Earnings call transcript: Mandalay Resources Q4 2024 sees record revenue

Mandalay Resources (MND) reported a transformative Q4 2024, achieving record annual revenue and free cash flow, alongside a significant increase in net income. The company also eliminated its debt, bolstering its financial position. According to InvestingPro data, Mandalay now holds more cash than debt on its balance sheet, with a healthy current ratio of 1.77. The company’s strong performance and strategic initiatives have positioned it as a potential mid-tier precious metals producer, with analysts projecting continued profitability for the year ahead.

Key Takeaways

• Achieved record annual revenue of $241 million.
• Net income surged from $8 million to $48 million.
• Eliminated all debt, establishing a $35 million undrawn revolver facility.
• Antimony spot price increased significantly, benefiting the company as a major producer.
• Share price increased over 150% in the past year.

Company Performance

Mandalay Resources demonstrated robust performance in Q4 2024, with record revenues and a substantial improvement in net income. The company’s focus on operational efficiency and cost management contributed to these results. Additionally, Mandalay’s strategic position as the largest single antimony producer in the Western world has been advantageous, especially given the sharp rise in antimony prices.

Financial Highlights

• Revenue: $241 million, a record high.
• Free cash flow: $69 million, another record.
• Net cash position: Increased to $76 million from a negative $6 million in 2023.
• Adjusted EBITDA: Doubled to $122 million.
• Net income: Increased from $8 million to $48 million.

Outlook & Guidance

Looking ahead, Mandalay plans to produce between 43,000 and 49,000 gold equivalent ounces at Costerfield and 42,000 to 46,000 gold ounces at Bjorkdal in 2025. The company has budgeted $12 million for exploration, focusing on resource growth and mine life extension. With an impressive Altman Z-Score of 8.24 indicating strong financial health, and a PEG ratio of 0.61 suggesting potential value relative to growth, Mandalay appears well-positioned for its strategic initiatives. Strategic growth and consolidation opportunities are also being explored.

Discover more about Mandalay’s growth potential with InvestingPro’s exclusive Fair Value analysis and comprehensive Pro Research Report, part of our coverage of 1,400+ top stocks.

Executive Commentary

CEO Fraser Boucher described 2024 as a "truly transformative year" for the company, highlighting the strengthened financial position and the strategic importance of antimony. Boucher emphasized, "We are now a much stronger company than we were a year ago."

Risks and Challenges

• Market volatility in precious metals prices could impact revenue.
• Potential operational disruptions due to geopolitical factors.
• Antimony price fluctuations may affect profitability.
• Regulatory changes in critical mineral classifications could impact market dynamics.

Q&A

During the earnings call, analysts inquired about the potential of the TrueBlue project at Costerfield, grade variations in reserves, and cash management strategies. The company also explained the dynamics of the antimony market, emphasizing its strategic importance.

Full transcript - Monadelphous Group Ltd (MND) Q4 2024:

Conference Operator: Good day, and thank you for standing by. Welcome to Mandalay Resources Corporation Q4 and Year End twenty twenty four Conference Call. Today’s call contains forward looking statements, which reflect the current expectations or beliefs of the company based on information currently available to the company. Forward looking statements are subject to a number of risks and uncertainties that may cause actual results of the company to differ materially from those discussed in the forward looking statements. Factors that could cause actual risks or events to differ materially from the current expectations are disclosed under the heading Risk Factors and elsewhere in the company’s annual information form dated 03/28/2024, available on SEDAR and at the company’s website.

Mandalay Resources disclosed its financial resources at market close. You can access their consolidated financial statements and MD and A on either the company’s website or through our profile on SEDAR. At this time, all participants are in a listen only mode. After the speaker’s presentation, there will be a question and answer session. To ask a question during this session, you will need to press 11 on your telephone.

You will then hear an automated message advising that your hand is raised. Please be advised that today’s conference is being recorded. I would now like to turn the conference over to your speaker today, Fraser Boucher, President and CEO of Mandalay. Please go ahead.

