Download - Mandalay Resources September 2016 Investor Presentation

This presentation contains "forward-looking statements" within the meaning of applicable securities laws, including statements relating to life of

mine production plans, exploration plans and the growth and strategy of Mandalay. Actual results and developments may differ materially from

those contemplated by these statements depending on, among other things: exploration results or production results not meeting management’s

expectations; capital, production and operating cost results not meeting current plans; 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. 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 30, 2016 and

in its final prospectus dated July 18, 2016, copies of which are 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.

Quality Control and AssuranceQuality control and assurance programs are implemented in line with the standards of National Instrument 43-101.

The exploration programs at Costerfield and Björkdal are supervised by Chris Gregory (Member, Australian Institute of Geoscientists, VP of

Operational Geology for Mandalay and a “Qualified Person” as defined under National Instrument 43-101. Mr. Gregory regularly visits Costerfield

and Björkdal, and supervises the collection and interpretation of scientific and technical information contained in this presentation.

The exploration programs at the Cerro Bayo and Challacollo projects are supervised by Scott Manske, Chief Cordilleran Geologist of Mandalay

Resources, and an Oregon registered Professional Geologist. A “Qualified Person” as defined by NI 43-101, he has reviewed and approved the

technical and scientific information on these projects contained in the presentation.

Dr. Mark Sander (Member: AusIMM), President and CEO of Mandalay, has visited the Costerfield, Cerro Bayo, Challacollo, and Björkdal and

has supervised the preparation of this presentation.

All currency references in US$ unless otherwise indicated

Forward-looking Statements

2

A Values-Based and Value-Focused Company

We 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

WE ARE SUCCESSFUL WHEN:

Our employees live and work safely and experience the personal

satisfaction that comes with high performance and recognition

The communities in which we operate value our presence

Our environmental impact is minimized and causes no permanent harm

We have a large, diversified set of customers who are delighted with

and compete for our products

Our shareholders realize a superior total return on their investment and

support our corporate values

Our values are visibly demonstrated by strong local management, at the

point of impact with or stakeholders, and coordinated across the

Company for maximum effect

Profitable and Dividend-Paying: (2.9% yield)*

*Trailing 12 months dividends divided by current market capitalization (Sept 1, 2016)

3

Designed for Value: How We are Different

Acquire only when we see possibility of 3-5X value uplift in 3-5 years

Target cash cost of production: 50% of ‘reversion to mean’ metal price

• Au <$700/oz

• Ag<$10/oz

100% ownership of all operations; no private royalties, no streams

Flat, virtual, low-cost organizational structure; local GM accountability

Direct relationships and sales contracts with customers

Dividend-paying: 6% of trailing quarterly revenue

No hedging of metal prices

Lightly levered with low-interest, gold-convertible bonds

Stingy with equity

Disciplined management processes operated with integrity

Compensation systems based on value-add

4

2009

• Costerfield, Australia

• Gold & Antimony

2010

• Cerro Bayo, Chile

• Silver & Gold

2014

• Challacollo, Chile

• Silver & Gold

2014

• Björkdal, Sweden

• Gold

Results: Strong performance across the price cycle

1. The Company defines EBITDA as earnings before interest, taxes and non cash charges/ (income). EBITDA should not be considered by an investor as

an alternative to net income or cash flow as determined in accordance with IFRS – EBITDA figures reflect adjusted EBITDA, please see the Company’s Management’s Discussion

and Analysis.

TIMELINE

2016 Quarterly

Financial

Measures

Revenue,

EBITDA(1) &

Cash from

Operations

Revenue

EBITDA

Cash from

Operations

Record

Revenue

2nd best EBITDA &

Cash from Operations

• No acquisition

• Optimize operations

• Pay down debt

• Exchange warrants

• Begin dividends

2011-2013

5

1. 2016 metal price assumptions: $1,202/oz Au, $16.87/oz Ag and $6,820/t Sb

2. Please refer to Mandalay’s NI 43-101 Mineral Reserves and Resources Estimates, filed on SEDAR and available on the Company’s website.6

Based on Matched Production and Reserve Growth

6

15,854 63,351

107,941 126,908

154,810 166,679

254,000

520,000 633,000

772,000

1,123,000 1,070,000

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

0

50,000

100,000

150,000

200,000

250,000

300,000

2010 2011 2012 2013 2014 2015 2016E

Oz A

u E

q.

