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2016-10-12

Mandalay Resources Corporation Announces Production and Sales Results for the Third Quarter of 2016

Mandalay Resources Corporation
Press release

Mandalay Resources Corporation Announces Production and Sales Results for the
Third Quarter of 2016

TORONTO, 2016-10-12 13:30 CEST (GLOBE NEWSWIRE) --
Mandalay Resources Corporation ("Mandalay" or the "Company") (TSX:MND)
announced today its production and sales results for the third quarter of 2016.

In the third quarter of 2016, Mandalay produced a consolidated 34,586 saleable
ounces of gold equivalent and sold 35,617 ounces of gold equivalent.

Mark Sander, President and Chief Executive Officer of Mandalay, commented,
“Mandalay’s consolidated saleable gold production for the third quarter of 2016
at 24,309 ounces was slightly less than the amount for the same quarter last
year at 25,996 ounces. Year-to-date, total gold production of 81,981 ounces is
slightly more than the 2015 total of 80,154 ounces.

“Similarly, for antimony, saleable production of 844 tonnes during the third
quarter of 2016 was slightly less than the previous year period of 964 tonnes,
while the 2016 year-to-date total of 2,806 tonnes is slightly greater than the
year-ago period of 2,775 tonnes.

“However, saleable silver production for the third quarter of 2016, at 388,139
ounces, and for the year to date at 1,365,817 ounces, was significantly less
than the 2015 volumes of 632,498 ounces and 1,820,741, respectively.”

Dr. Sander continued, “The good results year-to-date for gold and antimony are
due to consistently strong performance at both Costerfield and Björkdal.
Costerfield continued its solid performance in both the third quarter and
year-to-date, having produced slightly more of both metals year-to-date than in
the previous year. This is due to the continuing good developed state of the
mine delivering similar amounts of high-grade material to the fully-utilized
plant quarter after quarter.

“Björkdal produced 12,376 ounces of saleable gold in the current quarter, the
second-best production quarter ever under Mandalay ownership and only slightly
below production during the record second quarter of 2016. For 2016
year-to-date, Björkdal saleable production of 37,209 ounces is almost 4,000
ounces more than year-to-date production in the previous year. This performance
is yet more evidence that our grade control program continues to improve, even
in the Swedish summer months with typically high proportions of the workforce
on vacation. Also in the quarter, we made significant progress on
metallurgical projects that will allow us to recover more gold each quarter
from mined ore. The Board of Directors has approved a flotation expansion
project for the plant, which upon completion in mid-to-late 2017, is expected
to improve overall gold recovery by approximately 1.7%. In addition, our
60,000+ tonne commercial-scale test of optical ore sorting was completed with
favorable results. It suggests we can improve the grade of sorted material with
gold grades below approximately 1 gram per tonne by about 50% on average while
retaining approximately 90% of the total contained gold of the original feed
material. Engineering is in progress for optimizing the permanent
installation.”

Dr. Sander concluded, “The fatality incurred at Cerro Bayo on September 10 (see
Mandalay’s September 11, 2016, press release) severely impacted third quarter
production at the operation. All operations were suspended through September
19, 2016 (see Mandalay’s September 19, 2016 press release), when production in
the Delia NW and Delia SE mines, as well as processing, resumed. Mining in
Coyita, where the incident occurred, resumed on October 8, 2016. The resulting
388,139 saleable ounces of silver production and 2,831 saleable ounces of gold
production for the third quarter were significantly lower than the year-ago
amounts and our 2016 plan. Year-to-date production totals at Cerro Bayo were
also significantly below last year and our 2016 plan. Our previous expectations
that the developed state at Cerro Bayo would begin to recover in the fourth
quarter have been delayed into the first quarter of 2017.

“With Cerro Bayo restarting operations, we expect to issue updated Company
guidance for full-year 2016 production, together with our guidance for 2017,
when we announce our third quarter financial results after market close on
November 2, 2016.”

Saleable production for the three months ended September 30, 2016:

-- The Company produced a total of 24,309 ounces gold, 844 tonnes antimony and
388,139 ounces silver, representing a total of 34,586 ounces of gold
equivalent production, versus 25,996 ounces gold, 964 tonnes of antimony
and 632,498 ounces silver, representing a total of 40,293 ounces of gold
equivalent in the third quarter of 2015.
-- Production at Costerfield (Australia) was 9,102 ounces gold and 844 tonnes
antimony, versus 10,930 ounces gold and 964 tonnes antimony in the third
quarter of 2015.
-- Production at Cerro Bayo (Chile) was 2,831 ounces gold and 388,139 ounces
silver, versus 5,305 ounces gold and 632,498 ounces silver in the third
quarter of 2015.
-- Production at Björkdal (Sweden) was 12,376 ounces gold as compared to 9,761
ounces gold in the third quarter of 2015.

