Mandalay Resources Corporation

Good morning. My name is Paul, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Mandalay Resources Corporation's fourth quarter and full year 2021 financial results conference call. Joining us on the call is Dominic Duffy, President, Chief Executive Officer, and Director of Mandalay Resources. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. This call contains forward-looking statements which reflect the current expectations or beliefs of the company based on information currently available to the company. Forward-looking statements are subject to a number of risks and uncertainties that may cause the actual results of the company to differ materially from those discussed in the forward-looking statements. Factors that could cause actual results or events to differ materially from the different From the current expectations are disclosed under the heading risk factors and elsewhere in the company's annual information form dated March 31st, 2021, available on CEDAR and the company's website. Dominic, you may now begin.

Thank you, Paul. Good morning, everyone, and thank you for joining us today. With me on the call is Nick Dwyer, Mandalay's Chief Financial Officer, and I also have Chris Davis, Mandalay's Vice President of Exploration and Operational Geology. Mandalay released its fourth quarter and year-end 2021 financial results at market close yesterday. You can find our consolidated financial statements and MDMA on the Mandalay Resources website. We also have it under our profile on CETA. Mandalay achieved significant operational and financial milestones in 2021, illustrating the strength and execution on our strategy. Including this quarter, our year-end results have been heavily steered by the quality of Yule, our high-grade and low-cost gold and antimony mine in Victoria, Australia. For the year and the consolidated basis, Mandalay produced 123,000 ounces of saleable gold equivalent, which not only exceeded our 2021 guidance, but was also the company's best result achieved since 2017. Year-over-year production improvements since 2019 demonstrate the completed turnaround at both assets. and the long-term financial stability and growth they will provide for Mandalay. Looking ahead, we're expecting significant production increases at Bjorkdal and a slight production improvement at Costa Field over 2022. And we anticipate consolidated production of 118 to 130,000 ounces of gold equivalents. produced at an expected cash cost of $700 to $900 and all in sustaining around about $1,100 to $1,300. I am pleased that in December we successfully completed the sale of non-core Cerro Bayo mine to Equus Mining. We believe that Equus is well positioned to move this project forward. allowing for both parties to mutually benefit. Before discussing our operations in more detail, I'd like to pass the call off to Nick, who will walk through the financial highlights of the company during Q4 and full year. Nick.

Thanks, Dominic. Mandalay delivered another excellent quarter and an overall fantastic 2021 year. The company achieved numerous financial records, including revenue and adjusted EBITDA For Q4 and full year 2021, we recorded $73 million and $229 million in revenue, respectively. On adjusted EBITDA, we achieved records of $41 million and $115 million during the same periods. As compared to full year 2020, our revenue grew by 28% and we also improved our adjusted EBITDA margin to a healthy 50%. This lift was due to an overall increase in consolidated gold equivalent ounces sold of 26% compared to last year. During Q4, we recorded a consolidated net income of $15 million, which is 17 US cents per share or 21 cents Canadian. For the year, consolidated net income was $55 million, which is 60 US cents per share or 76. 75 cents Canadian, which is a great effort. Mandalay's average realized gold price for 2021 was $1,818 per ounce as compared to $1,804 during 2020. Also, Antimony's strong appreciation to above $11,000 per tonne from under $6,000 last year had pushed Antimony's contribution to consolidated revenue to 18%. Currently, the antimony price is above $13,000 per tonne, which is excellent for Madeleine. Our consolidated cash cost did lift from $843 to $873 per gold equivalent produced for 2021. This was mainly due to the costs incurred at Cerebio for the processing of the lower margin material. Dominic mentioned earlier that this asset sale was completed in Q4 last year. From an all-in sustaining cost point of view, the increased production performance from Costa Field aided the groups, all-in amounts to $1,254 per ounce to $1,212 for 2021. Madeleine closed the year with $30.7 million in cash, a slight increase from the $29.8 million in Q3 2021. However, due to global shipping challenges at Costa Field, our year-end cash total leaves out a significant amount of cash, which was normally scheduled to be received in December but was pushed out to January 2022. So that said, at the end of January 2022, Mandalay had a cash position of $47.2 million. Regarding our debt, our syndicated facility stands at 43.9 million, and we will continue to service this debt with the 3.8 million quarterly repayments during 2021, sorry, during 2022, with the $29 million balloon payment, which is due in Q1 2023. Lastly, and Chris can speak to this in more detail, but the 2022 exploration spend is expected to be increased following our successful 2021 program. At Bjorkdal, we are looking to spend $4 to $5 million US, while at the Costa field, it will be around $7 to $9 million US. I'd like to turn the call back to Dom. Thanks, Nick.