Ye

ar-

En

d R

es

erv

es

Oz A

u E

q.

An

nu

al

Pro

du

cti

on

165,000 –

180,000(1)

With Continuing Low Cash and All-In Production Costs

$/O

z A

u E

q. (C

os

t) o

r A

u (

Pri

ce

)

600

800

1,000

1,200

1,400

1,600

1,800

-

10,000

20,000

30,000

40,000

50,000

60,000

Production Cash Cost AISC Average Au price

Au

Eq

. O

z/Q

tr

Reducing volatility with growing number of operations

1 mine restart

1 mine restart

1 mine transformation1 mine restart

1 mine transformation2 mines producing

1 mine transformation

P&L Margin

EBITDA Margin

2010 2011 2012 2013 2014 2015 1H-2016

And Adding Reserves Cost-Effectively


2. Please refer to Mandalay’s NI 43-101 Mineral Reserves and Resources Estimates, filed on SEDAR and available on the Company’s website.7

0

20

40

60

80

100

120

140

160

180

2010 2011 2012 2013 2014 2015

US

$/o

z A

u E

q. P

&P

Ad

ded

Mandalay Cost of Acquiring and Exploring for Reserves

Cumulative Cost per oz Au Eq. Acquired or Discovered

Cost Per oz Au Eq. Discovered in yr

Cost Per oz Au Eq. Acquired in yr

Exploration adds at

cumulative average

$50/oz Au Eq.

Acquisition + Exploration

adds at cumulative

average $78/oz Au Eq.

(for developed &

producing reserves)

0

2

4

6

8

10

12

14

16

18

20

-$20,000

$0

$20,000

$40,000

$60,000

$80,000

$100,000

Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15

Volu

me (

mill

ions)

Invest

ment

Valu

e

(1) Adjusted for reinvested dividends. Assumes investment in Mandalay made as part of private placement announced on 24-Sep-09 to fund acquisition of Costerfield and accounts for warrant exchange offer of

0.47 shares per warrant. (2) Peer Index: Argonaut, Dundee PM, Kirkland, Lake Shore, OceanaGold, Perseus, Primero, Timmins. (3) Gold Seniors: Agnico Eagle, AngloGold, Barrick, Goldcorp, Gold Fields,

Kinross, Newcrest, Newmont, Polyus, Yamana. (4) End date as at July 26, 2016.

Creating Superior Value for Shareholders

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

2010 2011 2012 2013 2014 2015 9M-2016

Dividends Paid (USD)**

6% of revenues (dividend contribution)

16.2% Cumulative Total Return (% Value Change)*

*Q3 2010 to Sept 1, 2016, includes all dividends paid. Source: MetalPrices.com for metal spot prices Index: September 30, 2009 = 100. Mandalay share price: $1.10.

Graph updated quarterly, prices as at the last trading day of each respective quarter.

**Annual cash dividend paid quarterly, based on 6% of the Company’s trailing quarter’s gross revenue and the future cash requirements of the Company

Mandalay(1) Peer Index(2) Gold Senior(3)

Total Return vs. Peers and Seniors

A $10,000 investment on September 24, 2009 would be worth today(4):

• Mandalay: $77,332• Peer Index: $13,000• Gold Seniors: $8,328

8

Record

Dividends

50%

100%

150%

200%

250%

300%

350%

Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3 2013 Q3 2014 Q3 2015 1-Sep-16

Mandalay Cumulative Returns

16.2% Annual Compounded Rate of Return

Gold

Silver

Trading Volume, Ownership and Coverage

Major Shareholders(1)

Holders Shares (Million) Shares (Percentage)

GMT Capital 62.6

Sentry Investments 43.5

Ruffer LLP 42.0

Plinian + Management + Directors 37.5

West Face Capital 35.3

Large Holders (Top-5) 220.9

Other Holders 229.8

TOTAL 450.7

Analyst Coverage

Firm Analyst

BMO Brian Quast

Desjardins Mike Parkin

Haywood Ben Asuncion

Raymond James Chris Thompson

Volume

30-day Average Daily Volume 1,067,859

100-day Average Daily Volume 1,207,267

13.9%

9.7% 9.3%

8.3%

7.8%

51.0%

9

Average Daily Volume across all trading platforms as at August 11, 2016

Known ownership positions as at July 26, 2016

As at September 1, 2016 Millions

(Except Share Price Info)

