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Press release from CNW Group

Mandalay Resources Corporation Delivers Record Production in Fourth Quarter 2010, Generates New Ore Intercepts in its Augusta Deeps Drill Program and Announces 2011 Production Plans at its Costerfield Gold-Antimony Mine, Australia

Thursday, January 13, 2011

Mandalay Resources Corporation Delivers Record Production in Fourth Quarter 2010, Generates New Ore Intercepts in its Augusta Deeps Drill Program and Announces 2011 Production Plans at its Costerfield Gold-Antimony Mine, Australia11:20 EST Thursday, January 13, 2011TORONTO, Jan. 13 /CNW/ - Mandalay Resources Corporation ("Mandalay" or the "Company") (TSX: MND, MND.WT) today announced record quarterly operating performance at its Costerfield gold-antimony mine in Victoria, Australia and its intention to prepare a new, independent NI 43-101 reserve and resource report for the mine.Record Quarterly Production for the Quarter Ending December 31, 2010During the three months ended December 31, 2010, the Costerfield mine produced a quarterly record 15,062 tonnes of ore while also mining a record 19,980 tonnes of waste and completing a record 1,124 metres of operating development. The mine also placed the second best quarterly total of 3,641 tonnes of backfill.During the quarter, the mill processed 13,481 tonnes of ore.  While not a record throughput tonnage, record high antimony grades (5.31% in fourth quarter, 2010, vs 4.22% year-to-date) and gold grades (9.04 g /t in fourth quarter, 2010 vs 7.36 g t year-to-date)  led to record concentrate production of 1,110 dry metric tonnes, saleable antimony production of 356 tonnes and saleable gold production of 2,330 ounces.  Sales volumes for the fourth quarter, 2010, are also records: 1,323 dry metric tonnes of concentrate, 420 tonnes of antimony, and 2,194 ounces of gold.The Costerfield operational plan for 2011 anticipates ore processing building from an average of approximately 5,000 tonnes per month in the fourth quarter, 2010, to an average of approximately 6,000 - 7,000 tonnes per month throughout 2011. The combination of higher throughput and higher grade is expected to lead to a significant increase in quarterly metal production in 2011 vs the fourth quarter, 2010.Planned 2011 Costerfield Production1 Q1 2011Q2 2011Q3 2011Q4 2011Ore tonnes processed19,000-21,00019,000-21,00019,000-21,00017,000-19,000Antimony tonnes sold500-600550-650700-800600-700Gold ounces sold3,500-4,0003,750-4,2504,750-5,2504,250-4,750Cost (US$) per Gold equiv. oz2550-600600-650500-550550-6001 See "Forward-Looking Statements" below.2 Au equiv. oz calculated at: Gold price = US$1,350/oz; Antimony price = US$11,500/tThe anticipated higher ore processing rate in 2011 is supported by, and assumes:The presence of approximately 5,000 tonnes of ore stockpiled as of December 31, 2010;Continuing the mine Decline to develop levels below the 1,000 level as fast as possible;Incremental production scheduled from shallow resources in the Augusta E and W-lodes not previously included in mine plans or reserves; andIncremental production scheduled from the nearby N-lode (development towards N-lode is currently underway).The expected higher quarterly metal production in 2011 is supported by, and assumes, the planned increased tonnage throughput described above, plus the higher grades indicated in new mine sampling, drill intercepts, and the resulting resource block model.Results of the 2010 Augusta Deeps Drilling ProgramA total of 11 new drill intercepts of the Augusta W-lode below the current workings were generated in 2010.  Together with the 10 historic drill intercepts from previous years, the new data is plotted on the long section below and summarized in the following assay table.http://files.newswire.ca/895/Augusta.pdfThis new information shows that the ore shoot extends to at least the 875 elevation (MH 204 and MH 205); more than 100 metres below the current bottom of the mine.  Whereas the northern margin of the ore shoot at depth is relatively well defined between the 4450N and 4500N northing by current workings and recent drilling (MH206 and MH208), the southern margin is yet to be bound at depth.  The Company plans to continue drilling on the Augusta Deeps target through 2011 with the goal of defining the southern and depth extents of ore.  Meanwhile, development of the Decline and associated mining levels is expected to continue below the 1,000 level, with the objective of extending the limits of measured resource (defined as resource based on closely spaced mine samples) by converting indicated and inferred resources (defined solely by drilling).New W Lode Drilling InterceptsHole IDInterceptNorthing(GDA94)InterceptEasting(GDA94)InterceptDepth(m)TrueWidth(m)GoldGrade(g/t)AntimonyGrade (%)MH1985914154.1304139.2213.70.3481.053.5MH1995914237.8304110.8262.84.2033.85.5MH 2005914158.4304119.8278.90.234.92.8MH 2035914271.7304098.6340.90.553.07.2MH 2045914277.4304099.4308.40.929.74.9MH 2055914276.6304099.6309.50.928.96.2MH 2065914278.3304105.3226.50.1013.22.4MH 2075914314.3304095.9228.41.460.90.2MH 2085914279.5304114.7197.01.214.80.4MH 2095914230.6304122.8203.31.3514.73.9MH2115914196.2304127.9201.20.6544.220.7 Previously Drilled