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2016-12-15

Mandalay Resources Corporation Increases Mineral Resources and Reserves at Its Björkdal Gold Mine

Mandalay Resources Corporation
Press release

Mandalay Resources Corporation Increases Mineral Resources and Reserves at Its
Björkdal Gold Mine

TORONTO, 2016-12-15 13:30 CET (GLOBE NEWSWIRE) --
Mandalay Resources Corporation ("Mandalay" or the "Company") (TSX:MND) is
pleased to announce its exploration efforts in 2015 and the first three
quarters of 2016 have resulted in substantially increased Mineral Resources and
Mineral Reserves at its Björkdal open pit and underground gold mine in Sweden.
In the Measured and Indicated Resource categories (Table 1) after mining
depletion, contained gold increased from 598,000 ounces as of December 31,
2015, to 911,000 ounces as of September 30, 2016 (approximately a 52%
increase). In the Proven and Probable Reserve categories (Table 2), contained
gold increased from 418,000 to 586,000 ounces (approximately a 40% increase) in
the same period. These increases are after depletion of 44,000 ounces produced
from December 31, 2015 to September 30, 2016. Before depletion, the absolute
increase of Measured and Indicated Resources was 357,000 ounces and Proven and
the increase of Probable Reserves was 212,000 ounces.

The effective date of the new Mineral Resource and Mineral Reserve estimate is
September 30, 2016, and the estimate was independently compiled and verified by
Roscoe Postle Associates Inc. (“RPA”). The new estimate will be fully
documented in an updated NI 43-101 Technical Report, which will be filed on
www.sedar.com and the Mandalay website (www.mandalayresources.com) within 45
days of this press release. All dollar amounts in this press release are in
U.S. dollars unless otherwise noted.

Mark Sander, CEO of Mandalay, commented, “Mandalay’s Mineral Resource and
Reserve position at Björkdal has significantly increased due to our increased
rate of exploration drilling since our acquisition of the mine in September,
2014. This investment is based on a continuing evolution of our understanding
of the fundamental geology of the deposit, made possible by the careful factual
observations and insightful interpretations of our team. As well, the
methodology for conversion of Mineral Resources to Mineral Reserves has
improved to more closely match the actual mining practices we are implementing.
We believe that the Mineral Resources and Reserves will continue to grow
significantly with future exploration efforts.”

“Our spending on underground exploration drilling since the previous
underground estimate of year-end 2014 (see Mandalay February 17, 2015 press
release) as well as our open pit exploration drilling since the previous open
pit estimate of year-end 2015 (see Mandalay February 29, 2015 press release),
totals $5.94 million. Dividing this amount by the 212,000 gold ounces added to
reserves yields a discovery and conversion cost of new Proven and Probable
Reserves of just $28 per ounce of contained gold.”

Dr. Sander concluded, “Finally, dividing the new reserves by the 2017 guidance
for gold production from Björkdal (50-55,000 saleable ounces of gold; see
Mandalay November 2, 2016 press release) yields a forward-looking mine life of
over 10 years, up from the previous 8 years (including 2016). This extension of
the beneficial economic, employment, and community impacts of the mine is most
gratifying and we look forward to continued extensions.”

Table 1: Mineral Resources at Björkdal, Inclusive of Mineral Reserves, as of
September 30, 2016

Category Area Tonnage Au Grade Contained
(kt) (g/t) Au (koz)
Indicated Resources
Open Pit 4,258 1.99 273
Underground 5,643 3.29 597
Sub-total 9,900 2.73 870
Stockpile 1,929 0.65 40
Total Indicated 11,829 2.39 911

Inferred Resources
Open Pit 2,643 1.19 101
Underground 920 3.20 95
Total Inferred 3,564 1.71 196

Notes:

1. Mineral Resources are estimated as of September 30
th
, 2016.
2. CIM definitions were followed for Mineral Resources.
3. Mineral Resources are inclusive of Mineral Reserves.
4. Mineral Resources are estimated using an average Au price of $1,400/oz, and
an exchange rate of 8.4 SEK/US$.
5. Bulk density is 2.74 t/m
3
.
6. High gold assays were capped to 30 g/t Au for open pit.
7. High gold assays underground were capped at 60 g/t Au for the first search
pass and 40 g/t Au for subsequent passes.
8. Interpolation was by inverse distance cubed utilizing diamond drill,
reverse circulation and chip channel samples.
9. Open pit Mineral Resources are estimated at a cut-off grade of 0.35 g/t Au,
constrained by the resource pit design and the 30
th
September 2016 open pit digital terrain model.
10. Underground Mineral Resources are estimated at a cut-off grade of 0.90 g/t
Au.
11. A nominal two metres minimum mining width was used to interpret veins using
diamond drill, reverse circulation, and underground chip sampling.
12. Reported Mineral Resources are exclusive of previously mined underground
development and stopes.
13. Stockpile Mineral Resources are estimated at a cut-off grade of 0.40 g/t Au
and are based upon surveyed volumes supplemented by production data.
14. Mineral Resources that are not Mineral Reserves do not have demonstrated
economic viability.
15. Numbers may not add due to rounding.
16. The Independent Qualified Person for the Björkdal Mineral Resource estimate
is Reno Pressacco, P.Geo., RPA, who is a Qualified Person as defined by NI
43-101.

