Mandalay Resources sees quarter-on-quarter pick-up

Dividend paying precious metal junior Mandalay Resources Corp (TSE:MND) rose in early deals in Toronto as it reported a sharp improvement on the previous quarter.

Investors had already been tipped the wink last month that first quarter production were down year-on-year, so it was little surprise that first quarter revenue of US$45.37mln was down from US$50.44mln in the corresponding period of 2016.

The decline was primarily due to lower volume of metal sold in the 2017 period than in the 2016 period, partially offset by higher average market prices this time round.

DETAILS OF THE FOURTH QUARTER RESULTS can be found here READ Mandalay Resources confident on output and sales increase in 2017

The lower revenue filtered through to softer adjusted earnings (EBITDA) of US$11.4mln versus US$17.3mln  the year before.

The post-tax net loss of US$2.35mln contrasted with a profit of US$1.15mln in the same period a year earlier, but did not stop the company paying out a dividend of 5.7 cents a share.

Total cash capital expenditure during the first quarter of 2017 was US$12.1 million compared to US$9.1 million in the year-ago quarter.

At March 31, 2017, the company had US$58.9 million of cash and cash equivalents compared to US$66.9 million three months earlier.

“Mandalay’s financial performance in the first quarter of 2017 was a marked improvement over performance in the fourth quarter of 2016,” noted Dr Mark Sander, president and chief executive officer of Mandalay.

“These improved results reflect a combination of continued strengthening of our operations and improving metal prices. We expect to see production continuing to increase throughout 2017, with a consequent improvement in unit costs going forward,” Dr Sander continued.  

The company revised its full-year production guidance in February and stuck by those numbers in its first quarter results statement.

“Looking at the company’s operations, at Björkdal, we are pleased that the grade control program continues to function well and we are implementing several incremental operational improvements to increase the rate at which our higher-grade ore is mined and delivered to the plant.

“These improvements are expected to increase the average grade of processed material going forward, increasing production of saleable gold and reducing cash cost per ounce of saleable gold,” Dr Sander declared.

“Costerfield continued to deliver dependable performance in the first quarter of 2017, producing 12,891 gold equivalent ounces at a very sound cash cost of $719 per ounce, and an all-in cost of $1,033 per ounce,” the Mandalay boss observed..

“At Cerro Bayo, the operation has noticeably stabilized after the difficult third and fourth quarters of 2016. Safety has shown a marked improvement and the ore reserve model on which the revised guidance of February 16, 2017 was based is performing well,” Dr Sander said.

“Grades began to lift towards the end of the first quarter as more stopes became available in Coyita North. We expect grades to continue to lift the remainder of the year as production from Coyita North grows,” he added.

The shares were up 2.8% at C$0.545 in late morning trading.

Story by ProactiveInvestors