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Björkdal is a standout but miner Mandalay’s resilience underlined by this year’s production stats

Mandalay is a multi-mine firm, and is not reliant on one project.
 Björkdal is a standout but miner Mandalay’s resilience underlined by this year’s production stats
Mandalay has projects in Sweden, Chile and Australia

Precious metals group Mandalay Resources Corp (TSE:MND) has faced challenges in 2017 but its recent production and sales update underlined the resilience of its core mining business.

Mandalay is a multi-mine firm, not reliant on one project. It bought the  Björkdal gold mine in Sweden in 2014, and it has operated the Costerfield gold-antimony mine in Victoria, Australia, since 2009.

Production suspended..

Its other main production asset is the Cerro Bayo silver gold mine in Chile, which is currently on care and maintenance after production was suspended last June 9 after flooding beset the Delia NW mine.

The firm had conducted a search for two missing miners, but, said on June 27, the hunt had been unsuccessful. The Chilean Office of Exception State had ruled out the possibility of finding the two miners alive.

On June 30 it said it had declared force majeure in respect of the Cerro Bayo mine - suspending its obligations under contracts with various parties, such as suppliers and customers.

It also started an independent technical investigation into the flooding.

Mark Sander, chief executive, told investors in the recent update that "a diligent and committed permitting process" was now underway at Cerro Bayo to work with regulators to receive the outstanding permits necessary to restart the mine and complete its life of mine plan.

Brilliant Björkdal ..

The highlight of the latest operational update was the Swedish mine Björkdal , which in the fourth quarter, exceeded Mandalay's annual consolidated revised output guidance for 2017.

On an annual basis, the mine produced 62,028 ounces of gold, which was not only 30% greater than in the previous year, but was also the highest production from the mine since 1998.

Output for the three months at Björkdal was 22,035 ounces gold compared to 10,934 ounces gold in the same period of 2016.

Meanwhile, Costerfield produced 12,360 gold equivalent ounces in the fourth quarter and 52,137 gold equivalent ounces for the full year.

Fourth quarter production at the Australian mine was similar to that of the same period in the previous year and Mandalay is on track with respect to the capital development program announced in November last year, to reach the Brunswick vein and extend mine life, it said.

Meanwhile, over the year (there was no production in the third and fourth quarters), output at Cerro Bayo in Chile was 5,909 ounces gold and 794,533 ounces silver.

Consolidated output for the year was 131,186 ounces of gold equivalent in 2017 compared to 145,497 gold equivalent ounces in 2016.

In terms of sales over the whole year, Mandalay sold 127,367 ounces of gold equivalent in 2017 versus 146,564 ounces of gold equivalent in 2016.

For full year 2018, Mandalay is guiding for 101,000 to 113,000 gold equivalent ounces to be produced at an all in cost of between $1,155 and $1,280 per gold equivalent ounce.

Mark Sander, president and chief executive of Mandalay told investors: "I am delighted to note that Mandalay’s consolidated production from our two currently producing assets during the fourth quarter of 2017 was higher than in the fourth quarter of 2016, when all three mines were operating.


"This resiliency is characteristic of our multi-mine company and, more importantly, of our people."

Looking ahead, Mandalay envisages that Cerro Bayo will remain on care and maintenance through 2018 but will restart in the first quarter of 2019.

At Björkdal, capital will be spent on underground development, and tailings dam improvements, and Costerfield will see  the Brunswick orebody developed and a tailings dam expansion.

In terms of exploration, $3.4mln will be spent at Björkdal in a bid for more reserves and $2.9mln at Costerfield mostly on drilling the emerging Costerfield Deeps and Kendall high-grade targets.

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Mandalay Resources Corp. Timeline

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