Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Mandalay Resources Corp (MNDJF, Financial) achieved significant financial progress in the first half of 2024, generating $24 million in cash flow from operations and an adjusted EBITDA of $36 million.
- The company strengthened its balance sheet, ending the quarter with a cash balance of $63 million and repaid the entire $20 million outstanding balance on its revolving credit facility.
- Operationally, Mandalay Resources Corp (MNDJF) is on track to meet its annual production guidance of 90,000 to 100,000 gold equivalent ounces, having produced approximately 51,000 gold equivalent ounces in the first half of 2024.
- The Costerfield site saw a 32% increase in gold equivalent ounces produced in Q2 2024 compared to the same period last year, driven by a rise in the average milled gold head grade.
- Bjorkdal achieved a 21% increase in production in Q2 2024 compared to Q2 2023, attributed to the inclusion of high-grade Aurora development in the plant's feed material.
Negative Points
- Costerfield faced geotechnical challenges that required adjustments to the mine schedule, potentially impacting production stability.
- Processed antimony grades at Costerfield were lower in Q2 2024 compared to Q2 2023, and this trend is expected to persist.
- The company anticipates a decrease in gold equivalent mining grades at Costerfield in the second half of the year.
- Despite strong financial performance, the company has not committed to a dividend, prioritizing investment opportunities and potential acquisitions.
- There was a notable sale of shares by the lead independent director, raising concerns about insider confidence in the company's strategy.
Q & A Highlights
Q: Looking to next year, should we expect grades at Costerfield to decline and production to decline in 2025?
A: Frazer Bourchier, President and CEO, mentioned that while grades might taper off this year, the budgeting process for next year is ongoing. Ryan Austerberry, COO, added that gold grades are expected to remain stable, with a slight drop in antimony grades. Production tonnage should be similar to this year.
Q: Can the production at Björkdal in Q2, which was the best in a while, be improved upon?
A: Frazer Bourchier explained that improvements were largely due to the mill conversion project, increasing throughput. While focusing on higher-grade areas, more development and drilling are needed for sustainable improvements.
Q: Can you provide an update on exploration at Costerfield and the confidence in replacing reserves this year?
A: Christopher Davis, VP of Operational Geology and Exploration, stated that significant milestones are approaching, and a press release will be issued soon. While progress is expected, it's too early to provide specific indications on reserve replacement.
Q: With the credit facility paid off, is there any thought of a potential dividend?
A: Frazer Bourchier noted that while dividends are an option, they rank lower in priority compared to investment opportunities within existing operations or potential acquisitions. A sustainable dividend policy is preferred over intermittent payouts.
Q: Regarding gold hedges, have 25,000 ounces been moved to next year, or is there an additional 15,000 ounces hedged for next year?
A: Hashim Ahmed, CFO, clarified that 15,000 ounces from the initial 25,000-ounce hedge were restructured to next year. A put option was purchased for the second half of the year to secure gold sales at a minimum price, providing downside protection.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
