Mandalay Resources Corporation Cerro Bayo Exploration Update: Discovery at Delia SE and Extensions of Dagny, Fabiola and Delia NW Veins

TORONTO, Sept. 6, 2011 /CNW/ - Mandalay Resources Corporation ("Mandalay" or the "Company") (TSX: MND, MND.WT) is pleased to provide an update on development and diamond drilling at its Cerro Bayo, Chile, silver-gold mine (click here for Cerro Bayo Property Map and here for Laguna Verde Overlook). A complete description of the mine, the current reserves and resources and the restart plan that Mandalay has been executing since acquiring the project in August 2010, is contained in the NI 43-101 compliant technical report dated May 17, 2010, and available on www.sedar.com (the "2010 Technical Report").

Brad Mills, CEO of Mandalay, commented, "The results of our first seven months of intensive exploration and development at Cerro Bayo are extremely encouraging. Drilling to test the first near-mine exploration target, the Delia SE extension, has successfully located the offset vein and confirmed continuity of high-grade mineralization. We are excited that this target has potential to substantially increase our mineral resources given its impressive widths and grades. We are following up these initial intercepts in the third quarter to determine the overall strike and dip extent of the high-grade mineralized zone as well as infill it to determine continuity.

In addition, infill drilling of previously Inferred resources in and around the first three of our planned mines, Dagny, Fabiola and Delia NW is confirming the continuity and grade of mineralization, with numerous intercepts showing high-grade mineralization for both silver and gold. Furthermore, underground development sampling has demonstrated that actual minable ore boundaries extend well beyond those predicted by the drilling-based block models. These results give us great confidence in our start-up mine plan and our ability to significantly extend the initial mine life."

Delia Vein SE Discovery -
At the time of Mandalay's acquisition of the Cerro Bayo property, previous drilling had outlined Inferred resources in the Delia Vein SE area which were not included in reserves (click here for Delia Vein SE long section). Drilling since January of this year has confirmed the existence of continuous high-grade mineralization at Delia SE in a zone approximately 250 meters ("m") long and 150 m down dip. It also has now extended this mineralization an additional 150 m to the southeast across what was previously believed to be a bounding fault, for a total of at least 400 m strike length.

Selected assays for drilling completed in 2011 from the Delia Vein SE are listed in the following table, showing intercepts ranging in true width from 0.9 to 4.1 m, in gold grade from 0.93 to 24.96 grams per tonne ("g/t") and in silver grade from 130 to 1,170 g/t (see Appendix 2 for a complete table of assays).

Hole_ID Intercept
UTM_E Intercept
UTM_N Int. Elev.
(m) Int.
From
(m) Int.
To
(m) Int.
Length
(m) Int.
True
Width
(m) Au
Grade
(g/t) Ag
Grade
(g/t) AuEq
(g/t)
(diluted
to min.
2.4 m)
DELIA VEIN SE
DDE-088 271736.95 4840330.18 99.64 224.1 226.0 1.94 0.92 24.96 272 11.65
DDE-089 271783.66 4840266.02 195.01 124.3 130.7 6.37 4.00 0.93 239 5.71
DDE-090 271687.20 4840324.68 160.99 185.2 187.7 2.49 1.55 6.59 1170 19.37
DDE-096 271749.46 4840322.55 113.79 216.1 229.7 13.57 6.70 8.19 333 14.85
DDE-099 271700.78 4840358.34 89.19 258.1 261.3 3.24 1.79 6.45 215 8.02
DDE-106 271724.73 4840298.50 176.36 145.7 151.3 5.55 3.45 3.32 514 13.60
DDE-113 271908.45 4840286.92 72.77 265.8 269.2 3.37 1.43 2.01 374 5.65
DELIA VEIN SE EXTENSION
DDE-104 271940.18 4840224.51 176.11 130.2 133.4 3.24 1.64 1.08 166 3.01
DDE-122 272041.29 4840205.10 105.44 184.5 190.8 6.22 4.06 17.63 317 23.97
DDE-124 271940.71 4840258.84 125.03 187.7 190.8 3.07 1.53 5.42 130 5.11
DDE-128 271940.69 4840258.79 125.09 171.1 175.6 4.50 3.70 4.94 435 13.64

Note: Au Equivalent grams per tonne ("AuEq g/t") = Au(g/t)+ Ag(g/t)/50, accounting for metal price and recovery.

The Delia Vein SE extension zone remains open to the southeast and follow-up drilling is continuing.