Fraser Boucher, President and CEO, Mandalay Resources: Thank you, operator, and welcome everyone. Joining me on this call today is Hashim Ahmed, our Chief Financial Officer. And in addition, I have Ryan Osterberry, our Chief Operating Officer and Chris Davis, our VP Exploration, providing commentary in their respective areas. 2024 was a truly transformative year for Mandalay Resources. Mandalay is now a much stronger company than it was a year ago.

And early into this twenty twenty five year, we are continuing to build on this momentum, executing on a clear multi year growth strategy. Since becoming President and CEO in the second quarter of twenty twenty three, I have worked with the team to instill a strategic emphasis on high margin production, cost efficiency including prudent capital management, operational improvements and increased organic exploration. This approach of execution and accountability delivered outstanding results in 2024. For example, and note, all dollar amounts are in U. S.

Dollars, free cash flow generation of $69,000,000 that’s after all capital and exploration spend as compared with just $300,000 in 2023. Cash balances increased threefold year on year, now sitting at over $76,000,000 All debt completely eliminated, now a fully undrawn $35,000,000 revolver facility. That gives us available liquidity of well over 100,000,000 We achieved our cost guidance with production up 8% from the previous year. That’s just shy of 100,000 ounces at 97,000 gold equivalent ounces. And that was at the upper end of our guidance.

And exploration success was now over 2,000,000 ounces of gold equivalent in just the M and I category of mineral resources across our two operating assets in Tier one jurisdictions. And finally, a share price that more than doubled during 2024 at 114%. And at today’s price, the share price, which is up over 150%. And that is four to five times the increase of variant relevant indices, such as the JDX and the JDXJ. We believe that we truly outperformed.

I would now like to hand the call over to different members of my executive team to recap the fourth quarter results, which bookended this exceptional year for Mandalay Resources. First, Ryan Ofterberry, our Chief Operating Officer.

Ryan Osterberry, Chief Operating Officer, Mandalay Resources: Thanks, Fraser. Mendeley closed out 2024 strongly with Costerfield achieving its best quarter of gold production for the year. As Fraser mentioned, delivering towards the top end of our guidance reflects the hard work and operational execution from the entire team. The exceptional performance at Costa Field was driven by excellent mining performance, reliable plant throughput, continued high gold equivalent grades, which is a trademark of Costerfield and high metallurgical recoveries. Mine ore tonne tonnage exceeded targets, thanks to increased stoping activity from shorter tramming distances and the ability to occasionally use larger equipment.

This enabled the site to achieve its strongest quarterly gold production of the year, totaling over 12,000 pure gold ounces. In 2024, the average process grades were approximately 11 grams per tonne of gold and 1.7% for antimony, resulting in the production of 43,000 ounces of gold and 1,300 tons of antimony, which is nearly 55,000 gold equivalent ounces. In line with Fraser’s approach to operational improvements and striving for excellence, we made several targeted investments, which included the implementation of a two stage crushing process, leading to an upgraded crush product for milling and lowering maintenance time and cost rebuilding of the front end of the primary mill, which reduced downtime, thereby improving milling rates through increased operational hours. For twenty twenty five, due to mining sequencing, we expect Costa Fields production to range between 43,000 to 49,000 gold equivalent ounces with higher historic production rates currently scheduled to return in 2026. Turning to Bjorkdal.

Fourth Quarter production remained steady compared to previous quarters, delivering about 9,700 gold ounces and contributing to an annual total of just over 42,000 ounces, which was a slight improvement on 2023. Similar to Costa Field, we made several investments aimed at improvements. Completion of the mill conversion project, increasing annual throughput by approximately 150,000 tonnes to now 1,400,000 tonnes per annum run rate being achieved, upgrades to the underground water pumping network, which are ongoing, reducing the risk of operational disruptions. And we employed operational efficiency experts to improve systems and processes, which will carry through to 2025 this year and expand that to Costerfield. In 2025, at Bjorkdal, the focus will remain on capital development to increase access to more veins and establish multiple production fronts to enhance operational flexibility.