Turning to our operations, as I discussed earlier in the call, a large part of this strong quarter and year-end 2021 was due to the continued high-grade ore from Costa Field. During Q4, Costa Field was able to process gold grades of 13.5 grams per tonne, lifting the year-end grade to average to 11.8 grams per tonne. On gold grades alone, this makes Costa Field one of the highest grade gold mines in Australia and places us in a very competitive spot globally. If antimony was considered, Costa Field processed an average gold equivalent grade in excess of 20 grand per tonne for the whole year, further strengthening Costa Field's position as a high quality asset. As compared to 2020, Crossfield's gold equivalent production improved 18% to 68,700 ounces. This lift was supported by the above-mentioned improvements in antimony prices, but nonetheless, standalone gold production year-over-year did improve for approximately 6% to 47,750 gold ounces. As I mentioned of this improvement, Crossfield's revenue for Q4 2021 was $49 million, an 87% increase from $26 million in Q4 2020. However, this will not be a normalised level moving forward, unfortunately, as there was an increase in ounces sold during Q4 2020. deriving from the delay in shipments that pushed recognition of Q3 revenue into Q4 2021. Cash cost per ounce of saleable gold equivalent produced in Q4 2021 was $557 compared to $668 in the same period in 2020, while all in sustaining cost per ounce of saleable gold equivalent produced in Q4 was $731. These declines in cost per ounce metric was also seen within our year-end results as site recorded a cash and oil and sustaining cost of $593 and $866 respectively, a decline of 6% and 14%. Looking ahead at cost field, we anticipate a slight improvement in the production profile during 2022 as doping ramps up at Yule and with the initiation of production from the high-grade deposit at Sheppard. Moving to Bjorkdal, in line with the previous year, the site produced 45,000 saleable gold ounces and generated $85 million in revenue and $28 million in adjusted EBITDA. This annual production performance was below our planned production rates. As mentioned in the Q3 call, this underperformance has been from dilution issues in several stopes and most importantly the Aurora zone, which is where a lot of our production came from in 2021. Since then, the site has continued with its program of step changes to support the hanging wall with long bolts with Kaggle bolts being used throughout the stope drill pattern design changes and removing development drives from the hanging wall side of the deposit. These steps have translated into production improvements over the quarter and will set the operation up for better 2022. The operation currently has a significant amount of production areas to focus on. As we are seeing improvements in our stoking measures, we expect to see gains in our monthly gold output. Cash and oil in sustaining costs were higher at $1,233 and $1,600 per ounce compared to a year ago. These increases were primarily due to higher costs of production and a $10 million investment in the tailings lift and a relative strengthening of the Swedish corona currency against the US dollar. For 2022, we expect grades to lift and stabilize at planned levels through improvements carried out in the second half of 2021. And we will begin focusing on the recently discovered high-grade eastern zone of Bjorkdal to incorporate it into the medium and long-term plans of Bjorkdal. At Cerro Bayo, from January 1st to December 1st, 2021, the site provided the company with $12.7 million and $3.6 million in revenue and adjusted EBITDA respectively. In addition to our operation and financial success, I would now like to invite Chris to speak to our recent exploration developments.

Chris?

