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2016-05-12

Mandalay Resources Corporation: Mandalay Resources Corporation Announces First Quarter 2016 Financial Results and Quarterly Dividend

TORONTO, May 11, 2016 (GLOBE NEWSWIRE) -- Mandalay Resources Corporation
("Mandalay" or the "Company") (TSX:MND) today announced revenue of $50.4
million, adjusted EBITDA of $17.3 million and consolidated net income before
special items of $1.1 million or $0.00 per share for the first quarter of
2016. The Company's unaudited consolidated interim financial results for the
three months ended March 31, 2016, together with its Management's Discussion
and Analysis ("MD&A") for the corresponding period can be accessed under the
Company's profile on www.sedar.com and on the Company's website
atwww.mandalayresources.com. All currency references in this press release
are in U.S. dollars except as otherwise indicated.

In accordance with the Company's dividend policy, Mandalay's Board of
Directors declared a quarterly dividend of $3.0 million (6% of the trailing
quarter's gross revenue), or $0.0073 per share (CDN$0.0094 per share),
payable on June 3, 2016, to shareholders of record as of May 24, 2016.

The Company's consolidated net income for the quarter of $1.1 million ($0.00
per share) has been adjusted for special items to an adjusted net income of
$1.0 million ($0.00 per share). Special items excluded from adjusted net
income are: tax expense adjustment at Costerfield of $1.4 million; write-off
of $3.4 million of residual mining interest at Fabiola and Yasna veins at
Cerro Bayo and the associated tax savings of $0.8 million; and tax savings of
$1.4 million upon cancellation of the royalty rights at Cerro Bayo purchased
from Coeur Mining during the quarter. For a full reconciliation of the
adjustments, please refer to the Adjusted EBITDA Reconciliation to Net Income
table found on page 14 of the Company's MD&A for the first quarter of 2016.

Commenting on first quarter 2016 financial results, Dr. Mark Sander, President
and CEO of Mandalay, noted, "Mandalay generated strong revenue and EBITDA in
the first quarter of 2016, on an annualized pace exceeding last year's
revenue and EBITDA, despite lower metal prices relative to the first quarter
of 2015. As a result of our continuing low average cash production cost per
saleable gold equivalent ounce ("oz Au Eq.") of $751, we generated 34% EBITDA
margins in the quarter. We ended the quarter with $40.7 million in cash and
cash equivalents, down from $49.2 million at the beginning of the quarter,
due to the $4.0 million cash portion of the Cerro Bayo royalty acquisition
and increases in accounts receivables of $6.0 million mainly due to unsettled
shipments sold late in the quarter. Having repurchased the Cerro Bayo
royalty from Coeur Mining, the Company has no remaining private royalties on
any of its current operations and our shareholders can expect to realize the
full benefit of increasing production and metal prices going forward."

Dr. Sander continued, "During the first quarter of 2016, Costerfield continued
its excellent operational and financial performance, producing its second
highest ever quarterly total of 16,966 oz Au Eq., at a record low cash cost
of $512/oz Au Eq. and all-in cost of $724/oz Au Eq. Since achieving its
maximum daily design throughput rate of 450 tonnes ("t") per day in 2014, the
Costerfield team has consistently delivered continuous operational
improvements, which in the current quarter include mining record tonnes at
record low cost/t and processing record tonnes at record low cost/t. Having
completed all major capital items for the current life of mine plan at
Costerfield, we receive substantial free cash flow each quarter from the
operation. We are working to extend the mine life through drilling lodes
below the King Cobra fault, approximately 100 metres deeper than the current
Cuffley workings, and by applying recent, sustainably lower operating costs
to evaluation of resources already drilled in the Brunswick lode adjacent to
the plant."

Dr. Sander added, "Our underground grade control program at Björkdal started
to demonstrate success in the first quarter for the first time since our
acquisition of the project. We were able to deliver on-vein development
grades in excess of 2.5 grams of gold per tonne ("g/t Au") and stoping grades
in excess of 1.75 g/t Au for the last two months of the quarter. As a
result, the mine produced its second highest amount of gold (12,185 oz) at
its second lowest cash cost ($821/oz Au) under Mandalay ownership. Key to
further improvement is accelerating the rate of underground development so
that we can consistently deliver 2 g/t Au reserve grade to the plant. This
acceleration process is well underway. The Company also initiated a grab
sample program for grade control in the open pit with the aim of better
delineating the mineralization within blasts and improving the overall
production grade from the open pit. The grade improvement from this
procedural change is expected to be seen for the remainder of the year. We
also expect to start our large scale (60,000 t) optical ore sorting test in
the second quarter to assess our ability to upgrade lower-grade development
ore that is currently being transported to the low-grade stockpile.

