Mr. Frazer Bourchier reports

MANDALAY RESOURCES REPORTS ENCOURAGING NEAR-MINE EXPLORATION RESULTS FROM THE EASTERN EXTENSION AND NORTH ZONE DRILLING PROGRAMS

Mandalay Resources Corp. has provided an update on the eastern extension and North zone drilling programs at its Bjorkdal operation in Sweden.

Highlights:

• Extension of Lake zone veining including intercepts:
  • 116.8 grams per tonne gold over 0.35 metre (estimated true width of 0.27 m) in MU23-016;
  • 51.3 g/t gold over 0.60 m (ETW of 0.52 m) in MU23-016;
  • 88.6 g/t gold over 0.45 m (ETW of 0.34 m) in MU23-015.
• Further drilling of the North zone providing confidence in veining architecture and continuation of mineralization;
• Highlights a new mineral domain (the Boreal zone) that exists between Aurora and North zone;
• North zone and Boreal zone composite highlights:
  • 207.0 g/t gold over 0.55 m (ETW of 0.45 m) in MU22-040;
  • 72.8 g/t gold over 0.45 m (ETW of 0.29 m) in MU22-025;
  • 33.6 g/t gold over 0.70 m (ETW of 0.61 m) in MU23-022.

Frazer Bourchier, president and chief executive officer of Mandalay, commented: "I am very pleased with the consistent success of our near-mine drilling program at Bjorkdal. These results reinforce our geologists' keen insights and focus on targeted exploration strategies implemented over the past few years. I am especially impressed with some of the remarkable intercepts of these underground-originated exploration drill holes. We are keen to learn more over the coming year as the technical teams continue to update their geological models to better understand the potential mineral reserve impacts."

Chris Davis, vice-president of exploration and operational geology, commented: "Over the past two years, the eastern extension program has been a primary area of exploration and has yielded remarkable results -- some of the most significant intercepts seen historically at Bjorkdal. The drilling conducted in this area has extended the Lake zone veining both eastward and at depth. Although the veining density is not as high as that of the Main zone, the veins are continuous, with notable intercepts observed up to 560 m from the current infrastructure.

"Furthermore, our upper western extension drilling within the North zone drilling program identified an exciting new domain of veining, which we have called the Boreal zone. The veining observed in this domain exhibits a similar orientation and gold endowment to that found in both the North zone and the Aurora zone. The extent of the veining in the Boreal zone is still underexplored, and future drilling campaigns will be focused on understanding its full breadth.

"A video has been prepared which walks through the highlights of this release with greater spatial context. This video can be found on Mandalay's website."

Mr. Bourchier concluded: "These recent developments in exploration underscore one of our strategic objectives committed to organic growth as we continue to explore for both higher-margin reserve ounces that may extend life as well as new mineral targets within our land packages. We expect that the inclusion of the eastern extension will contribute to the continued growth and success of Bjorkdal."

Discussion

Building from the company's press releases in July, 2022, and February, 2023, near-mine exploration has focused on two continuing drilling campaigns. The eastern extension campaign has continued with a move to the north, testing the eastern continuation of the Lake zone veining. Running parallel with this program, the North zone drilling has progressed to an extension phase with four subprograms, testing the strike and dip extent of the 19 veins now modelled within the emerging domain.

Lake zone eastern extension drilling

Drilling of the eastern flank of the Bjorkdal mine has consistently delivered high-grade vein intercepts, supporting the modelling of gold enrichment within veining continuing to the east underneath the plunging marble horizon. Drilling over 2022 concentrated on the extension of Main zone and Central zone with highlight significant results (see previous releases). The latest drilling in this area of enrichment has focused on the eastward extension to the Lake zone veining that is being currently mined to the west of the target area.

Ten holes have been drilled in 2023, showing that key veining within the Lake zone area continues to the east. The density of veining is observed to be lower than that of the Central and Main zones to the south; however, significant grades have been intercepted 560 m from current mining, showing the mineralization is still open at depth and to the east. The furthest intercept from current development returned 5.4 g/t gold over one m (ETW of 0.64 m) in MU23-017.

Other significant grades within the program include 51.3 g/t gold over 0.60 m (ETW of 0.52 m) and 88.6 g/t gold over 0.45 (ETW of 0.34 m) in MU23-015, as well as 116.8 g/t over 0.35 m (ETW of 0.27) in MU23-016.

North zone extension and Boreal zone

To the north of the current mine and the well-established Aurora zone, the North zone is an emerging veining system that has been a recent focus of exploration at Bjorkdal. The veining exists in a similar setting to that of the Aurora zone being above the marble horizon and interacting with a number of flat faults theorized to be conduits for mineralizing fluids. Like Aurora, the significance of the North zone is in the geometry of the sheeted veining and potential for structural and grade continuity over a large strike and vertical length, which can facilitate greater mining efficiency.

Since the last market update on the North zone in June, 2022, a further 19 holes have been drilled into the area to test extensions of the predefined veining. Primarily the upper and western extents were tested using a drilling horizon high in the Aurora mine and, as a result, a new mineral domain was intercepted between the Aurora and North zones, called the Boreal zone. This new domain is divided from the targeted North zone by the Balder fault, which appears to bound the Boreal zone to the northeast, as does the Frea fault to the southwest. Like the Aurora and North zones, the Boreal zone seems to follow an echelon pattern of sheeted veins within their respective fault blocks. Excitingly, the Boreal zone is only approximately 180 m from current mining infrastructure.

Intercept highlights from the North zone drilling include 19.4 g/t gold over 0.45 m (ETW of 0.41 m) within the western extension of the North zone, 207.0 g/t gold over 0.55 m (ETW of 0.45 m) within the Boreal zone and 72.8 g/t gold over 0.45 m (ETW of 0.29 m) within the Aurora system, which was traversed at the start of the drill holes on the way to the Boreal and North zones.

Drilling and identification of the Boreal zone were a byproduct of the upper west testing of the north zone and, as such, the full extent of the veining has not been tested. A specific Boreal zone drilling campaign has been designed to test the breadth and depth component of the veining. This campaign commenced in the second quarter this year, and the company expects results in the coming months.

Drilling and assaying

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

Assaying was conducted utilizing the Pal1000 cyanide leaching processes. Mandalay's rigorous quality assurance/quality control program included the use of standard reference samples, blanks, duplicates, repeats and internal laboratory quality assurance 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, as well as a member of the Australian Institute of Geoscientists (MAIG) and a qualified person under National Instrument 43-101. He has reviewed and approved the technical and scientific information provided in this release.

About Mandalay Resources Corp.

Mandalay Resources is a Canadian-based natural resource company with producing assets in Australia (Costerfield gold-antimony mine) and Sweden (Bjorkdal 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 cash flow. 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 profitable operation and continuing the regional exploration program at both its Costerfield and Bjorkdal mines. Currently, the company's main objectives are to continue mining the high-grade Youle vein at Costerfield, bring on-line the deeper Shepherd veins, both of which will continue to supply high-grade ore to the processing plant, and extend Youle mineral reserves. At Bjorkdal, 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.

We seek Safe Harbor.