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Press release from CNW Group

Mandalay Resources announces completion of CDN $23 million offering and changes to its Board of Directors

Friday, August 06, 2010

Mandalay Resources announces completion of CDN $23 million offering and changes to its Board of Directors17:40 EDT Friday, August 06, 2010TORONTO, Aug. 6 /CNW/ - Mandalay Resources Corporation (TSX: MND, MND.WT) ("Mandalay" or the "Company") is pleased to announce that it has completed the previously announced offering (the "Offering") of subscription receipts (the "Subscription Receipts") pursuant to a short form prospectus dated July 27, 2010 at a price of $0.28 for aggregate gross proceeds of CDN$23 million. The Offering was co-led by GMP Securities L.P. and BMO Capital Markets (the "Agents"). The proceeds will be used to fund the cash portion of the purchase price for the acquisition (the "Acquisition") of Compania Minera Cerro Bayo Ltda. ("Minera Cerro Bayo"), a wholly owned, Chilean subsidiary of Coeur d'Alene Mines Corporation ("Coeur") and the balance will be used to fund Cerro Bayo mine development, exploration and plant improvements as well as general working capital. All of the conditions precedent to the Acquisition have been satisfied and the formal completion of the closing is only subject to Coeur receiving the balance of the purchase price which is expected to occur on August 9, 2010.Brad Mills, CEO of Mandalay, said "The acquisition of the Cerro Bayo gold-silver mine is the second step of our strategy of building a portfolio of near-term producing, self-funding growth projects. Our first acquisition, the Costerfield, Australia, gold-antimony mine has ramped up its production, is generating cash, and has begun drilling to define reserves and resources for mine life extension. At Cerro Bayo we will begin mine development and launch exploration with the goal of proving significant additional reserves by the time the mill starts commercial production in early 2011. When the two mines are producing, our revenue will be well diversified among gold, silver, and antimony coming from high-grade mining operations in two mining-friendly countries."The gross proceeds of the Offering less an amount equal to the expenses of the Agents in connection with the Offering were held in escrow pending satisfaction of certain release conditions (the "Release Conditions"), including the satisfaction of the conditions precedent to the Acquisition and the receipt by the Company of the conditional listing approval of the Toronto Stock Exchange (the "TSX") of the common shares (the "Common Shares") and warrants (the "Warrants") underlying the Subscription Receipts as well as the common shares underlying the Warrants (the "Warrant Shares").All of the Release Conditions were satisfied, and each Subscription Receipt was automatically exchanged without payment of any additional consideration for one Common Share and one Warrant. Each Warrant is exchangeable into one Warrant Share at a price of $0.33 for a period of 24 months. Upon the exchange of the Subscription Receipts for Common Shares and Warrants, the Company paid the Agents a commission equal to 5% of the gross proceeds received by the Company from the Offering or $1.15 million. Of this amount, $100,000 was paid in cash, and the balance was paid by Mandalay issuing 3,750,000 Common Shares and 3,750,000 Warrants to the Agents.After giving effect to the Offering, the issuance of 17,857,143 Common Shares to Coeur as part of the consideration for the Acquisition and the issuance of 3,750,000 Common Shares to the Agents, the Company has 203,142,850 Common Shares outstanding.Under the Offering and pursuant to the Company's prospectus, West Face Capital Inc. ("West Face") acquired control of 71,428,500 Subscription Receipts purchased by West Face Long Term Opportunities Global Master L.P. ("West Face GM"), a fund managed by West Face. The conversion of the Subscription Receipts resulted in West Face controlling and West Face GM owning 71,428,500 Common Shares, representing approximately 35% of the outstanding shares, and 71,428,500 Warrants. As a result West Face and West Face GM have a securityholding percentage, calculated in accordance with National Instrument 62-103 The Early Warning System and Related Take Over Bid and Insider Reporting Issues, of approximately 52%.West Face GM acquired these securities for investment purposes. West Face and West Face GM may in the future acquire or dispose of these and other securities of the Company or related financial instruments in the open market or in privately negotiated purchases or otherwise, in each case to the extent then permitted by applicable law and regulation.Under applicable TSX rules, the issuance of more than 20% of the Company's outstanding Common Shares to West Face GM pursuant to the Offering required the approval of the Company's shareholders. The Company obtained this approval prior to closing by way of a written