Canada-based Mandalay Resources has lowered its 2023 production guidance to between 88 000 and 100 000 gold-equivalent ounces (GEO) at a higher cost forecast of $1 370 to $1 580 a GEO, citing a “challenging first half”.

The original guidance for 2023 was 105 000 GEO to 118 000 GEO at an all-in sustaining cost of $1 150 to $1 325/GEO from the Costerfield gold mine in Australia and the Björkdal gold mine, in Sweden.

“Despite our original expectation that production will be higher in the second half of this year than it was over the first six months, we no longer anticipate that this will compensate for the shortfall experienced year-to-date and are therefore revising production guidance downward by just over 15%,” reported president and CEO Frazer Bourchier.

"While the revision in our annual guidance is unfortunate, we now have a better understanding of the factors that led to the recent production shortfalls. We are taking steps to implement mitigating solutions, which I am confident will be effective.”

COO Ryan Austerberry explained that several temporary, yet significant factors influenced the miner’s production performance during this quarter, which caused output to fall below our initial expectations at both operations.

On a consolidated basis, the company produced 20 850 and 40 836 saleable GEOs during the second quarter and the first six months of this year, respectively.

Björkdal produced 10 397 saleable gold ounces in the second quarter, while facing continued challenges related to personnel vacancies, mined tonne volumes and stope dilution.

Austerberry reported that Mandalay were seeing encouraging signs of improvement resulting from the initiatives implemented during the first half of the year with a steady increase in ore volumes delivered from the mine.

"Looking ahead, we are optimistic that we will receive the mining concession required to allow us to begin production from the eastern extension of the Björkdal veining that was discovered and defined over the past two years. This development would initially shift our focus to the Eastern extension of Main Zone, where we are anticipating higher gold grades and less dilution due to the vertical orientation of the mineralization. Regarding personnel, we are committed to ongoing investment and training, but have needed to leverage the expertise of experienced contractors to supplement staffing shortfalls particularly over the summer vacation period in Sweden,” said Austerberry.

Costerfield produced 10 453 saleable GEOs in the second quarter, as it encountered challenges leading to deficits in the yearly budget for both gold grades and mined tonnes. The drop in grades can be attributed primarily to a delay in stope progression into the higher-grade core of the Youle orebody.

Austerberry said that Mandalay had investigated root causes of the grade discrepancies and had recalibrated the geological modelling and scheduling, adding confidence to the revised guidance.

“For the latter half of this year, we will be retreating production fronts into the higher-grade core of Youle while continuing to develop along the multiple veins of the Shepherd orebody.

"The shortfall in mined tonnes was further exacerbated by supply chain issues that resulted in a delay in receiving a remote underground loader. Although we initially anticipated its arrival during the second quarter, we now expect it to be delivered and fully functional in the third quarter."