Mandalay Resources : ESG 2023 Report

2023

Environmental,

Social and

Governance Report

June 28, 2024

Table of Contents

Message From Our CEO		2
About Mandalay	.	3
About this Report	.	6
ESG Highlights		7
Environmental Performance	.	8
Social Performance		13
Governance	.17
Forward Looking Statement		20
Contact	.21

Message

Our CEO

Welcome to Mandalay Resources Corporation's 2023 Environmental, Social and Governance ("ESG") report. Mandalay remains committed as a foundational operating principle, to pursuing best practice and continuous improvement as relates to sustainable and responsible mining.

I am proud that we successfully managed through the evolving dynamics of global markets and environmental challenges, while not wavering from our strategy and core values, measuring our success on the following principles:

Our employees and contractors' well-being and personal dignity is safeguarded as they work safely and experience the personal satisfaction that comes with high performance and recognition;

Gender equality, diversity across all human dimensions including thought, and inclusive and respectful engagement, dialogue and participation underpin our hiring and operating practices;

The communities in which we operate value our presence through fostering healthy relationships with active dialogue;

Our environmental impact and carbon footprint is minimized in a sustainable manner and causes no permanent harm;

Our shareholders realize superior returns on their investment and support our corporate values including striving for ESG excellence;

Our company-wide ESG strategy is focused on implementing good industry practice in key material ESG areas of our business, while simultaneously building a strong culture of responsible mining across the organization. In 2023, the Company achieved its best safety record to date, with a Lost Time Injury Frequency Rate ("LTIFR") of 2.0 per million hours worked. This was largely driven by further education and training on incident management and response. This steady decline in LTIFR, coupled with consistent production levels over recent years, is a testament to the effectiveness of our safety programs and reflects the care employees have for one another. We continually strive to improve our ESG training, communication and education. Our

board of directors (the "Board"), along with its committees within their functional areas, oversees ESG risks. Oversight of environmental and social risks falls within the mandate of Mandalay's Safety, Health and Environmental Committee ("SHEC"). Whereas Governance falls within the mandate of the Compensation, Corporate Governance and Nominating Committee ("CCGNC"). Environmental and social performance criteria are factored into our corporate performance scorecard, which is linked to executive compensation. We also incorporate ESG targets and objectives into performance scorecards for each of our operations. Our management and the Board annually reviews and updates, as required, our policies and procedures with the desired outcome of doing the right thing for our communities, the environment and our shareholders.

Our mine operations are heavily engaged in community engagement efforts, and we are proud of the support we provide locally. As an example, we have been providing monthly funding for local food relief and undertaking volunteering at the local community house near our operation to assist with preparing meals.

I would like to thank our Board for their guidance, as well as our shareholders for their continued support. I especially express my appreciation to all our employees and contractors for their hard work, resourcefulness, alignment with our core values and their commitment to operational excellence. It's through the collective efforts of our talented people that we will continue to strive to reach new heights in 2024 and beyond. I am excited for the future and look forward to updating the market on our progress.

Frazer Bourchier

President, CEO and Director

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Mandalay

Mandalay Resources Corporation ("Mandalay" or "the Company") is a Canadian-based natural resource company with two producing assets: The Costerfield gold-antimony mine ("Costerfield") in Australia and The Björkdal gold mine (Björkdal) in Sweden. Mandalay is committed to operating safely and in an environmentally responsible manner, while developing a high level of community and employee engagement.

Mandalay's corporate office is located in Toronto, Canada. As of December 31, 2023, the Company had 477 employees and 127 contractors, for a total workforce of 604 people working across all jurisdictions. Mandalay trades on the Toronto Stock Exchange under the symbol "MND" and has approximately 93 million issued and outstanding shares as of the date of this report.

Company Highlights

Diversified gold and antimony production in top-tier jurisdictions

Proven cost-effective resource growth with exploration upside

New management team with vision to build a mid-tier producer

Strong cash flow generation and sound balance sheet

Proven track record, with 10+ years of operations

All amounts in this document are in United States Dollars ("US$"), Swedish Krona ("SEK") or Australian Dollars ("AU$").