In 2025, production at Bjorkdal is expected to be 42,000 to 46,000 gold ounces consistent with 2024 levels supported by stable process tonnage and grades. We plan to continue prioritization of the reliable higher margin underground material, while leveraging the existing low grade surface stockpiles to fully utilize the plant’s 1,400,000 tonne per annum capacity. In summary, we were pleased with the results at both Costerfield and Beorthdahl in 2024. We will continue to invest in the operations in 2025 in order to maintain the momentum we have established. I would like to now pass the call to Hashim, our Executive Vice President and Chief Financial Officer, who will highlight our financials.

Hashim Ahmed, Chief Financial Officer, Mandalay Resources: Thank you, Ryan. Mandalay achieved its highest annual revenue to date, reaching $241,000,000 and generated a record free cash flow of $69,000,000 Our year end net cash position rose more than $10,400,000 to $76,000,000 compared to negative $6,000,000 at year end 2023, underscoring our disciplined approach to cost management, pursuit of operational efficiencies and favorable metal prices, all of which supported the achievement of our 2024 production and cost guidance. Operating cost totaled $110,000,000 a marginal increase of 4%, mainly due to processing costs at Costa Field associated with tailings and water management, as well as increased throughput tonnage at Bjorkdal. Adjusted EBITDA was 122,000,000 doubling from $60,000,000 Net income was $48,000,000 increased from $8,000,000 in 2023. Cash operating cost per ounce of gold equivalent produced at $11.00 $6 per ounce was broadly in line with 2023.

All in sustaining costs per ounce of gold equivalent produced increased by 3% to $15.48 dollars per ounce in 2024 compared to $14.97 dollars per ounce in 2023, mainly due to the increase in cash operating costs and higher tailings dam amortization. I’d like to say a few words about antimony markets. Spot price of antimony in U. S. Dollars was around $40,000 per ton at the end of twenty twenty four with some sources stating an even higher price.

This represents a significant increase from the beginning of the year, which started at around $12,000 per tonne. However, global import export restrictions on antimony have also put pressure on refiner margins and payabilities. Mandala is actively working with our refining partners across the globe in searching for new alternative markets for our Gold Antimony concentrate as a risk mitigation strategy. Our current approach is to sell the gold Antimony concentrate on a shipment by shipment basis to realize best value for Mandeville. Turning next to our CapEx line.

In an effort to strengthen the foundation of our operations, as Ryan discussed, we will look to make the following key investments in 2025: the new tailings facility at Costerfield to be completed in the first half of twenty twenty five, which will provide an additional six years of capacity. Accelerated underground development at Beoptol to improve operational flexibility and reduce reliance on lower grade surface stockpiles and replacement of an aging mining fleet at Beopdol to enhance equipment availability and reduce downtime. The majority of these expenditures are expected to occur in the first half of this year. Additionally, we remain dedicated to creating further value through near mine and regional exploration at both sides with potential for additional resource allocation to accelerate progress creation success. Mandalay enters 2025 in a very strong financial position.

This gives us the capacity to invest in key operational priorities while maintaining our prudent approach to capital allocation. I would like to now pass the call to our VP of Exploration and Operations Geology, Chris Davis. Chris?

Chris Davis, VP Exploration, Mandalay Resources: Thanks, Hashim. As Fraser alluded to, we are pleased with our exploration progress with notable developments at both Costerfield and Bjorkdal, leading to key mineral resource growth and mineral reserve replacement. At Costerfield, net of depletion, mine life remains at four years, which is considered normal at this operation, which has averaged two to five years over the past nineteen years of operation. On the January 28, we were excited to announce that TRUBLUE is emerging as a potential new frontier for Costerfield. With high grade veining both in gold and antimony intercepted in multiple holes.