Table 2: Mineral Reserves at Björkdal, as of September 30, 2016

Category Area Tonnage Au Grade Contained
(kt) (g/t) Au (koz)
Probable
Open Pit 4,592 1.36 201
Underground 4,256 2.52 345
Stockpile 1,929 0.65 40
Total Probable 10,778 1.69 586

Notes:

1. Mineral Reserves are estimated as of September 30
th
, 2016, and depleted for production through to September 30
th
, 2016.
2. CIM definitions were followed for Mineral Reserves.
3. Open Pit Mineral Reserves are based on mine designs carried out on an
updated resource model, applying a block dilution of 75% at 0.2 g/t Au. A
cut-off grade of 0.4 g/t Au was applied.
4. Underground Mineral Reserves are based on mine designs carried out on
updated resource model. Minimum mining widths of 3.5 m for stopes (after
dilution) and 3.8 m for development were used. Dilution was applied by
adding 0.5 m on each side of stopes and adding 10% to development.
Extraction was assessed at 95% for stopes and 100% for development. A
cut-off grade of 1.00 g/t Au was applied. An incremental cut-off grade of
0.4 g/t Au was used for development material.
5. Stockpile Mineral Resources are estimated at a cut-off grade of 0.40 g/t Au
and are based upon surveyed volumes supplemented by production data.
6. Mineral Reserves are estimated using an average long-term gold price of
$1,200/oz, and an exchange rate of 8.4 SEK/US$.
7. Tonnes and contained gold are rounded to the nearest thousand.
8. Totals may appear different from the sum of their components due to
rounding.
9. The Independent Qualified Persons for the Björkdal Mineral Reserve estimate
are Ian Weir, P.Eng., RPA, (for open pit reserves) and David Robson,
P.Eng., RPA, (for underground reserves), who are Qualified Persons as
defined by NI 43-101.

Bjo?rkdal 2016 Exploration and Updated Mineral Resources and Reserves

Bjo?rkdal has drilled 38,709 m of diamond core and reverse circulation
exploration holes since the previous resource estimation (December 31, 2014 for
underground targets, and December 31, 2015 for open pit targets). As well,
through September 30, 2016, the effective date of the new estimate, 8,263 m of
underground on-vein development has occurred. A total of 2,000 chip samples
along this on-vein development and from the open pit were assayed to provide
short-range confidence in the model.

Mandalay personnel performed all core and reverse circulation drill logging and
sampling, as well as all underground and open pit mapping and chip sampling.
Drill and chip samples were sent to CRS Research, Ltd. for assay by the
pulverise-and-leach process. The exploration drill samples were assayed at
offsite commercial CRS Research facilities, whereas chip samples were assayed
either at CRS commercial offsite facilities or at the on-site assay laboratory
at Björkdal that CRS Research has operated for Mandalay since mid-2016.
Mandalay geologists conduct a QA/QC procedure in which blanks, standards and
sample duplicates are inserted in sample batches submitted to the assay lab.

In the underground, the Company generated substantial exploration success in
all principal production areas drilled – Main Zone, Central Zone, South Zone
and Lake Zone. The Company expects that the underground Resources and Reserves
will continue to increase in 2017 as further definition drilling is carried out
along the known extensions of the underground orebody.

In the open pit, the Company conducted infill and extension drilling of the
currently operating East Pit, West Pit, and Quartz Mountain areas. As well, it
continued to infill and extend the Nylunds Open Pit deposit, yet to be mined,
to the southeast of the operating mine. The Company expects further increases
in Resources and Reserves in the Nylunds Pit area over the course of 2017 as it
continues drilling in the area.

Mandalay geologists interpreted approximately 600 individual vein wireframe
models which were reconciled in three dimensions and were used to constrain
grade estimation. The Mineral Resource estimate was carried out using Geovia
Surpac software and utilized an inverse distance cubed interpolation within
wireframes. Gold assays were capped at 30 g/t Au in the open pit, whereas a two
stage capping strategy was used for underground, 60 g/t Au for the first search
pass and 40 g/t Au for subsequent search passes. The estimates were based on
intercepts from diamond core, reverse circulation drilling, and chip-channel
sampling in both the open pit and underground domains.

Mineral Resources are reported inclusive of Mineral Reserves.

Underground Mineral Resources are estimated at a cut-off grade of 0.90 g/t Au
over a nominal minimum two meter mining width utilizing a $1,400/oz gold price.

...

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