Altius Minerals Corporation press release

Mandalay Resources announces positive Preliminary Economic Analysis, inception of Cuffley development, and exploration update for its Costerfield gold-antimony mine, Australia

2013-09-10

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TORONTO, Sept. 10, 2013/CNW/ - Mandalay Resources Corporation ("Mandalay" or the "Company") (TSX: MND) is pleased to provide the following update for its Costerfield gold-antimony mine in Victoria, Australia:

the Company has completed a Preliminary Economic Analysis ("PEA") of the Cuffley mine life extension, demonstrating enlarged Mineral Resources net of depletion relative to previously announced, year-end 2012 Mineral Resources and suggesting a financially robust four-year mine life with total potential saleable production of approximately 214,000 ounces of gold equivalent ("oz Au Eq.") and an after tax net present value ("NPV") of approximately $67 millionat a gold ("Au") price of $1,300/oz, an antimony ("Sb") price of $9,500/tonne ("t"), a 0.9 US Dollar("USD") per Australian Dollar ("AUD") exchange rate, and a discount rate of 5%;

the Company has begun capital development toward Cuffley, with the goal of demonstrating short-range grade continuity and mineability of Cuffley by year-end 2013 that will support conversion of currently Indicated Mineral Resources to Mineral Reserves. As of the end of July, 2013, 286 metres ("m") of a total of 330 m of decline necessary to access the planned bottom of the Cuffley ventilation shaft and escapeway are complete; and

the Company continues to generate mineralized intercepts in its resource extension and conversion drilling program on N-lode and Cuffley lode. It is expected that this work will support further growth of Costerfield Mineral Resources and Mineral Reserves, the next estimates of which are to be prepared at year-end 2013.

All dollar amounts presented in this press release are in U.S. dollars unless otherwise indicated.

The PEA was prepared by SRK Consulting (Australasia) Pty Ltd, Melbourne, Australia("SRK") and the full technical report will be filed on SEDAR and the Company's website within 45 days of this news release.

The PEA is preliminary in nature and includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves, and there is no certainty that the PEA based on these Mineral Resources will be realized. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

Brad Mills, CEO of Mandalay, commented, "The PEA suggests that the Cuffley lode is a robust project that could potentially extend the Costerfield mine life to at least the second quarter of 2017. During this four-year period, the Company could potentially produce a total of approximately 129,000 oz of saleable Au and 12,000 t of saleable Sb, amounting to approximately 214,000 saleable oz Au Eq. We intend to infill nearly all of the Inferred Resources modeled for extraction in the PEA in order to increase confidence to the Indicated level by early 2014. We also expect that much of this material will be converted to Probable Reserves with the first development of Cuffley mining levels (assuming demonstration of local grade continuity and mineability) by the end of 2013, making for a very low risk project. Total capital for the four-year Life of Mine ("LOM") is $28 million; approximately half of the total is for capital development and approximately a third of the total will be spent during 2013 simply developing initial access and first vein drives to demonstrate local grade continuity and mineability. Recent performance of the mine has demonstrated the Company's ability to operate continuously in the 10,000 to 12,000 tonnes per month ("t/m") range at low unit costs; this performance is expected to continue. At the conservative metal prices of the PEA, we expect that Costerfield can nearly self-fund the Cuffley investment during the peak investment period from now through the first quarter of 2014, with any remainder contributed from the Company's current cash position. The LOM cash operating cost is projected to average approximately $766/oz Au Eq., and the LOM total cost (operating plus capital cost) to average approximately $898/oz Au Eq. The Cuffley lode is expected to support a significant increase in mine production to 60,000 to 65,000 oz Au Eq. per year from the high-grade core of the lode through mid-2015. The Company will then have an option to increase the rate of mining and processing to approximately 15,000 t/m. We believe this will make it possible to sustain the high rate of annual metal production as the mill feed grades decline during the last two years of the current PEA study period. We intend to drill intensively between now and mid-year 2014 to demonstrate sufficient additional resources to justify the investment in the electrical power upgrade and mill expansion required for that 15,000 t/m rate, while adding to mine life at the expanded rate."

