Consolidated cash operating cost per ounce of gold equivalent produced increased by 22% to $1,322 per ounce in the third quarter of 2024 compared to $1,084 in the third quarter of 2023 due to the 8% decrease of gold equivalent production in Q3 2024 with 20,323 ounces produced compared to 22,032 ounces in Q3 2023, combined with a 13% increase in cash costs mainly due to increased costs for tailings and water management at Costerfield and increased process plant throughput (tonnage) at Björkdal.
All-in sustaining costs increased by 25% to $1,790 per ounce of gold equivalent produced in Q3 2024, compared to $1,436 in Q3 2023, mainly due to the 22% increase in cash operating costs per ounce of gold equivalent produced. Consolidated general and administrative costs were $0.9 million higher compared to the third quarter of 2023 mainly due to higher business development costs.
Costerfield gold-antimony mine, Victoria, Australia
During Q3 2024, Costerfield produced 8,218 ounces of gold compared to 8,377 ounces in Q3 2023, a decrease of 2% or 159 ounces. The decrease in ounces produced was a result of a decrease in the average milled gold head grade from 9.56 g/t in Q3 2023 to 8.09 g/t in Q3 2024. Production in Q3 2024 was affected by some unplanned overbreak in Shepherd stopes. Antimony production during Q3 2024 was 252 tonnes, a 36% decrease from the 395 tonnes produced in Q3 2023. This was mainly due to a decrease in the average milled antimony head grade from 2.18% in Q3 2023 to 1.33% in Q3 2024 due to an increased mill feed of ore from Shepherd which carries less antimony than ore from Youle ore body.
The cash operating cost per ounce of gold equivalent produced increased by 20% to $1,174 per ounce in Q3 2024 compared to $975 per ounce in Q3 2023, and all-in sustaining cost per ounce of gold equivalent produced increased by 13% to $1,424 per ounce in Q3 2024 compared to $1,265 per ounce in Q3 2023, both mainly as a result of a 19% increase in cash operating costs compared to Q3 2023, mainly due to increased processing costs due to higher costs for tailings and water management and increased mining costs due to higher costs for maintenance including unplanned corrective machine maintenance and increased costs for parts. Costerfield generated $27.3 million in revenue and $17.5 million in adjusted EBITDA, which resulted in net income of $8.5 million.
Björkdal gold mine, Skellefteå, Sweden
During Q3 2024, Björkdal produced 9,626 ounces of gold compared to 11,224 ounces in Q3 2023, a decrease of 14% or 1,598 ounces. The reduction at Björkdal was primarily caused by lower mined tonnes due to inclement weather causing flooding in the Main (Eastern) Zone thereby temporarily restricting access to this area. Consequently, the site had to pivot to, and rely on, lower-grade mining areas. With reduced mining flexibility affecting mined tonnes, there was also an increase in low grade surface stockpile feed to maximize plant feed leading to lower production ounces. The gold mill head grade is expected to return to levels of the first half of 2024, as access returns to the Main (Eastern) extension and more material is mined from that more consistent and reliable underground area.
The cash operating cost per ounce produced for Q3 2024 increased by 25% to $1,487 per ounce compared to $1,189 per ounce in Q3 2023 and all-in sustaining cost per ounce of gold equivalent produced increased by 33% to $1,967 per ounce in Q3 2024 compared to $1,474 per ounce in Q3 2023, both mainly as a result of the 14% decreased gold production combined with a 7% increase in cash operating costs mainly due to higher throughput post the commissioning of the mill conversion capital investment project in Q1 2024 resulting in increased consumption of grinding media and other mill consumables. Björkdal operations also incurred increased consultant costs due to the engagement of a mining optimization group with a focus on improving the utilization of existing technology and systems at the mine going forward into 2025 and beyond. The external group of subject matter experts advised the operations on mine debottlenecking, cost optimization and productivity improvements. Björkdal generated $28.0 million in revenue and $11.8 million in adjusted EBITDA, which resulted in net income of $4.7 million.
Conference Call
A conference call with Frazer Bourchier, President and Chief Executive Officer of Mandalay, for investors and analysts on November 7, 2024, at 10:00 AM (Toronto time). Interested investors may join by using the following dial-in number:
Participant Number (North America toll free): 1-888-510-2154 Conference ID: 13145
Alternatively, please register for the webcast here. A replay of the conference call will be available until 11:59 PM (Toronto time), November 14, 2024, and can be accessed using the following dial-in numbers:
Encore Number (Canada Toll free): 1-888-660-6345 Encore Replay Code: 13145 #
About Mandalay Resources Corporation
Mandalay Resources is a Canadian-based natural resource company with producing assets in Australia (Costerfield gold-antimony mine) and Sweden (Björkdal gold mine). The Company is focused on growing its production and reducing costs to generate significant positive cashflow. Mandalay is committed to operating safely and in an environmentally responsible manner, while developing a high level of community and employee engagement.
Mandalay's mission is to create shareholder value through the profitable operation and regional exploration programs, at both its Costerfield and Björkdal mines. Currently, the Company's main objectives are to continue mining the high-grade Youle and Shepherd veins at Costerfield, and to extend Mineral Reserves. At Björkdal, the Company will aim to increase production from the Eastern Extension area and other higher-grade areas in the coming years, in order to maximize profit margins from the mine.
Forward-Looking Statements
This news release contains "forward-looking statements" within the meaning of applicable securities laws, including statements regarding the Company's anticipated performance in 2024. Readers are cautioned not to place undue reliance on forward-looking statements. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, 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 Mandalay's annual information form dated March 31, 2024, a copy of which is available under Mandalay's profile at www.sedar.com. In addition, there can be no assurance that any inferred resources that are discovered as a result of additional drilling will ever be upgraded to proven or probable reserves. 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.
Non-GAAP Performance Measures
This news release may contain references to adjusted EBITDA, adjusted net income, free cash flow, cash operating cost per ounce of gold equivalent produced and all-in sustaining cost all of which are non-GAAP performance measures and do not have standardized meanings under IFRS. Therefore, these measures may not be comparable to similar measures presented by other issuers.
Management uses adjusted EBITDA and free cash flow as measures of operating performance to assist in assessing the Company's ability to generate liquidity through operating cash flow to fund future working capital needs and to fund future capital expenditures, as well as to assist in comparing financial performance from period to period on a consistent basis. Management uses adjusted net income in order to facilitate an understanding of the Company's financial performance prior to the impact of non-recurring or special items. The Company believes that these measures are used by and are useful to investors and other users of the Company's financial statements in evaluating the Company's operating and cash performance because they allow for analysis of its financial results without regard to special, non-cash and other non-core items, which can vary substantially from company to company and over different periods.
The Company defines adjusted EBITDA as income from mine operations, net of administration costs, and before interest, taxes, non-cash charges/(income), intercompany charges and finance costs. The Company defines adjusted net income as net income before special items. Special items are items of income and expense that are presented separately due to their nature and, in some cases, expected infrequency of the events giving rise to them. A reconciliation between adjusted EBITDA and adjusted net income, on the one hand, and consolidated net income, on the other hand, is included in the MD&A.
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