Established Track Record of Production1,2

koz AuEq | US$/oz AuEq

Costerfield		Björkdal		Cerro Bayo3		Cash Operating Costs		AISC5

$1,254	$1,212
$843	$873

$1,497	$1,515
$1,221
$1,100	$1,110
$896

		123
	103					106
			9		90	95
			45
	45				41
					42		45
	58		69			65
					48		50
	2020	2021	2022	2023		2024E

1. AuEq production per average gold and antimony prices, as determined by LME and Rotterdam warehouse, respectively
2. Mid-pointgraphed for 2024
3. Cerro Bayo placed under care and maintenance in 2017 and subsequently sold in 2021
4. 2024E as per the full year production and cost guidance press release on January 16, 2024

• Cash operating costs and all-in sustaining costs are non-GAAP financial performance measures with no standard definition under IFRS. Refer to the NonGAAP Financial Performance Measures section of our MD&A.

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Vision

At Mandalay, it is our vision to build a recognized and respected mid-tiergold producer that generates attractive financial returns, synchronous with ensuring the well-beingof all stakeholders.

Growth Strategy

Values

Safety: Safety is paramount in all our decisions and actions; we proactively protect people and property.

Integrity: We are our word; we honour our commitments; we abide by applicable laws, and we live by high ethical standards.

Responsibility: We are responsible for our actions and their consequences; we operate with social and environmental responsibility, and we promote sustainable development.

Excellent Performance & Innovation: We encourage excellence in everything we do, and we create an environment where ideas and innovative methods to improve our processes and results are encouraged.

Value Creation: We aim to seek and seize every opportunity to create more value with our resources.

Agility: We continuously seek out new opportunities and rapidly respond to new challenges.

Mergers and Aquisitions	Where We Operate
	BJÖRKDAL

Organic Exploration

Cashflow from Production

AITIK
BJÖRKDAL	100%
BOLDEN AREA	Owned

SWEDEN

GARPENBURG

ZINCGRUVANStockholm

The Björkdal operation is located within the Boliden mining district, approximately 28 km northwest of the municipality of Skellefteå and approximately 750 km north of Stockholm. Acquired in 2014, the mine produced gold from both an open pit and underground mine. In 2019, Mandalay Resources completed the transition and suspended the open pit operation and now solely operates the underground mine. The target was to eliminate the associated open pit costs and

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take advantage of processing higher margin underground Aurora zone and stockpiled ore. Mandalay Resources expects to increase the processing rate to 1.45 million tonnes of ore in 2024.

The Björkdal operation has been operational since 1983. Currently, the Björkdal mine produces ore from the Aurora zone underground mine, as well as from a stockpile of low- grade material accumulated over the course of its life of mine. Approximately 80% of the mill feed is attributed to the underground operation and the remining 20% from the stockpiled material.

Underground mining is accomplished by long-hole stoping using a combination of contractors and owner-operated mobile fleet. Access is via dual ramps from the open pit. The processing plant includes: multiple crushers, a ball mill and rod mill, a gravity circuit, and a flotation circuit. Four separate gravity and flotation gold concentrates are produced and sold to smelters in Sweden and Germany.

COSTERFIELD

Costerfield is located within the Costerfield mining district of Central Victoria, Australia, approximately 10 km northeast of the town of Heathcote and 50 km east of the city of Bendigo.

	VICTORIA	AUSTRALIA	100%
			Owned
	FOSTERVILLE
		COSTERFIELD
	STAWELL
		Melbourne

Purchased in 2009, Mandalay Resources immediately restarted capital development and mining. By 2013, through extensive improvements and investments in mining and processing methods, the processing plant's capacity was expanded to approximately 13,000 tonnes per month from 5,000.

The Augusta mine has been operational since 2006 and was the sole ore source for the Brunswick processing plant until December 2013, when ore production started from the Cuffley deposit located approximately 500 m to the north of the Augusta mine workings. The Brunswick deposit is being mined in conjunction with the Youle deposit, which produced its first ore in August 2019. Currently, Youle and Shepherd are the main source of material for Costerfield.

