Mandalay Resources Announces Purchase of The Challacollo Silver Project in Northern Chile From Silver Standard Resources

TORONTO, December 20, 2013 /PRNewswire/ --

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.