Mandalay Resources Corporation Announces Initial Drilling Results at its
Costerfield Gold-Antimony Mine

TORONTO, Aug. 24 /CNW/ - Mandalay Resources Corporation ("Mandalay" or the "Company") (TSX: MND) is pleased to report initial drilling results that confirm its hypothesis of a significant, high-grade extension of the Augusta W-Lode ore shoot below the current workings at its Costerfield Gold-Antimony mine in Victoria, Australia. These results are part of Mandalay's "Augusta Deeps" exploration program aimed at extending the mine life.

Intercepts in two recently completed holes (MH198 and MH199) confirm the down-dip extension of the W-lode with improving grade and thickness. These holes are the first two of a planned program of 15 intercepts targeted at demonstrating a significant, continuous, downward extension of the W-lode. Intercepts drilled by the former mine owners before December 1, 2009, and released here for the first time, had hinted at the possibility of the W-lode being higher grade at depth.

Mark Sander, COO of Mandalay, commenting on the significance of MH199 said: "This is the first time that drilling at Costerfield has generated multiple, high-grade gold intercepts with free gold over multiple meters. More work is needed to determine how extensive these high grades are, yet we are very encouraged that both of our first two holes in the Augusta Deeps program have returned such good results. Given the location of these intercepts immediately beneath existing mine levels, we expect that, should we be successful in extending and proving up a resource with closely spaced drilling, we will have an immediate impact on increasing minable reserves and mine life. If similar high grade intercepts continue to be encountered as we go forward with the program, we look forward to the possibility of significantly growing the rate of gold production and improving operating margins at the mine."

Details of the two new drill intercepts and the previously drilled holes, provided for context, are presented in the table below:

Mandalay Augusta Deeps Drill Results-W-Lode Intercepts

    
    -------------------------------------------------------------------------
    New Drilling Intercepts
    -----------------------
    -------------------------------------------------------------------------
             Intercept  Intercept  Intercept   Estimated     Gold    Antimony
    Hole      Northing   Easting     Depth    True Width     Grade     Grade
     ID        (GDA94)    (GDA94)      (m)        (m)        (g/t)      (%)
    -------------------------------------------------------------------------
    MH198    5914154.1   304139.2      213.7       0.34         81       53.5
    -------------------------------------------------------------------------
    MH199    5914237.8   304110.8      262.8     4.20*      33.8        5.5
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Assay Data Included in the calculation of the above MH199 intercept.
    -------------------------------------------------------------------------
              Down Hole  Down Hole   Interval  Estimated     Gold    Antimony
    Hole        Depth      Depth      Length  True Width     Grade     Grade
     ID        From (m)    To (m)       (m)        (m)       (g/t)      (%)
    -------------------------------------------------------------------------
    MH199       285.95     286.25        0.3       0.15       96.1       59.7
    -------------------------------------------------------------------------
    MH199       286.25      286.5       0.25                 107.6        2.6
    -------------------------------------------------------------------------
    MH199        286.5      287.1        0.6      0.108      703.9       34.4
    -------------------------------------------------------------------------
    MH199        287.1     287.91       0.81                   3.8        0.1
    -------------------------------------------------------------------------
    MH199       287.91     288.75       0.84                   0.6        0.1
    -------------------------------------------------------------------------
    MH199       288.75     289.37       0.62      0.062      162.8       14.1
    -------------------------------------------------------------------------
    MH199       289.37      289.9       0.53                  47.8        5.4
    -------------------------------------------------------------------------
    MH199        289.9      290.7        0.8                   1.2        0.1
    -------------------------------------------------------------------------
    MH199        290.7      291.6        0.9                   0.4          0
    -------------------------------------------------------------------------
    MH199        291.6     293.27       1.67                     0          0
    -------------------------------------------------------------------------
    MH199       293.27        294       0.73                   0.3        0.1
    -------------------------------------------------------------------------
    MH199          294     294.85       0.85                   0.7        1.1
    -------------------------------------------------------------------------
    MH199       294.85     295.45        0.6       0.18       26.4       26.8
    -------------------------------------------------------------------------
    MH199       295.45     295.65        0.2                  18.3        8.6
    -------------------------------------------------------------------------
    MH199       295.65      295.9       0.25      0.075       98.2         23
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Previously Drilled Intercepts Below Current Workings
    ----------------------------------------------------
    -------------------------------------------------------------------------
             Intercept  Intercept  Intercept   Estimated     Gold    Antimony
    Hole      Northing   Easting     Depth    True Width     Grade     Grade
     ID        (GDA94)    (GDA94)      (m)        (m)        (g/t)      (%)
    -------------------------------------------------------------------------
    MH165    5914213.2   304138.7      174.7       0.26       22.5       25.6
    -------------------------------------------------------------------------
    MH168    5914279.1   304128.2      167.8       0.81       30.8       16.2
    -------------------------------------------------------------------------
    MH173    5914129.9   304151.5      184.4       0.74       85.0       27.1
    -------------------------------------------------------------------------
    MH174    5914350.0   304088.3      198.1       0.05       29.5       29.7
    -------------------------------------------------------------------------
    MH176    5914245.8   304131.5      164.6       0.59       33.0       59.9
    -------------------------------------------------------------------------
    MH177    5914108.4   304162.0      159.4       0.20       36.1       16.6
    -------------------------------------------------------------------------
    MH178    5914166.5   304161.5      158.8       0.61        3.5        2.9
    -------------------------------------------------------------------------
    MH179      5914184   304122.5      237.5      0.140       67.8       45.4
    -------------------------------------------------------------------------
    MH182    5914145.4   304163.2      158.8      0.400        8.5       22.4
    -------------------------------------------------------------------------
    MH184    5914164.4   304141.7      184.9      0.220       71.3       40.5
    -------------------------------------------------------------------------
    * The true width of the intercept in MH199 is to be confirmed by follow
        up drilling.
    

Plotted on a long section of the W-lode, these intercepts define a volume that is at least 150 m along strike and extends at least 100 m below the current workings (see long section below). The maximum dimensions of the ore shoot along strike below and down dip of the current workings have not been established by the drilling: all holes reported here have intersected mineralized vein material.

Long Section of the W-Lode, Costerfield Mine, Victoria, Australia

http://files.newswire.ca/895/MandalayCosterfield.pdf

Qualified Person:

Neil Schunke, Manager at Costerfield and a member of the AusIMM is a Qualified Person as defined by NI 43-101, and has reviewed and approved the technical and scientific information pertaining to the Costerfield mine contained in this release.

About Mandalay Resources Corporation:

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

%SEDAR: 00016244E

SOURCE Mandalay Resources Corporation

For further information: For further information: Bradford Mills, Chief Executive Officer, Greg DiTomaso, Investor Relations, Contact: 647.260.1566, Email: g.ditomaso@mandalayresources.com; Company website: www.mandalayresources.com

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Mandalay Resources Corporation

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