Mandalay Resources Corporation (MND) Earnings Call Transcript & Summary

Good morning. My name is Paul, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Mandalay Resources Corporation's Fourth Quarter and Full Year 2021 Financial Results Conference Call. Joining us on the call is Dominic Duffy, President, Chief Executive Officer and Director of Mandalay Resources. [Operator Instructions] As a reminder, this conference is being recorded. This call contains forward-looking statements, which reflect the current expectations or beliefs of the company based on information currently available to the company. Forward-looking statements are subject to a number of risks and uncertainties that may cause the actual results of the company to differ materially from those discussed in the forward-looking statements. Factors that could cause actual results or events to differ materially from the different -- from the current expectations are disclosed under the heading Risk Factors and elsewhere in the company's Annual Information Form dated March 31, 2021, available on SEDAR and the company's website. Dominic, you may now begin.

Thank you, Paul. Good morning, everyone, and thank you for joining us today. With me on the call is Nick Dwyer, Mandalay's Chief Financial Officer; and I also have Chris Davis, Mandalay's Vice President of Exploration and Operational Geology. Mandalay released its fourth quarter and year-end 2021 financial results at market close yesterday. You can find our consolidated financial statements and MD&A on the Mandalay Resources website. We also have it under our profile on SEDAR. Mandalay achieved significant operational and financial milestones in 2021, illustrating the strength and execution on our strategy. Including this quarter, our year-end results have been heavily steered by the quality of yield, high-grade and low-cost gold and antimony mine in Victoria, Australia. For the year and the consolidated basis, Mandalay produced 123,000 ounces of salable gold equivalent, which not only exceeded our 2021 guidance, but is also the company's best result achieved since 2017. Year-over-year production improvement since 2019 demonstrate the completed turnaround at both assets and the long-term financial stability and growth that it will provide for Mandalay. Looking ahead, we are expecting significant production increases at Björkdal and a slight production improvement in Costerfield over 2022. And we anticipate consolidated production of 119,000 to 130,000 ounces of gold equivalent produced, then expected cash cost of $700 to $900 and all-in sustaining at around about $1,100 to $1,300. I am pleased that in December, we successfully completed the sale of noncore Cerro Bayo mine to Equus Mining. We believe that Equus is well positioned to move this project forward, allowing for both parties to mutually benefit. Before discussing our operations in more detail, I would like to pass the call off to Nick, who will walk through the financial highlights of the company during Q4 and full year. Nick?

Thanks, Dominic. Mandalay delivered another excellent quarter and an overall fantastic 2021 year. The company achieved numerous financial records, including revenue and adjusted EBITDA. For Q4 and full year 2021, we recorded $73 million and $229 million in revenue, respectively. On adjusted EBITDA, we achieved records of $41 million and $115 million during the same period. As compared to full year 2020, our revenue grew by 28%, and we also improved our adjusted EBITDA margin to a healthy 50%. This lift was due to an overall increase in consolidated gold equivalent ounces sold of 26% compared to last year. During Q4, we recorded a consolidated net income of $15 million, which is USD 0.17 per share or CAD 0.21. For the year, consolidated net income was $55 million, which is USD 0.60 per share or CAD 0.75, which is a great effort. Mandalay's average realized gold price for 2021 was $1,818 per ounce as compared to $1,804 during 2020. Also, antimony's strong appreciation to above $11,000 per tonne from under $6,000 last year had pushed antimony's contribution to consolidated revenue to 18%. And currently, the antimony price is above $13,000 per tonne, which is excellent for Mandalay. Our consolidated cash cost did lift from $843 to $873 per gold equivalent produced for 2021. This was mainly due to the costs incurred at Cerro Bayo for the processing of a lower-margin material. As Dominic mentioned earlier, this asset sale was completed in Q4 last year. And from an all-in sustaining cost point of view, the increased production performance from Costerfield aided the group's all-in amount to $1,254 per ounce to $1,212 for 2021. Mandalay closed the year with $30.7 million in cash, a slight increase from the $29.8 million in Q3 2021. However, due to global shipping challenges at Costerfield, our year-end cash total leaves out a significant amount of cash, which was normally scheduled to be received in December but was pushed out to January 2022. So that said, at the end of January 2022, Mandalay had a cash position of $47.2 million. Regarding our debt, our syndicated facility stands at $43.9 million, and we will continue to service this debt with the $3.8 million quarterly repayments during 2021 -- sorry, during 2022, with a $29 million balloon payment, which is due in Q1 2023. Lastly, and Chris can speak to this in more detail, but the 2022 exploration spend is expected to be increased following our successful 2021 program. At Björkdal, we are looking to spend USD 4 million to USD 5 million, while at Costerfield, it will be around USD 7 million to USD 9 million. I'd like to turn the call back to Dominic. Dom?

