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Mandalay Resources reports 'stellar' performance in 3Q, thanks to metals prices and its Australia mine

The firm, which also has the Björkdal mine in Sweden, said the numbers represented the third straight quarter of improved financials and cash generation

Mandalay Resources Corp. -
Mandalay posted another all-time record in quarterly adjusted EBITDA at the Costerfield mine of $18.8 million

Mandalay Resources Corporation (TSE:MND) (OTCQB:MNDJF) (FRA:R7X2) posted what it called a 'stellar' third quarter, showing the firm has 'turned the corner' financially and operationally, thanks to high metals prices and a continued strong performance from its Costerfield mine in Australia. 

The miner, which also operates the Björkdal mine in Sweden, said the numbers represented the third straight quarter of improved financials and cash generation and it expects the positive trend to continue. 

READ: Mandalay Resources hails recent drill results from Youle deposit in Australia, which will add potential mine-life

Adjusted underlying earnings (EBITDA) for the three months to September 30, came in at US$26.7 million, up from US$5.5 million in the same quarter last year, which was the firm's second-highest on record.

Revenue was US$49.7 million (2019: US$28.7 million), which Mandalay said was the highest quarterly revenue figure since the second quarter of 2016.

Dominic Duffy, the group's CEO, told investors in a statement that the company's performance was driven by "another all-time record in quarterly adjusted EBITDA at Costerfield of $18.8 million, surpassing the $15.4 million record set last quarter".

"As a result, we generated a $26.7 million in adjusted EBITDA on a consolidated basis during the quarter, bringing the year-to-date total to $68.9 million – more than 400% higher than the $14.9 million amount in the same period last year," he said.

"Our consolidated cash costs for the quarter were $826 per saleable gold equivalent ounce produced as compared to the $1,186 in the same period last year.”

Free cash flow across the group for the third quarter was US$17 million, while net cash flows from operating activities came in at US$28.9 million.

"We increased our cash balance since the previous quarter by 57%, ending the third quarter of 2020 with a cash balance of $32.9 million, and are well-positioned to meet our target of becoming net debt neutral in 2021," added Duffy.

The Costerfield mine in Victoria produced 11,749 ounces of gold and 991 tonnes of antimony for 14,620 gold equivalent ounces in the third quarter of 2020 and recorded quarterly revenue of US$27.9 million, a 22% improvement on last quarter, and an adjusted quarterly EBITDA margin of 67%.

Mandalay expects further improvement during the fourth quarter at the mine and that output for 2021 will exceed 2020.

Over in Sweden, Mandalay said Björkdal produced 11,044 ounces of gold in the third quarter with cash and all-in sustaining costs of US$1,051 per ounce (oz) and US$1,505 per oz, compared to US$941 per oz and $1,332 per oz respectively, in the same quarter of 2019.

"Björkdal delivered "stable, profitable" gold production, said Duffy, which led to US$21.9 million in revenue and US$9.6 million in adjusted EBITDA.

"We expect Björkdal to improve operationally and financially in the coming quarters as we develop further into the higher-grade, lower levels of the Aurora zone," he added.

Mandalay has producing assets in Australia and Sweden, and care and maintenance and development projects in Chile.

Shares in Toronto added 1.82% to C$1.68 each.

----Updates for share price---

Contact the author at giles@proactiveinvestors.com

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Price: 2.15 CAD

Market: TSX
Market Cap: $196.14 m

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