Saleable production for the nine months ended September 30, 2016:

-- The Company produced a total of 81,981 ounces gold, 2,806 tonnes antimony
and 1,365,817 ounces silver, representing a total of 114,204 ounces of gold
equivalent production, versus 80,154 ounces gold, 2,775 tonnes antimony and
1,820,741 ounces silver, representing a total of 123,286 ounces of gold
equivalent in the third quarter of 2015.
-- Production at Costerfield was 33,787 ounces gold and 2,806 tonnes antimony,
greater volumes of gold and antimony than in the corresponding nine months
of 2015.
-- Production at Cerro Bayo was 10,985 ounces gold and 1,365,817 ounces
silver, lower volumes of both gold and silver than the prior period.
-- Production at Björkdal was 37,209 ounces gold, higher than the prior
period.

Table 1 – Third Quarter and Nine Months Saleable Production for 2016 and 2015

Metal Source Three months Three months Nine months Nine months
ended ended ended ended
30 September 30 September 30 30
2016 2015 September September
2016 2015
Gold (oz) Costerfi 9,102 10,930 33,787 30,909
eld
Cerro 2,831 5,305 10,985 15,671
Bayo
Björkdal 12,376 9,761 37,209 33,574
Total 24,309 25,996 81,981 80,154
Antimony (t) Costerfi 844 964 2,806 2,775
eld
Silver (oz) Cerro 388,139 632,498 1,365,817 1,820,741
Bayo
Average
quarterly
prices:
Gold US$/oz 1,334 1,125
Antimony US$/t 7,244 6,894
Silver US$/oz 19.58 14.93
Au Eq. (oz)1 Costerfi 13,684 16,835 47,673 49,340
eld
Cerro 8,526 13,697 29,322 40,372
Bayo
Björkdal 12,376 9,761 37,209 33,574
Total 34,586 40,293 114,204 123,286

1 Quarterly gold equivalent ounces (“Au Eq. oz”) produced is calculated by
multiplying the saleable quantities of gold (“Au”), silver (“Ag”), and antimony
(“Sb”) in the period by the respective average market prices of the commodities
in the period, adding the three amounts to get a “total contained value based
on market price”, and then dividing that total contained value by the average
market price of Au in the period. Average Au price in the period is calculated
as the average of the daily LME PM fixes in the period, with price on weekend
days and holidays taken of the last business day; average Sb price in the
period is calculated as the average of the daily average of the high and low
Rotterdam warehouse prices for all days in the period, with price on weekend
days and holidays taken from the last business day; average Ag price in the
period is calculated as the average of the daily London Broker’s silver spot
price for all days in the period, with price on weekend days and holidays taken
from the last business day. The source for all prices is www.metalbulletin.com.

Sales for the three months ended September 30, 2016:

-- The Company sold 24,888 ounces gold, 804 tonnes antimony, and 433,904
ounces silver, representing a total of 35,617 ounces of gold equivalent.
-- Costerfield sold 8,865 ounces gold and 804 tonnes antimony.
-- Cerro Bayo sold 3,265 ounces gold and 433,904 ounces silver.
-- Björkdal sold 12,758 ounces gold.

Sales for the nine months ended September 30, 2016:

-- The Company sold 84,022 ounces gold, 2,690 tonnes antimony, and 1,476,518
ounces silver, representing a total of 117,165 ounces of gold equivalent.
-- Costerfield sold 32,121 ounces gold and 2,690 tonnes antimony.
-- Cerro Bayo sold 12,993 ounces gold and 1,476,518 ounces silver.
-- Björkdal sold 38,908 ounces gold.

Table 2 – Third Quarter and Nine Months Sales for 2016 and 2015

Metal Source Three months Three months Nine months Nine months
ended ended ended ended
30 September 30 September 30 30
2016 2015 September September
2016 2015
Gold (oz) Costerfi 8,865 9,758 32,121 29,284
eld
Cerro 3,265 5,819 12,993 ...

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