"Cerro Bayo continued its transition from the depleted Yasna and Fabiola veins
to the new Delia SE and Coyita mines during the first quarter of 2016. At
Delia SE, we commenced stoping, a few months delayed due to slower on-vein
and capital development than planned arising from poorer ground conditions
than anticipated. The Company received governmental permission during the
first quarter to begin extracting and processing ore from Coyita and on-vein
development of ore blocks has now started. We plan to mobilize a contractor
late in the second quarter to accelerate capital and on-vein development,
increasing the developed state of the mines and allowing a return to mining
and processing average reserve grades at our plant design rate of 1,400
t/day. Despite the development bottleneck, the mine and plant have been
producing and processing high rates of ore at the lowest unit costs to date
over the last few quarters. We anticipate a return to our historical strong
financial performance at Cerro Bayo when the mine reaches its target state of
development and head grades return to historical averages.

"We continued advancing our Challacollo development project during the
quarter, applying for new water rights to support our preferred processing
alternative. We also expect to recommence exploration on the property later
in the year."

Dr. Sander concluded, "Given our strong overall performance in the quarter, we
are maintaining our guidance for corporate consolidated 2016 production,
average cash production costs, and capital spending as set out in our January
13, 2016 press release."

First Quarter 2016 Financial Highlights

The following table summarizes the Company's financial results for the three
months ended March 31, 2016 and 2015:

---------------------------------------------------------------------------------------------
| Particulars Three months Three months |
| Ended March Ended March |
| |
| 31, 2016 31, 2015 |
| $'000 $'000 |
| Revenue 50,442 56,779 |
| Adjusted EBITDA 17,262 24,267 |
| Income from mine operations before depreciation and depletion 19,016 25,785 |
| Adjusted net income before special items 1,020 12,484 |
| Consolidated net income 1,149 11,762 |
| Cash capex 9,057 13,001 |
| Total assets 357,117 357,202 |
| Total liabilities 142,190 138,603 |
| Adjusted net income per share 0.00 0.03 |
| Consolidated net income per share 0.00 0.03 |
---------------------------------------------------------------------------------------------
The declines in revenue and adjusted EBITDA during the first quarter of 2016
relative to the first quarter of 2015 were principally due to lower realized
metal prices. (2.3% lower for Au, 10.8% lower for silver ("Ag"), and 35.0%
lower for antimony ("Sb"). Factors affecting sales volumes include lower Ag
and Au production at Cerro Bayo. Year-on-year operational country exchange
rates declines of 8% for the Australian dollar, 12% for the Chilean peso and
1% for the Swedish krona as well as 29% lower petroleum prices partly helped
offset the impact of lower metal prices.

During the first quarter of 2016, cash capex was approximately $4.0 million
lower than in the same quarter of 2015. Virtually all of this decrease was
due to completion of the life of mine capital program at Costerfield, where
spending was $1.3 million in 2016 versus $5.0 million in the first quarter of
2015.

During the three months ended March 31, 2016, the Company paid out a total of
$2.7 million in dividends and $4.0 million for the cancellation of the Coeur
Mining royalty at Cerro Bayo.

First Quarter 2016 Operational Highlights

The table below summarizes the Company's capital expenditures and operational
unit costs for the first quarter of 2016.

----------------------------------------------------------------------------------------------------------
| Three months Three months |
| ended March ended March |
| |
| 31, 2016 31, 2015 |
| $'000 $'000 |
| Capital development 9,896 6,891 |
| Capital purchases 2,790 4,259 |
| Capital exploration 2,565 2,000 |
| Cerro Bayo: Cash cost per oz Ag produced net of Au byproduct credit $ 9.76 $ 10.09 |
| Cerro Bayo: Site all-in cost per oz Ag produced net of Au byproduct credit $ 18.78 $ 17.61 |
| Costerfield: Cash cost per oz Au Eq. produced $ 512 $ 566 |
| Costerfield: Site...

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