Mandalay Resources Provides 2015 Year-End Exploration Updates for Its Costerfield, Bjorkdal and Cerro Bayo Mines

TORONTO, Jan. 19, 2016 (GLOBE NEWSWIRE) -- Mandalay Resources Corp. ("Mandalay" or the "Company") (TSX:MND) is pleased to provide 2015 year-end exploration updates for all three of its mines. Figures accompanying this release can be found in an exploration presentation posted on the Company's website. It can be accessed here: 
http://www.mandalayresources.com/investor-presentations/#Technical_Presentations

Brad Mills, CEO of Mandalay, commented, "Our exploration programs across the Company once again continued on track to approximately replace reserves with our end-of-2015 resource and reserves update expected to be released in mid-February, 2016.  Exploration at all sites continued to identify new quality target areas for future exploration.  At Costerfield, exciting new intercepts suggest that at least three branches of the Cuffley lode occur below the King Cobra fault in the vicinity of our underground infrastructure; all three contain high gold and/or antimony grades and we are optimistic that further drilling planned for 2016 will outline a potentially significant new resource. Intercepts obtained at the Margaret and Brunswick targets have confirmed the presence of mineralized veins and improved our understanding of the structural settings for potential mineralization in these areas. Finally, an initial round of shallow reverse circulation drilling to test the large top-of-bedrock gold and antimony anomaly at West Costerfield has demonstrated the presence of an extensive system of mineralized structures, which may be followed up by core drilling in 2016."

Mr. Mills continued, "At Cerro Bayo, drilling under Laguna Verde continued to reveal the southeast and depth limits of the Coyita vein, with a gap remaining in the middle of the lake that has proved difficult to drill from currently accessible locations. New intercepts on the Yasna vein under Laguna Verde have further defined and slightly enlarged this ore shoot as well.  We expect modest increases in resources on both these veins at the year-end 2015 resources and reserves update. Our first hole to test below the northeastern half of the lake intersected a new vein called Victoria.  While this wide intercept did not contain economic grades, it indicates that significant structures exist to the east of the current Laguna Verde vein system that were active at the time of mineralization."

Mr. Mills concluded, "At Björkdal, drilling has pushed the limits of underground mineralization some 200 m to the north and up to 100 m to east and northeast. We expect this work will translate into a significant increase in underground resources and reserves in our year-end reserve and resource update.  Furthermore, drilling results in and around the southeast part of the open pit suggests we will be able to expand the pit in this area.  This year's core drilling has also confirmed the validity of the Nylunds resource model that had previously only been defined by historic RC drilling. We expect the Nylunds resource to convert to a new open pit reserve as a result. Finally, a new mineralized zone was intercepted in the Storheden area some 700 m north of the current Björkdal mine. This intercept, which is anomalously wide for the district, represents a new high quality exploration target for the coming year."

Costerfield

Drilling, Sampling, and Assaying

During the second half of 2015, Mandalay drilled 11,525 metres ("m") of diamond core in 29 holes on Cuffley, Sub-King Cobra, Margaret, Brunswick and Corridor projects (Figure 1). In addition, the Company completed 1,781 m of on-vein operating development and associated sampling of the N- and Cuffley lodes. Thirty-eight reverse circulation ("RC") drill holes totaling 2,780 m were drilled at the West Costerfield bedrock geochemical anomaly. Diamond drill core and RC cuttings were 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, (with the exception of the West Costerfield and Margaret drilling samples that were sent to ALS in Orange, NSW, 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 March 31, 2015, Technical Report entitled "Costerfield Operation, Victoria, Australia NI 43-101 Report", available on SEDAR (www.sedar.com), which contains a complete description of drilling, sampling, and assaying procedures).

Drill Results

Assay results are summarized in Tables 1 through 6 below; they are displayed in geologic context in Figures 2 through 7. 

Cuffley Main (Table 1; Figure 2)

• Four new intercepts were obtained in the Cuffley Main zone, incidental to testing the Corridor target.  The highest grade of these, COR003, intercepted 0.045 m at 14.4 grams per tonne ("g/t") gold ("Au") and 2.3% antimony ("Sb").
   
• These intercepts were generated while drilling to reach the primary target in the Corridor zone below the Tiger Fault and are not expected to significantly change the estimated resources in the Cuffley Main zone as they penetrated the Main zone within the boundaries of already-Indicated Resource.  
   
• However, they do increase the level of confidence for mine planning in the area.

