Forward-looking Statements

Transcription

1 BJÖRKDAL

2 Forward-looking Statements The information given in this presentation and during Mandalay Resources Corporation s September 12, 2016 Investor Day contain "forwardlooking statements" within the meaning of applicable securities laws, including statements relating to life of mine production plans, exploration plans and the growth and strategy of Mandalay. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things: exploration results or production results not meeting management s expectations; capital, production and operating cost results not meeting current plans; and 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 30, 2016 and in its final prospectus dated July 18, 2016, copies of which are available under Mandalay's profile at 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 forwardlooking 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. Qualified Persons The exploration programs at Costerfield and Björkdal are supervised by Chris Gregory (Member, Australian Institute of Geoscientists, VP of Operational Geology for Mandalay and a Qualified Person as defined under National Instrument , Mr. Gregory regularly visits Costerfield and Björkdal and has reviewed and approved the scientific and technical information related to these projects contained in this presentation. The exploration programs at the Cerro Bayo and Challacollo projects are supervised by Scott Manske, Chief Cordilleran Geologist of Mandalay Resources, and an Oregon registered Professional Geologist. A Qualified Person as defined by NI , he has reviewed and approved the technical and scientific information related to these projects contained in the presentation. Non-IFRS Measures The presentations given during Mandalay Resources Corporation s September 12, 2016 Investor Day Presentations include non-ifrs performance measures including Adjusted EBITDA, cash costs and site all-in costs. These measures are included in these presentations because the Company believes these are useful indicators to discuss and understand performance of the Company and its operations. These performance measures do not have a meaning within IFRS and, therefore, amounts presented may not be comparable to similar data presented by other mining companies. These non-ifrs performance measures should not be considered in isolation as a substitute for measures of performance in accordance with IFRS. For a more detailed discussion of how the Company calculates non-ifrs performance measures and reconciliations (where applicable) to the nearest IFRS measure please refer to the Company s management discussion and analysis for the quarter ended June 30, All currency references in US$ unless otherwise indicated 2

3 What did we see at the time of acquisition? Operating property in a Fraser top 10 jurisdiction Already permitted and built Excellent infrastructure Well educated and productive workforce Highly mechanized underground mine Low capital needed for turnaround 45,000 50,000 oz/yr, breakeven at the site at low gold price World class low mining and milling costs per tonne Poor quality third party resource and reserve estimate Minimal effort to have effective grade control Low average mine/mill grade Low metallurgical recoveries with undersized flotation section Simplistic geologic understanding and underexplored Distressed at the corporate level Elgin burdened by $4 million/yr corporate overhead, legacy US liabilities Market skepticism about viability of Björkdal based on series of ownership changes Depressed Elgin stock price 3

4 Multiple ways to win Cut out corporate overheads and legacy liabilities Sell non-core assets (Lupin and Ulu) New mine plan based on best practice resource & reserve estimates Raise head grades to mill Implement best practice grade control Ore sorting Expand flotation section to improve recoveries Never expanded despite 2X expansion of throughput Expand resources and reserves with exploration GOAL: Achieve a 70,000 oz Au/yr production rate at $700/oz cash cost with 10 year mine life within 2 3 years 4

5 Where are we today, 2 years into program? Elgin overhead eliminated for no incremental adds to MND overhead Letter of Intent for sale of Lupin/Ulu in improved markets All technical aspects of program accomplished or proved in testing Fundamental geologic reinterpretation; excellent exploration results What remains to be done in coming year? Reinforce shared values and cultural habits needed for success Grade control successful; need to improve consistency of delivery Install flotation expansion phase 1 (approved) Complete capital and operating cost study of ore sorting Complete new report in Q4 incorporating two years of MND drilling focused on near-term reserve additions Complete just-approved round of new target testing to define limits of much larger system 5

6 LTIFR Björkdalsgruvan: Safety first Zero lost time injuries (to August 2016, compared with 7 during 2015) Record low LTIFR in 2016 Dupont STOP system implemented Rescue training implemented New safety equipment installed Björkdal Average Annual LTIFR YTD 6

7 Björkdal Geology and Mining Transformation Improved knowledge: Fundamental geology of district Higher-resolution data capture and analysis Clearer understanding of gold distribution More selective and geologically controlled resource modeling New operating practices: Increased exploration drilling resource/reserve expansion o 32,500 m of oriented diamond core drilling since Jan 2015 Grade control drilling Björkdal owned and operated o 16,000 m of diamond core drilling for geological and grade control since Jan 2015 Detailed core logging and sampling Detailed vein mapping and sampling Geology informing mining decisions Results: Increased resources and reserves Real-time grade control Improved grade from underground and open pit know what is being mined More ounces from current mill capacity 7