resolution signed by the holders of a majority of the outstanding Common Shares.Based on public filings, Western Coal Corp. ("WCC") currently holds 48,000,000 Common Shares representing approximately 24% of the outstanding Common Shares and Warrants to acquire an additional 16,000,000 Common Shares.In connection with the Offering, the Company entered into a securityholders agreement with West Face GM whereby West Face GM was given the right to appoint two nominees to the Company's Board of Directors ( the "Board") for so long as it holds at least 20% of the Company's outstanding Common Shares and one nominee to the Board for so long as it holds at least 10% of the outstanding Common Shares. Also in connection with the Offering, the Company agreed to appoint one nominee of WCC to the Board. To accommodate these changes, the Company increased the size of the Board to seven, Gordon Watts and John Conlon resigned, Peter Jones and Tony Griffin were appointed as West Face GM's nominees and Braam Jonker was appointed as WCC's nominee.Brad Mills commented, "On behalf of the Company, I look forward to working with new Board members, Messrs. Jones, Griffin and Jonker, whose experience and industry knowledge will undoubtedly benefit Mandalay."Brief biographies of the new directors are as follows:Peter R. Jones, P. Eng.Mr. Jones is a retired mining executive and Professional Engineer with 40 years of experience in senior operational and project positions at coal, gold, base metal and potash mines. He has also consulted in many countries. Previously he was CEO of Hudson Bay Mining and Smelting Co., Limited (HBMS) for Anglo American, President and CEO of HudBay Minerals and Chairman and CEO of Adanac Molybdenum. He is a past Chairman of the Mining Association of Canada and in 2006 was named prairie region, Entrepreneur of the Year, by Ernst and Young. Mr. Jones is an advocate of corporate governance and graduated from the Camborne School of Mines, UK. in 1969 and the Banff School of Advanced Management in 1984.Tony GriffinMr. Griffin is a Partner with West Face Capital Inc., a Toronto based investment manager. Prior to joining West Face, Mr. Griffin was a Managing Director of Amaranth Advisors Canada (ULC). Mr. Griffin holds a Bachelor of Commerce from the University of British Columbia.Braam JonkerMr. Jonker is a Chartered Accountant (South Africa and England and Wales) and has over 15 years of extensive accounting and corporate finance experience, mostly in the mining industry. He has worked as a consultant to the mining sector in Africa, spent time with Mwana Africa Plc, and with the corporate finance departments at Anglo American Corporation and PricewaterhouseCoopers. Most recently, Mr. Jonker was the Chief Financial Officer of Cambrian Mining Plc. Mr. Jonker joined Western Coal in July 2009.For a copy of the early warning report filed by West Face in connection with the acquisition of securities of the Company, please contact: << Alexander A. Singh West Face Capital Inc. 2 Bloor Street East Suite 810 P.O. Box 85 Toronto, Ontario M4W 1A8 (647) 724-8900 About Mandalay Resources Corporation: ------------------------------------- >> Mandalay Resources is a Canadian-based natural resource company with producing assets in Australia and exploration projects in Chile. The Company is focused on executing a roll-up strategy, creating critical mass by aggregating advanced or in-production gold, copper, silver and antimony projects in Australia and the Americas to generate near-term cash flow and shareholder value. << Disclaimer: ----------- >> The securities described herein have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws, and accordingly, may not be offered or sold within the United States except in compliance with the registration requirements of the U.S. Securities Act and applicable state securities requirements or pursuant to exemptions therefrom. This press release does not constitute an offer to sell or a solicitation of an offer to buy any of the Company's securities in the United States. << Forward-Looking Statements: --------------------------- >> This news release contains "forward-looking statements" within the meaning of applicable securities laws. Readers are cautioned not to place undue reliance on forward-looking statements. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, changes in commodity prices and general market and economic conditions. The factors identified above are not intended to represent a complete list of the factors that could affect Mandalay. In addition, there can be no assurance that any inferred resources that are discovered as a result of additional drilling will ever be upgraded to proven or probable reserves. Although Mandalay has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.For further information: Bradford Mills, Chief Executive Officer, Greg DiTomaso, Investor Relations, Contact: 647.260.1566, Email: g.ditomaso@mandalayresources.com, Company website: www.mandalayresources.com