Dagny, Fabiola and Delia NW Veins Infill Drilling -
Infill drilling of Inferred resources defined in the Dagny, Fabiola and Delia NW veins by the 2010 Technical Report has confirmed significant quantities of high-grade mineralization. Selected intercepts are listed in the following table, showing intercepts ranging in true width from 0.46 to 7.96 m, in gold grade from 0.89 to 11.43 g/t and in silver grade from 284 to 3,193 g/t (see Appendix 2 for the complete table of assays).

Hole_ID Intercept
UTM_E Intercept
UTM_N Int. Elev.
(m) Int.
From
(m) Int.
To
(m) Int.
Length
(m) Int.
True
Width
(m) Au
Grade
(g/t) Ag
Grade
(g/t) AuEq
(g/t)
(diluted
to min.
2.4 m)
DAGNY VEIN
DDAG-85 271288.37 4840873.22 260.83 59.35 61.35 2.00 1.72 2.68 541 9.66
DDAG-92 271158.01 4840921.71 179.71 135.8 138.9 3.14 1.79 1.92 289 5.76
DDAG-105 271358.45 4840709.75 85.35 254.7 257.0 2.31 1.11 6.64 347 6.28
DDAG-107 271070.05 4841035.60 151.55 158.1 158.8 0.68 0.57 11.43 308 4.18
DDAG-110 271252.69 4840780.38 91.21 201.0 202.6 1.53 0.99 4.66 575 6.67
FABIOLA VEIN
FCH529 271272.99 4841351.38 258.44 2.59 102.72 105.31 2.34 3.38 379 10.68
FCH532 271210.20 4841472.58 197.19 7.73 171.56 179.29 5.21 6.12 3193 69.98
FCH534 271047.19 4841623.25 261.33 0.73 100.07 100.80 0.46 4.46 824 4.01
FCH536 271438.91 4841228.98 184.98 2.60 131.55 134.15 1.59 0.89 512 7.36
FCH537 271278.18 4841376.35 200.67 2.15 106.90 109.05 1.66 2.65 416 7.60
FCH541 271317.37 4841336.56 221.55 2.00 108.20 110.20 1.50 2.19 704 10.17
FCH548 271527.68 4841159.20 129.27 1.94 193.36 195.30 0.76 4.89 649 5.66
FCH549 271487.41 4841164.58 210.21 3.45 111.02 114.47 1.95 1.13 818 14.24
DELIA VEIN NW
DDE-066 270847.29 4840792.70 238.67 76.6 78.1 1.55 1.51 2.46 1100 15.39
DDE-067 270816.80 4840829.97 212.10 88.3 97.0 8.70 6.35 4.16 290 9.96
DDE-076 271242.10 4840540.78 121.66 237.2 251.9 14.70 7.96 2.76 335 9.46
DDE-079 271042.01 4840721.65 102.16 196.1 199.1 3.02 1.77 4.22 298 7.51
DDE-080 271381.05 4840460.90 230.22 142.2 147.2 4.92 3.67 1.25 284 6.93
DDE-093 270862.66 4840809.02 180.12 151.5 153.1 1.59 1.46 5.23 441 8.55
DDE-094 270940.62 4840757.20 176.10 139.2 144.0 4.83 4.22 5.22 633 17.88
DDE-097 270959.79 4840743.71 177.94 139.7 144.1 4.40 3.92 10.85 787 26.59

Note: Au Equivalent grams per tonne ("AuEq g/t") = Au(g/t)+ Ag(g/t)/50, accounting for metal price and recovery.

Production Sampling from Development Drives on the Dagny and Fabiola Veins -
Production development sampling in the operating Dagny and Fabiola veins is significantly extending the volume of high-grade mineralization beyond the original limits predicted by the resource model defined in the 2010 Technical Report. The location of the production sampling and the Mandalay infill drilling are summarized in the long sections of each vein (click here for Dagny long section, here for Fabiola long section and here for the Delia NW long section).

Bianca Vein - Mine development of the Dagny vein has discovered ore-grade mineralization in the intersecting Bianca vein. This was unexpected due to the fact that historical and recent drilling had not predicted significant ore grade mineralization in the Bianca vein. (click here for Bianca long section).

The Company is currently implementing the exploration program at Cerro Bayo with six drills, and is mobilizing a seventh drill to site. With an additional 14 high-priority drill targets similar to Delia SE to be tested in the next year, management believes that Cerro Bayo is developing into a significant, long-life, low-cost mine for Mandalay.


Qualified Person:

Ronald Luethe, General Manager of Mandalay Chile Ltda. is an Idaho registered Professional Geologist and an AIPG Certified Professional Geologist. As a Qualified Person defined by NI 43-101, he has reviewed and approved the technical and scientific information contained in this release.