Thanks, Nick. Turning to our operations. As I discussed earlier in the call, a large part of the strong quarter and year-end 2021 was due to the continued high-grade ore from Costerfield. During Q4, Costerfield was able to process gold grades of 13.5 grams per tonne, less than the year-end grade to average to 11.8 grams per tonne. On gold grades alone, this makes Costerfield one of the highest-grade gold mines in Australia and places us in a very competitive spot globally. If antimony was considered, Costerfield processed an average gold equivalent grade in excess of 20 grams per tonne for the whole year, further strengthening Costerfield's position as a high-quality asset. As compared to 2020, Costerfield's gold equivalent production improved to 18% to 68,700 ounces. This lift was supported by the above-mentioned improvements in antimony prices. But nonetheless, stand-alone gold production year-over-year did improve approximately 6% to 47,750 gold ounces. As I mentioned of this improvement, Costerfield's revenue for Q4 2021 was $49 million, an 87% increase from $26 million in Q4 2020. However, this will not be a normalized level moving forward, unfortunately, as there was an increase in ounces sold during Q4, deriving from the delay in shipments that pushed the recognition of Q3 revenue into Q4 2020 month. Cash cost per ounce of salable gold equivalent produced in Q4 2021 was $557 compared to $668 in the same period in 2020, while all-in sustaining cost per ounce of salable gold equivalent produced in Q4 was $731. These declines in cost per ounce metric was also seen within our year-end results as site recorded a cash and all-in sustaining cost of $593 and $866, respectively, a decline of 6% and 14%. Looking ahead at Costerfield. We anticipate a slight improvement in the production profile during 2022, as stoping ramps up at Youle and with the initiation of production from the high-grade deposit at Shepherd. Moving to Björkdal. In line with the previous year, this site produced 45,000 salable gold ounces and generated $85 million in revenue and $28 million in adjusted EBITDA. This annual production performance was below our planned production rates, as mentioned during Q3 -- in the Q3 call. This underperformance has been some dilution issues in several stopes and most importantly, the Aurora zone, which is where a lot of our production came from in 2021. Since then, the site has continued with its program of step changes to support the hanging wall with long bolts at -- with cable bolts being used throughout the stope, drill pattern design changes and removing development drives from the hanging wall side of the deposit. These steps have translated into production improvements over the quarter, and will set operation up for a better 2022. The operation currently has a significant amount of production areas to focus on. As we are seeing improvements in our stoping measures, we expect to see gains in our monthly gold output. Cash and all-in sustaining costs were higher at $1,233 and $1,600 per ounce compared to a year ago. These increases were primarily due to higher cost of production and a $10 million investment in the tailings lift and a relative strengthening of the Swedish krona against the U.S. dollar. For 2022, we expect grades to lift and stabilize our planned levels through improvements carried out in the second half of 2021. And we will begin focusing on the recently discovered high-grade eastern zone of Björkdal to incorporate into the medium- and long-term plans of Björkdal. At Cerro Bayo from January 1 to December 1, 2021, there's -- the site provided the company with $12.7 million and $3.6 million in revenue and adjusted EBITDA, respectively. In addition to our operation and financial success, I would now like to invite Chris to speak to our recent exploration developments. Chris?

