TORONTO, Dec. 20, 2013 /CNW/ – Mandalay Resources Corporation
(“Mandalay” or the “Company”) (TSX: MND) is pleased to announce that it
has signed a definitive purchase agreement (the “Purchase Agreement”)
with Silver Standard Resources, Inc. (“Silver Standard”) (NASDAQ: SSRI)
(TSX: SSO) to acquire the past-producing Challacollo silver property
(the “Project”) in Region 1, Northern Chile by purchasing all of the
shares of Silver Standard’s wholly-owned subsidiary Minera Silver
Standard Chile S.A. (“MSSC”).

As part of the due diligence process, Roscoe Postle Associates Inc.
(“RPA”) has estimated a new and independent NI 43-101-compliant Mineral
Resource for the Project, containing approximately 8 million ounces of
silver in the Indicated Resource category and approximately 25 million
ounces of silver in the Inferred Resource category.

Brad Mills, CEO of Mandalay commented, “The acquisition of the
Challacollo silver project is a significant growth step for Mandalay
and represents an excellent addition to our portfolio of assets in
Australia and Chile. With its well established resource, existing mine
infrastructure, significant exploration potential and a two- to
three-year timeline to production, Challacollo meets all of Mandalay’s
acquisition criteria. The terms of the acquisition include a similar
mix of cash, shares, deferred metal-denominated payments and royalty
payments that we have used successfully in previous acquisitions. The
purchase represents a headline value of approximately US$15.8 million
based on Mandalay’s recent share price of CAD$0.74/share. Further,
deferred consideration of five million shares and the cash equivalent
of 30,000 ounces of silver per quarter for eight quarters are
contingent on commercial production, thus reducing the acquisition risk
to Mandalay. We also welcome Silver Standard as a shareholder of
Mandalay and their vote of confidence in both Mandalay and the project
by taking Mandalay shares as a significant component of the
consideration for the transaction.”

The Transaction:

The Purchase Agreement provides that Mandalay will purchase all of the
issued and outstanding shares of MSSC in exchange for consideration of:

• US$7.5 million in cash, payable on closing.

• 12 million common shares of Mandalay to be issued to Silver Standard on
  closing, valued at US$8.3 million (CAD$0.74/share at Dec. 19, 2013
  close, using Bank of Canada exchange rate 1 CAD = .9367 USD for the
  same day).

• Five million common shares of Mandalay to be issued to Silver Standard
  at the end of the first quarter in which commencement of commercial
  production at the Project occurs.

• An aggregate cash payment equal to the equivalent of 240,000 ounces of
  refined silver, payable in eight quarterly installments equal to the
  cash equivalent of 30,000 ounces of refined silver per quarter, based
  on the average silver price for each such quarter, beginning with the
  quarter immediately following the quarter in which commencement of
  commercial production at the Project occurs.

• A 2% Net Smelter Returns royalty on silver sold from the Project in
  excess of 36 million ounces, with a cap/buyout of US$5 million.

Completion of the transaction is subject to a number of customary
conditions, including the receipt of applicable stock exchange
approvals. The transaction is expected to close in the first quarter
of 2014.

Mandalay’s advisors for the transaction include Goodmans LLP (Canadian
legal counsel), Philippi, Yrarrázaval, Pulido & Brunner (Chilean legal
counsel) and Roscoe Postle Associates Inc. (technical). Mandalay also
completed its own internal geology and exploration review of the
Project. As part of its engagement, RPA is preparing a NI
43-101-compliant Technical Report on the Project, which will be filed
on www.sedar.com and Mandalay’s website www.mandalayresources.com within 45 days of this press release.

About the Challacollo Property:

Challacollo is an epithermal silver deposit located in Region I,
Northern Chile. It is centered approximately 130 kilometres (“km”)
southeast of the major port city of Iquique. The Pan-American Highway
passes 30 km west of the property. Power transmission lines are located
15-30 km from the property, in part to service nearby mines such as
Collahuasi and Quebrada Blanca. The Project includes water rights.

The Project is situated within a metallogenic belt which parallels the
northern Chilean coastline that includes the Cerro Colorado porphyry
copper deposit and the El Peñon epithermal gold deposit. Silver
mineralization on the property is hosted in the Cretaceous Challacollo
volcanic complex of intermediate to silicic volcanic rocks and
associated sedimentary rocks that dip gently to the southeast.
Mineralization is contained in a system of northeast- to north-trending
epithermal quartz-carbonate-barite veins that have been oxidized to a
depth of at least 250 metres (“m”). The largest of these veins is the
Lolón Vein, which is more than 3.5 km in length and contains the entire
estimated Mineral Resource. The width of the vein exposed in workings
and drill holes varies from 2 m to 30 m and has an average width of 9 m
within the drilled length of the vein. Exploration potential exists
for strike extensions of the Lolón Vein in both directions, as well as
for similar, subparallel veins. Veins cropping out to the northwest of
the Lolón Vein are interpreted to represent deeper exposures of the
tilted terrane, possibly below favourable mineralization-forming
depths; veins cropping out to the southeast are interpreted to
represent shallower exposures, possibly above favourable
mineralization-forming depths. These latter veins have not been drilled
previously and represent excellent targets for exploration.

