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

Adding value through metallurgical excellence & processing optimization.

FEBRUARY 2015

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.

Forward-looking Statements

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Mandalay Vision

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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

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

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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

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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

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60 65 70 75 80 85 90 95 100 5000 10000 15000 20000 25000 30000 35000 40000 45000 Q1-2012 Q2-2012 Q3-2012 Q4-2012 Q1-2013 Q2-2013 Q3-2013 Q4-2013 Q1-2014 Q2-2014 Q3-2014 Q4-2014 Mill Availability % Ore Tonnes Processed Per Quarter

Improvement - Mill Availability and Processing Rate

t Processed Mill Availability %

1 2 4 3 5

Costerfield – longer term

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

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80 82 84 86 88 90 92 94 96 98 100 5000 10000 15000 20000 25000 30000 35000 40000 45000 Q1-2012 Q2-2012 Q3-2012 Q4-2012 Q1-2013 Q2-2013 Q3-2013 Q4-2013 Q1-2014 Q2-2014 Q3-2014 Q4-2014 Antimony Recovery % Ore Tonnes Processed Per Quarter

Tradeoff-- Processing Rate and Antimony Recovery

t Processed Antimony Recovery %

Slight easing of Antimony recovery with increase in processing rate

Costerfield – longer term

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Key Improvement Result

• 1. Improve Knelson Gravity Concentrator

efficiency Increased gravity gold recovery

• 2. Purpose-built gold room

Increased gravity gold portion of gold recovery to increase gold revenue due to better payables earned on gravity gold

80 82 84 86 88 90 92 94 96 98 100 5 10 15 20 25 30 35 40 45 50 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 Gold Recovery (%) Gravity Gold Recovery (%)

Improvement - Gold Recovery (Gravity and Overall)

Gravity Gold Recovery % Total Gold Recovery %

Renewed focus on separate gravity concentration product as flotation and grind issues fixed 2 1

Costerfield – longer term

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10 20 30 40 50 60 70 80 200 400 600 800 1000 1200 1400 1600 1800 Q1-2012 Q2-2012 Q3-2012 Q4-2012 Q1-2013 Q2-2013 Q3-2013 Q4-2013 Q1-2014 Q2-2014 Q3-2014 Q4-2014 Antimony tonnes Per Quarter in concentrate Cost per tonnemilled - A$

Improvement - Processing Unit Cost and Antimony produced

Total Sb t Produced Cost/tonne milled A$/t

Upward Antimony metal production trend due to processing improvements and increased throughput Downward unit cost trend as a result of increased throughput

Costerfield - Australia

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10 20 30 40 50 60 70 80 2000 4000 6000 8000 10000 12000 14000 Q1-2012 Q2-2012 Q3-2012 Q4-2012 Q1-2013 Q2-2013 Q3-2013 Q4-2013 Q1-2014 Q2-2014 Q3-2014 Q4-2014 Au in graity an flortatoin concentrate Per Quarter Cost per tonnemilled - A$

Improvement - Processing Unit Cost and Gold ounces Produced

Total Au oz Produced Cost/tonne milled A$/t

Upward Gold Ounces produced trend due to processing improvements and increased throughput Downward Unit Cost trend as a result from increased tonnes milled

Costerfield - Australia

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

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80% 82% 84% 86% 88% 90% 92% 94% 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 Recovery (%)

Improvement - Gold and Silver Recovery

Gold Recovery Silver Recovery

Cerro Bayo

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Key Factor Result

• 1. Increase Rougher Flotation rotor speeds

Increased recovery

• 2. Focus on operating discipline and improved mass pull

control Increased recovery

• 3. Process control automation construction and

commissioning with the objective to improve plant

• perating stability and recovery

Lower recovery due to instability in circuit with commissioning and tuning the system

• 4. Focused training of operators in automation system
• peration and further fine tuning of the system (Q1 – Q3

‘14) Increased understanding by the operators how to utilise the system in

• rder to improve recoveries. System utilisation by operators increased

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

to High Chrome alloy in all mills Less fine silver and gold losses in tails and higher flotation recoveries due to improved pulp chemistry through adding High Chrome grinding media 2 1 3 4 5

Install Flotation Automation Optimise piping, pumps, cyclones to allow automation to work System achieving target results

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0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 50000 60000 70000 80000 90000 100000 110000 120000 130000 140000 150000 Q1 - 2012 Q2 - 2012 Q3 - 2012 Q4 - 2012 Q1 - 2013 Q2 - 2013 Q3 - 2013 Q4 - 2013 Q1 - 2014 Q2 - 2014 Q3 - 2014 Q4 - 2014 Mill Availability (%)

Improvement - Increasing Mill Availability Leads to Higher Average Processing Rate

Processed t (DMT) Mill Availability (%) Tonnes Per Quarter (DMT) 27 Day Critical Mill Bearing maintenance Increased mine production to 1400 tpd runs into plant availability limitations

Cerro Bayo

Improved Prev.

• Maint. leads to

higher availability & higher throughput

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1 4 7 10 13 16 19

200,000 400,000 600,000 800,000 1,000,000 1,200,000 Q1 - 2012 Q2 - 2012 Q3 - 2012 Q4 - 2012 Q1 - 2013 Q2 - 2013 Q3 - 2013 Q4 - 2013 Q1 - 2014 Q2 - 2014 Q3 - 2014 Q4 - 2014

Cost per ounce silver US$/ ounce

Silver ounces per quarter (oz)

Saleable Silver Production and Cash Cost per Ounce

Silver produced" Cost per ounce 27 Day Critical Mill Bearing maintenance (high monthly cost)

Cerro Bayo

Björkdal– the beginning

• MND assumed control September, 2014
• Old, well-maintained plant with excellent availability
• 3500 tpd capacity, pushed hard with low-grade feed
• 88-89% recoveries in gravity and flotation circuits
• Rapid interventions
• Eliminated feed from low grade stockpile and lower

quality ore from open pit and underground

• Set expanded targets for high grade stockpiles and drilled
• re inventory underground to support higher feed grades
• Commissioned ore sorting tests
• Commissioned metallurgical survey of plant
• Approved new crusher to replace poorly performing old

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Björkdal - Sweden

Key Processing Improvement Projects Underway Project Methodology Intended Outcome

• 1. Ore sorting

Use laser sorting technology to separate

• re from waste rock

If successful, increase gold head grade before milling, improve valuable ore throughput, improve metal output, reduce mill power and consumables

• consumption. Potential to increase LOM

resource due to a potential lower cut-off grade that can be mined

• 2. Processing plant sampling survey

(Mill and Gravity recovery circuits) Perform a detailed sampling survey of the mill and gravity gold recovery circuits with the view of identifying improvement opportunities within the circuits for maximising throughput and gold recovery from the gravity recovery circuit (gold payables better for gravity gold). The work performed will include mass balancing of both the circuits as well as building predictive models to simulate various processing strategies considered Increased metal output from the gravity recovery circuit, which will result in increased revenue due to the higher payables received for gravity gold when compared to gold recovered from flotation

• 3. Flotation - laboratory test programme

Perform laboratory flotation tests to measure the effect of finer grinding and flotation residence time on gold recovery from the flotation circuit with the view of improving gold recovery in this circuit To increase flotation gold recovery and therefore overall metal output if gold recovery is improved by grinding finer and adding additional flotation residence time

• 4. Replacement of Cleaner Spirals

Replace Cleaner Spirals which reached their end of life Potential to increase gravity gold recovery through better separation achieved on new spirals