Mr. Patrick Downey of Elgin reports

ELGIN MINING PROVIDES UPDATE AND ENTERS INTO AMENDED AND RESTATED ARRANGEMENT AGREEMENT WITH MANDALAY RESOURCES

Elgin Mining Inc. is providing the following update on the previously announced transaction with Mandalay Resources Corp. Elgin Mining has now reached a resolution on all outstanding reclamation obligations relating to its former coal operations in Kentucky and these are to Mandalay's satisfaction. Elgin Mining has filed amended and restated interim financial statements and management's discussion and analysis for the three months ended March 31, 2014, to reflect this settlement. The parties have also entered into an amended and restated arrangement agreement dated July 25, 2014, with respect to the previously announced acquisition by Mandalay of all the outstanding common shares of Elgin Mining for consideration consisting of 37 cents in cash or 0.4111 of a Mandalay common share per Elgin Mining common share, subject to proration, by way of a plan of arrangement.

The amended and restated arrangement agreement increases the amount of cash consideration available to $27-million (from $25-million as previously disclosed) in order to accommodate any exercise of Elgin Mining's outstanding share purchase warrants as a result of Elgin Mining's acceleration of the expiry date of its warrants to Aug. 26, 2014. As a result of such acceleration, no warrants will be outstanding after the close of business on Aug. 26, 2014.

Second quarter of 2014 gold production

The Bjorkdal mine had an excellent second quarter of production of 12,098 ounces of gold. Production was from the processing of a mix of open-pit and underground ores. Gold production for the third quarter of 2014 also started strongly in July, which is normally a low month for gold and ore production due to the vacation period in Sweden reducing the availability of both company miners and mine contractors.

Shareholders meeting

Elgin's shareholders meeting to approve the arrangement is scheduled to occur on Wednesday, Sept. 3, 2014, at 8 a.m. (EDT) at the offices of Cassels Brock & Blackwell LLP, Scotia Plaza, 40 King St. West, suite 2100, Toronto, Ont. Relevant meeting materials providing further details of the transaction are expected to be mailed on Aug. 1, 2014. Assuming receipt of all necessary court and shareholder approvals, and the satisfaction of all other conditions, closing is expected to occur on or about Sept. 10, 2014.

Revised interim financial reports for the three months ended March 31, 2014

The company's previously filed interim financial statements for the three months ended March 31, 2014, reflected a provision for reclamation and closure for its former U.S. coal operations in the amount of $2,562,834 (U.S.). This reclamation estimate was based on the amount of reclamation bonds posted by the company and held by the state of Kentucky as financial security for the performance of the company's required reclamation activities.

Since April, 2014, the company has been working with an experienced local consultant and external counsel to reach a settlement whereby the company would achieve a full and final release of all remaining coal reclamation obligations. The final amounts of the reclamation settlements with both the State of Kentucky and the U.S. Army Corps of Engineers, and including consultant fees, are expected to total $10,364,567 (U.S.). The company has determined that the dollar amount of the settlements reached with the respective U.S. government agencies provides a better estimate of the company's reclamation liabilities that existed at March 31, 2014, than the amount previously provided for in the interim financial statements, which were filed on May 13, 2014.

As a result, the company has amended and restated its interim financial statements and management's discussion and analysis for the three months ended March 31, 2014, to increase its coal reclamation liability to the expected costs of the settlements of $10,364,567 (U.S.) and to include disclosure of events occurring subsequent to the date of the filings on May 13, 2014.

We seek Safe Harbor.