Post by
ganndolph1 on Apr 14, 2021 12:45am
The TWIN MIRACLE Quarter at Mandalay Resources
all,
So, for everyone who watches the weather and climate, we know that January and February were brutal months in the northern hemisphere. It turns out that the wintry weather impacted the Bjorkdal mine in Sweden lowering the daily throughput to 3390 tpd during those two months with throughput recovering to 3520 tpd. So throughput for the quarter was down on the order of 5 percent. Quarter over quarter gold production dropped from 12,252 ounces to 11,855 ounces--a 4 percent drop.
However, relative to the mine plan for 2021, the implied underground mine production was running at 79 percent of the mine plan with the extra ore coming from the long term stock pile. So rather than producing 14,126 ounces of gold per the mine plan at a milled head grade of 1.54 g/t, it looks like actual production was 11855 ounces at a milled head grade of 1.38 g/t.
That is a 16 percent miss relative to the technical guidance implied in the 2021 Bjorkdal 43-101 report.
So where is the miracle in all this?
Well, it turns out that last quarter Bjorkdal produced 12,252 ounces of gold but sold only 87.7 percent of production or 10,746 ounces. That left Bjorkdal with at least 1,506 ounces of gold in inventory.
Good move, for Q1 2021 gold sales were 221 ounces higher than gold production at 12,076 ounces, resulting in a 12 percent quarter over quarter increase in gold sales from Q4 2020 to Q1 2021. So management comes out smelling like a rose on the Q1 2021 financial report in spite of Bjorkdal underperforming by a factor of 20 to 25 percent. And furthermore, management has at least another 1285 ounces of Bjorkdal gold in inventory at the end of Q1 2021 to play with.
At Costerfield, the story is even more remarkable. With average gold grades running at a very high 11.0 g/t and antimony grades running at 3.9 percent, gold production based on Q4 2020 recoveries should have been around 12,200 ounces with 1,400 tonnes of antimony.
So the implication is that gold recovery dropped from 91 percent to 81 percent, and antimony recovery dropped from 90 percent to 55 percent. Absolutely HORRIBLE!
Management reported the following tidbit:
"In Q1 2021, we saw a slight dip in grades compared to Q4 2020--mainly related to the site purposefully feeding lower grade ore into the plant while dealing with the lack of processing reagents which impacted recoveries." No big deal! Just a drop of 10 percent in gold recovery and 35 percent in antimony recovery!
And on top of all this the cavitation tube flotation columns are running late and have not yet been installed.
All this news is extremely bearish, yet there is another miracle here in the Costerfield production story. Last quarter gold production was running at 12,236 oz/quarter, but Costerfield sold only 10,943 ounces leaving 1,293 ounces of gold in inventory. So with this quarter's gold production running at 11,082 ounces, gold sales were 11,781 ounces or an increase of 7 percent quarter over quarter from Q4 2020 to Q1 2021!
On the by product metal antimony, there is an equally remarkable story. Even though antimony sales dropped from 915 tonnes in Q4 2020 to 829 tonnes in Q1 2021, the 10 percent drop in antimony sales was eclipsed by a 50 percent quarter over quarter increase in the antimony price, which resulted in the following miracle.
Gold equivalent sales increased from 13,996 ounces in Q4 2020 to 15,573 ounces in Q1 2021. So the miracle here is that in spite of horrible recoveries in the plant at Costerfield, management comes out smelling like a rose because quarter on quarter gold equivalent sales increased by 11 percent.
So the double miracle is that quarter on quarter gold equivalent sales increased to 28,218 ounces of gold compared with 24,742 ounces in Q4 2020--a 14 percent quarter on quarter increase in spite of a huge underperformance at both Costerfield and Bjorkdal in Q1 2021.
Mr. Duffy comes out smelling like a rose, because revenue will have increased by 4 million USD quarter over quarter, and EBITDA will have increased from $25.3 million USD to $29.5 million USD!
Only in the gold business can one have a terrible quarter at both mines, yet report a double digit increase in revenue and the bottom line! Hence, the title of this post as the TWIN MIRACLE Quarter at Mandalay Resources!