viewMandalay Resources Corp.

Mandalay Resources poised for more growth in 2021 as both its mines continue to be significant cash generators


The company is focused on operating and optimizing its mines at Costerfield in Australia and Björkdal in Sweden

Mandalay Resources Corp. -

Quick facts: Mandalay Resources Corp.

Price: 2.14 CAD

Market: TSX
Market Cap: $195.23 m
  • Both mines continuing to be significant cash generators in 2021
  • Costerfield seeing continued exploration success at one of the highest grade gold mines in world
  • Group expects to be debt free in 2021

What Mandalay Resources does:

Mandalay Resources Corp (TSE:MND) is a metals miner and produces gold, silver and antimony.

The company is focused on operating and optimizing its mines at Costerfield in Australia and Björkdal in Sweden. Both assets have the potential for further growth via production and exploration. The aim is to be cash generative, to self-fund exploration, establish and maintain high operating margins and return cash to shareholders.

The Costerfield mine produces gold and antimony and covers 1,293 hectares. Antimony has various uses including making paints, flame-proof materials and ceramics, as well as an alloy with lead. Björkdal has a mine life of over a decade and has a processing capacity of 1.3 million tonnes a year. The project covers over 12,000 hectares.

In 2019, Mandalay struck a binding deal with Equus Mining to dispose of its third asset, the Cerro Bayo mine in Chile, a non-operating asset since, which had been on care-and-maintenance since 2017, when a flood led to output being suspended. Also in 2019, the firm arranged the sale of other non-core assets - the Challacollo concessions to third parties, and the Ulu project in Nunavut.

How is it doing:

In January, 2021 Mandalay posted its fourth quarter production results, which showed the miner produced the highest amount of saleable gold in nearly three years - at nearly  24,488 ounces.

The quarter was its fifth consecutive quarterly improvement in consolidated saleable gold production and highest consolidated gold output since 4Q, 2017.

For the full 2020 year, the company produced 103,444 ounces of gold equivalent and sold 99,935 ounces of gold equivalent, meeting its annual output guidance and achieving 35% year-over-year growth. The majority of the gold production came from Mandalay’s flagship Australian asset, Costerfield, where the high-grade Youle vein deposit continued to deliver excellent results.

Mandalay put its 2021 guidance at between 105,000 to 117,000 ounces of gold equivalent.

The same month, the group reported further drilling success at the Youle deposit in Australia, which, it said, was likely to lead to a longer life for the asset.

And on February 23 this year, Mandalay told investors that last year's exploration efforts had boosted both its operating mines, with an almost doubling of proven reserves at its Australia mine and an uplift of underground reserves in Sweden.

At Costerfield, proven and probable reserves as at end 2020 for contained gold and antimony increased by 25% (255,000 ounces versus 204,000 ounces in 2019) and 22% (21,800 tonnes compared to 17,800 tonnes in 2019), respectively, net of depletion for 2020.

The Costerfield mine life was also extended by one year to 2024, net of depletion for 2020 production, the group added.

Across both mines, as of December 31 last year, total proven and probable reserves totaled 799,000 ounces of gold and 21,900 tonnes of antimony. That compared to 752,000 ounces of gold and 17,800 tonnes of antimony at the end of 2019.

Inflection points:

  • More exploration drilling results
  • Financial results
  • Precious metals moves

What the boss says:

In a statement accompanying the year-end reserve and resource updates in February, CEO Dominic Duffy outlined the group's plans for 2021.

"Moving into 2021, at Costerfield, we will be drilling a number of Youle analogue targets through the main Costerfield corridor alongside mineral reserves growth drilling at Youle and Browns.

"While at Bjorkdal, a significant exploration campaign is under way with the emphasis on building gold grade and optionality in mining areas. The four major areas of focus will be: identifying higher-grade areas within the Lake zone and Aurora deeps areas; testing of high-grade veining extensions to the east; growth of resources within skarnified lenses; and delineation and growth of Aurora."

Contact the author at giles@proactiveinvestors.com

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Mandalay Resources latest drilling shows impressive results from Youle...

Mandalay Resources (TSE: MND-OTCQB: MNDJF) President and CEO Dominic Duffy joined Steve Darling from Proactive with news the company has seen some very strong numbers from the latest drill results on the Youle Deposit at their Costerfield Project. Duffy telling Proactive the numbers returned...

on 10/23/2020

4 min read