Mandalay Resources Corporation (TSX: MND) (OTCQB: MNDJF) is pleased to provide an update on the eastern extension drilling and significant intercepts from the North Zone drilling program at its Björkdal operation in Sweden.

New Drilling Highlights:

North Zone

• 155.0 g/t gold over 0.80 m (Estimated True Width “ETW” 0.61 m);
• 183.0 g/t gold over 0.45 m (ETW 0.34 m); and
• 64.8 g/t gold over 0.85 m (ETW 0.55 m) in MU22-002.

Extension Plunge Extension

• 14.7 g/t gold over 4.10 m (ETW 3.48 m) in MU21-009;
• 27.3 g/t gold over 2.20 m (ETW 1.61 m) in MU21-010; and
• 91.3 g/t gold over 0.30 m (ETW 0.26 m) in MU21-012.

Note: Further intercept details including significant intercepts within composite intervals can be found in Table 1 in the Appendix to this document.

Dominic Duffy, President and CEO of Mandalay, commented:

“We are pleased to report progress on the Eastern Plunge extension program where infill drilling of the eastern section between the Central and Lake Zone plunge extensions have produced excellent results while bridging our knowledge in this new and exciting extension. We expect these results will increase our 2022 year-end Mineral Reserves.

“Furthermore, as the initial step out phase of eastern extension drilling concludes, underground drilling resources will shift towards our North Zone program. An area north of Aurora in which east-west trending veining parallels the Aurora and surrounding veins. The latest round of drilling is ongoing and is aimed at infilling known veining and testing for the lateral and vertical extents. So far, the drilling supports the interpreted veining previously tested and suggest a concentration of veining approximately 450 m north of Aurora where the best grades of the prospect have been recovered in MU22-002. Lateral extension drilling is not far progressed, however, there are indications that the trend could span 750 m.

“Lastly, a video has been prepared by Chris Davis, Vice President of Operational Geology and Exploration, to further explain the information in this release. This video can be found on Mandalay’s website or by clicking here.”

Dual focus for Underground Exploration

During the first half of 2022 underground exploration at Björkdal has been focused on further defining the Eastern Plunge extension veining and investigating the breadth and grade of mineralization to the north of Aurora within the North Zone.

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Figure 1. Perspective view of the Björkdal Mine looking towards the SW highlighting the interaction of the veining (Red), Marble (Blue) and Björkdal fault (Yellow). Drilling from the 2022 Eastern extension and North Zone programs is also shown.

Eastern Extension

Late in 2021, it became apparent that a gap of highly prospective ground was underexplored between Lake and Central Zones at depth. A testing program was designed to explore the gap and yielded initial success (press released January 24, 2022). A follow-up drilling campaign was designed to define the extended and newly discovered veining. The 2022 program included seven holes and intercepted 17 now modelled veins with encouraging grades amongst them including 14.7 g/t gold over 4.10 m (3.48 m ETW) and 27.3 g/t gold over 2.20 m (1.61 m ETW). Assays are pending for the last half of MU22-006 however veining was identified within this drillhole along trend.

This drilling program has now identified veining of mineable grades up to 400 m down plunge from the current underground infrastructure.

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Figure 2. Plan section of the Central Zone – Lake Zone Link Drilling. Intercepts above 0.5 g/t Au when diluted to 1 m are denoted by dots. Drillholes are annotated with composites over 2.0 g/t Au when diluted to 1 m.

Like previous drilling of the eastern continuation, visible gold is common within the quartz veining and is generally accompanied by significant gold grades when assayed. Below is an image of the aforementioned MU022-010 intercept.

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Figure 3. Photograph of core containing gold within MU22-010 (340.05 – 342.25 m – ETW 1.61m @ 27.3 g/t Au).

North Zone

In January 2022, Mandalay recommenced the North Zone drilling program with an intention to further define mineralization intercepted in 2020 and test for lateral and vertical extents. The drilling program is ongoing with 11 drill holes completed to-date. Excitingly, the drilling has highlighted an area of increased veining density at approximately 450 m north of Aurora. This increased density is also accompanied by increased grades with two of the best results in the prospect coming from MU22-002. These are: 155.0 g/t gold over 0.80 m (0.61 m ETW) in MU22-002 and 183.0 g/t gold over 0.45 m (0.34 m ETW).