Building off these new results, the TRUBLUE inferred resource is now 132,000 tonnes at 14.6 grams per tonne gold and 3.4% antimony for 96,000 gold equivalent ounces, an almost fourfold increase from the maiden resource reported last year. Mandalay has committed to unlocking the full potential of True Blue through an extensive extensional drilling program with a third drill rig now operational. In parallel to our regional exploration program, our near mine exploration efforts continue with the objective of immediate mine life extension. We have an additional three drill rigs operating underground continuing to grow mineral resources and specifically testing the large potential we see at depth below the Cuffley deposit turned sub KC. At Bjorkdal in December, we reported on the discovery of a new underground domain called North Zone below marble, which marks an exciting continuation of the deposit with great results, including 179 grams per tonne gold over 1.15 meters.

These results, alongside continued growth on the underground Eastern Extension Zone and Aurora Zone have created a considerable build of mineral resources at Bjorkdal and growth of mine life to over a decade. Additionally, and adjacent to the mine, we have also announced the maiden resource of Sawhaddon, which is currently 100,000 gold ounces. Looking ahead, we will continue to grow high margin ounces at Bjorkdal with further drilling slated for North Zone below Marble, Eastern Extension and Storeheiden in 2025. I would like now to return the call to Fraser.

Fraser Boucher, President and CEO, Mandalay Resources: Thank you, Chris, Hashim and Ryan. While higher metal prices contributed to a strong year, our renewed operational and financial focus leading to budgeted execution has played a crucial role in our strong share price. As a result, 2024 is marked by record financial performance and substantial earnings growth. But for us, this is just the beginning of a multiyear growth trajectory we remain very focused on. In 2025, we have a number of operational initiatives planned to further streamline performance at our operations, while building on our track record of reliable performance.

As a result, we anticipate continued strong cash flow from both gold and antimony production. As for antimony, antimony is listed as a critical and strategic mineral to U. S. Economic and national security interests by the U. S.

Department of Interior. And the CMI, which is a recognized global institution known as the Critical Minerals Institute, lists antimony as one of the 14 most critical minerals to governments in the Western world. So what does that mean for Mandalay? Well, at our Australian Costerfield operation, we remain the largest single company producer of antimony in the Western world. In the recent discovery and updated mineral resource announced at TrueBlue, well with any future exploration success this year, TrueBlue may well underpin that current statement into the future.

We will continue to prioritize exploration with the objective of both replacement of mine depletion and extension of mine life, both in known mineralized areas and potential new near mine discoveries. We have budgeted a minimum of $12,000,000 for exploration through a part of 2025 with future spend to be stage gated based upon exploration success. And we look forward to updating you on our progress. Lastly, with a strong balance sheet and zero debt, as well as improved valuation, Mandalay is well positioned to capitalize on strategic growth opportunities that support our vision of becoming the next mid tier precious metals producer. There are numerous consolidation opportunities in the precious metal space and our shareholders are supportive of our strategy.

As a mid tier producer, we would have increased trading liquidity and the potential for a significant rerating of our stock to further build upon what has already been witnessed a more than doubling of our share price over the past year. On behalf of Mandalay’s Board and management, I would like to express my appreciation for both MineSight team’s hard work, their loyalty, aligning with our core values and their commitment to operational excellence. It’s through the collective efforts of all our employees, including our small executive corporate team that we will continue to strive to reach new heights in 2025 and beyond. Thank you everyone and this concludes this portion of the call. I would like to open the lines for questions now.

Conference Operator: Our first question will be coming from Kevin Tracy of Oberon Asset Management. Please proceed with your question.

Kevin Tracy, Analyst, Oberon Asset Management: All right. Thanks for taking my questions and congrats on a good year. My first question was relating to the reserves or specifically from Costerfield. I understand the comment in the call that mine life is seen as normal at Costerfield. But I suppose my sense is that your hopes would have been to grow the mine life given the exploration spending we’ve seen over the last couple of years.

