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Press release from CNW Group

MANDALAY RESOURCES COMPLETES HEDGING PROGRAM TO PROTECT CASH FLOW IN 2011 AND 2012

Friday, May 20, 2011

MANDALAY RESOURCES COMPLETES HEDGING PROGRAM TO PROTECT CASH FLOW IN 2011 AND 201214:10 EDT Friday, May 20, 2011TORONTO, May 20, 2011 /CNW/ - Mandalay Resources Corporation ("Mandalay" or the "Company") (TSX: MND, MND.WT) has completed the hedging program that was previously announced on May 6, 2011.Under the hedging program, Mandalay has purchased put options that ensure that the Company will receive a minimum of $30/ounce for approximately 75% of its silver sales and $1,400/ounce for approximately 70% of its gold sales in 2012. The Company is not obliged to exercise any of the puts and, accordingly, retains all of the upside benefits associated with any silver and gold prices movements over these levels in 2012.Brad Mills, CEO of Mandalay commented, "With the Company expecting gold production of 35,000 - 40,000 ounces and silver production of3.2 million - 3.7 million ouncesfor 2012, this put purchase program secures significant downside price protection for the majority of our silver and gold sales in the second half of 2011 and for all of 2012, thus ensuring significant cash generation during this formative growth period for Mandalay."The total cost of purchasing the puts to date has been approximately US$16 million, most of which has been funded using the proceeds from the recent C$15 million exercise of share purchase warrants by West Face Capital Inc.The gold and silver puts purchased by the Company for the second half of 2011 and all of 2012 are shown in the table below. This table includes 900,000 previously announced $25/ounce silver puts that were purchased on February 11, 2011 and described in the Company's press release dated May 6, 2011. The counterparty for all puts purchased is PB Financial Services Inc., a subsidiary of Bache Securities (Prudential).Table 1: Mandalay Resources Gold and Silver Put Purchase 2011 - 2012ProductPut price (US$)Q1 2011Q2 2011Q3 2011Q4 2011Q1 2012Q2 2012Q3 2012Q4 20122011 Total2012 TotalAu Puts1,400    7,0007,0007,0007,000-28,000% CoverExpected Production 0.00%0.00%0.00%0.00%76.98%75.19%66.01%64.18%-70.15% Ag Puts25--150,000150,000150,000150,000150,000150,000300,000600,000Ag Puts35---90,000300,000300,000300,000300,00090,0001,200,000Ag puts30----210,000210,000210,000210,000-840,000% Cover Expected Production 0.00%0.00%25.00%36.60%86.45%85.67%64.27%71.28%31.06%75.72%About Mandalay Resources Corporation: Mandalay Resources is a Canadian-based natural resource company with producing assets in Australia and producing and exploration projects in Chile. The Company is focused on executing a roll-up strategy, creating critical mass by aggregating advanced or in-production gold, copper, silver and antimony projects in Australia and the Americas to generate near-term cash flow and shareholder value.Forward-Looking Statements: This news release contains "forward-looking statements" within the meaning of applicable securities laws, including statements regarding the Company's expected gold and silver production in 2012. 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, 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. A description of additional risks that could result in actual results and developments differing from those contemplated by forward-looking statements in this news release can be found under the heading "Risk Factors" in Mandalay's annual information form dated March 31, 2011, a copy of which is available under Mandalay's profile at www.sedar.com.  In addition, there can be no assurance that any inferred resources that are discovered as a result of additional drilling will ever be upgraded to proven or probable reserves. 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. For further information: Bradford Mills Chief Executive Officer Greg DiTomaso Investor Relations Contact: 647.260.1566