Mandalay Resources Corporation Provides Exploration Update And Announces Early Success of the Brown’s Prospect Drilling Program at Costerfield

TORONTO, June 22, 2020 - Mandalay Resources Corp. ("Mandalay" or the "Company") (TSX: MND, OTCQB: MNDJF) is pleased to report on the initial encouraging results of its regional testing programs and high-grade resource extensions in both the Youle and Aurora ore bodies at its Costerfield operation in Victoria, Australia, and its Björkdal operation in Skellefteå, Sweden, respectively.

Exploration Highlights

Costerfield

• Early success in regional drilling program with significant intercepts in first drill hole into Brown’s prospect:
  • 14.5 g/t gold, over a true width of 1.27 m and 23.5 g/t gold over a true width of 0.12 m in BWN001 (first hole in the testing program)
• The high-grade Youle ore body extends to the north with substantial grades intercepted:
  • 21.7 g/t gold and 1.7% antimony over a true width of 1.23 m in BC099; and
  • 44.3 g/t gold and 26.3% antimony over a true width of 1.07 m in BC100
• Commencement of second Costerfield deeps hole with results expected in August.

Björkdal

• Drilling results show high-grade extension at depth in Aurora with additional extension potential to the east:
  • 9.7 g/t gold over a true width of 4.31 m in MU20-011; and
  • 2.5 g/t gold over a true width of 7.21 m in MU20-018
• Northern drilling has intercepted three zones exhibiting high-grade intercepts:
  • 26.9 g/t gold over a true width of 0.61 m in MU20-001; and
  • 2.5 g/t gold over a true width of 2.09 m in MU20-002

Dominic Duffy, President and Chief Executive Officer of Mandalay, commented, “We are pleased to report continued exploration success at both of our sites. The most recent drilling results at Costerfield and Björkdal confirm the significant upside potential value of our operations. Despite the ongoing COVID-19 pandemic, we have been able to increase our drilling while protecting our staff and contractors with strict risk mitigation protocols.”

Mr. Duffy added, “At Costerfield, we are excited by the early success in our regional testing programs which have targeted parallel lines of historically mined gold reefs. The first hole drilled into the Brown’s prospect, which is 2.3 km east from our high-grade Youle mine, returned a highly significant intersection of high-grade gold, along with encouraging intercepts on parallel veins. We also encountered encouraging early intercepts within the True Blue line. This intercept strengthens our vision of a long term, high performing asset in this rich central Victorian field. These drilling programs are still in their infancy and Mandalay is committed to continuing and accelerating drilling where needed in order to understand their full potential.”

Mr. Duffy continued, “As we continue to extract excellent grades from the Youle ore body we have also had success in our near-mine drilling program extending strike to the north with characteristically high-grade mineralization intercepted along structure. We have also enjoyed the encouraging intercepts returned from our Aurora extension drilling program at Björkdal. Grades we are seeing at depth are comparable to the highest we have seen at Björkdal with strike extension drilling also showing high-grade results to the east.”

Mr. Duffy continued, “Whilst the Aurora deposit grows at Björkdal, we continue to drill to the north with aims to secure additional, parallel and high-grade veining. This program has continued to deliver towards this goal with three zones of veining intercepted at significant grades. The realization of stacked Aurora-like systems is of great importance to the mining operations at Björkdal and could allow a step change in high-grade ore extraction rates in the future.”

Mr. Duffy concluded, “Along with this exploration update, we have posted on our website a video prepared by Mr. Chris Davis, Vice President of Operational Geology and Exploration, explaining the updates for both sites. I invite you all to click here to view.”

Mandalay Resources Exploration Update June 2020: https://www.globenewswire.com/NewsRoom/AttachmentNg/528007cd-8893-40af-a148-fd3ba7ba7eaa

Costerfield Drilling Programs

Since our last update in January 2020, Mandalay has increased drilling rates on the Youle extension program and started the already successful regional resting programs. The anticipated second deep drill hole underneath the central Costerfield system has also commenced.

Youle Optimisation and Extension Drilling Results

Mandalay’s Youle development has continued with exceptional gold and antimony grades being realised. 12 active headings have advanced along the veining, with strike extents between 240 – 290 m achieved in line with geological interpretation and expected grades. Additionally, 63 optimisation and extension diamond drill holes, totalling 7,667 m of oriented diamond drill core, have increased confidence in Mandalay’s mining schedule and strike extension for the area. Further testing and bounding drilling is planned as optimised underground drill sites continue to become available with active underground development.