So can you, I guess, talk about, well, if that first, if that’s right? And then as we look ahead to this year and the reserve report you’re going to publish a year from now, if you do hope to grow the mine life? And if so, could you talk about where you think that growth would come from? Would it mostly come from Cuffley or TrueBlue or more Shepherd and Yule? That would be great.

Fraser Boucher, President and CEO, Mandalay Resources: Yes, thanks for that, Kevin. And fair question. I suppose the short answer is the last two or three years with elevated exploration spend, I would say 65% to 70% of that has really been focused around resource growth, both inferred and M and I. So for example, TrueBlue would be one example of that and some work in Kapolei Deep is another example. So we expect while there’s a bit of a lag, at first glance, the reserve increase might look somewhat disappointing, but we expect in the next year or so, you’re going to start to see that go up as we built up this not insignificant pool now of resources at Costerfield.

And the two areas I would say specifically will be certainly true blue in three or so years. We hope that could be a real game changer. Let’s call that another Yule, for example. And then the, Kumpfle Deeds or more so the sub KC below that where we’re targeting a lot of energy on what I would call the near mine conversion, both more resources and turning that into reserves. So that’s really it.

It’s been about resource growth initially, but we do expect to start to see improvements in reserves now that we have that pool of resources. And even though Yule winds up, the last area continues to be shepherd as we go to the West or what we call shepherd surrounds. But we think the bigger areas are going to come from Cuffly Beach, Sub KC rather and True Blue eventually.

Kevin Tracy, Analyst, Oberon Asset Management: Okay. And so just thinking about the mine plan in the coming years, and if I look at the reserve report, just the proved portion of the reserves, that’s showing roughly two years of ore at quite high grades or over 11 grams a tonne. I imagine that’s mostly shepherd and yule. But then if I look outside of that or in the probable portion of the reserve, the grade falls quite a bit to below six grams a tonne. So am I or the I guess how should we think about it?

Should we think about, okay, there’s two more years roughly of quite high grade production from Yule and Shepherd? And then as we look towards 2027, there’s kind of there’s still a question mark or are you confident that you’ll be able to continue to produce high grades in 2027? And is that likely to come from sub KC before

Ron Stewart, Analyst, Red Cloud Securities: we get to true blue? It would

Kevin Tracy, Analyst, Oberon Asset Management: just be helpful if you could talk through kind of the sequencing of the next few years.

Fraser Boucher, President and CEO, Mandalay Resources: Sure. Yes, Kevin. So just at a high level, I mean, I think your main question is the split in reserve, the cost of real between what we call proven and probable, even though they’re all qualified as economic mineral reserves. Usually the classification we do on the higher confidence, let’s call it proven versus probable is area where we have completed all the developments already. So we have top cuts, bottom cuts.

So both even a higher degree of certainty and a lot more information and data, which shows those higher grades you refer to, which tends to be more consistent with what we usually have at Costerfield. In terms of the probable as opposed to the proven, and sorry, that former tends to be mostly Yule and Shepherd. But as far as the probable, a couple of things. Development is not out there yet, number one. Number two, because of the higher metal prices, both gold and antimony, we are actually bringing in more material that normally would not have been economic, but or significantly economic and now it is.

So even if it’s at a lower grade, so there are lower grades there. And then finally, when we do get out there and this is in areas like Augusta, Brunswick (NYSE:BC), Cuffley on the edges and some at Shepherd, my sense is those grades will go up as we do more sampling on top cuts and bottom cuts. So that’s really the difference, if that was your question, between proven and probable, The next two, two point five years, a lot of it Yule and Shepherd. The remainder, we believe, in those other areas of Augusta, areas we call Kendall and Augusta and Cuffley on the edges and Allison, for example, it is I think those grades will come up as we get development out there. And it was not in reserves before.

So that’s good news that it’s now significantly economic.

Kevin Tracy, Analyst, Oberon Asset Management: Okay. And TrueBlue, you think that could come into production in three years’ time or what could you update us on the timeline on what that could look like? And also if you could comment on is that is there a material amount of capital that would need to be invested to bring that into production?

