Mandalay Resources Provides Exploration Results for the First Half of 2017

TORONTO, July24, 2017(GLOBE NEWSWIRE) -- Mandalay Resources Corporation ("Mandalay" or the "Company") (TSX:MND) is pleased to provide exploration updates for the first half of 2017 for two of its producing properties, Bj??rkdal (Sweden) and Costerfield (Australia), and its Challacollo (Chile) development project.

This press release refers to tables and figures. Accompanying tables can be found at the end of this press release, whereas the figures accompanying this release can be found in an exploration presentation posted on the Company's website that can be accessed at:

http://www.mandalayresources.com/investor-presentations/#Technical_Presentations

Dr. Mark Sander, President and CEO of Mandalay, commented, "In the first half of 2017, our exploration programs yielded excellent results, which clearly demonstrate the potential for significant near-term and long-term Mineral Reserve additions at both Bj??rkdal and Costerfield.

"At Bj??rkdal, extensional drilling to the northeast and north of the mine demonstrated that the gold mineralized system extends several hundred metres beyond the current mine in those directions and is not yet closed off.As a result, we have demonstrated the potential to increase Mineral Reserves at Lake Zone underground and West Pit at surface. We have also made significant progress in understanding the distribution and characteristics of high-grade skarn mineralization that occurs both in the open pit and underground mines. Follow-up drilling is planned.

"At Costerfield, drilling has improved the outlook for mine life extensions at different scales. At Brunswick, new holes have delivered high-grade, deep intersections that are expected to make a positive impact on the updated Mineral Resource and Reserve model anticipated in the fourth quarter. As previously reported, we anticipate the new model will significantly extend mine life based on our expectation that Brunswick will prove to be economic. As well, the potential next major new mineralized shoot after Brunswick has begun to emerge in our new drilling below the historic workings on the main Costerfield lode. These intercepts contain extraordinary gold and antimony grades scattered along a 400 metre strike length and 100 metre vertical interval. New intercepts along N-lode have also identified new splays which, as we follow them up, have the potential for incrementally adding Reserves near current underground infrastructure."

Dr. Sander concluded, "Lastly, at Challacollo, we reached a major milestone with the discovery of sufficient water to support an eventual operation.Activities to permit and complete a production well, followed by transfer of existing water rights to the new location are underway. We now have the option to launch a project to optimize previously estimated capital and operating costs for a mine and plant at Challacollo."

Bj??rkdal Exploration

Significant Exploration Results (Tables 1 through 4; Figures 1 through 5)

Underground Exploration

In the first half of 2017, underground diamond drilling at Bj??rkdal extended the north-eastern limit of the Bj??rkdal vein-system and infilled discrete areas. Intercepts from the extensional drilling demonstrate that gold mineralization extends along-strike from the defined resource for at least 200-300 metres (Figure 2 and Table 2) and mineralization remains open to the north and east. Infill drilling also increased confidence and delivered some high-grade intercepts in areas closer to the current limits of the mine (Figure 3 and Table 3).

Open Pit Exploration

Near-mine surface drilling with both core and Reverse Circulation methods during the first half of 2017 focused on extending gold mineralization in the north-western portions of the West Pit (Figure 4). This drilling intercepted many new mineralized intervals in the northern wall of the West Pit (Table 4). Results from this extensional drilling demonstrate that the mineralized vein-system in this area of the deposit extends from the current limits of the West Pit to at least 150 m further to the north. These veins are interpreted to correlate with the same vein-system mined from the underground mine, located to the east of this area.Therefore, the Bj??rkdal vein-system remains open to the west and north-west of the current mine footprint, presenting high-calibre extensional targets for future exploration programs at Bj??rkdal.

