Mandalay Resources Corporation Announces Commencement of Capital Development of the Delia NW Mine and Maiden Reserve Estimate on the Yasna Vein at Cerro Bayo

TORONTO, April 5 /CNW/ - Mandalay Resources Corporation ("Mandalay" or the "Company") (TSX: MND, MND.WT) is pleased to announce that it has begun capital development of the Delia NW mine and has estimated an initial mineral reserve in the Yasna vein at its Cerro Bayo silver-gold mine in Patagonia, Chile.

Commencement of Capital Development of the Delia NW Vein

On March 30, 2011, the Company took the first blast in the spiral ramp being developed from the surface portal of the Delia NW mine to access the northwest extension of the Delia vein. This blast, carried out ahead of schedule, is the first step in bringing the Delia NW mine into production, providing a third source of ore in addition to the already producing Dagny and Fabiola mines. Delivery of development ore to the plant from Delia NW is anticipated beginning in the fourth quarter of 2011. The Company forecasts that in the fourth quarter, total production from all the mines will be approximately 22,000 tonnes of ore per month.  Production is forecast to grow further during 2012 as stoping ramps up in the Delia NW mine.

Resource Increase and Initial Reserve on the Yasna Vein

Based on an existing inferred resource in the Yasna vein, Mandalay completed an infill drill campaign on the Yasna vein in February 2011, and produced the resource estimation effective as of April 1, 2011 and summarized below:

Vein Tonnes
(t)
Au
  (g/t)  
Ag
  (g/t)  
Au
(oz)
Ag
(oz)
Yasna Resource          
    Measured      5,000 2.60 514    418     82,685
    Indicated 125,000 2.09 451 8,390 1,812,464
Meas. + Ind. 130,000 2.11 453  8,808 1,895,149
    Inferred   26,000 2.27 391 1,897    326,909
           
Yasna Reserve          
    Probable   86,000 1.43 360 4,000 995,000

This compares with the previous resource estimate (validated in the SRK Consulting NI 43-101 report dated May 14, 2010 and filed on www.sedar.com "the SRK Report") of 69,463 tonnes of inferred resource at 2.4 grams/tonne ("g/t") gold and 497 g/t silver, containing 5,360 ounces of gold and 1,110,068 ounces of silver. Details of the drilling and resource estimation are provided below.

The corresponding maiden mining reserve for the Yasna vein has also been estimated: 86,000 tonnes of probable ore containing 1.43 g/t gold (4,000 ounces) and 360 g/t silver (995,000 ounces). Previously, there were no reserves estimated for the Yasna vein.  Details of the reserve estimation are provided below.

Relative to the previous total reserves for Cerro Bayo declared in the SRK Report (692,175 tonnes containing 2.61 g/t (58,098 ounces) of gold and 300 g/t (6,684,904 ounces) of silver), the Yasna reserve addition represents an overall 12% increase in ore tonnes, a 7% increase in contained gold ounces, and a 15% increase in contained silver ounces.

The Company currently plans to mine the Yasna vein beginning in the second quarter of 2011, accessing the ore shoot quickly and at low incremental cost from the nearby Fabiola decline. First ore feed to the mill is anticipated early in the third quarter of 2011.

Brad Mills, CEO of Mandalay, commented, "We are pleased that Cerro Bayo is delivering on the potential we saw when we acquired the mine in August 2010.  Commencing underground development of the Delia NW mine is an important milestone on the way to full production at the operation. By the fourth quarter of 2011, we plan to have production from four mines feeding ore to the concentrator: Dagny, Fabiola, Delia NW, and Yasna (accessed from Fabiola).  Our aim this year is to prove up additional reserves on all four of these veins to enable that high rate of ore feed to be extended for as long as possible.  Two additional veins, the Delia SW and Marcela Sur, are scheduled for development later in the sequence, as Dagny and Fabiola are exhausted. Our new resource estimate for the Yasna vein is a small but strategically important down payment on our goal of significantly increasing resources and reserves at Cerro Bayo this year. We expect that these new reserves will be quickly and efficiently developed from the nearby Fabiola mine infrastructure and converted into incremental cash flow beginning in the third quarter of this year. We look forward to completing similar infill and step out drilling programs on the Dagny, Fabiola, Delia NW and SW, Coyita, Delila, and Marcela Sur veins in the coming months."