Mr. Mills continued, "The completion of the PEA and commitment of associated investments is a clear example of Mandalay's strategy in action. Costerfield was acquired in late 2009 on care and maintenance with no NI 43-101 compliant Mineral Resources or Mineral Reserves. It was promptly restarted, and in 2010 it produced 15,872 oz Au Eq. at a cash cost of $936/oz Au Eq. Over the last three years, it has funded itself to the following achievements:, improved safety and environmental performance; a sustainable staffing level; conversion to a new, more efficient mining method; a nearly doubled mining and processing rate; significantly reduced unit costs; and exploration success to support the nominal four-year mine life described by the PEA. Today the future looks bright, with good margins being achieved even at the recent low gold and antimony prices and with significantly more exploration potential to test going forward. We expect Costerfield to emerge as an even more significant value contributor to Mandalay as it achieves this next phase of growth over the coming months."

Highlights of the PEA

_Upgraded Cuffley resource - _The PEA includes a new Mineral Resource estimate for the Cuffley lode based on drill results through June 30, 2013(see Table 1 below).

| Table 1: Mineral Resources of the Cuffley lode as of June 30, 2013 | | | | | | | | | | | | Resource | | Tonnes (t) | | Sb Grade (%) | | Sb Contained (t) | | Au Grade (g/t) | | Au Contained (oz) | | Measured | | - | | - | | - | | - | | - | | Indicated | | 133,000 | | 5.4 | | 7,000 | | 16.9 | | 72,000 | | Measured + Indicated | | 133,000 | | 5.3 | | 7,000 | | 16.8 | | 72,000 | | Inferred | | 273,000 | | 3.2 | | 9,000 | | 10.4 | | 91,000 |

| 1. | Mineral Resources stated as of June 30, 2013. | | 2. | Mineral Resource estimate used relevant sample data as of June 30, 2013. | | 3. | Tonnes resource and Sb rounded to nearest thousand; oz Au rounded to nearest thousand. | | 4. | Mineral Resources stated according to CIM guidelines and include Mineral Reserves. | | 5. | A 3.6 g/t Au Eq. cut-off grade over a minimum mining width of 1.8 m is applied where Au Eq. is calculated at a gold price of $1,400/oz and an antimony price of $12,000/t. | | 6. | The cut-off grade has decreased from 4.7 g/t Au Eq. used in the December 31, 2012, Mineral Resource estimate due to changes in metal price assumptions, updated cost experience, recoveries and other assumptions. | | 7. | Mineral Resource estimate supervised and approved by Dr. Andrew Fowler, AMC Consultants Pty, BSc, PhD, MAIG and MAusIMM CP (Geo), who is a qualified person under NI 43-101. |

The infill drilling carried out in the first two quarters of 2013 accomplished the goal of increasing the certainty around the PEA resource: relative to the end-of-2012 estimate, the June 30, 2013estimate contains more tonnes of resource, more contained Sb and more contained Au in the Indicated Resource category and slightly less in the Inferred Resource category.

_Increased total Measured and Indicated Resources on the property - _In addition, the resources for the other Costerfield lodes, while not updated for new drilling and face sampling data (since the December 31, 2012Resource Estimate), were depleted for production through April 30, 2013and restated for the new 3.6 g/t Au Eq. cut-off grade applied in the PEA (see Table 2).

| _Table 2: Mineral Resource of the entire Costerfield property included in the PEA_ | | | | | | | | | | | | Resource | | Tonnes (t) | | Sb Grade (%) | | Sb Contained (t) | | Au Grade (g/t) | | Au Contained (oz) | | Measured | | 184,000 | | 4.3% | | 8,000 | | 7.1 | | 42,000 | | Indicated | | 534,000 | | 3.7% | | 20,000 | | 11.1 | | 190,000 | | Measured + Indicated | | 718,000 | | 3.9% | | 28,000 | | 10.1 | | 232,000 | | Inferred | | 680,000 | | 2.6% | | 18,000 | | 6.4 | | 140,000 |

