Mr. Brad Mills reports

MANDALAY RESOURCES ANNOUNCES FINANCIAL RESULTS AND QUARTERLY DIVIDEND FOR THE FIRST QUARTER OF 2014

Mandalay Resources Corp. had revenue of $38.1-million, EBITDA (earnings before interest, taxes, depreciation and amortization) of $16-million and net income of $5.7-million or two cents per share for the first quarter of 2014. The company's unaudited consolidated financial results for the three months ended March 31, 2014, together with its management's discussion and analysis (MD&A) for the corresponding period, can be accessed under the company's profile on SEDAR and on the company's website. All currency references in this news release are in U.S. dollars except as otherwise indicated.

In accordance with the company's dividend policy, Mandalay's board of directors declared a quarterly dividend of $2,285,511 (6 per cent of the trailing quarter's gross revenue) or 0.67 cent per share (0.74 Canadian cent per share), payable on May 26, 2014, to shareholders of record as of May 16, 2014.

Brad Mills, chief executive officer of Mandalay, commented: "Both Cerro Bayo and Costerfield operations achieved near-record-low cash-cost-per-ounce performance during the first quarter. Costerfield's cash cost was $800 per gold equivalent ounce and Cerro Bayo's was $5.81 per silver ounce net of gold credits. This reflects the rapid scaling up of the mines and favourable impact of exchange rate movements during the period. Both mines are on track to deliver their planned expansions on time and on budget. The Challacollo feasibility study commenced in April and the company will hold a conference call to discuss its first quarter 2014 results, 8 a.m. ET on May 6."

                           FIRST QUARTER 2014 FINANCIAL HIGHLIGHTS

                                        Three months ended             Three months ended
                                            March 31, 2014                 March 31, 2013

Revenue                                      $  38,091,844                  $  41,624,688
EBITDA                                          16,026,666                     19,838,082
Income from mine operations                     10,432,133                     15,785,066
Net income                                       5,744,073                     10,904,114
Total assets                                   214,629,257                    196,590,632
Total liabilities                               44,343,720                     44,324,175
Earnings per share                           $        0.02                  $        0.03

The decreases in revenue, EBITDA and profit during the first quarter of 2014 were mainly due to lower metal prices, partially offset by higher volumes sold and lower unit operating costs achieved. Higher operating expenses, depletion and depreciation in the first quarter of 2014 were associated with higher production output and sales volumes.

Net income is inclusive of non-cash, non-operating income of $104,743 related to mark-to-market adjustments of financing warrants and an Australian/U.S. currency option and deferred tax expense of $1,552,318. Excluding these items, profit after tax from underlying operations for the first quarter was $7,191,648 (two cents per share). By comparison, in the first quarter of 2013, the company's net income of $10,904,114 (three cents per share) was inclusive of non-cash, non-operating expenses of $169,470 related to mark-to-market adjustments of financing warrants, and cash election options and deferred tax recovery of $60,701. Excluding these items, profit from underlying operations in the first quarter of 2013 was $11,012,883 (three cents per share).

On March 10, 2014, Mandalay paid a quarterly dividend in the total amount of $2,344,013 (0.77 Canadian cent per share). Cash and cash equivalents of the company were $20-million as of March 31, 2014, compared with $26.64-million as of March 31, 2013.

First quarter 2014 operational highlights

Costerfield gold-antimony mine, Victoria, Australia

In the first quarter of 2014, Costerfield produced 7,915 ounces of saleable gold (Au) and 858 tonnes of saleable antimony (Sb), versus 6,203 ounces Au and 766 tonnes Sb in the first quarter of 2013. Higher mine output and plant throughput, and a full quarter of operation of the new gold room, resulted in a higher percentage of gold reporting to the gravity concentrate for which we receive significantly better payment terms than the company's gold in antimony sulphide concentrate. These factors resulted in higher saleable metal production in the first quarter of 2014, than achieved in the first quarter of 2013.

The combined impact of higher production, good total spending control due to cost efficiencies achieved and effect of lower currency exchange rates led to a reduction in cash cost per gold equivalent ounce produced to $800 per gold equivalent ounce, as compared with $948 per gold equivalent ounce in the corresponding quarter of 2013. Site all-in costs were $1,052 per gold equivalent ounce, versus $1,177 per gold equivalent ounce in the previous year.

Cerro Bayo silver-gold mine, Patagonia, Chile

During the first quarter of 2014, the Cerro Bayo mine produced 743,569 ounces of saleable silver (Ag) and 5,280 ounces of saleable Au, versus 611,441 ounces Ag and 4,432 ounces Au in the first quarter of 2013. Higher tonnes mined due to higher extraction of mineral from production stopes, improved mine grades due to larger proportion of ore extracted from high-grade areas of Fabiola and Delia veins, and higher metallurgical recoveries, resulted in higher unit production compared with the corresponding quarter of previous year.

Cash cost per ounce silver produced net of Au byproduct credits was $5.81 during the first quarter of 2014, lower than the $8.96 in the first quarter of 2013, principally due to the combined impacts of higher metal produced, good cost performance and advantageous currency exchange rates. Site all-in costs were $11.31 per ounce, versus $14.06 per ounce in the previous year.

Conference call

Mandalay management will be hosting a conference call for investors and analysts on May 6, 2014, at 8 a.m. (Toronto time). Analysts and interested investors are invited to participate using the following dial-in numbers:

Participant number (international/local):  647-427-7450

Participant number (toll-free North America):  888-231-8191

Conference ID:  40385081

A replay of the conference call will be available until 23:59 p.m. (Toronto time), May 20, 2014, and can be accessed using the following dial-in numbers:

Encore toll-free dial-in number:  1-855-859-2056

Local dial-in number:  416-849-0833

Encore ID:  40385081

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