Thanks, Tom. Subsequent to the quarter end, we reported on two key developments to Mandalay. First up in January, we provided the market with an update on the eastern extension drilling programs at Bjorkdal. We were very excited to report on multiple high-grade intercepts in the eastward and depth extension to the central zone veining. This emerging high-grade domain could have a significant impact on production profile of Bjorkdal going forward. Several of the intercepts were some of the best grades yet seen at the Yorkdale, including an intercept of 47.7 grams per tonne gold over 11.7 metres, with an estimated true width of 5.8 metres. These significant results have been linked to the extension of 21 veins with the discovery of 16 new veins. Whilst the veining has been extended 350 metres, it is expected that the additional veining drilling will create confidence in structural and grade continuity, leading to the further lifting of modelled tonnes in grade within the domain. The main, lake and central zones are all open to the north-east, and with the exciting results seen, this drilling will continue to be one of the primary exploration focuses over the course of 2022. The second major development was the update to our mineral resource and mineral reserve estimates. At Costico, the proven and probable mineral reserves for contained gold were increased by 24% net of depletion for 2021 production. During the 10 months from discovery to data cut-off in 2021, Sheppard contributed 296,000 tonnes of ore at a grade of 12.4 grams per tonne gold and 1% antimony into mineral reserves. Costa Field's total proven and probable as of December 31st 2021 is 769,000 tonnes at 12.6 grams per tonne gold and 2.5% antimony for a contained 312,000 ounces of gold. and 19,500 tonnes of antimony. We extended the mine life by two years to 2027, and the mineral reserves of the Yule and Sheppard ore bodies were added at an exploration cost of $31 per gold equivalent ounce. At the Oakdale, the mine maintained its long mine life until 2030, we improved our geological understanding, allowing for measured resources and proven reserves to be estimated for the first time at Bjorkdal. Bjorkdal's total proven and probable reserves as of December 31st, 2021, were 12.1 million tonnes at 1.39 grams per tonne gold for a contained 542,000 gold ounces. The cost of adding those mineral reserves was $41 per ounce of gold. Unfortunately, a lot of the high-grade drilling results of the Central Zone Extension Program were realised during the fourth quarter and were therefore not included in the year-end mineral resource and reserve estimates. We expect higher-grade additions to the end of 2022 as a result of the continued drilling along the eastern flank of Bjorkdal. Lastly, looking ahead, exploration at Bjorkdal in early 2022 is planned to see a continuation of the eastern extension and infill programs, as well as the recommencement of the north zone testing and infill program, which is designed to extend resources found in 2020 along multiple veining horizons located up to 500 metres north of Aurora. Regional surface... Sorry. Regional surface diamond drilling will also recommence in April on several highly prospective targets. At Costa Field in Q1 2020, a significant number of drilling programs are expected to commence with the focus on expanding the Sheppard Veining to the south and at depth. The Brunswick and Margaret depth testing programs will also continue through Q1. And the Cuffley Deep's Robinson testing and Yule East testing programs are expected to commence as well. Thank you. That concludes the exploration update. And I'd like to hand back the call to Dominic. Dom?

Yeah, thanks, Chris. With the amazing success of the eastern extension at Bjorkdal, a mining concession application has already been submitted to the relevant authorities in Sweden. to extend the mining licence holdings to cover this eastward extension of the veining. The increasing grades within the extensions of the Bjorkdal deposit mark a very significant development for this mine and will be a major focus of our production in the years to come, I would expect. While at Costa Field, Shepard's significant grade and ounce contribution in such a short time span between discovering and publishing the mineral reserve and resource highlights the richness of the Costa Fields mineral system and the expectations of much more finds to come. Thank you to everyone. This concludes this portion of the core. I would now like to open the lines up for any questions.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. Our first question is from Daniel Baldini with Oberon. Please proceed with your question.

Hi, good morning. I have a few questions. And the reason I'm on the line is because my colleague, Kevin Tracy, who you know well, is on vacation. So I'm going to ask a few questions. And I'm not as well informed as he is. But I have been following the company for an awfully long time. So you've given guidance for this year, and it seems as though the guidance for this year is sort of within the ranges of what you produced last year. And I read the report. You had free cash flow, I guess, adjusted for the delays in shipping of 33 million U.S. in 2021. And so would it be reasonable to expect – you know, free cash flow of a similar amount for 2022, assuming that gold price and antimony prices stay, you know, at the levels they were in 2021?

