Mandalay Resources Corporation Announces 2010 Year-End Financial Results

TORONTO, March 31 /CNW/ - Mandalay Resources Corporation ("Mandalay" or the "Company") (TSX: MND) is pleased to announce it has filed its financial results from the fourth quarter and the year ended December 31, 2010.

Brad Mills, Chief Executive Officer of Mandalay, commented, "We are very pleased that the Company achieved its first profit in the fourth quarter of 2010. The Company is well-positioned to continue growing profits and cash flow in 2011 and 2012 as both our Costerfield gold-antimony mine and our Cerro Bayo silver-gold mine achieve full production. As previously announced we have commenced an $11.7 million exploration program for 2011 which we expect will substantially increase the Company's reserves and resources by year-end 2011."

The Company has received exemptive relief from the Canadian securities regulatory authorities to prepare its financial statements for the year ended December 31, 2010 in accordance with International Financial Reporting Standards ("IFRS") with an adoption date of January 1, 2010. All future financial statement and Management's Discussion and Analysis ("MD&A") filings will be completed in accordance with IFRS, including the annual financial statements and MD&A for the year ended December 31, 2010.

In addition, the Company has adopted the U.S. dollar as its reporting currency as management believes that this will allow investors to more readily compare the Company's financial results with those of other multi-jurisdictional mining companies, many of which also use the U.S. dollar as their reporting currency. All currency references in this press release are in U.S. dollars except as otherwise indicated.

A complete copy of the Company's audited financial statements for the fourth quarter and year ended December 31, 2010, together with the associated MD&A can be accessed under the Company's profile on www.sedar.com.

Fourth Quarter 2010 Financial Results:

In the fourth quarter of 2010, the Company generated record revenue of $8,322,097, record profit from mining operations before depletion and depreciation of $3,535,295 and its first ever net income of $1,740,990 (gain of $0.01 per share) versus revenue of $317,552, loss from mine operations before depletion and depreciation of $378,370 and a net loss of $1,227,600 (loss of $0.03 per share) in the fourth quarter of 2009. The principle reasons for the differences are a full production and sales quarter for the Costerfield gold-antimony mine in the fourth quarter of 2010 versus one month of start-up production in December of 2009. In addition, the Company realized significantly higher antimony and gold prices in the fourth quarter of 2010 versus the fourth quarter of 2009 (see table below).

The following table summarizes the Company's financial results for the three months ended December 31, 2010 and 2009:

Fourth Quarter 2010 Operational Highlights:

Costerfield gold-antimony mine, Victoria, Australia

In the fourth quarter of 2010, the Costerfield mine delivered record production.  Saleable gold production for the fourth quarter was 2,330 ounces versus 1,848 ounces in the third quarter of 2010 and 226 ounces in the fourth quarter of 2009.  Antimony production for the fourth quarter of 2010 was 356 tonnes versus 267 tonnes in the third quarter of 2010 and 23 tonnes in the fourth quarter of 2009.

Cash cost per ounce of gold equivalent produced in the fourth quarter of 2010 was a record low of $732 versus $1,048 in the third quarter of 2010 and $2,738 in the fourth quarter of 2009. The decreasing costs reflect the progression of the mine ramp-up, increasing mill throughput, increasing grade of gold and antimony in ore, increasing metal produced and sold, increasing antimony prices, and careful attention to cost control.

Cerro Bayo silver-gold mine, Patagonia, Chile

During the fourth quarter of 2010, development continued on the Dagny and Fabiola veins, ore was stockpiled, and the plant was prepared for restart. The plant restart occurred on schedule on January 10, 2011. By December 31, 2010, 547 metres of primary horizontal development and 856 metres of secondary horizontal development were achieved on those veins. 236 metres of vertical development were completed to install ventilation and escape ways.

Total ore mined and stockpiled in front of the mill as of December 31, 2010, was 12,048 tonnes containing average grades of 0.86 grams per tonne gold and 282 grams per tonne silver, for total contained 334 ounces gold and 109,337 ounces silver.

The application to SERNAGEOMIN for permission to mine the third vein, the Delia NW vein, was completed during the fourth quarter of 2010, with a positive decision received in the first quarter of 2011. Capital development on the Delia NW vein is expected to begin in March 2011.

During the fourth quarter of 2010, a two-rig drilling program focused on converting the inferred resources contained in the Yasna vein into measured and indicated resources and proven and probable reserves was executed. The results of this program are anticipated in the early second quarter of 2011.

La Quebrada copper-silver exploration project, La Serena, Chile

During the fourth quarter of 2010, Mandalay completed the environmental assessment for its first round of drilling at the La Quebrada copper-silver project and completed the permit application.  Permission was received in the first quarter of 2011.

Fourth Quarter 2010 Corporate Developments:

Equity Financing

Sprott Asset Management and related funds purchased 10 million shares of Mandalay in a private placement that closed on December 14, 2010 at a price of CAD$0.32 per share.