Share price (Sept 1, 2016 - close) (C$) 1.10/shr

Shares Outstanding 450.7

Stock Options(1) 20.1

Fully Diluted Shares Outstanding 470.8

Market Capitalization (C$) $495.8

Cash and Cash Equivalents (US$) + Cash Proceeds of Bought Deal(3) $73.7

Total Interest-Bearing Debt (US$) $58.8

Total Enterprise Value (US$)(2) $371.8

Net Cash (US$) $14.9

Strong Balance Sheet

1. Exercise Price: C$0.58 – C$1.13 expiry dates ranging from April 11, 2016 - Mar 24, 2020

2. Market Capitalization converted to US$ using exchange rate of 1 CAD = 0.78 USD (Sept 1, 2016) – Debt number as at end Q2-2016

3. Cash position is as at end of Q2-2016, plus the C$36.9 million net proceeds raised on bought deal that closed July 26, 2016

10

Corporate Consolidated Guidance

2016E

Au oz Saleable Production 100,000 – 115,000

Ag oz Saleable Production 2.9 million – 3.3 million

Sb t Saleable Production 3,000 – 3,500

Total Forecast Production Au Eq oz 165,000 – 180,000(1,2)

Reiterating corporate total guidance Au Eq. oz and cash cost/saleable oz;

individual sites will vary up or down, balancing out.

Total cash costs per saleable Au Eq oz $690 – $810

Total capex spend $31 million – $37 million(3)

Total exploration spend $7 million(4)


2. Actual AuEq production ounces dependent on realized metal prices used for AuEq calculation

3. Excluding Board approved unbudgeted capex of $3.7 million, announced Aug. 11, 2016

4. Excluding Board approved unbudgeted exploration spend increase of $3-4 million, announced Aug. 11, 2016

11

Corporate Consolidated Guidance – Production, Investment & Costs

Currently pointing to:

Lower end of consolidated Au Eq. production range

Upper end of consolidated cash cost/oz Au Eq range

$3-4 million exploration spend above guidance

Costerfield Gold-Antimony Mine: Turnaround Complete

Land package 1,293 hectares

Ownership 100%

Number of Employees(1) 172 direct, 4 contractors: 176 total

Current throughput (Q2-2016) 405 tpd

Plant recoveries (Q2-2016) Au: 90.73%, Sb: 95.11%

1. As at year-end 2015, filed in Company’s Annual Information Form

12

13

Costerfield: Continuous Improvement

$0

$100

$200

$300

$400

0

10,000

20,000

30,000

40,000

50,000

Q4-09(Dec. only)

Q4-10 Q4-11 Q4-12 Q4-13 Q4-14 Q4-15

USD

/ To

nn

e

Ton

nes

Pe

r Q

uar

ter

Mining Rate and Unit Cost

t Mined Cost/ t Mined

$0

$50

$100

$150

0

10,000

20,000

30,000

40,000

50,000

Q4-09(Dec. only)

Q4-10 Q4-11 Q4-12 Q4-13 Q4-14 Q4-15

USD

/ To

nn

e

Ton

ne

s P

er

Qu

arte

r

Processing Rate and Unit Cost

t Processed Cost/ t Processed

Cont. Impr.

Start-up

$0

$1,000

$2,000

$3,000

0

5,000

10,000

15,000

20,000

Q4-09(Dec.only)

Q4-10 Q4-11 Q4-12 Q4-13 Q4-14 Q4-15 USD

/ O

z A

u E

q.

Ou

nce

s P

er

Qu

arte

r

Au Equivalent Production and Unit Cost

Oz Au Eq. Cost/ Au Eq. Oz

Costerfield Operational Improvements:

Record High Rate Record Low Cost

Improved mine output/mill throughput from

170 tpd to 450 tpd (capped by grid power and

site grinding capacity)

Changed mining method from cut-and-fill to

blast-hole stoping with cemented rock fill

(greater production, lower unit costs)

Introduced contract capital development for

faster and lower cost results

Increased sub-level spacing from 5 – 10 m

Replaced mechanized mining fleet

Introduced mobile crusher to decrease particle

size of mill feed (better recoveries, higher

throughput)

Grew mine life from zero reserves to roughly 4

years while mining continuously for 6 years

Operations continue setting records and new

targets being tested

13

Start-up

Transformation

Cont. Impr.