Recent production optimisation drilling has been focused on delineating the extents of the Youle system whilst navigating the locally complex system. The program has added significant value by adding detail to a comprehensive model on which sound scheduling and viability decisions are made. Major gold and antimony grades have been intercepted in these holes, including 61.7 g/t gold (“Au”) and 15.0% antimony (“Sb”) over a true width of 1.77 m in hole KD624 and 139 g/t Au and 51.8% Sb over a true width of 0.47 m in hole KD619 (Figure 1). Further highlighted results from the drilling program can be found in Table 1.

Figure 1. Longitudinal section of Youle illustrating the location of recent Youle extension and optimization intercepts in close proximity to current workings.
ttps://www.globenewswire.com/NewsRoom/AttachmentNg/e0fc1801-998a-4f9e-89dc-ffee87ee2f5d

Table 1. Production Optimization Drilling Highlights

Notes
1. The AuEq (gold equivalent) grade is calculated using the following formula:

Figures used: Au $/oz = 1478, Sb $/t = 5931 Au Recovery = 89.3% and Sb Recovery = 95.3%.
2. Where the true width of the composite is greater than 1.8m the diluted AuEq g/t is not diluted.
3. Intercepts listed in the above table are highlights. The full table can be found in Appendix A.

With additional capital development opening up underground drill sites, exploration drilling at Youle has continued to build on the mineralized extents of the ore-body. Youle exploration highlights identified significant mineralization to the north in BC099 (21.7 g/t Au and 1.7% Sb over a true width of 1.23 m including 0.1 m true width at 263 g/t Au and 15% Sb), as well as BC100 (44.3 g/t Au and 26.6% Sb over a true width of 1.07 m). Further significant southern zones were defined down-dip in BC083, which intercepted 49.8 g/t Au and 27.8% Sb at a true width of 0.37 m (Table 2). These results have extended the mine plan in the lower southern portion of the mine and to the north by upwards of 70 m.

Figure 2. Longitudinal Section and Plan Section of Youle illustrating the location of recent exploration intercepts with detail against the Youle Extension intercepts.
https://www.globenewswire.com/NewsRoom/AttachmentNg/caeed020-1a34-4b6e-9128-083bb1a2a11b

Table 2. Youle Extension Highlights

Note
1. The AuEq (gold equivalent) grade is calculated using the following formula:

Figures used: Au $/oz = 1478, Sb $/t = 5931 Au Recovery = 89.3% and Sb Recovery = 95.3%.
2. Intercepts listed in the above table are highlights. The full table can be found in Appendix A.

Costerfield Regional Testing

A series of short diamond testing programs have been designed and executed with the intent of testing potentials around Costerfield that will add significant growth to the life of the operation.

Early success at the Brown’s prospect includes encouraging results in True Blue and Robinson’s Prospects.

Figure 3. Map of the regional testing programs
https://www.globenewswire.com/NewsRoom/AttachmentNg/d9ac7212-7da2-429c-ac37-d7a3b884001a

Brown’s Prospect

Following a review of historic literature and comprehensive surface mapping of the area, Mandalay began a diamond drilling program targeting both the Brown’s and Robinson’s prospects in May 2020 (Figure 3). The Brown’s drilling program is still underway with only two out of five holes completed (total of 623 m has been drilled of the 1,200 m program). The first drill hole intercepted 14.51 g/t Au, over 1.27 m (true width) in diamond drill hole BWN001. Both BWN001 & BWN002 (Figures 4 & 5) were drilled below the historic Felix Brown mine.

Assays for two (BWN001 & BWN002) drill holes have been returned. Below are the significant assays along with their intervals. The main Brown’s reef intercept in BWN001 consists of a multi-generation breccia, containing free gold, and a small amount of pyrite and trace sphalerite. Two main lines of mineralization have been interpreted at Brown’s, which are hosted by a large north-south orientated anticline, which is broadly continuous for several hundred meters, situated east of the well-known Costerfield anticline.

Figure 4: Plan Section illustrating drill hole trace for BWN001 & BWN002 in relation to historic Felix Brown mine and mapped surface reefs in the Brown’s Program.
https://www.globenewswire.com/NewsRoom/AttachmentNg/ed986c23-675d-4ec0-91e6-fbb1456c2cd7

Table 3. Significant intercepts of the Browns Testing Drilling Program

Note
1. The AuEq (gold equivalent) grade is calculated using the following formula:

Figures used: Au $/oz = 1478, Sb $/t = 5931 Au Recovery = 89.3% and Sb Recovery = 95.3%.
2. Intercepts listed in the above table are highlights. The full table can be found in Appendix B.