Updated Yasna Reserve and Resource Estimation Details:

Coeur d'Alene Mines Corporation, the previous owner of Cerro Bayo, had drilled 69 intercepts into the Yasna vein prior to Mandalay's acquisition of the mine.  From these, an inferred resource of 69,463 tonnes at 2.4 g/t gold and 497 g/t silver was estimated for Coeur by Scott, Wilson, Roscoe, Postle and validated in the SRK Report.  This inferred resource contained 5,360 ounces of gold and 1,110,068 ounces of silver. At that time, there were no reserves estimated for the Yasna vein.

Mandalay drilling on the Yasna vein began in November 2010, with the goal of upgrading and adding to the existing inferred resource, as well as converting measured and indicated resources to proven and probable reserves. Drilling, logging, assaying, resource estimation, and reserve estimation were performed under the direction of, and validated by, Ronald Luethe, a qualified person under NI 43-101.

Drilling on the Yasna vein ended in February 2011 with a total of 7,479 metres of new core drilled containing 35 new intercepts of the Yasna vein.  The core was logged and sampled by Mandalay geologists and assayed on-site at the Minera Cerro Bayo laboratory. The Cerro Bayo laboratory, which has been audited by SGS Lakefield Research Ltd., routinely sends check samples to ALS Laboratory, La Serena, Chile, following QA/QC practices established by Coeur.  The tables below summarize both the historic Coeur assays and the recent Mandalay assays used in this updated resource and reserve estimation.  Data was entered into Vulcan software and vein walls were interpreted manually.  Gold values were capped at 10 g/t and silver values were capped at 2,700 g/t before compositing across the vein width.  Ore grades for gold and silver for each 5 x 5 metre resource block were estimated by the inverse distance cubed method with no manually interpreted ore shoot boundaries.

Levels of certainty for each block estimate were defined as:

  • Measured — two or more drill intercepts within 14 metres;

  • Indicated — two or more drill intercepts within 45 metres along strike and 30 metres down dip; and

  • Inferred — two or more drill intercepts within 90 metres along strike and 60 metres down dip.

Specific gravities of 2.62 g/cc for ore and 2.54 g/cc for waste were used to calculate the tonnes of each mining block.  Resources are reported above a 3.9 g/t gold equivalent cut-off based on gold price of US$1,100/ounce, silver price of US$17/ounce, and identical metallurgical recovery of the two metals.  This cut-off grade is lower than the 4.5 g/t used for the Dagny, Fabiola, Delia NW and Marcela Sur resources in the SRK Report because the Yasna vein is adjacent to the Fabiola vein, allowing it to be accessed from the existing Fabiola mine and therefore needing to support only incremental operating costs, without capital development or infrastructure. Mineral resources are reported inclusive of mineral reserves and are reported in-situ, without dilution or mining recovery.

From this resource, a mine plan was designed based only on measured and indicated resources using the same blast hole stoping method as employed in the current Fabiola and Dagny veins.  A cut-off grade of 3.9 g/t gold equivalent and a minimum mining width of 2.4 metres were used, with planned and unplanned dilution at zero grade.