Fraser Boucher, President and CEO, Mandalay Resources: Sure. I mean, look, this is all early stages. However, we’re number one, moving three drills into that are now we just had the one drill, so we’re hitting that quite hard. Secondly, it’s only two kilometers to the West of Brunswick, not far from our current working. So we would not expect a lot of capital to bring that in.

And then the third issue is we’ve already started or will be imminently starting a permitting process to make sure that’s not a bottleneck to us. Mind you, we don’t think that will be more than two years. So between doing more drilling, if we get success moving that into reserves, any development that has to go from underground, say, two kilometers across, our plan would be to see that in production. I used to say five years from now, but I would say we’re looking to target three at most four. So that’s why we’re drilling so much there.

We’re both excited about it. We want to make sure that that could come in to the mine plan if we get success there and approves to be a good economic reserve as opposed to the current M and I resource that’s gone up four or five times. I get that, but we want to add more to that and then start to move it into reserve.

Kevin Tracy, Analyst, Oberon Asset Management: Okay, great. And then shifting to Borstol, just looking at the reserve report, can you help me understand the discrepancy between the proved and probable underground grade, which is roughly 1.6 grams a tonne and then the resource underground grade, which is much higher 2.4 grams a tonne. And maybe you could talk a little bit about what needs to happen to convert that higher grade resource into reserves and maybe even more importantly, when you might be able to mine this higher grade ore?

Fraser Boucher, President and CEO, Mandalay Resources: So two parts to that Kevin, if I understand that, Bjarto. So and if you have we can always do a follow-up afterwards. But in the footnote of the tables, the delta or that difference in what we state as that underground reserve grade as opposed to the measured and indicated resource grade. A lot of that is engineered dilution. So we take our stope width go as wide as three meters and our development ore development drifts go as wide as 4.5 meters.

So there is a dilution component to that. There is also while we try to mitigate that about 2015% to 20% dilution that we find occurs. So that’s an additional dilution factor that’s put in there. It’s about 20% for ore drives and 10% for capital. But so between the engineer dilution, meaning that’s the width we have to take it at and some dilution, it does bring that grade down from what you see as a resource grade that you referenced to reserve grade.

So however, so from that 2.4 down to 1.6, we’ll both look at ways to better optimize that. And the areas that I’m most focused on there, it’s great to have Aurora, which is above the Marble unit, which is large bulk lower grade, but it’s the Eastern extension, as well as now this North Zone below marble, which has been a recent addition and big win for us last year. Those grades are both better. I mean, we think those grades could be as high as even diluted 1.7 to two and also more consistent. So that’s why it’s great to have a longer life and added more, but I want to focus on the higher grade portions of that.

Kevin Tracy, Analyst, Oberon Asset Management: Okay. And just maybe if you could talk big picture about Borkdal. It’s been quite a few years now where we’ve seemingly been getting these exciting drilling results. And also you have plans this year to increase the spending or the capital spending on underground development and improve the operations. Yet the production there seems kind of stopped in the last several years on this kind of 40,000 to 45,000 ounces a year.

I suppose can you just maybe set up our expectations for where you expect Borfthal to go looking out maybe a bit further?

Fraser Boucher, President and CEO, Mandalay Resources: Sure. I mean, without again, this is all potential. I don’t want to mislead the thing Yorkdal is suddenly going to become a 60,000 to 70,000 ounce a year producer. It consistently runs, but this is after the open pit ended in 2019 where you could get more throughput, but more grade. But here’s where I think the upside is on Bjorkdal, irrespective of even potential polymetallic BMS stuff in the Southwest portion.

The first is, as that North Zone I alluded to, I mean, it is a little bit deeper. So we want to invest in that equipment and make sure that it’s good quality equipment that can bring that higher grade material up. There’s potential skarn areas we’ve recently been hitting, which tends to be even higher grade back in the Eastern Zone. So those two areas I talked about, I think that could give us potentially a nice pop in the next year or two. And then there’s you’ll see two things that were new.