Apart from the exceptional grade, these intercepts are important due to their location above the marble unit and what that could mean for vertical and lateral grade continuity. Veining below the marble horizon general persists for 80 m in vertical extent. The Aurora orebody – like the North Zone – exists above the marble and has a mineable vertical extent of approximately 350 m and lateral extent of 400 m. The 2022 North Zone drilling campaign has intersected mineralization across a 750 m trend and 200 m vertical extent although the bounds of the zone have not yet been found.

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Figure 4. Plan section of the North Zone drilling area showing the 2022 drilling complete to date. Intercepts above 0.5 g/t Au when diluted to 1 m are denoted by dots. Drillholes are annotated with composites over 2.0 g/t Au when diluted to 1 m.

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Figure 5. East-West cross-section of area showing the divergence of Marble and Björkdal Shear. Intercepts above 0.5 g/t Au when diluted to 1 m are denoted by dots. Drillholes are annotated with composites over 2.0 g/t Au when diluted to 1 m.

Drilling and development of both areas of interest will be ongoing through 2022 with an intent of increasing reserves and setting up the next high tonnage and grade development area for the Björkdal Mine.

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Figure 6. Photograph of the MU22-002 intercept at 476.7m with image of core showing gold entrained within quartz.

Drilling and Assaying

At Björkdal, all diamond drill core was logged and sampled by Björkdal geologists. Exploration drill hole samples were sent to CRS Laboratories Oy (“CRS”) in Kempele, Finland for sample preparation and assaying.

Assaying was conducted utilizing the Pal1000 cyanide leaching processes. Mandalay’s rigorous QA/QC program included the use of standard reference samples, blanks, duplicates, repeats, and internal laboratory quality assurance procedures (see March 31, 2022, Technical Report entitled “Mandalay Resources – Björkdal Property NI 43-101 Technical Report” available on SEDAR (www.sedar.com), which contains a complete description of drilling, sampling, and assaying procedures).

Qualified Person:

Chris Davis, Vice President of Operational Geology and Exploration at Mandalay Resources, is a Chartered Professional of the Australasian Institute of Mining and Metallurgy (MAusIMM CP(Geo)), as well as a Member of the Australian Institute of Geoscientists (MAIG) and a Qualified Person as defined by NI 43-101. He has reviewed and approved the technical and scientific information provided in this release.

About Mandalay Resources Corporation

Mandalay Resources is a Canadian-based natural resource company with producing assets in Australia (Costerfield gold-antimony mine) and Sweden (Björkdal gold mine), with projects in Chile and Canada under closure or development status. The Company is focused on growing its production and reducing costs to generate significant positive cashflow. Mandalay is committed to operating safely and in an environmentally responsible manner, while developing a high level of community and employee engagement.

Mandalay’s mission is to create shareholder value through the profitable operation and continuing the regional exploration program, at both its Costerfield and Björkdal mines. Currently, the Company’s main objective is to continue mining the high-grade Youle vein at Costerfield, bring online the deeper Shepherd veins, both of which will continue to supply high-grade ore to the processing plant, and to extend Youle Mineral Reserves. At Björkdal, the Company will aim to increase production from the Aurora zone and other higher-grade areas in the coming years, in order to maximize profit margins from the mine.

Appendix

Table 1. Table of Significant Intercepts from the Central to Lake Zone drilling program

Notes:

1. Where true widths are greater than 1m, grades are not diluted and are presented as the grade over the composite true width.
2. Composites that are below 0.5 g/t Au when diluted to 1 m are not reported in this table.

Table 2. Table of Significant Intercepts from the North Zone drilling program

Notes:

1. Where true widths are greater than 1m, grades are not diluted and are presented as the grade over the composite true width.
2. Composites that are below 0.5 g/t Au when diluted to 1 m are not reported in this table.

Table 3. Drill Hole Collar Details

Notes:

1. Coordinate System: SWEREF 99