MAR
2016
TSX // MND
1
Quality Control and Assurance
Quality control and assurance programs are implemented in line with the standards of National Instrument 43-101.
The exploration programs at Costerfield and Bjorkdal are supervised by Chris Gregory (Member, Australian Institute of Geoscientists, VP of Operational Geology for Mandalay and a“Qualified Person” as defined under National Instrument 43-101. Mr. Gregory regularly visits Costerfield and Bjorkdal, and supervises the collection and interpretation of scientific and technical information contained in this presentation.
The exploration programs at the Cerro Bayo and Challacollo projects are supervised by Scott Manske, Chief Cordilleran Geologist of Mandalay Resources, and an Oregon registered Professional Geologist. A“Qualified Person” as defined by NI 43-101, he has reviewed and approved the technical and scientific information on these projects contained in the presentation.
Dr. Mark Sander (Member: AusIMM), President of Mandalay, has visited the Costerfield, Cerro Bayo, Challacollo, and Björkdal and has supervised the preparation of this presentation.
All currency references in US$ unless otherwiseindicated
Forward-looking Statements
This presentation contains "forward-looking statements" within the meaning of applicable securities laws, including statements relating to life of mine production plans, exploration plans and the growth and strategy of Mandalay. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things: exploration results or production results not meeting management’s expectations; capital, production and operating cost results not meeting current plans; and 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. A description of additional risks that could result in actual results and developments differing from those contemplated by forward looking statements in this news release can be found under the heading“Risk Factors” in Mandalay’s annual information form dated March 31, 2015 and in its final prospectus dated September 2, 2014, copies of which are available under Mandalay's profile atwww.sedar.com.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-lookingstatements.
2
Profitable & Dividend-Paying (4.8% yield)*
We create exceptional shareholder value through the acquisition of undervalued assets that can rapidly become cash generative, self-fund exploration, establish and maintain high operating margins and return cash to shareholders within a planned period of time. Mandalay is committed to operating safely and in an environmentally responsible manner, while developing a high level of community and employee
engagement
WE ARE SUCCESSFUL WHEN:
Our employees live and work safely and experience the personal satisfaction that comes with high performance and recognition The communities in which we operate value our presence
Our environmental impact is minimized and causes no permanent harm
We have a large, diversified set of customers who are delighted with and compete for our products
Our shareholders realize a superior total return on their investment and support our corporate values.
Our values are visibly demonstrated by strong local management, at the point of impact with or stakeholders, and co-ordinated across the Company for maximum effect
Mandalay: A Values-Based & Value-Focused Company
* Current annualized dividend yield based on $0.88 share price (Feb. 26, 2016)
3
2009
• Costerfield,Australia
• Gold &Antimony
2010
• Cerro Bayo, Chile
• Silver & Gold
2013
• Challacollo,Chile
• Silver & Gold
2014
• Björkdal, Sweden
• Gold
Delivering Consistent Value
TIMELINE
1. The Company defines EBITDA as earnings before interest, taxes and non cash charges/ (income). EBITDA should not be considered by an investor as an alternative to net income or cash flow as determined in accordance with IFRS.
2015 Quarterly Financial
Measures Revenue, EBITDA
(1)&
Cash from Operations
Revenue EBITDA Cash from Operations
4
1. Adjusted for reinvested dividends. Assumes investment in Mandalay made as part of private placement announced on 24-Sep-09 to fund acquisition of Costerfield and accounts for warrant exchange offer of 0.47 shares per warrant. End date as at Feb. 18, 2016. 2. Peer Index: Argonaut, Dundee PM, Kirkland, Lake Shore, OceanaGold, Perseus, Primero, Timmins. 3. Gold Seniors: Agnico Eagle, AngloGold, Barrick, Goldcorp, Gold Fields, Kinross, Newcrest, Newmont, Polyus, Yamana.
