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Mandalay Resources Corporation October 2013 Investor Presentation

Transcript of Mnd investor presentation_oct_2013


    October 2013

    TSX: MND

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    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 managements expectations, that Cerro Bayo and Costerfield capital, production and operating cost results may not meet current plans, that reclamation costs associated with

    Mandalays 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


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    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.

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    Locations and Tradeflows


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    Mandalay in Todays 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


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    Management and Board of Directors


    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


    Belinda Labatte,

    Corporate Secretary

    Over 10 years of

    experience in capital

    markets and investment


    Braam Jonker,


    Peter R. Jones,

    Independent Director

    Tony Griffin,

    Independent Director

    Robert Doyle,

    Independent Director

    Dominic Duffy, COO

    Mining Engineer with

    extensive technical and

    operational management


  • **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 Companys trailing quarters gross revenue and the future cash requirements of the Company.

    *****2013E Assumes dividend payable in Q4 2013 is C$ 2.23 million


    Strategy: Rapid Value Generation and Returns


    0.3 20.6



    2009 2010 2011 2012

    Increase Revenues ($US MM)

    -1.0 1.7



    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 managements 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


    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


    Dividend Payouts ($CAD MM*****)


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    Capital Structure and Ownership


    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 October 3, 2013 Millions

    (Except Share Price Information)

    Share price (Last close) (CAD$) 0.79/shr

    Shares Outstanding 323.7

    Options(1) 16.2

    Warrants(2) 21.0

    Fully Diluted Shares Outstanding 360.9

    Market Capitalization (CAD$) 255.7

    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$) 231.2

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    Management Track Record: Execution, Value Creation


    Company History and Milestones

    2009 Q4 2010 2011 2012 2013