The intercepts gained in BWN001 & BWN002, provide the first step in proving the down-dip continuity of the extensive surface mineralization and the reef worked in the Felix Brown mine. Similar quartz-pyrite-gold breccias similarly occur within the Cuffley and Brunswick veins in the Augusta mine which may have positive implications for the nature of the mineralized vein structures at depth.

Figure 5: Cross Section illustrating interpretation from the first 2 holes drilled so far in the Brown’s Program.
https://www.globenewswire.com/NewsRoom/AttachmentNg/266aeb4b-57f5-420f-ba26-eaebd1480925

Robinson’s Prospect

To the south of the Brown Prospect, three holes totalling 636 m have been drilled out of a five-hole, (900 m) program into the Robinson prospect (Figures 6 & 7). Assays for the most prospective samples have been returned with the most significant intercept recovered on the historically named Cochrane’s reef (RB002, 2.7 g/t Au and 0.4% Sb over a true width of 1.42 m).

Diamond drilling thus far, has confirmed that the geology of Robinson’s and Cochrane’s reefs is very similar to Brown’s prospect. The reefs are situated in the hinge zone of a large anticline, folding silty sandstone-dominated Wapentake Formation turbidites. In drill core, the mineralized structures are found to be quartz-cemented breccias with dispersed pyrite and silica flooding of the included wallrock clasts. In RB001, the intersection of Robinson’s reef was not found to be significantly mineralized and in light of subsequent intercepts of the nearby Cochranes reef appears to be significantly affected by late faulting, causing a blank in mineralization. Where the mineralized structures have been intercepted in the weathered zone (eg, Cochrane’s Reef in RB002), the vein carries a visibly yellowish hue characteristic of decayed sulfides and synonymous with gold mineralization within the district.

Figure 6: Plan Section illustrating drill hole trace for RB001, RB002 and RB003 in relation to historic Robinson’s shaft and Robinsons and Cochranes’s surface reefs.
https://www.globenewswire.com/NewsRoom/AttachmentNg/69accc9e-61dc-4d70-a410-7fbc5dfd413c

Table 4. Significant intercepts of the Robinson Testing Drilling Program.

Note
1. The AuEq (gold equivalent) grade is calculated using the following formula:

Figures used: Au $/oz = 1478, Sb $/t = 5931 Au Recovery = 89.3% and Sb Recovery = 95.3%.
2. Intercepts listed in the above table are highlights. The full table can be found in Appendix B.

Figure 7. Cross Section illustrating interpretation from the first 2 holes drilled so far in the Robinson’s Program.
https://www.globenewswire.com/NewsRoom/AttachmentNg/25d4ee84-37d9-4895-a54b-bbc52cb61d31

The confirmation that Brown’s and Robinson’s prospects share a common geological setting, and the interpretation of both prospects lying on the same large-scale structure along strike opens up the possibility of additional undiscovered mineralization under the wide alluvial cover of Sandy Creek which runs between the two areas.

True Blue Testing

The first phase of Costerfield’s True Blue Regional testing commenced mid-March, with the first two (623 m) of five holes completed. Lying 2.2 km west of the Youle and Brunswick mine workings (Figure 3) the True Blue Prospect is targeting several lines of the historic True Blue line of workings.

Mandalay drilled a single hole (TB01) beneath the northern end of the old mine in 2010 and intercepted low-tenor quartz-stibnite veining in heavily faulted ground (Figure 8). Auger-sampled bedrock geochemistry in the area undertaken in 2014, also revealed a large antimony-gold anomaly extending under alluvial cover to the south of the old workings.

Following a review of historic literature, previous diamond and auger drilling programs and intensive surface mapping; two major fault systems have been identified – the Malbec and Merlot faults. The first phase of drilling is testing the down dip extension of the True Blue shaft and the previously identified geochemical anomaly. The first drill hole, TB002, successfully tested the down dip extension of the Malbec fault, below the True blue mine and returned 5.8 g/t Au, and 14.2% Sb over 0.13 m (true width). TB003 tested the down dip continuation of the Merlot fault, also successfully identified mineralization of 2.1 g/t Au over a true width of 0.3 m and 1.5 g/t Au over 1.5 m (true width) in the Merlot splay fault (Figures 8 & 9).