In addition to successful extensional drilling of the Bj??rkdal vein-system, significant gold intercepts were also obtained from non-veined, mineralized carbonate lenses belonging to the host-stratigraphy (the Bj??rkdal marble unit). These mineralized carbonate lenses are strongly altered, containing abundant amphiboles (predominately actinolite), silica and chlorite with accessory pyrite, pyrrhotite and pyroxenes. This metasomatic assemblage suggests skarn-like depositional mechanisms, and represents an exciting new deposit-type both within and peripheral to the footprint of the current Bj??rkdal mine.

Three gold-bearing, skarn-like bodies have been defined though drilling over the past six months; two in the vicinity of the underground mine and a single in the open pit mine (Figure 5). The skarnified carbonate lenses are shallow dipping, narrow, plunging bodies that are located above and adjacent to the Bj??rkdal vein-system. Intercepts of this skarn-hosted gold-mineralization include:

• 12.2 m (true width) at 26.99 g/t Au in hole MU7-037 (Table 2); and
  
• 1 m at 10.99 g/t Au in hole MR7-002 and 8 m at 0.67 g/t (Table 4).

These results suggest that this style of mineralization presents the possibility of bulk-minable tonnages of potentially much higher gold-concentrations than the more typical Bj??rkdal vein systems. Within the month of June, a 1,176 tonne parcel of the recently exposed West Pit skarn ore was crushed and milled with results indicating a back-calculated head-grade of 4.30 g/t Au. The recent intercepts of all significant gold-bearing skarn intercepts will be followed up as priority targets in the remainder of 2017 and 2018 exploration programs, while regional exploration models and programs will be refined to incorporate further targeting of near-surface, high-grade gold skarn and skarn-like mineralized systems in the larger Bj??rkdal area.

Bj??rkdal Drilling, Sampling and Assaying

During the period from January 1, 2017 to June 30, 2017, a total of 13,640 metres of exploration drilling was completed in 66 drill holes.Drilling included 23 surface core and RC holes totalling 3,451 m and 43 underground core holes totalling 10,189 m. All drill-hole collars are surveyed, and downhole surveys are completed in order to record hole azimuth and dip variations.

All surface and underground exploration drilling has been conducted by third party contractors, with a mix of core and reverse circulation drilling using WL66, NQ2, HQ and 5 1/2 " RC sized drilling equipment (producing 50 mm, 50.5 mm and 63.5 mm diameter core respectively).

Core and RC samples are logged by Mandalay geologists on-site. Assaying of Bj??rkdal samples was completed at CRS Minlab Oy (CRS) in Kempele, Finland and ALS in Pite??, Sweden. Whole core samples (WL66 and NQ2 size) were sent directly to the independent laboratories for sample preparation and assaying, while HQ diameter core was half-sawn at the laboratories off-site before sample preparation. Assaying was conducted utilizing the Pal1000 (CRS) and LeachWELL (ALS) cyanide leaching processes. Mandalay's rigorous QA/QC program includes the use of standard reference samples, blanks, duplicates, repeats, and internal laboratory quality assurance procedures. More details on the drilling, logging, sampling, and assaying procedures are contained in the Technical Report "Mandalay Resources Corporation Technical Report on the Bj??rkdal Gold Mine, Sweden" filed on SEDAR (www.sedar.com) on January 27, 2017.

Costerfield Exploration

Significant Exploration Results (Tables 5 through 8; Figures 6 through 12)

Brunswick

Following structural analysis of Brunswick mineralization, the Company conducted infill drilling within the Penguin to Kiwi (PK) panel of the Brunswick lode (Table 6 and Figure 7). Further confidence of grade continuity was gained through this drilling, with high-grade intercepts including 24.4 g/t Au and 6.1% Sb over a vein width of 2.01 m in BD278W2.

These results will be reflected in a resource update expected in the fourth quarter of 2017. This drilling is expected to result in an increase in Indicated Mineral Resource of the Brunswick lode.