About Mandalay Resources Corporation:

Mandalay Resources is a Canadian-based natural resource company with production and exploration assets in Australia and 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, in particular with respect to the significance of reported drill intercepts at the Cerro Bayo mine on the Company's operational plans and expectations. Readers are cautioned not to place undue reliance on forward-looking statements, since actual results and developments may differ materially from those contemplated by these statements depending on, among other things, changes in commodity prices, general market and economic conditions, and success of future drilling. 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, 2011, 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.


Appendix 1: Drilling, sampling, and assaying process

The Company began underground vein development in the third quarter of 2010 based on Proven and Probable reserves estimated in the 2010 Technical Report. The objective of concurrent drilling has been to infill Inferred resources identified in the 2010 Technical Report on veins planned for near-term mining in order to convert them to Measured and Indicated resources that can quickly increase Life of Mine ("LOM") Proven and Probable reserves. In a press release dated April 5, 2011, the Company announced its first resource and reserve additions, estimated from early infill drilling on the Yasna vein. With the arrival of two additional contract rigs in June and July, the Company also began testing high-priority targets for potential extensions to known ore shoots.

Drilling at Cerro Bayo is currently advancing with four mine-owned Diamec drills using NQ/BQ core and two drills contracted from Master Drilling using HQ/NQ core. Core is logged, split or sawn, and then sampled on-site by Mandalay personnel. Samples are prepared and assayed by the on-site mine laboratory, which has been recently audited by SGS.

Mine assay samples are taken from channels across the vein from each blast face by mine geologists. Separate samples of the vein, the footwall, and the hanging wall are taken at chest height.

Mandalay follows a strict Quality Assurance and Quality Control ("QA/QC") program in accordance with industry standards that includes incorporation of blanks and standards in every assay batch as well as duplicate assays of selected samples. Routine check samples are sent to the ALS Chemex laboratory in La Serena, Chile, for independent verification. The detailed QA/QC process from drilling through sampling and assaying is described in the 2010 Technical Report. For internal grade control, a gold equivalent grade of each assayed interval is calculated according to the formula below, which accounts for metal price and recovery:

Au Equivalent grams per tonne ("AuEq g/t") = Au(g/t)+ Ag(g/t)/50.


Appendix 2— Drilling results

Dagny Vein — (click here for Dagny long section)
Prior to Mandalay's acquisition of Cerro Bayo from Coeur d'Alene Mines Corporation ("Coeur"), Coeur had drilled 133 holes (24,496 total meters) on the Dagny vein. Coeur generated 58 intercepts with grades greater than the current incremental cutoff grade of 2.4 g/t AuEq over 2.4 m ("successful" intercepts), for a success rate of 44%. In the 2010 Technical Report, a Proven and Probable reserve of 203,850 t containing 325 g/t Ag (2,130,265 oz) and 2.35 g/t Au (15,403 oz Au) was estimated from these intercepts, with an additional 31,736 t of Inferred resource.

In 2010 and 2011 to date, Mandalay has drilled 34 additional holes (6,410 total meters), generating 7 intercepts greater than the internal cutoff grade for a success rate of 21%. Inspection of the Dagny section shows that no waste holes were drilled inside limits of the Indicated resource, and the 7 successful holes served to confirm the Indicated resource or confirm/extend the Inferred resource. As well, for 2011 to date, Mandalay has achieved 857 m of horizontal ore development, 148% of the planned 581 m. Part of this excess is due to faster than planned advance and part is due to moderate extension of high-grade mineralization beyond the limits predicted by the block model presented in the 2010 Technical Report. The Company anticipates that this new drilling and production sampling will result in a modest net increase to estimated Measured and Indicated resources when the model is updated, after giving effect to 2011 production.

In addition, three high-grade holes at the southeast end of the Dagny section suggest that the mineralization shoot continues out under Laguna Verde. This target will be followed up later in the program.