Figure 8: Plan Section illustrating drill hole trace for TB002 & TB003 in relation to historic Merlot and Malbec faults.
https://www.globenewswire.com/NewsRoom/AttachmentNg/423d39c3-6598-40ce-a9e3-635bddca49c1

Table 5. Significant intercepts of the True Blue Testing Drilling Program

Note
1. The AuEq (gold equivalent) grade is calculated using the following formula:

Figures used: Au $/oz = 1478, Sb $/t = 5931 Au Recovery = 89.3% and Sb Recovery = 95.3%

2. Intercepts listed in the above table are highlights. The full table can be found in Appendix B.

Figure 9. Cross Section illustrating interpretation so far in the True Blue Program.
https://www.globenewswire.com/NewsRoom/AttachmentNg/979b5532-1d9a-4a0d-9ea3-d9125571d9b7

Costerfield Deeps Program

In late March 2020, the second hole of the Costerfield Deeps Program; CD002 commenced drilling. The aim of this hole is to investigate a highly prospective block located at depth below the Augusta-Cuffley portion of Costerfield’s mine. This mineralized zone was first identified in the 2015 – 2016 sub-King Cobra Fault drilling campaign, during which high grade nuggety gold-bearing veins were intercepted in the tail portions of the then deepest holes in the district. CD002 was advanced to 1,043 m by early June, and is not yet entered the anticipated target zone. It is expected that this diamond drill hole and the wedge daughter hole will be completed in August 2020.

Björkdal Drilling Programs

Since our last update in January 2020, Mandalay has continued to focus on the lateral and vertical extensions of the Aurora zone, as well as the further investigation into the progression of the mineralized package to the North of current operations. Furthermore, an additional extensional program was completed in January 2020, targeted at the down dip extension of skarn mineralization observed in the open pit.

West Pit Skarn Extension

During the last quarter of 2019 and the first quarter of 2020, Mandalay completed a surface drilling campaign, totalling 10 diamond drill holes for 1,544 m. The aim of this program was to investigate the down-dip continuation of mineralized skarnification observed in the open-pit. The drilling successfully demonstrated that the skarnification continues down-dip from the pit and above the current underground infrastructure. The resultant grade within the skarnification was relatively low, however, high-grade veining (43 g/t Au over 1.02 m) was intercepted below the marble horizon. Further follow up work will be required in this area.

Table 6. Significant intercepts of the West Pit Skarn Extension Program

Note: intercepts listed in the above table are highlights. The full table can be found in Appendix C.

Figure 12. Cross section of Björkdal Mine Area Showing the Location of the Northern Extension Intercepts.
https://www.globenewswire.com/NewsRoom/AttachmentNg/41c3320a-3a74-4d7b-8f69-a9d2b83e1de1

Figure 13. Cross section of Björkdal Mine Area Showing the Location of the West pit Skarn Extension intercepts.
https://www.globenewswire.com/NewsRoom/AttachmentNg/3ec8a109-a6e5-4c03-995d-312ff2e392c5

Aurora Extension and Delineation

Since Mandalay’s last exploration update, our understanding of the Aurora system has been augmented by 13 extensional drill holes (3,877 m of diamond core) and 24 Development Optimisation Drill (DOD) holes (further 4,230 m of diamond core). Underground drilling to the east and at depth has excitingly intercepted high grades including 9.7g/t Au over 4.3 m in MU20-011 and 14.5 g/t Au over 1.07 m in MU20-009A. These holes have confirmed the existence of a structurally controlled, high-grade zone plunging towards the northeast. The up-dip extension of the zone revealed mixed results with extension to the veining intercepted at shallower depths with lower grades. An exception is ME20-005, which returned grades along Aurora at 1.55 g/t Au gold over 4.3 m to the upper east. Extension drilling towards the east is currently being planned in addition to the four remaining holes within the extension program.

Table 7. Significant intercepts of the Aurora Extension Drilling Program

Note: intercepts listed in the above table are highlights. The full table can be found in Appendix D.

Figure 14. Björkdal Mine Scale Overview Map Showing the Location of the Aurora Zone and the Northern target test drilling in relation to mine development. Below Cross section are denoted with A-A’ (Aurora Longitudinal Section) and B-B’ (Northern Extension Cross Section).
https://www.globenewswire.com/NewsRoom/AttachmentNg/2a550d63-3c13-4ba3-b106-2ee06ec2b2bd

Figure 15. Longitudinal Section of the Aurora Zone, Looking North, Illustrating Location of Recent Intercepts.
https://www.globenewswire.com/NewsRoom/AttachmentNg/7f030662-b320-4178-b894-6944b5cc3af0

Northern Extension

The Björkdal gold deposit is a lode-style, sheeted vein deposit hosted within the upper portions of the Skellefte Group metavolcanics/volcaniclastics. The veining is locally structurally complex, with many cross-veining features observed and thin mineralized quartz veinlets in the wall rocks proximal to the main quartz veins. The main portion of gold mineralization historically lays below and within the Marble horizon. The Aurora system and surrounding veins uncharacteristically exists above the marble extending up dip for hundreds of meters and, as previously stated, is open to the east and down plunge.

