Mandalay Resources Corporation

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Filer granted relief to file annual financial statements for year ended December 31, 2010 using IFRS-IASB -- Filer's financial results for the year ended December 31, 2010 will be based on a subsidiary that prepares IFRS financial statements -- Relief granted subject to conditions.

Applicable Legislative Provisions

National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards, Part 4.

March 4, 2011

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

(the Jurisdiction)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

MANDALAY RESOURCES CORPORATION

(the Filer)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) exempting the Filer from the requirements of Part 4 of National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards (the Instrument) (the Exemption Sought) including the requirement that financial statements be prepared in accordance with generally accepted accounting principles determined with reference to Part V of the Handbook of the Canadian Institute of Chartered Accountants (the Handbook) applicable to public enterprises (Old Canadian GAAP), in order that the Filer may prepare financial statements for periods relating to financial years beginning on or after January 1, 2010 in accordance with generally accepted accounting principles determined with reference to Part I of the Handbook applicable to publicly accountable enterprises, that is International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IFRS-IASB).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for this application; and

(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland.

Representations

This decision is based on the following facts represented by the Filer:

1. The Filer is a corporation incorporated under the Business Corporations Act (British Columbia) on January 29, 1997. The head office of the Filer is 76 Richmond Street East, Suite 330, Toronto, Ontario, M5C 1P1.

2. The Filer is a "reporting issuer" or its equivalent in the provinces of Ontario, British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland. The Filer is not, to its knowledge, in default of its reporting issuer obligations under the legislation in those jurisdictions.

3. The Filer's common shares and warrants are listed on the Toronto Stock Exchange under the symbols "MND" and "MND.WT" respectively.

4. Prior to December 31, 2010, the Filer prepared its financial statements in accordance with Old Canadian GAAP. The financial year end of the Filer is December 31.

5. The Filer is a natural resources based company with producing and exploration assets in Australia and Chile. The Filer's operations are primarily conducted through wholly-owned subsidiaries in Australia and Chile, being AGD Mining Pty Ltd (AGD) and Compania Minera Cerro Bayo Limitada (Cerro Bayo) respectively.

6. The Filer acquired AGD in December 2009 and Cerro Bayo in August 2010 and the Filer's only producing mine during 2010 was owned by AGD. Therefore, the Filer's financial results for the year ended December 31, 2010 will be based primarily on AGD's financial results. The year ended December 31, 2010 will be the first full fiscal year in which the Filer's financial statements will be prepared, in part, based on IFRS financial statements of subsidiaries.

7. AGD prepares its financial statements in accordance with Australian international financial reporting standards, which is functionally equivalent to IFRS-IASB in all material respects. Cerro Bayo has historically prepared its financial statements in accordance with United States GAAP.

8. The Instrument sets out acceptable accounting principles for financial reporting by domestic issuers, foreign issuers, registrants and other market participants. Under the Instrument, domestic issuers are required to prepare financial statements in accordance with Old Canadian GAAP for financial years beginning before January 1, 2011 and in accordance with IFRS-IASB for financial years beginning on or after January 1, 2011.

9. In CSA Staff Notice 52-321 -- Early Adoption of International Financial Reporting Standards, Use of US GAAP and Reference to IFRS-IASB, staff of the Canadian Securities Administrators recognized that some issuers may wish to prepare their financial statements in accordance with IFRS-IASB for periods beginning prior to January 1, 2011 and indicated that staff were prepared to recommend exemptive relief on a case by case basis to permit a domestic issuer to do so, notwithstanding the requirements of the Instrument.

10. The Filer believes that adoption of IFRS-IASB will eliminate complexity and cost for the Filer's financial statement preparation process.

11. The Filer has implemented a comprehensive IFRS-IASB conversion plan.

12. The Filer has the necessary technology and administrative processes in place to prepare IFRS-IASB financial statements.

13. The Filer has carefully assessed the readiness of its staff, board of directors and auditors for the adoption by the Filer of IFRS-IASB for financial periods beginning on or after January 1, 2010 and has concluded that the Filer and all parties are adequately prepared for the Filer's immediate adoption of IFRS-IASB for the financial periods beginning on January 1, 2010.

14. The Filer has considered the implications of adopting IFRS-IASB beginning on or after January 1, 2010 on its obligations under Canadian securities legislation.

15. The Filer has considered the implications of early adoption of IFRS-IASB on its obligations under securities legislation including, but not limited to, those relating to CEO and CFO certifications, business acquisition reports, offering documents, and previously released material forward looking information, to the extent applicable.

16. The Filer has concluded that early adoption of IFRS-IASB is in the best interests of the Filer and users of its financial statements.

17. The Filer will communicate its IFRS-IASB implementation plan to investors as contemplated by CSA Staff Notice 52-320 Disclosure of Expected Changes in Accounting Policies Relating to Changeover to International Financial Reporting Standards by disclosing relevant information about its changeover to IFRS-IASB in a news release not more than seven days after the date of the decision approving such early adoption application, including:

(a) the key elements and timing of the Filer's changeover plan;

(b) the accounting policy and implementation decisions the Filer has made or will have to make;

(c) the exemptions available under IFRS 1 First-time Adoption of International Financial Reporting Standards that the Filer expects to apply in preparing financial statements in accordance with IFRS-IASB;

(d) major identified differences between the Filer's current accounting policies and those the Filer is required or expects to apply in preparing its financial statements in accordance with IFRS-ASB; and

(e) the impact of adopting IFRS-IASB on the key line items in the Filer's financial statements.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision. The decision of the principal regulator under the Legislation is that the Exemption Sought is granted provided that:

(a) the Filer restates and refiles its interim financial statements that were originally prepared in accordance with Old Canadian GAAP for all financial periods beginning on or after January 1, 2010 in accordance with IFRS-IASB, together with the restated interim management's discussion and analysis as well as the certificates required by National Instrument 52-109 -- Certification of Disclosure in Issuer's Annual and Interim Filings (NI 52-109) (collectively, the Restated and Refiled Interim Filings);

(b) the Filer ensures that its first IFRS-IASB financial statements for an interim period beginning on or after January 1, 2010 present all financial statements with equal prominence, including the opening statement of financial position at the date of transition to IFRS-IASB;

(c) the Filer provides the communication set out in paragraph 17; and

(d) the Restated and Refiled Interim Filings and the Filer's annual financial statements, annual management's discussion and analysis and the certificates required by NI 52-109 for the year ended December 31, 2010:

(i) are prepared in accordance with IFRS-IASB;

(ii) comply with Part 3 of the Instrument that came into force on January 1, 2011;

(iii) comply with the IFRS-related amendments to National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) that came into force on January 1, 2011;

(iv) comply with the IFRS-related amendments to NI 52-109 that came into force on January 1, 2011; and

(v) comply with the IFRS-related amendments to National Instrument 52-110 Audit Committees that came into force on January 1, 2011.