One is Norbury, and I’ve always been excited about that. The bottleneck there will probably be permitting, but that could be an interesting open pit, even a starter open pit at higher grades. So that’s better than the surface stockpile that’s sitting at 0.6 grams a tonne. If we can get stuff that’s two grams a tonne that’s open pit, even if it’s only a year or two. And then the last one, you’ll see the open pit cutback.

We’ve been doing some economic assessment. We’re going to do some further work on that, but that’s been added this year that we think a layback makes economic sense. And so even if the grades are a little bit less, just the efficiency with the open pit, even considering the strip ratio is always a bit more efficient than the deeper underground. So I think those things combined without promising, I still think we’re a minimum 40,000, 40 five thousand ounce a year producer could have maybe tip up higher, yes. If I believe it’s going to go longer than even ten years, Yes, not enough to justify a further increase in the plant throughput, but the mill has gone from 1,250,000 tons per annum and it’s now 1,400,000 tons.

So I think that will all underpin a minimum of $40,000,000 to $45,000,000 a year and maybe better in the next year or so depending on those areas I just shared with you.

Kevin Tracy, Analyst, Oberon Asset Management: Okay, great. And then just lastly, can you remind me of the goal around the underground mining rate? I want to say my memory is it was 1,200,000 tons a year, but I could be misremembering that. And is that something you hope to get closer to in the coming years?

Fraser Boucher, President and CEO, Mandalay Resources: Yes. So there’s two different things. Our underground mining rate right now is about 1,000,000 tons per annum and the rest is supplemented with the old surface stockpile feed. So that gives us a combined rate of about 1,400,000 tons through the plant. So about 30%, thirty %, thirty five % comes from surface stockpile and the rest comes from underground.

But due to this increased development that we’re doing, that’s the purpose behind that is to both look to increase the underground mining rate and give us more operational flexibility dealing with targeting higher grades. So for now, it’s still around 1,000,000. We’d like to get that to 1,100,000 from underground and then supplement the rest from the surface stockpile. So the plant right now is still 1,400,000 tons per annum and that’s the split on service stockpile and underground mining rates.

Kevin Tracy, Analyst, Oberon Asset Management: Okay. Thank you for answering all those questions.

Fraser Boucher, President and CEO, Mandalay Resources: Thank you, Kevin.

Conference Operator: And one moment for our next question, which will be coming from Ron Stewart of Red Cloud Securities. Please proceed with your question.

Ron Stewart, Analyst, Red Cloud Securities: Good morning, Fraser, and congrats everyone for a great quarter. Most of my questions were related to the development of TrueBlue, which got answered. I guess I’d just like you to comment, if you could, on the antimony. I see that you used $19,000 as your baseline price for reserves and going forward. Where do you see it going from here?

How long do you think that this is going to last? Or do you have any kind of guidance? Can you give us any kind of longer term guidance on the Antimony margin?

Fraser Boucher, President and CEO, Mandalay Resources: Sure. Thanks for that, Ron. I mean, my general comments and Hasha may want to add in here. The Antimony story is very exciting. That being said, I think you appreciated the mining company.

We’re probably somewhat conservative. We want to be careful. We’re not putting all our eggs in that basket. It’s great. It adds a lot of wind to our sales, but a year ago or just over a year ago when it was $11,000 12 thousand dollars that U.

S. Per metric ton and now the fast market price is 3.5 to four times that, we think we can capitalize on that now. But it’s a pretty opaque market driven by the export restrictions out of China and the fact that 85% of all the antimony produced is out of China, Russia or Tajikistan. So who knows if that starts to go down? General sentiment is this price will stay for a little while, but I would be false to give you any predictions that are three or four years out based on the volatility and what’s happened so recently.

And there were very few that predicted this a year or a year and a half ago. So we’re optimistic. We think there’s a benefit to that, but it’s not a main lead strategy for us necessarily. But there’s a lot of attention and a lot of interest coming into us as the largest producer of antimony in the Western Hemisphere. So for now, we’re somewhat conservative.