| 1. | Mineral Resources estimated as of December 31, 2012, and depleted for production through April 30, 2013, except for Cuffley lode for which Mineral Resources are stated as of June 30, 2013. | | 2. | Mineral Resources stated according to CIM guidelines and include Mineral Reserves. | | 3. | Tonnes resource and Sb rounded to nearest thousand; oz Au rounded to nearest thousand. | | 4. | A 3.6 g/t Au Eq. cut-off grade over a minimum mining width of 1.8 m is applied where Au Eq. is calculated at a gold price of $1,400/oz and an antimony price of $12,000/t. | | 5. | The cut-off grade has decreased from 4.7 g/t Au Eq. used in the December 31, 2012, Mineral Resource estimate due to changes in metal price assumptions, updated cost experience, recoveries and other assumptions. | | 6. | Mineral Resource estimate supervised and approved by Dr. Andrew Fowler, AMC Consultants Pty, BSc, PhD, MAIG and MAusIMM CP (Geo), who is a qualified person under NI 43-101. |

Relative to the total property-wide resource at the end of 2012, this represents 35% more contained Sb and 44% more contained Au in the Measured plus Indicated categories. It represents 9% less Sb and unchanged Au in the Inferred Resource category. These changes are mostly due to a decrease in the cutoff grade from 4.7 to 3.6 g/t Au Eq. used in the respective estimates (based on recent operating experience) and to a change in the definition of sterilized resource in the Augusta lodes (based on revised mine design).

_Four-year mine plan_- The PEA identified 509,000 t of potential mill feed (Measured, Indicated and Inferred material) in the PEA LOM Plan at average grades of 3.8% Sb and 10.5 grams per tonne ("g/t") Au. The Company expects to mine this material at an average rate of 10,000 to 12,000 t/m through the second quarter of 2017. Over the four-year mine life, a total of 12,000 t saleable Sb and 129,000 oz saleable Au for a total of 214,000 saleable oz Au Eq. is expected to be produced and sold at an average of about 53,000 oz Au Eq. per year. Average cash cost over the LOM is $766/oz Au Eq. and average P&L cost (cash cost plus capital cost) is $898/oz Au Eq. At flat metal prices of $1,300/oz Au and $9,500/t Sb, with a 0.9 Australian dollar/U.S. dollar exchange rate, the after tax NPV of the project based on a 5% discount rate is $67 million. The after tax Internal Rate of Return ("IRR") is 3,309%.

Based on the robust results of the PEA, the Company is continuing capital development for the rest of the year at the current rate of capital development spending in order to complete the Cuffley decline, establish infrastructure at the bottom of the decline, and accomplish the on-vein secondary development required to demonstrate short-range continuity and mineability of the Mineral Resources. The Company anticipates mining approximately 4,000 t of Cuffley material by the end of 2013.

Drilling highlights

Drilling continued on the N-lode and Cuffley lode through July 30, 2013. The goal of this program was to define sufficient Inferred Resource to support the PEA as well as upgrade sufficient Inferred Resource to Indicated Resource to reduce the risk of the project.

_N-lode_- close-spaced drilling necessary to convert all of the Inferred Resource that is utilized in the PEA to Indicated Resource is nearly complete. Drilling results continue to expand the limits of the mineralized shoot to the north (click here for figure 2), and further expansion of Measured, Indicated, and Inferred Resources by the end of 2013 is expected. In addition, mining level development and sampling is expected to convert a significant part of the Indicated and Inferred Resources to Measured Resources (and Proven Reserves) by year-end.

_Cuffley lode_- close-spaced drilling has converted Inferred Resource to Indicated Resource around the previously defined, high-grade northern shoot and extended the limits of mineralization to the south and at depth (click here for figure 3). At the current rate of drilling, it is expected that all the Inferred material targeted by the PEA will be infill drilled by early second quarter of 2014.

The Company has approved continuing the current rate of drilling (three rigs) through the end of the year to continue resource extension and infill drilling with the goal of adding as much Mineral Resources and converting as much Mineral Resources to Mineral Reserves by the end of the year as possible.

Costerfield drilling, sampling, and assaying

From January 1 to July 30, 2013, Mandalay drilled 13,416 m in 53 holes for approximately $2.9 million. In addition, the Company completed 3,123 m of on-vein operating development and took an associated 746 face samples of the E-, W-, and N-lodes in the Augusta mine.