Further drilling was undertaken with the purpose of extending Brunswick below the Kiwi Fault and to the south. Both drilling campaigns intercepted antimony and gold mineralization along the Brunswick corridor. Mineralization has now been identified approximately 280 m below historic workings and approximately 100 m below the current Inferred Mineral Resource. Below the historic B3 pit, the Brunswick line of mineralization has been identified at a depth of 225 m below surface and over a strike length of 300 m (Figure 7). Highlights of this extension drilling are:

• 9.3 g/t Au and 2.5% Sb over a vein width of 1.56 m in BD268 below the Kiwi fault; and
• 17.4g/t Au with 4.7% Sb over a vein width of 0.63m in BD289 within Brunswick South.

Future exploration efforts are expected to focus on extending the current Mineral Resource below the Kiwi fault and into Brunswick South, pending economic analysis.

Costerfield

A target testing campaign investigating the continuation of mineralization underneath the historic Costerfield mine workings is currently underway. The early stages of this campaign have shown great success with mineralization confirmed over a strike length of approximately 500 m and to a depth of approximately 150 m vertically below the current workings (Figure 8). The highlight of the program during the first half of 2017 is the deepest northern intercept, which contained 59.8 g/t Au and 3.2% Sb over a true vein width of 0.56 m in BC006w1 (Table 7).

N Lode Upper

Structural analysis of the mineralized corridor known as N Lode has led to the recognition of a previously untested prospective zone near to surface. The first drill hole to test this area has confirmed the presence of an up-dip continuity to the enriched northern portion of N Lode. The proximity of this mineralization to established underground development makes this find an important focus for near future delineation drilling (Table 8 and Figure 9).

Alison South

Testing of the upper portion of mineralization over the Cuffley Deposit has returned high-grade gold results within two veins in an offset, up-dip continuation of the Cuffley Deposit named Alison South. The highlight of this drilling was an intercept containing 71.1 g/t Au and 0.5% Sb over a true vein width of 0.35 m in AD168 (Table 8 and Figure 10).

K Lode

A high-grade portion of K Lode was discovered through the opportunistic drilling program (Table 8 and Figure 11). This vein has already been accessed through mining on an intersecting portion of N Lode which makes this a potential low-cost mining source in the near future.

Augusta East

A drilling campaign investigating the possibility of an eastern repetition of the Augusta and Cuffley line of mineralization is currently underway. Gold has been located within a near-surface, sub-vertical vein set in the first hole to be drilled on this target (Figure 12). Although the grade of these intercepts are not potentially economic, they are characteristic of the periphery of orebodies in the district. Follow-up drilling is planned.

Costerfield Drilling, Sampling, and Assaying

During the first half of 2017, Mandalay drilled 18,489 m of diamond core at its Costerfield gold-antimony mine (Table 5). 5,520 m was dedicated to increasing immediate mine life through infill and extension of the Brunswick resource and through opportunistic drilling projects on K Lode, N Lode and Alison South. 12,969 m was devoted to regional exploration, with the drill testing of the Costerfield Mine extension, Augusta East and Brunswick line of lode extension. In addition, the Company completed 1,652 m of on-vein operating development and associated sampling of N Lode, Cuffley Lode, New Vein, Bob lode and associated splays.

Drill core was logged and sampled by Costerfield geologists, who also mapped and sampled the development advances. All samples were sent to Onsite Laboratory in Bendigo, Victoria, Australia for sample preparation and assay. Site geological and metallurgical personnel have implemented a QA/QC process that includes the regular submission of standard reference materials and blanks with drill and face samples submitted for assay. Standard reference materials have been certified by Geostats Pty Ltd. (see Technical Report entitled "Costerfield Operation, Victoria, Australia NI 43-101 Report", filed on SEDAR (www.sedar.com) March 31, 2017, which contains a complete description of drilling, sampling, and assaying procedures).

Challacollo Exploration

Four holes were drilled at Challocollo during the first half of 2017 to explore for water, a critical requirement for further project development. A total of 416.5 metres was drilled, with all four holes encountering promising quantities of water. Drill hole locations are provided in Figure 13, with pump test results in Table 9.

