Mr. Frazer Bourchier reports

MANDALAY RESOURCES ANNOUNCES FINANCIAL RESULTS FOR THE SECOND QUARTER 2023

Mandalay Resources Corp. has released its financial results for the quarter ended June 30, 2023.

The company's condensed and consolidated interim financial statements for the quarter ended June 30, 2023, 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.

Second quarter 2023 highlights:

• Maintained a strong financial position with $32.8-million of cash on hand;
• Generated consolidated quarterly revenue of $39.7-million;
• Consolidated quarterly adjusted EBITDA (1) (earnings before interest, taxes, depreciation and amortization) of $8.9-million;
• Consolidated net income was $500,000 (one U.S. cent or one Canadian cent per share);
• The company settled its final gold hedging obligations in July, 2023.

Frazer Bourchier, president and chief executive officer of Mandalay, commented:

"Mandalay delivered stable financial results in the second quarter, marking an impressive 12th consecutive profitable quarter. We are pleased to have maintained a healthy net cash position amidst various production challenges.

"At Bjorkdal, some of the initiatives implemented during the first half of the year are leading to encouraging improvements in terms of mined ore tonnes and grade. Subsequent to Q2, we achieved a milestone by obtaining the mining concession for the recently discovered eastern extension of our Bjorkdal mine. This achievement brings forth exciting opportunities for growth with our strategic objective of incorporating higher gold grades and margin ounces into our near-term production profile at Bjorkdal. At Costerfield, despite the delayed arrival of a replacement underground loader, we improved mined ore tonnes by over 25 per cent from the previous quarter. Our focus remains on improving our understanding of the Shepherd zone by progressing development. In the last half of this year, our plan is to focus production on the higher-grade core of Youle while simultaneously advancing development of the multiple veins of the Shepherd orebody."

Nick Dwyer, chief financial officer of Mandalay, commented:

"The company maintained a healthy balance sheet supported by $39.7-million in revenue and $8.9-million in adjusted EBITDA (1), which resulted in net income of $500,000. Mandalay ended Q2 2023 with $32.8-million cash on hand and a net cash position of $8.2-million. We achieved this while still encumbered by our historic gold hedge obligations, in respect of which we paid $4.4-million this quarter. These hedges mostly expired in June, 2023, which will improve our profitability going forward based on assumed current spot metal prices.

(1) Adjusted EBITDA, adjusted net income, cash costs and all-in sustaining costs are not standardized financial measures under IFRS (international financial reporting standards) and might not be comparable with similar financial measures disclosed by other issuers. Refer to non-IFRS measures at the end of this news release for further information.

"Our consolidated cash costs and all-in sustaining costs (1) per saleable gold equivalent ounce produced during Q2 2023 were $1,159 and $1,644, respectively, up from the previous quarter mainly due to lower metal production due to lower grades at Costerfield.

"To further support our growth prospects, exploration spend both near mine and regionally within our tenement packages remains on track with an anticipated full year spend of $10-million to $14-million across both sites."

Mr. Bourchier concluded: "We remain steadfast in not losing focus on our two existing operations while continuing mine optimization avenues, driving effective organic exploration activities and exploring any accretive corporate development opportunities. These focus areas and pursuits not only enable optionality in growth strategies but should pave the way for sustained financial success and growing shareholder value."

Second quarter 2023 financial summary

The attached table summarizes the company's consolidated financial results for the three months and six months ended June 30, 2023, and June 30, 2022.

In Q2 2023, Mandalay generated consolidated revenue of $39.7-million, 21 per cent lower than the $50.1-million in the second quarter of 2022. The decrease in revenue was due to lower gold equivalent ounces sold at Costerfield. The company's realized gold price in the second quarter of 2023 increased by 3 per cent compared with the second quarter of 2022, and the realized price of antimony decreased by 6 per cent. In Q2 2023, Mandalay sold 6,552 fewer gold equivalent ounces than in Q2 2022.

Consolidated cash cost per ounce of $1,159 was higher in the second quarter of 2023, compared with $1,020 in the second quarter of 2022. Cost of sales during the second quarter of 2023 versus the second quarter of 2022 was $2.3-million higher at Costerfield and $1.6-million lower at Bjorkdal. Consolidated general and administrative costs were $300,000 higher compared with the prior-year quarter.

Mandalay generated adjusted EBITDA of $8.9-million in the second quarter of 2023, 56 per cent lower than adjusted EBITDA of $20.3-million in the second quarter of 2022; the decrease in adjusted EBITDA was due to lower revenue in the current quarter. Adjusted net loss was $3.2-million in the second quarter of 2023, which excludes $4.2-million unrealized gain on financial instruments and a $500,000 writedown of assets, compared with an adjusted a net income of $5.4-million in the second quarter of 2022.

