Mandalay Resources Closes First Tranche of $10 Million Secured Credit
Facility

TORONTO, Dec. 24 /CNW/ - Mandalay Resources Corporation ("Mandalay" or the "Company") (TSX: MND, MND.WT) announced today that it has closed the first tranche of a $10 million senior secured credit facility with Sprott Resource Lending Partnership ("Sprott Lending") in respect of a two year debt facility totaling $10 million at an interest rate of 11% per annum.

In the second tranche, Mandalay will receive an additional $5 million advance under the credit facility upon Sprott Lending receiving perfected security interests in Mandalay's Cerro Bayo mine in Chile.

As partial consideration for the advance of the facility, Mandalay has issued 1,885,938 common shares to Sprott Lending.

The credit facility is part of the $13.2 million in debt and equity financing that the Company announced on December 3, 2010.  The first stage of that financing, a $3.2 million private placement of common shares to Sprott Asset Management L.P. for and on behalf of certain funds, was completed on December 14, 2010.

Brad Mills, CEO of Mandalay Resources commented, "We are pleased to have Sprott Asset Management L.P. as an investor in Mandalay.  The proceeds from the equity and debt financing will be used to accelerate development at the Cerro Bayo Silver-Gold Mine in Chile and for working capital which will see the Cerro Bayo project through to profitability. In 2011, we expect to produce approximately 2.3 million ounces of silver from 2011 production at Cerro Bayo and take advantage of the ongoing climate of high silver prices."

About Mandalay Resources Corporation:
Mandalay Resources is a Canadian-based natural resource company with producing 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. 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, Mandalay's ability to complete the transactions described herein on the terms outlined, 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.

For further information:

Bradford Mills
Chief Executive Officer

Greg DiTomaso
Investor Relations
Contact: 647.260.1566
Email: [email protected]  

Company website: www.mandalayresources.com