Intercepts Below Current WorkingsHole IDInterceptNorthing(GDA94)InterceptEasting(GDA94)InterceptDepth(m)TrueWidth(m)GoldGrade(g/t)AntimonyGrade (%)MH1655914213.2304138.7174.70.2622.525.6MH1685914279.1304128.2167.80.8130.816.2MH1735914129.9304151.5184.40.7485.027.1MH1745914350.0304088.3198.10.0529.529.7MH1765914245.8304131.5164.60.5933.059.9MH1775914108.4304162.0159.40.2036.116.6MH1785914166.5304161.5158.80.613.52.9MH1795914184.0304122.5237.50.1467.845.4MH1825914145.4304163.2158.80.408.522.4MH1845914164.4304141.7184.90.2271.340.5Updated NI 43-101 ReportIn order to confirm the significant increase in reserves and resources at the Costerfield mine expected as a result of the positive drill results in the 2010 Augusta Deeps program and detailed sampling of the new mining levels accessed in 2010, Mandalay has commissioned an updated, independent NI 43-101 resource and reserve report for the mine. The Company expects to release this report with its 2010 annual report.Brad Mills, CEO of Mandalay, commented, "The hard work and focus of our staff has resulted in record fourth quarter production and sales volumes, demonstrating the capability of the ramped-up Costerfield mine and dramatic recovery from extremely high rainfall and associated flooding, electrical problems, ground conditions, and difficult ore processing experienced in the third quarter of 2010.  There are several portents of continued good results going forward:Ore grades as demonstrated in mine sampling along development drifts in the four new levels above the 1,000 level are significantly higher than the grades as estimated purely from exploration drilling;These higher head grades are showing up in the concentrator head grades of ore mined and in metal production quantities;The mine has delivered a balanced ore-waste development program synchronized with high rates of backfill for several months, indicating that a sufficient number of ore faces will be available to sustain tonnage rates going forward; andOur continued exploration drilling in the Augusta Deeps suggests the ore shoot continues at depth.We look forward to announcing the financial results associated with this record production, plus our updated reserves and resources, in our fourth quarter financial statements and annual report in mid-March 2011.""For 2011, we plan to grow our throughput rate to 6,000 - 7,000 tonnes per month and grow metal output beyond the levels seen in the fourth quarter of 2010.  With this planned output, and at current record high antimony prices, we expect cash costs per gold equivalent ounce to be low and margins high. The strong, planned cash flow performance of 2011 allows us to reinvest confidently in extending the life of the Augusta ore shoot at depth. In addition, we expect to commence district-wide brownfields exploration - drilling along the additional 10 kilometres of strike length of the Costerfield structure we control - in an attempt to locate similar or better orebodies in the district."Quality Assurance, Quality Control, and Qualified PersonSales volumes for the fourth quarter are provisional because final adjustment invoices have not yet been received from the customer. Drillhole collars and trajectories are surveyed by the Company's qualified Mine Surveyor and using calibrated surface and downhole survey instruments.  Diamond drill core is logged, photographed, split, and sampled by Mandalay personnel on-site.  Sampling and assays are performed according to a formal quality assurance and quality control (QA/QC) program as described in the NI43-101 Technical Report for Costerfield Operations dated April 2010.  Samples are transported by the Company exploration team members and Freight Man courier company to Onsite Laboratory Services (Bendigo), a laboratory that is independent of the Company and certified as complying with ISO9001:2000, for assay.. Standard assay and laboratory-prepared repeat assay analyses are also carried out by Onsite Laboratory Services. The Company's exploration team designed and executed the drilling program under the supervision of Mr. Neil Schunke, Mine Manager at Costerfield, a Qualified Person as defined by National Instrument 43-101, who has reviewed and approved the content of this news release.About Mandalay Resources Corporation: Mandalay Resources is a Canadian-based natural resource company with producing assets in Australia and Chile, along with 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 including, in particular, statements regarding anticipated production, processing, sales and costs from Mandalay's Costerfield mine in 2011, Mandalay's plans to continue to develop and explore the Costerfield mine, Mandalay's intention to produce an updated NI 43-101 mineral resource and reserve report for the Costerfield mine and its expectation that such report will disclose a significant increase in mineral resources and reserves and Mandalay's assumptions regarding gold and antimony prices in 2011. 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, currency exchange rates 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 OfficerGreg DiTomaso Investor Relations Contact: 647.260.1566 Email: g.ditomaso@mandalayresources.com  Company website: www.mandalayresources.com