delivering value, earnings and growth in 2012...dr. mark sander (member: ausimm), chief operating...
TRANSCRIPT
Delivering Value, Earnings and Growth in 2012
April 2012
TSX: MND, MND.WT
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This presentation contains "forward-looking statements" within the meaning of applicable securities laws, including statements relating to life ofmine production plans and exploration plans and the growth and strategy of Mandalay. Readers are cautioned not to place undue reliance onforward-looking statements. Actual results and developments may differ materially from those contemplated by these statements dependingon, among other things, that exploration results at Cerro Bayo, Costerfield, and La Quebrada may not meet management’s expectations, thatCerro Bayo and Costerfield capital, production and operating cost results may not meet current plans, that reclamation costs associated withMandalay’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 hasattempted 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 canbe no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially fromthose anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.
Quality control and assuranceQuality 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 CharteredProfessional (Mining)), General Manager of Australasian Business Development for Mandalay and a Qualified Person as defined under NationalInstrument 43-101. Mr. Gregory regularly visits Costerfield, supervises the collection and interpretation of scientific and technical informationcontained in this presentation, and has reviewed and approved the presentation itself.
The exploration programs on the Cerro Bayo and La Quebrada projects are supervised by Ronald Luethe (Member: American Institute ofProfessional Geologists and an Idaho Registered Professional Geologist), General Manager of Mandalay Chile Ltda. and a Qualified Person asdefined under National Instrument 43-101. Mr. Luethe visits the Cerro Bayo and La Quebrada projects often, supervises the collection andinterpretation of scientific and technical information contained in this presentation, and has reviewed and approved the presentation itself.
Dr. Mark Sander (Member: AusIMM), Chief Operating Officer of Mandalay, has visited the Costerfield, Cerro Bayo, and La Quebrada projectsseveral times during 2010 and 2011 and has supervised the preparation of this presentation.
Forward-looking statements
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Strategy: Build a portfolio of high quality producing assets with excellent exploration potential
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What differentiates Mandalay is the discipline we bring to implementing the following principles:
Acquisition focus – Superior unrecognized upside potentialExplorationMetallurgyOperational efficienciesFinancial restructure/recapitalization
Low Cost Entry PointAcquire assets at a low cost relative to the ultimate value we believe the project may achieve as a result of good operational implementation & exploration successUse a combination of cash, equity, & debt to reduce dilution & leverage equity returns
Cash FlowFocus on early cash flow from high margin depositsReinvest cash in exploration, development, and operational improvementsDeleverage as rapidly as possible
Returning Cash to ShareholdersNCIB
Growing reserves and resources
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1 Source: Roscoe Postle Associates, February 2012, documented in an independent NI 43-101 report filed 30-Mar-2012.
2 Source: Snowden Group, February 2012, documented in an independent NI 43-101 report filed 30-Mar-2012.
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1,000
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9,000
10,000
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50,000
100,000
150,000
200,000
250,000
300,000
2010 Total 2011 Total 2012 Est
t Sb
Oz
Au
, Oz
Au
Eq.
, Oz
Ag/
10
0Mandalay production
Gold Silver Au Eq. Antimony/100
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Growing production from acquired assets
Ounces Au Equivalent production (oz Au Eq) is calculated by dividing total revenue in the period by the average LME (PM) gold price in the period
Growing revenue and EBITDA
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‐20.0
0.0
20.0
40.0
60.0
80.0
100.0
Q4‐09 2010 2011
$ Million
GROWING REVENUE AND EBITDA
Revenue EBITDA
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Tailings Mill
LAGUNA VERDE
DELIA NWFABIOLADAGNY
CoyitaDalila
YASNA
Cerro Bayo: Laguna Verde area
Producing Mine or Planned mine (Vein Outcrop) Exploration Vein
BIANCA
Q4, 2011
Trinidad
DELIA SE.