Yeah, I would hope that we have an increase in our cash flow in the coming year, Daniel. The main reason being, if you look at our guidance, our production profiles, are similar. However, you must take into account that that's without Cerro Bayo mine, which produced approximately 9,000 equivalent gold ounces. So if we're getting a similar production profile, that would be without the Cerro Bayo costs that were attributed to last year. We do have some large capital, but yeah, I would hope that we because there are no associated cerebral costs, yet a similar production profile within our guidance. We do have more expiration spend, fortunately, this year as well. But I would hope that we can improve on our cash flows during 2022. Okay.

And then in your reserve, in the press release with your reserves, the grade of these reserves seems to be I don't know, equal or better than the grade of what you mined last year. And so, and you say, and it seems as though you have a reserve life of at least six years, you know, and consolidated. I mean, well, longer as Yorkdale's longer. So, so assuming, you know, the price goal price and antimony remains the same, you could imagine that you'd have that free cashflow and, for six years, six more years. Yeah, correct, definitely.

The reason we firstly processed at lower than our reserve grade last year is because we were still mining some of the lower grade deposits. As of now, we're pretty much, by year end, we're pretty much solely producing from the shepherd, sorry, from the yield. and starting a little tiny bit within Sheppard. That's why our gold grades in Q4 were 13 grams, which corresponds slightly above our reserve grade. So yeah, I would anticipate going forward now, because the bulk of the low-grade remnants have been completed, that we will be mining at our reserve grades at Costa Field. However, I do anticipate over the coming years that we will be increasing our production at Bjorkdal. We don't know as of yet what the impact of this eastern central zone will be, but we do anticipate that will be lifting our grades. So over the coming six years, I would actually anticipate further improvements, similar production profile from Costa Field, but improvements without any real additional cost at Bjorkdal.

Okay. Let me ask just a few more questions, then I'll So with Shepard, you added 130 ounces to the reserves, but it seems as though there's, there's more to go. And do you have any sense of the potential with Shepard and how many ounces of reserves might be added this year from Shepard or, or what percent of the, your, what, uh,

thoughts or what percent of your estimate of the deposit there has been added to reserves yeah so it's a tough question because we we've only known about it for 10 months and today we have been quite limited in how much we could drill of it because of the draw angles We know at the bottom section of what we have drilled, there is what's called a calcite band, which generally kills the mineralization within the cost of field deposits. However, quite generally, the deposits do come back in after those calcite bands. So we will be drilling deeper below that this year to confirm whether the mineralization continues to that. But probably the more More focused drilling will be on the south as the deposit is getting higher up, which is very good for us. So we'll be drilling. It's strange that this deposit is below the yield deposit. However, as you go further to the south, it actually becomes higher. And so probably over the next six to 10 months, our main focus will be easier drilling for us to the south and up higher. But honestly, it's hard to say how much more these will grow because we just really haven't drilled much outside of the current mineral reserve and resource. But we definitely do anticipate that it will be growing this year.

Okay. And when do you expect to announce some drill results?

Chris, when do you expect we'll be updating on cost of field again?

I was going to say in the next couple of months we should put out an update on the drilling there. Just to follow on from what Doug was saying, late last year we really focused on infill drilling of Sheppard so that we can bring on those ounces that we found there into reserves. So now we're just starting that journey of extending both to the south and depth, the Shepard Resorts.

Okay. Now one final question. All right. Now one final question. So I don't know, for the past five or six years, we've all dreamed that somewhere in this Kosterfeld is another Fosterville and you're every once in a while you drill one of these very deep holes. And I'm wondering, is there going to be any developments on that front over the course of this year?

Yes. Yeah, we're dreaming about that also, Daniel. Don't worry. There will be a few deeper holes that we will be drilling this year. So mainly focus on the Brunswick deposit and And Cuffley deposit, it will most likely change throughout the year, but there are going to be several deeper holes drilled within that area this year. Okay.

All right. Well, thank you for your time and congratulations on the wonderful performance. Keep it up. Yep. Great. Thanks, Daniel. Yep.

Thank you. Our next question is from Robert Plum, private investor. Please proceed with your question.

Hey guys, congratulations on the quarterly and yearly results. Tremendous. It's been a tremendous turnaround at the company and as a shareholder, I'm very happy. But my first question is I've seen some of your interviews and videos on YouTube in the past. Will you be engaging in any promotional activity this year to try and get the word out on how well the company is doing and maybe lessen the discount?