Drill core was logged and sampled by Costerfield geologists, who also performed mine sampling of the development advances. All samples were sent to Onsite Labs in Bendigo, Victoria, Australia, for sample preparation and assay. Site geological and metallurgical personnel have implemented a QA/QC process that includes the regular submission of standard reference materials and blanks with drill and face samples submitted for assay. Standard reference materials have been certified by Geostats Pty Ltd. (see Costerfield Technical Report filed March 28, 2013, which contains a complete description of drilling, sampling, assaying and data verification procedures).

Costerfield drill results

For the locations of the N-lode, Cuffley lode, and W-lode, please click here for figure 1.

N-lode

Drilling results for N-lode appear in Table 3. Please click here for figure 2, which displays drill results and mine sampling results as long section.

Table 3: N-lode drill results

| Hole ID | Hole Completion Date | Intercept Northing (Mine Grid, m) | Intercept Easting (Mine Grid, m) | Relative Elevation (m) | *True Width (m) | Gold Grade (g/t) | Antimony Grade (%) | Hole Depth (m) | | MH239 | 3/Dec/12 | 4588 | 15312 | 984 | 0.210 | 101.8 | 45.2 | 171.7 | | MH309 | 19/Dec/12 | 4593 | 15292 | 880 | 0.110 | 98.1 | 46.3 | 215.8 | | MH331 | 18/Mar/13 | 4523 | 15306 | 858 | 1.260 | 0.2 | 0.1 | 252.3 | | MH333 | 21/Feb/13 | 4479 | 15312 | 849 | 0.129 | 0.2 | 0.0 | 402.3 | | MH334 | 4/Mar/13 | 4435 | 15313 | 843 | 0.112 | 0.6 | 8.2 | 407.0 | | MH335 | 12/Mar/13 | 4632 | 15307 | 952 | 0.116 | 68.9 | 38.5 | 411.5 | | MH336 | 26/Mar/13 | 4638 | 15299 | 905 | 0.334 | 113.2 | 59.5 | 402.4 | | MH337 | 8/Apr/13 | 4641 | 15294 | 854 | 0.282 | 24.6 | 45.8 | 459.4 | | MH338 | 12/Apr/13 | 4607 | 15289 | 847 | 0.192 | 0.7 | 0.6 | 250.2 | | MH339 | 17/Apr/13 | 4527 | 15307 | 891 | 0.328 | 45.2 | 42.3 | 276.2 | | MH341 | 29/Apr/13 | 4590 | 15296 | 932 | 0.450 | 80.1 | 46.0 | 437.4 | | MH348 | 3/May/13 | 4636 | 15322 | 985 | 0.417 | 22.6 | 3.0 | 195.1 | | MH349 | 8/May/13 | 4663 | 15307 | 939 | 0.212 | 118.9 | 36.9 | 229.2 | | MH350 | 13/May/13 | 4638 | 15297 | 883 | 0.338 | 166.5 | 46.0 | 249.5 | | MH351 | 16/May/13 | 4707 | 15341 | 1039 | 0.090 | 99.2 | 23.1 | 201.1 | | MH352A | 22/May/13 | 4700 | 15321 | 976 | 0.083 | 17.8 | 11.1 | 221.2 | | MB023 | 16/Jan/13 | 4859 | 15343 | 964 | 0.120 | 13.0 | 16.8 | 344.6 | | MB025 | 18/Dec/12 | 5009 | 15373 | 1022 | 0.080 | 4.7 | 14.5 | 305.6 | | MB024 | 2/Apr/13 | 4704 | 15342 | 1064 | 0.333 | 0.9 | 0.6 | 163.0 | | MB027 | 11/Apr/13 | 4773 | 15339 | 1019 | 0.676 | 41.6 | 21.2 | 241.4 | | MB029 | 10/May/13 | 4731 | 15345 | 1031 | 0.068 | 9.1 | 2.1 | 242.8 | | MB028 | 22/Apr/13 | 4774 | 15340 | 972 | 0.160 | 0.2 | 0.0 | 288.3 | | MB031 | 7/Jun/13 | 4717 | 15334 | 962 | 1.750 | 3.8 | 1.8 | 380.4 | | MB032 | 21/Jun/13 | 4757 | 15350 | 990 | 1.310 | 64.9 | 2.8 | 380.7 |

On the N-lode long section (click here), it can be seen that the new drill results have extended the limits of mineralization approximately 50-100 m north of the limits of Measured, Indicated, and Inferred Resources in the December 31, 2012, Mineral Resource Estimate. As well, recent face sampling of the 10 m-spaced upper levels of N-lode have extended high-grade mineralization beyond the limits of previously Measured Resources out into Indicated, Inferred, and even previously un-estimated areas of the lode. Continued drilling is expected to extend the limits and fill in mineralization in N-lode; significant resource additions in all categories are anticipated by year-end.