Silver has been produced from the Challacollo district since colonial
times by artisanal miners. Underground mining with rubber-tired
equipment and complemented variously by direct shipping, flotation and
agitation leach processing has also been used to extract and process
approximately 250,000 tonnes (t) of material from the Project, with
average grades of 660 grams/tonne (g/t) silver and 1.43 g/t gold prior
to December 1980, and approximately 70,000 t during the 1988-1990
period.

New Mineral Resource Estimate:

Mandalay commissioned RPA to complete a new mineral resource estimate
for the Project based on drilling and underground face sampling
completed by Silver Standard. The resource estimate, dated December 16,
2013, was prepared using a block model constrained with 3D
mineralization wireframes. Values for silver and gold were interpolated
into blocks using inverse distance cubed. RPA estimated the following
Measured, Indicated, and Inferred Resources contained in the Lolón
Vein:

	Million Tonnes	Ag g/t	Au g/t	Ag Moz	Au oz
Measured	–	–	–	–	–
Indicated	1.03	242	0.40	8.0	13,400
Inferred	4.0	193	0.32	24.9	41,200

Notes:
1.	CIM definitions were followed for classification of Mineral Resources.
2.	Mineral Resources are estimated at a silver equivalent (AgEq) cut-off grade of 110 g/t.
3.	Mineral Resources are estimated using a silver price of US$24/oz and a gold price of US$1,400 per ounce.
4.	High silver and gold assay values were capped to 700 g/t Ag and 3.0 g/t Au, respectively.
5.	Rock density of 2.4 g/cm³ was used.
6.	The silver equivalent equation is AgEq = g/t Ag + 63.97 * g/t Au.

Challacollo Development Plan:

Mandalay intends to begin a feasibility study for the Project promptly
upon closing of the transaction and anticipates that the study will be
completed by the end of 2014.

As well, Mandalay intends to begin the permitting process with
collection of critical baseline data starting as soon as possible after
close and continuing on to preparation of the permit applications as
soon as key information is available from the feasibility study.
Subject to receiving a positive feasibility study and permits, the
Company’s goal is to begin production at the Project within three years
of closing.

The Company will provide an update on the Challocollo development plan
in the first quarter of 2014.

Qualified Person:

Luke Evans, M.Sc., P.Eng, RPA Executive Vice President, Geology and
Resource Estimation, a Qualified Person under NI 43-101, prepared the
mineral resource estimate on which this press release is based and has
approved the technical information in this release. The complete
Technical Report supporting the estimate will be published on the
Mandalay website (www.mandalayresources.com) and on www.sedar.com within 45 days of this release.

About Mandalay Resources Corporation:

Mandalay Resources is a Canadian-based natural resource company with
producing gold-antimony assets in Australia and silver-gold assets in
Chile as well as exploration projects in Chile. Mandalay’s 2013
production guidance is 2.8-3.1 million ounces of silver, 38,000-46,000
ounces of gold and 2,800-3,000 tonnes of antimony. The Company is
profitable and pays a quarterly dividend of 6% of trailing quarterly
revenue.

About Silver Standard Resources Inc.:

Silver Standard Resources is a Vancouver-based mining company with
assets throughout the Americas. It is listed on the Toronto Stock
Exchange (TSX: SSO) and on the NASDAQ Global Market (NASDAQ: SSRI). The
Company owns and operates the Pirquitas mine in Jujuy, Argentina, which
is one of the largest primary silver mines in the world. Pirquitas
achieved commercial production in December 2009. In 2012, the mine
produced 8.6 million ounces of silver, exceeding production guidance
for the year, and is expected to produce approximately 8.0 million
ounces of silver in 2013. Silver Standard also has two wholly-owned
feasibility stage projects, Pitarrilla in Mexico and San Luis in Peru.

Forward-Looking Statements:

This news release contains “forward-looking statements” within the
meaning of applicable securities laws, including statements relating to
the proposed transaction and its terms, the Challacollo development
plan, the anticipated timing of a feasibility study for Challacollo and
the growth and strategy of Mandalay following completion of the
transaction. 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, risks that the parties will not proceed with the
proposed transaction, that the ultimate terms of the proposed
transaction will differ from those that currently are contemplated,
that the proposed transaction will not be successfully completed for
any reason, that exploration results at Challacollo may not meet
management’s current expectations, Mandalay’s ability to secure
additional financing, 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 27, 2013, a
copy of which is available under Mandalay’s profile at www.sedar.com.
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.

SOURCE Mandalay Resources Corporation