Debt Financing

During the fourth quarter of 2010, Mandalay arranged a CAD$10 million secured credit facility with Sprott Resource Lending Partnership. The first CAD$5 million tranche closed on December 24, 2010, and the second closed on February 2, 2011.

Repayment of Promissory Note

In December 2010, Mandalay repaid a CAD$1.5 million promissory note from Western Coal Corp. that the Company originally issued in connection with its acquisition of AGD Mining Pty Ltd ("AGD").

Full Year 2010 Financial Results:

Revenue for the full year 2010 was $20,618,328 versus $317,552 in 2009. Profit from mine operations before depletion and depreciation was $6,682,147 versus a loss from mine operations before depletion and depreciation of $378,370 in 2009. Net loss for the year was $3,416,351 versus a net loss of $3,124,372 in 2009. On a per share basis the Company lost $0.02 per share on a primary basis and $0.02 on a fully diluted basis versus a loss of $0.15 per primary share and $0.15 per fully diluted share in 2009.  In 2010, the Company transitioned from a pure exploration company with several non-producing projects under option in Chile (the La Quebrada property, on which the purchase has been completed; and the Los Santos Ladrones properties, options on which have been dropped) to an operating company with two operating mines following the purchase of the Costerfield gold-antimony mine in December of 2009 and the acquisition and restart of the Cerro Bayo sliver-gold mine in August of 2010.

The following table summarizes the Company's financial results for the twelve months ended December 31, 2010 and 2009:

At December 31, 2010, the Company had working capital of $21,317,992 plus cash and cash equivalents of $14,923,106 versus working capital of $1,120,089 and cash and cash equivalents of $5,489,000 at December 31, 2009.

Full Year 2010 Operational Highlights:

Costerfield gold-antimony mine, Victoria, Australia

For the full year 2010, the Costerfield mine produced 53,021 tonnes of ore, while also mining 69,169 tonnes of waste and placing 15,427 tonnes of backfill.  The corresponding performance in 2009 (1,676 of tonnes ore, 3,435 tonnes of waste, and 1,250 tonnes of backfill) represent only one month's performance (December).  The 3,526 metres of operating development and 931 metres of capital development during the entire 2010 year compare to the 91 metres of operating development and 74 metres of capital development during the one month of December 2009.

During the full year 2010, the concentrator processed 50,713 tonnes of ore, producing 3,495 dry metric tonnes of concentrate, 7,661 ounces of saleable gold and 1,106 tonnes of saleable antimony.  This compares with the single month of December 2009, in which 1,813 tonnes of ore were processed, producing 75 dry metric tonnes of concentrate, 226 ounces of saleable gold, and 23 tonnes of saleable antimony.

Sales for the full year 2010 were 7,317 ounces of gold and 1,141 tonnes of antimony.  For the single 2009 month of December, 222 ounces of gold and 21 tonnes of antimony were sold.

The Company is currently executing an extensive drill exploration program to test the down-dip extent of the W-lode ore shoot at Costerfield. The interim results of this work as of year-end will be included in an updated, independent NI 43-101 report of mineral resources and reserves as of December 31, 2010.  Preliminary drilling results announced to date (see press releases dated January 13, 2011 and August 24, 2010) show conclusively that the ore shoot continues at least 150 metres below the current workings.

Cerro Bayo silver-gold mine, Patagonia, Chile

The Company purchased Compania Minera Cerro Bayo from Coeur d'Alene Mines on August 10, 2010.  By December 31, 2010, the Company had completed all hiring, capital and operating development, capital purchases, equipment rehabilitation and other tasks necessary to restart commercial production, which occurred in January 2011.

Total ore mined and stockpiled in front of the mill as of December 31, 2010, was 12,048 tonnes containing average grades of 0.86 grams per tonne gold and 282 grams per tonne silver, for total contained 334 ounces of gold and 109,337 ounces of silver. Processing commenced during January 2011, including all of this material, plus newly mined ore during the month.

For the full year 2010, capital spending at Cerro Bayo was $6,653,189. This includes $5,465,390 for capital development and $1,187,799 for capital purchases.

La Quebrada copper-silver exploration project, La Serena, Chile

During 2010, $1,682,859 was spent on the La Quebrada exploration property. This included the early exercise of the Mandalay purchase option on the property, so that the Company now owns 100% interest in the property, subject to a 2% net smelter royalty to the previous  owner.  Additional activities on the property included all activities needed to prepare for Mandalay's drill program: remapping the surface, re-logging selected drill intervals, reinterpreting data, renegotiating access terms with the local community, and applying for the environmental permit to drill.  The permit was received in the first quarter of 2011.

About Mandalay Resources Corporation:

Mandalay Resources is a Canadian-based natural resource company with producing assets in Australia and producing 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. 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. 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.