Mandalay Resources Corp. (TSX:MND, OTCQB:MNDJF), the metals miner, told investors that it had revised downwards its output guidance for the full year 2022 but remained on track to achieve its unit costs forecasts as it continues to make savings and bids to improve operations.
Reporting sales and production figures for the third quarter to end-September, the company said it now expected to generate between 106,000 and 115,000 gold equivalent ounces for the year, compared to between 118,000 and 130,000 previously.
But its cash and all-in sustaining cost guidance per ounce of gold-equivalent produced remain unchanged at between US$700 to US$900 and US$1,100 to US$1,300 respectively, due to cost measures and the stronger US dollar.
Notably, Mandalay also said it had reduced its capital expenditure guidance by between US$9 million and US$13 million to a consolidated US$41 to US$45 million.
READ: Mandalay Resources CEO says drilling at Costerfield operation in Australia is 'achieving its goals'
Dominic Duffy, CEO of Mandalay, put the lower output guidance down to COVID-related labour shortages at both its mined and temporary lower grades.
"Despite this lower production, our cost per ounce metrics have stayed comparatively in line with the previously stated guidance and will remain unchanged due to tight cost controls and the strengthening of the US Dollar relative to the Australian Dollar and Swedish Krona, both of which help offset the lower consolidated production rates," he said.
"We also expect to reduce capital spending by approximately $9 - $13 million due to cost-saving measures and delaying purchases of capital items."
Mandalay has producing assets in Australia - at the Costerfield gold-antimony mine - and in Sweden, with its Bjorkdal gold mine.
At Costerfield, Duffy said the company expected grades to lift as sickness absenteeism stabilized and additional development on the extremities of the Youle ore target are completed, allowing the miner to "focus on developing the higher-grade central area of the deposit".
At Bjorkdal, the CEO said he expected production to continue increasing compared to Q3 as the firm continues mining the lower levels of Aurora and initiates development in several higher-grade areas of the Eastern Central zone.
"We are very pleased that despite the lower production forecast, our continued focus on cost controls are expected to ensure that we will remain on track to achieve our previously stated unit costs guidance," he said.
"Expected fourth quarter operational improvements, combined with operational and capital cost controls will ensure that the company continues with the trend of generating positive free cash flow for 2022," he added.
In the three months to September 30, Mandalay reported saleable production of 27,287 ounces of gold equivalent, down from 33,121 in the same quarter a year earlier. Total gold-equivalent sales came in at 26,551 in the latest third quarter, down from 29,509 a year earlier.
Mandalay said it is focused on growing production and reducing costs to generate significant positive cash flow.
Contact the author at giles@proactiveinvestors.com