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spk02: Good morning ladies and gentlemen and welcome to the Mandalay Resource Corporation first quarter 2024 conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, May 9, 2024. 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 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 current expectations are disclosed under the heading risk factors and elsewhere in the company's annual information form dated March 28, 2024, available on CDAR and the company's website. I would now like to turn the conference over to Mr. Fraser Boucher, President and CEO. Please go ahead, sir.
spk01: Thank you very much, operator, and welcome. But before getting into our quarterly performance, I want to extend a warm welcome to Ahmed, our EVP and Chief Financial Officer. On his I can bring the wealth of industry experience. particularly in financial management, corporate strategy, and capital markets, making him a greatest As we continue to progress into our
spk06: Next growth phase, Hashim will be instrumental in guiding our financial strategies and ensuring our ongoing fiscal success. Also joining us on the call today are Ryan Osterberry, our Chief Operating Officer in Melbourne, and Chris Davis, our VP of Operational Geology and Exploration, also in the Melbourne area. Yesterday, Mandalay Resources disclosed its financial results at market close. You can access our consolidated financial statements and the MD&A on either the company's website or through our profile on CDARP. Mandalay sustained its operational and financial momentum generated through the second half of last year and commenced this year strongly and safely in achieving a solid production outcome of nearly 25,000 gold equivalent ounces across both of our operations, about 60% from Costerfield, 40% from Bjorkdal. This achievement positions the company on our previously stated trajectory towards meeting our annual production guidance of 90,000 to 100,000 gold equivalent ounces. Of notable mention, is Mandalay's substantial enhancement in cash reserves, with a cash balance increase of over $20 million during the quarter, leading to a closing quarter cash balance of US $47 million, which represents about 30% of our market.
spk01: capital we anticipate a significant year as we build upon these achievements. Our primary focus remains on closely monitoring key operations and operational lead metrics. which flow into these important financial lag metrics. Continue to proactively address any potential risks to achieving our 2020 goals. and to bolstering our cash flow generation.
spk06: Of equal importance, we remain exploration-centered on extending the mine life at Costerfield as has been replicated over the past 15 years. The strategic focus on quality organic growth at both operations along with continuing to review all external opportunities sets the stage for an exciting year ahead for Mandalay. I would like to now hand the call over to different members of my team to recap various sections that pertain specifically to them in our first quarter results mandolin.
spk01: So first, Ryan, our Chief Operating Officer. Thanks, Fraser.
spk08: During the first quarter of 2024, we successfully produced 14,566 gold equivalent ounces across the field. This is despite challenges caused by two separate adverse weather events, leading to temporary site access restrictions and power disruptions in January and February of 2024. In Q1 2024 Costa Field mined 31,259 tonnes of ore, making a 19% increase from the 26,285 tonnes mined in Q1 of 2023, 12 months earlier. The increase in mining rate can be attributed to addressing a specific
spk01: specific non-systematic incidents encountered at the beginning of 2020. Furthermore, capital development in quarter one of 2020. Amounted to. 131 metres which was 20% lower than the 165 metres in the quarter one of 2023. This was the intentional due to prior rehabilitation ...work over capital development advancement... ...advancement...
spk08: Copperfield processed 32,872 ore tonnes in quarter one of 2024, a 7% decrease compared to the 35,382 tonnes processed in quarter one of 2023. The decline in processing volume can be attributed to various factors. The wet weather occurrences, Processing challenges posed by Sheppard Ore, which is inherently harder than Yule Ore, so somewhat slightly lowers the throughput rate, and the same systematic conditions that affected past processing variances and which are being addressed with capital investment. A significant budgeted maintenance stop is planned in the plant in May this month. or rebuilding the front end of the plant to assist with material flow to optimise throughput. Processed gold grades were higher during quarter one of 2024 at 12.4 grams a tonne gold compared to 7.7 grams a tonne gold in quarter one of 2023, linked to processing of lower grade stockpile material 12 months earlier. Conversely, the processed antimony grades were lower in quarter one of 2024, standing at 2.2% in contrast to 2.6% in quarter one of 2023, which can be associated to mining more tonnes from a lower-grade antimony shepherd deposit. The grade trend in antimony milled head grade is expected to persist as shepherd becomes the dominant ore body being extracted.