Yeah, yeah, Robert, we definitely will. So we're actually going to be using some additional firms to try and get more messages out there. It's obviously with COVID, obviously, um have been restricted myself and nick um in attending a lot of conferences in person but with things opening up now we will be trying to drum up a lot more additional investors um speaking to a lot of people and obviously trying to get as many interviews as possible to get the word out there um As you know, it's definitely a very underappreciated story with our financials, so we will be focusing a lot on trying to get the message out there and point out exactly how well positioned this company is.

Great. Wonderful to hear that, which leads to my next question. Recently, Australia, I guess, has been opening up and reducing travel restrictions. Will that help with your situation at Costa Field with labour and such?

Yeah, we never really had many labour issues within Costa Field because Australia was so tightly locked down and controlled that there were very little instances of... COVID within the site. So the main impact from Costafield was actually shipping. The international trade routes, everything became very difficult. That's why we had delayed payments over the course of last year. What it does allow is for ourselves and corporate to get the site more often, but we COVID never really had much of an impact. We will see some inflationary impact over the course of this year going forward as the costs of consumer laws are lifting, but that has been taken into account into our budgeting.

Okay. Well, that's good to know. Thank you. Also, can you speak a little bit as to your overall environmental liabilities? I see that you're expecting a refund of... approximately 3.5 million Canadian from the closed lupine mine. Yes. Have your overall environmental liabilities gone up or down? Can you speak to that a little bit, please?

So over the course of this year, our overall liabilities will have dropped significantly because we have approximately 14 million Canadian in security bonding for the closure of that asset. So that's remaining. So we anticipate $3 million returning soon. That rehab is scheduled for completion this year, after which we should be able to recover the majority of that bonding. So that either towards the end of this year or early next year, several, probably $2 to $3 million will have to stay in that security bonding long term. for monitoring of the site. But we're very glad that we've been able to work so closely with the Nunavut government to get that completed over the last three years. It's been a very close relationship and there's actually been very good department work with the authorities we deal with, both federal and local within Canada. In relation to the other two sites, bonding is always increasing. As operations continue, the tailings dams get larger, the operations move out further. So you do always have incremental increases, but we don't anticipate anything significant over the coming years. Yep. And also, I forgot to mention, we did decrease last year $7 million of our asset retirement with ARO because of the sale of Cerro Bayo also. So that was quite a large obligation that we have actually halved.

Okay, very good. Thank you. And my last question is, is what eventually, and I know it's kind of a difficult and open-ended question, but what eventually do you think could be the Bjorkdale ASIC goal? I think it was $1,700 for a fourth quarter. Do you think eventually that could come down to, say, $1,500 or $1,400, somewhere in that neighborhood?

Look, I'd like to get it. Bjorkdale is very great dependents. So it's a fairly fixed cost operation with our underground workers. So the key is increasing the grades to decrease our cash and all in sustaining costs. You're correct, it's a difficult one to answer, but Longer term, I'd definitely be aiming to get it below 1,300. With what we're seeing in the eastern zone drilling, I'm hoping that we can get some very good grade boosts to this operation long term. So we are anticipating being over the 50,000 ounces produced this year, so that naturally will be dropping it quite a bit from where it was.

Okay, good to know. Thank you, guys, and congratulations on the great quarter, great year, and keep up the good work. Thank you so much. Great. Thanks, Robert.

Thank you. Our next question is from Lawrence Retail with a private investor. Please proceed with your question.

Hi, Dominic and the team. And congratulations again on a wonderful year. I only have a couple of questions. My first one is, could you comment on any external growth in the company with regards to acquisitions?

So, Lawrence, we are firstly saying thanks for the congratulations. So we are actively looking for potential transactions. It's but it is definitely a slow process where we're continually talking to counterparties and banks to see if there are opportunities out there at the current time. We are in a very good financial position now. We've got internal growth from our two assets, but we do need, over time, to find additional opportunities So we are actively looking on the M&A front to see if there is anything that potentially works for Mandalay. One of the issues is most companies do say this, but we definitely are undervalued. So as I think was Robert asked, a lot of our focus will be on Mandalay. trying to get the word out there and some further share price appreciation. So we will be spending a lot of time on that, which would help us a hell of a lot. We've been able to close out an M&A type of transaction.

