Q3 2018 What happened and why?all,
When the history of Mandalay Resources is written 10 or 20 years from now, the historians will be questioning on what happened in Q3 2018 to cause the collapse in gold production at Bjorkdal?
Thanks to the 2019 43-101 report on Bjorkdal, we now have the answers to exactly what happened.
I had originally concluded that because of the reported bottleneck in ore hauling that none of the high grade ore (2.4 g/t from underground) was processed at the plant in Q3. Wrong conclusion!
We now know from Table 14-13 that 55,215 tonnes of ore grading 1.54 g/t were trucked to the A grade ore stockpiles, and that 53,632 metric tons grading 1.19 g/t were processed in Q3 from underground ore stopes. With ore grade control in place low grade ore under 1.0 g/t is supposed to be stockpiled, while higher grade ore gets processed.
In Q3 grade control worked in reverse because they somehow lost 700 ounces of mined gold between the ore hauled to the surface versus the underground stope ore processed. From Table 14-14, we find out that 96,330 metric tons grading 0.94 g/t were hauled to the surface, and of that ore, 70,563 metric tons grading 1.38 g/t were processed through the mill, so grade control seems to have worked on underground development ore. For the development ore, grade control seems to have worked.
From Table 14-12, we find out that 42.192 metric tons of open pit ore grading 1.25 g/t were trucked to the A grade ore stockpiles in Q3, but because of apparent ore dilution the grade processed by the mill was only 0.83 g/t!
That ore qualifies as B grade, so with grade control in place, why did the plant process this substandard material? So here’s the interesting part. Table 14-11 provides a summary of plant production statistics for 2018, and we know from this table that 361,394 metric tons of A grade ore grading 1.19 g/t were processed through the mill from the open pit. In addition
, 72,268 metric tons grading 0.66 g/t of B grade ore were also processed through the mill for total open pit throughput of 433,662 metric tons grading 1.10 g/t for total open pit ore processed of 15,260 ounces of gold. However, the total tons of A grade open pit ore processed was only 317,238 metric tons grading 1.18 g/t for a total of 12,040 ounces of gold. Houston, we have a problem!!! What happened to the 3,200 ounces of gold that was supposedly processed from the open pit? Second, since Table 14-12 reports on A Grade ore grading greater than 1.0 g/t, how is it that the milled plant feed was B grade ore in Q3 and Q4? One has to assume that B grade ore was processed because they didn’t have the hauling capacity to move A grade ore, or that their grade control discipline fell apart in the second half of the year. So here is my reconciliation of the Q3 2018 production numbers from Bjorkdal:
- 55824 t grading 0.83 g/t for 1489 oz from the open pit 17.1%
- 53632 t grading 1.19 g/t for 2052 oz from underground stopes 16.5%
- 70563 t grading 1.38 g/t for 3131 oz from underground development 21.6%
- 145954 t grading 0.68 g/t for 3191 oz from the low grade ore stockpile 44.8%
- Total milled throughput was 325973 t grading 0.94 g/t for 9864 oz of gold production.
My conclusion in looking at this data is that while their underground trucking bottleneck amounted to 30 percent reduction in Q3 hauling capacity, the main problem seems to have been grade related, and it is likely that had to process extra low grade stockpile ore to make up for the high grade underground ore that was lacking, but they also may have processed B grade ore from the open pit during this time period—all factors resulting in the huge decline in gold production between Q2 and Q3.
Now how convenient is it that they had negative cash flow and poor performance at Bjorkdal exactly at the same time that they had underperformance at Costerfield? It provided a wonderful shake out opportunity and buying point for any investor brave enough to step into Mandalay Resources stock last November! And it provided management with a perfect excuse to do a financing which resulted in 4 of the largest shareholders being able to double their ownership interest in the next FOSTERVILLE while diluting the little investors who now control only 25 percent of the float.
Guess what the big boyz are going to want your remaining shares, so I repeat again the only defense is to double your share holding in MNDJF or MND.TO!!!!