                                                   
HOLE-ID
    From
(m)
    To
(m)
    Width
(m)
    True Width
(m)
    Au
(g/t)
    Ag
(g/t)
    Easting
(m)
  Northing
(m)
  Elevation
(m)
Coeur d'Alene Intercepts prior to August, 2010
DFA-14
DFA-15
DFA-21
DFA-22
DFA-23
DFA-24
DFA-25
DFA-28
DFA-29
DFA-3
DFA-31
DFA-32
DFA-33
DFA-34
DFA-35
DFA-36
DFA-37
DFA-38
DFA-39
DFA-40
DFA-41
DFA-42
DFA-43
DFA-44
DFA-45
DFA-46
DFA-47
DFA-9
DYA-1
DYA-2
FCH210
FCH218
FCH220
FCH221
FCH238
FCH240
FCH241
FCH243
FCH244
FCH246
FCH247
FCH248
FCH250
FCH251
FCH252
FCH253
FCH254
FCH256
FCH264
FCH265
FCH266
FCH267
FCH270
FCH271
FCH273
FCH274
FCH275
FCH276
FCH277
FCH278
FCH280
FCH282
FCH284
FCH287
FCH290
FCH297
FCH300
FCH304
FCH305
    54.92
148.98
244.60
90.10
101.47
82.78
51.74
17.76
47.67
36.84
148.48
159.54
118.11
86.82
121.89
88.60
134.84
101.10
125.41
107.67
64.09
138.32
153.15
249.83
118.22
163.92
271.14
53.50
120.19
167.07
62.02
68.87
60.43
140.88
188.15
126.36
229.80
264.39
7.00
248.30
266.01
97.41
60.45
93.43
85.38
137.92
122.19
146.30
145.08
132.11
116.13
175.44
183.55
261.50
165.77
284.68
251.66
308.07
192.92
217.00
252.20
196.00
160.90
214.31
87.86
228.30
265.94
299.37
269.07
    55.70
149.20
247.06
91.20
102.36
84.50
52.29
18.50
48.19
37.04
148.61
159.80
118.64
90.85
122.60
92.54
135.70
103.17
126.64
108.64
66.43
139.41
154.80
250.79
118.95
165.29
272.09
53.70
121.18
168.92
62.20
68.99
61.37
143.31
188.61
126.78
231.44
265.36
8.00
249.73
267.26
98.37
60.66
97.56
85.51
139.20
123.28
147.33
147.03
134.82
117.21
176.52
186.38
262.60
167.39
284.99
251.91
308.27
194.34
218.05
252.73
196.77
161.69
215.75
88.00
228.47
266.19
299.70
269.57
    0.78
0.22
2.46
1.10
0.89
1.72
0.55
0.74
0.52
0.20
0.13
0.26
0.53
4.03
0.71
3.94
0.86
2.07
1.23
0.97
2.34
1.09
1.65
0.96
0.73
1.37
0.95
0.20
0.99
1.85
0.18
0.12
0.94
2.43
0.46
0.42
1.64
0.97
1.00
1.43
1.25
0.96
0.21
4.13
0.13
1.28
1.09
1.03
1.95
2.71
1.08
1.08
2.83
1.10
1.62
0.31
0.25
0.20
1.42
1.05
0.53
0.77
0.79
1.44
0.14
0.17
0.25
0.33
0.50
    0.48
0.16
2.02
0.91
0.65
1.44
0.46
0.65
0.38
0.16
0.09
0.15
0.43
2.57
0.52
2.94
0.52
1.65
0.84
0.75
1.65
0.75
1.17
0.78
0.55
0.90
0.72
0.11
0.60
1.29
0.09
0.07
0.65
1.73
0.41
0.19
1.44
0.82
0.47
1.16
0.92
2.05
0.12
2.62
0.76
0.81
0.59
0.75
1.20
1.46
0.63
0.49
1.77
0.54
0.95
0.23
0.11
0.13
0.75
0.51
0.25
0.38
0.47
0.70
0.10
0.08
0.20
0.22
0.39
    0.43
1.89
0.45
0.55
0.43
0.23
0.32
0.30
0.53
0.36
7.78
2.88
2.22
1.27
2.59
1.11
8.44
0.31
0.68
