Mandalay Resources Corporation Announces Proposed US$60 Million Debt Financing

TORONTO, April 23, 2014 /PRNewswire/ --

Mandalay Resources Corporation ("Mandalay" or "the Company") (TSX:MND) announced today that it intends to borrow US$60 million from Gold Exchangeable Limited, an unaffiliated special purpose vehicle incorporated in Jersey (the "Issuer"). The Issuer has today launched a proposed private placement offering of US$60 million of senior exchangeable bonds (the "Bonds") and the Company, through its wholly owned subsidiary Mandalay Resources Finance Limited (the "Borrower"), intends to borrow the proceeds of the Bond offering from the Issuer under the terms of a loan agreement and related funding agreement (together, the "Loan Agreements") which together mirror the terms of the Bonds. The performance of the Borrower's obligations under the Loan Agreements will be guaranteed by the Company to the Issuer.

Mandalay is pursuing the financing in order to take advantage of attractive market conditions that provide an opportunity to secure long-term financing at favourable terms. Mandalay intends to use the proceeds for general corporate purposes.

Mandalay notes that:

• the Bonds will become due five years from issuance (the "Maturity Date"), will be issued at par and are expected to carry a coupon of between 5.0% and 5.5% per annum payable semi-annually in arrears;
• the Bonds will be exchangeable into shares of the NYSE Arca listed SPDR GOLD exchange tradable fund (the "GLD Shares") at an initial exchange price to be set at a premium of 25% above the closing price of the GLD Shares on the business day immediately prior to the pricing date. The exchange price will be subject to adjustment pursuant to the final terms and conditions of the Bonds;
• the Issuer will have the right to redeem all outstanding Bonds at par plus accrued but unpaid interest (i) on or after the date falling three years plus one month after the Issue Date (as defined below) if the closing price of the GLD Shares exceeds 130% of the then prevailing exchange price or (ii) if 15% or less of the principal amount of the Bonds originally issued remains outstanding; and
• as security for its obligations under the Bonds, the Issuer will be required to deposit into a custody account, in quarterly instalments over the fourth and fifth years of the term of the Bonds, the aggregate number of GLD Shares issuable upon exchange of the Bonds.

As noted, the Borrower's obligations under the Loan Agreements will mirror the terms of the Bonds and will be guaranteed by Mandalay. Among other things, this means that the Borrower will be required to make interest and principal payments to the Issuer in amounts and at times that coincide with the Issuer's obligations under the Bonds. The Borrower will also be required to provide the Issuer with all funding it requires from time to time to satisfy its obligations to deliver GLD Shares (i) into the custody account, as security for the Bonds and (ii) upon the exchange of Bonds in accordance with their terms.