Costerfield produced 11,079oz of gold and 523 tonnes of antimony, or 14,989oz of gold equivalent, in the June quarter.
It was lower than the 17,247oz of gold equivalent produced in the March quarter, but up year-on-year.
Mandalay CEO Dominic Duffy said two factors contributed to the lower quarter-on-quarter production.
"First, we were mining within the lower-level extremities of the Youle orebody, which continued out further than expected, but at lower grades than the central parts of Youle," he said.
"Even though this material was at a lower grade than previously mined, it was still profitable and development continued so as to not sterilise the ore.
"Secondly, the site experienced an extremely high number of sick leaves during the quarter as COVID protocols prevented any persons with flu-like symptoms from entering the site.
"This affected our underground production rates, forcing the operation to process more lower grade stockpile than planned.
"That said, overall, we achieved another very profitable quarter with an average processing gold equivalent head grade of 17.1 grams per tonne.
"This continued strength allowed Costerfield to produce 32,236 saleable gold equivalent ounces during the first half of the year, approximately 6% higher as compared to the six-month period ending in June 2021."
Group gold production from Costerfield and Bjorkdal in Sweden was 23,305oz of gold equivalent, while sales were 26,381oz of gold equivalent, below expectations.
However, Duffy said both sites were expected to improve as mining moved back into higher grade areas in the current half.
"As always, we are committed to delivering strong performance and remain confident that we will achieve our 2022 operational and financial guidance," Duffy said.
"We expect grades to improve over the remainder of 2022 at both sites and look forward to demonstrating the sustainability and growth potential of our operations."
Group guidance for 2022 is 118,000-130,000oz of gold equivalent at cash costs of of US$700-900 and all-in sustaining costs of $1100-1300/oz.
Shares in Mandalay dropped 1.2% overnight to A$2.56, valuing the company at $234 million.