1.28
0.29
1.48
1.88
0.73
0.28
2.54
0.25
0.30
0.34
2.18
0.17
2.89
0.57
0.96
0.40
0.07
0.45
0.76
0.05
3.56
0.60
0.63
1.03
0.61
1.09
0.74
2.05
3.14
1.17
1.43
0.59
2.10
6.45
0.22
2.05
0.63
7.48
0.29
3.07
1.20
0.63
3.38
2.13
4.22
1.46
0.43
7.62
3.79
0.98
    136
246
43
251
120
66
113
55
50
44
2700
400
1058
553
1060
943
2226
89
112
1150
121
451
770
78
208
305
27
46
132
869
14
166
167
391
142
15
90
50
6
806
107
102
64
233
579
207
296
680
177
230
125
144
577
15
214
96
417
36
110
23
63
359
553
67
144
4
2700
243
535
    271274.17
271202.75
271515.73
271315.53
271315.08
271384.57
271420.06
271436.73
271271.39
271269.80
271228.75
271239.54
271283.79
271408.02
271277.79
271394.08
271277.36
271458.29
271444.25
271362.54
271482.32
271344.72
271485.33
271532.68
271501.15
271483.52
271530.15
271110.65
271371.45
271405.60
271273.31
271162.31
271356.33
271346.72
271523.87
271218.74
271510.59
271513.63
271104.35
271566.41
271559.20
271331.20
271155.81
271472.31
271417.47
271288.31
271429.73
271341.11
271466.87
271374.45
271335.78
271466.71
271383.47
271371.88
271431.45
271504.81
271414.06
271620.83
271333.39
271331.67
271470.60
271431.08
271289.72
271287.53
271196.83
271219.02
271598.35
271612.89
271602.17
  4841511.43
4841564.61
4841225.52
4841456.05
4841457.84
4841385.10
4841369.58
4841369.11
4841511.09
4841510.70
4841543.66
4841540.24
4841503.58
4841359.47
4841511.25
4841371.86
4841517.30
4841308.04
4841313.74
4841400.21
4841295.46
4841416.20
4841265.86
4841203.53
4841263.11
4841271.54
4841202.95
4841632.68
4841389.66
4841358.61
4841503.54
4841587.20
4841421.13
4841413.67
4841238.85
4841543.49
4841233.83
4841232.51
4841633.09
4841169.95
4841166.13
4841432.80
4841599.08
4841290.31
4841335.43
4841498.99
4841331.98
4841421.90
4841287.46
4841384.10
4841430.82
4841288.53
4841371.44
4841358.67
4841331.99
4841229.33
4841318.04
4841106.94
4841417.16
4841414.32
4841272.23
4841323.83
4841498.54
4841490.84
4841559.84
4841542.54
4841167.80
4841126.75
4841153.35
  285.02
237.15
123.87
235.81
215.92
236.30
250.58
269.93
296.41
306.21
233.44
213.54
220.56
211.14
212.99
219.31
190.47
217.20
187.64
217.00
230.98
186.33
166.47
114.40
200.58
148.83
81.28
310.70
212.65
183.97
274.40
296.00
274.57
215.92
177.23
229.66
151.80
100.91
348.40
113.10
79.91
222.34
303.20
205.68
218.77
189.68
179.74
178.27
160.86
171.48
192.36
123.55
132.69
49.72
147.82
66.79
59.05
58.68
123.66
96.51
63.58
114.89
164.24
104.74
290.56
136.65
145.52
93.10
137.32

