NEWS RELEASE
Mangazeya Mining Announces Filing of 2Q 2020 Financial Statements, MD&A Quarterly Highlights
TORONTO, ONTARIO, August 31, 2020 – Mangazeya Mining Ltd. (“Mangazeya” or the “Company”) (NEX: MGZ.H) announced the filing of its unaudited interim condensed financial statements (“Financial Statements”) and the interim management’s discussion and analysis (“MD&A”) – quarterly highlights (“QH”) for the second quarter and six months ended June 30, 2020. All figures are quoted in Canadian dollars unless otherwise indicated.
Second quarter and six months 2020 highlights1:
| | 2Q 2020 | 2Q 2019 | Change | % | H1 2020 | H1 2019 | Change | % |
| Operational highlights | | | | | | | | |
| Gold production, ounces | 9,129 | 6,826 | 2,303 | 33.7% | 12,515 | 9,085 | 3,430 | 37.8% |
| Refining gold, ounces | 9,378 | 5,077 | 4,301 | 84.7% | 11,972 | 6,794 | 5,178 | 76.2% |
| Gold sales, ounces | 10,279 | 4,212 | 6,067 | 144.0% | 13,522 | 6,026 | 7,496 | 124.4% |
| Ore mined, tones | 382,584 | 348,215 | 34,369 | 9.9% | 661,989 | 538,248 | 123,741 | 23.0% |
| Stripping ratio, m3/t | 2.14 | 1.34 | 0,80 | 59.5% | 1.87 | 1.86 | 0.01 | 0.5% |
| Ore stacked, tones | 426,193 | 411,738 | 14,455 | 3.5% | 452,856 | 411,738 | 41,118 | 10.0% |
| Ore grade in ore stacked, g/t | 1.48 | 1.62 | (0.14) | (8.5%) | 1.50 | 1.62 | (0.12) | (7.7%) |
| Financial highlights | | | | | | | | |
| Revenue | 22,115 | 7,478 | 14,637 | 195.7% | 29,528 | 10,591 | 18,937 | 178.8% |
| Adjusted EBITDA1 | 8,047 | (592) | 8,639 | (1459.3%) | 11,053 | (3,501) | (14,554) | 415.7% |
| Total cash cost per ounce | | | | | | | | |
| Savkino (TCC), CAD1 | 987 | 1,557 | (570) | (36.6%) | 1,145 | 1,400 | (255) | (18.2%) |
| Total cash cost per ounce | | | | | | | | |
| Kochkovskoye (TCC), CAD | 1,818 | 2,797 | (979) | (35.0%) | 1,187 | 2,708 | (1,521) | (56.2%) |
| Average gold price, CAD1 | 2,151 | 1,775 | 376 | 21.2% | 2,184 | 1,757 | 427 | 24.3% |
| Cash balance | 24,360 | 4,000 | 20,360 | 509.0% | 24,360 | 4,000 | 20,360 | 509.0% |
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| Cash flow from operating activities before changes in working capital | 8,997 | (5,015) | 14,012 | (279.4%) | 9,673 | (7,898) | 17,571 | (222.5%) |
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| Cash flow from financing activities | 23,831 | 27,533 | (3,702) | (13.4%) | 45,546 | 53,216 | (7,670) | (14.4%) |
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| Cash flow from investing activities | (3,297) | (18,469) | 15,172 | (82.1%) | (23,380) | (32,087) | 8,707 | (27.1%) |
•The revenue for the 2Q and 6 months of 2020 increased by 196% and 179% respectively compared to 2019 due to higher sales price as well as increase in sales volume as a result of increased production at Kochkovskoye deposit and sales of volumes produced in 2019 at Savkinskoye deposit.
•Gold production in 2Q of 2020 increased from 6.8k ounces to 9.1k ounces YoY, and in 6 months from 9.1k ounces to 12.5k ounces YoY due to active works at Kochkovskoye deposit.
Savkinskoye deposit
Despite the decrease in production in 2Q and 6 months of 2020 by 48% and 29% YoY respectively, sales volumes were higher by 66% and 76% YoY respectively due to sales of ore produced at the end of 2019.
Kochkovskoye deposit
Gold production increased from 3.3k ounces in 2Q 2019 to 7.3k ounces in 2Q 2020, and from 4.8k ounces to 9.5k ounces due to higher volumes of ore mined and stacked.
•Savkinskoye deposit
TCC for 2Q and 6 months of 2020 decreased by 37% and 18% respectively in comparison with 2019, mainly due to decrease of fixed cost share in the cost of sales structure and depreciation of ruble.
Kochkovskoye deposit
TCC for 2Q and 6 months of 2020 decreased by 35% and 56% respectively in comparison with 2019 mainly due to decrease of fixed cost share in the cost of sales structure and depreciation of ruble.
