2015 Adding value through metallurgical excellence & processing - PowerPoint PPT Presentation

FEBRUARY 2015 Adding value through metallurgical excellence & processing optimization .

Forward-looking Statements This presentation contains "forward-looking statements" within the meaning of applicable securities laws, including statements relating to life of mine production plans and exploration plans and the growth and strategy of Mandalay. 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, that exploration results at Cerro Bayo, Costerfield, Bjorkdal, and Challacollo may not meet management ’ s expectations, that Bjorkdal, Cerro Bayo and Costerfield capital, production and operating cost results may not meet current plans and that there may be 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. 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. 2

Mandalay Vision To create exceptional shareholder value through the acquisition of undervalued assets that can rapidly become cash generative , self-fund exploration, establish and maintain high operating margins and return cash to shareholders within a planned period of time. Mandalay is committed to operating safely and in an environmentally responsible manner, while developing a high level of community and employee engagement. This presentation: How we add value through metallurgical excellence and processing optimization 3

Some reasons for undervalued mines – what we look for in an acquisition – Lack of process control leading to unstable operations – Poor recovery and understanding of recovery – Underutilized capacity (due to capacity mismatch with mine) – Poor preventive maintenance leading to poor availability – Higher operating costs than comparable operations – Inability to produce a product acceptable to customers – The more of these we see, the greater the potential upside if we can propose improvement hypotheses • These are reasons that mines fail “normal” DD; reduce competition • We complete due diligence on our improvement hypotheses – If none or few of these exist, likely to be little upside in the way of metallurgical and process improvements • Target will widely “pass” due diligence– lots of competitors • Unless we see reasons for undervaluation in other areas (e.g. geology & exploration, costs, financial structure), we will walk 4

Mandalay approach – Simplify and focus on what works – Invest in comprehensive metallurgical studies of ore – Invest in complete metallurgical survey of plant – Minor capital investments to optimize grind/retention time/reagents and right-size piping, pumps, cyclones, etc. – Investigate commercial possibilities for making higher value products to support expanded customer base – Plant automation where feasible to control process; improve recovery and product; and reduce costs – Upgrade preventative maintenance to enhance availability & reduce costs 5

Costerfield – the beginning • MND assumed control December, 2009 • Old, complex plant in poor condition--- flotation, gravity, and cyanide leaching circuits in small 250 tpd plant • Poor availabilities and recoveries • Excessive staffing for three circuits – high costs • Only run 5 days/week- plant was the bottleneck • Rapid interventions • Tests proved leaching unworkable; circuit shut down • Temporarily blended gravity conc. into flotation conc.-- focus on flotation improvements where most of value recovered • Increased to 24/7 operation to match mine production, reduce stockpile and improve cash flow 6

Costerfield – longer term Improvement - Mill Availability and Processing Rate 45000 100 1 3 40000 Ore Tonnes Processed Per Quarter 95 2 5 35000 90 Mill Availability % 30000 85 25000 80 4 20000 75 15000 70 10000 65 5000 0 60 Q1-2012 Q2-2012 Q3-2012 Q4-2012 Q1-2013 Q2-2013 Q3-2013 Q4-2013 Q1-2014 Q2-2014 Q3-2014 Q4-2014 t Processed Mill Availability % Key Improvement Result 1. Redesign Ball Mill Chute Prevent chute blockages – increased availability 2. Install standby pumps for all critical pumps Less unscheduled downtime – increased availability 3. Improve planned maintenance efforts Increased availability – less unscheduled breakdowns 4. Commission mobile crusher to crush finer Feed finer material to ball mill – increased throughput 5. Running mobile crusher for longer hours Increased crushed tonnes – ensuring constant feed and throughput 7

Costerfield – longer term Tradeoff-- Processing Rate and Antimony Recovery 45000 100 98 40000 Ore Tonnes Processed Per Quarter 96 35000 94 Antimony Recovery % 30000 92 25000 90 Slight easing of Antimony 20000 recovery with increase in 88 processing rate 15000 86 10000 84 5000 82 0 80 Q1-2012 Q2-2012 Q3-2012 Q4-2012 Q1-2013 Q2-2013 Q3-2013 Q4-2013 Q1-2014 Q2-2014 Q3-2014 Q4-2014 t Processed Antimony Recovery % 8