                                                   
HOLE-ID
    From
(m)
    To
(m)
    Width
(m)
    True Width
(m)
    Au
(g/t)
    Ag
(g/t)
    Easting
(m)
  Northing
(m)
  Elevation
(m)
Mandalay Intercepts after August, 2010
FCH489
FCH490
FCH491
FCH492
FCH493
FCH495
FCH496
FCH497
FCH499
FCH500
FCH501
FCH502
FCH503
FCH504
FCH505
FCH506
FCH507
FCH508
FCH509
FCH510
FCH511
FCH512
FCH513
FCH514
FCH515
FCH516
FCH517
FCH518
FCH519
FCH520
FCH521
FCH522
FCH524
FCH525
FCH526
    119.15
148.92
186.97
143.70
109.59
180.87
150.10
115.41
118.80
140.72
181.62
159.28
222.04
144.95
155.06
141.84
227.23
182.52
154.92
214.01
150.30
215.19
179.50
183.40
154.35
157.44
189.75
93.05
234.20
227.10
80.18
189.65
98.12
116.42
72.57
    119.65
150.22
187.86
144.08
110.56
181.31
150.77
116.80
119.94
142.00
182.37
159.76
222.29
145.50
155.80
142.41
228.65
183.30
155.48
215.02
150.90
221.00
180.64
183.82
158.31
159.14
190.42
96.45
235.50
228.13
80.50
192.44
100.59
119.30
73.27
    0.50
1.30
0.89
0.38
0.97
0.44
0.67
1.39
1.14
1.28
0.75
0.48
0.25
0.55
0.74
0.57
1.42
0.78
0.56
1.01
0.60
5.81
1.14
0.42
3.96
1.70
0.67
3.40
1.30
1.03
0.32
2.79
2.47
2.88
0.70
    0.39
0.79
0.40
0.28
0.81
0.25
0.57
1.04
0.97
1.02
0.37
0.34
0.10
0.46
0.37
0.45
0.69
0.54
0.30
0.37
0.39
2.05
0.75
0.23
1.70
1.36
0.40
3.06
0.71
0.40
0.28
1.79
1.83
1.80
0.62
    0.73
5.36
6.93
1.30
0.68
0.20
3.26
0.66
0.89
1.01
5.15
1.36
0.76
0.50
0.33
0.13
1.45
0.07
1.39
0.30
2.03
0.08
1.43
0.05
3.03
1.77
1.49
0.45
0.57
0.85
0.10
3.11
0.41
3.08
0.10
    373
1189
117
45
234
7
482
274
251
186
121
78
5
74
41
16
72
19
107
32
164
13
197
3
434
661
52
355
68
162
22
678
214
1125
79
    271298.42
271307.18
271296.84
271318.93
271273.27
271227.27
271195.13
271267.57
271290.63
271242.45
271275.76
271202.72
271245.66
271170.96
271271.09
271155.14
271315.20
271134.92
271358.70
271366.78
271184.60
271390.08
271321.62
271185.45
271407.84
271478.92
271210.30
271359.21
271454.49
271422.82
271337.08
271450.68
271436.90
271391.01
271459.15
  4841480.84
4841468.16
4841477.75
4841457.83
4841517.71
4841543.75
4841550.84
4841530.49
4841489.19
4841528.75
4841505.86
4841565.96
4841521.56
4841579.26
4841522.99
4841607.28
4841443.58
4841600.60
4841398.53
4841367.97
4841591.37
4841357.45
4841441.26
4841585.75
4841368.57
4841279.35
4841561.49
4841405.55
4841290.63
4841312.38
4841434.04
4841309.97
4841337.40
4841370.32
4841328.71
  214.79
169.14
123.70
189.75
247.77
175.09
260.16
238.16
228.65
256.37
137.67
222.89
101.62
267.21
166.36
279.57
88.31
232.95
153.03
84.77
231.60
94.82
146.83
188.49
158.87
186.18
178.09
242.05
88.06
74.27
248.38
144.70
220.56
191.48
246.75

Qualified Person:

Ronald Luethe, General Manager of Mandalay Chile Ltda. and an Idaho registered professional geologist and a member of the American Institute of Professional Geologists is a Qualified Person as defined by NI 43-101.  He supervised all activities related to the Yasna exploration program culminating in the resource and reserve estimates and has reviewed and approved the technical and scientific information pertaining to the Cerro Bayo mine contained in this release.

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, including statements regarding production forecasts for the Company's Cerro Bayo mine, its intention to start mining the Delia NW and Yasna veins of the Cerro Bayo mine and the planned development of the Delia SW and Marcela Sur veins. 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 32, 2011, 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.

 

SOURCE Mandalay Resources Corporation

For further information:

Bradford Mills
Chief Executive Officer

Greg DiTomaso
Investor Relations

Contact:
647.260.1566

Profil de l'entreprise

Mandalay Resources Corporation

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