Thanks, Dom. Subsequent to quarter end, we reported on 2 key developments to Mandalay. First up in January, we provided the market with an update on the eastern extension drilling programs at Björkdal. We were very excited to report on multiple high-grade intercepts in the eastward and depth extension to the central zone veining. This emerging high-grade domain could have a significant impact on production profile of Björkdal going forward. Several of the intercepts were some of the best grades yet seen at Björkdal, including an intercept of 47.7 grams per tonne gold over 11.7 meters, with an estimated true width of 5.8 meters. These significant results have been linked to the extension of 21 veins with the discovery of 16 new veins. Whilst the veining has been extended 350 meters, it is expected that the additional veining -- drilling will create confidence in structural and grade continuity, leading to the further lifting of modeled tonnes and grade within the domain. The Main, Lake and Central zones are all open to the northeast, and with the exciting results vein, this drilling will continue to be one of the primary exploration focuses over the course of 2022. The second major development was the update to our mineral resource and mineral reserve estimates. At Costerfield, the proven and probable mineral reserves for gold -- for contained gold were increased by 24%, net of depletion for 2021 production. During the 10 months from discovery to data cutoff in 2021, Shepherd contributed 296,000 tonnes of ore at a grade of 12.4 grams per tonne gold and 1% antimony into mineral reserves. Costerfield's total proven and probable as of December 31, 2021, is 769,000 tonnes at 12.6 grams per tonne gold and 2.5% antimony for a contained 312,000 ounces of gold and 19,500 tonnes of antimony. We extended the mine life by 2 years to 2027, and the mineral reserves of the Youle and Shepherd ore bodies were added at an exploration cost of $31 per gold equivalent ounce. At Björkdal, the mine maintained its long mine life until 2030. We improved our geological understanding, allowing for measured resources and proven reserves to be estimated for the first time at Björkdal. Björkdal's total proven and probable reserves as of December 31, 2021, were 12.1 million tonnes at 1.39 grams per tonne gold for a contained 542,000 gold ounces. The cost of adding those mineral reserves was $41 per ounce of gold. Unfortunately, a lot of the high-grade drilling results of the Central zone extension program were realized during the fourth quarter and was therefore not included in the year-end mineral resource and reserve estimates. We expect higher-grade additions to the end of 2022 as a result of the continued drilling along the eastern flank of Björkdal. Lastly, looking ahead, exploration of Björkdal in the early 2022 is planned to see a continuation of the eastern extension and infill programs as well as the recommencement of the north zone testing and infill program, which is designed to extend resources found in 2020 along multiple veining horizons located up to 500 meters north of Aurora. Regional surface drill -- sorry, regional surface diamond drilling will also recommence in April on several highly prospective targets. At Costerfield, in Q1 2020, a significant number of drilling programs are expected to commence with a focus on expanding the Shepherd vein to the south and at depth. The Brunswick and Margaret depth testing programs will also continue through Q1 and the Cuffley, Robinson's testing and Youle east testing programs are expected to commence as well. Thank you. That concludes the exploration update. And I would like to hand back the call to Dominic. Dom?

Yes. Thanks, Chris. With the amazing success of the eastern extension at Björkdal, a mining concession application has already been submitted to the relevant authorities in Sweden to extend the mining license holdings to cover this eastward extension of the veining. The increasing grades within the extensions of the Björkdal deposit marked a very significant development for this mine and will be a major focus of our production in the years to come, I would expect. While at Costerfield, Shepherd's significant grade and ounce contribution in such a short time span between discovery and publishing the mineral reserve and resource, highlights of richness of the Costerfield's mineral system and the expectations of much more veins to come. Thank you to everyone. This concludes this portion of the call. I would now like to open the lines up for any questions.

[Operator Instructions] Our first question is from Daniel Baldini with Oberon.

I have a few questions. And the reason I'm on the line is because my colleague, Kevin Tracey, who you know well, is on vacation. So I'm going to ask a few questions. And I'm not as well informed as he is. But I have been following the company for an awfully long time. So you've given guidance for this year. And it seems as though the guidance for this year is sort of -- well, within the ranges of what you produced last year. And I read the report, you had free cash flow, I guess, adjusted for the delays in shipping of USD 33 million in 2021. And so would it be reasonable to expect free cash flow of a similar amount for 2022 assuming the gold price and antimony prices stay at the levels they were in 2021?

