Mandalay Resources reports successful year of exploration as increases mineral reserves

Mandalay Resources (TSE:MND) says its exploration strategy is paying off - as it revealed an increase in mineral reserves in 2012.

The figures come from year-end independent estimations at its mines at Cerro Bayo in Chile and Costerfield in Australia.

Contained gold reserves increased by 33%, contained silver by 14%, and contained antimony by 38%, all net of mine depletion, the company said.

Proven and probable gold therefore now stands at 214,000 ounces (2011:161,000 ounces), silver proven and probable reserves are 18.25 mln (2011:15.96mln) and antimony is 7,200 tonnes (2011: 5,200 tonnes).

The increase in mineral reserves is based on increased measured and indicated resources, the firm said. 

At Cerro Bayo, the combined measured and indicated resource now stands at 1.9 mln tonnes with 194,000 ounces of gold at 3.2 g/t and 22.276 mln ounces of silver at 367 g/t.

At Costerfield, the measured and indicated resource is 524,000 tonnes with 161,000 ounces gold at 9.4 g/t and 21,100 tonnes of antimony at a grade of 4%.

At La Quebrada, measured and indicated resource is 34.8 mln tonnes with 459 million pounds of copper at 0.6% and 11.2 million contained ounces of silver at a grade of 10 g/t.

Mandalay chief executive Brad Mills told investors: "Mandalay's strategy of reinvesting operational cash flow in exploration was successful once again in 2012. 

"Cerro Bayo, initially acquired in 2010 and restarted with a mine life of three years based on proven and probable reserves at the time, now has a nominal life of approximately six years after two years of production. 

"Costerfield significantly increased its proven and probable reserves, maintaining its nominal two-year life despite a significant and sustainable increase in production rate delivered in the second half of 2012. 

"At Cerro Bayo, the company has expanded mineral resources in the Coyita vein and converted them to mineral reserves, adding a planned sixth mine to the current three producing and two planned mines on the property. 

"At Costerfield, the company significantly expanded mineral resources on the N-lode and Cuffley lode during 2012, with further expansion anticipated in 2013." 

Looking ahead, Mills said: "We plan to continue the intensity of exploration on our properties in 2013. 

"At Cerro Bayo, we have replaced our drilling contractor with owned rigs, reflecting our long-term commitment to exploration. We plan to follow up our success at extending resources and reserves on the Dagny vein under Laguna Verde with drilling on Fabiola, Yasna and Coyita veins under the lake as underground access is developed. 

Surface drilling on other vein targets throughout the district will increase relative to the effort in 2012, with activity focused on the higher elevations to the south in the southern-hemisphere summer months and on the lower elevation targets during the southern-hemisphere winter months. 

"At Costerfield, our wide-spaced drilling program has shifted from focusing on increasing N-lode resources in the second half of 2012 to focusing on increasing Cuffley lode resources in the first half of 2013.  

"We expect a development decision for Cuffley lode, associated with expansion of mine production to 500 tonnes per day from its current rate of around 300 tpd, in June of 2013."