Mandalay Resources Corporation completes purchase of Challacollo silver-gold project, files technical report, and begins 12 month feasibility study

February 7, 2014

TORONTO, Feb. 7, 2014 /CNW/ – Mandalay Resources Corporation (“Mandalay”
or the “Company”) (TSX: MND) is pleased to announce that it has
completed the purchase of Silver Standard Resources Inc.’s (“Silver
Standard”) (TSX: SSO, NASDAQ: SSRI) 100% interest in the Challacollo
silver-gold project in Region I, Northern Chile (the “Project”). Terms
of the purchase were as disclosed in the press release announcing the
transaction on December 20, 2013 and as below. The value of the closing
consideration was approximately US$16.7 million using the Canadian/US
Dollar exchange rate and the Mandalay share price on the day of

Mandalay has filed an Independent Technical Report prepared by Roscoe
Postle Associates Inc. (“RPA”) substantiating the Mineral Resource
estimate announced in the December 20, 2013 press release. The resource
contains 8.0 million ounces of silver in the Indicated Resource
category and 24.3 million ounces of silver in the Inferred Resource

Brad Mills, CEO of Mandalay commented, “The acquisition of the
Challacollo silver-gold project has been completed as contemplated by
the Share Purchase Agreement announced on December 20, 2013.”

Mr. Mills continued, “With the close of the transaction and the
publishing of the Mineral Resource Estimate, we now have a solid
foundation on which to commence our feasibility study. The study work
is expected to consist of 8,000 to 10,000 metres of diamond core
drilling and associated assays which are designed to infill and upgrade
the current RPA resource estimate. 10% of the drill metres will also be
used to test resource extensions. Mine design and costing will be
completed once the resource estimate has been updated. Metallurgical
testing will be conducted on both drill core and underground samples
from the developed portion of the deposit. The metallurgical
information will be used to complete detailed plant design and costing.
Engineering studies will be completed on the required infrastructure
requirements such as access roads, power, and water. Finally,
environmental and community baseline studies necessary for mine
permitting will be commenced.

The goal of the program is to complete and publish a full feasibility
study and file for all permits required for construction and operations
within 12 months. We expect the cost of the program to be approximately
$5-7 million dollars, funded from current corporate cash resources.

We are very pleased with the acquisition of the Project as it meets our
acquisition criteria of low cost, near-term production with significant
exploration potential.”

The Transaction:

Under the terms of the Share Purchase Agreement, Mandalay delivered to
Silver Standard upon closing:

        --  US$7.5 million in cash; and

        --  12 million common shares of Mandalay, valued at $US9,188,160 at
            a share price of $CAD0.85/share and $US/$CAD exchange rate of

Contingent consideration to be delivered to Silver Standard under the
Share Purchase Agreement includes:

        --  5 million common shares of Mandalay to be issued at the end of
            the first quarter in which commencement of commercial
            production at the Project occurs;

        --  an aggregate cash payment equal to the equivalent of 240,000
            troy ounces of refined silver, payable in eight quarterly
            installments equal to the cash equivalent of 30,000 troy ounces
            of refined silver per quarter, based on the average silver
            price for each such quarter, beginning with the quarter
            immediately following the quarter in which commencement of
            commercial production at the Project occurs; and

        --  a 2% Net Smelter Returns royalty on silver sold or produced
            from the Project in excess of 36 million ounces, with a
            cap/buyout of US$5 million.

About the Challacollo Property:

Challacollo is an epithermal silver deposit located in Region I,
Northern Chile. It is centered about 130 kilometers (km) southeast of
the major port city of Iquique. The Pan-American Highway passes 30 km
west of the property. Several power transmission lines are located 15
and 30 km from the property. The Project includes water rights.

Silver mineralization on the property is hosted in the Cretaceous
Challacollo volcanic complex of intermediate to silicic volcanic rocks
and associated sedimentary rocks. Mineralization is contained in a
system of northeast- to north-trending epithermal
quartz-carbonate-barite veins that have been oxidized to a depth of at
least 250 meters (m). The largest of these veins is the Lolón Vein,
which has a strike length of at least 3.5 km and contains the entire
current estimated Mineral Resource.

Mineral Resource Estimate:

In the Technical Report filed on SEDAR, RPA has identified the following
Indicated and Inferred Mineral Resources contained in the Lolón Vein
based upon drilling and underground sampling data generated by prior
operators. The effective date of the Challacollo Mineral Resource
estimate is December 13, 2013.

Table 1 – Mineral Resource Estimate, Challacollo

    |         |Million|Ag (silver) g/t|Au (gold)| Ag Moz | Au koz  |
    |         |Tonnes |  (grams per   |   g/t   |(million|(thousand|
    |         |       |    tonne)     |         |ounces) | ounces) |
    |Indicated|  1.03 |         242   |   0.40  |   8.0  |   13.4  |
    |Inferred |  3.90 |         193   |   0.32  |   24.3 |   40.1  |


      1. CIM definitions were followed for classification of Mineral
      2. Mineral Resources are estimated at a silver equivalent (AgEq)
         cut-off grade of 110 g/t.
      3. Mineral Resources are estimated using a silver price of US$24/oz
         and a gold price of US$1,400 per ounce.
      4. High silver and gold assay values were capped to 700 g/t Ag and
         3.0 g/t Au, respectively.
      5. A density of 2.4 g/cm³ was used.
      6. The silver equivalent equation is AgEq = g/t Ag + 63.97 * g/t Au.

Qualified Person:

Luke Evans, M.Sc., P.Eng., of RPA, a Qualified Person under National
Instrument 43-101, prepared the Mineral Resource estimate on which this
press release is based and has approved the disclosure about the
resource estimate in this press release. The complete Technical Report
supporting the estimate has been published on the Mandalay website www.mandalayresources.com and on www.sedar.com.

About Mandalay Resources Corporation:

Mandalay 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.

About Silver Standard Resources Inc.:

Silver Standard is a Vancouver-based mining company with assets
throughout the Americas. It is listed on the Toronto Stock Exchange
(TSX: SSO) and on the NASDAQ Global Market (NASDAQ: SSRI). Silver
Standard owns and operates the Pirquitas mine in Jujuy, Argentina,
which is one of the largest primary silver mines in the world. The
Pirquitas mine achieved commercial production in December 2009. In
2013, the mine produced 8.2 million ounces of silver, and is expected
to produce in excess of 8.2 million ounces of silver in 2014. Silver
Standard also has two wholly-owned feasibility stage projects,
Pitarrilla in Mexico and San Luis in Peru.

Forward-Looking Statements:

This news release contains “forward-looking statements” within the
meaning of applicable securities laws, including statements regarding
the Challacollo development plan. Readers are cautioned not to place
undue reliance on forward-looking statements. Actual results and
developments may differ materially from those contemplated by
forward-looking statements depending on, among other things, risks that
exploration results at Challacollo may not meet management’s current
expectations, Mandalay’s ability to secure additional financing,
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 27, 2013, a copy of
which is available under Mandalay’s profile at www.sedar.com. 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

Source: PR Newswire

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