Yes. I would hope that we have an increase in our cash flow in the coming year, Daniel. The main reason being, if you look at our guidance, our production profiles are similar. However, you must take into account that that's without Cerro Bayo mine, which produced approximately 9,000 equivalent gold ounces. So if we're getting similar production profile, that would be without Cerro Bayo costs that were attributed to last year. We do have some large capital, but I would hope that would be because there are no associated Cerro Bayo cost at a similar production profile within our guidance. We do have more exploration spend fortunately this year as well, but I would hope that we can improve on our cash flows during 2022.

Okay. And then in your reserve -- in the press release with your reserves, the grade of these reserves seems to be, I don't know, equal or better than the grade of what you mined last year. And so -- and you say -- and it seems as though you have a reserve life of at least 6 years in consolidated. I mean, well, longer because Björkdal is longer. So assuming the price, gold price and antimony remains the same, you could imagine that you'd have that free cash flow for 6 years, 6 more years.

Yes. Yes, correct, definitely. Because we -- the reason we, firstly, process at lower than our reserve grades last year is because we were still mining some of the lower-grade deposits. As of now, we're pretty much -- by year-end, we are pretty much solely producing from the Shepherd -- I'm sorry, from the Youle line and starting a tiny bit within Shepherd. That's why our gold grades in Q4 at 13 grams, which correspond slightly above our reserve grade. So yes, I would anticipate going forward now because the bulk of the low-grade [ remnants ] have been completed, that we will be mining at our reserve grades at Costerfield. However, I do anticipate over the coming years that we will be increasing our production at Björkdal. We don't know as of yet what the impact of this Eastern-Central Zone will be, but we do anticipate that will be lifting our growth. So over the coming 6 years, I would actually anticipate further improvements, similar production profile from Costerfield but improvements without any real additional cost at Björkdal.

Okay. Let me ask just a few more questions, then I'll go. So with Shepherd, you added 130 ounces to the reserves. But it seems as though there's more to go. And do you have any sense of the potential with Shepherd and how many ounces of reserves might be added this year from Shepherd? Or what percent of the -- your thoughts or what percent of your estimate of the deposit there has been added to reserves?

Yes. So it's a tough question because we've only mined about it for 10 months. And to date, we have been quite limited in how much we could drill of it because of the drill angles. We know at the bottom section of what we have drilled, there is what's called a calcite band, which generally kills the mineralization within the Costerfield deposits. However, quite generally, the deposits do come back in after those calcite bands. So we will be drilling deeper below that this year to confirm whether the mineralization continues to that. But probably the more focused drilling will be on the south, as the deposit is getting higher up, which is very good for us. So we'll be drilling it strange at this deposit is below the Youle deposit. However, as you go further to the south, it actually becomes higher. And so probably the next 6 to 10 months, our main focus will be easier drilling for us to the south and up higher. But honestly, it's hard to say how much more this will grow because we just really haven't drilled much outside of the current mineral reserve and resource. But we definitely do anticipate that it will be growing this year.

Okay. And when do you expect to announce some drill results?

Chris, when would you expect we'll be updating on Costerfield again?

Yes. No, I was going to say in the next couple of months, we should put out an update on the drilling there. And I guess, yes, just a follow-on from what Dom was saying, late last year, we're really focused on infill drilling at Shepherd so that we can bring on those ounces that we found there into reserves. So now we're just starting our journey by extending both to the south and depths and the Shepherd results. So [indiscernible] impact for months. Yes.

Okay. And then one final -- all right, one final question. So I don't know, for the past 5 or 6 years, we've all dreamed that somewhere in this Costerfield is another Fosterville. And every once in a while, you drill one of these very deep holes. And I'm wondering, is there going to be any developments on that front for the course of this year?

Yes. Yes, we're dreaming about that also, Daniel. Don't worry. There will be a few deeper holes that we will be drilling this year, so mainly focused on the Brunswick deposit and the Cuffley deposit. It will most likely change throughout the year, but there are going to be several deeper holes drilled within that area this year.

Our next question is from Robert [ Plum ], private investor.