The northern extension drilling is continuing to intercept high grade within Aurora style mineralization along multiple horizons, again sitting above the marble, to the north. Underground drilling in this area has been carried out intermittently since 2016 however, with the establishment of Aurora, this northern extension drilling has become a consistent and highly encouraging program.

A total of three diamond drill holes have been drilled into the area during 2020 to date, totalling 1,768 m. Three additional 600 m holes are planned to be drilled to complete this program. To date the drill spacing in the region is >70 m, however, a number of auriferous veins can now be traced over an approximate 200 m strike length. Although the program is still relatively in its infancy 3 zones of mineralization are becoming apparent with grades, such as 26.9 g/t Au over 0.61 m in MU20-001.

Table 8. Significant intercepts of the Northern Extension Drilling Program.

Note: intercepts listed in the above table are highlights. The full table can be found in Appendix E.

Figure 16. Cross section of Björkdal Mine Area Showing the Location of the Northern Extension Intercepts.
https://www.globenewswire.com/NewsRoom/AttachmentNg/4ca7aead-4604-4baf-88d5-d51786c7bc8d

Drilling and Assaying

At Costerfield, diamond drill core was logged and sampled by Costerfield geologists. All samples were sent to OnSite Laboratory Services 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. For further details please refer to the March 30, 2020 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.

At Björkdal, all diamond drill core was logged and sampled by Björkdal geologists. Exploration drill hole samples (prefix MU) were sent to CRS Minlab Oy (CRS) in Kempele, Finland for sample preparation and assaying. Development Optimization drill hole samples (prefix DOD) were at the onsite lab ran by ALS for sample preparation and assaying. For further details please refer to the March 30, 2020 Technical Report entitled “Technical Report on the Björkdal Gold Mine, Sweden”, available on SEDAR (www.sedar.com), which contains a complete description of drilling, sampling, and assaying procedures.

Assaying in both the CRS and ALS laboratories was conducted utilizing the Pal1000 (CRS) cyanide leaching processes. Mandalay’s rigorous QA/QC program included the use of standard reference samples, blanks, duplicates, repeats, and internal laboratory quality assurance procedures.

Qualified Person:

Chris Davis, Vice President of Operational Geology and Exploration at Mandalay Resources, is a Charted Professional of the Australian Institute of Mining and Metallurgy (MAusIMM CP(Geo)), and a Qualified Person as defined by NI 43-101. He has reviewed and approved the technical and scientific information provided in this release.

For Further Information

Dominic Duffy
President and Chief Executive Officer

Edison Nguyen
Manager, Analytics and Investor Relations

Contact:
647.260.1566

About Mandalay Resources Corporation

Mandalay Resources is a Canadian-based natural resource company with producing assets in Australia and Sweden, and care and maintenance and development projects in Chile. The Company is focused on growing production at its gold and antimony operation in Australia, and gold production from its operation in Sweden to generate near term cash flow.

Forward-Looking Statements:

This news release contains "forward-looking statements" within the meaning of applicable securities laws, including statements regarding the exploration and development potential of the Youle deposit (Costerfield) and the Aurora Zone (Björkdal). 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 30, 2020, 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 A. Costerfield - Youle Extension and Production Optimisation Drilling Result

Notes
1. The AuEq (gold equivalent) grade is calculated using the following formula:

Figures used: Au $/oz = 1478, Sb $/t = 5931 Au Recovery = 89.3% and Sb Recovery = 95.3%

2. Where the true width of the composite is greater than 1.8m the diluted AuEq g/t is not diluted.

Appendix B. Costerfield - Regional Drilling Results

Notes
1. The AuEq (gold equivalent) grade is calculated using the following formula:

Figures used: Au $/oz = 1478, Sb $/t = 5931 Au Recovery = 89.3% and Sb Recovery = 95.3%

2. Where the true width of the composite is greater than 1.8m the diluted AuEq g/t is not diluted.

Appendix C. Björkdal – West Pit Skarn Intercepts

Appendix D. Björkdal – Aurora Intercepts

Appendix E. Björkdal – Northern Extension Intercepts

Notes

* True width not attainable as intercept was not associated with a measurable vein.