Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Mandalay Resources Corp (MNDJF, Financial) reported strong financial performance with revenue increasing to $55 million, up from $41 million in Q3 2023.
- The company's cash position has significantly strengthened, standing at $55 million at the quarter's end, more than doubling since December 2023.
- Mandalay Resources Corp (MNDJF) fully repaid its $20 million revolving credit facility, leaving the company with zero debt.
- Operating cash flow rose substantially to $21 million, and free cash flow increased to $13 million, compared to $4 million and negative $6 million last year, respectively.
- The company remains on track to achieve its annual production guidance of 90,000 to 100,000 gold equivalent ounces, maintaining its long-term commitment to profitability and shareholder revenue.
Negative Points
- Operational challenges were faced in Q3, including a slight production decline at Costerfield due to typical quarterly metal grade variations.
- Antimony production declined by 36% from Q3 2023, attributed to increased feed from the lower antimony grade Shepherd deposit.
- Bjorkdal experienced a 14% decrease in gold production due to flooding from unseasonal rainfall, impacting access to higher margin areas.
- Operating costs rose by 7% year over year, driven by increased costs for tailings and water management.
- All-in sustaining costs per ounce sold increased by 25% year on year, mainly due to increased operating costs and a reduction in ounces produced.
Q & A Highlights
Q: Can you comment on the antimony grades and the potential for improvement given the current market prices? Also, is there a possibility to lock in higher prices through long-term contracts?
A: The antimony grades are lower as expected due to mining in the Shepherd area, but higher-grade areas remain in the reserves. Some higher grades will come through in the next few years. Unfortunately, the antimony market lacks financial instruments to lock in prices, but we continue to explore options. (Frazer Bourchier, President & CEO; Ryan Austerberry, COO; Hashim Ahmed, CFO)
Q: With the improved cash balance and outlook, has your business development focus shifted from mergers of equals to individual asset purchases?
A: Asset purchases have become more challenging due to high seller expectations in the current metal price environment. We remain cautious to avoid diluting shareholders and continue to explore potential mergers with companies in similar situations. (Frazer Bourchier, President & CEO)
Q: Are you tracking to the low end of your CapEx guidance, and is this range reasonable for 2025?
A: CapEx was light in the first half of the year but will increase in Q4 due to tailings work at Costerfield. We might be slightly below the budgeted spend but within guidance. For 2025, while we don't provide guidance until January, the range is likely consistent with past years, including exploration spend. (Hashim Ahmed, CFO; Frazer Bourchier, President & CEO)
Q: Could you provide more details on the operational challenges faced in Q3 and the measures taken to address them?
A: At Costerfield, production was stable despite lower antimony grades. At Bjorkdal, flooding impacted access to high-margin areas, but we maintained mill capacity using lower-grade stockpiles. Investments in water infrastructure and process optimization are underway to improve future production. (Ryan Austerberry, COO)
Q: What are the key exploration initiatives and their expected impact on resource growth?
A: Exploration at Costerfield focuses on high-confidence resources in Shepherd and Kendal veins, with promising high-grade intercepts. At Bjorkdal, efforts target the eastern extension and other prospective zones, aiming to validate and grow high-grade resources. (Chris Davis (Trades, Portfolio), VP, Operational Geology & Exploration)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