Table 1— Drill Intercepts of Dagny Vein

HOLE_ID Hole
Total
Depth
(m) Intercept
UTM_E Intercept
UTM_N Int. Elev.
(m) Int. From
(m) Int. To
(m) Int. Length
(m) Int. True
Width
(m) Au
Grade
(g/t) Ag Grade
(g/t) AuEq
(g/t)
(diluted
to 2.4 m)
2010 Mandalay
DDAG-85 71.95 271288.37 4840873.22 260.83 59.35 61.35 2.00 1.72 2.68 541 9.66
DDAG-86 64.90 271319.73 4840832.07 262.02 50.49 51.07 0.58 0.53 0.60 184 0.95
2011 Mandalay
DDAG-87 111.80 271041.23 4841088.65 237.09 84.5 84.9 0.40 0.26 2.90 699 1.86
DDAG-88 152.50 271037.46 4841096.03 237.82 84.0 86.8 2.84 1.98 0.20 12 0.36
DDAG-89 170.75 271025.76 4841110.38 257.57 54.0 56.6 2.56 1.71 0.11 11 0.23
DDAG-90 150.00 271074.90 4841025.94 205.11 120.8 121.6 0.83 0.54 2.53 312 1.98
DDAG-91 132.10 271061.18 4841057.61 255.04 46.6 47.3 0.61 0.36 0.40 87 0.32
DDAG-92 161.75 271158.01 4840921.71 179.71 135.8 138.9 3.14 1.79 1.92 289 5.76
DDAG-93 189.15 271169.93 4840900.26 134.61 163.0 163.9 0.83 0.32 0.63 43 0.20
DDAG-94 205.00 271110.50 4840977.07 122.12 185.5 186.1 0.56 0.19 0.10 4 0.01
DDAG-95 160.00 270997.44 4841146.29 187.13 142.9 143.5 0.56 0.28 2.07 32 0.32
DDAG-96 251.70 271072.54 4841018.81 94.59 208.5 209.3 0.85 0.25 0.13 18 0.05
DDAG-97 126.50 270955.66 4841182.91 260.00 92.9 93.7 0.79 0.79 1.97 282 2.50
DDAG-98 151.45 270948.55 4841189.39 247.50 96.0 96.4 0.34 0.31 0.50 135 0.42
DDAG-99 166.45 271006.26 4841106.65 166.11 133.4 134.1 0.75 0.14 0.23 4 0.02
DDAG-100 239.00 271346.95 4840730.95 177.41 199.6 200.4 0.78 0.58 2.10 342 2.16
DDAG-101 165.25 270944.72 4841193.56 203.18 126.7 127.2 0.58 0.45 1.17 50 0.40
DDAG-102 220.45 No Intercept on Dagny Vein
DDAG-103 227.65 No Intercept on Dagny Vein
DDAG-104 284.90 No Intercept on Dagny Vein
DDAG-105 288.05 271358.45 4840709.75 85.35 254.7 257.0 2.31 1.11 6.64 347 6.28
DDAG-106 305.55 271352.04 4840691.59 79.03 251.6 252.8 1.20 0.48 1.04 89 0.56
DDAG-107 181.00 271070.05 4841035.60 151.55 158.1 158.8 0.68 0.57 11.43 308 4.18
DDAG-108 251.10 271097.33 4840968.27 82.84 213.7 216.0 2.30 1.47 0.25 12 0.30
DDAG-109 197.70 271240.47 4840841.04 128.37 180.6 181.0 0.39 0.32 2.56 814 2.51
DDAG-110 221.80 271252.69 4840780.38 91.21 201.0 202.6 1.53 0.99 4.66 575 6.67
DDAG-111 250.10 271231.42 4840738.90 60.96 225.0 225.9 0.91 0.55 0.41 59 0.36
DBI-001 140.00 271022.33 4841109.63 269.46 47.4 47.7 0.34 0.25 0.10 11 0.03
DBI-002 160.30 271019.41 4841108.63 242.66 60.8 62.2 1.36 0.55 0.66 68 0.46
DBI-011 256.40 271003.34 4841133.37 209.49 122.4 123.1 0.68 0.41 2.60 97 0.78
DBI-013 143.75 271027.09 4841075.34 254.36 42.7 43.0 0.30 0.23 0.46 242 0.51
DBI-014 214.40 271003.86 4841134.55 233.62 110.1 111.1 0.95 0.92 0.18 40 0.38
DBI-015B 189.10 271023.44 4841086.77 244.68 50.0 52.2 2.21 1.63 0.37 82 1.37
DBI-017B 207.00 271055.58 4841060.81 208.45 96.3 98.0 1.63 0.86 1.27 202 1.90

Note: Au Equivalent grams per tonne ("AuEq g/t") = Au(g/t)+ Ag(g/t)/50, which accounts for metal price and recovery.


Fabiola Vein — (click here for Fabiola long section)
Prior to Mandalay's acquisition of Cerro Bayo, Coeur had drilled 98 holes, for a total of 19,688 m, on the Fabiola vein. Coeur generated 43 intercepts with grades greater than the current incremental cutoff grade of 2.4 g/t AuEq over 2.4 m, for a success rate of 44%. In the 2010 Technical Report, a Proven and Probable reserve of 199,060 t containing 338 g/t Ag (2,098,200 oz) and 3.32 g/t Au (20,610 oz Au) was estimated from these intercepts, with an additional 29,371 t of Inferred resource.

