mandalay resources november 2016 investor presentation

Download Mandalay Resources November 2016 Investor Presentation

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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, 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 managements

    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 Mandalays 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 Bjrkdal 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 Bjrkdal, 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 Bjrkdal 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 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 our

    stakeholders, and coordinated across the Company for

    maximum effect

    Profitable and Dividend-Paying: (3.4% yield)*

    *Trailing 12 months dividends divided by current market capitalization (Oct. 31, 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

    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

  • 1.7

    32

    79.967.7 64.4 68

    -0.8

    30.6

    61.275.9

    52.473.4

    20.6

    92.2

    171.8 166.9184.6

    194.5

    -50

    0

    50

    100

    150

    200

    250

    2010 2011 2012 2013 2014 2015

    2009

    Costerfield, Australia

    Gold & Antimony

    2010

    Cerro Bayo, Chile

    Silver & Gold

    2014

    Challacollo, Chile

    Silver & Gold

    2014

    Bjrkdal, 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 Companys Managements 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

    50.454.2

    48.5

    17.322.1

    13.8

    7.3

    22.3

    15.5

    0

    10

    20

    30

    40

    50

    60

    Q1 2016 Q2 2016 Q3 2016

    US

    $ M

    MU

    S$ M

    M

  • 1. Assumes full-year 2016 prices: Au $1,258/oz, Ag $17.00/oz, Sb $6,505/t

    6

    Based on matched production and reserve growth

    6

    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 Q3 2016

    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 2017E

    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

    149,000

    152,000(1)

    155,000

    175,000(1)

  • 0

    50

    100

    150

    200

    250

    300

    2010 2011 2012 2013 2014 2015

    US

    $/o

    z A

    u E

    q. P

    &P

    Ad

    de

    d

    Mandalay cost of acquiring and discovering 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

    And adding reserves cost-effectively

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

    2. Source: BMO

    Exploration adds at

    cumulative average

    $50/oz Au Eq.

    Acquisition + Exploration

    adds at cumulative

    average $78/oz Au Eq.

    (for developed &

    producing reserves)

    Cerro

    Bayo

    Bjrkdal

    Median for all Au sector acquisitions

    2012 2016 = $254/oz Au Eq.(2)

    7

  • 50%

    100%

    150%

    200%

    250%

    300%

    350%

    Q32009

    Q12010

    Q32010

    Q12011

    Q32011

    Q12012

    Q32012

    Q12013

    Q32013

    Q12014

    Q32014

    Q12015

    Q32015

    Q12016

    Q32016

    Mandalay Cumulative Returns

    14.6% Annual Compounded Rate of Return

    Gold

    Silver

    (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: Alacer, Argonaut, Dundee PM, Kirkland, Klondex, Newmarket, Perseus, Primero, Richmont. (3) Gold Seniors: Agnico Eagle, AngloGold, Barrick, Goldcorp, Gold Fields, Kinross, Newcrest, Newmont,

    Polyus, Randgold. (4) End date as at October 17, 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)

    14.6% Cumulative Total Return (% Value Change)*

    *Q3 2010 to Q3 2016, includes all div