So is there anything close to, are you pulling the trigger on anything soon or is it still?

I wouldn't anticipate anything in the immediate future, I don't think. But I can't really comment too much on what type of discussions we would have been having with anybody.

You mentioned working with banks and financial institutions. Would Sprott Asset Management be part of some of your discussions on acquisitions?

We would have spoken to Sprott in virtually most of the big banks within Canada. So we're always in contact with the banks.

Okay. I guess my two questions pertain mostly to Yorkdale. It was mentioned in a previous call that the farther you mine away from the plant, there's an increase in haulage costs. Is there any way to address that?

Yeah, so for the Out into the deposit, we do get, yeah, there's increased haulage costs. However, with what we are finding in this central zone to the east, that actually, if that is appearing to be significant, that discovery, that would actually decrease our haulage costs because it's close to the portal. So we've got a lot of expectations for that area. But, yeah, the further north we go, we do increase our costs, and that's definitely... That's not anything you can overcome. That's just something we have to live with. But we are exploring four higher grades within the north-western zone as well. Mine continues further out there to focus more on that. But I'd hope that our central zone discovery will be able to lower our haulage costs. I'd like a lot of our production over the coming years to be coming from there.

Well, it's quite an interesting find now that you're finding grades above the marble, what do you call it, the marble contact there.

They're actually below the marble contact in that eastern zone.

It's big. You're drilling into the lake zone from underneath. Are you going to be drilling from above? and will that area become pittable?

No, no, it's definitely not. It's too deep to be pittable. So when we drilled above Aurora, we actually found pretty much at the limits of the mineralization up above, and that corresponds to the lake zone as well, which is it starts too deep to be pittable.

Okay, so it sounds like it's, trending in all directions and downwards, but not necessarily straight up to the surface.

Yeah, pretty much. That's only one direction we have limited it.

Okay. My last question is to do with the ore sorter. Has any decisions been made to put an ore sorter in at Yorkdale?

Yeah, there's actually work ongoing with that at the moment. So we are in the process of actually trade-off study between all sorting or increasing the overall throughput of Bjorkdal. And we have money budgeted for some of that work to be done this year. But we have to complete a study that the... The downside of ore sorting is that you're throwing away 10% of your gold. So you have shorter-term benefits against longer-term losses with ore sorting quite often. The benefit if you were permitted to process more if you could upside. Increase the throughput through the processing plant. You're not actually losing any additional ore. and you are slightly lowering your operating cost per tonne because the more you process, the lower your cost per tonne in the plant is by fractional amounts. So you're not increasing the operational costs and you're not throwing away any of the additional gold. So between the two of them, a lot of it depends on the capital outcome, but my preference personally would be tending towards an upgrade in the plant as opposed to an optical or sort of, but that's something ongoing and we do anticipate that we'll be able to inform the market of what direction we're going within the next few quarters.

So it's going to be, well, either way, I guess there's going to be a capital expenditure to expand the curtain mills.

Yes, and that's where, obviously, where almost 90% of the study is going into.

And how much do you estimate that to cost?

At the moment, that's where... That study is still ongoing, so I can't really say until we have the final numbers.

Are you testing any ore to determine which way you're going to go?

We did carry out optical sorting testing several years ago. So we understand very well what type of results we would be getting with ore sorting. It's just a capital that has to be studied. The complication with Skeletia or the region where we operate is it's very cold. So the freezing of the mineral actually, once you wash it, does complicate things quite a bit and it increases the capital. Cold zones, optical sorting projects are significantly more expensive than warmer climates because you have to put in heating. Everything has to be done indoors. etc. The water has to be heated to minimize the freezing of the mineral.

I understand. I know what it's like to live in a cold country and I'm pretty sure that most of your travel expenditures from your team is probably to Australia instead of Sweden during the winter time.

Yeah, I think it's almost the opposite unfortunately.

Anyways, thank you for answering my questions and I wish you a wonderful day.

Fantastic. Thanks, Lawrence.