In 2010 and 2011 to date, Mandalay has drilled 38 additional holes for 8,202 m, generating 12 intercepts greater than the internal cutoff grade for a success rate of 38%. Inspection of the Fabiola section shows that 10 of the successful holes mostly serve to confirm or extend Indicated or Inferred resources, whereas only 2 of the below cutoff holes were in areas of Indicated resource. For 2011, Mandalay has achieved 1,073 m of horizontal ore development, 212% of the planned 507 m. Inspection of the long section reveals that most of this excess is due to extending the limits of high-grade mineralization predicted by the block model presented in the 2010 Technical Report. From the drilling and mine sampling results, the Company anticipates a significant increase in Measured and Indicated resources when the model is updated, before giving effect to 2011 production. This may translate into a moderate increase after giving effect to 2011 production.

Table 2 - Drill Intercepts of Fabiola Vein

Hole_ID Hole
Total
Depth
(m) Intercept
UTM_E Intercept
UTM_N Intercept
Elev
(m) Intercept
Length
(m) From
(m) To
(m) True
Width
(m) Gold
Grade
(g/t) Silver
Grade
(g/t) AuEq
(g/t)
(diluted
to
2.4 m)
2010 Mandalay
FCH489 232.15 271232.64 4841452.36 179.09 1.87 198.67 200.54 1.49 1.96 185 3.53
FCH490 260.50 271256.47 4841431.98 100.51 0.91 241.79 242.70 0.55 10.44 338 3.94
FCH491 312.90 NO VEIN INTERCEPT 0.00
FCH492 233.65 271268.75 4841418.80 141.37 0.56 223.54 224.10 0.41 0.96 48 0.33
2011 Mandalay
FCH503 300.75 271209.74 4841509.39 42.73 0.13 292.17 292.30 0.05 2.99 58 0.09
FCH505 279.40 NO VEIN INTERCEPT 0.00
FCH507 318.00 271278.23 4841418.47 25.04 1.85 304.56 306.41 0.93 1.17 27 0.66
FCH510 297.00 271350.38 4841348.15 34.12 0.28 271.12 271.40 0.10 6.07 96 0.34
FCH512 297.00 271348.01 4841357.43 37.33 1.12 288.78 289.90 0.38 0.05 8 0.03
FCH513 275.00 271279.37 4841409.18 99.65 0.35 250.93 251.28 0.25 1.79 131 0.45
FCH517 332.75 NO VEIN INTERCEPT 0.00
FCH523 348.75 NO VEIN INTERCEPT 0.00
FCH527 93.80 271056.00 4841640.00 166.13 1.25 70.25 71.50 0.93 0.13 28 0.27
FCH528 161.50 271386.42 4841278.83 187.01 1.82 140.00 141.82 1.58 0.98 147 2.58
FCH529 116.10 271272.99 4841351.38 258.44 2.59 102.72 105.31 2.34 3.38 379 10.68
FCH530 113.40 271365.34 4841277.49 232.35 0.82 92.26 93.08 0.79 1.36 420 3.21
FCH531 263.10 271493.88 4841150.29 211.19 0.80 114.00 114.80 0.43 0.10 2 0.03
FCH532 188.00 271210.20 4841472.58 197.19 7.73 171.56 179.29 5.21 6.12 3193 69.98
FCH533 222.05 NO VEIN INTERCEPT 0.00
FCH534 145.00 271047.19 4841623.25 261.33 0.73 100.07 100.80 0.46 4.46 824 4.01
FCH535 164.05 271486.84 4841179.82 179.23 0.93 139.65 140.58 0.46 0.50 203 0.87
FCH536 131.00 271438.91 4841228.98 184.98 2.60 131.55 134.15 1.59 0.89 512 7.36
FCH537 156.10 271278.18 4841376.35 200.67 2.15 106.90 109.05 1.66 2.65 416 7.60
FCH538 184.00 271320.75 4841361.53 164.03 0.98 154.75 155.73 0.48 0.15 27 0.14
FCH539 177.00 271336.69 4841327.39 177.68 0.35 159.65 160.00 0.29 0.80 125 0.39
FCH540 206.00 271508.61 4841159.46 148.64 2.00 167.60 169.60 0.62 0.22 50 0.31
FCH541 134.00 271317.37 4841336.56 221.55 2.00 108.20 110.20 1.50 2.19 704 10.17
FCH542 181.00 271358.71 4841310.78 161.23 1.85 161.93 163.78 1.53 0.71 101 1.75
FCH543 206.12 271338.16 4841336.26 125.86 0.55 190.60 191.15 0.26 0.10 4 0.02
FCH544 229.00 NO VEIN INTERCEPT 0.00
FCH545 272.55 271494.67 4841205.44 107.32 0.40 210.40 210.80 0.15 0.10 2 0.01
FCH546 215.25 271366.68 4841309.85 111.59 1.80 197.00 198.80 1.34 0.53 52 0.87
FCH547 260.80 271424.08 4841223.46 111.63 0.47 199.53 200.00 0.30 0.56 157 0.46
FCH548 214.10 271527.68 4841159.20 129.27 1.94 193.36 195.30 0.76 4.89 649 5.66
FCH549 128.06 271487.41 4841164.58 210.21 3.45 111.02 114.47 1.95 1.13 818 14.24
FCH550 145.00 271462.04 4841204.76 198.46 0.46 128.18 128.64 0.24 0.62 49 0.16
FCH551 209.85 NO VEIN INTERCEPT 0.00
FCH552 196.85 271006.45 4841677.40 280.38 0.76 94.85 96.12 0.76 0.70 59 0.60