Table 1: Significant new drill intercepts on Cuffley Main

* True width is preliminary estimate only and may not reflect final true width used in resource estimate

Cuffley Deeps (Table 2; Figure 3)

• Two drill holes were completed with the aim of increasing the confidence in the geometry and the extent of the high grade mineralization found at the top of the Cuffley Deeps zone. These holes were successful in delineating the southern boundary of the high grade zone and proving that the grade continues to the north.

Table 2: Significant new drill intercepts on Cuffley Deeps

* True width is preliminary estimate only and may not reflect final true width used in resource estimate

Sub King Cobra (Table 3, Figure 4)

• Three high grade structural zones have been identified in drilling beneath the King Cobra fault system (Eastern, Central and Western). The vein composition within these mineralized zones vary from high stibnite concentrations (54.8 g/t Au and 37.2% Sb) in the Eastern structure to visible coarse gold in quartz (3,928 g/t Au and 0.02% Sb) within the Central and Western. 
  
  
• Assaying and interpretation of the "Eastern" mineralized zone has resulted in      significant intercepts in CSK009 of 0.77 m at 2.6 g/t Au and 3.8% Sb, 1.07 m at  6.4 g/t Au and 4.1% Sb.
  
  
• Hole CSK007 identified the "Central" Zone as a wide, 8 m zone consisting of quartz-stibnite veins with visible gold in two veins at ~374 m (0.071 m at 119.4 g/t Au and 7.0% Sb, 1.39 m at 136.8 g/t Au and 1.2% Sb). 
  
  
• The "Western" mineralized zone is located 120 m to the west of the central zone in CSK007 (2.37 m @ 47.5 g/t Au). It consists of a 1.75 m fault zone, containing minor quartz-gold fragments. 
  
  
• These three zones represent high priority drill targets for follow up in 2016.

Table 3: Significant new drill intercepts on Sub King Cobra

* True width is preliminary estimate only and may not reflect final true width used in resource estimate

Margaret (Table 4, Figure 5)

• Three holes have been drilled on the Margaret target for a total of 1,274 m. The drilling program resulted in shallow intercepts ranging from 75 to 100 m downhole on the "Margaret East" target zones. MM011 displayed visible gold in core and returned grades of 0.14 m at 46.5g/t Au and 3.5% Sb. MM010 was also successful and intercepted high grades in "Margaret East": 0.19 m at 5.8 g/t Au and 9.4% Sb; and 0.1 m at 5.6 g/t Au and 6.7% Sb.
   
•  Follow-up drilling is anticipated in 2016.

Table 4: Significant new drill intercepts on Margaret

* True width is preliminary estimate only and may not reflect final true width used in resource estimate

Corridor (Table 5, Figure 2)

• Five holes totaling 3,545 m have been drilled in the mineralized Corridor program.
   
• Four of the five holes drilled on the target confirmed a sub-vertical structure approximately 350 m to the west of the Cuffley Deposit. This newly identified structure has a confirmed strike length of 500 m and is open along strike to the north and south. Mineralization consists of brecciated quartz with pyritic matrix that bears strongly anomalous Au and Sb.

Table 5: Significant new drill intercepts on Corridor

 * True width is preliminary estimate only and may not reflect final true width used in resource estimate

 Brunswick (Table 6, Figure 5)

• During November - December 2015, 3 diamond drill holes totalling 1,172 m were drilled at Brunswick, targeting the northern extension of mineralization and a continuation of the lode at depth below the Brunswick pit.
   
• BD238 and B240 confirmed the continuation of the Brunswick structure at depth and to the north, respectively; however, the structure intercepted in these holes only contains trace mineralization.
  
  
• BD239 has proven up the continuation of mineralization below the south end of the Brunswick pit returning assays of 0.3 m at 8.1 g/t Au and 0.6% Sb.
   
• While the 2015 program bounded the upside potential of Brunswick to the north, should metal prices and economic analysis warrant, a follow-up program to infill the southern area around and below BD239 plus other sparsely drilled gaps in the lode is possible.

             
Table 6: Significant new drill intercepts on Brunswick

* True width is preliminary estimate only and may not reflect final true width used in resource estimate

West Costerfield (Table 7, Figure 6)

• A total of 38 holes totaling 2,780 m of RC drilling was undertaken during the second half of 2015 in order to confirm the bedrock geochemical anomaly found in the 2014 auger drilling program.
   