Congratulations on the quarterly and yearly results. Tremendous -- there's been a tremendous turnaround at the company and as a shareholder, I'm very happy. But my first question is, I've seen some of your interviews and videos on YouTube in the past. Will you be engaging in any promotional activity this year to try and get the word out on how well the company is doing and maybe lessen the discount?

Yes, yes. Robert, we definitely will. So we're actually going to be using some additional firms to try and get more messages out there. It's obviously with COVID. I have been restricted myself and Nick in attending a lot of conferences in person. But with things opening up now, we will be trying to drum up a lot more additional investors, speaking to a lot of people and obviously, trying to get as many interviews as possible to get the word out there. As you know, it's a pretty good -- it's definitely a very underappreciated story with our financials. So we will be focusing a lot on trying to get the message out there and point out exactly how well positioned this company is.

Great. Wonderful to hear that, which leads to my next question. Recently, Australia, I guess, has been opening up and reducing travel restrictions. Will that help with your situation at Costerfield with labor and such?

Yes. We don't have -- we never really had many labor issues within Costerfield because Australia was so tightly locked down and controlled that there were very little incidence -- instances of COVID within the site. So the main impact from Costerfield was actually shipping. The international trade routes and everything became very difficult, that's why we had delayed payments over the course of last year. What it does allow is for ourselves and corporate to get to site more often. But COVID never really had much of an impact. We will see some inflationary impact over the course of this year going forward as the cost of consumables are lifting, but that has been taken into account into our budgeting.

Okay. Well, that's good to know. Also, can you speak a little bit as to your overall environmental liabilities? I say that you're expecting a refund of approximately CAD 3.5 million from the closed Lupin mine. Have your overall environmental liabilities gone up or down? Can you speak to that a little bit, please?

So over the course of this year, overall liabilities will drop significantly because we have approximately CAD 14 million security bonding for the closure of that asset, and so that's remaining. So we anticipate 3 million tonnes soon. That rehab is scheduled for completion this year, after which we should be able to recover the majority of that bonding so that -- by that towards the end of this year or early next year, several -- probably $2 million to $3 million will have to stay in that security bonding long term for monitoring of the site. But we're very glad that we've been able to work so closely with the Nunavut government to get that completed over the last 3 years. It's been a very close relationship and it's actually been -- they've been very good department to work with the authorities we deal with, both federal and local within Canada. In relation to the other 2 sites, bonding is always increasing. As operations continue, the tailings dams get larger, the operations move out further. So you do always have incremental increases, but there's nothing -- we don't anticipate anything significant over the coming years. And also, I forgot to mention, we did decrease last year's $7 million of our asset retire with ARO because of the Cerro Bayo also. So that was quite a large obligation that we have actually halved.

Okay. Very good. And my last question is what eventually, and I know it's kind of a difficult and open-ended question. But what eventually do you think could be the Björkdal basic goal? You were at, I think, it was $1,700 for fourth quarter. Do you think eventually that could come down to, say, $1,500 or $1,400, somewhere in that neighborhood?

Look at it -- I'd like to get at it. Björkdal is very grade dependent. So it's quite -- it's fairly fixed cost operation with our underground workings. So it's -- the key is increasing the grades to decrease our cash and all-in sustaining costs. You're correct. It's a difficult one to answer. But longer term, I'd definitely be aiming to get it below $1,300 with what we're seeing in the eastern zone drilling. I'm hoping that we can get some very good grade boost to this operation long term. So we are anticipating being over the 15,000 -- sorry, 50,000 ounces produced this year. So that naturally will be dropping quite a bit from where it was.

Okay. Good to know. Congratulations on the great quarter, a great year and keep up the good work.

Great. Thanks, Robert.

Our next question is from [ Laurence Retail ], a private investor.

And congratulations again on a wonderful year. I only have a couple of questions. My first one is, could you comment on any external growth in the company with regards to acquisitions?