Thank you. Our next question comes from Daniel Baldini with Oberon. Please proceed with your question.

Hi, it's me again. So I just had a thought prompted by a previous caller's question. You know, I imagine when you go out and visit with investors and advisors and investment bankers and so on, they'll tell you, oh, this is all very interesting, but there's no liquidity, so we can't invest. And then the next proposal will be, oh, you need to issue shares to improve the liquidity. Well, I'd just like to suggest that you bat away that idea. And the liquidity in the stock is just a matter of price. And maybe if someone says this, you can just say, well, you know, bid more than the current price, significantly more than the current price, and a lot of liquidity will show up. but resist any temptation to issue shares simply to improve the liquidity, because if the share price goes up, the liquidity will improve.

Yeah, no, thanks for that point, Daniel, and you are correct about what the banks do say to us. But yeah, we have definitely resisted that. I agree that liquidity is a big issue. We're very tightly held. So the Small stock movements can have a significant impact on our share price, but the company's in a very good position that there is no real need for. We're generating a lot more cash than we can spend at the current time, so it would not look good to our current shareholders to be doing any financial issuing of stock.

Yeah.

Okay.

Thanks for that. Thanks.

Thank you. Our next question is from Robert Plum, private investor. Please proceed with your question.

Hey, guys. Another couple quick questions for you. Are you having any problems getting the assay results back from labs in terms of having to wait a long time, or is that okay at this point?

No, we haven't had any major issues. Obviously, our main competitor in our lab in Victoria is Fosterville, but they haven't done any upgrading of their processing. There's a lot of exploration occurring in Victoria, but there's no real uplift. So that's been fine. Most of our assays in Sweden are done in a Finnish lab, and that's been fine as well. So obviously, you do have... Our main competitors there for getting lab space, obviously, the Agnico, Kittler Mine, and with Rupert doing a lot of drilling up north in Finland, but there's been no major increase that has impacted us significantly. So fortunately, unlike a lot of companies that I've heard about, we haven't really been impacted.

Good to know. Thank you. And then I guess finally, my last question is, unfortunately, the energy situation in Europe has been in the news here quite a bit. Are you having any tremendous cost inflation with electricity or energy at Yorkdale? Or do you anticipate any of that moving forward?

No, Sweden and Norway are very different cases than a lot of Europe in that regard. They're majority hydro. So part of the reason why JBL can operate at the current low grades, which we anticipate to lift, is because our energy costs are extremely cheap. And we just last year signed another long-term contract for our fixed energy costs, which are generally a fraction of what most mining operations pay because of the hydro. Okay.

Good to know. Okay. Thank you, gentlemen.

Thank you. Our next question comes from Ernie Molesk, private investor.

Please proceed with your question. Yes, Dominic. Congrats on the great results. When are you going to start issuing a dividend? I mean, you're making now a dollar per share in income. So one would think you could afford a dividend.

Yeah, so obviously our main focus was becoming net debt free, so before considering a dividend. So it was discussed in earlier board meetings that that was a focus for the current time. Our next board meeting, I dare say that will be part of the discussion. There may be the possibility of implementing a dividend but obviously on this call I can't say whether we will or won't. That has to become public if the The board makes a decision through the correct means. But, yeah, we definitely could. We are in a position that we could with our current financial position. So it is a possibility going forward.

And is there any possibility of the hedge going away sooner?

No, unfortunately. Unfortunately, no. We could buy it out, but that would be very expensive. That's always an option with a hedge, I understand. But we haven't looked at that at the current time. It expires mid-2023, so we've got just over a year and a half remaining on that, fortunately. So, yeah. Yeah. And that's 50,000 ounces per annum, half in U.S., half in Aussie.

Okay, thank you. That's all I have.

Thank you. There are no further questions at this time. I would like to turn the floor back over to Dominic Duffy for any closing comments.

Thanks, Paul. No further closing comments at this current time. I'd just like to thank all of our investors for the patience they've shown as we turn this company around and all of our employees who have done a fantastic job turning Mandalay into what it is today. And I look forward to updating the market on our future progress. So thanks very much. Bye.

This concludes today's conference. You may now disconnect your lines at this time. Thank you for your participation.