Mandalay Resources Corporation Extends W- and N-Lode Ore Shoots and Identifies New Alison Shoot in Drilling at its Costerfield, Australia, Gold-Antimony Mine

TORONTO, Aug. 24, 2011 /CNW/ - Mandalay Resources Corporation ("Mandalay" or the "Company") (TSX: MND, MND.WT) is pleased to provide an update on exploration drilling being conducted at its Costerfield, Australia, gold-antimony mine (click here for property and drill collar map). There are two key drilling projects at the property-the "Augusta Deeps" project, where the Company's focus is infilling and extending the W-Lode ore shoot in the existing Augusta mine; and the "Brownfields" project, where the Company is drill-testing targets for new shoots along strike of the E- and W-Lodes north and south of the Augusta mine. Key results of the two projects include:

• The Augusta Deeps infill and extensional drilling project , W-Lode (click here for W-Lode long section and see Table 1 below for W-Lode assay results):  Drilling from January 1, 2011, to the end of July 2011, has generated 15 new intercepts of W-lode, of which ten are above the mill feed cutoff grade over the minimum 1.8 m mining width. These intercepts confirm and extend the inferred resource beneath current reserves estimated from 2010 drilling and described in the Company's independent NI-43-101 technical report entitled "Mandalay Resources Corporation: Costerfield (Augusta) Gold-Antimony Mine: Mineral Resource and Mineral Reserve Estimate" filed on June 2, 2011 (the "Costerfield Technical Report"), a copy of which is available on www.sedar.com. The ore shoot remains open at depth and open to the north and south at depth.
• The Brownfields project (click here for drill collar map, and see Tables 3, 4 and 5 for assay results):  Drilling from January 1, 2011, to the end of July, 2011, on the Brownfields targets has confirmed and expanded drill targets beneath inferred resources previously reported in the Costerfield Technical Report on the N-Lode East and N-Lode West veins (click here for N-Lode East and here for N-Lode West long sections). In addition, a potential new mineralized shoot beneath the historic Alison mine workings has been identified with a first hole and confirmed with a second hole (click here for Alison long section).

Brad Mills, CEO of Mandalay, commented, "We are pleased to announce significant new high grade intercepts in two historic veins at Costerfield, the N-Lode and the Alison Lode. While significant work will be required to extend these intercepts into resources and potentially convert such resources into reserves, the high grade and persistence of mineralization encountered in both of these veins opens large target volumes to follow up with more detailed drilling. To date we have only tested about 50% of our planned targets in the Brownfields project and this early success rate is highly encouraging. In addition, we continue to extend the W-Lode ore shoot in the Augusta mine, which we believe will ensure continuity of production as we develop these new discoveries."

Drilling and Assaying

Drilling on both projects at Costerfield is currently being done by Starwest Drilling with three surface Diamond drill rigs using HQ and NQ2 coring systems. Core is logged, split, and sampled on site by Mandalay personnel. Samples are sent to Onsite Laboratory Services Labs, where they are prepared and assayed (atomic adsorption for antimony and fire assay for gold). Mandalay maintains a Quality Control program which includes incorporation of blanks and standards with samples for assays as well as duplicate assays of selected samples. The detailed process of drilling through sampling, assaying, and Quality Control is described in the Costerfield Technical Report.  The gold equivalent grade ("AuEq g/t") of each assayed interval was calculated according to the formula:

using a gold price of US$1,275/oz, an antimony price of US$11,625/t, and total metallurgical recoveries of 71% for gold and 59.4% for antimony.

Augusta Deeps Project

W-Lode
Total drilling of 5,347 metres (m) in 15 holes from January 1, 2011, to the end of July 2011, has generated 15 new intercepts of W-Lode, 10 of which exceed the incremental cutoff grade for mill feed of 2.9 g/t AuEq over 1.8 m, for a success rate of 67% (see Table 1 below and click here for the W-Lode long section). These intercepts confirm and extend the inferred resource beneath current reserves estimated from 2010 drilling in the Costerfield Technical Report. This 2011 success rate is similar to the 68% success rate found in the 2010 drilling that resulted in a moderate reserves and resources increase net of 2010 production, and gives the Company confidence that resources and reserves will likely be increased again in the next estimation update. The ore shoot remains open at depth. The new drill intercepts also suggest that the shoot is open to the north and south at depth.

E-Lode
So far in 2011, two holes primarily targeted on W-Lode or N-Lode were extended deep enough to also test E-Lode (see Table 2 below).  Both intercepted the vein, but neither of the intercepts assayed above the incremental mill feed cutoff grade (click here for E-Lode section.) This result was not unexpected: E-Lode has substantial remaining reserves and resources, but the known ore shoot is well-bounded.

Brownfields Project

N-Lode
As described in the Costerfield Technical Report, previous work had identified a small resource (approximately 14,000 t) on the east and west veins of N-Lode a short distance northwest of the Augusta mine. Based on this, the Company has driven capital development access from the Augusta decline out to the N-Lode (click here for surface projection map of the N-Lode access) with the goal of providing approximately 500 tonnes per month ("tpm") of incremental feed for the plant. Initial sampling in the development drift along N-Lode has confirmed the resource.  The Company has also drilled three new holes, MB-001, MB-002, and MB-008 for a total of 621 m, all of which intercepted the N-Lode (see Table 3 below and click here and here for the N-Lode long sections). Compilation of the new and historic assay results show that, rather than the small volume of shallow inferred resource identified in the Costerfield Technical Report, the N-Lode ore shoots (in both the east and west veins) are open at depth and are possibly 200-300 m long or more.  These two N-Lode shoots are high quality targets for future infill drilling, and the Company is considering the optimum follow-up based on the overall results of the Brownfields project.

Alison Lode
One drill hole, MB007 in the Brownfields project, was designed to test the potential for ore beneath the historic Alison mine workings approximately 500 m north of the N-Lode access in the Augusta mine. This hole intersected the main Alison Lode at the relative level (RL) 1030 m with a true width of 0.70 m containing 27.6% antimony and 3.5 g/t gold (see Table 4). Based on this initial intercept, the Company initiated a four-hole follow-up drill program which is still in progress. The first hole of that program, AD-002, also intersected the Alison Lode beneath the historical workings, this time with an intersect of 1.0 m true width containing 27.0% antimony and 7.4 g/t gold. This AD-002 intercept is some 50 m below and to the south of the MB-007 intercept, suggesting the potential for a mineralized shoot of significant size. (click here for the Alison Lode long section). The Company is encouraged by these first two intercepts and will complete the Alison follow-up drilling in the third quarter.

Other Brownfields
In addition to drilling the Alison and N-Lode targets, the Brownfields exploration program also completed two assessment holes on the exploration licenses for a total of 315 m (further than 1 km from the mine) and a hole to test geochemical anomalies south and east of the Augusta portal for 199 m (see Table 5 below and click here for the near-mine collar map). No intercepts with assays greater than the incremental mill cutoff grade over 1.8 m occurred in these holes.

Qualified Person:

Neil Schunke, a Manager at Mandalay's Costerfield mine, accredited Chartered Professional (Mining) and a Qualified Person defined by NI 43-101, 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 Costerfield mine on the Company's operational plans and expectations. 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, 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. 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.

Table 1-2011 Drill Intercepts of W-Lode

Table 2- 2011 Drill Intercepts of Augusta E-Lode

Table 3-2011 Drill Intercepts of N-Lode

*West Vein
**East Vein

Table 4- 2011 Drill Intercepts of Alison Lode

*West Vein
**East Vein

Table 5- 2011 Other Brownfields Drill Holes