So Laurence, we are -- firstly, thanks for the congratulations. So we are actively looking for a potential transaction. But it is definitely a slow process where we're continually talking to counterparties and banks to see if there are opportunities out there at the current time. We are in a very good financial position. Now we've got internal growth from our 2 assets, but we do mean over time to find additional assets. So we are actively looking on the M&A front to see if there is anything that potentially works for Mandalay. One of the issues is -- most companies do say this, but we definitely are undervalued. So I think it was Robert who asked, and a lot of our focus will be on trying to get the word out there and some further share price appreciation. So we will be spending a lot of time on that, which would help us a hell of a lot. We've been out to close out an M&A type of transaction.

So is there anything close to -- are you pulling the trigger on meeting soon? Or it's still...

I wouldn't anticipate anything in the immediate future, I don't think. But I can't really comment too much on what type of discussions we would have been having with anybody.

You mentioned working with banks and financial institutions. Would Sprott Asset Management be part of some of your discussions on acquisitions?

We would have spoken to Sprott, virtually most of the big banks within Canada. So we're always in contact with the banks.

Okay. I guess my only -- my 2 questions pertain mostly to Björkdal. It was mentioned in previous calls that the farther you mine away from the plant, more cost to the -- there's an increase in haulage costs. Is there any way to address that?

Yes. So the further out into the deposit we do yet, there's increased haulage costs. However, with what we are finding in this Central zone to the east that actually, if that it is apparent to be significant in that discovery, that would actually decrease our haulage cost because it's close to the portal. So we've got a lot of expectations for that area. But yes, the further north we go, we do increase our costs, and that's definitely -- that's not anything you can overcome. That's just something we have to live with. But you would have -- we are exploring 4 high grades within the northwestern zone as well as mine continues further out there to focus more on that. But I would hope that our Central zone discovery will be able to lower our haulage costs. I'd like a lot of our production over the coming years to be coming from there.

Well, it's quite an interesting sign now that you're finding grades above the marble, what do you call it, the marble contact there, so...

They're actually below the marble contact in that eastern zone. Yes, yes, sorry.

But you're drilling into the Lake Zone from underneath. Is there any -- are you going to be drilling from above? And will that area become [ pittable ]?

No. No, it's definitely not. It's too deep to be [ pittable ]. So when we drilled the above Aurora, we actually found pretty much any limits of the mineralization up above. And that corresponds to the Lake Zone as well, which is it starts too deep.

Okay. So it sounds like it's trending in all directions and downwards, but not necessarily straight up to the surface.

Yes, yes. We're pretty much in that tiny, [ humble ] direction, we have limited it.

Okay. My last question is to do with the ore sorter. Is there any -- has any decisions been made to put an ore sorter in at Björkdal?

Yes. There's actually work ongoing with that at the moment. So we are in the process of actually trade-off study between ore sorting or increasing the overall throughput of Björkdal, and we have money budgeted for some of that work to be done this year. But we have to complete the study, the downside of ore sorting is you're trying to weigh 10% of the gold. So you have shorter-term benefits against longer-term losses with ore sorting quite often. The benefit, if you could, we're permitted to process more, if you could, upside, increase the throughput through the processing plant. You're not actually losing any additional ore and you are slightly lowering your operating cost per tonne, because the more you process, the lower your cost per tonne in the plant is by fractional amounts. So you're not increasing the operational cost and you're not throwing away any of the additional goal. So between the 2 of them, a lot of it depends on the capital outcome, but my preference would be tending towards an upgrade in the plant as opposed to an optical sorter. But that's something ongoing, and we do anticipate that will be able to inform the market on what direction we're going as we could within the next few quarters.

So it can be a -- well, either way, I guess, there's going to be a capital expenditure to expand the deferred mills.

Yes. And that's with, obviously with almost 90% of the study is going into.

And how much do you estimate that to cost?

At the moment, that's where -- that study is still ongoing. So I can't really say until we have the final numbers.

Are you testing any ore to determine which way you're going to go?

We did carry out optical sorting, testing several years ago. So we understand very well what type of result we would be getting with ore sorting. It's adjusted capital that has to be studied. The complication with Skellefteå, or the region where we operate, is it's very cold. So the freezing of the mineral actually once you wash it does complicate things quite a bit and increases at capital cold zones, optical sorting projects are significantly more expensive than warmer climate because you have to put in heating, everything has to be in dollars, et cetera, the water has to be heated to minimize the freezing of the minerals.