spk01: Bjorkdal showcased sustained improvements over the last four quarters, achieving a production of $10,370. of the answers. increase from the This advancement is much ...improved grades in the eastern extension zone and an 8%... ...uptick in all tons... ...tonnage process. Great Pacific. There was a 9% increase in the average. Okay, great. Climbing from 1.05.
spk08: grams per tonne gold in quarter one of 2023 to 1.15 grams per tonne gold in quarter one of 2024. Throughput lifted from 317,543 tonnes in quarter one 2023 to 343,146 tonnes in quarter one of 2024 in part due to the successful and ongoing mill ramp-up commissioning. For the remainder of the year, we anticipate stable gold grades driven by increased mining activity in higher-grade underground areas and heightened attention to further minimising underground development and stove ore dilution. Lastly, in the first quarter of 2024, total capital development amounted to 845m, which included exploration capital drive mining marking a 17 increase from the 722 meters recorded in quarter one of 2023 the reduced capital meters the capital development progress observed in quarter one of 2023 can be largely attributed to staffing challenges increased capital development helps generate increased working state fronts which in turn aids
spk01: to increase required mining flexibility. I would now like to pass the call to Hashim, our EVP and Chief Financial Officer, who will highlight Mendeley's financials. by as a reminder number noted I use currency as Fraser mentioned earlier, it's worth creating that are stable. that are stable cost structure has enabled the company to capitalize on the current metal price environment resulting in strong cash generation for the quarter. In comparison 24, 23, mandolin substantial increase in cash balance by over $20 million. reaching $47 million in cash with a net cash position of approximately $20 million. Q124.
spk04: Consolidated revenue rose by 32% to $55 million compared to $42 million in Q123. This significant increase was primarily driven by 16% higher gold ounces sold in Q124 compared to the same quarter in 2023. This reflects higher production mainly due to increased throughput at the octole and a higher gold head grade across the field. Additionally, high realized metal prices further contributed to the revenue, with 2,200 per ounce gold and antimony at 13,823 per ton in Q124, which is higher by 13% and 8% respectively compared to Q123.
spk01: Compared to last year, operating costs were relatively stable at 2017. I consolidated And all In cost all in sustaining cost for our during Q1, 24. And 1,004.30 respectively. Marking it. decrease compared to the corresponding cost. due to production and relatively This means that in line with the annual guidance provided earlier in January.
spk04: In summary, the company generated 16 million in free cash flow during Q124, equating to approximately 636 per ounce of gold equivalent sold, which was mainly due to a two-fold increase in cash flow from operating activities. Finally, I'm pleased to announce that subsequent to Q1, we successfully renegotiated an extension to our revolving credit facility with Scotiabank, now extended until 2027. This enhances our financial flexibility towards growth capital expenditures and other M&A initiatives that may offer significant returns aligning with our long-term growth objectives. I would like to now pass the call to our VP of Exploration and Operations Geology, Chris Davis. Chris?
spk07: Thanks, Hashim. During Q1 2024, drilling efforts across the field were concentrated on growing neem mine resources and assessing regional targets. Four neem mine areas were active during the quarter.
spk01: Firstly, the infill drilling on Sheppard focused on the west and most veining within the system. In the center of the field, the drilling continued on the Brunswick depth And to the south, two drilling programs. And the depth extension of the cuff is deposit as well as the northern extension of the Sub-King Cobra Reserve. Moving into Q2, in line exploration will prioritize the company's monthly DEEPS programs. and Shepard Info programs. Another focus area will be the link between Shepard and the Brunswick deposit. Mineralised connection is anticipated. through currently non-tested... ..ground.