Consolidated net income was $500,000 for the second quarter of 2023, versus $2.7-million in the second quarter of 2022. Mandalay ended the second quarter of 2023 with $32.8-million in cash and cash equivalents.

Second quarter operational summary

The attached table below the company's operations, capital expenditures and operational unit costs for the three months and six months ended June 30, 2023, and 2022.

Costerfield gold-antimony mine, Victoria, Australia

Costerfield produced 7,296 ounces of gold and 517 tonnes of antimony for 10,453 gold equivalent ounces in the second quarter of 2023. Cash and all-in sustaining costs at Costerfield of $930 per ounce (oz) and $1,184 per oz, respectively, compared with cash and all-in sustaining costs of $646 per oz and $916 per oz, respectively, in the second quarter of 2022.

During Q2 2023, Costerfield generated $20.5-million in revenue and $5.2-million in adjusted EBITDA, which resulted in a net income of $800,000. Head grades during Q2 2023, which averaged 7.4 grams per tonne (g/t) gold and 2.4 per cent antimony, were below expectations as processed grades were adversely affected by a delay in stope progression into the higher-grade core of the Youle orebody, continuing normal course geology model reconciliations and a shortfall in mined tonnes due to delays in receiving a replacement remote loader.

Bjorkdal gold mine, Skelleftea, Sweden

Bjorkdal produced 10,397 ounces of gold in the second quarter of 2023, with cash and all-in sustaining costs of $1,389 per oz and $1,942 per oz, respectively, compared with cash and all-in sustaining costs of $1,696 per oz and $2,120 per oz, respectively, in the second quarter of 2022.

Bjorkdal generated consistent production and sales figures with $19.1-million, $5.4-million and $2.9-million in revenue, adjusted EBITDA and net loss, respectively, in Q2 2023. Production of 10,397 ounces was higher than the 8,316 ounces produced in the second quarter of 2022 due to the higher processed head grade. As compared with the same period last year, mined ore was up approximately 9 per cent as the new haulage fleet alleviated the prior bottleneck arising from a lack of available trucks. The increase in mined tonnes reduced the need to supplement the mill with the lower-grade stockpile material compared with the first quarter of 2023. With the continuing operational actions Mandalay is taking to improve production, unit costs at both sites over the balance of 2023 are expected to decrease compared with the first half of the year.

Lupin, Nunavut, Canada

Care and maintenance spending at Lupin was less than $100,000 during the second quarter of 2023, which was same as in the second quarter of 2022. Reclamation spending at Lupin was less than $100,000 during the second quarter of 2023, compared with $2.5-million in the second quarter of 2022. The majority of this reclamation work is expected during 2024 as Lupin is currently in the process of final closure and reclamation activities, which are mainly financed by progressive security reductions held by the Crown indigenous relations and Northern Affairs Canada.

La Quebrada, Chile

No work was carried out on the La Quebrada development property during Q2 2023.

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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). 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 the 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 the deeper Shepherd veins into production, both of which are expected to continue to supply high-grade ore to the processing plant and to extend Youle's 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.

Non-IFRS measures

This news release may contain references to income from mine operations before depreciation and depletion, adjusted EBITDA, adjusted net income, free cash flow, cash cost per saleable ounce of gold equivalent produced, and all-in sustaining cost, all of which are non-IFRS measures and do not have standardized meanings under IFRS. Therefore, these measures may not be comparable with similar measures presented by other issuers.

Management uses adjusted EBITDA and free cash flow as measures of operating performance to assist in assessing the company's ability to generate liquidity through operating cash flow to finance future working capital needs and to finance future capital expenditures, as well as to assist in comparing financial performance from period to period on a consistent basis. Management uses adjusted net income in order to facilitate an understanding of the company's financial performance prior to the impact of non-recurring or special items. The company believes that these measures are used by and are useful to investors and other users of the company's financial statements in evaluating the company's operating and cash performance because they allow for analysis of its financial results without regard to special, non-cash and other non-core items, which can vary substantially from company to company and over different periods.

For the company as a whole, cash cost per saleable gold equivalent ounce is calculated by summing the gold equivalent ounces produced by each site and dividing the total by the sum of cash operating costs at the sites. Consolidated cash cost excludes royalty and corporate level general and administrative expenses. This definition was updated in the third quarter of 2020 to exclude corporate general and administrative expenses to better align with industry standard. All-in sustaining cost per saleable ounce gold equivalent in the period equals the sum of cash costs associated with the production of gold equivalent ounces at all operating sites in the period plus corporate overhead expense in the period plus sustaining mining capital, royalty expense, accretion, depletion, depreciation and amortization, divided by the total saleable gold equivalent ounces produced in the period. A reconciliation between cost of sales and cash costs, and also cash cost to all-in sustaining costs, are included in the MD&A.

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