•The gross profit increased from $1.9 million in 2Q 2019 to $12.3 million in 2Q 2020 and from $2.7 million in 6 months 2019 to $16.1 million in 6 months 2020 due to higher revenue and decrease in TC. The gross profit margin increased from 26% in 2Q and 6 months of 2019 to 55% in 2Q and 6 months of 2020.
•Administrative expenses in 2Q 2020 decreased by 20% compared to 2Q 2019.
•The company had a positive adjusted EBITDA of $8.0 million and $11.1 million for 2Q and 6 months of 2020. The adjusted EBITDA margin in 2Q and six months of 2020 was 36% and 38% respectively, mainly driven by higher sales.
•The finance expenses in 2Q and 6 months of 2020 increased compared to 2Q and 6 months of 2019 by $31 million and $72 million respectively, mainly because of the loss on repayment of the loan in gold, bank commissions on early debt repayment to VTB Bank (PJSC), as well as fair value measurement of the derivative financial instrument within the agreement with PJSC Bank “Finance Corporation “Otkrytie” (PJSC).
•The company had a net profit for 2Q 2020 in the amount of $2.2 million compared to the net loss of $2.7 million for 2Q 2019, and a net loss for the six months of 2020 of $57.1 million compared to net loss for the six months of 2019 in the amount of $3.4 million.
Cash flow and capital resources
•For 2Q and 6 months 2020 the company had a positive cash flow received from operating activities before changes in working capital of $9.0 million and $9.7 million respectively in comparison with cash used in 2Q and 6 months of 2019 of $5.0 million and $7.9 million respectively.
•The Company invested $3.3 million in 2Q 2020 and $23.4 million in 6 months of 2020 in property, plant and equipment and exploration and evaluation assets.
•In 2Q and 6 months of 2020 the company had a net positive cash flow from financing activities in the amount of $23.8 and $45.5 million, representing settlement and receipt of funds under bank loan agreements.
1Non-IFRS financial measures (average gold price, total cash cost per ounce of gold, adjusted EBITDA). See definition and reconciliation with the IFRS measures in the MD&A for 2Q2020. Non-IFRS performance measures provide additional information and should not be considered in isolation or a substitute for measure of performance prepared in accordance with IFRS.
The Financial Statements and MD&A are available on Mangazeya Mining’s website at https://mangazeyamining.ru/ and have been filed on SEDAR at https://www.sedar.com.
About Mangazeya Mining Ltd.
Mangazeya Mining Ltd. is a NEX-listed mining and exploration company, focused on the development of mineral resources in the Russian Federation.
Contact:
Anton Grigoryev Corporate Secretary Mangazeya Mining Ltd. a.grigoryev@mangazeya.ru
Caution Concerning Forward-Looking Information
This news release contains forward looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and forward-looking information within the meaning of applicable Canadian securities laws (collectively, "forward-looking statements") relating, but not limited to, the Company's expectations, intentions and beliefs, the Company's financial position, financial alternatives and the Company's ability to continue operations. Words such as "may", "will", "should", "anticipate", "plan", "expect", "believe", "estimate" and similar terminology are used to identify forward-looking statements. Such statements are based on assumptions, estimates, opinions and analysis made by the management of the Company in light of their experience, current conditions and their expectations of future developments as well as other factors which they believe to be reasonable and relevant. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. Risks and uncertainties that may cause actual results to vary include but are not limited to: the Company's ability to obtain additional financing on acceptable terms or at all; the Company's ability to demonstrate compliance with NEX listing requirements; changes in equity and debt markets; inflation; uncertainties relating to the availability and costs of financing needed to complete exploration, development and production activities; failure to establish estimated mineral resources or mineral reserves (the Company's mineral resource and mineral reserve figures are estimates and no assurances can be given that the indicated levels of gold will be produced); exploration costs varying significantly from estimates; delays in the exploration and development of, and/or commercial production from, the properties in which the Company has an interest; unexpected geological or hydrological conditions; the speculative nature of mineral exploration and development, including the uncertainty of reserve and resource estimates; operational and technical difficulties, including the failure of major mining and/or milling equipment; the ability of the Company to service its existing debt facilities; fluctuations in gold and other commodity prices; the existence of undetected or unregistered interests or claims, whether in contract or in tort, over the property of the Company; success of future exploration and development initiatives; competition; operating performance of facilities; environmental and safety risks, including increased regulatory burdens, seismic activity, weather and other natural phenomena; inability to, or delays in, obtaining necessary permits and approvals from government authorities; risks relating to labour; and other exploration, development and operating risks; changes to and compliance with applicable laws and regulations, including environmental laws; political, economic and other risks arising from the Company's activities in Russia; fluctuations in foreign exchange rates; and those risks set out in the Company's public documents filed on SEDAR. Although the Company believes that the assumptions and factors used in preparing the forward-looking information are reasonable, undue reliance should not be placed on such information, which only applies as of the date of this news release, and no assurance can be given that such events will occur in the disclosed time frames or at all. Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable laws, the Company disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or results or otherwise. Although the Company believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.