Dominic Duffy, president and CEO of Mandalay Resources (TSX:MND, OTCQB:MNDJF), reports seeing positive signs in production at its mines and expects the Canadian miner to finish with a stronger fourth quarter and ride this “positive momentum” into 2019.
Looking ahead, the company’s focus is to fast-track production from the high-grade Youle deposit at its Costerfield gold-antimony mine in Victoria, Australia.
“With the operational issues of the third quarter now fundamentally behind us, Mandalay expects to finish with a stronger fourth quarter, generating positive momentum into 2019,” Duffy said in a statement. “Going forward, our primary focus is to fast-track production from the high-grade Youle deposit at Costerfield.”
Duffy described Mandalay’s third-quarter as “challenging” operationally as the Canadian metals miner worked to address and correct production disruptions at its two producing mines, Costerfield and the Björkdal gold mine in Sweden.
Production and sales this quarter were significantly impacted by a delay in the on-vein development of the Brunswick lode at Costerfield, caused by the need for more dewatering than anticipated. This was combined with a changeover of the underground haulage contractor at Bjorkdal which caused a haulage bottleneck of higher-grade underground ore, which created the need to process lower-grade stockpiled material.
“The lower production and sales volumes for the quarter compared to previous quarters negatively impacted the Company’s financial performance and led to uncharacteristically high unit costs, which we do not expect to recur in the coming quarters,” Duffy said.
But Duffy is bullish on the mines’ future prospects as the company has begun development on the higher-grade Brunwick vein at Costerfield and is seeing higher-grade ore being processed at Bjorkdal early in the fourth quarter.
“We are … pleased to say that we have now begun development on the higher-grade Brunswick vein at Costerfield, and we are seeing higher-grade ore being processed at Björkdal early in the fourth quarter, as the underground haulage rates continue to increase at the mine,” Duffy said.
During the third quarter, Mandalay reported some positive news regarding its non-core assets. First, the company signed a non-binding letter of intent with Aftermath Silver Limited to sell its Challacollo silver-gold project in Chile in exchange for total consideration of C$11.6 million.
Second, the company also received C$5.3 million via a release of funds which had been posted by Mandalay as a security for its reclamation obligations related to the Lupin mine. Last July, Mandalay filed its final closure and reclamation plan for the Lupin mine, which is set to be approved about 12 months from its submission.
In the third quarter, Mandalay reported quarterly revenue of $21.8 million, down from $35.4 million in the year-ago quarter. Its consolidated net loss came to $7.47 million.
Its Björkdal gold mine produced 8,504 ounces of gold in the third quarter while Costerfield produced 8,370 gold equivalent ounces.
Mandalay slipped 6.67% to C$0.070 in Thursday’s afternoon-trading session.
Contact Ellen Kelleher at [email protected]