8 What did we have to put in place? Add senior experienced geologic and engineering staff from Costerfield Hire, train and mentor local geologists & samplers On-site assay lab for 24 hour turnaround Purchase and use dedicated grade control drill Increased stockpile area at the crusher pad, to reduce rehandling Invest in block model with high degree of geologic control 600 wireframed veins 8

9 Björkdalsgruvan: Underground Began in 2006 Typical face underground Longhole Sub-level Open Stoping; traditional 20 m levels 5 X 5 m drifts 4 m stopes Average 2,000 t/d rate 9

10 Improved Production Grade Control Block Models On-vein sampling (face sampling) 10

11 Development Advance (m) Reconciled mill feed grade - g/t Au Longitudinal grade control is working Sampling every round results in Sampling every discarding 30-40% round results of mineralized in waste material Mill Feed Grade Proof of concept positive for 5 of 7 mo Traditional on-vein development and without Grade Control while establishing new mapping, sampling, assaying, planning practice Stockpiling gradecontrolled development grade-controlled stoping Speeding up development & initiating ore while stoping old way Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 On-vein development ore Stope Ore Accelerating Underground Development x Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Underground meters - Monthly 11

12 Björkdalsgruvan: Open Pit Mining began in 1988 Traditional dimensions: 5m high benches 20m between safety berm Drilling, blasting, loading and hauling is contracted Underground Development N Mining Concession In order to minimize ore dilution, the blasting direction is along strike of the ore zones WEST QZM EAST 12

13 Ounces Gold Per Quarter $/ oz Au Tonnes Per Quarter $/ Tonne Tonnes Per Quarter $/ Tonne Operating performance & improvements to date 400,000 Mining Rate and Unit Cost $30 Björkdal 2015 Operational Improvements: 300, , ,000 0 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 t Mined Cost/ t Mined 340, , , ,000 Processing Rate and Unit Cost 300,000 Q4-14 t Processed Q1-15 Q2-15 Q3-15 Cost/ t Processed Q4-15 Q1-16 Q ,000 10,000 5,000 0 Au oz Saleable Gold Produced and Unit Cost Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Cost/ oz Au Grade Control showing in Q1 results $20 $10 $0 $20 $10 $0 $1,500 $1,000 $500 $0 Record High Rate Record Low Cost Introduced best practice mapping, drilling, sampling, and modelling of coarse gold deposits Produced a more refined resource model to support more selective underground & open pit mining 2016 Planned Improvements: Increasing grade of mill feed through more selective underground and open pit mining at an increasing rate to overcome the discarded material Pilot optical ore sorting IN PROGRESS Pilot coarse and ultra-fine gold float COMPLETE 13

14 Getting to the next level: Increased focus on values Dupont for everyone Committed speaking & listening Tailings permit Community & employee surveys Deliver the goal Leadership training Installing capital projects Cross functional teams working with just-in-time grade control data 14

15 Underground improvements going forward Continuing improvements incremental, not revolutionary Replace current high profile equipment with low profile Decreased dilution Stopes: reduce level spacing to 15 m and width to 3 m On-vein development: reduce dimensions by 7% On-vein development Increasing development rates to 200 m/week Longer development blast holes Reduced dimensions by up to 23% less drilling, mucking Planning a on-site shotcrete plant & underground delivery truck More detailed and accurate planning and scheduling Surveying all the veins; tracking actual mined shapes. New rise drill patterns to increase reliability & success 15

16 Open pit improvements going forward Continuing improvements incremental, not revolutionary Grade control and production models Longer RC holes Mapping and sampling bottom benches to understand level below Drill and blast improvements to reduce dilution A drone to monitor actual blast from above Blast Movement Monitoring with GPS sensors GPS controlled excavating Reduce strip ratio by steepening overall slope angle 16

17 Plant & processing improvements Initial trials nearly complete Implementation Projects: Flotation expansion phase 1: 1.7% recovery improvement; complete Q3, 2017 Flotation expansion phase 2: 1-2% recovery improvement; commit in 2017 Ore sorting to increase mill feed grade over mined grade: commit in 2017 Extended Tailing Storage Facility: needed by

18 Ore sorting: Encouraging visual results backed up by preliminary processing results Bulk Test Start Grade End Grade Times Upgraded Waste Rejection Gold Retained g/t Au g/t Au (%) (%) Underground Ore Stockpile Ore Result includes fines (-20mm) that are to fine to sort Waste No vein fragments, presumed very low-grade Ore Abundant vein fragments, presumed increased grade 18

19 Increasing the size of the Björkdal gold district Not just a gold mine, but a gold district with multiple deposits Main deposit with MI&I, P&P in open pit and underground Nylunds potential new open pit, infill drilling by end of 2016 Rönnberget historic and current drilling with multiple intercepts Storheden historic resource with mining concession 2km Rönnberget Morbacken Nylunds Storheden Pit 1 Pit 3 Pit 2 19

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