spk07: Regional exploration at Kosterfeld primarily targeted the True Blue deposit, with one program extending the inferred mineral resource and another testing the mineralized corridor with stiff-out drilling up to a kilometer further south. Towards the end of the quarter, two additional drill programs began testing the northern and southern strike extents of the Brunswick mineralized corridor. At Bjorkdal, near-mine drilling activities in Q1 focused on depth testing of this large system, with programs dedicated to the depth and eastern extension of Aurora and the northern continuation of veining below the Marble Horizon. Towards the end of the quarter, drilling also began on a SCARN extension project aimed at extending the mineralized envelope known for its historically high grades In Q2, near-mine exploration at Bjorkdal will continue in the North Zone depth extension and the Skarn extension programs, as well as a new program focused on infill drilling the eastern extension of the Bjorkdal veining. There was no surface drilling conducted during Q1 2024, however last month Mandalay released exciting results from our northern prospect, Storheden, situated 600 metres north of the Bjorkdal mine.
spk01: The 2023 program aims to confirm and give context for the previous drill as well as test the system at depth. The drilling was successful in our increasing the known depth extent of the deposit to 200 meters. firming the mineralized strike length of 1.6 kilometers with some encouraging assets. During Q2, surface drilling will commence on and we will continue to update the market on our regional drilling programs within the eastern and southern prospects.
spk07: I would like to return the call to our president and CEO, Fraser Boucher. Fraser?
spk06: Yeah, thanks a lot, Chris. I appreciate that. And look, throughout the remainder of 2024, our primary emphasis will be on further improving operational discipline with resulting steady production within projected costs. And we will continue to efficiently allocate capital resources to our self-funded exploration growth, targeting both near mine and regional exploration opportunities, with the plan to expand and prolong reserves at both of our assets. Our vision remains to become a mid-tier gold producer in an industry that is in need of smaller scale consolidation into mid-scale producer status. We are a diversified gold and antimony producer in top tier global jurisdictions with proven cost-effective resource growth replacement based on ongoing organic exploration upside. With this newly enhanced management team aligned with this vision, And with support of cornerstone shareholders, this corporate growth strategy is underpinned by strong cash flows, you know, $16 million free cash flow alone in the past quarter.
spk01: And a strong balance sheet, including $47 million in cash, in the 35 million inactive revolver positions. The transition into this new stage. I anticipate the company emerging. as a key mid-tier player in the gold sector over the next three to five years. So on that note, I wish to thank everyone. This concludes this portion of the call. I'd like to open up the lines for any potential questions. Thank you. Operator.
spk02: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touchtone phone. you will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number two. If you are using a speakerphone, please lift the handset before pressing any keys. Your first question comes from the line of Kevin Tracy from Auburn Asset Management. Please go ahead.
spk03: Great, thanks. Hi, Frazier. It was good to see the grades that Costa filled in the quarter. I was happy to hear you expect those grades to continue. So my question really is around what we can expect over the next few years out of Shepherd. So I look back at your most recent reserve report, and you made a pretty big revision down in the average grade from 12.5 to 10.5 grams per ton. Here we are this quarter, processed grades over 12, and you say that's going to continue so should we be more hopeful that maybe the average grades are north of 12 or i mean i understand this is coming off of the 2023 when grades disappointed but can you help me a little bit there uh sure kevin uh i'll i'll give you a high level and then uh i can uh
spk06: refer further to some comments that Ryan may want to add.
spk01: Look, at the end of the day, the grades will stay for a little while at this, but it doesn't change the reserve grade. that we updated. It's generally I would say a reverse hockey stick later of those grades will go off a little bit. bit so the reserve grade that we stated now we see no change in And although we do see what's happening. other three to six months before it starts to tail off. So it doesn't really change the reserve picture. Picture number one, it doesn't necessarily change Our guidance, that's still online.
spk06: When you use the term hope, I'd be a bit more optimistic and hope where the hope comes in really is the focus we have on our exploration, especially in the near mine in terms of those deposits that Chris shared being continued around Shepherd Surrounds and Cuffley Deeps in particular. Maybe I'll, if you have a further question on that, I can certainly have Chris and or Ryan add some comments. But does that answer your question for now?
spk03: Yeah, maybe I could follow up there on the exploration side. So you say, well, you sound optimistic. When, and you mentioned in your prepared remarks, that we should hope, or you hope or expect to extend the mine life at Costerfield. Are we going to get another reserve report early next year, or, you know, the previous management team had shifted to only updating the reserve reports every two years?