14

Costerfield H1 2016 N-Lode North drilling

Areas in plane of zone with

cluster of intercepts >1.6

g/t Au over 1.8 m minimum

mining width

Section views– labeled dots represent H1 2016 intercepts;

unlabeled dots represent pre-2016 intercepts

Plan view– unlabeled dots represent H1 2016 intercepts

Costerfield H1 2016 New Lode drilling

15


Areas in plane of zone with cluster

of intercepts >1.6 g/t Au over 1.8 m

minimum mining width

Section views– labeled dots represent H1 2016

intercepts; unlabeled dots represent pre-2016 intercepts

Taits

mine

Costerfield H1 2016 Brunswick Lode drilling

16


Areas in plane of zone with cluster

of intercepts >1.6 g/t Au over 1.8 m

minimum mining width

Section views– labeled dots represent H1

2016 intercepts; unlabeled dots represent

pre-2016 intercepts

Björkdal Gold Mine: Emerging from Intensive Care


Ownership 100%


Current throughput (Q1-2016) 3,560 tpd

Plant recoveries (Q2-2016) Au: 88.4%

1. As at year-end 2015, filed in Company’s Annual Information Form17

18

Björkdal Operating Performance and Improvements

$0

$5

$10

$15

$20

$25

$30

0

100,000

200,000

300,000

400,000

Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16

$/

Ton

ne

Ton

ne

s P

er Q

ua

rter



$0

$2

$4

$6

$8

$10

0

100,000

200,000

300,000

400,000

Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16

$/

Ton

ne

Ton

ne

s P

er

Qu

arte

r



$0

$500

$1,000

$1,500

0

5,000

10,000

15,000

Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16

$/

oz

Au

Ou

nce

s G

old

Pe

r Q

uar

ter

Saleable Gold Produced and Unit Cost

Au oz Cost/ oz Au

Björkdal 2015 Operational Improvements:


Introduced best practice mapping, drilling,

sampling, and modelling of high nugget-

effect gold deposits

Produced a more refined resource model to

support more selective underground & open

pit mining techniques

Establishing a local assay lab for faster

grade control turnaround

2016 Planned Improvements:

Increasing grade of mill feed through more

selective underground and open pit mining at

an increasing rate (making up for discarding

waste)

Pilot optical ore sorting – IN PROGRESS

Pilot coarse and ultra-fine gold float – DONE

18

Transitioning to Proper Longitudinal Grade Control

19

Sampling every round results in

discarding 30-40% of material

Ore sorting: Encouraging visual results backed up by preliminary processing results

20

“Ore” – Abundant vein fragments,

presumed increased grade

“Waste” – No vein fragments,

presumed very low-grade

Bulk Test

Start

Grade

End

Grade

Times

Upgraded

Waste

Rejection

Gold

Retained

g/t Au g/t Au (%) (%)

Underground

Ore 1.93 2.97 1.54 43.0 87.0

Stockpile

Ore 0.80 1.19 1.48 39.0 90.0

Result includes fines (-20mm) that are too fine to sort

Björkdal Processing Improvements

21

Completed:

Sampling survey on milling and gravity gold circuits to identify

improvement opportunities

Laboratory flotation recovery study on effect of fineness of

grind, % solids, and residence time – key for decision-making

on possible future flotation circuit expansion

Pilot on-site testing of coarse and ultra fine gold flotation

Flotation circuit and ancillary equipment expansion study to

determine OPEX and CAPEX for a planned flotation circuit

expansion. Goal: improve flotation recovery and concentrate

grade

2016 Planned Improvements:

Milling/Flotation material flow stability survey to identify areas

where automation can be implemented to improve recovery

Introduction of high chrome grinding media for increased wear

resistance, grinding media cost saving and improved pulp

chemistry for improved flotation recovery

22

Björkdal H1 2016 Drill Results

Filling in gap

between Open Pit

and Nylunds

Expanding

underground

footprint

5 km top-of bedrock gold anomaly

extends from open pit to Au

prospect at Ronnberget

DDE2015-006 (assays received in

2016) about halfway along;