Yes. I understand, yes. Well, I know what it's like to live in a cold country, and I'm pretty sure that most of your travel expenditures from your team is probably to Australia instead of Sweden during the winter time.

Yes. I think so myself. Opposite, unfortunately, is that...

Our next question comes from Daniel Baldini with Oberon.

It's me again. So I just had a thought prompted by the previous caller's question. I imagine when you go out and visit with investors and advisers and investment bankers and so on, they'll tell you, "Oh, this is all very interesting, but there's no liquidity, so we can't invest." And then the next proposal will be, "Oh, you need to issue shares to improve the liquidity." Well, I'd just like to suggest that you bat away that idea. And the liquidity in the stock is just a matter of price. And maybe if someone says this, you can just say, well, bid more than the current price, significantly more than the current price and a lot of liquidity will show up. But I resist any temptation to issue shares simply to improve the liquidity because if the share price goes up, the liquidity will improve.

Yes. And thanks for that point, Daniel. And you are correct about what the banks say so to us. Yes, we have definitely resisted that. I agree that liquidity is a big issue, we're very tightly held. So small stock movements can have a significant impact on our share price. But the company is in a very good position that there is no real need for -- we're generating a lot more cash than we can spend at the current time so -- and would not look good to our current shareholders to be doing any issuing of stock.

Our next question is from Robert [ Plum ], private investor.

Another couple of quick questions for you. Are you having any problems getting the assay results back from labs in terms of having to wait a long time? Or is that okay at this point?

No. We haven't had any major issues. Obviously, our main competitor in our lab in Victoria is Fosterville, but they're not -- they haven't done any upgrading of that process, and there's a lot of exploration occurring in Victoria but there's no real uplift. So that's been fine. Most of our assays in Sweden are done in a Finnish lab, and that's been fine as well. So obviously, you do have made competitors there for getting lab space, obviously, the Agnico Kittila mine. And we're doing a lot of drilling up north in Finland, but there's been no major increase that hasn't impacted us significantly. So fortunately, unlike a lot of companies that I've heard about, we haven't really been impacted.

All right. Good to know. And then I guess, and finally, my last question is, unfortunately, the energy situation in Europe has been in the news here quite a bit. Are you having any tremendous cost inflation with electricity or energy at Björkdal? Or do you anticipate any of that moving forward?

No. Sweden and Norway, very different cases and a lot of Europe in that, they're majority hydro. So part of the reason why Björkdal can operate at the low current flow grades, which we anticipate to lift is because their energy costs are extremely cheap. And we just last year signed another long-term contract for our fixed energy costs, which generally a fraction of what most mining operations pay because of the hydro, so...

Our next question comes from Ernie [ Malesk ], a private investor.

Dominic, congrats on the great results. When are you going to start issuing a dividend? I mean you're making now $1 per share in income. So one would think you could afford a dividend.

Yes. And so Ernie obviously, our main focus was becoming net debt free. So before considering a dividend, so it was discussed in earlier Board meetings that, that was a focus for the current time. Our next Board meeting, I dare say that it will be part of the discussion, that there might be the possibility of implementing a dividend. But obviously, on this call, I can't say whether we will have one. That has to become public if the Board makes decision through the correct means, but yes, we definitely could. We are in a position that we could with our current financial position, so it is a possibility going forward.

And is there any possibility of the hedge going away sooner?

No. Unfortunately, no. We could buy it out, but that would be very expensive. That's always an option with a hedge. I understand. But we haven't looked at that at the current time. It expires mid-2022 -- 2023, sorry. So we've got just over 1.5 years remaining on that, fortunately. So yes, yes. And that's 50,000 ounces per annum, half in U.S., half in Aussie. Yes.

There are no further questions at this time. I would like to turn the floor back over to Dominic Duffy for any closing comments.

Thanks, Paul. No further closing comments at this current time. I'd just like to thank all of our investors for the patience they have shown as we turn this company around, and all of our employees who have done a fantastic job turning Mandalay into what it is today. And I look forward to updating the market on our future progress. So thank you very much. Bye.

This concludes today's conference. You may now disconnect your lines at this time. Thank you for your participation.