spk06: No, I've changed that coming in. We'll go back to annual. That was just something that was an attempt last year, but I think we've all agreed that both are operations. Annual updates as per, you know, cutoff drilling September, December, December we finish it and then announce early in the year and file it by February of the following year. So that will go back to annual, both of them.
spk03: Okay. And in terms of the mine life extension, where do you expect that to come from? Is that just more an extension of Shepard or do you think Cuffley or True Blue showed some
spk01: promising results last year. Is there any one of those that you think has the best prospects to add reserves this year. Look, I'll make some general high-level comments. And then I'll have Chris stay this way in. At the end of the day, this operation has It's always been exciting. But it has fluctuated in the two to five year months. night for the last 15 years since Mandalay got involved with in 2009. So it's a bit of the nature of the ore body.
spk06: We had the yield success, we had some success around Sheppard. 60-65% of our expenditure is focused on near-mine because reserve extension, even though it's never a guarantee, it has proven to happen in the past, but it's important for us for a number of reasons. Between Sheppard and Cuffley Deeps is probably our highest prospectivity right now, but those things can change. When you make reference to True Blue, though, We want to be clear, that's pretty exciting to us, the whole regional. But when I think regional, I think sort of five plus years out. So that balance of the other 30, 35% of our exploration spend is important. But we want to make sure that we continue to have at least a three to five year mine life in front of us on the near mines. Chris, would you like to add just a few high level comments to that in terms of prospectivity, especially on the near mine versus the regional?
spk07: Yeah, sure, Fraser. I think you've covered it pretty well. But I guess on the near mine front, really sort of where we're looking at at the moment is sort of a westward progression step between Sheppard and Brontwick for that northern part of the field. That's something that we're testing at the moment. And we thought that we needed to kind of wait for testing horizons. We're actually sort of drilling some of our projects there from surface at the moment. But also at the same time we're drilling underneath the Cuffley deposit to the south. But that's quite an exciting area because we already do have resources there and we're looking to extend and upgrade those resources into something that's feasibly mineable.
spk01: Moving on from there, we're pretty excited about the sort of three major areas that are within a couple of kilometers from our structures, so there's, yeah, true blue, the Browns Line, and a northern point extension. which we're drilling all of these this year. We're continuing to do that. That's my two cents. Thanks. Okay. And on Bork, So there the mind grade was around basically in line with what we've seen over the last
spk03: And if I heard correctly on the prepared remarks, the expectation is for the grades to be stable at Borkdahl. And I guess why is that the case? Or I had thought coming into this year with more mining coming from the eastern extension higher grade zone that grades could improve more materially?
spk06: Yeah, good question, Kevin. Let me again give a high level and then Ryan can add some further color. Because this system is so large and massive, as you correctly point out, the issue has never been the size of the system, although we always continue to extend it. It's targeting the higher grade sections. So there's two parts to that. One correct is the Eastern. But because we got that extension last year in the license, there is more development work to be done in that Eastern extension. So while we started to tap into it, there's a bit of a lead time before we can get into that and get more ore on a more consistent basis. And the second part is the overall feed grade. looks a little bit lower because we've expanded our mill. And that's because we're still underground mine constrained somewhat as we increase our development. So we top it up with the old open pit stockpile or we call the BOR. So that grade runs about 0.6. So the average weighted grade of the feed comes down. But to get back to your main question on underground mine, we are targeting the higher grade sections and also focused on minimizing dilution in stope and development areas for all others to try and get that grade to maintain a 1.5, 1.7 grams per ton, so to speak, so the weighted average runs above what you saw in the financial.
spk01: Okay. Good. And on the business development front, Can you just talk about what the activity levels looked like? And can you also confirm that your focus is on Are you open-minded to... Sure. I'll answer that in reverse. We are open minded. with some restrictions in the sense that it's mainly gold, silver, copper, antimony.
spk06: We're not going off into rare earths or lithium or graphite or something like that. So we're not focused only on gold, but I would say precious metals, and certainly with the copper element and having antimony, that gives us a certain interesting lead on some other opportunities we're looking at there. As far as how busy we're on that, I would say we're quite active. That's taking more and more of my time as I engage in discussions with a number of different parties. Fortunately, I leave in good hands the operations and exploration with Ryan and Chris, But with Hashim here and Scott Treblecock, who you would know, we are fairly engaged in doing respective DVs and discussions.