Costerfield – longer term Improvement - Gold Recovery (Gravity and Overall) 50 100 Renewed focus on separate gravity 45 98 concentration product as flotation and grind Gravity Gold Recovery (%) 40 96 Total Gold Recovery (%) issues fixed 35 94 30 92 25 90 20 88 2 15 86 10 84 5 82 1 0 80 Q1-2012 Q2-2012 Q3-2012 Q4-2012 Q1-2013 Q2-2013 Q3-2013 Q4-2013 Q1-2014 Q2-2014 Q3-2014 Q4-2014 Gravity Gold Recovery % Total Gold Recovery % Key Improvement Result 1. Improve Knelson Gravity Concentrator Increased gravity gold recovery efficiency 2. Purpose-built gold room Increased gravity gold portion of gold recovery to increase gold revenue due to better payables earned on gravity gold 9

Costerfield - Australia Improvement - Processing Unit Cost and Antimony produced Downward unit cost trend as a result of 1800 80 increased throughput 1600 70 Antimony tonnes Per Quarter in concentrate Cost per tonnemilled - A$ 1400 60 1200 50 1000 40 800 30 Upward Antimony metal 600 production trend due to processing improvements and 20 400 increased throughput 10 200 0 0 Q1-2012 Q2-2012 Q3-2012 Q4-2012 Q1-2013 Q2-2013 Q3-2013 Q4-2013 Q1-2014 Q2-2014 Q3-2014 Q4-2014 Total Sb t Produced Cost/tonne milled A$/t 10

Costerfield - Australia Improvement - Processing Unit Cost and Gold ounces Produced Downward Unit Cost trend as a result from 14000 80 increased tonnes milled 70 12000 Cost per tonnemilled - A$ Au in graity an flortatoin concentrate Per Quarter 60 10000 50 8000 40 6000 30 4000 20 Upward Gold Ounces produced trend due to processing 2000 10 improvements and increased throughput 0 0 Q1-2012 Q2-2012 Q3-2012 Q4-2012 Q1-2013 Q2-2013 Q3-2013 Q4-2013 Q1-2014 Q2-2014 Q3-2014 Q4-2014 Total Au oz Produced Cost/tonne milled A$/t 11

Cerro Bayo – the beginning • MND assumed control August, 2010 • Well preserved but early 1990’s vintage plant • On care and maintenance • 1650 tpd capacity • Entirely manual control • Rapid interventions • Restarted plant in earliest 2011 • Some recovery & concentrate grade surprises- feed from new Laguna Verde veins vs. traditional Cerro Bayo veins • Plant ramp-up to 1200 tpd in late 2012 to match mine – substantial spare capacity and no major issues • Installed modern flotation automation system in early 2013 to increase recovery 12

Cerro Bayo Improvement - Gold and Silver Recovery 94% 5 92% 2 4 Total Recovery (%) 90% 1 3 88% System achieving 86% target results Optimise piping, pumps, 84% cyclones to allow 82% automation to work Install Flotation 80% Automation Q1 - 2012 Q2 - 2012 Q3 - 2012 Q4 - 2012 Q1 - 2013 Q2 - 2013 Q3 - 2013 Q4 - 2013 Q1 - 2014 Q2 - 2014 Q3 - 2014 Q4 - 2014 Gold Recovery Silver Recovery Key Factor Result 1. Increase Rougher Flotation rotor speeds Increased recovery 2. Focus on operating discipline and improved mass pull Increased recovery control 3. Process control automation construction and Lower recovery due to instability in circuit with commissioning and commissioning with the objective to improve plant tuning the system operating stability and recovery 4. Focused training of operators in automation system Increased understanding by the operators how to utilise the system in operation and further fine tuning of the system (Q1 – Q3 order to improve recoveries. System utilisation by operators increased ‘14) significantly to 97%, adding increased plant stability and improved recovery in Q3 and Q4 ‘14 5. Limit over grinding in mills and change grinding media Less fine silver and gold losses in tails and higher flotation recoveries due to High Chrome alloy in all mills to improved pulp chemistry through adding High Chrome grinding media 13