Nguyen 647 260 1566 [email protected] www.mandalayresources.com Twitter: @MandalayAuAg TSX:MND OTCQB:MNDJF