The mining method employed is long-hole stoping with cemented rock fill. Ore is accessed by a primary spiral ramp. Level spacing is at 10 m centers and horizontal development is advanced in a minimum of 1.8 m wide drives in both directions of the deposit. Levels are then mined out on retreat with long hole stopes drilled to a minimum width of approximately 1.5 m. The stopes are subsequently backfilled with cemented rock fill to supply stability, reduce dilution, and allow for mining above and below developed levels. Ore is trucked on the surface from the Augusta mine portal to the Brunswick processing plant, where it is stockpiled and blended into the processing circuit. Costerfield is currently planning a second mine portal at Brunswick. The circuit includes primary mobile crusher, primary and secondary ball mills, rougher, scavenger, cleaner flotation, gravity circuit, and filtering. Gravity gold concentrate is sold to a refinery in Melbourne, Victoria, and gold-antimony flotation concentrate is trucked to the port of Melbourne and shipped to a smelter in China.

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Report

Mandalay recognizes that ESG risks are critical issues within the mining industry and continues to improve our reporting processes to better align with the Sustainability Standards Accounting Board ("SASB") standards. The SASB framework focuses on materially sustainable issues relevant to stakeholders that could impact the financial condition or operational performance of a company. This report details Mandalay's ESG performance for the year ended December 31, 2021, December 31, 2022, and December 31, 2023.

Mandalay's goal is to focus on improving both our ESG performance and disclosure. In June 2024, we began conducting ESG materiality and gap assessment at our operations. The results of the assessments will be discussed

internally with our site management teams, senior leadership team, and Board - and then also with external stakeholders and affected indigenous groups. This will help us identify areas of improvement and determine priority ESG areas.

In addition to the metrics defined by SASB, Mandalay tracks a number of other ESG-related information such as: the number of community resolution processes conducted each year, in- country payroll and funds for community initiatives, in-country taxes and royalties and detailed safety statistics.

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Highlights

Environmental

Reduced GHG at Costerfield by 15% since 2021

Björkdal recycled about 56% of its water

Environmental policy training for employees

Zero significant environmental incidents

100% of electricity from fossil-free sources at Björkdal

At Björkdal, oxides of nitrogen ("NOx") levels have declined 36% since 2021

18% of the energy consumed per annum at Costerfield is off grid

Significant trials and testing have been conducted on aquifer recharge rates to reinject extracted groundwater back into the aquifer at an energy efficient, low cost, and low risk process which was approved for an initial two-year term by

the regulators.

Social

Zero fatalities

Zero human rights violations

The best safety record to date, with a Lost Time Injury Frequency Rate ("LTIFR") of 2 per million hours worked

Safety training for employees

AU$45,575 spent on local community events and charities in 2023 at Costerfield

SEK200,000 spent on local sponsorships annually at Björkdal

Local employment rate remains above 72% at Björkdal

Local employment rate remains above 80% at Costerfield within 85 km of operation

Governance

29% women on our Board, surpassing our target of 25%

Ratio of independent directors is 57%

New management team with vision to build a mid-tierproducer

Adopted a Board Diversity Policy

The legal and human resources teams work together to identify, assess and manage Modern Slavery risks

Anonymous and confidential whistleblower reporting system

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Environmental Performance

Greenhouse Gas Emissions

The Company currently does not have a formal emissions reduction plan and none of our operations are currently subject to emissions-limiting regulations. However, we recognize the global importance of achieving energy efficiency through the reduction of greenhouse gas ("GHG") emissions.

The Company tracks GHG emissions at both of our operating sites using continuous emissions monitoring systems. On an annual basis, we review applicable GHG legislation as well as potential investments into energy efficient technologies. All GHG numbers reported here are Scope 1.