Note: Au Equivalent grams per tonne ("AuEq g/t") = Au(g/t)+ Ag(g/t)/50, accounting for metal price and recovery.

Bianca Vein - (click here for Bianca long section)

Mandalay encountered the Bianca vein in 2011 as a splay off the Dagny vein while developing the northwest portion of the Dagny mine. Sampling on two levels demonstrates that high-grades are present, but are quite variable over short distances. Stoping has begun on this vein.

Coeur did not identify the Bianca vein in its historical drilling, although reinterpretation of Coeur's data suggests that the Bianca vein was intercepted five times with two successful hits above cutoff grade. Mandalay drilled 15 more holes to probe ahead of the ore-grade mine advances in Bianca and only encountered one intercept above cutoff grade. The occurrence of ore-grade advance sampling in an area of disappointing drill results is not an anomaly—similar results have occurred outside the modeled ore reserves in Fabiola.

Table 3 - Drill Intercepts of Bianca Vein

Hole_ID Hole
Total
Depth
(m) Int.
UTM_E Int.
UTM_N Int.
Elev.
(m) Int.
Length
(m) From
(m) To
(m) True
Width
(m) Au
Grade
(g/t) Ag
Grade
(g/t) AuEq
(g/t)
(diluted
to 2.4 m)
2011 Mandalay
BDI-001 140.00 271056.95 4841169.59 240.78 122.3 122.7 0.45 0.32 0.17 12 0.05
BDI-002 160.30 271037.96 4841163.80 183.16 144.6 145.5 0.93 0.35 1.38 52 0.35
BDI-003 170.45 271051.17 4841198.33 252.92 102.7 103.1 0.39 0.22 0.73 244 0.51
BDI-004 161.40 271018.34 4841233.73 219.60 129.3 129.6 0.30 0.20 0.30 32 0.08
BDI-005 185.50 270999.44 4841275.94 239.12 140.5 141.0 0.50 0.40 4.46 358 1.94
BDI-008 265.85 271012.71 4841234.21 163.90 177.6 179.4 1.74 0.90 0.10 8 0.10
BDI-009 184.95 270967.47 4841313.77 137.33 231.1 232.0 0.98 0.42 0.47 16 0.14
BDI-010 197.35 270953.77 4841394.16 238.00 192.4 192.9 0.53 0.44 0.27 12 0.09
BDI-012 250.25 270968.98 4841346.03 214.52 219.4 220.0 0.54 0.42 6.83 33 1.31
BDI-013 143.75 271079.19 4841078.40 187.62 127.0 128.2 1.18 0.65 5.11 100 1.93
BDI-014 214.4 271041.46 4841182.27 201.71 178.3 180.1 1.77 1.50 2.62 99 2.88
BDI-016 232.70 270967.55 4841280.86 171.67 207.5 208.5 1.02 0.67 0.30 3 0.10
BDI-017B 207.00 270958.05 4841318.64 186.11 160.0 161.3 1.31 0.30 2.88 46 0.48
BDI-018 221.65 271091.86 4841052.83 156.59 200.1 200.3 0.21 0.13 0.10 2 0.01
BDI-019 290.00 271167.50 4841473.49 190.40 176.3 177.7 1.43 0.55 0.44 38 0.28

Note: Au Equivalent grams per tonne ("AuEq g/t") = Au(g/t)+ Ag(g/t)/50, which accounts for metal price and recovery.