spk03: Okay. And then last thing. So you're earning all this great cash flow. You have net cash. So why hedge? And I saw you just in April, you extended part of the hedge into next year. So I was a bit surprised by that. Can you just talk about why you're doing that?
spk06: Yeah, that's a very good question. And so let me answer that in fall. Back in December 23, when we entered into these hedges, which was about 20% of our production, 25% of our production, just for this year, we kind of hard-tailed that initially at the end of December of this year. Gold was trading at an all-time high, and we wanted to lock in to some of that opportunity more in a sense of creating a solid floor to our 2024 budget.
spk01: It wasn't trying to capitalize on higher gold prices going up, especially for... ...yard dolls being... ...a lower margin, even though it's a large operation. We wanted to just... Let's call it... mitigation. You know, of course, 75% of the gold production and 100% of the antemortem production is not happening. But considering operating performance in Q1. and our strengthening balance sheet. I currently do not see to do that. Further, I prefer to have our investors open to the gold price. So that was a risk mitigation measure. put in three months ago after we did a budget and I saw what it looked like, wanted to make sure we at least had a floor and we're going to exceed that.
spk06: Now that I have more comfort there, my view is that we would not be going back to do that again.
spk01: Okay. Thank you. Thanks, Kevin.
spk02: Ladies and gentlemen, as a reminder, if you have a question, please press star followed by the number one on your telephone keypad. Your next question is from the line of Lawrence, private investor. Please go ahead.
spk05: Good morning, gentlemen, and amazing results. I love the cash position we have. So I just have a few questions, mostly to do with Yorkdale. If Fraser was to authorize the purchase of the optical sorter tomorrow, how would that look like at Bjorkdale? How would it change the head grades on the mill? And how would you address the haulage constraints from the underground mine?
spk06: Hi, Lawrence. Look, thanks for that question. Let me answer it. and then I'm going to have Ryan add some further commentary. Look, we actually did consider ore sorting in the past, both screening and beneficiary type ore sorting, as well as optical. There was a study done. At that time, not to say that we would not revisit that again, we found it was not economic and instead went the route of an increased mill throughput expansion, which was completed towards the end of last year and we're commissioning it as Q1, Q2.
spk01: So that we found was had better economic returns And what we found was not beneficial in the studies we did. But Ryan, would you like to add some more? are colored that reports on the on the Yeah, on the optical... ...sorting... ...a number of years back. capital option and also a um payback and also with the obstacles holding at
spk08: not there is some gold that gets discarded so ultimately at the end when we look at that there's um there's some profit loss in in that um in terms of the mine the mine at the moment is not filling the plant so we're not really constraining that in that way so in terms of moving moving ore We're not totally trucking constrained at Yorkdale. It also comes down to being mining constrained because although it's a big operation and there are a lot of veins, it's narrow vein mining so we have a lot of stopes on the go at one time. That's probably our constraint, getting enough stopes on mine.
spk05: When do you think you're going to get the mill running at full capacity then? if I understood your previous comment. Yeah, so... Yeah, Ryan, you can add that.
spk06: Yeah, no, go ahead. I mean, we're just about there, but you can let Lawrence know the status of that.
spk08: Yeah, basically, in quarter one, we've ramped up to almost where we expect to be, around the 1.45 million tonnes annualised throughput. There are some minor tweaks still going for the next quarter, and I expect by the end of this quarter, we'll be there. at that throughput.
spk05: I like the drill results from the property next door. I can't remember the name of it, and my computer's not working these days, so you're going to have to refresh my memory on it. But I thought the drill results were really good. But evidently, the price of gold had a bit of an effect on the price of the stock, so that was kind of disappointing.
spk01: Thank you very much for your time. And I wish you a wonderful day. Thanks, Laurence. Laurence, appreciate your question. There are no further questions. at this time I would like to hand the call back to Fraser Boshe for closing remarks please go ahead Thank you, operator. Thank you, everyone, for joining. for your time and I'm looking forward to an even more exciting Q&A too so we will talk at that time cheers ladies and gentlemen this concludes today's conference call thank you very much for your participation you may now disconnect
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