The main point of distinction between our operating sites is that Björkdal sources 100% of its electricity from fossil-free sources (predominately hydropower), while at Costerfield, it's approximately 27%. Australia has made a pledge to reduce its emissions and reach a net zero position by 2050. In support of this promise, Costerfield will continuously investigate feasible renewable energy options.

BJÖRKDAL

At Björkdal, with no smelting activities on-site, GHG emissions is calculated using the primary emissions-causing actions stem from diesel consumption and heating activities related to cars, machines, equipment and engines. The small increase year over year is due to increasing production from underground and having to truck further each year. We will continue to investigate GHG emissions reduction opportunities.

Björkdal	Unit	2021	2022	2023
GHG emissions	Metric t	5,984	6,241	6,444
of CO2

COSTERFIELD

At Costerfield, GHG emissions are calculated in accordance with guidelines from Australia's National Greenhouse Emissions Reporting ("NGER") scheme. With the assistance of monitoring tools, Costerfield can record data directly on diesel consumption from heavy equipment, power machines

and light vehicles on surface and underground. Year-over-year, GHG emissions have declined due to production that is capital development reduction and leaving all waste underground for backfill.

Costerfield	Unit	2021	2022	2023
GHG emissions	Metric t	24,268	22,394	20,909
of CO2

Air Quality

The Company maintains strict compliance protocols with respect to air quality. Both sites disclose relevant and material air pollutants to ensure compliance with mining permits, or technological processes improvements aimed at reducing hazardous air pollutants.

BJÖRKDAL

At Björkdal, oxides of nitrogen ("NOx") levels have been declining as a direct result of less explosives being used due to the pause in the open pit operation since 2019.

Björkdal	Unit	2021	2022	2023
NOx	Metric t	297	183	190
of NOx

COSTERFIELD

At Costerfield, all air pollutants are tracked within the scope of the NGER, with tests conducted by consultants. Emissions of carbon dioxide, NOx and significant (antimony) metal emissions from annual stack testing of vent rises during underground firings are all directly monitored.

Costerfield	Unit	2021	2022	2023
NOx	Metric t of NOx	49.0	41.5	41.5
Sulphur Oxides	Metric t of SOx	0.034	0.031	0.031
("SOx")
Mercury	Metric t of	0	0	0
Mercury

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Costerfield	Unit	2021	2022	2023
Lead	Metric t of Lead	0.003	0.002	0.002
Volatile Organic
Compounds	Metric t of VOCs	3.5	2.588	2.588
("VOCs")
Particulate	Metric t of	52.5	44.2	44.2
Matter	Particulate matter

Energy Management

Electricity usage is monitored at the operating site level, however does not currently have a corporate mandate on strictly using renewable energy sources.

BJÖRKDAL

At Björkdal, electricity consumption is monitored and controlled within the Skellefteå Kraft reporting framework and all energy consumed is on grid. Currently, hydropower accounts for 100% of our electricity consumption.

Björkdal maps their energy consumption and continuously works towards energy saving measures according to a Swedish law based on European directive. The latest energy mapping project was undertaken in 2021.

Björkdal	Unit	2021	2022	2023
Energy
consumed
(68% of	Gigajoules	267,242	282,784	297,051
all energy
consumed)

COSTERFIELD

Costerfield is a certified user of renewable energy, having obtained energy credits, Victorian energy efficiency certificates, and large-scale generation certificates.

On average, 18% of the energy consumed per annum at Costerfield is from renewable sources. The majority of diesel consumption relates to the operating equipment underground. Electricity consumption is monitored and controlled by NGER.

Costerfield	Unit	2021	2022	2023
Energy
consumed
(86% of	Gigajoules	147,591	136,578	129,715
all energy
consumed)

Water Management

Environmental performance is monitored at the corporate level, and initiatives such as recycling water to increase the site's efficiency in water consumption is highly encouraged. The Company tracks its use and discharge rates for water and is in compliance with all local permits.

BJÖRKDAL

The water quality at the operation is monitored on a regular basis at eight strategically placed monitoring stations. Sampling is performed by certified samplers and the protocol includes analyses for a suite of twenty-two metals.

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