We’ll use 20,000 or so in our budgeting, but the reality is the fast market’s price is 40,000 right now over time.

Ron Stewart, Analyst, Red Cloud Securities: Okay, fair enough. The other question I guess that brings to mind here is with such a robust cash balance and the ability to generate free cash flow. Have you talked about or put together any kind of plan as to how much cash you actually want to amass onto your balance sheet that at some point here it’s becoming an overwhelming size compared to the market cap?

Fraser Boucher, President and CEO, Mandalay Resources: Yes. No, look, that’s a fair question, Ron. In terms of as the cash is now probably 25% of our entire market cap today, I think our market cap is $320,000,000 and as we are US76 million dollars at the end of last year and you can imagine what’s happening this year. So we have two or three options. We’re not going to do anything silly here in terms of the inorganic opportunities.

If we find something that we truly believe is accretive to give us size and scale, be it asset acquisition or more likely sort of combination with other companies that are producers, It’s good to have that cash available in the event of a need for that in the pro form a to further invest and increase the production profile and especially the cash return significantly. In the event that does not happen, we are certainly looking at other options. We do have a buyback program in place. So buyback is certainly an option and or dividend is something we certainly can consider. Although right now, we don’t believe dividend is the best return to shareholders unless we really don’t find something that’s accretive and make sense on the inorganic M and A front.

So we’re keeping all options open. You are correct. There’s a limit to how much cash you build up before you decide how the shareholders can see a participation in that.

Ron Stewart, Analyst, Red Cloud Securities: Right. Okay. Well, listen, congrats on the good year and thank you for that.

Fraser Boucher, President and CEO, Mandalay Resources: Thank you, Ron.

Conference Operator: And our next question will be coming from Volker Mollat of PMG. Please proceed with your question, Volker.

Volker Mollat, Analyst, PMG: Yes. I’ve got a question concerning Bjorkdal. Why don’t you spend $5,000,000 and buy an OARS order and convert the 0.65 grams per ton to 1.5 grams per ton?

Fraser Boucher, President and CEO, Mandalay Resources: Yes, no, that’s a great question. I mean, internally, we have done some studies on poor beneficiation, both optical sorting and screening, which get up to grade there. We haven’t had the results that were positive yet that we hoped there. We are certainly going to continue to explore that. So the short answer is, in theory, that sounds great, but ore grade upgrading on that surface stockpile right now has not proven to be economic, be it optical sorting or screening.

Volker Mollat, Analyst, PMG: Okay. What about ore sorting on the underground ore? Because your ore is on narrow vein, right? So there should be a big difference between the characteristics of the ore and the characteristics waste?

Fraser Boucher, President and CEO, Mandalay Resources: Yes. No, we’ve done some work there too, granted we’re somewhat mind constrained. So finding sufficient ore is always a bit more challenging there. But point taken in terms of even then, while it might not save on the drill and blast cost, it could save on the haul cost of the surface. But the optical sorting there that we did some test work on did not prove up as we were hoping as well.

So for now, we’re going to continue to look at other opportunities even though we’re underground mine constrained. But at present, that hasn’t turned out to show value for us yet.

Volker Mollat, Analyst, PMG: Okay. Thank you. That’s all I have. Thank you.

Fraser Boucher, President and CEO, Mandalay Resources: Thank you.

Conference Operator: And I would now like to turn the conference back to Farezer for closing remarks.

Fraser Boucher, President and CEO, Mandalay Resources: Thank you very much. Thank you to everyone for their time. While we were very pleased with how 2024 year went, I’m even more excited for this year as we continue to focus on both operational excellence, organic exploration, both regional and near mine as shared, and the potential for inorganic growth opportunities, while continuing to be prudent and careful and ensuring we’re supportive of our shareholders’ intentions. So on that note, thank you again to everyone and all the best.

Conference Operator: And this concludes today’s conference call. Thank you for participating. You may now disconnect.

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