Lucia
Delia to Dagny
Yasna to Coyita
Gabriela
Coigues
Coigues Hill
Discoveries
Laguna Verde: NE-SW cross section
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Delia FabiolaDalilaBianca
Dagny YasnaCoyita
Abundant economic veins at or near rhyolite-dacite contact
All are blind; no outcropping ore
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Cerro Bayo District: Target rich land package
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NI43-101 Reserve-Resource veins2012 Infill and Step-Out Drilling
2012 New infill from 2011 Blue Sky successes2012 Scheduled Blue Sky drill targets 2012- Field work to prep for 2013 drilling
Lucia
ChatitoSb Anomaly
Roadside
Brillantes
Cerro Viento
AquilaSinter Hill
Laguna Verde
Coigues
Marisol Area
High level, Madre-Aquila-Meseta
Cerro Bayo
Guanaco
Esperanza
Sb Anomaly
MarcelaRoadside
Cerro Viento
Brillantes
1010
Fabiola vein: More ore found than expected SURFACE
30 m BELOW IN MINE
Approx. 1 m
Cerro Bayo operating performance
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Cerro Bayo operating plan 2011 – 2012
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Cerro Bayo Plan 2011 Act. 2012 Est.Saleable Gold Produced (oz) 6,678 12,000 – 16,000
Saleable Silver Produced (oz) 1,318,655 2,700,000 – 3,000,000
Operating Costs (US$ m) 25.1 35 – 39
Concentrate Shipping & Treatment (US$ m) 6.3 8-10
Cash Cost/oz Ag net Au Credit 14.29 7.00 – 9.00
Capital Expenditure – PP&E (US$ m) 3.4 7-8
Capital Development (US$ m) 9.3 9-10
Capitalized Exploration (US$ m) 5.7 10-11
Cerro Bayo beyond 2012
4th mine permitted and built – opportunity to grow production to 1,600 tpd
Drilling in 12 major district exploration areas, rapidly expanding reserves
Flotation automation improves recovery and cost
Low cost with expanding production
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Costerfield project location
Costerfield district exploration potential
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Costerfield exploration success
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Cuffley (Alison)
N-lode
W-lode
Successes to date:Multiple Cuffley intercepts
• Up to 1 m thick• High-grade
Multiple N-Lode interceptsInfill W-lode at depth
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Cuffley deposit
N
W
Cuffley Lode
Drill Holes
Old Alison Mine
Offset Fault
The old Alison lode structures are offset by a flat fault by approximately 40 m
Offset theorized and tested by Mandalay geologist Brian Cuffley
Costerfield performance
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Costerfield production plan 2011-2012
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Costerfield Plan 2011 Act. 2012 Est.Saleable Gold Produced (oz) 12,244 14,000 – 18,000
Saleable Antimony Produced (t) 1,576 1,800 – 2,200
Operating Costs (US$ m) 29.6 30 – 35
Concentrate Shipping and Treatment (US$ m) 1.0 1.0 – 1.5
Cash Cost/ oz Au Equiv. (US$) 1,117 1,000 – 1,200
Capital Expenditure- PP&E (US$ m) 3.4 8-9
Capital Development (US$ m) 6.1 2-3
Capitalized Exploration (US$ m) 2.8 3-4
Costerfield beyond 2012Cuffley lode development and production
• 2x production from higher grade ore
Continuing district exploration
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Manto outcrop
Casa de Piedra
TugalPit
La Quebrada copper-silver exploration project
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Casa de Piedra: Geology & drill map
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Casa de Piedra: Cross-section B-B’ in-fill drilling during 1H 2012
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Mandalay financials (as at December 31, 2011)
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Revenues, Costs and Capital • Actual 2011 revenue = $92.1 million• Actual operational costs inclusive of overheads = $60.1 million• Actual capital and exploration expenditures = $33.0 million
Balance Sheet• Cash and cash equivalents (December 31, 2011) = $12.7 million• Fair value of Au, Ag puts (December 31, 2011) = $16.2 million• Total debt (December 31, 2011) = $10.3 million