• Results from the RC drilling confirmed bedrock mineralization in the anomaly. The identification of the geochemical anomaly represented an almost entirely untested, near surface mineralized system. 
   
• The program generated five low grade intercepts, one of 4 m width and the others of 1 m each.
   
• Correlations in the district suggest that RC results tend to underestimate grades found in the same vein by neighbouring core holes, suggesting that follow-up of the mineralized RC intercepts by core holes may be warranted in the future.

Table 7: Significant new drill intercepts on West Costerfield

* True width is preliminary estimate only and may not reflect final true width used in resource estimate

Cerro Bayo

Drilling, Sampling and Assaying

A total of 14,007 m of NX and BX diamond drill core were produced from 34 holes at Cerro Bayo during the second half of 2015.  The bulk of this meterage was drilled from surface platforms on the margins of Laguna Verde, while the rest was completed from underground stations in the Dagny and Yasna mines.  All drill holes were directionally surveyed by standard techniques with a downhole instrument.

Drill core was logged and sampled by staff geologists and all core samples (including blanks, standards and duplicates) were submitted to the on-site assay laboratory of Compañia Minera Cerro Bayo. The Cerro Bayo assay laboratory was audited in 2011 by SGS Lakefield Research Ltd. and routinely sends check samples to the ALS laboratory (ISO 9001:2008 and ISO/IEC 176025:2005 certified) in La Serena, Chile, following QA/QC practices established by the parent company, Mandalay Resources.  (Please see the Company's previously filed document, 'Technical report on the Cerro Bayo project, Region XI (Aysèn) Chile', dated March 28, 2014, and available on SEDAR (www.sedar.com), for a full description of the drilling, logging, assaying and estimation processes, including data verification procedures).

Drill Results

The following tables and figures display mineralized intercepts obtained through December 31, 2015, correlated by vein according to the latest structural interpretation. Such structural interpretation may be subject to revision as more drilling data are acquired.

Coyita vein (Table 8, Figures 9,10,11)

27 new drill holes completed during the second six months of 2015 indicate that the Coyita vein is a strongly mineralized fissure essentially all the way across Laguna Verde to the district-scale fault structure of the Falla Cañadón Verde (Figure 9). The mineralization in the vein largely has been closed off in both its SE and NW extents, with a few gaps remaining on the extreme southern end and the central section under the lake to be drilled (Table 8, Figures 10 and 11).  Localized, significant grade has been recognized in subordinate branch veins lying to the west of the Coyita vein. A new vein was intersected far to the east of the Coyita, dubbed the 'Victoria' vein (Figure 9).  This latter feature was not well-mineralized in this initial intercept, but the characteristics of hydrothermal alteration and gangue mineralogy encourage further drill testing at higher structural levels and along strike.

Table 8:  Summary of mineralized intercepts correlated to the Coyita vein

Yasna vein (Table 9, Figure 12)

Three new infill drill holes on the Yasna vein largely confirm that the mineralized zone has been closed off and remains approximately 200 m long by 70 m high, down-dip.  Minor increases in the size of the shoot could be generated by more infill drilling, but Mandalay has decided to wait to complete this work until excavation of a nearby drill station makes the project cheaper and more cost effective.

Table 9:  Summary of Mineralized Intercepts Correlated with the Yasna Vein System

Kasia vein (Table 10, Figure 13)

Five new drill intercepts were obtained on the Kasia vein, in the southern sector where the Kasia and Yasna systems appear to converge.  Some remarkable grades were obtained from veins lying between the Kasia fissure and the Coyita vein, which may represent a step-over or linking system between the two named veins, similar in orientation to the Yasna inflection (drill hole DLV15-054; Figure 9). 

Table 10:  Summary of Mineralized Intercepts Correlated to the Kasia Vein System

Björkdal

Drilling, Sampling and Assaying

All the surface, and the majority of the underground exploration diamond drilling were conducted by third party contractors, producing WL66-, NQ2- and WL76-sized core (50.7 mm, 50.6 and 57.5 mm diameter core, respectively). During the period from July 1, 2015, to December 31, 2015, 21 diamond core drill holes totalling 3,098 m were drilled to infill and extend open pit resources; 26 core holes for 6,768 m were drilled to infill and extend underground resources; 17 core holes totalling 2,875 m were drilled to confirm and extend the historic resource at the near-mine Nylunds Deposit; and 12 core holes for 2,111 m were drilled to test targets within the near-mine exploration tenements. All diamond drill hole collars are surveyed. Downhole surveys are also carried out to record hole azimuth and dip.