Delia Vein NW — (click here for Delia NW long section)
Prior to Mandalay's acquisition of Cerro Bayo, Coeur had drilled 95 holes, (15,649 total meters), on the Delia Vein NW. Coeur generated 64 intercepts with grades greater than the current incremental cutoff grade of 2.4 g/t AuEq over 2.4 m, for a success rate of 67%. In the 2010 Technical Report, a Proven and Probable reserve of 196,053 t containing 258 g/t Ag (1,628,572 oz) and 2.62 g/t Au (16,536 oz Au) was estimated from these intercepts, with an additional 158,427 t of Inferred resource in both the Delia NW and Delia SE segments.

In 2011 to date, Mandalay has drilled 29 additional holes for 5,837 m, generating 12 intercepts greater than the internal cutoff grade for a success rate of 41%. Inspection of the Delia vein NW section shows that these successful holes mostly serve to infill or extend Inferred resources. The Company anticipates a significant increase in Measured and Indicated resources when the model is updated.

Table 4 - Drill Intercepts of Delia NW Vein

Hole_ID Hole
Total
Depth
(m) Int.
UTM_E Int.
UTM_N Int.
Elev.
(m) Int.
From
(m) Int.
To
(m) Int.
Length
(m) Int.
True
Width
(m) Au
Grade
(g/t) Ag
Grade
(g/t) AuEq
(g/t)
(diluted
to 2.4 m)
2011 Mandalay
DDE-066 98.55 270847.29 4840792.70 238.67 76.6 78.1 1.55 1.51 2.46 1100 15.39
DDE-067 126.15 270816.80 4840829.97 212.10 88.3 97.0 8.70 6.35 4.16 290 9.96
DDE-068 191.95 HOLE DID NOT INTERCEPT DELIA VEIN
DDE-069 158.65 HOLE DID NOT INTERCEPT DELIA VEIN
DDE-070 173.25 271317.41 4840485.25 199.08 123.8 125.5 1.75 0.89 1.89 362 3.39
DDE-071 275.75 271315.64 4840496.53 122.6 249.3 249.9 0.57 0.26 6.01 661 2.08
DDE-072 302.65 271379.76 4840467.73 125.45 275.3 277.5 2.14 0.87 0.11 3 0.06
DDE-073 329.65 271340.97 4840520.63 55.89 321.2 322.1 0.91 0.61 0.53 2 0.14
DDE-074 233.65 271277.85 4841513.72 162.57 214.1 214.5 0.39 0.23 1.09 67 0.23
DDE-075 302.40 271284.16 4840520.7 122.36 251.0 263.7 12.65 6.95 2.21 57 3.35
DDE-076 275.70 271242.1 4840540.78 121.66 237.2 251.9 14.70 7.96 2.76 335 9.46
DDE-077 232.90 271094.9 4840658.88 70.65 218.3 222.4 4.04 2.75 0.27 15 0.57
DDE-078 200.00 271230.64 4840516.76 203.12 172.2 172.7 0.45 0.28 0.33 17 0.08
DDE-079 221.70 271042.01 4840721.65 102.16 196.1 199.1 3.02 1.77 4.22 298 7.51
DDE-080 161.35 271381.05 4840460.9 230.22 142.2 147.2 4.92 3.67 1.25 284 6.93
DDE-081 191.25 271416.97 4840444.34 203.81 156.6 158.3 1.63 1.15 0.17 6 0.14
DDE-082 201.90 271080.01 4840656.93 125 177.3 184.4 7.01 5.69 0.62 25 1.12
DDE-083 201.65 271457.54 4840400.66 210.05 157.7 160.4 2.75 1.66 1.09 84 1.92
DDE-084 170.55 271003.86 4840673.13 196.3 147.7 148.5 0.80 1.37 0.10 13 0.21
DDE-085 254.70 271476.3 4840455.86 125.91 243.3 243.6 0.21 0.13 0.33 105 0.13
DDE-087 98.55 271017.04 4840673.95 174.69 151.9 152.9 1.03 0.94 1.30 257 2.52
DDE-091 110.95 271005.59 4840658.17 196.22 101.1 102.0 0.86 0.68 0.53 117 0.81
DDE-092 207.90 271331.53 4840498.57 151.16 196.8 197.6 0.77 0.36 0.57 17 0.14
DDE-093 174.85 270862.66 4840809.02 180.12 151.5 153.1 1.59 1.46 5.23 441 8.55
DDE-094 163.30 270940.62 4840757.2 176.1 139.2 144.0 4.83 4.22 5.22 633 17.88
DDE-095 160.00 271281.71 4840499.68 185.36 125.4 127.9 2.46 1.03 0.10 4 0.08
DDE-097 169.20 270959.79 4840743.71 177.94 139.7 144.1 4.40 3.92 10.85 787 26.59
DDE-103 189.75 270862.33 4840816.88 141.98 171.9 175.9 4.02 3.32 1.77 174 5.25
DDE-112 188.65 270711.28 4840925.29 184.04 143.6 145.4 1.89 1.64 2.18 9 1.61

Note: Au Equivalent grams per tonne ("AuEq g/t") = Au(g/t)+ Ag(g/t)/50, which accounts for metal price and recovery.