Mandalay Shareholders Realize a Superior Total Return on their Investment
$0
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
2010 2011 2012 2013 2014 2015
Dividends Paid (USD)**
6% of revenues (dividend contribution) 50%
100%
150%
200%
250%
300%
Q3 2009
Q1 2010
Q3 2010
Q1 2011
Q3 2011
Q1 2012
Q3 2012
Q1 2013
Q3 2013
Q1 2014
Q3 2014
Q1 2015
Q3 2015
Mandalay Cumulative Returns
9.5% Annual Compounded Rate of Return GoldSilver
Cumulative Total Return (% Value Change)*
*Q3 2010 to Q4 2015, includes all dividends paid. Source: MetalPrices.com for metal spot prices Index: September 30, 2009 = 100. Mandalay share price: $0.64.
Graph updated quarterly, prices as at the last trading day of each respective quarter.
**Annual cash dividend paid quarterly, based on 6% of the Company’s trailing quarter’s gross revenue and the future cash requirements of the Company
0 2 4 6 8 10 12 14 16 18 20
$0
$20,000
$40,000
$60,000
$80,000
$100,000
Volume (millions)
Investment Value
Mandalay(1) Peer Index(2) Gold Senior(3)
Total Return vs. Peers and Seniors
A $10,000 investment on September 24, 2009 would be worth:
• Mandalay: $56,255
• Peer Index: $9,165
• Gold Seniors: $3,881
5
5
Land package 12,747 hectares
Ownership 100%
Number of Employees
(1)145 direct, 65 contractors: 210 total
2015 Production 44,039 oz Au
2016E Production 50,000 – 55,000 oz Au
P&P Reserves
(2)7.0 Mt @ 1.85 g/t Au
Current throughput 3,500 tpd
Plant recoveries (2015) Au: 88%
2016 Planned Exploration Budget $3 million
1. As at year-end 2014, filed in Company’s Annual Information Form 2. Please see notes to Reserves on Company website
Björkdal Gold Mine: Overview
6
Björkdal Mineral Reserves and Resources
Björkdal Reserves Tonnage (t) Au Grade (g/t) Au (cont. oz)
Proven - - -
Probable 7,012,000 1.85 418,000
Total 7,012,000 1.85 418,000
Björkdal Resources Tonnage (t) Au Grade (g/t) Au (cont. oz)
Measured - - -
Indicated 7,524,000 2.47 598,000
Measured + Indicated 7,524,000 2.47 598,000
Inferred 1,552,000 1.86 93,000
Source: Björkdal – Roscoe Postle Associates, Effective December 31, 2015, please refer to Mandalay Resources’ press release dated Feb. 29, 2016
7
Björkdal Gold District – 2016 Exploration
2 KM
Pit 2
8
Björkdal Mine:
MI&I Resources P&P Reserves Open Pit
Underground
Mine Target Storheden
Intercepts under tailings
Nylunds
Potential open pit –
infill drilling 2016 Rönnberget
Historic and current
drilling with high-
grade intercepts
No granodiorite – all rocks are metasomatised volcanic and sedimentary rocks
No thrust – contacts are stratigraphic and/or metasomatic
Two main sets of qtz veins – mine developed along visually prominent but lower grade set No gold in wallrock
Bigger system – gold in veins 1- 5 km from pit
Geology at Björkdal
•
•
•
•
•
Grandodiorite Marble
• Significant gold in wallrock
9
Geology Today (Q1 2016):
Geology at Acquisition (Q3 2014):
Björkdal Geology and Mining Transformation
10
Improved knowledge:
• Fundamental geology of district and mine
• Understanding gold distribution in the vein system
Plus new operating practices:
• Commitment to exploration - (US$3.0 million in 2016)
• Detailed drill core logging and sampling
• Detailed face mapping and chip sampling every blast; discard low-grade on-vein advances and detailed stope design, leaving behind low-grade segments
• Commitment to in-mine drilling (both POD and extensional)
• Local assay lab under construction – LeachWell process (large samples so more accurate;
high capacity and fast turnaround)
• Commitment to test programs to confirm/measure improvements
• Geology informing mining decisions (small cross-discipline teams)
Leading to:
• More selective and geologically-controlled extraction supported by improved resource modelling
• Increased reserves
• Improved grades from underground and open pit
• An improved, deliverable economic mine plan – with real-time grade control
• Production of more ounces of gold from existing capacity at lower cost/oz
11
NYLUNDS
Björkdal 2015 Drill Results
NYLUNDS
Detailed Gold Distribution in Test Drilling Area
• Two dominant gold-bearing vein directions 070 and 090 (mine-grid), or 040 and 060 (True North)
• 090 veins seem relatively continuous however, the grade within is not
• Grade decreases with increasing lode width (Au endowment is equal between thick and thin veins)
Observations:
Grade increases at vein intersections
Grade is not continuous along either vein orientation
A’
A
30
°
12
Detailed Au Distribution: In Sulfidic Veins of 090 Strike
Milky Quartz – Low-grade, especially when wide – 070° trend veining. Averaging below 1g/t. These wide, milky 070
trending veins were the focus of previous operators
Sulfidic Quartz – Sulphide-rich veins
(pyrrhotite+pyrite), ± actinolite and/or biotite.