intersected 1.05 m @3.91 g/t Au

Cerro Bayo Silver-Gold MineLand package 23,106 hectares

Ownership 100%


Current throughput (Q1-2016) 1,157 tpd

Plant recoveries (Q2-2016) Ag: 87.62%, Au: 84.00%


23

Cerro Bayo Operating Performance and Improvements

$0

$50

$100

0

50,000

100,000

150,000

Q4-10 Q2-11 Q4-11 Q2-12 Q4-12 Q2-13 Q4-13 Q2-14 Q4-14 Q2-15 Q4-15 Q2-16

$/

Ton

ne

Ton

ne

s P

er Q

ua

rter



$0

$50

0

50,000

100,000

150,000

Q4-10 Q2-11 Q4-11 Q2-12 Q4-12 Q2-13 Q4-13 Q2-14 Q4-14 Q2-15 Q4-15 Q2-16

$/

Ton

ne

Ton

ne

s P

er

Qu

arte

r



$0

$5

$10

$15

$20

0

500,000

1,000,000

1,500,000

Q4-10 Q2-11 Q4-11 Q2-12 Q4-12 Q2-13 Q4-13 Q2-14 Q4-14 Q2-15 Q4-15 Q2-16 $/

oz

Ag

Ne

t B

ypro

du

ct

Oz

Ag/

Qu

arte

r

Saleable Silver Produced & Unit Cost

Ag oz Cost/ oz Ag net Au

Cerro Bayo Operational Improvements:

Shifted the mining method from shrinkage

stoping to completely mechanized blast hole

open stoping;

Ramped up throughput from 0 tpd – 1,400 tpd

from three mines

Installed flotation automation system to

maximize silver and gold recoveries

Extended mine life from 3 years at 1,200 tpd

to 5 years at 1,400 tpd while mining

continuously for 4 years

Ongoing improvements to increase pace of

development mining

24


25

Laguna Verde veins and operations

View

Delia SE Portal

Cerro Bayo H1 2016: Drill results in Coyita SE vein

26

• Dots without assay labels are

pre-2016 intercepts

• Dots with number and assay

labels are H1-2016 results

27

Cerro Bayo H1 2016 – Branca vein long section showing new drill intercepts

• Dots without assay labels are

pre-2016 intercepts

• Dots with number and assay

labels are H1-2016 results

Challacollo Silver-Gold Project 2016


Ownership 100%

Location 130 km SE of Iquique, Chile

Mineralization Epithermal, oxidized Ag-Au

Number of Employees(1) 6 direct: 6 total

Elevation Approx. 1,500 ASL


28

Water exploration and water rights transfer

Exploration and optimization

Self- potential

anomalies north and

south of Lolon veinLolon vein

29

Invest with us: How we will deploy your capital

1. Acquire new assets counter-cyclically – only at deep discount to value

• Deliver base case returns at least 2x the investment

• Upside case 3-5x over 3-5 years based on specific testable hypotheses

• Keep portfolio evergreen – exit assets that do not fit

2. Execute focused operational improvement projects at each site

3. Apply relentless, disciplined financial management

• Exploration – project portfolio targeted on discovery of near-term reserves

• Mining – projects focused on safer, more mechanised mining with higher extraction, lower dilution

and reduced cost

• Metallurgical – projects focused on higher recovery, higher availability, higher quality products with

higher payables and reduced costs

• Commercial – create more diverse customers paying better terms

• Low cash cost and overheads for high EBITDA margins

• Low DD&A for high P&L margins – low acquisition cost, focused CAPEX & exploration

• Prudent, low-cost leverage to fund growth when needed

• Minimize shareholder dilution

• Return cash to shareholders: dividend = 6% trailing qtr. revenues

4. Engage all stakeholders in a values-based and value-focused organization

For more information, please contact:

Greg DiTomaso

Director, Investor Relations

Tel: 647.260.1566

Email: [email protected]

Company Website: www.mandalayresources.com

Twitter: @MandalayAuAg

Download - Mandalay Resources September 2016 Investor Presentation

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