Cuffley lode

Drilling results for Cuffley lode appear in Table 4. Please click here for figure 3, which displays drill results in long section.

Table 4: Cuffley lode drill results

| Hole ID | Hole Completion Date | Intercept Northing (Mine Grid, m) | Intercept Easting (Mine Grid, m) | Relative Elevation (m) | *True Width (m) | Gold Grade (g/t) | Antimony Grade (%) | Hole Depth (m) | | AD022W1 | 8/Feb/13 | 5007 | 15178 | 737 | 0.123 | 101.4 | 5.9 | 593.4 | | MH333 | 21/Feb/13 | 4493 | 15114 | 783 | 0.068 | 1.8 | 0.3 | 402.3 | | MH334 | 1/Mar/13 | 4402 | 15105 | 767 | 0.120 | 0.5 | 0.1 | 407.0 | | AD022W3 | 3/Apr/13 | 4982 | 15180 | 784 | 1.105 | 2.4 | 0.6 | 458.5 | | MH336 | 26/Mar/13 | 4688 | 15183 | 814 | 0.958 | 0.3 | 2.5 | 402.4 | | MH335 | 12/Mar/13 | 4692 | 15152 | 875 | 1.904 | 0.6 | 0.0 | 411.5 | | AD026 | 28/Feb/13 | 4864 | 15156 | 744 | 0.361 | 18.1 | 0.6 | 543.3 | | AD026W1 | 22/Mar/13 | 4871 | 15150 | 691 | 0.709 | 3.5 | 1.5 | 606.2 | | MH337 | 8/Apr/13 | 4691 | 15189 | 740 | 0.091 | 0.7 | 0.0 | 459.4 | | AD030 | 15/Apr/13 | 5011 | 15185 | 990 | 0.330 | 39.7 | 25.6 | 245.6 | | AD031 | 26/Apr/13 | 4988 | 15183 | 1037 | 0.960 | 12.5 | 8.4 | 251.6 | | MH341 | 29/Apr/13 | 4610 | 15121 | 832 | 0.139 | 1.2 | 0.0 | 437.4 | | MB018 | 29/Apr/13 | 4789 | 15126 | 713 | 0.210 | 6.3 | 3.4 | 680.4 | | AD032 | 8/May/13 | 4964 | 15173 | 992 | 1.038 | 106.2 | 17.4 | 255.6 | | AD039 | 22/May/13 | 4991 | 15195 | 918 | 0.146 | 32.8 | 33.0 | 386.3 | | AD040 | 6/Jun/13 | 4955 | 15187 | 890 | 0.696 | 7.0 | 1.9 | 434.6 | | AD041 | 20/Jun/13 | 4966 | 15186 | 915 | 0.102 | 16.4 | 12.7 | 329.7 | | AD042 | 3/Jul/13 | 4925 | 15189 | 935 | 0.602 | 1.6 | 0.3 | 316.4 | | AD051 | 16/Jul/13 | 4793 | 15171 | 920 | 0.816 | 0.9 | 0.1 | 276.2 | | * True widths may vary from those used in resource estimation | | | | | | | | |

In the long section, the impact of new intercepts in extending the volume of Indicated Resources can be seen. As well, several new intercepts, although too sparse to support Inferred Resources, suggest extension of mineralization more than 100 m below the limits of Inferred Resources.

W-Lode

Drilling results for W-lode appear in Table 5.

Table 5: W-lode drill results

Mandalay Resources announces positive Preliminary Economic Analysis, inception of Cuffley development, and exploration update for its Costerfield gold-antimony mine, Australia

Highlights of the PEA

Drilling highlights

Costerfield drilling, sampling, and assaying

Costerfield drill results

Earlier from Altius Minerals Corporation