• Coeur silver loan will be paid back on time by Q4, 2012• Company intends to pay the Sprott loan off early at $1 M/mo for 10 mo
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Capital & share structure (31-Jan-2012)
Shares outstanding 270,156,575
Options (1) 13,586,966
Warrants (2) 105,379,312
Shares fully diluted 389,122,853
Major shareholders: Approx. Ownership (basic) Shares Owned
West Face Capital 43.26% 116,883,045
Plinian Capital (Mills, Sander, Swarup) 11.61% 31,354,627
Sprott (all) 10.32% 27,885,938
Arcourt (Byrne) 3.90% 10,530,241
Audley Capital and Associates 2.71% 7,333,333
Market price (03-April-2012) CAD$0.76/shr
(1) Exercise price: C$ 0.255 to C$ 0.76; Expiry date: May 9, 2012 to Dec 2, 2016 (2) Exercise price: C$ 0.20 to C$ 0.465; Expiry date: August 6, 2012 to November 30, 2014
Investment highlights for 2012
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A significant and growing producer of gold, silver and antimony from two mines
Cerro Bayo – Developing third mine; full production @ 1,200 tpd in Q4, 2012• Doubled reserves and mine life at year-end 2011 • 8 rigs currently drilling infill, extension, and new targets• 2012 flotation automation project; Delia SE mine permitting
Costerfield – At design production rate of 200 tpd• Augusta mine reserves replaced in 2011; new resource at Cuffley (Alison) lode• 3 rigs on site defining Cuffley lode and Augusta lode extensions• Successful introduction of cemented rock fill methods; 24:7 ore production
La Quebrada – Infill drilling for inferred resource in 1H, 2012
Price protection program in place for 2012: 75.7% of silver production guaranteed at $31.14/ounce, and 70.1% of gold production guaranteed at $1,400/ounce
2011 Production 2012E Forecast Production
Gold (oz) 18,922 26,000 – 34,000
Silver (oz) 1,318,665 2,700,000 – 3,000,000
Antimony (t) 1,576 1,800 – 2,200
2012 goals:
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• Complete the ramp-up of the Delia NW mine, achieving total sustained production of 1,200 t/day by Q4, delivering an annual rate of 30,000 oz Au and 3-4 million oz Ag
• Install and commission the flotation automation project for higher recovery
• Repeat the significant increase in mineable reserves delivered in 2011
• Drill test at least the five best blue-sky targets and generate new targets
• La Quebrada – Infill drill Casa de Piedra and deliver NI 43-101 inferred resource
• Acquire at least one new high quality project to the portfolio
Cerro Bayo Costerfield Portfolio
• Continue decline and development to lower levels in Augusta
• Continually refine CRF stoping method for higher productivity and lower cost
• Mine and mill average 6,000 tpm ore
• Thoroughly drill test Cuffley lode and deliver Preliminary Economic Analysis
• Continue Augusta Deeps drill exploration from underground, focus on W and N-lode
Investment advantagesBig company
experience with the agility of a junior
• Management team with excellent track record in acquisition, discovery, development and production of natural resources
• Small, close-knit, disciplined team makes rapid decisions
In production –generating cash flow
from diversified portfolio• Company is
– Multi-mine – Multi-jurisdictional– Multi-metals – Au, Ag, Sb, Cu– Multi-customer
• 100% owned properties
• Costerfield & Cerro Bayo on self-funded growth plans
• Substantial free cash flow– Zero debt by end 2012 – Returning cash – NCIB
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• Cash flowing company, with access to projects and strong institutional support
• Quantum jump in critical mass with Cerro Bayo
• Aggressive exploration on near-mine targets for reserve expansions
• Capability and capacity for the next acquisition
Opportunity to invest at the right time
Appendices
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TSX: MND, MND.WT
For more information, please contact:
Greg DiTomasoTel: 647.260.1566Email: [email protected] Website: www.mandalayresources.com
Management and Board of DirectorsBrad Mills, CEOFormer CEO Lonmin plc, over 30 years of experience in Copper, Gold, PGMs
Sanjay Swarup, CFOFormer Lonmin plc, over 20 years of industry experience
Mark Sander, COO 27 years of experience in exploration, strategy, and operating improvements
Belinda Labatte, Corporate Secretary10 years of experience in the capital markets, former investment banker
Ron Luethe, Country Manager – Chile
Andre Booyzen, GM Costerfield
Dominic Duffy, GM Cerro Bayo
Chris Gregory, GM Corporate Development and Exploration, Australasia
John Hetrick, VP of Human Resources
Toni Stryzinski, VP of Metallurgy and Processing
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Board of DirectorsInterim Chairman:Braam Jonker
Executive Directors:Brad MillsSanjay Swarup
Independent Directors:Robert Doyle Peter R. Jones Tony Griffin
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Mandalay locations and tradeflow
Low political risk100% ownership of all projects & minesDiverse customer base
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Source: www.metalbulletin.com
Metal price history
Mandalay Reserves – Costerfield & Cerro Bayo
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Cerro Bayo Reserves1 Resource (t)
Ag Grade (g/t)
Ag (cont. oz)
Au Grade(g/t)
Au (cont. oz)
Proven Reserves 156,000 341 1,713,000 1.9 10,000
Probable Reserves 1,859,000 238 14,247,000 2.1 125,000
P&P Reserves 2,016,000 246 15,960,000 2.1 135,000
Costerfield Reserves2 Ore (t)
Sb Grade (%)
Sb (cont. t)
Au Grade (g/t)
Au (cont. oz)
Proven Reserves 41,900 7.9 3,300 13.2 18,000
Probable Reserves 46,500 4.0 1,900 6.4 10,000
P&P Reserves 88,400 5.9 5,200 9.6 27,000
TOTAL RESERVES: 31-December-2011
Ag (cont. oz)
Au (cont. oz)
Sb (cont. t)
Mandalay Proven Reserves 1,713,000 28,000 3,300
Mandalay Probable Reserves 14,247,000 133,000 1,900
Mandalay P&P Reserves 15,960,000 161,000 5,200
1 Source: Roscoe Postle Associates, February 2012, documented in an independent NI 43-101 report filed 30-Mar-2012.
2 Source: Snowden Group, February 2012, documented in an independent NI 43-101 report filed 30-Mar-2012.
Numbers have been rounded
Mandalay Resources – Costerfield & Cerro Bayo
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Cerro Bayo Resources1 Resource (t)
Ag Grade (g/t)
Ag (cont. oz)
Au Grade(g/t)
Au (cont. oz)
Measured Resources 121,000 520 2,031,000 2.8 11,000Indicated Resources 1,544,000 355 17,642,000 3.1 153,000M&I Resources 1,666,000 367 19,673,000 3.1 164,000Inferred Resources 682,000 239 5,251,000 2.1 45,000
Costerfield Resources2 Ore (t)
Sb Grade (%)
Sb (cont. t)
Au Grade (g/t)
Au (cont. oz)
Measured Resources 158,400 7.8 12,300 12.9 66,000Indicated Resources 202,700 3.7 7,500 7.1 48,000M&I Resources 361,100 5.5 19,800 9.8 114,000Inferred Resources 373,900 5.6 21,100 12.7 153,000
TOTAL RESOURCES31-December-2011
Ag (cont. oz)
Au (cont. oz)
Sb (cont. t)
Measured Resources 2,031,000 77,000 12,300
Indicated Resources 17,642,000 201,000 7,500
M&I Resources 19,673,000 278,000 19,800
Inferred Resources 5,251,000 198,000 21,100
1 Source: Roscoe Postle Associates, February 2012, documented in an independent NI 43-101 report filed 30-Mar-2012.
2 Source: Snowden Group, February 2012, documented in an independent NI 43-101 report filed 30-Mar-2012.
2011 – 2012 price protection program
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Product Put price (US$)
Q1 2011
Q22011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
2011 Total
2012 Total
Au Puts 1,400 - - - - 7,000 7,000 7,000 7,000 - 28,000% Cover Expected Production
0.00% 0.00% 0.00% 0.00% 76.98% 75.19% 66.01% 64.18% - 70.15%
Ag Puts 25 - - 150,000 150,000 150,000 150,000 150,000 150,000 300,000 600,000
Ag Puts 35 - - - 90,000 300,000 300,000 300,000 300,000 90,000 1,200,000
Ag Puts 30 - - - - 210,000 210,000 210,000 210,000 - 840,000% Cover Expected Production
0.00% 0.00% 25.00% 36.60% 86.45% 85.67% 64.27% 71.28% 31.06% 75.72%