Delia Vein SE— (click here for Delia vein SE long section)
Prior to Mandalay's acquisition of Cerro Bayo, Coeur had drilled 29 holes for a total of 6,113 m on the Delia Vein SE. Coeur generated 17 intercepts with grades greater than the incremental cutoff grade of 2.4 g/t AuEq over 2.4 m, for a success rate of 59%. In the 2010 Technical Report, no Measured or Indicated resources were estimated for this section of the vein.

In 2011 to date, Mandalay has drilled 17 additional holes for 4,172 m, generating 12 intercepts greater than the internal cutoff grade for a success rate of 71%. Inspection of the Delia Vein SE section shows that these successful holes have confirmed the Inferred resource. The Company anticipates a significant increase in estimated Measured and Indicated resources when the model is updated.


Delia SE Extension Target - (click here for Delia SE Extension long section)
Previous drilling by Coeur encountered high-grade mineralization along the Delia Vein SE until the shoot was truncated by a fault. Two Coeur holes drilled to locate the vein offset failed. Mapping and interpretation by the Mandalay team generated a new hypothesis for the offset geometry, which was confirmed by Mandalay's first new target drill test. The geometry has been confirmed and refined by five follow-up holes, one that missed the offset vein and four that intersected it. The Delia vein is the thickest and highest-grade vein included in the Cerro Bayo mine plan to date and proving that it exists with significant grade and thickness across the fault opens up a large target for immediate follow-up drilling.

Table 5 - Drill Intercepts of Delia Vein SE and SE Extension Discovery

Hole_ID Hole
Total
Depth
(m) Intercept
UTM_E Intercept
UTM_N Int.
Elev.
(m) Int.
From
(m) Int.
To
(m) Int.
Length
(m) Int.
True
Width
(m) Au
Grade
(g/t) Ag
Grade
(g/t) AuEq
(g/t)
(diluted
to 2.4 m)
Mandalay 2011
DDE-086 271631.11 4840369.08 123.00 227.3 228.0 0.67 0.38 0.10 2 0.02
DDE-088 271736.95 4840330.18 99.64 224.1 226.0 1.94 0.92 24.96 272 11.65
DDE-089 271783.66 4840266.02 195.01 124.3 130.7 6.37 4.00 0.93 239 5.71
DDE-090 271687.20 4840324.68 160.99 185.2 187.7 2.49 1.55 6.59 1170 19.37
DDE-096 271749.46 4840322.55 113.79 216.1 229.7 13.57 6.70 8.19 333 14.85
DDE-098 271761.64 4840279.08 170.72 144.1 146.4 2.32 1.23 3.00 180 3.38
DDE-099 271700.78 4840358.34 89.19 258.1 261.3 3.24 1.79 6.45 215 8.02
DDE-100 271806.54 4840282.20 87.21 230.2 233.0 2.83 0.97 0.10 6 0.09
DDE-101 271880.55 4840260.25 96.83 223.4 224.5 1.15 0.41 2.37 10 0.44
DDE-104 271940.18 4840224.51 176.11 130.2 133.4 3.24 1.64 1.08 166 3.01
DDE-106 271724.73 4840298.50 176.36 145.7 151.3 5.55 3.45 3.32 514 13.60
DDE-107 271893.81 4840267.50 85.66 240.9 241.9 1.01 0.41 0.92 97 0.49
DDE-114 NO VEIN INTERCEPT
DDE-113 271908.45 4840286.92 72.77 265.8 269.2 3.37 1.43 2.01 374 5.65
DDE-122 272041.29 4840205.10 105.44 184.5 190.8 6.22 4.06 17.63 317 23.97
DDE-124 271940.71 4840258.84 125.03 187.7 190.8 3.07 1.53 5.42 130 5.11
DDE-128 271940.69 4840258.79 125.09 171.1 175.6 4.50 3.70 4.94 435 13.64

Note: Au Equivalent grams per tonne ("AuEq g/t") = Au(g/t)+ Ag(g/t)/50, which accounts for metal price and recovery.



For further information:

Bradford Mills
Chief Executive Officer

Greg DiTomaso
Investor Relations
Contact: 647.260.1566
Email: g.ditomaso@mandalayresources.com
Company website: www.mandalayresources.com