Variable grade but usually likely to contain 5+
g/t (in test area). Strike 090°, sub-vertical dip.
Can cause intense alteration/bleaching on wall- rock (albite and chlorite, minor calc-silicate)
Mixed veins – Overprinting of sulfidic quartz over milky quartz. Suggest the later sulfidic veins are responsible for the grade within 070° striking veins (that are most often solely composed of milky quartz)
milky qtz – low Au
sulfidic qtz – high Au milky qtz – low Au
vein contact
12
Note: these vein orientations are measured against Mine Grid North, which is 330 Magnetic North
Grade Control Improvements at Björkdal
Current Step: In first 3 weeks of on-vein selectivity, sample set totals 12,890 t @ 2.37 g/t Au. Historically, entire
tonnage would be sent to plant.
With new selectivity, tonnage would be:
9,154 t above >0.7 @ 3.18 g/t Au sent to mill
2,239 t @ 0.49 g/t Au stockpiled
1,497 t @ 0.23 g/t, sent to waste
Next step: Implement selective mining for stoping ore
14
?
15 m levels 20 m levels
5 X 5 3.5 X 3.5 On Vein Selectivity
Reducing Level Spacing
Closer levels (15 m vs old 20 m) will reduce exits of subvertical veins out of stopes
Will take time to clear 18 mo inventory at old geometry Reducing Drift Size
Now that Au hosted in vein walls disproved, smaller drifts on the right mineralized veins will reduce dilution
Next Step: Reduce drift size from the old 5 m to 3.5 m
Increasing On-Vein Selectivity 2015 chip sampling in the
drive shown suggested 1/3 of
mined material is high-grade
(Coloured).1/3 is marginal
(Greyed) and 1/3 is waste.
Open Pit Grade Improvement by BMM Technology
Insert Blast Movement Monitoring balls in extra blast holes in high grade zones
Location of balls after blast used to locate and selectively load displaced ore zones
Expected 0.1-0.2 g/t improvement in mill head grade (from 0.8-1.1 g/t)
15
Björkdal Processing Improvements
16
Completed:
Sampling survey on milling and gravity gold circuits to identify improvement opportunities
Laboratory flotation recovery study on effect of fineness of grind,
% solids, and residence time – key for decision-making on possible future flotation circuit expansion
2016 Planned Improvements:
Milling/Flotation material flow stability survey to identify areas where automation can be implemented to improve recovery
Introduction of high chrome grinding media for increased wear resistance, grinding media cost saving and improved pulp chemistry for improved flotation recovery
Flotation circuit and ancillary equipment expansion study to determine OPEX and CAPEX for a planned flotation circuit expansion to improve flotation recovery and concentrate grade
Pilot tests to investigate the improvement of coarse, fine, and
ultra-fine particle gold recovery in the flotation circuit
Ore sorting at Björkdal
Stockpiled Mixed Low-Grade Material
Sorted Waste – no veins Sorted Ore – with veins
Bulk Test Start Grade End Grade Times Upgraded Waste Rejection Gold Retained
g/t Au g/t Au (%) (%)
Underground Ore 1.93 2.97 1.54 43.0 87.0
Stockpile Ore 0.81 1.11 1.37 30.0 96.0
