Mandalay Resources Announces Financial Results and Quarterly Dividend for the Third Quarter of 2014

TORONTO, Nov. 6, 2014 /PRNewswire/ -- Mandalay Resources Corporation ("Mandalay" or the "Company") (TSX: MND) announced today revenue of $34.7 million, adjusted EBITDA of $10.5 million and net loss of $0.7 million or $0.00 per share for the third quarter of 2014. The Company's unaudited consolidated financial results for the three and nine months ended September 30, 2014, together with its Management's Discussion and Analysis ("MD&A") for the corresponding period can be accessed under the Company's profile on www.sedar.com and on the Company's website at www.mandalayresources.com. All currency references in this press release are in U.S. dollars except as otherwise indicated.

In accordance with the Company's dividend policy, Mandalay's Board of Directors declared a quarterly dividend of $2,080,565 (6% of the trailing quarter's gross revenue), or $0.0051 per share (CDN$ 0.0058 per share), payable on November 27, 2014, to shareholders of record as of November 17, 2014.

Brad Mills, Chief Executive Officer of Mandalay, commented, "Production and cash operating costs were excellent during the quarter, with Cerro Bayo and Costerfield both achieving record production. Cerro Bayo's cash and all-in sustaining costs in the third quarter were $6.26 and $12.23 per ounce of silver net of gold byproduct sales. Costerfield achieved cash costs and all-in sustaining costs of $747 and $1,047 per gold equivalent ounce in the quarter. Bjorkdal, acquired with Elgin in the transaction that closed on September 9, also contributed with production of 3,091 ounces of gold at a cash cost of $706 per ounce gold and all-in sustaining costs of $852 per ounce gold.

Mandalay's revenue, EBITDA and earnings were impacted by the delay in shipment of approximately 400,000 ounces of silver and 3,000 ounces of gold that were shifted from the third quarter into the fourth quarter due to inclement weather at Cerro Bayo's main debarkation port of Chacabuco. Revenue and EBITDA were reduced by this event by about $12 million and $5 million respectively. Earnings were further decreased by one-time expenditures of approximately $900,000 associated with the completion of the Elgin transaction. Mark-to-market adjustments of outstanding sales invoices due to lower gold and silver prices in the quarter also reduced earnings by $600,000.

We expect all delayed shipments at Cerro Bayo to be made up in the fourth quarter and the impact of lower production costs experienced in the second half of the third quarter at Costerfield to continue for all of the fourth quarter as the benefits of higher grade Cuffley ore start to contribute to production and earnings consistently. Significant work is also underway at Bjorkdal to develop a new life-of-mine operating plan and reduce dilution in the underground mine. Work is also underway to quantify opportunities to improve the concentrator performance.

Challacollo completed its infill drilling program with results consistent with the previous drilling. The feasibility study is advancing on track for completion at the end of the first quarter of 2015. Exploration at Cerro Bayo under Laguna Verde continues to deliver significant results which will be reported at year end."

Third Quarter 2014 Financial Highlights

The following table summarizes the Company's financial results for the third quarter of 2014 and 2013:

The decreases in revenue, adjusted EBITDA and profit during the third quarter of 2014 over the same quarter in 2013 were principally due to the lower volumes sold and decreases in metal prices.

Net income is inclusive of a non-cash, non-operating gain of $72,157 related to mark-to-market adjustments of financing warrants and loss of $38,059 related to marketable securities and deferred tax recovery of $144,270. Excluding these items, loss after tax from underlying operations for the third quarter was $869,946 ($0.00 per share). By comparison, in the third quarter of 2013 the Company's net income of $10,998,651 ($0.01 per share) was inclusive of non-cash, non-operating gain $189,827 related to mark-to-market adjustment of an AUD/USD currency option, non-operating expense of $122,962 related to financing warrants, $22,820 related to cash election options and non-cash deferred tax expense of $1,590,596. Excluding these items, income after tax from underlying operations in the third quarter of 2013 was $12,545,202 ($0.04 per share).

On August 28, 2014, Mandalay paid a quarterly dividend in the aggregate amount of $2,693,278 (CDN$ 0.0086 per share). Cash and cash equivalents of the Company were $45 million as of September 30, 2014, compared to $27.7 million as of September 30, 2013.

Third Quarter 2014 Operational Highlights

Costerfield gold-antimony mine, Victoria, Australia

In the third quarter of 2014, Costerfield produced 9,454 ounces ("oz") of saleable gold ("Au") and 1,000 tonnes ("t") of saleable antimony ("Sb"), versus 8,831 oz Au and 966 t Sb in the third quarter of 2013.

Cash cost per Au Eq. oz produced in the third quarter of 2014 was $747 versus $626 in the third quarter of 2013. The higher cash cost in the third quarter of 2014 was mainly due to higher operating costs incurred during the transition of mining from the W-lode to the Cuffley lode and higher one-off environmental and community related costs. The site all-in cost per Au eq. oz produced in the third quarter of 2014 was $1,047, versus $873 in the third quarter of 2013.