Diamond core samples were logged by Mandalay geologists on-site. Assaying of Björkdal samples was completed at CRS Minlab Oy (CRS) in Kempele, Finland. Whole core samples were sent directly to the independent laboratory for sample preparation and assaying. Assaying was conducted utilizing the LeachWELL process. Our rigorous QA/QC program included 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 Corp. Technical Report on the Björkdal Gold Mine, Sweden" filed March 31, 2015 and available on SEDAR (www.sedar.com).

Drill Results

Underground (Table 11, Figures 14 and 15)
                               
Underground diamond drilling at Björkdal intercepted many new economic gold-bearing veins (Table 11). These new intercepts come from the Lake zone, Lake zone north, Central zone and Main zone (Figure 15). They serve to push the limits of continuous mineralization 200 m to the north and up to 100 m to the northeast and east of previously interpreted limits; mineralization remains open in those directions.

Table 11: Significant Björkdal Underground Drill Results

The completion of the test drilling program within the eastern limit (mine-grid) of the Main zone (DDT diamond drilling program, Figure 15) has also seen extremely positive results in that many new significant intercepts have been reported (Table 12). The test drilling program was drilled with oriented core to successfully identify mineralized veins of several different orientations within the Main zone of the mine. These veins strike at an oblique angle to the dominant vein direction and commonly contain higher than average gold grades.  The use of oriented, closely-spaced drilling has allowed for a detailed understanding of a geologically complex area within the mine. This new geological knowledge is now being successfully transferred to other areas of the operation where it has confirmed the similar behaviour of the orebody throughout the known limits of the deposit.

Table 12: Significant New Detailed Test Drilling (DDT) Intercepts

Open Pit

Surface drilling has extended the southeast limits of shallow Au mineralization adjacent to the currently mined Björkdal open pit. (Table 13 and Figure 16 for intercept locations). Future drilling will test the possibility that the East pit resource may be continuous with the shallow Nylunds resource further to the southeast.

Table 13: Significant New Near-Surface Core Drill Intercepts from the South-Eastern Portion of the Björkdal Open Pit

Nylunds

The Nylunds deposit is located 200 m southeast of the current Björkdal open pit (Figure 17). Infill and extension diamond drilling was performed in order to confirm and convert a previous historical resource based only on RC drilling.  Many significantly mineralized Au-bearing vein intercepts were intercepted (Table 14). The Nylunds deposit remains open to the north, south and west (mine-grid) suggesting potential for more mineralized exploration from future exploration efforts. Immediate exploration of this deposit will likely focus on the areas immediately north located between Nylunds and the Björkdal open pit.

Table 14: Significant New Core Intercepts at Nylunds

Storheden Deposit

The Storheden deposit is located approximately 750 m northeast of the Björkdal mine (Figure 14). Two significantly mineralized, closely-spaced, sub-parallel vein systems were intercepted returning an assay of 2.49 g/t Au from an interval measuring 7 m in true thickness (Table 15).  Historical drilling by previous owners has intersected mineralization in this area as well.

Table 15: Significant New Drill Intercept at the Storheden Deposit

Challacollo

No significant work was planned or completed at Challacollo in the second half of 2015.

Qualified Persons:

Costerfield: Chris Gregory, Vice President of Operational Geology and Chief Shield Geologist 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 about Costerfield contained in this release.

Cerro Bayo:  Scott Manske, Chief Cordilleran Geologist of Mandalay Resources, is an Oregon registered Professional Geologist. A "Qualified Person" as defined by NI 43-101, he has reviewed and approved the technical and scientific information on Cerro Bayo contained in this release.

Björkdal: Chris Gregory, Vice President of Operational Geology and Chief Shield Geologist, 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 about Björkdal contained in this release.

For further information: 
Bradford Mills 
Chief Executive Officer

Greg DiTomaso 
Investor Relations

Contact: 
647.260.1566

About Mandalay Resources Corporation: 
Mandalay is a Canadian-based natural resource company with producing assets in Australia and producing and development 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 and the Americas 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 the Company's Mineral Resources, Mineral Reserves (including anticipated increases of each), ongoing exploration plans and goals. 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, 2015, a copy of which is available under Mandalay's profile at www.sedar.com. In addition, there can be no assurance that any current or future 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.