Mandalay Resources announces mineral resources and reserves for its
Costerfield gold-antimony mine and completion of an updated NI 43-101 report

TORONTO, May 14 /CNW/ - Mandalay Resources Corporation ("Mandalay" or the "Company") (TSX-V: MND) is pleased to announce that it has completed a detailed review of the mineral inventory at its Costerfield, Australia gold-antimony mine. This work, conducted under the supervision of Mandalay's independent consultants, SRK Consulting, is detailed in a new NI 43-101 compliant report on the property. The report contains the first estimate of proven and probable reserves for the mine, which have been developed from previously announced mineral resource estimates. The complete NI 43-101 report is available on the Company's website www.mandalayresources.com and under the Company's profile at www.sedar.com.

    
    MINERAL RESOURCES(1) (as at April 1, 2009, minus estimated resource
depletion to February 28, 2010)

    --------------------------------------------------------------
    Resource Type         kTonnes   Au g/t   Sb%    Au oz    Sb t
    --------------------------------------------------------------
    Measured & Indicated    218.5     11.8   6.4   83,100  14,000
    --------------------------------------------------------------
    Inferred                126.9      9.2   4.5   37,400   5,700
    --------------------------------------------------------------
    (1) Resources include Augusta E, W, N, and C lodes. Resources are
    reported on a diluted, in-situ basis using a 4.6 g/t Au equivalent cutoff
    grade calculated at US$1,000/oz Au and US$6,000/t Sb and a minimum width
    of 1.2 metres. Resources are reported inclusive of reserves.

    The resources of the Brunswick Vein have been established separately by
AMC Consultants.

    MINERAL RESERVES(2) (as at March 1, 2010).

    --------------------------------------------------------------
    Reserve Type          kTonnes   Au g/t   Sb%    Au oz    Sb t
    --------------------------------------------------------------
    Proven                   20.1     16.9   9.7   10,937   1,953
    --------------------------------------------------------------
    Probable                 45.4     11.4   5.8   16,656   2,636
    --------------------------------------------------------------
    Proven & Probable        65.6     13.1   7.0   27,594   4,588
    --------------------------------------------------------------
    (2) Reserves include Augusta E and W lodes only and are reported on a
    mined and diluted basis using 1.5 metres minimum mining width and planned
    and unplanned dilution of zero grade. Reserves are calculated at US
    $1,000/oz Au and US$6,000/t Sb.
    

The SRK Life of Mine Plan, based on mining 100% of the proven and probable reserves, mines and processes ore 65,600 tonnes of ore containing 27,594 oz Au and 4,588 t Sb. It extends through November 2011 at an average mining and processing rate of 4,000 tonnes ore per month. Metal recoveries in the plan are based on a constant flotation tail of 0.7 g/t Au and 0.3 % Sb. Saleable total production is 20,722 oz Au and 2,431 t Sb. Total operating cost, including mining, processing, selling, and administration, is A$385 per tonne ore processed. Going forward capital costs for this base case plan include A$1.1 million for capital development and A$0.8 million for capital purchases. Due to tax loss carryforwards of approximately A$40 million, there are no income taxes due on income from this base-case plan.

The SRK Life of Mine Plan produces a cumulative cash surplus of A$8.5 million at a gold price of US$1,000/oz and antimony price of US$6,000/t. For comparison, as reported by www.metalbulletin.com, the April 2010 monthly average London PM gold price was US$1,149/oz and the monthly average free market warehouse antimony price was US$8,369/t.

Brad Mills, CEO of Mandalay, said "Costerfield is one of the few mines in the world that produces high-grade gold-antimony concentrate for the Chinese market. Given the strong improvements in the fundamentals for antimony with the closure of unregulated production in China we are very encouraged about the future of this market. With this maiden reserve estimate for Costerfield, based on a rigorous examination of technical, capital, and operating costs for the life of mine to the standards required by the new Mandalay management and by National Instrument 43-101, we are confident about our ability to deliver consistent quantities to our customers. Even though the base case mine life, founded only on proven and probable reserves, runs just through Q4 2011, the extraordinarily high grade of gold and antimony in the ore, coupled with high metal prices, means that we anticipate the mine will generate more than enough cash to fund our continued investment in production improvements and exploration. The base case plan includes deepening the Augusta decline to develop new levels on the Augusta W and E lodes, which we expect to more than replace reserves depletion over the coming months. As well, we are embarking on an A$1.1 million Augusta Deeps drilling program designed to bring a targeted 120,000 to 230,000 tonnes of W-lode material at typical W-lode grades of 12-15 g/t gold and 7-8% antimony into the inferred resource category. Finally, we have narrow-width, mechanized production drilling equipment on order that should allow us to significantly increase our mining rate and productivity beginning in late Q3, 2010. When that equipment is fully commissioned, we expect to be able to increase monthly average payable production to approximately 1,500 oz Au and 160 t Sb."

In connection with the Augusta Deeps drilling program described above, it should be noted that the potential quantity and quality of material identified as the exploration target is conceptual in nature and that there has not yet been sufficient exploration to define this material as a mineral resource. It remains uncertain if the planned drilling or other future exploration will result in this material being delineated as a mineral resource.

    
    Qualified Person:
    -----------------
    

Chris Raleigh, Principal Consultant (Mining) with SRK and a Qualified Person as defined by NI 43-101, has reviewed and approved the technical and scientific information pertaining to the base case Costerfield mine plan contained in this release.

For details of the resource and reserves calculation and the base case Life of Mine Plan based on proven and probable reserves, please refer to the NI 43-101 report.

    
    About Mandalay Resources Corporation:
    -------------------------------------
    

Mandalay Resources is a Canadian-based natural resource company with producing assets in Australia 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 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 relating to anticipated drilling efforts and productivity increases at the Costerfield mine. 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, the results of additional drilling at the Costerfield mine and Mandalay's ability to obtain and effectively utilize additional drilling equipment to increase its mining rate or productivity at the Costerfield mine, Mandalay's ability to secure additional financing, 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. 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.

THE TSX VENTURE EXCHANGE HAS NOT YET REVIEWED AND DOES NOT TAKE RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THE CONTENT OF THIS NEWS RELEASE.

For further information: Bradford Mills, Chief Executive Officer; Greg DiTomaso, Investor Relations, Contact: [phone], Email: [email protected]