Cerro Bayo silver-gold mine, Patagonia, Chile

During the third quarter of 2014, the Cerro Bayo mine produced 823,379 oz of saleable silver ("Ag") and 6,445 oz of saleable Au, versus 733,659 oz Ag and 5,611 oz Au in the third quarter of 2013. The variation in production quantities is attributable to the higher tonnes mined and processed in the current quarter.

Cash cost per oz Ag produced net of Au by-product was $6.26 during the third quarter of 2014, lower than the $6.41 in the third quarter of 2013. Site all-in costs were $12.23/oz versus $12.05/oz in the previous year.

Bjorkdal gold mine, Sweden

In the third quarter of 2014, Bjorkdal produced 3,091 oz of saleable Au during the 20 days Mandalay ownership of third quarter.

Cash cost per Au Eq. oz produced in the third quarter of 2014 was $706. The site all-in cost per Au eq. oz produced in the third quarter of 2014 was $852.

Production, Capital and Cost Guidance for 2015

Mandalay offers the following production, cost, and capital expenditure guidance for 2015.

Conference Call

Mandalay Management will be hosting a conference call for investors and analysts on November 7, 2014, at 8:00 am (Toronto time). Analysts and interested investors are invited to participate using the following dial-in numbers:

Participant Number (International/Local): +1-416-764-8688

Participant Number (Toll free North America): +1-888-390-0546

Conference ID: 65694148

A replay of the conference call will be available until 23:59 pm (Toronto time), November 21, 2014, and can be accessed using the following dial-in numbers:

Encore Toll Free Dial-in Number: +1-888-390-0541

Local Dial-in-Number: +1-416-764-8677

Encore ID: 694148 

About Mandalay Resources Corporation:

Mandalay Resources is a Canadian-based natural resource company with producing assets in Australia and producing and development projects in Chile. The Company is focused on executing a roll-up strategy, creating critical mass by aggregating advanced or in-production gold, copper, silver and antimony projects in Australia and the Americas to generate near-term cash flow and shareholder value.

Forward-Looking Statements

This news release contains "forward-looking statements" within the meaning of applicable securities laws, including guidance as to anticipated gold, silver, and antimony production in future year or years. 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, 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 28, 2014, 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.

Non-IFRS Measures

This news release may contain references to adjusted EBITDA, cash cost per ounce of gold equivalent produced, cash cost per saleable ounce of silver produced net of gold credits, site all-in cost per ounce of gold equivalent produced and site all-in cost per saleable ounce of silver produced net of gold credits, which are all non-IFRS measures and do not have standardized meanings under IFRS. Therefore, these measures may not be comparable to similar measures presented by other issuers. Management uses adjusted EBITDA as measures of operating performance to assist in comparing the Company's ability to generate liquidity through operating cash flow to fund future working capital needs and fund future capital expenditures and to assist in financial performance from period to period on a consistent basis. The Company believes that these measures are used by and are useful to investors and other users of the Company's financial statements in evaluating the Company's operating and cash performance because they allow for analysis of our financial results without regard to special, non-cash and other non-core items, which can vary substantially from company to company and over different periods.

The Company defines adjusted EBITDA as earnings before interest, taxes, non-cash charges and finance costs. For a detailed reconciliation of net income to adjusted EBITDA, please refer to page 12 of management's discussion and analysis of the Company's financial statements for the third quarter of 2014.

Equivalent gold ounces produced is calculated by adding to gold ounces produced, the antimony tonnes produced times the average antimony price in the period divided by the average gold price in the period. The total cash operating cost associated with the production of these equivalent ounces produced in the period is then divided by the equivalent gold ounces produced to yield the cash cost per equivalent ounce produced. The cash cost excludes royalty expenses. Values for 2013 have been re‐calculated accordingly. Site all-in costs include total cash operating costs, royalty expense, depletion, depreciation, accretion and write-off of exploration and evaluation. The site all-in cost is then divided by the equivalent gold ounces produced to yield the site all-in cost per equivalent ounce produced.

The cash cost per silver ounce produced net of gold byproduct credit is calculated by deducting the gold credit (which equals ounces gold produced times the realized gold price in the period) from the cash operating costs in the period and dividing the resultant number by the silver ounces produced in the period. The cash cost excludes royalty expenses. The site all-in cost per silver ounce produced net of gold byproduct credit is calculated by adding royalty expenses, depletion, depreciation, accretion and write-off of exploration and evaluation to the cash cost net of gold byproduct credit dividing the resultant number by the silver ounces produced in the period.

Bradford Mills, Chief Executive Officer; Greg DiTomaso, Investor Relations, Contact: +1.647.260.1566

Related Links

http://www.mandalayresources.com