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Press release from CNW Group

Mandalay Resources Corporation Announces Commencement of Underground Mining at its Cerro Bayo Gold-Silver Mine, Chile

Thursday, September 16, 2010

Mandalay Resources Corporation Announces Commencement of Underground Mining at its Cerro Bayo Gold-Silver Mine, Chile16:33 EDT Thursday, September 16, 2010 TORONTO, Sept. 16 /CNW/ - Mandalay Resources Corporation ("Mandalay" or the "Company") (TSX: MND, MND.WT) is pleased to report that it has commenced mining at its recently purchased Cerro Bayo silver-gold mine in Chile. The first blast was an ore round taken in the Fabiola vein, the first of four veins included in the base case restart plan.  Development mining is also planned to commence at the Dagny vein in the next few weeks.  Mandalay intends to stockpile development ore taken from these two mines for the remainder of 2010 and restart the mill in January, 2011. Mandalay currently expects development of the Delia vein to start in the first quarter of 2011. The operation, which has been on care and maintenance since October of 2008, is expected to produce 12,000 ounces of gold and 1.89 million ounces of silver in 2011 as the concentrator ramps up from its planned restart in January, 2011 to its planned processing rate of 20,000 - 25,000  tonnes per month in the third quarter of 2011. When full production is achieved (expected in Q3 2011), the mine is expected to deliver annual saleable production of approximately 20,000 - 25,000 ounces of gold and up to approximately 3 million ounces of silver.  Brad Mills, Chief Executive Officer of Mandalay, commented, "We are pleased to begin mining on schedule after closing the Cerro Bayo transaction, an achievement we had planned for, due to the fact that all permits are in-hand, the core leadership group was retained through the transaction, and the workforce largely remained in the Cerro Bayo area while the mine was on care and maintenance. Cerro Bayo is Mandalay's second operation, following the acquisition and restart of the Costerfield gold-antimony mine in Victoria, Australia, in December of 2009.  We look forward to continuing to deliver on our strategy of creating a portfolio of profitable mines, each one a self-funding growth project." Qualified Person: Ronald Luethe, General Manager of Mandalay Chile Ltda and an Idaho registered professional geologist and a member of the American Institute of Professional Geologists is a Qualified Person as defined by NI 43-101, and has reviewed and approved the technical and scientific information pertaining to the Cerro Bayo mine contained in this release. 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. 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: <p>Bradford Mills<br/>Chief Executive Officer<br/><br/>Greg DiTomaso<br/>Investor Relations<br/><br/>Contact: 647.260.1566<br/>Email: <a href="mailto:g.ditomaso@mandalayresources.com" cr="true">g.ditomaso@mandalayresources.com</a>  <br/><br/>Company website:<br/><a href="http://www.mandalayresources.com/" cr="true">www.mandalayresources.com</a></p>