Qualified Person:

Chris Gregory, Vice President of Operational Geology and Exploration at Mandalay Resources, is a Member of the Australian Institute of Geoscientists (AIG), and a Qualified Person as defined by NI 43-101. He has reviewed and approved the technical and scientific information provided on all the Company's properties contained in this release.

About Mandalay Resources Corporation:

Mandalay Resources is a Canadian-based natural resource company with producing assets in Australia, Sweden and producing and exploration projects in Chile. The Company is focused on executing a roll-up strategy, creating critical mass by aggregating advanced or in-production gold, copper, silver and antimony projects in Australia, the Americas and Europe to generate near-term cash flow and shareholder value.

Forward-Looking Statements:

This news release contains "forward-looking statements" within the meaning of applicable securities laws, including statements regarding expected exploration results and increases to resources and reserves. Readers are cautioned not to place undue reliance on forward-looking statements. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, changes in commodity prices and general market and economic conditions. The factors identified above are not intended to represent a complete list of the factors that could affect Mandalay. A description of additional risks that could result in actual results and developments differing from those contemplated by forward-looking statements in this news release can be found under the heading "Risk Factors" in Mandalay's annual information form dated March 31, 2017, a copy of which is available under Mandalay's profile at www.sedar.com. In addition, there can be no assurance that any inferred resources that are discovered as a result of additional drilling will ever be upgraded to proven or probable reserves. Although Mandalay has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

Accompanying Drill Summary Tables:

Table 1: Bj??rkdal H1 2017 drilling summary

Table 2: Bj??rkdal underground extensional drilling results

Significant new underground core-drilling intercepts from extensional drilling. Note: only intercepts displayed with Au grade greater than resource cut-off grade (i.e. greater than underground resource cut-off grade once diluted to minimum mining width of 3 metres). Drill holes labelled with italics and "*" are skarn-hosted intercepts.

Table 3: Bj??rkdal underground infill drilling results

Significant new underground core-drilling intercepts from infill drilling. Note: Only intercepts included with Au grade that is greater than resource cut-off grade (i.e. greater than underground resource cut-off grade once diluted to minimum mining width of 3 metres).

Table 4: Bj??rkdal significant new open pit core-drilling (MP-7 series) and reverse circulation (MR-7 series) intercepts from extensional drilling

Note: only Au grade is displayed that is greater than resource cut-off grade (i.e. greater than underground resource cut-off grade once diluted to minimum mining width of 2 metres). Drill holes labelled with italics and "*" are skarn intercepts.

Table 5: Costerfield H1 2017 drilling summary

Table 6: Brunswick lode significant intercepts

Note:
- Raw, undiluted assay intervals are reported that occur within diluted intervals that contain greater than 1 AuEq g/t over a minimum mining width of 1.8 m.
- True width is preliminary estimate only and may not reflect final true width used in resource estimation
- AuEq (g/t) = Au (g) + Sb (%) x (Price per 10 Sb(kg) ? Sb Recovery(%))/(Price per 1 Au(g) ? Au Recovery (%))

Table 7: Costerfield lode significant intercepts

Note:
- True width is preliminary estimate only and may not reflect final true width used in resource estimation
- AuEq (g/t) = Au (g) + Sb (%) x (Price per 10 Sb(kg) ? Sb Recovery(%))/(Price per 1 Au(g) ? Au Recovery (%))

Table 8: Opportunistic drilling significant intercepts

Note:
- Raw, undiluted assay intervals are reported that occur within diluted intervals that contain greater than 1 AuEq g/t over a minimum mining width of 1.8 m.
- True width is preliminary estimate only and may not reflect final true width used in resource estimation
- AuEq (g/t) = Au (g) + Sb (%) x (Price per 10 Sb(kg) ? Sb Recovery(%))/(Price per 1 Au(g) ? Au Recovery (%))

Table 9: Challacollo pump test results

For further information:

Mark Sander
Chief Executive Officer

Greg DiTomaso 
Investor Relations

Contact
647.260.1566